There is an amendment to this amendment on the Order Paper. It will be taken after amendment No. 71 so it will not alter the pattern of discussion in any way.
Finance Bill, 1958—Committee Stage (Resumed).
SECTION 49.
Debate resumed on amendment No. 71:—
Before Section 49, between lines 7 and 8 and before Part VIII, to insert a new section as follows:—
(1) In this Part of this Act and the Third Schedule thereto "the operative date" means the 6th day of April, 1957.
(2) This Part of this Act and the Third Schedule thereto, as well as applying prospectively with effect as from the passing of this Act, shall also apply retrospectively with effect as on and from the operative date (no interruption of application being regarded as having occurred at such passing) and, for that purpose, the said Part and Schedule (apart from this sub-section) shall be construed, where appropriate, as if this Act had been passed on the operative date.
(3) This Part of this Act and the Third Schedule thereto shall, so far as they relate to income-tax (including surtax), be construed together with the Income-Tax Acts and shall, so far as they relate to corporation profits tax, be construed together with Part V of the Finance Act, 1920, and the enactments amending or extending that Part. —(Minister for Finance.)
With regard to the amendment on the Order Paper, I would prefer to withdraw it on behalf of Deputy Sweetman, with the right to put it down again.
Not moved.
On the understanding that the right to put it down again on Report Stage is reserved.
Very good.
Last night, I was making representations to the Minister which I think I had fully explained in regard to the principle of retrospection here involved. I should be glad to know if, in the light of the representations made by members on all sides of the House on the occasion of the Financial Resolution and of the discussion on this amendment, the Minister is prepared to meet us in any degree in respect of the principle of retrospection.
I am afraid I shall have to hear more before I can change my mind.
The Minister said at an earlier stage of the Bill he felt perhaps the House was erring on the side of excess in making the representations, and he yearned for expedition. I made the case last night against it and I do not want to weary the Minister or the House by repeating the representations I made last night, to which I have nothing really to add. Retrospection in itself is bad. This very issue was examined in Great Britain, where the Chancellor of the Exchequer was in a position to say he had given two years' notice of his intention. Nevertheless, on the representations submitted to him, he determined to abandon the retrospective element in his proposals, because he felt that to persist in them was to abandon a vital principle for disproportionate gain for the Exchequer. His position was that in the current year he expected claims to be made on the Exchequer amounting to at least £2,000,000.
In our conditions, we understand the Minister's highest anticipation is that claims might mature up to £100,000. None of us in any part of the House is desirous of seeing those who engaged in this operation benefiting, as we believe their activities to be unmeritorious, and I think that is the strongest adjective we could properly apply; but if, by their action, they manoeuvred us in this House into doing something we have never done before in order to give ourselves the satisfaction of believing that we have frustrated something that we could have foreseen perfectly easily—because we were forewarned of it by what transpired in the British House of Commons two years ago—and if we were deluded into abandoning a very fundamental principle of legislation by the simple desire to frustrate people who we think are more clever than is good for them or for the community to which they belong, we could make a terrible mistake.
I do not believe we would be justified in legislating retrospectively in any circumstances, but if the Minister were even in a position to put forward his argument that this practice had come upon him like a bombshell and that he had to take a snap decision— where I speak of the Minister, I mean the Minister and his predecessor—I could understand his arguing strongly for the course which it is proposed to follow in this amendment, but he is not in that position. The Minister for Finance in Ireland had full knowledge of this type of operation. Consequent on this discussion in the British House of Commons in 1956, the Minister had full knowledge in Ireland of the Treasury view that was taken of this kind of operation two years ago, and it was open to him last year to pass the requisite legislation, even though he might have felt that at that time the drafting of remedial measures might have lacked perfection, but it would have put all and sundry on notice that legislation was there which it was intended to operate to the limit of our capacity to prevent this practice.
The very fact we had all that foreknowledge and did not do it seems to me to make it doubly wrong to invoke on this occasion the principle of retrospection, and I urge most earnestly on the Minister that to throw away the record of administrative integrity that we enjoy in this community for so trifling a purpose is an egregious error. I think it right, although these grounds were advanced by Deputy Sweetman when we were discussing this matter before, to point out, that quite apart from the ethical considerations underlying our objection to retrospective finance legislation, there is the fact that when you seek to draw into the country foreign investors, the first question potential investors will ask their accountants and legal advisers is: are we certain that we know the law as it is of this day? Heretofore, we were in a position to say to any such inquirer: "Yes, and you have further the certainty that there is accepted in our legislation, as it has been accepted in many other legislations in the world, the principle that the law will not be changed retrospectively and therefore anything you undertake to do to-day, if it is lawful, cannot retrospectively be made unlawful."
If we adopt the course proposed in the Minister's amendment for the purpose of catching out a few individuals who may otherwise benefit, I think we throw away that most important quality of certainty that heretofore we have been in a position to offer to potential investors; and instead we will be obliged to say to them in the discharge of a professional man's duty that, since the Finance Bill of 1958, nobody can ever know under our system what the law is from year to year, because it is now the position that what is legal to-day can be made next year or the year after retrospectively illegal.
It is hard enough to persuade people to venture into a strange country with their assets and to risk their capital under a legal system and conditions with which they are not familiar, but to introduce a new element of uncertainty seems to me to be supreme folly and therefore on ethical grounds we are most strenuously opposed to the introduction of the principle of retrospection into finance legislation and, of commercial grounds, we think the introduction of the principle of retrospection into finance legislation is a game which most emphatically is not worth the candle. If we succeed in frustrating a few individuals from claiming back from the Treasury £10,000, £20,000 or £50,000, or whatever sum may ultimately appear to be involved, we shall pay far more for that petty triumph than the actual sum by which the Treasury will benefit.
We have debated the Finance Bill with the Minister for days on end. We have made several representations from this side of the House and the Minister himself has admitted that the Bill has been approached on a reasonably objective basis. He said he desired to keep it on that basis. We all know that most of these proposals are ordinary run-of-the-mill proposals presented by the Revenue Commissioners for the defence of the revenue. If it was not the Minister's duty to bring in those, it would be some other Minister's duty to examine them, bring them in or to reject them, but here is an entirely new principle, the principle of retrospection in finance legislation.
The most urgent representations have been pressed on the Minister not only from the Opposition but also from his own benches. I suggest it is not a good thing for parliamentary procedure if, in respect of every detail involved in legislation of this character where it does not constitute some fundamental part of Government policy, reasoned representations from all sides of the House are rejected on the ground that the Minister is not prepared to depart from the text of what he originally introduced. Indeed we are now discussing a ministerial amendment to his own Finance Bill. Whether or not the Minister entirely agrees with the views expressed from this side of the House and from his own benches on this question of retrospection, he cannot doubt that there are many responsible elements in the House who regard this principle as bad ethically and commercially.
I think he would be well advised in the circumstances to say: "This view is so strongly pressed on me that I am prepared to accept it. I do not see the dreadful consequences other Deputies appear to see in this but I understand what is worrying them and I am anxious to meet them." Or, are we to take it that restrained argument in regard to a Bill of this kind is so much beating of the wind? If that is the fact, it is something profoundly to be deplored and I think this House should begin to make its influence felt. I have no doubt that powerful and strenuous arguments have been pressed on the Minister by his revenue advisers. That is their job: it is their duty to make the case as an autonomous body in defence of the Treasury and for its protection, but it is our job as representatives of the people to make the case on the merits of what appears to us to be the ethical and the commercial expediency of such an effort to protect the Treasury.
I think we have made a very strong argument and even if we on this side of the House, and those Deputies on all sides of the House who have spoken, have not carried complete conviction to the mind of the Minister, at least we must have made him certain of this: that the proposal shocks and disturbs reasonable elements in the House and that we have a legitimate right to make a claim upon him that there is nothing here at stake by way of principle which would justify the Minister for Finance in a democratic Parliament in violating what appears to us to be a fundamental ethical principle, that is, the impropriety of retrospection in finance legislation.
I am glad the Deputy said that we have dealt with every question on this Finance Bill in an objective way. I agree with him. In fact, as the Deputy says, in many cases members of my Party agreed with members of the other Party and vice versa. I would like to deal with this case objectively also. I do not see how there could possibly be a clear-cut division between two Parties on this question.
The next point I want to make is this—let us leave the Revenue Commissioners out of it. It is the Dáil that will make this decision. The Dáil will have to decide whether we will hand over money to certain people and ask the taxpayer to make good the void in the Exchequer; in other words, whether the people we are dealing with here have more right to get the money back than the taxpayer has to keep the money in his pocket. It is the Dáil which has to decide that matter and whatever decision is made here will be carried out by the Revenue Commissioners. If I want to get a certain thing done, I will ask the Revenue Commissioners how to go about doing it and when we make the law here, we rely on the Revenue Commissioners to carry out that law.
The point I want to make on this is whether it is retrospection or not. If it was the case here that these people we are dealing with had got the money we are talking about and I was asking the Dáil that they should pay it back, there would be no doubt that such a procedure was retrospection. I do not think it is the same thing and it cannot be regarded as retrospective legislation or retroactive legislation, if we come here and say that we do not think we should pay out certain sums of money that are claimed by certain people under certain circumstances.
Nobody in this House has raised the slightest objection to the method by which I propose to deal with this activity, which has become known as dividend stripping, from this day forward. There is, therefore, nothing but disapproval of the practice from any member of this House. To that extent, we have a very strong volume of opinion that it should be stopped. I think Deputies will also admit that if it had occurred to any Minister for Finance, or any Deputy or any member of the staff of the Revenue Commissioners when Finance Bills were being framed in the past that this position could arise they would have dealt with it long ago.
These people, therefore, are availing of a flaw in the Act which was overlooked because the circumstances under which it arose were never visualised by anybody in framing the Finance Acts. This, it is true, is a legal position which we discussed here yesterday and we need not go back over it again. The circumstances under which people can buy up another company is a legal process. The circumstances under which they can claim back income-tax already paid is also a legal process, but it is one which no responsible person in this House ever envisaged would occur. It is a legal device and it must be condemned as far as we can.
The application here is for the repayment of income-tax and the application is being made because legally the person can show that he suffered a loss. In fact, he had no loss and that must be kept in mind. Legally, under the income-tax law as it stands, he can show a loss and because he can show that loss, he claims a refund, and as the law stands, that refund must be made. I, therefore, ask the Dáil not to pay out this money. The Dáil is quite agreeable to give me that power for any transaction from this on. However, I went further and I said that claims may come in for a transaction that took place after 7th April, 1957, and I am asking power also to refuse to make a return of income-tax paid in this case.
That is what some Deputies disagree with. They do not like that because they say it is retrospection and they do not think retrospection should be agreed to. I point out against that that we are not compelling anybody to suffer a loss. We are merely saying to them: "You tried to get away with an opportunity under the law which happened to be there. You did not suffer any loss and I am, therefore, asking the Dáil to give me power not to pay out to you because you did not suffer any loss, and it is not right that you should be paid."
The British House of Commons has been quoted here, but as far as I could read the proceedings—I read extracts from the speeches there and I got one copy of the Official Reports—I gathered that the argument in the British House of Commons was not on principle. If the British Government were acting retrospectively with regard to a principle, then the Chancellor of the Exchequer would never have put that into his Bill. I do not see how he could do so if the British Government were acting retrospectively. On the evidence, the British Government did not think of doing anything wrong with the principle of retrospection even though the Labour Party, which is a very large minority there, are altogether in favour of going back over the years in this particular instance. As far as the British House of Commons is concerned, we may dismiss them and go on to deal with our own problem. I am not saying that we should follow anything they may have done because circumstances may be quite different.
I have some regrets, if you like, on the matter of tactics in putting this into the Bill. If I had not put it in, it is almost certain that somebody else would put it in in the form of an amendment on the Committee Stage and I might be in a better position to agree with it in that way. However, that is over and done with and the question is there now and we must deal with it.
I thought these amendments were designed to bring in retrospection?
