Is the Minister moving to recommit the Bill?
Finance (Miscellaneous Provisions) Bill, 1956—Report and Final Stages.
I do not think it is necessary.
Will you just allow me at this stage to say——
The Deputy is not in order in making any comment at this stage.
I say it is proof of the undesirability of trying to rush a Bill of this kind through the Dáil when the Minister has to come in on Report Stage with 30 amendments.
That is nonsense. The Minister made it quite clear on Second Reading that he deemed it to be a Committee Bill and that he was open to hear arguments on Committee. The Deputy is merely trying to suggest that other people should have the same closed mind as he has.
I am only suggesting that there is a great deal of incompetence shown in the activity of the Government.
Amendment No. 1 by the Minister has been ruled out of order as not being relevant to the subject matter of the Bill.
May I say that I entirely accept that ruling, that I only got notice of this matter from the President of one of the constituent colleges on Friday last and, accordingly, it was not possible for me to include the relevant provision which is in the amendment which has been ruled out of order in the appropriate time? I want to make it clear to the House that I propose at the first available opportunity to introduce such a provision with relevance as of this date.
I suppose we need not commit ourselves. At least some of us are in sympathy with this.
Amendment No. 1 not moved.
Perhaps amendments Nos. 2 and 7 could be discussed together, if the House agrees?
In fact, Sir, amendments Nos. 2,3,7 and 9 all deal with the same matter. I move amendment No. 2:—
In page 4, line 43, before "the year", to insert ", in any case in which the standard output of coal is the volume of output of coal in the 12 months ending on the 30th day of September, 1956,".
Since the discussion that we had on the Committee Stage, a case was made to me in relation to both the export provisions of this Bill and the coal-mining provisions, that it was possible that during the year ended 30th September, 1956, there would have been a freak contract obtained which would mean that exports in the year to the 30th September, 1956, were higher than might have been the case——
Is the Minister dealing with amendments Nos. 2 and 3?
The two things are together. They both deal with the change of the datum year. It was represented to me that there might be a freak contract obtained in relation to the year ended 30th September, 1956. Equally, the case was made that there might have been a freak seam of coal obtained during the same year. The case was made here on Committee Stage that I should take a wide period of years and take an average or allow a wide option. I did not accept that view then and I do not accept it now, but I do accept the view that, if there was a freak occurrence in the year ended 30th September, 1956, the operation of that freak occurrence should not be to the detriment of the company concerned. If the same thing happened in two years, then I think it would be perfectly fair to say that it was not a freak but that it was part of a regular pattern.
Accordingly, I have provided in the amendment that is now before the House which deals specifically with coal-mining, that a company will have the option of choosing for its datum year whichever it prefers, either the year ended 30th September, 1955, or the year ended 30th September, 1956, thus giving the company the opportunity of getting away from a freak occurrence of the nature to which I have referred.
I do not think that the two cases are quite as similar as the Minister suggests. It is quite true that, as I argued in Committee, in the case of coal-mining there are practical factors which may vary the output of a mine from one year to another and these practical factors are almost certain to occur from time to time in some regular cycle. For that reason I argued that the standard output for a coal-mining undertaking should be the average of three years rather than the accidental output of a single year. The Minister's decision to allow a coal-mining company the choice of one of two years is probably just as good and is unlikely, I think, to cause any inequity in the operation of the Bill. I still think that the average of three years would have been a better arrangement, having regard to the circumstances under which coal-mining concerns are carried on.
In the case, however, of companies doing an export trade, the case I argued here was not based upon the possibility of a company having got a temporary increase in its export business in a single year which would make it impossible for it ever to benefit under this Bill because it could not get back again to that year's level. The effort to get our industrial firms into export trade has been going on for some time and the introduction of this Bill now, confining the reliefs given by the Bill only to firms which export in the future or increase their export trade in the future, operates to penalise those who were the first to respond to the appeals addressed to them by this Government and the previous Government to increase, if they could, their export trade.
For that reason, I think the basis year for manufacturing companies should be brought back and I suggest as a date which has some relation to Government activity is that upon which the organisation to encourage exports, Córas Tráchtála, began to function. Clearly, at that time there was an export drive begun. That certainly was what the organisation was intended to achieve. That organisation contacted many firms in the country, urged them to examine the possibility of getting into export trade and carried out market research so as to indicate to them the openings that were available to them.
