Dáil Éireann debate -
Thursday, 19 Jun 1958

Vol. 169 No. 3

Finance Bill, 1958—Committee Stage (Resumed).

Question again proposed: "That Section 6 stand part of the Bill."

Mr. Sweetman

On the section yesterday we were discussing the question really under the amendment that had been moved by Deputy Haughey. I wonder has the Minister had time to consider the matter since last night? I cannot see how under this section an employer who wishes to fulfil his proper legal obligations can avoid keeping the type of records that are not in any way necessary. I cannot understand why it should be assumed that an employer would deliberately inflate expenses paid to his employee thereby losing 20/- when he would get back, by so doing, only 7/6 income-tax. That proposition means that a man is budgeting all the time to lose 12/6 and I cannot conceive anybody doing that.

Be that as it may, there is the other aspect of it. In cases where vouched expenses are paid by an ordinary individual in business to someone not in partnership with him in any shape or form or by a company to someone not a director or shareholder of the company, surely the vouching of such expenses by the owner of the business is sufficient for the Minister? It should be unnecessary to return such expenses separately. It is not necessary from the Minister's point of view but, even if it were necessary from his point of view, the provision of a paragraph in the section by which an employer was bound to return any composite or compounded sum paid for expenses would achieve what the Minister has in mind equally well without imposing on employers the difficulty and the additional expense that this section will impose. Employers would not mind so much the additional expense being imposed if they felt there was any point in it, but I cannot see any point in nine-tenths of the information that will be made available under this section.

Mr. Haughey

When we reported progress yesterday evening I was making the point—perhaps I should reiterate it in case I did not get it across very clearly—that when a trading company submits its accounts to the inspector of taxes, every heading in the profit and loss account is scrutinised by the inspector, and the expenses in relation to which Section 6 endeavours to get information must be included among those headings. The inspector of taxes, as a matter of normal routine, looks for an analysis of any heading which he thinks would contain the type of expenses envisaged in Section 6. The Revenue Commissioners already have that machinery at their disposal for getting this information and it is a better type of machinery than that proposed here. It is immediately aligned on the target. I think that the existing system should be quite sufficient for the Revenue Commissioners, because, under it, they can get a perfectly clear picture of this whole matter. For that reason, I would appeal to the Minister to reconsider the question, and, if he thinks that this must be included in some form, I suggest that he put in some limitation.

Minister for Finance (Dr. Ryan)

I had an opportunity last night of studying the origin of this section. It is, as Deputies are aware, a part of Section 105 of the Income-Tax Act of 1918, which was passed by the British Parliament. I was interested to know what became of it, as far as the British authorities were concerned, and I found that they amended it in 1939 by machinery on the same lines as we are suggesting here. The same controversy took place in the House of Commons and the Chancellor of the Exchequer then said that he did not believe that all the terrible things forecast were going to happen. He said on that occasion that he would give an undertaking that they could come back to him, if they found these things happening. However, they never came back.

Mr. Sweetman

They were interested in a much more important matter at that time—a war.

Dr. Ryan

There have been two wars since then and the section is still working in Britain, and there has been no great complaint. In these matters, the Revenue Commissioners find from experience that they have to ask for many more powers than they intend to use. The form which it will be proposed to serve on employers in this matter will be a prescribed form and it will be possible to exclude many of the irritating things to which employers might object, such as the inclusion of bus fares. It would be impossible to put all these things into an Act of Parliament, but in a prescribed form it would be easy to do it.

I would ask Deputies to wait and see what the prescribed form is like. If there is any serious complaint then as to the conduct of the Revenue Commissioners in the use of this section, I shall be quite prepared to discuss the matter with Deputies. There might be a difficulty in doing that formally, but I would be prepared to discuss it with them outside the House altogether. I think they will find that what the Revenue Commissioners will be looking for will be perfectly reasonable.

It must be remembered that the number of income-tax payers here is about 120,000 or 140,000. The Revenue Commissioners cannot possibly look for information where the major number of these employees are concerned. They could not deal with all these matters. It is quite obvious that their intention is to get after the employers who are not straight and honest in their returns. As far as the great majority of employers are concerned, the form will be drafted in such a way as to give them practically no trouble at all. That is all I can say about it now. I think there is undue anxiety about this section on the part of Deputies and that it will be found there will be no cause for complaint.

Mr. Sweetman

I should like to correct the Minister on one matter. There have been a great number of complaints in Britain about the whole abracadabra and about the trouble imposed on employers by these returns. It is said to be one of the things that is wrong with the whole code. One of the things wrong with this Bill is that it assumes that our circumstances are exactly the same as those in Britain. Our circumstances are as different from those in Britain as chalk is from cheese. The necessity to go into these matters in highly industrialised countries is completely different from the necessity to go into them here. I should like to see an acceptance of the fact that we are not a highly industrialised country as Britain is and that the approach to our system of taxation —I am not referring to the taxation itself—should be different. It is because the approach to the machinery is exactly the same here and in Britain that I think this is one of the worst Finance Bills that has ever come before the House.

Question put and agreed to.

SECTION 7.

Question proposed: "That Section 7 stand part of the Bill."

Dr. Ryan

This is a very simple section. Those who are in receipt of wound pensions and disability pensions under the Military Service Pensions Act are free from income-tax. An increase was given to them in 1957 and that increase is dealt with in this section. We also say that in all future Acts this increase is covered so there will be no need to bring in this amendment every time there is a difference.

Question put and agreed to.

Section 8 agreed to.

SECTION 9.

Mr. Sweetman

I move amendment No. 9:—

In sub-section (5), page 9, line 11, to delete "at any time".

I put down this amendment for the purpose of getting it clear as to whether there is any time limitation on the notice required under sub-section (5). I think there should be some time limit and that it is not reasonable for the Revenue Commissioners to come along a considerable number of years afterwards. Any reasonable time limit will satisfy me.

Dr. Ryan

This depends to a great extent on the persons concerned. The Revenue Commissioners are not concerned with the time in this regard. The words in the section are copied word for word from a previous Act and it is for the person concerned to make application to the Revenue Commissioners. The sooner they do so, the sooner the matter will be dealt with. The removing of the words would not make an awful lot of difference.

Mr. Sweetman

Sub-section (5) gives the Revenue Commissioners power to require returns for the purposes of this section at any time. They may require the returns to be made at any time. Surely the Revenue Commissioners are not entitled to come along, eight years after a husband or wife thought that the income had been dealt with satisfactorily and under separate assessments, and ask for another return—not, as I understand it, of one's own income but of that of the other spouse—in circumstances where the husband and wife are separate? This section, as I understand it, covers cases where the husband and wife are not together, where they are geographically separate, whether because they are estranged or because the employment of the husband means that he is away at sea or something like that. Surely the Revenue Commissioners cannot come along and by notice require a return to be made without any limit of time? There must be some limit of time on it somewhere.

Dr. Ryan

I think the position is that they are together, as far as being a married couple is concerned, but one of them is absent. The return here is really to give the person the reliefs, so it is up to the person to make the return as soon as he can and then the Revenue Commissioners will deal with it.

Mr. Sweetman

I wish the Minister would take the trouble to read the sub-section just once. This is a return which the Revenue Commissioners say is to be made within "any time"; and if it is not made, in case of the neglect or refusal to make it, or wilful delay in making any such return, all the penalties of the Income-Tax Acts are invoked. What is the use of this House trying to discuss this Bill if we are to be misled in relation to explanations on it? The section on its face is perfectly clear. The Revenue Commissioners can ask a person to make a return, by notice. If he does not make that return, he can be put in jail under the powers in the Income-Tax Acts. I suggest that in those circumstances it is outrageous to have no limit of time on the period over which such a return can be called for. Whether the period should be stipulated in this Bill or whether the period is already in some other Act, I do not know, but I want to know that there is a period somewhere.

Dr. Ryan

This practically repeats what was in the Finance Act of 1920. The expression "at any time" is used in that Act. As far as I can see and as far as I am advised, leaving out "at any time" would not make very much difference. The Revenue Commissioners would proceed in the ordinary way, whatever that may be.

Mr. Sweetman

Can the Revenue Commissioners ask for a return ten years after the year? I think they can, as this section is phrased.

Dr. Ryan

I think not.

Mr. Sweetman

If I am sure that they cannot, then I am quite happy to wait for the reference afterwards, but unless I am assured that they cannot ask for the return ten years afterwards, I must say this is an outrageous section.

Dr. Ryan

At any rate, the return is needed only for the purpose of apportioning reliefs between husbands and wives.

Mr. Sweetman

Then, if that is all the return is needed for, we will delete lines 12 to 16 on Report—the lines which provide for penalties for neglect or refusal to deliver. One should not penalise a man for refusing to deliver something that is entirely for his own benefit. Either the explanation that it is entirely to his own benefit is incorrect, or the penalty clause can go, without any harm to the Revenue Commissioners. I will withdraw the amendment and will take the matter up on the Report Stage.

Amendment, by leave, withdrawn.

Section 9 agreed to.

SECTION 10.

Mr. Sweetman

I move amendment No. 10:—

In sub-section (1), line 45, before "give" to insert "not later than the year following that in which the tax became due".

This is part of the same case, that we must have a time limit somewhere. The section provides that the Special Commissioners may, by notice, require the wife to pay tax out of her own income, even though it has been assessed on her husband; or, if she is dead, it may require her executors to do likewise. I think it is essential to have some finality somewhere. If the Special Commissioners wish to collect separately, apart from the ordinary process of collection, it should be limited to the year following the year of assessment. I should be quite prepared to compromise on two years, if necessary, but there should be some finality in this.

I do not wish to suggest that husbands do not always know what their wives have done or have not done, but it occasionally happens, at least in story books, that husbands think their wives had paid this tax, for example, and that years afterwards they get a shock at the breakfast table one morning by a letter from the Special Commissioners. In the interests of fairness of all sorts, there should be some time limit on that period. There may be, in another section of the Bill, but I do not see it here.

Dr. Ryan

No; I do not think there is a time limit. This section deals with the case where it is found that the husband is not paying or not able to pay, and the assessment is made on the wife, she having the money.

Mr. Sweetman

Yes, I am sorry; I switched them around. I said it was the husband who would get the shock at the breakfast table. I should have said that it was the wife.