The whole three went in together. It was an after-thought—it was left out of the Bill when it was drafted and the three amendments went in together.
Take, for instance, income-tax. Supposing I had proposed in this year's Budget to put another 6d. on income-tax I would, in fact, have said to a person drawing a salary: "You lived your life last year on a certain salary and I am going to take 6d. in the £ from you off that salary." In my opinion that is a much better example of retrospection than this particular case because, in this case as pointed out already, what we are doing is saying: "We will not give you what you are applying for," but in the case of an imposition of income-tax there is retrospection there. There was never any objection from that point of view. Certainly it was not objected to on principle.
We all have objections to income-tax, to the standard rate of income-tax. We have all said it was too high, but I do not recall any member of Dáil Éireann saying it was wrong in principle to impose taxation and take it from last year's salary. Let us take another example. When Deputy Dillon was Minister for Agriculture in 1956, I think at that time he fixed the price of barley at 42/- a barrel.
40/-.
It does not matter for the sake of the example, but let us say it was 40/-. Suppose some wealthy man saw some profit in it and he said to his agents down the country: "Give 42/6."
They did.
When the barley went into that man's barns, when people began looking for barley he said: "My price is 60/-." That man was taking a commercial risk. Things might go wrong with that barley, it might go damp, or go bad and he was taking a risk. There would be a clamour in this House if that happened and Deputy Dillon would be compelled to fix the price at, say, 50/-. There is a case where there would be retrospection and I am quite certain whatever objections might be raised to the particular transaction, or to the action of the Minister for Agriculture, nobody would say it would be wrong in principle. Nobody could say so.
We could continue quoting cases of better examples of retrospection than those, but I am giving only these few cases to show that, though retrospection may be wrong in principle, you can invade the principle of retrospection and people will not say you are evading it, and will not condemn you because you practice retrospection in another way. It is because this thing has been referred to as retrospection that the big objection appears to be put up to it. I think we should not adopt the very strict interpretation of the whole procedure that has been adopted on it by certain Deputies here —not on that side alone I admit—and we should take a more practical and sensible view of what is taking place here. We should try to make up our minds whether these people deserve our sympathy more than ordinary taxpayers. As I have said already if these people take £100,000—I do not know how much it may be, there is no possibility of finding out how much it may be—then the taxpayers generally must make up the £100,000, and it is a question of whether these people we are dealing with are more deserving than ordinary taxpayers.
I mentioned here before, and I think it was a very good illustration, that we are dealing with people who have really put their hand into the till. We are making up our minds whether we shall say to them: "Take your hand out of the till, we are not going to permit that," or whether we shall say to them: "Dáil Éireann on the 6th April, 1958, says, ‘Fill your hand, fill it well, because it is the last chance you have'." I do not like to see these people getting away with it. I may have given this matter more study than other Deputies and perhaps I am prejudiced. I do not know but I do not like to see these people getting away with it. I must say I am not convinced by the arguments put up to me that we should let them get away.
In conclusion, I would like to say I am not arguing this as a political question. I do not see how political Parties could be divided for or against this. It is a matter for individual approach. There may be individuals on the side of Fine Gael who do not like this and there may be individuals on that side who say they do not see much wrong with it. There may be the same difference of opinion on this side here. There may be individuals who do not like it and there may be others who think we should not show any mercy whatever to these people.
I wish to make it perfectly clear that I have no sympathy with people engaged in share stripping activities. My anxiety is not the protection of the guilty, but the protection of the innocent. I do not believe, for a moment, that the share strippers are innocent in any moral sense whatever, but what I am concerned about is that once we step on to this slippery slope, as Deputy Dillon has called it, we will expose ordinary taxpayers to retrospective legislation. I cannot agree with the Minister at all that there can be anything innocent in retrospection.
Hear, hear!
Retrospection is here. I can fully sympathise with the Minister in his anxiety to protect the revenue. That is his main responsibility and I have every sympathy with him as he tries to discharge that responsibility. He has put it to us what he is trying to do is to protect the ordinary taxpayers from paying a sum of £100,000 to a person engaged in a rather shady transaction. I am just as keen as he is to protect taxpayers, including myself, against such a contribution in such a connection. At least we shall know the total amount which we as taxpayers will have to pay. We have a fair idea at the moment that it is somewhere around £100,000 but, if we once leave the door open to subsequent Ministers for Finance as advised by the Revenue Commissioners, I am gravely concerned lest we should be putting ourselves in a position of creating a precedent whereby there can be retrospective legislation for taxation or otherwise.
I view this whole thing rather like a town planning question. It might well be there was a flaw in a town plan whereby a factory, though it was undesirable, was permissible. Supposing a person found that loophole in town planning regulations and was able to erect a factory quite within the law, even though possibly it was undesirable, we would have created a precedent which would have allowed the Legislature to say: "You did not break any law by erecting that factory. We are not asking you to take it down or compelling you to take it down. We are simply passing a nice little bit of legislation whereby you will not be able to use it." That person would possibly have incurred very considerable expenditure and in that case he would not be able to get any return from it. It is the same as saying: "I am not taking any money away from you; I am just preventing you getting any return for your investment."
I do not want to be personal about the Revenue Commissioners because they are not able to protect themselves in this House, but, at the same time, the Revenue Commissioners are advising the Minister. They are the watchdogs over the national Exchequer and they are inclined to be ruthless. At a time like this, I am frightened of them and I am frightened as to what advice they may give to this Minister or subsequent Ministers. They may very well say that we ought now introduce legislation which will catch certain guilty parties who are perfectly obvious and they may overlook the fact that they may catch a very large number of innocent parties as well.
Another simile, if you like, is the legal principle that everyone is innocent until proved guilty. That means that some guilty people get away. It is far better that guilty people should be acquitted rather than that one innocent man should be convicted. For the same reason, I believe that it is better that some trickster, if you like, should get away with some money almost illegally, although not quite, than that one innocent taxpayer should be taxed retrospectively or improperly.
My objection to the whole thing is not directed at the protection of share strippers. Any way we can get them, let us get them, as long as it does not create a precedent whereby innocent parties can subsequently be placed in an invidious position. I do sympathise with the Minister in his anxiety, but, once we do this, there will be no protection for the ordinary taxpayer. I am more worried about him than I am about the foreign industrialist. I am worried about the danger that retrospective legislation might be brought in whereby the ordinary taxpayer will be made liable to tax retrospectively.
I find myself in considerable embarrassment over this. I greatly dislike disagreeing with my own Minister, but, as the Minister himself has stated and as Deputy Dillon has stated, we are trying to deal with this in an objective way. I will find myself placed in an extremely embarrassing position, and I think other Deputies on this side of the House will also, if this matter is pressed. I do hope that the Minister will yield to us on this. We will all join with him in every possible endeavour to stop this happening in future. We are absolutely behind him in that, but the danger is that, through over-anxiety to convict the guilty, we may be creating a position in which the innocent may also be convicted in future. I would plead with the Minister again and again, with the utmost sincerity, with everything I have got, to reconsider this matter and let it be a unanimous decision to get after these rather shady transactions. By all means, let us stop them, but, for heaven's sake, do not let us ever do anything whereby retrospective legislation of any kind can be justified by this precedent.
Deputy Booth's speech, coupled with the Minister's approach, rather disturbs me. The Deputy rather intimated that he would like to get after dividend strippers in every possible way. I think the Deputy might halt and clear our minds on that, because I take it that, whatever emotional element may have entered into the words "dividend strippers" now, they were proceeding to do what was perfectly open to them to do under the law. Just for clarity, I should like to know what element there is in their transaction that would make Deputy Booth want to get after them in every possible way.
I mentioned only the future—only in the future.
I am glad that point has been cleared because what the Deputy said struck me as rather supporting the Minister in the attitude that the Minister puts before us now, that these were pilferers and that, while individual Deputies may have certain views on the situation, no ordinary Deputy who has to think as an ordinary man and has to think of the taxpayer behind him, would take the risk of casting a vote that would in any way help somebody who was pilfering. I think Deputy Booth's remark, therefore, rather dangerous in the atmosphere created by the Minister. I do not think it is reasonable for the Minister to put it in the form in which he does. However, the Minister having put it in that form, it makes me hark back to an original remark made by the Minister. I understood him to say that he would want to hear more before he would change his mind on the matter. Would the Minister elaborate on that?
We are asked now to leave the Revenue Commissioners out of it. They have made their case; they have made their stand. The argument that has been made against the principle of retrospection has been fairly clearly-put. It is that it introduces an element of doubt into the atmosphere in which men in the financial or business line might be operating in future and that no man could be clear that that is the law to-day and that he can work on that law securely and with confidence.
When the Minister indicates that there is a possibility that he could change his mind if he heard more, in what way does he want to hear more? Does he want to hear more in quality about the disturbance that this might create in the minds of people proceeding about their business in the ordinary way inside the law? Does he want to hear more from Deputies or Senators? Has he heard anything at all from outside? When the Minister refers to things that are being said that might cause him to change his mind, is he referring only to what has been said in the Dáil up to the present? Has he heard anything at all from people connected with financial, legal, commercial and production circles, either individually or collectively? Has he heard anything at all from individuals or functional groups in relation to the financial side of business, the legal side, the commercial side or the production side?
It is rather important that we should know that. Is it a fact that the only people who are vocal in this matter up to the present are the Deputies who have spoken in the House, who have spoken from their contacts with the commercial and business life and from the ethical outlook? It would be very interesting if it were the case that, while we are dealing with this measure, no group or individuals connected with any aspect of finance or economics have made representations to the Minister. Is the Minister in a position to say that he has not heard anything from them, or, if he has heard from them, is he in a position to say anything about the quality or the volume of the arguments they have put up?
I am rather amused at all this talk about the danger of retrospective legislation. I have a distinct recollection of an occasion in this House, after a certain court action in a copyright case, when the then Government rushed in here to make an amendment to an Act of this House, whereby the word "shall" shall now be deemed to mean "shall not" and shall always have been deemed to mean "shall not". That was retrospective legislation.
Did the Deputy approve of it?
I was in the Opposition and did not approve of it.
I am glad to hear the Deputy rallying to our side.
I did not approve of it, but, on the other hand, we are dealing with retrospective legislation every year and in the middle of the year. A merchant in this country has goods on the high seas which he has ordered with the knowledge of existing tariffs and a Government rushes in here and puts on levies. If that is not retrospective legislation applied to the individual who, in good faith months before this legislation was brought in made commitments on certain costings for goods, I do not know what is. Here we are using arguments against retrospective legislation in relation to people who have sat down and deliberately searched for flaws in an Act of Parliament in order that they can rob the ordinary taxpayer. More damage has been done to this country in the last few weeks on this matter than can ever be calculated. Deputy Mulcahy asks has anybody met people outside who have any representations or suggestions to make.
I did not ask that.
The Deputy asked had the Minister heard any expression or volume of opinion. The Deputy three times referred to legal gentlemen and every kind of profession. I myself have met people from abroad who were seriously considering investing in the creation of an industry here and on the day after this matter was first raised in the Dáil they produced to me the morning newspaper saying: "This guarantee of your Government of freedom from income-tax on profits made on exports is not worth anything because a succeeding Government can come along——"
And do what the Minister is trying to do.
The damage has been done by the expression that that would be so.
What expression? Is it by the word "retrospective"?
Yes.
The damage has been done by the word "retrospective"?
By the suggestions made by those who are objecting to this piece of legislation by saying this is the beginning of retrospective legislation as if it had never existed here before. Everybody in this House knows—members of all Parties have always subscribed to it and I am always very happy to feel that it is so—that every Government that has come to office has always honoured its obligations and has accepted the obligations of previous Governments. When a Government indicates in all seriousness: "This is a piece of legislation limited to a certain type of transactions" it is sufficient for me to accept it as dealing with a particular thing.