Companies that responded to that effort, those who made the maximum attempt on the advice of Córas Tráchtála to do export trade then, are going to suffer in comparison with those who have waited until now to do anything of that kind. I think that is undesirable. I think it is likely to defeat the declared purpose of this Bill because I believe that it is the firms which were the first to respond before which will be the most likely to exert themselves to increase their effort now. To signal out these firms for discrimination to their detriment is, I think, unwise. My suggestion was that these firms should be given a choice extending back over a number of years, extending back at any rate to 1953. The Minister has decided to give them a choice of two years. That is better than the Bill as introduced, but I still think he is unwise. I repeat that this Bill will have very little effect because the inducements given to firms to undertake the very risky business of export are entirely inadequate; that, whatever effect it will have, will be improved by the alteration in the Bill, and that can be still further improved if the Minister adopts the suggestion I put forward to him.
I want to add nothing to what I said on the last occasion.
Amendment agreed to.
I move amendment No. 3:—
In page 4, line 51, to add at the end of the line, ", or, if the company in question so elects, in the 12 months ending on the 30th day of September, 1955".
This is consequential.
Amendment agreed to.
I move amendment No. 4:—
In page 5, line 34, before "a" to insert "(save for the purposes of the proviso to the definition in this section of ‘goods')".
This amendment is, in fact, consequential upon the change in the definition of goods which is covered in amendment No. 6. This amendment relates in the main to the case where two companies are so closely related that one company, with a controlling interest in the second, owns 90 per cent. of the shares of the other. In such a case the goods exported by one company will have relief notwithstanding that the goods are manufactured by the other company. The relief, of course, will only be given to the company which exports the goods. This amendment is introduced to meet the "family of companies" to which Deputy MacEntee referred the other day in so far as there is common ownership.
Deputy Lemass has a later amendment that goes further than that. His amendment would have the effect of widening the scope much more. If his amendment were accepted it would mean that the company exporting the goods would be entitled to the relief irrespective of whether those goods are manufactured by it, by another company or by another individual. Under the framework of this Bill, that would leave a loophole for evasion which, if it were availed of extensively, would seriously imperil the purposes of Part III of the Bill, namely, to avoid the measure of tax relief in respect of increased exports.
It would also have the effect in many instances of depriving those who already have a business, with an export proportion attached to that business, of the business they already have. If a company already has an export business, it gets under Part III of the Bill a relief in relation to the excess computed in a certain way. If, on the other hand, I were to adopt Deputy Lemass's amendment, the effect would be that a new company, because it would get the entire relief in respect of existing exports which would be quite untraceable, could take all the business away from the existing concern. I do not know whether I have made myself clear.
The Minister certainly has not.
We will assume that a business which manufactures a particular type of textiles has exports in whatever is the datum year to the value of £100,000. In the current year —that is to say, after the datum year— as the Bill stands it may export to the value of £150,000. It will get the concession in respect of £50,000 of the excess related to its total sales. Because it is the manufacturer of those goods it, and only it, can get the concession. If Deputy Lemass's amendment were adopted, then I could set up in business, I could buy the product of that firm, I could export it and I would get the relief not merely on the £50,000 but on the total £150,000 because it would be a new business. Once you drop the words "manufactured by the person who exports them" you have no chance whatever of seeing where the goods come from originally. The effect, therefore, would be (a) that it would not be for increased exports at all and (b) that the newcomer would be able to displace the existing exporter. That is a situation which, I think, the Deputy will readily agree would do far more harm to exports rather than assist them.
The Minister knows quite well, whatever argument he bases upon my inefficiency as a draftsman, that I do not contemplate that the tax relief will go to anyone except the manufacturer. It may be that the form in which the Bill appears before the Dáil might have to be reconsidered to ensure that.
The Deputy may have intended that but he made a different case.
The Minister says that the goods must be manufactured by the person who exports them, but I urge that he should encourage the export of goods by whomever they are exported. It should be sufficient for the manufacturer to qualify for the tax relief to show that the goods he manufactured were exported through a trading organisation operating within the State.
