Dáil Éireann debate -
Thursday, 10 Jul 1958

Vol. 170 No. 3

Finance Bill, 1958—Report Stage (Resumed) and Final Stage.

Mr. Sweetman

I move amendment No. 11:—

In page 15, between lines 35 and 36, to insert a new section as follows:—

If a body corporate furnishes to the inspector of taxes a statement of the cases and the circumstances in which payments of a particular nature are made or things of a particular nature are provided for any of its directors or employees and the inspector of taxes is satisfied that no additional tax would fall to be paid if this Part were to apply in relation to payments made or things provided by the body corporate in accordance with the statement, he shall notify the body corporate accordingly and, where such a notification is given, this Part shall not apply in relation to payments made or things provided by the body corporate in accordance with the statement:

Provided that the inspector of taxes may, if in his opinion there is reason to do so, by notice in writing served on the body corporate, revoke any such notification, either as from the date of the making of the notification or as from such later date as may be specified in the notice, and thereupon all such tax shall become chargeable, and all such returns shall be made by the body corporate and by the directors or employees in question, as would have been chargeable or would have had to have been made in the first instance if the notification had never been given, or, as the case may be, if it had ceased to have effect on the specified date.

Last week, the Minister for Finance, when dealing with this on the Committee Stage, certainly left the House under the impression that in this Part IV, and in the section there dealing with expenses, he had afforded to the taxpayers all the easements that were afforded in Britain. I say that because the Minister paraphrased the view of the British Chancellor. He said the British Chancellor told the House of Commons he was sure that, after two years, there would be no complaint about the manner in which that Part of the Act was being operated in England and that we here, because of that, would be in exactly the same position.

When dealing with this Part of the Act, the Minister for Finance took from the British Act everything that was favourable to the Revenue but left out this section because it was favourable to the taxpayer. I confess that Deputy Haughey mentioned this section on the last occasion but it was not until I sat down and read the debate and was able to check back on the reference he made that I understood the section to which Deputy Haughey was then referring.

Quite honestly, I am not desperately happy that a power of dispensation in this way is the right way of going round the legislation. I would suggest many other ways. At least, however, I think the House should be afforded the opportunity of receiving from the Minister an explanation as to why, when he was giving and presenting the Revenue case, he did not present, as I suggest the Minister is bound to present, both sides of the question.

The Minister may have some very good and excellent reasons. No doubt we shall hear them now, if there are any. However, there is no doubt but that the operation of such a section should be used as a means of easing the trouble, the time and the expense that many of the companies anxious to fulfil their obligations will otherwise have to incur under this part of the Bill.

Apart from anything else, by putting down this amendment, at least it is on the record and must obtrude itself on the members of the Income-Tax Commission who, I have no doubt, notwithstanding the fact that the Minister ignored them, will themselves take into account at a later date, but at an ex post facto date, the amendments that have been incorporated by the Minister in the income-tax code. As is clear from its face, the amendment provides that an inspector of taxes, who is the equivalent here of the surveyor in England, can dispense a company with the collection of certain records where he is satisfied that the company deals with a matter not merely according to the letter but according to the spirit of the Acts. I have some doubt as to whether or not that is a wise provision, but it is one which most certainly should have been considered and ventilated in this House.

No matter what the Minister may say the effect of this part of the Bill will mean that 95 per cent. of the employers, be they companies, bodies corporate, partnerships or individuals, who are assessed for tax under Schedule D will have to keep additional records as between different individual employees in a way that is not going to bring in one extra penny tax to the Exchequer.

In 95 per cent. of the cases, the firms involved are paying all the tax for which they could possibly, under any interpretation, be assessed as being due by them. The Minister makes the case that he wants to get after the other 5 per cent. Here is a way of absolving the 95 per cent. from the onerous responsibility of keeping the additional records, and of saving all the time, trouble and expense that will be involved by so doing.

Dr. Ryan

This idea was debated on the Committee Stage. I argued then and I repeat now that in order to deal with this trouble we are up against, of expenses being charged which should really not be allowed, we must give very wide powers of inspection, etc., to the income-tax authorities. I cannot see what great difference an amendment of this kind would make because if a company makes a return of the kind set out here, and if the inspector is satisfied he will say so; he will say: "That is all right; that is all I need." What great advantage is there in giving that the force of law, particularly as we have provided in the section that he can revoke the consent which he gave to the company if he thinks there is anything wrong? I think this would be better carried out administratively and it is almost certain to be carried out administratively in the way it is set out here. The advantage is that there can be no charge against the inspector and there can be no charge against the company either, that they undertook to give true returns and afterwards it was found they were not true.

For all these reasons I would much prefer to see the Bill left as it is in this respect. The Deputy says we adopted the British Acts and did not put this in. Deputy Dillon accused us of taking sections holus bolus from the British Acts, without regard to the conditions here. This is one case where I believe the conditions are different and I hope I am at least pleasing Deputy Dillon in that——

Mr. Sweetman

If the Minister can explain what the conditions are.

Dr. Ryan

——and that I am trying to adjust it to our conditions.

Mr. Sweetman

In not accepting anything that is favourable to the taxpayer but screwing them for everything without regard.

Amendment negatived.

Dr. Ryan

I move amendment No. 12:—

In page 16, line 9, Section 24, to delete "twenty" and substitute "ten".

There was some discussion on this point which is that certain benefits in kind will be exempted for the purposes of the provisions of this Part. The benefit may be necessary for the man's employment.

An Ceann Comhairle

I take it that we may discuss amendments Nos. 12 and 13 together?

Mr. Sweetman

Yes.

Dr. Ryan

The benefits would cover matters such as the occupation of living accommodation over a shop, or in a factory, where it was the custom for an employee to live and where that custom had been established for over 20 years. It was pointed out that 20 years was a long time and there was an amendment tabled by Deputy Sweetman to make it three years, which I thought was too short. We now propose to alter it to ten years.