I am amazed at the attempt that is being made to make much of it. A Government comes in here at Budget time or in between Budgets and will bring in legislation to increase or reduce tariffs. What is the effect and the impact on the trader? One man may have brought in a large consignment of goods and paid very heavy tariffs and, having got his stock in, discovers the Government is reducing the tariff on that. He is left with his high-priced goods to meet competition from somebody who has not before brought them in; or the reverse, as I indicated, by imposing the levies, or by imposing additional tax on goods coming in. We have all had the experience of people saying these goods were ordered in good faith. They were on the high seas and could not be in but because the tariff increase operates as from the moment it is announced, those people are caught and out of pocket.
That to me is a worse type of retrospective legislation than that now suggested because it affects the ordinary trader, the ordinary person who is honourably concerned in carrying out his business, who is not sitting up burning the midnight oil to find a flaw and then to go about acquiring somebody else's business — which through prudence has a reserve of undistributed profits—and who after buying at, to the seller, a high price, uses it then for the purpose of collecting a drawback against what he can produce as evidence of other losses. It is one of those peculiar transactions that only a certain type of brain can work out, but it is against the welfare of the public generally and I have no hesitation in saying that I hope, no matter what the discussion is, the Minister will stick to his guns and put through this piece of legislation.
It may be truly said by the Minister for Finance: "May God defend me from my friends." He has at least heard now from the lips of Deputy Briscoe and on his authority what this retrospective element in this proposal has meant to people outside. They have expressed incredulity and, according to Deputy Briscoe, so high a degree of dismay that they have recoiled from the thought of pursuing their original purpose of making investments in this country, and they did it because it has been represented to them in the course of this debate that this proposal represents retrospective legislation. Is that not so?
Does the Deputy not admit that there are no grounds for supposing that retrospective legislation would be introduced to affect the undertaking of a Government in respect of freedom from income-tax for profits from exports? Would the Deputy admit that is not in his mind?
The Deputy assures the House that amongst his own acquaintances numerous foreign capitalists recoiled at the prospect of a system under which retrospective financial legislation would be enacted.
If people believe what is said.
It was the retrospective element which shocked them when they heard of it, according to the Deputy, in the course of the debate here. The Deputy must not have read the sheet of amendments.
I know what is in it.
What is in it? The first place the word "retrospective" occurs in this context is in the note to the amendment which reads as follows: "Operative date, application (prospective and retrospective)..."
To this limited item.
The Deputy recalled his experience of long ago when he was on this side of the House. He was shocked to hear the principle of retrospection introduced into legislation and when he was then told: "This applies only to a very limited extent" he tells us all from these benches he still passionately opposed it because the principle was at stake. Behold the miracle! This Daniel come to judgment has crossed the floor of the House and lo and behold! He has not only turned his person, he has turned his mind as well.
It is a different subject altogether.
Yes; but the Deputy will agree that it is the same old principle of retrospection in legislation which shocked him in his salad days. He has now grown old, hoary and experienced and what dismayed him then causes him no tribulation now.
I am not old, hoary or bald-headed.
Is the Minister consoled by Deputy Briscoe's representations? Is he sustained in his resolution by Deputy Briscoe's agony of soul? I do not know whether it is necessary to pursue Deputy Briscoe's well intentioned intervention further, save to thank him for recalling that, in his pristine youth, he felt the same degree of apprehension about the principle of retrospection as I feel now. Let us jointly deplore autres temps, autres moeurs. He is a very different man to-day from what he was a golden quarter of a century ago. He is a much tougher proposition, with a conscience more reconciled to practical expediency than it used to be.
Leaving that aside for the moment, the power of words is wonderful. "Dividend stripping,"—I do not attribute that artistic touch exclusively to the Revenue Commissioners of Ireland. I think it was born in the Revenue Commissioners in London. I recall, however, that for many years a distinguished Irishman was chairman of that body and he left his poetic heart after him. If we called this operation "dividend equation," it would not have sounded half so indecent. It is most moving to me to see Deputy Booth shudder at the horrible activity of dividend strippers. I was at once carried down into the lowest dive of Hell's Kitchen in New York with strip-teasers all around me. I can sympathise with Deputy Booth's feeling that to associate with such people was positively impure.
Let me assure Deputy Booth that this rather seedy transaction was conducted very largely in the offices of eminent solicitors and accountants of standing, but the Revenue Commissioners got in before the accountants and solicitors got in. If Deputy Briscoe would ever engage in this kind of activity, I think he would have called it dividend equation. I think that would have a respectable and——
I hope the Deputy got out before the strip-teasers undressed.
I do not follow that.
The Deputy spoke about being carried down to the lowest dive of Hell's Kitchen in New York where there were strip-teasers.
I was apprehensive for fear Deputy Booth, in this context, would feel he frequented an atmosphere analogous to that. I do not think it is true. I do not think this activity of dividend equation or whatever you call it is praiseworthy. However, it is silly to get "het up" about it. It is a perfectly lawful operation under the law as it stands at this moment. To introduce emotional reactions into our discussion carries us nowhere. Nobody, on any side of the House, is concerned to preserve anybody's right to conduct this dividend equation operation to the detriment of the Exchequer.
All are agreed it is an operation which, in the interests of equity between taxpayers, should be put a stop to. That is all. But, just as we were concerned on other occasions not to achieve a relatively minor good at the cost of a major evil, we should to-day refrain from abridging the principle against retrospective legislation, though tempted to frustrate the activities of half a dozen or a dozen people who have perfectly lawfully carried out this dividend equating operation during the past 12 months.
I think the Minister overstates his own case when he says he is entirely satisfied that, if this operation had been foreseen, his predecessors or he himself would have taken measures in anticipation to put an end to it. Surely he cannot say that when he knows we were forewarned of it and given a full detailed description of it in the course of the discussion on the Finance Bill in the British House of Commons in 1956. The average Deputy did not have his attention directed to it, but every adviser of status in the Minister's entourage was fully informed and directed the attention of the Minister to it, in so far as it was thought expedient to do so. Therefore I suggest to the Minister that there is no validity in his argument that had he been forewarned of the possibility of such a practice, inhibitory steps would have been taken and that the present course is embarked upon only because this practice came upon them like a thunder clap.
Even though we are all agreed that this practice should be stopped, I think we ought to hasten to add—pace, Deputy Booth—that though we disagree with every word a man may speak, if he does it within the law, we should be ready to lay down our lives in defence of his right to speak it. Though we may dissent emphatically from certain actions which certain individuals may take, if they act within the law, then, if we believe in democracy and freedom, we should cheerfully lay down our lives in defence of their right to do what we dislike. But one thing we must not do is to legislate in retrospect and say that: “Because we do not like what you do or say, we shall declare to-day that, as of six months ago, what you did was illegal, though we know that when you did it, it was not.” Surely, here is a great and important principle which is worth defending and which is of consequence to the community to which we belong.
Lastly, I think the Minister revealed his own state of mind when he found himself forced by his own argument into the necessity of saying: "It is a very mild form of retrospection." I do not think I am in any degree irreverent if I remind the Minister of the Scriptural saying: "He that contemneth small things shall fall little by little." To that affirmation, I do not think anything could profitably be added.
All of us must be very wary of accepting retrospective legislation in any shape or form. It seems to me that there is a lot in what Deputy Booth says. He said he appreciates that this legislation may be introduced for the purpose of catching people who have been able to evade taxes, which, morally, they were liable to pay, but which, legally, they could escape paying but that we would also catch in the net other perfectly innocent people who would be brought in under this legislation. As I understood him, the Minister tried to make the case that this is a very mild type of legislation, that it affects certain people only and would not in any way affect anyone who was innocent.
I think I am right in saying that the function of the Revenue Commissioners is to collect the moneys due to them by law. No matter what the case may be in favour of not embodying a particular individual in this retrospective legislation, it will be the task of the Revenue Commissioners—in fact, it is mandatory on them—to collect those sums, and if this House passes this legislation, then I do not know how deep or how far it goes. Quite frankly, I am not much clearer after the Minister's statement than I was before it. No matter how far it goes, or who it enmeshes, it will be mandatory on the Revenue Commissioners to collect that money. Therefore, on principle, I am against retrospective legislation. I feel it is a very dangerous form of legislation for us to bring into being in this State.
Several arguments have been used by Deputy Briscoe and others as to legislation passed here in times gone by. In fact, as far as Deputy Briscoe's intervention went, I could not understand it. At first, I thought he was arguing in favour of the Minister and then it appeared to me that he was arguing against the Minister, because he made it quite clear that the fact that this side of the House found itself impelled to oppose some of the proposals in this Bill, and more particularly its retrospective proposals, meant we are going to prevent industrialists—who are expected to come in shoals from overseas to start industries here under tax-free concessions—to set up here. That, in itself, appears to be an argument 100 per cent. against the legislation which the Minister is introducing.
I do not think the Minister has justified his case. He ought to make it much clearer to the House as to what persons he has in mind to get at. I take it that it is some of these industrial groups who have grown fat in the State, and probably in and around the City of Dublin. I would like the Minister to give us something more concrete than he has given. I should also like him to indicate the dangers to those who may be embroiled by this legislation, and who those people are who are brought in under this legislation, so that the House may judge fairly for itself.
It is quite obvious that there is not any great measure of support for the Minister on that side of the House and I am perfectly certain there is none on this side. It may be that the Government wants to drain the last drop of blood out of the tax-paying public. That is pretty evident. It may be that the Revenue Commissioners, in doing their duty to the Government, in trying to provide all possible revenue to carry on the administration of the State, have advised the Minister on this matter. Personally, I am not satisfied with that legislation. The Minister could very easily take a further look at it, but perhaps he is not prepared to take a further look at it. He should justify his case to a greater degree than he has done so far.
In conclusion, I suggest to the Minister that as there does seem to be a good deal of controversy about this legislation, and as it affects so vitally the whole principle of taxation, he should leave it to a free vote of the House and there will be no doubt about the outcome—it will be thrown out.
Deputy Esmonde is entirely wrong. We have spent a good many hours on this problem for about a fortnight and again yesterday and again to-day. It is unfair that Deputy Esmonde should come in now and ask me to restate the whole position. The Revenue Commissioners are not entitled to collect any money from anybody under this clause. If Deputy Esmonde makes a case that the Government are trying to drag money out of the taxpayer, it is quite the opposite. We are trying to save the taxpayer from paying out certain money to someone who we think should not get it. So far as Deputy Esmonde's argument is concerned, I think we can dismiss it at that.
There has been a lot of play made with the word "retrospective". The point I made before was that it was not retrospective at all and I think I was in a stronger position there. Retrospection, after all, is only wrong in principle, if it entails a penalty. In this Bill, we have given retrospection where benefits were concerned and nobody objects to that. It is only where a penalty is involved that you could claim that it was wrong. Our discussion, therefore, is based entirely on whether there is a penalty or not.
As I pointed out before, we are endeavouring in these clauses—leaving out this particular clause, dating back to 6th April, 1957—to prevent people buying shares from another company, on which income-tax has been paid, showing a loss in their accounts, and then claiming a refund of the income-tax on the shares on which they got a dividend. Whether my proposal to stop refunding that tax on that dividend which has been received, is a penalty or not is the whole question. However, we have debated that often enough and I suppose we will have to come to a decision on it.
Deputy Booth and others are afraid of a precedent. I must say I cannot see why. Whether we agree or disagree with that, it is not going to change my nature as Minister for Finance or that of any other Minister for Finance. He will look at each problem as it comes, and as it strikes him, and it makes no difference, in my opinion, as far as the future is concerned.
In answer to another question, I did not meet anybody from finance or business. As far as I know, the financial and business population in this country are entirely disinterested.
Oh, Sir.
They have come to see me about other parts of this Bill. They are very concerned about some parts, but as far as this is concerned, I have heard nothing whatever.
Did the Minister hear anything from organised persons or the business community?
Nothing whatever. I have heard the views of a number of Deputies. Some of them agreed with the proposals I have here and some were against them. The great majority who spoke here were against this, but I suppose that is only to be expected. If people feel they are against something, they are inclined to say so, whilst those agreeing with it are inclined to let it stand and come along at the time to support it.
