Dáil Éireann - Volume 399 - 23 May, 1990

Finance Bill, 1990: Report Stage (Resumed).

Debate resumed on amendment No. 15:

[148] In page 13, between lines 2 and 3, to insert the following:

“(2) Notwithstanding anything contained in the Tax Acts, Part II of the Table to section 2 of the Finance Act, 1984, (inserted by this section) shall apply to persons with dependents who are widows, widowers or single parents.”

—(Deputy Rabbitte).

Mr. Rabbitte: Before the Adjournment I was dealing with the inequities in the tax code as they apply to widows, widowers and single parents. I expressed my disappointment that the Minister chose not to make progress on those inequities. My amendment seems to have the support not only of Opposition parties but of a majority of the Minister's backbenchers who supported the case I made on Committee Stage against this cruel anomaly.

On Committee Stage Deputy Noonan asked if it was likely that a constitutional question arises from the application of the double tax bands to single parents but, with political will, we can overcome those problems. The Minister cannot advance any argument, and he did not try to support the move in the event of a death of a spouse in a family, by the Revenue Commissioners to gang up on the family and demolish the tax allowances they previously enjoyed. In such circumstances the remaining spouse will, in all probability, find it necessary to employ a housekeeper or a child minder but will find the tax allowance they previously enjoyed has been reduced.

How can one defend the present position when in the case of marital breakdown if one spouse leaves the family home the remaining spouse who struggles to rear the family is entitled to the existing tax concession? There is no diminution involved in that case. How is it that in the event of an appalling tragedy and death of one spouse the remaining spouse who must rear the family is considered to be better off than when both [149] were alive? This is an anomaly and the Minister acknowledges that.

There appears to be cross-party support for the amendment which, if adopted, would cost a mere £3 million in a full year. The extention of the double band rate for a full year would cost £3 million but it would be bring a lot of relief to many people. I cannot understand why the Minister continues to resist my request. I have heard it argued that the problem we are talking about derives from the interpretation by the Revenue Commissioners of the Murphy case but I do not know if that is the position. Will the Minister comment on that suggestion? The Minister appeared to sympathise with the argument I advanced on this issue on Committee Stage and I cannot understand why of all the groups we have dealt with, with the obvious exception of those we disposed of this morning, this group of taxpayers are most sinned against by our tax laws. The Minister should have a rethink on this.

An Leas-Cheann Comhairle: I should like to ask Deputy Rabbitte, a very keen user of the English language, if he would like to have second thoughts about his phrase, “the Revenue Commissioners gang up”.

Mr. Rabbitte: It conjures up an awesome prospect and I am happy to withdraw it.

Mr. Garland: I note from the Official Report that I did not make a contribution on this issue on Committee Stage. I support Deputy Rabbitte's amendment and I note that the Minister in the course of his reply on Committee Stage, seemed to adopt a conciliatory approach. However, at the end of the day he has not conceded the point. At this late stage I should like to ask him to reconsider Deputy Rabbitte's amendment.

Minister for Finance (Mr. A. Reynolds): I promised the House on Committee Stage that I would give a further report on the tax treatment of widowed and single parents on Report Stage. I have already made the point that [150] the income tax structure does provide some help for widowed and single parents. Widowed persons have a widowed personal allowance which stands at £2,550 compared with the single person's allowance of £2,050. Both widowed and single parents benefit from lone parent allowances which, combined with their basic personal allowance, give such parents effectively the same personal allowance as a married couple, that is, £4,100.

As regards conceding the double rate bands to single and widowed parents, I would make the point that this would, in fact, benefit only about 20 per cent of such parents, that is, those who are paying tax at the higher rates, in other words, the higher paid. Such a move would, as I have already informed the House, involve a cost ot some £3 million in a full year. That is if we could confine it to that and the advice to me is that it is most unlikely. Further costs would arise if double allowances for other reliefs, for example, life assurance and mortgage interest, were to be conceded. The question would also arise of having to exclude married couples opting for single treatment.

As Deputy Rabbitte said, that is part of the problem. Deputy Noonan touched on it when he asked if there would be a constitutional problem involved. There is also the complexity that the double bands would in effect be conceded because single and widowed parents had children. As the House is aware, there has been no general tax allowance for children since 1986, when the general allowance was abolished in favour of increased child benefit.

Deputy Noonan suggested that consideration should be given to increasing the £500 differential which widowed persons have over the single person's basic personal allowance of £2,050. I have been looking at this possibility but it could also give rise to difficulties. For example, increasing the differential by, say, £500 — which will be worth £150 a year to a widowed person paying tax at the standard rate — would cost some £8.5 million [151] a year. It would also mean that the combined allowances of a widowed parent — the widowed personal plus the widowed parent allowances — would, at £4,600 be £500 more than the £4,100 married personal allowance.

As Deputies will gather from what I said, changing the tax treatment of widowed parents is a complex matter. I am, however, conscious of the difficulties faced by such parents and I am also conscious of the sympathy for their position among Deputies on all sides of the House, which I share. We are all aware of cases where a spouse was left with a family, who had to educate them to second and third level, and the problems which can arise. The Murphy case is part of the problem and the complexities of which we spoke.

However, the root of the problem is — I have to repeat — the burdensome nature of our income tax structure. Our tax rates are too high and our tax bands are too narrow, which means that the higher rates are reached very quickly, even by those on relatively modest incomes. We have made very substantial progress on income tax in recent years by reducing the top rate of tax from 58 per cent to 53 per cent and the standard rate from 35 per cent to 30 per cent. We have extended the standard band by £1,800 for a single person and £3,600 for a married couple. That is a lot of progress in a few years. Widowed taxpayers will have benefited from the improvements of recent years and will again benefit from the further improvements to which the Government are committed.

I will continue the search for a solution to this problem although it is very difficult to see where it lies. We can avail of legal advice in relation to what we can do and the constitutional aspects. Conceding the double rate bands to single and widowed persons would, as I already informed the House, involve a cost of £3 million, even if it stopped at that. Of course it would not stop at that because the question would also arise of having to exclude married couples opting for single treatment. Double bands would, in effect, be [152] conceded because single and widowed parents have children. As the House is aware, there has been no general tax allowance since 1986. Married couples would also make the point that in their case there are two adults to support. Conceding the double rate bands to single and widowed parents would benefit only the 20 per cent to whom I referred.

We must continue to try to find solutions to the various aspects of the problems. I assure the House that I will continue that search but, unfortunately, at this stage it is not open to me to accept the amendment.

Mr. Taylor: I strongly support this amendment. Clearly, the Minister is sympathetic towards it but, in real life, sympathy does not put food on the table or provide clothing or education.

It is extraordinary, with all the expertise and back-up available to the Minister — his staff in the Department, the Attorney General and so on — that a way cannot be devised to respond sympathetically to the needs of a family when one of the spouses has died tragically. I do not accept the argument about the Constitution put forward by the Minister. It is trotted out far too often. Our Constitution may have its defects in some areas but, by and large, its intent is fairness and equality and its whole thrust is towards a humane position. I cannot see that any court will interpret a decision in regard to fairness and equality in tax laws as contrary to the Constitution. The reverse is the case. Indeed when laws have been struck down by the Supreme Court as being contrary to the Constitution the more usual position has been because there had been inequality or unfairness.

The position of a family hit by death is traumatic and the State at such a time should be strongly supportive of that family in every possible way. There are enough family difficulties when one of the spouses has died without heaping on an additional financial burden. The loss of the spouse in itself causes a serious [153] trauma to the surviving spouse and children and to add to that concern by bringing in financial worries which did not exist when the spouse was alive is inhumane and much too tough. Generally speaking, we are not that badly off and we do not need to punish families in that way.

The Minister said that a married couple could make the case that after a death there was only one adult to support. That is true but the other side of the coin is that there is only one adult left in the family and whereas before there might have been two earners, as a result of the death they might be down to one — or no — earner. It could well be that the surviving spouse, by reason of commitments to family and children, would not be in a position to go out to work and would be reliant on a relatively modest income which would be very severly eaten into by inequitable and inappropriate tax charges. If the Minister, the Government and the Department wanted to do something about this they could.

Financial hardship is caused very often, particularly to widows with young children, as a result of tax impositions when the spouse has died. I know of many cases where this applies. It is a family even though one spouse has died. The remaining spouse and children constitute a family within the definition of the Constitution and our laws. They need additional support when they have been bereaved but we are giving them less support by increasing the level of taxation on the same income which was there before the person died. One would have thought that they needed greater financial support instead of less.

At the very least — although I would not regard it as acceptable — I would have thought that it should have been possible for a period of at least five years after the death to grant a concession to the bereaved family to enable them to sort out their affairs, to get on their feet, [154] to establish a new pattern and to accustom themselves to a new situation. I do not think that a period of five years would be adequate — I would not accept it as a permanent solution — but it would be a start. I would beseech the Minister to have a further think about this as quickly as possible and perhaps introduce amending legislation to cover the point. I am quite sure he would have the support of all sides of the House on any concession he would make on this point.

Mr. Rabbitte: Although there were some very important issues dealt with I have avoided pressing votes in so far as that was possible throughout the passage of this Bill. I must say I regard this as the kind of anomaly on which it was reasonable to expect a response from the Minister. I fully accept his bona fides and the fact that he is sympathetic to it but it is an area that merits a response and on which I will have to press for a vote.

An Leas-Cheann Comhairle: Is the Deputy asking that I put the question?

Mr. Rabbitte: I am. I just wanted to say, finally, that we have seen, in other sections of the Bill, the extraordinary rate of success that professional lobbyists have had since budget day in causing the Minister to make concessions. It would appear that groups like widows do not have any such professional expertise or lobbyists available to them. For example, it was possible to make significant concessions to businesses, the banks and others since budget day but not in this case. Because this group of vulnerable people do not have any professional lobbyists I have no choice but to press my amendment.