Mr. Sweetman

I am afraid the Minister caught me off my guard. He suggested ten years and I was much too soft when I agreed with him. However, I shall keep my word. Ten years is much too long. Regardless of the number of years it is a thing that will be going on and it is a thing that should be fixed as from the passage of this Act. If the custom had been there for ten years at any period then when the custom has grown up for ten years the Minister can be satisfied that it is not brought in purely for tax avoidance. Therefore I suggest that at the time the claim becomes operative it should be considered ten years back, rather than back to 1948, whenever the claim comes up. If for example the claim was made in 1962 then it would go back to 1952, and that at least gives it some fluidity which it should have.

Amendment agreed to.

Mr. Sweetman

I move amendment No. 13:—

In page 16, lines 9 and 10, to delete "twenty years ending with the passing of this Act" and substitute "ten years prior to the income-tax year in question."

Dr. Ryan

With regard to the Deputy's point, that this same position would arise as time goes on, that may be, but I think it would be a dangerous amendment to accept from every point of view. Let us say that a private company has changed shops. They might pick out a very nice residence over one of the shops and put in the son who would qualify in the coming ten years to occupy that house for the rest of his time, even when he became a proprietor or a director. It might lead to an attempted evasion of the intention at least of this particular Part. I would not be prepared at this stage to adopt it. I should like to have some experience of the working of this Part of the Act before we could experiment in this way in the future.

Mr. Sweetman

It does not matter very much because long before the passage of years makes this a practical problem, I shall be over there and I shall produce a very different sort of Act.

Dr. Ryan

Indeed the Deputy will not—I mean he will not make any change.

Amendment, by leave, withdrawn.

Mr. Sweetman

I move amendment No. 14:—

In page 16, to delete lines 16 to 20, inclusive.

The Minister on the Committee Stage said he would look into a point in relation to this proviso. I put down this amendment only to put him in order in giving his views to the House.

Mr. Dillon

May I occupy the interval while the Minister is studying this, to read for Dáil Éireann the words which it is proposed to delete, so that everyone's mind can be crystal clear as to what is being done? They are:

"...but this sub-section shall not apply where the employee is a director of the body corporate in question or of any other body corporate over which that body corporate has control or which has control over that body corporate or which is under the control of a person who also has control over that body corporate."

There are no commas, no semicolons and no full stops. Has anybody in Dáil Éireann the faintest notion as to what this means?

Mr. Haughey

We all know exactly what it means.

Mr. Dillon

I should like to hear Deputy Haughey paraphrasing them, while the Minister is mastering them.

Mr. Haughey

We discussed this question at length on the Committee Stage and I had an amendment down along the same lines as Deputy Sweetman has here now. Our joint purpose was to see that the exception which is provided in sub-section (3) is extended to directors. The rigmarole of words which Deputy Dillon has just read out simply means that it will apply to a director whether he is a director of the body corporate itself or it is under his control.

Mr. Sweetman

Does the Minister recollect saying that he would look into this? I cannot find my reference at the moment.

Dr. Ryan

It was on amendment No. 28 we had the discussion on the Committee Stage. Deputy Haughey had an amendment down very much on the same lines—indeed, exactly as the Deputy has the amendment down now. One of the principles underlying this Part is that directors, or at least proprietary directors and proprietary employees—they being defined as persons having more than 10 per cent. of the shares of the company—should not get benefits which are exceptionally given, let us say, under this section to other employees. No exception can be made as far as they are concerned. Deputies should keep in mind that in the case of employees, it applies only to persons earning more than £1,500. In the case of the proprietary director, it does not matter how much he may be getting, as this particular proviso applies to him also.

Mr. Dillon

Would the Minister excuse me? He says "a proprietary director".

Dr. Ryan

That is a director with more than 10 per cent. of the shares.

Mr. Haughey

That does not apply here.

Dr. Ryan

That does not apply—I am sorry—it applies to any director.

Mr. Dillon

Whether he is proprietary or not.

Dr. Ryan

We argued this over and over again on the Committee Stage, in regard to this point of directors and proprietary employees and so on being excluded from benefits that might be given to other employees. Because of their big influence in the company they could get any perquisites that might be going, such as a nice house or a good car. For that reason, they were excluded.

Amendment, by leave, withdrawn.

Mr. Sweetman

I move amendment No. 15:—

In page 16, between lines 29 and 30, to insert a new sub-section as follows:—

(6) Sub-section (1) of this section shall not apply to expense incurred by a body corporate on or in connection with the provision of medical or hospital benefits which are, if required, available to all the directors and employees of that body corporate.

We had a lot of discussion on the Committee Stage and I put this down to inquire whether the Minister had given it any further consideration. It seems to me that to include medical benefits, when the medical benefits are available for every director and member of the body corporate concerned, is carrying the thing much too far.

Admittedly, there may be a good case to be put otherwise, if only a director was going to get the free medical services. The effect of my amendment is to make clear that it must be included in the scheme that every director and every employee of the company is entitled to take advantage of it. If it is such a scheme for the whole company, then I think it should be treated as a social advancement and not taxed as specific income.

Mr. Dillon

It may be of interest to know that when legislation of this character was introduced in the Federal Parliament in India, I understand this very point was argued and the Indian Federal Government accepted an amendment to their proposals which in fact excluded health schemes of this character from the general prohibition. It seems to me, on the arguments adduced mainly by Deputy Sweetman on the Committee Stage, that there is a strong argument on grounds of social policy for following the example of the Federal Government of India in this regard.

Mr. Sweetman

How did the Deputy discover that?

Mr. Dillon

I met an Indian who told me—a high Indian civil servant.

Dr. Ryan

To quote Deputy Dillon again, we must look to our own conditions here.

Mr. Dillon

Yes.

Dr. Ryan

We had a long discussion on the Committee Stage. Again on the same principle, I did not think it was fair that, even where a medical benefit scheme is at the disposal of employees in a company, the directors or proprietary employees should be entitled to these benefits as untaxable. They are entitled to them, of course, but they will be taxed. If we are to make the income-tax code as equitable as possible between all income-tax payers, we should charge income-tax on the benefit, whatever that benefit may be worth, in the case of these particular groups.

