Dáil Éireann debate -
Tuesday, 24 Jun 1924

Vol. 7 No. 29

DAIL IN COMMITTEE. - FINANCE BILL, 1924—REPORT STAGE.

Mr. GOOD

I have put down two amendments. I move:—

1. To insert before Section 9, page 9, a new section as follows:—

(1) If any person who has paid tax charged under an assessment to income tax made for any year under Schedule D, or according to the Rules applicable to that Schedule, alleges that the assessment was excessive by reason of some error or mistake in the return or statement made by him for the purposes of the assessment, he may, at any time not later than three years after the end of the year of assessment within which the assessment was made, make an application in writing to the Revenue Commissioners for relief.

(2) On receiving any such application the Revenue Commissioners shall inquire into the matter and shall, subject to the provisions of this section, give by way of repayment such relief (including any consequential relief from super-tax) in respect of the error or mistake as is reasonable and just:

Provided that no relief shall be given under this section in respect of an error or mistake as to the basis on which the liability of the applicant ought to have been computed where the return or statement was in fact made on the basis or in accordance with the practice generally prevailing at the time when the return or statement was made.

(3) In determining any application under this section the Revenue Commissioners shall have regard to all the relevant circumstances of the case, and in particular shall consider whether the granting of relief would result in the exclusion from charge to income tax or super-tax of any part of the profits or income of the applicant, and for this purpose the Commissioners may take into consideration the liability of the applicant and assessments made on him in respect of other years.

(4) Any person who is aggrieved by the determination of the Revenue Commissioners on an application made by him under this section may, on giving notice in writing to those Commissioners within twenty-one days after the notification to him of their determination, appeal to the Special Commissioners.

(5) The Special Commissioners shall thereupon hear and determine the appeal in accordance with the principles to be followed by the Revenue Commissioners in determining applications under this section, and subject thereto, in like manner as in the case of an appeal to them against an assessment under Schedule D, and the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the statement of a case of the opinion of the High Court on a point of law) shall apply accordingly with the necessary modifications:

Provided that neither the appellant nor the Revenue Commissioners shall be entitled to require a case to be stated for the opinion of the High Court otherwise than on a point of law arising in connection with the computation of profits or income.

The object of this proposal is to bring the Finance Bill into conformity with the Finance Act that exists in England. The position under the Bill is this, that where an assessment is made under Schedule D, if an appeal be not lodged against that assessment within 21 days, the assessment becomes final. Under Section 24 of the British Act, any taxpayer—and if this amendment is passed we will have the same privileges here—can reclaim any tax paid through error, or from any other causes in making his return. It is hardly necessary in these days in this country to point out the reasonableness of such a provision as is now proposed. Many people on whom these assessments were made have left the country. In other cases our postal arrangements are not exactly in an ideal state. One might cite many reasons why it is very undesirable that where an appeal against an assessment should be made within twenty-one days, that, in the circumstances I have pointed out, it would be quite unfair to enforce these conditions, and for that reason I propose that this additional section should be added. It will put the income taxpayer in the Free State in exactly the same position as the income taxpayer is in England, where the same conditions that I have cited do not prevail.

Prof. THRIFT

I second.

Mr. BLYTHE

This amendment is, I think, a copy of Section 24 of the British Finance Act of last year, with the substitution of the words "Revenue Commissioners" for "Commissioners of Inland Revenue." It is one of two sections in that Act. One section gives certain additional powers to the Revenue, and another gives certain additional privileges to the taxpayer. Deputy Good has proposed a section which gives certain privileges to the taxpayer. It has been the practice for a good many years past to repay the taxpayer any tax overpaid by him in error, and the section will only give him as a legal right what he has got in practice in the past. There are, however, one or two slight emendations which, I think, would be necessary. As we do not propose, at present at any rate, to take the additional powers for recovery of penalties which were taken by the British in the Act of 1923, I do not think that it is desirable that we should give what may be in some cases six years for the making of the application. Then, as the law stands at present, if this amendment were passed, we would give an additional appeal in this case beyond the appeal in England. We would give an appeal not merely to the Commissioners but to the Circuit Court. In these matters of errors I do not think it is necessary that we should have an appeal to the Circuit Court, and have the litigation and delays that are likely to rise. If Deputy Good would accept a couple of small emendations which I would suggest, I will be prepared to take the amendment.

