Wednesday, 25 May 1977
Dáil Eireann Debate
Mr. Colley: The Minister's proposal under the section is to raise the maximum qualifying premium from £1,500 to £2,000, or 15 per cent of relevant earnings, whichever is the lesser, in the case of deductions for premiums paid for persons in self-employment or holding non-pensionable employment. I presume the intention is to make the figure £2,000 or 15 per cent, whichever is the lesser. The move in this respect is in the right direction as is the move to increase the corresponding limit for qualifying premiums in respect of a spouse or dependant from £500 to £650.
I have not had time to work out the adjustments which I proposed in regard to people born before 1917 but I presume they are in proportion. Although the move in this direction is welcome, I want to make the point that the kind of person with whom we are dealing is obliged out of his or her own savings to make provision for retirement, and in effect this section is the only one which represents any assistance from the State in that respect. Having regard to the outrageous inflation with which we have had to grapple in recent years and to the various taxation measures introduced by this Government, the position of self-employed people in particular, and indeed those who are employed but in non-pensionable positions, has been very seriously eroded, and a comparison has to be made between the position of such persons and those in  categories who not only have pensions provided for them but in some cases have what are virtually inflation-proofed pensions.
We adverted to the problems that arise in this respect in the context of other measures, not least in respect of wealth tax and the other capital taxation measures. At that time the Minister seemed to me to be less than aware of the real problems arising for persons who are self-employed trying to make provision for their old age. Indeed one of the very distressing aspects of the capital gains tax is that in the case of such persons the business they may have built up throughout their lives and on the sale of which they are relying to provide them with some kind of a reasonable standard in their old age when they cannot continue to work is being subjected to capital gains tax, something I do not believe the general public wanted at any time. They wanted to see capital gains tax directed at speculators. Having regard to this situation, it seems to me that while the move is in the right direction the question arises whether the increase provided in the section is adequate. In this connection it is interesting to note that across the water they raised the corresponding limit this year to £3,000 as against the figure of £2,000 proposed in this section.
Having regard to all the circumstances, some of which I have outlined, there is a very strong case for increasing the figure considerably beyond the £2,000 provided in this section. Even at this late stage I would urge the Minister to consider increasing it at least to £2,500, showing, even belatedly, some concern for those who are self-employed and endeavouring to make provision for their old age in very difficult circumstances.
Ruairí Brugha: The Minister ought consider this aspect—to use words he is fond of using himself—in equity. The case made by Deputy Colley is an exceptionally good one. As I understand it, a senior civil servant, a head of a Department, retiring after this year will qualify for a pension which no businessman could make available for himself at present under something  less than premiums of approximately £3,000 per annum. I do not think it would be possible——
Ruairí Brugha: I want to return to an old issue in this respect debated in the House a couple of years ago in relation to the effect of inflation. Even assuming that a reasonably successful businessman could afford to invest in insurance for retirement at the level of £3,000 per annum, in three years' time, assuming he was retiring then, the value of his pension would have dropped by at the very least one-third. Therefore if one is engaged in enterprise one finds oneself in the unfortunate position that it is virtually impossible to keep abreast with the effects of inflation even through very substantial assurances.
There is some merit in moving from £1,500 to £2,000. I expect that very few of us—certainly not I—would be in a position to make that sort of contribution. In equity, if one is to afford those engaging in enterprise the possibility of maintaining the standard of living in retirement now being given in the public service, the Minister should reconsider the move from £1,500 to £2,000 and come up to or go beyond the level of the present standard in Britain. From what this Minister and others have said it would appear they want to encourage enterprise, they want people to engage in the production of goods and the creation of wealth. In that sense there should be encouragement given to those engaging in risk enterprise so that they can at least provide for their retirement in a reasonable way. Bearing in mind inflation effects over the next few years the present level of £2,000 will deprive any businessman of the opportunity to provide for his retirement at this level of assurance allowance against tax.
Minister for Finance (Mr. R. Ryan): Like all other requests for reasonable tax, it is easy to make the request but not so easy to grant it because that means one transfers the cost to somebody else. Here we are speaking of  people who have an income of, say, £13,300, allowing them to set 15 per cent of that aside each year and, in so doing, avoid payment of tax on it. This is quite a considerable amount. The vast majority of people earn incomes much less than that and would not be in a position to set aside——
Mr. R. Ryan: While one hears some Deputies suggesting the wringing of the cloth in this section to give every last drop of sympathy for the people concerned—it is perfectly understandable; I have sympathy and regard for them, that is why I am increasing the figure from £1,500 to £2,000, which is quite a considerable increase, 33? per cent in one year, which more than compensates for the amount of inflation over the last year or so—the percentage limits of 15 per cent are not being changed. They automatically increase the amount which can be set off each year because of the linkage between them and whatever is the person's income. With respect, I think we should let the section go as it is. It is a significant increase this year and we can have a look at it next year or on some other future occasion.
Mr. Colley: The Minister is a little too glib when asked to do anything which is in any way a relief saying that this is then transferring the burden on to other taxpayers. I say too glib because, as Deputy Haughey pointed out last night, he is doing precisely this on a major scale in the budget, in this Bill and in some cases has been granting very substantial tax relief to people on very high incomes. Therefore, on the basis of his argument, he is transferring that burden on to people less able to pay. I do not think that would be true but that is the argument he is making and it is not good enough. The real question here is whether the Minister's frequent protestations of equity mean anything at all. If they do, would he explain how he views the situation as between the kind of self-employed person with whom we are dealing in this section  and a senior member of the public service regarding their treatment relating to their provision for old age, for a pension, leaving aside the whole question of retirement gratuities, which, of course, arise in the case of the public service, speaking only of pensions, because that is what this section is dealing with. I do not object in any way to the terms that are available to the public service. On the contrary, I believe it is setting a target which I hope all sections will be able to reach in due course. In the public service, especially in the upper reaches of the public service, there are provisions for superannuation which are far superior to what is being envisaged here for those who are self-employed. Would the Minister tell us how he reconciles the two approaches that seem to be involved here which on the face of it appear to discriminate in favour of the public service as against the self-employed?
Mr. R. Ryan: ——which is clearly reflected in Fianna Fáil thinking, like when Dr. Martin O'Donoghue suggested last year that public service pay should be reduced by five or ten per cent. We have the same attack now on the public service.
Mr. R. Ryan: Deputy Colley knows that and yet he has chosen this  occasion to make an attack on the public service without throwing into the balance the many restrictions which apply to people in the public service which prevent them from acquiring opportunities for wealth which are available in the private sector. I will not go into a long recitation of the advantages which apply in the private sector but which do not apply in the public sector. They are well known. People in the public sector are much more restricted and the number who can ever reach anything like what we are talking about here are very few and far between. This year we are providing in the section a very significant relief for people who are earning five figures and upwards. These people will also enjoy the very significant reductions in the rates of personal taxation, so that their financial positions this year will be better than they were last year or than they have been for many years in the past. When all this is taken into account any reasonable person would agree that we are striking a very fair balance between the relief which it is appropriate to give to these people and the relief which we also owe to the general body of taxpayers.
Mr. Colley: It is of some significance that the Minister responded in the way he did. What I said was that the treatment of the senior members of the public service on the one hand as against the corresponding people who are self-employed appeared to be discriminatory and I invited him to comment on this and to explain his thinking on it. The Minister's response was to say that I was attacking the public service. The lack of logic involved in the Minister's approach is obvious. The motivation is a matter for speculation to different people. I do not want to go into speculation, I am trying to deal with this on a factual basis.