Mr. Sweetman

I know that this is the Report Stage, but I might ask the Minister how this will operate in the case of, say, Bord na Móna? Bord na Móna pays its doctor a lump sum in Newbridge for looking after all the employees. The employees call that doctor in—all sorts of employees, from the top to the bottom. How is it to be decided what proportion of that doctor's annual retention fee is to go into the return?

Dr. Ryan

Of course, naturally, it will not apply to the ordinary first aid or to an examination as to whether a person is fit for duty that day, or a matter of that kind.

Mr. Sweetman

On the section, it must.

Dr. Ryan

On the other hand, if it were abused in the other direction, a director could get free hospital treatment. It would be very unfair to the general taxpayers that the cost of that hospital treatment should be free of income-tax.

Mr. Dillon

If he insures himself in a general health scheme, he is expressly relieved from income-tax on the amount of the premium. Does this not seem that we are legislating in opposite directions?

Dr. Ryan

He does not insure himself here.

Mr. Dillon

Surely he does? Surely part of his remuneration is in the form of a health insurance scheme? We are taking the extraordinary measure that we are notionally attaching that premium to his income for the purpose of taxing him, whereas the man next door is actually paying out a similar sum out of his taxable income. If that is not draft legislation I do not know what is.

Dr. Ryan

There is a very big distinction.

An Ceann Comhairle

We are not going into a Committee Stage I hope.

Mr. Dillon

It would be no harm if we did. It seems to me it is a pity that should be done by Parliament because none of us has examined it before it was brought before us.

An Ceann Comhairle

Is the amendment withdrawn?

Mr. Sweetman

No.

Amendment negatived.

Mr. Sweetman

I move amendment No. 16:—

In page 18, lines 49 and 50, to delete "it carries on a trade or its functions consist wholly or mainly in the holding of investments or other property." and substitute "it is assessable in respect of its activities under Schedule D."

I am not quite clear why this has been limited in the way that it has been limited by the Minister. We had some discussion about it on Committee Stage, and it seems to me that a more accurate measure of the application of this Part would be that the body concerned was assessable under Schedule D. For the life of me, I cannot see why a promotional body operating for gain should be treated in any different way from a trading company. The example the Minister gave on the last occasion was that a State-sponsored company was not being covered by this Part of the Act. It is a bit odd that we are putting through legislation, onerous legislation on individuals, and the one class of person that we except from that onerous legislation are employees and directors of State-sponsored companies. What is fish for one should be fish for the other.

Why should we treat State-sponsored companies in a different category from ordinary private individuals and private public companies? I am not quite clear whether the change to Schedule D assessment would cover State-sponsored bodies as such, but it does seem, whether it covers them or not, to be a more logical basis on which to start than the "trade" which the Minister suggests in the section.

Dr. Ryan

I am rather puzzled with the Deputy's amendment because I do not know exactly what the Deputy is getting at. I do want to say, however, that we are not excluding State-sponsored companies if they are trading companies. The example I gave was Córas Tráchtála, Teoranta, but the E.S.B. is not excluded and neither is Irish Shipping, Limited.

Mr. Sweetman

What about Bord Fáilte?

Dr. Ryan

Bord Fáilte is not a trading company. It would be excluded I believe.

Mr. Sweetman

What is the difference? What is the difference between a promotional company and a trading company?

Dr. Ryan

I could not give the definition straight off, but I have a fair idea. The E.S.B. is evidently a trading company; so is Bord na Móna and so is Irish Shipping. There are only a few exceptions really and Bord Fáilte is one of them.

Mr. Sweetman

Córas Tráchtála is a promotional company. Surely that is a trading company?

Dr. Ryan

It is not a trading company by definition.

Amendment, by leave, withdrawn.

Mr. Sweetman

I move amendment No. 17:—

In page 20, line 47, to delete "ten" and substitute "thirty-three and one-third".

An Ceann Comhairle

Amendment No. 17 and amendment No. 18 can be discussed together.

Mr. Sweetman

They are the same. I suggested 50 per cent. on the Committee Stage, but the Minister said I was opening my mouth too wide. He said he would look into the matter and come back to it on Report Stage. He has not come along with anything so I presume by that that he is going to accept my "thirty-three and one-third".

Dr. Ryan

Having looked into this matter I feel I was foolish to make any suggestion that I should go further than 10 per cent. I think 10 per cent. is very high. If it goes to 15 per cent. and there are four partners, who are relatives, running a company then they can own half the company between them. If it goes to 33? per cent. two people could control a company. Therefore, I think the Deputy's figure is altogether too high. The very most I could do on that—if I did make some promise to the Deputy—would be to accept 15 per cent. Even that, I think, is a bit dangerous.

Mr. Sweetman

The foundations of the State would be shattered.

Dr. Ryan

Not exactly. Would it be in order to substitute 15 per cent. in the Deputy's amendment.

An Ceann Comhairle

If the House is agreeable.

Amendment, as altered, agreed to.

Mr. Sweetman

I move amendment No. 18:—

In page 20, line 52, to delete "ten" and substitute "thirty-three and one-third".

Dr. Ryan

I suggest 15 per cent. instead of 33? per cent.

Amendment, as altered, agreed to.

Amendment No. 19 not moved.

Dr. Ryan

I move amendment No. 20:

In page 23, before "that" in line 37, to insert ", or on appeal to the satisfaction of the Special Commissioners,"; before "as" in line 47 to insert ", or on appeal the Special Commissioners,"; and to delete "they" in line 48 and substitute "the Revenue Commissioners".

Amendment agreed to.

Amendment No. 21 not moved.

An Ceann Comhairle

Amendment No. 22 is out of order.

Dr. Ryan

I move amendment No. 23:—

In page 30, line 7, Section 38, before "Section 32" to insert "subsection (1) of".

This is really a correction amendment.

Mr. Sweetman

That is the one we caught you out on during the Committee Stage.

Dr. Ryan

That is right.

Amendment agreed to.

Dr. Ryan

I move amendment No. 24:—

In page 41, line 14, Section 51, before "a person" to insert ", on or after the 19th day of June, 1958,".

