I move:—
That to remove doubts it is hereby declared and resolved that so much of Section 69 of the Local Government Act, 1925 (No. 5 of 1925), as enacts that for the purposes of the assessment and levying of certain rates the valuation of certain buildings under the Valuation Acts shall be deemed to have been reduced by two-thirds does not and shall not apply to or operate to reduce the annual value with reference to which the tax in respect of such buildings under Schedules A and B of the Income Tax Act, 1918, is to be ascertained, and it is hereby further declared and resolved that, notwithstanding the said Section 69 but without prejudice to the proviso to sub-section (1) of Section 187 of the Income Tax Act, 1918, the annual value of such buildings for the purposes of the of the said tax be taken the full amount of the valuation thereof for the time being in force under the Valuation Acts.
The necessity for this motion arises out of Section 69 of the Local Government Act which was recently passed. That section provides that for the purpose of local rates the valuation of certain buildings during a period of years should be taken to be one-third of the actual valuation. However, in the drafting of that provision sufficient advertence was not given to the wording of the Income Tax Acts, and, in consequence, doubt has been raised whether it actually does not mean that the reduction is also for the purpose of income tax as well as for local rates, as was specifically intended. The position is that that would cause a loss of income tax which had not been anticipated or budgeted for if the courts were to hold that view. It would mean also that the Exchequer was losing revenue without any corresponding gain, whereas if the local authorities lost two-thirds of the rates they would have got something on new buildings, whereas, from the income tax point of view, if money which was paying full income tax was removed from investment and was put into buildings, it would pay income tax at only one-third of the Schedule A rate. In order to remove the possibility of the courts interpreting this particular section of the Local Government Act in a way that was not intended, it has been felt advisable to have a declaratory resolution moved here and to put a corresponding section into the Finance Bill.