I would ask Deputy Good to insert the word "for" instead of the word "within" in the third last line of paragraph 1, so that it would read: "he may, at any time, not later than three years after the end of the year of assessment for which the assessment was made, make an application in writing to the Revenue Commissioners for relief." In the brackets in paragraph 5, I suggest the insertion of the words "but excluding the provisions of Section 196 of the Income Tax Act of 1918," so that it would read "(including the provisions relating to the statement of a case of the opinion of the High Court on a point of law, but excluding the provisions of Section 196 of the Income Tax Act of 1918)." If these words were inserted the position in regard to appeals would be the same as in England. If they were not inserted there would be an appeal to the Circuit Court, for where there is no parallel in England.

Mr. GOOD

I will be glad to accept the amendment to the new section.

Professor THRIFT

Has the Minister noticed the necessity for the change of the word "of" to "for" in that, so as to make it read "for the opinion of the High Court"?

Mr. BLYTHE

Yes; that is a slip and should be made right.

Leave to amend the new section granted.

New section, as amended, put and agreed to.

Mr. GOOD

I beg to move:—

To insert before section 9, page 9, a new section as follows:—

(1) Section forty-one of the Income Tax Act, 1918, and Rule 5 of No. V. of Schedule A. (which fix the period within which certain claims for repayment of income tax may be made) shall, so far as relates to claims for repayment in respect of income tax charged for the year 1921-22 or for any subsequent year of assessment, have effect as though a period of six years after the expiration of the year of assessment were substituted for a period of three years after the expiration of the year of assessment.

(2) Section twenty-five of the Income Tax Act, 1918 (which grants relief from tax in respect of income accumulated under trusts) shall, in case of such a contingency as is referred to in that section happening in the year 1921-22 or in any subsequent year of assessment, have effect as though a period of six years after the end of the year of assessment in which the contingency happens were substituted for a period of three years after the end of the year of assessment in which the contingency happens.

(3) Any provision of the Income Tax Acts which authorises a claim for repayment of income tax to be made at the end of any year of assessment or within a specified period of less than one year after the end of any year of assessment shall be amended so as to authorise the making of the claim within a period of one year after the end of the year of assessment.

This proposed new section extends the time for making claims for refunds under the Income Tax Act to six years beginning with the year 1920-21. The period at the moment is three years. This will bring the Free State Finance Act into conformity with the Finance Act of 1923 which is in existence in Great Britain at the moment. One might also mention incidentally that the period of six years within which one can make claims is also the period fixed by the Statute of Limitations.

Mr. BLYTHE

I must resist this proposed new section, because, even more than in the previous case, this is only part of the change which was made in Great Britain. There were two sections inserted together in the British Finance Act of 1923. Section 29, which extended from 3 to 6 years the time within which additional assessments or surcharges for 1920-21, or any subsequent year, could be made by the Revenue; and Section 30, which extended the time within which the taxpayer might claim repayment from 3 to 6 years. This matter was considered by us, and we decided that we could not this year, at any rate, introduce the changes here that were introduced in Great Britain. The income tax staff here is so heavily worked, from the point of view of dealing with arrears already in existence, that it would be impossible for them to make use of additional powers such as were taken for the Revenue under Section 29 of the British Act. Then there is the additional reason that we do not wish to go back now on matters prior to 1922-23, when we took over the income tax collection. If we adopted this proposal it would mean that we would give the taxpayers six years for reclaiming without giving the revenue 6 years in which to make additional assessments or surcharges. We think that if a change is being made the two changes should come about together. There is another reason. If this change were made it would automatically involve us in making repayments to taxpayers who had paid to the British, so that, as a matter of fact, we would be repaying money which we had never received. I do not think that this is particularly desirable. We are inclined to think that a change such as this might be made, and I think that the Deputy may take it that in a subsequent Finance Bill this provision, with the countervailing provision giving the Revenue authorities their 6 years, will be included.

