Committee on Finance. - Finance Bill, 1957—Committee Stage.

Question proposed: "That Section I stand part of the Bill".

Section 1 is the section that imposes both income-tax and surtax for the current year. Many people would like to hear from the Minister why it is that he and his advisers consider it impossible to deal with this question of income-tax and surtax by a single return. I know there are certain administrative difficulties and that it is not for me, at the moment, to point out those difficulties. That is for the Minister.

Everybody with whom the Minister will discuss this problem outside will say he finds it impossible to realise why one must make one return to the income-tax inspector and then make a return of exactly the same income to the Commissioners of Surtax. It seems to me that it should be possible to deal with the two on the one basis. There was, I know, an objection raised some years ago that surtax payers did not want their incomes known by the ordinary income-tax inspectors. I think that type of objection, certainly valid some time ago, is no longer valid.

There is also the objection that surtax and income-tax are not always assessed in exactly the same way, but I think it would ease considerably the task of administration and might bring down the administrative costs about which the Minister spoke during the Budget debate, if he were able, in the course of the current year, to arrive at a basis by which we could have such an assessment for income-tax and surtax and that the one statement of total income would be sufficient.

The position here is different from that which obtains in Britain. I know that in Britain in this respect there has been some considerable discussion on this subject. However, we are in an entirely different position, having regard to the size of our country and the size of incomes generally. Therefore, I think the Minister would be well advised in the year that lies ahead to give some critical examination to the problem and to ensure that this problem, if nothing else were examined by the Income-Tax Commission, would be treated as a matter of urgency so that a recommendation by the commission might be forthcoming in time for next year's Budget.

It does appear, looking at this from the outside, that it would be very much more convenient for a person to pay both his income-tax and surtax together—maybe not together, but at any rate it would be much more convenient if he were assessed on the two on the one form. It would look as if there could be a saving in administration if both assessments were dealt with by the same person.

However, the matter is very complicated indeed, as the Deputy will agree. It is being considered by the Income-Tax Commission and I hope the commission will, in time, make recommendations on the matter which can be accepted and which will, in many other ways, make the whole scheme more convenient and more understandable to the person paying income-tax. At the same time, it might be possible to make savings in administration. What I feel sure Deputy Sweetman will realise and will agree with is that all these things which appear simple might make for very much more complicated administration. I know the commission are bearing this matter in mind.

Has the Minister thought of asking the commission to issue an interim report on any aspects of their deliberations? The final report will obviously take a very considerable time. In the meantime, there are certain pressing problems with which it might be possible they could deal on an interim basis. I should like to know whether the Minister has considered putting these specific problems to the commission, with a request that they might issue an interim report on them. I do not think it would be advisable or possible for them to make comprehensive reports until they had completely reviewed the entire tax code, but it might be worth while asking them to deal with specific problems on an interim basis.

I think it would be difficult to get them to report on such matters specifically. As I have pointed out, they must consider the whole question of the tax code. In fact, they may recommend that income-tax be abolished altogether and that we find our money by some other means.

Does the Minister consider that likely?

It is not likely, but they may do it. That being the case, it is difficult to see how an interim report could be got from them.

Will the Minister travel as far with me as to indicate to the commission that, if they wish to make an interim report on specific matters, he will have no objection?


Question put and agreed to.

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.

First of all, let me make it clear that there is a scheme for the employed person where the contributions are exempt from income-tax and where the fund which is properly applied towards retirement pensions is also exempt from income-tax.

That is only for an employee.

Yes. There is also, as Deputies are aware, relief on insurance premiums if people wish to provide for their old age in that way. It is fairly substantial relief and they can have their retirement pensions made out in their own way, but there is not complete exemption from income-tax in that case.

I must confess I did not give this matter very much thought because there was not time. However, I did see two British reports and the cost estimated appeared to be extremely high. It was really a frightening figure. If applied here or if it cost us the same amount in proportion, it would be very substantial, I am afraid, but of course it is only an estimate in England and I might be told, if I investigated circumstances here, it would not cost as much, or maybe it would cost more in proportion. All I can say is that I have not given it very much thought, but I am certainly sympathetic to it, if I thought it could be done and were satisfied as to how it could be done.

The Deputy is quite right in saying that the legislation would be difficult and involved and I am told it would take several clauses in the Finance Bill to deal with it. It might therefore have to be done by a separate Bill because it is a big subject and all I can promise—even though the Deputy thinks it is a facile way of getting out of it—is that it will be considered next year.

