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Dáil Éireann debate -
Thursday, 26 Nov 1959

Vol. 178 No. 4

Finance (No. 2) Bill, 1959—Second Stage.

I move that the Bill be now read a Second Time. The essential purpose of this second Finance Bill is to implement the Government's decision of the 3rd April last to introduce, as soon as practicable, a "Pay As You Earn" system for the taxation of salaries and wages which would spread the incidence of the tax more evenly over the year and make easier the discharge of liability.

The scheme which is now being provided for is that which has been outlined in the recent White Paper on the subject; and I do not think that it will be necessary for me to describe in detail what is already set out in that document. The scheme has been discussed by the Revenue Commissioners with representatives of employers and employees and I believe that it is generally acceptable to both parties.

The Bill is divided into three Parts. Part I, consisting of Sections 1 and 2, covers the short title and construction of the Bill and provides also that Part III, to which I shall refer in a moment, is to come into effect on the 6th April, 1960. Part II, which has 12 sections—namely, Sections 3 to 14 —contains the provisions directly related to the proposed scheme of P.A.Y.E. and its operation.

Part III—Sections 15 to 18—makes certain alterations and adjustments in the personal reliefs and allowances available for Income Tax purposes. While these changes are designed to facilitate the administration of P.A.Y.E. they will apply to all individual taxpayers no matter under what scheme they are assessed.

From Sections 3 and 4 it will be seen that the new system to be introduced will apply to everything assessable under Schedule E—or, as the Bill expresses it, to all "emoluments"— with three exceptions.

First of all there are what may be described as emoluments of employees of the State or of certain other bodies with their own Assessors of Income Tax, where tax is already deducted at the source, so that there is no problem of arrears. It is not intended in this regard to interfere with an established procedure which is functioning satisfactorily and well. Secondly, there will be cases to which it would not be practicable to extend the provisions of the Bill. The third exception to the general rule is the instance where the person is in receipt of earnings chargeable under Schedule D and at the same time has emoluments falling under Schedule E and where, for the taxpayer's convenience, the whole of the earned income is dealt with in a single assessment under Schedule D. This is the usual method of dealing with a professional man who engages in private practice and also holds an appointment related to his profession. So much for the exceptions.

Section 5 embodies the kernel of the new system. It begins by laying it down that, as from the year 1960-61 onwards, Income Tax on emoluments within the scope of P.A.Y.E. is to be computed by reference to the actual earnings of the year of assessment— and not by reference chiefly to earnings of the year preceding the year of assessment, as hitherto. It goes on to provide for the making of the appropriate tax deductions and repayments by employers. It is perhaps appropriate that, at this stage, I should say how deeply I appreciate the goodwill of employers and of employees which has been manifest towards this scheme. The successful working of any system of P.A.Y.E. must depend upon the full co-operation of employers and of employees with the Revenue Commissioners.

Section 6 empowers the Revenue Commissioners to make the necessary regulations as to the assessment, the charge, the collection and the recovery of Income Tax under P.A.Y.E. Regulations under the section will of course be submitted to this House. The mode of collection to be provided for in the regulations is that in force in Britain and commonly known as the "cumulative" system. Under this system the tax varies week by week— or month by month if the employee is paid monthly—with any fluctuations in earnings. When earnings increase, the deductions for tax increase accordingly. When earnings fall, the tax likewise falls; and the employee, instead of paying tax, becomes entitled to a repayment if earnings fall below a certain amount.

Section 7 contains penalties for neglect in complying with the regulations. It imposes a penalty of £20, together with a continuing penalty of the same amount for every day on which the non-compliance is continued. While I have every confidence that employers and employees generally will co-operate fully in operating the new system, it is obviously necessary to provide against the possibility of non-compliance.

Section 8 authorises the charging of interest where an employer does not pay over the tax to the Revenue in due time.

Section 9 provides in effect for the employer who has a small number of employees earning a fixed remuneration and in constant employment. Under a simplified procedure the employer will be enabled to pay over to the Revenue, by means of stamps to be affixed by him to stamp books, the tax he has deducted.

The need for Section 10 arises out of the contemplated change over, for 1960-61 and succeeding years, from the previous year's basis of assessment to the basis of the current year. The change will mean that earnings for the year 1959-60 will not constitute a basis of assessment. In order to prevent an improper advantage being taken of this fact, Section 10 secures that, where the emoluments for 1959-60 exceed those for 1958-59, the excess is to be added to the 1959-60 assessment, except where the excess is due to a promotion in the ordinary course of events, etc.

Section 11 secures that the provisions of the Income Tax Acts as to the recovery of Schedule E tax are to apply, with appropriate modifications, to the recovery of any amount of tax which an employer will be liable under P.A.Y.E. to pay to the Revenue Commissioners.

Section 12 makes deductions under P.A.Y.E. rank as preferential payments in cases of bankruptcy and insolvency.

Section 13 incorporates various supplemental provisions, such as abolition of the requirement for raising formal assessments under Schedule E save in a small proportion of cases.

The object of Section 14 is to ensure that a person will not, by reason of his being brought within the provisions of the P.A.Y.E. scheme, pay more than approximately a year's tax in the year 1960/61 in respect of remuneration. This is done by remitting half the tax on earnings in 1960/ 61 in appropriate cases. If this were not done, in addition to paying half the tax for 1959/60 in July, 1960, a taxpayer would pay the whole of the 1960/61 tax as well—or tax for a year and a half in all.

Section 15 marks the beginning of Part III, which effects general amendments in the personal allowances so as to facilitate the operation of P.A.Y.E. This section raises the existing unmarried personal allowance from £150 to £234, the married personal allowance from £310 to £394 and the allowance for widows or widowers from £175 to £259. These increases are in compensation for the termination of the reduced rates of tax, which at present are 2s. 9d. in the £ on the first £100 of taxable income and 5s. 6d. in the £ on the next £100. The termination of these reduced rates is provided for in Section 18.

Section 16 alters, in the interests of simplification, the rate of earned income relief from one-fourth on earnings up to £800, plus one-fifth on earnings from £800 to £1,800, to a uniform rate of one-fourth on earnings up to £1,800.

Similarly in the interests of simplification for P.A.Y.E. purposes, Section 17 amends the life insurance relief by making it allowable as a deduction from income, rather than from tax.

The broad effect of the amendments in this Part of the Bill will be that persons who now have to pay £11 11s. a year or less will be relieved entirely from Income Tax liability. To all other individual taxpayers the amendments will bring some measure of relief.

I am hopeful that the Bill will commend itself to all sections of the House. I shall, of course, be glad to deal with any points of detail as regards the various provisions in it on the Committee Stage.

Before the Minister concludes, would he explain a little further what he means by the exclusion of people in the public service to which he referred briefly in his opening statement?

What I said was that the people in the public service have been paying income tax and there have never been arrears of income tax. If you take next year, people in the public service will be paying on their earnings for 1959-60 but they will pay the full year within the next year. There never have been any arrears of income tax as far as they are concerned. They are paying regularly on the assessment for the previous year. Every other employed person will be paying on next year's income in this year.

How will they be affected next year?

They will be as they are. They will not be affected at all.

Does that apply to temporary employees, unestablished persons?

Yes, any person drawing money from the public service. I believe that some of them employed locally may come under P.A.Y.E.

What does the Minister mean by "employed locally"?

Forestry workers.

I suppose so.

What about temporary clerical staff or engineering staff?

It will apply more to casual temporary workers. There are many categories in the Civil Service. There are people who are regarded as temporary. Everybody knows they are there for life. They will stay as they are.

At present, as I understand the position, a civil servant liable to pay income tax from the 5th April to the end of March does not, in fact, get his assessment until about August. It is between August and September that he has to pay the tax for the whole year. I certainly know that is the position in a number of large Government Departments. Will such a person be deprived of the opportunity of paying each week or month under this Bill, an opportunity which is being extended to other sections?

As a matter of fact, this system is not being extended to the Civil Service. No change is being made as far as they are concerned. They will be assessed as they are at the moment. It is not being applied to the Civil Service.

Is there any reason for that?

They are paying regularly. There are no arrears. I have not heard that there is any case of hardship in regard to a civil servant in that respect. It is a painless——

To do it within a period of five months is not so painless.

I do not know if there are such cases.

Does it apply to teachers and Guards?

When I speak of civil servants, Guards, teachers and army officers are included.

I think the replies from the Minister to the questions make it pretty clear that he is interested not in the question of making it easier for the taxpayers to pay, but in the question of the arrears of income tax. We shall come back to that point in a few minutes.

Before I deal with the Bill as it stands, I want to refer to the Report of the Commission on which this Bill is based. The commission was set up with wide general terms of reference, deliberately framed by me in as wide and as general a form as was possible, "to enquire generally into the present system of taxation of profits and income."

I must say that I am very disappointed, indeed, that the Commission has up to this concerned itself only with ironing out certain anomalies— this one in the first Report and three in the second Report. It has not addressed itself at all to the wider issues which it was set up to consider. I think the House and the country will be very disappointed, indeed. The primary function of the Commission is set out in their terms of reference in these words:

and if it is considered that the taxation of profits and income should be terminated, or modified in any manner involving loss of revenue, to recommend alternative means of raising equivalent revenue.

The principal function they were given in a general way was to see whether it was desirable to substitute some other type of revenue raising for a tax on income and a tax on earnings, particularly, in the light of the view, widely held, that such a tax was a deterrent on enterprise. The only comment which I can see the Commission has made on that wider aspect is at paragraph 4 of the Introduction to the Report on which this Bill is based. They say there:

We have not so far considered fully the possibility of substituting for income tax an alternative form of taxation. All the representations promised us have not yet been received. However we think it right to say that, from the information so far before us, we do not see any possibility of recommending a form or forms of taxation that could substitute completely for taxation on incomes.

I think that the casual dismissal of their main function that has been given there is one that is not anything like adequate. Every anomaly that is ironed out in the existing tax code is an improvement to the existing tax code but, equally, every anomaly that is ironed out makes it more certain that we are building up the existing tax code on income into permanency in which it will be very difficult, if not impossible, to get the consideration that should have been given to this matter at the very beginning.

I think it is unfortunate that that approach was adopted. I could understand it, perhaps, in relation to the first Report but when we get the second Report as well and find that in relation to that they are still not grappling with the main issue, I think we have the right to express ourselves as being dissatisfied, though appreciating their industry.

In so far as the effects of this Bill will mean that it will be easier for people to suffer—I use the word "suffer" quite deliberately—the payment of income tax by regular instalments, the Bill will, I imagine, be accepted by both sides of the House. It is, however, both childish and ridiculous for anyone to suggest that the payment of tax, whether by direct payment, by regular periodic payment, or by deduction, is a painless process, as was suggested in the Minister's "kept newspaper" when the White Paper was issued about ten days ago. The payment of tax is bound to be a painful process. The only thing that one can do in relation to it, is to try to ensure that it is no more painful than is absolutely necessary.

I was more than struck, as I said at the outset, by the approach of the Minister to the problem with which we are dealing here. Initially in his speech, and many times in the course of replies to questions put to him, he stressed arrears, making it clear that he was bringing this Bill in primarily to make it more certain there would be no arrears rather than making it less painful to pay the tax due. He stressed that all tax would be collected. No matter what welcome there may be for this measure at the moment, this time next year there will be the reverse of whatever welcome exists now. When, this time next year, tax starts to be deducted there will be not the paean of praise that the Minister expects today; there will then be quite a different situation. That will arise in reference to the matter the Minister has stressed, namely, arrears.

As far as I can understand Paragraph 46 of the White Paper, if there are any arrears due on 5th October, 1960, the whole of those arrears must be collected by the employer by way of deduction in the half-year between 5th October, 1960, and 5th April, 1961. There are cases in which, for one reason or another, because of disputes and so forth, arrears have been accumulating over the years. There are cases of people who did not realise that they were subject to tax at all. They will now be drawn in by this measure into the income tax net for the first time. They will be included in the returns made between April and July of next year. As far as I can interpret the legislation, and its intention, the Revenue Commissioners will be entitled, as they are entitled now, to go back in all these cases over a long period of years and assess the arrears due over that period. They will insist—they will be bound to insist as I understand Paragraph 46—that all those arrears will be collected in that one half-year.

We are hampered in discussing some of the detailed operations of this scheme here because detailed operations will arise not under the Bill that is before us, but under the regulations that will be made. I am not making the point that the details should have been in the Bill. I quite understand that some of the provisions necessary are clearly provisions which can be more usefully covered by regulation. I merely refer to the fact that we have not the detailed operations before us and it is, therefore, difficult for us to discuss details since we do not know what the details will be. We shall only know the details when the regulations are made at a later stage.

If the situation will be as I interpret Paragraph 46, namely, that all arrears are to be collected in the one half-year immediately prior to 5th April, 1961, no matter when those arrears accumulated, and if all those arrears are tumbled down on top of the employee in that period, frankly I visualise in the first six months of the operation of this scheme wholesale emigration by people to ensure that they will not have placed on top of them an impossible liability. There should be proper and adequate provision made to provide that, where arrears have arisen through no fault of the taxpayer concerned, those arrears can be spread over a reasonable period and must not be collected all at the one time.

I am concerned also at the other end of the scale. I am concerned at the amount of trouble, difficulty and cost that will be involved in the scheme, particularly for the small employer. Paradoxical as it may seem, I do not think there will be anything like the same amount of trouble and cost involved in the case of the large-scale employer. In fact the large-scale employer is specifically excluded by the provisions of the scheme because he will continue his mechanical accounting process. He will not have to complete any cards for employees. He will continue his present mechanical accounting system, with merely an undertaking that he will not destroy any of the records of that system for a period of three years.

