Wednesday, 31 May 1995
Seanad Éireann Debate
|Part of taxable income||Rate of tax||Description of rate|
|The first £8,900||25 per cent.||the standard rate|
|The remainder||45 per cent.||the higher rate|
|Part of taxable income||Rate of tax||Description of rate|
|The first £17,800||25 per cent.||the standard rate|
|The remainder||45 per cent.||the higher rate|
|Part of taxable income||Rate of tax||Description of rate|
|The first £10,000||23 per cent.||the standard rate|
|The remainder||42 per cent.||the higher rate|
|Part of taxable income||Rate of tax||Description of rate|
|The first £20,000||23 per cent.||the standard rate|
|The remainder||42 per cent.||the higher rate|
(c) as respects the year of assessment 1997-98, by the substitution of the following Table for the Table to that section:
|Part of taxable income||Rate of tax||Description of rate|
|The first £12,000||21 per cent.||the standard rate|
|The remainder||40 per cent.||the higher rate|
|Part of taxable income||Rate of tax||Description of rate|
|The first £24,000||21 per cent.||the standard rate|
|The remainder||40 per cent.||the higher rate|
 (d) as respects the year of assessment 1998-99, by the substitution of the following Table for the Table to that section:
|Part of taxable income||Rate of tax||Description of rate|
|The first £14,000||20 per cent.||the standard rate|
|The remainder||38 per cent.||the higher rate|
|Part of taxable income||Rate of tax||Description of rate|
|The first £28,000||20 per cent.||the standard rate|
|The remainder||38 per cent.||the higher rate|
(e) as respects the year of assessment 1999-2000, by the substitution of the following Table for the Table to that section:
|Part of taxable income||Rate of tax||Description of rate|
|The first £15,000||20 per cent.||the standard rate|
|The remainder||35 per cent.||the higher rate|
|Part of taxable income||Rate of tax||Description of rate|
|The first £30,000||20 per cent.||the standard rate|
|The remainder||35 per cent.||the higher rate|
I welcome the Minister. As I said on Second Stage, the process of tax reform which was started in 1989, when there were three income tax rates, and continued until 1992, by which time there were only two rates, 27 per cent and 48 per cent, needs to be put back on the rails. This country needs a programme of tax reform which could in the life of one Government reduce the standard rate of income tax to 20 per cent and the top rate to 35 per cent and eliminate PRSI.
This recommendation spells out a two pronged approach to tax reform over a number of years, which would reduce the marginal rate to 40 per cent and increase the amount of income which a single person could earn without reaching the top rate by increasing the bands and reducing the marginal rates of tax.
All of us have said that unemployment is the most pressing problem facing the Government. The Culliton report said tax reform is the greatest tool the Government has at its disposal. If we are serious about the level of unemployment we need to tackle this problem and set targets for tax rates. We usually decide how much we are going to spend and then look for the money to do this, which is found in the form of income tax. Tax on work is far too high and we need to set a target of reducing it. People are entitled to be told by the Government what it intends to do about taxation over a period of years. Ministers come and go and perhaps they feel the urgent need is to deal with the problem in a particular year. We need to have a long term view of  the economy if we want to solve the unemployment problem. We must have a long term view of what we want to do in relation to taxation. This is the purpose of my recommendation.
Under the increases in allowances introduced by the Minister, a single person earning below the average industrial wage will begin to pay tax at the higher rate on earnings of £12,340. They are paid approximately £170 a week into their pocket. This is a very punitive rate of tax and we must make an effort to reduce it.
There are many anomalies in the system. We have talked about the integration of the social welfare and taxation systems. This needs to be addressed quickly because many people who are working and paying taxes feel that they may be thought of as fools and that they would be better off on social welfare. I would like the Minister to spell out what he intends to do while he is in office rather than giving us rates for this year and saying these rates will apply in subsequent years.
Mr. Mulcahy: This party is totally in favour of the gradual reduction of personal taxation. The Minister would be well aware that his predecessor, with whom he is reputed to be a good friend, was on a course of such a gradual reduction. In fairness, that course, although it was slightly altered and diminished, was carried on this year.
I have to say to Senator Honan that it is too easy to propose sweeping changes in the levels of personal taxation without specifying how the shortfall will be made up. It is never easy to say what services will be cut or where the shortfall will be made up to pay for reductions. The movement towards taxation levels pertaining in other countries, particularly in the US and the UK, is something we all desire. Allied to this is a desire for social services of a fairly egalitarian nature. Anybody closely examining Thatcherite and post-Thatcherite Britain and Reagan and post-Reagan America would be well able to identify areas where the level of social  support and the intervention by the State for the assistance of the truly needy certainly falls very far short of the mark to which we would aspire.
Unfortunately, it is difficult for us to make a decision on this issue because our party is firmly of the view that the Government and the Minister have not covered themselves in glory in relation to keeping the parameters of public spending under control.
I know the Minister is in touch with the business community and with people who seek to generate wealth in this country. I would be failing in my duty if I did not say that there are many members of the business community who are beginning to lack confidence in the economic policy of the Government. I mean that sincerely. People are saying the Government seems to have too large and generous a chequebook, that we must control public spending and, in particular, control the levels of public pay.
An Leas-Chathaoirleach: The Senator is straying.
Mr. Mulcahy: I was straying a little, a Leas-Chathaoirligh, but it is not really a useful exercise to comment on a line by line basis on these proposed amendments. They have a certain effect. Unless the Government undertook a level of borrowing for the next three or four years which we do not wish to do, public services would have to be cut. In those circumstances I respectfully suggest that certain items of this recommendation should not be supported by the House. Notwithstanding the failure of the Minister for Finance and the Government to have a prudent economic policy, the Fianna Fáil Party will always be responsible and will never try to con people that tax cuts of this order and magnitude can be brought in so quickly without pain and suffering by people in need.
Mr. Cregan: '77.
Minister for Finance (Mr. R. Quinn): I understand the genesis of this recommendation coming from the Progressive Democrats. It has a certain validity in relation to the internal coherence of its argument but it is flawed, because until such time as we got our expenditure commitments committed in a similar manner and we could say with certainty say what our expenditure ceilings would be for the next three years, it would be imprudent to fix one side of the balance and to leave the other side unfixed. On Committee Stage in the Dáil, when this was debated at some considerable length, the Progressive Democrats spokesperson argued somewhat persuasively that there was a close correlation in his view and in the view of the Progressive Democrats between high levels of personal income tax on single persons, not married persons. That is a function of the Murphy judgement and the way it has been implemented by successive Administrations, including those in which the Progressive Democrats participated.
The thrust of the argument was that the high level of taxation on single workers on below average industrial wage was a disincentive to employment and prevented people from working. That is a presumed judgement. I have seen no scientific evidence to sustain that. There is nothing in the labour market figures to suggest people are not taking on work because of the level of taxation. Certainly, there are strong and substantial costs on employment generally and disproportionate costs on low-paid workers relative to other categories of workers. Those costs factored themselves through into labour-intensive industries in the traditional sectors which are trying to compete in the United Kingdom. There is scientific evidence to sustain that particular observation and we have tried to address the validity of it by focusing the tax relief on the lower paid by widening the bands. In addition, for the first time ever we altered the relief with regards to PRSI payments for those in the open  competitive private sector as distinct from the non-open public sector. The specific intent is to alleviate in part the distortion for such categories of employment that are clearly at a competitive disadvantage with the UK market. Furthermore, on the employers side we have also intervened by raising the threshold whereby the full rate of PRSI is reduced by 3 per cent. I know on Committee Stage we are confined to this particular recommendation but it must be taken in the context of what is being done with taxation policy. Looking at what we have tried to do altogether, our taxation policy is not to fix ourselves to a statutory commitment over the next three years when we cannot be that certain. Even if we were to start to fix figures, my preference would be to fix expenditure figures rather than income tax figures so that we would know where we were.
If I may address the point made by Senator Mulcahy, unlike the previous Administration and the one that preceded it, this is the first Administration that has actually voluntarily taken upon itself a limit on increases in public expenditure. The increase this year will be less than the increase was last year. I addressed these comments at some length on Second Stage yesterday evening. There is some misinformation put out by IBEC and others about the actual increase in terms of figures. Senator O'Kennedy was being misled, or allowed himself to be misled, in relation to the way those figures were being quoted, but I am possibly out of order in addressing what was perhaps an out of order comment.
We are not prepared to accept this recommendation because it puts the cart before the horse. Frankly, given the scarcity of resources and the need to intensify employment opportunities within our economy, this is not the best method of approach. While the argument can be well made in favour of the single worker below the average industrial wage, the consequence of that system, if factored through the entire system, as would be the case, would be to  have exactly the same effect it had in Mrs. Thatcher's Britain and Mr. Reagan's United States. There would be winners and the real winners would be at the top end of the income scale, which perhaps may be the motivation of the Progressive Democrats. I do not know.
Ms Honan: In reply to Senator Mulcahy, the Opposition are not allowed to make any proposals to increase taxation or to widen the tax base. We cannot even suggest there should be a system of tax credits, which the Progressive Democrats believes would be much fairer than tax allowances. Everybody would then get the benefit of the same rate rather than people on higher wages and salaries getting greater benefit because they pay tax at the higher rate.
I agree with the Minister. It is essential that we fix expenditure figures. For instance, any household cannot decide how much they will spend, go looking for the money, borrow the shortfall and try to repay the shortfall in future years. That is not possible. We need targets in both our expenditure and income. We need it on both sides. That is why we need to tell people the targets we have set for ourselves in relation to taxation. Does the Minister intend to fix expenditure over a number of years or to tell us of the increases in expenditure over a number of years so that we could match our taxation take to the same amount?
I accept and the Progressive Democrats agree with the Minister's argument in relation to the Murphy case. We should not need to double the allowances of single people for a married couple. We should not need to follow that through in all the allowances the State gives, because it is less expensive for two people to live together. It does not amount to double the cost of living of one person.
I have had experience of employers who are hoping to employ people starting work in labour intensive industries. They find it extremely difficult to get people who are willing to begin at a low level of pay because of the social welfare  system. I am constantly contacted by people complaining. They say there is supposed to be a huge unemployment problem and ask why they find it so difficult. We need to address the problem. We need to get people into the work system. They would progress through it, but they need to see at the beginning that they will not stay at that low level of pay. We need to be able to attract them in initially.
Mr. Daly: I do not wish to misrepresent what the Minister said but I take it, from what he said in reply to a question a few minutes ago, that he does not believe that the high tax levels are a disincentive to people to work. The fact is that a huge number of people, especially young highly qualified professional people, are leaving Ireland to avail of opportunities abroad, even though there are opportunities available for them here, because of the high levels of personal taxation. This fact is borne out by the example of the Shannon industrial estate. Some highly paid American executives came to establish businesses and then found that, when they set about training people to take over from them, many of these people left the area and went to the United States and other places because of the exorbitant levels of taxation which they were paying here. I do not want to misrepresent what the Minister was saying but I took it that he was endeavouring to say that levels of taxation were not disincentives to people taking up employment.
Mr. R. Quinn: We could get into an extended debate on this issue. I understood Senator Honan to be making the comment that some people felt they would be better off on the dole than working. I have yet to find this mythical person who has opted to leave a job to go on to the dole and I have yet to find somebody who wants to be on it after 12 months. However, that is not to say that there are not many people at work who feel dissatisfied with the amount of pay they are getting or the amount of  tax they have to pay. I have yet to meet somebody who feels happy with the amount of tax they pay in any jurisdiction. Of the 80 to 85 per cent of the working population who are at work, few would say they are happy with the level of remuneration they get. Let us separate satisfaction with pay from how the taxation system prevents people being in work or going to work.
In the context of migration and people moving to other jurisdictions because of the level of taxation, I have to tell Senator Daly that a survey on migration was done during my time in the Department of Labour in the mid-1980s. We found that there were three categories of people who migrated or emigrated: it was migration rather than the kind of historical emigration. One third went abroad for work experience, even though they had opportunities here — typically people who graduated from the third level system and deliberately chose to go abroad for experience; I was one of them. Another third were at work in Ireland and went away to get experience. Many of them were on career breaks from the Civil Service. The residual third — we called them one third each but that would not suggest that it was a mathematical third — were people who went away for genuine employment reasons.
There are individual cases where the level of taxation is a disincentive in terms of personal income. People look at their personal income tax and think it is far less in the United States but many people do not add into the cost of living in the United States the local tax, the state tax and the property tax, if they are renting. For example, there are three categories of tax in New York City: federal income tax, New York state income tax and New York City income tax. When people start to compare the actual amount of income tax, they do not compare like with like: they compare federal tax with national tax in Ireland and they exclude the fact that, by and large, there is no property tax here of what we would regard as traditional rates, as is the case in Northern  Ireland and in the rest of the United Kingdom.
Returning to the central point made by Senator Honan in this recommendation, the position of the Labour Party and of the tripartite Government in this regard — and the position of the Fianna Fáil Party when they were in Government — is not to reduce the rates of taxation, which is the preference of the Progressive Democrats, but to widen the bands and increasingly to have as many people as is possible paying tax at the standard rate of 27 per cent. If this Finance Bill is enacted, it will result in an increase of approximately 1.5 per cent in the total number of people — bringing it to 66 per cent of the workforce — who will be paying at the standard rate.
Recommendation, by leave, withdrawn.
Section 2 agreed to.
Question proposed: “That section 3 stand part of the Bill.”
Mr. Daly: Will the Minister give us an example of this section in operation and what effect it would have?
Mr. R. Quinn: My speaking note states that the married allowance will go up by £300, from £4,700 to £5,000. The normal widowed allowance will go up by £150, from £2,850 to £3,000, while the allowance for a widowed person bereaved in the year of assessment will increase by £300, from £4,700 to £5,000. The single allowance will go up by £150, from £2,350 to £2,500, and the single parent allowance is will also be increased by £150, from £1,850 to £2,000 in the case of widowed parents, and from £2,350 to £2,500 in the case of other single parents.
Question put and agreed to.
 SECTION 4.
Question proposed: “That section 4 stand part of the Bill.”
Ms Honan: Section 4 changes the special allowance in respect of PRSI. The Progressive Democrats would like PRSI to be amalgamated with PAYE and I am therefore opposing section 4.
Question put and declared carried.
Mr. Mulcahy: I move recommendation No. 2:
In page 15, line 41, after “residence” to insert “or was the residence, for the purposes of attending an institution of third-level education, of a student of whom he was the parent or guardian”.
This recommendation speaks for itself. It is about the requirements of a person in relation to their residence and third level institutions. There is no logical reason the Minister should not be prepared to accept this recommendation. It makes common sense and there is no point in making a lengthy speech about it.
Mr. R. Quinn: I am familiar with this recommendation and I understand the background to it. Let me address the reason the section was introduced in the first instance. There are three categories of people being housed on this island at present: owner-occupiers, local authority tenants and private tenants. I am leaving aside those in household or institutional arrangements. Local authority tenants get State support and housing assistance support through the differential rent system, which is income related. Owner-occupiers, if they are purchasing with the help of a mortgage, get income tax relief State assistance to enable them to purchase their home. We have the highest level of home ownership in Europe and possibly in the world — New Zealand may have a marginally  higher level — at approximately 80 per cent. I have always held the view that people in private rented accommodation got no assistance whatsoever in State support. There is also a view which I share, based on my constituency experience, that there are may landlords in the black economy who are not reporting the amount of rental income they are getting from private tenants.
This section attempts to do two things. First and foremost, it will give private tenants a modest measure of income tax relief, to which they are entitled — especially people who want to have long term tenancy arrangements and not to be moving around. In addition, it will have the added beneficial effect of bringing into the compliant tax economy those landlords who are outside it at present. It is designed to facilitate people who are dependent on private rented accommodation for their housing needs or who have chosen to rent accommodation rather than commit themselves to substantial capital purchases. That is increasingly the desire of many single people who do not necessarily want to acquire a capital asset, which they cannot take with them after they depart, or who want to live in a particular location.
To give effect to the Fianna Fáil recommendation would be to give tax relief to students living away from home. That is the intent of their proposal. The thrust of the section is towards equity in the primary housing market, not providing assistance for students or others living away from their primary residence. I am therefore not prepared to accept it.
Mr. Cregan: I welcome the section and the Minister's reply. Is he prepared to consider giving further tax benefits in the future to people who are prepared to go into private rented accommodation? In the past I strongly urged that people should get every possible assistance to accommodate themselves and, as the Minister said over 80 per cent of Irish people own their accommodation.  However, when I look at the benefits given to financial institutions and the money they make from people who borrow money to purchase accommodation, I wonder whether we are taking the right approach. The Minister is now giving £1,000 relief to a married couple who are tenants and bringing landlords who were outside the system for many years into the tax net.
Is the Minister prepared to consider second generation mortgages? We will now see more people going into private rented accommodation, as happens on the Continent. In Germany, Belgium and other countries few people buy their own accommodation. We are now putting the responsibility on young couples in that we are not prepared to give them tax relief on their mortgages, but we will give £1,000 in tax relief when they rent. Since those tenants will be paying persons or companies acting as landlords, we should ensure the landlords are named before the relief is given. If the Minister is prepared to broaden this in the future, the financial institutions should be made aware of it.
Mr. McGowan: The Minister said there were three categories but I suggest there are four. A new development is that people rent houses and get their health board to pay up to £65 in supplementary rent allowance. This is done in collusion with the tenant in some cases. The new fund costs the State £48 million. We have acted out of concern for those who are renting flats, but there is collusion in setting rent. It will be fixed at £80 but the tenant pays the landlord only £15 while the State pays £65. The bill for this, which is the fourth category, is escalating. I hope the Minister recognises this group and includes it in the taxation net.
Mr. Burke: The section is a step forward. In continental countries most people do not own property; they live in rented accommodation, provided by a landlord or the Government. The provision will lead us in the right direction. For various reasons some young couples  do not want to own the accommodation where they live. Many old people would prefer to live in rented accommodation and they will benefit from this provision. I welcome the provision and, like Senator Cregan, ask the Minister to consider including second generation mortgages.
Mr. Daly: We welcome the section. In the recommendation we endeavour to extend relief to students living away from home. The Minister acknowledges the intention, but he may not appreciate the burden families carry in these cases. Two of my children attend higher level institutions in Limerick. I know of other families in this position who have become part of the new poor. They pay tax and work hard but find it almost impossible to meet the expenditure involved. Not only are there fees and maintenance, but the burden of rental allowances is so heavy that many families almost go to the wall.
There may be another mechanism by which we can achieve the objective of the recommendation, but we wish to put a formula in place which will relieve the burden on these families. There is also travel expenditure because many of these students go home at weekends. It is mainly middle income families who are involved and because the students are not at college for the full year the burden on the Exchequer would not be extraordinary. We do not anticipate that the allowances would apply for the full year because terms in the colleges are limited, so expenditure for the State would not be as large as for an all year allowance.
Can the Minister indicate what the cost of the recommendation would be? I do not believe it would be exorbitant but it would relieve the cost of accommodation of students in higher education on families who find it expensive.
Mr. R. Quinn: A number of points have been raised and I will address them seriatim. Senator Cregan raised general questions about housing policy. It is some time since I was involved in  housing economics but I can offer a view based on memory and on my experience on Dublin City Council, a position I shared with Senator Mulcahy.
The pattern in local authorities is that 50 per cent of allocations are to households of two persons and less. That is a dramatic transformation from my time as a housing design architect, when the typical mix was 75 per cent of an estate was three bedroom, five roomed houses for families of three to four children, 15 per cent was four bedroom houses and 10 per cent was for the elderly. That mix, which was standard through the 1960s and 1970s, has now been transformed.