The operating date remains. That means that any company that was acquired by another company before the 6th April, 1957—we are not concerned with that case—are free to do what they like under the law as it stood. Any company that was acquired between the 6th of April, 1957, and the 19th June, 1958, will come up for consideration. Where the dividend of the acquired company was declared before the 19th June, then they are entitled to a refund of income-tax as if this Act were not passed. If any dividend is declared after the 19th June, 1958, the sections which we inserted on Committee Stage will apply. I think that covers the whole thing.

Mr. Sweetman

I want to congratulate the Minister on having abandoned the retrospective provisions in the Bill —the retrospective provisions inserted in the Finance Resolution passed here on the 18th June and which were continued in amendment No. 71 on Committee Stage, amendments and provisions which were likely to make for great uneasiness in commercial transactions.

I am glad that the arguments adduced in the House by my colleagues and myself have persuaded the Minister to drop that retrospective provision. The position now is that anybody who acted within the law and completed the transaction up to the 19th June, is not taxed retrospectively. That is a very welcome and significant advance.

I appreciate that there might be cases where, between the 6th April, 1957, and the 19th June, 1958, people had bought a company legally, as they were entitled to do, with the intention of doing something else about it. One cannot, however, cover intentions of that sort. I think the factual removal of retrospection which has been carried through in this Bill is adequate to preserve the principle. It is a principle that is quite vital to our fiscal legislation.

There may, perhaps, be a trifling matter to arise out of it and that is where, between the 6th April, 1957, and the 19th June, 1958, a person has travelled part of the way towards scrambling the egg and now wishes to unscramble the egg. He cannot be taxed as he would have been taxed before but I think no obstacle should be put in his way to make it harder for him to carry out the unscrambling process. Probably it will not arise at all. I certainly know of no such case. I would only suggest that, if such a case does come to light, it should be made as easy as possible to unscramble.

It is not normal for members of the Opposition voluntarily to make suggestions on matters like this to the Minister for Finance. I want to make it clear that it is the principle of retrospection with which I am concerned and vitally concerned. If, therefore, in the future the Minister should find that there is something that he considers to be a breach of the spirit of this Part of the Act, rather than ever again adopt retrospective legislation let him bring in a special ad hoc Bill to operate as from that date.

In so far as there is need for cooperation in giving such an ad hoc emergency Bill urgent consideration, he will get it from us because it was not with dividend stripping that we were concerned but with the factual principle of retrospection. Every Deputy who spoke on this matter was prepared to accept the Minister's view that the practice of dividend stripping was one that would have to be stopped. What was essential was that it should be stopped in such a way that it would not act as a precedent for future Ministers or for the present Minister for other retrospective legislation. Should an unhealthy practice arise in the future it can always be met in the manner I suggest by ad hoc emergency legislation rather than that any Minister should ever try to tread the path which it was sought to tread on the Committee Stage of this Bill.

Mr. Dillon

Out of evil in this case good has come because I can see that the fruit of our discussion and the decision now taken to eliminate the threat of retrospection in this Finance Bill further consolidates the principle which this House accepts that in respect of fiscal or penal legislation the principle of retrospection will be diligently avoided. Had we allowed this instance of retrospection to pass, I have no doubt it would have constituted a precedent for the repetition of this objectionable kind of legislation in the future. The fact that we have secured agreement on all sides of the House in this respect provides a good precedent for the proposition that Oireachtas Éireann will not hereafter legislate in the fiscal or penal sphere retrospectively.

That, I think, is a very important principle to reinforce which no trouble and no time spent was excessive. Deputy Sweetman said all that requires to be said. I do not believe that any Party in this House was particularly concerned to protect individuals who were engaged in this operation, indelicately described as dividend. stripping—in fact, invoking the law as it stood to avoid the impact of normal income-tax on the profits of businesses which they were in process of acquiring. I do not think that we ought to get into a state of virtuous indignation. Nor do I think there is anything indecent or anything dishonest about what any of these firms may have or may not have done. I agree that the operation would put them in a preferential position and I agree with the Minister that it was a practice which he had an obligation to arrest and stay.

I want to subscribe to what Deputy Sweetman has said, that if the spirit of the purpose enshrined in the Financial Resolution and in this section of the Bill should be violated in the future the Opposition stands ready to assist the Minister in any emergency legislation which may be intended to plug any loopholes which anxiety to avoid retrospection may have left in the Bill.

When we speak of ad hoc legislation there are two meanings in which such legislation can be applied. One is that it can be directed against an individual and the other is that it can be directed against the practice. What we have in mind is that if a practice emerges, which the Minister diagnoses to be a violation of the general principles enshrined in this section, legislation designed to abrogate that practice will be assured expeditious passage in so far as the Opposition can give that facility to the Minister. I do not think that any of us would accept the principle of legislation ad hoc for an individual.

On that understanding I think that we have done a good job. I do not think we should allow the occasion to pass without drawing attention to the fact that those—and there are far too many of them—who are inclined to refer to this Parliament as being an unnecessary part of the institutions of this State, should bear in mind that it is by free discussion and argument in this House that fundamental liberties are maintained. The fundamental liberty here involved that is of great value to the free man is the knowledge that when he complies with the law to the best of his ability and to the best of his knowledge he is safe from prosecution by the Executive. The moment the principle of retrospective legislation in fiscal or penal matters was accepted, no one would ever be safe again.

This is an occasion to rejoice that argument and discussion have carried conviction to the mind of the Executive that the dignity of our laws was of more importance than the passing advantage of wreaking vengeance on some individuals who may have got outside those laws. That benefit would not have been achieved but for the operation of free debate which even some members of this House may have thought was dragged out to an extreme. Those of us who understood what we were talking about and what we were concentrating on wasted no time. I believe we wasted no time in bringing about the happy conclusion which this amendment enshrines to-day.

I like to think that this is another case in which the free functioning of this Dáil has further guaranteed the individual liberty of the most humble citizen of this State and of the most powerful. Our purpose, and the ourpose of these institutions of ours, is to ensure that all men, rich and poor, great and humble, shall be equal before the law.