I gave instances of the type of case I had in mind. I mentioned the efforts made by Córas Tráchtála to set up a marketing organisation to sell in America the products of certain kinds of prepared foods manufactured here. The main difficulty which Córas Tráchtála expected to meet in America was that the quantity of goods which they would have would be insufficient to interest the people in America, if they were dealing with only one manufacturer here. So they got two or three manufacturers to combine to produce a similar article under the same trade name. In that way, they were able to offer to the firm in America a not inconsiderable amount of these goods, enough to interest them and to get them to buy them.
That type of organisation cannot operate under this Bill. If a manufacturer decides to export his goods through such an organisation, he will not qualify for the tax relief. He must export them himself, or through a subsidiary company, and, if he does not do so, he cannot qualify. I know of other instances of the same kind where efforts were made to set up merchant houses to handle the products of more than one Irish manufacturer. British exports throughout the world were developed mainly by the enterprising merchant houses who did not manufacture a thing, but were the medium through which the market possibilities of the world and the British manufacturers were brought into relationship with each other. I would like to see that development begin here and I hope that we shall not put into this Bill anything that would discourage it.
The manufacturers of Irish woollen products, in selling their goods throughout the world by getting them incorporated in the pattern books of British merchant houses, sold their goods all right but the goodwill went to the British merchant houses. I asked them not to adopt that practice because it brought the goodwill to the British merchant houses, and not to the manufacturer and it did not secure for them any safe market abroad. These Irish woollen manufacturers, if they follow that course, will qualify for the relief, if they send their goods to the warehouse of a British merchant house, because they are selling abroad, but if they sell their goods through an Irish merchant house, they will not qualify.
The Minister has gone some part of the way to meet the difficulties I mentioned. The practice of some manufacturers of selling through subsidiary companies is dealt with, but there is another problem there, and, if the Minister will not move to meet it now, I am urging him to consider the possibility that he is doing something that will force development into undesirable trends. If he can so devise it that relief will go only to the manufacturer and not make it impossible for manufacturers to combine or compel them to use British merchant houses as a selling medium, he should do it. It is undesirable that we should impose these unnecessary restrictions. I do not think there is any safeguard in the retention of these words. I admit that, with the Bill as it now stands, there is the possibility that a company which was not doing any manufacturing might come to claim relief under the Bill, but my intention is that only the manufacturer should get the relief.
That is not the case the Deputy made at all.
That is the case I intended to make.
I will accept that, but the case the Deputy made is that the merchant house would get the concession. As I understand the merchant house, it is an organisation which buys a commodity from the manufacturer not for the purpose of reselling it, but rather it is a combination of a sales service for the purpose of going out and getting orders which orders would be passed on to the marketing association. It is not at all the same as the case where the goods are bought by the merchant house from the manufacturer and resold to the customer.
I think that, in theory, that is what happens.
I think that what they do in those cases is to make it a joint function—they combine a purchasing and a sales service together.
Would the Minister explain the force of the words "or some of them" in the beginning of amendment No. 6?
They might not export all the goods.
The Minister has concluded on this amendment.
I was only answering a question for the Deputy.
I am grateful for the effort the Minister has made to understand what I was trying to say on the last occasion and to meet the difficulty I described. The amendment does not cover the whole ground, but it goes part of the way. I would like to point out what I have in mind. First, there is the company which we can describe as No. 1 company. That is the manufacturing company.
To set your mind at ease, Sir, I am quite prepared to recommit the Bill for the purpose of amendment No. 4.
Bill recommitted for further consideration of amendment No. 4.
There is the No. 1 company which is a manufacturing company for the purposes of this Bill. It establishes No. 2 company which is an exporting company solely and which operates solely on behalf of No. 1 company. That is quite simple and is fully covered by the amendment. However, company No. 1 subsequently establishes another manufacturing company to which I shall refer as company No. 3, which is wholly owned by company No. 1. Company No. 3 develops a small export trade but is one which may grow. In its initial stages, and for the purpose of testing the market and so on, it avails of the services of No. 2 company. It seems to me that as the amendment is drafted, company No. 2 would derive no benefit under Section 10 on the profits which it makes on the export of the produce of No. 3 company.
Is the shareholding capital the same in the three?