It will not be disputed that, as the Minister said, there are only a small number of people in the public service who would be in a comparable position. Would the Minister agree that there can only be a small number of people in the private sector who would  be at the maximum figure envisaged here? If that is so, we can ignore the question of numbers in this regard. I invited the Minister to tell the House his attitude in regard to the apparent discrimination. It may be that there is no discrimination and that the Minister can point that out. On the face of it, there is definite discrimination between the public and the private sectors. I invite the Minister to say whether he agrees that there is such discrimination. If the Minister does not agree perhaps he would point out why, or on the other hand if there is such discrimination, on what basis can the Minister justify it. Despite what the Minister tries to say, that does not involve an attack on the public sector. In fact, if there is an attack involved at all it is on the Minister. I am not attacking the Minister just yet, until I hear what he has to say on this.
Mr. R. Ryan: Deputy Colley is attacking the 1967 Income Tax Act and the earlier Acts of 1958, 1959 and 1965. If there is an element of unfair discrimination this has been in our statutes for 19 years. There is difference of treatment because the emoluments during employment and the pension arrangements are different. The few people in the public service who may even remotely come near the figure of income that we are talking about in this section enjoy these higher incomes for a very short time. As a rule it is only for the last five years or so of their working life, before compulsory retirement, that they enjoy such incomes, whereas in the private sector it is not unusual for such incomes to be enjoyed for a much longer period. Because of the way in which the Schedule D system operates as against the very strict way in which PAYE operates, it is not unknown for people with particular levels of income under Schedule D to pay a lower amount of tax than people who are on the PAYE system. When all the calculations are done in trying to ascertain whether or not Mr. Black and Mr. White are being treated in exactly the same way, it will be found that there are pluses and minuses on both sides. Deputy Colley knows that well.
Mr. Colley: The provisions in this regard were made in the 1967 Income Tax Act and earlier, but the Minister knows very well that in 1967 the position of even the most senior members of the public service did not compare with the persons who would have been at the maximum level envisaged in this section. That position has been changed. Furthermore, the Minister knows something at least of the inflation which has operated in recent years which has distorted the whole value of the concession involved in this section. The comparison that the Minister is trying to make, therefore, is quite spurious. It is true that some persons in the private sector manage to evade paying the full amount of income tax they should pay. It is not unknown that persons in the public sector who engage in outside activities evade tax on them. That is no reason for penalising the whole public sector, nor is it any reason, because some persons in the public sector evade their tax liabilities, for penalising the whole private sector. That argument will not do. The Minister is trying to tar the whole private sector with the brush of tax evasion. That will not do. We are dealing here with persons who are assumed, until it has been proved otherwise, to be paying their full liability for tax. If they are not doing so they should not be dealt with by a blanket approach to the whole private sector under this section. They should be dealt with in another way.
Furthermore, the question arises of how such people are dealt with in the private sector. If you give a little thought to it for a moment and assume a person in the private sector has to make provision for himself and his wife in old age, with no assistance from anywhere else, you realise he would need to be earning over many years a great deal more money than his opposite number in the public sector if he is to make any kind of adequate provision. We could get into very deep water if we tried to allege that somebody who is earning more in the private sector is thereby so much better off than somebody in the public sector if we do not try to give him  equal treatment in regard to making provision for his old age.
Of course, this kind of saving, if you like, ought to be encouraged anyway from an overall economic point of view. I will not pursue that. What I am concerned with, what I tried to draw attention to, is the fact—and from what he has said the Minister has not really denied this—that there is discrimination in the way persons who are self-employed are treated in regard to their provision for old age as against a person employed in the public sector. I have asked the Minister to try to justify this. Maybe he has done so, but I do not think he has and I doubt that many persons who are self-employed would think so. I would also doubt that many persons in the public sector who have any sense of fair play would agree with the Minister's approach to this matter.
Mr. Colley: I want to ask the Minister on section 3 if he can confirm that the two definitions with which we are dealing here apply to exactly the same kind of company and that there is no extension in meaning. I will elaborate on that to explain what I mean. Section 3 amends section 59 of the Finance Act, 1974. In that section there was reference to a company which, if incorporated in the State, would be a company within the meaning of section 530 of the Income Tax Act, 1967. That section 530 contained the definition of what was normally regarded as a controlled company and companies which came within that definition were those to which subsection (3) applied. The definition of a close company is long  and complex and it is subject to modification in section 95.
It is not clear that what is a close company under the Corporation Tax Act is exactly the same as what may be called a controlled company under subsection (6) of section 530 of the Income Tax Act. If these definitions do not correspond, it is possible that there is not a complete overlap of definition. An important factor in this is that this proposed amendment in section 3 of this Bill is to take effect from 31st March, 1976. Consequently, it is important to be sure that no company acting in the belief that it did not come within the provisions of the Finance Act, 1974, will now find itself retrospectively within the definition and will be obliged to provide information which, up to the present, it did not think itself obliged to provide. I would ask the Minister, therefore, to assure the House that what is being substituted does not involve any extension in meaning and that no company will find itself at a disadvantage because of this change.
Mr. R. Ryan: This section makes a technical amendment to section 59 of the Finance Act, 1974. In subsection (3) of that section there is a reference to bodies corporate within the meaning of section 530 (6) of the Income Tax Act, 1967, that is, broadly, private companies under the control of not more than five persons. Section 530 was repealed by the Corporation Tax Act, 1976, and, therefore, it is necessary to substitute a new reference. The most appropriate one is a reference to close companies within the meaning of the Corporation Tax Act, 1976. Since that Act which repealed the provision containing the existing reference passed into law on 31st March, 1976, a new reference is being substituted with effect from that date.
Mr. Colley: Can the Minister assure us that there will be no extension of meaning with the effect that a company which operated bona fide up to now and did not feel obliged to furnish information under section 59 will now become liable retrospectively to furnish the information?
Mr. R. Ryan: There is no extension of any obligations on people to supply information as a result of this section. As I understand it, the Deputy's query is: are we creating some new obligation? The answer to that is no.
Mr. Colley: No special case has come up which would be dealt with by this section now? I am sure the Minister will understand my concern when it is retrospective and when this amendment was not made previously when a number of other amendments were being made. I have the Minister's assurance that, as a result of the enactment of this section, no company will be put at any disadvantage as against the position it was in up to now?
Mr. Colley: There are two aspects of this section, one relating to payment of income tax on earned income under Schedule D and the other to payment of tax on unearned income. In regard to the latter point, would the Minister explain why he is providing for payment of tax on unearned income in one instalment and not two, as in the case of tax on earned income?
Mr. R. Ryan: This is part of the exercise to try to treat all taxpayers as far as practicable in a similar way. As we know, PAYE taxpayers are involved in direct payment of tax at the moment of receipt of their income and in equity it was necessary to endeavour to accelerate the date on which tax was payable by other people. That was the reason for advancing the date of payment of tax by Schedule D  payers and persons paying tax on unearned income.
Mr. Colley: I presume the Minister is aware that one of the consequences of this is that people are being obliged to pay a full year's tax on what is supposed to be unearned income before they receive it and in many cases in due course they do not receive the income which they are expected to receive and then they have to go through the procedure involved in trying to recover the money paid. The big objection is that they are obliged to pay on income which they have not received.
