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Dáil Éireann debate -
Wednesday, 18 Jun 1958

Vol. 169 No. 2

Committee on Finance. - Finance Bill, 1958—Financial Resolutions.

I move:—

(1) That the Revenue Commissioners shall not make a repayment under sub-section (1) of Section 6 of the Finance Act, 1953 (No. 21 of 1953), to the proprietor of an entertainment held on or after the 19th day of June, 1958, if the duration of the entertainment exceeds two and one-half hours.

(2) That where an entertainment consists of two or more displays of the same programme in its entirety, each such display shall for the purpose of this Resolution but for no other purpose be deemed to be a separate entertainment.

(3) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

I do not know whether it would be better to discuss this Resolution in full now or have the discussion on amendment No. 14.

Is this not the provision to prevent the same film being shown again and again.

That is right.

Might we not have the discussion on the Resolution and if that discussion is satisfactory, the question may not arise later on?

It probably would arise more relevantly on the section.

Let us preserve at least the fiction that matters are discussed and decided here. Let us not pass a Resolution binding us consequently to pass the section. If we have this debate on the Resolution while our minds are still open and then carry it, we can conscientiously refer to it on the section, but if we pass the Resolution without discussion then, whatever our views are on the section, we must look up the section. I do not think this will involve a long discussion.

Not at all—three minutes.

This Resolution is preparatory to amendment No. 14 which deals with entertainments tax. Amendment No. 14, if agreed to, will be a new section in the Bill which will restrict, as from 19th June, 1958, the operation of Section 6 of the Finance Act, 1953, to film shows not exceeding 2½ hours in length. This section in the Bill proposed to give a remission of tax under certain conditions and it is proposed to amend the Bill now so that these concessions in entertainments tax will not be given to people under certain conditions.

First, I should say that Section 6 of the Finance Act, 1953, authorises a 50 per cent. repayment of entertainments duty in respect of cinema shows one-third of which consists of an Irish-language film or one-half of which consists of films in a language other than English; but from mid-1957 onwards there was a gross abuse of this provision. Until mid-1957, there was no claim for remission under this section. At that time, a certain proprietor of cinemas began showing Irish language films in two of his cinemas for about 1½ hours either before or after the usual evening programme of English-language films which lasted from 8 p.m. until about 10.30 p.m.

In that way, the Irish-language film actually formed one-third of the total film show because it was shown for 1½ hours from 6.30 until 8 and the ordinary film show followed from 8 to 10.30, and he was therefore entitled to repayment of the entertainment duty. Having succeeded in two of his cinemas, he extended the practice to five other cinemas and this practice was followed by other cinema-owners, until, in March, 1958, the concession had extended to 36 houses altogether.

The manner in which the Irish-language film was shown in these houses left no doubt whatever that it was used merely as a legal device to get remission of entertainments duty. There was no publicity indicating that an Irish film was being shown and there was a very small attendance— in fact, in some cases, none. People came in in the ordinary way about 8 o'clock when the Irish film was almost completed. Also, the practice in many places was to show a very short Irish film over and over again until 1½ hours were completed.

To counter these abuses, the Government, on March 21st last, under the Imposition of Duties Act made an Order entitled Imposition of Duties (Entertainment) No. 23 Order restricting, with immediate effect, the operation of the concession provision precisely on the lines set out in the draft section which is now on the paper as amendment No. 14. Since that, there has been no claim for any refund of entertainments tax. As Deputies are aware, it is necessary to confirm such Orders and the object of amendment No. 14 is to confirm by law the Order made at that time. The amendment has to be preceded by the Financial Resolution which I have moved.

What will the circumstances of a refund be now?

If this is passed, for the purpose of this section, it will mean a 2½ hour show where one-third of the 2½ hours is devoted to an Irish-language film, or where one-half of the 2½ hours is devoted to films in a language other than English. That will be the condition to be complied with in order to get a refund.

I do not think we should blame the cinema proprietors altogether in this matter. I happened to attend a show in Sligo some six or eight weeks ago and an excellent Irish film was shown at 10.30 at the end of the ordinary show. I counted the number of people who remained for that Irish film and it was six people out of a capacity house. I certainly agree with the amendment as put down by the Minister, but we should not blame the cinema proprietors altogether.

I am not blaming anybody.

What will the effect of this be? The original proposal, I take it, was to promote the showing of these Gael Linn films.

No; Gael Linn is a different matter.

To promote films then in the Irish language?

That was the original purpose, and as the scheme was first adumbrated, it seems to have failed in its purpose and this amendment will operate now to wipe out the scheme altogether? I think that is what Deputy Mulcahy's query to the Minister was intended to elicit. If we pass this Resolution, what is left of the original scheme to promote the showing of these Irish language films? Is there any inducement left to show them?

The original intention when this clause was put in was to give proprietors of cinemas an inducement to show Irish films, but it was thought at the time that the Irish film would be part of the programme. It was never contemplated that the proprietor could show the Irish film before the doors usually opened. Now they are opened at 6.30 and they start showing. This was a plain device to collect a refund. That is all. We are back, really, to the original intention.

I cannot say we will get any results from this. Somebody mentioned Gael Linn. I think they have a very short Irish item. There is no tax concession due on that at all. As far as I know, the showing of the Gael Linn item takes only about two-and-a-half minutes. That does not qualify for any refund of tax.

Do I understand that, in principle, the concession will remain?

But it is now proposed to arrange that two-and-a-half hours will be the normal time the average person attending a cinema is expected to spend in the house?

That is right.

The question now is whether two-and-a-half hours will be regarded as the right measurement.

That is the idea.

I take it that that will arise on the Report Stage? Maybe the Minister can substantiate his conviction in the matter.

Two-and-a-half hours is correct.

Are there any films in existence that would make it possible for a cinema proprietor to conform to the spirit and letter of this concession, or are we making a concession here which nobody can avail of? Is there in existence a film of sufficient length and substance to constitute a third part of a normal cinema programme? If there is, or if there is in contemplation the preparation of such a film, I can understand the purpose of this. If there is not any film in existence which will provide one-third of the normal programme, what kind of shadow-boxing are we going on with here by making a provision to induce people to show a film that does not exist and that has no prospect of existing? Has the Minister in mind the existence of any film which would fill the terms of this concession?

My concern is to stop an abuse. When this Act was brought in, I was at the time Minister for Health. At that time we produced some films on health subjects that were in both Irish and English. I think they ran for about 15 minutes. There were a number of them. I think others films as well as health films were produced at that time and since. From the revenue point of view, I know that no genuine cinema-owner has claimed a refund.

