Financial Resolutions. - Financial Resolution No. 2: Value-Added Tax.

Thursday, 26 June 1975

Dáil Eireann Debate
Vol. 282 No. 9

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Minister for Finance (Mr. R. Ryan): Information on Richie Ryan  Zoom on Richie Ryan  I move:

(1) That, with effect on and from the 1st day of July, 1975—

(a) the Value-Added Tax Act, 1972 (No. 22 of 1972), be amended by the addition of the following paragraphs to the Second Schedule—

“(xvii) clothing, including textile handkerchiefs and footwear;

(xviii) fabrics, yarn and thread of a kind normally used in the manufacture of clothing, including elastics, tape and padding materials in the form supplied for the manufacture of clothing;

(xix) sole and upper leather of a kind supplied for the manufacture and repair of footwear, and also soles, heels and insoles of any material;

(xx) (a) coal, peat and other solid substances held out for sale solely as fuel,

(b) gas of a kind used for domestic or industrial heating or lighting, whether in gaseous or liquid form, but not including gas of a kind normally used for welding and cutting metals or gas sold as lighter fuel,

(c) electricity,

(d) hydrocarbon oil of a kind used for domestic or industrial heating not being hydrocarbon oil sold for use in internal combustion engines.”,

(b) in consequence of the amendment specified in subparagraph (a) of this paragraph, the Value-Added Tax Act, 1972, be further amended as follows:

(i) by the deletion of paragraphs (xi), (xii) and (xiii) of Part I of the Third Schedule,

(ii) by the substitution, for paragraph (xxiii) of Part I of the Third Schedule, of the following paragraph: “(xxiii) fuel other than fuel of a kind specified in paragraph (xx) of the Second Schedule;”,

(iii) by the insertion in paragraph (xxiv) of Part I of the Third Schedule, after “(including greases)”, of “other than hydrocarbon oils of a kind specified in paragraph (xx) of the Second Schedule”,

(iv) by the insertion in paragraph (xxviii) of Part I of the Third Schedule, after “specified in”, of “the Second Schedule or”,

(v) by the addition of the following paragraph to Part II of the Third Schedule:

“(viii) the hiring of goods of a kind specified in paragraph (xvii) of the Second Schedule”.

(vi) by the substitution, in section 8 (3) (a) (i), of “, (xv) and (xx) of the Second Schedule” for “and (xv) of the Second Schedule” (inserted by the Finance Act, 1973 (No. 19 of 1973)) and by the substitution of “and (xxii) of Part I of the Third Schedule” for “, (xxii) and (xxiii) of Part I of the Third Schedule”,

[2005] (vii) by the substitution, in section 8 (3) (b) (ii), of “, (xii) to (xv) or (xvii) to (xx)” for “or (xii) to (xv)” (inserted by the Finance Act, 1973),

(viii) by the substitution, in section 11 (1) (b), of “, (xii) to (xv) and (xvii) to (xx)” for “and (xii) to (xv)” (inserted by the Finance Act, 1973), and

(ix) by the substitution, in section 11 (1) (d), of “,(xii) to (xv) and (xvii) to (xx)” for “and (xii) to (xv)” (inserted by the Finance Act, 1973), and

(x) by the substitution, in section 15 (2) (a) (ii), of “, (xii) to (xv) and (xvii) to (xx)” for “and (xii) to (xv)” (inserted by the Finance Act, 1973).

(2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

The resolution removes from the value-added tax by application of the zero rate the following items : clothing (including textile handkerchiefs and footwear); certain clothing and footwear materials and fuels, including electricity but not road fuels. The relief, which will take effect as and from Tuesday next, will have the effect of entirely removing the existing tax, 6.75, from the items affected. As a consequence the prices involved should be reduced as from 1st July for supplies made and paid for on or after that date. The cost to the Exchequer of granting these reliefs is £8.2 million in the current year and £27.2 million in a full year.

I should like to add, in reply to a question raised earlier, that registered sellers may continue to obtain a credit or refund in respect of any tax suffered by them on their purchase of taxable goods.

Mr. Colley: Information on George Colley  Zoom on George Colley  I should like to ask the Minister, in the light of the wellknown difficulties in the clothing and textile industries, whether he considers the removal of value-added tax may, in fact, increase imports of such goods?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The Deputy and I [2006] obviously share a concern that any increase in the demand for goods which may be generated by this reduction in price will not leak into imports. However, in the final analysis the decision as to whether or not Irish people buy Irish goods or foreign goods lies with each purchaser, but a tremendous responsibility lies on traders. It is for traders to decide whether or not their interests, and the interests of Ireland, lie with their purchasing goods manufactured by Irish people or purchasing from outside the country. I am sure there are many members, myself included, who have experienced difficulty themselves in endeavouring to buy in retail stores in this city items to which the Deputy refers like garments, textiles and footwear. Sometimes it is difficult to obtain goods manufactured in Ireland.