Finally, I was asked by Deputy Mulcahy what I meant by saying I should like to hear more. It is because I had heard the views of only four or five Deputies here so far. As far as the arguments put to me are concerned, I still remain convinced that this provision is right. There is one thing I would like to say. The Opposition are all right—they can vote against it—but if I were convinced that members on this side had a conscientious objection and might be divided between loyalty to their own convictions and loyalty to Party, then I should not like to put them in that position.
In any case we are not up against a decision to-day. The amendment to the amendment is not being moved, as already stated. The section deals with other things besides this particular matter. The Dáil has to agree with the section and leave a decision on this net point until the Report Stage. That is the only reasonable way we can do it.
I do not think the Minister is quite correct. We are dealing with amendment No. 71.
Yes.
That section has as its note, if the Minister will look at page 11 of the amendments:—
"Operative date, application (prospective and retrospective) and construction."
Part of the section has to do with it; the other part has not.
The description in the note states that the section deals with the " operative date (prospective and retrospective)."
It also deals with other matters.
Perhaps the Minister would give an indication in regard to Deputy Sweetman's amendment on the Order Paper, which goes very netly to the point of the operative date? It appears on to-day's Order Paper, page 388:—
To delete "6th April, 1957" and substitute "19th day of June, 1958."
If the Minister says he prefers to have a decision on this net point postponed until the discussion of that amendment comes before the House, I am quite prepared to accept that.
I think it is the best way.
Might I ask the Minister this indulgence? If that is, in his judgment, the better way to deal with it, may I assume that, for the purpose of this amendment only, the matter will be recommitted on Report Stage?
Yes, if the Deputy wishes.
There is no need to press this to a division then. We are leaving open the question of the date.
Amendment to amendment No. 71 not moved.
Amendment No. 71 agreed to.
Section 49 agreed to.
SECTION 50.
I move amendment No. 72:—
Before Section 50 to insert a new section as follows:—
The Third Schedule to the Finance Act, 1946 (No. 15 of 1946) is hereby amended by the deletion of all words from and including "And in the event of the goods or chattels of the said" down to, "whichever shall be the shorter".
This is an amendment which I would urge very strongly on the House. There is at this moment, to my knowledge, a man in this country in jail in the following circumstances. He was engaged in business. His business terminated and was taken over by another firm. He took employment with the firm which was taking over the business. After a period that firm went out of business and this man's employment came to an end. He was left without any means of livelihood because he had found no alternative employment.
In those circumstances the Revenue Commissioners recovered a judgment against him in respect of approximately £200 income-tax which it was determined was due in respect of his income in the past. After a limited time the Revenue Commissioners handed that decree which they got to the Sheriff for collection. The Sheriff attended at that man's place of residence and, having investigated the circumstances, returned the decree to the County Registrar endorsed nulla bona—the man had no goods.
At the instance of the Revenue Commissioners that decree was then endorsed by the County Registrar and handed by him to the local superintendent of the Guards who, without any other legal procedure, went to the residence of the man in question and, on the authority of that decree endorsed by the County Registrar, arrested that man and removed him to jail where he now is, and informed him that he would be kept there in jail for six months or until such time as the Revenue Commissioners' claim was discharged, whichever was the shorter.
The man has no property. He has no means of paying the debt and must remain in jail for six months. Everybody knows that on the day of his discharge from jail there is outstanding against him a further debt for £400. Presumably, if the law remains as it is, that man will go back to jail for another six months.
I believe that that procedure is ultra vires the Constitution because it means that man is being put in jail without any recourse to any court of law and is being detained there without any judicial sentence being passed upon him. I have tried to establish how this came about and how this power is claimed and used by the Revenue Commissioners. I find that in the Finance Act of 1946, Section 27 sets out:—
"(1) This section applies to any proceeding instituted in the High Court or the Circuit Court for the recovery of any tax or duty under the care and management of the Revenue Commissioners or any fine, penalty or forfeiture incurred in connection with any such tax or duty, wherein an execution order (the form whereof is set out at No. 37 in appendix N to the rules of the Supreme Court (Ireland) 1905 and is therein described as a form of writ of Levari Facias) or an order similar in requirements thereto could hitherto have been issued if such proceeding had been instituted in the High Court.
(2) Notwithstanding anything to the contrary provided by or under any enactment or by any rule of court, where judgment against the defendant for any amount is given by the High Court in proceedings to which this section applies, the form of execution order to be issued for that amount shall, if the plaintiff or informant so requires, be in the form set out in the Third Schedule to this Act, and where such judgment is given in the Circuit Court, the form of execution order to be so issued shall, if the plaintiff or informant so requires, be in the said form with the appropriate modifications."
When you turn to the Third Schedule, you find the form of execution order in revenue cases. It reads as follows:
"HIGH COURT OF JUSTICE. REVENUE.
To the several Sheriffs, Under-Sheriffs and County Registrars and to the Commissioner and Officers of the Garda Síochána:
Whereas it has been adjudged by the High Court of Justice that John Doe is justly indebeted to the Minister for Finance for the benefit of the Central Fund in the sum of X pounds, X shillings and X pence together with the sum of X pounds, X shillings and X pence costs as appears of record in the High Court of Justice. You the several Sheriffs, Under-Sheriffs and County Registrars are therefore hereby commanded to take in execution the goods and chattels of the said John Doe to satisfy the said sums for debt and costs.
And in the event of the goods or chattels of the said John Doe not being sufficient to satisfy the said debt and costs or in the event of the said John Doe having no goods or chattels which can be taken in execution to satisfy the said debt and costs as aforesaid, you, the Sheriff, Under-Sheriff or County Registrar to whom this order is handed for execution, are hereby commanded to give a certificate to that effect in one of the forms endorsed hereon and to transmit this order with such certificate signed by you endorsed hereon to the Superintendent or other proper officer of the Garda Síochána who shall act for the area or district within which you may levy execution. And you the Commissioner and Officers of the Garda Síochána are hereby commanded upon the receipt of this order by such Superintendent or other proper officer with the certificate endorsed hereon signed by the said Sheriff, Under-Sheriff or County Registrar, to take and convey the said John Doe to the nearest prison and there deliver him to the Governor of such prison there to remain and be kept by such Governor until satisfaction be made of such debt and costs, or until the expiration of the period of six months whichever shall be the shorter."
Now I took the trouble to find out as best I could the history of the writ of levari facias. The history of it is that it originated in ancient ecclesiastical proceedings, but the furthest to which it ever went was that it provided that, if a person was unable to satisfy the demands of the Crown on foot of a decree secured against him, the sheriff of the area in which he was domiciled could take into his custody all his goods and property and hold it for the benefit of the Crown until the Crown claim was satisfied. But there was never any provision in that writ of levari facias that in any circumstances the debtor could be seized and thrown into jail. Even with the limited application of the ancient writ of levari facias, it was provided by the Bankruptcy Act of 1883, Section 146 (2), 46 & 47 Victoria, Chapter 52, that the writ of levari facias was abolished in all civil proceedings.
In those circumstances, I began to ask myself, if this recourse had been abolished by the Bankruptcy Act of 1883, how was it preserved under our legislation? Then I noticed that its abolition in the Bankruptcy Act related only to proceedings between citizens, but reserved the rights of the Crown. Then it struck me that, even under the prerogative of the Crown, no claim was made that you should have power to detain the person of the debtor— only his goods and his real property. I then discovered that if you went back to the Taxes Management Act of 1880, you found the root of this matter.
I want to tell the House this. I have already referred to the finance Act of 1946 and I have given the House the text of Section 27 and the relevant Schedule. I was a member of the House in 1946 and I was astonished that a Finance Bill with that section could have passed the House without comment from me, at least. However, anyone who looks at the Act of 1946 will realise that it was a long and complex Bill. Yet the matter was raised; and the then Minister for Finance, Deputy Aiken, was asked to state the significance of this section and the Schedule. His answer was: "It represents the correction of archaic phraseology in the existing law." That is the only discussion of this section that took place in Oireachtas Éireann—"It represents the correction of archaic phraseology in the existing law."
The significance of that is that in the rules as set out by No. 37 in Appendix N to the Rules of the Supreme Court of 1905, the form of the writ of levari facias mentions King Edward VII. I think that most Deputies in the House believed that this was simply another handspring of Deputy Aiken, the Minister for Finance, to shake off his lily-pure person the regal references to King Edward VII. Certainly I do not believe anybody in Dáil Éireann had the faintest notion that we were legislating to incarcerate people in jail for their inability to pay a debt. In fact, probably that section is not the real root of the power which the Revenue Commissioners seek to exercise and had in fact exercised on the person of the man to whom I referred at the opening of my remarks.
Accordingly, I determined to seek further and I found that the power traces back to the Taxes Management Act of 1880, 43 & 44 Vict. Chapter 19, Section 89. As far as I know, that is the first reference in British law to the power of the Revenue Commissioners under modern conditions to imprison a citizen for debt. When I sought to inquire into what discussion had taken place in connection with that, I was unable to find Hansard for that date. In any case, as Deputies will understand, members of the Irish Party then present in the British House of Commons were concerned with graver matters relative to the people of this country than the implications of the Taxes Management Act of 1880, 43 & 44 Vict.
I want to ask Deputies here now whether there is any Deputy on any side of the House who believes that if a decree is being got by the Revenue Commissioners against a man or woman in this country for arrears of income-tax and if the sheriff has attended with authority to seize his property and dispose of it and realise that property for the satisfaction of the claim, and then certifies to the county registrar that the man has nothing, has no goods, it is intended that he should be locked up in jail for six months or until such lesser time as the Revenue Commissioners' claim is satisfied. I do not. I believe it is wrong and I believe it is unconstitutional.
Now, the difficulty is this. One thinks immediately, if this is unconstitutional, why does not one go to the courts and prove it so? The answer is that these unfortunate people, by the very nature of their circumstances, cannot get access to the courts. Who is going to take their case? Who is going to ask before a High Court judge for a writ of habeas corpus, and then get a conditional order, which has to be argued thereafter to make the order absolute? There is open to the Revenue Commissioners not only the right but the duty to go to the Supreme Court, where protracted argument may take place. Where is the man, who has no goods, going to find solicitor and counsel who will be prepared to embark on that protracted litigation, without fees or prospect of reward?
This matter cannot be tested in the courts, because the only people who have the right to test it are persons who have no goods. Now, I would be quite content in regard to this matter, if the Minister were prepared to say he would request the President to submit this section of the existing law, through the Council of State, to the Supreme Court for determination as to its constitutionality. I am perfectly certain that it would not stand examination for a moment, but I think it would be much better if Oireachtas Eireann would here and now declare that they do not approve in our community of imprisonment for debt. Certainly, not imprisonment for debt without giving the debtor any right to appeal to the court, for the protection which the court is there to provide against the Executive, where oppression by the Executive threatens the individual citizen.
We are all aware that, under the existing law, if one citizen recovers a judgment against another and hands the writ to the sheriff for execution and finds the writ returned nulla bona, it is up to that citizen to apply to the District Court to have the debtor brought before the court and there examined as to his means; and unless the creditor can convince the court that the debtor has available means which could be properly applied to the redemption of his debt, having due regard to his family responsibilities, the district justice will make no instalment order against him.
But suppose the district justice does make an instalment order, thereby declaring that he has available means to pay the debt if he wants to pay it, and directs him to make a payment once a month or once a week, or whatever the period may be, if the debtor subsequently fails to perform what the court has directed him to perform, it is not open to the creditor to hand the instalment order to the superintendent of the Garda and have the fellow-citizen removed to jail. He must bring the man back to the court and there ask the district justice to make a committal order, on the ground that the debtor, being able to perform what the instalment order required him to do, refused to do so. It is open to the debtor, at that stage, to say: "Since the instalment order was made against me, my circumstances have deteriorated and I am not now in a position to perform that which by inquisition I was found to be able to do when this instalment order was made." If the court so finds, the man will not be committed to jail and the instalment order will be suitably amended to meet the new circumstances in which he now stands.