Mr. R. Ryan: This is one of the considerations which led me to change the date from 1st July to 1st September, as proposed in this Bill. Tax will now be payable five months after the commencement of the tax year and interest on the delayed payments is not chargeable unless payments are not made by 1st November, that is, seven months after the commencement of the tax year. There is a seven month holiday —if I may use that word—available to such taxpayers which, of course, is not available to PAYE payers.
Mr. Colley: Nevertheless, I presume the Minister would accept the fact that even with the proposed later date in this section we will still have a situation in which people will be paying tax on income they have not received, in regard to unearned income. Regarding earned income, the move involved in this section is in the right direction and I suppose we should welcome it, although it highlights the wrongheaded approach by the Minister last year when it was pointed out to him from all sides, not least from this side, that what he was doing was wrong. He refused to listen. I suppose the fact that he is now proposing to extend the date for payment is at least a partial acknowledgment of the correctness of the arguments put forward at that time from this side of the House.
I welcome the move but I suggest it does not go far enough because many taxpayers will be obliged to pay four half-yearly instalments of tax in  a period of 18 months. The case still arises and the Minister is obliged to explain why he feels that he should not grant to such taxpayers the same concession that was granted to PAYE payers and to the public service when they were brought from the deferred payment system on to the PAYE system. They were given six months' remission of tax. Indeed, in virtually every case of a change, a six months' remission of tax was granted but it was refused in this case. We are dealing in the main with the self-employed. There is an onus on the Minister to justify what appears to be discriminatory treatment of those who are self-employed as against the rest of the community.
Mr. R. Ryan: Nobody knows better than those who have made representations in this area why the request which they make is not a meritorious one. Those who pay tax on the Schedule D basis are paying tax on a preceding year basis. Those members of the public in the private sector and those serving in the public sector who received a six months' remission of tax when they were transferred from a preceding year to a current year basis obtained the concession because they were being changed from an advantageous position to one that is less advantageous and which involves a higher amount of tax. There is no increase in the tax burden of Schedule D payers; the date of payment is being advanced but there is no increase in the burden. At a time of escalation of incomes it is a very substantial benefit to be allowed to pay one's tax on a preceding year basis rather than on a current year basis. That case was very well made in the media last year when people in the public service were transferred from a preceding year to a current year basis. If the day were to arrive when Schedule D payers paid on a current year rather than a preceding year basis then a case could be made, which I believe could not be refused, for a remission to allow such people to adjust to a current rather than a preceding year basis.
Mr. Colley: Whether one is paying  on a preceding or current year basis, does the Minister really think that it is in any way easy or equitable for a taxpayer to have to pay four half-yearly instalments in 18 months?
Mr. R. Ryan: I do not accept this formula of the 18 months which was advanced last year. We went into this in very great detail. Our experience has indicated that very few problems, if any, arose in relation to these changes. While there was opposition to them when they were originally proposed they did not appear in practice to generate any problems.
Mr. R. Ryan: The Revenue Commissioners are very familiar with the problems of businesses. If businesses encounter problems in this or any other area they are not slow to bring such problems to the notice of the Revenue Commissioners. Problems did not come to light.
Mr. Colley: It is ultimately to the notice of the Minister they have to come and the message from the Minister is that he is either unaware or does not care about the problems of this kind encountered by businesses. As long as he can present it as equity in taxation he does not care what he does to them.
Mr. R. Ryan: I received representations from the accountancy profession, to which I previously referred. They anticipated problems but I was not given any information that they had actually occurred, nor did they emerge in the ordinary process of tax collection. If problems had been there I am certain they would have been rapidly identified. Some problems arose in the course of preparing accounts and so forth.
Mr. R. Ryan: Will the Deputy wait while I tell him? I want to help him. The preparation of accounts created trouble. We know the actual work that had to be done in order to have the tax correctly assessed.
Mr. R. Ryan: Maybe Deputy Colley—sorry, Deputy Haughey; I am always mixing up the twins—maybe Deputy Haughey is not as actively engaged in accountancy practice as he used to be but he knows well from his long experience that accountants need time to prepare accounts and so do their clients and that is the reason why I am bringing the date back from July to September. July is a time of year when many clients and their professional advisers take their annual holidays.
Mr. T.J. Fitzpatrick: (Dublin Central): I intend to confine myself to section 4 and point out to the Minister the result of the introduction of this section. The biggest problem for industrialists and business people over the past two years was that of cash flow. Many firms had to close down because their borrowings were too  high and that played no small part in putting many people out of work. The tax here is very seldom liquid cash in the hands of the business community. I doubt if the Minister will understand at this late stage of this Dáil but representations were made to him about the problems this tax would create. Cash that would normally be ploughed back into the business for expansion purposes or to purchase goods had to be taken out and, operating under a fairly rigid bank control, there were only two options. The cash they had had to be forwarded to the Revenue Commissioners and they had to run down their stocks and the net effect of that would be a certain amount of unemployment. To survive they had to try to put off the Revenue Commissioners' demands and keep their cash flow. The Minister could not have picked a worse time to introduce this kind of legislation when cash in every company was at its lowest. The Confederation of Irish Industry and people engaged in business made representations to the Minister. We made representations on the Finance Bill last year. We told the Minister what the consequences would be. The section certainly had a detrimental effect on the cash flow in many companies with consequent unemployment and a cessation to expansion in many industries.
The Minister has seen the light now and that is the only reason he is doing what is proposed here. Surely he is not telling us now that it is because of complications in accountancy that he is deferring this. That is not the reason at all. The fact is this created an impossible burden on certain companies who could not meet their commitments and that is the reason the Minister is forced to bring in this section deferring payment. One has only to read the reports of companies over the past two or three years about the reduction in retained profits to realise what the situation was. I do not care what the Minister says about expansion in the majority of companies. They have had to borrow and they have suffered a reduction in retained  profits and it will take them a long time to accumulate sufficient to start expanding again. The real sufferers are, of course, the thousands of people who are unemployed today because of the fiscal policy of the Minister. That has been the result of the various Finance Bills introduced by the Minister over the past three or four years. His negative approach has resulted in a substantial increase in unemployment. We pointed out time and time again what the consequences of his policy would be. He is now deferring payment, but the damage has been done. Confidence will not be regained for a long time. The only reason for this concession at this late stage is because of the strong representations made to him. He has had to make other concessions, concessions we demanded if the country was to get moving again. He is doing this on the eve of a general election and, if he thinks for one moment that industrialists and business people are taking this seriously, he can think again. It is a step in the right direction but it is a step that should not have been necessary.
Mr. R. Ryan: He was talking about companies which pay their tax nine  months after the end of the financial year. He made several comments not relevant to this Finance Bill but they can be quickly dealt with. The growth in unemployment was less here than anywhere else in Europe. Recovery is faster here than anywhere else in Europe. Company profits are better here than anywhere else in Europe. Industrial exports have risen by 52 per cent this year compared with last year. All this emotional talk from the keeners in Fianna Fáil does not reflect the improvement. Neither does it relate to the findings of the innumerable objective assessors of the performance of our economy. It is very interesting. Week in and week out, month in and month out, we used to hear from the Opposition lengthy quotations from every book or journal dealing with statistics which they could find suggesting everything was wrong with the economy. They are afraid to open them now because they contain good news and they do not want to read it.