I am concerned, therefore, with the small employer, the person who will find a substantial volume of work thrown on him under this scheme. That will cost him quite a bit. I do not understand what is meant by the provision in relation to the small employer either in the Bill or in the White Paper. In no part of either can I find any definition of what a small employer is. Perhaps I have missed it but I cannot see anywhere any definition suggested in paragraphs 53 to 58 of the White Paper itself of what is a small employer and who, therefore, can opt to utilise the stamp method instead of utilising the card-completion method.

I can appreciate the statement that is included in the memorandum that in the initial stages there would be some additional cost to the revenue. It will take some time, naturally, to prepare forms, prepare regulations, issue cards and get the system working smoothly, but once that has been done I cannot see why it is alleged that there will be any additional cost in the operation of this scheme. I would have thought that the position would have been entirely the reverse, that the effect of the scheme is to throw over on to the employers a great deal of the administrative work. The detailed cost of assessment, the issue of assessments and all the cost of collection, except for the supervisory side of that collection, is now being taken off the backs of the Revenue Commissioners and put on the backs of the employers.

The cost of the collection of Schedule E income tax on earnings up to this has always been a very substantial figure and a very substantial proportion of the tax that was so collected. That cost is now all gone. It is being taken off the Minister's back and being put on the backs of the employers and although I am not suggesting that this scheme should not operate in that way, at the same time we should have our eyes open to the fact that we are imposing that cost on the employers, particularly on small employers, and we should try to see how we can ease the burden we are placing on them.

One way in which that burden might be eased would be to provide something of a similar nature to the discount there is at present in the payment of rates on small dwellings. Deputies are aware that in relation to dwellings, the valuations of which are low, there is a special system by which the owners can pay under discount if they so desire. Some similar type of discount might be provided for the small employer if, by this, he is going to be put to the expense of doing work that was heretofore done by the Revenue Commissioners themselves. I have no doubt that notwithstanding what the cost may be the employer will feel that the extra cost and effort he has to make under this Bill should be his contribution in the public interest. That does not detract from the fact that we should try to meet him so far as possible.

The system that has been in operation has undoubtedly created hardship. The basis on which people whose only income from which to pay the tax is the earnings on which that tax is levied, find it very difficult, naturally, to meet the tax liability on income many months after the income has been earned and perhaps spent. The existing system by which people in employment are assessed on their previous year's earnings, and having been assessed, have to pay that tax on the 1st January following the close of the year on the 5th April before that, meant there was such a big gap that it was very difficult to meet the amount involved particularly if, during the interval, there had been a diminution of earning power. To meet that situation the proposals put forward by this scheme will be acceptable and will perhaps make it less painful—but certainly not painless—to pay the tax involved.

It is very important that members of the House should get the greatest possible knowledge of this system during the passage of the Bill. I say that because it is an open secret that we are not so much legislators here as high-level welfare officers and I have no doubt that when this Bill goes through, in every Deputy's post bag every day there will be queries about its operation and requests from constituents to try to unravel the knotty points with which they will be faced next year. Therefore, it is of the utmost importance that the fullest possible implications, not merely of the legislation as such but of the practice that is to be adopted under it, should be made known. The White Paper goes some distance in that respect but I feel that it ought to be possible also to have specimens of the tax deduction cards that are to be issued and of the stamp books system that will be utilised. The general framework of the regulations I am sure has already been made. I suggest that all these things should be placed by the Minister in the Library between now and the Committee Stage so that we may see exactly what is involved. Without them it is difficult to see how details will work out. I am not suggesting that there may not be some minor variations of the draft regulations between this and then or that there may not even be some minor variation of the tax deduction card but the general broad lines must be already framed and if this information is now made available it would help considerably our understanding and interpretation of the practice that will operate.

There are many points of detail upon which further information will be required. I want to mention some of them to-day not so much because I expect the Minister to answer in detail at the conclusion of this Stage of the Bill but so that information will be made available in some way before the Committee Stage so that we can see how we are to provide for the points that are involved. I should like the Minister to tell us whether I have correctly understood the provision that is contained in paragraph 52 of the White Paper. As I read that paragraph, the rate of interest the Minister is charging for tax that is in arrear is one per cent. per month, the equivalent of 12 per cent. per annum. Is that correct? Is it really correct that a Minister comes in here and suggests that interest on late remittances is to be charged for at the rate of 12 per cent. per annum? I cannot see what one per cent. per month means other that 12 per cent. per annum. In case there is any possibility that I may have misunderstood paragraph 52, I shall refrain from further comment on that aspect until the Minister confirms or denies it.

I am not clear what happens if an employee has had his tax deducted under this system, if it has been paid, accordingly, to the employer and the employer does not remit it to the Revenue Commissioners and the employer goes bankrupt. Is it clear beyond question that, in those circumstances, the employee cannot be asked again to make the payment that is concerned? Is it clear beyond question that, once the deduction has been made by the employer, that ends the matter so far as the Revenue and the employee are concerned?

I do not quite understand how the system of refund will operate. An employee has obtained the appropriate certificate of allowances from the inspector; the employer calculates the tax that is payable on the basis of his likely earnings during the year, and deducts accordingly. We will leave out next year because it is only a half year but, in ordinary circumstances, that is worked on for five months. The five months will be April, May, June, July and August. The employee gets ill on 1st September. The tax that has been deducted from that employee up to the end of August has been remitted by the employer to the Revenue on the 14th of each following month and it has all been remitted by 14th September. The employee comes back again, shall we say, on 1st October, after his illness, only to do half work, being still unable to do full work. There is, accordingly, a refund of tax due to him. As I understand the situation, the employer is to make repayment to him of that refund as and when a week's salary would otherwise become due. I am not clear whether it arises during the first week of illness or whether it arises only when he takes up duty again but, in either event, the answer is the same. The employer has already paid the tax to the Revenue Commissioners and yet has to make the refund. That does not matter in the very slightest if only one employee out of ten is concerned because the other nine will be having amounts due to the Revenue deducted from them and presumably it is the intention that the refund that is to be made will be deducted by the employer out of what he has collected from the others.

Supposing the position arises—it could easily arise, shall we say, on a cessation of work—that there is no such deduction there of tax by the employer. Then, it seems to me that, as the basis is set out, the employer has to pay back to the employee tax that he has already paid over to the Revenue and that he has to act, so to speak, as the banker for the Revenue Commissioners without any question of his getting 12 per cent. or any similar interest from the State for that. If my interpretation of the White Paper is correct, that does not seem to provide an appropriate method.

I should also like to refer to paragraph 49, which deals with new employees. As I understand the system, when a new employee comes along, the employer, for the first four weeks, is bound to deduct tax as if the employee was an unmarried person, without any allowances other than the single personal allowance. At the end of four weeks, if he has not got a certificate of allowances, he is bound to deduct tax at the full rate without any allowances at all. I cannot understand what is the significance or the reason or the necessity for that provision. Everyone is entitled to a personal allowance. Whether one is married or unmarried, one is entitled to the minimum allowance. The unmarried allowance is smaller than the married allowance and why there is to be the provision that if the certificate has not come in at the end of four weeks the earnings are to be treated as not being entitled to any deduction for allowances is something that I cannot understand. It seems to me that it would be quite clear that at least the minimum allowance would have to be made in any event. Why, therefore, should the practice change after four weeks, giving additional and unnecessary trouble to all concerned?

In the event of there being a married woman in employment, the scheme provides that the allowances will be apportioned by reference to the earnings of the preceding year. I am not clear whether that means merely in the first year until this scheme comes into operation or whether it is always to be the case. I should like that clarified.

I should like also to have clarified a point which I know is worrying some people considerably. It is in regard to what disclosures will inevitably be made by this system on behalf of employees by the Revenue Commissioners to their employers. If a person is, say, employed as a journalist by a newspaper on a regular salary basis and in addition to that employment does, as he is entitled to do under the terms of his employment, what I believe is termed free lance journalism outside, I think the position is that in relation to his salary he would be taxable under Schedule E, that in relation to his free lance work he would be assessable under Schedule D, it being treated as a profession. Unless all his allowances are to be set off against his salary then his employer, when he sees the certificate of his allowances, will know what he is earning outside in his profession. That obviously is most undesirable.

Equally, what will happen in the case of a person who has private income? It was referred to I know by the Minister in one way but let us take it in another way. An employee may very well not want his employer to know what private means he has assessable under Schedule D and he is perfectly entitled, if he so desires, to keep that information scrupulously to himself. But his certificate of allowances, if it takes account of that income by having allowances set off against that income and not set off against salary, will show his employer what the taxpayer concerned has in the way of outside income. That is a private, confidential matter of the taxpayer's own and it is no concern and should not be permitted to be a concern of anyone else.

Again I cannot see in this Bill or in the White Paper any suggestion as to what is to be done in relation to the offset claim that is liable for bank interest under Schedule E if the taxpayer concerned has no other income. How is the taxpayer going to be able to make certain that other people do not know that he has an overdraft if he does not wish that information disclosed? It is obviously a confidential matter which he is entitled to keep to himself is he so desires, and yet the amount of his allowance must be increased in one way and reduced in another by the bank interest involved. If he has no other income at all his earned income allowance will, I think, be calculated not on his earnings but on his earnings less bank interest and, against that, he would be allowed the amount of bank interest as a set-off against his earnings. It seems to me, therefore, that unless some other method is provided for dealing with that aspect, inevitably his employer will be able to tell when he sees the certificate of allowances whether his employer has an overdraft or not.

The general scheme that is included in this White Paper is certainly simpler than the one in operation across the water. The simplifications that have been introduced are desirable and deserve support. I should like the Minister to state if I am correct in saying that the legislation to provide these calculations that are included in Appendix 3 of the White Paper is based on the effort to get the nearest figures of liability that the simplification involves; in other words there is no intention in the altered provisions that are exemplified in Appendix 3 of the White Paper and contained in sections 15, 16 and 17 to provide relief but merely an intention to provide simplification and to ensure that under the simplification no one pays any more tax than that to which he is liable at the present time. I think it has been on that basis that the Minister has struck his calculations but I should like that categorically confirmed.

The provisions of the new system that are to be included in this Bill are ones that will make it easier to some extent for people once they have got over the initial shock to meet their liabilities. It will increase unfortunately the burden on employers, more particularly on the small employers who will not understand the matter so well, but notwithstanding that, the provisions are better in the national interest.

I would, however, urge the Minister strongly to go away from the conception of arrears being the overriding interest in this Bill and to ensure particularly that in relation to any accumulation of arrears there are discretionary provisions to enable those arrears to be spread over a longer period in such a way that the deductions will not be so harsh because, if that is not done, I am afraid the effect will be that the people concerned will pack up and go away, a course that none of us would wish.

The main issue raised in this Bill is whether income tax should be collected in two moieties in the year or whether persons liable to income tax are to pay a proportionate amount of their income tax to their employers when they receive remuneration; in other words you can pay twice yearly as at present or you can have whatever you are liable to pay in that year deducted from your wages or salary by your employer every time he pays you, and he makes the settlement for you with the Revenue Commissioners.

That is the net issue involved in a Bill of this kind. To think it will bring balm and ecstasy into the minds of income-tax payers is a complete illusion. It is just another method of getting out of their pockets something which would be got out one way or another in the course of time.

I have seen cases in this country where persons emigrated rather than pay their income tax demand, only to see them come back from England after a while, saying it is worse over there because they have to pay every week. As a matter of interest, I asked some of these people which method they found the more convenient. Quite candidly, this view was put to me and it has been expressed in England, too. Under the method of paying twice a year, you can have a fling or a flutter many times during the year but under the method of deducting income tax every week, the bit is in your mouth and the whip is on and you have not much chance of engaging in any flutter or undertaking even a miniature spree. In the long run, it is just a matter of what punishment you are used to. If you prefer to be punished each week or month, well and good. If you prefer to take a heavier hiding twice a year, well and good; you can get used to that method, too.

On the other hand, I would say the British method of pay-as-you-earn has given a greater measure of satisfaction and has produced considerable administrative smoothness in the existing circumstances in Britain than would have been possible if the old method of collecting twice a year had been maintained. On balance, there is a case to be made for the pay-as-you-earn system. It is calculated to avoid the problem of how to find the money to pay the twice-yearly instalments. But the other method does keep down the liability by the compulsory deductions which are made when the person concerned is being paid.

To interpret this Bill, one would need to see the regulations which the Revenue Commissioners will make under a number of its sections. It is through the regulations that the Bill must be largely interpreted. The Bill in fact is one enabling the Minister and the Revenue Commissioners to do certain things and it is the enabling process that provides the real guide as to the manner in which the whole scheme will be administered. Until we can see these regulations, it is not possible adequately to evaluate the Bill. I am wondering, however, whether the Minister could give some idea, when replying or on the Committee Stage, as to the manner in which it is proposed to pitch these regulations so that at that stage we might get some idea as to the lines upon which the Bill will be administered.

I do think that the whole income tax code is a complete mystery. People who appear to be intelligent in every other walk of life seem to be unable to measure up to its intricacies. That is bad enough in relation to a code with which they have now grown from childhood to manhood and even to old age, but if they are to get now, in the autumn and winter of their lives, a new code of the character we are enshrining in this Bill, then I think the process of assimilating the new code will be as difficult and as painful as it was under the present process.

I would suggest, therefore, to the Minister that the Department or the Revenue Commissioners buy space in the newspapers and, by means of some simply written articles, endeavour to explain to the community what in fact is involved in this change-over. The community ought to be advised to cut out these articles and keep them for reference so that they will be able to have the queries which arise from time to time answered by the information contained in such advertisements. I would suggest, too, that the Minister might find an opportunity of getting somebody to write a case for this change and to explain the change, not to the lawyer or to the professional man, but to the Pat Murphys in every position in every town in the country, so that the pamphlet will convey to them something of what is being done here and what the effect of the change is from the present code to the code upon which we are now about to embark.

