Dáil Éireann debate -
Wednesday, 9 May 1934

Vol. 52 No. 6

Financial Resolution No. 1. - Financial Resolution No. 2—Income Tax.

Mr. MacEntee

I move:—

(1) That Rules 7 and 8 (which relate to certain allowances for repairs and maintenance) of No. V (Rules in respect of deductions and allowances) of Schedule A of the Income Tax Act, 1918, as amended, by subsequent enactments, shall cease to have effect in respect of any assessment other than an assessment on any lands or on any farmhouse or farm buildings occupied together with any lands for the purpose of farming such lands or on any premises being mills, factories, or other similar premises.

(2) It is hereby 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, 1927 (No. 7 of 1927).

In connection with this Resolution the House will appreciate that income tax assessments under Schedule A on buildings in the Saorstát are based on the poor law valuation, and in making that valuation an allowance for repairs and maintenance is made before it is struck. There is, therefore, no justification for making a deduction from the income tax assessment in respect of the same items which have already been allowed for in making the valuation, and it is proposed to discontinue the deduction granted. That is the purpose of this Resolution. I should say that no alteration will be made in the existing practice in regard to the assessment of land, farm houses or factories.

Mr. Cosgrave

Was there a similar recommendation put before the Dáil about ten years ago on the same basis? If my recollection is correct there was a recommendation made here; it was passed through the House here, and went to the Seanad. The Seanad recommended that the matter should stand as it was, and the Dáil agreed with the Seanad notwithstanding my objection. Can the Minister say if this same recommendation was made about ten years ago?

Mr. MacEntee

I understand that is a fact, but I am not very certain that the Deputy then raised any great objection. However, I think the first thoughts of the Dáil on that occasion were best.

Mr. Cosgrave

It is ten years ago, and I will ask those other members of the Executive Council who were with me at that time to excuse my exposing —if I may use that expression—or disclosing this matter to the Dáil. I was, perhaps, the only member of the Executive Council who was against it. As fortune had it, when the Seanad sent up this recommendation I was the only member of the Executive present on the front bench, and I had to recommend it to the Dáil although I did not believe in it. It was held by them and held properly, I think, that a change of this sort, having regard to the custom, practice and all the rest of it, is not fair. Some reason for the alteration should be given other than what the Minister has stated. In regard to the poor law valuation, if people have come to the conclusion in connection with the purchase or sale of property that they are buying or selling it without that liability, then some consideration must be present to our minds for an alteration of this sort other than that we have suddenly discovered, 40 or 50 years after the income tax laws were inaugurated, that this particular advantage lay with persons who have property. I do not think it is advisable to be making these piecemeal changes year after year. I did not agree then, as I have said, although the balance of the wisdom of the Executive Council was against me, and the House here having heard all the arguments of the case, decided by a majority of three to leave the law as it was. I propose to divide the House on this.

Mr. MacDermot

The Minister says he is using a realised surplus of £1,300,000 to avoid borrowing. Does that mean he is using it exactly as if it was ordinary revenue?

Mr. MacEntee

No.

Mr. MacDermot

In what way does it differ?

Mr. MacEntee

Ordinary revenue, to use the term which the Deputy has used, is generally applied to defray ordinary administrative expenses. In other countries it is the custom, when a surplus occurs in that way, to utilise that surplus for the purpose of reducing the amount which has been borrowed previously by a separate operation in some cases. Here, instead of using that rather roundabout way of getting to the same objective, we simply take our surplus, use it for capital purposes, and so avoid creating the debt.

Mr. MacDermot

Then am I to understand that the Minister is borrowing £7,212,000 for capital purposes? Is that right? In addition to borrowing that for capital purposes he is using the £1,300,000 also for what he regards as capital purposes?

Mr. MacEntee

That has already been applied. We have already spent it in buying shares of the Industrial Credit Corporation and the Beet Sugar Company, and allocated the balance to the Local Loans Fund.

Mr. MacDermot

Now I have got it.

General Mulcahy

Following what Deputy Cosgrave has said, I should like to ask the Minister if he can give detailed figures, for either an actual or a hypothetical case, which will show the relationship between the expenditure that he proposes to deal with here and the reliefs that would be given in either one or the other way.

An Ceann Comhairle

On Resolution No. 2?

General Mulcahy

Yes.

Mr. Good

What reliefs were made last year that are not now being made?

Mr. MacEntee

In what way? I have pointed out that at the present moment assessments under Schedule. A are based on the poor law valuation, which is a very inadequate valuation in the case of most buildings. In addition to that, the income tax payer gets an allowance of one-sixth off the valuation, to cover repairs and maintenance, but before the valuation was struck he had already received that allowance. I say that he should not get it on the double.

Mr. Dockrell

I should like to ask the Minister if this applies to business premises, as I take it that the exemption is being withdrawn from private houses. I take it this still extends to business premises? The wording is "any premises being mills, factories or other similar premises."

Mr. MacEntee

Business premises which are owner-occupied will lose under this, but, if the buildings come within the definition of "factories" they are exempt and the allowance still remains.

Mr. Dockrell

They are exempt?

Mr. MacEntee

Yes, if it is a factory, a farm building or a mill.

