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Dáil Éireann debate -
Thursday, 10 Dec 1959

Vol. 178 No. 8

Committee on Finance. - Finance (No. 2) Bill, 1959—Committee and Final Stages.

Section 1 agreed to.
SECTION 2.
Question proposed: "That Section 2 stand part of the Bill".

In relation to Section 2, I want to be clear on a matter of order. The question of allowances arises in Part III. I want to know whether it would be more appropriate to raise the question of allowances for those people who will start under P.A.Y.E. on the 6th October, 1960, on this section or at a later stage.

I think it would be better taken on Section 14.

As long as that is quite clear, I shall discuss it at the later stage. It is all right so long as I know that I shall not be told that I cannot discuss the matter on Section 14. I think it would save two discussions on the one subject if we waited until Section 14.

Question put and agreed to.
SECTION 3.
Question proposed: "That Section 3 stand part of the Bill."

I want to raise on this section a question which I raised on the Second Reading as to why civil servants and certain other parties are excluded from the scope of the Bill. The Minister indicated, on the last occasion, that the reason civil servants were not being brought in under the Bill was that there was no difficulty in collecting their assessments from them. If P.A.Y.E. has any beneficial effects for the taxpayer, I see no reason why these people—civil servants, Gardaí, teachers and Army officers— should not be brought within its beneficial scope if there is a beneficial scope attached to the Bill. At present, civil servants and these others pay their income tax deductions within a period of six months by way of monthly deductions from their salaries. The deductions start about August or September or even October and are completed by the following March. In other words, they pay their income tax over a period of approximately six months. The new scheme here envisages that income tax will be paid by weekly or monthly deductions from any person employed or in receipt of emoluments.

I want again to raise the question that civil servants, Gárdai, Army officers, teachers and such persons should be given whatever benefits are being conferred in the Bill on ordinary persons in employment. I see no reason why civil servants should be excluded from the provisions of this Bill. It is not sufficient for the Minister to say they do not cause any difficulties in the administrative machine. If it is an easement of their difficulties to spread their income tax payments over 12 months, by 52 weekly deductions or 12 monthly deductions, they ought not to be denied the benefit of the provision which is being made available for other persons.

I feel that the matters referred to by the Deputy would more relevantly arise on Section 4.

Amendment No. 2 in my name has the express purpose of covering these cases. I do not mind on which section we discuss it, so long as I know where I am.

I feel it would arise on Section 4.

As I understand Section 3, the definition of emoluments includes, not merely cash that is paid for wages, but benefits in kind that are also paid to employees. We had a tremendous discussion on this subject on the Finance Bill, 1958, and, as a result of the enactment of that measure, various benefits in kind are now to be classed as taxable salary. For example, in the case of a director, I think I am correct in saying that "emoluments" covers the fees payable to a director by a company and that, therefore, whatever fees are paid to a director will be taxable under Schedule E. I am not quite clear on that and I should like some confirmation, or otherwise, of the position. If that is so, then I am equally not clear at what stage it is determined that emoluments in kind are to be taken into account. The framework of P.A.Y.E. is that in the case of persons whole-time engaged, it will apply to those who are in receipt of amounts in excess of £6 per week. If a person is receiving £4 per week in cash and, shall we say, living expenses valued for a further £4, does that person automatically have his £4 worth of—shall we call it?—living expenses added? Is he, therefore, considered now to be assessable under P.A.Y.E. and is the employer bound to take cognisance of that and make the appropriate deductions?

I should like to reinforce what Deputy Sweetman has said. This would arise in the case of practically every commercial traveller, many of whom are paid salaries and then are given money for hotel expenses, petrol and such various things. That can amount to a considerable sum, and yet in no way is that considered part of their income. It would be grossly unfair if it were to come in sideways under this Bill.

I do not see how anything can come in, as Deputy Dockrell has said, sideways under this Bill. It seems to me that the definition of "emoluments" in this section is clear and unambiguous. As far as I can see, it does not affect the existing position except to set out that "emoluments" means "anything assessable to income tax under Schedule E", anything assessable at the moment to income tax under Schedule E. That does not make any change.

There is this change. As far as I see it now, it is not the Revenue but the employer who is to determine what is assessable to income tax, because it is the employer who has to decide whether the person concerned comes under P.A.Y.E. or not.

I do not think so.

I appreciate the Minister has had to take up this brief at such short notice. If he wants a moment to read his notes, we are perfectly agreeable to give him any time he wants.

I should like to come back to the definition in the section, which means "anything at the moment assessable." The point there is that there is no change, as far as I can see, in the method of assessment. That will be continued to be made in accordance with the existing law. I gather that, because arrangements are being made for payments by instalments, so to speak, there will be at the end of the year some assessment made as to whether there has been an underpayment or an over-payment of tax and that in certain cases there may be a formal assessment. I understand that one of the advantages of the present system is that, except where it is necessary to make a formal assessment, perhaps in such cases as were referred to by Deputy Dockrell, for the great generality of persons, there will be no formal assessment. At the beginning of the year, however, when the tax deduction card is applied for, the question of the allowances to be made to that person will be settled once and for all for him on the basis of the information he has supplied to the Revenue Commissioners or to the inspector of taxes. I understand that the deductions will be made on that basis and that there will be no determination by the employer as to what is properly chargeable to tax. I think that is the point which the Deputy——

No, it is the point Deputy Dockrell made, not I.

——which Deputy Dockrell made. It will not be the employer who really determines what is the net taxable income of any employee. It will be determined on the basis of the information furnished by that employee himself to the Revenue Commissioners.

With regard to the other question, which I did not quite gather, the question of a director——

Are they assessable under Schedule D or Schedule E?

They will be assessable under Schedule E under this Bill.

Schedule E?

"E" for Edward?

"E" for Edward. I do not see that there will be any difficulty in their case. There is, of course, this vexed question of allowances, allowances in kind, allowances, say, in the use of a motor car, the use of a residence, and matters of that sort. I gather that that has already been determined by the House in the Finance Act of last year and there has been no change made in that regard. I hope I have conveyed to the Deputy what is in my own mind in regard to this matter.