Mr. GOOD

On the whole, I think the explanation of the Minister is only fair. To give the privilege to one side, and not extend the same privilege to the Executive, would be unfair. I think the Minister would be well advised in a few years to try, as far as possible, and keep the taxpayer, from the point of view of privileges in the Free State on the same terms as the taxpayer in Great Britain. We are anxious that many of those who, owing to high rates of income tax and other reasons, have left the Free State, in many cases taking considerable amount of capital with them, should be encouraged to return and give the advantage of that capital to the Free State. From that and other points of view I urge that it would be exceedingly desirable in future Finance Bills that the Minister should, as far as possible, in matters of this kind, endeavour to have the Acts prevailing in the two countries as nearly alike as possible. In view of what the Minister has said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. BLYTHE

I beg to move:

In Section 15 (2), page 8, line 25, to delete the words "not contained in bottles" and to insert in lieu thereof the words "imported in sealed tins or cans."

This amendment states the matter in a positive rather than in a negative way, and also avoids difficulties which might arise as regards the question, whether a particular vessel was a bottle or a jar.

Mr. JOHNSON

I think this form is much better, and I approve of it.

Major COOPER

May I congratulate the Minister on having adopted the words of my amendment, but may I express my regret that he has not adopted the substance of it by letting these fruits in sealed tins and cans in free of duty altogether. May I also call attention to the fact that there are not 20 Deputies present.

A count having been taken:

AN CEANN COMHAIRLE

There are 20 Deputies present, including myself.

Amendment agreed to.

Mr. BLYTHE

I beg to move:

In Section 18, page 9, line 5, after the word "candles" to insert the words "tapers and nightlights."

This amendment is proposed by way of preventing litigious persons from raising questions. The word "taper" is applied very frequently to small, coloured candles. They are called Christmas tapers, on which the Revenue Commissioners will be bound to charge duty. Of course the Revenue Commissioners would regard night-lights as candles of a small size and shape.

Mr. JOHNSON

Litigious persons might raise the question that night-lights might include electric lights or any other sort but wax or fat. I suggest to the Minister that he should reconsider that term. Night-lights, I think, is too general a term to cover candles, or something appertaining to candles.

Mr. BLYTHE

If the Ceann Comhairle will allow me, I will make it "candles, including tapers and night-lights."

Professor THRIFT

I think Deputy Johnson has raised a point of substance. The term "electric candle" is quite common in the trade.

Mr. BLYTHE

I think we can leave that to the discretion of the Revenue Commissioners.

Leave to amend the amendment granted.

Amendment, as amended, agreed to.

Mr. BLYTHE

I move:

In the Fourth Schedule, page 17, at the beginning of the second column, to delete the word "Act" where it first occurs in the expression "Finance Act (1909-10) Act, 1910."

Amendment agreed to.

Mr. BLYTHE

I move:

In the Fourth Schedule at the beginning of the Schedule (i.e., before the words relating to the Finance (1909-10) Act, 1910) to insert the following:—

16 & 17 Vict. c. 107	Customs Consolidation Act, 1853.	Sections 114 and 115
25 Vict. c. 22	Revenue Act, 1862	Sections 27 to 37 and so much of Schedule C as relates to playing cards.
54 & 55 Vict. c. 38	Stamp Duties Management Act, 1891.	In section 26, the words “or playing cards.”
8 Edw. VII. c. 16	Finance Act, 1908	In sub-section (4) of section 4, the words “and playing cards.”