Dr. Ryan

The Deputy's amendment would have this effect, so far as I can make out. Suppose it were to occur now, it would have to be paid by January, 1959. That might be a dangerous provision, even from the point of view of the income-tax payer, himself or herself. It might prevent the Revenue Commissioners from giving time or from saying they would accept payment in instalments. On the whole, I think it is better to leave things as they are. I am not sure whether there is actually a limit. I do not think there is, but I am not sure. I suppose that, in practice, anyway, it may be taken that the Revenue Commissioners will try to get things going as quickly as they can, because of their interest in getting the money.

Mr. Sweetman

I am thinking of a particular case I know about, which occurred when this section was not there. The wife died. Her assessment had been made on her husband, as was proper, in accordance with the law. They were, in fact, estranged. The husband had literally no assets and died three months after the wife. The husband's estate was not sufficient to pay the tax due, though it paid some of it. The wife's estate was not liable for it, as the law stood. Now the wife's executors have distributed the wife's estate. If there is no time limit, in that case, the Revenue Commissioners can serve a notice now on the executors and, even though they have distributed the assets, they would still be liable. That woman died eight years ago, in 1950. There must be some time limit; otherwise, no executor could ever safely distribute any estate. If the Minister would look into the question, that would do.

Dr. Ryan

The notice must be served within a certain time. I think that would cover the Deputy's trouble there.

Mr. Sweetman

Could the Minister tell us where the provision is about the serving of the notice? I wonder is any time limit fixed for serving of notice under sub-section (1)?

Dr. Ryan

I think we must take Section 11 where the husband disclaims liability. That, I think, would cover the point.

Amendment, by leave, withdrawn.

Question proposed: "That Section 10 stand part of the Bill."

Mr. Haughey

This is only a small point, but should there not be an "and" at the end of paragraph (a) of sub-section (1)? It is not in my copy at least.

Mr. Sweetman

There are several cases in the course of this Bill where I thought there should be an "and". Apparently it is left out all the way along and where there are several subparagraphs, only one "and" is put in.

Dr. Ryan

The draftsman was already asked about this and he says "no".

Mr. Haughey

Regarding subsections (3) and (4), I think this is only a matter of drafting, but it would seem to me that sub-section (3) should contain some reference to sub-section (4) (b) because sub-section (3) says:

"Where a notice is given under sub-section (1) of this section, tax up to the amount required to be paid by the notice shall cease to be recoverable under the original assessment."

In fact, sub-section (4) (b) goes on to state a way in which tax will again become recoverable under the original assessment. It would seem that sub-section (4) (b) should come into it and that in sub-section (3) there should be some such phrase as "subject to the provisions of sub-section (4) (b) herein".

Dr. Ryan

No. I think the way it works is that the husband has already got an assessment. Now, they go to the wife and assess her and take that amount off the husband's assessment; but if they do not succeed in getting it from the wife, they come back to the husband and say: "We must get it from you."

Mr. Haughey

Sub-section (3) states clearly and without qualification that where notice is given under the sub-section tax shall cease to be recoverable under the original assessment. Sub-section (4) (b) shows quite clearly that it creates a position where tax becomes again recoverable under the original assessment.

Dr. Ryan

Yes.

Mr. Sweetman

I thought I understood this sub-section, but if I heard the Minister's explanation correctly, I find that either I did not understand it at all or the explanation is not correct. I understood that the effect of sub-section (3) was that the Revenue Commissioners, if they wanted to avail of sub-section (1), had to exercise an option and the option they exercised was to collect from the wife and that the effect of sub-section (3) was that if they required £x of the assessment to be paid by the wife under sub-section (1), then, I thought as I read the sub-section, they could not go back to the husband for that £x. But the Minister has just said that if they are unable to collect from the wife, they can go to the husband again. I do not think that is so. I think they can go back only in the event of a change in the actual assessment itself, in the quantum of the assessment, but if some assessment which is made on the husband is correct for income in the sum of £1,000 and if in the make-up of that income £500 is the wife's and £500 is the husband's, once the Revenue Commissioners serve notice under sub-section (1) of the section to collect tax on the wife's £500 from the wife, I do not think they can go back afterwards, if they do not get it from the wife, and collect it from the husband. If I am wrong in that, what does sub-section (3) mean?

Dr. Ryan

It may work in favour of the husband as well as against him——

Mr. Sweetman

I am not arguing about that.

Dr. Ryan

If the amount is reduced on appeal, they must reassess the husband——

Mr. Sweetman

But I am assuming the £1,000 is the correct assessment and that there is no question of variation on appeal. I want to know what the section means.

Dr. Ryan

Suppose the wife gets the amount reduced as a result of an appeal. The husband, of course, has not appealed and has to pay on the original assessment. He has not appealed and therefore it stands as far as he is concerned, but it might happen that, on appeal, the Revenue Commissioners would, let us say, learn facts they did not know before and would give him relief.

Mr. Haughey

I think I am clear on what the sub-section means. Sub-section (3) deals with the case where notice was given in relation to the original assessment and the assessment becomes a divided one, and you cannot go back.

Mr. Sweetman

I think so, but the Minister said you could go back.

Mr. Haughey

I do not think you could, unless there was an appeal.

Dr. Ryan

But this deals with an appeal. Sub-section (4) deals with an appeal.

Mr. Sweetman

Sub-section (3) does not deal with an appeal.

Mr. Haughey

The sub-section is dealing with the original amount being altered on appeal. Naturally, if the original assessment is altered in the total amount, the divided amounts will be altered also, but all I am concerned with is the position regarding sub-sections (3) and (4). I think there is a clear contradiction between them. It is only a matter of phraseology or drafting, but I feel that sub-section (3) is in clear contradiction of sub-section (4) (b). I know what the Revenue Commissioners want to do, and it is correct, but this phraseology does not do it.

Mr. Sweetman

The Minister said that in relation to the question of a time limit under Section 10, we should first discuss Section 11. I accept that in regard to cases where the husband is the moving party because then the position is that the husband is the moving party under Section 11; but where the Revenue Commissioners are the moving party, I do not think Section 11 operates at all.

Dr. Ryan

No.

Mr. Sweetman

I think, where the Revenue Commissioners are the moving party, they move solely under Section 10 and not with any reference to Section 11. Therefore, I do not think it is quite correct to say that the time limit imposed in Section 11 always covers Section 10. It does not; it covers it in only one case. I think there should be some time limit in relation to those cases in which the Revenue Commissioners are the moving party. Otherwise, the position will be, as I said, in Section 10.

Dr. Ryan

I take it that under Section 10 when the notice is served on the wife, the husband evidently not having the money, the matter proceeds like an ordinary assessment. But if there is any point in what the Deputy says, that a long delay might prejudice the position of both husband and wife, I shall look into that and see if something can be done about it.

Mr. Sweetman

In the case I mentioned, I think notice could now be served, even though the person has been dead for eight years.

Question put and agreed to.

SECTION 11.

Mr. Sweetman

I move amendment No. 11:—

To delete sub-section (2).

Why should the husband be bound to give the names of the woman's executors if he does not know them? As I understand this situation, it can arise that he does not know. He must serve two months from the date of the grant. If the grant has been issued, the probability is that he will know. If it is a grant of probate he probably will know. If it is a grant of administration with the will annexed he probably will know. If it is a grant of intestacy, he must know.

What worries me is this. Suppose no grant is taken out to the wife's estate. Suppose he knows he will not get any interest. Suppose his wife told him long ago that she was leaving him nothing, that she had made a will and that it was no business of his. They may be living together from the point of view of tax assessments, which is all that line 50 means. What happens in that case?

If the husband knows or if it is reasonably possible for him to find out, I entirely agree he should give the information required by sub-section (2). However, I think there will be cases— not many—in which he does not know. I want to provide for such a case.

Dr. Ryan

I think it is more reasonable to put that onus on the husband rather than on the Revenue Commissioners. He should know more about it than they. As sub-section (1) is drafted here, he could not proceed without first serving notice on the administrators, and so on, that he would do this. If the Deputy feels the House would agree with his amendment, I suggest he could bring in a consequential amendment.

It is reasonable to expect that the husband would know the administrators of his wife's estate. This is a new concession. He has not that right at the moment. The concession now is that he may, in certain circumstances, have the amount collected from his wife's estate. I think we are entitled to say: "Find out, first of all, who the executors are. Then make the necessary application to the Revenue Commissioners. Then the matter can be fixed up, probably."

Mr. Sweetman

I do not think I have explained my point sufficiently. It is my fault on this occasion and not the Minister's. In the case of an executor, the husband, shall we say, knows that the will is in existence, knows that he has no interest in it, as he was told so by her, and knows where the will is. He still probably—even though the grant has not been taken out—could get whoever has custody of the will to give him a copy of it. He would have no right to get it but it would be very unlikely that he would be refused a copy.

Take a case where, similarly, there is a will. An executor is appointed. The executor predeceases the testatrix. The husband has no interest under that will. He cannot tell who will take out the grant. It will be a legatee's grant by one of the legatees, probably. If the grant had been taken out, certainly he would know. I agree that, when he does know, it is right and proper that he should give that information to the Revenue Commissioners.

In the case I am thinking of, he cannot serve the notice under sub-section (1) because he does not know who will take out the grant nor can he give the information under sub-section (2) because, similarly, he does not know who is taking out the grant. The residue may be divided between five nephews. He cannot tell who will take out administration with the will annexed. This section, therefore, is completely inoperative for him until somebody other than himself does something.

This section is framed more for the type of case where, though husband and wife are together, their property will go in different directions after their death. There should be some provision that it would be sufficient for the husband to furnish the Revenue Commissioners with a copy of the will, if there is a will, or, in the event of intestacy, with such information as he has regarding the next-of-kin and who would be entitled to take out the grant.

There are certain other sections on which I think we might get more assistance from the Minister. This is frightfully technical. I do not expect the Minister to follow it totally. It will be sufficient for me if the points I have raised are examined by the technicians between this and the Report Stage.

Amendment, by leave, withdrawn.

Section 11 agreed to.

SECTION 12.

Question proposed: "That Section 12 stand part of the Bill."