Mr. A. Reynolds: That is not the reason for it and the Deputy knows that as well as I do.

Amendment put.

The Dáil divided: Tá, 69; Níl, 72.

[155] [156]

Ahearn, Therese.

Allen, Bernard.

Barnes, Monica.

Barrett, Seán.

Bell, Michael.

Belton, Louis J.

Blaney, Neil Terence.

Boylan, Andrew.

Browne, John (Carlow-Kilkenny).

Bruton, John.

Bruton, Richard.

Byrne, Eric.

Connaughton, Paul.

Connor, John.

Cosgrave, Michael Joe.

Cotter, Bill.

Creed, Michael.

Crowley, Frank.

Currie, Austin.

D'Arcy, Michael.

Deasy, Austin.

De Rossa, Proinsias.

Doyle, Joe.

Durkan, Bernard.

Farrelly, John V.

Fennell, Nuala.

Ferris, Michael.

Finucane, Michael.

FitzGerald, Garret.

Flanagan, Charles.

Garland, Roger.

Gilmore, Eamon.

Gregory, Tony.

Harte, Paddy.

Higgins, Jim.

Higgins, Michael D.

Hogan, Philip.

Kavanagh, Liam.

Kemmy, Jim.

Kenny, Enda.

Lowry, Michael.

McCartan, Pat.

McGahon, Brendan.

McGinley, Dinny.

Mac Giolla, Tomás.

McGrath, Paul.

Mitchell, Gay.

Mitchell, Jim.

Moynihan, Michael.

Nealon, Ted.

Noonan, Michael.

(Limerick East).

O'Keeffe, Jim.

O'Shea, Brian.

O'Sullivan, Gerry.

O'Sullivan, Toddy.

Owen, Nora.

Pattison, Séamus.

Quinn, Ruairí.

Rabbitte, Pat.

Reynolds, Gerry.

Ryan, Seán.

Sheehan, Patrick J.

Sherlock, Joe.

Spring, Dick.

Stagg, Emmet.

Taylor, Mervyn.

Taylor-Quinn, Madeleine

Timmins, Godfrey.

Yates, Ivan.

Níl

Ahern, Bertie.

Ahern, Dermot.

Ahern, Michael.

Andrews, David.

Aylward, Liam.

Barrett, Michael.

Brady, Gerard.

Brady, Vincent.

Brennan, Mattie.

Briscoe, Ben.

Browne, John (Wexford).

Burke, Raphael P.

Calleary, Seán.

Callely, Ivor.

Clohessy, Peadar.

Connolly, Ger.

Coughlan, Mary Theresa.

Cowen, Brian.

Cullimore, Séamus.

Davern, Noel.

Dempsey, Noel.

Dennehy, John.

de Valera, Síle.

Ellis, John.

Fahey, Jackie.

Fitzgerald, Liam Joseph.

[157]O'Connell, John.

O'Dea, Willie.

O'Donoghue, John.

O'Hanlon, Rory.

O'Leary, John.

O'Malley, Desmond J.

O'Rourke, Mary.

O'Toole, Martin Joe.

Power, Seán.

Quill, Máirín.

Fitzpatrick, Dermot.

Flood, Chris.

Gallagher, Pat the Cope.

Geoghegan-Quinn, Máire.

Harney, Mary.

Haughey, Charles J.

Hillery, Brian.

Hilliard, Colm.

Hyland, Liam.

Jacob, Joe.

Kelly, Laurence.

Kenneally, Brendan.

Kirk, Séamus.

Kitt, Michael P.

Kitt, Tom.

Lawlor, Liam.

Lenihan, Brian.

Leonard, Jimmy.

Lyons, Denis.

Martin, Micheál.

McCreevy, Charlie.

McDaid, Jim.

McEllistrim, Tom.

Molloy, Robert.

Morley, P.J.

Nolan, M.J.

[158]Reynolds, Albert.

Stafford, John.

Treacy, Noel.

Tunney, Jim.

Wallace, Dan.

Wallace, Mary.

Walsh, Joe.

Wilson, John P.

Woods, Michael.

Wyse, Pearse.

Tellers: Tá, Deputies Byrne and McCartan; Níl, Deputies V. Brady and Clohessy.

Amendment declared lost.

Amendment No. 16 not moved.

Mr. Garland: I move amendment No. 17:

In page 13, between lines 2 and 3, to insert the following:

“3.—As respects 1990-91 and subsequent years of assessment, relief in respect of children shall be allowed at £300 per child.”.

This amendment would have the effect of restoring to our tax code the children's allowance which was discarded some years ago. The sum I am suggesting is £300 per dependent child. I am aware that this would, once again, put a heavy burden on the Exchequer but, as I have already stated on an earlier amendment, I feel the amounts involved could be made up through extra taxation or the closing of tax loopholes and breaks for the corporate sector and in the area of capital taxation. I make no apology for the potential loss in revenue in this matter.

The reason for the elimination of the children's allowance was that adequate payments were being made to families through the child benefit scheme. I am sure the Minister will also say that the lower paid families are catered for by the children's allowance where the exemption limits have been raised from £200 to £300. That, however, does not cater for the average family which is under attack at the moment. We have extensive debates in this House on the question of mortgage interest and I do not want to go over those points again. I am sure the Minister would agree that the situation of a family with a mortgage is very much worse now than it was a couple of weeks ago.

Our Constitution is particularly protective of the family and I would be the first to support the Constitution in that. There is a very strong case to be made for having the children's allowance restored and I would suggest that the figure should be £300.

Mr. Noonan (Limerick East): The Government of which I was a member removed the child allowance from the tax code and at the same time increased child benefit. The argument was that because of the different rates of tax the child allowance applied unequally. If we take on board Deputy Garland's amendment the parent on the standard rate of taxation would get £90, the parent paying tax at 48 per cent would get £148 and the parent paying tax at the highest rate would get £159 in respect of each child. We believed there was a better way to give money to parents and that was through child benefit, or children's allowance as we used to call it.

The child benefit is paid to the mother. In most families the child benefit, whether it comes through the post office or in the pay packet, is used for the benefit of the family. In families where there are difficulties, however, money put in the hands of the mother is more likely to be used for the benefit of the children than money which accrues to the father's pay packet because he pays less income tax. Those are the reasons the changes were made.

This gives rise to a difficulty however. It accentuates the poverty trap we were [159] talking about before lunch. Under the social welfare code unemployed parents are given child benefit whether they are on unemployment assistance, unemployment benefit or any other benefit. Children's allowance does not distinguish between children, all children under 16 years of age are eligible. The difference in income between people on small wages and those on social welfare is so small that it is difficult for people with children to work for low wages. There is no doubt that the abolition of the child allowance under the income tax code accentuated that problem. If the Minister continues to reduce taxation and arrives at a situation where there are two tax rates of 25 per cent and 40 per cent, or if we go along the road Deputy Rabbitte advocates and move towards tax credits, it may be possible to direct money for the benefit of children through the tax code. At the moment if the Minister had £100 million at his disposal I would prefer that he would use it to increase child benefit, which would apply equally to all children, than to apply it to tax relief for children which works very unevenly between different levels of taxpayers.

The Minister had very few resources at his disposal for the benefit of children when he increased child benefit this year — the increase in child benefit was extremely small. However, I accept much of what Deputy Garland said. There certainly is a problem in directing resources to families where there are a number of children in a way that does not accentuate poverty traps. If we could get over the problem of child tax reliefs having varying cash benefits depending on the rate of tax a person is paying, I would go along with Deputy Garland's amendment. At present it is very interesting to debate it and I am glad that Deputy Garland put it down.

Mr. A. Reynolds: Deputy Noonan has put the question of tax allowances for children in perspective. They were removed in 1986 and an increase in child benefit was called for. The details of existing rates for child benefit after this [160] budget is £15.80 per month for the first to the fourth child and for the fifth child and upwards £22.90 per month.

What Deputy Garland is looking for is a tax allowance of £300 per child. It has already been pointed out that this would mean that people on standard rate of tax would get less than the people on the higher rates, and that is not the way to distribute money, if it is there to be distributed. Taken with the rest of the package of taxation and the cost, this is the first time in a number of years that child benefit has been increased. Except for the fifth or sixth child, in the last year or two there has not been an increase for quite some time. When resources permit we would all like to channel money to families with children in accordance with what is in the Constitution — that we should cherish the children of the nation equally. We all recognise how expensive an exercise it is to rear, clothe and educate children. There is, of course, covenanting which will help taxpayers with children.

As Deputy Noonan rightly says there have been extremely generous increases under the social welfare code in the whole area of child dependants as far as we could go. The special exemptions Deputy Garland referred to were the first step along the road in attacking this problem, and going so quickly to £300 per child in the special exemption area is also a generous recognition. We would, of course, like to go further and will undoubtedly do so as circumstances permit.

The amendment put forward by Deputy Garland would cost £41 million in 1990 and £68 million in a full year. We must ask ourselves if this is the right way to go. Would it be the most equitable way? Would the money be getting to the people who need it most? If there is money available it should go to child benefit. There again some would argue that people who do not need it will get it as well. I know this benefit goes to the wife and is seen as her income, the sole income for stay-at-home wives. That is the way it is viewed and that is the way it always will be viewed.

[161] There are no more resources available at the moment. The debate, however, is worth having to see which direction people feel is more equitable — the taxation route which will give less to the people on the standard rate, who are the people who need it most, and give more to the people on the higher rates.

The first time I looked at this last year when there were little or no resources available, I felt that most hardship would fall on the children of large families and that is why I focused any money I had in that direction. This year we went for a wider spread on the basis that the benefits had not been increased for quite some time. It is no harm to have the views of the House before sitting down to look at this for the 1991 budget on the basis that there would be additional resources at that stage, but no one can say with any certainty that that will be the case.

