COMMITTEE ON FINANCE. - RESOLUTION 2. (INCOME TAX). – Dáil Éireann (3rd Dáil) – Friday, 13 Apr 1923

COMMITTEE ON FINANCE. - RESOLUTION 2. (INCOME TAX).

The PRESIDENT

I beg to propose Resolution No. 2 as follows:—

"That (1) Where any employed person has omitted to make payment of any income tax under Schedule D or E, due and payable by him for any year, the Revenue Commissioners may give notice to the employer of such person at any time after a period of three months has elapsed since such income tax became due and payable, requiring such employer to deduct the amount of income tax so in arrear from any remuneration payable by him to such employed person.

"(2) On receipt of such notice the employer shall deduct such sum or sums, not exceeding in the aggregate the total amount of income tax so in arrear, at such times, and in such manner, as the Revenue Commissioners may direct, and shall forthwith pay over the amounts so deducted to the Accountant-General of Revenue.

"(3) If any employer refuses or neglects to pay over to the Accountant-General of Revenue any such sum or sums within the time specified in such notice, such employer shall be liable to pay such sum or sums as if the same had been duly assessed upon him, and proceedings for the recovery thereof may be taken in any manner prescribed by the Income Tax Act, 1918, including the issue by the Special Commissioners of their warrant to the collector in whose collection the business premises or property of the said employer are situated, requiring him to distrain the said employer by his goods and chattels; and failure on the part of the employer to deduct any such sum or sums from the employed person shall not be any bar to the recovery of such sum or sums by proceedings or distraint. "(4) Any employer who neglects or refuses to comply with the provisions of this section shall be liable to the penalty imposed by Section 107 of the Income Tax Act, 1918, upon a person who neglects or refuses to deliver a list, declaration, or statement, and such penalty shall be recoverable without prejudice to any other remedy provided by the Income Tax Act, 1918, or this resolution.

"(5) Where the employer is a body of persons, the provisions of Sub-sections 2 and 4, Sections 105 and 106 of the Income Tax Act, 1918, shall apply in relation to anything required to be done under this resolution.

"(6) Nothing in this section shall affect the provisions of Rule 11, Schedule E, of the Income Tax Act, 1918, or of Rule 7, Schedule E, of the same Act, as amended by Section 18 (3) of the Finance Act, 1922.

"(7) An employer who pays over to the Accountant-General, or to the collector in whose collection his business premises or property are situated, any such sum of income tax as required by notice from the Revenue Commissioners as aforesaid, shall be acquitted and discharged of so much money as is represented by such payment as if that sum of money had actually been paid as remuneration to the employed person.

"(8) And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

Mr. JOHNSON

May I ask the Minister if he will tell us whether this resolution embodies anything different in any degree from the practice hitherto prevailing?

The PRESIDENT

That embodies certain powers that are possessed in the law in Scotland, and I think it embodies some of the powers that are in operation in England. One of the reasons for it is that there are huge sums of money outstanding under Income Tax. For 1920-1921 there are 3,725 cases where we are owed under £100. For 1921-1922 there are 6,861 such cases. The tax covered by these is not less than a quarter of a million. As regards cases over £100, there are 200 for 1920-21 and 423 for 1921-1922. The actual tax in this case is £115,000. In Dublin City alone the arrears due from employees, exclusive of workmen, is £365,000. Making allowance for deductions which may be claimed, the net sum is something like £300,000. I do not know whether the Deputy will agree with me or not, that the collection of Income Tax from trade unionists is scarcely an economic proposition.

Mr. JOHNSON

I am not satisfied that the Minister, in answering, clearly understood the import of my question, which was whether this resolution embodies in any degree any change in the practice that has hitherto been operative? Is this the same kind of a resolution, for instance, that was passed by the British Parliament a year ago, verbally identical except for the change of name?

The PRESIDENT

No. The alterations that I have indicated are alterations in it. In other words we are taking practically the same powers as are in operation in Scotland. We have taken the Scotch rather than the English system.

Mr. JOHNSON

That explains why I wanted to postpone the discussion upon this resolution. We ought to have time to consider what is meant by the resolution. If it had been simply a carrying over, a formal resolution carrying over something that we have already accepted by our adoption of certain Acts it might be excusable that these things should be passed. But we have had these resolutions placed in our hands now; we have not had time to read them; we have not been able to understand them, and they may commit us to agreeing to principles we object to absolutely.

Mr. DARRELL FIGGIS

Not a bit.

The PRESIDENT

I am afraid I was wrong. This is absolutely new; it deals with the special circumstances of the case I have described. I have had an undertaking from the Revenue Commissioners that they will exercise discretion in the collection of arrears of Income Tax so as to avoid hardship in any individual case, but these are cases in which payment has been deliberately withheld from us and in which it has been almost impossible for us to get payment by any other means. It represents a very considerable sum and deals with the class of persons who are able to pay but who have evaded payment and who unless machinery such as this be devised to deal with their cases will not pay their contribution towards the upkeep of the State.