We will postpone our row for 12 months.

Amendment, by leave, withdrawn.

I move amendment No. 2:—

To add to the section a new sub-section as follows:—

(6) In the case of any business being assessed as a trade for the first time in the year commencing on 6th April, 1957, then notwithstanding the words "on or after the 6th day of April, 1958", the provisions of this section shall apply to such initial assessment.

This arises on a point I made on the Second Stage, and again I have not drafted the amendment in the exact technical language that would be required but merely for the purpose of giving the Minister an indication of what was in my mind. As I understand the position, the provisions of Section 2 would mean that a person buying machinery for a new business first coming to be charged under Schedule D this year would not get the benefit of the increase in Section 2 by way of depreciation for that machinery for the current year. I freely admit to the Minister that it is an extremely technical matter, but that was my opinion when I read the Bill first, and I asked another person about it and he confirmed that that was his interpretation of it also. If our interpretation of the section is wrong, then the amendment is unnecessary. If, therefore, the Minister would like to give a little exposition on the technical aspects of the section——

They are exactly in the same position. A new business starting, let us say, on 1st June, would be in exactly the same position as an existing business. They would get the existing rate of wear and tear allowances, plus, of course, the initial allowance as the other firm. They would get these this year and then be assessed next year on this year's business. They would get the same as existing firms, five-fourths of wear and tear, with 25 per cent. added on. I think, as the section stands, the Deputy may accept that the company starting off is not in any worse position than the existing company and that, therefore, an amendment of this section would put them in a better position.

My anxiety is not to put them in a better position, but it would seem that a new company starting off must be assessed on current profits for this year?

For this year, yes.

And that therefore when anybody is asked whether it is desirable for the new company to buy machinery or not, they would have to advise that it would be deferred until after 6th April, because otherwise the company would not get the benefit of this provision? If that is the situation, it is an invidious one, and, as I see it, the new company starting off and wanting to buy machinery worth £10,000, shall we say, would be told it would be better advised to defer that modernisation until after 6th April and that if it did, it would earn more in tax relief?

No, no; that is not the way at all.

Could the Minister explain why?

There is no inducement whatever for them to wait until next year.

But why? Is it not correct that the new company will be assessed on profits in this year?

Yes, that is right, but that applies to existing companies also.

No; existing companies this year are assessed on last year's profits.

But they get the 25 per cent. next year all the same. They will both get it next year, with 25 per cent. added on in any case.

On what basis will a new company be assessed next year?

A company starting, say, on 1st June this year is assessed from 1st June to 5th April.

For this year?

Yes, and next year it is assessed from 1st June this year until 1st June next year. In other words, there would be a nine months' sort of an assessment twice.

If there is nine months' assessment twice, it does not get the benefit?

It gets it next year.

If the Minister assures the House that is so, I accept it. He is the expert, not I.

I am assured they are in no worse position.

Amendment, by leave, withdrawn.
Section 2 agreed to.
Question proposed: "That Section 3 stand part of the Bill."

This is the section that I indicated I would like to introduce when the Finance (Miscellaneous Provisions) Bill was going through the House last November, but it was not within the scope of that Long Title. I have read the wording of the section several times and I am not quite clear as to what the Minister means by "college". Does he intend "college" there to be solely a college that is a constituent college of a university or does he mean any college, whether it is part of a university or not. We have two universities and one has three constituent colleges, while one has one constituent college. National University has Dublin, Cork and Galway, while Trinity is the constituent college of Dublin University. Is "college" intended to be restricted to those, or is it intended to cover anything other than that?

It means any college, but of course it is given only for research, so that secondary school colleges would not be eligible. To take an example, it will include the College of Surgeons, if they do medical research, the same as any other medical college.

It includes anybody going in for research, any educational establishment that goes in for research?

That is right.

Fair enough.

Question put and agreed to.

I move amendment No. 3:—

In sub-section (1), line 26, to delete "the passing of the Act" and substitute "1st May, 1923."

This amendment is for the purpose of ensuring that, where there is a benefit that is uncovenanted going to shareholders, it will start from the inception of this State, not from a date half-way through.