Mr. Rabbitte: I rise to support Deputy Garland's amendment. I have a certain sympathy with the point that Deputy Noonan has raised, that available resources should be better targeted in the form of child benefit, but we are dealing with the tax code. Advancing arguments, as both he and the Minister have done, to the effect that it would disproportionately benefit the higher income groups is not a very plausible argument at this stage of the day because we have long since agreed that the entire system of tax allowances and the present structure of the tax code does precisely that. All that Deputy Garland can do is to function within the existing system. I accept, as does everybody, that it will benefit the higher earner more but what else can we do in the circumstances?

It is not as if there were not a precedent for Deputy Garland's approach. For example let us take the very significant element of relief that has been introduced in the residential property tax. It was found feasible to provide that residential property tax in respect of a property can be reduced by the ratio of the number of children, up to ten, residing in the home. So if you take a family that includes five [162] children where those five children normally live in the family home, the residential property tax otherwise payable is reduced to half. I think section 112 of the Act applies the reduction of one tenth of the tax in respect of each qualifying child. If we are making the argument that an allowance disproportionately benefits the better off, I would have thought that by and large — although I know it is not as simple as this — the better off home owners, who would be liable to residential property tax, which says something about the type of home they have even in these days of spiralling prices, benefit from this relief. As I said yesterday most of my constituents are not liable for residential property tax. Why can we find it possible to bring in special reliefs for people who are liable for this tax when we cannot do it for the generality of taxpayers, as Deputy Garland seeks to address in his amendment.

The Minister has said that it is good that we are arguing about this point. Having regard to the overall inequity of the system, I agree with the thrust of Deputy Garland's amendment.

Mr. A. Reynolds: It would cost £68 million to implement, as against £1.5 million for the relief on residential property tax.

Mr. Taylor: The debate on this amendment has degenerated into a debate on some possible future developments that might take place and on which the Minister invites us to debate. In the ideal situation one would have a provision whereby people with an income over a certain amount would not qualify for a child allowance, and the maximum available would be applied to people at the lower end of the scale and in accordance with the number of children they had. That would be a fair and equitable solution and there is no reason that such a proposal should not be considered. There is no need to pay child allowance or to make any of the substantial allowances available to people on the upper end of the scale. Everybody in the House pays lip service to that concept but when it [163] comes to the actual legislation in respect of it opinions divide and different things are said and done.

Deputy Garland's amendment is not ideal for the reasons pointed out by Deputy Noonan. I agree that it is not ideal and it would have the effect of disproportionately benefiting those whose incomes were higher. People paying tax at the marginal rate of 53 per cent would benefit more pro rata than a person on the lowest or middle scale. Nonetheless, as has been said, we have to take the amendment in the context in which we find it and it would be of appreciable benefit to those families with a large number of children who must be supported on that account.

Mr. Garland: I am glad that Deputy Noonan raised the question, which I had overlooked but which was very much on my mind, that the reintroduction of children's allowance would effectively benefit the higher rate taxpayers. Of course that is so. The reason for my omission is very simple, that I am totally out of sympathy with the tax system and every time I look at an allowance I have to keep reminding myself that it should be only at the standard rate, in other words we need a system of tax credits, which would get over the problem.

The present level of child benefit has already been dealt with in the Social Welfare Bill and it is no longer possible to address that problem. I agree that the matter would be far better addressed through child benefit payments than through a child allowance. In that connection it might be worthwhile introducing a very substantial increase in child benefit next year which would be taxable, in the same way that pensions and contributory old age pensions are taxable. In this way, whether it is done through the child allowance or through child benefit, the benefit flows to the lower paid worker away from the higher paid worker. The Minister could consider this suggestion for next year.

There was, of course, a bit more flexibility with regard to the child allowance, [164] in that it applied to children attending third level institutions, parents with children receving third level education need this allowance, whereas there does not seem to be any machinery to deal with their situation under the child benefit system. Under the circumstances, a Leas-Cheann Comhairle I am not pressing the amendment.

Amendment, by leave, withdrawn.

Mr. Rabbitte: I move amendment No. 18:

In page 13, line 8, to delete “£286” and substitute “£500”.

This amendment is blatantly seeking to give some additional relief to the most oppressed section of the taxpaying population, the PAYE workforce. It is merely seeking to address an element of it, the special allowance in respect of PRSI. Originally when this allowance was introduced — I cannot remember how many years ago — it was in the region of £312. Apparently it was reduced successively by Governments since then and it now stands at £286. It is unusual among allowances in the sense that it is going backwards rather than forwards. The argument on validity at the time of its inception seems to be equally valid today. The figure was £312 at the time of inception and £500 seems very reasonable now. This amendment does no more than seek to give some relief to the hard-pressed PAYE workforce. It also, to some extent but by no means adequately, addresses the question that Deputy Noonan and others have raised here during the course of the debate on this Bill concerning how punitive PRSI can be especially on lower income groups where there is no escape, no threshold and no exemption limit and where people paying the top rate of PRSI are liable on every pound. No concession is given for that in the tax code. I will not labour the point. This amendment is an attempt to lighten the burden on the back of the PAYE workers.

Mr. A. Reynolds: The special PRSI allowance for higher rate contributors to [165] social insurance was introduced in 1982 to offset the decline in disposable incomes caused in 1982-83 by the increases in the higher rates of PRSI and the imposition of the 1 per cent youth employment levy. The amount of the allowance was set at £312, as Deputy Rabbitte has said. It was not available to public servants and others who contributed at a lower rate of PRSI. The relief was confined to 1982-83.

The allowance is not a permanent allowance and requires renewal on an annual basis. The relief was nontheless reintroduced in 1983-84 at £286 and has continued annually since then at that rate. The allowance is now being retained for the year 1990-91. As Deputy Rabbitte has said, the amendment is another blatant attempt to try to get more relief for the PAYE sector. The increase to £500 will cost an additional £23.9 million in 1990 and £39.8 million in a full year and these people will benefit in whole or in part from the increase. The cost of the retention of the allowance at last year's level, as I have said, at £286 as proposed in the Bill is estimated at £51 million in 1990 and £80.2 million in a full year and 611,000 taxpayers, of whom 607,000 will have a reduced tax liability and 4,000 will be relieved of tax altogether, are expected to benefit. In these circumstances and bearing in mind the cost of this year's income tax package, excluding the PRSI allowance, which will amount to £200.7 million in a full year — not counting the benefits to everybody from the reduction in VAT by 2 percentage points and a reduction of excise duties in certain areas — I must reject the amendment.

An Leas-Cheann Comhairle: Can Deputy Rabbitte live with that rejection?

Mr. Rabbitte: It is the unfortunate PAYE sector who will have to live with it. In the circumstances, I do not see that they have much choice.

Amendment, by leave, withdrawn.

[166] Mr. A. Reynolds: I move amendment No. 19:

In page 13, between lines 9 and 10, to insert the following:

4. —As respects the year 1990-91 and subsequent years of assessment, section 3 of the Finance Act, 1969, is hereby amended, in subsection (1), by the substitution of “£5,000” for “£2,500” (inserted by the Finance Act, 1985) in each place where it occurs, and the said subsection (1), as so amended, is set out in the Table to this section.

TABLE

(1) Subject to the provisions of this section, an individual who, in the manner prescribed by the Income Tax Acts makes a claim in that behalf, makes a return in the prescribed form of his total income and proves—

(a) (i) that, throughout the year of assessment, he was totally incapacitated by physical or mental infirmity, or

(ii) that, being a husband, who, for the relevant year of assessment, is assessed to tax in accordance with the provisions of section 194 of the Income Tax Act, 1967, his wife was, throughout that year, totally incapacitated by physical or mental infirmity, and

(b) that for the year of assessment he has employed a person for the purpose of having the care of the person (being the individual or his wife) who is so incapacitated,

shall, in computing the amount of his taxable income, be entitled to have a deduction made from his total income of £5,000, if the amount ultimately borne by him in the year of assessment in employing the employed person is not less than £5,000, or the amount so borne, if it is less than £5,000.

I informed the House on Committee Stage that I would consider the question of an increased allowance for a person — in the case of a married couple, either spouse — who may be totally incapacitated by a mental or a physical infirmity and who may employ a person [167] to take care of himself or of the incapacitated spouse as the case may be. The amendment proposes to increase the allowance from £2,500 to £5,000 in such cases.

Mr. Rabbitte: The Minister made specific reference to a person who would be employed to look after the incapacitated person. I am not sure that I fully understand this. The last point in my amendment No. 16 of last Wednesday referred to the case that gave rise to this amendment, the Dunne baby case. The Dunne parents were entitled to avail of the sum of £2,500 per year or approximately £50 per week from the interest on the capital sum. It was my understanding that if that was increased, as I proposed, to £5,000 — which the Minister now seems to be agreeing to in his amendment — a person in the circumstances that I am referring to who is not technically employed but who is looking after the incapacitated person would now be entitled to avail of £5,000 per annum from the money available. Is that correct?

Mr. A. Reynolds: This allowance is intended where a taxpayer employs somebody to look after an incapacitated person. In the Dunne case — the next amendment will exempt them from tax — this allowance will not apply because the tax will be wiped out.

Mr. Noonan (Limerick East): The allowance seems to be confined to the incapacitated person or to the spouse of the incapacitated person.

Mr. A. Reynolds: If the disabled person is a taxpayer he can technically employ somebody to look after him and in those circumstances the allowance applies. What gave rise to the discussion was the Dunne case. When we discussed that matter, that person was a taxpayer but he will be exempted from paying tax under a later amendment. Consequently the allowance will not [168] apply but it will apply in many other cases.

Mr. Rabbitte: I welcome without reservation the Minister taking on board the amendment.

An Leas-Cheann Comhairle: I am conscious of the fact that the debate to date has been of the highest standard. Normally on Report Stage there is only one contribution from every Deputy apart from the Deputy who moves the amendment. With that reminder, I would ask Deputies to give expression to all their thoughts while on their feet.