The principal factor in determining whether or not Irish goods are for sale or bought lies on us and not on any arrangements which governments may make. The Deputy is aware that there are constraints on us now by reason of EEC obligations which restrict the scope which we at one time had in relation to restrictions on imports. However, we have already raised with the EEC the steps which we propose to take to restrict the importation of footwear. There are special reasons why it would be possible to do it in respect of footwear which do not apply to the other items.

Mr. T.J. Fitzpatrick: Information on Tom J. Fitzpatrick  Zoom on Tom J. Fitzpatrick  (Dublin Central): Would the Minister explain how this can come into effect from 1st July in respect of large retail stores who have already paid VAT on the wholesale price?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Such registered retailers may apply for and obtain a credit or refund in respect of any tax suffered by them on the purchases of the goods in question, so they will not be at any loss because they cannot pass it on to the purchaser.

Mr. T.J. Fitzpatrick: Information on Tom J. Fitzpatrick  Zoom on Tom J. Fitzpatrick  (Dublin Central): That is in respect of goods over the past six months?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Yes.

[2007]Dr. Gibbons: Information on Hugh Gibbons  Zoom on Hugh Gibbons  May I ask (1) what would this mean to the average family? (2) Can it be alleged by the EEC that the £12 employment premium will distort competition? And (3) how does the Minister propose to meet this grave deficit that has arisen in 1975 as a result of the two budgets?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I think some of the Deputy's questions go beyond the immediate impact of this financial resolution. The question of financing the deficit I dealt with in my earlier statement today.

Deputies:  Borrow.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  It would seem that some Deputies think the Minister for Finance is Santa Claus. He must not tax—because they have just voted against taxation; he must not borrow because they consider it improper to borrow; he must reflate the economy with fresh air.

Mr. Colley: Information on George Colley  Zoom on George Colley  The Minister is learning about the problems now that he is in office.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  We would be very interested to hear in the course of the debate——

Mr. R.P. Burke: Information on Ray Burke  Zoom on Ray Burke  The Minister is irresponsible.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Deputy Burke will please desist from interrupting.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  ——how they propose to do that. It is a trick that is not known to any economics expert or practitioner. On the question of how much it would mean for an individual family, it is clearly not possible to state what relief it might give to any family because family expenditures can vary considerably, but the consequence for the consumer price index of these reductions would be about 1 per cent.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  I wish to put one or two questions but before I do may I comment on the remark made by the Minister that we voted against taxation? We voted against this taxation for the two reasons I already gave but I would remind the Minister that [2008] the last vote we had was the only vehicle for voting against the Minister's package and his failure to handle the whole situation. In a couple of minutes' time the General Resolution will be moved; that will be debated tomorrow and on Tuesday, as I understand it, and will be adjourned sine die. The first opportunity we shall have of voting on these specific measures the Minister proposes will be in the Finance Bill, I take it, which is due some time in the autumn. Therefore, we wanted to take the earliest opportunity to mark our disapproval and, indeed, our condemnation of the activities of the Government and the Minister.

I want to ask the Minister a question on the subsidies. The explanatory memorandum is all-embracing in relation to VAT and subsidies. In the pink explanatory memorandum the Minister says :

A further subsidy is now being provided to enable CIE to reduce the fares it charges on Dublin city bus services, road passenger provincial servies and Dublin and Cork commuter rail services...

I take it that does not exclude city services in the other county boroughs?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  No.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  He also says in the same memorandum “A subsidy will be paid to producers of town gas”. He used the same words in his statement today “town gas”. It is more general in the Financial Resolution No. 2 where it describes it as “gas of a kind used for domestic or industrial heating or lighting whether in gaseous or liquid form.” Do I take it that includes bottled gas?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  No. The subsidy applies to town gas. VAT is being removed from bottled gas and piped gas. The items of fuel which will be relieved from VAT are fuels of all kinds used for domestic or industrial heating or lighting, including electricity, for example, coal, coke, turf, firewood, firelighters, heating oils, central heating oils, fuel oils other than those used in internal combustion engines, paraffin oil, piped gas and bottled gas.

[2009]Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  The subsidy will be paid on town gas, and bottled gas will be assisted by way of removal of VAT?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Yes.

Mr. Haughey: Information on Charles J. Haughey  Zoom on Charles J. Haughey  Does the subsidy on fares apply exclusively to CIE or is it the intention that it will be extended to other transport operators, and, if not, does this not mean that these private operators will be placed at a very serious disadvantage in relation to CIE?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I would not say they will be placed at a serious disadvantage. CIE are providing many transport services which are really social services and are not commercial propositions. It is they who have to carry losses which the private sector would not carry. It is on that account they have to pass on to users of transport the losses which are suffered by them on the many social services which they provide by way of transport facilities in areas of small demand, and, therefore, it is for CIE alone that the subsidy will be provided.