Can I take it from what the Minister says that there is a concession to other languages besides the Irish language?

That is right.

In other words, you can flood the market with the Italian stuff?

If it is in another language, it must be half the time but one-third of the time for Irish.

In fact, there are no such films?

There are the continental films.

There are no such Irish films. Is that what the Minister said? He said no genuine cinema-owner makes a claim. Therefore, there cannot be the films.

At the moment, we have a lot of continental films, with English dubbing.

They would be English-language films.

If a film is shown in Italian, with dubbing in the English language, does the dubbing of that film remove the film from the benefit of this concession?

I could not answer that question.

What is dubbing?

If its title is in English, it would remain an Italian film.

What is dubbing?

I could not define it.

The hero embraces the heroine——

A person could see that without having to be told.

You do not need to know the language.

Let us have an end to this cod. The plain fact is that we all know that dubbing does not disqualify a picture. The Minister has not read his brief. He does not want to admit that this concession is available as much to French, Italian and other such pictures as it is to Irish pictures. He should tell the truth.

I am telling the truth, as far as I know.

The Minister does not know. Is it not scandalous that the Minister rambles into this House with a brief before him and that he is too lazy to read it?

I said that dubbing, in so far as writing in sub-titles in English is concerned, does not——

The Minister is the greatest operator in this House. He knows blooming well what a dubbed film is.

I never saw one.

The Minister does not want to admit that an Italian or French film qualifies for the same concession as an Irish film.

We do not know as much as Deputy Dillon seems to know about dubbed films. We have not a chance of going to cinemas.

The old warrior tells us anything that comes into his head. If he would tell us the facts he would have no difficulty. The Parliamentary Secretary need not worry. The operator sitting below him is a good deal shrewder than he can ever hope to be. He is at present generating a smoke fog, and if the Parliamentary Secretary does not know that, he had better study himself for a while.

I am not impressed by a lecture on the truth from Deputy Dillon.

I can imagine that. Hammering on an iron pot does not often bring results.

Question put and agreed to.

I move:—

(1) That the Acts relating to income-tax (including surtax) and corporation profits tax shall be amended, and any appropriate charges to those taxes shall be imposed, so as to give effect to:

(a) provisions with respect to the computation of the profits or gains or losses of trades comprising dealings in securities in cases where dividends on shares are received which are to be regarded as paid to any extent out of profits accumulated before the shares were acquired, or out of other past profits,

(b) provisions with respect to the restriction of any right to claim exemption from tax on dividends in cases where the dividends are to be regarded as paid to any extent out of past profits,

(c) provisions with respect to the restriction of relief for losses by repayment of tax in cases where dividends are to be regarded as paid to any extent out of past profits, and

(d) provisions supplementary or ancillary to the provisions referred to in the foregoing subparagraphs.

(2) That the provisions giving effect to this Resolution, as well as applying prospectively with effect as from the passing of the Act containing those provisions, shall also apply retrospectively as on and from the 6th day of April, 1957 (no interruption of application being regarded as having occurred at such passing).

This brings in a bigger subject.

I want the Minister's explanation of this. The second part of this is most outrageous.

It concerns what is referred to popularly as "dividend stripping". As Deputy Sweetman said, it is a difficult and involved problem. I can best explain it, as it was explained to me, by giving an example.

It is done by three classes of people -a finance company, which is in the best position to do it; a charity or so-called charity, which also can benefit from it and an ordinary trading company. I should like to take the three separately so as to give an idea of how they operate. In all three cases, I can take the same example of the company they are about to strip which we will refer to as company "A". The company they are about to strip is usually a semi-dormant company which has made big profits which are lying there and they have not made up their minds about what to do with them.

Have the profits already been taxed?

Yes. Company "A", let us say, has reserves amounting to about £135,000, on which tax is paid. I am taking £135,000 because I am assuming a dividend of £125,000 which means a gross of £200,000. With income-tax at the rate of 7/6 in the £, the net is £125,000. The finance company say: "We will buy it."

These figures could not be right. There would be corporation profits tax to throw the calculation out.

They are paid also, but we cannot get them back, let us say. I am dealing only with income-tax. Company "A" has this £135,000. Company "B", which is a finance company, purchase the company and agree to give £135,000 for it. Having got the company for £135,000, they arrange that the company taken over pays out a dividend of £125,000.

Would the Minister prefer that we should let him get to the end before we ask him questions? I do not understand how anybody would sell what is worth £135,000 for £125,000.

Perhaps when I finish, you will see it is all the same. They purchase it for £135,000——

Here the Minister has an admirable brief, if he would take it over immediately.

I would prefer if the Deputy would not instruct me in this matter. Let me go on in my own way. It might not be as competently done as the Deputy would do it, but let me continue in my own way. They purchase the company for £135,000. They get the company to declare a dividend of £125,000 and sell the original company back to the owners for £10,000. Let us take the company. They sold it for £135,000 and they buy it back for £10,000. There was £10,000 of the profits left in it so they buy it back for £10,000. They are in the very same position as they were before they started. They neither lose nor gain anything. The finance company that buys it gets the company to declare a dividend and pays out £125,000.

I should mention at this stage that the stock and trade, the business, of a finance company is buying and selling shares and, if it makes a loss on the buying of shares, it shows a loss in its balance sheet, and if it makes a gain, it shows a profit. They are able to show as a result of this transaction they bought a company for £135,000. They sold it for £10,000 and they show a loss of £125,000 on their trading. Therefore, they can go to the Revenue Commissioners and say: "We have shown a loss of £125,000. We have in this company a dividend, on which income-tax is paid, or £125,000 net, that is £200,000 gross, and we are entitled to a refund of income-tax." They are entitled to get that refund back so there is a clear profit of the income-tax. That is where the problem comes in. It is a fairly substantial sum as a rule because they do not go in for a small deal. The point is: how is it proposed to stop that? As I said, under the present law the thing, of course, is legal.

It is perfectly legal?

It is legal.

I did not hear whether the Minister said "legal" or "illegal."

Under the present law, if the finance company shows a loss in its dealing in shares it is entitled to a refund of income-tax to the extent that they made a loss. The way it is proposed to deal with that is that the dividend payable of £125,000 will be charged as income and, of course, the loss will be wiped out and there will be no refund requested from the Revenue Commissioners.

The second class of companies or people that could benefit in this way are charities. I know I shall be told charities will not do this.

Before the Minister passes to the case of charities, could he give us any indication of what induces the vendor company to part with its property. It does not seem to get any award.

It loses £125,000.