It would be. My difficulty arises from the proviso which states that "where there are two companies, one of which manufactures goods and the other of which exports them and where one of the companies holds more than 90 per cent. of the ordinary shares in the other company or where persons who have a controlling interest in one company hold, either directly or indirectly, more than 90 per cent. of the ordinary shares in the other company, the goods manufactured by one of the companies shall, when exported by the other company, be deemed to be manufactured by that other company".
Am I to understand that companies Nos. 1, 2 and 3 have virtually the same shareholders?
Companies Nos. 2 and 3 are fully owned by company No. 1, but companies Nos. 1 and 3 manufacture the goods.
They are clearly covered then.
I hope so. If the Minister gives me that assurance and if the Revenue Commissioners hereafter take that view I shall be quite satisfied.
If the Deputy looks at the amendment he will see that it reads:—
"Where one of the companies holds more than 90 per cent. of the ordinary shares in the other company or where persons who have a controlling interest in one company hold, either directly or indirectly, more than 90 per cent. of the ordinary shares in the other company..."
I think I have the matter more clearly in my mind now. The manufacturing subsidiary has no interest in and has no control over the exporting company, which is company No. 2. Company No. 3 has no shareholding interest in company No. 2. but companies Nos. 2 and 3 are subsidiaries of company No. 1. That is the difficulty which arises from the form in which the amendment is drafted.
Company No. 3 would stand on its own feet.
It does not own any shares in the other companies. If it exports it should get relief in respect of its exports.
If Deputy MacEntee looks at the amendment again he will see that, subject to the proviso that where there are two companies, one of which manufactures goods and the other of which exports them and where one of the companies holds more than 90 per cent. of the ordinary shares in the other company, the goods manufactured by one of the companies shall, when exported by the other company, be deemed to be manufactured by that other company. That is company No. 1 to company No. 2. It is not the situation visualised by the Deputy that company No. 1 has more than 90 per cent. of the ownership in companies Nos. 2 and 3? Therefore, it comes in under the second part of the proviso.
But does it? I shall not argue the legal aspect of the matter with the Minister; I want to argue it from the point of view of the layman. There seems to be very strong distinction made between one company and the other. However, the Minister might look into the matter between now and the time the Seanad considers the Bill and see if there is a point to be met.
I shall certainly do that.
Amendment agreed to.
Bill reported with an amendment.
Report Stage resumed.
Amendment No. 5 not moved.
I move amendment No. 6:—
In page 5, line 37, to add at the end of the line "or some of them and who in relation to the relevant basis period or the relevant accounting period is the company claiming relief under this Part of this Act, subject, however, to the proviso that, where there are two companies one of which manufactures goods and the other of which exports them and where one of the companies holds more than 90 per cent. of the ordinary shares in the other company or where persons who have a controlling interest in one company hold, either directly or indirectly, more than 90 per cent. of the ordinary shares in the other company, the goods manufactured by one of the companies shall, when exported by the other company, be deemed to be manufactured by that other company".
Amendment agreed to.
I move amendment No. 7:—
In page 5, line 43, before "the year" to insert "in any case in which the standard period is the period of one year ending on the 30th day of September, 1956,".
This is consequential.
Amendment agreed to.
I move amendment No. 8:—
In page 5, line 45, to delete "relevant year of assessment" and substitute "year of claim".
Amendment agreed to.
I move amendment No. 9:—
In page 5, line 49, before "and" to insert "or, if the company so elects, the period of one year ending on the 30th day of September, 1955,".
Amendment agreed to.
I move amendment No. 10:—
In page 6, line 7, to add at the end of the line "and".
Amendment agreed to.
I move amendment No. 11:—
In page 6, line 11, to delete "and".
This is a drafting amendment. The "and" was in the wrong place.
It was put in the wrong place in every section. Would the Minister put his "ands" in the right place in future?
It was not in the wrong place by reason of the original Bill but in view of the amendments that were introduced. In the original Bill the "and" was in the right place and Deputy Lemass was wrong in his reading of it.
That is not clear to me anyway.
I did not expect the Deputy would admit that it was.
Amendment agreed to.
I move amendment No. 12:—
In page 6, to delete lines 12 to 15.