Now, I ask whether anybody in this House wants to preserve to the Revenue Commissioners the right to send a man to jail because he has not got the means wherewith to pay what is due. I believe this power is infrequently used for the purpose of bringing pressure to bear on the relatives and friends of the debtor to provide for the Revenue Commissioners the money they claim. To do that by the operation of blackmail, by incarcerating a father of a family in jail, is really, to my mind, an uncivilised procedure.
I want this clearly understood, as I have said it frequently in this House before. We are not in this House to point the finger of scorn at the Board of the Revenue for discharging the duty that we put upon them. If we give them powers to be used in certain circumstances and if they use them when those circumstances occur, the fault is not with them but with us. That is why I am asking the House to delete that part of the form set out in the Third Schedule of the Act of 1946, which says:
"And in the event of the goods or chattels of the said John Doe not being sufficient to satisfy the said debt and costs or in the event of the said John Doe having no goods or chattels which can be taken in execution to satisfy the said debt and costs as aforesaid, you, the sheriff, under-sheriff or county registrar to whom this order is handed for execution, are hereby commanded to give a certificate to that effect in one of the forms endorsed hereon and to transmit this order with such certificate signed by you endorsed hereon to the superintendent or other proper officer of the Garda Síochána who shall act for the area or district within which you may levy execution. And you the Commissioner and officers of the Garda Síochána are hereby commanded upon the receipt of this order by such superintendent or other proper officer with the certificate endorsed hereon signed by the said sheriff, under-sheriff or county registrar, to take and convey the said John Doe to the nearest prison and there deliver him to the governor of such prison there to remain and be kept by such governor until satisfaction be made of such debt and costs, or until the expiration of the period of six months, whichever shall be the shorter."
I ask the House to delete those words and leave the Revenue Commissioners vis-a-vis any citizen of this State in the same position as that in which a creditor would stand, with the right to bring him before the District Court and get an instalment order against him; if it is believed that he has means, to prove the existence of those means and to get an appropriate assessment made, for a regular reasonable instalment to discharge the liability; and with the further right to the Revenue Commissioners, if the debtor fails to conform with that requirement, to bring him further before that District Court for such committal order as the district justice may think appropriate in the light of the action of the debtor on foot of the instalment order made.
I cannot withhold from the House this information, that I know of a case in which this power was used before. The circumstances were those of a dentist. Prior to the establishment of this State, it was popularly proposed to our people that it was a praiseworthy thing to withhold payment of taxes to the British Crown. A great many people followed that advice, some from the loftiest motives, some from motives more easily understandable by the mundane mind.
Sometimes from a combination of both.
Yes, sometimes from a combination of both. But there then came the establishment of the State, the establishment of our own Board of Revenue and our own Revenue Commissioners, and the injunction of this House to go and collect the income-tax due to the State. This procedure was invoked and the sheriff attended on a man who had been adjudged by a court of competent jurisdiction to be in default in income-tax. The trouble was that, as a result of his patriotic refusal to pay income-tax, he had lived somewhat above the true income which he ought to enjoy. There was no money left, but he was a dentist and had his skill. In the course of collecting the goods and property, they took his dentist's chair, they took his instruments and sold them by public auction.
He found himself at the end of the proceedings bereft of the means to prosecute his profession. In those circumstances, they returned to the charge. They got the writ further endorsed and they lodged him in Mountjoy Jail. In those days, there was abroad in this country a passionate love of freedom and for once, the Executive of this State was invoked and there was then a Minister who said to the Revenue Commissioners: "Let us not delay in an examination of the law. Let this man out," and he was let out. Since that time, this matter, as far as he is concerned, has remained in abeyance.
I think the necessity to have recourse to executive action of this kind is deplorable. I do not think it should be possible under our law for an injustice of that kind, which necessitated recourse to the executive act of sovereign government, to arise. I do not want to enjoy my freedom from imprisonment at the will of the Executive. I claim for every citizen of this State the right, before any governor of any prison in this country can take his person into custody, to appear before an independent judiciary and to make the case that I have done, knowing that he has not done anything which the law prohibited or omitted to do anything which the law required him to do.
Under the law as it stands to-day, there is a man in jail in this country who is guilty of no offence other than that his goods and chattels were not sufficient to satisfy the debt and the costs. I do not see how any of us can sleep easy at night in the knowledge that there is a man in that condition in this country at the present time. Let it be said at once lest the Minister should misunderstand my solicitude or see in what I have said any implication reflecting on his integrity, that the person in question is, to the best of my knowledge and belief, an active supporter of the Government to which the Minister belongs. I think that is a matter of indifference.
What to me is horrible is that, under our law, a father of a family is in jail because his goods and chattels were not sufficient to meet the claims of the Revenue Commissioners, that that could happen to him and that he was afforded no opportunity of going before any independent judicial person to make the case that it was no fault of his, or that he was prepared to discharge the debt on any terms that an independent court thought fair and equitable. He was taken from his house without reference to any court of law, incarcerated in jail the governor of which, without any warrant from any independent judge, now holds him in accordance with our law under a dispensation—which I think exists in no other civilised country in the world except here and in Great Britain—that in the case of debts to the Crown or State the debtor can be held in prison until he pays them or for six months.
There is the additional horrible aspect to the situation that it is quite possible that, when he goes to jail and abides there for six months, on the day he leaves it exactly the same thing will begin all over again in respect of another claim. In this case there is outstanding another claim twice as big as the one on foot of which he is already in jail. Surely nobody in Dáil Eireann wants that to go on being the law in Ireland. If they do not, there is an easy may to amend it—to insert this amendment in the Finance Bill. If that is done this Finance Bill, bad as it is in many respects, will have the distinction of becoming a new charter of freedom for a very oppressed section of our people—the debtors who have no goods.
There is one aspect of the amendment which I should like to put to the Minister. A person can become a debtor for income-tax and get into the situation which Deputy Dillon has described inadvertently. I have in mind a situation such as this—that because of the complexity of the Income Tax Acts the assessments are very frequently made at a stage much later than the income accrued. In this way, it is quite possible for a man to believe that the income he was receiving was capital income and not taxable. He could dispose of that income entirely on the basis that it was his own and that he could do with it what he wished and that no income-tax was payable in regard to it.
At a later stage the income would be assessed and he would become a debtor and the procedure described by Deputy Dillon would come into operation. That would lend weight to Deputy Dillon's argument. In that case it is much more unfair to the person involved than if he were an ordinary debtor. The ordinary debtor must be fairly conscious of the fact that he is incurring a debt and his case would be far worse than that of the income-tax debtor. I mention that aspect of the matter in support of the amendment.
I did not ever think when I was taking on this job as Minister for Finance, that I could be, indirectly at least, guilty of the great criminal actions that Deputy Dillon and others have outlined against the Revenue Commissioners and the collectors of taxes generally. Deputy Dillon made a very moving speech here. I was looking at some of the older members of the Fine Gael Party as I thought tears would come to their eyes, but, to give them their due, they had not that much hypocrisy in them. I do not know enough about this.
You began very offensively if you did not know enough about it. You knew enough to be offensive.
I do not know enough about Deputy Dillon's heartrending appeal. There were so many big questions in the Finance Bill to be gone into in detail that it was impossible to deal in detail with every amendment put in. This amendment which Deputy Dillon put in was entirely apart from all the other amendments to the Bill and I had not time to go into all the merits and demerits of the case made by Deputy Dillon. Therefore I am not going to accept it as put by him. I suppose he has been often wrong and was sometimes right.
It does not matter if he was right.
It does matter very much if he was right.
If I am right, will the Minister accept the amendment?
Not necessarily. First of all, we have to make a distinction between the ordinary debtor and a person who owes money to the Revenue Commissioners. For one thing, if a man is dealing with a shop, the shop can say: "We will give you no more goods," and the shop suffers no more loss. In the same way, the E.S.B. can cut off his current and they will suffer no more loss either, but the State goes on and on and its loss accumulates. The State has no means of stopping that because if the income-tax is not paid every half-year or every year, it gets no return. For that reason, the State is in a different position from that of an ordinary trader. The ordinary trader does not continue to supply goods, but the State goes on supplying its services generally. It must supply these services and, therefore, it is in a different position.
As I said at the beginning, I do not know whether the present procedure is unjust or unjustifiable, whether it should be changed or abolished. I do know this, however, that there is one thing Deputy Dillon said that is not altogether correct. I think he said a man could be imprisoned without any recourse to the courts at all. Of course that is wrong. The person is taken before the court for the purpose of getting a distraint on his goods and, at the time the court gives that decision, they give a decision that if distraint is not successful, then imprisonment may follow. That is the law and I am not saying whether the law is right or wrong. That is the law as it stands, and Deputy Dillon is wrong in saying there is no recourse to the courts in the case of imprisonment for a defaulting income-tax payer.
Why?
Because the Revenue Commissioners use their discretion about the man to light on. They take only the man they know has the money and will not pay it, and in practically all cases where they have adopted that procedure, the person involved does pay. That shows that, if that penalty was not there, a man would get away without paying. I am just stating facts; I am not giving opinions at the moment. One particular case was stated to me in all detail. It concerned a man who had a very big income in this country from foreign securities. He had as big an income as probably the sum total of all the incomes of all Deputies put together, and I am including some very wealthy men on the other side in that. He had this very big income, but he paid no income-tax. He had no goods and he lived in a rented house. Nothing could be done about it and it was only the threat of imprisonment that availed at all in that case. There was no other recourse open to the Revenue Commissioners in that case.
There may be at least the appearance of injustice in the case quoted by Deputy Dillon, but, even if there is, even if this were established and, on examining the case, I came to the conclusion that Deputy Dillon was right, it does not mean this amendment could be accepted. There are cases so far as I can judge at the moment in which it might be necessary to retain the powers of imprisonment, where it is obvious that the men have money but will not pay. It is very obvious that if a man, living a very luxurious life, were to come in to the Revenue Commissioners and say: "Please certify as he requests and so he gets his double income-tax arrangement carried out with the British. In such a case, the Revenue Commissioners know what his income is and what his tax should be, and still they cannot collect it. I think Deputies will see there is a difficulty there and that a sweeping amendment such as this could not be accepted without having at least an alternative. The question will have to get very much more consideration.
I want to make this point. Sometimes the Minister wants to make little of this House. For myself, I am nothing but I represent a constituency and I have been a Minister of this State. If I put down an amendment, which is obviously a considered amendment, three weeks ago, and have gone to very great trouble to get it set down at the earliest possible moment so that the Minister's advisers would have time to consider it, then I am entitled, both in the capacity as representative of a constituency and as an ex-Minister of this State, to expect from the Minister for Finance a greater courtesy than a public declaration that, in his preoccupation with the Finance Bill, he had not time to consider every little amendment put on the Order Paper. I think that is extremely uncivil and I think it is bad for the House. It makes little of Parliament and it is an insult to every Deputy, never mind to those of us who have been privileged to participate in Government. I do not believe the Minister himself was ever exposed to an affront of that kind by his predecessor, and I think it is an affront which does not become the Minister or any member of an Irish Government.
I am not asking that the Revenue Commissioners should be deprived of the means of collecting income-tax from wealthy men who come in asking for assessment to be made. I am asking only that the Revenue Commissioners be constrained to do what any other creditor has to do, that is, to apply to a court of law for an instalment order against such a man. I am asking that they bring him before a court of law and tell the court that a judgment has been given for £1,000 against him.
I am asking them to tell the court that they feel he has an income wherewith he can pay that sum that is due, and that they ask the District Court to make an instalment order prescribing the days and dates upon which he shall meet this obligation, whether it be in one sum or in a series of instalments, and, having got that order from the court, if the debtor fails to perform it, they shall come back before the court and say: "This man has failed to perform what you considered he was fit and able to do. Let him now tell the court why he has not done it and accept the penalty of his refusal to perform that which the court is satisfied he is well able to do."