Because of fertility within our families and society, the headship rate in our society is producing a different type of household, the size of which is much smaller and requires smaller accommodation. The economics of providing such accommodation suggests multiple dwellings, because two-roomed, stand alone detached buildings are ludicrously expensive in an urban context. Individuals with medium incomes cannot finance such activity, so a structure of joint apartment buildings is required, provided by professional landlords. Such supply has been generated on the Continent because of the demand.
Abroad, some people want to purchase their dwelling and obtain second generation mortgages. My understanding of that, which is subject to confirmation, is that it is because the capital costs of such buildings are far in excess of what they would be in Ireland. Anybody who has inquired as to the cost of property in continental cities relative to the cost of property here will be aware of that phenomenon.
What is needed is a new economic housing policy, having regard to the changing nature of household formation. There are many single people or people with limited commitments who do not necessarily want to spend 20 years paying a mortgage on a capital asset which they cannot take with them and for which they do not wish to assume responsibility, and they would  prefer to use their disposable income for other purposes.
It is a more complex issue than the Finance Bill can address in this context. I have already said to my colleague, the Minister for the Environment, Deputy Howlin, that we need a new White Paper on housing or a new outlook on housing over the next ten to 20 years. We have addressed more satisfactorily than most European countries the housing problems we had in the 1960s when there was a housing crisis in Dublin and other cities.
Senator McGowan spoke about collusion. Perhaps the health board in Donegal is more generous in relation to rent allowances. Senator Mulcahy will agree with me that the maximum rent allowance in our area of south Dublin is £20 to £24 per week on top of what is being paid. If somebody is getting about £50 per week supplementary rent allowance in Donegal we will be able to talk to the Department of Health about it. There is no reason anything of that order would be justified.
There have been problems in the past in this regard. The Programme for Government will transfer responsibility for the allocation of rent allowances from the health boards to the housing authority. One housing authority will have responsibility. Thus the potential collusion to which the Senator referred — I have no evidence of such but I respect his judgement in this matter — could be minimised.
In addition, section 14 will give the Government the powers to obtain from the health boards on a legal basis the names and addresses of the landlords in receipt of these allowances. It seems incredible that the Government was unable to get full co-operation from local authorities as to which landlords were in receipt of rent allowances through their tenants. Section 14 will now enable us to get that information. Where there is possible abuse or overcharging, or a flow of income not fully reflected in returns to the Revenue  Commissioners, we are taking steps in a later section of the Bill to address that.
Senator Daly raised the issue of accommodation and income support for students, which is a separate matter of which accommodation is one element. I do not wish to confuse one with the other; there are other ways of addressing that issue. I would not disagree with some of the points the Senator made. One could make other observations in the context of support for third level students. However, it is a separate issue from the question of providing some degree of equality of treatment in relation to a category of people which is growing in numbers because of the change in the demographic structure of society and who do not get any support from the State, and a subcategory of people who traditionally supplied that accommodation. Reason, anecdotal evidence and 20 or more years of political stomping around Dublin South East would lead me to suspect that many landlords were not revealing to the Revenue Commissioners the full amount of money they were being paid.
Mr. McGowan: Nobody in the North Western Health Board area is getting a £65 rent subsidy. To my knowledge people in Dublin city are getting a £65 subsidy.
Could the Minister grant some relief to those keeping students in the Gaeltachtai? They have to provide accommodation which meets fire regulations and the season is short. Could some relief be granted in those circumstances?
Mr. R. Quinn: No.
An Leas-Chathaoirleach: Is the recommendation being pressed?
Mr. Daly: Yes.
Recommendation put and declared lost.
Section 5 agreed to.
 SECTION 6.
Question proposed: “That section 6 stand part of the Bill.”
Ms Honan: Section 6 deals with relief on fees paid to private colleges. The Government has found itself bound to introduce tax allowances for private third level colleges because of the socially regressive policy of the abolition of all university fees. The abolition of university fees for everybody is not socially equitable.
Reform of the grants system was needed. Everybody felt the grants system was being abused and many people in the middle income bracket were not able to avail of the grants system for their children. It is not acceptable that children of wealthy parents will only have to pay half university fees this year and no fees next year while there are people on social welfare who would qualify for a full grant but are still not in a position to be able to afford to attend college — although the fees are paid, the maintenance grant is too low.
The amount of money being devoted to abolishing university fees could have been put to better use in reforming the grants system by giving grants to people in the middle income bracket and increasing the grant for those who, although they would be entitled to a grant, will not go to university because the grant is at such a low level that it is not possible for them to afford it.
Mr. Burke: I welcome this section and the abolition of third level fees. The country was crying out for the abolition of third level fees. There was a group of people who could not afford to send their children to third level institutions and the abolition of third level fees will allow them to do so. I congratulate the Minister for Finance, the Minister for Education and the Government on this measure.
This section deals with the relief on fees paid to private colleges. The changes in employment trends have brought about the growth of private colleges.  This section will allow tax relief to be given on the fees charged by the private colleges. Many people have now decided to return to college later in life and this will help them
Mr. Daly: I support the provision in this section as a welcome development. Many families have had to go into debt to send their children to colleges and they have not been getting relief up to now. This is a welcome development which we asked for last year.
Many of these private colleges are business and innovation oriented and that is to be encouraged. We have far too few colleges concentrating on training people in business management and organisation. Some of the private colleges have undertaken extraordinary work. The HSI college, for example, in Limerick city has been run by Michael McNamara and his mother for over 40 years. It is an excellent institution which has produced highly trained professionals.
Many of the parents who sent their children to such schools found they could not get relief on the fees because they did not qualify. They did not get any tax relief either. This is a welcome improvement which I support.
Mr. Calnan: I welcome this section because people from many walks of life, especially those on short term courses, have been caught in economic traps. This tax relief will be of great benefit to them.
Professor Lee: Tá fáilte roimh an Aire. It would take several hours to address the implications of all the issues involved. However, I welcome the general thrust of Government policy in this direction and these specific provisions. I hope the Government will be able to consider post-graduate finance and mature student finance at an early stage because these are major issues of equity and cost benefit investment in educational terms. I hope the Minister introduces provisions for these areas in next year's budget.
 Question put and declared carried.
Mr. Mulcahy: I move recommendation No. 3:
In page 19, line 38, after “£150” to insert “or the amount, if lesser, of the service charge actually proven to have been paid”.
It is not necessary to make a long speech on this recommendation which deals with service charges. Instead of including a rigid figure, a tax credit should be given if an amount of money is paid.
Mr. Cregan: I welcome this section. In 1984, when local service charges were implemented, it was felt that there should be tax relief on them and that the PAYE sector should benefit. I argued this point with the then Government and Minister for Finance, Deputy Dukes, but it would have cost the Department of Finance £47 million per year because Dublin was included.
While I agree with the limit of £150, there is a problem implementing it at local authority level in Cork city. It does not operate in the same way as mortgage relief in that if a person pays their mortgage they will get a certificate from the local authority which enables them to claim tax free allowances and benefits. This is being implemented differently. Is it possible to simplify it so that it can be implemented at local authority level in the same way as mortgage relief?
The Department of Finance has said that because it is awkward to implement, people will not get the benefit. This creates more problems. It is unacceptable that a son who lives with his retired parents and who works in the PAYE sector could claim tax relief on it. We do not want an awkward system implemented at local authority level so that arguments will be made by people who do not want to pay. It is recognised that local authorities must collect  money locally in order to improve their situation. We should implement a simple system. People who want to pay their local service charges must now go to the Revenue Commissioners. Can relief on local service charges be implemented in the same way as mortgage relief in that if a person pays a mortgage to a local authority they will get a certificate which will allow them to claim their tax benefits?
Ms Honan: I oppose this section because it is crazy to make local authorities go to court before they can recover small amounts for local service charges. The Government has introduced an allowance of £150 because a decision was made that local authorities had to go to court to encourage people to pay. It was accepted that these people would probably not pay because they did not have to unless the county council brought them to court.
We all accept that local authority funding needs to be reformed but successive Governments have failed to address this issue. It is crazy to introduce one such reform and to involve the bureaucratic system in local authorities by asking it to give people certificates. Local authorities were happy with the money they collected from local service charges because there was a high compliance rate. As a member of a local authority I know people who were threatened that the services provided by the local authority would be cut off if they did not make an attempt to pay their charges. It is annoying for local authorities to have to go through this procedure and then to have another bureaucratic system to issue certificates. I cannot support this section. We should consider reforming local authority funding, but not through the introduction of such silly measures in order to appease Democratic Left.
Mr. Calnan: Many heated debates took place in local authority chambers on local service charges and double taxation. The Minister recognised this and introduced the necessary legislation. A  person who must pay for water supply, refuse collection, sewage disposal facilities and a group water scheme will now be able to claim tax relief. The Minister has done a comprehensive study of this area. I welcome this section which I hope will stop double taxation.
Mr. Burke: I welcome this section because it covers private group water schemes. There is a new sewerage charge in County Mayo, in addition to water and refuse charges. This section will give tax relief to people who pay local service charges. Although local authorities must now issue a certificate to a person who pays these charges, there was always an obligation on them to issue a receipt. I have no sympathy for people who do not pay for services. Water, refuse collection and sewage are essential services which must be paid for. The Government has taken the right step because a person will either get tax relief if they pay the charges, or, if they cannot pay, they will be able to avail of a waiver system. That is a fair and equitable arrangement.
I welcome this section and I hope the new sewage charge introduced by some local authorities will be considered for tax relief.
Mr. R. Quinn: Senator Cregan made a point about procedures. Tax relief — we can address this if it does not happen in Cork, although it would surprise me if that is the case — is claimable on payments made in the previous year. To certify that a payment has been made, a local authority will either give an individual a receipt in paper form, which they can include with their tax returns like everyone else, or, if they use state of the art information technology, they can take the RSI number and file it directly with the Revenue Commissioners. There is no paper transaction.
Mr. Cregan: The Revenue Commissioners do not accept that.
Mr. R. Quinn: That is a problem for Cork. I am aware that Cork's aspirations for independence on occasions are fairly strong, but on this occasion the federalist and centralist nature of the State is intact and Cork is still a compliant partner in it. We will try to sort it out, but Cork was the first to break ranks with regard to the actions of city managers. In reality, however, those are the two choices. We should be advised if there are operational problems, but the formal arrangements that have been negotiated with the local authorities and the Revenue Commissioners are as I have described.
With regard to the points made by Senator Honan, the issue is in respect of services to a dwelling. A dwelling that does not have either sewerage or water is uninhabitable for the purposes of all our legislation. Where local authority tenants refuse to, do not or fail to pay their rent, the local authority cannot put them out. There is due process and there are civilian and civic rights within the State. We are saying to local authorities that if they are to undertake actions that would constitute rendering the dwelling a non-dwelling or a noninhabitable dwelling, they must observe due process and there must be some degree of equity. This is a republic; people have rights. It may be cumbersome and bureaucratic, but it is a balance that has been struck between the rights of citizens on the one hand and the powers of a local authority on the other.
The measure is based on legislation derived from Scotland, where a local authority cannot arbitrarily and unilaterally cut off the supply of an essential service that turns a building into a dwelling. Without the sewerage and water supply the building is incapable in modern terms of being a dwelling and this is why the measure was introduced. It is a response in the Programme for Government to what was an outstanding political issue, and it has now been resolved. There is no longer any justification for anybody not to pay their service charges. It is a spurious argument  that it was a double taxation, and I have always regarded it as such. Buying a pint of stout is an exercise in double taxation because there is income tax taken off the money in the first instance, followed by the tax on the pint of stout.
Many transactions in this country could be described as double taxation. It is an argument that goes back to the time when rates were abolished and people were told that they did not have to pay rates because it would be paid in income tax. This was the origin of the highly politicised double taxation argument. I believe we have resolved this matter and this tenuous argument — I have always believed it to be such — in a manner which is satisfactory. In addition, as has been remarked by Senator Calnan and Senator Burke, we have extended it to group water schemes, private refuse collections and any other services which are introduced. It is up to a maximum amount of £150, or whatever the service charge is in the local authority. For example, if the maximum service charge in a local authority is £80, the person does not get £150 but £80.
Ms Honan: The threat of cutting off the water supply was a sanction available to the local authority and the cost of taking people to court is probably something that they will not now pursue because it is so expensive. The amount of money they could possibly recover would be less than the cost of going to court. Many of those who comply and pay their charges in time every year are very annoyed that people do not pay and continue to refuse to pay. The fact that the local authorities had this sanction was in itself an incentive for a very high compliance rate.
Mr. McGowan: The people in difficulty with paying a service charge of any kind, whether it be water, sewerage or refuse collection, are not in the income tax bracket. I am a long time member of a local authority and I make a handful of representations on this issue every  week. I know the kind of people in difficulty and at the point of having their water disconnected.
The Minister is honest and correct to state that this is a political issue. Unfortunately, it is a political issue which affects local authorities in collecting what is a fundamental piece of revenue for them if they wish to look forward and extend their services. For example, in my county the local authorities have to provide additional water connections continually every year, and it is an ongoing programme. The Minister's solution to the problem is that those who pay water charges obtain income tax relief. However, those involved in the problem are not in the tax net——
Mr. Cregan: That is not a problem.
Mr. McGowan: I raise this matter in the hope that there is an answer. This measure presents all kinds of complications. It may have satisfied a partner in the Government, but there is not enough transparency on the matter because the person who may be cut off knows what is involved, along with everybody else. This is a serious matter. The Minister is capable of making a clear cut decision on it. He would not waffle, mess about and go around in circles to get a solution. He is capable enough and honest enough to decide on a course of action which is simple and straightforward. This has been a waffling issue which has presented all kinds of complications for local authorities.
Mr. Burke: It has always done so.
Mr. McGowan: It has not always done so.
Mr. Burke: What percentage of charges were collected?
Acting Chairman (Mr. Sherlock): Senator McGowan without interruption.
Mr. McGowan: I visit people's houses and see a disc aerial on the house and I  look at the expenditure on the house and make my own assessment. The Minister accepts that there are those who do not want to pay and will not pay. He has thrown such people a life-belt and has caused complications over a simple straightforward issue. Local authorities have a problem. To offer tax relief to those who pay their water charges who may not be in the net in the first instance begs the question as to why not extend it to car tax and so on? I cannot get tax relief for paying my car tax, my ESB and telephone bills. There are no grounds for this kind of solution to the problem, which was unnecessarily created at the outset. I am a supporter of the Minister. I grant him a straightforward, simple attitude because of his northern blood, but he is compromised——
Mr. Daly: He is not giving any of it away.
Mr. R. Quinn: It was hard to come by.
Acting Chairman: This issue has been debated at length and there is much repetition.
Mr. McGowan: The Minister compromised on this matter and does not even believe in what he has to do.
Acting Chairman: There is much repetition.
Mr. McGowan: The Minister is in a complete mess on this issue in order to satisfy a lame duck partner that made an unreasonable demand.
Acting Chairman: The debate started on recommendation No. 3 but included the entire section. Is recommendation No. 3 being pressed?
Mr. R. Quinn: In response to Senator McGowan, we are nothing in this House if we are not politicians and we deal with problems that emerge in a political way. I make no apology to anybody in stating that this was a political problem  for many of the parties. I seem to recall that in the Fianna Fáil manifesto of 1985, written by Deputy Molloy, service charges were regarded as double taxation and they were to be abolished by Fianna Fáil.
Mr. Mulcahy: The Minister brought them back.
Mr. R. Quinn: I am acutely aware of the origins of the service charges. I was the Minister of State responsible for bringing them through the House. We all know the background to that. I wish to address the specific points made. I make no apology for being a politician or for finding political solutions to political problems. That is my trade.
I want to address the comments made by Senator McGowan. Anybody who is not paying income tax should qualify for a waiver in respect of service charges. If their income is such that they are not eligible to pay income tax, then all other things being equal they should qualify for a waiver and, if they do not, this should be brought to the attention of the county manager or to the Minister for the Environment. In general that is what the waiver scheme is supposed to be about and there is some discretion in that respect.
On Committee Stage during the passage of this legislation through the other House the Opposition made the very valid point that if the registered occupant of a house was an elderly parent and a working son or daughter was living in the house, paying the service charge, the ESB bill and all the other bills, as is normal, then that working person, although he or she would not be the registered occupant for the purposes of the serving of the charge, should qualify for the income tax relief. I was persuaded of its validity and we amended the section accordingly. Therefore, it addresses that situation and brings it in line with the situation where if an elderly mother or father is  the registered tenant of a local authority house and the working daughter or son was in effect paying the mortgage repayments, that son or daughter could qualify for the tax relief. If there are further examples Senator McGowan should by all means bring them to my attention; but in the first instance he should bring them to the attention of the local authority, where he has considerable clout.
Recommendation put and declared lost.
Question, “That section 7 stand part of the Bill,” put and declared carried.
Acting Chairman: Recommendations 5 and 6 are related and recommendation No. 9 is consequential on recommendation No. 4. All those recommendations will be discussed together.
Mr. Mulcahy: I move recommendation No. 4:
In page 23, line 21, after “Minister for Finance” to insert the following:
“or any of the charities listed in the Second Schedule”.
The Minister has heard of the expression which states that charity begins at home. That is the fundamental principle on which this recommendation is based. I do not know why the Minister decided in section 8 of this Bill to permit tax relief only in respect of contributions made to charities working in developing countries and territories, those on the list produced by the development aid committee of the Organisation for Economic Co-operation and Development.
An enormous amount of excellent charitable work is done in this country. The range of organisations and their activities are widespread. Ireland is known to be an extremely charitable country. Thousands of volunteers work for the organisations listed in the proposed  Second Schedule and these organisations need money to fund their activities. The primary source of funding for these organisations is their own private fund-raising schemes, such as church gate collections, selling flowers, daffodil days and so on. The Minister will also be aware that with the introduction of the national lottery complaints were made by many charities that consumers' discretionary spending has been soaked up by the national lottery and that these organisations were not benefiting from the national lottery.
The Minister will have read the proposed Second Schedule to section 8 which contains the list of charities. In effect, the Minister is saying that the Alzheimer's Society of Ireland does not deserve support, that the Cystic Fibrosis Association does not deserve support, that the Irish Kidney Association does not deserve support, that the Polio Fellowship of Ireland does not deserve support. These organisations need help. Why should we discriminate between poverty in Ireland and poverty in other countries? There is no logical answer to that question.
Poverty, as the Minister, a reader of Karl Marx, knows, is relative. A thatched cottage might be a castle for somebody while a semi-detached house might not be suitable for somebody else. There are people in this country who may be sick, handicapped, lonely or disabled and fortunately there are people who organise themselves in charities to help those people. I am not suggesting for a minute that the Minister is not personally sympathetic to these charities; that would be totally wrong of me. However, there might be a body of thinking in a certain Government Department to which the Minster is attached which sees yet another escape of possible taxation revenue and is not prepared to run with it. The answer to that is very clear. If the Minster is going to open the door, he must open the door to everybody.
What the Minister is proposing might have the invidious result of creating competition and perhaps friction  between various charitable institutions in this country. The Minister says it is there already. I have never seen or heard of friction between charitable organisations in this country.
Mr. R. Quinn: There is no competition?
Mr. Mulcahy: I am not saying that there is no competition.
Mr. R. Quinn: The Senator said that there was competition.
Mr. Mulcahy: Will the Minister accept that there is no friction?
Mr. R. Quinn: Absolutely.