Mr. Rabbitte: I am genuinely trying to tease out this matter. I think I might be at cross purposes with the Minister. This amendment deals with the allowance for a housekeeper taking care of an incapacitated person. That is how it is described in section 3 of the Finance Act, 1969. In the Dunne case, as I understand it, which was my motivation in tabling this amendment, where the child is a ward of court, the parents are permitted £2,500 per year in order to look after the child. The parents were not employed and they could avail of an allowance up to but not beyond £2,500, which was £50 per week because the father would lose his dole entitlement or whatever. I am puzzled by the reference to the employed person. Can a parent in this situation be an employed person?

Mr. A. Reynolds: The situation in relation to the Dunne case as reported in the newspapers, as I understand it, was that when the Dunne child was in an income tax situation the allowances available to him were the single personal allowance plus the £2,500 allowance for somebody to look after him on the basis that that person is a taxable person. At this stage we do not know who will look after the child. It may well be that they may have to employ somebody from outside and if that is the case that allowance is available. That is where it originates. [169] It also applies where there is an incapacitated spouse in the house and somebody has to be employed — this is where it became known as a housekeeper's allowance — to look after a fully incapacitated person. There was an allowance of £2,500 but it is now £5,000. It could also apply where the two people in the house are incapacitated, where a person has to be employed. That is the reason I say one spouse or spouses because there could be two people in the house who are incapacitated. In that case the allowance of £5,000 is still available. Does that clarify the matter?

Mr. Rabbitte: Thank you. It does clear up the point. There is nothing then preventing a situation in the generality of this type of case where one or other parent may for the purposes of this section be the employed person.

Mr. A. Reynolds: So far as I know that is the case. When the Deputy put down the two amendments he was approaching the issue from two different directions.

Mr. Rabbitte: I understand that clearly.

Mr. Noonan (Limerick East): Because of the Minister's explanation to Deputy Rabbitte I understand the position better now. The table attached to the amendment would seem to confine this particular relief to the incapacitated person or to the spouse of the incapacitated person, and as drafted it refers to a wife. What about a situation where there is an incapacitated person in a house other than the husband or the wife? Since we are talking about the Dunne case, suppose they had lost the court case, they had an incapacitated child in the house who was not a taxpayer because he did not have any income. In those circumstances there would be no allowance of £2,500. That is the position of a child. Is that correct?

Mr. A. Reynolds: The incapacitated child would have £600. The child would [170] not have a taxable income and consequently the £5,000 would not be available if the Dunnes themselves were paying tax, but they are not in the income tax bracket. In their case if they were paying income tax they could only claim for £600 for each incapacitated child allowance.

Mr. Noonan (Limerick East): Are we not legislating for a very peculiar anomaly now in a circumstance where the person who is incapacitated wins the court case, has an award and is consequently a taxpayer. They are in a position to claim an allowance of £2,500 which we are now raising to £5,000. In the circumstance where the person is equally incapacitated but loses the court case, they have no allowance except the incapacitated child allowance of £600. That is a most peculiar way to go after it.

Mr. Rabbitte: It does not apply any longer in the first case.

Mr. Noonan (Limerick East): The Leas-Cheann Comhairle will not allow me to speak a second time. I have another point to raise.

An Leas-Cheann Comhairle: Deputies are confined to dealing specifically with what is contained in amendment No. 19.

Mr. Noonan (Limerick East): In circumstances where there is a Down's Syndrome adult in a house, the parents are taxpayers and they need a housekeeper to look after the Down's Syndrome adult who is aged 24 or 25, and certainly above the age of majority, they would not receive this allowance.

Mr. A. Reynolds: This is a taxation measure. It does not apply in the social welfare, health area, etc. The allowance applies to an incapacitated child in the situation we are talking about, or spouses of incapacitated persons or incapacitated persons themselves to enable them to employ somebody to look after them. There is nothing magic about it. It is provided for in the tax code since 1969.

[171] Mr. Noonan (Limerick East): Suppose the Dunnes had lost the court case——

Mr. A. Reynolds: Then it would be a matter for the health boards.

Mr. Noonan (Limerick East): Would they or would they not be eligible?

Mr. A. Reynolds: Under the tax code they would have to look after somebody who, firstly, has no income and secondly, has a father and mother who do not have an income and who are in the social welfare health area. The Minister is aware of what happens that when the income comes in all the other benefits disappear, for example, the medical card and all the other areas from which the child benefited until the court award was made. One cannot talk on the one hand in the tax code area and try to move it over and apply it in a non-tax area.

Mr. Noonan (Limerick East): I am not asking the Minister to do that. All I am saying is that in circumstances where individuals are taxpayers it seems to me that the law should apply equally between them. If the incapacitated child is a taxpayer, arising out of an award, from which an income derives, this allowance would seem to apply.

Mr. Rabbitte: No.

Mr. Noonan (Limerick East): Not after the next amendment is accepted, because that person is being taken out of the tax code. In relation to the amendment as drafted the £5,000 allowance can only apply to a taxpayer who is incapacitated or whose spouse is incapacitated——

Mr. Rabbitte: A small number of people.

Mr. Noonan (Limerick East): ——in respect of having a housekeeper employed to look after either himself or the incapacitated spouse. It does not seem to apply on a wide-ranging basis.

Mr. A. Reynolds: It applies to a very [172] small number of people. When the next amendment goes through it will apply to about 200 people.

Mr. Noonan (Limerick East): It does not apply to an incapacitated son or daughter. There are circumstances where people are incapacitated, for one reason or another, which do not give rise to court cases and where no lump sum is invested in the child, there is no income and they are not taxpayers. In those families there is no allowance, according to these amendments, except the £600 incapacitated child allowance.

Mr. Rabbitte: Provided they are paying tax.

Mr. Noonan (Limerick East): I know all the provisions. I am talking about circumstances where they are paying tax. How can the Minister justify taking a person who has had a major award and is getting an income from that award out of the tax code while down the road there is a family with an incapacitated child, who did not get an award and therefore are not in receipt of any other income, and if the parents are taxpayers they cannot get this allowance? That does not make sense.

I welcome what the Minister has done arising out of the Dunne case, and that is very clear in amendment No. 20, but the manner in which he has treated the allowance in amendment No. 19 gives rise to a serious anomaly. The parents of an incapacitated child who are taxpayers will get only the £600 allowance. They cannot get the £5,000 housekeeper allowance to mind the child. On the other hand, if the child is incapacitated and has an income, the circumstances are different.

Mr. A. Reynolds: No, the Deputy is trying to widen the argument into a whole range that does not apply here. All I am saying is that this change applies to only about 200 people. The Deputy is trying to widen it into a whole range of areas that are the responsibility of other [173] agencies or areas. I am dealing with only the tax and nothing else.

Acting Chairman (Mr. Stafford): Deputies, I am new at this, but you seem to be going outside amendment No. 19. That amendment covers a particular point according to my reading of it. I believe you are going beyond that point by bringing in another issue.

Mr. Noonan (Limerick East): On a point of order, I have addressed amendment No. 19, and only amendment No. 19, and the issues and figures in amendment No. 19. I have not gone beyond the scope of amendment No. 19 in any respect. I might be wrong and if I am I would like it explained to me, but I am not out of order.

Mr. Rabbitte: The Deputy is wrong. As the author of this misfortune let me say they are two quite distinct and separate matters. Amendment No. 19 has nothing to do with amendment No. 20 because when amendment No. 20 becomes law amendment No. 19 does not apply in the case of amendment No. 20.

Mr. A. Reynolds: That is right.

Mr. Rabbitte: It is merely updating a provision in the 1969 Act from £2,500 to £5,000 where somebody is employed to look after the incapacitated person. There is really no connection at all. The Minister pointed out that it is my fault inasmuch as I went after the one problem from two points of view. I tried to cope with it on the basis of the incapacitated allowance if amendment No. 20 did not materialise, and I went for the amendment No. 20 type solution if that was there. In the event it was, the Minister has taken it on board and therefore there is now no connection.

Acting Chairman: Deputy Taylor has not spoken and I think he should have the right to speak.

Mr. Noonan (Limerick East): Amendment No. 19 does not apply to children.

[174] Acting Chairman: Let us hear what Deputy Taylor has to say, bearing in mind what has been said in relation to amendment No. 19.

Mr. Taylor: I must bear that in mind but Deputy Noonan is quite right, I have to disagree with Deputy Rabbitte on this. We are discussing amendment No. 19 which is before the House, and it is fair to comment on amendment No 19, today what it does, what it does not do and to give our opinion as to what it ought to do. That is what we are talking about and that is perfectly in order.

Amendment No. 20 is related. There is a relationship with amendment No. 20 because of the suggestions that there was an interlink between the two positions. We must be clear on what amendment No. 20 does not do. We know what it does — it covers the Dunne case and a very small number of similar cases. As I said this morning, I am delighted about that and the Minister is to be congratulated for doing it. This will be of immense help to the Dunne family and the others who are in that position. However, the number of cases it will cover is extremely small. It is tied down very stringently in the conditions that are set. I do not complain about that but, for example, it applies only to people who have a mental or physical infirmity which is permanent. Many people will have incapacities for ten or 20 years, and that might not be regarded as permanent. People could be very severely injured in an extraordinarily bad way yet not come within those parameters. It is for such situations that we have to look at the amendment No. 19 type of measure, namely, the provision of a tax allowance for a person to care for them. There always was such a provision — I think it was originally in section 143 of the Principal Act, but it is extremely limited in its application, as Deputy Noonan said rightly, covering only the case where a husband or wife is totally incapacitated by old age or infirmity and a person is [175] employed to take care of the incapacitated individual. All the Minister is doing here is——

Mr. A. Reynolds: Updating it.

Mr. Taylor: ——in that very narrow parameter increasing that tax allowance from £2,500 to £5,000 which, so far as it goes, is welcome.