This raises again the question of the desirability of keeping this, in my opinion, foolish provision that the granting of this relief is conditional on a company using no part of the profit gained in increased export trade to pay a dividend to the shareholders. The Minister gave no reason why that restriction is in the Bill. I do not see the sense of it. It seems to me to be ruling out of consideration the one possibility of benefit to the country that might have arisen from the Bill. We have been trying to attract firms who do manufacturing operations elsewhere for world markets to transfer some of these operations here. We have not been able to get them to do so because the attractions we offered were not sufficient. With this Bill it might have been possible to say to them they would gain the advantage of a 50 per cent. remission of taxes. Now we are to tell them they will get that remission on condition only that they do not pay any dividends to their shareholders. That withdraws any attraction there might have been.
Of course that is not the effect of the section at all.
Will the Minister explain then? This section relates to goods involved in the export trade but sub-section (2) relates to goods that were never before in the export trade.
That is not the point I am making against the Deputy.
Is it not a condition that where a company claims to be entitled to this relief it must also show that the whole or part of the profits which are attributable to the new trade they have gained have not been distributed by way of dividend or otherwise? Is that not what the Bill says? Anyway on the assumption that that is what the Bill says I moved to delete these words because they seem to me to provide a condition which it is impossible to enforce and which, if it can be enforced, can only stultify the whole Bill.
Is my sheet wrong? I took it the Minister was agreeing with Deputy Lemass, that he was moving the same amendment.
Certainly I am, but not for the reasons Deputy Lemass gave.
I am glad the Minister is doing that because I cannot see how you would operate under paragraph (d) of sub-section (1).
The situation is quite simple.
I did not expect to see the Minister's name behind my own in the amendment.
Deputy Lemass was all wrong here on the Committee Stage when he said in relation to the new exporting company that the effect of this provision was that it could not pay any dividends. It could have paid dividends and would have obtained relief in respect of the proportion that it ploughed back. That was the Deputy's reason—because he misinterpreted the section—for putting down the amendment. My reason is entirely different. I would prefer to have been able to retain the ploughing back provision but if the House will look at amendment No. 14 it will be seen that I am adopting a new method of assessing the portion of the export profits. While it would be entirely reasonable to provide that a person should plough back a portion of their profits I do not think it would be realistic to provide that a person should be bound to plough back something that is merely being deemed to be, for the purposes of amendment No. 14, a portion of their profits. That is the reason why I put my name to the amendment and not for the reasons Deputy Lemass had.
I do not mind by what wrong road the Minister came to the right conclusion.
We have discussed amendment No. 12 and we are now proceeding to open a discussion on amendment No. 13.
I am not opening any discussion on amendment No. 14.
Amendment No. 13.
Amendment No. 12 is before the House. Amendments Nos. 13 and 14 might be regarded as consequential.
Amendment agreed to.
I move amendment No. 13:—
In page 6, lines 17 and 18, to delete "said whole of the profit so attributable or the said part of that profit (as the case may be)," and substitute "profit attributable to the said excess".
It is rather difficult to see what precisely the Minister has in mind here.
I think the real discussion should be on amendment No. 14.
Amendments Nos. 13 and 14 will be debated together.
The purpose of amendment No. 13 is subsidiary to that of No. 14. The purpose of amendment No. 14 is to provide something that will enable the company to get a benefit from an expansion of exports without going to the position which Deputy Lemass advocated on the Committee Stage which would be untenable for the reasons I gave then. The basis of the original section was that it was the excess of the profits that were obtainable from the export market that got the relief and that measured the amount of the relief. There would be no difference between amendment No. 14 and the original section if the company concerned were getting the same ratio of profit for the export market as they were for the home market. However, I think we must accept the situation that in relation to the export market the margin of profit available will not be as great as it would be in the home market and that, in any event, it is desirable for us to provide an inducement in this for people to go out into the export market even though by so doing they might not get the same ratio of profit as they would in the home market.
The purpose, therefore, of this amendment can perhaps be explained more easily in this way. The amount that will qualify now is, in relation to such proportion of its total profits as are the excess receipts from the exported goods to the total receipts from the sale of goods. Let us take a concrete example. Supposing in the standard period that the excess receipts from exports of manufactured goods came to £10,000, and the total receipts from the total sale of goods, home and exports, came to £50,000 and profits were £5,000, then the effect of this formula is to provide that one-fifth of the whole profit, that is to say, as £10,000 is to £50,000 would be the profit that would be attributable to excess export sales and it would mean £1,000 of profits would be so attributable. As I said, if the ratio of profits between home and export is exactly the same, there is no benefit in this amendment, compared with the original section, for the exporter, but the moment the ratio of profits starts to drop as between export sales and home sales then there is a benefit to the exporter from this formula.