Mr. Colley: Unfortunately, the Minister did not accede to the requests for cuts in income tax at the time he should have done so. He waited until inflation had eroded any benefits that were still there from the previous tax cuts under Fianna Fáil and then made very grudging adjustments. Finally, having studied the Fianna Fáil economic proposals he picked out parts of them including tax cuts but he did not do it adequately. He did not understand the role of tax cuts in the economic management of our country  in relation to the achievement of competitiveness in industry by the proper combination between tax cuts and pay rises so that one could ensure the standard of living of our workers and, at the same time, the competitiveness of our goods, thereby saving thousands of jobs. Those jobs should have been saved over the past few years but were lost by the wrong approach by the Minister. We have here a belated acknowledgment of the correctness of the policies we have been urging for so long on the Minister. This is not adequate although it is a move in the right direction.
Usually when the Minister belatedly takes a move which we have been urging on him for a long time one can be sure it is in the right direction but one can be almost as sure that it will not be enough. In this case if one takes an overall view of the situation one finds that a married man with two children who is earning £2,500 per year would save under this section £57.60 income tax while a married man with two children earning £20,000 per year would save almost £2,000. The Minister would try to justify that by saying that many other people in the top earning bracket were giving up and saying that they had not adequate incentive when they are asked to pay a 77 per cent rate of tax, the latest imposed by the Minister. The fact is that if this section was supposed to be designed to provide some kind of incentive then it should provide an incentive for people in what might be called the middle-management bracket. It does not do so. In anything I am saying I am ignoring the position with regard to the combination of tax cuts and the national pay agreement although it is very relevant and the Minister would acknowledge that there is a close connection between the two. The fact is, taking the tax cuts in conjunction with the national pay agreement, most workers are going to have a very definite fall in their standard of living this year. The Minister said that the combination would give the average industrial worker an increase in take home pay of 10 per cent. Even the most optimistic preelection estimates of inflation do not put it as low as that. I believe 13 per  cent is the lowest figure we have got so far but I expect it will go lower before the election. I doubt if it will go as low as 10 per cent in the next three weeks, though the Minister might be tempted. I have no doubt that some belated concern for credibility would prevent him going that far.
If we take 10 per cent as the increase provided in take home pay as a result of this section and the national pay agreement for the average industrial worker and if we take inflation as only 13 per cent this year then there is clearly a fall in the standard of living of the average worker. There need not be such a fall if the matter was handled properly. The Minister may talk as much as he likes about how welcome the tax cuts are—any tax cuts are welcome—but the reality is that what he is talking about is a cut in the standard of living of most of the workers. The fact that that cut will only begin to bite later in the year has also a certain electoral significance and is not irrelevant to the date of the timing of the general election.
I was adverting to the position of people in middle-management and it should be realised that if one takes the position of a married man with two children on a salary of about £7,000 per year the changes produced in this Bill give him about £5 per week apparent increase in take home pay. This would be so whether he has children or not. There is effectively, in such a case, no real increase in after-tax income because of the erosion by inflation of the relief proposed to be given. If we bear in mind that many persons in middle-management are provided with cars to carry out their business and that they will be charged tax under the penal arrangements we were adverting to yesterday, and that the Revenue Commissioners are still trying to catch up on some—we know they have not caught up on these; they are stretched to the full in relation to this and many other matters—effectively this year people in income brackets of between £5,000 and £7,000 per year will find that they will be paying more in income tax than they did last year if one combines these two  factors. Of course, when one throws in the erosion of inflation their position disimproves. The Minister cannot with any sense of reality claim that in such cases anything he has done will act as an incentive to such people.
If the Minister wants to provide an incentive to people at that level he should have another hard look at the provisions he has brought in with regard to benefit in kind from cars supplied for business. I am not saying that that should not be taxed at all but he should bring in a system which is fairer and less costly to administer. Another thing which the Minister ought to advert to in his consideration of tax cuts is that many people in the income brackets between £4,000 and £8,000 per year are young married couples who are endeavouring to buy their houses on mortgages. With the price of houses going up as they have been, and the price is continuing to rise, the restriction on income relief to £2,000 has hit that income group very harshly. If the Minister was serious about providing incentives, he could start by making special provision for interest paid on house mortgages and treat this interest as a separate category. He would allow income tax relief in full for tax purposes in cases of that kind. They are the sort of measures that would help people meet the increasing costs with which they are faced—the increasing cost of housing in particular—and the diminishing value of money. They would also enable people anxious to progress to see some results in effective after-tax income as a result of their efforts.
Another general comment that must be made is that the provisions of this section relate to a tax relief for a married man of about 9 per cent; in the case of a single person, 7 per cent and for a widowed person, 3 per cent. There is no attempt to keep pace with inflation and no differentiation at all between married people with children and those who have no children. I wonder how there could be any justification or attempt at justification from a social point of view for refusing to increase the tax allowances in respect of a child which is £240 at present.  Effectively the same tax relief is being given under this section to a married couple with no children as to a married couple with ten children. That is hardly a justifiable approach and certainly is not one that can be said to be based on social justice.
The general approach by the Minister in this regard has been, I believe, defective both from an economic and social point of view. I know the Minister is going to say that these income tax cuts are widely welcomed. He need not try to make any argument out of that because we are not arguing with him. As I said any tax cut is widely welcomed. These tax cuts are not sufficient or geared to the situation of most married couples. They do not recognise the difficulties these people are facing trying to bring up their children. They do not keep pace with inflation.
The sad fact is that any chance of ever restoring the taxpayer to his position as it was under Fianna Fáil seems to have gone because the present Government in the adjustment they have made in income tax since they came into office have not remotely kept pace with inflation. Therefore, the position of the taxpayer in real terms is considerably worse now in many cases than it was when this Government came into office. The gap is so great that it is probably unrealistic to think it will ever be restored.
The Minister instead of—as I have heard him doing and I suspect he may want to do again—crowing about his belated conversion to Fianna Fáil policy on tax cuts, ought to be telling us what he intended to do to extend the tax cuts proposed in this section, having regard to the social obligations of taxpayers and of the Minister, and to the economic effect which is being achieved by this and which should be achieved by tax cuts in our present circumstances.
Mr. Haughey: I want very briefly because the time at our disposal is very limited to support my colleague Deputy Colley in what he said about the level of the burden of taxation. I want as quickly as I can to rebut totally and completely and to reject the fraudulent claims by the Minister  that the economy is in a good state, is improving, or any of the other things he claims are happening.
The fact is that the marginal figures which the Minister and his colleagues are fastening on with such pathetic eagerness are nothing more than minor improvements brought about by the swing of the pendulum. If an economy goes down to a certain level, by the sheer reaction of certain circumstances some improvement must come as companies restock and as individuals undertake expenditures they cannot put off. As I said, that is the sort of thing which happens inevitably through the swing of the pendulum and that is all that is happening at the moment in our case.
The deep underlying problems of our economy are as real today as they were 12 months ago. It is absolutely fraudulent and dishonest of the Minister to endeavour to persuade this House and the country that just because there is a general election in the offing our economy is getting better and all is well. That is simply not the case. The Minister asked us to give him a quotation. I would quote the vice president of the Irish Congress of Trade Unions speaking two days ago. He said that far from things getting better in the employment field, they are getting worse. In his estimate, very shortly there will be 120,000 persons unemployed, not 112,000 or 114,000 as we have at the moment. Let the Minister be honest with the House and with the people and face up to the reality that we are in a catastrophic economic situation and are making no attempts to get to grips with it.