Mr. Haughey: Information on Charles J. Haughey  Zoom on Charles J. Haughey  But persons who have to avail of private transport firms for their transport will be at a disadvantage in relation to those who can use CIE.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  No, because the cost of such operations tend to be less than the cost which CIE must charge because CIE are providing many services which are uneconomic. Hitherto it has not been the practice to provide any subsidies for any of those private concerns, but for many years, in fact, decades now, subsidies have been provided for CIE.

Mr. Haughey: Information on Charles J. Haughey  Zoom on Charles J. Haughey  Admit that it is an anomaly and straighten it out.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  No. I do not believe it is an anomaly. If CIE were relieved of the cost of carrying uneconomic services it would be a very paying service indeed.

Mr. Haughey: Information on Charles J. Haughey  Zoom on Charles J. Haughey  Did the Minister advert to this before today?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Yes.

[2010]Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  Could I ask the Minister to clarify further the statement that retailers who have paid VAT on goods purchased from wholesalers can apply for a rebate on the amount of VAT already paid? Does this apply to any goods upon which VAT has been paid, or is there any limitation on the period within which these goods could have been purchased——

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  No.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  ——and what procedures would the Minister introduce to facilitate the claim for rebate? As the Minister may well appreciate, a shelf in a retail shop could have half of the goods on which VAT has already been paid and new stock coming in after July on which no tax would be payable and it does present a difficulty for retailers unless it is cleared up before July.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  No. I think very few people would consider that any difficulty is created for them when they apply for a refund of money which they have previously advanced. They have had previous experience of this when value-added tax was removed from food, and registered retailers are obliged to make and, in fact, do make, their bi-monthly returns and, in the process of making these returns, they will make their application for a credit or refund in respect of the tax paid by them on the goods.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  The Minister appreciates that food, being a perishable item, would not be as long in stock as clothing, footwear and so on.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The length of time has nothing to do with it. If the tax has already been paid it is not now recoverable from the retail purchaser.

Mr. T.J. Fitzpatrick: Information on Tom J. Fitzpatrick  Zoom on Tom J. Fitzpatrick  (Dublin Central): I presume he would have to have invoices to prove he is not sold out.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  He will simply produce evidence of having purchased the goods. That is all.

Mr. Callanan: Information on John Callanan  Zoom on John Callanan  The Minister said he could not estimate what the cost of the £12 employment subsidy would [2011] be. Would it not be rather small if the Minister gives £12 and someone on the dole is employed? Is it not the same as social welfare? I could not see it costing a great deal. It is taking it from social welfare, which is a good idea.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  That does not arise on this Financial Resolution.

Mr. Callanan: Information on John Callanan  Zoom on John Callanan  I was just asking if that is so.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Yes. I agree with the Deputy that it is a good idea and that is why we are implementing it.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  In respect of the removal of VAT from electricity, will VAT on the fixed charge element also be removed?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The answer is in the affirmative.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  That is about the first positive thing I have had from the Minister in relation to this.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  It is the first thing the Deputy understood.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  I assume that the Minister expects that the removal of VAT from clothing will help the home textile industry. The amazing thing is why the Minister did not do this long ago, and I hope it is not a matter now of being too late.

Mr. Reynolds: Information on Patrick J. Reynolds  Zoom on Patrick J. Reynolds  Why did the Fianna Fáil Government put it on?

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  At the time a great many people were employed in the textile industry. We did not have mills closing all over the country. The Deputy may not have been aware of that. Are blankets and so on included under clothing?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  It includes ordinary items of clothing and footwear for humans, underwear as well as overwear, irrespective of the material from which it is made. It extends to protective clothing, sportswear and surgical clothing, elastic stockings and surgical boots, certain types of clothing accessories, such as belts, braces, textiles, handkerchiefs, but not paper [2012] handkerchiefs, babies' napkins, sanitary wear, ties, scarves and headbands. The clothing and footwear materials which will qualify are synthetics, fabric, yarn and thread of the kind normally used in the manufacture of clothing, as well as elastic, tape, padding materials used in the manufacture of clothing, leather soles and uppers of the kind supplied for the manufacture and repair of footwear, and also soles, heels and insoles of any material.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  Am I to take it blankets are not included?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  They are not included.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  What is the existing VAT rate on blankets?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  6.75 per cent.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  Would the Minister check that figure?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I am sorry. It is 19.5 per cent.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  In view of the fact that it is 19.5 per cent and we have blankets manufactured in the country competing with blankets brought over the Border illegally by travelling people and sold on every roadside, would the Minister not agree it would be desirable to encourage the creation of more jobs in industry by taking off this monstrous VAT charge on blankets?

