I move amendment No. 26:
In page 19, between lines 18 and 19, to insert the following:
"12.—An individual who makes, in the manner prescribed by the Income Tax Act, 1967 a claim in that behalf and makes a return in the prescribed form of his total income shall, for the purposes of ascertaining the amount of his assessable income for the purposes of income tax, be allowed a deduction from the amount of his earned income as estimated in accordance with this Act of a sum equal to one-fourth of that income, but not exceeding, in the case of any individual, the sum of £1,500.".
In introducting this amendment I am seeking to put back on the Statute Book earned income relief which was abolished about 15 years ago as part of the so-called tax reform. The words "tax reform" are used very loosely in the House when often what is meant is tax reduction or tax changes. The implication that there is any new thinking involved in this so-called reform is a joke. This tax was introduced supposedly to simplify the income tax code. To an extent, it certainly did simplify the income tax code in that it reduced a very simple and easily calculated relief which was given on earned income — that is income from salaries, wages, business profits, professional earnings and so on. It was a very simple relief to calculate and it differentiated between earned income on the one hand and unearned income on the other. For the life of me, I could never see the logic of this being abolished. Surely we should be differentiating in favour of earned income and discriminating against unearned income from rent, interest and so on. The difficulty with this amendment is that it must be taken in conjunction with the rest of my amendments but that cannot be because it must stand on its own. For example, I was proposing the abolition of the PAYE and PRSI allowances. If these allowances were eliminated this would go a very long way towards paying the cost of the earned income relief.
The great advantage of the earned income relief is that it removes the differentiation between wages and salaries on the one hand and business profits and professional earnings on the other. We have had an adequate debate on this matter already. In view of the current year basis of assessment there is no longer any reason for differentiation between these two types of income. I listened to the Minister's explanation for his reasons for keeping up this differentiation but I was not impressed with the reasons he put forward. It is obviously too late to do anything in this budget but I would ask the Minister to look again at this whole question of the PAYE allowance, the PRSI allowance and the earned income relief. We would move on to a much better system if this amendment were adopted.