Mr. JOHNSON

What I feel about it is that we are not able to understand it, not having had time to read it, and that we ought not to be asked to vote even upon it without some consideration. If the Dáil expresses its view that it approves of the Minister's proposal it is to that extent committed to embodying it in the Finance Bill.

AN CEANN COMHAIRLE

The resolution must be reported to us on Wednesday. This resolution will then be passed in its present form or passed with certain amendments or rejected.

Mr. JOHNSON

True, but the fact that it is brought here to be considered and accepted by the Committee clearly assumes that we are going to understand what we are doing. Deputy Figgis suggests that we should do this thing without understanding it. That may be acceptable to him but it is not acceptable to me. I would like to understand the proposals that are put before us but it is not possible to understand them by this casual method of proceeding.

Mr. DARRELL FIGGIS

Are not we merely passing these resolutions now in order that they may be given statutory effect, and shall we not have an opportunity for a fuller discussion later?

Mr. JOHNSON

I do not want them to become statutory.

Mr. DAVIN

I join with Deputy Johnson in protesting against the form in which these Resolutions have been handed to us this evening. It may be all right for Deputy Darrell Figgis to move the adjournment of the Debate in order that he, in consultation with those whom he represents outside, may have an opportunity of considering the implications that the resolutions involve. That aspect of the case does not appeal to me. The President has said that Resolution 2, which he has just moved, is more or less a copy of law now in operation in Scotland.

AN CEANN COMHAIRLE

He has withdrawn that.

The PRESIDENT

This is not the one; this is completely new.

Mr. DAVIN

From my personal knowledge of the operation of resolutions of this kind, it is not new so far as the British Government is concerned. I must say right away that I regard the question of income tax as a matter to be settled between the individual citizen and the State which presumes to have the right to impose such taxation. I think that any citizen who regards it as a patriotic duty to comply with the laws that are made by the State of which he is a citizen will always regard himself as liable for any taxation that is imposed by the Government acting for the time being. However, this particular resolution and all its implications have been in operation during the British regime in this country. As a result of instructions that were issued during the Anglo-Irish war, I had personal experience of contesting the right of a British employer by whom I happened to be employed regarding the right of that particular employer to impose upon me income tax which I regarded as a charge that was necessary to retain the British Army and all its connections in this country. I was advised by a member of the Second Dáil, who, unfortunately, has now passed away, that I was quite right in contesting that particular aspect of the case; but now I find that a native Irish Government comes along and repeats the very dose that they have already advised us to contest with the British who were putting it into operation. I look upon the matter of income tax as a matter between the individual citizen and the State, and I think that this Government or any other Government has no right to impose upon any employer, no matter in what capacity, the duty of extracting from the individual employee, under any covering resolution of this kind, taxation which is a matter between the individual citizen and the State. I object to and protest against the passing over to us by resolution of this kind a law that was in operation when the British were in charge of this country, and when we were advised by the people who were opposing the laws at the time to ignore. I think it is most unfair, particularly to salaried staffs of any company or those who are employed in positions in the Irish Free State, that they should be called on to comply with a resolution of this kind.

Mr. O'HIGGINS

I listened rather carefully to Deputy Davin. Unless I misunderstand him, he says that he objected to paying income tax to the British Government because he had a scruple about it lest any halfpenny of that money might be used to maintain here armed forces of one kind or another that were making war on or opposing the will of the majority of the people. That is one proposition easily understood. The people here had set up a native Parliament; they had set up their own democratic institutions, and it was attempted to smash those democratic institutions by force, and Deputy Davin, inspired solely by a high civic sense, objected to paying any money that might possibly assist that attempt. The situation now has altered. I think Deputy Davin in his statement failed to take stock of the very radical alteration that has taken place. It is not now a question of a particular law imposed by force upon the people. It is a question now of the Government elected by the people's Parliament, responsible to the people, requiring certain facilities for the collection of taxes which are submitted to the people's Parliament for approval. There is a difference, Deputy Davin will agree, and he need not be afraid now that any halfpenny or penny of his money will be used to defeat the majority will of the people or to smash any institution which the people have set up. I think that in these, as in other matters, that people catch on to ideas that were current and phrases that were current in the past, and attempt to apply them now, when in fact they are inapplicable, and when in fact the whole position is radically and fundamentally altered. The argument that objections which were perfectly valid objections in the past are equally applicable now is unsound. I have very little doubt that he was advised to withhold income tax in the past at his own risk—other people were—to put up to the British Government that kind of passive resistance which was the best support the civilian population could give to those who were actively opposing that Government.

Mr. DAVIN

I submit as a matter of explanation that the question of income tax is a matter of individual liability between the citizen and the State. That is my contention.

Mr. O'HIGGINS

The Deputy will agree with me that the considerations which influenced him in the past are now non-existent.