I have given that example where they remain in the same position but they could equally get a margin of profit. They could be given £5,000 on the deal.

Not on the figures the Minister has given.

I have given an example where they do not make anything.

They lose £125,000 in the way you explained it.

They do not.

They sold £135,000 worth for £125,000. That is £10,000 gone and they had to buy back the company for another £10,000. That is £20,000.

I may not have given the figures as I should have given them. They bought for £135,000. They left £10,000 in the company; they did not take all the £135,000 of assets out of the company. They sold it back to the original company for £10,000 but they still had £10,000 assets left in it.

That is quite clear. That was not the Minister's first explanation.

It will be said that most charities will not do this. That is quite true but it is possible a charity may get through as a charity and then engage in this sort of business. As a charity, where they buy that sort of company, they would go through the same performance as the others did and, at the end, would say to the Revenue Commissioners: "We have here £125,000 after reduction of £75,000 tax and we are exempt from taxes and, therefore, we are entitled to get the income-tax back." Again, as the law stands, that would have to be done. It was rather difficult to deal with charities but what is proposed in the Bill is that where a finance company would be dealt with as I have already outlined, in such cases if a charity is concerned then no tax refund will be given. That is how we shall deal with charities.

What happens the deed of covenant in the case of a charity? Is that cancelled?

I do not know.

This affects it.

I believe it has nothing to do with it.

This Resolution does not prevent that still operating?

No. An ordinary trading company can be a company dealing in anything, in goods or services, but not a finance company. Where an ordinary company has made a loss, as Deputies, of course, are aware, that loss can be carried on to the next year and, if there is a profit, the loss can be put up against the profit and it saves the income-tax in years to come. However, such a company may not like to wait for five or six years to get back their loss in that way, and they have an easier way of doing it. At the present time to buy this company the same operation is gone through. They have £200,000 in dividends on which income-tax is paid and they claim income-tax back as against their loss, their ordinary loss in trading and again as the law stands they would have to get it.

In this case we have to deal with it somewhat differently and the clause that is put in to deal with it really has the effect of closing the gap by imposing a restriction on the income which may be used by a non-finance company to support a loss claim. These are the three types of cases we have to deal with and they are being dealt with in that way. Against that, of course, we have to bring in the overall various safeguards to safeguard what may be an honest transaction but which might not look an honest transaction on the face of it.

First of all, we cannot use these clauses unless at least 10 per cent. of the shares or assets of the company is purchased by a particular person. In order to prevent three or four people combining and each buying 8 per cent. or 9 per cent., we also deal with transactions which take place at the same time by a number of people, and if the sum total is over 10 per cent. they can be dealt with.

If a dividend is paid in a case like this it would reduce suspicions but if the company goes on—the stripable company as I should say in this case —and no dividend is paid out of the proposed purchase transaction that company will not, of course, be liable, will not be covered by the clauses which are put in. In other words, it is only dividends paid out of ante-purchase profits that will be liable to be dealt with by these provisions. Also, a normal dividend will not be affected.

If, for instance, one company takes over another, which has very big assets, admittedly, paying let us say, a dividend of 15 per cent. before it was taken over, and this company says they could easily pay 17½ per cent., we shall say: "That is all right. That is normal. Two and a half per cent. is not abnormal." But, if it went up to 50 or 60 per cent., we would have to take notice of the fact. If the normal dividend or around the normal dividend is payable, no action will be taken. Also, if in purchasing the company they were getting a dividend on their money which would be only around the normal return from a stock exchange quotation at the time that would save them from any treatment under these provisions here.

Lastly, if a company is taken over in that way and no dividend is paid for six years, then the matter finishes. They may distribute their money after six years, because it is felt that people who are dealing in this, who are taking advantage, let us say, of the present law in these matters, are people who are looking for quick returns and I think there is no danger in saying: "You must wait for six years before you reap any benefit from such a transaction."

I also want to deal with the fact that there is a retrospective clause in this and I want to say that, frankly, I am looking for retrospection.

I am looking for retrospection in these clauses. I do not want to have any doubt about that. One case at least has come to light but, unfortunately, we do not know how many cases will come to light on transactions that took place since 5th April, 1957, because those who are claiming refund of income-tax and so on may yet claim it on the year 1957 and may claim it, indeed, for, say, some months to come. We do not know, therefore, what amount may be claimed by way of refund of income-tax in this particular type of business and, for that reason, I am asking the Dáil to give me permission to go back to any transaction which took place since 5th April, 1957.

It is, I admit, very involved and very difficult. I must say, it took me a long time to get even the understanding I have and I feel that I am not a very good exponent, that I cannot explain clearly to Deputies what the whole thing amounts to. However, if we are asked questions, we shall be able to get a clearer understanding of it.

How many such cases have come to the Minister's notice?

Only one definitely.

This Resolution is in two parts. In regard to part (1) the Minister attempted to give us an explanation. I am afraid I did not follow it at all. I could not understand what he was getting at. It seems to me that, in the first case the Minister mentioned, there is £135,000 in the kitty which has already borne taxation, that the company is sold for that amount, that the company that is then purchased distributes £125,000 by way of dividend and, having done so, leaves £10,000 in the kitty and sells it back. It means that the vending company in those circumstances is exactly where it was. The £125,000 that has been paid out in dividends by the purchasing company is liable to tax in the hands of the recipients and the people who have received that dividend, if it is paid out, have to account for that dividend in the ordinary way. It seems to me that people when they receive dividends have to account for them.

In the sale of the capital assets, if there is £125,000 of a loss it offsets on paper the profit, but then the £125,000, unless it is paid out, is still in the kitty and it has got to be paid out, some way and, when it is paid out, unless the company is liquidated, the person who receives the money gets the profit. If the case made is that the company is put into liquidation then, perhaps, there might be a case that the moneys are paid out as capital and reach the hands of the creditors as capital payments from the liquidator.

Excuse me. There is just one point there. Perhaps we are on different lines. Company B takes over company A. Company A is still a company which has paid tax on its profits. It declares a dividend. There is no tax payable on that dividend.

But the tax has already been paid.

That is right.

The figure £65,000 is not right because corporation profits tax comes into it. There is no question of the refund of corporation profits tax.

That is something they save. The company A saves surtax because it is capital.