I made some reference to this on the Second Stage. I noted that the Minister when replying—perhaps because he was dealing with broader aspects of the matter—made no reference to the points I raised. I do not intend to discuss the subject this morning on the political plane and I shall not be so unkind as to remind the Minister of all the things the Minister for Industry and Commerce said about Section 7 of the Finance Act, 1932, when he was on these benches. Rather do I rejoice in the fact that the Minister has been able to convert him to my point of view, that these provisions had merits.

Candidly, I cannot see what the Minister hopes to get from this section. It will give a benefit to new shareholders in Irish securities and I am glad new shareholders are getting such a benefit. When I received the report on capital for industry from the Industrial Credit Company I failed completely to understand what they believed this step would bring. They indicated that a bold step of this nature would be desirable, but they gave no reasons as to why it would be desirable. They merely indicated that it would be a bold step.

There was a very clear reason why I brought in the amendment I made last year. Without that amendment issues of various companies would be subdivided, and in fact were subdivided, in such a way as to make them far less readily marketable. I cannot see how this section will increase the marketability of any particular issue. If the Minister's case for the section is that there are certain issues in which the shares are still divided into (a) and (b) and that this section will enable those shares to be amalgamated, I would like him to quote those issues.

It seems to me that this section gives a completely uncovenanted benefit. If that is so, it is irrebuttable that the fair thing to do is to go back to the inception of the State. I think I am right in saying that 1st May, 1923, was the transfer date from the British in so far as financial matters were concerned. I do not know what issues were made between 1st May, 1923, and the passing of the 1932 Finance Act. Whatever they were, whether they were large or small, the holders of those shares have in justice and in equity equally as good a case for the preferential treatment it is proposed to give by this section as those who invested since 1932. Whether an investor put his money into Irish development in the period from 1923 to 1932, or in the period since 1932, matters little when considering the position from the point of view of the development of the country and I would seriously press the Minister to accept this amendment because, if he does not do so, there will be a feeling of differentiation and hardship which will impinge on prospective investors and make them perhaps less likely in the future to invest in Irish industry.

The year 1932 happened to be a year in which a new Government came into office but, leaving that out of the question completely, the object at that time was to give an incentive to invest in new industries or in new companies that might be formed. If we look at this purely as a matter of incentive I do not think there would be any justification whatever for going back before 1932 because, obviously, those who had invested in companies before 1932 had already invested and giving them this concession would, therefore, have been giving them a present from the point of view of incentive. If an investor were to argue that he merited some reward for supporting industry before 1932, then I do not think we could even stop at 1923 or 1922 because it could be argued that companies formed here before 1922 deserved great credit for their action in trying to build up industry here under the British régime. But that is not the point.

We should look on this as a division of benefits for those who invested under one Government or another. The object really at the time was to give an incentive to Irish people to put their money into Irish industry. When one goes back to that time, one will find in the debates that everybody here agreed, irrespective of Party, that the Irish people with money to invest were not Irish-industrially minded. If they were putting their money into industry, they were putting it into industry in England. They had no great confidence in new industries starting here and, from that point of view, it was felt that some incentive was necessary.

If we look at it entirely from the point of view of incentive, there is no justification for going back further on the date. I do not know what it would cost to go back from 1932 to 1923 and I would not like to resist it on the basis of cost if I felt there was an injustice being done to those who invested their money from 1923 to 1932. Every Deputy must agree that they invested their money at that time in the expectation that they would have to pay full income-tax on any dividends they might receive and there is not, therefore, a very good case to be made for putting the date back, as the Deputy has proposed.

The Minister has made exactly the case I wanted him to make. I agree there must never be any question of giving a present by legislation to past investors. Incentive is the one thing that must be considered. But this section is giving a present. There is nothing whatever of incentive in this section. There is nothing whatever in Section 4 which will induce one penny piece extra to be invested in Irish industry. If there was in Section 4 an incentive for future investment, then the case the Minister has made would have been a perfect case. But there is no incentive. The sole reason for Section 4 is to put the shares of Irish industries already subscribed, already provided and already utilised into a different category from those of other countries. There is a strong case for doing that but it is a case that must be administered with complete fairness, complete justice and complete equity.