Mr. Haughey

On the section. Sub-section (1) of this section reads as follows:—

"A married woman shall be treated for income-tax purposes as living with her husband unless either—

(a) they are separated under an order of a court of competent jurisdiction or by deed of separation, or

(b) they are in fact separated in such circumstances that the separation is likely to be permanent."

I want to know a little more about that. Will it become a question of fact, say, to be determined by the Special Commissioners in the event of appeal? If so, it will lead the accounting profession into some rather delicate territory from time to time.

Dr. Ryan

I presume yes. I presume that if there is any disagreement there can be an appeal to the Special Commissioners and from that to the court. I imagine there would be no great difficulty in these cases. If the husband is paying the income-tax for himself and for his wife, no question naturally will be raised if he says: "We are not living together." I suppose they would accept that and proceed on those lines. Who will object?

Mr. Sweetman

What are the circumstances under which sub-paragraph (b) comes into operation?

Mr. Haughey

Exactly.

Question put and agreed to.

Mr. Russell

I move amendment No. 12:—

Before Section 13, but in Part I, to insert a new section as follows:—

Sub-section 1 (c) of Section 35 of the Finance Act, 1941 (No. 14 of 1941) is hereby amended by the substitution of £5,000 for £2,500 wherever the latter figure occurs.

The purpose of this amendment is to give some measure of relief from corporation profits tax to small and medium-sized business concerns. As the Minister is aware, the exemption limit for corporation profits tax was £10,000 from 1926 to 1930 at a rate of 5 per cent. In 1931, it was reduced to £5,000 and the rate increased to 7½ per cent., and in 1941, it was reduced to the present limit of £2,500 and the rate increased to 10 per cent. I submit, with the depreciation in the value of money over the past 18 years, that a figure of £5,000 now is only barely comparable with £2,500 in 1940.

The actual measure of relief is a small one when the fact is taken into consideration that corporation profits tax is allowable as an expense in computing income-tax, so that the actual improvement of £250, that is 10 per cent. on the increased sum of £2,500, must be reduced by the allowance which is claimed, and is set off for income-tax purposes, of £80 or £90. Therefore, the actual increased relief would be a net amount of £170 or £180, looked at from that point of view, but it does mean something to a small or medium-sized business.

On all sides of the House, we at least pay lip service to the desire to maintain the family concern as an integral part of our commercial set-up here, and we do know that over the years there has been a tendency for the smaller business to go out, to become amalgamated, or to be taken over by the larger concern. It is in order to offset that tendency to some small degree that I put down this amendment. The fact that the value of money has depreciated over the years is recognised in the ordinary income-tax laws. The exemption limit for an individual for income-tax purposes has been increased from £150 in 1946 to £240, which is the present limit, or double what it was just over 12 years ago.

In computing income-tax, if a company makes a loss in one year, it can carry that loss forward to a second year, but that does not apply when computing corporation profits tax. Again, if a company does not become liable for corporation profits tax, if its profits are less than £2,500, it cannot carry forward, so to speak, the unused credit into a subsequent year when its profits may be substantially in excess of the present limit of £2,500. Again in computing corporation profits tax, no allowance is given for the rateable valuation of premises. If a company owns a premises, the valuation of which is £400, that is allowable for income-tax purposes but not for corporation profits tax purposes. Yet again, directors' remuneration in excess of £1,500 is allowable for income-tax, but not for assessing corporation profits tax.

As I said at the outset, the main type of company or concern which I am anxious to try to help by this modest measure is the small, medium-sized firm which is finding acquisition of capital and accumulation of capital for expansion purposes so difficult to-day, and it is for that reason primarily I put down this amendment, which I hope will be acceptable to the Minister. I think everybody is agreed it is a self-evident fact that the value of money has depreciated more than the suggested increase of 100 per cent. in the exemption limit which I suggest in my amendment, and I think the increase from £2,500 to £5,000 is a very reasonable suggestion, having regard to the depreciation of money, and to the increase in all other expenses, which is recognised by the increase in various allowances given under the income-tax code.

That depreciation in the value of money has also been recognised in the increases given in salaries and wages generally over the past 18 years. That is all I wish to say on the subject, except to appeal to the Minister to accept this amendment. I had some difficulty in fitting this into the Finance Bill, but I do not know of any other measure to which it can be related. Therefore, I hope the Minister will accept it and agree to insert it as a section following on Section 12 of Part 1 of the Bill.

Dr. Ryan

Of course the difficulty with all suggestions like that which Deputy Russell is now putting forward is that they are all very advisable, but are they feasible? The cost of this would be about £200,000 which we cannot afford to forgo at the present moment. Anyway, I think we have been going in another direction with industries and companies in the past three or four Finance Acts. Very big concessions have been made in other ways, like increased initial allowances, increased wear and tear allowances, industrial buildings allowances and the concessions on profits from exports. These are all costing a fair amount of money, but I suppose Deputy Russell would be inclined to answer me that these concessions are much more important to the bigger companies than to the smaller ones. I suppose, on the whole, they are, but, on the other hand, if we take a small company which has a profit of £4,000 or £5,000, the relief of £2,500 is a big proportion of that. It is not so very big for big companies, but it is very big for the small ones. The Deputy has argued for relief for small companies but the big companies would get it also.

I have to come down to the same argument in the end, that we cannot afford it at this moment. Anyway, even if we could, I should be more inclined to give benefits in the direction we have been going, namely, to give more on the expenses side of industry than to give it on this side.

Mr. Russell

As the Minister has pointed out, it is essentially the larger businesses that tend to benefit from the new trend in concessions, in allowances and grants, but the type of business I am interested in is the old-established family business, the small company that either does not desire to avail of these, or its type of business does not suit it to avail of them. The strongest argument the Minister has put forward is that he cannot afford to lose £200,000, and I wonder is that a misplaced argument. There is the question that he cannot afford to lose £200,000, but, at the same time, he is prepared to shut his eyes to a trend that has been taking place over the years, and which will continue to take place, unless something practical is done to check it.

As the Minister says, the bigger companies would also enjoy this concession. That is quite true, but the concession of £250, less the set-off against income-tax, would be a very small proportion of a big company's profits, whereas £180 or £200 to a small company would be very welcome. It is just a question of whether we want the present trend to continue, or whether we want to help the type of company I have in mind. If the Minister says that he cannot afford £200,000, all other arguments are purely academic in that regard.

Dr. Ryan

That is true.

Mr. Russell

We all genuinely contribute to the opinion that it is desirable to maintain the small business, particularly in our type of economy. I would ask the Minister to consider the matter with the experts in his Department to see if some measure of relief can be given to this type of company other than the grants and allowances about which he talked a few minutes ago and which he admitted are mainly availed of by the larger concerns.

Dr. Ryan

I expressed the opinion here before that I should like to do anything possible to maintain these small family and private companies because they are a very important factor in our economic position. On that occasion we were dealing with credit and I did make them eligible in that Bill for credit which, I was informed by Deputies, they found it hard to get at that time. We did provide that, at any rate, and I would certainly always keep in mind, if any concession were being given to industry, that it is most important to maintain these small family and private industries.

Mr. Sweetman

Did I understand the Minister to say earlier to Deputy Russell that he thought the trend had been in recent years towards lightening the load in another direction——

Dr. Ryan

That is right.

Mr. Sweetman

——and that if funds were available to him he would continue on that trend rather than take this trend?

Dr. Ryan

I think so—on the expense side.

Mr. Sweetman

The reason I say that is that I can remember that only last night the Minister for Finance made the most extraordinary statement ever made by any Minister for Finance in this House. He said last night that the trend in that direction in relation to exports, which he mentioned a minute ago particularly, had been started by me, that he did not approve of it himself and that, unfortunately, he was not able to carry his own colleagues with him in relation to the trend. Now he is saying to-day that it is a trend of which he approves. I wish the Minister would make up his mind which he wants.

Dr. Ryan

I say the trend has been that way. Personally, in the beginning, I did not favour all that matter of remission of income-tax in all its directions but it is there now and we cannot go back of it.

Mr. Russell

There is the other concession that the Minister has been talking about—that they had been given the same opportunity to accumulate capital. That is primarily to help firms to accumulate capital rather than go to the sponsored companies for loans. I think, personally, that it is better policy to allow a company to accumulate capital out of its own resources than to say that we shall not allow them to accumulate capital by giving them concessions but that there is a semi-State body which will give them a loan at 6 per cent. or 7 per cent. It is a question as to which is the better policy, whether it is better to put the onus on the family business concerned.

Amendment, by leave, withdrawn.

Question proposed: "That Section 13 stand part of the Bill."

Dr. Ryan

This deals with the withdrawal of the customs duty on films coming in.

Question put and agreed to.

SECTION 14.

Question proposed: "That Section 14 stand part of the Bill."

Mr. Sweetman

I am not quite clear what the point of this section is. Perhaps the Minister would explain it.

Dr. Ryan

There is a clause in the Transport Bill now before the Dáil which does not put the onus any longer on C.I.E. to be a licensed company. We are giving this concession with regard to diesel oil for passenger services for licensed companies. It is just to make that right.

Question put and agreed to.

SECTION 15.

Question proposed: "That Section 15 stand part of the Bill."

Mr. Sweetman

Could the Minister tell us what is paragraph (f) that we are deleting, please?

Dr. Ryan

It is a small point but it takes some explanation. I must go back to the Anglo-Irish trade negotiations of 1938. There was a provision there, as Deputies will remember, that cars over £750 would be allowed in on a duty of 22 two/ninths per cent. Cars under £750 could be taxed as far as that is concerned higher than 22 two/ ninths per cent. In fact, the ordinary duties on an assembled car were 33½ per cent. on chassis and 50 per cent. on the body. In the 1948 agreement the £750 was raised to £1,300 but, although the duty was changed, the quota still remained. There was a quota of cars allowed in between £750 and £1,300. Paragraph (f) put on the restriction that it must not be higher than a seven-seater. It was to exclude what one might call small buses. In fact, I believe that in recent years there are only about 20 or 22 cars in this category coming in each year and some of them are of the small bus type. They are coming in as prototypes to assemblers here. The assemblers asked to have this restriction removed. The Department of Industry and Commerce say that they see no objection to it because the limit is 22 per year. There may be a few of them which are over seven seats. The Department of Industry and Commerce see no objection to the concession being given.

Mr. Sweetman

When the Minister says that the limit is 22 per year, is that a statutory or a quota limit or is it just the average that there has been?