Amendment agreed to.

Dr. Ryan

I move amendment No. 25:—

In page 41, line 45, Section 51, before "a person" to insert ", on or after the 19th day of June, 1958,".

Amendment agreed to.

Dr. Ryan

I move amendment No. 28:—

In page 43, line 38, Section 52, before "the" to insert "(being a dividend which, on or after the 19th day of June, 1958, he becomes entitled to receive)".

Amendment agreed to.

Amendment No. 27 not moved.

Dr. Ryan

I move amendment No. 28:—

In page 43, to delete lines 56 to 60, and in page 44, to delete lines 1 to 3 and substitute the following:—

(2) This Part of this Act and the Third Schedule thereto shall have and be deemed to have effect as on and from the operative date and, for that purpose, shall be construed, where appropriate, as if this Act had been passed on the operative date.

Amendment agreed to.

Mr. Dillon

I move amendment No. 29:—

In page 46, between lines 10 and 11, 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 "the period of six months" and the substitution therefor of "such period as a court of competent jurisdiction may prescribe".

I do not know what the Minister's attitude to this amendment is but here I seek to vindicate a principle which I believe is acceptable to every member of the House. I am not in the least solititous that the vindication of this principle should be in the form of my amendment. I am no longer fortified by the fact which I was entitled to adduce to the House a week ago. Then there was a man in jail because he had not the wherewithal to pay his income-tax. That man is no longer in jail. He has been released but I want to ensure that hereafter nobody else will go to jail for debt in Ireland.

We have abolished, in this country, imprisonment for debt, but I want to recall to Deputies what imprisonment for debt means. It was for a long time the law in this country and in Great Britain that if a person secured a judgment against you for debt and if he could not recover that debt from your property he could remove you to the debtors prison and detain you there until the debt was paid. One hundred years ago that was a common enough practice and the novels of Charles Dickens described the horror of men who spent the greater part of their lives in jail because they had not the money to pay their debts.

This was what gave rise in this country to what were known as Sunday men. I think there are Deputies who will have heard from their fathers and grandfathers who had personal acquaintance of the Sunday men. They were men against whom warrants for debt were in the hands of the sheriff but these warrants were not executable on the Sabbath and neither were they executable in the man's house. They had to be executed outside the house and if the man kept to the house except on the Sabbath day he was not liable to imprisonment. These men were not able to come into the light of day except on Sunday.

I cannot believe that there is any desire to see that system revived to-day but the great danger is that some of the Deputies of this House are so far removed from reality that they believe it could not happen again. It is dreadful to think that a man may be decreed for income-tax and may be incarcerated without having any opportunity of going to an independent court and explaining his circumstances to the judge. That man may be sitting in his wife's house and be dependent upon her or upon his children for accommodation. He may be sitting in his son's room. The superintendent of the Guards can walk in and arrest him, remove him from his home and bring him to jail and there incarcerate him for six months for no offence other than that he has not money to pay his debt. I conceive that situation arising for quite a number of perfectly respectable and decent citizens.

I cannot imagine that any of us desire that the payment of a debt to the State should be enforced by that procedure. I am bound to press this to its true conclusion. When we read in the Scripture of the man delivering his debtor to the torturers to secure payment of his debt and then seeking mercy for himself, it seems to me the utmost end of obvious retribution that he should be denied the mercy he refused to his debtor. I want to say quite deliberately that, in our modern society, to take a respectable citizen in the presence of his neighbours and to lodge him in a hard labour prison is to torture him for debt. I ask Deputies to consider the position of a man in that circumstance whose children are at school. Suddenly they wake up one morning to read in the paper that their father, on the previous evening, was taken to jail. Young children and adolescents do not clearly distinguish between the stigma of being lodged in a hard labour prison for debt and lodged there for an offence against the law.

In our society, the committal of a person involved the stigma of being a jail bird and normally reasonable citizens do not upbraid one another with that term of derision. However, we have to think of the respectable citizen who sees that his children are thereafter open to that challenge by their playmates or contemporaries as a result of his failure to pay his debt. I think that is torture beyond yea or nay.

I cannot see that anyone would wish to leave in the hands of the Revenue Commissioners or the Executive that right to torture a citizen for the payment of a debt. On the other hand, we have to face the fact that, unless the Revenue Commissioners have power to collect the revenue, the taxpayers being human creatures will not pay. None of us likes to pay taxes. There must be no sentimental folly of going to the length of saying that the Revenue Commissioners must be stripped of the power to collect the taxes. If we did that, the State would collapse and the end result must be anarchy which is worse than any form of tyranny. Therefore, to be practical and sensible, we must envisage what then are the Revenue Commissioners to do if, a taxpayer's liability having been established, he will not pay.

I suggest to the Minister that a perfectly adequate procedure exists, to which many of us demurred when it was first implemented in this country, for the protection of ordinary creditors. I am not sure it did not go too far in the protection of ordinary creditors but it has now been part of our established law for 30 years. With this system there, I suggest to the Minister it is quite adequate for the purpose of the Revenue Commissioners. It is this. After they bring the taxpayer to court, which they now must do to establish his liability—say a sum of £200 is involved—the taxpayer then has the opportunity to pay the £200 and let the matter be closed. If he does not pay the Revenue Commissioners, a writ can be handed to the sheriff who can make a seizure of his goods to that value, if such goods exist, and thus the Revenue Commissioners' debt is satisfied. If that recourse fails, and the writ is returned nulla bona, under the existing law, which I seek to amend, the Revenue Commissioners have the right to get the county registrar to endorse the writ whereupon, without further formality, that endorsed writ can be handed to the superintendent of the Guards who can arrest the debtor and deliver his person with that writ to the governor of a hard labour prison and that endorsed writ is, under our law, a good warrant whereunder to hold that man for six months or until such time as the Revenue Commissioners claim is satisfied.