It is truly ridiculous to suggest that the Revenue Commissioners have no recourse for the recovery of taxes against a defaulting taxpayer except the power enshrined in Section 46 of the Finance Act of 1946 and the section of the 1888 Act to which I have referred. Of course, the Revenue Commissioners have abundant means of collecting what is due. The Minister says himself that he has not had time in the last three weeks to bother his head about an amendment of this kind or even to inquire from his advisers what its meaning or significance is and that though he knows there is a man in jail at this moment under the provisions of this Act, he would not bother his head to inquire into the rights and wrongs of the Act under which a man is at this moment in jail.
I think that is carrying irresponsibility to lengths which I certainly have never heard paralleled in this House before and I am amazed that the Minister or any of his colleagues, on being fixed with notice that there was a man in jail, could bring himself to come into this House and say: "I could not bother inquiring into why or wherefore he is in jail or whether the provision of the law under which he is in jail was deserving of amendment or not." That is offensive and outrageous, not only to a man who, in my judgment, is the victim of cruel injustice, but offensive and outrageous to every Deputy in this House. If the Minister has not read the amendment, other Deputies have read it and they are at least entitled to hear from the Minister responsible for Finance in this country his answer to the case I have made. He has made no answer so far.
Is he prepared to say now that if the facts are as I stated he will take some measure to implement this intention on the Report Stage of the Bill? Is he prepared to say that the man at present in jail will be let out or are we in this House to shrug our shoulders and say: "Let him stay in jail; he is no concern of ours"? He is in jail. He has no means open to him of having his constitutional right to freedom vindicated. Does Dáil Eireann say to-day they just do not give a damn? I am happy to think that 30 years ago they did not say that but I do not despair that they will not say it now.
The Minister has raised the point that this amendment goes too wide and that it would operate to wipe out powers and leave nothing behind. The Minister has been apprised of a particular case. He has intimated that he has not examined the details of the case. In view of the presentation of the case that has been made by Deputy Dillon, does the Minister undertake within the next 24 hours to examine the details of that case and to establish to his own satisfaction the case that the Revenue Commissioners have that this man is able to pay but is not paying? At any rate, will he look into the details with a view to seeing that immediate relief is given to the person in this case if that relief is warranted and do that as an interim measure to having this matter discussed further on Report Stage? It would take the edge off the type of discussion that has gone on here if the Minister would give an undertaking of that kind.
If I thought that Deputy Dillon or Deputy Mulcahy had a quarter of the sympathy for that man that I have, I might do something about it.
Either the thing is just or it is unjust.
That is all right—justice and so on. Why not, as we agreed to-day, deal with this objectively and not try to score political points?
I am not moving this on behalf of any individual. I am merely pointing out to the House that this power is in use to-day. I have no authority to speak on behalf of any individual. I am not personally concerned on behalf of any individual but I conceive that to come before the House and to argue in vacuo for an amendment of the 1946 Act, if I were not in a position to say the power is being used, would be very materially to weaken the case. I do not base the case I made on one case.
The Deputy spoke about it enough anyway.
The Minister is trying to be rude and provocative. I do not propose to accept that challenge at this time. I am making a case on the merits. Is it right that people in this country should be imprisoned for debt without any right in them to have access to an independent judiciary to make the case, "I have no means to pay the debt"? I believe that to be wrong. I believe it to be unconstitutional. I believe that the constitutionality of this cannot be tested because the victims of this injustice have not the means to set the law in motion and that this injustice goes on indefinitely, simply because the victims, by their very circumstance, cannot get access to a court of law.
I would be content if the Minister would say that on the constitutional issue he would initiate to the President the appropriate procedure for having the constitutionality of this proviso tested in the Supreme Court, which it is within the power of the President to do at the instance of the Council of State.
Surely this House is entitled, unless we have sunk to a very low level, to hear a better discussion on an amendment of this character than to hear the Minister for Finance saying: "In the last three weeks I had not time to inquire what the meaning of this amendment was." That is a depth of degradation to which I never thought the Legislature of this country would be brought and I do not believe it true that the Minister for Finance received no advice from the advisers who surround him in respect of this amendment. I know it is not, because my own experience teaches me that, no matter what the nature of any amendment submitted, it was never brought to my desk when I was Minister for Agriculture without an appropriate memorandum from the relevant section of the Department setting out the significance of the amendment and the departmental view upon it for acceptance or rejection by me as Minister preparatory to the debate.
It is an abomination that a Minister for Finance should come into the House in that attitude and state that which I cannot accept as being a true representation of the fact. It is offensive; it is degrading to the House and, what to me is worse, it is a repudiation of his responsibility to see justice done to humble people who have no other means of getting justice than the power of this House to protect them from the arbitrary action of the Executive acting through a board on which duties have been placed which, in my judgment, should never have been thrust upon them.
The Deputy tries to misrepresent me. I said I had not time to go into this thing fully but I did say in the end that I had time enough to go into it to the extent of knowing that I could not accept the amendment and surely that is fair enough. If I had any doubt about the amendment I could have gone into it more and more, but I had no doubt having gone into it, not fully, but to some extent. Of course, the officials gave me notes on it. I read them, but I came to the conclusion without going into them fully that I could not accept the amendment.
I gave a case. Why can the Minister not argue the case at least?
I gave the reasons why.
I gave the Minister this case: the Revenue Commissioners have power to recover any sum due to them by the ordinary procedure available to any other creditor in the State. They can get an instalment order against a person who defaults and subsequently a committal order if the person stubbornly refuses to pay what is due while he has the means to do it. Is that not available to the Minister? Is that not sufficient? Why should the Revenue Commissioners, as distinct from every other creditor in the country, have the power to put their debtor in jail?
We were all taught as children in the elementary study of the Scripture, through the story recited in parable, that the cruellest injustice was when a creditor delivered his debtor no the torturer until the debt was paid. The modern parallel of that is to take the father of a family and put him in jail, there to remain until his debt is paid. I think it is torture to the average law-abiding citizen of this State who has met with adversity to find himself deposited in jail, eating prison fare, living with the stigma of the prison upon him and knowing that his children are obliged to avow before their contemporaries that their father is in jail in the knowledge that the average citizen does not distinguish very acutely between the various circumstances which may bring a man to jail.
Is that a matter to be laughed off as being irrelevant? To me it is a horror. It is a continuing horror and it is in our power now to put it right as of this very day but we shrug our shoulders and pass by simply saying: "It does not matter. We have not had time to examine it." It is not true for the Minister to say that this amendment in its present form would deprive the Revenue Commissioners of the power to collect the revenue due. They would have all the power that any creditor in this State has to collect his debt. What more do they want? Surely there is an obligation on the Minister to tell the House, why, if that remedy is sufficient for any citizen of the State, it is not sufficient for the Revenue Commissioners, or is he too proud to stoop to give that kind of explanation?
Amendment put.
The Committee divided: Tá, 40; Níl, 57.
Tá
- Barrett, Stephen D.
- Belton, Jack.
- Blowick, Joseph.
- Browne, Noel C.
- Burke, James.
- Carew, John.
- Coburn, George.
- Coogan, Fintan.
- Corish, Brendan.
- Cosgrave, Liam.
- Costello, Declan D.
- Costello, John A.
- Desmond, Daniel.
- Dillon, James M.
- Esmonde, Anthony C.
- Everett, James.
- Fagan, Charles.
- Giles, Patrick.
- Hogan, Bridget.
- Jones, Denis F.
- Kenny, Henry.
- Kyne, Thomas A.
- Larkin, Denis.
- Lindsay, Patrick.
- Lynch, Thaddeus.
- McAuliffe, Patrick.
- MacEoin, Seán.
- McGilligan, Patrick.
- McMenamin, Daniel.
- McQuillan, John.
- Manley, Timothy.
- Mulcahy, Richard.
- Murphy, William.
- O'Donnell, Patrick.
- O'Higgins, Michael J.
- O'Reilly, Patrick.
- Palmer, Patrick W.
- Reynolds, Mary.
- Sheldon, William A.W.
- Tierney, Patrick.
Níl
- Allen, Denis.
- Bartley, Gerald.
- Blaney, Neal T.
- Boland, Gerald.
- Boland, Kevin.
- Booth, Lionel.
- Brady, Philip A.
- Brennan, Paudge.
- Breslin, Cormac.
- Briscoe, Robert.
- Browne, Seán.
- Burke, Patrick.
- Calleary, Phelim A.
- Carty, Michael.
- Childers, Erskine.
- Clohessy, Patrick.
- Collins, James J.
- Crowley, Honor M.
- Cummins, Patrick J.
- Cunningham, Liam.
- Davern, Mick.
- de Valera, Eamon.
- de Valera, Vivion.
- Doherty, Seán.
- Mooney, Patrick.
- O'Malley, Donogh.
- Ormonde, John.
- O'Toole, James.
- Ryan, James.
- Donegan, Batt.
- Egan, Kieran P.
- Fanning, John.
- Flynn, Stephen.
- Gilbride, Eugene.
- Gogan, Richard P.
- Griffin, James.
- Haughey, Charles.
- Healy, Augustine A.
- Hillery, Patrick J.
- Hilliard, Michael.
- Humphreys, Francis.
- Kenneally, William.
- Kennedy, Michael J.
- Killilea, Mark.
- Kitt, Michael F.
- Lemass, Seán.
- Loughman, Frank.
- Lynch, Celia.
- MacEntee, Seán.
- Medlar, Martin.
- Millar, Anthony.
- Moher, John W.
- Moloney, Daniel J.
- Ryan, Mary B.
- Sheridan, Michael.
- Smith, Patrick.
- Traynor, Oscar.
Tellers:—Tá: Deputies Palmer and T. Lynch; Níl: Deputies Mrs. Lynch and Loughman.
Section 50 agreed to.
Amendment negatived.
SECTION 51.
Question proposed: "That Section 51 stand part of the Bill."
Perhaps the Minister would tell us what this section purports to do.
Sub-paragraph (a) extends the period to ten years. Sub-paragraph (b) gives the year 1961 as a possible first year. Sub-paragraph (c) extends the period for corporation profits tax by five years. Sub-paragraph (d) includes two new categories—fish and mushrooms. I intend to add another category—publishing. There appears to be a prospect of a fairly big business for publishing here. I shall raise the matter on the Report Stage.
Sub-section (3) makes 1969-70 the last year. Sub-section (4) means that the new categories of mushrooms and fish may go back a year or two, if they wish, in order that they may get the concession backwards for two years.
Is it the Minister's intention to extend that to publishing, too?
I think so, although I do not think it is needed there, so far as I know. However, we shall inquire about that.
Under sub-section (5) the company concerned must pay on the relief it gets on the dividends, if these are paid to another company. That company in turn must pass them on.
Sub-section (6) is quite obscure. It seems to relate to another matter altogether. It deals with Section 4 of the Finance Act, 1937.
It means the losses can be carried forward.
Under Section 4 of the Act of 1937, if a loss is displaced by the allowance for wear and tear, in the six years following the year in which the loss was sustained, the displaced loss should be carried forward. This gives the same concession with regard to building allowances. That is, if there is an accumulated loss which takes six years to clear, the fact that the loss on building allowances was taken into account will not vitiate that. It can be carried forward for the six years.
I do not want to appear obscurantist to the Minister, but he has not made it clear. It appears, as far as I can see, to bring the main deduction in respect of building into line with some deductions that heretofore had been allowed with regard to wear and tear on machinery and plant.
It brings it into the same category, with regard to allowances and covering losses.
Question put and agreed to.
SECTION 52.
Question proposed: "That Section 52 stand part of the Bill."
Perhaps the Minister will give us a brief explanation of this.
As I mentioned before, this matter has been under consideration for some time. The banks have asked for some sort of arrangement by which they could pay cheques without having them brought in to be stamped and embossed, as they have to be at the moment. There was a good deal of trouble in that and the Revenue Commissioners, having satisfied themselves that there would be no loss or evasion, have agreed to do it in this way. The banks will no longer be asked, when this section comes into operation, to have this embossed stamp. There will be some note on the cheques that the stamp duty has been paid to the Revenue Commissioners and they will pay it every quarter, or at the end of whatever period is decided upon.