I think Deputy Noonan is trying to make a point — and if he is I support him — that there is a very large number of very needy and deserving cases to which that concession should be extended and should apply. He referred to Down's Syndrome cases, and there could be other types of cases of severe incapacity, where a child or a father with a modest income is paying tax, but cannot, because of his or her old age, responsibilities or whatever, care for the incapacitated person. In that case there is no allowance in the system to employ a person to take care of such an incapacitated individual. This is the appropriate category to discuss it because the issue of providing care is what is under discussion. Unfortunately, mental illness — in particular Down's Syndrome and other illnesses — is tragically an appreciable and increasing phenomenon in Irish society. It is high time that we applied our minds to what that means for families with a person in that position.

We know that health cuts have severely cut back the number of residential places that are available for these people. The present trend is to have these people cared for within the community and within the family. That is a debatable point in itself, but, even assuming one accepts that as a starting point, if some incapacitated people are to be cared for within their own families and communities, surely the State has a responsibility to make financial provision to enable families, enlarged families and communities, to do just that, and that it has not done. the Minister for Health and the Minister for Finance saved themselves appreciable sums of money by their health cutbacks reducing the numbers of residential places. The very least the [176] State could do would be to make a tax allowance for the family with a modest income to enable a person to help take care of his or her relation who is suffering from a very serious mental or physical infirmity.

Mr. Rabbitte: On a point of information, Deputy Taylor has elaborated on a real social need and Deputy Noonan raised the question in terms of the necessity to broaden the scope of section 3 of the 1969 Finance Act. I agree with that — and I am sure we all do — but if it is otherwise, I would like the Minister to tell me because after I asked the initial questions I thought I was clear in my mind on it.

I rise on the point Deputy Noonan made that an incapacitated person who is made an award in the circumstances described can benefit from this allowance but all these other categories such as Down's Syndrome people who were not made an award cannot benefit from the allowance. My clear understanding is that this allowance does not apply in the first category because after amendment No. 20 there will be no liability to tax. Therefore this allowance cannot apply. It can only apply in the restricted terms of section 3.

Mr. A. Reynolds: That is correct. It is an allowance against a taxable income. Deputy Taylor and Deputy Noonan are quite right. This allowance was introduced about 1969 and it is being updated. Amendment No. 20 takes out a category which could apply and deals with it separately. This does not do anything for Down's Syndrome children. It fits the purpose which we intended — no more, no less.

Mr. Garland: I feel bound to agree with Deputy Noonan and Deputy Taylor and it seems that an amendment would be required to do what the Minister would like. An extra paragraph would have to be inserted in subsection (1). The first part of the subsection deals with a totally incapacitated taxpayer; the second paragraph deals with a wife who [177] is incapacitated. We need to add a third paragraph dealing with an incapacitated child. A suitable amendment is needed.

Amendment put and agreed to.

Mr. A. Reynolds: I move amendment No. 20:

In page 13, between lines 9 and 10, to insert the following:

4.—(1) This section applies to any payment which is made—

(a) to, or in respect of, an individual who is permanently and totally incapacitated by reason of mental or physical infirmity from maintaining himself, and

(b) following the institution by, or on behalf of, the individual of a civil action for damages in respect of personal injury giving rise to that mental or physical infirmity.

(2) Income which arises to a person, to or in respect of whom payments to which this section applies are made, from the investment, in whole or in part, of such payments or of income therefrom, being income consisting of dividends or other income which would, but for this section, be chargeable to tax under Schedule C or under Case III, IV (by virtue of section 4 of the Finance Act, 1974) or V of Schedule D or under Schedule F, shall be exempt from tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts but the provisions of those Acts in relation to the making of returns of total income shall apply as if this section had not been enacted:

Provided that this section shall not apply in a case unless the income so arising (hereinafter in this proviso referred to as “the exempt income”) is the sole or main income of the individual to or in respect of whom the exempt income arises.

(3) This section shall have effect as respects the year 1990-91 and subsequent years of assessment.

[178] Amendment agreed to.

Mr. Noonan (Limerick East): I move amendment No. 21:

In page 13, between lines 9 and 10, to insert the following:

4. —Section 138B of the Income Tax Act, 1967 (inserted by the Finance Act, 1980) is hereby amended by the deletion of all words from and including “, save that it does not include” in the definition of “emoluments” in subsection (2), down to the end of the section.

The purpose of this amendment is to provide the £800 PAYE allowance to relatives of owners and directors of companies in circumstances where full tax return is made and full PRSI is paid. If a son or a daughter is employed in a parent's company as an employee, paying full income tax and full PRSI, he or she should get the allowance just like any other PAYE worker and should not be excluded simply because of relationship to the proprietor.

Mr. Garland: I am totally in support of Deputy Noonan in this matter. Governments in the past few years have been increasingly anti-small family business. This is a very serious discrimination. It is outrageous and representations have been made to me about it. I do not know how it ever got into legislation. If two small business people know one another, each has to send one of his children to the other's business. That is the only way they can get the allowance. There is an implication that a family business is a tax racket and that the employment of sons or daughters is a gigantic tax fiddle. That is a libel on the self-employed who are the backbone of this country. I would be totally supportive of Deputy Noonan in that regard.

Mr. A. Reynolds: The purpose of this amendment is to extend the PAYE allowance to certain categories of persons, i.e. proprietary directors, their spouses and [179] children and the spouses and children of self-employed individuals, who are at present excluded from the allowance even though they are taxed under the PAYE system.

The PAYE allowance is, and always has been, intended to be available only to ordinary employees. When the allowance was introduced it was made clear that it was aimed at improving the tax progression for these ordinary PAYE taxpayers and was in response to the case made by the ICTU that the general scheme of allowances then in existence discriminated against employees and in favour of other taxpayers.

Proprietary directors were originally excluded from the allowance on the basis that they were in a position to control their own remuneration or that of their spouses. Proprietary directors are, in fact, in most instances the self-employed in an incorporated form.

Spouses of the self-employed and proprietary directors are excluded from the PAYE allowance to avoid a repetition of the abuses of the “working wife's allowance”. When that allowance existed, it was common-place for the self-employed to set up nominal employments for their wives, sufficient to attract the full measure of the allowance without incurring any extra tax. It was very difficult for the Revenue Commissioners to challenge a wife's entitlement to this allowance because the husband invariably produced “evidence” to prove that she was entitled to it.

Children of the self-employed and proprietary directors are excluded from the PAYE allowance because the experience of many years has shown that if a tax advantage can be gained by creating artificial income or employment for children then that device will be used. Furthermore, the wages of many people who carry out duties in their parents' business, or indeed their spouses' business, are not subject to the proper operation of PAYE. In such cases, there would appear to be no justification for granting the PAYE allowance.

Following the Finance Bill debates on [180] the issue in 1980, the possibility of extending the allowance to spouses and children of the self-employed was examined in response to an undertaking by the then Minister.

No satisfactory means could, however, be found of identifying the cases to which the allowance should be extended. Whatever criteria might be decided upon, they would require that the Revenue's income tax staff would be involved in elaborate investigation and policing procedures in order to work the scheme in practice. The diversion of the Revenue's scarce resources to such work would be highly undesirable. Even if the problem of identifying the cases to which the allowance should be extended could be solved, it was found that it would still not be possible to devise a scheme that would not be open to widespread abuse and avoidance.

Apart from the foregoing, there remains the important question of cost. It is estimated that the cost of extending the PAYE allowance on the basis proposed by the amendment would cost about £58 million in a full year and about £38 million in 1990.

In all the circumstances, I cannot accept the amendment.

Mr. Taylor: In the first instance I should declare my interest by saying that my son works in my firm and if Deputy Noonan's amendment were adopted it would be to his advantage. I have been discussing with Deputy Rabbitte the original rationale of this exclusion of a child working in a parent's firm from the PAYE allowance. As the Minister has indicated, it turns out to be that if the exclusion were not there it might lead to widespread fraud. It seems somewhat strange when one analyses it that this is an adequate reason for discriminating and for taking away the rights of one person which are enjoyed by another person in exactly the same situation. There are always possibilities of fraudulent abuse in all aspects of tax laws, and no doubt there is a fair bit of it, but I think it is true to say that the overwhelming majority of people are law abiding and [181] pay whatever tax is properly due. Fortunately the number who do not is relatively small.

It seems somewhat anomalous that where there are so many genuine cases of a son or daughter working hard in a perfectly normal manner in firms — I know many who do this — their position should be different from the point of view of tax for no reason than that the owner of the firm happens to be their parent. I suppose it would be hard for them to accept that the reason for them being deprived of the same PRSI allowance their friend down the road has is because other people might resort to fraud. I understand the reasons for it but it does seem a bit hard.

Mr. Noonan (Limerick East): I am disappointed at the Minister's reply. I do not want to catch all the categories alluded to by the Minister with my amendment, only sons and daughters. I can see the difficulty in applying the allowance to spouses. I am sure the Minister appreciates that we do not have the excellent staff advising us which he has advising him and that sometimes when we are drafting an amendment and thumbing through old Finance Bills we do not absolutely hit the nail on the head. What I had in mind are sons and daughters in respect of whom proper tax returns and full PRSI payments are made. I did not think it would be beyond the wit of the officials in the Revenue Commissioners and the Department of Finance to give them the £800 allowance like anyone else. I believe that would cut down on the opportunities for fraud. If a proper return is made for income tax and PRSI they should not be excluded from the PAYE allowance simply because their father or mother owns the business in which they work. Perhaps the Minister will look again at this point — I presume he will be bringing in a budget next year. I will not press my amendment.

Mr. Rabbitte: Deputy Noonan has advanced this kind of amendment in respect of proprietory directors, the self-employed and so on in areas with which [182] I have little enough sympathy but it seems to be a bit harsh in the case of sons and daughters. I have some sympathy with his amendment.

Amendment, by leave, withdrawn.