Dr. Ryan

It is quota limit. It is not in the Act.

Question put and agreed to.

SECTION 16.

Mr. Russell

I move amendment No. 13:—

Before Section 16 to insert a new section as follows:—

Notwithstanding anything contained in Section 15 of the Finance Act, 1956 (No. 22 of 1956), as from the passing of this Act the rate of entertainments duty on dances or balls shall be payable by means of an annual licence or fee based on the capacity or location of each dance hall, the amount of such licence or fee not to exceed 33? per cent. of the duty payable in any case under the said Section 15.

The purpose of the amendment is fairly clear. It is to provide an alternative means of securing revenue from dance halls or ballrooms to the present assessment on patrons of dances or balls. There is ample evidence that the revenue from this entertainment tax is declining. In reply to a question of mine yesterday, the Minister intimated that since the Finance Act, 1956, there has been a substantial pro rata reduction in the entertainment tax collected by his Department. The tax was in effect for only eight months of the year ended 31st March, 1957 but taking it on the basis of 12 months the figure, which is not absolutely accurate, demonstrates my argument. The tax on that basis for 12 months would amount to £190,500. The actual tax collected in the year ended 31st March, 1958 was £154,000, or a reduction of £36,500. As every Deputy will affirm, there has been a considerable reduction in employment and in employment opportunities in the dance hall industry, particularly amongst musicians. That, in turn, has affected ancillary businesses such as catering, transport, advertising, electrical business, and so on.

Dancing is generally confined to the younger generation, the type of people who are emigrating to a greater extent than any other section of the population. There is the further point that when a musician becomes unemployed it is extremely difficult, if not impossible, for him to find employment elsewhere in his own profession. The outlets simply do not exist. The instruments which these bands use are liable to heavy import duties or levies, and generally there has been an overall decline in dancing. I am informed by proprietors of dance halls in different parts of the country that the number of days on which dances are held in their halls has been reduced, and they are now confined to week-ends and to specific days in the week.

There is a further difficulty from the point of view of urban dance halls, that is, that they are asked to bear this tax when halls quite close to them, outside the urban boundary, or the borough boundary, as the case may be, are free of tax and, of course, the urban dance halls have to bear substantial rates and other charges.

I asked the proprietor of a substantial ballroom in my constituency to give me some figures regarding the decline in the admission takings over a period of some years. Those figures are rather interesting and they do illustrate the general trend towards lower takings in dance halls. From 1955 to 1956, there was a reduction of 12.8 per cent. and the reduction from 1955 to 1957 was 15.8 per cent. From 1955 to date, there was a reduction of 48 per cent. There has been an almost comparable decline in the amount of wages paid by that dance hall owner to musicians and staff. This question of entertainments tax is one that has been chopped and changed, as the Minister is aware, particularly in recent years. The previous Fianna Fáil Government took off the tax and the inter-Party Government put it on again, and that in itself has caused a degree of uncertainty to dance hall proprietors and to anybody considering erecting a dance hall.

Apart from the question of the proprietors of dance halls, the musicians and others employed in the industry, there is another category which would be assisted by the Minister's acceptance of my alternative: dances held by charitable or philanthrophic organisations. As the Minister knows, at the moment there is an expenses limit of 50 per cent. Most Deputies will be aware of the fact that in their own constituencies, charitable, or other worthy organisations, have held dances which have shown no profit, or they have just scraped through with a modest profit. If their expenses, for one reason or another, have exceeded 50 per cent, they immediately become liable to tax. If my amendment is accepted, that type of taxation would go. I understand there are something like 570 or 580 dance halls and ballrooms in the Twenty-Six Counties. If the Minister is agreeable to putting a licence, or fee on each hall, based on its size or geographical position, it will give a very useful regular income to the Exchequer. At the same time, it would eliminate any possibility of evasion of the present entertainment tax which I think is not unknown.

By and large, I would think that in present circumstances and having regard to the overall trend in the amount of entertainment tax collected by the Minister's Department, particularly over the past four or five years, it would be more rational and sensible to collect the tax by means of a fixed levy, or licence based on the capacity of the ballroom, and its geographical position. Or, perhaps the Minister can suggest an alternative measure rather than levying it on the admission charges, which are a declining source of revenue and which are open to certain abuses.

Dr. Ryan

The general idea underlying this amendment may be worth discussing, although naturally we could not make any changes for this year. Again, I must refer to the difficulty of giving this concession from the point of view of loss of revenue. The Deputy gave a correct figure; the present yearly yield from this tax is about £150,000. The Deputy's amendment would oblige us to arrange the tax so that there would not be more than one-third from any one dance hall. That would mean that you would cut it down to £50,000, and at the moment we could not face that. It would be more convenient if a scheme of that type could be evolved, of taxing the hall rather than taxing the admission charges, and it would be more convenient for collecting the money. The rates would have to vary according to location and on the basis of capacity of the dance hall. It would be a very involved scheme to work out, but once worked out, I admit it would not be so involved in the collection of tax. It is difficult to see how we could get £100,000 or even £50,000. The Deputy gave a figure of about 500 dance halls——

Mr. Russell

About 570 to 580.

Dr. Ryan

It would not be so easy to get £100 or £200 from each of them, I am afraid, so that the scheme would not appear to be feasible. I am attracted to a change from the present system and I give the Deputy an assurance that we will consider some flat rate rather than the present system, but it could not be done before the next Budget.

Mr. Russell

I appreciate that. When the Minister says it is worth £150,000, as of this date it is a declining source of revenue.

Dr. Ryan

It is.

Mr. Russell

From that point of view, I would have thought the idea of a fixed licence or fee, based as I suggested on location and size would yield a certain given income and the fact that we are getting £150,000 should not deter us from getting a substantial sum. If the figure of one-third sounds rather too much, there is plenty of room for an increase.

Mr. Sweetman

If the Minister can find a method of making a flat rate charge, I agree with him without question that it would be very much better. I tried to see if I could find a method of getting what I wanted by a flat rate instead of by an admission tax, so to speak. I am afraid the various suggestions for flat rate charges which came before me all had considerable objections, partly, perhaps, because if you tried to base it on capacity, you would be in the difficulty that the practice in relation to capacity for licences under the Dance Hall Acts varies tremendously all over the country.

It would be very simple to operate it in certain parts of Leinster. In certain parts of Leinster, a dance hall proprietor applies for a licence to have a dance hall for the year in which he may not have more than 500 people. It would be easy enough to have the flat rate in that case. But in Donegal, for example, no such limiting figure is included in the licence. I understand there is a different practice again in Cork. It seems to me that it would be highly desirable to have the flat rate, but before one could adopt a flat rate principle, one would have to get the Department of Justice to make sure that there was some unified method of licensing rather than the individual one of different district justices. Perhaps the Minister will be able to succeed where I failed.

Amendment, by leave, withdrawn.

Section 16 agreed to.

SECTION 17.

Dr. Ryan

I move amendment No. 14:—

Before Section 17 to insert the following new section:—

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

We discussed this on the Financial Resolution. This is the section dealing with the remission of entertainment tax where a film in the Irish language is shown for more than a third of the programme and a film in any other language but English is shown for more than a half. We discussed it fairly fully on the Financial Resolution and I do not know if it is necessary to add anything at this stage.

Mr. Sweetman

The Minister said on the Resolution yesterday that no genuine cinema was applying for a refund. Did I understand him correctly when he said that?

Dr. Ryan

No genuine claim for relief has been made under this.

Mr. Sweetman

Does that not mean that the material is not there?

Dr. Ryan

I should say that no genuine claim for relief has been made in regard to Irish films. I think there was a claim in regard to foreign language films. I am not sure.

Mr. Sweetman

That means that the material is not there for the Irish section? It looks like it.

Dr. Ryan

Evidently no proprietor would risk that entertainment and make the thing pay.

Mr. Sweetman

It is hardly a tribute.

Amendment agreed to.

Question proposed: "That Section 17 stand part of the Bill."

Mr. Sweetman

This deals with removal of the additional part of the hawker's licence for selling tobacco, the part that varies with the poor law valuation of the premises? Is that it?

Dr. Ryan

Yes.

Question put and agreed to.

SECTION 18.

Mr. Sweetman

I move amendment No. 15:—

In page 12, line 37, before "or" to insert "diesel oil, lubricating oil,".

I am not quite clear whether the definition "hydrocarbon oil and lubricating grease" includes diesel oil and lubricating oil. If it does, there is no necessity for any amendment.

Dr. Ryan

It does.

Mr. Sweetman

All right.

Amendment, by leave, withdrawn

Section 18 agreed to.

SECTION 19.

Dr. Ryan

I move amendment No. 16:—

Before Section 19 to insert the following new section:—

(1) In this section "the Act" means the Finance (Excise Duties) (Vehicles) Act, 1952 (No. 24 of 1952).

(2) The following sub-section shall be inserted immediately after sub-section (11) of Section 1 of the Act:—

(11A) In such cases and subject to such conditions as the Minister for Local Government may prescribe by regulations—

(a) a licence under this section or a general licence under Section 9 of the Roads Act, 1920, may be surrendered prior to its expiry, and

(b) a repayment in respect of the duty paid on a licence surrendered under this sub-section may be made at such rate as the Minister for Local Government may prescribe by regulations.