Mr. Mulcahy: The goodwill of the vast majority of the people involved in Irish charitable organisations is such that they would not partake in any kind of behaviour that might lead to friction. I am not saying that charities which have their principal work abroad should hot be supported, but it amounts to heartlessness on the part of this Government and of the Department of Finance to close the door on Irish charities.
The Association of National Charities had a meeting with the Minister and described that meeting as most unsatisfactory. It is very distressing to hear any group of charities describe their meeting with any Minister as most unsatisfactory. They say:
We cannot believe that a Labour Minister for Finance has created a two tier sector in the charity area and is providing an incentive to the already generous Irish public to donate their money to Third World charities over those charities operating at home.
My colleagues will also deal with this topic and we agree there should be a maximum financial limit on the amount of money which might be lost to the Exchequer. That makes sense and the Minister must be strong on this issue.  He should listen to us and remember that charity begins at home.
Ms Honan: Recommendation No. 5 is in my name. I agree with Senator Mulcahy that the Minister is creating inequality. I listened to the Minister's reply to our arguments in relation to national charities on Second Stage yesterday. He stated there would be no difference in the amounts given to both types of charities and that an additional amount would be paid over to the charity by the Revenue. However, the value of a person's contribution to a Third World charity will now be greater and these charities will advertise this fact.
There is grave concern among national charities about this. They feel the contributions made to their organisations and to Third World charities should qualify for tax relief. They welcome and are in favour of the Minister's move in relation to Third World charities but they feel they should be given equal status. As Senator Mulcahy said, a huge number of voluntary workers help domestic charities and they can only conclude, as the National Charities Association itself stated, that this Government places more value on Third World charities.
This is unacceptable, particularly since the Government relies heavily on national charities, such as the Society of St. Vincent de Paul, the Irish Cancer Society, the Irish Red Cross Society and the Irish Society for the Prevention of Cruelty to Children, to carry out voluntary work. This is work it would have to pay for if these groups did not exist. The measure is most ungenerous.
The Minister said the floodgates could open and one did not know where it would end. Senator Lee's recommendation limits the relief to £2 million in any one year, which we would be most willing to support. The Minister also mentioned that 3,000 organisations might claim this relief. It is interesting that the Minister of State at the Department of Foreign Affairs, Deputy Burton, has invited organisations involved in fund raising for charitable and other  purposes to a meeting to discuss difficulties they encounter, to examine the recommendations contained in the Costello report with a view to drawing up legislation and accounting practices and standards for charities. The Minister of State only invited 100 organisations because the Department of Foreign Affairs believes there are only 100 organisations——
Acting Chairman: May I draw Members' attention to the fact that they have consulted each other four times while another Senator was speaking? The Members' discussion can be easily heard and I ask them to give attention to the Senator who is speaking.
Mrs. McGennis: Apologies.
Ms Honan: If a Minister of State considers that only 100 organisations are involved in fund raising for charitable and other purposes, how does the Minister for Finance believe that the floodgates could open and many other organisations would apply? Senator Lee's recommendation suggests a limit of £2 million and most Members would support that. I ask the Minister to be generous to Irish charities and to show that this Government values them on an equal basis to Third World charities and appreciates their great work in this country. I ask him to accept the recommendation.
Professor Lee: I warmly applaud the Minister's intention to trying to positively and concretely commemorate the 150th anniversary of the Famine. However, the way in which he has gone about it has already been counter-productive by creating unnecessary divisiveness. It is accepted that there will always be divisiveness where there is human agency, but one can do with as little divisiveness as possible in an area where the objectives are so admirable.
I could understand the linking of the 150th anniversary with the approach if the proposals had been specifically  focused on famine relief around the world, or even famine relief interpreted as natural disaster relief of horrors of a crisis nature wherever they occur. I am not clear as regards the list of designated countries but we are obviously accepting an OECD listing. Other countries may be included, but I do not know if Armenian earthquakes or Bosnian horrors of various types are covered as I suspect the OECD does not include these in its list. We should determine our priority countries rather than follow another organisation's listing.
I will return to point about the deleterious effects of the distinction between domestic and foreign charities and what is being done. However, I suspect the admirable motive of making some restitution, however psychological, for the benefits we received from charitable people during the Famine — the Minister said earlier that we are all politicians and that there are political dimensions to everything — has not been unaffected by the consideration that our contribution is 0.23 per cent of GNP and the OECD average is 0.35 per cent.
I suspect the Minister may have felt inhibited at meetings from time to time, in speaking out as strongly as he might wish on certain matters, by the fact that other members could point to our low official contribution and that we have not been able to incorporate the benefits of the substantial private charity to which we contribute in our formal positions. I have no objection to linking private voluntary charity with official charity in order to clarify for the wider world the earnestness and seriousness with which we take our responsibilities to those less fortunate than ourselves at national level. I welcome this move but the mechanism is most unfortunate.
It will create divisiveness between foreign and domestic charities. I hope I am not misrepresenting the Minister's position; I have been reading Dáil debates in between examination papers. It is rare that one turns to a Dáil speech for relief, but this is one occasion on which one does so. There is now an  incentive for Third World charities to try to impress on potential donors that there is more bang for their buck in turning to the Third World than in contributing to domestic charities. In the circumstances, it would be natural and proper for Third World charities to intensify their advertising to impress this aspect on potential donors.
Although we are all uncertain about the precise consequences, it is reasonable to assume that there will be an inevitable diversion of the resources involved as a response to the intensification of the campaign to take advantage of this measure, which will be specifically listed as a reason for responding in a more generous way to Third World charities. Diversion and redistribution within the charitable field as a result of specific legislation is undesirable, unless there is an intention to damage the domestic charities. I accept that this intention does not exist, but I am convinced there is a serious danger. Far from being threatened with danger, the domestic charities ought to be encouraged.
I am not anti-State on an ideological basis. I believe in seeking results whether they are delivered by the State or by voluntary or private concerns. The voluntary sector in this country will be called upon to deliver more and more services because institutions which traditionally catered for disability of various types are declining in their effectiveness. The only alternative to such institutions is either the State or voluntary organisations.
I do not dispute the good intentions of the State but voluntary organisations play a positive role in fostering the type of society most people want us to be. We need a thriving voluntary sector and we must encourage the voluntary sector by expressing our admiration and gratitude for what it does. I know it was not the Minister's intention but already this proposal conveys the impression that domestic organisations are second class citizens within the voluntary charities sector. As long as this distinction lasts that impression cannot be avoided.  However unintentional it was — and I accept that it was entirely unintentional — it is necessary that we extend this provision to the domestic voluntary charities as well as to organisations such as the Red Cross which have commitments in both areas and which may find contributions for their work in the Third World or overseas seriously affected by what appears to be almost double discrimination.
I am concerned at the potentially deleterious effects of this provision. It is better to hasten slowly in these matters. I accept that there are implications for the Exchequer. That is why there is a capping figure which I owe, I hasten to add, to Deputy Sargent who perused the amendments proposed in the Lower House. I accept the principle of that but I am not hung up on a particular figure. The principle involved is that it is better to hasten slowly and to feel one's way in what is a generally desirable direction — a direction I applaud — rather than simply to introduce this. There is a commitment that if in a year's time it has been seen to be deleterious some compensatory mechanism might be put in place. However, why take the risk? Even admitting that it might be shows the uncharted waters we are entering. We should not take that risk against what is the most deserving of all sectors in our society. I implore the Minister to reconsider this matter at this juncture.
Acting Chairman: A number of speakers are offering. I remind Senators that discussion on this Part of the Bill concludes at 1 p.m.
Mr. Daly: Like Senator Lee, I believe it would be a great pity if the Minister's good intentions in this section were to be diluted in a way he had not intended and in a way that would create unnecessary problems for many societies and organisations which have been doing excellent work for a number of years. The Minister must be aware of the widespread anxiety that exists, especially in organisations such as the Society of St. Vincent de Paul and the  Irish Red Cross Society. It is unnecessary to remind the Minister that the Irish Red Cross Society was established by statute. It has been involved, as Senator Lee said, in a variety of operations at home and overseas. The effect of this section — let us put it in its starkest terms — will be that £1 donated to, for example. Concern will go further than £1 donated to the Irish Red Cross Society.
I listened carefully to the Minister's Second Stage reply last night. I did not fully grasp what he was trying to say but I got the distinct impression that he was suggesting that societies such as the Irish Red Cross Society would be able to benefit from the Exchequer through covenants or some other mechanism. I am not totally convinced by his argument. However, I would remind him that the Irish Red Cross Society, although engaged in a great deal of humanitarian work overseas, also has been involved in a great deal of work at home, for example, dealing with refugees. When I was Minister of State at the Department of Foreign Affairs we were involved in difficult negotiations about bringing refugees into this country. The Irish Red Cross Society did trojan work on that occasion by organising facilities and so on for the refugees. It is also the principal first aid agency in Ireland. I compliment the chairperson of the Irish Red Cross Society, Una McGurk, and the society's administration on their excellent work. Recently the society helped the flood victims in Clare, Gort and Galway.
What the Minister proposes in this section — and I do not think it was his intention and listening to his observations last night he would appear to be sympathetic towards dealing with the situation — will seriously discriminate against these bodies.
Mr. R. Quinn: No.
Mr. Daly: The Minister will have to demonstrate otherwise. We are not convinced that he will not create unnecessary  competition. Organisations such as the Irish Red Cross Society which are doing trojan work here and overseas will be seriously affected by this measure. That applies also to the Society of St. Vincent de Paul and the 75 other agencies in this sector.
Mr. Burke: I compliment and congratulate the voluntary groups on their magnificent work. The Minister clearly spelt out yesterday what he intends to do about this matter. He said he has a number of options with regard to the National Lottery Act. He has also established a mechanism with regard to the Irish Red Cross Society whereby people will benefit from tax relief when donating through covenants to that organisation. I agree with Senator Daly that the Irish Red Cross Society is doing magnificent work throughout the country. However, the Minister has clearly outlined his intentions.
This is the first time that Third World charities have benefited from special concessions and different treatment from domestic charities. The Minister said he would like to do something to commemorate the 150th anniversary of the Famine and he has done so by giving special concessions to Third World charities. In view of these considerations we should leave this provision as it stands. We will be in a position to see if it has adverse affects on domestic charities by next year. At that stage we could reverse the provision or give concessions to domestic charities. I appeal to Members to give this provision a chance for 12 months. We can gauge any adverse affects envisaged by the Opposition in 12 months.
Mrs. McGennis: I join with other speakers in congratulating the Minister for introducing this worthwhile initiative. It is well intentioned. However, the Minister must be aware that giving tax relief only to Third World charities is predicted to have a major effect on charities at home. The fact that the charities spent some of their very scarce resources to place a full page advertisement  in national newspapers is an indication of how scared those organisations are about the effect of this provision.
Any politician who has knocked on doors will have met people who are involved with some charity or who have a relative with a handicap. Every Member of the Oireachtas must admit that the work being done by charities affiliated to the National Charities of Ireland — as we will be told quite honestly on the doorsteps — is work which should properly be done by Government, regardless of what party is in power. All parties in this Chamber have been in Government at various times so I am not apportioning blame to anybody. I am trying to be fair. All these groups which are permanently fund raising and so on are doing work which I and the public believe should properly be done by the Government of the day.
My colleague, Senator Daly, referred to the Irish Red Cross Society. I want to refer to the Society of St. Vincent de Paul because of my own situation in Dublin. I live in and represent Blanchardstown and my local authority ward is particularly disadvantaged. Four of the six parishes in my electoral ward are designated as CODAN. The Minister may be aware of that term, but if he is not, it means County Dublin Areas of Need. They are designated as such because they have upwards of 60 per cent unemployment. The reality for people living in those situations is that while they receive the social welfare payments or unemployment benefits to which they are entitled, difficulties arise at First Communion or Christmas time. Where people are not in that 60 per cent bracket, I have had to approach the St. Vincent de Paul to ask for help for those who are having serious problems with their mortgages. That is the reality.
I recognise that famine is an emotive area. However, the reality is that people — I am sure throughout Ireland but I can only refer to suburban parts of Dublin — are unbelievably deprived and rely heavily on the Society of St. Vincent de Paul for light, heat, a roof over their head and children's clothes. There  is a high traveller population in the county and they also rely heavily on the Society of St. Vincent de Paul in the County Dublin area. A group of people will arrive home tomorrow having walked 200 miles for multiple sclerosis. A famine walk will take place in September in aid of St. Francis's Hospice in Raheny. These organisations must constantly come up with new ideas because people get tired of buying the daffodil or whatever.
I do not understand the reference to covenants, because if I put a pound in a basket for a lily or a bonnet I am not covenanting a pound. The bulk of the money raised by these groups comes from the pound in the basket or the direct request from the Irish Red Cross Society to homes. Those donations are between £1 and £5 and cannot be covenanted. It just will not happen.
Mr. R. Quinn: That is exactly the point.
Mr. Burke: They will not have tax relief either.
Acting Chairman: I ask Members not to interrupt.
Mrs. McGennis: Three Members of this House, from both the Opposition and Government sides, have a motion on the Adjournment tonight looking for support for the Irish Wheelchair Association. It would be very hollow if we were all to come into this Chamber tonight and try to successfully achieve something on the Adjournment which we are not prepared to support in a more tangible way on this section.
I want to make one final point to the Minister, whom I respect. He made the point earlier that he makes no apology for coming up with political solutions. He is quite right; we are politicians and that is our job. This requires a political solution and is as worthy and probably more worthy than the political solution requested by one of the Government parties regarding water charges. This is more serious and, because we are talking  about charities, I beg the Minister to accept the worthy recommendations from this side of the House.
Mr. Calnan: I compliment the Minister for introducing this section and a well balanced budget. He has taken into account that for the first time tax relief can be given to designated Irish Third World charities. If a person contributes £750, the charity will benefit to the tune of about £1,027. The tax relief will go directly to the charity and will not be dealt with by the person. It is another initiative taken by the Minister and I admire him for it and support him totally.
Acting Chairman (Mr. R. Kiely): It was agreed on the Order of Business that the question would be put at 1 p.m. and I ask Senator O'Kennedy to be brief.
Mr. O'Kennedy: I appreciate that. I may not be as brief as Senator Calnan but I will nonetheless be brief.
Mr. Calnan: Say little but make it good.
Mr. O'Kennedy: It is particularly appropriate that this issue be dealt with in detail in the Seanad because we are, under the Constitution, the law and our mandate, the representatives of this country's vocational and voluntary organisations. It was specifically provided in the Constitution that because those organisations played such a vital part in society through their caring and active support for all that is best in our community and particularly the needy, the Seanad would have an element of vocational representation.
I am privileged to have been nominated, as other colleagues were by different organisations, by the Irish Wheelchair Association, which is one of the charities which will be negatively affected, while not deliberately nonetheless directly, by what was originally a well intentioned provision. It is essential  that we highlight the anomalies and discrimination that arises as a consequence of this provision. The Irish people do not make any distinction in their care, concern and support for charities wherever they operate. It is one of the healthiest signs in our community that organisations have from time to time worked without recognition or a full level of support.
At a time when we worry about social attitudes we can take some degree of comfort and consolation from the obvious spontaneous support of our people for these deserving charities and the people who devote their lives to involvement in them. Whether it is a Third World, domestic, national or local charity, the response is always immediate and generous. If the people do not discriminate, it is essential that those of us who represent them as legislators do not discriminate, even unintentionally, in any legislation we pass. We would not be reflecting the views of the people and we certainly would not be discharging our responsibility.
I am all for co-ordination and association of charities, but the Minister must have been surprised that as a consequence of section 8 of this Bill, a new national organisation was launched, namely the National Charities of Ireland.
Mr. R. Quinn: Very good.
Mr. O'Kennedy: Yes, but why? The Minister has to ask why and the reason is not what the Minister would want. Co-ordination is fine because the organisations operate in different areas for different purposes with different targets. This was a spontaneous coming together of these organisations to prevent the discrimination they believe will apply, albeit unintentionally, because of this provision. It is quite extraordinary that as a consequence of the section a national organisation had to be formed to campaign against discrimination against people and organisations which we all admire and respect and which do things which perhaps we do not do as  positively. I have been privileged from time to time to be associated with some of these organisations, but unfortunately in public life one does not have the opportunity to give the commitment they give voluntarily to great effect.
This is not meant to be a criticism of the Government. Social problems are growing and we are reacting to the problem of unmarried mothers, battered wives, unemployment and so on. Are we going to ignore the fact that these organisations must cope, day in day out and night in night out, with urgent calls about problems which unfortunately are almost endemic in our community? That is where they are. Anyone in contact with the Society of St. Vincent de Paul — and the others as well, I do not want to discriminate against them — probably the organisation targeted most directly on poverty and depression, will tell you that the demands on their resources are now greater than ever. Surely this is not the time to introduce discrimination, unintentional though it may be. It is even questionable whether a discrimination of this type would be legally defensible. I question that because, in my view, it is not defensible in terms of political actions.
The people who sent us here, and the public who do not actually vote for us, would expect us to appeal to the Minister. If an unintentional anomaly or discrimination has been introduced, and it is very clear that it has, then it should be eliminated. It is not reasonable to suggest that you can equalise in covenant what is provided under specific provision in statute. The two are not the same. It would give the wrong signal, that is, that there are two levels of State recognition of the worthiness or activity involved, one for those engaged in voluntary organisations overseas and another for those at home.
I respect the voluntary organisations overseas and I will be visiting a refugee camp next week where they operate. I was involved in setting up many of their campaign programmes in Africa. In my  view, there is no justification for this discrimination.
Mr. Cregan: I listened with interest to the points made and in particular to Senator Lee who is right when he says that what the Minister is trying to do this year is relevant. I am involved in a voluntary organisation, and have been for many years, which collect day in and day out. Unfortunately, there is a need for voluntary groups now more than ever. It is a sad reflection on us as a society but it is a fact of life.
We are even asking voluntary groups to take care of the elderly because we can no longer provide the necessary geriatric health care. It is also a sad reflection on us that there are fewer nuns and brothers whose commitment to voluntary work down the years has been enormous.
The Minister recognises what he wants to do and he made it quite clear when he said: “If it turns out that I am wrong in this view, there is a mechanism open to us with regard to altering the donations which might derive from the national lottery.”
I want to make that point strongly. Many people involved in voluntary organisations are watching the amount of money given every week by the national lottery. Some £4.3 million was won by a Dublin family the week before last and I congratulate them. However, we have an opportunity here that we should avail of and we should hold the Minister to it.
The impression is being given that when you give £100 to one organisation you will get tax relief, but you will not. Somebody else is getting the extra benefit if we donate it to a Third World charity.
We were very badly off 150 years ago and we got very little help. We must not forget either that for many years Governments, irrespective of the parties involved, demeaned these organisations and the State's contributions to Third World aid amounted to only a small percentage of GNP. We are now trying  to get it up to 0.7 per cent which is very welcome.
I understand how local organisations feel but I would not like to see a divide. Senator O'Kennedy is right in saying that we represent different organisations and that we are elected by them. I appreciate that fact. It is a feature of both Houses that we can speak on behalf of particular organisations, and it cannot be said that we are lobbying because we are not.
Mr. Daly: Do not vote against them.
Mr. O'Kennedy: They nominate us. We could not do without them. We would not be here without them.
Mr. Cregan: Yes, that is a fact. The Wheelchair Association will be the subject of a broad discussion later in this House; this discussion is long overdue. Given the number of people confined to wheelchairs here, we should be contributing much more to making life easier for them and we can do so at very little cost.
I do not want to stray from the point but this year, the 150th anniversary of the Famine, we have an opportunity to do something. The Minister is sincere about this; if he was not I would say so. He has made a political decision to commemorate the 150th anniversary of the Famine.