There is no case whatever for giving a present to people who subscribed to Irish industry since 1932 and not giving the same treatment to those who subscribed in the 1923-32 period. If there was any element of justice in Section 4 as it stands, I could understand the Minister's viewpoint. But that is not the case. Section 4 will do exactly what the Minister said a few minutes ago should not be done. If that is to be done, and the Minister is going to do it, then it should be done fairly in relation to all concerned. When I was speaking a moment ago I never mentioned anything about one Government or another Government, and it would be a very sorry day if anybody got the impression that Exchequer benefits would go according as to whether legislation was introduced by one particular Government or another. It should be considered on a much broader basis. There is, undoubtedly, therefore, from that aspect also, every argument in favour of my amendment.

The case the Minister made, that we will have to go back behind 1923 to the days when we were controlled by the British, is not one that will bear any real examination. The Minister knows as well as I do that that is a very flimsy argument. I thought the Minister would reject any argument of that sort that might come to his hand. We have done many things since the inception of this State which we would never have done if that argument were accepted. We must all agree that a new set of circumstances arose with the transfer of our financial powers from the British on 1st May, 1923. If any date is chosen for giving what amounts to a present, for giving something not merely from an incentive point of view—and Section 4 has not an incentive point of view—the operative date and the date that should be given, in all responsibility, is the date of the inception of the State.

I think the Deputy will have to admit that there is a great difference between a change of legislation back to pre-1932 and, as it were, an improvement of the legislation that was passed in 1932. The Minister who brought in that Act in 1932 purported to give relief in income-tax to those who put their money into Irish industry. He did put in certain safeguards which he thought were necessary. Certain of these safeguards have proved to be cumbersome and, I suppose, some people would argue, even unjust. Some of these safeguards were removed by my predecessor last year and I am now removing others.

The recommendations were made by the Industrial Credit Company who put it very strongly that some of the companies whose shares are affected by this clause that was passed in 1932 have actually suffered disabilities that other companies did not suffer. It was really an attempt, if you like, to give equity to all under the clause that was passed in 1932.

There is not a great deal as far as cost goes in this section. It is to remove certain anomalies that exist and to try to get the scheme that was thought out in 1932 to work smoothly and equitably as between all the companies concerned. I feel that that is a very different matter from going back to before 1932. The Minister in 1932 who was concerned with this held out incentives to those who would invest in Irish companies. Since that, some people found that they did not get the benefit that was held out at the time.

Oh, surely——

It is true, of course, that in certain of these issues they knew that they would not get it.

And it was only refused to them in issues in which they knew they were not going to get it.

Yes. It has, in effect, however, worked out rather inequitably between one company and another, and it is for that reason, I presume, that the Minister last year tried to remove some of these anomalies and that I am trying to remove some of the others now.

Let me correct the Minister at once. First of all, I am absolutely positive that no company which published in its prospectus that it was getting the relief was denied that relief by any Government.

That is right. Of course, some applied who did not get it.

Yes. Application is one thing. The investors would judge by the prospectus. I removed certain disabilities last year for one sole purpose—I think I made it quite clear in the House at the time—that certain issues of Irish companies, because of the restriction on "rights" and bonus issues, had to be subdivided, that the fact of their subdivision made their shares far less marketable and that the general marketability of shares of Irish industries was a good point in favouring new investment in Irish industry. I do not think this section does provide for any increase in that marketability, nor do I think it provides the incentive.

There are, if I may say so, certain points arising on this amendment that really arise on the section itself and what I propose to do, therefore, is to deal with them more fully on the section. I do not know whether the Minister considers that the report of the Industrial Credit Company is a confidential document or not. If it is a confidential document, I would not dream of quoting any part of it here. If it is not, I would ask the Minister to quote where in that report it is stated that this will act as an incentive for future investment. I do not think it is so stated. It is stated, certainly, that the subdivision of shares acts against marketability. That subdivision of shares was removed last year. There is no other argument, to my recollection, utilised for this. The only case that can be made for it is that it is desirable to put Irish industry in a different category for investors from foreign industry. I agree, but it should be all Irish industry, not a selection.

Does the Deputy want the amendment put?

No. I will withdraw it and reintroduce it on Report Stage, after we have a discussion on Section 4.

Amendment, by leave, withdrawn.
Question proposed: "That Section 4 stand part of the Bill."

Would the Minister explain to us exactly where the incentive comes in this section?