These are the new repeals relating to playing-cards. Sections 114 and 115 of the Customs Consolidation Act, 1853, relate to the obligation to import playing-cards in wrappers. That was necessary when there was an Excise Duty which was collected by means of the wrapping on home-made playing-cards. The others are various sections in which there are provisions in relation to playing-cards.

Amendment agreed to.

Mr. BLYTHE

I beg to move:

Fourth Schedule to delete the following words and figures:—

10 & 11 Geo. V. c. 18

Finance Act, 1920

Paragraph (e) of sub-section (2) of section 53.

This was a repeal which went in by accident. It should not have been included.

Amendment agreed to.

Mr. BLYTHE

I beg to move:

Fourth Schedule in the third column, opposite the expression "Finance Act, 1921," to delete the word and figures "Section 29" and to insert in lieu thereof the words and figures "Sections 13 and 29."

This is another section dealing with playing cards. In the Schedule, Section 29 is an Income Tax section. Section 13 is a section which provides for the warehousing of home-made playing cards intended for export. As the Excise Duty is removed there is no need for the section now.

Amendment agreed to.

Motion made:—"That the Bill, as amended, be received for final consideration."

Mr. JOHNSON

Perhaps I will be permitted to say a few words arising out of Deputy Good's remarks. He has suggested that it should be the policy of the Minister for Finance to approximate the finance schemes of the Free State to that of Great Britain—in effect, to make of no value the fiscal freedom that we have to develop on our own lines. If it is to be the policy that Ministers for Finance should make their finance schemes fit in with those of Great Britain, I would suggest to the Minister that it should be rather the contrary, that we should not adopt a finance scheme and make it conform to that of Great Britain, but rather to a very great extent be the opposite to it. The present scheme is mainly a carry-over scheme from the British scheme.

The result of it is to impose on the mass of the people as consumers a disproportionate share of the burden of running the State. The effect of that is that the consumers of the ordinary, common necessaries of life as such are made to bear this disproportionate burden, notwithsanding the pleas made on behalf of income tax payers, notwithstanding what one may speak of as the bitter cry of the income tax payer. The fact that the poor man and woman who do not pay income tax are taxed upon the necessaries and common luxuries makes them bear an undue burden of taxation. I suggest to the Minister that the whole plan of the Bill is wrong and should not be continued any longer than is necessary, that so far from carrying over the taxes on sugar and tea and other necessaries which are all imported, it would be better for the State to reduce the taxation on those articles which are not produced at home, and transfer those taxes upon imports, so long as taxes upon imports continue, to articles of the kind that may be produced in this country. I suggest to the Minister that he should look around for other methods of financing the State, and in taking into account the imposition of taxes for services which are at present rendered, he ought also take into account services that ought to be rendered and are not. This, no doubt, would cost money, or possibly might cost money, but it would either immediately or eventually become beneficial and of advantage in wealth production to the community.

I dissent from the general scheme of this Bill, and would more especially dissent from it if I thought it were likely to be the basis of continued legislation with regard to finance, because it is following out a plan which was adopted by Britain, an industrial country living on the export of manufactured goods and depending for its existence upon the importation of foreign-grown food stuffs. We in this country have entirely different economic conditions and, therefore, I submit we should have a different system of taxation and that the taxation scheme should be fitted in, not merely to make it comparatively easy for the Finance Department to rake in money, but should also be designed for the purpose of enlarging the area of cultivation and generally promoting the production of commodities which are consumable and exchangeable within, and outside, this country. I submit that the scheme of finance ought to have regard, to a very much greater extent than this Bill has, to its re-action in the field of production and it should also differ entirely and utterly from the ideas expressed by Deputy Good. We should rather go counter to the schemes of finance and the raising of revenue that have been adopted in Great Britain. This cannot be done this year and, no doubt, the Bill will pass without any further comments or alterations, but for fear the Minister is unduly impressed by the arguments of Deputy Good I want to put in the other side of the case.