The Minister has destroyed and ruined incentive and enterprise in this country. He has killed them. As Minister for Finance he set out with a certain objective in mind. He got it all wrong. He misread our situation completely. He set out to be a Minister for taxes. He set out to be the greatest Minister for taxation this country or any other country had ever seen. He wanted to have a perfect textbook taxation structure here but, of course, he would never succeed in doing that. In the process he neglected his real job as the Minister for economic development.  Instead of trying to improve the size of the national cake, of trying to create more resources and more income, he concentrated all his efforts on squeezing more and more out of existing income. The more he did that the more he depressed the level. He is, historically, a tragedy for this country in the economic sense.
He may get some satisfaction from the fact that he introduced all sorts of new taxes and he pursued various objectives. I am not denying he honestly pursued the objective of equity in the tax system. I am saying that he totally misread our economic situation and our economic needs.
I have a very simple proposition to put to the Minister in regard to our economic situation. What we need is a restoration of incentive and enterprise. We want productivity. The only way to get productivity is by giving people a reward. We want more people at every level of our society working more effectively and efficiently and producing better and cheaper goods and services. That is the only way out of our difficulty. Anything else is only tampering with the situation and not getting to grips with it.
The way to get productivity is to restore the rewards for work. The only way that can be done is by substantially reducing the level of personal taxation. In all the gamut of statistics we have connection with this Bill, in Table 6—the Minister supplies very informative tables with the budget speech—he sets out the income tax which will now be payable by a married man with two children. A man earning £3,500 a year will now pay £497 tax, almost £500. In this day for a man earning £70 a week to pay £10 in tax is absurd and ridiculous. Until we effect a major change in that sort of situation, we will not get this country moving again. We will not be able to tackle our fundamental long-term problems.
The Minister for Finance is leaving office after four-and-a-half years. I must say with great regret that he has left our situation in regard to the economy in a pathetically worse state  than he found it. Any impartial observer would admit that. As Deputy Fitzpatrick pointed out a few moments ago, this is largely due to the obsessive concentration of this Minister for Finance on taxation to the exclusion of everything else.
We all know the country must be run and the money must be found to run it. We all want fairness and equity in our taxation system. I suggest that the Minister has concentrated his efforts, the efforts of the civil servants, the Revenue Commissioners and everyone under his command, on this one aspect of his duties to the exclusion of all others.
When we come back into office we will have as a major plank in our programme, as a major factor in getting the economy moving again, the restoration of enterprise by rewards for effort. We will do that by a major and substantial reduction in personal taxation. My colleague, Deputy Colley, will be outlining our proposals in that regard very shortly. However we might differ on what particular reductions should be made or on how or where they should be made in fairness to different sections of the community, there is no doubt in my mind or the minds of my colleagues that a major reduction in the level of taxation on personal earned income is what is urgently needed. We shall not get out of our difficulties until we have that. That is my suggestion to the Minister.
Mr. R. Ryan: If the Chair does not think he should get the award, I shall not give it to him. For 11 years Fianna Fáil did nothing about adjusting the personal rates of income tax. Now they are the big spenders. Not a day passes but they are going to spend more money on this, that or the other project and then they have the temerity to say that at the same time  as they will spend more money they will borrow less and tax less. They had 35 years in office in which to perform miracles——
Mr. R. Ryan: ——and they performed no miracles but left Ireland at the end of their term of office with the highest unemployment rate in Europe, with the highest inflation rate in Europe, with the highest emigration——
Mr. R. Ryan: ——and all at a time when the world economy was expanding. They could not even keep up with the rest of the world. They condemn us because we performed better than the rest of the world during a period of recession. Deputy Haughey referred to me as Minister for taxation. I am the Minister who removed value-added tax from foodstuffs, clothing and footwear, from the essentials of life after Deputy Haughey and his colleagues imposed tax on food-stuffs——
Mr. Haughey: I am prepared to take any criticism and any words like  hypocrisy that the Minister in his wisdom may throw at me but I want to point out that he has just made a mis-statement of fact: I never said what he has just said and I would be grateful if the Minister would withdraw it.
Mr. R. Ryan: We have written into our business tax code now a top rate of 45 per cent corporation tax. The Opposition, when in office, indulged in a taxation rate of 58 per cent on business. A year after we went into office we reduced the top rate of income tax from 80 per cent to 70 per cent. The reductions of this year are part of a pattern of substantial tax relief and reform which this Government have enacted in the past few years in the teeth of virulent and continuous opposition from the party opposite.
I do not propose to go into a lengthy dissertation about economic performance because we are dealing with income tax on this section. But Deputy Haughey has chosen to describe the Irish economy as a very sick one. I do not know where these stone-age Fianna Fáil men have been for the last few years: they must have been in their caves. They have never recognised what the Irish people have  obviously recognised that there has been a world economic crisis. They are not prepared to accept that could have had an impact on our economy. Of course it had an immense impact. But we in Ireland did not suffer as serious a decline as any member of the EEC. Our rate of recovery is faster than that being achieved in the EEC. Last year we had a growth rate of 3½ per cent; this year it is moving towards 4½ per cent and it would appear that we shall have a 5 per cent growth rate this year, putting us at the top of economic performance in Europe. This is being acknowledged not merely by objective commentators at home but also by the EEC itself under the OECD which recognise Ireland as Le Monde recently described as “the Singapore of Europe”, Singapore being the great economic success of Asia. Europe recognises that Ireland is the greatest economic success of Europe at present.
Mr. R. Ryan: Unemployment figures are dropping. With Germany and Holland, Ireland will have a reduction in unemployment this year. These reductions have been taking place and we have about 6,000 fewer unemployed since last summer. As the main impact of the budget expenditure of £56 million for direct stimulation of employment and the business incentives and tax reductions we have given will have most impact from now on, the unemployment figures will by this summer be down to 95,000 or possibly less. This is a move in the right direction. The country is moving in the right direction. I shudder to think of what would happen if those who have attacked our policies that have achieved this success were ever to achieve their ambition to move the country because clearly they disagree with the direction in which we are moving it; they want to move it in the opposite direction.
I should like to conclude by coming back to this section dealing with income tax and to quote the remarks  of the then president of the Institute of Chartered Accountants in Ireland who said of this year's tax reductions:
Mr. R. Ryan: That was his valedictory address as he handed over office to another. He was expressing his confidence that the right decisions had been taken. The reliefs this year would not be possible and the further reliefs, to which in our second term of office we will give effect, would not be possible had it not been for the fact that in the teeth of the most virulent opposition we amended the most antiquated, inequitable and inefficient taxation system which we inherited from our predecessors. I could not find any country where so little was done by way of tax reform in the previous decade as was done in Ireland. Virtually nothing was done except an odd bit of cosmetic work here and there. There was nothing of a significant or worth-while nature. We have done the job; we have succeeded. We have proved our successes by being able to achieve the remarkable improvement in the whole taxation climate which is part and parcel of our budget policy for 1977 and one to which we are committed for several years to come.