Next year we will have an opportunity to do some something if this provision is not working properly on behalf of the national organisations, the voluntary groups, the handicapped and others. I am directly involved with the handicapped and can speak personally because I have a nephew who is badly handicapped. I can understand what happens when these people do not receive voluntary assistance from others. They put a lot more into it than any of us do as politicians. They are committed in no small way.
In future, the Minister should recognise the work of voluntary organisations in all aspects of our society. He should  look at the amount of money that is being spent every week on the national lottery and he should make sure that more of this money is given to charities, whether as a tax relief nationally or internationally to the Third World.
Most of the money donated to charity here is collected in baskets, hats or by selling daffodils or other items. Each contribution amounts to 50p, £1 or £5, not massive sums, and the majority of national charity organisations make do with that. We do not want to give the wrong impression to the general public who, in comparison with other countries, stand above the rest in making contributions to organisations in need.
Acting Chairman: Three Senators are offering now, and the Minister has to contribute also.
Mrs. McGennis: And the amendment has to be voted on.
Acting Chairman: Yes, and the question has to be put before 1 o'clock.
Mr. O'Toole: I propose that we have two minute speeches.
Acting Chairman: Is that agreed? Agreed.
Mr. O'Toole: I agree with Senator Lee's point that the Minister was well motivated and positively disposed in bringing this proposal forward. The problem that has been created was not anticipated. The Minister should respond to the fact that Senators on this side of the House find it impossible not to support organisations who feel cut out of this arrangement.
It is a personal thing for people like myself who are involved in groups like the Society of St. Vincent de Paul and other charities who deal with schools. At different times in this House we have discussed various groups, such as the Simon Community, those dealing with autism, and others and there is a real commitment to them from all sides of the House.
 This provision is going to produce anomalies, division and confusion and, more importantly, it will be a cause of demotivation for people in Irish-based charities who will feel discouraged and will feel that they have been cast adrift.
People send their contributions where they feel it will have the maximum impact. If there is chance that it will mean twice as much to the charity to which they make their donation, it will work to the detriment of charities who do not have objectives abroad. It will also create confusion for those acting in a dual capacity, not just the Irish Red Cross but refugee agencies. I am a trustee of an anti-torture trust which deals with people who have suffered in Third World countries. The people who qualify under the 1967 Finance Act should also be included.
Mr. Roche: I want to make sure that we vote on this section. I have no doubt the Minister is as interested in all the voluntary bodies in our society as I am so I am not scoring any particular point. I am simply making the point that there is a mistake. The inclusion of this provision in the Finance Bill was good and progressive but it should also apply to domestic charities. After all, charity begins at home. The chairwoman of the Red Cross and the chairperson of the Society of St. Vincent de Paul are in the Visitors Gallery. We all know the good work they and the other groups mentioned in the Schedule do. I suggest that the Minister's proposition as regards covenanting would not meet the needs of these charities. I suggest that his undertaking as regards the national lottery, although well meaning, could not meet the same requirements as the legislative provision.
Mr. R. Quinn: This is a political decision that was brought in by the Government at my request. We recognised that it could create some of the difficulties which have arisen but I believe they are exaggerated. I do not agree with the phrase “charity begins at home” because home is the entire  globe. The difference in terms of real standards of living——
Mr. O'Kennedy: There is no distinction.
Mr. R. Quinn: I refer to a comment made by one of the Senator's colleagues. The difference between the Third World and the First World is fundamental; it is quantum in terms of what we are talking about. Income in Ireland is 50 times that in Rwanda which has no support systems.
Existing bodies referred to in the Schedule — I will not be provocative — include the National Youth Federation which gets over £2 million from the Department of Education and the Society of St. Vincent de Paul which got £1,055 million from the Vote of the Department of Social Welfare in 1994.
Mr. O'Kennedy: It probably needed £10 million.
Mr. R. Quinn: It could get a lot more, but I am talking about relative comparisons. The present pitch is uneven. The national lottery cannot give money to Third World charities. There are already distortions — if one wants to use that word — in the existing system.
No more than anyone else in the House, I recognise the validity of all the charitable work being done. I have proposed that a contribution of between £200 and £750 will qualify. Anything below that does not get into this system so the type of impulse donation to which Senator McGennis referred is not affected. A person will have to make a conscious decision to make a standing order or to write a cheque to an organisation which will take their cheque and RSI number, which will be fed on line to the Revenue Commissioners. If a person gives the maximum amount of £750, the Revenue Commissioners will deduct from the total tax paid from that person's income tax payment into the central fund a sum of £250 which will be grossed up and remitted to the recipient organisation.
 There is no marketing benefit for a person giving money to a Third World organisation as against a First World one, if I can call it that. A person is no better off because the £250 cheque does not give them a rebate on their tax; it gives extra money to Third World charities. To use a phrase which Senator Lee used, there is a bigger bang for the buck. I am deliberately giving a bigger bang for the buck given to Third World charities because it is self-evident that they need it.
The organisations listed in the Schedule, for example, Barnardos, which will get £45,000 and the Alzheimer's Society of Ireland, which will get £44,000, never get enough, but they do get taxpayers' money at present. I am trying to construct a relationship between citizens in the year of the 150th anniversary of the Famine to take on a type of personal citizen identification with Third World calamities and deprivation. No matter how desperate the situation is in a family with a handicapped child or with an elderly parent with Alzheimer's or the deprivation to which Senator McGennis referred, this is real. Poverty is relative and on a scale of magnitude it does not compare with the type of problems we are talking about.
I am trying to construct a relationship where citizens will feel that they have a responsibility and a possibility of making a contribution. To address a point made by Senator Lee, we have structured it in a way so that money transferred in this manner — it has been carefully designed to so qualify — will be seen as additional parts of Ireland's contribution under the ODA provisions of the United Nations so that it will qualify for assistance to Third World countries. That is why it is the OECD group and not areas of tragedy like, for example, Sakhalin, in the former Soviet Union. We are way off our target of 0.7 per cent of GNP in contributions to Third World countries. We have contributed less than half that target at present. This is a way to recognise the partnership between Government, taxpayers'  donations given in the normal way and citizens, which are volunteered through this system. It is a voluntary system, but at least we recognise — I do not suggest that we substitute — that the value of this will be perceived as additional and it will be quantified.
Mr. Wright: On a point of order, we would like to vote now otherwise the Chair will not be in a position to call one.
Mr. R. Quinn: When I met with the charities I was honest. I could have made them feel happy and sent them away thinking they would get some type of concession but I told them exactly what my views were then, and they are still my views. I put on the record what I said and what Senator Cregan quoted. If their genuine fears materialise, I will intervene to correct it, but I do not believe they are real.
Recommendation put and declared lost.
Ms Honan: I move recommendation No. 5:
In page 24, subsection (2), between lines 18 and 19, to insert the following:
“Provided however that the Minister for Finance may make a designation for the purposes of this section in respect of a body or institution to which paragraphs (a), (b) and (c) of this subsection applies where the body or institution has as its object or purpose the relief of poverty, homelessness, illness, disability or provision of welfare services within the State or a charitable object which the Minister for Finance may consider applicable under this section.”.
Recommendation put and declared lost.
Professor Lee: I move recommendation No. 6:
 In page 24, between lines 18 and 19, to insert the following subsection:
“(3) Tax relief shall be extended to all charities in Ireland that have been allocated charitable status by  the Revenue Commissioners on a first come first served basis and limited to £2 million in a single tax year for charities operating in Ireland.”.
The Committee divided: Tá, 20; Níl, 26.
|Belton, Louis J.
Cregan, Denis (Dino).
Enright, Thomas W.
Farrelly, John V.
Ross, Shane P.N.
Tellers: Tá, Senators Mullooly and Lee; Níl, Senators Cosgrave and Magner.
Recommendation declared lost.
An Leas-Chathaoirleach: In accordance with the order of the House, I am not putting the question: “That the sections of Part I of the Bill not disposed of are hereby agreed to.”
The Committee divided: Tá, 26; Níl, 19.
|Belton, Louis J.
Cregan, Denis (Dino).
Enright, Thomas W.
Farrelly, John V.
Ross, Shane P.N.
Tellers: Tá, Senators Cosgrave and Magner; Níl, Senators Fitzgerald and Mullooly.
Question declared carried.
Mr. Manning: As we have run late I propose we adjourn until 2.30 p.m., with the agreement of the other parties.
An Leas-Chathaoirleach: Is that agreed? Agreed.
Sitting suspended at 1.20 p.m. and resumed at 2.30 p.m.
Sections 77 to 79, inclusive, agreed to.
Question proposed: “That section 80 stand part of the Bill.”
Mr. Daly: Would the Minister give an indication of his intention in this section?
Mr. R. Quinn: This section empowers the Revenue Commissioners to add potentially all tobacco products to the categories where they may remit or repay duty paid on tax stamps which are destroyed, damaged or defective. It also allows for the extension to such products of new provisions for payment arrangements for tobacco tax stamps and for consequent longer deferment arrangements so the point of liability will now be earlier.
The present arrangement for these products requires payment of duty no later than the last day of the month following the release from the warehouse. In essence what we are doing is closing a loophole of excise payment where we now have tobacco tax stamps on cigarettes sold on the street and we are adding that to loose tobacco or roll-your-own tobacco.
Question put and agreed to.
Sections 81 to 86, inclusive, agreed to.
Question proposed: “That section 87 stand part of the Bill.”
Mr. R. Quinn: This is a restoration of powers. The House may recall there was a court case last year concerning some of the powers deemed to be vested in the Revenue Commissioners and Customs and Excise service following the removal of the customs barriers consequent on the completion of the Internal Market. Whereas previously one had customs barriers on the frontier with all these powers, it was necessary to extend these powers across the country where Customs and Excise officers in the course of their duty felt they had reason to believe there was contraband or smuggling taking place. These powers are being reinstated.
A legal doubt was cast on their operational and constitutional validity and they are being restated to put them beyond any legal doubt. By and large, they are a restoration of the existing powers introduced in the Finance Act, 1992.
Mr. Daly: Does it affect personnel?
Mr. R. Quinn: No. It merely relates to their powers to stop and search vehicles.
Question put and agreed to.
Sections 88 to 94, inclusive, agreed to.
Question proposed: “That section 95 stand part of the Bill.”
Mr. Daly: Does this cover amendments to the Schedule?
Mr. R. Quinn: This section sets out the powers of the Revenue Commissioners to deal with goods or vehicles seized in the time before they were condemned. These include delivery to the claimant against appropriate payment and a procedure for dealing with anything seized which might be of a perishable nature and cannot be stored. In the event of court proceedings establishing that anything seized is not liable to forfeiture but has already been disposed of, the section provides for reimbursement to the claimant.
Mr. Daly: There have been complaints that goods have been seized and disposed of without adequate notice being given to the claimant which would enable them to have sufficient time to claim or examine the condition of the goods.
In some cases cars have been seized and offered for sale and people had claimed they were entitled to import the cars under the transfer of residence provisions. Pending clarification or a final decision in some of these cases the properties were sold by the Revenue Commissioners expeditiously and sufficient time was not available to lodge objections or claims. People found that property which they may well have decided not to import had been disposed of before they had the opportunity of a full examination of their application for the transfer of residence provisions.
 How is this section changing what was already in place?
Mr. R. Quinn: It is largely a reinstatement of what was in place but with some modifications. Section 94 (2) requires that where a seized item found not liable to forfeiture by a court cannot be restored to its owner the Revenue Commissioners must, under paragraph (a), refund any amount paid under section 94 (1) (a) or, under paragraph (b), pay over the proceeds of any sale or, under paragraph (c), if the item seized has been destroyed, refund its market value.
I am not sure if that addresses the Senator's concern. He was saying that a good may be seized and sold before the owner of the good has a chance to repossess it, reclaim it or send it back. If the Senator has any specific cases in mind we could try to address them and learn from them.
Mr. Daly: Unfortunately, most of these cases are to do with public houses. At the weekend a person in business, who imported a Mercedes, complained to me that, because he had a residence here and in the United Kingdom, he was entitled to transfer his car back, but he did not have sufficient opportunity to make the necessary inquiries under the transfer of residence provision. I am pleased the Minister is interested in this area and I will deal directly with him when I get the full details. Is the Minister making specific changes to the existing legislation and are the new sections necessary?
Mr. R. Quinn: We are restating what we said before, but we are putting it beyond any legal doubt, which the court case had cast upon the provision. There are no additional powers. We are restating, beyond any legal doubt, provisions of the 1992 Act which were deemed to be open to challenge.
Mr. Daly: The complaint is that the powers are already too extensive and that there was insufficient opportunity for people to have their cases examined,  especially if, under the transfer of residence provision there was doubt about entitlement to bring the goods in. I am referring mainly to cars and other items, for example, cameras, which are seized at airports.
Mr. R. Quinn: There is an appeals mechanism in section 92 for anyone who feels they have been wrongly dealt with.
Question put and agreed to.
Sections 96 and 97 agreed to.
Question proposed: “That section 98 stand part of the Bill.”
Mr. Daly: Last night during the Second Stage debate I mentioned this new provision which I welcome. I appreciate that the Minister had discussions with the motor industry before this provision of £1,000 was introduced for ten year old cars. Many people have expressed the fear that the £1,000 will be transferred to the price of a new car and that it will be the same as the housing grant. There was always a claim that the benefit of that grant was not passed on to the consumer. The Minister indicated last night that he hoped to pay the £1,000 directly to the person involved, which would avoid the use of that money in the dealing arrangements. Is the Minister satisfied that this benefit will go to the person who is entitled to get it and that it will not be lost in the maze of transactions and deals for cars? I do not propose to become involved in the second hand car business because there is no expertise on that market available in this House.
An Leas-Chathaoirleach: You would be surprised.
Mr. Daly: I am concerned about the large number of imported cars which have come on the market, especially from the United Kingdom. There have  been complaints that some of them do not meet the description specified in the transactions and that they are a combination of two or three cars. There is widespread anxiety about this business. It would help if the Minister could shed some light on how he proposes to deal with this issue under this section.
Mr. Burke: I concur with Senator Daly on this issue. I hope the consumer benefits directly from the £1,000. Yesterday the Minister outlined how the scheme would operate. The explanatory memorandum states that the scheme will operate from 1 July 1995 until 31 December 1996. Does this mean it will stop after 1996 and that it will not operate in 1997?
Mr. Calnan: I welcome the £1,000 relief on the sale of old cars. The price of a car will not be of great consequence after ten years. I compliment the Minister for taking this initiative. Although it is a temporary measure, perhaps it will be continued in future budgets.
Mr. Cregan: I welcome the fact that we are trying to have better cars on our roads; it is unfortunate that we do not have better roads. If a car is more than ten years old and is worth more than £1,000 and its owner decides to trade it in for £2,000, will the garage owner benefit? We must not allow such a situation to develop.
Mr. R. Quinn: It might help Members if I read my briefing note. The Society of the Irish Motor Industry, the organisation representing dealers, the Revenue Commissioners and officials in the Department of Finance, covered all the possible loopholes which the ingenuity of the Irish psyche is capable of identifying and then driving a coach and four through. That was where we started from and I will not explain how it will function.
Subsection (1) provides that the Revenue Commissioners may make a VRT repayment of £1,000 to any person — I ask the House to bear with me in  relation to this — who buys a new vehicle in category A, which includes cars. The repayment of the £1,000 is conditional on the following conditions being met. First, the new vehicle must be registered for the first time during the period from 1 July 1995 to 1 December 1996; that would exclude second hand cars coming from the United Kingdom or elsewhere. Second, the person claiming the repayment must be the first registered owner of the new vehicle; in other words, they cannot have bought it the week before.
Mr. Cregan: It must be the first registered owner.
Mr. R. Quinn: I will come back to the Senator on that point. The person buying must be the first owner. That is a double jeopardy clause to get rid of the possibility that not only is the car being registered for the first time, but the person must be the first owner of the new car. Third, the same person must be the owner of another category A vehicle which must be scrapped within one month from the date of the first registration of the new vehicle. Fourth, the scrapped vehicle must be not less than ten years old at the time it is scrapped. Fifth, the scrapped vehicle must be taxed and insured during the two year period immediately prior to it being scrapped.
Subsection (2) provides that the subsection (1)(e) condition — the last one I mentioned — need not be complied with where any period or periods during which the vehicle was not taxed in the two years before scrapping does not exceed six months and where the purchaser can produce a written declaration made before a member of the Garda Síochána that the vehicle was not used during that period. The car, however, must be taxed and insured on the day it was scrapped. In essence, therefore, it must be a new car, it must be the first time owner applying for the benefit and the cars to be scrapped must clearly be their cars and must clearly have been in their ownership for a period  of not less than two years. Prior to that, it must have been taxed and insured.
Mr. Cregan: Is ownership to be in the name of the person for two years?
Mr. R. Quinn: I will get clarification on that point, but it is to be in the name of the person.
Mr. Cregan: That should be included in the provision.
Mr. R. Quinn: Subsection (3) places a requirement on the person who receives a repayment not to dispose of the new vehicle until at least six months have elapsed from the date of its first registration. If this requirement is breached the person who receives the repayment must reimburse the Revenue Commissioners. There can be no short term windfall gain. One must hold on to the new car for a period of six months.
Mr. Daly: There is more concern about the second hand car.
Mr. R. Quinn: Subsection (4) empowers the Revenue Commissioners to recover the repayment in the event of non-compliance with the requirement provided for in subsection (3), and the subsection defines the terms “new” and “scrapped”. Section 98 also amends section 141 of the Finance Act, 1992, to empower the Revenue Commissioners to make regulations governing the operation and the repayment scheme provided for in the new section 135.
Mr. Cregan: I welcome the Minister's remarks. The idea is excellent. The car must be ten years old, but the vast majority of cars are less than ten years old. There are cars that are more than ten year old that are worth more than £1,000. A person who owns such a car will hold onto it for longer than ten years, say for 12 years, until its value is reduced accordingly and he can avail of the benefit. Take a person with a car worth £2,000 and which is over ten years  old. He decides to trade it in at a garage which, more than anything else, wants to make money. The garage buys the car and the transfer of ownership goes from the owner to the garage. As a company, the garage can consider that the car was insured and taxed for two years previously, it can hold the car for another month and advise another prospective customer that it has a car which is over ten year old and if he exchanges his five year car for the older car he can then trade it for a new car. He will then gain a benefit of £1,000, but the garage will have gained a similar benefit in the meantime. Will the Minister clarify this point?
Mr. R. Quinn: It is a technical matter. I believe that the answer is no, but I will obtain confirmation of the position. It is a fair question.
Mr. Cregan: I am trying to protect the car owner. We want safer cars on our roads and we want every benefit to be given to those who have older cars which might be in very good condition. They should receive the benefit of the £1,000. I appreciate that the payment should be made directly to the car owner, but the situation could easily arise that if the car is traded in for more than £1,000 the benefit could go to the new owner of the car, which could be the garage, the second hand car owner or somebody else. The Minister should close this loophole.
Mr. Daly: Given the stipulations in the proposal, it would be easier to win the lotto than obtain a cheque for £1,000. Can the Minister give an indication, in the discussions he had with SIMI, of the likely level of activity and how much it will cost? What provision is the Minister making for this for the coming year?
Mr. Burke: Is there a salvage value on the car? If, for example, a car worth £1,500 is traded in, the seller buys a new car and complies with the criteria, presumably  he obtains £1,000 from the Revenue Commissioners or whoever. Where can he obtain the extra £500? Is the car dismantled? Does it ever go on the road again? Is it scrapped and, if so, does the garage owner make good the extra £500 that the car is worth?