(3) The following paragraph shall be substituted for paragraph (b) of sub-section (1) of Section 2 of the Act:—

(b) (i) the vehicle is used in a condition or manner or for a purpose which would, if it was used solely in that condition or manner or for that purpose, render it chargeable with duty at a rate higher than that at which duty has been paid, or

(ii) in the case of a vehicle to which, by virtue of the operation of paragraph 3 of Part II of the Schedule to this Act, subparagraph (c) of paragraph 4 of Part I of the Schedule applies—

(I) it is used in a condition or manner or for a purpose which, or

(II) the person who took out the licence has an occupation which

would, if it had been shown at the time of the taking out of the licence that it was used in that condition or manner or for that purpose or that that person had that occupation, have rendered it chargeable with duty at a rate higher than that at which duty has been paid, and

(4) The following paragraph shall be substituted for paragraph 3 of Part II of the Schedule to the Act:—

3. (1) Where, apart from this paragraph, subparagraph (c) of paragraph 4 of Part I of this Schedule would apply to a vehicle, that subparagraph shall not apply to it (and subparagraph (d) of that paragraph shall apply to it accordingly) unless the person taking out the licence shows to the satisfaction of the licensing authority either—

(a) that his only or chief occupation is farming and that the vehicle is used only occasionally on public roads and then only—

(i) for the haulage of the produce of his farm and articles required for the farm, including the farmhouse and farm buildings, but excluding the haulage of fuel if being transported as a commodity for sale, or

(ii) for the haulage of similar goods for another farmer, provided that such goods are not hauled for reward, or

(iii) for the haulage for another farmer for reward of—

(I) milk being hauled to a creamery or cream-separating station, or

(II) separated milk being hauled from a creamery cream-separating station, or

(III) milk containers being hauled to or from a creamery or cream-separating station, or

(iv) for the haulage of live stock for reward, and that the live stock—

(I) are owned by a person resident not more than two miles from the haulier's residence,

(II) are being hauled to or from a farm from or to a live-stock auction mart or a place where a market or fair specified by Order made by the Minister for Industry and Commerce under the Transport Act, 1958, is held,

(III) are being hauled only on the day on which such auction, market or fair takes place, and

(IV) are not being hauled in either direction on any part of a public road which is more than 20 miles by public road from the haulier's residence, or

(b) that he is a contractor engaged to do agricultural work on a farm and that the vehicle is used on public roads only for the haulage of articles required by him for the purpose of doing that work.

(2) Where a farm is carried on as part of or in connection with—

(a) a hospital, sanatorium, convalescent home or similar institution,

(b) a mental institution within the meaning of the Mental Treatment Act, 1945 (No. 19 of 1945),

(c) a monastery, convent or similar institution, or

(d) a college, school or similar institution,

the person carrying on the farm shall be regarded for the purposes of this paragraph as being a person whose chief occupation is farming.

(5) If this Act is passed before or on the 1st day of July, 1958, sub-section (4) of this section shall come into operation on that day and, if it is passed after that day, it shall be deemed to have come into operation on that day.

(6) The appropriate repayments shall be made having regard to the provisions of sub-sections (4) and (5) of this section and the repayments shall be made in accordance with such directions as may be given by the Minister for Local Government.

This section amends the excise duties on vehicles in three respects. In the first case, sub-section (2) would enable the Minister for Local Government to repay motor vehicle duties in prescribed cases in certain conditions. The Minister for Local Government has no power to refund any part of licences paid. There are two particular cases he would like to deal with. The section gives him power to deal with any cases he might prescribe. He intends to prescribe two particular types of cases. The first is in regard to special tourist buses. C.I.E. have found that their peak demand for these buses is over a short period; but the period, however, would mean they would have to tax the buses for three months and it would not pay them on that basis. It was thought that the best way to deal with this position would be to tax the buses for three months and then to get a refund for the time the buses were off the road.

The second case is where a man taxes his car in good faith but finds that, because of serious illness which may be prolonged or because he may have to leave the country, he will not need the taxed car for the rest of the year. Provision will be made to refund the tax in such cases. These are the two cases the Minister has in mind.

Sub-section (3) deals with a doubt that has arisen in regard to the £8 tractor licence taken out by a farmer on his own farm. The idea underlying the Act is that if a man takes out a certain tax on a vehicle and uses that vehicle for a purpose that would carry a higher tax, he is ordinarily bound to pay the higher tax, but it is not too sure if the drafting of the Act dealing with agricultural tractors covers this. It is to make that right and bring it into line with legislation generally.

Sub-section (4) relates to a clause being inserted in the Transport Bill to-day by the Minister for Industry and Commerce. Deputy Cosgrave knows this intimately. I saw his name down to a similar amendment. The clause being inserted in the Transport Bill is not sufficient to effect the concession proposed; it must be put in the Finance Bill so that the concession can be given. A concession is being given to farmers who carry for reward, on behalf of their neighbours in their own tractors and trailers, live stock to a fair, market or a sale and this provision gives sanction for that.

Sub-sections (5) and (6) refer back to sub-section (2). If this Bill is passed before 1st July, well and good, but if not, the concession with regard to the buses and so on could be back-dated to 1st July in anticipation of the Bill being passed.

Mr. Cosgrave

There is only one point on which I wish to have some information. Sub-section (4), 3. (1) (a) stipulates "that the only or chief occupation is farming and that the vehicle is used only occasionally on public roads." Would that cover a case in which a farmer has land some distance away from the home farm? He might be going every day to that second farm for a period and he might not then use the vehicle again for, say, a month or six months. Would "occasionally" include regular use for a limited period!

Mr. Sweetman

If a farmer has, for instance, two farms separated by the public road and he uses his trailer solely for the purpose of carrying his own produce—cattle, pigs, fencing posts, corn, or anything like that— from one farm to another, is he not then entitled to keep to the lower rate of duty?

Dr. Ryan

I understand he is entitled to run his tractor for that purpose on an £8 licence. I do that in my own case anyway. I was advised it is all right.

Mr. Sweetman

The Minister would want to be careful that he is not prosecuted.

Dr. Ryan

That licence would be sufficient to cover him under sub-section (4).

Mr. Cosgrave

But occassional use might mean continuous use for a period.

Dr. Ryan

That is so. It is the legal phrase.

Mr. Sweetman

"Occasionally" in the definition is in respect of carriage for reward.

Dr. Ryan

That is so.

Mr. Sweetman

It can be continous use so long as it is not for reward and so long as it is the farmer's own stuff.

Dr. Ryan

That is so.

Mr. Sweetman

The Minister said that this was to cover a case where there was something unexpected, such as illness. I have in mind a particular case where a very unusual type of vehicle was licensed by a firm solely because they had one contract, which was renewable annually. When the contract came up for renewal, it was not renewed. This firm would have no use for that vehicle except in regard to this one contract. Would they, on proof that their contract had been lost and they had, therefore, no use for this type of vehicle, come within the scope of this section? Would that be an exceptional type of case to which this section would apply? I do not wish to mention the case, but the vehicle was a type of vehicle for carrying certain machinery and it would be no use whatsoever except for carrying that type of machinery.

Dr. Ryan

The section gives the Minister for Local Government power to return a licence under conditions. As I stated, the Minister does not intend to make it general. He intends to deal with two classes of cases—the first being the buses and the second being in relation to hardship, such as illness or transfer from the country. It might be well for the Deputy to put that type of case to the Minister because he might then be able to include it in his regulation.

Mr. Sweetman

I shall do that.

Amendment agreed to.

Dr. Ryan

I move amendment No. 17:—

In page 12, lines 42 and 43, to delete "the Imposition of Duties (Entertainment) (No. 23) Order, 1958 (S.I. No. 71 of 1958)".

This amendment is consequential on amendment No. 14. The practice is that protective duties are covered by legislation introduced by the Minister for Industry and Commerce under the Imposition of Duties Act and, as there was a special clause dealing with this, it really should not be put in here at all. It is technical and it is consequential on amendment No. 14.

Mr. Sweetman

What duties have been deleted so far as the section is concerned?

Dr. Ryan

We are dealing with the entertainment duty only.

Mr. Sweetman

Is No. 23 the same as the duty we have already deleted by Section 13? Is it the duty on cinematograph films?

Dr. Ryan

No. It is the language films.

Amendment agreed to.

Question proposed: "That Section 19, as amended, stand part of the Bill."

Mr. Sweetman

This is a section which does a variety of things, one of which is to make the levies permanent customs duties. I am afraid I shall require a great deal of information in relation to this section. First of all, I should like to say that I received yesterday the new print of the special import levies. That print makes the situation a little easier of understanding, though I have not had as much time as I should have liked to study the print.

I want to draw the Minister's attention, in particular, to page 9, references 566 and 567. On the Second Stage of the Finance Bill I asked the Minister to make clear beyond question the position in relation to refund—I do not know whether it should be called a drawback in relation to levies as well as to customs duties—in the case of newspapers coming in here which had borne a special import levy and were then returned unsold. I mentioned this on the Second Stage because the Minister had made the newsprint tax permanent and the matter appeared to be one which should receive more attention than might have been necessary if the tax were of a temporary nature. I do not think I got any definite statement from the Minister. Perhaps he had not sufficient time when concluding.

This is a matter that we must have clear before this section goes through. I must confess that I have found considerable difficulty so far as these duties are concerned in understanding why one type of duty has been deleted and another type has not. I do not understand why, so far as bed warmers are concerned, warming pans should bear a special import levy at a rate of 40-60 per cent. and metallic bed warmers should only bear a duty at a rate of 25-37½ per cent. The pattern of the levy, as a result of the various amendments made by the Minister, is one very difficult of interpretation. Coffee grinders, for example, appear to have been freed from levy unless they are wanted for domestic use. If a shop wants to buy a coffee grinder it can bring it in without levy; if any of us wish to buy a small coffee grinder for domestic use, then it is subject to levy in accordance with the pattern laid down by the Minister now.

Similarly, non-domestic convector heaters are free of levy; domestic convector heaters are subject to 25 per cent. or 37½ per cent. levy. A commercial dishwasher is free of levy, but if one brings a dishwasher into one's home for the purpose of easing the domestic difficulties of one's wife, one has to pay a levy on it. Domestic dryers are subject to levy but non-domestic dryers are allowed in without any levy. A domestic fan, whatever that is, is subject to levy; a non-domestic fan is free of levy. That is the pattern all the way through and I shall give only a few more examples, some of which are completely impossible to understand. If a person installs an electric immersion heater in his hot water system, he has to pay a levy of 25 per cent, or 37½ per cent., because it is classed as a domestic immersion heater; if a non-domestic immersion heater is installed, there is no levy on it at all.

This is not a question of protection. The levy was never intended as a protective tariff. In fact, it was made clear beyond question that not merely was it never intended as a protective tariff, but that it was being imposed in circumstances deliberately outside that basis for the purposes of trade balance considerations.

Domestic radiators are subject to levy but non-domestic radiators bear no levy. Although commercial refrigerators are free of levy, domestic refrigerators are subject to either 40 per cent. or 60 per cent., as the case may be. A non-domestic toaster is free of levy but a domestic toaster to ensure that the Minister can have some toast for his breakfast in the morning carries a levy of 25 per cent. or 37½ per cent.