All I ask under this amendment is that, when the writ is returned nulla bona, the Revenue Commissioners will proceed with the same measures as are available to the ordinary creditor, that is, that they will apply to the District Court for an instalment order against the defaulting taxpayer. The taxpayer can then come before the appropriate judicial authority and open his affairs to that independent authority and say: “I have not the money to pay.” If the Revenue Commissioners have information that he has money but is concealing it they can produce the evidence. If the district justice is satisfied that he has the money but will not pay he can make an order of the court that he shall pay at the rate of £10 or 10/- or 10d. a week, whatever the district justice thinks fair and equitable in view of the defaulting taxpayer's means and the family responsibilities that devolve upon him.

That then becomes an order of the court but it is an order of an independent judicial person who has heard the case made by the Revenue Commissioners and the case made by the debtor and has made an order which, in the light of all the information available to him, he knows to be fair and equitable. Now, if the defaulting taxpayer will not conform to the order of the court, which has been made in the light of his ascertained resources, that man is simply and manifestly defying the law and refusing to conform to a reasonable enforcement of his duty as a citizen. Let the Revenue Commissioners bring him back before the justice and say: "We have established that the man owes the debt and we have established to your satisfaction that he has the means to pay it. We stand ready to receive it on the terms laid down by you. This man simply refuses to comply and says he will not pay his share of the common burden that everybody else pays through taxes to the State."

Let the district justice then have the man brought before him and let the man make his case, as is done at present in the case of an ordinary creditor. Maybe his circumstances have changed. Maybe some family catastrophe has come upon him that has eaten up whatever resources he had when he was last before the court. If he has no case to make other than that he will not pay then let the law operate against him as it would against an ordinary debtor, not on the ground that he is in debt but on the ground almost of contempt of court because, having been directed by the court to do that which was equitable and fair, he simply stuck his heels in the ground and said he would not comply. Under the existing law, any person who sets a court of competent jurisdiction at defiance is susceptible to imprisonment.

There is no way of maintaining order and vindicating the law other than by providing that, where a citizen sets the judiciary at open defiance, the judiciary shall have the right to incarcerate him until he has purged his contempt and declared himself ready to conform with the law. Surely that remedy is adequate to ensure that the Revenue Commissioners will be able to collect the tax.

The fact is I do not believe the Revenue Commissioners use that power of imprisonment for defaulting taxpayers in very many cases. They may argue that it is necessary to have this power in terrorem and it is the fact that they have this power that makes it unnecessary for them to use it. I want to say again that it is the principle of the matter with which I am concerned. No man, no authority, no Government in this country, should have the power to imprison a citizen of this Republic for debt. I readily conceive that the Government, or such bodies to which it properly delegates its functions, must have the ultimate sanctioning of imprisoning a citizen who will not comply with the law.

I would ask the Minister, if he has any difficulties or doubts about my proposal, that he should at least give it a period of trial, and if in that time it transpires that the Revenue Commissioners are unable to collect the revenue for want of this power, then we can consider restoring the power to them. I do not believe that situation will ever arise.

Lastly I want to make this point. It would be inappropriate for anyone here to express expert opinions—other than the Attorney-General and we have none in the House at the moment —on matters of constitutional law but every citizen of this State, no matter how humble, is entitled to express a view as to what his constitutional rights are and I am convinced that under the Constitution this power is ultra vires and that if it were tested in the Supreme Court the Supreme Court would declare that it was ultra vires. It never has been tested in the Supreme Court and one of the reasons why it has not is that whenever anybody proposed to contest it a compromise settlement was effected.

Ordinarily it might be argued that if it were suitable for an adjudication by the Supreme Court, anyone who felt their rights were being abridged could seek that remedy. But in this particular context the people who are likely to suffer under this proviso are, by the very nature of their circumstances, effectively debarred from going to the Supreme Court, because they have no goods and they cannot embark on litigation, vis-a-vis the Revenue Commission, if they have no solicitor and no counsel to represent them. In the mundane conditions in which we live it will not be easy to find a solicitor or competent counsel to accept a brief in protracted legislation, which would be virtually certain to go from the High Court to the Supreme Court, on the understanding that the client had no goods and would be unable to pay their fees.

In these circumstances there is a peculiarly solemn responsibility on the Oireachtas to protect the rights of such people. Therefore, I ask the Minister to do either of two things. I ask him to accept my amendment, or in the alternative, that in the light of representations made to him, he will ask the President to have the matter referred to the Supreme Court for adjudication on whether the existing law, which we must remember we have inherited from the British legislation prior to the establishment of this State, is or is not in conformity with our Constitution. I am sure it is not, but either means of meeting the matter raised by me will be acceptable if the Minister will adopt one of them.

Dr. Ryan

One thing which I want to be clear about is that arrests do arise from an order of the court and that——

Mr. Dillon

Surely that is not correct?

Dr. Ryan

It is.

Mr. Sweetman

I do not think it is correct. Could the Minister explain how they do arise from an order?

Dr. Ryan

The court, when giving the order against a man to pay up, also gives the Revenue Commissioners, in the same order, the power to arrest him if he does not pay.

Mr. Dillon

Is the Minister sure? The decree must be endorsed by the registrar.

Mr. Sweetman

It has to go back to the county registrar.

Mr. Dillon

And is then issued to the superintendent of the Gardaí for the area.

Dr. Ryan

That is the position anyway. I see an order here where a person is ordered to pay up and the Revenue Commissioners have power to imprison him if not. There are two types of cases where this type of power has been used and in one case, anyway, it is difficult to see what could have been done otherwise. One is a case where a man boasts to his friends that he will not pay income-tax. He has made arrangements to show that he has no goods; he owes a lot of money but he does not own his house or his furniture and he boasts that he has provided against paying income-tax, although admittedly he has money. During his boasting he spends a good deal of money on his friends and so on.

The second case is where a person is working in this country and means to retire to another country—very often a foreigner—at a certain time. He provides, in the last four or five years of working here, that he has no property and does not pay income-tax, although he is receiving a fair amount of money by way of salary, and perhaps, getting money from investments abroad. In that case I do not know how you could provide to get after him, except in the manner provided for at the present time. The Deputy said that he did not think the power was used by the Revenue Commissioners very much. It is not. I asked for figures and they gave me figures as far back as they had records. The records go back 15½ years, to the 1st January, 1943.