The Minister, in the course of some questions I put to him at the end of his speech, said it was not proposed to include in this Bill civil servants or persons in the public service generally, Civic Guards and Army personnel. These people can show good reasons perhaps for their inclusion within the scope of this Bill. As I understand the position of civil servants—certainly I know this is so in the Post Office— during the financial year, sometime about August or July, the individual officer is notified that his income tax for the year is x sum of money and that it is proposed to collect this by monthly deductions of so much until the end of the following March. In other words, he has paid no income tax in April, May, June and July. If he starts to pay his yearly instalments in the month of August, he then pays them monthly until the end of the financial year, because what he is liable to pay is divided between the number of months available for its collection. Thus, if he owes £48 and there are six months to collect it, then he pays £8 per month. But in order to make the punishment appropriately oriental, quite a number of cases have arisen in which this deduction is made on the Saturday preceding the first Monday in August. Therefore, when a fellow is paid, say, £9 a week on the Saturday preceding the first Sunday in August, he frequently finds he is liable to pay £8 income tax for the month of August. That £8 is deducted from the £9, and it is on the surviving £1 that he approaches the August Monday and survival for the following six days.

I suggest to the Minister there is no reason why he should not apply to civil servants, teachers, the Army— everybody in fact—the same principles as are applied to income taxpayers outside the public service. Why cannot they have, for example, the opportunity of having their tax deducted when they are being paid? It is a simple operation. The only reason the Minister can say he is not interested in including them is that he knows that the present method of collection ensures there can be no arrears. But the Minister is also applying this scheme to what I might call public servant income taxpayers. Even in individual cases over a wide field of taxpayers, there need be no arrears. The Minister is asking employers to do for the private income taxpayer what the State, as the employer of public servants, is not willing to do in respect of the easement of payments of income tax by the Civil Service income taxpayers.

There is no reason why those in the public service—teachers, soldiers, civil servants, particularly those in the manipulative trades in the Civil Service, the lower paid people— should not get the benefit of a Bill such as this, should there be any benefit in it. It is just as difficult for them to pay income tax when it arises. If the income tax can be paid more frequently, and the burden of the heavy payment thereby avoided, in all reason and even as reward for their regularity in payment, the Minister might endeavour to include them within a Bill of this kind. I think they are included in England. Although I do not say that with a certainty, my recollection is that they are included.

There seems to be quite a good case for the inclusion of a person such as a lieutenant in the Army or a sergeant or Gárdaí. Similarly, there is no reason why single officers and even married officers in the Civil Service who find it hard to pay a monthly instalment should not have the benefit of paying weekly, if that eases the burden.

One cannot adequately assess this Bill at this stage. It is when the regulations are made and when payments commence under them that the real impact will be felt. Notwithstanding the possibilities that difficulties and friction may arise in that area at a later stage, on the whole, in the light of experience of the same method of collection in Britain, this proposal has advantages over the present method of income tax collection.

To some extent, I feel that the observations on this measure by the first speaker who followed the Minister, Deputy Sweetman, are very relevant to the issue. From the point of view of making a more workable arrangement to discharge the liability of taxpayers, the Bill is to be welcomed. I think it is the only feature attached to the Bill which would justify anybody in welcoming it to the Statute Book.

The introduction of the Bill indicates that we have at last reached a time when the Revenue Commissioners appreciate that the existing system for the collection of income tax, particularly, must be changed. In that way, the Bill is a very praiseworthy departure from the old system. In recent years, particularly since the war—the past ten or 12 years—because of the general increase in the wage incomes of wage-earning classes, quite a new family, if I might so term it, has come into the income tax net. It is quite obvious that particular types of workers whose predecessors and indeed themselves were never obliged to make any contribution to the income tax pool will naturally resist the imposition they more or less found placed on them overnight.

The whole difficulty in this country is not so much in the general administration of the code but in the actual collection of the liability attached to assessments. I think that arises mostly from the fact that in years gone by only rich people were obliged to pay income tax. The hallmark of a rich person was that he was paying income tax. In more modern times, whilst that belief did not hold good, nevertheless it took the average man in the street quite a time to get used to it. Indeed, some of them have not yet got to the stage of realising that income tax liability is based on a very definite scale of wages or salaries, as the case may be.

The first requisite for the success of any scheme is to try, by publicity or whatever other means you can use— which I could not suggest at this stage but publicity comes to mind as the most practical and easiest method of approach—to get home to our citizens that there is an income tax law which obliges them to make a return of their incomes and to pay tax if those incomes are liable to tax. There should be a far more definite approach to this question than there has been in the past. I feel that, heretofore, it has been approached with a certain amount of apology and, by and large, did not get the acceptance it should have got from the people.

I am quite satisfied that this Bill will spread more evenly the income tax liability among the category it proposes to deal with. In that connection, I feel quite a section of taxpayers, indeed the larger proportion, have been asked to pay too much. In other words, the few are paying too much and quite a number are not paying anything at all. If the Bill, when implemented, does anything to make everybody pay his fair share, it will justify its introduction.

There are quite a few points in the Bill that worry me. In the first place, a grave obligation is being placed on employers. In the White Paper, Page 3, it is stated that the Minister has met representatives of employers and employees and discussed with them the preparation and the putting into effect as soon as possible of an acceptable and workable scheme. This paragraph also indicates that further discussions evidently took place at a later stage between the Revenue Commissioners and certain employers' associations and trade unions. I have no doubt that that statement is correct.

The only thing I am at a loss to understand is that employers' organisations which participated in those discussions do not seem to have publicised the fact and sent their viewpoints in the matter down the country to their branches. In so far as workers' organisations are concerned, I think it can truthfully be said that these bodies are more representative of the workers than the couple of employers' organisations that exist in this country are representative of the average employer, particularly the small employer.

I think it was Deputy Sweetman who indicated that it would be very difficult to get the co-operation of small employers to work the machinery of this system smoothly.

I have no doubt that it will be almost impossible to get their co-operation. First of all, the small employer will be unduly frightened about any question of having to cooperate with the State in the collection of income tax. Secondly, this whole problem of income tax, as I have indicated, appears to be quite inexplicable to the average man. Deputy Norton made a very good point when he asked the Minister to try to prepare some simplified explanation which could be passed on to the man in the street with a view to giving him an understanding of the general framework of the income tax code. It is quite true that nine-tenths of the people who are perfectly competent to deal with most problems fight shy of any attempt to grasp this problem of income tax administration and collection. This new system, from the point of view of being a practical system, will certainly be practical if we can get the co-operation of employers and employees.

Quite a number of employed people who are not members of trade unions will come within the scope of this legislation. It will be necessary for the Minister to devise some means of getting the new proposal over to them. I feel this booklet, drafted in simple terms, indicating that workers in industry or similar occupations with similar wages are being assessed and are liable to assessment, will help to get an acceptance of this new system. The average worker is flexible to the extent that he can leave the country and go to England, as many have done. In the case of income tax liability, they probably find in England, as Deputy Norton said, that the position, if anything, is worse and they come back eventually. They are then frustrated and are less valuable to the community than they were before they departed in the first instance.

The Revenue Commissioners, I am glad to say, have adopted what I regard as a very realistic approach to this problem. I am glad that when the scheme which is explained in the White Paper was being prepared, they approached it from the point of view of suiting the average requirements of the ordinary taxpayers. In the past, documents of this kind were more or less prepared on the British pattern. I am glad that in this instance—and for the future, I hope—we have got away from those antiquated and outmoded ideas.

The White Paper indicates that the Commission appointed to study the trend of income tax recommended a change in the system of collection. It was, broadly, on those recommendations that this new arrangement was thought out. Paragraph 6 of the White Paper says:—

In their First Report the Commission on Income Taxation dealt with the method of collection of Income Tax charged on employees. The Commission studied the existing system, and adverted particularly to the extent of the arrears of employees' tax.

I think the accumulation of arrears, which was not improving from the point of view of the Revenue Commissions, influenced them considerably in devising this new method. If it served no other purpose than to bring about this experiment, I think that justifies its existence.

I am glad Paragraph 6 of the White Paper adverted to Section 6 of the Finance Act, 1923, and that the Commission admitted they found, from the evidence which came before them in their various sittings, that the use of Section 6 of the Finance Act found disfavour with employers and employees. They indicated that it was represented to them as having an adverse effect on industry and on the economy generally, and as being to some extent a contributory cause of emigration. That system, of course, was brought into operation only when the normal existing methods of collection failed.

I have objected in this House already, on several occasions, to the operation of Section 6 of the Finance Act. I felt that the Revenue Commissioners were entirely too reluctant to proceed through the ordinary channels in that connection. I always thought it was rather high-handed of them to compel an employer to pay an accumulation of an employee's arrears, and then to make certain deductions from the employee's remuneration. What was objectionable in that method was that in quite a number of cases it was possible that the assessments which were being claimed, and which the employer was obliged to discharge, might not be due at all. To my mind, that was adding fuel to the flames. Persons who were regarded as liable to pay income tax in many cases refused to continue in their employment when they were advised that deductions would have to be made from their wages. They had the usual remedy. They left that employment and went to the next employment or emigrated.

One satisfactory feature in the present arrangement is that it differs from the position which obtains under Section 6 of the Finance Act. It appears to me, from the terms of the Bill, and the explanation in the White Paper, that the assessment will have to be made before there is any question of an employer having to collect a tax, except in specified instances where it is inevitable. That is a good thing and we should accept this arrangement as being worthy of a fair trial. I feel that the former method of wage earners having to pay income tax in two instalments created hardship. The wages earned were probably, in most cases, little more than sufficient to enable the wage earners concerned to carry on. It is obvious that in a case like that, if a liability is to accrue at certain periods for a wage earner, the most satisfactory and efficient way for the person concerned is to discharge that liability by weekly or monthly instalments. I have a lot of sympathy for the body of employers who will have to operate this new system. In my opinion, it will impose hardship, and indeed some expense, on all categories of employers whether they employ a large or a small number of wage earners. I have a good deal of sympathy with the point made by a previous speaker that some consideration should be given to employers in an effort to cover them for a certain part of the administrative expenses which, of necessity, they will have to incur to carry out the obligations of this legislation.

I notice also that the Bill lays down that the appropriate remittances which employers will have to send in to the Revenue Commissioners must be sent in by a given time, I think it is 14 days, under a penalty of one per cent. per month being attached to any late remittances. If that one per cent. per month is, as Deputy Sweetman states, equal to 12 per cent. in the year, I think it is a fantastic figure to attach as a penalty to the obligation of remitting the relevant amounts by a given date.

There is one point which arises from that requirement. Heretofore, the local collectors of taxes were obliged to go out and collect the taxes from the taxpayers. That necessity, in so far as the Schedule E taxpayers are concerned, will not arise any longer. It occurred to me from what I have read in this Bill that it must be the intention of the Revenue Commissioners completely to do away with the collection of Schedule E taxes by the present system of tax collectors. I think that would be a retrograde step in so far as business people are used to a direct collection of their accounts. They are used to a collection of accounts by the representatives of the firm with which they deal. I would suggest that the local collector of taxes who heretofore operated directly with the taxpayer should still continue to collect the bulk tax now deducted from the taxpayer by the employer where an employer fails to remit it in time. I think it would be more practicable from the point of view of the Revenue Commissioners to get the payment of tax direct.

I also feel if there were any small incentive to the employers to do so, the Revenue Commissioners would find general co-operation in that regard. Rather than charge a levy, or interest, on what is regarded as an overdue payment, it would be preferable to have a representative of the local inspector of taxes, preferably the collector—who will still have to operate in regard to the collection of tax under the other Schedules—call on the employer and try to get him to comply with his obligation. As I said, most employers do not make direct payments. They allow their accounts to stand until the representative of the particular firm calls on them and then pay him and give him a fresh order.

It would be difficult to get most employers to accept the position in regard to income tax in any way other than that in which they carry out their ordinary business transactions. As I have already stated, I think this new system is certainly an improvement on what existed. It has certain defects but every system, no matter how good it may be, will show defects. We cannot have it both ways. For many years, people have been complaining, particularly the lower income groups who are obliged to pay tax, about the method of collection. Representations have been made to various sources to have the method changed and the time has now come when it is proposed to change it. Taking all these relevant circumstances into consideration, the change set out in the White Paper which was issued to us some weeks ago, has been carried out with a high degree of efficiency and approached in a very realistic way.

I hope it will be possible for the Minister to get the necessary co-operation, particularly from employers, in order to help this new scheme and to ensure that it gets a fair chance. I take it that in the course of its operation if any important or serious defects show up, the Minister will be prepared to review the whole code again this time next year, or perhaps this time two years when the new scheme will have had a year's trial. As an employer myself, I would ask people like myself to approach the matter in the spirit that employers are more or less obliged to make the contribution which this scheme requires from them.

First of all, it should be remembered that this Bill deals only with a small body of direct income taxpayers of whom there are some 200,000 in the country. In order to collect the tax more efficiently, it proposes to substitute for two large biannual and very painful extractions, 52 extractions in the case of weekly wage earners and 12 extractions in the case of monthly salaried or wage earners.

There is no doubt that the present system of collecting income tax, especially from employees, is unsatisfactory and, from that point of view, I think the Bill, particularly as it effects the introduction of a system of P.A.Y.E., is a step in the right direction. Unfortunately, however, the Bill does not come to grips with the main problem in this country which, of course, is the absolute necessity for a general reduction in direct taxation. It does show, as I said already, that those who did pay income tax heretofore will henceforth pay that more efficiently and more effectively, and the tax evasions, which have arisen due to loopholes in present legislation, will be effectively blocked so that the Revenue Commissioners can collect virtually 100 per cent. of the assessable income tax revenue.