Mr. Noonan (Limerick East): I move amendment No. 22:

In page 13, to delete lines 10 to 12.

If I recall correctly, section 4 reduces the income tax allowance in respect of premia on life assurance from 80 per cent to 40 per cent——

Mr. Taylor: From 80 per cent to 50 per cent.

Mr. Noonan (Limerick East): I think one can now claim a quarter of the annual premium against income tax. The purpose of my amendment is to delete section 4 which brings about the reduction and to leave matters as they were heretofore.

This comes back to the debate we had this morning on mortgage interest relief and the relative merit of allowances. There is a cross over effect here for mortgage interest relief. In the case of endowment policies the insurance element is caught by this section and this adds another burden to the unfortunate mortgage holder who is increasingly sagging under the strain. We are not making great progress on the Bill so I will not say any more on this amendment.

Mr. Garland: This is another area where the Minister could afford to be generous if we had a system of tax credits which, of course, we do not have. In the absence of a system of tax credits this is the second best solution. I have little doubt about this.

I think it is fair to say that in many of these cases one could argue there is an element of retrospective legislation in that a commitment to take out an insurance policy and pay an annual premium is a permanent long term commitment. One could argue in cases like this — I should like the Minister to take [183] this point on board for the year — that the full relief should be granted in respect of those policies already taken out. If there is to be a restriction, which I do not believe there should be, it should be limited to policies taken out after the appropriate date.

Mr. A. Reynolds: The whole area of insurance and the purposes for which insurance premiums are used has changed dramatically during recent years. I do not think we should lose sight of the fact that the purpose of the tax relief in respect of life assurance was to encourage taxpayers to make provision for their dependants in the event of early death or for their eventual retirement. However, with the growth of superannuation schemes, the provision of sophisticated retirement packages for the self-employed and the advent of PRSI for the self-employed the original justification for the relief has been considerably diminished. Furthermore, the life assurance industry in Ireland has experienced substantial growth in the past few decades not only in terms of volume but also in the range of products on offer. An increasing proportion of life assurance contracts are being used as savings and investment vehicles rather than as a means of providing security for dependants.

The consequences of the interaction of these developments and the tax relief available in respect of premiums paid is that, in effect, the taxpayer is getting tax relief on the capital element of his investment. To that extent, the availability of the relief is a cause of distortion in the financial investment. An added consideration is that relatively little tax is paid by assurance companies on the incomes generated by them from life assurance and the investment as it finally emerges from the company is fully exempt in the hands of the investor.

I do not accept the contention that restriction of life assurance relief is somehow bad for the economy. The restrictions I have introduced are aimed at getting income tax rates down, reducing [184] the income tax burden and helping job creation. The income tax system is acting as a disincentive to enterprise. The changes I have introduced in the last two year are aimed at unlocking that effort in enterprise for the benefit of the economy. I cannot accept that this essential task of improving our income tax structure will in some way damage the economy. This is the view held by those outside and has been expressed to me many time in letters, etc.

We all agree that we need a better income tax system. The Government are doing their very best to bring this about and the restriction on life assurance must be seen in that light, it is purely as a contribution to the overall tax reduction package which was given out in the budget.

Mr. Noonan (Limerick East): What is the tax take from this?

Mr. A. Reynolds: About £13 million or £14 million, a small contribution.

Mr. Taylor: The Minister made the point that it is less necessary now to give the relief because of the availability of superannuation schemes, pension schemes and so on. There are certainly plenty of pension schemes and superannuation schemes available although there are tax implications involved in those as well. Those pension subscription items represent a very substantial cost to the Exchequer and very considerably more than would be involved in the life assurance policies we are talking about here.

The Minister also made the point that insurance companies pay very little tax on what comes to them from this source. If that is so — and I know it is so — it is nobody's fault but the Minister's because he is the one who can bring in taxation measures on the insurance companies to ensure that there is an appropriate take from them. The Minister ought to do this; the Labour Party have advocated this for many years. Like the banks and financial institutions insurance companies are not paying nearly enough. They are always [185] moaning and complaining about something. Their profits go up all the time, yet they whinge and moan. When we had juries they moaned and wanted them abolished. They told us that if juries were abolished everything would be all right but when the Government abolished juries they continued to whinge. It is difficult to know what they want but in the meantime their buildings get glossier and are granite and marble faced. They continue to build luxury offices. There are not many signs that they are in a bad way. In my view they are doing extraordinarily well for the reason that the Minister advanced, they are paying very little tax. The Minister should do something about that.

Mr. A. Reynolds: The Deputy's party did not do anything about them when they were in Government for four and a half years.

Amendment, by leave, withdrawn.

Mr. Noonan (Limerick East): I move amendment No. 23:

In page 13, between lines 12 and 13, to insert the following:

“5.—The amount of rent which tenants aged 55 and over of private landlords can claim against income tax under section 142A of the Income Tax Act, 1967 (inserted by the Finance Act, 1982 (as amended) is hereby increased from £750 (single and widowed persons) and £1,500 (married couples) to £2,000 in all cases.”.

This amendment is also in Deputy Garland's name, a new grand alliance has been established on these amendments. As a nation we take pride in the fact that we have the highest home ownership of any country in Europe. We also take pride in the fact that those who do not own their own homes are housed very adequately, generally speaking, by local authorities but one category experiences difficulty, those who do not own their own homes and are in private rented accommodation. I do not have in mind [186] the young workers around the city who live in flats, bedsitters and so on but those over 55 years of age who for one reason or another do not have a home of their own and who do not qualify for a local authority house. There is a tax allowance against rent of £750 for a single person and £1,500 for a married couple. That was introduced in 1967 when it was quite common for people in their later years to be in accommodation where the rent was more or less fixed. A famous court case found in favour of the landlord rather than the tenant and, following the passage of legislation here, rent tribunals were established to review rents every five years. Rents now relate more to market value for people in their fifties and sixties who for much of their lives lived in the rented accommodation and paid very low rent.

Our suggestion is that the allowance should be increased substantially, up to £2,000 for married couples and single people though there might be a constitutional problem in treating a married couple and a single person similarly for allowance purposes. Deputy Rabbitte referred to another problem in regard to rented accommodation. A married couple qualify for the £1,500 allowance but if one of them dies the surviving spouse must pay the same rent. However, the allowance is reduced to £750. That can represent a very serious imposition. The trauma of bereavement is accompanied by a serious deterioration in that person's finances.

Mr. Garland: I should like to put it on the record of the House that my mother lives in rented accommodation. The principle behind the relief has been accepted. The rates were increased in 1985, and rightly so, but they have not been reviewed for five years. In the meantime rents have increased substantially, by about 35 per cent. It seems only reasonable that the increases in rents should be reflected in the allowance. It is reasonable that there should be a special provision to cater for a surviving spouse who must continue to pay the full rent. It could be argued that now that only one [187] person instead of two is living in the house or flat the surviving spouse has too much space at his or her disposal and should seek smaller accommodation at a lower rent. I hope the Minister will not use that argument against our amendment. Most of us have elderly parents and are aware that when they reach a certain age it is difficult to get them to leave their accommodation. Generally speaking, a couple who move to rented accommodation at a certain age will not leave it. I should like to ask the Minister to be generous in regard to this allowance. The amount involved is very small, particularly in regard to widowers or widows.

Mr. Taylor: The amendment raises a very fundamental issue. As the years roll on and one comes across provisions in the income tax code and branches of the law they become almost like axioms. One almost comes to the conclusion that they have always existed. One adjusts one's mind to the belief that the provisions are right and proper. However, we should stop and think about these matters. Where is the rationale in saying that a person in the happy position of being able to buy a house with a mortgage, although he may be struggling to meet his repayments or have his mortgage interest relief cut back to 80 per cent of the amount, should have at least a proportion of his repayments credited against his income tax? That person will own the house at some stage although that may not occur for ten or 20 years. We take it that it is right and proper that such a person should be given an income tax allowance in respect of his repayments which are building up an equity in the house and that a tenant who, generally speaking, is at the lower end of the scale and is not building up an equity in the premises he is living in, should not receive any credit for income tax purposes against the rent payments he makes. There is no logic to that.

There is no doubt that most people would say that the tenant should have first claim to income tax relief rather than the purchaser. Everything is loaded in [188] favour of the purchaser, although I accept that the relief has been cut back but the unfortunate tenant, except those over 55 years of age, does not receive anything. He pays out his rent and does not build up any interest in the house. The tenant will never own the house irrespective of how long he lives there and his rent will be increased from time to time. He will get the wrong end of the stick on all occasions. Where is the rationale in that? Where is the rationale for saying that a person who rents a business premises is entitled to write off the full amount of his rent against his tax liabilities whereas the residential tenant, who provides a home for himself by paying rent, is not entitled to anything? That is a fundamental question. We have often talked about tax reform and we have said that it does not mean tax reductions or adjustments. This is the sort of thing we mean when we talk about tax reform.

I am not saying that a fundamental issue of that nature can be tackled by this amendment or indeed in the Finance Bill. Obviously it cannot but I ask the Minister to think about it and begin the process as soon as possible of bringing the position of the tenant into line vis-à-vis that of the house purchaser and to equalise their tax positions. The amendment is extremely limited but it should be supported for the small benefit it would bring to a very limited category of tenants.

Mr. Rabbitte: I support, without reservation, what my colleague said on this amendment. There can be no justification for not acceding to the request. All parties have been provided with a note to remind us of the grim reality by the organisation Threshold, for example, and the pertinent points have been put on the record of the House. It should be noted they make the point that most of the affected tenants are now very elderly, in declining health and — as a result of a survey conducted in 1989 — that the number of former rent controlled tenants has fallen by one third since 1982 and that 25 per cent of the remaining decontrolled tenants were aged 75 or over.