I think I explained already. For future issues, there may be some incentive if an investor in Irish industrial securities sees a new company coming along and, if he is a very keen person, he may say that the passage of this section will give him a better chance, but I am not relying very much on that. As I explained in answer to the Deputy's case for his amendment, it is not that there is an incentive in this section, but that it irons out certain difficulties that arose out of the incentive section of 1932. I do not think it is claimed that it gives any further incentive. After all, the Deputy, as Minister last year, did iron out some of these difficulties himself.

Perhaps the Minister would not mind explaining what the difficulties are. I thought I ironed out last year all the difficulties that remained.

There is one perhaps I could mention. The public issue is one of the things that have given some trouble. Now it will be sufficient to quote it on the stock exchange. I think that is one of the questions that remain in this amendment.

That matter was raised on the Finance Bill last year. I gave an assurance that it had always been dealt with administratively.

I do not think so. I am not saying the Deputy did not say so but I do not think it is being dealt with administratively.

I would not have got that advice had it not been true. The difficulty that arose about the words "public issue" was in the case of shares which went to the Industrial Credit Company and were subsequently offered for sale by them. The question was whether that was a public issue or not. That has always been treated as a public issue. I was so assured and I am quite certain that the assurances I got were accurate.

I think the Minister is not correct when he says there is any difficulty in relation to public issues. Let us look to what Section 4 does. Sub-section (1) merely acts as the vehicle for inserting a new section into the original section. It does one good thing—it changes the issue of the certificate from the Minister for Finance to the Revenue Commissioners. Any Minister for Finance will give such a certificate on the recommendation of the Revenue Commissioners. In its original form it was adding unnecessary administrative trouble.

Secondly, I think it is undesirable that in tax legislation there should be any suggestion that the political head of the Department had any power to give or withhold benefits. That would be highly undesirable. Therefore, I welcome the change that the persons to give the certificate are now the Revenue Commissioners rather than the Minister for Finance. As far as the remainder of the section is concerned, I think it follows, by and large, the original section. I cannot see any difficulty that is removed.

In relation to sub-section (2), that has the effect of withdrawing certain conditions that were included in the Finance Act, 1935, in the analogy of the Control of Manufactures Acts, 1932 and 1934. I do not know whether I am to take from sub-section (2) of this section that, when the Government have enacted this, the Minister for Industry and Commerce will repeal the Control of Manufactures Acts? Certainly, those Acts require amendment I hope that the fact that the Government as a whole have approved sub-section (2) of Section 4 of this Bill means that they will seek the amendment of the Control of Manufactures Acts as well.

As far as sub-section (3) is concerned, that is merely a saver because we are granting with retrospective effect. Sub-section (4) is also a saver. I cannot see anywhere in which the operative sub-section which is sub-section (1), removes any difficulty. I am always willing to learn and I am waiting now to learn a little more from the Minister.

Perhaps there is only a very small difference at first sight but the important thing in this section is to bring shares in that are quoted on the stock exchange. Of course, there is the other change—it may be small but I think it is overdue—that the Revenue Commissioners should deal with this rather than the Minister.

With regard to this question of incentive, I think Deputies will have to admit that when most difficulties in regard to shares and interest on shares qualifying for relief of income-tax have been removed, it should improve the marketability generally of Irish industrial shares. That was the aim of this section and I am sure it was the aim of the section the Deputy brought in last year: to improve marketability generally.

No, specifically.

Yes, specifically, which, I suppose, amounts to generally in the end. If you remove it specifically, it will have a good general effect. That is all I can say about this section. That is the aim. It was put very strongly to us by the Industrial Credit Company. I should like to have time to look it over again. Personally, I do not think there is anything confidential about it but I should like to look at it again and, if possible, I shall let the House or the Deputy have it.

I have a copy of it. Perhaps the Minister will consider particularly the confidential nature of this report between this and the Report Stage. It would be much easier for us to discuss the amendment if that were on the Table.

Question put and agreed to.

Amendment No. 4 is on the same principle as amendment No. 2. I will not move it now but I might move it on the Report Stage after I have considered what the Minister has said on amendment No. 2. I think it follows the same principle.

Not exactly, but it is all right.

Amendment No. 4 not moved.
Section 5 agreed to.
Question proposed: "That Section 6 stand part of the Bill."

Does this specifically cover the case of Bord na Móna issuing security to Guinness's?

No, not that alone; any public issue.

I know it covers any public issue, but it will cover that one?

Question put and agreed to.
Question proposed: "That Section 7 stand part of the Bill."