I cannot understand the basis upon which the selection has been made. In every case where the article is to be used for the home the levy has been retained, and in all the cases I have mentioned, where the article is not being used in the home, no levy is chargeable. That is discrimination which is impossible to justify. I am not quite clear whether some of the other customs duties are included in this, but I think all the duties that were in Order No. 92 of 1958 are included in this section and are confirmed by this section. I want to know whether these are intended to be protective or revenue duties. Reference No. 12 in the First Schedule to the Imposition of Duties (No. 28) Order, S.I. No. 92, of 1958, says: "A domestic or household article of porcelain, china or other kind of pottery which does not exceed 5/- in value and which is glazed or unglazed or is vitrified or unvitrified of any of the following descriptions..." The descriptions are all set out and these articles carry a duty of 1/6 full rate and 1/- preferential for each article.

Is that intended to be a protective or a revenue duty? If it is intended to be a protective duty, that is all right, but we should like to know what is being protected. If it is intended to be a revenue duty, I want to make it clear to the Minister that the effect of that part of the section will be that he will get no revenue at all. There used to be a levy in relation to those articles on another basis. I tried to get from the Minister the revenue that had been obtained from it, but he was unable to give me that information because the items were not segregated. These items were probably included in the old list on page 14 under reference No. 630 in which the previous duty was 25 per cent. or 37½ per cent., as the case may be.

The duty now being imposed of 1/6 an article will not be paid. It will have the effect of complete exclusion of the articles in question. That may be a good thing, in the Minister's opinion, but if the duty is being imposed for the purpose of complete exclusion, let us be told so, so that the people who are concerned in that type of import business will know exactly where they stand. It may be from the balance of payments point of view that the Minister has made up his mind he wants to exclude this type of imports, but if he is doing it from the point of view of collecting revenue, he will get no revenue on this basis and he would have got far more revenue if he had retained the old basis.

I should like also to know what is the situation in respect to any of these duties confirmed in this section in relation to goods in transit at the time the Orders were made. Were licences given in any case for the import of any such goods free of levy, or free of duty because they were in transit at the time the Order was made, or because irrevocable letters of credit had been opened?

I have already made my view crystal clear in relation to the change by the Minister of the levies from temporary impositions to permanent taxation. I do not think it can be stressed sufficiently often that if we run into balance of payments difficulties in the future, the Minister has, by his own act, made the fiscal levy weapon no longer available to him or to any other Minister. The effect of weaving the levy procedure into the permanent customs code would mean that in future physical control would have to be utilised, if the situation arose, rather than the fiscal deterrent. That would be highly undesirable and difficult to administer in practice and would open up a vista which I shudder to contemplate. I think the Minister made his greatest mistake in doing what he did because he threw away the weapon and because, if he had maintained the levies in their temporary condition, in respect of the capital programme, he would have been able to reach on certain capital and desirable things that he will not be able to reach on without the capital that has now been turned into current revenue.

It is undesirable that the new list of the levies was made available to Deputies only in the last couple of days. Therefore, we have not had all the opportunity one would wish for considering how they work out before this section goes through the House. Having only received my tariff supplement in the last couple of days, I will, if I find it necessary on fuller examination of that supplement, put down amendments to the section on the Report Stage.

Dr. Ryan

With regard to the general question as to why certain articles, if used for domestic purposes, have to pay duty and, if not, are exempt, I have already stated that when these were first imposed by my predecessor, Deputy Sweetman, the intention was to charge the final domestic consumer but, as far as possible, not to increase the cost for hotel keepers and others who had to compete in the tourist trade. Many of those I have left as they are and, although we have about two-thirds in the value of yield removed or changed over to the revenue or protection side, the idea still persists to some extent that the charges should remain on the consumer and that they should not be levied on the hotel keeper or trader where competition is necessary.

I have been asked about foreign newspapers. They pay a levy coming in, but if there are any copies unsold, they get a refund.

Mr. Sweetman

If that is to be a permanent situation, it is most unsatisfactory.

Dr. Ryan

I do not know about that. The question was also raised regarding goods in transit and the practice is that if goods are in transit when a levy is put on, they get the benefit of the lower levy. As regards china ware, that is one of the cases where the heads were changed. The duties on these were put on with the object of giving protection to the china industry. If there is no receipt from these duties, it does not matter because it is not considered a revenue duty.

Mr. Sweetman

The Minister may not be aware of it, but the Department of Industry and Commerce has stated that it is not a protective but a revenue duty. I am glad that the Minister has categorically cleared up the position in the House.

Dr. Ryan

There was some mistake about that.

Mr. Sweetman

People often like to push the responsibility on to the other fellow. The Minister dealt with the question of bed warmers, but why are the metallic ones and the warming pans dealt with at a different rate? I am not very happy regarding the explanation the Minister has given in regard to that matter. It does not seem to me that he has given a complete answer to the point I raised and I will deal with it by questions on specific duties when they come before the House.

With regard to the levy on newsprint, as long as the newsprint levy was only a temporary thing, no matter how inconvenient it might be to certain people and how much it imposed a hardship on them, it could always be changed. My anxiety in the matter was to have less newsprint used in the country. I had to do that for the purpose of ensuring that we paid out less money for things which we could manage without. The imposition of the newsprint levy did cause a shrinkage in the size of newspapers, but that was a shrinkage that was unavoidable in order to assist us in getting out of our difficulties.

Now that is all past. Now we have a situation in which something entirely new operates. Now we have a permanent newsprint customs duty imposed only for revenue purposes. There could be no question of an element of protection in relation to newsprint, as none is made in this country. It is a revenue duty and nothing else.

Side by side with that duty, there is a levy in relation to imported newspapers. The home paper, the paper that is produced here, pays its permanent revenue duty on the newsprint that comes in before the paper is made up. The foreign paper which is imported does not have to pay that duty. It has to pay a levy when it is brought in; but if it is in the position of being able to get the levy refunded on its unsold copies, is it not by that in a position to compete unfairly with the home-produced paper which has already paid its duty?

The Minister would be well advised to examine that aspect of the situation and to see whether it would not be fairer to the home papers to provide, in relation to levy, that a proportion only of the levy would be returned on unsold papers. It might not be desirable that the full levy should be charged on unsold returns of foreign newspapers, but there should be some stipulation which would make it clear that the foreign paper which was being brought in could not, on a sale and return basis, compete on terms unfavourable to the home paper, now that he has made the newsprint duty a permanent revenue duty. It is a matter which would require some effort to work out.

Dr. Ryan

They are not all in proportion. The duty on the foreign paper is far higher than that which the home produced paper has to pay on newsprint.

Mr. Sweetman

The foreign paper can bring in all its paper in the hope that it will sell them and, if it does not sell them, it takes them out without having lost any duty at all.

Dr. Ryan

There is that point, all right.

Mr. Sweetman

The home paper cannot do that.

Question put and declared carried.

SECTION 20.

Mr. Sweetman

I move amendment No. 18:—

Before Section 20, but in Part III, to insert a new section as follows:—

Sub-section (3) of Section 21 of the Finance Act, 1956 (No. 22 of 1956) shall not apply in respect of any death which occurs after the passing of this Act.

This is an amendment I have put down for the purpose of correcting something which I did and what I now feel was a mistake. When I introduced the Finance Act in 1956, I incorporated in it a provision that, in certain circumstances, the estates of people dying would not have to pay the full death duties, if they held part of their estate in Irish industrial investments. The definition of Irish industrial investments was that contained in Section 7 of the Finance Act of 1932.

Under Section 21 of the Finance Act of 1956, if a person held Irish industrial investments to which the Finance Act of 1932 applied, either from the time such investments were originally offered to the public or for a period of three years before that person's death, then those investments ranked only at two-thirds their value for estate duty purposes. The purpose of that section, which was included in that Finance Act, was to endeavour to give an additional fillip to Irish industrial development. There already was a fillip there by reason of the fact that a 20 per cent. remission of the income-tax and surtax in respect of such investments was granted. I was anxious to include a death duty remission on the same basis and, therefore, the investments to which the section applies carry only two-thirds of the normal death duties.

Section 7 of the Finance Act of 1932 has been very much extended in its scope by the Minister during the past 15 months. In the light of that, I think it is undesirable that the restriction in relation to estate duty, which was imposed by me in the 1956 Act, should remain. It is undesirable that it should be necessary now for a person to hold in his estate such industrial investments for a period of three years before his death or since the investments were first offered. One of the reasons I feel it is a mistake to continue that restriction is that we have not got a sufficiently fluid market in Irish industrial shares.

The cost of any such amendment as this to the revenue will be quite infinitesimal, but it would make for a certain greater fluidity and mobility of ownership of industrial shares. If the effect of wiping out the restriction means that people would consider the purchase of these shares from the point of view of having them in their portfolio at the date of their death, then anything like that, which would create an interest and mean that the shares would be quoted more often or dealt with more often on the stock exchange, would be very desirable, indeed. It would effect an interest which would not merely improve the position of the existing shares but would go far to create a climate in which other industrial issues could be successful in the future.

I know that the objection from the revenue standpoint will be that people who are coming near the end of their time will organise their affairs by holding largely this type of share. Even if they do that, it will have the effect of creating the interest and creating the market. The additional cost that could ever arise to the revenue would be trifling, compared with the benefit which will arise.

I am asking the Minister to relax a restriction which I myself imposed. I think I was, at that time, in the situation that I said the Minister was in yesterday—that I could not see the wood for the trees. Frequently that happens in regard to certain matters until one has an opportunity of standing back and looking at them. Candidly, I feel now that if I were in 1956 in my present frame of mind, I would not have bothered with the section at all if I had to include sub-section (3). I think it would be better if the sub-section were taken out at this stage.

Dr. Ryan

I must say I should be much more inclined to agree with the Deputy in his first attempt at this in 1956 than with his attitude now. The object is to create, or build up, a market here for Irish securities by inducing people to invest in them so that they will get an income-tax concession which is there already. This concession was given for death duties in 1956. The concession for death duties is much bigger, or can be much bigger, than it is for income-tax. Perhaps I am not altogether right in that, but it can be big, in any case.

Mr. Sweetman

I think the Minister is right. One is one-third and the other, one-fifth.