Minister for Foreign Affairs (Dr. FitzGerald): Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  One cannot take the Fianna Fáil tax off everything.

(Interruptions.)

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Order.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The Minister for Foreign Affairs has very correctly said that we cannot overnight reform the legacy of taxation left by Fianna Fáil. As far as illegal imports are concerned, the Revenue Commissioners have been very active indeed in policing illegal importations and bringing prosecutions.

(Interruptions.)

[2013]An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  When Deputies seek information they should be good enough to listen to the reply.

Mr. G. Collins: Information on Gerard Collins  Zoom on Gerard Collins  Do not be getting narky.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I would point out that value-added tax applies to items whether they are imported or not. I have already answered here in the last few weeks a question as to whether or not value-added tax was collected on items sold on the roadside and I assured the House the Revenue Commissioners endeavour, as best they can, to ensure that all engaged in the sale of goods pay the appropriate taxes.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  Would the Minister like to repeat now the reasons why he has removed VAT from clothing and textiles generally?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  To reduce the cost of living and to assist in increasing the demand for clothes, textiles and footwear for the purpose of stimulating employment in Irish manufactured goods.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  In the light of that explanation would the Minister not now accept my request to include blankets in order to preserve jobs in the textile industry, an industry the Government have neglected for so long?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Will the Deputy then support the additional borrowing necessary to make up the revenue loss or will he join with his colleagues in condemning borrowing?

Mr. Colley: Information on George Colley  Zoom on George Colley  The Minister is responsible for the enormous borrowing. He is Minister for Finance and he has created this situation.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  Will the Minister consider removing VAT from blankets or reducing it to a reasonable level for the reasons he has spelled out now as the reasons why he is in fact reducing VAT on textiles?

Dr. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  Why did Fianna Fáil put such a high rate on blankets to start with?

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  The Minister's Government increased it.

[2014]Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  The Minister for Foreign Affairs probably does not know what is happening.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Deputy Ciarán Murphy.

Mr. C. Murphy: Information on Ciaran P. Murphy  Zoom on Ciaran P. Murphy  May be the Minister for Finance would like to answer Deputy G. Fitzgerald first.

An Ceann Comhairle: Information on Seán Treacy  Zoom on Seán Treacy  Did the Deputy offer or did he not?

Mr. C. Murphy: Information on Ciaran P. Murphy  Zoom on Ciaran P. Murphy  On a point of information, the Minister has risen as if he wishes to reply.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The question at issue is whether or not the House agrees to the removal of the 6.5 per cent value-added tax from clothing, footwear and textile items previously subject to VAT. That is the point at issue. Perhaps Deputies opposite would indicate whether or not they agree with its removal.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  Why is the Minister differentiating?

Dr. FitzGerald:  Fianna Fáil did not differentiate.

Mr. G. Collins: Information on Gerard Collins  Zoom on Gerard Collins  You shut up.

Mr. G. Fitzgerald: Information on Garrett Fitzgerald  Zoom on Garrett Fitzgerald  When the Minister was removing VAT from clothing, why did he not also remove it from all items of clothing manufactured in this country, used and needed by the ordinary people to help, as he said, reduce the cost of living and preserve further jobs? Is he concerned now about ensuring that those industries too will be too far gone when he tries to come to their rescue?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I find this very interesting. I will make a further study to find out why Fianna Fáil included blankets with animal clothing, bracelets, buckles, buttons, costume hire, costume jewellery, cufflinks, dolls' clothing, earrings, handbags, measuring tapes, necklaces, needles, paper patterns, rings, rugs, rug wools, sleeping bags, studs, towels, thimbles, umbrellas, watches and zip fasteners.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  On all of which the Minister increased the rate of VAT.

[2015]Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  Does the Minister think blankets should not be included with these categories?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I said I will make a study as to why Fianna Fáil included it there.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  Can the Minister answer a straight question?

Dr. FitzGerald:  He may have had a good reason.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  Does the Minister concede there may have been good reasons for it?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I will not rush to any conclusions. I would like to study why it was done. Occasionally Fianna Fáil did things for good reasons.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  I only asked that question because the Minister read out that list in a rather contemptuous fashion, as if he did not agree that blankets should be included with the other items. If he did not agree, why did he not remove it?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I will not rush to any conclusion in the matter. I want to study why it was included in this list.

Mr. Dowling: Information on Joseph Dowling  Zoom on Joseph Dowling  I would like to enlighten the Minister——

Acting Chairman (Mr. M.E. Dockrell): Information on Maurice E. Dockrell  Zoom on Maurice E. Dockrell  I trust the Deputy is seeking information.

Mr. Dowling: Information on Joseph Dowling  Zoom on Joseph Dowling  A moment ago the Minister said he did not know the VAT chargeable on blankets. He indicated it was 6.75 per cent, when in fact it was 19.5 per cent. He referred to the items from which he removed VAT as wearing apparel and indicated that this was to reduce the cost of living. Is that so?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  That is right.