Am I right in assuming that a profit earned on increased exports will be calculated on the basis of the actual increase in export sales and assuming a uniform rate of profit on all sales?
A uniform rate of exports on all sales, assessing receipts of goods to the total sales of goods.
The profit will be measured by the actual increase in sales without taking into account the profits earned?
Yes.
I think that is a big improvement.
Amendment agreed to.
I move amendment No. 14:—
In page 6, Section 12, before sub-section (2) to insert a new sub-section as follows:—
(2) For the purposes of sub-section (1) of this section "the profit attributable to the said excess" shall be taken to be such sum as bears to the amount of the company's profits for the year of claim, computed in accordance with the Income Tax Acts, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount of the said excess bears to the total amount receivable by the company from such sale in the basis period.
Amendment agreed to.
I move amendment No. 15:—
In page 6, line 25, to add at the end of the line "and".
This is consequential on the previous amendment, as is amendment No. 16.
Amendment agreed to.
I move amendment No. 16:—
In page 6, line 27, to delete "and".
Amendment agreed to.
I move amendment No. 17:—
In page 6, to delete lines 28 to 31.
Amendment agreed to.
I move amendment No. 18:—
In page 6, lines 33 to 35, to delete "said whole of the profit on the sale of the goods so exported or the said part of that profit (as the case may be)," and substitute "profit on the sale of the goods so exported,",
Amendment agreed to.
I move amendment No. 19:—
In page 6, Section 12, to add to the section a new sub-section as follows:—
() For the purposes of sub-section (2) of this section "the profit on the sale of the goods so exported" shall be taken to be such sum as bears to the amount of the company's profits for the year of claim, computed in accordance with the Income Tax Acts, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount receivable in the basis period from the sale of goods exported bears to the total amount receivable by the company from the sale of goods (whether exported or not) in the basis period.
Amendment agreed to.
I move amendment No. 20:—
In page 6, line 42, to add at the end of the line "and".
Amendment agreed to.
I move amendment No. 21:—
In page 6, line 47, to delete "and".
Amendment agreed to.
I move amendment No. 22:—
In page 6, to delete lines 48 to 51.
Amendment agreed to.
I move amendment No. 23:—
In page 6, lines 53 and 54, to delete "said whole of the profit so attributable or the said part of that profit (as the case may be)," and substitute "profit attributable to the said excess".
Amendment agreed to.
I move amendment No. 24:—
In page 7, Section 13, before sub-section (2), to insert a new sub-section as follows:—
(2) For the purposes of sub-section (1) of this section "the profit attributable to the said excess" shall be taken to be such sum as bears to the amount of the company's profits for the accounting period, computed for the purposes of corporation profits tax, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount of the said excess bears to the total amount receivable by the company from such sale in the accounting period.
Amendment agreed to.
I move amendment No. 25:—
In page 7, line 6, to add at the end of the line "and".
Amendment agreed to.
I move amendment No. 26:—
In page 7, line 8, to delete "and".
Amendment agreed to.
I move amendment No. 27:—
In page 7, to delete lines 9 to 12.
Amendment agreed to.
I move amendment No. 28:—
In page 7, lines 14 to 16, to delete "said whole of the profit on the sale of the goods so exported or the said part of that profit (as the case may be)," and substitute "profit on the sale of the goods so exported".
Amendment agreed to.
I move amendment No. 29:—
In page 7, Section 13, before sub-section (3) to insert a new sub-section as follows:—
(3) For the purposes of sub-section (2) of this section "the profit on the sale of the goods so exported" shall be taken to be such sum as bears to the amount of the company's profits for the accounting period, computed for the purposes of corporation profits tax, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount receivable in the accounting period from the sale of goods exported bears to the total amount receivable by the company from the sale of goods (whether exported or not) in the accounting period.
Amendment agreed to.
I move amendment No. 30:—
In page 7, line 27, to delete "1st day of October, 1955," and substitute "day on which the standard period commenced,".
Amendment agreed to.