On Section 7, the effect of sub-section (6) is to increase the rebate from 12/4 to 12/10 per lb. Would the Minister tell me what is the amount by which that rebate would have to be increased if the entire additional duty on hard pressed tobacco were to be offset?

The retail price is increased by 2d. If this sub-section had not been put in it would have been 2½d.

This is a rebate of 6d. per lb.?

Therefore, if the entire increase were to be offset, it would have to be a rebate of 2/6?

Roughly in that proportion?

Yes, roughly.

The Minister is not prepared to consider that increase?

We might give him the opportunity of considering it again on the Report Stage.

Question put and agreed to.
Question proposed: "That Section 8 stand part of the Bill."

This section deals with the question of tobacco duties and stocks.

I think about £100,000 is involved.

Is that all?

Question put and agreed to.
Question proposed: "That Section 9 stand part of the Bill."

Could the Minister give us an indication of the proportion of home-made beer and foreign beer in the last financial year? I think in previous years the imported beer represented about 10 per cent.

It is much less than 10 per cent. but I could not give the Deputy the figure.

In 1955-56 was not the barrelage of home-made beer 884,000 and was not the barrelage which paid duty 1,180,000? I am sure the Minister has that in his brief.

I could have the figures for the next stage.

On the next stage I would not be entitled to get them. I shall have to put down an amendment for the purpose of getting them.

Question put and agreed to.
Question proposed: "That Section 10 stand part of the Bill."

I seem, Sir, to have put down an amendment indicating that I was opposing Section 11 but of course it is Section 10 that deals with petrol duty, not Section 11. I only mention that because courtesy requires that I give notice to the Minister. I am afraid I must have given notice of the wrong section. However, I think the Minister was pretty well aware of what was in my mind when I indicated that I was going to oppose the section.

Under the existing legislation the Minister has administrative power, after consultation with the Minister for Industry and Commerce, to repay any duty that is charged on mineral hydrocarbon light oil. When petrol duties were increased in August, 1948, a provision was introduced administratively to ensure that farmers using tractors which worked on petrol would not have to pay the additional increase. The purpose of course was to ensure that there would not be any brake on production. The figure fixing the duty in 1948 was 1/2 per gallon and as a result of the licensing provision made at that time, operating under the 1938 Act, repayment was made at the rate of 6d. per gallon in respect of petrol used in agricultural tractors and stationary engines used for agricultural purposes. That repayment rate was increased to 8d. per gallon when the duty was increased in May, 1951.

Those two occasions of course were occasions on which the inter-Party Government was in power and on each of those occasions we deemed it desirable and necessary in the national interest that there should be no brake on production and that therefore nothing should be done which might in any way deter farmers from using petrol driven tractors. The Minister's Party came into power in 1951 and in the Budget of 1952 the petrol duty was increased from 1/4 to 1/9½ a gallon. On this occasion when Fianna Fáil got into power there was no remission for production on the land. Last year I found it necessary to increase the petrol duty but I operated the administrative provisions. I indicated in my Budget speech that I would operate the administrative provisions virtually to offset the entire increase in petrol duty where it was used for that productive purpose. I think it was purely a round figure of ¼d. that was included because the duty was brought up by 5¾d. and it was impossible to operate it in farthings from the repayment point of view.

This year the Minister has again deemed it necessary—we have had long discussions on the question of petrol duty and I do not intend to go into the matter again—to increase the duties but again he has followed the pattern of his predecessor in 1952. Again the Fianna Fáil Party have indicated that they are not prepared to give a rebate for production. There are not many petrol driven tractors in the country but there are a certain number and it seems to me that the cost of any such remission in favour of the farmer who uses such a tractor can amount only to a trifling sum. At the same time it is a rotten principle to reject the practice which existed before of exempting this productive work. The Minister and his colleagues correctly called for more production from the land but as soon as the Fianna Fáil Party get into office, if the opportunity arises, they do their utmost, through this type of imposition, to prevent production. That is what this section is doing, without the administrative provision.

There is another principle which I should like to mention and that is the principle of giving a rebate on certain taxes. When the amount of rebate gets too high and when the margin between the price of petrol to any particular class and to the ordinary person becomes too great, there is always the danger of the abuse of the rebate. I may say that is one of the principal reasons why I thought it would be unwise to give this rebate, because the margin would become very big.