Mr. Dowling: Information on Joseph Dowling  Zoom on Joseph Dowling  The normal working woman who buys a coat for a child at £8 saves 56p. The Minister has removed VAT from mink coats. A woman buying a coat for £800 would save £56. For whom is he reducing the cost of living to the greatest degree?

[2016]Mr. Coogan: Information on Fintan Coogan  Zoom on Fintan Coogan  There is a tax on mink coats too.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  It is gone now.

Mr. Dowling: Information on Joseph Dowling  Zoom on Joseph Dowling  The mink coat Government.

(Interruptions.)

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  What special assistance is provided for Irish-made footwear in this budget?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Footwear is relieved of VAT and that should help stimulate the demand. In my financial statement, I referred to another matter which is not relevant to the financial resolution before us, and that is that the Government have made an approach to the European Community for the purpose of restricting the importation of footwear.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  Perhaps I could enlighten the Minister. The Government have been approaching the EEC for the past nine months——

Acting Chairman:  In the form of a question, please.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  That is not much consolation to the footwear industry. Is it a fact that what the Minister is doing here is reducing the already very low price of footwear coming in here from the low cost countries?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I have already spoken about the purchase of Irish goods. It is open to anybody to refuse to purchase foreign goods, and that is exactly what anybody interested in employment in Ireland and the future of this country should do.

This country voted for membership of the EEC. We have to abide by their rules or face the consequences, which could mean a judgment against us in a European Court. Only in certain circumstances—and we are satisfied those circumstances now exist—can we make an approach to the EEC to make arrangements to regulate the flow of footwear into this country. This cannot be done unless certain conditions exist. We are satisfied that those conditions do exist and that is why the approach has been made.

[2017]Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  Those conditions have existed for a considerable time and no move was made by the Minister for Industry and Commerce to do anything until we pushed him into it, and it is not done yet. From what I can see in this budget, it will not be done. Is the Minister aware that in my constituency, for example, there are hundreds of footwear workers unemployed? One industry has gone into liquidation. What help is there for these people to get employment?

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  On a point of order and information. When Deputy Faulkner was speaking a few minutes ago, the Chair put it to him that he ought to ask a question? We are in Committee and Members are entitled to make submissions.

Acting Chairman:  We are not actually in Committee. We appear to be in Committee, we are close to being in Committee but we are not in Committee. Members are allowed by the Chair to ask questions for elucidation.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  And not make observations?

Acting Chairman:  I have heard observations in the form of a question but not, I am glad to say, when I was in the Chair.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  I can say from experience when I sat in the Minister's seat for some years that on budget resolutions observations were made in the form of short speeches by Members of the Opposition and, indeed, from the Government benches.

(Interruptions.)

Acting Chairman:  On the point of order, made by Deputy Lynch: Committee on Finance was abolished in the last revision of Standing Orders.

Mr. Colley: Information on George Colley  Zoom on George Colley  But we are discussing a resolution?

Acting Chairman:  The Chair is very anxious to allow the House as much latitude as possible in elucidation of various points. I am sure the Minister is equally anxious to oblige them, so long as they stay within those [2018] wide limits. I am here to protect the House and the Minister.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  Might I point out to the Minister that only about a fortnight or three weeks ago we discussed a Private Members' Motion on the footwear industry. At that time, he did not appear to be able to do anything. What has happened in the meantime which created the situation where we can approach the EEC with some confidence?

Mr. E. Collins: Information on Edward Collins  Zoom on Edward Collins  They caught up with the Minister for Foreign Affairs in South Africa or somewhere.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The Minister for Industry and Commerce has raised this matter with the Commission more than once.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  After we pushed him into doing it.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  No, before the Deputy even thought of it. The Minister has been anxiously pursuing with the Commission the possibility of taking steps to protect the Irish market from improper imports. It is not an easy matter, and the evidence has to be obtained and presented and, as a result of further developments, a further approach has been made. As a consequence, it is open to us now to make the appropriate arrangements to regulate the importation of footwear in the interests of employment.

Mr. O'Malley: Information on Desmond J. O'Malley  Zoom on Desmond J. O'Malley  Is the Minister aware that in this House on the debate to which Deputy Faulkner referred, both the Minister for Industry and Commerce and his Parliamentary Secretary stated categorically that unless we declared a balance of payments crisis under Articles 108 and 109 there was nothing we could do to limit imports other than the surveillance measures introduced a fortnight ago? If that were true then, how is it untrue now, or is it the intention of the Government to declare a balance of payments crisis in addition to the various other crises declared today?

Acting Chairman:  The Chair does not want to curtail the debate. Questions [2019] are allowed for elucidation on the actual Financial Resolution. The Chair is not certain that the elucidation being sought at the moment strictly arises on this Resolution.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  It arises under VAT.