The salary earner, the wage earner, is of course a sitting duck as regards the collection of income tax and he must continue, as the law stands at present, to subscribe altogether too great a proportion of the general income of the State. The proposed legislation makes that payment rather more easy than it has been up to now, but does not take away from the fundamental fact that the direct taxpayer is paying too much, is paying an altogether disproportionate share of the revenue of the State. Until we get down to the basic problem of spreading the whole load of taxation more fairly over the population as a whole, we shall have to continue to examine the effectiveness of our tax laws.

I think that a general reduction in direct taxation, apart from easing the whole question of tax collection and doing away with the encouragement of tax evasion, would be the best possible means of encouraging enterprise in the State—an object we are trying to achieve by offering substantial tax inducements in another form. It would encourage the investment of outside capital in the State by people who would come here to live in the country and spend their capital on worthwhile enterprises. However, that is completely outside the scope of this Bill, but I do not think it is outside the scope of the commission, set up while Deputy Sweetman was Minister for Finance, to inquire into the whole question of the incidence of taxation. I share disappointment with him that at least some suggestion with regard to the basic problem of the unfair distribution of taxation was not contained in the commission's report.

P.A.Y.E. has a number of advantages. I have already mentioned that income tax is collected in 52 comparatively small instalments, instead of two substantial instalments that fall to be paid at two very awkward periods of the year. The suggestion to rationalise the calculations under Schedule E is also a very important step in the right direction, and will certainly help to simplify the whole code of income tax in regard to that Schedule. Up to now the mere fact of having 6 or 8 different Schedules, under which a person's income tax could be assessed, has led to general confusion and to ignorance of our income tax code.

There is no doubt that this legislation will mean extra cost to employers, particularly to small employers who will not have the necessary equipment or staff to deal with the new system. From that point of view it does mean a shift of responsibility and work from the Revenue Commissioners and their staffs throughout the country to the employers. Of course, the employers will not get extra reward for that extra responsibility and work and, for that reason, it must cause disruption, particularly in the working of small businesses, at the outset.

I should like to suggest to the Minister that he should ensure that the enforcement of the penalties provided in the Bill will be moderate and applied with understanding. There is no doubt that it will take some time before this system works smoothly and, during that transitional or initial period, inspectors of taxes should regard themselves as general advisers to employers and employees, rather than as being there for the purpose of ensuring that these penalties are collected, if there are any arrears of tax.

Another point was made by Deputy Sweetman to which I should like to advert. That is the question of the disclosure of certain confidential information. The mere giving of certain information in regard to the liability of an employee will disclose sources of income, as I understand it, outside income from the employer in question. I am not quite certain, but I should like to ask the Minister if the same does not apply in the case of an employer who would be a director, managing director, or secretary of a company? Is he under a similar obligation to make information available with regard to his own earnings outside the business with which he is directly connected?

The question of arrears, or interest on arrears of taxation, is also mentioned in the Bill. I wonder if any provision could be made to allow interest to an employer or a firm which discharged the estimated taxation liability ahead of the required payment period? I am thinking of something that exists in the case of insurance, in workmen's compensation, where the bulk of the premium is paid on an estimated figure over a year, then is corrected, and an adjustment is paid after some months, at the end of the financial year. If a firm could make a down payment at the beginning of the year would it be entitled to some interest on that payment?

There is also reference to an income tax month which begins on the 6th April, the 6th May, or the 6th of June as the case may be. I think the reference to the income tax month beginning on the 6th of the month is an indication that the time has come when we should look at the totally irrational period covered by the present income tax year. The time is not inopportune for the Minister to consider changing the income tax year to coincide with the calendar year. I think I am correct in saying it is being done in Western Germany at the moment and it would be more applicable in this country than a year starting on the 6th April.

This legislation will take time to operate smoothly and, of necessity, it will require the co-operation of all interests concerned, the employers, the employees, and particularly the Revenue Commissioners and their inspectors throughout the country. That is why I would like to repeat my appeal that understanding and consideration be shown in the various offices throughout the country, and that inspectors and their staffs should regard themselves as advisers, as assistants, in getting this new system into operation as smoothly as possible.

It should not be forgotten that P.A.Y.E. was initially designed for a large, wealthy, industrialised country, and its application to a small underdeveloped country, thinly populated and largely agricultural, is bound to bring with it a number of difficulties that cannot be foreseen at this stage. Therefore, I hope that, when the Bill is put into operation, every possible help will be given by the Minister's own Department, and by the Revenue Commissioners and their various staffs throughout the country. There are bound to be snags and difficulties arising out of it, and it is quite likely that in a year's time or so the Minister may be faced with the necessity of making adjustments. I suggest those adjustments would be all the easier if a spirit of good will emanates from his own Department and, through it, to the various Revenue Commissioners' staffs through the country.

I welcome this Bill and I think it will be generally welcomed throughout the country. The only feature of this with which I find fault is that of turning the heavy taxpayer into a tax gatherer. I think the Minister should give some recognition of that fact to employers.

I believe the measure will be welcomed because it is overdue. I know that many cases of emigration are caused by the demands being so very great at the end of the year. We often wonder why the people leave the country. It is caused by the demands for income tax. That is what drives the people out. This measure is to be welcomed as a Bill which will help to get the necessary moneys and prevent a lot of abuses.

I wish to make a few remarks of a general nature on the question of P.A.Y.E. Last year, I asked a question in the House in regard to how much the Exchequer lost as a result of people who owed income tax leaving the country— people who were not able to pay because they were asked for a lump sum. I got no satisfactory answer. I understand that thousands have left the country and I suppose that over the past 20 years the figure runs into millions.

The average small man cannot save a lump sum. If the average worker has a few shillings, he will use them to buy clothes. To ask him to hand over a lump sum is asking the impossible. That is the cause of emigration. I agree that many of these people have good jobs. A friend of mine who was in receipt of £12 per week owed £40. He had a family and he left his job and went to England. That embarrassment will not occur now. People will be able to remain in their jobs and the Exchequer will benefit. It may cause some extra work for the employers but from the point of view of the small man it is not before its time.

I have found in regard to people whose electricity is cut off that the person concerned, even if he is an unemployed man, is asked to hand over £2 or £4 in a lump sum to the E.S.B. When it came to the question of payment, the man had not the money and his light was cut off. Every day in the week I have experience of cases where people, who may not have the rent, leave it until the following week. The rentman will not take the rent unless he gets the payment for the two weeks. This thing acts like a snowball. It is no time before the sheriff is on the doorstep.

The small man and the man who has no capital or business, the man who depends entirely on his wages is asked to save money, which he cannot do. It is against human nature. I welcome the Bill because it helps the small man. Let the other people look after themselves.

The Bill now before the House covers two principal aspects. One is an aspect which it is hoped will to some extent cure a very serious complaint over the years arising from the present method of collecting tax under Schedule E and the hardships which that particular method has inflicted upon the ordinary wage and salary earner in the State.

The wage and salary earners in the moderate income bracket have very little, if any, balance left over each week or month. They certainly have found it increasingly difficult to provide for the payment of income tax. Consequently, in very many cases they found the Revenue Commissioners using their powers to compel employers to deduct amounts of income tax due by their employees.

The peculiar feature of the system in past years was that these deductions always appeared to take place at times when the employees concerned required not only their weekly or monthly salary but possibly something in addition. It has not been uncommon for wage and salary earners to find that, when they are looking forward to their annual holidays, in the two or three weeks immediately preceding their holidays, they had deductions amounting possibly to 20 per cent. or 50 per cent. of their salary.

A significant number of citizens, particularly young men, having failed to make provision to pay their income tax due on the appointed date and having come up against the system of deduction, decided to seek pastures new. There is hardly a Deputy who is not aware of cases where such people would possibly have a considerable portion of their wage or salary deducted for two or three weeks at a time.

The provisions in this Bill and the regulations which in due course will be made under it will, at least, in my view, bring substantial relief to sections of wage and salary earners. They will be faced, of course, with the payment of income tax but at least the payment will be made when they are drawing their normal weekly or monthly wage or salary. Consequently, the hardships should be eased to that extent.

The other aspect of the Bill deals with the position in respect of arrears of income tax. On the regulations coming into effect in October, 1960, it is proposed that all outstanding arrears shall be collected in the six months following that date. That may not prove to be a hardship if the arrears amount in no case to more than the arrears in respect of a particular year. It has been indicated, however, that there may be substantial arrears for one cause or another. Those arrears may not be due to any attempt on the part of the taxpayer deliberately to evade responsibility. They may be due to ignorance and to the failure to make a proper and adequate return because of that ignorance. I appeal to the Minister to consider whether the collection of all outstanding arrears within the six months following October, 1961, may not impose an undue hardship on those concerned.

Reference has been made to the desirability of having a complete review of the income tax code. I do not think anyone here is opposed to a review. Such a review might to some extent be coloured by a desire to bring within the code, sections of the community which have so far been able to evade their responsibilities to the community. Those who pay income tax are in many cases bearing an undue proportion of the burden of State expenditure. Their contributions to such expenditure are not limited to their payments by way of income tax. They are also contributing heavily through indirect taxation.

The introduction of this measure is overdue. It appears to give some relief in the actual collection of income tax. From that point of view it is welcome. I should like to support the suggestion that its provisions should be extended to public servants. If the private employee can spread his income tax payments over twelve months or 52 weeks in the year, surely it is only reasonable that those employed in the public services should have the same advantage. Why should they have to pay their income tax over a period of five or seven months? Are the conditions and the salaries enjoyed in the lower grades and manipulative sections of our public services so good that they permit the payment of income tax over six or seven months as against 12 months in the case of other employees?

Reference has been made to the burden that will be thrown on small employers. I have not heard the case that such a burden will exist proved here. It is difficult, in the absence of any definition from the Minister, to decide who is to be regarded as a small employer. If it is an employer who employs three persons, the work involved by such an employer in relation to this matter will not be particularly onerous. It should be simple enough to make a calculation in respect of three employees at the end of the week. I doubt if even 12 employees would impose any great strain from the point of view of the income tax code. If it is shown that there is hardship, the Minister can then look into the matter to see what reliefs he can give. This change has been long overdue. In so far as it will prove of benefit to the limited extent contemplated, it should be welcomed by this House.

The proposed legislation has come into my hands only recently. I have not had time to go through the many details incorporated in it as a result of the recommendations of the Income Tax Commission. A couple of points, however, arise immediately. There has been general acceptance of the proposal to introduce this scheme. I have the feeling—I do not like to forecast— that, come a year from now, people will not be so happy when they find how the scheme actually works as they are now when it is merely a matter of something on paper. A paper proposal can be dealt with very easily and very smoothly. It is a tribute to the many hard-working people on that commission that their proposals have met with such general acceptance. It is also a tribute that the scheme on paper looks, as I say, easy to apply. There is even a slight prospect of relief to certain taxpayers. That relief I doubt. I shall question it in a moment.

There are two small points I do not understand in the scheme. The main point is easy to grasp. The scheme will apply to full-time employees earning £6 per week or over and the employer will be responsible for the deduction of the tax so soon as he has the information on the tax deduction cards. The duty still rests on the employee to get a determination of his tax free allowances fixed. The burden is quite properly imposed on him of making certain claims which will be considered, and his tax free allowances will then be put on record. If he is earning over £6 per week the deductions thereafter will follow, if his tax free allowances do not bring him outside the scope of the provisions.

At the end of paragraph 29 of the White Paper under the heading, "Determination of Tax-Free Allowances of Employees", it is stated:—

Even though an individual may never be liable, having regard to the extent of his allowances and reliefs, it will be essential for him to complete a form of return of income and send it to the Inspector of Taxes if his earnings exceed the amounts set out at the commencement of this paragraph.

Why on earth should a person who is described in this way—he will never be liable having regard to his allowances—be asked to fill in a form and send it to the Inspector of Taxes as long as his salary goes above the £6 per week? It seems to put unnecessary worry and turmoil on the unfortunate taxpayer and does not seem to add anything, in the way of safeguarding revenue, to the powers the inspectors of taxes have.

There is one other point that one finds that causes me, at any rate, a certain amount of anxiety. It is the reference in paragraph 46 to the matter of arrears. It is there laid down that where income tax due by an employee on or before the 1st July, 1960—that is the pivotal date for this scheme—is not cleared before P.A.Y.E., it will be collected by the process of reducing the tax-free allowance of the employee. That, in its application in the ordinary case, might be the proper thing. If a person runs into a certain amount of arrears that will be taken from him and the easy way to take it from him is by reducing the tax-free allowances over subsequent years.

The warning is then given that this will, of course, mean heavier tax deductions than would apply under P.A.Y.E. if there were no arrears. Then this surprising sentence occurs:

Furthermore, until all of his tax arrears have been disposed of, an employee cannot be granted a refund of tax during a period of reduced pay or of unemployment.

That is harsh. A man comes into this scheme owing a certain amount of money to the State, and, whatever his salary is, he gets a record of tax allowances and there still have to be deductions made from his salary in order to pay tax. That man may run into a period of unemployment when he is not receiving anything by way of salary or wages and it is then proposed even though in the ordinary way he might have to get a refund of whatever had been deducted from him not to give him the refund because of his arrears.

I do not know how this matter of arrears is going to work. Take the case of a person who has been at work and earning, say, £8 a week. He continues at £8 a week for, say, half the year and then becomes unemployed. It is quite clear, of course, that tax deductions made in respect of a salary of £8 a week for a whole year will have to be modified if at the end of a year it is discovered that his salary was £8 a week for only half the year and that for the rest of the year he was not earning anything. There has to be some system of credit or giving of a refund. In Britain refunds are given. I cannot discover in this system where there is to be a credit given or any system of refund.