We all know, I am sure, that these things are being used only by a few people. The great majority of the farmers work the scheme honestly and squarely, and there is no abuse, but we must keep our eyes on the small minority, or few, who abuse the privileges they got, and that abuse is likely to increase as the gap becomes bigger. The amount involved would not be an insurmountable difficulty for the Minister. The number of farmers who have petrol tractors is falling, as is shown by the amount paid out in rebate over the past two or three years. I think, generally speaking, these rebates are bad and we should try to do away with them as far as possible.

Is that the Minister's only reason?

It is the big reason.

I should like to ensure a full attendance of the Fianna Fáil Party to hear that reason.

Notice taken that 20 Members were not present; House counted, and 20 Members being present,

Now that we have some of the Fianna Fáil Deputies in——

Have the Opposition deserted this House? Their constituents will be interested to know there are only three of them present.

An té nach bhfuil peaca aige caithfidh sé an chéad cloc.

If Deputy Brennan had been in the House, he would have realised there was no necessity for any of the Opposition to be present for this section because our record is completely clear. For the benefit of Deputies, I should like to repeat some of it. The situation in relation to petrol duties was that, in 1948 and 1951, when there was a question of increasing them, provisions were made by virtue of which the increased taxation was not passed on to a farmer using a petrol tractor for production. Fianna Fáil in 1952 found it necessary to increase petrol duties. Did they give the same benefits to farmers using petrol tractors? No, they did not. In 1956, I found it necessary to increase petrol duties, but I provided that there would not be a similar increase in relation to petrol fuel utilised for production on the land. Fianna Fáil came on again in 1957 and did the same thing. In 1952 and in 1957, when Fianna Fáil were the Government on both occasions, and when they increased petrol duties, they allowed no remission for farmers producing from the land with petrol tractors. In 1948, 1951 and 1956 the inter-Party Government in power gave a rebate in each case. With that history there, Deputy Brennan will easily understand why it was not necessary for any Deputies on this side of the House to be in on the discussion of this section.

If the Deputy and his Party were so very troubled about this, they should have given the rebate that Fianna Fáil did not give. They did not give it. They gave the rebate only on their own taxes and if they felt it was just, they should have given a rebate on the Fianna Fáil taxation also.

We dealt with it on our own.

Question put and agreed to.
Section 11 agreed to.
Question proposed: "That Section 12 stand part of the Bill."

Can the Minister give us an indication as to what are the changes in the rates of entertainments duty which this section provides?

I could circulate it to the Deputy, but it would be impossible to read it out, as the Deputy knows.

Am I correct in saying that the free seat of 4d. and under now becomes a free seat of 5d. and under, and the scale is adjusted to that all along?

We calculated to get the same amount out of it.

To whose advantage will it be?

We calculate to get the same amount out of it and the cinema proprietors calculate to get the same amount out of it. I suppose the person who goes in has to pay.

There will be an advantage to the small cinema owners.

Question put and agreed to.
Sections 13 and 14 agreed to.
Question proposed: "That Section 15 stand part of the Bill".

On the question of death duties in general, could the Minister give us any indication of the cost in the year of reducing death duties to the level which I mentioned, and which he mentioned on Second Reading? What would be the cost of reducing the Irish rates to the same level as the Six-County rates? I mentioned it on the Second Stage and the Minister made a reference to it in his reply.

I am afraid it would take me some time to make it out.

I will put down a question on it before the Report Stage.

Question put and agreed to.
Section 16 agreed to.

I move amendment No. 5:—

In sub-section (1), line 15, to delete "new."

This amendment and amendments Nos. 6 and 7 are all cognate. Provisions in respect of investment allowances apply only to new shipping under this section. There are many companies— perhaps not so many, but there are companies—which are small and which frankly have not got the funds to buy new ships. Last year, when I was introducing the additional allowances for shipping, after representations had been made to me, I provided that the payment of an initial allowance or an additional allowance for ships should cover not merely new ships but secondhand ships. In his provisions in Part V, the Minister has deliberately restricted the investment allowance to new ships. He has deliberately excluded secondhand ships.