Acting Chairman:  I think the Minister has already dealt with it.

Mr. J. Lynch: Information on John Lynch  Zoom on John Lynch  May I respectfully suggest that we have two Resolutions here. We have a lot of matter in the budget and the only chance we will have of getting replies to questions from the Minister on other aspects of the budget outside the scope of these Resolutions is here and now.

Acting Chairman:  The Chair takes note of that and would not like to curtail any form of elucidation or anything that would help Deputies. The Minister has dealt with that. Perhaps Deputy Burke wants elucidation on something else.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  Could we have an answer to Deputy O'Malley's question about a balance of payments crisis declaration?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I have been asked a question about what the Minister for Industry and Commerce said when he was speaking on this matter in this House in the past couple of weeks. Without having the Official Report before me I am not in a position to say whether he did or did not say a particular thing. As I have already said in reply to Deputy Faulkner, the process of collecting the necessary information on which to base a further approach to the Commission of necessity took some time. The information being now available which justifies an approach to the Commission under Article 135, the approach has been made and, on foot of that, action is now being taken.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  Six months ago we pressed the Minister to deal with this matter on a Private Members' motion. In supplementary questions and answers since then we pressed him to move. He raced out to Brussels two days before the Private Members' [2020] motion was discussed. We discussed it again very recently. He told us there was a very narrow confine to what he could do. As Deputy O'Malley said, according to the Minister, one of the few ways in which he could take action was under Articles 104 and 108 of the Treaty of Accession. This meant that the country could claim it had a balance of payments problem. Deputy O'Malley and I want to know whether there is a balance of payments problem now and if that is the reason why it is possible to go to Brussels and do something about it.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  As the Chair has pointed out to us, we have ranged far beyond the scope of the Financial Resolution before us. Once again I will say to the House that we are making the approach under Article 135. We now have the evidence which we are satisfied is sufficient to enable us to proceed in this way.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  Will the Minister quote Article 135?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Mere suspicion, mere anxiety, is not adequate evidence either in civil proceedings or legal proceedings or for the purpose of an application to the EEC. We have the evidence which shows that there has been a rise in the share which imports have on the home market. We also have the evidence of the closure of firms. We now have all the evidence necessary to proceed to regulate imports of footwear.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  That evidence has been available for months. Would the Minister quote Article 135?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Mere allegations are not evidence.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  If the Minister comes down to my constituency he will realise they are not allegations.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  We are supposed to be deciding whether we will remove VAT from several items including footwear for the purpose of generating demand. That is the issue which is now at stake, and not the issue which has been debated at great length.

[2021]Mr. R.P. Burke: Information on Ray Burke  Zoom on Ray Burke  With a sweep of the hand the Minister says we are removing VAT from various items for the purpose of cutting down prices and generating employment. The Minister deliberately excluded road fuels. One industry, together with the building industry and the footwear trade, which is having problems, is the motor trade. Last year the Minister introduced savage increases in the tax on road fuels. Would the Minister not consider that he should have given some relief to the already over-burdened section of the community, the motorists and the motor trade generally, to stimulate purchases and employment? He had that opportunity today but, as he did in relation to many other sections of the economy, he failed miserably. Would he not like to answer this question since he is sitting beside the Minister for Foreign Affairs who represents an area where one company had a massive sit-in, the Reg Armstrong organisation?

Acting Chairman:  The Deputy must not mention firms.

Mr. R.P. Burke: Information on Ray Burke  Zoom on Ray Burke  I am sorry I mentioned the Reg Armstrong organisation.

Acting Chairman:  The Deputy mentioned it twice.

Mr. R.P. Burke: Information on Ray Burke  Zoom on Ray Burke  Would the Minister answer that question?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  It seems to range beyond Financial Resolution No. 2. I suspect the Deputy's main disappointment is that we have not fulfilled the forecasts that we would increase motor taxation.

Mr. R.P. Burke: Information on Ray Burke  Zoom on Ray Burke  Answer the question. Do not make smart-alecky remarks.

Acting Chairman:  It does not really arise on this Resolution.

Mr. R.P. Burke: Information on Ray Burke  Zoom on Ray Burke  Of course it arises.

Mr. Cunningham: Information on Liam Cunningham  Zoom on Liam Cunningham  In regard to the textile industry and the footwear industry could I ask if the considerations or the constraints which the Minister [2022] for Industry and Commerce mentioned have been surmounted? Is the removal of VAT from shoes and articles of clothing the only distance he has been permitted to go? Surely the imposition of duty on these articles would be a further step. Surely the removal of VAT from the sale of imported shoes and boots does not give home manufacturers any advantage. In other words, the concession of the removal of VAT will mean more purchases and a lowering of the cost of living, but that does not go to the root of the problem. Has the Minister sought the removal of any constraints other than VAT? If VAT was one of the constraints he mentioned, has the Minister for Industry and Commerce gone further? With what result? Do the Government propose later to introduce anti-dumping measures and duty measures on imports? Otherwise they are not differentiating between imported goods and home-produced goods, all of which will be free from VAT.