Will the Minister deal with civil servants?

The position there is that they would be more properly assessed under Section 4.

We shall deem the remarks to be made on Section 4. I shall not go back to Section 3 again.

I am afraid I have not made myself clear to the Minister. I agree that in the case of a person whose basic salary is over £6 a week and who is paid expenses in addition, there will be no change in the existing position. What I am worried about is the marginal case. As I understand it, an employer, if he does not pay a person more than £6 per week, has not got to deduct tax in any circumstances. Supposing an employer pays a person, let us say, £4 a week and provides expenses of some sort for him, then, as I understand the provisions of Section 3, it is the employer who will have to decide whether the expenses he is paying him are assessable to tax or not. If those expenses are not assessable to tax, then the employer does not bring the employee in under P.A.Y.E. because he is being paid less than £6 a week. If the expenses are assessable to tax, then he must make the appropriate deductions.

My anxiety is to ensure that there will be some method of making certain that it will not be left to the employer in that position himself to make the determination at the beginning of the year, only to find that his determination, made bona fide, is wrong, that, in fact, what he should have been doing all the time was deducting tax from the employee and that, accordingly, the bona fide mistake he has made as to what is or is not assessable in the way of expenses or gain of that sort, as apart from a cash gain, means that there is arrear of tax and that he will have to make it up.

I see Deputy MacCarthy shaking his head vigorously all the time. Perhaps he will be able to explain the matter more clearly than I can. There is no doubt whatever that there is the marginal case for which there must be some method of ensuring that the employer does not have to put himself in the position of being the judge as to what is assessable in the way of expenses and what is not. That is a matter that must be determined in the last analysis by the court on appeal from the Special Commissioners and there must not be a situation arising in which, because an employer has differed from what is in the last analysis ultimately determined by the court, he, the employer, is liable for not having deducted the tax during the course of the year. I accept that the method of providing that will probably have to be an administrative method rather than an express section in this Bill but it is a matter that must be covered in some way. I should like to hear the Minister's views as to how it will be covered.

As I understand it, when a person enters into employment, the onus is on the employer to secure from that person a tax free pay certificate. The onus is then on the employer to apply to the Revenue Commissioners for the tax free pay certificate and to furnish them with all the information available.

Is the onus on the employer only if he is paying £6 a week in cash?

Yes. Wait, though. The employer, I would say, where he is paying a nominal weekly wage and grants a substantial allowance——

Take a simple case —a domestic servant who is paid £4 a week and lives in. Is the value of the living in an emolument within this section?

I think the answer, according to my advisers, is that in the case of a domestic servant receiving a weekly wage of £4 and living in, the allowance in kind is not taken into account because her total income is under £1,500 a year.

Under what?

£1,500 a year.

That may be the answer that clears the whole thing up. Then am I to understand from the Minister that so long as the total value of the cash paid, plus the value of the expenses does not exceed £1,500, there is no need to take into account the value of the expenses at all? If that is so, I am answered.

Again I am advised that the Deputy is quite correct except in the case of a director who, apparently, is in a special category.

All his things are added together?

May I put it this way? In the case of an employee who is not a director, who works whole-time for one particular person, then is it clear that the value of emoluments other than cash does not come into the assessable computation unless the value of such emoluments other than cash and the value of the cash exceed £1,500? If the answer is that it does not, then I am satisfied.

I think that is broadly correct. I cannot go into any fine points in a matter of that sort.

Did the Minister say "probably"?

"Broadly".

Very good.

Question put and agreed to.
SECTION 4.

I move amendment No. 1:

In page 2, to delete paragraph (a) and substitute the following paragraph:—

"(a) emoluments arising from an office or employment of any class which is such that, in relation to the year 1958-59, tax on emoluments from an office or employment of that class was deductible or treated as deductible from the emoluments under any Rule, other than Rule 7, of the Rules applicable to Schedule E,".

As the House has been informed by Deputy Norton and Deputy Sweetman, Section 4 applies Part II of the Bill to all emoluments except those set out in paragraphs (a), (b) and (c). As the Bill stands, paragraph (a) excludes emoluments the tax chargeable on which is deductible pursuant to Rule 11 of the Rules applicable to Schedule E. The purpose of this was to exclude remuneration which was assessed departmentally. It has always been accepted in practice that the tax in such cases is deductible under Rule 11.

Rule 11, as the Deputy knows, is of somewhat ancient origin. I think it is to be found first in the Act of 1918 and a number of refined applications of that Rule have been made over a period of years. It is now felt desirable to treat the tax in such cases as deductible not only under Rule 11 but under the Rules applicable in general to Schedule E, with the exception of Rule 7 which will be dealt with in Section 13 of the Bill.

Would the Minister say what will be the effect of the passage of this amendment?

I am as clear as mud about this.

It will not make any change in intention.

Did I understand the Minister to say that the effect of this amendment would be that it will make no change? If so, why is he putting in the amendment?

That is what I want to find out.

I said that it does not express any change in intention. It is merely put down for the purpose of clarification. If P.A.Y.E. is to work the whole procedure in relation to the calculation of allowances will have to be simplified.

Apart from calling Rule 11, Rule 7, does it do anything else?

It does not call Rule 11 Rule 7.

The process is under Rule 7.

It excludes Rule 7 very definitely.

What does it do with Rule 11?

It makes——

A regulation of it.

It does not relate the deductions specifically to the deductions which may be made under Rule 11.

Do I understand the position to be this? A person was assessed under Rule 11 and he is now affected by the amendment. The amendment is in regard to exceptions and anyone assessed under any part of Schedule E, other than Rule 7. It seems to be a simple question of construction.

Wait. I am in this difficulty in relation to the fact that both of us, I fear, are using words which are terms of art and we are misapplying them. It is not a case of assessment. It is a case of deductions and allowances.

No, it is not.

It is. The tax on emoluments is ... "deductible or treated as deductible from the emoluments under any Rule ..."

But it is the tax to be deducted.

What we are excluding here are emoluments from Section 4. We are excluding the whole body of emoluments covered by the paragraph as amended.