And no question of liability can arise for the unfortunate drawer of a cheque?
No.
I should like to be clear on this. I am obliged to stamp certain instruments to which I am a party. Is that not so? It is the duty of the recipient of a payment to stamp the receipt, but I commit an offence if I accept a receipt which is not appropriately stamped. Is that not so?
Yes.
I want to know this: supposing it is the duty of a bank to pay poundage on cheques or, say, the poundage is paid, and if there is issued to me a book of cheques by any bank, in respect of which the appropriate payment has not been made, or if the bank gets into trouble with the Revenue Commissioners, on foot of payment, can I be made a party liable for that? I was a participant in the unlawful use of a cheque upon which the duty has not been paid.
I do not think the Deputy is right. There is no obligation on the recipient of a receipt to insist that the stamp duty is paid. The person who issues a receipt must stamp it and he is liable.
Is this not under the Bills of Exchange Act? It is not a receipt.
I am merely giving a parallel case. If you accept a document without the appropriate stamp, you commit an offence. If it is the duty of the bank to see that the cheque is stamped, and they have arrived at an agreement for short-circuiting the procedure, that is all right. There is not a residual liability for those who draw cheques for any default on the part of the bank in performing their duty in paying the appropriate amount.
The Deputy may be quite satisfied that there is no danger from that point of view.
I want to ask the Minister what is the definition of a banker. Who exactly will be involved?
Does the Deputy want a definition?
As far as I can see, there is no definition in the section. There are all sorts of people who call themselves bankers. Hire-purchase people call themselves industrial bankers, and so on. Are these the commercial banks?
There is a definition in the Banking Act and the same definition would apply.
Is that stated here?
No, but that is the definition that would apply.
Should it not be said here somewhere?
I take it that an agreement would not be made with a person, unless he was a banker.
Could the Minister say how these receipts will now be accounted for? Will they be accounted for as stamps or cash?
They will be accounted for under the heading of stamps.
Question put and agreed to.
SECTION 53.
Question proposed: "That Section 53 stand part of the Bill."
What class of payments are these?
There are a small number of cases that come under the Land Commission and the Church Temporalities Fund where this stamp receipt is necessary, but in most other cases it is not necessary. Last year, I believe, it amounted to £15 altogether.
Question put and agreed to.
SECTION 54.
Question proposed: "That Section 54 stand part of the Bill."
Will this section have the peculiar result that any receipt issued by the Department of Agriculture will have to bear stamp duty, whereas receipts issued by any other Department of State will not? Part of the revenue of the Department of Agriculture derives from the Church Temporalities Fund. It says here:—
"Stamp duty shall not be chargeable on any instrument (including an instrument executed but not stamped before the passing of this Act) where the amount of such duty chargeable thereon, but for this section, would be payable solely out of moneys provided by the Oireachtas."
As the Minister knows, the revenue of the Department of Agriculture consists of moneys provided by this House, plus an annual grant from the Church Temporalities Fund, I think. Does that mean that every receipt issued by the Department will have to bear stamp duty?
No.
Why?
This applies to some cases, instruments relating to the Land Commission, forestry lettings, diplomatic immunity and so on.
I understand that, but does the word "solely" not exclude a Department of State, part of whose revenue comes from a source other than the moneys provided by the Oireachtas? Has this matter been overlooked?
No. The question the Deputy is raising is that the Department of Agriculture has a certain income under the Church Temporalities Fund. It is provided that the Exchequer will make good. In some other Act, we have gone part of the way. In any case, the Exchequer will make it good.
The section is really designed to spare trouble and to avoid people having to stamp receipts unnecessarily. It would appear that the myriad receipts issued by the Department of Agriculture, which I suppose at present carry a stamp, are not to be stamped. It is sought to put an end to the need for stamping such receipts; but if the words "where the amount of such duty chargeable thereon...would be payable solely" mean what I think they mean, does it mean that if a Department's revenue comes partly from moneys provided by the Oireachtas and partly from moneys provided under statute from another source, the strict interpretation of this section would not exonerate such Department from the obligation to stamp its receipts?
I have the Deputy's point now. I thought he was referring to the income. These receipts are stamped on credit by the Revenue Commissioners and, later on in the year, the Department of Finance has to make good out of the Contingency Fund to the Revenue Commissioners. It is a very involved procedure. The whole amount of money involved is not very much. I do not know how it would apply in this case.
In any case, will the Minister look into it?
Surely the point in answer to Deputy Dillon is that unless an Act, such as the Church Temporalities Act, provided that some of the money going from that to the Department of Agriculture was subject to stamp duty, only then would Deputy Dillon's point arise. It is not the amount for which the receipt is being given that matters. The section says: "Where the amount of such duty chargeable thereon...would be payable solely out of moneys provided by the Oireachtas".
I mean no discourtesy to the Deputy when I say that I do not give a fiddle-de-dee, provided the Minister looks into it between now and Report Stage. I am sure the Deputy agrees with me in that. We are all concerned with the removal of an anomaly, if one exists.
Question put and agreed to.
SECTION 55.
Question proposed: "That Section 55 stand part of the Bill."
What bonds?
This is concerned entirely with customs bonds. Where a visitor with a motor car comes into the country temporarily, there is a bond which has to be signed and there is 5/- duty. It is not considered worth while collecting it. There is a good lot of trouble. The officer has to go to the Castle to get it stamped and so on. The total income is about £1,000 a year. It was considered better to drop it.
Question put and agreed to.
SECTION 56.
Question proposed: "That Section 56 stand part of the Bill."
I take it that there is no departure from the usual annual practice in this section.
No.
Question put and agreed to.
SECTION 57.
Question proposed: "That Section 57 stand part of the Bill."
What is the significance of this section? This is the section in which the Minister is transferring the levies?
That is right.
What is the prospective yield of the levies this year?
This year, they are estimated at £1,750,000.
I think it was Deputy Haughey intervened in the Budget debate to say how highly he praised the Minister for having avoided the necessity of any additional taxation.
The Deputy made that mistake before; I shall not correct him again.
Does the Deputy recollect that?
I remember having to contradict the Deputy on this very point.
The Deputy overlooked the fact that the Minister had the intention of producing Section 57.
The amount received from the levies and, therefore, the level of taxation are the same, but he is doing a different thing with the amount collected. He is using it for current purposes rather than putting it into capital, and, therefore, he is not raising the level of taxation.
There is another little "if" in this business. The Deputy will recollect that an essential element of the levies was that they were a temporary expedient designed to discourage consumption, until such time as the balance of payments should be restored. That purpose was achieved in the calendar year 1957 when, for the first time for 20 years, there was a credit balance of £9,000,000 on the balance of payments. The clear implication was that if that measure of success continued to attend our efforts, these levies would be abolished. They are now part of the revenue of the State. One million, seven hundred and fifty thousand pounds per annum are being used for the recurrent annual charges that will come in course of payment. If we do not get them from this source, they must be sought from some other source.
Now, in the calendar year 1958 it looks as if the balance of payments is going to go wrong again, and we do not know what the prospects are for 1959. Suppose they do go wrong again, what do we propose to do about them? This section withdraws from our disposal the flexible and effective instrument of levies which we used before and which held down consumption, pending the expansion of exports. It is no longer available to our hand because now it is part of the revenue of the State, to be used for the Supply Services and the Central Fund. What can we do to check consumption, if that necessity should come upon us, as it may come if our balance of payments position continues to deteriorate? It cost the Government, of which I was a member, pretty dearly in terms of politics to restore the balance of payments, but we did it. How do our successors propose to do it, if confronted with the same problem? This section in fact operates to increase taxation by £1,750,000.
There is one specific matter on this section which I want to raise. When the appropriate measures were taken to change the levies into permanent taxes a good deal of excitement was created and a good deal of publicity was bespoken by the announcement that one levy would be abolished or would be excluded from the provisions of Section 57, on the ground that the public health demanded it. The Fianna Fáil Party, from which the Government is at present constituted, declared itself as distressed at heart and soul at the cruel imposition of a levy on oranges and that, therefore, when they brought the levies to account as revenue, they proposed to exclude oranges. We were all awaiting for the dramatic fall in the prices of oranges that would follow on that decision.
Has anyone seen any change in the price of oranges? Oranges were 7d. apiece before the levy came off and are 7d., 8d. and 9d. now, and the only difference I can find is that, whereas the Exchequer collected heretofore, those who deal in oranges at the point of import are collecting now. Is that a satisfactory situation? Has the Minister evinced any interest in what is becoming of the yields that used to be forthcoming from the levy on oranges which we had been scrupulous not to impose as a permanent tax?
It seems that if a commodity of that kind is expressly excluded from a section of this character, with a view to making the commodity more readily available to the poorer sections of the community, somebody should interest himself in the fact that, although the revenue no longer inures to the credit of the Exchequer, it is inuring to somebody else's credit. We should find out who the somebody else is and how it is that he is able to collar the lot. Is there a monopoly in the import of oranges, or how is it that the ordinary law of competition in trade does not bring the price of oranges down? Why is it the price of oranges has not come down? Is it the Minister's intention to inquire into that question and find out why the benefit it was intended to confer has in fact never reached those for whom it was intended?
I do not want to delay unnecessarily but I think I should reply to a point which the Deputy raised. I congratulated the Minister at Budget time on not raising the level of taxation and Deputy Dillon cannot adduce Section 57 as a reason for withdrawing that congratulation. Section 57 does one simple thing. It states that after 31st March, 1958, receipts from import levies will not go into the Capital Fund which was there before. That has no bearing whatever on the amount of taxation that is to be raised or the level of taxation, or the amount to be raised under Special Import Levies. It merely means that instead of taking the same amount and putting it into a special capital fund, we will now use it for revenue purposes.
When the special import levies were brought in, their purpose from the economic point of view was twofold. First of all, they acted as a discouragement on imports and consumption generally, but in addition to that, they were a classic deflationary device for taking money from current revenue and putting it into capital account. It is only the latter aspect of them that is changed by Section 57. They are, in fact, current revenue and it is perfectly legitimate to use them for current expenditure, but, because the Minister for Finance at the time decided he would not do that, he pressed the deflationary aspect further and instead of using them for current expenditure, used them for capital. Section 57 changes that back to the normal situation where we have ordinary revenue being used for ordinary current expenditure. Certainly, it has no bearing whatever on the amount of money raised by them or on the level of taxation.
Question put and agreed to.
SECTION 58.
I move amendment No. 73:—
In sub-section (1), to delete paragraph (a).
Perhaps if I say a word here, it may help the Deputy if he is putting in this amendment or amendment No. 74 on the Report Stage. I want to warn the Deputy that the effect of the amendment as put down would be that we could hold securities in the United States and Canada, but we could not hold cash. That would create an impossible position, because, if we have securities in dollars, whether Canadian or American, we will receive dividends and we shall have to deal with those by cashing them for the time being and putting them on deposit somewhere. I think the amendments are impracticable. We must have a certain amount of external assets in reserve because the Post Office Savings Bank is a very big fund, something like £90,000,000. Theoretically, it can all be drawn out at any time and for that reason we must have a fair external reserve. No Deputy will say there is any good reason why it should all be in sterling. There is no reason why part of it should not be in securities in the United States or Canada.
Another point is that the foreign exchange account is being closed. I think that was an emergency measure and that in fact it is closed now since 30th June because the emergency legislation has gone. It was necessary, as we had some dollars there, to transfer them somewhere and we thought the most convenient place was the Post Office. I am just making these points in case the Deputy might propose to reintroduce the amendments on Report.
I propose to withdraw amendment No. 73 and not to move No. 74, reserving such rights as I may have to put them down for the Report Stage.
Amendment, by leave, withdrawn.
Amendment No. 74 not moved.
Section 58 agreed to.
SECTION 59.
Question proposed: "That Section 59 stand part of the Bill".