I think that is a mistake. Certain small companies cannot buy new ships and should be assisted to buy more modern ships than the ones they have at present, even though those ships may have been once used. The cost of any such amendment could only be trifling. I accept that if there were not some restriction in it, there might be a series of sales between some companies which would mean that a fraudulent company could get more than one allowance of tax. That can easily be covered in the manner I have dealt with in sub-section (4). Alternately, I should be quite happy if the Minister would treat as new a secondhand ship coming from another country.

Our aim should be to get increased shipping on our register. The smaller companies, more often than not, buy secondhand ships from other countries. There is a difference in relation to ships being bought secondhand and anything else which is bought secondhand, inasmuch as a certificate is available for them. The purchaser of any ordinary machine has no way of knowing whether or not it is good or bad, except his own knowledge and also that of any experts he may employ. However, Lloyds' experts are to be found all over the world. When buying a secondhand ship, it is easy for the purchaser to ensure that it is in suitable order because the ship will be certified by an independent body— a body which has to be very accurate and exact in its requirements as otherwise it would not be adequate for insurance risks. I think the Minister should accept this amendment—either that or without the provision that the ships must have come on to the Irish register for the first time.

The question at issue is the initial allowance and the investment allowance. Deputies are probably aware that machines ordinarily used by factories get the initial allowance only when they are new. The exception was made last year in regard to ships. A ship need not be new to get the initial allowance when it comes into the hands of an Irish owner. We are now bringing in further relief, that is, an investment allowance for a new ship. The investment allowance is a more valuable concession.

Deputy Sweetman is arguing that we should give the investment allowance to the purchaser of a secondhand ship as well as to the purchaser of a new ship and thus put the purchaser of the secondhand ship on the same level as the person buying a new ship. As the Bill stands, the purchaser of the new ship gets the investment allowance and the person buying the secondhand ship will get the initial allowance. It is better to leave it that way. We should give more encouragement to those who are buying new ships as they are more valuable, not only to the buyer but to the country generally.

I urge that the Dáil agree to leave things as proposed in the Bill and at least let us see how things work out for a few years. It is always possible to make amendments for the improvement of people, but it is not so easy to face them with a disimprovement. It is always possible to make amendments to improve the lot of the beneficiary. I urge, therefore, that the Dáil agree to leave things as they are for this year.

With regard to the Deputy's last amendment, I do not know how he would view that amendment if the Dáil were to decide not to make any change in regard to the new ship. If it were accepted with his other amendments, I think it would mean that the first buyer would get the investment allowance and that subsequent buyers would get the initial allowance.

I did not want a fraudulent person to be able to get two allowances.

If the Dáil does not agree with the Deputy's first amendments, then the last one will fall.

That is right. They all hang together.

Amendment, by leave, withdrawn.
Amendments Nos. 6 and 7 not moved.
Section 17 agreed to.
Sections 18 to 27, inclusive, agreed to.
Question proposed: "That Section 28 stand part of the Bill."

I do not know whether I can say what I want to say now as, quite frankly, I was looking at a subsequent amendment when Section 14 was passed. I intended to speak about the levies and the confirmation of the amendments made in Section 14. I do not know whether or not they really come under Section 28: I suppose they do not, strictly speaking. Perhaps I might just say I was glad the Minister, on the Second Stage, confirmed what I said in relation to motor cars. He confirmed that it was only when his Government changed the provisions of the previous levies that it was necessary to have regard to the provisions of the 1938 and 1948 Trade Agreements with Britain.

I think it would be wrong if I did not say that, when we found ourselves in balance of payments difficulties, we made it clear that it was necessary for us to take certain steps, of a temporary nature, notwithstanding the provisions of those trade agreements, and that that necessity was undoubtedly appreciated. When the Minister changed the temporary character of the levies and brought in the amendments under permanent customs duties, he got himself into difficulties. I was glad that, somewhat inadvertently, the Minister let the cat out of the bag when replying on the Second Stage. He made it clear that what I had said on the earlier stages was correct and not what Deputy Lemass said.

That is not so.

The record is right. However, it is lucky I missed Section 14 or we would have been here a long time.

Question put and agreed to.
Section 29 agreed to.
Schedules and Title agreed to.
Bill reported without amendments.

Could we have the Report Stage now?

We can have it on Tuesday. There are certain things which the Minister promised——

Would the Deputy object to Friday? I might have to go to the Seanad next week.

We could order the Report Stage for Friday but as to whether we take it on Friday or not the Whips and I can have some discussion.

Report Stage ordered for Friday, 28th June, 1957.