Mr. R. Quinn: The details of the scheme are being worked out in final form between Revenue and SIMI, based on similar schemes that operated in France and Denmark. Three conditions apply. A person must have a ten year old car or an older car. He or she must have owned, taxed and insured it for road use for at least two years, must buy a new car and must arrange to have the old car scrapped. In those three circumstances coming together one may apply to the Revenue Commissioners for £1,000 VRT repayment.
To claim a repayment applicants will have to undertake the following steps. In the first instance, they must make a written application to the Revenue Repayments Office in Monaghan on a form which will be prescribed in the Revenue Commissioners' regulations. Second, they must enclose with the application the following documentation in respect of the car to be scrapped: the current tax disc, the certificate of insurance and the log book. In addition, they must enclose a certificate, to be prescribed, to the effect that the engine and the chassis of the vehicle have been destroyed.
If the car was not taxed for periods which do not exceed a total of six months during the previous two year period before the car was scrapped, a written statement made before a member of the Garda Síochána and stamped with the appropriate Garda stamp must be enclosed with the application. However, the car must have been taxed and insured on the date that it is scrapped. If there is a gap in the preceding two year period and one can satisfy the gardaí — as we have all done on occasions to get insurance and so on — that the gap can be closed, but on the date the car is to be scrapped it must be  taxed and insured. All applications will be dealt with by the VRT repayments office in Monaghan which will send the repayment to the applicant, the car owner, that is, to the purchaser of the new car who had disposed of the old car, not the motor car dealer. Claimants whose applications are in order should receive their cheques within one month of the date on which the applications are received in Monaghan. A person who receives a repayment will be required not to dispose of the new car before six months have elapsed from the date of its first registration. I thought this measure would be a “win win”, but my officials reckon it will be a “draw draw”. According to our best estimates, it will be revenue neutral. We do not know how well it will work.
Mr. Burke: What will happen to the old car?
Mr. R. Quinn: The old car will be physically destroyed. There is a precedent for this in respect of how it worked in Denmark and France. It will be physically destroyed and evidence of this will be provided.
Mr. Cregan: There are loopholes and the Minister should be aware of them.
Mr. R. Quinn: I respect the Senator's ability to identify loopholes.
Mr. Cregan: If the two year licence is transferred to another person to buy, that person can have the car insured and licensed for the past two years. The name of the person who owns the car should be included in the documentation; otherwise one is in trouble. Already there has been some speculation, for example, in the newspapers last Sunday, as to which companies will avail of the opportunity to scrap these cars. This aspect should be seriously examined to avoid a pollution problem, but a loophole exists.
Mr. Daly: I wish to return to the point about the importation of cars and whether the £1,000 will apply to cars imported from the UK, which is the main volume of trade. Could the Minister indicate whether a protection is included in cases involving the beneficial sale of cars? A similar situation applied to scrapping procedures for boats, which were EU arrangements. Grants were paid for the scrapping of boats——
Mr. R. Quinn: Fishing boats.
Mr. Daly: ——fishing boats in the French market. These were subsequently reimported and used, although they were not supposed to be included in the tonnage. If cars are imported from the UK, how long must they be in Ireland to qualify or can they benefit from this measure? The Minister is aware of quite a number of suggestions — I am not sure whether they are accurate — that second hand cars are being broken down, reassembled and exported to Ireland where they are put on the market. This is already creating some problems in the market. I have no evidence other than hearsay and widespread comment in the motor trade that there is quite a racket going on involving scrap cars which are put together in the UK and imported into Ireland where they are put on the market as genuine second hand cars.
Mr. Burke: Will it apply in the case of a husband and wife, where the old car was in the wife's name and they want the new car to be in the other partner's name, or must it strictly be on a one to one basis?
Mr. R. Quinn: It is a one to one basis; I also identified the possibility of that circumstance. The people promoting this measure are in the industry itself and their business is to sell new cars.
Mr. Daly: That is why we are sceptical. We would be happier if the Minister was directly promoting it.
Mr. R. Quinn: As I understand it, there could be a legal situation — this is subject to confirmation or correction by my officials — involving a two car family where the husband's car is relatively new and the wife's car is older. If that car is ten years old and meets all the qualifications, that person can go and buy a new car. They now have a new car and another car which is five years old——
Mr. Cregan: That is their business.
Mr. R. Quinn: It is entirely their business and there could be a situation where the woman of the house has——
Ms Honan: Two cars.
Mr. R. Quinn: ——had an 11 year old, 1.5 litre vehicle, but she now has a five year old, two litre car. However, I will believe that when I see it.
The legislation and regulations will give us the power to close as many of the loopholes that can be identified. The Senator has put his finger on some potential loopholes and raised some fears in relation to others and we will consider them. If this scheme is abused, it will be closed down within 18 months and there is no doubt about that. However, if it tends to be positive from our point of view and more than Revenue neutral, we will review it at the end of 1996. As Senator Daly said, the temptation for taking short cuts in that trade, no more than others, always exists and we will try to eliminate the loopholes as much as possible.
Mr. Daly: For professionals?
Mr. R. Quinn: I am not sure whether I am in order but this provision will not in any way facilitate or assist the second hand car market. The car which is being sold must be new and a second hand car from Japan, the UK or elsewhere will not qualify. It must be a car which has never previously been on the road.
Mr. Daly: I do not mean that aspect, but rather second cars coming in from the UK which may have been scrapped already under some scheme.
Mr. R. Quinn: There is no such scheme in operation in the UK.
Mr. Cregan: There is one in Japan.
Mr. R. Quinn: It is not that they must be taken out of use; they must be physically destroyed. Our provisions, and those in France and Denmark, stated that the car must be physically destroyed so that it was incapable of being sold again as a vehicle. It may have some residual scrap metal value, but I cannot comment on that aspect. It will not apply in terms of where a car is capable of being reused as a car.
Question put and agreed to.
Section 99 agreed to.
Question proposed: “That section 100 stand part of the Bill.”
Mr. Daly: This section involves amendments to the Finance Act, 1992. Could the Minister clarify the purpose of these measures? Do they relate to EU Directives?
Mr. R. Quinn: This chapter is required to enable us to comply with European Union law. It removes a number of hydrocarbon oils from the scope of the EU control and movement system for excisable products. The oils in question are those that, because of their end use, do not normally attract a positive rate of excise duty. The chapter makes provision for the reintroduction of the EU system if the oils are found to be diverted to a dutiable end use, such as motor or heating fuel use.
The chapter also provides for exemption from excise duty on oil in the standard fuel tanks of motor vehicles at the time of their importation to the State.  This is in line with current operational practice. The chapter also provides for exemption from excise duty for oil used in coke operated blast furnaces for the purposes of chemical reduction and introduces a number of minor changes in respect of documentary procedures concerning the movement of excise goods.
Mr. Daly: Will it have any material effect on prices?
Mr. R. Quinn: We do not expect so.
Mr. Daly: It will not increase prices?
Mr. R. Quinn: No, it should not.
Acting Chairman (Mr. Finneran): Is the section agreed?
Mr. Daly: Can I be reassured that the section will not cause a material increase in market prices?
Mr. R. Quinn: I am assured that it will not have a price effect and that it is a procedural change.
Question put and agreed to.
Question proposed: “That section 101 stand part of the Bill.”
Mr. Daly: The proposal is good and will be an incentive to put new cars on the market. The section states “1 July” but is there a provision to retrospectively cover cars bought around 1 January this year?
Mr. R. Quinn: No. This comes into effect on 1 July and one must have been the owner of the car for the previous two years. It must be taxed and insured in the manner of the provisions already described. There is no backdoor out of which people can rush, buy a car and qualify for it now.
Question put and agreed to.
 Section 102 agreed to.
Question proposed: “That section 103 stand part of the Bill.”
Mr. Daly: What type of appeals does this section cover? Is it a re-enactment of something which already existed or is it something new?
Mr. R. Quinn: I am informed that the purpose is to harmonise the process of appeal that currently exists for income tax and other types of taxation where there is ultimate access to the appeal commissioners and to bring excise taxes under that appellant structure. If one has a dispute or wishes to appeal in respect of an excise duty, the measure will ensure that the appeal mechanism is the same as that for income tax or corporation tax.
Mr. Daly: When the legal aid legislation was before the House there was a great deal of discussion about when free legal aid should be available. I presume there is no provision for free legal aid in these appeal cases. Is it the intention to make such a provision?
Mr. R. Quinn: Unless one gets the services of a very expensive accountant. It is not like a court. One can go to the appeal commissioner in the same way as one can go to the Employment Appeals Tribunal. It is a cheap process once one has one's facts and figures.
Mr. Daly: We had a long discussion on the Free Legal Aid Bill last week. On that occasion, an attempt was made to extend the provision of free legal aid to cover social welfare appeals and appeals to the Employment Appeals Tribunal. There was a long discussion and I do not wish to repeat what was said. However, the appeals bodies have the benefit of professional help and advice in a complex area. That would not be available to the ordinary individual who has a grievance or complaint  and who might have to employ expensive advice to deal with the appeal in a reasonable manner. Would it be the intention to make any allowance for the cost of professional help in dealing with such appeals through the free legal aid system? Would free legal aid apply to this?
Mr. R. Quinn: On the contrary, if I had my way I would keep the lawyers out of as many appeals mechanisms as possible.
Mr. Daly: That is not happening in practice.
Mr. R. Quinn: If one were to offer free legal aid or the prospect of it there would be an army of lawyers kicking in the door trying to get a bit of the action. I saw that happen in planning appeals. When they were first set up there was no need for a legal presence because the points being argued were not points of law to be argued in an adversarial sense. It was a more consensual process to arrive at an agreed compromise. When I was practising as an architect I had to put the words into the mouth of a much higher paid lawyer who then tried to regurgitate the argument in a confrontational and adversarial manner. That is the culture of the courts system.
The Employment Appeals Tribunal was designed to avoid that type of confrontational system but over time, because lawyers have become involved and have started to charge fees, the basis of that culture has been legalised in the pejorative rather than the constitutional sense of the word. As public representatives. Members will have assisted at social welfare appeals and the last thing any of us would want is to have lawyers at such appeals.
In a matter such as this, where there is a dispute about a matter of fact, one is simply arguing figures. To involve lawyers or to provide free legal aid in such cases would be an invitation to lawyers to get involved in this type of activity. It would undermine the spirit of  what we are trying to do and would not be in the best interests of the citizen.
Mr. Daly: The counter argument is that the people on the appeals bodies have the best possible professional advice available to them to deal with complex areas. Genuine people who do not have such advice available to them are at a disadvantage in their appeals. I do not agree with the extension of legal involvement to planning matters and other areas. However, that is the reality of the marketplace at present. I want to ensure that, in this section, we will have reasonably satisfactory and responsible procedures so that people going to such appeals will not be at a disadvantage because the technical and professional expertise that is available to the appeals personnel will not be available to them.
Mr. Cregan: I understand Senator Daly's sentiments and I also understand the Minister's position. I agree with the Minister that the less the legal practitioners are involved the better.
Mr. Daly: I agree with that too.
Mr. Cregan: Indeed, we should curtail such involvement. However, I understand Senator Daly's sentiments. We should try in this provision to give benefits to the person who is making the appeal. Few people wish to go before the Revenue Commissioners with an appeal; indeed, few people want to go before the Revenue Commissioners at all. They would much prefer not to deal with them. That is why we should take every opportunity to simplify matters; these matters are being simplified now. Business people are getting the message that if they keep their houses in order they can be quite comfortable.
However, some people can be nervous about going to an appeal. Would it be possible to issue a leaflet to such people which states clearly what the appeal is about, what questions will be asked and so forth, so that they will know how they should act before they sit at a table with well trained people?  It is similar to me sitting before an architect — he can tell me how the wall is built, I cannot. I can tell him how I want it to be built but he will tell me how it can be done. We should try to do everything possible to assist a person who wants to pay.
Ms Honan: I understood that this section deals with appeals in relation to excise duties.
Mr. R. Quinn: That is correct.
Ms Honan: We are not talking about general appeals regarding income tax.
Mr. R. Quinn: Senator Honan is correct. We are providing that the existing system of appeal to appeal commissioners be extended to excise duties. It stands to reason that people in that situation would be involved in business and would have access to some form of accountancy advice in the preparation of their books. By and large, that is all they would require. I accept Senator Cregan's point. Everybody will agree that the Revenue Commissioners have become much more communicative and user friendly in their dealings with the public.
Mr. Cregan: They have.
Mr. R. Quinn: There has been a great improvement and the Revenue Commissioners are now being paid the compliment of visits by people from other jurisdictions to see how their work is being done. Part and parcel of an increasingly high level of compliance is a human understanding of the position of the small trader. Note has been taken of Senator Cregan's point that, since this is happening for the first time in the excise area, clear guidelines as to what is required, how to perform and what is expected can be provided. That will be done.
Mr. Daly: We are at a disadvantage in that the Minister has 12 advisers present and another group on standby. That  indicates the type of situation that might confront an innocent person facing an appeal. The appeals personnel will have probably hundreds of advisers available to them.
Acting Chairman: The Senator has been doing all right anyway.
Mr. R. Quinn: The Senator has all that Clare experience.
Mr. Daly: We absorbed some of that from the people who came down from Dublin to live with us. The point is there still might be a situation where the appellant might be at a severe disadvantage. He should get whatever help is available in that regard.
Question put and agreed to.
Sections 104 to 107, inclusive, agreed to.
Question proposed: “That section 108 stand part of the Bill.”
Mr. Daly: The Minister is proposing to repeal section 138 of the 1992 Act. I do not have a copy of the Act at my disposal so can he indicate what he is proposing to repeal?
Mr. R. Quinn: The section repeals the existing provisions for the processing of appeals by the Revenue Commissioners in relation to vehicle registration tax as VRT matters will now be dealt with under the general rules contained in this Chapter. The completion of the Single Market changed the nature of the tax on motor cars — it became a vehicle registration tax — so it must be dealt with in a different way. I offer the view — subject to appeal — that VRT is an excise duty and as such will come under the general appeals provisions.
Question put and declared carried.
Section 109 agreed to.
 SECTION 110.
Question proposed: “That section 110 stand part of the Bill.”
Mr. Wright: Has there been any examination of cigarette sales after a price increase at budget time? Various organisations with views on cigarette smoking believe extra excise on cigarettes affects people's smoking habits. Has there been any examination of the effect on sales or smoking habits of putting 10p, 20p, 30p or 40p onto 20 cigarettes?
Mr. R. Quinn: When the budget is being prepared there is a table which shows the yield of each increase on cigarettes. The Senator is familiar with the law of diminishing returns, which is based on patterns of consumption and behaviour. The higher the price increase, the lower the net gain. When one increases tax by a substantial amount, there is a point at which one gets less additional revenue than if one was to increase tax by a smaller amount and not negatively disrupt the pattern of sales. There is a fine balance. It is based on patterns of consumption which can only be tracked by sales volumes, which in turn can only be tracked by excise duties. I am not aware of any more subtle or definitive ways of measuring Ash Wednesday type stop smoking campaigns.
Mr. Wright: I asked the question because various Ministers for Health over the last number of years held the view that people should not smoke. Given the revenue aspect of this, how does the Minister for Finance square this circle with the Minister for Health? The presumption is that the more the Minister for Finance puts on 20 cigarettes, the less people will smoke.
Ms Honan: Obviously, the Department of Finance is looking at this from a completely different point of view from the Department of Health. If they increase excise duty on cigarettes to  such an extent that the number of people smoking is reduced, revenue to the Department of Finance is also reduced. This country spends something in the region of £730 million a year on smoking, which is about one third of what is spent on health.
Last year cigarette smoking increased in this country for the first time in 20 years. It is worrying because smoking damages people's health. Cardiovascular disease, which accounts for a huge number of deaths in this country, can be attributed directly to smoking. Last year figures produced by ASH showed that the number of people who died from smoking was six times greater than the number of people who died from road traffic accidents, AIDS, accidents in the home and other diseases and causes of death. It may be that the Government is more addicted to the revenue it is getting from cigarettes than the smokers are to the cigarettes themselves.
We should discourage people from smoking. Perhaps if we try to increase the cost of cigarettes and the excise duty, it will ultimately reduce the number of people smoking. It would affect the Revenue coffers but this would be greatly compensated for on the health side.
Mr. Daly: Several rates are mentioned here. Cigarettes are dealt with per 1000 while cigars are dealt with by weight. Why are cigars not dealt with by number?
Mr. R. Quinn: Cigars come in different sizes. They are not a standard size while cigarettes tend to be a standard size.
Mr. Daly: Cigarettes are not a standard size. Is the fine cut tobacco for rolling cheaper? It is difficult to determine this because fine cut tobacco for rolling cigarettes is dealt with by the kilogramme.
Mr. R. Quinn: I will answer the first question as I did not have the information to hand earlier. We have tracking  figures between projected and actual income. The forecast for this year on a monthly basis was that by the end of April, tobacco revenue would amount to £134.3 million. It actually amounts to £132.1 million, which is a variation in percentage terms of minus 1.6 per cent. That is neither here nor there and there is no indication that there is any impact on production or consumption.
Mr. Cregan: It might be Lent.
Mr. R. Quinn: The Senator from the observant city of Cork indicates to me that it might be attributed to Lent. There are figures which might be of interest to the House which state that consumption of cigarettes fell by 26 per cent between 1980 and 1988. The fall was due to a combination of factors including public concern about health risks posed by cigarette smoking and the relatively high level of taxation. Between 1989 and 1991, however, consumption grew by 11 per cent. This was helped no doubt by the absence of a duty increase in the 1990 Budget and lowering of the standard rate of VAT during this period. Following successive reductions in 1992 and 1993 of 4.5 and 4 per cent respectively cigarette consumption grew by 3.9 per cent, but with the return of The Labour Party to Government that has now been reversed. I jest.
Mr. Daly: There was a significant fall off in former Deputy Haughey's time when he put everyone off cigarettes.
Mr. R. Quinn: Consumption in 1994, however, was 4.8 per cent below that of 1991. There is a price correlation.
Mr. Cregan: There is a reduction in smoking.
Mr. R. Quinn: There was a reduction in overall VAT rates which would have affected sales. There was also a non-increase in excise duty on cigarettes which is partially related to a desire not to trigger off the consumer price index,  because it is factored into the consumer price index.
Mr. Cregan: Inflation.
Mr. R. Quinn: If the House in the interest of health would like us to take cigarettes out of the basket of commodities that make up the consumer price index we would be very happy to sit down and talk about that, because it is a distortion. If we put a penalty increase on cigarettes it will have a negative effect on the CPI.
Mr. Cregan: It should not have; it is only relevant to certain people.
Mr. R. Quinn: Yes, but that is the way the basket is at the moment.
Ms Honan: Would the Minister consider changing that? The Minister said that one of the considerations is the fact that cigarettes are in the basket of goods that affect the consumer price index. They should be taken out.
Mr. R. Quinn: There are arguments for and against it. This is clearly not the first time this has been raised. One of the constraints when considering a heavy penalty price increase is that it does have an effect on the CPI. The CPI is an average of what people consume and includes alcohol, even though not all people drink.
Senator Daly asked about the different categorisations. The way in which they are presented is in accordance with Community law because this is a common method of taxation. The definitions and the characteristics are common throughout the Community and were originally agreed under directives from Brussels.
Mr. Daly: Is the fine cut tobacco cheaper?
Mr. R. Quinn: I do not know. In the immortal words of President Clinton: “I never inhaled.”
Mr. Cregan: There is a rapid decrease in the number of people smoking. There is no doubt that there are fewer people smoking in Europe generally.