No. The holder receives his £125,000 and that is paid to him under deduction of tax, the tax having already been paid-£65,000. However, so far as that is concerned, that is a much more technical part of the subject that I propose to argue in much greater detail on the Committee Stage of the Bill. It is in relation to sub-section (2) of the Resolution and the retrospective effect of it that I want to address myself and to endeavour to persuade the Minister that retrospection in this connection is one of the most damaging things that could be done to the whole financial structure of the State. We are trying to get external capital in. No one will ever come into this country if he feels that there is a prospect of retrospective tax law. The Minister, when he was speaking, made it perfectly clear that what has been done is legal. If the law requires to be changed as from to-day, as it was changed in Resolution No. 3 in respect of the remission for an Irish-language film to cinemas, then that is a question which we can argue on the merits of the change but there can be no argument of any sort, kind or description that would justify the retrospective element that there is in part (2) of the Resolution.

I think that even a case of retrospective tax law of that sort is contrary to the Constitution and it would be upset under the Constitution.

Whether it is or is not constitutionally correct, for any Government to bring in tax retrospection undermines the whole confidence in civilised Government. For the purpose of discussing part (2), it does not matter in the slightest whether the Minister is 100 per cent. right on the merits of part (1). Certain people have done things that were absolutely lawful and because the Minister and I, if you like, as his predecessor, did not wake up in time to an amendment that it was thought should be introduced into the law, these people have carried out the law and now the Minister wants to wreak vengeance on them. That is not the way to carry on business; that is not the way to instil confidence; and certainly it is not the way to get anybody to come into this country with foreign capital for the establishment of business.

This is the beginning of the slippery slope. It has been brought in here, perhaps, because the Minister and his advisers feel that it would be unpopular to defend stripping dividends and therefore they can get away with it. I do not know enough about the practice to know whether it should be popular or unpopular, but I feel sure that is why it is put in here. Once you start on the principle of retrospection in relation to taxation, there is nowhere you can stop. Whether the Minister has his own mind made up, or whether this whole House has its mind made up, as to where retrospection should stop, you will never persuade other people that is so.

Once you start on this, one businessman after another will say to himself: "There is no use my taking certain steps to expand my business. It is perfectly legal as it is, but next year the Minister may come along and penalise me for doing it and put me under a charge for tax which I did not think I would have to pay under the existing law and that I did not have to pay under the existing law." Supposing a liquidator is involved. Supposing in pursuance of the present legal position, an accountant of repute —and there are half a dozen firms in Dublin who are well known as accountants of repute-was the liquidator of one of those companies and has distributed its effects, in accordance with the existing law and fortified by the advice of counsel, it means under this Resolution that that man is personally liable for making good, because the tax law has been changed retrospectively from what it was when he carried out the transaction in accordance with the law.

This matter was discussed across the water and there the Minister's counterpart, the Chancellor of the Exchequer, had a very different case to make. He made the case that he gave notice two years ago that if any attempt was made to sidestep his pronunciamento at that time he would block it as from that date. It then became clear to him there was considerable doubt as to whether the announcement he had made was sufficiently clear on its face and in its terms and because of the principle involved in tax retrospection, he abandoned the retrospective aspect of his section. Here the Minister has no such excuse.

So far as I am aware the Minister never referred to this matter in public at all until the Resolution appeared on the Order Paper. I would ask the Minister to correct me in that if I am wrong. I think there was never any such suggestion made at any time, until the day before yesterday, that this practice was to be changed and that anybody who had taken advantage of the law as it was would get the position varied so that the law as it was at time of his action was not the law at all.

I certainly never made any reference to it. I do not think Deputy MacEntee, when he was Minister for Finance, ever made any reference to this process and I do not think Deputy McGilligan, when he was Minister for Finance, made any reference to it, either. It is perfectly clear to me there never has been any suggestion by any Minister for Finance that such a practice was one that he was determined to block and that if clever people found a way around the block age proposed at that time, he would make sure that the loophole in the legislation was closed, and closed with retrospective effect. There is no, excuse for this except convenience, the convenience to the Minister and the convenience to revenue—I mean the tax revenue of the State, not the revenue personnel—and that will be vastly overshadowed by the damage that will be done.

I venture to say that when this sub-section is known—if the Minister does not change his mind and I believe he will—not one single foreign industrialist will ever come into this country again and invest his money in it. I have experience in my professional capacity, and other members of the House have experience in their professional capacities, of meeting people who come in here and want to consider setting up industry here. One thing I am always asked is what is the taxation position and on innumerable occasions I have been asked: "Is there any danger of the taxation position being changed retrospectively?" We have always been able to hold our heads high in Ireland and been able to say that we did not believe in doing that. We took the line that if we required to amend the laws, the laws would be amended with effect as from that date, but that we would not take the position in which people would be enticed here, and having been enticed, would then be, so to speak, hit on the head and hit in their pockets with retrospective legislation, so that, in relation to taxation, something that was perfectly legal was made illegal in order that the Minister could collect the few pounds involved. I do not know how much is involved. I accept the Minister's word that in these cases it is not going to be worth while unless the sum is substantial.

Nothing can justify the principle contained in clause (2) and I venture to say there is not a single person engaged in business who would not tell the Minister the same thing, that what he will get out of this sub-section (2) will be an insignificant trifle compared with the damage he will do to the whole confidence and structure of the State, and particularly that his colleague, the Minister for Industry and Commerce, may write off completely any prospect of getting in external capital and that we might as well wind up the Industrial Development Authority.

I want to direct the Minister's attention further to the subject matter of clause (2) of this Resolution. Deputy Sweetman has dealt with the possible repercussions of it on investment of foreign capital and I agree with him entirely. As well as that, there is a very great additional evil, of which I imagine most Deputies are quite well aware. The situation can here arise and in fact, does arise, in which one individual, of whom the Minister has knowledge, has carried through a perfectly legal transaction. The Minister now asks us to legislate to declare that transaction unlawful retrospectively. There is in the minds of most Deputies the idea that that cannot mean any more than that there shall be claimed back from him a certain sum of money. It means a great deal more. If as a result of the retrospective legislation it now transpires that this individual is liable to pay income-tax that he did not know he was liable to be called upon to pay, the Revenue Commissioners have power under Section 27 of the 1946 Act to issue a writ, get a judgment against him for it and, if he has not got the wherewithal to pay it, to get the writ returned nulla bona by the sheriff, get it countersigned by the county registrar, by which instrument the superintendent of the Guards can come and remove the gentleman to whom the Minister has referred to Mountjoy or Limerick jails and there detain him for six months without further legal procedure of any kind until such time as the amount of tax claimed is paid.