Dr. Ryan

Apart from that, there is a sort of a cumulative effect. When the estate is being valued, Irish securities are valued at two-thirds so that they bring the estate down to a lower category where the amount to be paid over all is less in that way, and it may be a very big concession. The object of the concession, as I say, was to create a market for Irish securities. I do not think we should pay here where a person comes in at the very end—an executor or whoever it may be, the person acting for the dying person, as it were—to buy up Irish securities in order to get this very big relief in death duty. To some extent, it would be defeating the object of the section as passed in 1956 and I must say I would much prefer to leave things as they are. I do not know exactly what objection the Deputy has to the present position. I could not quite grasp it from his argument. He said he thought it preferable to remove that concession, but I do not know why. I do not know if there is any really good argument for removing it.

Mr. Sweetman

I think the Minister will find if he makes inquiries that one of the real difficulties in relation to Irish industrial securities is that they are held too long. There is no changing ownership in them. They are always bought to hold and in consequence of that, none is being offered on the market, either for sale or purchase. The person who subscribed to Irish industrial issues in the past holds them virtually unchanged. That is one of the reasons why there is more interest in British securities—because there are varying prices.

If the Minister took up the stock exchange price list of Irish industrial securities, I venture to say that he would find at least half the quotations on any particular day are quotations a month old; in other words, there has been no dealing in 50 per cent. of the securities in the preceding month. I am talking, of course, of industrial securities, not of gilt-edged stocks, and I think the Minister will find that is the situation. That is bad.

If there is that stagnation in regard to dealings, there will not be the atmosphere in which people will invest freely in industrial securities. I appreciate that the effect of the deletion of sub-section (3) which my amendment proposes would mean that people would, perhaps, avail of this opportunity when very near the end of their days, but I think the loss involved by their doing so would be more than offset by the gain that would arise from an active market springing up in these securities, where the market does not exist at the moment. If there was already an active market in industrial securities, then I would accept the Minister's argument completely, but there is not. Anything we can do to create and foster that market is worth doing. This is one of the ways in which it could be done and, if so, it is worth while.

I wonder if the Minister has to hand any idea of the amount, say, in 1957-58, which this concession under the 1956 Act cost the revenue? I imagine that the amount would be very small and, if so, we are dealing only with a trifling consideration. I should like to know what was involved in 1957-58 both from the point of view of the straight deduction of the one-third of the duty concerned and from the effect of the 1956 Act method of valuation in putting the estate into a lower category.

Dr. Ryan

I think that figure could be got, but it would take some time.

Mr. Sweetman

I will put down a parliamentary question.

Dr. Ryan

As regards the Deputy's amendment, it is not a question on which anybody can be dogmatic, but, on the whole, I would prefer to leave things as they are.

Amendment, by leave, withdrawn.

Mr. Sweetman

I move amendment No. 19:—

In sub-section (1), line 6, before "payable" to insert "to the extent that it is allowable or is allowed."

This section, as I understand it, deals solely with the double taxation relief for death duties. If, under the double taxation arrangement we have with Britain, a person has some British assets, they are taxable for death duty purposes in Britain and estate duty is levied and paid in respect of them. When the estate duty is paid in Britain it is allowable here against Irish estate duty in so far as the Irish estate duty on those assets is concerned. It may be that the estate duty chargeable and payable in Britain exceeds the Irish estate duty on the same assets. If it does, the excess is not allowable under the double taxation agreement. The effect of the Bill as it stands is that not merely is the excess not allowed under the double taxation agreement but it cannot be taken out as a foreign debt deductible from the assets in arriving at the duty payable here.

I can fully understand that it would be quite wrong for the law to contain a loophole by virtue of which people would get their relief on the double, that they would, first of all, get relief set off against Irish estate duty under the double taxation agreement and secondly, that they would get the British duty not merely so allowed but also treated as a debt and therefore allowed in that way also. It seems to me, however, that the excess is in a different category. If a person has to pay more death duties in a foreign country than we charge here in respect of a particular asset, it is quite right that we should offset only for the amount which we would charge on that property, but should we not also allow him to deduct in the same way as he can deduct a foreign debt any excess in the duty? Otherwise, it seems we are penalising the estate concerned and that they are having to pay double death duties on a certain portion of the assets involved. I do not think we should aim at that.

Dr. Ryan

As Deputy Sweetman is aware, the section was brought in to deal with a certain doubt about our position at the moment. The practice has been to assess the death duty on the total. Let us take, for example, a man who has property worth £10,000 in England and who dies. The British Government take whatever duty is appropriate on £10,000 and the Revenue Commissioners here also assess on the £10,000. They do not assess on £10,000 less the £2,000 paid over to the British Government. There was a doubt as to whether that was legal. However, it was only a doubt. That action was taken to put the matter right.

In practice, how does it come about? If the duty payable in England on that £10,000 is higher than it would be here, then no duty is charged here. It is only where the duty charged there is lower than it would be here that the duty is collected here. Therefore, I do not think there is any possibility of injustice being done to the estate of a dead person.

Deputy Sweetman's amendment would have the effect that if the duty payable in England were higher than it would be here, we would have to forgo not only the duty here but pay the difference between what he would pay here over to him. We should have to subsidise him.

Mr. Sweetman

I do not want that. If that is so, the amendment is wrong.

Dr. Ryan

I think it is fair that, if he has to pay more there than here, there is nothing payable here.

Mr. Sweetman

I shall have to consider my drafting again, in view of what the Minister says.

Amendment, by leave, withdrawn.

Mr. Sweetman

I move amendment No. 20:—

To delete sub-section (2).

This is the retrospective section.

Dr. Ryan

There was never a question. A case never arose. This is put in only because a lawyer might see we could have claimed and might come back and claim.

Mr. Sweetman

So long as no case is pending——

Amendment, by leave, withdrawn.

Section 20 agreed to.

SECTION 21

Mr. Sweetman

I move amendment No. 21:—

Before Section 21, but in Part IV, to insert a new section as follows:—

This part of this Act shall not come into operation until the passing of the Finance Act which shall be passed next after the publication of the report of the commission now considering the income-tax code.

An Leas-Cheann Comhairle

Amendment No. 75 is consequential on amendment No. 21. One decision will cover both amendments.

Mr. Sweetman

Yes. Amendment No. 75 is entirely consequential on this amendment. This part of the Act and, indeed, Part V also, is extremely complicated. They are parts that have caused some very considerable disquiet amongst certain sections of the business community. It seems to those sections of the business community that they have been picked out for further stringent taxation at a time when every one of us understood that the whole basis of income-tax was under discussion and consideration by the commission.

Candidly, I am not in a sufficiently knowledgeable position to be able to judge whether some of the sections and new provisions incorporated in Part IV of the Bill are wise or unwise. It was precisely because I felt from my own point of view and because Deputies also felt from their point of view that we were not competent to express opinions on a large amount of the highly detailed and highly technical income-tax code that the commission was set up to consider the matter. It seems to me that this part of the Bill has been inserted as a deliberate attempt to jump the report of the Income-Tax Commission. This whole part is framed on the basis that we are exactly the same here as they are in Britain. Our circumstances in Ireland are entirely different from circumstances over there.

These provisions that are included were originally included many years ago in Britain by a Socialist Government. Even the same Socialist Party in Britain now are prepared to agree that the provisions then incorporated do not work out at all satisfactorily in practice. They were introduced, I think, partly in the post-war atmosphere when controls were the order of of the day, when there was a general viewpoint that regulations were inevitable and there was not the same critical examination of the regulation of people's lives as there would be to-day.

All of us, I think, feel that what is needed in relation to income-tax if it is to be continued, leaving aside the wider question as to whether or not income-tax should be continued at all, is a simplification of the tax code. Nobody could suggest under any circumstances that Part IV does anything to simplify the code. On the contrary, it makes the code very much more complicated and will inevitably mean that there will be considerable time, trouble and difficulty in understanding exactly what is permissible and what is not.

I assume, in relation to this part of the Bill, the Minister has been advised that a few people are getting away with evasion. I cannot see, unless he has been so advised, that there is any reason for the introduction of this Part of the Bill. I think that what he has been advised in that respect will be very much overborne by the general effect of the measure.

I do not think the fact that two or three people get away with something justifies placing a very onerous responsibility and a very onerous burden on the business community as a whole. It seems to me that this is the very type of technical matter for which a commission, such as the Income-Tax Commission, should be utilised for examination. No matter what experience or skill Deputies in this House may have in relation to the likely operation of Part IV, we are not competent to examine these provisions in the same way as the Income-Tax Commission would be competent to examine them. Frequently we have discussions here in relation to whether it is desirable that there should be in the tax code the easements which we think should be in it. Several suggestions have been mentioned across the floor of the House during the past year and the Minister, in reply, said he thought it desirable that consideration of all those problems should be left over until the Income-Tax Commission had reported. If that is so in relation to easements should it not also be so in relation to complications?

In relation to complications, such as are introduced in Part IV of this Bill —complications which I venture to say very few people will be easily able to understand—should not these too be put back, just as easements may be put back, for consideration in the general setting of the commission's report as a whole? I understand the Revenue Commissioners already have powers to investigate the expenses and perquisites charged by a body corporate for its employees and directors. I do not know why the existing powers have been deemed unsatisfactory, and I think we must get from the Minister a very much more clear picture of what his purpose is if this part of the Bill is to be permitted to be enacted.

I do not want, in relation to this first amendment, to go over the whole ambit of individual perquisites that may come into consideration. What, for example, is to happen to the case of the ordinary shopkeeper, in a town in rural Ireland, who lives in the backroom behind his shop? So far as I can see he is to be assessed now; he is to have an additional taxation assessment put on him in respect of the backroom living accommodation. That assessment will be put on him even if he does not use the backroom as a residence, but keeps it for the purpose of having his lunch there with, perhaps, a couple of daughters who may be attending the vocational school up the street. That type of assessment will now be made if Part IV of the Bill comes into operation. The large firm that is big enough to have a canteen will escape but the small firm, the small business of the type I suggested, will be involved in additional administrative costs and, I think, additional taxation.