Acting Chairman:  That point does not strictly arise on this Resolution.

Mr. Cunningham: Information on Liam Cunningham  Zoom on Liam Cunningham  This Resolution provides for the removal of VAT. The Minister may not wish to answer all the questions I asked. Will VAT, which we are now dealing with in this Resolution, disappear from imported shoes, shirts and so on?

Acting Chairman:  The Minister has said it will disappear.

Mr. Cunningham: Information on Liam Cunningham  Zoom on Liam Cunningham  Will the Minister answer that specific question?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The answer is “yes” because you may not use that to discriminate against goods on a national basis, but 70 per cent of clothing——

Mr. Cunningham: Information on Liam Cunningham  Zoom on Liam Cunningham  So, you are doing nothing.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Seventy per cent of clothing in the country is Irish made and if the Deputy and his colleagues who are criticising us would encourage people to buy Irish, nothing else need come into the country. We have the [2023] capacity to supply the whole Irish market in all these commodities. In many cases the difficulty these firms are experiencing at the moment is attributable not merely to imports but to a slackening of demand on the home market for all goods. Removal of VAT should help to stimulate demand and, therefore, have a beneficial effect on the sale opportunities of Irish manufacturers. Where the Government have evidence of dumping they will not hesitate to act to prevent that dumping but Deputies opposite who encouraged the Irish people to vote for membership of the EEC should not now in Opposition pretend that there are no contraints. There are constraints and we are still in a position so far as clothing and textiles are concerned, of exporting more than we are importing. We are producing and selling more textiles and clothing on the Irish market than we are importing. We have a net advantage in these items. The situation in footwear is different and that is why it is open to us to take the action we are taking in that regard.

Mr. Colley: Information on George Colley  Zoom on George Colley  In view of the danger that the removal of VAT from clothing, textiles and footwear may stimulate imports, would the Minister say whether consideration was given to the categorisation of footwear or clothing or textiles to determine those categories in which there was a predominantly imported element for the purposes of assessing the categories from which VAT should be removed and those from which it should not?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The Deputy appreciates that discriminatory action is not permitted.

Mr. Cunningham: Information on Liam Cunningham  Zoom on Liam Cunningham  Discriminatory action against EEC countries or third countries?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Either. The restrictions may apply in different ways but they are there. The EEC is a net exporter to the rest of the world and it is not in the interests of the EEC or of this country to have restrictions applied by third countries to our exports. The Government are taking [2024] action in the case of footwear as it is possible by reason of circumstances that have arisen to take action in that area. Do the Deputies opposite agree that the best action that can be taken in this area is for Irish people to buy Irish?

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  Of course, we have said that on numerous occasions. Would the Minister agree that action could have been taken months ago on the same basis as he is speaking of now? We were told then it was not possible to take that action. It is quite some time since we had a higher import of footwear than exports.

Acting Chairman:  That does not arise on the Financial Resolution. There will be ample opportunity for the Deputy later when he can speak with absolute relevance and at greater length and make this point if he wishes. I appeal to Deputies, now that they have made the points they wished to make, to remember that there is no good in flogging a dead horse.

Mr. Cunningham: Information on Liam Cunningham  Zoom on Liam Cunningham  You are dead right there.

Mr. Faulkner: Information on Padraig Faulkner  Zoom on Padraig Faulkner  That is the most accurate statement made yet.

Mr. Colley: Information on George Colley  Zoom on George Colley  Perhaps the length of my question was such that the Minister did not quite get the point. I asked was consideration given to categorisation. His reply referred to the inability of the Government to discriminate. The question is: was consideration given?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The principal objective was to reduce the cost of living and that objective will be achieved as a result of the reduction in the consumer price index which will flow from the removal of VAT from the items contained in Financial Resolution No. 2. As regards categorisation, there are very serious practical difficulties in refining it in a way which would admit items of Irish manufacture only and exclude all others.

Mr. Colley: Information on George Colley  Zoom on George Colley  Was it considered? That is what I am asking.

[2025]Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The answer is “yes”.

Mr. Colley: Information on George Colley  Zoom on George Colley  That is all I wanted to know.

Mr. C. Murphy: Information on Ciaran P. Murphy  Zoom on Ciaran P. Murphy  The Minister said that the removal of VAT from certain items and the subsidies introduced would bring about a reduction in the cost of living. Bearing in mind that a subsidy is being provided as well as a reduction in VAT in the case of town gas, did the Minister take into consideration a possible subsidy on bottled gas which is used for domestic purposes? If so, why was this not favourably considered as this would be a definite way of reducing the cost of living for a huge section of the community?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  Bottled gas is being relieved from VAT and that is a significant relief.