If the Minister reflects for a moment I think he will agree with me that it is entirely unthinkable that this House, by Resolution, should put any citizen of the State in that position as a result of retrospective legislation consequent upon his doing something which we are all agreed was perfectly lawful under the law as enacted by Oireachtas Eireann. For the broader reasons outlined by Deputy Sweetman, as well as the very important domestic reason to which I have directed the Minister's attention, I would urge the Minister most strongly to drop paragraph 2 of this Resolution. It will be more expedient to discuss the details, with special reference to the impact of this Resolution upon a charity, on the appropriate section of the Bill and confine our discussion at this stage to the principle enshrined in paragraph 2. I would ask the Minister to drop paragraph 2 and discuss the merits of the procedure in the ordinary context when we come to deal with the section.

In that connection, if the Minister could be persuaded to adopt that course, might I suggest this to him? These are highly technical matters. It would be of great assistance to the House if he would ask the Revenue Commissioners to set out in black and white a typical case, without any disguise, and to communicate it to the House, either by circulating it or by reading it out to the House and thus endorse in the Official Report verbatim the language employed by the Revenue Commissioners to indicate a typical case. It is extremely difficult to paraphrase a report of a matter of this kind. It is very hard to follow it. But if you have time to read it set out coldly with typical cases, then you can grasp it in a better fashion.

I cannot imagine that there would be much difficulty on any side of the House in accepting in principle the restriction on what is commonly known as dividend stripping in regard to finance companies and trading companies. I should like, however, to be a little bit clearer in my mind on the merits of the proposal as far as it relates to charities. As Deputy Sweetman says, this matter was very exhaustively discussed in the British House of Commons within the last three months. This Resolution is taken en bloc from the appropriate financial legislation in Great Britain. There, the defence was made that the Chancellor of the Exchequer had given notice so long ago as two years of his intention to introduce retrospective legislation if this practice continued. The Chancellor of the Exchequer claimed that the warning he had given in 1955 was that if this practice were continued in the City of London, he would introduce retroactive legislation to deprive those who continued the practice of any profit they might derive from it. It was argued in the House of Commons that no matter how explicit the warning may have been two or three years ago, the principle of retroactive taxation legislation was so repugnant to the whole spirit of parliamentary democracy that the warning he gave did not constitute a valid foundation for a retroactive resolution of that kind. Mr. Heathcote Amory accepted that view and actually withdrew the resolution in so far as it purported to be retroactive.

I think Deputy Sweetman is right. The right to say that the damage that will be done by abridging our right to say that the practice of retroactive legislation, especially in regard to taxation, is unknown in this country is far more precious than any remedial result the Minister can hope to have by the retroactive action in paragraph 2 of this Resolution. I press him very strongly to drop paragraph 2 and allow us to debate the merits of the general proposal on the appropriate section of the Finance Bill.

I have practically nothing to add to what Deputy Sweetman and Deputy Dillon have said about the proposal to make these provisions retrospective. It is important that I, on this side of the House, should add my voice to the appeal made to the Minister so that he can realise that the feeling that these provisions are not wise is not confined to the Opposition. That is the only reason I speak on the Resolution.

The moment I saw the draft of the new part of the Bill I was immediately struck by the fact that the proposals were to be retrospective. It seemed to me extraordinary that that should be so, particularly in view of the full debate there was in Britain on this very aspect. As has been stated, the Chancellor of the Exchequer, in spite of the excellent defence he had which is not available to the Minister here, withdrew the proposal to make the legislation retrospective in view of the volume of opinion opposed to it. I would also appeal to the Minister not to persist in making these provisions retrospective.

We all agree that dividend stripping is nothing more or less than a legal wangle to procure a refund of income-tax which should not be properly due. But, nevertheless, no amount of revenue which the Minister could get under these provisions would compensate for the sacrifice of this vital principle of not making tax legislation retrospective. I say that as one who has some knowledge and experience of the operation of the Income Tax Acts and of the whole code. I should like to say that I agree entirely with the arguments put up by Deputy Sweetman and Deputy Dillon and to make it clear to the Minister that the same feelings are held by some Deputies on this side of the House.

There is just one aspect on the general issue which I should like to suggest to the Minister. It is desirable that the Minister should give us a definition of the crime, a simple statement in clear basic English or basic Irish as to what the crime is in the complicated sequence of events described by him. Could he indicate at what particular point the commission of the crime is arrived at? Could he give us a picture of the beneficiaries as a result of the crime? In view of the complicated statement that has been made, it is desirable that we should have these points made clear.

I join with the other speakers in disapproving of retrospective legislation in this matter. I rather think the Minister when introducing this section was not entirely happy in his own mind. To date, only one case has been made known to the Revenue Commissioners. The Minister feels that others may arise and in order to safeguard that possibility, he is introducing this retrospective legislation. That is not a sufficiently good ground for departing from a well-established precedent. Retrospective legislation is not in accordance with normal democratic procedure. Like Deputy Sweetman, I think this will do considerably more harm than is visualised. I should like to ask the Minister to reconsider the position and not to introduce this retrospective legislation. It will do more harm than good.

When I mentioned charities, I gave them as an example of a body exempt from income-tax and, therefore, where income-tax has been paid on any shares, or anything like that, they would be entitled to a refund. The same would apply to trust funds, superannuation funds and to the fund envisaged under this Bill, namely, superannuation for the self-employed. There are other funds, too. I want to make it clear that we are not dealing with charities alone. We are dealing with all funds exempt from income-tax in the second category that I mentioned.

The example given by Deputy Sweetman of a liquidator being put in a very invidious position could not arise. This will not apply to a liquidator and therefore the position envisaged by Deputy Sweetman could not arise.

Why? If the liquidation were finished——

But he has got no money because no money will have been paid out under this.

A liquidator would not be dealing in shares. Therefore he would not come under this provision.

I want to bring this point home with regard to retrospection: we do not intend to take money from anybody. It would be a different matter if we had paid out money and were seeking to get it back. Retrospection applies only to the extent that it absolves the Exchequer from paying out money that may be claimed, but not yet paid. There will be no refund, therefore, from anybody under this clause.

Does the Minister mean the refund has not been paid yet?

No, and therefore, we are not depriving anybody of any money. We are merely withholding from them a profit they expected to make out of the Exchequer by purchasing shares in this way.

The Minister is imposing a loss on them because they have expended money under law.

Take the Minister's own case: they have paid £1,350 in stamp duty alone.

£135,000, and they got back £125,000 plus £10,000. I am not sure what the expenses are. We will leave out the stamp duty. It is true that this has been legal so far. It was referred to in another place as "legal robbery." I think that is a very good description.