What we were excluding in the original Bill were any emoluments which, before this Bill, had been assessed to tax and that tax was assessed under Schedule E, Rule 11, only.

Would the Minister mind explaining what clause (a) in the original Bill, before it is amended, means?

I can do that too.

I have no doubt the Minister can do a lot.

The purpose of Section 4 is to apply this procedure for the collection of tax, not the assessment of tax to which the Deputy has referred on several occasions, to all emoluments with certain exceptions. Now, the exceptions so far as the original paragraph (a) applies, are emoluments, the tax deductible on which is deductible in assessment pursuant to this Rule 11— that is to say, deductible in the way civil servants' salaries are; deductible more or less at the time of payment, or at certain specific or convenient intervals over the year, more numerous than the ordinary taxpayer has to provide for.

But under Schedule E, before this Bill is passed, people who are assessed under Rule 11 are assessed in a different way from the ordinary body of Schedule E taxpayers.

That may be but we are not dealing with the method of assessment.

We are not.

You are changing the method of assessment for the general body of Schedule E taxpayers from a preceding year's assessment to an actual year's assessment.

In relation to the general body of persons who are assessed under Schedule E, what we are discussing now is a provision in the Section which excludes a certain class. Oh, yes, all emoluments.

All "except ..."

"Except emoluments which are ..."

So this method of collection does not apply to those emoluments which fall within the terms of paragraphs (a), (b) and (c). In relation to paragraph (a) as I understand it, the tax on these emoluments is deductible. The tax on emoluments falling within (a) is deductible in accordance with Rule 11, at more frequent and more convenient intervals during the year than the tax under Schedule E is normally collected. I think the difference is that the general body of taxpayers have their tax collected under Schedule E at the moment. In the case of those who fall within paragraph (a), the tax is deducted when certain fractions of the salary are being paid.

The difference furthermore is that those assessable under Rule 11 are assessed on the actual income received during the year of assessment and the tax so assessed is deducted over that year. The remainder of the Schedule E tax paying community are assessed at present on the income they receive, not in the actual year of assessment but in the preceding year. That tax so assessed is payable in two instalments, on 1st January and on 1st July following. What I am trying to get at here is: why is the definition of emoluments made by reference to tax deductible rather than by reference to tax assessable, because the fundamental difference is not the deduction of the tax but the assessment of actual earnings rather than the preceding year's earnings.

That is the reason why it is necessary to exclude persons whose tax is assessed on their current year's earnings, on their earnings as they accrue from year to year, on their earnings as they accrue in the particular year in which the tax is deducted. That is why it is necessary to exclude them from a Bill which is designed to cover another body of Schedule E taxpayers, that is, that body whose tax is assessed, not on the year in which a moiety falls to be paid but on their earnings for the year preceding.

I suggested that to the Minister ten minutes ago and he said it had nothing to do with assessment, but it has. That is fundamental.

It is quite clear from the wording of the section that what we are concerned with here is the manner in which tax is deducted.

Could we clarify this in a simpler way? Do the three exceptions in Section 4, (a), (b) and (c) cover anyone other than class 1—civil servants, teachers, Gardaí and anyone paid by the State; class 2—employees of the Bank of Ireland who by statute are under a specific similar rule; class 3—the employees of the Dublin Port and Docks Board; class 4—the employees of the Commissioners of Irish Lights and class 5 the employees of the Representative Church Body? Are there any other classes that are excepted under paragraphs (a), (b) and (c)?

There are not. Paragraphs (b) and (c) do not apply. All the deductions to which the Deputy has referred are covered by paragraph (a) and will, perhaps, be more clearly covered by the paragraph——

——paragraph (a), as amended?

——which it is proposed to amend.

Does paragraph (a) as it is to be amended, cover any class other than the five classes I have mentioned? Are there any others in the same boat?

No. My advisers say the answer is "no."

I want to know what is the real effect of this. Words and phrases are being thrown about without producing any clarification to anybody other than those who resort to the very pleasant art of self-deception by pretending to understand it all. I do not intend to do that. As I understand it, the position is that civil servants, members of the Garda, the Army, Judges, Ministers, etc., pay income tax based upon earnings in the current year, that is, the year which ends on 5th April—for this year, 5th April, 1960. I understand they pay their income tax within that year by the method of deducting employed and that all persons who are in receipt of what is described as official pay come within the scope of this Rule 11.

In the case of outside persons, I understand they are assessed for the current year, not on what they earn in the current year but on what they earned in the preceding year. Therefore, for income tax purposes, they are assessed in two moieties on their current year's income, their current year's income being assumed to be what they earned in the previous year, and they pay the current year's income tax on the basis that one instalment is due and paid in January and the other paid in July. In other words, they pay portion of this year's income tax assessment—half of it—in January and the other half is paid outside the period, in July of the next year. From what I can gather from what the Minister said, some of these manoeuvres and this amendment are designed to eliminate something under paragraph (a) in the section of the Bill as drafted. An amendment to paragraph (a) is being offered by the Minister. What I want to know is : does the amendment to paragraph (a) offered by the Minister do anything to disturb the present method of assessment of those in receipt of official pay and if it does——

——will the Minister tell us in two simple phrases that Pat Murphy down the country can understand what is the effect of amending paragraph (a) as compared with paragraph (a) in the Bill?

I wish the Deputy would put his question in two simple phrases and then I might be able to answer it——

I shall put it in two simple phrases.

——so that Pat Murphy down the country can understand. The position is that if a man happens to be in any of the public services, he is taxed in respect of his current year's earnings and he will not be affected in any way by the proposed amendment of the existing paragraph (a). He will be in just the same position. The only thing about it is that the position will be much more readily understood by any person who has to deal with the matter——

Including the Minister.

——where there is a great deal of difficulty in finding precisely whether he comes under Rule 11 or Rule 12 or some other rule. That is the position. Any person who is assessed in respect of income earned by him in the year of assessment,—that is, the current year —and from whom tax is deducted as the year progresses——

On the assessment then made.

——will be in precisely the same position, under the section as amended, as he is in now. There will be no change in his position. Perhaps Deputy Sweetman is about to say something?