Mr. Dillon

Why only to that date?

Dr. Ryan

That is as far back as their records go. The figures given to me are for 44 cases. I think when I tell the house what happened in these 44 cases it will be said that the Revenue Commissioners showed great discretion and great judgment in respect of the people whose arrests they authorised. It does not of course detract from Deputy Dillon's argument that they should not have these powers. I am not dealing with that point now. I am saying that at least they used their powers discreetly and wisely. Of the 44 cases, 30 paid before they reached prison; seven paid the day they reached the prison. You have, straightway, 37 out of 44 cases who had the money to hand out, but did not do it until this took place.

Mr. Dillon

Surely that is not quite fair. Very frequently they get their friends to pay.

Dr. Ryan

You do not as a rule get your friends to pay for you on your way to prison.

Mr. Dillon

Indeed you would.

Dr. Ryan

These men did not leave their houses. These men were men who had boasted they would not pay. They had been pressed to pay over and over again, and over a long period, and in fact had not done so. In fact, there were only seven who actually spent a night in prison, and these seven were imprisoned as follows: one for two days; three for three days; one for 26 days, and two for 29 days. Therefore, of the whole number of 44, the amount was paid up and the debt, whatever it may have been, was paid.

Mr. Dillon

That is the best argument for a thumbscrew I ever heard.

Dr. Ryan

Going back to the point made by Deputy Dillon, I must say I cannot see any other way of dealing with the particular case I mentioned here. There have been a number in that category. In fact, I mentioned a type of case of which the Revenue Commissioners had actual experience. It was that of a man who had a big income and who called to the Revenue Commissioners once a year to get them to sign that he was liable for income-tax for such an amount. Even when they had signed that, they never got paid, and that went on until they exercised this power and got the income-tax. In that case, the man intended to go to live in another place. In such a case, if one had to go through the procedure outlined by Deputy Dillon, of going to the court for a committal order against him, that would be a signal to the man to go to-day rather than to-morrow. Under the particular powers which the Revenue Commissioners have at present, they were able to approach this man in this way. He was about to retire to another country to spend the remainder of his life there and to spend his money. They were able to tell him that, before going, he would have to spend six months in Mountjoy—and, rather than do that, he paid the income-tax. There was no other way of doing it, as far as I can see.

I would be quite prepared to examine this on Deputy Dillon's amendment, if it were possible to deal with it on the lines suggested by him. However, in that particular instance, I cannot see that it would be wise to take the powers from the Revenue Commissioners. I want Deputies to keep in mind that it does arise out of a court order. That is the point. The power they exercise arises out of a court order. The court order gives them power first to collect, to distrain on the goods and so on and, if that fails, to arrest.

Mr. Dillon

I assure the Minister that that is not so.

Mr. Sweetman

Is it not the fact that the court makes the order, that the Revenue Commissioners are to collect the amount? That is, the court is not asked anything at all in connection with the imprisonment. The section of the Act is such that it follows from the order to collect, without any discretion being vested in the court at all in relation to the imprisonment, or without the court being in any way brought in. What happens is that the collector of taxes goes into the court and asks for an order. He proves that there is £27 10s. 2d. tax due. Having proved that it is due, the judge then says: "Decree." When the judge gives his decree, because it is a revenue decree the addendum of collection by levare facias is included in the order automatically and must be included. When the court order goes to the sheriff and the sheriff is not able to collect and returns nulla bona, the position is that that nulla bona return on the court order is sent to the solicitor for the collector.

When the solicitor for the collector gets it, he has the option either of accepting the position that there are no goods or returning it to the county registrar to endorse; and then it is automatically endorsed for imprisonment, without a court order. The court order has been made for payment but the other consequence, the imprisonment, follows without any discretion by the judge and without the possible alternative of imprisonment even being mentioned to the judge when the order is being made. The Minister can take it from me that that is the manner in which it operates.

As this is the Report Stage and I can speak only once, I might add that there was a case of such imprisonment recently in Kildare. It has been suggested malevolently and maliciously by a particular person that I interested myself and intervened for the purpose of getting people into trouble in relation to that case. The Minister is aware that I never approached him; the Revenue Commissioners are aware that I never approached them. I never raised hand, act or finger in relation to that case. I was not approached by the person concerned and will not deal with matters unless I am approached. Unfortunately, a person in Naas has chosen to make trouble deliberately, so I am glad to have this opportunity to state categorically that there was no such justification for it. In that case there was no court order except in the manner I have indicated.

The position is that the decree is given by the district justice if it is under the district court jurisdiction, by the circuit judge if it is under circuit court jurisdiction; and then, because it is a Revenue decree the addendum is stamped on the decree and because it is a Revenue decree the county registrar can endorse over to make the writ into one of levare facias.

An Leas-Cheann Comhairle

Is the amendment being withdrawn?

Mr. Dillon

Will the Minister undertake to review this or consider this matter, on two bases? One is the expediency of the present procedure and the desirability of amending it. Secondly, will he ask the Attorney General to express his opinion to him as to whether the present procedure is consistent with the Constitution?

Dr. Ryan

On the first point, I am prepared to consider it, but I must say that I cannot promise the Deputy that I see a way to meet it to any great extent. There may be certain possibilities of altering things, but I see no alternative at the moment. I shall promise to examine it, certainly.

Mr. Dillon

Does the Minister feel free to say at this stage that he will invite the opinion of the Attorney General on its constitutionality?

Dr. Ryan

I do not feel bound to do that. Let somebody else do it if he wants to.

Mr. Dillon

Who is to do it?

Dr. Ryan

I do not know.

Mr. Dillon

No victim of this procedure is circumstanced to do so.

Mr. Haughey

Why does the Deputy not let his Dáil income-tax go into arrears?