I move amendment No. 31:—
In page 7, line 51, to delete "1st day of October, 1955," and substitute "day on which the standard period commenced,".
Amendment agreed to.
I move amendment No. 32:—
In page 8, line 2, before "entitled" to insert ", otherwise than under Rule 20 of the General Rules,".
I think the Minister should make a statement explaining amendments Nos. 32 and 33.
These are amendments which are consequential, and are introduced, at this stage, by reason of the fact that we have deleted the ploughing back provisions. The effect of these amendments is to provide that a shareholder cannot get back, if he qualified for a dividend, more than the actual tax that has been paid under the relief.
That is quite so.
Amendment agreed to.
I move amendment No. 33:—
In page 8, Section 15, to add to the section the following new subsections:—
(2) Where, under Rule 20 of the General Rules, a company is entitled to deduct income-tax from any dividend, tax shall not in any case be deducted at a rate exceeding the rate of the income-tax as reduced by any relief from that tax given under this Part of this Act, and the provisions of Section 5 of the Finance Act, 1940 (No. 14 of 1940), shall apply accordingly, with any necessary modifications.
(3) The rate of income-tax at which any repayment of income-tax for any year of assessment falls to be made shall be subject to such adjustments as may be proper in cases in which relief is given under or by virtue of this Part of this Act.
(4) Where, by virtue of sub-section (2) of this section, income-tax is deducted from a dividend at a reduced rate, the amount to be included in respect of the dividend in any return for the purpose of surtax shall be an amount which bears the same proportion to the amount of the dividend as the rate of income-tax deducted therefrom bears to the rate which would have been authorised to be deducted if this section had not been enacted.
Amendment agreed to.
Bill, as amended, received for final consideration.
Agreed to take Final Stage now.
Question proposed: "That the Bill do now pass."
The Minister will appreciate that he has taken this Bill at a fairly rapid rate and for myself, I waited until yesterday before submitting any amendments, expecting the Minister's amendments to arrive. They did not arrive until this morning and I did not get an opportunity of seeing them until just before the Dáil assembled. There are points which have occurred to me and which I think would have produced amendments from me.
I want to direct the Minister's attention to those points. One concerns Section 13. Paragraph (b), as I understand it, precludes from the benefits of this Bill any company carrying on mining operations. That, I think, is perfectly legitimate in regard to those mining companies who got the benefit of the Act which was passed early this year, the Finance (Profits of Certain Mines) Act, and, of course, so far as coal-mining companies are concerned, they are separately provided for in the Bill. There are companies, however, in this country carrying on mining operations and, in one instance, mining operations for the purpose of exports, which do not benefit under any of these Acts. I think it is undesirable that they should be left in that position. The Act earlier this year——
If the Deputy does not wish to mention the name of the company——
I will mention one commodity, gypsum, and I suppose barytes and some other products could be affected. The Act earlier this year gave the tax concessions to companies carrying on new mining operations and no benefits to existing mining companies that might extend their operations into the export trade. This Bill gives concessions to coal-mining companies who increase their production. It seems to me that there are gaps being left which will be regarded as inequitable and to which some thought should be given. A company carrying on the mining of gypsum, whether an old company or a new one —gypsum is a non-bedded mineral— might not qualify under the earlier Acts. There are gypsum companies producing gypsum products here and exporting them. Indeed, exports run to several hundred thousand pounds in value, and, as I understand the position, if they extend their exports, they get none of these benefits.
That is not so.
Perhaps the Minister will explain that. Section 16 provides that expenditure on an industrial building shall qualify for this initial allowance but leaving out of account any part which was met directly or indirectly by the State, by any board established by statute, or by any public or local authority. I think the Minister has in mind Foras Tionscal or possible grants under the Bill which the Dáil was discussing to-day. As far as the Industrial Grants Bill is concerned, it is specifically stated to be towards the cost of the industrial buildings that grants will be given and because of that I make no point. In so far as State grants are given towards the cost of buildings anywhere, it is reasonable enough to provide that the initial allowance should not operate, but, in the case of Foras Tionscal, there is power to give grants for a variety of purposes—the erection of buildings, the construction of approach roads, the training of staff or the purchase of plant.