Mr. DARRELL FIGGIS

There is a personal matter which I hardly like to make reference to, but I should be something less than human if I did not regard it as a matter of offence that it should be stated in the Dáil by any Deputy that I desired to move the adjournment of the Dáil for any other reasons than the reasons I stated in making that request. There was no other reason present to my mind, and I cannot but regard any such reference as a discourtesy which should not have been offered. My only desire in moving that the Debate should be adjourned was that we should have the whole particulars before us in accordance with the custom which obtains in other places, pending fuller examination of the resolutions which still remain before us, and that they should be put into effect directly they are brought in, so that nobody can have an opportunity of taking advantage of any pre-knowledge of them.

Mr. DAVIN

I wish to make a personal explanation. I had no intention, and I hope I never will have, of being discourteous to Deputy Darrell Figgis, or to any other Deputy of the Dáil.

Mr. DARRELL FIGGIS

I accept that entirely.

Mr. GAVAN DUFFY

I hope the resolution now before the Dáil is not going to be voted on before we adjourn. When the first resolution was before the Dáil I understood—and, I think, the Dáil generally understood—that there were good reasons for treating it as urgent, and that the temporary resolution should go through. I should like to know if that applies in the same way to any of the other resolutions on this paper? The Dáil has a very real grievance, in respect of these resolutions, against the Minister who introduced them. The Minister made a long, careful, and very clear statement. The Dáil, and every member in it, were entitled to assume that, in making that statement, the Minister for Finance was covering the ground of the resolutions which he was about to put before the Dáil. I suppose we all assumed that that was the case. It now turns out that through inadvertence, or some other reason, at least two resolutions are sprung on the Dáil without any explanation having been given of them in the opening statement of the Minister for Finance. I refer to the second and third resolutions. I think, in view of the importance of these resolutions, and in view of the fact that the subject under discussion was the most important we could discuss here, these matters should not be rushed, and that having had his first resolution passed, the Minister for Finance should be content. I take the opportunity of saying that personally I regret that the resolution on which the general discussion is to take place is not the first one before the Dáil. The statement which the Minister for Finance made, and the subject he raises is the most important that could come before the Dáil, and should be treated as such. I should have liked to see serious discussion upon that statement raised as the immediate outcome of the speech of the Minister, instead of having these various specific resolutions interpolated before we reach the discussion on the general subject. I do ask the Minister really to let us know whether there is any reason why any other resolution beyond the first resolution should be proceeded with to-night, before the Dáil has had an opportunity of doing anything more than skimming over the very considerable amount of matter in these documents.

AN CEANN COMHAIRLE

Does the Deputy understand that we were proceeding to the general discussion on the first resolution when he moved that the question be now put? Do I understand him now to complain that we cannot have that discussion on the first resolution?

Mr. GAVAN DUFFY

What I understood——

AN CEANN COMHAIRLE

I understood the Deputy to say he regretted we could not have a discussion on the first resolution. We were about to have that discussion when the Deputy moved that the question be put.

Mr. GAVAN DUFFY

What I understood the Ceann Comhairle to say was that the proper time for a general discussion was on the resolution concerning law, which I think he called the ninth resolution, and that he deprecated discustion on the first resolution, which was merely an Income Tax resolution.

AN CEANN COMHAIRLE

The Ceann Comhairle had taken care to write out what he had to say, and perhaps Deputy Gavan Duffy would listen to what was stated from the Chair at the opening. "The Minister for Finance, before moving the first resolution, which relates to a particular tax, will make a general statement upon the financial position. The debate which follows that statement can cover the whole field of taxation and expenditure." I think that makes the position of the Chair very clear

The PRESIDENT

This resolution, even if passed, will not be acted upon, except and until it is law. The resolutions affecting other matters, such as tea, will be acted upon immediately. Income Tax will be charged at 5/- in the £. This whole series of resolutions I am putting up is part of the Bill which will be subsequently introduced. As far as this particular item and some of the others are concerned, they do not affect the issue. This is much the same as the first reading of the Bill. Only to that extent is the Dáil committed.

Mr. JOHNSON

May I ask the Minister, if the resolution cannot be acted upon until the Finance Bill becomes law, can he not provide us with an apportunity at a later stage to discuss this resolution when we understand it?

AN CEANN COMHAIRLE

An opportuntity can be provided at a later stage.

Mr. JOHNSON

Before the Dáil is asked to commit itself even in the slightest degree to it? I understand the point that there is to be what you might call a First Reading, or admission of the resolution into the Dáil, but I do not want to be committed in any degree to this resolution until I understand its import. As there is no urgency for it, there is no reason why it should not be held over until a later stage in the discussion.

The PRESIDENT

We have got to get it through now or at a later stage, and it is simply for the purpose of conveniencing the Dáil in the matter of the rest of its business that I put all the resolutions down for to-day. The passing of it now does not in any way restrict discussion on it at a later stage.

Dáil Éireann debate - Friday, 13 Apr 1923