Paragraph 46 says that until a man's tax arrears have been disposed of an employee cannot be granted a refund of tax. It is bad enough that the man is not to get a refund of tax during the period of reduced pay, say his pay fell to £6 a week, but even when he is in a period of unemployment he will not get the refund. I am afraid this gets back to the old habit which I am afraid the Revenue Commissioners must be accused of having that they feel from time to time that by mere pressure they can squeeze blood from a stone. The Revenue Commissioners have often attempted to do that. I think this is setting them again on a very evil course.

The scheme generally has been welcomed and that welcome will continue until people find out the hardship of it and I believe there will be plenty of hardship found in the application of this system. I do not know to whom this scheme is to be applied. I take the first report of the Commission on Income Taxation. Chapter 1, page 6, sets out the procedure, that is, the payments and the demands and the two moieties, one payable in January and the other in July and in paragraph 6, page 6, chapter 1, this information is given:

This procedure does not apply to (a) public servants, members of the Army and of the Garda, post office officials and national teachers;

In fact, there are compulsory arrangements made with regard to these people and tax is deducted at source with regard to all of them.

Secondly, there are officials of the Bank of Ireland, employees of railway companies, the Commissioners of Irish Lights, the Dublin Port and Docks and clergymen of the Church of Ireland. These people have entered into voluntary arrangements whereby certain tax deductions are made.

I go on to page 7, paragraph 8, where there is set out an analysis by the Revenue Commissioners of the appropriate number of taxpayers whose main source of income arose within Schedule E for 1956-57 and for 1955-56. In 1956-57, the number from whom tax was deducted under statutory provisions—for instance, civil servants—was 44,000 and under voluntary arrangements, 13,000. Those two groups numbered 57,000 and I take them as being in fact the people described in paragraphs (a) and (b) of paragraph 6, page 6. That leaves 90,000 people.

The Revenue Commissioners' memorandum, which is given as a Schedule to the report at page 111, analyses those whose income was mainly liable to tax under Schedule E and they divide up the year 1955-56 again. They say in that year the total was 138,000, that is the total of the second group given on page 7. These then divide into 40,000 already subject to tax deductions from their emoluments in accordance with statutory provisions — civil servants, national teachers, Gardaí, railway employees, etc.

A further 8,000 as a result of voluntary arrangements with their employers agreed to the deduction of tax from their remuneration. That is 48,000, leaving a balance of 90,000. These figures are set out on page 7. So that for the first year taken, 1955-56, out of 138,000, 48,000 already have arrangements made, and I gather those arrangements were satisfactory, for tax deduction. Is it proposed to put all these people under the new legislation? If it is, I think it is unnecessary. If arrangements have been made, and made by statute, for certain groups and made voluntarily in other cases and if the procedure is satisfactory, why not limit the application of the new legislation to, say, the 90,000?

I notice a further analysis made of the 90,000 by the Revenue Commissioners set out in their memorandum on page 111. The total is 90,000 and of that 90,000 a considerable number, estimated between 35,000 and 40,000, failed to pay the tax to the collector of taxes and recovery was made through the employers in accordance with the provisions of Section 6 of the Finance Act of 1923. I do not know whether it is a correct deduction but it would appear to me that they are the only people who should have P.A.Y.E. imposed on them—I use that term deliberately—these 50,000 or 45,000 people in connection with whom resort had to be made to the Finance Act of 1923 in order to compel the employers to pay.

If it is intended to bring the whole 138,000 under this scheme I think it is unnecessary. I believe it would be better to omit those on whom honesty is statutorily imposed, the State personnel; and those who have entered into voluntary arrangements whereby tax is deducted from earnings and in whose case the method of collection appears to be quite satisfactory. It is proposed to bring them in. I think it is unnecessary and I do not think any case has been made for the application of this measure to them. I use this phrase "imposed" with full recognition of its meaning, because I believe this will not be found to be so welcome when, as I say, the machine begins to turn over and the results are seen when some of the results are shown in the Revenue Commissioners' Report.

I listened with interest to Deputy Larkin here to-day because many a time, when I was in the Department of Finance, I had meetings with trade unions and I do not remember any occasion on which P.A.Y.E. was not entered on the agenda at those meetings. I never found it discussed and I did make inquiries on one occasion after about the sixth or seventh meeting when this was on the agenda. I was told—I cannot say whether it was a union or unions— were opposed to the matter. If there has been a change of mind in that respect——

The Deputy should read the newspaper reports of Trade Union Congresses.

I have seen contrary views expressed, yes. One big union is in favour of this; one other, may I say, bigger union is against it.

One Congress approved a resolution against it some years ago.

There is disagreement. However, if those most likely to be affected are in favour of this, well and good. I only hope they will not live to regret the day on which they, first of all, asked for the introduction of this system and, secondly, welcomed whatever is here in front of us.

Deputy Moloney made the remark that what agitated people in this country with regard to income tax was the desire to make everyone pay his fair share. That is a difficulty. Anybody who pays income tax believes he is paying more than his fair share. So to speak, the whole income-taxpaying body are gathered together under that particular umbrella as people clamouring to get everybody else to pay his fair share.

What does paying one's fair share mean in this respect? There are said to be certain reliefs coming through this and there is a figure given at the end of the White Paper, on page 20, that the loss of revenue is estimated at £1,100,000 in a full year. Of course, there is no way of making the calculation for oneself but that figure is arrived at at the end of the report. Early in the report it is said that there are about 150,000 people whose main income is derived in such a way that they are open to Schedule E assessment. If my calculation is correct and if the Exchequer loses £1,100,000, I presume the taxpayer under Schedule E will gain it. If that be the case, it will look as if each of these people will receive £7 a year. It is not very much but, at least, it is something and it is satisfactory. However, I have seen the other tables in which it is said that that would be divided out with regard to the taxpayer's income, whether he is a married man, a married man with two children, and various calculations are given. The highest figure I have seen by way of improvement is a sum of £18 in the year. What is called the typical figure is shown as getting relief of about £12 in the year. The average figure is about £7. It is not a whole lot but anything is welcomed these days.

On the other hand, paragraph 59 says that when P.A.Y.E. is operative in a full year it may be expected to yield an additional £980,000, so that the reliefs are practically balanced by the new revenue that will accrue to the Commissioners. I think that when the £980,000 is referred to as the new returns in a full year, that has nothing to do with arrears; that only has to do with the prevention of evasion. There will be arrears continuing and rolling in year by year but nobody could calculate the amount that will roll in to bring up some part of the £980,000. I take it the £980,000 is the prevention of evasion for the future.

It may be a good thing to have the evaders brought to book but the evaders are not always delinquents. There may be people who must evade simply because they have not the means at certain times and, more particularly under the present system, where one is charged in a particular year on the earnings of a previous year and where the earnings in the year in which tax is levied under the present system may not be equal to the burden of sustaining tax as being incurred in the year when earnings were better.

I want the House to look at it this way: 150,000 taxpayers will gain between them £1,100,000. Of the same group of taxpayers some of them will yield up an extra £980,000. I should like to have from the Minister that there are no arrears counted in that £980,000, that it does mean a better yield of tax without counting any arrears or including any calculation as to arrears that may be flowing in year after year.

References have been made by Deputy Russell, Deputy Sweetman and others to the fact that people are very disappointed because the two reports so far have dealt only with relatively minor parts of the income tax levies. In this scheme which we are considering the revenue from Schedule E was put at about 30 per cent. of the full revenue. The figure is given on page 7:

In 1949-50 the net yield of tax under Schedule E was about 25 per cent. of the yield under all Schedules —£4 millions approx. out of £16 millions. In 1956-57 the Schedule E yield was almost 30 per cent. of the total—£6,600,000 out of £22,285,000.

Therefore, as far as this concerned, we are dealing with about 30 per cent. of the revenue that is collected.

The Second Report deals with three points but mainly with regard to Schedule A. There is a recommendation with regard to "one taxpayer, one charge." This was really only a method of collection. Secondly, there is a recommendation in regard to surtax, that there should be no separate return and, thirdly, there is a group of recommendations with regard to buildings and land. On page 48 of the Second Report it is said:

Our recommendations under head III involve the virtual abolition of Schedule A.

In paragraph 118 on page 49, they say:

Two of our recommendations affect tax yield. Recommendation number III (c) would, we estimate, bring in £400,000-£500,000 when fully operative, a lesser sum in the earlier years; recommendation number III (d) would, as far as we can judge, cost the Exchequer about £200,000.

I should add that Schedule E matters cover about 30 per cent. of the revenue. That is, of course, taken for a particular year and may have changed. I have not the calculation exactly made but Schedule A could not be more than four per cent. I think it is over three per cent. of the revenue.

I have here, between these two Reports, recommendations which affect about one-third of the revenue, that is to say, the revenue shown in Iris Oifigiúil under the heading of Receipts, Issues into and out of the Exchequer.

Having dealt with one-third of the revenue derived from this system of taxation, the situation is that on P.A.Y.E., that is Schedule E, the State will lose £1,000,000 and under Schedule A the State will lose, say, £200,000, and the gain to the State on the P.A.Y.E., that is, Schedule E, is £980,000 and the gain to the State under Schedule A is £500,000. So that, these two recommendations are to subtract from the State a sum of £1,300,000 and give to the State about £1,500,000 so that, so far, on the recommendations of the Income Tax Commission, the taxpayers are going to lose about £200,000 a year.

While one can express admiration for the work the Commission are doing, we must remember the terms of reference, which have been emphasised here. The terms of reference are very general. This Commission was set up on 18th February, 1957. Its first report was issued about December, 1958. The first legislation based on any report is what we have now, coming at the end of November, 1959. The Commission worked for two and three-quarter years and have produced two reports covering about one-third of the revenue of the State. Their recommendations, if carried out, will not relieve the taxpayers as a body but will be in favour of the Revenue Commissioners to the extent of £250,000. The terms of reference are:

To enquire generally into the present system of taxation of profits and income, its scope and structure, including the provisions for collection and for the prevention of evasion;

Evasion has been tackled to some extent, at least among those who are liable under Schedule E. The terms of reference continue:

its effects on the national economy, and the equity of its incidence; to recommend such amendments of the law as appear desirable and practicable; and if it is considered that the taxation of profits and income should be terminated, or modified in any manner involving loss of revenue, to recommend alternative means of raising equivalent revenue.

When that Commission was set up, the points mainly commented upon by the people outside were the equity and the incidence of the present tax code; and, secondly, the question as to whether the taxation of profits and income should be terminated or modified in any manner. I think there was a unanimous chorus of approval of the thought that the present system of taxation of profits and income should be modified, but, of course, the alternative was not very well received, namely, that alternative means of raising equivalent revenue should be considered by the Commission.

There is no doubt that the people of the community thought the Commission were going to produce some method of taxing profits and income different from the present method, and the general objection to the present system was that it imposed upon a small number of people a great burden. The full amount of revenue receipts that went into the Exchequer for the year ending 31st March, 1959 was £126 million. Of that, income tax including sur-tax, brought in £25 million; corporation profits tax brought in £2,800,000, that is to say, under the code of taxes referring to income in different ways, almost £28 million out of £126 million. The thought that made many people happy was that if this group of people were only given the time they would find some way of spreading that £28 million over a greater number of people than are now subject to the income tax code.

For two and three-quarter years, the Commission worked and, not meaning to be unfair to them and recognising the difficulty of their inquiry, I think people are becoming a little anxious as to when the main question will be tackled, because the main question has not yet been tackled. What has been done so far reminds me of what one sees at the start of, say, a soccer match. The teams line out and shoot practice goals in their own half without anyone opposing them. They are just limbering up. This Commission has been limbering up for over two years. It has debated a few points, for instance, in regard to separate assessment of tax, the application of Schedule A and it remains to be seen whether success will be achieved in regard to this P.A.Y.E. scheme.

The main point the Commission were supposed to investigate was the incidence of the present system and the equity of it, and to advise some alternative means of raising equivalent revenue. I do not think the Commission have an easy task. In fact I doubt if they can produce a report that will be welcomed. If they do not hold that the incidence of the present system is inequitable, they will be condemned by a very vocal section of the community; if they do say it is inequitable and propose changes, they will have to find alternative means of raising the equivalent revenue. I may be wrong but most of the letters to the newspapers, most of the editorials and most of the comments by those people who have bothered to write about this seemed to me to be in relation to two amendments; first, so to enlarge the tax code that it will catch the farming community; and, secondly, instead of having payment of income tax to have payment of revenue through purchase tax, a tax to be imposed when one purchases goods.

Taxation of farmers is a matter that has been debated here many times indirectly and very few have shown themselves in favour of any extension which would catch the farming community and, in any event, it would be futile. One recognises the importance of the farmer's position and what he does for the community in the way of the exportable surplus he produces, and it is hardly possible to think of any scheme that would cause more indignation and more injustice than one to extend income tax to the farmers.

If this Commission can produce anything that will get public favour it will be almost miraculous and a great tribute to them. As regards purchase tax, if any of the goods purchased entered into the cost of living index, everything would be in a turmoil once more. Wages and salaries would have to be adjusted and if one were to exclude from purchase tax everything that entered into the cost of living figure there would be very little left to tax and it would not be possible to formulate a scheme which would produce such a sum as £28 million.

Let us hope, however, that the Commission will be encouraged by the reception this P.A.Y.E. scheme has got so far, and that it will speed them up in approaching the main task, which I understood was to inquire into the equity and incidence of the present system and, if it were found to be inequitable, to produce an alternative system.