Mr. C. Murphy: Information on Ciaran P. Murphy  Zoom on Ciaran P. Murphy  That is not the answer to the question I asked. The Minister did state that VAT is coming off bottled gas and gas bills—I take it. There will also be a subsidy of 12½ per cent for town gas. Was consideration given to providing a subsidy on bottled gas?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  In selecting items for subsidy and for removal of VAT we were concerned to ensure that any subsidies given or any VAT relief given would be passed on to the consumer. Obviously, when we were concerned to reduce the consumer price index there would be little point in giving widespread relief which would not be passed on to the consumer. Obviously, electricity and piped gas are items which can very easily be policed and we can ensure that a reduction given in these areas will be passed on to the consumer. That is the special reason why they got the treatment they did get. In respect of bottled gas, the relief has been given by the removal of VAT. The same applies to electricity, as regards removal of VAT. That is the relief given.

Mr. C. Murphy: Information on Ciaran P. Murphy  Zoom on Ciaran P. Murphy  While I welcome the relief in the removal of VAT from bottled gas, does the Minister [2026] not realise that he had a wonderful opportunity to reduce the cost of living for many thousands of people by giving a subsidy on gas? Why did he not avail of this? His argument is very thin.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The Deputy seems to think that if all taxation could be abolished it would reduce the cost of living but that opportunity does not happen to present itself.

Mr. C. Murphy: Information on Ciaran P. Murphy  Zoom on Ciaran P. Murphy  Surely there is a parallel: if you introduce a subsidy for town gas you could subsidise bottled gas which is used essentially for the same purpose, cooking. The opportunity was there.

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The value-added tax is off; transport costs are down; electricity is down, bread is down——

Mr. C. Murphy: Information on Ciaran P. Murphy  Zoom on Ciaran P. Murphy  Did the Minister consider a subsidy on bottled gas?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I considered everything and I do all that is possible— more than is possible.

Mr. C. Murphy: Information on Ciaran P. Murphy  Zoom on Ciaran P. Murphy  If the Minister refused to provide a subsidy for bottled gas on the arguments he has produced here, his consideration of the matter was precious little.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  I want to ask the Minister some questions arising out of what Deputy Murphy has been saying.

Could I ask the Minister between now and the next day to consider extending the subsidy to islanders who depend on bottled gas both for cooking and light? I do not have to argue in favour of that. It is obvious.

The Minister circulated a document called a Table Explanatory of the Revised Current Budget which indicates that payments to the Road Fund are to be reduced from those stated in the Financial Statement of 15th January. What will the effect of the reduction be? Which local authorities will suffer a reduction in allocation? Road estimates meetings have been held and road allocations have been issued by the Department of Local Government to the local authorities. Work is planned. [2027] Will this mean a further cut back in the level of road work undertaken by local authorities who this year are put to the pin of their collar even to maintain the existing permanent labour road work force?

Acting Chairman:  I hesitate to interrupt the Deputy's questioning, but these questions do not arise on the Financial Resolution.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  I would suggest that they do because the effect of Resolution No. 2 is related to the overall budgetary position and the Minister has had to revise the overall budgetary position which necessitates, according to these figures, a substantial reduction in payments to the Road Fund which will affect the work carried out by local authorities and, principally, the level of employment in local authorities. Will the Minister explain this?

Acting Chairman:  The Chair does not consider that the Minister is bound to explain that.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  He may wish to. It affects a great many people.

Acting Chairman:  That may be but it does not arise at this point.

Mr. Molloy: Information on Robert Molloy  Zoom on Robert Molloy  May I ask the Minister if he would be prepared to give an explanation of this reduction?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I will be happy to deal with that on Resolution No. 3. We are at the moment on Resolution No. 2 which deals with value-added tax.

Mr. Colley: Information on George Colley  Zoom on George Colley  Has the Minister any estimate of what the reduction for local authorities will be as a result of Resolution No. 2 being implemented?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  I have not got that detail.

Mr. Colley: Information on George Colley  Zoom on George Colley  If he did have it, would it be affected by the reduction in the moneys referred to by Deputy Molloy?

Mr. R. Ryan: Information on Richie Ryan  Zoom on Richie Ryan  The Deputy is trying to establish a very thin link between the two. I admire the Deputy's ingenuity.

Mr. Colley: Information on George Colley  Zoom on George Colley  The Minister has no information?

[2028]Acting Chairman:  Have the Deputies finished their questions, because, if so, I will put the Resolution?

Mr. Colley: Information on George Colley  Zoom on George Colley  Any that we are going to get answered.

Resolution agreed to.


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