I am looking forward to the entertainment of Deputy Colley saying how he is virtually going to abolish taxation and spend money right, left and centre. That is the policy of spendthrifts. It is the kind of thing one expects from a group who have no serious prospect of entering into office because anybody with a serious ambition would never pretend that taxes can be abolished and more money  spent. That gets a country very quickly into bankruptcy; it happens in a matter of months. Even in the midst of all our difficulties we never had to go cap in hand to the International Monetary Fund——
Mr. R. Ryan: What the Deputy has said is true but does he know the reason? When the Fianna Fáil stone-age men were in their caves the world was going through a recession. There was a massive transfer of resources from the industrialised world of which we are a part to the OPEC countries to pay for the price of oil which had quintupled in that time. Fianna Fáil apparently did not know that 75 per cent of the energy of this country has to be produced from imported oil. The Deputies should stop talking this nonsense. They should stop trying to compare the world economic position of 1973 to 1977; with those halcyon days when they were in power——
Mr. R. Ryan: When Fianna Fáil were in power they dragged down the economy. When the world was experiencing economic expansion all we could do was to crawl along after the world.  When the world had an economic recession we did not go into the deep recession the rest of the world experienced. Certainly we had our difficulties and we never tried to conceal them. They were painful and inconvenient and they were very serious for some people but at least we provided, in the teeth of Fianna Fáil opposition, as much relief as could be provided for those who suffered particular problems during those traumatic years for all of the world. Many of those problems are still with us and they remain with the rest of the world but in the midst of it all we protected Ireland from the worst.
Perhaps the greatest compliment that can be paid to me is the suggestion that comes from the cavemen of Fianna Fáil that Richie Ryan alone was the man who caused the greatest economic recession in the world since 1973 because that is what they are saying. They say that nobody except this Government was responsible for the traumatic events the world has experienced in the past few years. Fianna Fáil should come out of their caves. They should put on their earphones and hear what is happening in the outside world.
Mr. T.J. Fitzpatrick: (Dublin Central): The Minister must have been reading a few statements from the IMI and the Central Bank but if he had read the other section of the report of the Central Bank pointing out the state of our finances and the serious consequences with regard to our future development he would realise the serious condition of the economy. The Minister has said that Ireland was quoted as being the Singapore of Europe. Did the Minister read a recent article in one of the daily papers regarding labour conditions and wages in Singapore? I sincerely hope we will never have a state like that here, paying our people a pittance.
Mr. T.J. Fitzpatrick: (Dublin Central): As Deputies Colley and Haughey have pointed out, the fiscal policy of the last four years has discouraged businessmen from investing and we know the consequences. Thousands of people would be employed today but for the policy adopted by the Minister. All of us welcome a reduction in tax. As Deputy Haughey has said, it is the one way to instil confidence. The policy pursued by the Minister in the past four years has undermined that confidence and that is the difference between this party and the Government. The Government do not know how to create a climate that will encourage industrialists and businessmen to expand their undertakings. Our future prosperity depends on the ability to generate wealth. In this way the weaker sections are helped. That is what we will do in our economic policy. That is how we will give a reduction in taxation because we will be able to instil confidence among all sections of the community.
During the budget debate the Minister for Finance spoke at length about the great taxation reduction and what they would mean to the average wage earner. They were part of the package of the national wage agreement. We know from statements of leaders of trade unions and many workers that their standard of living is 4 per cent or 5 per cent lower than what it was six months ago. That is what the  taxation package meant to the workers.
During the negotiations with regard to the national wage agreement the workers did not know that the Ministers for Finance and Industry and Commerce were withholding the report of the National Prices Commission until the package was negotiated. We know the consequences when the report was published about a week after the package was sealed. The wage earners realised how they had been “conned” into accepting the taxation measures and they resented it. They realised the Minister for Finance had fooled them with false promises. The same thing will happen one month from now.
Various Ministers are going around the country making all kinds of promises. They are trying to create the same kind of climate that existed when the national wage agreement was being negotiated. If the people are foolish enough to accept these false promises the consequences are that the Minister for Finance will be back in the Dáil next September introducing another budget. The Government have no plan to provide the necessary money to pay for all the undertakings he is giving now. The people will have to realise that before they cast their votes in the near future. They need only to think back to February and they can see how they were fooled by the Minister for Finance. Many promises are being made by various Ministers today. If they think the people attach any significance to them they are mistaken. The people have already learned their lesson.
We welcome various taxation measures, as I have already said, but we must remember there are people who pay no income tax. People with families of six and seven children who are probably paying for their houses did not qualify for any tax relief in the budget. Any man with an income of £3,000 or £4,000 and with four children did not get any tax relief either. That man belongs to the lower income group and was not paying tax. At the same time he had to accept the low terms of the national wage agreement. I know that certain  sections in the table provided will qualify but there are many thousands of people who will not. Many people have told me that the reduction in income tax meant nothing to them as they were not paying any income tax because of their low wages and high overheads. Those people will not thank the Minister for anything contained in the budget.
There are several aspects of this matter which should be taken into consideration. As Deputy Haughey stated the excessive taxation policy which has been pursued by the Minister for Finance during the past four years has undermined confidence in the country and retarded expansion. The Minister will certainly be remembered as the Minister for taxation. The business journals have a different name for him which is not nearly as complimentary as the title given by Deputy Haughey. The people have been misled in the past but I do not believe they will be misled in the future.
“Notwithstanding anything contained in this or any other enactment no charge to tax shall be made on any person in respect of any benefit derived by him from the provision of a vehicle where such person is wholly and exclusively employed in the capacity of commercial traveller by the person or organisation supplying the vehicle.”.
I trust that the fundamental disagreement which exists between the Minister for Finance and myself on economic and taxation policies generally will not have any effect on his consideration of this amendment. I ask him to consider it seriously on its merits on the grounds of fairness and equity. I want in this amendment to achieve a situation where a genuine whole-time commercial traveller will  not be taxed on some imaginative benefit which the Revenue Commissioners believe he derives from being provided with a company car.
We had a discussion yesterday evening about benefits in kind which taxpayers derive from being provided with company motor cars. I want to indicate to the Minister as clearly as I can that in this amendment I am not concerned with people who really derive benefit from having cars provided by their companies which in effect is an addition to their incomes. I would like on another occasion to argue with the Minister about that whole taxation provision and perhaps persuade him, as Deputy Colley attempted to do, to alter the system, not necessarily change the principle.
I am concerned in this amendment with a very limited and clearly defined situation. I am not concerned with the managing director or the general manager who has a large car placed at his disposal by an appreciative company, which in fact amounts to a substantial perquisite in his case. I am concerned solely with commercial travellers, men who are fully occupied by an employer, a company or an individual as commercial travellers. I did not put down this amendment because of any approach from commercial travellers as an organisation.
This matter was brought to my attention very definitely and very clearly by a constituent of mine who is a commercial traveller. He is a hard working individual and is married with six children. He has a moderate income and he received from the Revenue Commissioners an additional assessment going back over four or five years which amounted to £300 or £400. This was a crushing blow to this man. He is, like many other people, particularly the white collar category, continually striving to make ends meet. He has to pay for practically everything for himself and for his family. He gets very few free services from any organisation. He is just about able to make ends meet from month to month.
This extra additional taxation was a crushing hardship inflicted on him  because in the view of the Minister and the Revenue Commissioners he is deriving some tangible benefit from the car provided for him by the company he works for. That car is an absolute necessity. He leaves his family early on a Monday morning and travels throughout the country on his company's business and returns home on a Friday night or maybe a Saturday morning. It is both absurd and ridiculous to suggest that he is deriving some positive benefit by reason of that car being provided for him.
The commercial traveller has a difficult and tedious sort of life which involves most of the men and women concerned being away from home from Monday to Friday and living during the week in difficult and unsatisfactory conditions around the country. It is unreal as well as unfair to suggest that they be taxed on some imaginary benefit. Their companies provide cars so that the travellers can pursue their occupation and carry out the work of the organisations concerned. I came to this situation as a result of having been made aware of the dilemma of a constituent of mine. This is a hard-working, family man who is pushed hard to make ends meet in the normal course of events. Suddenly he has received an assessment for income tax in respect of an imaginary benefit. He simply does not understand the reasoning behind this. I endeavoured to explain to him the concept of benefits in kind and he suggested that if it would suit the Revenue Commissioners he would be prepared to leave his car at his company's premises during week-ends, that he would arrive at his office early on Monday morning and get away as quickly as possible if this would prevent the Revenue Commissioners from placing that unfair imposition on him. I was unable to put across to that man the idea behind these assessments. I am asking the Minister to look at the situation of this category of persons who do not derive any positive satisfactory benefit from these company cars.