In answer to Deputy Mulcahy's query as to what the crime is, the position can be stated in this way: provision was made in the income-tax code to give a refund in certain circumstances—as I said earlier, to charities or funds of that kind, or, where a person had suffered a genuine loss in trade, such a person might possibly be entitled to a refund of income-tax in order to make up for that loss. The position is different in the case of a person coming in to take advantage; that is the offence we are trying to deal with now. Call it a crime, if you like.

It is not, as Deputy Sweetman said, merely a matter of convenience to deal with it in this way. It is really a question of cash because we are dealing with a device which was discovered only recently. It was discovered first in England and then the idea came in here. It was a device to take money from the Exchequer in a very shady manner, to say the least of it. It is not money which might be got in a commercial way in which a person might have to take a risk or show some business acumen in order to make money. It is simply a matter of taking money from the Exchequer. I do not think there is much to be gained by quoting what has been done in England. We are not, after all, in a position to appreciate conditions there. Almost half the House of Commons were for retrospection. The curious thing was that it was the Opposition who wanted retrospection. The Government were against it. The position is reversed here.

Since when has the Minister transferred Deputy Haughey to the Opposition?

Apparently he is on the transfer list.

I cannot see much in the argument put forward by Deputy Sweetman that this will have repercussions of any kind. People who come in here to do business will be sensible enough to understand the position. Every honest man would say that we should take all possible steps to deal with this. We are taking such steps and we are asking for retrospection only to the extent of the cases that we have. We have heard of one case, but nothing has been done about it. One application has been made and there is another application which may be made. I see no objection whatsoever to telling the House what the extent of these losses will be, but I have no information on that. At this stage, it would even be impossible to hazard a guess as to what they may amount to; they may not amount to more than the cases we know of already. We have had one application and there is a certain suspicion in another case; it may not go any further.

What is the amount in the known cases?

I think it would be about £100,000. I cannot give that as a correct figure, but it is round about that, as far as I know. I may be putting it too high. Everybody says this is a practice that should be stopped. The only objection appears to be: "You should not make it retrospective." I am asking that we should go back to the 1st April, 1957, in other words, to the cases that we would be asked to deal with this year, some of which may not have arrived yet. I am asking for permission to do it in that way especially when I can say we are not asking any of those people to suffer a loss on the transaction. We shall deal with them only in so far as they attempt to take easy money out of the Exchequer, which is a very different matter indeed from the ordinary transaction with which one might be asked to deal under the income-tax code.

I want to ask the Minister to use his own business acumen in relation to this matter and not to be blinded entirely by the revenue aspect of it. The Minister, when he was not a Minister, had certain business contacts with companies outside and he must know very well from that, that once it becomes common knowledge, as it will become common knowledge when this is passed that retrospective legislation is to be enacted by the Dáil in relation to taxation, the whole structure and foundation of confidence will be utterly lost.

I thought when the Minister was risking literally the structure on which business is built in the country there would be something far more substantial involved in terms of money than the figure he mentioned. I do not agree with the Minister that he is entitled to say, even in relation to the transactions that have occurred, that they are not honest. There are only two standards of honesty that I know, first, one's conscience according to whatever Church one belongs to and the other the law of the land. By both of those standards the transactions are honest up to the time the law is changed; then they cease to be honest. Once the law of the land is changed anybody who attempts to do something against the law is dishonest. I do not think the Minister will get anybody to agree with him from a religious point of view that it was dishonest to carry through a perfectly legal transaction of the type the Minister indicated.

Whether that is so or not, it is all past. It is from now on that counts. If the Minister was making the case for the future that these transactions meant that some people were getting away without paying their full burden of taxation, then the House might be prepared to sit down and discuss the details of the proposals but the provisions that are inherent and specific in sub-section (2) go back to the 6th April, 1957. The Minister may think that because it affects only those cases it will not have any effect on confidence. Everybody will accept this sub-section, this retrospection, as being the thin end of the wedge and the beginning of the slippery slope, more particularly people whom we are trying to induce to come in from outside. The game is not worth the candle; the damage that will be done is not worth it even if the Minister were to lose ten times the figure he has suggested is involved.

I shall not argue at length with the Minister about the question of loss, but he is wrong. There is loss. In order to arrive at the situation in the case to which the Minister has referred—I know nothing about that case—stamp duty must have been paid to the extent of £1,350, from the Minister's own figures. To arrive at that condition there must have been very substantial fees incurred to accountants, to barristers and solicitors, and it is quite possible that the stamp duty that would have been payable would have been payable on a very much higher figure because there might have been stamp duty on the re-transfer. No matter what happens, whoever has been engaged in this practice has incurred loss if this provision goes through as it is.

However, I am not so much interested in that. That is in the past. What I am interested in is that when any foreigner comes to me or to any other professional person in Dublin, be he accountant, solicitor, manufacturer or anybody else and asks, as I have been asked: "Is there any danger that taxation laws will be amended retrospectively?", we shall now have to say to him: "There is. The precedent is here in the 1958 Finance Act and if the Government find they do not like the way you are arranging your tax affairs then they can make a change and knock you back." Nobody will come in here in such circumstances. You might as well wind up the Industrial Development Authority and bring back its representatives from America, because once that gets out there is not a hope of anyone coming in here and starting an industry.

I do not think the ordinary taxpayer will be impressed one whit by this talk about retrospection. I imagine the Revenue Commissioners are already in receipt of thousands of returns from taxpayers of their ordinary income. These taxpayers are asked to declare what their income has been for the year ended 5th April, 1958. Does that not take us back to April, 1957, and are not all these income-tax returns retrospective if you wish to interpret a declaration of what your income has been for the past year as retrospective? That is an entirely new twist to give to this principle of retrospection——

——against which everybody would protest, including Deputy Haughey.

The Parliamentary Secretary does not understand what he is talking about.

Deputy Haughey had quite a different idea in mind altogether. The ordinary taxpayer would certainly have a great grievance if, having had his taxable assets looked into for a year past, he were to be told that very large finance corporations could get away with that retrospective year by a subterfuge. The shoe is really on the other foot and the Minister is serving the interests of the ordinary taxpayer by what he is doing.

Thanks be to God, in this Parliament every Deputy is free to speak his mind whether he knows what he is talking about or whether he does not. There is no limitation, but I want to put it to the Minister that describing the undesirable character of the activity against which this Resolution is directed is quite irrelevant to the principle enshrined in paragraph (2). The Minister and I would have felt deeply against the people who sent ships to sea overloaded, but they did not commit an offence until Plimsoll passed his Act of Parliament and it would not have been right to make them criminally responsible for doing something that the Minister and I would both agree was unfair, unjust and improper, by passing a retrospective Act of Parliament to that effect.