That may be so in theory, but, in practice, that man, in 1960-61, will be in a worse position than his colleague who is not paid out of public funds and to whom P.A.Y.E. applies in that year and in that year only. I do not propose to argue as to whether there is a difference in that argument as between paragraph (a) as amended and paragraph (a) as in the Bill. There might be one very slight difference between one class and another. It is better to take the broad issue. Let us take it this way: we have two people, both of whom are married and both of whom have two children. Their assessments in 1960-61 will be computable on the basis set out on page 23 of the White Paper in the last column. In respect of the person whose earnings for the year are £1,000, the tax assessable in the last column is £54.12.

What page?

Page 23, Appendix 3. The last two columns are for the married couple with two children. After this Bill is passed the taxpayer who earns £1,000 a year will be liable for £54 12s. His tax liability in the year 1961-62—not next year—will be £54 12s., and Pat Murphy, who is in the public service, and Bill Fleming, who is employed, shall we say, by any outside private firm, in 1961-62 are both going to pay £54 10s. But, in 1960-61, that is next year, Pat Murphy will pay £54 10s., the same amount, but in 1960-61, because P.A.Y.E. comes into operation only on the 5th October next year, Bill Fleming, who is employed by an outside firm, will only pay £27 6s. In fact, the civil servant, the employee of the Bank of Ireland, the teacher, the Garda, the officer in the Army, the employee of the Dublin Port and Docks Board, of the Commissioners of Public Lights or of the Representative Church Body— all those people who are paid £1,000 per annum, and who are married with two children—will pay £27 6s. less than their colleagues in outside employment, earning exactly the same pay during 1960-61.

Theoretically there may be no change. What is sauce for the goose should be sauce for the gander, and their liability for the first year in which this scheme comes into operation should be equated. I tried to provide this in a different way by adding a new subsection to Section 5, but it is easier, perhaps, to discuss it on Section 4, having regard to the fact that the Minister put down an amendment to Section 4. Is there any reason why a person who has been in the situation, in the Minister's own view, of giving no trouble to the Revenue, because there are no arrears, should pay during 1960-61 double the tax that the ordinary salary earner will have to pay? That is exactly what it amounts to, that the person who is in any of the classes I have mentioned, and as far as I know under Clause A there are no other classes involved, will pay next year twice as much tax as the ordinary person earning a salary from an outside firm.

This was a case that was taken into account quite deliberately in the British legislation when pay-as-youearn was introduced in Britain. Last night the Minister chided me, when I mentioned Canada and the United States, for not having given examples about our next-door island. I am giving one to him now and if it was bad for me to take comparisons elsewhere, if the comparisons I should have taken should have been in respect of U.K. tax, then he is hoist with his own petard because the British, when they were introducing pay-as-you-earn, did take account of the fact that these classes would otherwise be paying more than the ordinary salary earners. I think the technical phrase—the Minister's advisers will know this because I do not know whether I am correct—was that for them they had certain segregations of tax "holidays" to enable everyone to come up and pay the same amount for equivalent salaries in the first year in which pay-as-you-earn came into operation.

There is no use whatever in taking the line that the existing legislation makes no change in people's circumstances. What matters in relation to taxation is that the burden is equally spread over the community, and if Bill Fleming and Pat Murphy are both in exactly the same personal circumstances, both earning £1,000 per annum, both married, both having to support a wife and two children of the age, or in the educational period of their life in which they are entitled to claim under the Income Tax Acts, is it not proper that both should pay the same amount of tax and be assessed for the same amount of income tax for 1960-61?

As the situation stands, the civil servant will have to pay £54 12s. for 1960-61, will have that amount deducted from his pay, while the person in outside employment will have to pay only £27 6s. That is reduced to the simplest language that I can reduce it, and I should like the Minister to say whether it is correct that one will pay £54 12s. and the other only £27 6s.

I am interested in the same point that Deputy Sweetman raised. I must confess I am puzzled by the phrasing of the Bill, particularly in relation to present income tax practice. Perhaps the Minister would be able to tell us what would be the position in this respect? I take the case of two young men who have been at the university. They both qualify and become engineers. Let us say that one goes to private employment and the other goes to the Board of Works, both for the same pay, and both are in the same domestic set of circumstances. The tax which they would both pay in the year 1960-61 is £36. Let us also say that they both take up employment on the 6th April, 1960. The engineer who goes to the Board of Works, in accordance with the customary method of deducting income tax from public employees, the moment he starts his employment pays his income tax in instalments at the rate of £9 in June, £9 in September, £9 in December and £9 in March. In other words, he pays a total of £36, and that is his assessment for 1960-61.

The other young man starts in private employment and commences work on the 6th April. His P.A.Y.E. comes into operation on the following October, so he pays nothing between April and October, and in October he proceeds to pay. As I understand the Bill, he pays whatever he is liable for from October onwards; he pays £3 in October, £3 in November and £3 in each of the months following right up to the end of March. He pays, in other words, a total of £18. I may be wrong in this and that is why I ask the Minister, with the technical resources at his command, to clarify the point.

I understand the position to be that the person who goes into the public service on the same day as another takes up outside employment, the relevant circumstances being the same, in the year 1960-61, is in a different position from that of his counterpart in outside employment. The person who goes into the public service will pay a total of £36 income tax; had he gone into private employment instead of into the public service, he would be called upon to pay only £18 because, in his case, payment would commence in October. In the public service, however, it commences from 6th April. Am I correct in that? If I am not correct, will the Minister tell me what section in the Bill ensures that that will not happen, that someone in one employment will pay double the income tax paid by his counterpart in other employment?

I think Deputies had better cast their minds back, first of all, to the reasons which induced the Commission on Income Tax to recommend the introduction of this system and subsequently induced the Government to accept that recommendation. The general argument for the introduction of the new system is that the existing system can occasion grave hardship, particularly in the case of manual workers and persons in receipt of earnings from employment which is liable to interruption and whose earnings from these sources may not be very considerable. A person may be employed in an industry in which he earns a considerable amount of overtime in one year. In the next year, circumstances may change, for one reason or another, and he may find himself out of a job. Because he is liable to income tax in respect of the money he earned in the preceding year and is now out of a job, it is impossible in many cases for tax to be collected. Having failed to meet his obligation in respect of the income tax for which he was liable when he was in employment, he is now in the position that, in order to evade the Revenue Commissioners, he may have to leave his employment and go elsewhere. What we are doing here is, in fact, changing the basis of assessment.