Mr. GOOD

I do not think that there is the least fear of the Minister being unduly influenced by any remark of mine, but I am influenced by a suggestion which has fallen from Deputy Johnson, who urges, seeing that Great Britain is going in one direction, that it ought to be the policy of those in charge of the finances of the Free State to go in the other direction. If that means that while Great Britain is maintaining a high rate of income tax at a war level, which is very inadvisable in times of peace, and if Deputy Johnson means that we should go in the opposite direction and get the income tax back to what it ought to be, instead of being on a war rate level, there is no difference whatever between Deputy Johnson and myself, and I heartily support his proposal. In this question of taxation and the burden of taxation I urge that at least the taxpayer in the Free State should not be put at any disadvantage as compared with the taxpayer in Great Britain. The reasons why I urge that as a policy are obvious.

During the last few years the Free State has lost a considerable number of its old citizens as well as a considerable amount of capital. That is a distinct disadvantage to the Free State, and I therefore urge, in putting forward these economies, that we should do everything we possibly can to attract back to this country those persons with capital who have left, and everything that places the taxpayer in the Free State at a disadvantage, as compared with the taxpayer in Great Britain, adds to the difficulty of getting those persons and that capital back to the Free State. One does not want to go into all the grievances from which we suffer, such as high income tax, high postal rates, and high charges of one kind or another which do not exist on the other side to the same extent. The only attraction at all which the Minister for Finance holds out to those possessed of capital and who left this country, in order that they might come back to the Free State, is a reduction in death duties. I do not know whether that reduction will be looked upon as a very attractive one on the other side, because my idea is that where people live they generally die, and if he cannot attract them to live in the Free State, I do not think that we will attract them to die here by a reduction of death duties.

Major BRYAN COOPER

I am never surprised by Deputy Johnson, but I got nearer to it this afternoon than I normally get, because his speech was more divorced from reality than is customary with him. I expected him to complain, not that we were following Great Britain too closely, but that we did not follow the present Chancellor of the Exchequer closely enough. I expected him to ask the Minister for Finance for a reduction in the sugar and tea duties, further than that which has been given, and a reduction on other items which have been taxed, but Deputy Johnson did not take that line. I want to know exactly on which leg Deputy Johnson stands. Does he believe in increasing direct taxation? Is that his policy, because if so, it is and has been the British policy? The thing that differentiates British financial policy from that of other countries is the fact that they introduced income tax at an earlier date, and collected it on a very much higher scale than any continental country. The continental countries relied on high prices and indirect taxation, while the British, on the other hand, introduced the income tax.

Deputy Johnson does not wish income tax to be done away with, and at the same time wishes to get away from the direct system, the British system, which is an income tax system. Take France, for example. The system of taxation is indirect, and is largely avoided. The same thing holds in Italy. The way money is raised there is by high taxes. As Deputy Johnson knows, and certainly Deputy Davin knows, you cannot leave the station, at Paris, Milan, or Rome without a man at the gate asking you if you are bringing in any foodstuffs. That is for the purpose of the municipal octroi, the tax on the import of any foodstuffs. That raises the cost of living for the poor. Is that Deputy Johnson's policy? Are we to get away from the income tax and follow that un-British policy? There was one respect in which I would ask the Minister to follow the French financial policy. At present, if an American visitor takes a house here, tax is levied on the whole of his income if he remains over a certain time. In France that policy is not followed. He is taxed with the income he apparently spends in the country on the valuation of his villa and on the income he appears to enjoy. If he lives in a modest way the tax is a moderate tax, but it is helpful to the Revenue. If the Minister would, in considering his budget for next year, see the wisdom of making reductions on those lines, the visitors to the Tailteann games might be persuaded to return, and settle here for a longer period. Or is Deputy Johnson's other alternative that this country should follow the United States?