I cannot conceive any case which the [189] Minister could advance against implementing this amendment. It also provides for a situation where one of the spouses dies which, in the circumstances we are describing, is particularly tragic because to lose a lifelong partner in the twilight of your life is traumatic. As Deputy Garland said, I presume nobody will suggest that they should move out of their accommodation, which might have been their home for many years, to live the remainder of their life in a smaller abode. That is simply not practical. The rent remains the same but the allowance is halved. That is unjust and I urge the Minister to accept this amendment.

Mr. A. Reynolds: This amendment proposes to increase the allowance to individuals aged 55 years and over in respect of rent paid for private accommodation from £750 to £2,000 in the case of a single and widowed person and from £1,500 to £2,000 in the case of a married couple. The cost of the amendment is estimated at a reasonably small sum of £900,000 in 1990 and £1.5 million in a full year.

As drafted, I am advised that the amendment would clearly be in conflict with the Supreme Court judgment in the Murphy case. To accord with that judgment the allowance for a married couple would have to be set at double the figure for single persons, which is £4,000. In that event, the cost would be £1.35 million in 1990 and £2.25 million in a full year.

Deputies should also bear in mind that as you increase the tax allowance on anything like this, the landlord raises the rent. As I said, I cannot accept the amendment but I undertake to have it examined sympathetically for next year's budget.

Mr. Noonan (Limerick East): I am aware of the constitutional implications but there is a counter legal view of the interpretation of the Murphy decision from that of the Revenue, which might be worth looking at. I am glad the Minister made a commitment in the House and I presume that, if he continues to insist [190] that there is a constitutional bar to doing it this way, he will pick a figure — as Deputy Garland suggested — somewhere in between, especially in relation to widowed people. If there is an increase next year and a new category in between for the widow or widower I will withdraw my amendment, if Deputy Garland agrees.

Amendment, by leave, withdrawn.

Amendment No. 24 not moved.

Mr. Taylor: I move amendment No. 25:

In page 19, between lines 18 and 19, to insert the following:

“12.—(1) The Minister may make regulations under this section providing for the assimilation of the treatment under the Income Tax Acts afforded to parties to a non-marital relationship to that which would be afforded to a husband and wife.

(2) Regulations made under this section may provide for such consequential, supplementary and ancillary provisons, including provisions modifying any provision of the Income Tax Acts, as the Minister considers necessary or expedient.

(3) For the purposes of this section two persons shall be regarded as being parties to a non-marital relationship if they prove, in accordance with the regulations, that they have entered into a voluntary union which is intended to endure for their joint lives to the exclusion of all other persons.

(4) Where the Minister proposes to make regulations under this section a draft of the proposed regulations shall be laid before each House of the Oireachtas and the regulations shall not be made until a resolution approving the draft has been passed by each such House.”.

This amendment would authorise the [191] Minister to make regulations to liken the treatment under the Income Tax Acts of parties to a non-marital relationship with that accorded to a husband and wife.

Last night, on Committee Stage, we discussed an amendment in the context of the capital acquisitions tax legislation and this is a similar amendment to deal with the income tax position arising in non-marital relationships. As I said on the debate on the other matter last night, the State, particularly since the passing of the Judicial Separation Act, recognises marital breakdown. We must recognise that there is a high incidence of marital breakdown, that an appreciable number of judicial separation decrees has been pronounced by the courts and separation agreements entered into.

We must also accept that many of the people who are involved in marital breakdown have set up permanent and lasting relationships with other partners and that many children are involved. The law has already recognised and quite properly given them equal rights and status with marital children. I do not want to go over last night's debate but a very large proportion of the people living in non-marital relationships do so involuntarily in the sense that they would like nothing better than to get married and regularise their position if the law would allow them to do so. However, because one of the spouses is married to someone else and because we do not have absolute divorce, they have no choice but to live the way they do. Many of the relationships have lasted for anything from ten to 30 years or more and they constitute a family in everything except the technical aspect of the term. It is just, right, equitable and proper that the same income tax laws should apply to them as is the case with spouses but it does not apply.

They fall into two categories, the wealthy and ordinary working people. The wealthy do not have much of a problem because they can get advice on their tax affairs from solicitors, accountants and so on. However, working people, those [192] on very low incomes or who are unemployed, are in an appalling position. The tax allowance that a husband, for example, gets for his wife does not apply here. The husband will receive a single person's allowance only. In many cases the female partner in the non-marital alliance would have no income at all. The only tax allowance they would receive would be the man's single person's allowance. No doubt the Minister will tell us when replying — and he will be quite right to say so — that they can put that position in order by entering into an annuity deed. That is not true; I know all that. The Minister should not waste breath telling me that; I know that; I know they can do so. First of all, they must know about that — and many of them do not; and they have to be able to afford solicitor's or accountancy fees to do so——

Mr. Noonan (Limerick East): ——and they are expensive.

Mr. Taylor: They are expensive and they just do not have the money to pay solicitors and accountants to see to that. They may have to pay stamp duty on the annuity document. They may have quite a prolonged, frustrating correspondence and negotiation with the Revenue Commissioners to have it accepted and registered. The Revenue Commissioners raise all sorts of questions — I would not say difficulties but they raise questions — as to proof that the money has been paid; they ask for affidavits to verify that it has been paid and so on. All of that costs money and trouble. We must remember we are talking here of people on very low incomes.

There is a principle involved in all of this. Let us accept the principle. If the Minister is saying they can rectify the position by the back door, by entering into annuity deeds, why not rectify the position up-front, recognise that such circumstances exist, say: we do not want to put these people through the mill of a whole legal gobbledegook, a fictional arrangement to provide for something we know is right, that should be provided for [193] by law in the normal way. When they establish that a permanent liaison exists, the same income tax regime should apply to them as would apply if they were married. For all practical purposes in their relationships such people live together for very many years, are devoted to each other, the relationship is permanent and they have children. It is exactly the same as a family arrangement or unit and should be regarded as such. There is nothing unconstitutional about it any more than there is in recognising the rights of non-marital children. That is one aspect of it.

When the male partner of a non-marital liaison dies the female partner remaining is in a particularly indivious position. Had she been his wife she would have been entitled to a widowed person's allowance of £2,550. She has no such entitlement because, technically speaking, she is not the widow. Then we are faced with the strange position that the widow's allowance would go to the original “wife” — in parenthesis — whom the man might not have seen for 20 or even 30 years and who is then very likely living with somebody else in a different non-marital liaison. Where is the logic of saying that the former wife should have the benefit of the widowed person's allowance rather than the woman that man has been living with for, say, 25 years, who may have brought up a family of three, four or five children?

These are the kinds of illogicalities we are allowing prevail within our tax system when we fail to recognise circumstances staring us in the face, that we know are widespread in this country. Rather we go through this pretence, this cod, of convincing ourselves, saying: Ah, no, this woman he has not laid eyes on for 20 years is his wife; she is the person who is entitled to receive the widowed person's allowance; we pretend that she is the person with such entitlement, as though they were married in the normal way and everything was normal as in an ideal relationship. Why do we deal with it by messing about with annuity deeds, fixing up the position and not recognising the [194] reality but rather dealing with it all by way of pretence?

There are other adverse effects, not just in respect of the widow's allowance or the income tax allowance that a spouse would normally receive. It applies also to mortgage interest relief. For example, a widow would be entitled to mortgage interest relief of £2,320 whereas the partner in a non-marital liaison left widowed for all practical purposes would receive no mortgage interest relief whatsoever. Likewise in the case of age allowance, a married couple would receive £400 which would not apply in the case of non-marital relationships.

Those are the anomalies prevailing. We must recognise that we are now in the nineties in Ireland. We accept that marital breakdown occurs; we accept that judicial separation decrees are given; we accept that separation agreements are entered into. These tax consequences flow from a recognition of these circumstances. It is no good pretending that they do not exist. It is sad, unfortunate, one would wish it did not happen, but it is all too widespread. The numbers of cases are increasing in which judicial separation orders are made. The effect of such orders is a complete break between husband and wife when they become completely separate people. As I said yesterday it is exactly the same as a divorce for every single purpose except as to their right to remarry. It has tax implications. Let us recognise them and deal with the position as it obtains.

There are details to be worked out in any endeavour to abolish this discrimination. I am not specifically legislating by way of this amendment. I am simply suggesting an enabling provision to allow the Minister make regulations to sort out the details. It would constitute a tremendous saving and give relief to so many thousands of couples up and down the country in this position. I had one such person in my office a few weeks ago, a bus conductor with Bus Áth Cliath. He has a fair salary from that position, nothing to write home about. He was married before, has been separated from his former wife for many a long year. [195] He is living with this woman, they have children, and find themselves in a hopeless financial position. His taxation is crippling them. In order to alleviate their position I have to set about the whole rigmarole with regard to annuity deeds which I am endeavouring to undertake for him, and which is complex. The Revenue Commissioners are not as accommodating as they might be on this issue and they are slow enough.

We must remember that, even when an annuity deed has been negotiated and signed and they endeavour to obtain the refund to which they are then entitled, they must wait a whole year before the processing of the application for the refund is completed. In other words, for the whole of the relevant year they have to suffer and get by. I would remind the Minister that they do suffer hardship in not having sufficient food on the table, sufficient clothing, sufficient school books for their children. I am talking about one salary earner, the wages of a bus conductor with Bus Áth Cliath — that is all the income coming into that household. He is taxed as a single man although his family unit consists of himself, the woman concerned and three young children. They are suffering financially. All right, come the middle of the year, I suppose he will receive his refund but he must wait a long time for it.

The Revenue Commissioners want proof that the annuity money was paid week on week or month on month, whatever. They do not even accept a statement to that effect. That is the case even though these people living as a family unit. For example, the couple were given a local authority house. In additon, affidavits were required of both the woman and the man, and that is expensive. Then one must correspond with and get clearance from the Revenue Commissioners. I can tell the Minister that, as a result of his staff cutbacks, a reply from the Revenue Commissoners will not be forthcoming within the week or the month either. It is a long, slow haul. By the time one finds the right Department, one's [196] correspondence having passed from this to that section, from this to that PAYE unit, from one premises to the other, it becomes a cumbersome, lengthy process. I have experience of it.