Hear, hear!

The basis of assessment under this will be on present earnings and not on earnings in the preceding year. In the normal way, if there were no special provisions in this Bill, the result of the change would be that the person coming under the P.A.Y.E. scheme would, first of all, have to meet his liability in respect of the past year of assessment, that is, in respect of the year preceding that during which he comes under P.A.Y.E., together with an additional half-year's payment. The result would be that in the year in which he comes under P.A.Y.E., were it not for the special provisions in this Bill, he would pay not 12 months' tax but 18 months' tax. Everybody will concede that that would constitute a grave hardship on any taxpayer and, above all, on the general body of taxpayers for whose convenience and relief this P.A.Y.E. system is being introduced.

The persons whom it is intended to exclude under paragraph (a) are not in the position I have just outlined. They have been in employment and on the hypothesis that that employment will be constant and lifelong, special rules have been made for the collection of tax. They are in the position that their obligations, so far as Schedule E is concerned, have been met approximately to date. They have paid their tax. When this change takes place, they will not be liable to an extra half-year's tax. The provisions of the Bill are designed to relieve a hardship which would arise because of the introduction of this new system of tax collection. That hardship would fall only on those who are outside the categories covered by paragraph (a). There is, therefore, no injustice being done to any taxpayer when one does not provide special measures to compensate him for a hardship he never suffered.

The Minister does not follow.

No. I understand there has been a good deal of contention. First of all, let me deal with the special position of the British. Deputy Sweetman mentioned the British position. He was not, of course, strictly accurate in his description of what the British did in 1944 or in relation to the circumstances in which the P.A.Y.E. system came into operation in Britain in 1944. Prior to the introduction of that scheme, a scheme of compulsory tax deduction was in force. Under that scheme, the tax collectable during the year 1943-44 had to be collected during the months of April to October, 1944. When the P.A.Y.E. scheme commenced in April, 1944, the tax payable under the old scheme in the months April to October, 1944, was remitted because, if that were not done, then in a seven-month period from April to October, 1944, double deductions would have been suffered. In Britain—and I think this is really relevant to the discussion —when civil servants were brought within the P.A.Y.E. scheme, they were not granted any remission of tax for the reason that there was no period during which, as taxpayers, they would be suffering deductions under the old system and under P.A.Y.E.

We have been talking here about a certain section of people who are being assessed under Schedule E and we are trying to say that they are being unfairly treated by comparison with the general body of persons who are assessed under Schedule E. They are not being unfairly treated. They are not being called upon to pay any greater tax. The people who come under P.A.Y.E. will have to pay 12 months' tax in the year 1960-61; they will have to pay in that year 1960-61, the last moiety of their tax in respect of their income for 1959-60 together with six months' tax in respect of their earnings in 1960-61. They will pay the equivalent of 12 months' tax in any event, and any Schedule E taxpayers who are excluded from P.A.Y.E. will also pay 12 months' tax. The cash obligations to the Revenue Commissioners in respect of the year 1960-61 will be the same, for all classes of Schedule E taxpayers, whether within paragraph (a) or outside of paragraph (a). I am excluding those covered by paragraphs (b) and (c) from the argument because it is only with those who are covered by paragraph (a) that we are dealing.

I want to make it quite clear that there is no injustice because there is no danger of hardship. There would be a great danger of hardship in respect of the general body of P.A.Y.E. taxpayers if it were not for the saving provisions in Section 5. However, the Minister for Finance is prepared to give further consideration to this matter as it affects persons within Section 4 (a) and on his behalf, I propose to put the following statement on record:

Since the Second Reading took place, it has been represented to me that certain bodies which are excluded from the scope of P.A.Y.E. by paragraph (a) of Section 4 of the Bill may wish to have the option of coming into P.A.Y.E. I would certainly accord the most careful consideration to the case of any bodies of which the great majority of the members desired to enter the scheme; and, if it appeared in all the circumstances that they should be included, I would be quite agreeable to introduce the necessary provision in next year's Finance Bill. There would presumably have to be in the first instance a ballot among the members and the result reported to me in good time—say, before the middle of next February, at latest.

There is one important respect, however, in which persons within paragraph (a) of Section 4—that is, persons assessed departmentally, who are at present outside the ambit of Part II of the Bill—differ from those who are affected by Part II and are to come under P.A.Y.E. It is this: that, in the former case, the whole of their tax for 1959-60 will normally be paid by the 5th April, 1960, so that, if they were to come within P.A.Y.E., there would be no case for deferring the commencement of deductions until the 6th October, 1960. (The reason, of course, for deferring the deductions until that date for persons who do come within the scheme is that the 2nd instalment of their tax for 1959-60 does not fall due until the 1st July, so that, if P.A.Y.E. were to commence for them on the 6th April, 1960, they would have to suffer one and a half year's tax in 1960-61.)

If, therefore, persons who fall under paragraph (a) of Section 4 were to be brought within P.A.Y.E. for 1960-61, the deductions would have to commence on the 6th April, 1960; and no more than twelve months' tax would then be deductible in 1960-61. It would, however, be administratively impossible to make arrangements to have the scheme put into operation as early as April, 1960. It would also be impracticable to operate, for any body of taxpayers, the existing system for the half year to the 5th October, 1960, and P.A.Y.E. for the half year to the 5th April, 1961. Accordingly, if any of the bodies in question desired to come into P.A.Y.E,. the new system would have to apply for them as from 6th April in a given year—the earliest feasible date being the 6th April, 1961.

So far as a person coming within P.A.Y.E. is concerned, the benefit of the remission under section 14 of the Bill will not be felt until he will have ceased to be chargeable to tax.

Until he is dead.

At his wake.