The Minister may say that they have the use of the cars at weekends but people who drive around the country  from Monday to Friday in pursuance of their daily work have no wish to go on long drives on Sundays. Therefore, so far as the physical use of a car at weekends is concerned, the Minister can be assured that the people we are talking of engage only in the minimal amount of driving in their free time. I should like the Minister to tell me whether, if a commercial traveller leaves his car at his company's premises during the weekend, the Revenue Commissioners will insist on assessing him for benefits in kind.
When the person to whom I have referred brought this matter to my attention I decided to investigate further and I asked a number of other commercial travellers with whom I am acquainted what was the situation. They had all had a similar experience and all equally resented these assessments which they do not regard as either just or fair in their case. One very experienced commercial traveller told me that in most cases the tax-free allowances in respect of his friends on the road have been reduced by between £300 and £600 as a result of this alleged benefit in kind.
It is absurd to tell an ordinary hard-working commercial traveller that he is deriving £600 worth of benefit simply by having provided a car for use in the pursuance of the business of his organisation. I asked the Minister not to quote to me the case of the higher-paid executive who derives substantial benefit from his car. As Deputy Colley has said, we can argue that case some other time on its merits. Therefore, I ask the Minister not to confuse the issue by dragging in the situation of the managing director with the Mercedes. This argument is totally restricted to commercial travellers. However, I wish to say a word about the big car in this context. Many commercial travellers by reason of the mileage they do and by reason of the type of goods they carry need big cars. In the course of his political career the Minister, like the rest of us, travels a fair deal and he knows that if one is doing a lot of what is known as country work there is a major difference, from the point of view of one's performance, capacity, safety and  well-being, between a big car and a small car. For the commercial traveller who must carry a range of goods either a saloon-type car or a station wagon-type is necessary. I am making that point so that the Minister will not introduce the big car as a luxury item where the commercial traveller is concerned.
I am asking him to consider favourably the case I have made and not to give me the argument that if this concession is granted a corresponding burden must be placed on somebody else. That is an argument that is more apparent than real. First, it discounts any possibility of revenue buoyancy. As the Minister knows, it is possible for him to make concessions in the tax system without necessarily imposing a corresponding burden on another section. A concession can be taken care of in the general overall increase.
Mr. Haughey: That is so. This year he is granting concessions to the extent of £50 million and is relying on revenue buoyancy and on the general overall increase in tax revenue to cope with that. Likewise, he could grant to commercial travellers the limited concession we are seeking without necessarily placing a corresponding burden on some other section.
I recall the introduction here of the benefit in kind provisions. I have a clear recollection of the argument that took place at that time when the then Minister for Finance, Deputy Jim Ryan, was quoting instances of companies who supplied yachts on the Mediterranean for their executives. That was the sort of benefit in kind we were concerned with then—really significant benefits which were an abuse of the taxation system and which in some cases involved companies providing fully-furnished houses free of charge for their executives.
Down through the years this concept of benefit in kind has been refined considerably, but the Minister is pushing it too far. He has pushed it to the extent that this hard-working, dedicated group of people, whose services  are essential to the commercial life and on the success of whose efforts depends the future of the well-being of a great many of our commercial organisations, are being treated unfairly and unjustly. There is no point in producing goods if they cannot be sold. It is the job of the commercial traveller to bring together the produce and the purchaser. He knows the trade and the country. He knows which goods will sell in individual areas. In other words, his is a very skilled profession. A car is an essential part of the work. It is grossly unfair to suggest that these men derive some benefit in kind because the car is provided for them by the company and that they should suffer these additional assessments because of this imaginary benefit. I recommend the amendment to the House.
Mr. R. Ryan: The situation described by Deputy Haughey of a commercial traveller receiving a bill in respect of four years' use of a car does not arise out of any legislation passed by this Government. That liability could have arisen only out of the tax position which existed before we legislated in 1976. Under the old code a liability existed to pay tax in respect of a car supplied by a firm who entitled the employee to use it for private purposes. The only circumstances in which a four years' bill for arrears could have arisen would be if there was non-disclosure by the person in question to the Revenue Commissioners of his having a car. Deputy Haughey, as an accountant, knows that to be true. That applies not merely to a person who is the recipient of a car provided by a firm. The same liability in respect of private use of a car arises indirectly in respect of a professional man or a self-employed business person who uses his private car both for his professional or business work and for his private use.
Liability has always been there. There is no change whatsoever in the law in that regard. What we did here was to try to firm up, in the interest of the taxpayer as well as of ease of administration, the means of assessing the value of a car provided for private use as well as for commercial purposes.  If a car provided for a commercial traveller is left in the firm's premises when the commercial traveller is not working, then no liability or taxation of benefit in kind arises. If a commercial traveller returns to base on the Friday night and leaves the car on the firm's premises and does not use it until the Monday morning, then a liability to benefit in kind taxation does not arise because there is no element of private use.
Mr. R. Ryan: Indeed, it is well known. It is a matter for proof in each case and for the tax inspector to be satisfied that that is the position. I have very great sympathy for commercial travellers and understand the stresses and strains of their vocation. Some friends of my own very near and dear to me are commercial travellers.
Mr. R. Ryan: As politicians go about the country they meet these lonely and hard-working men in hotels scattered throughout the length and breadth of the land. They are unfortunate enough at times to have to be away from their families during the week. The mere—I do not use that word in any derogatory way—difficulties or unpleasant nature of a profession do not entitle a person to a lower rate of tax because of the unsocial, as it is called, nature of a job. I do not think that Deputy Haughey is suggestting that there should be a lower rate of tax for people because their jobs are less pleasant than the job of another. Far away hills are always green agus bíonn adharca fada ar na buaibh thar lear. Somebody else's job probably always looks more attractive than one's own. I could visualise endless arguments as to what should be the appropriate rate of tax if we are to incorporate a greater easement of the tax burden according to the nature of the occupation. It is not feasible to provide a tax system of that kind.
The reason for the £300 minimum  benefit in kind charge or 15 per cent of the cost of the vehicle is that on average nowadays people work five days a week and if a person has a car assigned to him by a firm he has a car available for private use on two days a week. The 15 per cent element is a very small percentage when you consider that the car may be used on two days a week. I agree with Deputy Haughey, again from my own knowledge of commercial travellers and their social habits, that they may have little inclination to go on long drives on Sundays, even to take the family out, which many of them do as an obligation because of the pleasure of being with their families. They do not do it as a first choice but nevertheless they do it. Often such a car may be driven by the spouse or other member of the family and not only by the commercial traveller himself.