Would the Minister tell us briefly what is the meaning of Section 59?
There are several Acts which deal with investments into which you could put Post Office and Savings Certificate funds. We have revised, as it were, the Post Office Savings Bank situation and we come along in the next section and say Savings Certificates will have the same list of possible investments.
Question put and agreed to.
SECTION 60.
Question proposed: "That Section 60 stand part of the Bill".
What does this mean?
There is an old-standing arrangement with the Bank of Ireland relating to the management of stocks for certain remuneration which, I think from my recollection, is £300 per £1,000,000 per year. Obviously, managing a £10,000,000 loan is a much simpler thing than managing Prize Bonds and this is to enable me to make a special agreement with the bank in regard to Prize Bonds to provide, naturally, for some higher rate.
How will the House be made aware of what arrangement the Minister comes to with regard to the expenses of Prize Bonds?
I do not know if it will be published anywhere, but if I am asked a question, I shall give the information.
Question put and agreed to.
SECTION 61.
Question proposed: "That Section 61 stand part of the Bill".
What is repealed by Section 61?
The Third Schedule gives the list.
Has the Minister any summary of what is being repealed?
This is to give legal effect to the Third Schedule.
This provides for enactments to be repealed, but does the Minister know what the Finance Act of 1920, 10 & 11 Geo. 5, c. 18, deals with? I do not know, and I do not know what Section 103 of the Income Tax Act, 1918, means.
Section 103 of the Income Tax Act, 1918, deals with a man living with his wife.
That seems to be a very proper arrangement. These queries are not raised tendentiously. If there was a White Paper accompanying this Bill, these queries would not be necessary, but at least we should know what we are doing, if not by means of a White Paper, then by reference to an extract from the Minister's brief.
Does the Deputy want me to go into these?
All I want is a short summary. I have already directed the Minister's attention to one reference which did not seem to be adequate.
Section 25 of the Finance Act, 1920, deals with the right of a husband and wife to claim separate assessments. Section 237 of the Income Tax Act of 1918 defines "incapacitated person" as meaning any infant, married woman, lunatic, idiot or insane person. The words "married woman" are being removed from this, because she will be dealt with in another place now.
What does Section 25 of the Finance Act, 1920, which is being repealed, mean?
The right of a husband and wife to separate assessments.
You gave me that already for the Act of 1918.
No.
This is the right of the husband and wife to claim separate assessments—Section 25 of the Finance Act, 1920?
It has to do with the consequences, as respects the allowance of personal reliefs, of a claim by a husband or wife for separate assessment. These consequences will in the future be governed by Section 9 of the Bill.
Would you tell me what Section 22 of the Finance Act of 1942 provides?
Section 22 of the Finance Act, 1942, confirmed, in order to remove doubt, that moneys of the Post Office Savings Bank might be invested in the stocks, funds and securities prescribed by law for the investment of balances of the Savings Certificate (Interest Charge Equalisation) Fund.
And that is now provided for by one of the sections we have just passed?
Yes.
What do the other two do—No. 35 of 1945 and No. 15 of 1951?
Section 2 of the Finance (Miscellaneous Provisions) Act, 1945, authorised the investment of moneys of the Post Office Savings Bank in local authority securities which are trustee securities. As Section 58 of the present Bill consolidates and extends the powers of investment in relation to moneys of the Post Office Savings Bank, the two sections mentioned above are no longer needed.
That is all right. Lastly, sub-section (4) of Section 4 of the Finance Act, 1951. Does that cover the same matter?
This sub-section refers to the apportionment of the relief known as "age allowance" in a case where a husband or a wife claims separate assessment. This matter is covered, in the present Bill, by Section 9.
Question put and agreed to.
Section 62 agreed to.
SECTION 63.
Amendment No. 75 is consequential on amendment No. 21.
I am not moving amendments Nos. 75 and 76, on the ground that they have already been settled by decisions taken on other amendments.
Amendments Nos. 75 and 76 not moved.
Section 63 agreed to.
First and Second Schedules agreed to.
THIRD SCHEDULE.
I move amendment No. 77:—
Before the Third Schedule to insert a new schedule as follows:—
THIRD SCHEDULE.
Dividends Regarded as Paid out of Profits Accumulated before Given Date.
1. (1) Subject to the provisions of the next following paragraph, a dividend shall be regarded for the purposes of Section 49 of this Act and of this Schedule as paid wholly out of profits accumulated before a given date (hereafter in this Schedule referred to as the relevant date)—
(a) if it is declared for a period falling wholly before the relevant date,
(b) if there are no profits of the company arising in the period beginning with the relevant date and ending with the date on which the dividend is payable, or
(c) if, out of such profits of the company as arose in the said period beginning with the relevant date, no part is, having regard to paragraph (3) of this Schedule, available for payment of the dividend.
(2) Subject as aforesaid, where, out of such profits of the company as arose in the said period beginning with the relevant date, some part is, having regard to paragraph (3) of this Schedule, available for payment of the dividend but the total amount distributed in payment of the net dividend on all the shares of the class in question exceeds the said part of the profits, the dividend shall be regarded for the said purposes as paid out of profits accumulated before the relevant date to an extent which is the same as the proportion which the excess bears to the said total amount.
(3) For the purposes of this Schedule a dividend which is declared for a period falling partly before the relevant date, and partly after, shall be regarded as consisting of two dividends respectively declared for the two parts of the period and of amounts proportionate to those parts.
2. (1) Notwithstanding the provisions of the foregoing paragraph, a dividend shall not be regarded as paid to any extent out of profits accumulated before the relevant date—
(a) if it became payable within one year from that date, and
(b) if in the opinion of the Special Commissioners the annual rate of dividend on the shares in question in the said year—
(i) is not substantially greater than the annual rate of dividend on those shares in the period of three years ending on the relevant date, or
(ii) in a case where the shares in question were acquired in the ordinary course of a business of arranging public issues and placings of shares, represents a yield on the cost to the person receiving the dividend which is not substantially greater than the yield obtainable by investing in comparable shares the prices of which are quoted on stock exchanges in the State.
(2) For the purposes of clause (b) of the foregoing sub-paragraph the Special Commissioners shall have regard to all dividends paid on the shares in the respective periods, to any share-issue made in those periods to holders of the shares and, in a case under sub-clause (i) of the said clause (b) where the shares were not in existence three years before the relevant date, to the dividends paid on, and any share-issue made to holders of, any shares surrendered in exchange for the first-mentioned shares or in right of which the first-mentioned shares were acquired, and shall take such averages and make such adjustments as may appear to them to be required for a fair comparison.
3. (1) The part of the profits of the company arising in the period beginning on the relevant date and ending on the date on which a dividend is payable which is available for payment of the dividend shall be determined as follows.
(2) There shall be deducted from the said profits such amount, whether fixed or proportionate to the amount of the profits, as in the opinion of the Special Commissioners ought justly and reasonably to be treated as set aside for payment of dividends on any other class of shares in the company, having regard to the respective rights attaching to the shares and on the assumption that the total amount available for distribution by way of net dividend on all the shares in the company over any period will be proportionately greater or less than the profits of the company arising in the period beginning on the relevant date and ending on the date on which the dividend mentioned in the foregoing sub-paragraph is payable, according as the first-mentioned period is longer or shorter than the second-mentioned period.
(3) In a case where, in the period beginning on the relevant date and ending on the date on which the dividend is payable, no previous dividend became payable on the shares of the class in question, the whole of the profits of the company arising in the period, less any deduction to be made under the last foregoing sub-paragraph, shall be regarded as available for payment of the dividend.
(4) If any previous dividend became payable in the said period on the same shares, there shall be determined in accordance with the foregoing paragraphs the extent, if any, to which that previous dividend is to be regarded as paid out of profits accumulated before the relevant date, and the profits of the company arising in the said period, less any deduction to be made as aforesaid, shall be regarded as primarily available for payment of the net amount of that previous dividend so far as it is not regarded as paid out of profits accumulated before the relevant date and only such balance, if any, as remains shall be regarded as available for payment of the later dividend.
(5) Where under sub-paragraph (2) of this paragraph it falls to the Special Commissioners to determine what should be set aside for payment of dividends on shares of any class, and dividends on shares of that class have been treated under this Schedule as paid to any extent out of profits accumulated before the relevant date, the Special Commissioners may take that fact into account and reduce the amount to be set aside accordingly.
4. (1) For the purposes of this Schedule, the profits of a company arising in a given period shall be determined as follows.
(2) The said profits shall be the income of the company for the period diminished by—
(a) the income-tax actually borne by the company for any year of assessment in the said period (including any surtax borne by the company under Section 21 of the Finance Act, 1922, and the First Schedule to that Act), and
(b) the corporation profits tax payable by the company for any accounting period in the said period;
Provided that where relief has been afforded to the company under Section 12 of the Finance Act, 1950 (No. 18 of 1950), Section 14 of the Finance Act, 1955 (No. 13 of 1955) or Section 42 of this Act, references in this sub-paragraph to tax actually borne or to tax payable shall be construed as references to the tax which would have been borne or payable if that relief had not been given.
(3) In ascertaining for the purposes of this paragraph the amount of income-tax and corporation profits tax by which the income of the company for the period is to be diminished, any tax on the amount to be deducted under clause (d) of sub-paragraph (3) of paragraph 5 of this Schedule shall be left out of account.
5. (1) For the purposes of this Schedule the income of the company for a given period shall be determined as follows.
(2) There shall be computed the aggregate amount—
(a) of any profits or gains arising in the period from any trade carried on by the company computed in accordance with the provisions applicable to Case I of Schedule D, and
(b) of any income for any year of assessment in the period (computed in accordance with the provisions of the Income Tax Acts) other than profits or gains arising from any such trade.
(3) There shall be deducted from the said aggregate amount the sum of the following amounts, that is to say—
(a) any loss sustained by the company in the period in any such trade (computed in the same manner as profits or gains under the provisions applicable to Case I of Schedule D),
(b) any allowances in respect of any such trade under Rule 6 of the Rules applicable to Cases I and II of Schedule D, sub-section (3) of Section 5 or Section 6 of the Finance Act, 1946 (No. 15 of 1946), Part V of the Finance Act, 1956 (No. 22 of 1956), Part. IV of the Finance (Miscellaneous Provisions) Act, 1956 (No. 47 of 1956), or Part V of the Finance Act, 1957 (No. 20 of 1957), for any year of assessment in the period,
(c) any payments made, by the company in any year of assessment in the period to which Rule 19 or Rule 21 of the General Rules applies, other than payments which are deductible in computing the profits or gains or losses of a trade carried on by it, and
(d) if the company is not engaged in carrying on such a trade as is mentioned in sub-section (1) of Section 49 of this Act and has received in a year of assessment in the period a dividend which, if the company had been engaged in such a trade, would have been required by the said sub-section (1) to be brought into account to any extent as mentioned therein, such amount as would, after deduction of income-tax at the rate authorised to be deducted by Rule 20 of the General Rules, be equal to the amount which would have been so required to be brought into account,
and the balance shall be the income of the company for the period.
6. Any reference in paragraph 4 or 5 of this Schedule to an amount for a year of assessment in the period in question shall be taken as a reference to the full amount for any year of assessment falling wholly within the period and a proportionate part of the amount (on a time basis) for any year of assessment falling partly within that period, and the reference therein to corporation profits tax payable for any accounting period in the said period shall be construed in a corresponding manner.
The new Schedule deals in detail with the dividends payable which would come under the new sections put in, Sections 48, 49 and 50, under this dividends stripping arrangement. This gives a very detailed account of the dividends that would be regarded as paid out of profits accumulated before a given date. Naturally, it will make a difference whether a dividend is paid before acquisition or afterwards.
Is this all part of the procedure for dealing with the dividends?
It is the procedure for dealing with the dividend stripping.
And it is related to the new Section 49 and not to Section 49 in the original Bill.
No.
Amendment agreed to.
Third Schedule agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage ordered for Wednesday, 9th July, 1958.