In other words, he will not get a six months' tax holiday. He will pay 12 months' tax in 1960-61 and in each succeeding year. If any of the bodies falling within paragraph (a) of Section 4 wished to come within P.A.Y.E., I would be prepared to consider bringing in a provision for granting an analogous remission or repayment of tax in the last year of employment.

Somebody has an oriental form of humour.

I think the Minister for Finance, in making that offer, is being exceedingly generous. He is making it—it is not for me to criticise it—at the expense of a very large body of taxpayers who do not enjoy the secure employment which those who are covered by paragraph (a) enjoy.

I never heard such nonsense in all my life. The great generosity and the great benefit which the Minister is giving to all the people in these five classes will arise when they cease to be employed. They can cease to be employed when they retire on pension but they are still assessable in the same way and they will cease to be employed for tax purposes only on the day they die. This is to be, as Deputy Norton intervened, a present for the wake.

Let us put the correct facts on the record. Let me take, for example, two people, my friends, Pat Murphy and Bill Fleming, both of whom start to be employed on 5th October, 1958. Pat Murphy is in the Civil Service and Bill Fleming is in outside employment. Pat Murphy is assessable for the income tax year 1958-59 on his actual earnings and the amount is deducted in the six months. Bill Fleming, it being the first year of assessment, is assessable on exactly the same amount and he will pay his tax liability not prior to 5th April, 1959, but in two instalments, one on 1st January, 1959, and one on 1st July, 1959.

In the following year, each of them will also be liable to assessment on their actual earnings, because, in the case of Bill Fleming, it is his first full year. Again his tax will be payable on 1st January, 1960. It would have been payable on 1st July, 1960, were it not for this Bill. Pat Murphy will have paid all his tax for the current year before 5th April next.

I deliberately take both of these men as going into employment on 6th October because that is half a financial year. They have both been working exactly the same period on 5th April, 1961. The person employed by the Civil Service will have paid, between October, 1958 and 5th April, 1961, two and half years' tax. He will have paid a half year of 1958-1959, the full year 1959-1960 and the full year 1960-1961. That is Pat Murphy's liability—two and half years' tax. Bill Fleming will have paid a half year's tax for 1958-1959, a full year's tax for 1959-1960 and half year's tax under P.A.Y.E. for 1960-1961. He will have paid two years' tax for the period for which the civil servant will have paid two and half years' tax, although the civil servant was employed on exactly the same day and at exactly the same pay. That is the effect of the Bill as it stands as amended.

The only conclusion I can come to when the Minister says that the Minister for Finance has made considerable concessions to these groups is that the Minister must have read the statement of the Minister for Finance rather hurriedly and that he does not fully understand its implications. I am quite satisfied that the Minister for Finance may feel fully assured that there will be no queues of people waiting to take advantage of the oriental offer made to them under the Bill. The whole phrasing of the document is clearly intended to frighten them off and it clearly tells them the woe that is coming to them under certain sections of the Bill.

The Minister does not come down to the one narrow point which indicates quite clearly the inequity of the hardship which is to be committed under the Bill. He talked of people in regular employment and said that they should be glad to be there and that they should be glad to pay their tax sharply and up to the point. I gave the case of two engineers, one of whom got employment in the Board of Works and the other who got employment outside. It might be said that the outside employment in that instance would be somewhat haphazard but I take the case of two people who leave the university on the same day. One goes to the Board of Works and the other goes to the E.S.B. No one can say that employment in the E.S.B. is intermittent. It is good, stable employment.

The man who goes to the Board of Works will pay 12 months' income tax in that year. He pays £36 income tax in that year in four instalments. That is his assessment. The other man goes to the E.S.B. on the same salary and on the same day. He gets the same reliefs and allowances and is assessed for income tax for the same year, April, 1960 to April, 1961, but because he does not start to pay his tax until October, he has to pay at the rate of only £3 a month for six months, while the other person will have to pay his full income tax of £9 a month in quarterly instalments. What grounds are there for saying that the man who goes into the Board of Works ought to pay twice the income tax of the man who goes into the E.S.B.?

It has become confusing for the ordinary Deputy to follow this. The Minister has said that these five categories of people— employees of the State, officers of the Bank of Ireland, officers of the Dublin Port and Docks Board, officers of the Representative Body of the Church of Ireland and the clergy of the Church of Ireland—are not suffering any hardship under this P.A.Y.E. system. That is quite true but they have a sense of grievance that the general body of the public are being remitted a half year's tax and they feel that they ought to be given the benefit of that.

In the case of the clergy of the Church of Ireland, apparently the British Government gave this corresponding reduction for the six months in the first year. It is rather difficult to find where are the generous benefits which the Minister for Finance proposes to give these people as envisaged in the statement which the Minister read out. In a hurried study of it, I cannot see what benefit they are to get and Deputy Norton and Deputy Sweetman do not think these benefits are real or tangible. If they are to come into operation when the individuals no longer exist, most of us will agree that we are not being generous to those officials. The Minister should make some better concessions to these bodies of people and I urge him to listen to the representations that have been made.

Could I put these figures on record to assist the Minister? If he wishes to see them, I shall pass them across to him when I have read them. Take the case of two married men with two children and also assume that the allowances are not changed as between 5th April, 1958 and 5th April, 1961. These two taxpayers are Pat Murphy, a civil servant, and Bill Fleming, an E.S.B. employee, as Deputy Norton suggested. Both started work on 6th April, 1958. For the income tax year 1958-59, each is liable for £15 income tax. For the year 1959-60, each, being employed for a full year, is liable for £50 income tax. For the year 1960-61, each is liable, under assessment, for £50 income tax. If there were no Bill here, that would make a total of £115 tax to be paid out of their earnings over 2½ years. On the basis of the exception in Section 4, paragraph (a), Pat Murphy would pay £115 out of the money he has earned in that period. He would pay that because it is deducted from him. A sum of £15 is deducted from his salary up to 5th April, 1959; £50 is deducted from his salary in the year ending 5th April, 1960; and £50 is deducted from his salary in the year ending 5th April, 1961. That makes a total of £115. The effect of this Bill will be that Bill Fleming will have paid £7 10s. 0d. on 1st January, 1959, £7 10s. 0d. on 1st July, 1959, £25 on 1st January, 1960, £25 on 1st July, 1960 and £25 spread by deductions under P.A.Y.E. between 6th October, 1960 and 5th April, 1961. That means that Bill Fleming is paying £90, whereas Pat Murphy, the civil servant, who has earned exactly the same money during the same period, has paid £25 more.