Mr. Wright: It has gone the other way.
Mr. Cregan: The figures explain exactly what is happening. There are fewer and fewer people prepared to accept smoking in particular areas.
Mr. Roche: Proper order.
Mr. Cregan: It is worrying that more and more young people are smoking. However, there is no question that on average smoking is not acceptable, even though I smoke a cigar myself and I enjoy it. The Minister, however, made an important point about the consumer price index. Looking at the annual inflation rate, if only a percentage of our people are smoking it can be argued that tobacco should not be recognised on the consumer index levels because not everyone smokes. It cannot, therefore, be recognised in the same way as food and shoes which, unlike cigarettes, everybody has to have.
We make no apologies for seeking further discussion on this matter. It is false thinking to say that cigarettes should be recognised.
Question put and agreed to.
Question proposed: “That section 111 stand part of the Bill.”
Mr. Wright: Is that related to a licence being given to a racetrack for a Sunday or Monday meeting?
Mr. R. Quinn: I will have to take advice on that, Senator, if you can just bear with me.
Mr. Wright: Point to point, is it?
Mr. R. Quinn: I am told that this section provides for the charging of an excise duty of £200 on a licence for the sale of intoxicating liquor granted under section 65 of the Irish Horseracing Industry Act, 1994. That may answer your question, but I will get the advice in a few minutes. Section 65 of the Irish Horseracing Industry Act provides that the Revenue Commissioners, on application to them by the executive of a racecourse authorised by the Irish Horseracing Authority, may grant to the executive, or a person authorised by the executive, a licence for the sale of intoxicating liquor for consumption at the racecourse or, in due course, a renewal of such licence. Section 110 of the Bill provides for the charge of an excise duty of a flat rate of £200 on these new licences. There is no reference here to anything about Sundays per se.
Mr. Wright: It is the track?
Mr. R. Quinn: It is track racing, yes.
Mr. Burke: A 12-month period?
Mr. Wright: Is it annual?
Mr. R. Quinn: Yes. The estimated total yield will be between £3,000 and £4,000.
Mr. Wright: That is right, yes.
Question put and agreed to.
Section 112 agreed to.
Question proposed: “That section 113 stand part of the Bill.”
Mr. Wright: Does that relate to the idea, with which I totally agree, that we should allow on-course betting? In the last six months there was an experiment at Leopardstown where on-course betting was allowed on the track. Without going into names, one particular company  had an on-track facility there. I welcome that and I would like to see it encouraged. It was an idea that, unfortunately, they decided to do away with at the time, but it was brought back under the Irish Horseracing Authority. It is in the interests of the consumer and the Revenue. As I read that section, it relates to somebody betting on events outside the race meeting itself in the on-course bookie facility. Is that what we are talking about?
Mr. R. Quinn: Not being a racegoer I will refer to the actual note itself, which is quite explicit, rather than trying to summarise this. The section makes a technical amendment to section 89 of the Finance Act, 1994, which provided for an exemption from betting duty on bets placed on course at a horse race meeting relating to events taking place elsewhere. The purpose of the amendment is to restrict the exemption to racecourses authorised by the new Irish Horseracing Authority, which was established by ministerial order on 1 December 1994. It was not possible in the 1994 Finance Act to restrict the exemption to such authorised racecourses, as the Irish Horseracing Authority was not established until after the passing of the 1994 Finance Act. The section also clarifies that the exemption in question does not apply to bets entered into by any means of telecommunications. This section has effect from the passing of this Act.
Mr. Wright: As a racegoer myself, may I ask the Minister to encourage such on-track facilities? The Irish Horseracing Authority has seen the merits of this experiment, which is in the interests of both the track and the consumers. It will ensure further attendance at race meetings, which in turn will yield further revenue to the Department of Finance.
Question put and agreed to.
 SECTION 114.
Question proposed: “That section 114 stand part of the Bill.”
Mr. Roche: I was under the impression that it was necessary for licences to be exhibited, which is the sole impact of this section. The Minister seems to be tidying up an anomaly here. Could the Minister and his colleagues examine the whole issue of gaming licences? The level of bets and the amount of money coming from them is anachronistic because people are effectively breaking the law all the time. Can the Minister give an indication of the impact of this provision and why it is going in at this time?
Mr. R. Quinn: As the Senator has rightly anticipated, this makes a number of technical amendments to section 43 of the 1975 Finance Act which deals with gaming machine licence duty, not the legalisation or the licensing of gaming machines as such. The purpose of the amendments is to make it an offence to have gaming machines available for play in a public place, as defined, without displaying a gaming machine licence as provided for in section 43 of the 1975 Act, and to extend officers' existing powers of entry, inspection and seizure in relation to gaming machines to include such public places. At present it is an offence to make gaming machines available for play without displaying a gaming machine licence only in respect of premises licensed for gaming on foot of a District Court certificate.
The more general question that the Senator referred to is one that would concern a lot of us, but it comes under the remit of the Department of Justice and not that of Finance.
Question put and agreed to.
Acting Chairman: By order of the House I must clear all sections up to 150 by 4 o'clock. I would ask Senators to  bear in mind that a recommendation has been tabled to section 131.
Question proposed: “That section 115 stand part of the Bill.”
Mr. Burke: Does this mean that the people listed here, such as auctioneers and bookmakers, have to have a tax clearance certificate before their licence will be renewed?
Mr. R. Quinn: That was always the position. This provides for a transitional one so that if they have not sorted out their affairs they can still continue to trade while they are getting their affairs sorted out.
Question put and agreed to.
Question proposed: “That section 116 stand part of the Bill.”
Mr. Daly: Will this have any effect on prices?
Mr. R. Quinn: I am told that it will not.
Mr. Daly: It will not increase prices?
Mr. R. Quinn: I am told that it will not have any negative effect on prices.
Question put and agreed to.
Sections 117 to 130, inclusive, agreed to.
Ms Honan: I move recommendation No. 8:
In page 166. before section 131, to insert the following new section:
“131.—As and from 1st July, 1995, the rate of VAT on newspapers and magazines shall be 5 per cent.”.
The rate of VAT on newspapers and magazines is 12.5 per cent, which is the highest rate in the EU. Britain, our nearest neighbour, has zerorated VAT on newspapers. As we are all aware, the newspaper industry is in a vulnerable situation at the moment. It provides a lot of employment and some of our newspapers are literally on their knees. I noticed, on Committee Stage in the Dáil, that the Minister said State aid may be available for a state of the art printing process for the newspaper industry. I noticed the various newspapers are divided as to whether this would be acceptable. The Progressive Democrats would not support State aid to a state of the art printing process. £15.5 million in VAT is collected from newspapers annually and a VAT reduction would make a huge difference to the industry and would greatly improve the fortunes of many newspapers.
I realise imported British newspapers pay VAT, but as a proportion of the total costs of these newspapers, the VAT on the small numbers of papers coming into this country in relation to their total sales has a small effect compared to that of a high rate of 12.5 per cent VAT on Irish newspapers. I ask the Minister to consider reducing the rate of VAT.
Mr. Roche: I support Senator Honan's proposal. Her arguments are so self-evidently sensible that I think it is something we need to address. The whole issue of VAT on newspapers and magazines has been a thorny one. We need to do something. I am sure the Minister, given the present hiatus in the Irish Press, is as concerned as the rest of us are on this matter. I rise simply to record my support for the proposition. It makes sense.
Mr. R. Quinn: I can understand the genuine and positive reasons why this  recommendation or proposed addendum is being put forward and supported but I am not in a position to accept for the following reasons. There would be a lost of revenue on an ongoing basis of the order of £13 million if magazines are excluded. I do not think that is the intent of the recommendation.
Ms Honan: Is that in respect of both?
Mr. R. Quinn: No. For newspapers alone. It is approximately £15 million for both magazines and newspapers combined. The benefits to the newspaper industry in Ireland, which clearly is going through a difficult period, would be negligible in our view. The newspapers would not get the benefit of it. It would simply lower the face price of the newspapers unilaterally across the board. Therefore, it would not confer any price advantage on a British tabloid newspaper as against an Irish newspaper. The reduction in the cover price of a tabloid selling at 25p or 30p would be less, as a percentage, in real terms than it would be for something selling at 85p; but there is no indication to suggest, from all market price theory and commonsense combined, that this would alter significantly the market share of any of the newspapers vis-a-vis the British tabloids, which is part and parcel of the problem.
There are bigger and wider issues. We had a fairly extensive discussion and it became more of a discussion than a debate on Committee Stage in the other House. At that time I offered a view, which was slightly firmed up by some of the newspaper commentary. If people wish, they can go back and look at what I actually said. I said that part of the problem in my estimation, from my experience as Minister for Enterprise and Employment and from some of the information I received there, was the structure of the Irish industry including its internal costs. I was offering a personal opinion which I repeat now. Some of these related to printing among some, but not all, of the newspapers. It is a matter for the industry in the first  instance. If the newspaper industry was prepared and in a position to come to the Government with a proposal that would address those cost issues, given the cultural and political role newspapers have to play in our society as well as the economic role, I felt any Government would look at it. Indeed, the previous Government was prepared to look sympathetically at such a proposal if it had broad industry support — not just because of the total number of jobs involved, although that clearly would be a factor, but because of the wider political and cultural issues.
We have a unique problem in the Republic of Ireland. It is unique to the whole of the EU. In Belgium, as colleagues are aware, which is partially a francophone country, there is no penetration to any extent of French daily newspapers. In multi-lingual societies like Switzerland, one seldom sees penetration of national French daily newspapers. Our difficulties are unique. They will probably be compounded and I am not sure what the answer to it is. I can say in the context of this particular proposal that the abolition of VAT on newspapers is not an answer. We would lose the revenue and I do not think it would have the desired effect. I say this in the full knowledge that as I speak there is a potentially disastrous situation in the Irish Press Group. I hope the talks that are about to resume between management and the workforce will be positive and will resolve the dispute.
Ms Honan: I thank the Minister. We all share his sentiments that the Irish Press dispute be resolved as speedily as possible. The newspapers have lobbied for a VAT reduction because they see a difference in price between British and Irish newspapers. There is quite a substantial difference. It is quite a shock to see how cheap British newspapers are compared to Irish newspapers and the huge penetration of British newspapers into the Irish market that has occurred. The industry itself feels a VAT reduction would be beneficial. I hear what the Minister is saying but they feel  the reduction of VAT to 5 per cent would make a sizeable difference.
Mr. Roche: I see the logic in everything the Minister said. I always wondered at the argument that has been made about VAT. I know the Minister has been concerned about this not only in this Administration but also during the last Administration. Can some thought be given to further encouragement to reducing the cost structures of the Irish national newspapers? The argument has been made, and was fostered by the Minister and his predecessor during the last administration, that there should be some joint pooling of costs, particularly on the printing end. It makes such eminent good sense. I wonder could the Minister's use his good offices' to propel the newspaper proprietors in that direction. It seems there is great validity in the arguments the Minister put forward, notwithstanding the fact that I supported the recommendation. Given the cost of £13 million to the Exchequer of surrendering the VAT, perhaps a more appropriate way might be to plough some element of that into assisting the reduction of cost structures. I rise to encourage the Minister. I know he does not need encouragement because it is an active issue in his mind that we should try, at the highest level in the State, to encourage our newspaper industry to come together and show a little more sense than they have done in the past. They must realise that, in addition to good management, we need good work practices and action on cost structures to save the Irish newspaper industry. The saving of the industry is in management's hands, particularly down on Burgh Quay. I was more than surprised at the attitude of management there but that is a debate for a different day.
Mr. Burke: I share the sentiments expressed by everyone here in relation to the Irish Press. I hope a solution can be found shortly to that dispute. I have to agree with the Minister that reducing  the VAT rate would not be the answer to all of the problems in the newspaper industry. We must remember that with the bringing of local and community radio on stream, they are all pulling out of the one cake. They are all fighting for the same business. By reducing the VAT rate it is reduced for all the competing papers and radio stations. I agree with the Minister that reducing the VAT rate is not the answer to the problem. He must consider competition, although it is healthy.
Mr. R. Quinn: I will respond very quickly to the points raised by Senator Roche. We do have a problem. Frankly, I am not sure what the solution to it is, but the solution can only emerge in part from the industry itself and all sides of that industry. There is both a commercial dimension and, as I said earlier on, a political and cultural dimension to it. There are different ways in which that could be addressed; but unless there is agreement, broadly shared by everybody, as to the way forward, then clearly the Government cannot move. The production costs are part of the problem. The market size, in terms of economies of scale, is a big problem as well. A broadsheet in Britain such as The Independent would have a circulation of around 200,000 to 300,000. It is now in trouble because of the price war that is going on over there. The tabloids — we do not have anything akin to them here except for The Star— have a circulation of 1,000,000 plus, whereas The Irish Press's circulation was something in the order of 50,000 at the last count. The sheer production economies of scale are frightening when you compare those two kinds. The set up costs, the journalists's costs and the printing costs, other than the paper, are similar.
It is a complex area and I want to convey clearly — and it is shared on all sides of this House — that there is no opposition in principle to some form of productive State assistance to the newspaper industry because it is part of the national institution. It is, self-evidently, the fourth estate. I am not sure how we  can provide and deliver assistance in a manner that does not compromise the independence of the newspapers and does not cut across commonsense grounds of commerciality. We would have to see, in the first instance, what the industry itself was going to propose. I have to acknowledge that I do not have direct responsibility in this area, but clearly the Government collectively has. My colleague, the Minister for Enterprise and Employment, has attempted to address that issue by having a forum, chaired by an eminent journalist, to try and tease out from the professionals answers to the very questions I have posed.
Recommendation put and declared lost.
Sections 131 to 134, inclusive, agreed to.
Question proposed: “That section 135 stand part of the Bill.”
Mr. Burke: I mentioned in my Second Stage speech that I hope the Minister will address the reduction of VAT in the clothing industry. I hope that next year, in the budget and in the Finance Bill, the Minister will aspire to reducing it. There are great prospects in the Irish clothing industry. We have the finest designers in the world and we have the finest tweeds and woollens in the world. If the clothing industry in this country was put on a proper footing, with a possible reduction in the VAT rate, and if the proper finances were put into that industry, we would have an industry that could expand into Europe and greatly advance the Exchequer returns for this country.
Question put and agreed to.
Sections 136 to 138, inclusive, agreed to.
 SECTION 139.
Question proposed: “That section 139 stand part of the Bill.”
Mr. Daly: Subsection (b) withdraws exemptions from golf clubs where green fees are being collected. I have never been on a golf course except to use it as a short cut and I have no particular interest in golf courses. There is now quite an amount of involvement by local communities in the provision of extensions to existing golf clubs where the conditions for membership have been changed in order to avail of European Union funding. It seems to be contradictory to grant EU funding to a number of golf courses in order to enhance our tourism product and now find that exemptions are being withdrawn. Many clubs are barely ticking over. They are not in any situation where they could reasonably be expected at this stage to make any major contribution towards taxation. I would not disagree in principle with this move at a later stage. We are endeavouring to develop a product that we have been short of in the market, especially in the tourism market, and some of the green fees coming in are subsidising the provision of services. Golf is no longer an elite sport; a sizeable number of people are now involved in clubs of some shape or form. It seems to be contradictory to be, on one hand, providing EU support and funding to enhance the prospect of getting new facilities provided and, on the other hand, withdrawing the exemptions.
Mr. Calnan: Section 139 (a) deals with measures with regard to the interest on hire purchase. I welcome this because the cost to people paying back hire purchase agreements is high and the charge on hire purchase interest was exorbitant. The reduction of this will help a lot of people involved in business who have to avail of hire purchase.
Mr. Burke: I welcome subsection (a) and, as outlined by Senator Calnan, the reduction in VAT. Subsection (b) withdraws  exemptions from golf courses and I can see what the Minister is getting at in this. It only applies to golf courses that take in over £20,000 annually in green fees. The majority of member-orientated courses would not be taking in £20,000 in green fees. The Minister is hitting at the bigger golf courses which are mainly geared towards green fees.
Mr. R. Quinn: This measure has been introduced in the interest of equity and not as a revenue generating measure because, as Senator Burke has mentioned, there are some large member-owned golf courses, one of which in the southwest has over £1 million in green fees income. That is far and away the exception, but that can be the scale of revenue we are talking about.
I will address the issue Senator Daly referred to. One of the reasons this measure is being brought in is because of a distortion of competition between commercially developed golf courses — and I welcome the development of such facilities as it reinforces the tourism infrastructure of the country — where people have taken out loans, raised capital or put in their own money and every game of golf played on such a course is subject to a VAT charge, and a members only course where the capital development cost has long since been repaid and the fee income from nonmembers is in excess of £20,000, which would suggest an active volume of external participants. In those instances in the interests of equity, because they tend to be located in similar regions, they should be eligible for VAT. If they run a bar, as most golf clubs do, they are paying VAT and excise duties anyway and they have a professional manager.
We had an extended and substantial debate on this matter on Committee Stage in the other House and a suggestion was made as regards the category of golf course to which Senator Daly referred where the community was raising money to develop and enhance the facilities of the golf course and was  using green-fees to fund this. There is no reason that type of golf course could not reconstitute itself. It could register itself as a company for VAT in every sense of the word so that it would have an income attracting a VAT charge but would also have outgoings which would have VAT and it would be able to trade one VAT against the other. That is the way to deal with that problem.
If the club in question has an income from green-fees which is over £20,000 and is likely to start to attract VAT on those fees, it should get good tax advice and reconstitute the operation so that its development is as tax efficient as possible within the context of the law. There is a way of redressing the problem to which Senator Daly referred.
This is an equity measure because there was a distortion between commercially developed golf courses, which we welcome, and others. In some cases State funding has been invested in the development of these golf courses and it does not make sense for that type of investment to be eligible for VAT on all the activities whereas down the road a well established golf course could have an income of over £20,000 per year which tax——
Acting Chairman: As it is now 4 p.m. in accordance with the order of the House, I am putting the question——
Mr. Daly: We had an extended sos which has not been taken into account. We should have another 15 minutes to deal with this.
Acting Chairman: I am dealing with the order agreed by the House which is that at 4 p.m. I am required to put the question, “That the sections of Parts III and IV of the Bill be agreed to.”.
Mr. Manning: If it is in the rules of order, I would be happy to extend this for another ten or 15 minutes.
Acting Chairman: Is it agreed that I will put the question at 4.10 p.m.? Agreed.
Mr. Burke: The cut off point is £20,000 and the club which takes in more than that amount in green-fees is charged VAT. In the last two months of a year a golf course might take in a few hundred pounds more and it might decide not to take in any further green-fees because if would then qualify to pay 12.5 per cent of the £20,000. Could this be introduced in stages or is it a deadline of £20,000?
Mr. R. Quinn: It will not take effect until 1 January next. I suggest that any golf course with income in or around £20,000 should look at the pattern of usage, which would tend to be reasonably constant, and plan for next year accordingly.
Question put and agreed to.
Sections 140 and 141 agreed to.
Question proposed: “That section 142 stand part of the Bill.”
Mr. Roche: I thank the Leader of the House for providing time because this is a section on which Members would like to comment and hear the Minister's views. At a time when we are only in a position to grant social welfare recipients an increase of 2.5 per cent, the lowest increase in 30 years and which will be below the target rate of inflation in real terms, section 142 and the apparent generosity to the banks would require some explanation from the Minister. It struck me and many others that when we are being parsimonious with people who live on limited fixed incomes, we seem to be excessively generous to the banks. I do not believe the banks deserve or require any special generosity in the Finance Bill. I believe they now operating in consort and are in effect an impediment to progress. They extract undue levels of profit and we are supporting them.