Mr. R. Ryan: Short of policing every car that is issued to a commercial traveller you cannot determine precisely the extent of a person's use. The reason for bringing in some relevant basis last year was that that difficulty existed and endless arguments went on. Sometimes the arguments went on so long that years of arrears built up. Maybe that was the case in respect of Deputy Haughey's constituent, that the arguments went on for a considerable time until ultimately the true facts were established and then a considerable amount had to be paid. Whenever any cases of that kind have been brought to my notice I have happily requested the Revenue Commissioners to extend the period over which any such tax arrears might be paid. However, the Revenue Commissioners are independent in the exercise of their duty and may, and frequently do, totally ignore representations from a Minister for Finance or from any other source. It is their duty to be neutral in the operation of the tax code, a duty which they discharge with total integrity. It is also appropriate that they be humane in their enforcement of the tax law, and invariably they are humane and will give  persons who find themselves with an unexpected bill of arrears some reasonable time to pay. They are particularly well disposed if the bill for arrears should have arisen due to ignorance or involuntary omission rather than deliberate intent to commit fraud.
The amendment as suggested by Deputy Haughey would not establish equality of treatment between commercial travellers, because while he is suggesting that no account be taken of the provision of a car to a commercial traveller if the car is provided by a firm, a commercial traveller who bought his own car—and a very large number of commercial travellers buy their own cars and are agents in their own right—would find himself involved in tax liability in respect of private use of the car.
Mr. R. Ryan: The principle enunciated by Deputy Haughey would be to give a tax exemption to one particular group exclusively and not to others. I do not think that that is an acceptable principle and it would be resented by others. The particular title, rank or vocation of commercial traveller is not defined in tax law, and it would be very difficult to find a sufficiently tight definition if the privilege sought was  to be confined to commercial travellers.
The amendment has another serious difficulty. It asks that this privilege be conferred on people who are wholly and exclusively employed in the capacity of commercial traveller. That would obviously involve the person being seven days a week, 52 weeks of the year, engaged as a commercial traveller.
Mr. R. Ryan: It is. It shows you how far-fetched the proposal is. The basis for having a charge in respect of benefit in kind is that it is common knowledge that people do not go as far as the Opposition have now suggested I was going; in other words, they do not work seven days a week, 52 weeks of the year, that they do stop working at some time or another, and that when they have stopped working they have available to them an asset which is of immense value.
Mr. R. Ryan: I ask those who are offering this proposal to contemplate the difficulties of the majority of taxpayers who have to provide a car out of after-tax income. It is a much dearer commodity and a much greater burden on a family's fortune if the family have to provide a car out of after-tax income.
Mr. R. Ryan: For a car for family purposes out of their after-tax income. Quite a large number of commercial travellers who have a car provided by their firm have not merely the car itself, which has immense capital value and saves the commercial traveller having to borrow or acquire a car on hire purchase, all of which eats into his disposable income, but also has the taxation of the car and oftentimes the petrol and the insurance on the car all paid for by the firm. Are we to say  that these are not benefits in kind, that these are things that it is not worthwhile having—the taxation, insurance, running costs, repair costs of your car paid for you by somebody else, even if you only use the car on two days a week for the family? I consider these are immense benefits. Other people are unable to get insurance to cover only two days a week or to tax their cars for only two days a week in respect of their family use of the car. The other side of this House are forever sneering at the concept of equity in the taxation system.
Mr. R. Ryan: They are now proposing here an exemption for a group which would stimulate an immense amount of envy among the general body of taxpayers who have to provide their cars out of after-tax income. There are many motorists today who, as far as they themselves are concerned moving to and from their work, would be quite happy to go by public transport, but they buy the car so that they can take out the wife and the children, and they have to do all that out of after-tax income. Let us be fair and not jump on the band wagon that some people would want to set rolling and, in the process of doing it, generate a considerable amount of annoyance and disappointment among others.
I want to conclude by quoting from the Irish Commercial Travellers' Federation News Bulletin for August, 1976, which says that less than 5 per cent of their members signed a petition to have the benefit-in-kind tax abolished.
Mr. R. Ryan: The Deputy is now saying that the Commercial Travellers' Federation were engaged in nonsense to ask their members to sign a petition in this regard. Only 5 per cent returned the form, and this was their own organisation.
Mr. R. Ryan: This was a petition which was presented not to me but to the people to return to their own federation. Therefore, there is no question, as Deputy de Valera suggested last night, of hesitation on the part of people to put their names to a piece of paper in case the Revenue Commissioners saw it. Perhaps the reason the petition did not come—I understand it did not come—was that those who are seeking the advantage that Deputy Haughey is seeking today is that they did not wish it to be known that so few people were protesting. We read widely and we know exactly what is going on. I think it is very significant indeed when only one in 20 sign, that it shows that what we did last year is clearly understood by people to whom it is meant to apply, and quite a number of them are happy now that they no longer have to engage in what they used to have engage in, most complicated accounting, the keeping of Bills and so on in order to sort out whatever would be their tax allowance in respect of the use of a car.
Major de Valera: The Minister talked a lot about equity and the difficulty of distinguishing between classes. The Minister is pushing that argument too far. If the Minister was right, Government Ministers would not have tax-free cars.
Major de Valera: They would not have. If the Minister's argument was right—I am not saying anything about the merits of that—that is the logic of it, that every Minister and person in that category should have these benefits tax free.
Major de Valera: That is fact and I know it. There are good arguments why Ministers should have cars like that, but if what the Ministers say here is right then the ultimate end of the logic puts him in a peculiar position. On Deputy Haughey's amendment, as he rightly points out, there is a difference between those who would be in the perquisite class, which the Minister referred to last night, and these people who are being employed and need a car for their employment and have it under these conditions. Whether I am right in my suggestion that people dislike to attract attention from certain Departments I will leave to the judgment of the people concerned—to the commercial travellers, to say which of us is right.
I have come to the figure of £5 million which the Minister gave last night. He was making the point that it was to capture those in the perquisite bracket and he mentioned cars in the price range of £8,000 to £10,000 and by way of breakdown he gave a percentage of between 20 and 25. That means that of the £5 million, £1.2 million comes from that class and that the remaining £3.8 million comes from others. In that class, I do not think I  would be far wrong if I said that each such person is assessed at about £1,000 which means in turn that the number involved would be between 1,200 and 1,500.
What then have we left? We have £3.8 million out of the £5 million collected from what one might call the working area, the people not in the luxury class. They would number roughly 7,500. Deputy Haughey mentioned a figure of 500 in one other class. All this adds up to the total of 10,000 people contributing £5 million. These figures make me wonder whether in a lot of these proposals the Minister has not been thinking of the weakest in voting power as far as he is concerned. In addition to what Deputy Haughey said, I wonder if there is not a little element of victimisation here because in many other areas expenses and allowances are given which are not available to people in the area I have just been talking about.
I have not time to develop the argument and before 1 o'clock I should like to make two short points. As Deputy Haughey has said, this class form an essential part of sales organisations. The Minister does not seem to have adverted to the ESRI study by Professors Geary and Dempsey in their study of schemes for the relief of unemployment in Ireland in which they say that these sales people are an essential part of the manufacturing and other trade products. Not only do they represent an element of employment themselves but they are a multiplier of employment and of economic activity. The proposals here are just another example of the Government's taxation policy which, despite the Minister's talk about equity, has had the effect of depressing economic activity in all areas. Though this is, perhaps, a small facet of it, it is symptomatic of the whole approach of the Minister to taxation since he came to office.
Even though this year's budget provides a heap of reliefs, we must ask what kind of budget will we have next year when we think of the 1976 budget, if the same Minister and Government are there after the election. Will we have another 1976 budget? One way to show practical  sympathy and to put our protestations into effect would be to accept the amendment or at least to compromise on it. It would not be too costly. What the Minister has done is to reject it out of hand through the stratagem of making legal arguments about the wording.
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