I would ask the Minister to study those figures. If they are wrong, he will be able to point out to me where they are wrong and we shall be able to have the matter cleared up. I take the view, and I think the Minister takes the view, that income tax should either be paid or saved out of the money you earn because that is what it is due on. Both people have earned exactly the same money in exactly the same period. In one case, one man has to pay £25 more than the other. That is not fair and there should be a remission of that £25 to that man.

I should like to express an opinion from the point of view of the workers who benefit by this legislation. This question of income tax has been a nightmare for thousands. I know a case of a single man who owed £40 income tax.

I am afraid that is not relevant to the section.

The Minister spoke about the merits of the Bill and told us of the benefits that would accrue to the small man able to pay weekly. Am I not to be allowed to do the same? First of all, I should like the Minister to state how much the State has lost as a result of default in paying income tax? A case for the Bill can be made under two headings: that it benefits certain people and that it benefits the State. I asked a question about the amount lost, but I was informed the Minister did not have any calculations. The Minister must have them now because he did not come before the House without knowing what he was losing. I want him to tell the House approximately how much annually the State has lost.

It is a fact that thousands of people have left the country, not because they had no employment, but because they had to face income tax bills. That was the point I was trying to develop when the Chair intervened. This man had just married and he owed £40. His situation had changed. He could not pay the £40, so he gave up a good job and went to England. The Bill at least taxes people on a weekly basis so that this nightmare does not arise. What will happen in the case of people who have defaulted? Will they still be pursued?

I am afraid all these questions do not arise on this amendment. The Deputy may have an opportunity later of raising them.

I welcome this Bill from the point of view of the worker. I believe this principle should be adopted generally. This business of asking people to save money for someone else is all right for the people with capital, but it is not all right for people who have only a wage and who like a drink or something like that. You will always get trouble from those people. The Minister should at least let the House know what the annual loss to the State has been as a result of default in the payment of income tax.

I am afraid I should have to have notice of that question. I have studied the figures Deputy Sweetman has quoted here. As far as I am concerned, and as far as the general body of taxpayers is concerned, the salient fact that emerges is that in the year 1960-61, both Bill Fleming and Pat Murphy will have paid £50 in tax.

Does the Minister challenge the accuracy of my figures?

Wait a moment. The special provisions of this Bill relate to the year in which the P.A.Y.E. system is being introduced. They are determined by the fact that if there was not this special provision in relation to the tax to be collected in the half-year 1960-61, those people, for whose convenience, in part, the Bill is being introduced, would be called upon to pay the equivalent of one and a half year's tax within 12 months. For the generality of the people, that will create a very severe hardship indeed. It is to deal with the hardship which arises in the case of Bill Fleming, who is in the E.S.B. but not in the case of Pat Murphy in the Civil Service, that the provisions in Section 14 of the Bill will be found.

That is the only question. You have to relieve hardship. You have to obviate the hardship which the introduction of the P.A.Y.E. system would otherwise impose on the very much larger body of Schedule E taxpayers who are being brought within the scope of this new system of collection. You are not doing an injustice to any person if you do not give special treatment to those for whom the introduction of the Bill creates no hardship at all and they are, of course, the people who are covered by paragraph (a) of Section 4. That is the simple case. There is not any other case than that.

Deputy Norton, and Deputy Sweetman to a less extent, have been pleased to be humorous at the expense of my colleague, the Minister for Finance. Let me say that, if his offer is accepted, the people in Schedule E, the people covered by paragraph (a), will be put in precisely the same position as the general body of P.A.Y.E. income taxpayers because there he says he would be prepared to consider bringing in a provision for granting an analogous remission or repayment of tax in the last year of employment and that is, in fact, when the real benefit of Section 14 will accrue to the body of P.A.Y.E. taxpayers. It merely means that when they go out, when they cease to be taxable as employees, that moiety of their income tax in the last year of employment which, if it were not for the P.A.Y.E. system, they would be called upon to pay six months after they are out of a job, will in fact be forgiven them. That is the position and the offer which the Minister for Finance has been prepared to make is not, as Deputy Norton said, an example of oriental humour; it is an example of a realistic, accidental approach to this very difficult question.

The Minister's case now is that because for the general body of Schedule E taxpayers, he has remitted a half year to obviate hardship in their case, he does not propose to make the same concession for the others. If, in the public interest— and it is in the public interest—under the introduction of this Bill, Bill Fleming should only have to pay £90 in the case I have given, I do not see any reason at all why Pat Murphy should not be put in exactly the same position. They both earn the same money over the same period.

In the speech which the Minister has just made, both by what he has said and by his failure to answer points which were made, he has clearly admitted that the State knows that it is definitely penalising by comparison those in the Civil Service, the Garda, the Army and other public employments, under this Bill. Certain people will get a remission of six months' income tax in the first year of commencement of this scheme. I do not deny them that. I think they are entitled to it under the mechanism which is operating and which is being altered by the introduction of this Bill, but it is expecting too much to imagine that it is acceptable that other people who see this concession being granted and who are in employment that is no more secure than that of those who will benefit should be denied the advantages which certain people are getting out of this Bill. Some better effort ought to have been made to equate the advantages than has been made in the Bill. To tell a man that in his last year of toil, 30, 40 or 50 years hence, when nobody knows what the world will be like, there will be a concession for him, which will be announced just before his wake, is making the thing absurd I think the Minister now admits that he knows this will happen, that the Government want it to happen and they are not prepared to make any concession in order to remove the obvious disparity that some people are getting a concession under the Bill which is withheld from others. The fact that that comparison can be made is bad from the point of view of legislation.

I do not see any difference in the amendment and paragraph (a) of the Bill.

It is a drafting amendment.

Amendment agreed to.
Section 4, as amended, agreed to.
SECTION 5.