The Minister, who has had some experience of the insurance business in his private capacity, will remember the impact of the 1909 Insurance Act in England. One of the things it did was to put an end to the system of industrial insurance companies lapsing people's insurance policies for default in payments. It imposed on the insurance companies an obligation to give a paid-up policy in respect of any lapsed policy and not simply to confiscate the other party's money. If that Insurance Act had sought to do in 1909 what this Resolution seeks to do to-day, it would have wiped out a great many of the industrial insurance companies of England. Indeed, if our own Insurance Act had attempted to do retrospectively what we ourselves did in 1936, we would have wiped out a great many of the industrial insurance companies in this country.

I think a good many people might have argued for that, on the merits of the issue of the lapsed policy but I think the right view prevailed. That was that the law speaks as from the date of its enactment and that people are entitled to carry on their lives under the law by showing it the due deference of full comprehension and complying with it. The whole of civilised existence practically breaks down if we are to live under a system whereunder, having taken every conceivable precaution to ascertain what the law is, we exert ourselves to comply with it, only to be told 12 months later that, despite our care to comply with the law, we are to be declared to be in default, retrospectively.

I am deliberately following a somewhat different line from that adopted by Deputy Sweetman, who points out the dangers of this to confidence. I do not think that aspect of the question can be overemphasised and I think it a vitally important one. I am concerned for a much more, to me, fundamental principle—that is, the whole question of retrospection by penal or quasi-penal legislation. I think it wrong and unjust and that the purpose to be achieved is out of all proportion to the evil that this Resolution seeks to abate through the medium of paragraph (2). If, in the course of the last 12 months, some people have got away with something that we wish we had foreseen, the prudent course is to say: "Well, we shall try not to let that happen again," rather than tear down the whole structure of precedents which has given the law its certainty in this country heretofore, in order to chase a very restricted number of persons who might have had to pay more income-tax than they otherwise would.

I want to put it to the Minister that it is quite illusory for him to say that this practice of dividend stripping has only recently come to notice. There is not a single accountant of standing, there is not a single officer of the Revenue Commissioners, who did not follow closely the whole discussion which took place in regard to this practice on the occasion when Mr. Thorney-croft issued his first warning in the British House of Commons in 1955. The practice was well known to revenue officials, to accountants and to solicitors with any experience of company law. I suggest to the Minister that, inasmuch as the warning issued in the British House of Commons was not issued here, it almost amounted to a declaration that, so far as our Department of Finance was concerned, we did not take so grave a view of it as the British Exchequer did. That is understandable, because as compared with the dimensions of the practice in Great Britain, our activities were microscopic.

I am rather inclined to agree with the Minister in his intention to put an end to the practice particularly in regard to the first and third categories he mentioned. I should like to look at the second category more closely when the matter is being discussed in the Bill. I urge most strenuously that a very strong and reasoned case is being made to him against paragraph (2) of this Resolution. It is useful from the point of view of our institutions of Government and of the functioning of this Dáil, that on occasion the Minister will meet the views of the Opposition. The Minister has had support from his own Parliamentary Secretary and he will weigh the arguments advanced by his Parliamentary Secretary against the arguments advanced from other parts of the House, both behind him and in front of him.

I do not think this case is being put in any controversial way and it would not be a bad thing if, on this occasion, the Minister announced that he was prepared to drop the retrospective clauses on the understanding that the matter could be discussed on its merits, on consideration of the Bill.

I should merely like to reiterate the point that this whole situation and the necessity for this section arise because the present Minister and his predecessor, apparently, could not take effective steps in time to put a stop to this practice; and I do not think that is a good reason for introducing retrospective tax legislation.

What Deputy Dillon said is perfectly true, that this practice of dividend stripping was known. There was no known case of it here until actually the Finance Bill had been circulated, because if we had thought there was a case before the Bill was circulated we would have put in the clauses then. It was only when the Bill had gone out that we discovered the first case.

Surely that blows the bottom out of the Minister's case altogether? You cannot legislate against an individual.

We do not know how many more are to come.

The Minister says that this is brought in on the knowledge he has gained.

We have discussed this problem on a very objective basis and it is not a political question. I would be very sorry to drive the debate in any other direction. However, we are dealing with a class of people here that are not the same as the ordinary individual one meets here, like the ordinary industrialist who is making returns under the income-tax code, or even the industrial insurance person, or anybody of that kind. We must remember that they are at least foreign-inspired if not coming in personally to take part in this issue. I do not want to raise any prejudice against them by saying they are foreign but the idea is foreign to us anyway, and they have engaged to some extent —I do not know how much—in it. I do not want to give the Dáil the impression that it may be £1,000,000 or £2,000,000; I am trying to give the figure as far as I can give it. The position really is that they have their hand in the till; they are able to pull out the money and we are saying: "No, we are not allowing you to pull it out." That is the position as it appears to me.

I must say I am not one bit anxious in regard to the position about foreigners coming in to invest their money. I think they will all understand the position very well. It is a very different thing from retrospection with regard to income-tax by making people pay more, or anything like that. Here is a thing that every decent person, whether in this country, in England or elsewhere says should be stopped. I have not met anybody who says it should not be stopped. I am saying we should stop it from those who are even now putting their hand into the till. I have not the legal power to say: "Take your hand out" at the moment but I am asking the Dáil to give me the power to say: "Leave it there," or to say: "If you leave your hand there another few days, you can take it out empty." That is all I am asking by way of retrospection.

I could understand the term "retrospection" being applied if this was going on for a number of years, if it was well known as a legal matter. I would see a big objection to it then but this was something never done by anybody before in this country. We have discovered the first case: we do not know how many more are to come. They will not lose anything by it. I am asking the Dáil to agree to this and I am prepared to meet the point raised by Deputy Sweetman in regard to any expenses that may be involved being covered. It should be possible to meet it that way but it is hardly worth considering because the expenses are very small compared with the total gains expected.

I want to put it to Deputies that we are not dealing with an ordinary case here; we are dealing with a very unexpected case—never known here before. These people are taking money out of the till and, to the extent they take it out, the unfortunate taxpayers have to make it up and I do not think we should allow that. That is why I say we must date it back to the 5th April, 1957.

Why use that date? Why not the 5th April, 1950 or have six years' limit for refund?

Because I think it is far enough to go back.

There is no logic in it.