It has not been the practice of Foras Tionscal to signify when deciding the amount of the grant what part is appropriate to buildings and what part appropriate to other purposes. Foras Tionscal have considered the proposals brought to them, assessed their possibility, and determined the amount of aid required in order to offset any possible disadvantage attached to the location of the undertaking. They have generally stipulated that their grants will not be payable until the buildings have been completed and it seems to me that some difficulties may arise on that account. It is true that the Bill refers to the extent to which expenditure on buildings has been or is to be met by State grants, but obviously there will be circumstances under which somebody will be called upon to decide in such cases what part of the total grant is to be regarded as appropriate to the construction of buildings. Indeed it could be argued in view of the practice of Foras Tionscal that no part of the grant was attributable to the cost of the buildings in so far as it has been the practice to require that the private interests concerned should have completed the buildings before Foras Tionscal actually parted with the amount of money they had agreed to give. It would be helpful to those in that position now or who may be in that position in the future, if the intentions of the Bill in that respect were clarified.
In relation to gypsum, first of all the Deputy was not quite correct in the case he made. There is certainly one company here that mines gypsum, that turns the gypsum into plaster and plaster boards, and in so far as it does any processing of the gypsum in that way and exports the plaster or the plaster board, it qualifies for relief under Part III of this Bill. Clause (b) of Section 15 does not exclude because the processing is superimposed on the mining operations.
In relation to the export of unprocessed gypsum, of course that would not be the case. It is a matter which was brought to my attention on last Friday or Saturday night for the first time and it is one that will require some consideration as to whether it is wise to encourage the export of unprocessed gypsum. The plaster or plaster board should be encouraged and export should be encouraged, but it is at least a matter for consideration—I will not put it any further than that at this stage—whether it is desirable to make it easier for the unprocessed gypsum to be exported and that it might not be better to concentrate the advantage on the processed article. That is a matter to which I am quite prepared to give consideration.
Gypsum was one such example of an established export trade. I presume there would also be barytes.
In so far as any processing is done afterwards it is quite clear that cover is afforded when it is processing. In so far as non-processing is concerned, that is a matter which I would prefer for each individual variety of mineral so as to be quite certain that before I considered any question of giving a concession for the export of the raw material I was not. in doing so, undermining—if I may use a pun in relation to that raw material—the processing which is carried on in it because, obviously, we want the greatest amount of value to be added to the raw material here before it is exported. Barytes is one of the minerals mentioned by Deputy Lemass and is covered in the previous Act.
There must be a new company.
Not a new company.
A new mine.
A new mine. The ownership in the Act we passed earlier this year did not in any way affect the issue. It was the actual physical cost in relation to the opening of a new mine which was entirely the governing factor.
Is that not the point I was going to make? A company concerned with barytes cannot benefit under the earlier Act passed this year.
It can.
They must open a new mine.
I am quite prepared to look at that in the future. So far as the point raised by Deputy Lemass in relation to Section 16 is concerned, I think what was intended is pretty clear. Incidentally, roads were a bad example for the Deputy to give because the term "structure" in the Bill covers things that are not normally thought of as buildings—walls, bridges, roads, and so on. Leaving that to one side, it seems to me that the Deputy is rather putting the cart before the horse. When this Act becomes law— it is in respect of new buildings—presumably An Foras Tionscal, in consequence and with the Act in front of them, will segregate the purposes.
My point is that the new arrangement applies to cases where the amount of the Foras Tionscal grant has already been determined, although not paid.
Yes, but the intention of the Bill is quite clear and I think nobody will fight with the intentions of the Bill. Where a building costs £100,000 and £40,000 has been given by way of grant only £60,000 will rank for relief. That, I think, we will all accept as the line that must be taken. I think it will be possible to get over, in respect of past decisions by Foras Tionscal, any difficulties that may arise without much trouble so far as the future is concerned.
The Minister told us that the total amount of grants approved was £800,000 and the amount paid only £200,000. There must be a number of cases awaiting payment of the grant.
I have seen the figures in some of these cases. They are specifically allocated and paid in certain cases even though allocation is for other purposes. The Deputy is right in respect of one instance. Any difficulty that arises in that respect can only be a difficulty in respect of the practice of Foras Tionscal before this Bill is passed. They can easily regulate their practice for the future.
Question put and agreed to.
Bill certified a money Bill.