Mr. Daly: I support Senator Roche. Originally, there was a furore that the State was providing security services for banks in the trans-shipment of money. Part of the reason for the introduction of that levy was to offset the cost to the State of providing security through the Garda Síochána and the Army for the transfer of money, which should be the responsibility of the banks. It was an effort to find a way in which some allowance could be made to the taxpayer and the Exchequer for the provision of these security services. The State still carries the cost of heavy security for banks in the shipment and trans-shipment of money. At a time when banks are making substantial profits, they are entitled to make a contribution to the Exchequer for the services which the taxpayer provides in the carriage of their funds. I have worked for 32 years in a permanent position, but I would have been as well off if I had gone into the bank on day one and said I would work for nothing for the rest of my life because I have being paying them back since.
Mr. R. Quinn: In deference to the order of the House, I will respond quickly. There is no loss of revenue as a result of this provision.
Mr. Daly: Of course there is.
Mr. R. Quinn: I am addressing the question of the bank levy.
Mr. Daly: That was why it was brought in.
Mr. R. Quinn: It was brought in because under section 84 and a lot of other shelters banks were paying virtually no tax. From 1992 they were allowed to offset the bank levy against corporation tax. To answer Senator Roche's question, there is not loss of revenue. We brought this in as a levy and the banks took offence. We agreed to take off the levy over three phases — it will be phased out over four years and will be zero in the last year — in return  for which they promised to make good the cash flow so that we do not even have a cash flow loss because they will pay up front the £12 million which would otherwise be due. I referred to that on Second Stage.
In addition the banks have undertaken to enter into detailed discussions with the Department of Finance about how they can be more supportive to small and medium sized industries and enterprises in general. We have no reason to doubt their sincerity in that regard. We can always return to the levy and make it an additional one on top of corporation tax if we believe that the banks are not performing or making the necessary contribution. I am prepared to take them on good faith at the outset, but if it does not manifest itself then the Government and the Oireachtas have other options. As regards security, three-quarters of the cost of the security independent of the levy is paid for by the banks.
Mr. Roche: I am pleased the Minister said that, in the event of the banks coming up with some creative ways of dogging their tax liabilities, he will come back to them. I believe the original levy was introduced by a Minister for Finance at the end of a long period when successive Ministers had been defeated in their efforts to bring the banks in. The banks still do not pay anything like their due amount in taxation to the State. They have been the most extraordinarily adroit group of institutions at avoiding their tax liabilities. I know the Minister, privately if not wearing his official hat, would agree with me on that. We are dealing with something which is so bizarre and anomalous that we introduced a levy which we are removing because the banks promised to stop being clever with the tax system.
Mr. R. Quinn: It is purely cosmetic.
Mr. Roche: The Minister mentioned that the banks have agreed a package for small and medium sized industry and  businesses, with which we would all agree. I hope he will use his good offices to try to expedite that matter.
Mr. Daly: Could the Minister give some indication of the expenditure in the Department of Justice Estimate and the Department of Defence Estimate for the provision of security for the banks by Army and Garda Síochána personnel? Could the Minister give us a round figure for each Department?
Mr. R. Quinn: It cost us only £4 million. They paid £2 million this year and it will be £3 million next year.
Mr. Daly: For each Department?
Mr. R. Quinn: No, the total cost of the security is £4 million. They paid £2 million this year and they have agreed to pay £3 million next year, which is 75 per cent of the cost.
Mr. Daly: They are still not paying the full cost of the security?
Mr. R. Quinn: No, they are not.
Question put and agreed to.
Acting Chairman (Mr. Maloney): In accordance with the order of the House, I am now putting the question: “That the sections of Part IV of the Bill not disposed of are hereby agreed to”.
Question declared carried.
Acting Chairman: In accordance with the order of the House, we now move to section 151.
Sections 151 to 165, inclusive, agreed to.
Question proposed: “That section 166 stand part of the Bill.”
Mr. Daly: Could the Minister give further details on this section in relation to heritage properties?
Mr. R. Quinn: A number of measures were introduced in relation to addressing issues of heritage and taxation. This particular section ensures that shares in a family controlled private company are exempt from capital acquisitions tax to the extent that their value is derived in part or in whole from the heritage property exempted from tax by virtue of section 55 of the Principal Act, or section 39 of the Finance Act. If one receives shares in a company by way of capital acquisitions and one is liable to capital acquisitions tax on the shares, the portion of the value of the shares which can be directly attributed to the heritage component of the overall enterprise is exempt. In other words, if one inherited a stately home which was being run as a B&B, the value which could be ascribed to the B&B derived from the stately home component of it would be exempt from the capital acquisitions tax.
Question put and agreed to.
Question proposed: “That section 167 stand part of the Bill.”
Mr. Roche: I am not sure what precisely the Minister is doing in this section, although I looked at the explanatory memorandum. Could the Minister explain this section, which deals with the deposit interest retention taxation? It is an area which has excited a fair amount of attention over the years.
Mr. R. Quinn: Chapter IV of Part I of the Finance Act, 1986, provided for a retention tax on interest paid or credited by financial institutions. Financial institutions are obliged to deduct the tax, known as DIRT, at the standard rate when paying or crediting interest on relevant deposits. A relevant deposit  includes most deposits with the main financial institutions but excludes any deposit in the beneficial ownership of a person not ordinarily resident in the State. Interest on such deposits was, therefore, paid on a gross basis. In other words, there was no DIRT deducted from non-resident accounts.
The 1994 Finance Act introduced a new definition of ordinary residence. The concept of ordinary residence is concerned with a person's habitual pattern of life. Prior to the 1994 change, ordinary residence could in certain circumstances commence on the date of arrival in the State and cease on the date of departure. However, since the 1994 Act ordinary residence is only acquired following three consecutive years of residence in the State. Likewise, it is only shed following three consecutive years of non-residence.
This has made the practical application of the law in relation to DIRT in this area somewhat anomalous. For instance, persons coming to live in the State can arrive here and be resident here for up to three years before becoming ordinarily resident and thus liable to DIRT. Likewise, Irish individuals going to live abroad cannot open a DIRT free account until they have lost their ordinarily resident status by being abroad for three years. The section provides that in future non-residence instead of non ordinary residence will be the criterion used for exemption for DIRT. It is a harmonisation of residential tax criteria from other tax legislation.
Mr. Roche: Of the residential element?
Mr. R. Quinn: Yes.
Mr. Roche: Could the Minister give us some indication of the figures involved?
Mr. R. Quinn: I do not have that information to hand but if I can get it I will communicate with the Senator in that regard.
 Question put and agreed to.
Sections 168 and 169 agreed to.
Question proposed: “That section 170 stand part of the Bill.”
Mr. Daly: As I see it, this is a new provision to provide some relief for people who work abroad for part of the year and who reside here for the rest of the year. Does the person need to have a residence here? Could the Minister give us more details of what is proposed in this section?
Mr. Roche: Sailors have been making representations to me about their taxation affairs. Unfortunately, since the demise of Irish Shipping there is not a huge number of Irish people employed in that area, but there is still a significant number employed in firms such as Arklow Shipping, which is expanding its fleet. I have received representations from the unions dealing with that. Will this in any way assist or alleviate the tax burden on sailors? I think that there would be a general sympathy for them and for anything which the Minister could do in that regard.
Mr. R. Quinn: In reply to Senator Roche, I suspect not, but this will become clearer when I elaborate on my speaking note. Senator Daly is correct that it is designed to further encourage, and penalise less, those people who work periodically away from Ireland. Section 154 of the 1994 Finance Act introduced a new relief for persons who are resident in the State and work outside the State for significant periods. It applies to persons who work abroad for at least 90 days in a tax year in continuous periods of at least 14 days at a time. That might exclude most sailors.
Mr. Roche: What about deep sea sailors?
Mr. R. Quinn: It would include deep sea sailors in normal circumstances. The relief operates on a proportionate basis related to the amount of time spent abroad in a year. Thus, broadly speaking, if a person works abroad for six months, the relief is equivalent to half the person's income in that year.
This section amends section 154, which I have just described, from the date of its commencement in two respects. First, up to now the first 15 days spent abroad in a year did not qualify for relief. It is considered that this is somewhat harsh in view of the other qualifying requirements of a minimum of 14 days absence at a time and an overall absence of 90 days in the year. Accordingly, the exclusion of the first 15 days is now being removed.
Second, the legislation is being clarified to ensure that those qualifying under the provision get the full value of the relief. As it stands, there is some doubt as to whether the relief should be based on total earnings for the year or merely on a proportion of the foreign earnings only. The section makes it clear that relief is to based on the total earnings for the year, as was always intended. Thus, for instance, an employee of a semi-State body seconded to carry out an assignment abroad is entitled to have the relief based on his or her earnings from the semi-State body plus the foreign earnings for that particular year. Likewise, in the case of a retired person similarly seconded to work abroad, the basis on which the deduction is to be calculated is to include that person's pension income for the year. The penalty of the first 15 days being discounted has been removed and, secondly, all income is being treated for the purposes of the tax exemption.
Mr. Roche: With regard to deep sea sailors, coming from a long maritime tradition, as every male in my family was deep sea at some stage bar myself——
Mr. R. Quinn: I am glad to see that the Senator has maintained it.
Mr. Wright: Not yet.
Mr. Roche: Some people have suggested that I should take up the tradition and go all to sea. I have had queries from a trade union representing Irish seamen. It would be helpful if the matter were clarified. Representations have been made to the Department. I am sure the Minister, who has a few deep seamen in his own constituency, will do that. I would be grateful for something in writing which I could pass on to these seamen.
Mr. R. Quinn: Before or after polling day?
Mr. Roche: Many of them are already deep sea.
Mr. R. Quinn: I genuinely wish the Senator the best in the by-election. It is a lonely and difficult battle.
Mr. Manning: Within reason.
Mr. R. Quinn: Anybody engaged in any kind of activity and who is normally resident in this country and deemed to be a taxable citizen of this State — that is, a person who would be taxed by the Revenue authorities — meets these conditions irrespective of the kind of work in which they are involved. If the Senator wants this in writing, I will send it to him.
Mr. Roche: Thank you.
Question put and agreed to.
Question proposed: “That section 171 stand part of the Bill.”
Mr. Roche: We do not have any queries on sections 171 to 175, inclusive. The Minister has given very good explanations. The explanatory memorandum  is very comprehensive. Acting Chairman, I know you have to formally put the sections but we will not impede you.
Question put and agreed to.
Sections 172 to 175, inclusive, agreed to.
Question proposed: “That section 176 stand part of the Bill.”
Mr. Daly: The announcement of tax relief on donations to national collections of important heritage items is a very welcome inclusion and I wish to put on record the appreciation of many people for this practical and sensible idea and I compliment the Minister on it.
The section refers to the appointment of a committee. Could the Minister indicate the type of committee he envisages? Does he envisage the involvement of the Heritage Council or does he propose to establish a new committee?
Will tax relief apply to important places which would not be national heritage centres? The Hunt collection is attached to the University of Limerick. It is privately owned and has been donated to the State, which is providing a new Hunt Museum in Limerick city. The Minister will be aware that the Commissioners of Public Works are involved in the provision of a new facility in Limerick. Most of the organisers of valuable private collections are finding it extremely difficult to provide the security and resources needed to enable them to be kept in regional areas. I make a special plea to the Minister to look carefully at how it would be possible to build up collections in regional cities, particularly Limerick, because of the very important Hunt collection. Will this provision apply to an institution like the Hunt Museum and will private substantial collectors, as well as collectors like the National Gallery of Ireland and the National Museum of Ireland, be assisted?
Mr. Roche: The explanatory memorandum uses an intriguing set of words. It refers to “donations to national collections of important heritage items”. I take it that this does not include my party or the Minister's.
Mr. R. Quinn: The way the Senator's party is going, it will be a heritage item.
Mr. Roche: An official in the Department of Finance had tongue in cheek when drafting that section of the memorandum.
Mr. R. Quinn: Never.
Mr. Burke: I welcome the section. Does it apply to private collectors as well as national collectors? I have no doubt that it will add greatly to the national collection. When does the Minister hope to have the committee established?
Mr. R. Quinn: With regard to the composition of the committee, I refer Senators to page 198 of the Bill, which defines the selection committee. It includes the chairperson of the Heritage Council, the Director of the Arts Council and so on. The committee will consist of executives of the major cultural institutions.
Senator Daly asked whether the section could apply to the Hunt Museum. Page 197 states that it can relate to the schedule of various national bodies “and any other such body being a body owned or funded wholly or mainly by the State or any public or local authority as may be approved with the consent of the Minister for Finance and the Minister for Arts, Culture and the Gaeltacht.” Therefore, a body like the Hunt Museum, which is partially funded, could qualify.
This provision was suggested to me by a member of the public to bring heritage items into national display in a cost effective way which could be offset against current tax liabilities or arrears as set out in the section. It is an experimental  provision. We are not sure how it will work. For that reason we have confined it at national level to these bodies or any other such bodies. If somebody said they particularly wanted an artefact to go to the Hunt Museum, they would make the bequest and offer this artefact on the understanding that it would go to that museum for reasons of personal sentiment or because of the relevance of the artefact, such as that it had some connection with the Limerick region.
In terms of costs, the cap which we have put on this is a maximum of £0.5 million. We do not know how it may or may not work. The minimum threshold is £75,000. This is so that people with outstanding arrears with the Revenue Commissioners will not offer items which they value highly but would not be of national or local significance in real terms. It is an innovative proposal and has been carefully designed by the officials of the Department of Finance in consultation with the Department of Arts, Culture and the Gaeltacht. We will have to see how it functions.
Mr. Daly: Will a new committee be set up?
Mr. R. Quinn: I refer the Senator to the definition of the committee on page 198, which states:
“selection committee” means a committee consisting of the Chairperson of the Heritage Council, the Director of the Arts Council, the Director of the National Archives, the Director of the National Gallery of Ireland, the Director of the National Library of Ireland, the Director of the National Museum of Ireland and the Director of the Irish Museum of Modern Art...
Mr. Roche: I thank the Minister for his explanation. It is a valuable and genuinely worthwhile addition to the tax code. Perhaps some of the Minister's officials might take note of the fact that in Carlow Garda station — Senator  Manning may be familiar with the lock ups there from time to time——
Mr. Manning: I have not been in Carlow Garda Station for a while.
Mr. Roche: ——there is a very important heritage artefact. This is the Geraldine tithe table, which had been in a castle in Kildare but which originally belonged to this House. There have been efforts in the past to offset this against some tax liabilities.
Mr. R. Quinn: It now qualifies.
Mr. Roche: I think it would qualify and it would be a good day's work if it could be taken out of the clink where it has been for a long time. I will write to the Minister to give him the details. I gave them to one of his predecessors. It illustrates how useful this provision could be. I compliment the Minister on it.
Mr. Burke: Can the reward for this be offset against anybody's tax liability or only that of the person who owns the artefact?
Mr. R. Quinn: No, only that of the donor.
Question put and agreed to.
Sections 177 to 179, inclusive, agreed to.
Question proposed: “That the First Schedule be the First Schedule to the Bill.”
Mr. Wright: I do not want to bore those in the horticultural industry but the point I want to raise is important. I asked the Minister last night how and when he intended this to be in operation. This is seen as a progressive step and the timing is right. The industry is ready for this investment. From my first correspondence with the Minister on  this subject after he took up this post, he held out hope for these proposals. It is important to send a message that the Government is supporting an indigenous, labour intensive industry. I hope it takes up the incentives the Minister makes available and I hope they are available soon and that it is made easy to invest in the industry.
Mr. R. Quinn: I acknowledge the Senator's role in this matter; on Committee Stage in the other House Deputy Cowen also made detailed proposals. I hope the guidelines are ready as soon as possible. As the Senator will be aware, the section in the Bill refers to the role of the Department of Agriculture, Food and Forestry, which will be the leader in setting the criteria because that is not the role or function of the Department of Finance. I suggest the Senator brings pressure on the other Department on this matter.
From my point of view as a customer, there seems enormous potential for import substitution of certain vegetables which could be developed by Irish horticulture but it has been badly under-capitalised for many years. I hope the provisions we have made are effective.
Mr. Burke: I asked yesterday about the capital write-off for holiday cottages which would qualify under the seaside resorts scheme. I believe these cottages are not entitled to such write off; they qualify for rent allowance write-off but capital expenditure cannot be so allowed under a provision in the Finance Act, 1992.
Mr. Wright: Section 35 provides pilot schemes for enterprise zones. I hope they are successful and I have recommended them for some time. The Minister should now consider a recommendation made in the Culliton report. Dublin is the only capital city whose airport does not have an enterprise zone around it. There were reasons that has not happened up to now but they no longer exist. In the interests of job creation such a zone should be set up. I  will send the Minister a report containing ideas for such a zone and I hope, if the pilot schemes prove successful, he will include Dublin Airport this time next year.
Mr. R. Quinn: Senator Burke asked about the capital write-off. Section 25 of the Finance Act, 1992, closed off a tax shelter for holiday cottages, which I think is the matter to which the Senator referred. Prior to that provision an investor in a holiday cottage could offset the expenditure incurred in the construction of the cottage against all his or her income, not just the rental income, as is the case in section 23 investment.
This offset was done through capital allowances on the holiday cottages. After ten years the investor would have unrestricted use of the holiday cottage and almost half the construction cost of the cottage would have then been paid for by the Exchequer — it was a substantial loophole — alternatively, he could sell the cottage and pocket any gains.
Due to the over-generous nature of the relief — which was described at the time by a promoter as the last great tax break — and because of the potential Exchequer cost involved, it was decided to curtail the scope of the relief by ring fencing the capital allowances to the income arising from the holiday cottage renting activity. That is why it was done. We are restricting the amount of capital write-off over a phased period.
Question agreed to.
Acting Chairman: As recommendation No. 4 was defeated recommendation No. 9 cannot be moved.
Recommendation No. 9 not moved.
Second Schedule agreed to.
 THIRD SCHEDULE.
Acting Chairman: Recommendations Nos. 10, 11 and 12 are related and may be discussed together.
Mr. Roche: I move recommendation No. 10:
In page 207, Part I, between lines 46 and 47, to insert:
The administrative area of Kilrush Urban District Council including all lands occupied by Shannon Maritime Co. Ltd.
The town of Lisdoonvarna.
The town of Killaloe.”.
I will be speaking to recommendation No. 12, which will be no surprise because it concerns County Wicklow. Within two days of the budget and long before the by-election in Wicklow I said on the Adjournment in this House that the most creative element in the budget was the new seaside resorts scheme, which has tremendous capacity to rejuvenate traditional seaside resorts like Bray, Greystones and many of those the Minister has included, which have become rundown and seedy and have lost their zest.
I realise the Minister would have difficulties with a town the size of Bray, as I said on the Adjournment debate, and I acknowledge two modest tax incentives given to Bray in the form of urban designation. However, in the most recent scheme almost all the land belongs to the State transport company, CIÉ, so it has little impact on the people. The scheme is welcome and I do not knock it, I simply make the point.
When the resort scheme was introduced in the budget I was one of the first to welcome it, although I asked for Arklow, Bray and Greystones to be included. The scheme was long overdue. When introducing the measure the Minister stressed this was a pilot scheme  focused on eight seaside resorts, six on the west coast and two on the south and south-east coast. Since then it has been extended and I acknowledge the Minister's generosity in extending it to Arklow; on 22 February in the House I specifically asked for that. I was supported vigorously——
Mr. Manning: By Councillor Honan?