I have heard it put forward by men whose opinion I value, that the policy of this country should be that of the United States—high import duties, high prices and high wages. I am sure from what I can now remember of the Governor-General's speech—it is a long time ago since I read it—that that is not the policy of the Government. Is that Deputy Johnson's policy, and is that the horse he declares to win on? If so, I would ask him to bear in mind the difference between a Continent largely undeveloped, with huge mineral resources, and a somewhat over-populated island, which has at present very little resources beyond that of agriculture, backed by a little distilling and brewing. Until our conditions are better, it is impossible to adopt a policy of that kind. It may be that tentative measures introduced by the Minister in this Finance Bill may help to an industrial revival. If that is so, let us help to develop the country, and then the time may come for Deputy Johnson's proposal. The time has not yet come, and it is chimerical when we reflect that across an imaginary land frontier there is another fiscal system in operation. You cannot draw an imaginary line there, and it is impossible that we cannot be influenced by that. In some cases there are men who have to pay under both systems. In many cases there are people with financial interests in both countries, and they do what Deputy Good says— they go and spend their money, and the interest of their money, in the country where it pays them best. That is human nature. Speaking for myself, if I may take a personal instance, Deputy Johnson has frankly warned me of his intentions with regard to income tax. On the day he becomes Minister for Finance I shall get out of this country with all I can take. He can confiscate all I may leave behind, but that will not be worth more than three years' income tax.

Mr. JOHNSON

We may search your pockets at the port.

Major COOPER

You will find very little in them but a railway ticket. My position is that of a great many other people, and Deputy Johnson's attempt will be singularly futile, for some of them are less scrupulous than I am, and already have taken care to put their money where he will not find it.

Speaking seriously, I think Deputy Johnson's proposals tend to additional insecurity and unsettlement, such as have done a lot of harm in the last four or five years. We want to dissipate that atmosphere, and the Government have done a great deal in that direction. Let them be prepared to meet those arguments to realise that there is something behind them, and it may be that there will be a fulfilment in ten or twenty years time, but Deputy Johnson's desires now would mean nothing but disaster.

Mr. T.J. O'CONNELL

There is one small point I would like to draw attention to. It is a matter for the future rather than the present. I refer to the question of insisting on stamps on receipts for wages, which is the custom at the present time. I refer especially to that practice so far as it refers to Government servants. It may be argued when a man is paid his salary for a month, and has to pay 2d. for a stamp he has not very much of a grievance. I do not say he has very much of a grievance, but there are other cases where a man, such as in the Post Office, etc., is paid weekly wages, and has to pay for a 2d. receipt stamp on his weekly receipt. I think that is an unfair tax. Many of those from whom such a tax is demanded have a small wage, and it is necessary for them to look into every penny. I think that matter ought certainly be considered by the Government. It is a question of a tax of something like 8/- or 9/- a year on those small wage earners. In the case of those who get a weekly wage, I would like the Minister to consider that position. I would like him to see if there would not be some way by which the payment of this tax could be discontinued.

It has been suggested that if this is the law now, and that we cannot get out of it in any other way, it could be managed by paying bi-weekly. I am sure that would be looked on by the particular people concerned as an advantage from another point of view.

Mr. BLYTHE

I do not really know what the position is at the moment regarding that question. I would have to look into it. With regard to the point raised by Deputy Bryan Cooper about the millionaires, I do not think he is quite well informed. As a matter of fact, a millionaire would be taxed on his whole income only if he were domiciled here. If he were merely resident, he would be taxed on the amount remitted, so that I do not think that any millionaire who may come will have very much to complain of.

Major COOPER

Will the Minister say what constitutes "domicile"?

Mr. BLYTHE

I could not say that. With regard to the very interesting discussion which has taken place between Deputy Good, Deputy Johnson, and Deputy Cooper, it would suffice, perhaps, if I said that I have nothing to add to the remarks I made on that particular matter when I was introducing the Financial Resolutions.

Question put—"That the Bill, as amended, be received for final consideration." Agreed.

Final Stage fixed for Friday.