Mr. Dockrell

Then I should like to ask the Minister where he is going to draw a distinction? If part of the premises is a factory, are the office buildings etc. to be reckoned as part of the factory?

Mr. MacEntee

Where the distinction will be drawn in that matter lies with the Revenue Commissioners who will determine the issue in accordance with the established practice.

Mr. Dockrell

I would suggest to the Minister that it is intended under this to exempt business premises, because it says "mills, factories or other similar premises."

Mr. Dillon

How much does the Minister propose to collect out of this?

Mr. MacEntee

£24,000.

Mr. Dillon

Is he in such dire straits that he has to resort to this kind of business?

Mr. MacEntee

No. We are merely remedying an injustice which the average taxpayer has suffered under for a considerable number of years.

Mr. Cosgrave

That is not a true statement. The legislature imposes taxation. It can impose it on any scale that it wishes. No injustice upon anybody was committed when this particular enactment was imposed. They were allowed one-sixth off for repairs. Anybody who has been either buying or selling premises bought or sold them with that advantage. A man bought premises last week, let us say; he bought them under the assumption that he was entitled to the one-sixth; now he loses it. He is placed in a position much less favourable than he was in last week. The whole sum and substance of it is £24,000, and there is scarcely a taxpayer in the country who has got that particular remission year after year but will fail to understand why he does not get it now. The administrative inconvenience will be enormous. The only reason why it is being imposed now is this £24,000. Let us take this case. There have been quite a number of revaluations in the City of Dublin, and also in Cork City, by reason of the rebuildings occasioned through the damages of the last 15 or 20 years. These have been highly taxed; they are on a poor law valuation. They are getting some advantage from the local authority, according to law, in connection with the rates, but the valuation has been enormously increased. In almost every case where a person rebuilds the valuation is increased. The Minister says they have already got the advantage in connection with the valuation. I have very grave doubts on that, and I have had as much opportunity of having a knowledge of the way in which valuations are imposed upon premises and so on as the Minister, having had many representations in connection with this matter from all over the country. I do not know that there is any case made by the Minister for this proposal except to get £24,000, and I submit that it is not a fair imposition.

Question put.

The Committee divided: Tá, 60; Níl, 38.

Tá

• Aiken, Frank.
• Bartley, Gerald.
• Beegan, Patrick.
• Boland, Gerald.
• Brady, Brian.
• Brady, Seán.
• Breathnach, Cormac.
• Briscoe, Robert.
• Browne, William Frazer.
• Carty, Frank.
• Concannon, Helena.
• Corish, Richard.
• Corkery, Daniel.
• Crowley, Timothy.
• Daly, Denis.
• Davin, William.
• Derrig, Thomas.
• De Valera, Eamon.
• Doherty, Hugh.
• Donnelly, Eamon.
• Dowdall, Thomas P.
• Flinn, Hugo V.
• Flynn, Stephen.
• Fogarty, Andrew.
• Pattison, James P.
• Pearse, Margaret Mary.
• Rice, Edward.
• Ruttledge, Patrick Joseph.
• Ryan, James.
• Ryan, Martin.
• Goulding, John.
• Hales, Thomas.
• Hogan, Patrick (Clare).
• Jordan, Stephen.
• Kehoe, Patrick.
• Kelly, James Patrick.
• Kelly, Thomas.
• Kennedy, Michael Joseph.
• Keyes, Michael.
• Kilroy, Michael.
• Kissane, Eamonn.
• Lemass, Seán F.
• Little, Patrick John.
• McEllistrim, Thomas.
• MacEntee, Seán.
• Maguire, Ben.
• Maguire, Conor Alexander.
• Moane, Edward.
• O'Briain, Donnchadh.
• O'Doherty, Joseph.
• O'Dowd, Patrick.
• O'Grady, Seán.
• O'Kelly, Seán Thomas.
• O'Reilly, Matthew.
• Ryan, Robert.
• Smith, Patrick.
• Traynor, Oscar.
• Victory, James.
• Walsh, Richard.
• Ward, Francis C.

Níl

• Alton, Ernest Henry.
• Beckett, James Walter.
• Belton, Patrick.
• Bennett, George Cecil.
• Bourke, Séamus.
• Brodrick, Seán.
• Burke, James Michael.
• Burke, Patrick.
• Coburn, James.
• Cosgrave, William T.
• Costello, John Aloysius.
• Curran, Richard.
• Davitt, Robert Emmet.
• Dockrell, Henry Morgan.
• Dolan, James Nicholas.
• Doyle, Peadar S.
• Finlay, John.
• Fitzgerald, Desmond.
• Good, John.
• Haslett, Alexander.
• Keating, John.
• Lynch, Finian.
• MacDermot, Frank.
• McDonogh, Martin.
• MacEoin, Seán.
• McFadden, Michael Og.
• McGilligan, Patrick.
• McGovern, Patrick.
• McGuire, James Ivan.
• McMenamin, Daniel.
• Minch, Sydney B.
• Mulcahy, Richard.
• O'Higgins, Thomas Francis.
• O'Leary, Daniel.
• O'Mahony, The.
• Redmond, Bridget Mary.
• Rice, Vincent.
• Rowlette, Robert James.

Tellers:—Tá: Deputies Little and Traynor; Níl: Deputies Doyle and Bennett.

Question declared carried.