It seems to me there is some confusion between what is legal and what is desirable from the point of view of the Minister. That appears to cover what the Minister is saying. I agree there are some financial practices which are most undesirable from the revenue point of view but that does not necessarily mean they are shameful. The fact they have not occurred before does not, to my mind, justify the Minister in saying this is something foreign; this is something which foreign influence has brought to bear on us or that foreign influence has brought about this whole situation. The real point is that these men who, since they have not broken the law, are presumed to be lawful, proper businessmen, have taken certain action which was approved by the law and from which they properly anticipated that certain benefits would result to them. I can quite see that the revenue does not want any benefit removed from themselves to anybody else but the fact remains that an investment, as it were, has been made by certain people who quite properly expected the result of that investment would be a refund of tax by the revenue.

What disturbs me even more about this is that it does not appear to be an isolated case. I do not want to anticipate the debate on the Finance Bill itself except to say that paragraph (b) sub-section (1) of Section 31 enshrines a rather similar provision. It is retrospective and, even though it does not take money away from a person retrospectively, it damages the quite lawful anticipation of a person of a financial benefit. It is a distinction which is too fine for me to appreciate—the distinction between taking money away from a person retrospectively and refusing to allow a person to receive something which they are properly and legally entitled to expect.

I am not sufficiently aware of the technicalities of dividend stripping to know in detail what the practice is but I am fully prepared to accept the view which appears to be general that dividend stripping is not a good thing. But you simply cannot legislate against things to which you object. Whatever has been done has been done legally and if some action has to be taken it should be properly taken. From the revenue point of view, I am all in favour of blocking loopholes but if there is a loophole which has been left open and through which somebody has gone, in a proper way and with full legal rights, they have a legal right to the refund. I think it is a most appalling precedent if we once enter on the course the Minister suggests.

I am particularly upset because, as I said, there is another somewhat similar provision in the Finance Bill itself. I would plead with the Minister, in spite of the pressure he is labouring under at the moment from the Revenue Commissioners, to bear his loss. We must all take a share of this loss. Loss is something that we all meet in business; as a businessman you realise you must stand up to losses and that there is no use in crying over spilt milk. The situation is not irretrievable; the loophole can and will be blocked although that does not mean there will not be other loopholes. Still it does not mean that anybody who had properly got through the loophole will be caught afterwards and the money taken from them. If it was money legally acquired at the time of going through the loophole, it will not be withheld from him. We are on a very slippery slope here. I strongly support what has been said against the Resolution. I am very sorry to have to oppose the Minister's Resolution and I would appeal to him not to put it to a division if there is any other way——

It will be embarrassing.

Deputy Corish says it will be embarrassing. It will be acutely embarrassing. I do not want to put it on a personal level. I think the Minister is being pressed to a wrong decision.

We will pair with you; we will give you up to 11 pairs.

I do not want to avail of pairs on this issue.

I should have said "swops".

I would suggest that the Minister should delay the decision so that he can consider it further. I am very alarmed by the whole trend of such legislation.

The Minister is in the position that he has been advised strongly on this point by the Revenue Commissioners. I shall not say one word that can be taken as critical of them because it is improper to criticise civil servants in this House and because I have immense respect for the manner in which they address themselves to their tasks. But I want to say they are in a position in which absolutely, inevitably, they cannot see the wood for the trees. Their job is to deal with trees day in and day out. Their job is to produce the estimates on which the Minister bases his financial policy and not merely to produce those estimates but to do their utmost to see that the estimates are realised. That is their job. It is inevitable, therefore, that they must approach problems like this from the point of view of the old saying: "You cannot see the wood for the trees." They would not be human if they were not looking at it in that way.

The Minister and the Government should take the wider issue that is involved-the issue which has been very well put by Deputy Booth that there is no difference between taking an exaction out of a man and telling a man he will not get what he has at this moment a legal right to obtain. Nobody will go into the definition the Minister makes between these and other cases. Everybody will feel that, in the future, some other Minister for Finance will have the opportunity of quoting this as a precedent—of going back and saying that, notwithstanding what the law was at the time certain transactions were carried out, he intends, retrospectively, to tax those transactions.

Daily, in the House, we see precedent after precedent being built up— desirably so. This is a precedent which, if started, will build up a chain in the other way. It will undermine completely confidence in our taxation structure, confidence in our financial policy at home and, even more so, abroad among those whom we wish to get in at the moment. I urge the Minister very strongly to reconsider clause (2). If the provisions of the Bill are not strong enough to enable the Minister to do what he wants for the future, I shall not argue with him about that. He can satisfy himself completely in that respect.

The House will be all of one mind as regards the position in the future. The position in the past is a very different thing indeed. I urge the Minister with all the vehemence I can command to reconsider this matter. We have discussed this objectively and not politically. There is no question of Party politics in relation to this matter. It is being discussed entirely objectively. The Minister would be doing a service not merely to the country but to his own Government by yielding to the representations made to him.

I must confess I was very much in sympathy with the Minister's point of view. I do not like to think that perhaps some financial shark is getting away with it. At the same time, I should not like to go as far as Deputy Sweetman went. We can probably do without industrialists who will be so easily scared off.

However, it is a bad principle. I doubt if it will have the effect on the ordinary taxpayer which the Minister suggests. The Minister made the case that if they had to give this money back, the ordinary taxpayer would have to make it good. I suggest that that need not happen. The Revenue Commissioners hold an increasingly large balance, which they do not pay into the Exchequer, and this loss could be offset by depleting that balance without affecting payments into the Exchequer. Whatever way it is borne, I think it must be borne, rather than introduce retrospective taxation.

It is all right for the Minister to say he would have no intention: Ministers on both sides of the House have always said they have no intention but five or ten years later somebody else may come along in the cheerful hope that the circumstances have been forgotten and claim it as a precedent. The type of debate that arises on precedents is not one that ever makes the position very clear. I do not want to throw a spanner into the amiable debate which is going on at the moment.

I do not know very much about this finance business or what share-stripping means. I gather it is about three years since this cropped up in England. When it did crop up in England, under very much the same type of income-tax code, why were no immediate steps taken to provide for plugging this hole? The fact that a case has arisen here only now does not seem to matter. Surely the duty of a Minister for Finance and his officials is to take warning from other people? There is a good old saying that a fool learns by experience, but a wise man learns by the experience of others.

I have not any more to say. I have to stick to my points. If Deputies opposite would like to pass on and deal with the matter on Section 50, I do not mind: it can be dealt with again. If there must be a decision on this matter, all I can say is that we will divide on it.

Do I understand that the Minister is suggesting he will look into it between now and the time we come to the Committee Stage?

It does imply that, but I do not give any promise that I will change my mind.

I am not asking for a promise. The door is not yet shut.

Question put and agreed to.
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