Mr. Roche: No, by Senator Ross, the councillor was not and still is not here.
Mr. Burke: He is in waiting.
Mr. Roche: I now make the case for Bray. There is an interest in reviving the seafront in the town; a group of business people have put together a scheme which would produce many jobs and ultimately provide a great deal of funds for the Exchequer. Adventurous propositions are contained in the proposal; for instance, the renovation of the chair lift on Bray Head, the rejuvenation of two of the hotels and other specific innovations.
I suggest that the Minister include the seaside area of Bray in the scheme; if he did so he would receive specific proposals. A catalyst is needed. The Minister knows the town — perhaps not as well as I do, but he is aware of the tradition in Bray. It was the original seaside resort in the country but it has run down. There has been a lack of capital investment and consequent deterioration and degeneration. The seafront contains many areas of architectural merit and unique features which are worth preserving.
If the scheme focused on that part of the town it would be of great benefit. The officials will say there are already two designated urban areas in the town but they and the Minister know that only applies to a specific geographic location. I want the whole seafront area of Bray to be included as it could be regenerated.
I would also make a specific case for Greystones. At present there are two separate propositions in the pipeline to  build a substantial marina development in Greystones. One has run into serious difficulties with the Minister for the Marine who, understandably, wants to charge a licence fee for the use of the foreshore. This is putting the economics of this planned 450 berth marina into question. If the benefits of this scheme were to apply it would have a real effect.
When the scheme was introduced I welcomed it as innovative and long overdue. I was among the first to look for extensions of the scheme; it is a pity Bray has been excluded from the extensions. The scheme has been extended to 17 seaside resorts in all and in the circumstances a positive case cannot be made for discriminating against Bray.
I propose that the Minister introduce on Report Stage further flexibility allowing him, in the next 12 months, to extend the scheme by ministerial order to towns that come to him with real investment proposals. I know that if a scheme is made universally available its value is dissipated. I suggest the Minister puts it up to the people of the areas, that they would come to him with specific proposals for investment and he could give himself the flexibility to add any town or area that is innovative enough.
The Minister could not argue against the need for rejuvenation of the seafront in Bray or the consequent job potential. Nobody could argue that the town needs a fillip. I know it is difficult for a Minister to take on board an Opposition proposal. I do not wish to simply score points and my credentials on this matter go back before the tragedy that caused the by-election in County Wicklow. I suggest the Minister examine the matter. If the propositions I make are not acceptable because they are too wide or open ended, could the Minister come back on Report Stage——
Mr. Burke: The Senator might be able to raise it in the Dáil.
Mr. Roche: I am making a genuine, meritorious case. I would listen to the  Senator if he was putting a meritorious case.
Mr. Burke: We are listening.
Mr. Roche: I do not want to put the Minister on the spot. He has introduced a worthwhile scheme and has given a great deal of life to seaside towns as he intended. There are investment proposals in the pipeline for Bray and if this catalyst was available the Minister would be doing a great amount to rejuvenate a town, which had a fine seaside tradition, and to stimulate a large amount of related employment.
I know there is a lot of pressure on the Minister, I am aware this is the llth hour 59th minute and I know there are political reasons it might not be clever to respond to my entreaties. The Minister has introduced a good scheme. There are investment proposals which have been prepared. The Bray and District Chamber of Commerce has written to the Minister. There is huge potential there which could be realised.
I ask the Minister to introduce some flexibility. It will not cost anything because if the investment does not come on stream there will be no loss to the Exchequer and it does comes on stream there would be a huge gain to the Exchequer. The Minister has introduced a good scheme. He is aware that Bray could do with the revival this scheme could bring and I ask him to consider favourably my proposal.
Mr. Kelleher: My recommendation is humble — I feel like Oliver Twist asking for a bowl of porridge. I want the Minister to include two townlands in the Clonakilty scheme. There is a planning application lodged at present for a hotel and leisure facility and these two townlands are adjacent to the area recommended for designation. Having spoken to the urban district council, the county engineers and my party colleague, Deputy Joe Walsh, I tabled this recommendation. It would have a great deal to offer to Clonakilty, particularly as a  planning application is already in process for a hotel and leisure facility. The two townlands concerned are Ballyduvane and Ahamilla. I would greatly appreciate if the Minister could include them.
Mr. Daly: I wish to record my appreciation to the Minister for including Kilkee and Lahinch in the scheme. There is nothing charitable about this arrangement. Many years ago isolated country areas were designated for special treatment for agricultural and industrial purposes. The western counties were designated for special treatment to attract industry and business and to help develop and keep together farming communities. That is succeeding, albeit at a slow pace.
The Minister will be aware that small western villages and towns are in serious decline. The prospect of stabilising the population in them is almost unreal. Post offices and Garda stations are closing and the best of the younger population are leaving. For this reason I suggested on Second Stage that it would be more advantageous and beneficial if there was a network of these designated towns in each of the important tourism counties.
I draw attention in my recommendation to the town of Kilrush which is already designated a heritage town by Bord Fáilte and Shannon Development; Killaloe which is an historic and important town on the Shannon with the prospect for investment and development in the context of the inland waterways which have already been fairly successful, and Lisdoonvarna, a more traditional resort where one of our former colleagues, Jim White, has made an enormous contribution towards its development. Jim White has kept Lisdoonvarna from decaying into a derelict town through hard work and heavy investment.
If these schemes are to be successful it is important they are dealt with on a regional or county basis. We do not want to see a town, say Lahinch, developing at the expense of Lisdoonvarna  or Kilkee. Overall that would be detrimental to the Minister's intention in this section.
I mentioned Kilrush Urban District Council in the recommendation because Shannon Maritime, a subsidiary of SFADCo, built one of the most modern marinas in the country at Kilrush. There was some criticism of the cost but a few million pounds was small compared to the cost of the development of the Howth marina in County Dublin: if the money spent on the marina in Kilrush was spent on the Howth marina it would not even be noticed. Given that it was built in a small, isolated, rural area, quite a song and dance was made about whether it was a good investment, especially by some people who were Ministers when the plans were made but are Ministers no longer. They thought it opportune to criticise investments although they were there when the decision was made to fund such projects.
Mr. R. Quinn: He was present for a lot of things which he subsequently criticised.
Mr. Daly: Yes——
Mr. Manning: I thought he was the Senator's new pal.
Mr. Daly: ——including the interpretative centre at Mullaghmore which he also condemned as a bad project in which to invest. He sat at that table when the decision was made about it.
Mr. R. Quinn: Is the Senator accusing him of inconsistency?
Mr. Daly: I do not wish to be sidetracked by that individual because we wish to conclude this discussion. I do not want my blood pressure to rise, particularly when we have had a reasonably successful day. His contributions, like those of many others, baffle me at times, but it is high-handed when someone who sat at the table and made the decision to fund the Mullaghmore project  attends a committee meeting of this House and criticises that decision. Unfortunately, many members of the committee were not aware of that. I sat at the Cabinet table when the decision was made to fund Mullaghmore and Luggala.
Acting Chairman: We are discussing recommendation No. 10.
Mr. Daly: The provision of maritime leisure facilities is important. I do not know a lot about fish, but I have detailed knowledge of the potential of estuaries, such as the lower Shannon Estuary. We endeavoured to build a marina there which would link Ballylongford and other places on the estuary and create a new tourism attraction by providing deep sea fishing, boating, yachting and leisure related activities. This is a hugely expanding international market, but we are only at the tip of the iceberg as regards available revenue from international tourists.
We should invest in the necessary amenities in order to exploit the full potential of the Shannon Estuary. Unfortunately, we are not prepared to do that because, as some people have said, the tidal nature of the lower Shannon Estuary is not conducive to developing maritime leisure and recreational facilities. However, the Germans have made huge investments in resorts on the North Sea, especially those which were derelict due to the decline of the German shipping industry, and provided leisure and amenity facilities. I do not want to labour this point because we will have an opportunity to discuss it when the harbour Bill comes before us.
There is a great absence of maritime leisure and recreational facilities in Ireland. We are not availing of international business in this regard and we need designated areas in order to provide facilities in marinas and on land adjacent to them. I was anxious to designate seven or eight acres adjacent to the local marina in Kilrush because the harbours were run down as a result of the  change in the pattern of shipping and trade over the past 40, 50 or 100 years. The harbour in Kilrush, which at one stage could facilitate over 600 ships, and the buildings which were used for grain storage are almost derelict. Many of these could be revitalised and rejuvenated in the same way as Dublin docks. There are many such areas in towns in coastal areas, including Youghal. Having taken this initiative, perhaps the Minister might follow it up along the lines suggested.
Mr. Wright: I am not looking for Malahide to be given status but I commend the Minister for this initiative which I am sure will be successful. For the past six months Balbriggan Town Commissioners — the Minister dealt with this in the Dáil — Balbriggan Chamber of Commerce and Fingal County Council have researched and put together a positive proposal for this area along the coastline which needs help. I ask the Minister to seriously consider this proposal if he decides to include other parts of the coastline in this scheme.
Mr. Burke: I welcome the initiative taken by the Minister for Finance and the Minister for Tourism and Trade, Deputy Kenny. Unfortunately, I did not get an opportunity to speak on this section during the Second Stage debate. I welcome these provisions which will play a major part in the development of tourism throughout the country. I understand the case being made by Senators on the opposite side of the House, but we could make that case for all our constituencies. The Government has done a great job because it has included one or two seaside resorts in each coastal county. Other areas can be considered next year.
Senator Wright made the case for Balbriggan. However, there is only one county which has shown evidence of decline and yesterday I said that a pilot scheme should be introduced for County Mayo.
Mr. R. Quinn: The Senator should talk to Commissioner Flynn.
Mr. Kelleher: Deputy Ring will look after the Senator.
Mr. Burke: County Mayo was divided into two constituencies, East Mayo and West Mayo, but now there is only one, which means we have lost a Deputy. County Mayo is declining and there is a case to be made for approving a pilot scheme for the entire county similar to the urban renewal scheme.
Mr. R. Quinn: A number of points were made, but I will give the genesis of this scheme as I did on Second Stage. The proposal originated when Deputy McCreevy was Minister for Tourism and Trade, inspired by Bord Fáilte and its current chairman. Irrespective of its origin, its merits seem to be self-evident. It focused on declining traditional seaside resorts which had no countervailing economic activities to sustain, support or expand them. They were selected on a pilot basis and the original list was larger than the numbers which currently appeared. It was felt that if it was extended to too many locations in the same region it would have a diluting effect and that there would be no additional benefit. It would mean that the activity would take place in those areas, but with a tax break like a windfall gain which was not warranted by any market force and which did not produce any additional activity.
The boundaries in relation to Clonakilty and other towns and areas were identified by the Department of the Environment and the Department of Finance in consultation with the local authorities, county councils and, in the case of Clonakilty, Clonakilty Urban District Council. They would have known about the proposed hotel development and they may have taken the view this would be windfall gain. This application was already submitted. As a hotel, it will qualify for a 15 per cent capital allowance in terms of writeoff value over the first six years and 100  per cent over seven years, which is a generous offset. The officials in the local authority, in consultation with the Department of the Environment, gave us the maps for all the areas, including Clonakilty.
If a new favourable regime came in when someone had planning permission in place and was proceeding with a project whose boundary stopped at the foot of their drive, they would want to get it extended, although they would not need it economically. They have done their sums and they have come to the conclusion that this is a viable project in the context of the existing tax regime. No one would argue that we should give a free gift to those who do not need it economically. This scheme is designed specifically to go to those areas that are declining and that do not have the countervailing support of new developments.
With regard to Senator Roche's eloquent advocacy of Bray and Greystones, Bray is serviced by the DART, and as the Senator clearly signalled to the country last Monday, Greystones will also have access to the DART. In addition, both are serviced by the N11, which is probably one of the best stretches or road in the country and the access into the Bray/Greystones part of this road — the new flyover — is among the best. In addition, Bray has already got urban designated status and the hotels along the front of the promenade in Bray will qualify for the very generous capital allowances that are already available.
As I am aware that Senator Roche believes in the free market and the spirit of entrepreneurship, I would not like to choke that free entrepreneurial spirit with too much State aid for fear that he might be accused of being some kind of Albanian Stalinist. What is available at present is more than enough to take out any residual risk in any of the projects. In addition. Bray and Greystones are part of the Greater Dublin urban system in daily terms and in terms of suburbanisation and access. The support in  population terms for retail and other activities is already there. The same could be said with less force for Balbriggan. The by-pass when it becomes operative will have a dramatic affect on the quality of life in the town but with less force because the transport infrastructure is not the same.
The Bill will have to be signed by the President by 8 June 1995 in order to comply with constitutional and legislative provisions, so I am not in a position to acquiesce to the requests for extensions and I have given reasonable explanations as to why. It is a pilot scheme and I hope it works. It will do so unevenly, because ultimately it now depends on the level of risk taking in the various towns, the quality of the product that is put in place and the way it is managed. It also depends on the quality of the partnership between the local authorities and local business interests, which is a very uneven commodity. It is one of the areas where local authorities and local representatives on local authorities can ensure that local administrative infrastructures are business and enterprise friendly rather than bureaucratic and obstructive. This must be worked at. It is not just the institutional systems that must be worked at but, given the nature of our society, personal relationships. Public representatives from all sides of the spectrum can play a very creative role in this area.
I am not in a position to extend the scheme any further. There are other support systems in place, some stronger than others. I recognise the points that have been made and at the end of two to three years we will review it to see if it needs to be extended. The precedent exists from the urban designated status scheme, which worked and was subsequently extended to other areas.
Mr. Kelleher: I put down the recommendation because the planning application was lodged recently. I do not know very much about the application, but it was probably lodged in the hope that it would be included in this scheme. My concern is that it may not now go  ahead. It is in respect of two townlands that are adjacent to the area already recommended for the tax incentives. This could jeopardise the project and it could move elsewhere, perhaps to a town which has been designated. I ask the Minister to take action with regard to these townlands to ensure that it remains in Clonakility. The planning application is in respect of a project in Clonakility and if it can remain there it would be greatly appreciated.
Mr. Roche: The Minister is wrong in his judgement about Bray; we will have to differ on this matter. While all the infrastructures are in place, the nature of the town has been changing and an industry is dying. The town is becoming a suburb of Dublin, but there was an industry and a degree of enterprise within the town which could be rejuvenated if the scheme was to be applied even to a portion of the town. This is why I have delineated a specific portion of the town that has always been identified with the tradition of the seaside resorts. I accept that two urban designations have been made, one of which has been very successful, with 100 per cent take up. The other will be equally successful.
This is a pilot scheme and there are three years to run. When the scheme was in its inception, I lobbied other Ministers in the previous Administration and was anxious that the case of Bray be considered, because I knew the official response to Bray — it is too close to Dublin. We are struggling for our life in a town that had a great life in the tradition of the sea side resort, and we are struggling to keep an industry alive that has declined. There were 1,500 to 1,600 jobs in the 1940s and the 1950s, but they have all disappeared. They were the best kind of jobs because they were indigenous.
We are not talking about people who want to get a windfall profit. We are talking about a group of entrepreneurs and a group of people who have come together and who are prepared to fund  things which on the surface would not be tremendous profit centres. For example, recently a group of them got together and put the sea side train on the sea front in Bray. It will not produce any kind of profit.
Is there a possibility that the Minster will consider Bray in next year's Finance Bill? If people come forward with realistic proposals, I only ask that he give them a hearing. There has never been the enterprise that exists at present, nor has there ever been a group of business people who want to lift the seafront above the slots, above what has become tacky and above its present situation. The enterprise of this group of people could be otherwise dissipated.
As the Minister remarked, capital will flow to wherever it gets the best return. Courtown and Arklow will give a better return than Bray for the kind of capital structures that are being put in place. I am not just referring to hotels but to specific facilities — for example, a chairlift, a planetarium or reviving that appalling monstrosity, the aquarium, which is effectively falling asunder on the main strip of the seafront. I am speaking of a group of business people who are willing to come together and put up money, not in the usual pubs or slots or whatever it is that gets a quick return, but to put it into something more thoughtful. I accept that the Minster's time has run out on this matter at present, but if they put together a costed proposal to him between now and next year's Finance Bill, will he listen to them? That is all I ask.
Mr. R. Quinn: I hear what the Senator is saying and of course I am prepared to listen to any reasonable proposal that comes from any part of the country.
Recommendation put and declared lost.
An Leas-Chathaoirleach: Recommendation No. 11 has already been discussed with recommendation No. 10.
Mr. Kelleher: I move recommendation No. 11:
In page 208, Part II, Article 3, line 4, after “(Rural)” where it last occurs to add “Ballyduvane and Ahamilla”.
Recommendation put and declared lost.
An Leas-Chathaoirleach: Recommendation No. 12 has already been discussed with recommendation No. 10.
Mr. Roche: I move recommendation No. 12:
In page 212, Part XII, after line 35, to add:
That part of the administrative area and the Urban District Council of Bray bounded to the North by the Dargle River, by the east side of Bray Main Street and to the south by Bray Head.
The administrative area of Greystones Town Commission”.
Recommendation put and declared lost.
Third Schedule agreed to.
Fourth Schedule agreed to.
Fifth Schedule agreed to.
Sixth Schedule agreed to.
Seventh Schedule agreed to.
Title agreed to.
Bill reported without recommendation and received for final consideration.
Question proposed: “That the Bill be returned to the Dáil.”
Minister for Finance (Mr. R. Quinn): I express my appreciation to the  Members of the House for the courteous and constructive manner in which they dealt with the Bill. I also express my appreciation to my colleagues on all sides in the other House who dealt with the largest Finance Bill in recent times. In its final form it contained 178 sections and Committee Stage in the other House was particularly onerous and intense. I pay tribute to the constructive debate which took place and to which I feel I was able to respond in substantial measure.
I would not have been in a position to respond to the debate at all without the enormous back up assistance provided by my colleagues in the Revenue Commissioners and the Department of Finance. In this my first Finance Bill, I express my considerable appreciation to them for their wonderful support and hard work which made the passage of this legislation possible.
Mr. Wright: This side of the House supports and welcomes many of the initiatives in the Bill. We wish the Minister well and hope that many of the innovative tax initiatives in various sectors of the business world will be successful. As we mentioned on Second Stage, we hope the Minister will continue the work done over the last eight years by his predecessors in relation to bringing the country's finances under control. We wish him well.
Mr. Burke: I concur with the sentiments expressed. I congratulate the Minister and thank him for his courtesy. He has a magnificent knowledge of the Bill, which is a most detailed document, and his officials provided wonderful back up assistance. However, the Minister dealt in great detail with many of its sections. This is his first Finance Bill and he displayed tremendous courage and commitment in the House. I have no doubt that he will be a marvellous Minister for Finance.
Mr. Calnan: I too compliment the Minister on the Finance Bill. I am particularly pleased to be a Member of  the Labour Party, given that Deputy Quinn is the first Labour Party Minister for Finance in the history of the State. The party is very proud of that fact. The Minister introduced a comprehensive budget and a Finance Bill containing 178 sections. Many sections contain innovative measures and attention was given to minor detail. Trial measures, such as the £1,000 VRT, are also included. The Minister has done very well and I compliment him.
Mr. Manning: I also pay tribute to the Minister. As Senator Calnan said, it is an historic occasion. The Minister is the first Member of the Labour Party to introduce a budget and safely guide it through the Houses of the Oireachtas. This was done with great style, openness, mastery of detail and a willingness to listen to all points. I compliment the Minister on the content of his budget and for navigating it safely through detailed Committee Stage debates in both Houses. I also compliment him on the style with which he did so.
Question put and agreed to.
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