I move amendment No. 1:—
Before Section 2 to insert a new section as follows:—
2. Any self-employed person assessable under Cases (1) and (2) of Schedule D who pays any sum, not exceeding 5 per cent. of his income so assessable, to an insurance company or to any co-operative or friendly society for the purpose of securing a pension for himself on retirement, shall have the amount of any such payment deducted from his assessment in having his liability to income-tax determined.
This amendment is, of course, not drafted in anything like an adequate manner. It is put down in that form only for the purpose of giving an indication of my views and of giving the Minister a proper chance of understanding the case I am making. Any proper section dealing with a self-employed person would require very many pages of drafting. The case of the self-employed person is one that has been the subject of considerable correspondence between the Revenue Commissioners and whoever has been the holder of the position of Minister for Finance, on the one hand, and those affected or their professional associations, on the other.
The legislation required to give individual relief might be very difficult to draft and I could understand the Minister taking the view that individual deductions must await the report of the commission. Apart from that, there is another method of dealing with this problem and it is the method to which I have adverted very briefly in this amendment. At present we have income-tax relief for the person who pays a premium for life assurance to cover the payment of a capital sum on the death of the person assured or, if it is an endowment assurance, at the end of a fixed time. We have, however, nothing comparable in relation to tax relief for the individual who wishes, not to provide a lump sum on death but to provide an annual pension where that individual is self-employed.
This is a matter which hits perhaps more than anyone else the professional middle-class. I would have thought it a comparatively simple matter to introduce legislation in this Finance Bill to provide that payments to an insurance company or to a co-operative society for the purpose of securing a pension would be entitled to relief in the same way as payment for life assurance. Certain bodies of persons who cater for the self-employed, the accountants' institution, certainly the Incorporated Law Society, and other bodies have been considering for some time setting up a group society to deal with pensions of this kind. It would obviously be useless for them to set up any such group scheme unless it was going to have recognition for tax purposes in legislation. Our primary aim must be—and whatever else the Minister disagrees with me on he will not disagree with me on this—to ensure that our people save a small part of their income for future capital development. Any type of tax incentive towards saving, therefore, should be considered as sympathetically as possible. The provision of a tax incentive for the self-employed in the manner that I have indicated in this amendment would give considerable inducement towards saving and would, in that way, contribute to national development.
I have no figures available to me in relation to the cost of any such scheme. Presumably it must come out of the yield from Schedule D tax which has been running over the years at approximately 60 per cent. of the general income-tax yield. The last year in respect of which I have percentages in front of me is 1953-54. In that year when £20,819,000 was collected in income-tax £1,512,000, or 7.3 per cent., came from Schedule A; only £104,000, or .5 per cent. from Schedule B; £606,000 from Schedule C, which is 2.9 per cent.; £12,974,000, which is 62.3 per cent., from Schedule D; and £5,623,000, which is 27 per cent., from Schedule E.
Of course, in respect of the Schedule D tax, not all of it by a long way would be referable to profits for the self-employed, that is, payment to the self-employed for his own work. It would include the yield from dividends and the direct profits of companies, which are, of course, far the greatest thing. I hope the Minister would not quarrel with me if I said that the yield from the self-employed assessment there in Schedule D is probably somewhere between £2,000,000 and £2,500,000. I think the break-up in the year I am quoting was that between professional earnings and individual traders it would have been about £2.1 million. Professional earnings were, I think, £600,000 and the profits of individual traders £1,700,000.
If I have correctly understood the figures and the total yield from the self-employed, out of that 60 per cent. as approximately £2,100,000, then it would seem to me that the cost of granting this concession would be very small relatively to our £100,000,000 of current revenue and expenditure. Certainly, the Minister will agree with me that it is impossible in any estimate of yield to be completely accurate. The Budget any Minister for Finance brings in at the beginning of the year is intended to be the best estimate he can make of how revenue will come in and how expenditure will turn out. It could not be completely accurate. There has to be variation both ways. On that account, I hope the Minister will not meet me with the facile but empty method of replying that this would unbalance the Budget and, therefore, he could not consider it. The amount would not be of such proportions as would throw out the Estimates and, in any event, it would probably not have much effect until the following financial year.