Of the total number of people, roughly 185,000, caught in the net in respect of income tax, 148,000 come under Schedule E. It is important to draw attention to the fact that in certain respects they are at a great disadvantage. Any member of a trade union by paying a shilling must get a copy of the rules, irrespective of what it may cost to print these rules. Let us look at the position of 148,000 taxpayers. They have not got copies of the rules under Schedule E. Whether they consider themselves victimised or not is another matter.

In reply to a question in the Dáil recently, the Minister admitted that the 1918 income tax code is now out of print. There are 18 special rules and 23 general rules affecting the people who come under Schedule E. Are these people not entitled to know the rules of the game? The Minister said a person may secure a copy of this old British Act of 1918, but the persons affected under Schedule E must also acquire up to 80 other British Acts to find out the rules of the game. I am surprised that the Minister is not placing these rules at the disposal of the 148,000 people who come under Schedule E. Why have we to depend on advice from others simply because we cannot get the rules? I would ask the Minister to make these rules available to the general public so that they can see what advantages or disadvantages may be there. Apart from sur-tax, the State collects up to £22 million in income tax, and the least they might give to the people from whom this money is collected is a copy of the rules of the game.

Certain tax free allowances are being made and in this case the rules are based on the Finance Act of 1920. I would also ask the Minister to place at the disposal of the people concerned the rules under that Act. I know the people can go to so-called specialists and get advice as to what deductions they may hope for on their assessments, but it should not be necessary for the ordinary man and woman to have the advice of these so-called professionals in this matter. I would ask the Minister to examine that matter.

Many people believe that this new system will probably catch more people. I suppose that is what it is eventually meant to do. All income tax legislation is meant to stretch the net as far as possible in order to bring in more victims. It is common knowledge, however, that one section of the community is getting away with murder, so far as income tax is concerned. I refer to the people of the various professional classes. We know that many of them prefer to be paid for their services in cash. Why they insist on that I shall leave to be imagined. Would it not be possible for the income tax authorities to issue official receipt books to these people, to insist that these people give an official receipt and to impose a penalty, if they do not make use of these receipts?

For many years, the ordinary working people, be they of the middle income group or below it, have been paying more than their share of income tax. They are the people who find it hard to scrape together a few pounds to go on a holiday in the summer time, as Deputy Larkin said. On the other hand, it is not difficult for the people in the other category I have mentioned to go to the Continent and enjoy a very good holiday, very often at the expense of the State because they have not shown a return for a fairly large proportion of the income they have received during the year. I would ask the Minister to consider that aspect and to ensure that all sections pay their share if they are in a position to do so.

We have been told that people at present paying on £11 11s. Od. may get off scot free. That sounds all right. The saving of a pound or two is a help to everyone. For the past ten or 15 years governments have conveniently forgotten completely the change in money values between 1939 and the present. The people will not gain by the increase of the tax-free allowances. Take, for instance, the figures for last year and compare them with the 1939 figures. In 1939, the allowance for a married pair amounted to £270. In 1959, it amounted to £413 and it is a little higher this year. But I believe that if we take into account the value of money in 1939 and to-day, the figure should be brought up not to £413, but to £705 and should be higher again on this year's figures. Take the case of a married man with a family of three. In 1939, the allowance was £483; in 1959, the allowance amounted to £812. Again, taking into account the difference in money values between 1939 and to-day, that man should receive an allowance of £1,216. Therefore, these people, instead of getting away with something, are paying a lot more than they should under the income tax code. I would ask the Minister between now and the Committee Stage to examine the allowances, taking into account the difference in money values.

That would not seem to be relevant on this Bill.

Quite so, but the Minister is basing his Bill on certain rates and has gone to the extent of stating, as was published in the Press, that there will be an exemption for people at present paying on £11 11s. If there is to be an exemption for them, it is only fair that we should draw attention to the fact that they should never have paid income tax if we take into account the 1939 money values.

The final remark—and certainly I want to keep within the rules of the House—I would offer in this refers to the compilation that will be imposed on the employer—and more so, the small employer, perhaps—in relation to the amount he must deduct and work out for his employees. They are not all mathematicians down the country. If it is based on the figures submitted by the Minister, even, say, 5/3d. in the £., that seems all right if the taxable amount works out at a figure of pounds or fairly even shillings. It would be easy to work out on £2.10.0. If the small employer has to work out the amounts to be deducted from his employee who earns, say, £2.16.3 or £2.17.4 a week he will run into difficulties.

Enshrined in this Bill is particular attention to serve penalties that will be imposed unless an immediate return is sent back to the Revenue Commissioners on their request for information. The Minister should try to simplify the tax basis somewhat. It may be all right in the very large concerns who can work out these figures either with their accountants or on their modern system of office machinery but that will not apply in many areas.

A percentage basis might be even easier to work on. If you take the basis of 5/3d., the percentage basis of that rate would be 26.25 and is complicated. If we want to make a success of the system, why not make it 26 per cent. or it would be very easy for the employer to work out returns for his employees on the basis of 25 per cent. A basis of 25 per cent. of any given amount would not be a complicated assessment for the employer.

If we want to make this a success in so far as it goes in relation to the income tax code and the collection of money from the people, the easier we can make it for all concerned, for the employee and for the employer, the better hope there is of ensuring its success. I want to draw particular attention to the fact that people are not, even under this new system of P.A.Y.E., getting a fair crack in relation to what they should now have to pay, when related to their 1939 incomes.

I find it very difficult to work up any enthusiasm for this Bill. When we come to consider financial proposals submitted by successive Governments, I often ask myself whether it was worth our while obtaining self-government. It is extraordinary, at this stage of our development as an independent Republic, to see us patching up an outworn, archaic tax code, which is what we are doing now in respect of the tax on wage earners and salary earners.

To some extent, there has been a public demand for this Bill, particularly from the trade union movement. That has rather amazed me. I fear many people are in for a big let-down. In a year's time, when this measure is brought into operation, they will find that they will be in as bad a case as ever they were in before and, indeed, many people will be in a worse case because these proposals will widen the income tax net.

We are modifying and adapting to our own purposes the British tax code and it has been done with considerable mechanical ingenuity. I would compliment the Minister on that aspect of the matter. The scheme as proposed seems to iron out many of the complexities of the British system of P.A.Y.E. and to make it more suited to our purposes. My complaint is that we are only patching up an archaic code.

This Bill is a bad augury for the future. I am disappointed that the Commission at present sitting has not brought in more radical proposals which would have the effect of providing us with a tax code more suited to our economy. In particular, I may say of the Labour movement that I would have expected far more radical proposals from them. One is inclined to wonder if anyone in the Labour Party has ever heard of Nicholas Kaldor or if anyone has ever heard of an expenditure tax.

The effect of these proposals is to bring in the greater number of wage earners, people who, up to now, have by fair and foul means managed to avoid their tax liabilities. We must remember that the vast majority of those who are avoiding tax are not wage or salary earners. There is such a thing as legal avoidance. A large number of wealthy people are at present completely outside the scope of our taxation code. I would ask the Minister what he intends to do to instil some measure of equity into the tax rules affecting wage and salary earners. I have in mind in particular the expense rule—expenses which may be claimed by such people—which is extremely unfair vis-á-vis business people.

I do not think I have very much more to say on this measure except to acknowledge that there has been some public demand for it. To that extent, the Minister is justified in introducing these proposals. He has further been recommended to do so by his Commission. I think it extraordinary that the Minister who may be described as a child of the revolution of this country is bringing in yet another conservative, unimaginative, flaccid tax proposal. I have no doubt he is a God-fearing man. He says his prayers every night. I want to suggest to him that now and then he should offer up his gratitude for the efforts of the British authorities, of which we make such use here.

I think we all on this side of the House agree with the principle of this Bill. It has been under consideration for some time and discussions have taken place among certain sections of the community. It has been thought desirable that we should have a Bill of some sort to enable the lesser paid workers to meet their commitments on possibly more advantageous terms. The White Paper seems to indicate to any unsophisticated person who did not study the matter closely, that a beneficent Government were introducing a Bill by which they would obtain, in revenue, a sum in the neighbourhood of £980,000 and that, with all the beneficence they could command, they were handing over to the public a sum of £1,000,000. Anyone who takes a cursory glance at the Bill would be inclined to accept that opinion.

I would fully agree that for the average lowly-paid wage earner or employee—if I may so designate him —it would be a simplification of matters for him to pay the sum immediately it is due so that he may discharge his debt and not be faced biannually with a bill of £10 or £12 or whatever the sum might be. Some speakers have suggested that that might not be a very great imposition on such people, but I think we must all accept the fact that to-day, in the peculiar circumstances that exist, no matter what salary they are drawing, married men with families and others have very full commitments. It is not very easy to put their hands in their pockets and produce a particular sum at a particular time, even twice a year. For that reason, I would be inclined to welcome this Bill and also because it is a contribution towards meeting the particular exigencies of the day.

I am not a financial expert but, so far as I can read the Bill, it appears that the difference between the British code—which Deputy Byrne has mentioned—and our own code is that the British system is really a system of pay-as-you-earn, whereas our system is a system by which you pay after you have earned. I may be wrong in my interpretation of the Bill but I take it to mean that your employer is assessed on your behalf, and he deducts from your income the appropriate amount so paid on money you have earned over the previous 12 months. It is probably true to say that was the only possible system we could introduce here but it raises a lot of difficult circumstances, and it imposes an obligation on employers, be they big or small, of securing for the Revenue Commissioners the money they feel is due to them. In other words, to put it crudely, every employer in this State from now on, whether big or small, will become a tax gatherer for the Government.

There may not be any other system if you want to introduce a system of pay-as-you-earn, but I have a feeling that this Bill will not be received by the public as a whole as a contribution towards simplifying the income tax code. I wonder will the Bill, 12 months after it has become fully operative—in July or October; I am not quite sure but I think it is October—really produce a simplification. I wonder will it produce all the satisfaction which it is thought it will produce, not only among the employers, but among the employees also.

I was particularly struck by something Deputy Sweetman said here to-day on behalf of this Party. If there are any arrears of income tax, according to the particular section of the White Paper concerned, the employer is responsible for arrears of one per cent. per month. He is responsible, in other words, for 12 per cent. per annum, plus arrears. That seems to suggest to me that not only are employers responsible for collecting the tax for the Government, but they are responsible for providing the arrears and they are responsible for paying 12 per cent. on the arrears as well. That is tantamount to asking the longsuffering, over-taxed public to do work the doing of which should really devolve on the State—to collect taxes for them and, if they do not, to pay the arrears.

I have experience of the Revenue Commissioners—I pay taxes from time to time and I am sure practically every Deputy pays taxes one way or another —and I have always been under the impression that, for some reason or other, it is impossible for the Revenue Commissioners, or that section of the Department of Finance, to get the requisite staff to deal with the problems which have to be dealt with. In substantiation of that argument—it is not entirely relevant to this Bill but it is relevant to the income tax code as a whole—it is a well-known fact that if one has any query relating to any income tax problem, if one writes to the income tax authorities, or if a duly appointed agent writes to them on one's behalf, one does not get a reply for a considerable period. I am not throwing this out as a charge against the Revenue Commissioners. I am simply stating the fact that they appear to be under-staffed and have difficulty in getting staff.

I do not think anyone, in his wildest imaginings, can suggest for a moment that a Bill such as this will not impose extra work on the Revenue Commissioners, although, very wisely from their own point of view, so far as I can see, they are laying a major part of the work on the employers.

The Deputy seems to be dealing with administration. That would arise more relevantly on the Estimate.

I am dealing with the collection of taxes under P.A.Y.E., in relation to the employer, and in relation to the Revenue Commissioners, and nothing else.

I thought the Deputy was complaining about the delays in receiving replies from the Revenue Commissioners. That is purely a matter of administration.

It is entirely relevant to this Bill because there will be delays under this system of P.A.Y.E.

The Chair is pointing out that that would be relevant on the Estimate, but not on this Bill which deals with the new system of payment of income tax.

I submit, with all respect, that in discussing the system of the collection of taxes, I am quite in order in relating it to the position of the Revenue Commissioners vis-á-vis the general public. This Bill deals with a collection of a particular tax, is that not right, Sir?

The Chair has already pointed out the position to the Deputy.

Unfortunately, Sir, the Deputy is not very clear on what the Chair means. I am always subject to the rulings of the Chair but I am pointing out to the Chair, with respect, that I am trying to relate the P.A.Y.E. system to the particular means by which the Revenue Commissioners propose to collect the tax. Surely I am in order in suggesting that if there are already difficulties and delays in the collection of tax that if you are introducing a complicated system such as this then, en passant, if you like, there are going to be further delays under this system. However, I shall leave that point. Since you have ruled me out of order, Sir, I shall say that I think there will be considerable difficulties in the collecting of this tax.

I should like to come back again to the figures in the White Paper which imply that the State will lose something to the tune of £120,000 a year. I do not believe that could be the case unless the Revenue authorities have to spend a considerable sum on administration—which I believe they will— but if they do not spend that sum on administration I think they will be considerable beneficiaries under this Bill. It is right for a Deputy to make that clear here. When discussing a Bill such as this we should discuss all its aspects and all its impacts on tax collection as a whole.

I think this Bill, if it goes through, will bring many different types of people under the tax code who have not paid tax already. I made this point in case Deputies feel that this Bill is introducing something which is giving reliefs to the tax-paying public as a whole. I cannot gainsay that. There are tax reliefs but at the same time the State will be adequately safeguarded financially because they bring into the orbit of tax-paying many sections of the community who have not paid tax before.