Mr. Dillon

I am a member of Oireachtas Éireann, and I think I have a right to indent upon the Minister at least this much that, without having to become a sacrificial figure as a member of this House, I have through him some claim on the advice of the Attorney General. When I make a case which at least has a prima faciae foundation, it is reasonable that when the Minister does not feel free to meet me, then I can ask him would he consult the Attorney General. Otherwise I know of no means short of that proposed by Deputy Haughey, one which I think I will be prepared to embark on if Deputy Haughey will join me. Would the Minister entertain my proposal without dramatic gestures of this kind by Deputy Haughey and myself?

Dr. Ryan

We might arrange for a quick decision.

Mr. Dillon

Would the Minister consider referring it to the Attorney General?

Dr. Ryan

I do not feel bound to do that.

Mr. Dillon

If I direct a question to the Minister about the constitutionality of this will he remit it to the Attorney General?

Dr. Ryan

I have a sort of idea we are getting too constitutional in this country.

Mr. Dillon

I fully understand the Minister's approach, but I do not believe we can have too profound a respect for the Constitution. I think Deputies ought to note the Minister's feelings in this matter of constitutionality, when he says he is beginning to think we are getting too constitutional in this country. Note the path we are travelling. I feel bound to say to the Minister that I propose to proceed in my efforts to have the constitutionality of this matter determined, and what I put my hand to I usually carry through.

I would much prefer the Minister would find some practical modus vivendi which would create embarrassment for nobody but, if he does not, I shall bring this forward as far as I am able to, because I believe it to be profoundly wrong, and I believe the Minister's approach to it concedes that he believes the truth of my case but he is not prepared to face the consequences of that concession.

Mr. Sweetman

It would be perfectly simple. All that would be necessary to do——

An Leas-Cheann Comhairle

I must point out we are on Report Stage.

Mr. Sweetman

We are on a most interesting discussion. The position at present is that when a collector of taxes has got a decree nulla bona from the court he goes back with that decree to the County Register and has it endorsed. It would be perfectly constitutional if he went back to the court.

Dr. Ryan

I am quite prepared to consider it.

Mr. Dillon

The Minister will consider it.

Dr. Ryan

Do not expect more than that. I am not promising anything.

Mr. Sweetman

He is promising to consider it. That is the furthest extension of the promise.

Amendment, by leave, withdrawn.

Dr. Ryan

I move amendment No. 30:—

In page 46, after line 52, to insert (within paragraph (d) of subsection (2) of Section 56, but not within sub-paragraph (ii) of that paragraph) "and, in a case in which books are printed within the State otherwise than by their publisher and they or some of them are exported by their publisher (not being a case to which the proviso to the said definition applies), the books shall be regarded for the purposes of the said definition as having been manufactured within the State by their publisher".

It was mentioned to me by the Minister for Industry and Commerce that he thought there was a possibility of a publishing business growing on a fairly large scale, if the encouragement given to exporters of manufacturing lines could be extended to them. On examination of that point I was told that legally the Bill would cover a printer and publisher, but not a publisher alone and, as this business is likely to be carried on by a publisher farming out his printing to various printers, it was felt it should apply to the publisher and this amendment covers that proposition.

Amendment agreed to.

Dr. Ryan

I move amendment No. 31:—

In page 50, line 27, Section 68, to delete "Parts IV and VI" and substitute "Part VI"

Amendment agreed to.

Dr. Ryan

I move amendment No. 32:—

In page 50, line 30, Section 68, to delete "Part V" and substitute "Parts IV and V".

The effect of these two amendments is to postpone Part IV.

Amendment agreed to.

Dr. Ryan

I move amendment No. 33:—

In page 59, line 11, before "which" to insert "(being a dividend which, on or after the 19th day of June, 1958, the company became entitled to receive)".

Amendment agreed to.

Bill, as amended, received for final consideration.

Agreed to take Final Stage to-day.

Question proposed: "That the Bill do now pass."

Mr. Sweetman

I want to make one last despairing effort, on the Final Stage of this Bill, to get from the Minister for Finance some indication of the financial policy of the present Government. This Bill is really the end of the debate on the Budget resolutions. I asked the Minister several times during the passage of the Budget, and of this Bill, does he consider that the danger at present is one of inflation, or does he consider the danger is one of deflation. I asked the Minister to consider whether the advice tendered by the Minister for External Affairs, that people should not hoard up their savings but should expend them on consumption, was right advice or whether his advice was still the same, that we had to increase our volume of savings if we were to make real economic progress.

We shall have a discussion next week on the Taoiseach's Estimate but, before we go into that debate, it would be of assistance to the House, and to the country, if we could get from the Minister now some indication as to whether he considers there is any danger of inflation or deflation, whether we are saving too much, as the Minister for External Affairs says, and as was published in the broadsheet published by the Department of External Affairs, or whether we are in the position that we want to support a higher productive capital programme by accentuating and increasing our savings ratio so that it will accord with the comparisons that there are in Europe to-day in that respect.

An Leas-Cheann Comhairle

The Deputy will appreciate that only matters contained in the Bill can be discussed on the Fifth Stage.

Mr. Sweetman

The Bill is most relevant to that, Sir.

Mr. Dillon

The Bill enshrines Government policy.

Mr. Sweetman

It is supposed to.

Dr. Ryan

This is a taxation Bill and I suppose the Deputy would be in order asking that question.

Mr. Sweetman

I have often been very much more out of order.

Dr. Ryan

My own opinion is that the danger of inflation is not too imminent anyway. Our production appears to be keeping pace with spending and as long as spending does not outstrip production, there is no danger of inflation. So far, we have succeeded in keeping these two things in line. On the other hand, there is certainly no danger of deflation in my opinion. We are saving to some extent and it would look, I think, from every point of view that if we could save a little more we would be in a better position. That is all I can say at the moment about the balance between inflation and deflation. I am satisfied that we are maintaining a proper line between inflation and deflation.

Mr. Sweetman

The Minister is most kind to give me plenty of ammunition.

Question put and agreed to.

An Leas-Cheann Comhairle

This is a Money Bill within the meaning of Article 22 of the Constitution.