I have processed one or two of these applications and, believe me, it is quite a headache. If one were to charge, as do most solicitors and accountants, the full scale fees, it would be quite a pricey, expensive operation, not the kind that a bus conductor employed by Bus Áth Cliath could readily afford. He is discriminated against and suffers in a way the wealthy person does not. What I am asking for here is fair, reasonable and equitable. It is also unanswerable. The Minister in his heart knows that it is unanswerable and that logic requires what is being sought in the amendment. I look forward with interest to hearing how he is going to approach the answer.

Mr. A. Reynolds: I will not bore Deputy Taylor by referring to the arguments put forward on a similar amendment which was discussed on Committee Stage in relation to capital acquisition tax. In the course of the debate I indicated that there were serious objections to the principle that tax law should lead general law in the manner Deputy Taylor describes. I do not at this stage feel there is any need to go over the same arguments again. Deputy Taylor knows quite well, being a legal man, that the issue he has debated at length are matters of general law which have to be tackled in general law and that tax law will follow, as appropriate.

As I could not accept the amendment on Committee Stage, neither can I accept it on Report Stage. I pointed out on Committee Stage the ways and means available under the present law to deal with the problems that exist. I recognise that such problems exist but we do not live in a perfect world. We are dealing here with tax law, not general law. Nevertheless, under tax law, as the Deputy admitted, one finds a way to deal with it. The bus conductor was lucky in going to Deputy Taylor as apparently he dealt with it in a reasonable way having regard to what the [197] bus conductor could afford. As I say, that is the position and until general law is changed there is no point in arguing the matter any further. When general law recognises the type of union Deputy Taylor speaks about I have no doubt that tax law will follow, as appropriate.

Mr. Rabbitte: We went over these arguments last night and Deputy Taylor has again very lucidly advanced the case in favour of his amendment. I see little point in dwelling on it now. The Minister has said we cannot have a situation where tax law leads general law——

Mr. A. Reynolds: That is the principle widely accepted.

Mr. Rabbitte: ——but this seems to be a case of live horse and you will get grass. As far as I can see, there is no prospect of the Government bringing forward the amendments required to general law. The practice has now left the law so far behind that it is completely anachronistic in the Ireland of the nineties. Everyone knows that the circumstances predicted in this amendment exist to a very wide extent throughout the entire country and are no longer confined to urban areas. It would be all very well to talk about awaiting amendments to general law if there was a prospect of this occurring but to the best of my knowledge and belief there is no such prospect.

I would draw attention once again, as I did last night, to the onerous conditions which would be imposed by the enabling provisions set out in the amendment especially in subsection (3). I cannot contemplate any circumstances outside of the regular marital arrangement whereby one could have more rigorous requirements imposed on a liaison than what are envisaged in subsection (3). It would be required for the purposes of that section that the two persons be regarded as being parties to a non-marital relationship if they prove, in accordance with the regulations, that they have entered into a voluntary union which is intended to endure for their joint lives to the exclusion of all other persons. They [198] would be as demanding as marriage vows, the only difference being the taking of marriage vows is not an option open to those we are referring to here through no fault of their own. The provision which would allow them to regularise the liaison does not exist under Irish law.

It is cold comfort indeed to the people who find themselves disadvantaged for the Minister to say that it would be improper for tax law to precede general law in this area. This is a matter of grave concern to a growing number of people in society and I do not accept that it is not possible for us, given the excellent tradition of an Irish solution for an Irish problem, to take on the tax implications of what is now a fact of life in Ireland and to devise an Irish solution for this peculiar Irish problem.

Mr. Ferris: I wish to respond to the Minister's reply to this reasonable amendment. The Minister spoke about creating a precedent if changes in general law were to be preceded by changes in tax law. However a precedent has already been created by the Department of Social Welfare because the Minister for Social Welfare penalises a couple on learning that they are co-habiting. As this is the case, why can the benefits which would accrue to the couple under tax law not be applied? One solution is as good as another, irrespective of whether it is an Irish solution. The Department of Social Welfare have no problem in penalising couples who co-habit. It would follow therefore that the privileges that might accrue under tax law should also be applied on the grounds of common justice.

Mr. Rabbitte: Nor have the local authorities.

Mr. Taylor: I thank Deputy Rabbitte and Deputy Ferris for their support for the amendment. As I said yesterday, I cannot accept the argument that one has to await an amendment to the general law as this is an income tax matter and nothing but and entirely appropriate to a Finance Bill. It is not appropriate to deal [199] with the wrong which I am trying to have remedied, by way of a change in the general law. One cannot deem the category we are speaking about to be man and wife. What we are trying to do is resolve the adverse income tax position of a couple living in a non-marital liaison on a permanent basis.

What the Minister has said on their position is harsh. We are supposed to cherish all the children of the nation equally but the position of the children of such a non-marital liaison is not equal. They suffer financially because of this harsh income tax provision which the Minister refuses to deal with. What it amounts to is a punishment on the family unit. The whole concept is that because they have not been able, through no fault of theirs, to adapt to the usual norm, live their married life, they find themselves forced into this position. This State takes [200] it upon itself to punish them financially, just as courts impose fines on people as a punishment. They are fined by having an appreciable amount of their hard earned money taken out of their modest wage. Why should they be punished in that way? I thought it was criminals who were punished, who were fined and who are adversely affected by the financial implications. These are innocent people trying to do their best for themselves and their children in difficult circumstances and it ill behoves us in this House to pass laws that are a harsh punishment week in and week out on them and their children. The financial implications are very serious indeed, and these people suffer very badly from them. It will be most disappointing if we do not face up to that situation and recognise it. I am pressing the amendment.

Amendment put.

The Dáil divided: Tá, 64; Níl, 73.

Ahearn, Therese.

Allen, Bernard.

Barnes, Monica.

Bell, Michael.

Belton, Louis J.

Browne, John (Carlow-Kilkenny).

Bruton, John.

Bruton, Richard.

Byrne, Eric.

Connaughton, Paul.

Connor, John.

Cosgrave, Michael Joe.

Cotter, Bill.

Creed, Michael.

Crowley, Frank.

Currie, Austin.

D'Arcy, Michael.

Deasy, Austin.

De Rossa, Proinsias.

Doyle, Joe.

Durkan, Bernard.

Farrelly, John V.

Fennell, Nuala.

Ferris, Michael.

Finucane, Michael.

FitzGerald, Garret.

Flanagan, Charles.

Gilmore, Eamon.

Harte, Paddy.

Higgins, Jim.

[201]Stagg, Emmet.

Taylor, Mervyn.

Taylor-Quinn, Madeleine.

Higgins, Michael D.

Hogan, Philip.

Kavanagh, Liam.

Kemmy, Jim.

Kenny, Enda.

Lowry, Michael.

McCartan, Pat.

McGahon, Brendan.

McGinley, Dinny.

Mac Giolla, Tomás.

McGrath, Paul.

Mitchell, Gay.

Mitchell, Jim.

Nealon, Ted.

Noonan, Michael.

(Limerick East).

O'Brien, Fergus.

O'Keeffe, Jim.

O'Shea, Brian.

O'Sullivan, Gerry.

O'Sullivan, Toddy.

Owen, Nora.

Pattison, Séamus.

Quinn, Ruairí.

Rabbitte, Pat.

Reynolds, Gerry.

Ryan, Seán.

Sheehan, Patrick J.

Sherlock, Joe.

Spring, Dick.

[202]Timmins, Godfrey.

Yates, Ivan.

Níl

Ahern, Bertie.

Ahern, Dermot.

Ahern, Michael.

Andrews, David.

Aylward, Liam.

Barrett, Michael.

Brady, Gerard.

Brady, Vincent.

Brennan, Mattie.

Briscoe, Ben.

Browne, John (Wexford).

Burke, Raphael P.

Calleary, Seán.

Callely, Ivor.

Clohessy, Peadar.

Connolly, Ger.

Coughlan, Mary Theresa.

Cowen, Brian.

Cullimore, Séamus.

Daly, Brendan.

Davern, Noel.

Dempsey, Noel.

Dennehy, John.

de Valera, Síle.

Ellis, John.

Fahey, Jackie.

Fitzgerald, Liam Joseph.

Fitzpatrick, Dermot.

Flood, Chris.

Gallagher, Pat the Cope.

Geoghegan-Quinn, Máire.

Harney, Mary.

Hillery, Brian.

Hilliard, Colm.

Hyland, Liam.

Jacob, Joe.

Kelly, Laurence.

Kenneally, Brendan.

Kirk, Séamus.

Kitt, Michael P.

Kitt, Tom.

Lawlor, Liam.

Lenihan, Brian.

Leonard, Jimmy.

Lyons, Denis.

Martin, Micheál.

McCreevy, Charlie.

McDaid, Jim.

McEllistrim, Tom.

Molloy, Robert.

Morley, P.J.

Nolan, M.J.

O'Connell, John.

O'Dea, Willie.

O'Donoghue, John.

O'Hanlon, Rory.

O'Kennedy, Michael.

O'Leary, John.

O'Malley, Desmond J.

O'Rourke, Mary.

O'Toole, Martin Joe.

Power, Seán.

Quill, Máirín.

Reynolds, Albert.

Stafford, John.

Treacy, Noel.

Tunney, Jim.

Wallace, Dan.

Wallace, Mary.

Walsh, Joe.

Wilson, John P.

Woods, Michael.

Wyse, Pearse.

Tellers: Tá, Deputies Ferris and J. Higgins; Níl, Deputies V. Brady and Clohessy.

Amendment declared lost.

Sitting suspended at 6.40 p.m. and resumed at 7 p.m.