There is one other point which puzzles me. It is in the section in the White Paper which says that the employer, if he takes on a new employee, is responsible for seeing that he pays tax forthwith, unless he can prove that he has not earned money in the preceding four weeks. It says that if he issues a simple statement of fact in his ledger that such an employee is not responsible for tax that will be sufficient. I do not know much about the law; I am not a lawyer. I do not know a lot about finance but it does seem to me, in a country like this where unfortunately we have a high measure of unemployment and also a fairly high measure of temporary employment, that the occasion will very often arise where a person will come into employment who may have been out of employment previously for perhaps six weeks, eight weeks or two months. Would it not be possible, for the purpose of simplifying this Bill and for the simplification of the work that employers, and particularly small employers, will have to do, to have something in the Bill whereby if an employee could intimate that he had been drawing unemployment benefit from his local labour exchange, that would be sufficient? A simple certificate to that effect would be sufficient to indicate he had been out of employment for a certain period and did not come within the orbit of tax collection.

That is the only contribution I wish to make to this Bill except to issue a word of warning. It sounds very good on paper. It sounds as though the State is doing something for which everybody should be grateful and proud of them for doing, but I think there are a lot of snags in the way. I think great difficulties lie ahead and that although it appears on paper—if one reads the White Paper—as a simple and more effective means of carrying out tax collection, when we have had a year's trial of this we may not all be quite as happy as the supporters of the Minister appear to be in regard to this Bill.

I should like to say a few words on this business of P.A.Y.E. I share Deputy Esmonde's apprehensions. After we have had experience of this system for a year or two it may not prove to be as great a boon as many people now believe it to be. I should not like to sound obscurantist but I have always considerable suspicion and distrust of the introduction into our kind of society of a system which has worked in a great industrial economy like that of Great Britain. While it is evident that those who were concerned with the preparation of the P.A.Y.E. scheme for Ireland have done their best to simplify it, as compared with the system operating in Great Britain, in order to make it more adaptable to our conditions, I am not at all sure that the whole conception of P.A.Y.E. will work as satisfactorily here as it appears to have done in Great Britain.

As Deputy Sweetman and Deputy McGilligan have pointed out, it is not altogether easy to examine this scheme in detail, because we are forewarned that a great deal of the detail is to be filled in by regulations made by the Minister under the powers conferred on him in this Bill. Doubtless that is a necessary procedure, but nevertheless one has to ask one's self how the whole procedure will affect first, the wage earner and secondly those who are called upon to operate it from week to week, and month to month. I have an uneasy kind of feeling that the wage earner may discover that the new system involves him in difficulties with which he has not had to contend heretofore. I have not heard, and I do not know if the Minister is yet in a position to tell us, what is going to happen to all the State employees, and all those other categories of employees who at present have income tax deducted at source. Are the existing systems of deduction all to be wiped away and the P.A.Y.E. principle applied to everybody?

I find it hard to believe that, despite all the simplification that has been attempted in the White Paper, you will not find a considerable number of employed people, particularly those with interrupted periods of employment, who will suffer material inconvenience. I think Deputy McGilligan dealt with one problem particularly—the man who goes into arrears and subsequently becomes unemployed, or the man who has acquired credits under which he is entitled to a refund who subsequently becomes unemployed and finds himself unable to recover the credits which are due to him on account of some outstanding arrears that had been accumulated in a previous period. As Deputy Esmonde has truly said I do not think we will be in a position to evaluate all those contingencies until (1) we have seen the Minister's regulations, and (2), until we have seen the system in operation for one or two years.

However, there is one problem that I think we can evaluate here and now, and it is something to which I wish to draw the Minister's special attention. If you examine where most of the employment in this country comes from, you will find it is given by people, up and down the country, in relatively small enterprises, who employ from five to 100 people. P.A.Y.E. was evolved in Great Britain, very largely for those categories of employers whose wage roll is so large that it almost justifies the employment of electronic computers, and who have a system under which punched cards can be inserted into a machine. This prepares the wage roll for payment, almost automatically.

Take the employer in rural Ireland who has five employees in respect of whom that calculation has to be made. He will himself be involved in a lot of clerical work of a character with which he has never had to deal before. Remember, in a great many rural businesses of that size, the man keeps a ledger with which he keeps himself adequately informed of how much he owes and how much people owe him. He has very little else except his bank book, if he has a bank book. He must now undertake the computation of the wage roll, and the payment to the Revenue Commissioners at monthly intervals of whatever has become due in respect of his few employees. I do not know how it will work out in his case because he has no experience of it, that is, of keeping accounts in the form in which he will have to keep them hereafter.

Consider the man employed by a firm with 40 to 60 employees. That man has his wages paid weekly by a clerk who is normally engaged on other work, but on Friday or Saturday makes up the wages for the men, puts them in envelopes, and they are handed out on Saturday night. It is quite unthinkable that a part time clerk can undertake the preparation of that wage roll now for 40 or 50 men, make all the computations required in this system, and see to the payment of prompt remittances to the Revenue Commissioners in monthly sums under threat of heavy penalties. I envisage in a firm of that character if the work is to be properly done—and sooner or later it must be done properly if the business is not to suffer penalties— another clerical assistant will be required. The employment of one clerical assistant means a payment per annum of anything from £260 to £360. When you are talking in the Dáil, as we habitually talk in terms of millions of pounds, £260 or £360 sounds a very trivial sum.

Where would you get these salaries for clerical assistants outside organised employment?

That is the question I am asking.

Where would they get it?

I do not understand the Deputy's question. Take a small business in rural Ireland of a manufacturing or distributing character. If you put upon them an impost of anything from £260 to £360 per annum to meet the clerical requirements of this new system, I just do not know where they will get the money. Their present margins of profit do not permit of a charge of that kind and I want to ask the Minister, in his consideration of this problem, is there any system whereby he can safeguard small country businesses—indeed, I am sure there are many such in the city of Dublin—from having to meet an impost of that kind? I really confess I find it hard to envisage a scheme which would deliver the kind of business I have in mind from such a charge.

I cannot see the Minister paying for clerical assistance himself, even if he wanted to do it. I do not know how he could do it, but I hope he will not close his eyes to the fact that the problem is there, and that the vast bulk of the employers in this country fall within the category to which I now refer. It is terribly easy to go on piling up small additional charges on the small business units of this country, until eventually we carry it to the point where they are not able to carry on. Many Deputies in the House are unaware of the fact that within the last 10 or 15 years a growing volume of clerical work has been imposed on every small business in the country for the purpose of facilitating the operations of the Central Statistics Office.

There are censuses of production and censuses of wage rates and a number of returns of that kind that have to be prepared at specified intervals. So far that burden has not become insupportable because usually these returns are not required at more frequent intervals than every six months. It is possible, with existing staff, to get the material, put it together and furnish it, if it is not of frequent and regular occurrence.

Here, however, is a new system. It requires not only a weekly calculation to be made of a pretty complex character, but a monthly return to the Revenue Commissioners as well. In my reckoning, it means a substantial additional charge on every industry and business required to operate it. I cannot doubt that it must relieve the Revenue Commissioners in their own costs of collecting taxes. Whether from that source any relief can be provided by those who undertake this work on behalf of the Revenue Commissioners, I do not know. Certain it is that their condition ought to be considered between now and the Committee Stage and some proposals made to us by the Minister for the resolving of that difficulty.

I think everybody appears to want P.A.Y.E. at the present time. I gather that the representatives of the Labour Party feel it is a good thing. I wish I were as sure of it as they appear to be. I think the Minister is justified in saying that where everybody longs for something of this kind, it is better to let them try it out, but we ought to remember that all our experience should go to tell us that once this system is installed, it is not more likely to be withdrawn, if the Revenue Commissioners can keep it in operation.

Nothing this House does is absolutely irrevocable by way of legislation but I should imagine that if we determine to establish the system of P.A.Y.E. we have done something as nearly irrevocable as it is possible for this House to do. I hope that those who give the system their unreserved support are right.

I know that the Minister for Finance and his predecessor took the precaution of consulting a Commission about it and that these proposals correspond very largely with the recommendations of that Commission, but I observe with some apprehension that this is the part of the Commission's report which we are rushing to implement. There are other reports of that Commission in reference to which a more circumspect attitude is being adopted. From the point of view of the taxpayer who will come within the grip of this system, I think a word of warning is not inappropriate.

We have an exceptionally fine board of Revenue Commissioners in this country. Their function and duty is to protect the revenue and collect the taxes. When they have done that and brought these taxes into the Exchequer, their job is done. Note well that this is one section of the Income Tax Commission's report which the Minister, presumably on the advice of his advisers, has been prompt to bring to the point of legislation. Remember that those experts' primary duty and function is the collection of revenue. There is no country in the world which can boast of a more efficient machinery for that purpose than the Republic of Ireland. I wonder will those upon whom this new system operates appreciate the diligence of our Commissioners as much in retrospect as they appear to appreciate it in anticipation.

Some Deputies expressed the opinion that the Income Tax Commission neglected the main purpose for which they were set up which was to consider basically the question whether income tax was or was not the best form of revenue collection, and, if they thought that income tax should be abolished, to suggest other means of raising revenue to replace it. I can say definitely that they did not neglect that point because I am quite sure that, from the information they have been looking for over the past two years, they are considering that point. Possibly they have not found a solution or come to a conclusion.

Deputy Sweetman said he judged from the answers I gave here just after I had moved the Second Reading that I was thinking more of arrears than of anything else. I should like to make this small correction. I spoke of arrears because I had in mind that it was the question of arrears which had caused the greatest dissatisfaction. Any man who pays income tax regularly— I admit he does not like income tax— does not come along to talk about the hardship of getting a certain sum when he is not in a position to meet it. These hardships arose from the fact that income taxpayers allow themselves to get into arrears. The demand is made to pay up in a given time. It is only that aspect of the matter I had in mind when I spoke of arrears. This P.A.Y.E. system is designed to get over that big problem of arrears which have to be paid fairly promptly when the time comes.

There is one point on which, I think, Deputy Sweetman—other Deputies followed on the lines argued by him— was wrong. The White Paper does not say definitely that the arrears must be collected during 1960-61. I have not got the figures with me but I can assure the Deputy that that is not so. The arrears may be collected in 1960-61 and afterwards, if it is necessary to extend the period. Deputy Norton also raised a point to which I want to refer with regard——

Paragraph 46 must be wrong then. It is quite specific. I do not want to interrupt the Minister now but would he clarify that sometime between now and Committee Stage?

We could do it better on the Committee Stage. I can assure the Deputy he is wrong in his view that it must be during 1960.

The phrase used here is "of his tax arrears." I cannot see what else that means.

I was coming to a point raised by Deputy Norton. He outlined what he said was the ordinary procedure in the Civil Service. The civil servant gets his assessment and is told in the month of July, or so, how much he has to pay. That is then deducted over seven or eight months, if he is paid monthly, or over 36 or 40 weeks if he is paid weekly. Sometimes the amount deducted is a little bit uncomfortable, shall we say, for the man concerned. So far as the Civil Service is concerned, Departments make their own regulations with regard to how they collect. They may take the same amount every week, or every month, over the whole year. With regard to those who are paid monthly, I think they generally take a little bit more in the third month as against the first and second months. These things can, of course, be changed. Collection at the moment may be a bit streamlined, but it can be equally streamlined if Departments are asked to operate under the P.A.Y.E. system.

The point was raised that, as a result of this legislation, the Revenue Commissioners will have much less work to do. For the first year they will have more to do. As time goes on they may have less work, but I do not believe it will be much less. Inspectors of Taxes are not so much concerned at the moment with Schedule E tax collection. They are much more concerned with collections under the other Schedules. There will not be very much saving of time as a result of this proposed scheme. It has been said that they will not have to assess each individual as they have to do now. They will, of course, have more people to look after inasmuch as they must give an exemption to those who are not liable to income tax. That will be an additional task on the staff of the Revenue Commissioners. As Deputies are aware, there are many people working in industry, and elsewhere, to whom not much attention has been paid up to this so far as income tax is concerned. They will all be taken in under this system and employers will have to know how their employees stand with regard to allowances, exemptions and so forth.

With regard to the question of interest, I do not quite like putting it this way because I may find myself in more trouble, but this is really more in the nature of a penalty. The Revenue Commissioners are not looking for interest. They want the tax paid. Some employers may be a bit slow in sending in the money. They will have collected the money from their employees. It will not be their money. It will be the Revenue Commissioners' money. All employers are asked to do is to send in the money by the middle of the following month. What they collect in November, for instance, must be remitted in or around the middle of December. If that is done, then everything will be all right. There is no intention of charging interest if the money comes in a day or two days late. There may, however, be some difficulty with employers who may hold the money, perhaps carelessly, perhaps intentionally against their overdraft and not send it until a good part of the collection due in the following month is made. They will wait until the end of December to send in the money collected in November. Some penalty is necessary to ensure prompt payment in such cases. That is the way in which we must look at this provision.

I was asked what would happen in the case of an employee who had deductions made from his earnings and whose employer meets with some misfortune; he goes bankrupt or clears out of business, and takes the money with him. How does the employee stand in such a case? The employee has paid and he will be credited with the amount. Action can be taken against the employer and that, of course, will be done where it is possible.

Once the deduction has been made the employee is clear?

Yes. He has paid his tax.

I know the Minister cannot answer every question now, but who will determine as to whether or not the deduction was, in fact, made?

We shall have to do the best we can. If there is a clerk, then there would be a witness. If the employer has only seven or eight employees, then it would be a case of taking the word of those employees as against the suspicion of the Revenue Commissioners. I do not think there would be much trouble in such cases.

Deputy Sweetman made the point that an employee may go sick and be due a refund of income tax. As the Deputy pointed out the position will be all right so long as the employer is collecting from his other employees because he will then have money on hands out of which he can make the refund to the employee who is ill. If it should happen that the employer goes out of business and men go idle, then there will be no employer to refund the tax paid by them. In that case the Revenue Commissioners will step in and make the refund. If an employer goes virtually bankrupt or reaches the point when he has no money, if he is a reputable and trustworthy man otherwise, the Revenue Commissioners will give him the money to make the refund. If they cannot trust him to make the refund, they must make it themselves directly.