The other day I was talking to a man who is the chairman of a factory in this country and who had just returned from abroad where he had been endeavouring to get new export business. In relation to one of his lines he told me he had been promised an order if he could cut his cost by one-hundredth of a penny. He did cut his cost by one-hundredth of a penny and he was able to get the order. I mention that to show how very vital it is, particularly in relation to export business, to keep down administrative costs at present in every way we can, but there is no doubt whatever that, as framed here, Part IV of this Bill will increase administrative costs and increase them fairly substantially.

Yesterday we had a discussion, in relation to the second Financial Resolution, on the position of those abroad who wish to come in here. We all accept it that before any foreign investor comes in to set up a factory here in Ireland one of the things at which he will look is the system of taxation, and the simpler we can make that system the easier it will be for us to get foreign investors to come here. Part IV of this Bill instead of simplifying matters makes the whole taxation code far more complicated. In addition, I think it will create a very real irritant in that people will not be able to know in advance the amount of income-tax for which they are liable.

Most business executives these days have to incur expenses in travelling or entertaining exclusively in the interests of their companies. In many cases that involves fairly large amounts of money and now they will not know in advance whether or not that money, that is reimbursed to them by their companies, will be taxable. It should be possible to arrive at a simpler system in which the position would be known to those people at once, and not after a delay of some two years. I wonder how it will be dealt with in practice because it seems to me it would be virtually impossible to have any degree of harmony in the manner in which this part of the Bill will be administered by different inspectors of taxes. There will inevitably be a degree of variation between the judgment of one man and that of another. It is highly undesirable there should be any element of discretional differentiation in the manner in which two people are assessed by different inspectors, particularly in a country as small as ours.

Another class of person affected by this is the foreign technician. We all agree that we have not got here all the technical know-how that we should have in relation to the establishment of certain industries, that we shall have to get foreign technicians to assist us in those industries. Above all, before a person such as a foreign technician comes into another country he wants to know where he will stand and to get a very clear picture of the salary offered to him and what it means in terms of living money after payment of taxes. I do not think it will be possible, under Part IV, to give anyone that clear picture. It may well be that the effect will be that the more responsible and desirable technicians will refuse employment because of this.

As I said earlier, if a person pays expenses he is paying them out of his own pocket. When he pays them out of his own pocket, surely that examination of what he has to pay in that regard, particularly in relation to vouched expenses, should be sufficient check? The people who will be examining these expenses returns under Part IV are very estimable. In general I would say that 99 per cent. of the revenue officials are genuinely anxious to assist the taxpayer. You get 1 per cent. who are young pups but that is inevitable anywhere and the fact that you do get that must not be allowed in any way to influence one's judgment of the overwhelming majority of the revenue officials. Nevertheless, having said that, I want to make it clear that, with all their excellent qualities, they are not practical businessmen. They do not know what has to be dealt with in relation to practical business and their approach to some of these problems is bound to be the same as the theoretical approach of someone to a practical problem when that person has only learned about the question from textbooks and has never had the practical experience.

I agree that, perhaps over a period, it may be possible to build up that practical experience amongst revenue officials but it is a thing that will take considerable time. I think it will mean dislocation and irritation in relation to the business community at a time when, in the national interest, we must concentrate all our efforts on production, particularly production for export, rather than be sidetracked by discussions with revenue officials on matters of this sort.

I have a feeling that the increase in administrative costs to the various companies and trades concerned which will arise from this will far outweigh anything that the Minister may receive by way of tax as a result of the enactment of this part of the Bill. I should like the Minister to tell us what he estimates he will get annually in taxation under Part IV that he would not get if Part IV were not there. I am sure that estimate must have been made in pounds, shillings and pence and we are entitled to hear what that estimate is.

I think the Minister, when introducing the Bill as a whole, said that Part IV followed the British Finance Act of 1952. I want to stress again that our circumstances here are entirely different from the British circumstances. The British, for example, have full employment. We, as the Minister for Industry and Commerce stressed last night, have nothing like full employment. We are trying to create it. They have got a vast industrial machine already operating throughout the whole country. We have not got that. We are trying to create new industries to develop exports and to give more employment at home and, even if there was a case for the new tax legislation, I do not think this is the proper time to add additional expenses to the administrative cost on the companies concerned. As I said, these regulations which were introduced in Britain in 1952 have already proved a failure in many respects and have had to be amended and I understand that further amendment is contemplated at the moment.

I think the Minister will agree with me that, no matter what he brings in in Part IV, there will probably still be loopholes in it through which the clever person can dodge. I do not think that he or any Minister will ever succeed in obtaining a perfect check in that respect. If that is so, is it not, therefore, a further argument that, before this whole new type of administrative machine is set up, there should be examination of the proposals by the Tax Commission set up for the purposes of simplifying the tax code, and an effort to provide some solution, if it is possible to provide one, to the complex nature of our difficulties and, thereby, at least satisfy everybody that the proposals have been fairly and impartially examined? No matter what case the Minister makes in this House, I do not think anyone will ever believe that the examination has been carried out in an impartial manner. I want to make it clear that what I mean is that it has never been examined by people who are able to sit back and see the difference between the wood and the trees. This whole part of the Bill which we are asked to pass here is another example in this Bill of the manner in which those who are close to the problem can only see the trees and have not any understanding, because of their closeness to the problem, of the manner in which it will affect our general business background.

Dr. Ryan

It is quite true, of course, as the Deputy says, that our conditions here are different from conditions in Great Britain but I do not think it true to say that the Revenue Commissioners or I proceed on the assumption that they are the same. Unfortunately, we are sometimes faced with the same problem. Very often the same problem occurs here as occurred there, but our position being different, it is quite right to say that we should deal with it as we see it here and not necessarily follow their procedure.

If there is a way found in Great Britain to evade income-tax and it goes on for some time, it is almost certain to appear here. We are up against the problem that they have usually dealt with the matter before we feel it strongly here. They dealt with this problem in 1948. The problem appeared here and has increased over the past few years, so I feel that we should deal with it. We are not dealing with it exactly as they did in Britain, but very often a problem of that kind has only one solution and if that solution has been adopted by the British Government, we cannot help but adopt it also.

I do not think it would be reasonable to say we should postpone this until the commission has reported, because there is no doubt that the sums that are lost to revenue through directors and high employees putting down amounts for expenses which are not justifiable are on the increase. As I said yesterday, I do not know when it is likely that the commission may report; it may not be for some time. Deputy Sweetman made some observations on the general question and I should like to say that some of his objections are not very valid. For instance, he said that inspectors' opinions would differ. Undoubtedly they will differ slightly. The opinions of an inspector in Cork, say, and the opinions of an inspector in Dublin may differ, but at any rate you have the Special Commissioners to co-ordinate, if an appeal is made to them.

But what is the present position? Surely the opinions of an employer in Cork and an employer in Dublin will differ very much more than will the opinions of the inspectors? They are decided at the moment on what should be allowed for expenses. On that argument, I say we are certainly going to get a more general pattern of expenses under the Revenue Commissioners than we have under the individual employers at the moment. After all, employers differ: some of them in their ideas of generosity and some of them in the degree of scrupulousness which they are capable of exercising in deciding these matters.

Another matter mentioned was in regard to foreign capital coming in. All I can say is that as far as I could find out we are not going to do any more here than is being done in other countries. If a foreigner comes in, he is almost certain to come from a country where the conditions are better than here at the moment in the matter of collection and assessment of income-tax.

It is quite true, as Deputy Sweetman said, that if a man allows expenses to his employee, he is likely to be particular about the amount, or likely to see that the employee accounts for the amount allowed, that is, of course in a genuine case. We are getting after the cases that are not genuine and I am quite prepared to agree that there is only a small proportion of employers who do not act properly in this regard. There is, however, a small proportion that are not acting properly and they are the ones we are trying to get after in Part IV.

I do not know whether or not the Deputy is right when he says that, whatever Act we pass, loopholes will be discovered in it. That has been the experience and I would not be so optimistic as to suggest that no loopholes will be found. All we can do is to deal with them as they are discovered and try to stop them developing into a very great source of leakage. We must deal with them as we go along. As far as Part IV is concerned, therefore, I think we should go ahead and deal with the matter as best we can. Therefore, I would not be agreeable to accepting the Deputy's amendment.

Mr. Booth

I am not quite clear whether this provision is an effort to make items taxable which have not been taxable previously, or whether it is an effort to enable the revenue to recover taxes which should have been recovered before, but which they have not been able to lay their hands on. Is it a fresh tax or just a means of recovering what should always have been taxable and which was not recovered?

Dr. Ryan

There are really two matters arising here. The principal thing is to get returns from employers. There are many employees—and that includes directors—now getting sums for expenses which are excessive, if they could be justified at all. To that extent, if they had been returned, the Revenue Commissioners would have collected income-tax, but they have not been returned. Secondly, there are certain benefits in kind which are now taxable but which were not taxable before.

Mr. Sweetman

The Minister did not deal with the point I raised about the small shopkeeper using a room at the back of his premises. Will he not be taxed for the first time?

Dr. Ryan

I do not think so.

Mr. Haughey

He is not an employer or a director.

Mr. Sweetman

Oh, yes.

Mr. Haughey

I thought the Deputy meant a person who owned the place.

Mr. Sweetman

I mean a man with a small room at the back of his premises and who gives his assistant dinner in the middle of the day.

Dr. Ryan

It would not apply to the shopkeeper. He is not employing himself.

Mr. Sweetman

He is employing an assistant.

Dr. Ryan

He is just taxed on his income.

Mr. Sweetman

Oh, no. This is a perquisite for the assistant.

Mr. Haughey

He would have to have more than £1,500 a year.

Mr. Cosgrave

I believe there is a good case for postponing this portion of the Bill until after the Commission on Income-Tax has reported. On a number of occasions since that committee was established, when suggestions were made to effect changes or alterations in the tax system, the matter was always deferred on the ground that the Commission on Income-Tax was inquiring into it. These reasons were well founded in so far as the body had been set up to consider the whole question. Therefore, if that was the reason for refusing to make other changes, it is only right that the proposals enshrined here, and which go much further than any earlier provisions, should at least be deferred until that commission reports.

It will be possible to consider the matter in the light of whatever recommendations are made, and, if it is considered appropriate, on the basis of the commission's report, changes might be made in the law. This amendment suggests that the changes contemplated in Part IV should be deferred until the passing of that Finance Act which will be passed after the publication of the commission's report.

Progress reported; Committee to sit again.