Is there an option whereby an employee may claim the refund either from his employer or from the Revenue Commissioners, if he cannot get it from his employer?

I do not think there would be an option, but the Revenue Commissioners will make sure that he gets it, whether he gets it through his employer or directly from them.

The employer will not have to be out of his own money in order to make the refund.

That is so. Deputy McGilligan also drew attention to a clause here under which, even though the employee will never be liable, a certificate must be obtained. The employee will have to seek a certificate. The reason is that somebody must decide whether or not the employee should be exempt and, therefore, he must produce a certificate to his employer showing that he is not liable for income tax.

Reference has been made by many speakers to the regulations. The Revenue Commissioners cannot, of course, put anything they like into the regulations. The Revenue Commissioners will be circumscribed inasmuch as there are certain headings under which they can make regulations and certain stipulations as to how far they can go. The regulations will be laid on the Table of the House in the ordinary way and objection may be taken to them, if the Dáil thinks it wise so to object.

I think Deputy Sweetman asked if the regulations could be ready before the next Stage of the Bill. I do not think they could. A great deal of thought must be put into those regulations and it would be unfair to expect that they should be ready by the time we come to the remaining Stages of this Bill. But there will be another opportunity for the Dáil to discuss this if they so wish when these orders are laid on the Table of the House.

Could the Minister provide at least a specimen of the tax deduction card?

There is a specimen in the White Paper on page 25.

That is a specimen of how it would be completed. I want to see how it will appear in blank so as to see what the employer puts in and what the Revenue Commissioners put in.

In other words, the form?

Yes, exactly. I want to see how much the Revenue people put in and how much the employer puts in and how the work is divided between the two.

Say a specimen for a man with two children earning £400 a year.

Deputy Norton said that the whole code of income tax was a complete mystery. To me personally it is a mystery but so far as I can follow the regulations and the provisions of this Bill I think it will be much more understandable to the ordinary person in future. He will be able to see and understand what he has to pay more readily under this system than in the past. He will be supplied with certain information that will help him in his card under the new system. Deputy Norton suggested —I do not know if it would be possible but I should like to investigate it to see if it would—that articles might be written for the newspapers explaining the system to the ordinary person and showing how it affects him, the sort of article a person could cut out and keep by him until he gets his card telling him how much income tax he will pay. He can use the article to check his card and see if it is right or wrong. If that is possible it would be a good thing, but in any case the Revenue Commissioners are preparing a simplified guide for employers telling them what their position is and what they are expected to do and helping them as far as possible to deal with any difficulties that may arise at their end. The Commissioners will also provide a guide, which they will call the Income Tax Quiz, for the employee and I think these will meet, to a great extent, the points raised by Deputy Norton.

Is there any hope of these guides being available before the Committee Stage?

I should not like to promise but they will be out in time.

Deputy Russell expressed the wish that any penalty under this Bill would be moderate. Personally, I have no desire to see the penalties inflicted— that is the way I look at it and I think the Revenue Commissioners take much the same view—unless you are up against a person who wants to "best" you if he can. Then of course penalties must be resorted to. I do not think there is any danger or intention of going back and charging this interest in the case of a genuine mistake or delay in sending in money. It is only there as a penalty for those who would keep money deliberately to suit themselves.

A question that was raised, I think, by Deputy Russell—and it struck me, too—is in regard to the secrecy of a man's affairs. When an employer is told that he must allow a certain amount of salary to an employee before he starts deducting, if he has a suspicion let us say that the employee has a big bank overdraft, that might be confirmed by the amount of allowance given to him. If, on the other hand, the employer had a suspicion that the employee was earning money elsewhere that might also be confirmed by information regarding the deductions. These things have to be kept in mind but I do not think we can go too far in our suspicions on that score. If we attempted to do that, the whole business would be impossible but the point is worthy of consideration and I mean to look into it again.

Somebody might suggest that the 6th of the month is a peculiar date and say: "Why not the 1st of the month?" This has been going on for so many years—the income tax year starts on the 6th April—that we have decided to stick to the 6th of the month. We can, however, have another look at it and see if anything can be done about it.

Deputy McGilligan raised the point that it is stated in the White Paper that where a man is in arrears and at a later stage some refund becomes due to him, that refund cannot be given until the arrears are paid. That appears to be a good proposition, put baldly like that. If a man owes me money and I have to pay him money he would come along and I would say: "Put one against the other and see how we stand." That appears fair enough and in many cases it would be a fair application. For instance, if a father is lucky enough to have a baby born in March he is due a refund back to the previous 1st April, a fairly substantial lump sum. If that man was paying off arrears I think it would be ridiculous not to say that that amount should come off the arrears.

Although the man, in a state of unemployment, had to provide for the baby for the next 12 months? Would you not like him to get it?

It will be more popular in the future than it was in the past. The allowance will be paid back to the beginning of the year in which the baby was born.

I am sure the Minister's tender heart would be glad to see the man get the back money.

If the man were in arrears, I think it would be wrong for him to expect that we should refund the tax paid because of the baby. I would think that would be ridiculous. I think we should take the amount he should get off his arrears.

I seem to remember something about an unjust steward who throttled his debtor and was cast into exterior darkness.

He was caught by the throat; we are not catching this man by the throat. We are only saying to him: "You were very lucky to get this. We will take it off your arrears." There may be cases where there appears to be hardship. The case where a man becomes unemployed is naturally one that would be quoted. In the ordinary way he would be entitled to a refund but there are arrears and we say he cannot get a refund until the arrears are paid up. When a man becomes unemployed under present circumstances he would not be earning and therefore no deductions would be made under the new system. It would not appear that there is a very strong case against the system as laid down.

Deputy McGilligan spoke about those employed in the Bank of Ireland, on railways, in Dublin Port and Docks Board and in the Irish Lights. It is not true to say that they have entered into a voluntary agreement to pay tax in a certain way. They pay their tax, as they are paying it, under statutory schemes. When these bodies were being set up at various times the statutory schemes were introduced under which they pay income tax. It is not proposed to interfere with these people in this Bill. It is proposed to leave them alone and let them carry on as they are. What Deputy McGilligan was arguing, as far as I could follow him, was that they should be let alone and allowed to carry on as they are. That is exactly what we are doing. We are not interfering with them in any way, except railway employees. They are being changed.

Deputy McGilligan referred to figures. I cannot look them up now, but, roughly, the figures he referred to were that it was calculated that the revenue would stand to lose £1,100,000 on this scheme but that better collection and so on, may eventually amount to something like £980,000. Deputy McGilligan wanted to know did that include arrears. It does not, no. That is a calculation of the Revenue Commissioners of better collections for many reasons. Of course there will be more prompt payment under this system. There may be people brought in who are not in at the moment and, thirdly, of course, which is an important matter also, they will pay in the year in which the income is assessed. Going back over the past seven or eight years, any Deputy can see that if we had been collecting tax every year on the year in which the money was earned, we would have got more than we did get by collecting on the earnings of the previous year because wages and salaries were going up all the time. If wages and salaries are inclined to go up, then, of course, there will be a definite revenue gain in this but that figure does not include arrears, and if there is better collection of arrears, of course the revenue will be even better than is laid down there.

Deputy Desmond came back to a point he raised at Question Time the other day—I explained it very fully at that time—with regard to the printing of the 1918 Act, which is the parent Act of all these income tax regulations, and so on. Deputy Desmond thought it was unfair that people who are bound to pay income tax are not in a position to get a copy of the rules under that Act. I dealt with it at that time. It can be got, but not easily. I imagine that most people dealing with income tax as experts, whether they be solicitors, bank managers, auditors or professional men of that kind, all have got these documents and have access to them but I did explain the difficulty of having copies made.

Deputy Byrne thought that, now that we are to have an effective system of collecting income tax from every person who is earning a salary or wage, we should see that everybody else pays his fair share of the tax. He referred in particular to expenses claimed by big businessmen. Of course, as Deputies are aware, we did bring in legislation on that almost two years ago and this is the first year in which the Revenue Commissioners can operate under the Act of 1958. I do not know yet what effect it may have.

Deputy Esmonde wondered if this Bill will actually produce simplification and give satisfaction. I think it certainly will produce simplification. I would have no great doubt about that. Of course, nobody can say whether it will give satisfaction or not. It is hard to expect satisfaction, perhaps, under any system of collection of income tax but I am sure it will be more simple.

Deputy Esmonde said that he believed the State will not lose and that in fact the State will gain more than it loses. I hope he is right in that. We shall have to wait and see.

Deputy Dillon, who was the last to speak, referred to P.A.Y.E. as a British system. That is not altogether correct. I do not know who first introduced this system but the Commission reported that there were 12 countries working this P.A.Y.E. system. Britain is different from the others in one respect, that is, in this cumulative system which, of course, makes the thing very much more complicated than the simple systems worked by other countries. We are not going altogether as far as Britain. We believe we have evolved a very much simpler system here than Britain but we were compelled, however, to have the cumulative principle involved in it. It is only fair, if you like, because if a man is paying income tax, say, for the first three months of the year and then becomes idle, of course, when the year goes out, the Revenue Commissioners and everybody else know that he was not liable to income tax and he gets a refund. He says he wants this refund when he becomes idle, that he cannot wait until the end of the year for it. That is the big reason why the cumulative system had to be resorted to.

One other point made by Deputy Dillon was with regard to the inevitable trouble and expense that will be thrown on employers in bringing this system into operation. Deputy Dillon did not suggest that the State should pay the employer for that. I was looking at this point, too, and of the 12 countries that have adopted the system, the Commission said that the Spanish one was different from the others in this respect, that they paid employers for doing the job.

The Spanish system?

They are the only ones who do pay. Deputy Dillon was not advocating that we should pay. I think he was advocating that we should try to give them some assistance. It is intended as far as possible to give the employers assistance by way of advice, in the beginning, at any rate, but I do not know whether we could go further than that. It would raise a very big problem to go further. It would be a very big problem to promise even any sort of clerical assistance because it would be nearly impossible to carry it out, so I think we shall have to ask the employers, giving them all the advice we can, to work this system on their own and to get a grip of it and to carry on as well as they can.

I do not think the employers have raised much objection to that in any meetings the Revenue Commissioners had with them. They quite realised that it would be troublesome. They are fearful, I think, of taking it on, that they may not be able to do it properly. On the whole, as I said in making my speech here already, the representatives of the employees and the representatives of the employers have been very helpful in any deliberations we have had with them in drawing up this scheme.

Would the Minister consider, at least, from his own personal knowledge, the circumstances of the moderate-sized employer, with special reference to rural Ireland but including small employers in the city of Dublin, actually operating this scheme? Where they have, say, 20 to 50 employees, it will be a weekly burden.

I know they will have some trouble, but of course, the stamps will be a much simpler system for the small employer.

What is the small employer? I could not find any defination.

I do not think we should define it.

You have not define it?

Not in present circumstances. I think it would be impossible to work the stamp system unless you have a regular wage. If you have a regular wage, it would not matter about the size of the employer. He can operate the system.

Where you have regular employment, a fixed wage rather than a fluctuating wage.

If you have any sort of fluctuation of wages, the stamp system would be virtually impossible.

Did the Minister deal with the question where a person has a salary and also outside earnings before I came in?

There was an exception mentioned by me. I had in mind a dispensary doctor. A dispensary doctor who is employed by the local authority has a salary; he is also earning fees. At the present time for convenience he is assessed under Schedule D on his fees; the other item is added, and he pays the whole lot under Schedule D. We shall have to except him from the Bill.

I wonder would the Minister enlighten me in a matter I raised earlier in connection with the collection of this tax in future. Will the services of the tax collector as such be utilised under any circumstances for the collection of this tax which is overdue?

That is a point on which I cannot be definite. I explained earlier—I do not know whether the Deputy was here—that we could not expect a very big saving in staff because most of the inspector's time goes on income tax other than Schedule E. That is only a small part of his business. The point raised by the Deputy is a new one and I shall have to give it further consideration.

The Minister mentioned the question of a baby being born in March. Does the person get the allowance if the child is not alive on the 6th April of that year.

That was the law. That has been changed.

Is that being changed now? It used to be given for the first year but then it was given for the last year after the child grew up.

That is changed.

Question put and agreed to.

Next Wednesday.

No. We want a longer time. The Government Chief Whip was specifically told by me that one of the reasons we were prepared to take the Second Stage was that we wanted a longer period between the Second and Committee Stages.

I do not mind if the Bill can be passed this session.

I was not suggesting the first day of next session for the Committee Stage.

You want all the Stages before Christmas?

I think it will be necessary to get the Bill through this session. We want to get the regulations out very soon after Christmas if at all possible. That is the trouble really.

It is a horrid dose to have to get it out so soon.

We shall say Wednesday week.

The Minister will appreciate that we on this side of the House shall have to consult with some of the people who will be affected by this before we shall be in a position to discuss it in committee. Wednesday week would be the 9th December.

Acting Chairman

It could be ordered for that date but not necessarily taken.

If the Opposition would agree to give me all Stages that week it would be all right.

I could not possibly give any such undertaking.

We are anxious to help but I do not think it creates a good impression anywhere if the House appears to deal with a matter of this kind on the basis of skimpy consideration. We are always anxious to accommodate the Minister as far as possible but I should not like the Minister to take it that we shall give him all stages. We can order the Committee Stage for Wednesday, 9th December, and decide then.

Committee Stage ordered for Wednesday, 9th December, 1959.
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