Amendment No. 2 was for the purpose of putting in an amendment to have the discussion we have had for the last hour and a half and I do not propose to pursue it. I cannot knock anything out of the flinty soul or heart of the pro-Minister for Finance over there.

Amendment No. 2 not moved.
Question proposed: "That Section 5 stand part of the Bill."

I want to raise a matter which to some extent has been referred to in the discussion on the first amendment but which was not the focal point of discussion there. One of the advantages of P.A.Y.E. is that a person pays while he is working and when he is unemployed, he is not under an obligation to pay, in circumstances in which he has no income, in respect of periods during which he had good employment. I should like to get some information from the Minister on this point. Take the case of persons who are seasonally employed, for example, dockers or turf workers. Dockers have busy periods at the port during which they earn good pay. They run into lean periods in which there is very little or no employment. A turf worker may commence work about February or March and is engaged on piece work until about September, when he is paid off. During that period, he may earn sufficient to make him liable, under P.A.Y.E., to income tax deductions.

Take the case of a single turf worker supporting a widowed mother. Between March and September, he may earn sufficient to make him liable to income tax. The pattern of employment on bogs is that when one loses employment, about September, there is practically no other employment available in the areas until such time as the bogs open again in the following year. I want to find out whether that person will be assessed in the knowledge that he will have a long period of unemployment in the winter, which will be balanced with his earnings in the summer, or whether because he starts with a regular job and overtime in the spring and summer months, his income tax will be assessed on estimated earnings for the rest of the year. When turf workers lose their employment, there is no alternative for them but to depend on unemployment benefit from the employment exchange and it would be rather ironic if, having paid heavily while in employment, it would take a considerable time to get a refund either from the employer or from the Revenue Commissioners.

These are cases in which the pattern of employment is intermittent. There may be regular work in the summer and long periods of unemployment in the winter, which can be gauged beforehand. I ask the Minister what will be the mechanism in those cases and how speedily will it work to ensure that there will be a refund of income tax when a person has been laid off and is likely to continue unemployed for a substantial period.

I think, in actual practice, the situation will not be as difficult as Deputy Norton has suggested.

I am hoping it will not be. I want to get clarification.

Unless I have specific cases, I cannot deal with the generality of hypothetical cases in relation to any one of which, if I attempted to make a statement in the House, I might be quite wrong because I did not understand it myself or because, perhaps, it was not put with sufficient clarity. The first thing that has to be borne in mind in this is that earnings do not become taxable until the proportionate amount of the personal allowance has been exceeded.

I have a case in front of me, the case of a single man. The first thing is that he gets a tax free pay certificate which the Revenue Commissioners have computed on the basis of the information given to them as to his circumstances, whether he is married or single——

If he is a single man, he cannot be a married man.

Wait; the Deputy need not pull me up on a simple point of grammar. It just happens that in this case he is single. He might be either single or married. If he is single, he may have dependent relatives, in which case he would have something over and above the single person's allowance. In any event, on the basis of information supplied by him to the Revenue Commissioners, his employer gets a tax deduction card on which is set out the cumulative tax free allowances to which he is entitled, week after week.

In the first week, he is allowed a tax free allowance of £7 10s. In the next week, he is allowed a tax free allowance of £15. That is the cumulative tax. In the third week, it is £22 10s., and so on through the 52 weeks of the year. If in the first week of his employment he earns something in excess of £7 10s., then that excess becomes taxable and he is taxed accordingly. If he earns less than £7 10s., he is not subject to tax and nothing is deducted but he has a cumulative allowance carried over into the next week. If in the next week he should earn sufficient to bring his earnings for the two weeks up to £15, then again he is not taxed but he has reached the limit of his taxable allowances for those two weeks.

In the third week, if he is out of a job, and earns nothing, or if because of inclement weather, his earnings are seriously reduced, then the amount which he has not absorbed is carried forward into the fourth week. Even though the employment is seasonal, at the end of his term, which lasts, say, 26 weeks, he will be entitled to a tax free allowance of £195. If within that period he has not earned £195, then again he will have paid no net tax at all. If, on the other hand, he has earned more than £195 and has paid tax and if in the following week, the 27th week, he earns nothing, he can apply to the Revenue Commissioners for a refund, provided he is out of employment. If he continues on the books of his employer, the employer will refund to him any tax which he has paid in excess of his tax free allowance. I hope I have made it quite clear.

The Minister has explained a case which is not quite the case I put to him. He explained the case of a person who might have six months' employment. At the end of six months' employment, because of his earnings, he might still have a reserve which could be utilised to cushion him against income tax assessment.

The case I want to put is the opposite type of case, a case where a person, a single man, or a single man with a widowed mother, goes into employment. From the first day of employment, he is liable to income tax on his earnings and as the season goes on, and as he is on piece work and on overtime, his liability for income tax increases, with the result that after six months in employment, he has paid a certain sum in income tax—let us say, £10, £20 or £30. Then the job finishes; he ceases to be employed by that employer. That employer has no further use for his services, no further record of him officially and no further contact with him. Here is this man who has paid income tax during the period of his employment. He has paid £10, £20 or £30 which he badly wants when he is unemployed.

I want to ask the Minister this question. I take it he can apply to his previous employer or to the Revenue Commissioners for a refund. The main point is how long will it take the man who has, in these circumstances, regularly paid income tax on his annual earnings, to get back what he has overpaid? Will it take a week or will it take a month? Will the Minister give any indication as to how long the unemployed man living on unemployment benefit will have to wait for the refund?

He is unemployed —is that the point?

He will have to apply to the Revenue Commissioners and in that connection I am not in a position to say how long it will take. The Revenue Commissioners, having regard to the hardship which would be inflicted, would deal with these cases expeditiously and special machinery will have to be set up.

On Section 5, I want to ask the Minister a question. It is natural in examining this Bill in detail to appreciate its impact in the set of circumstances set out by Deputy Norton—the unemployed man who wants to get a repayment and the impact of tax on the employed man also. Subsection (2) is the subsection which places on the employer the duty of subtracting the appropriate amount for income tax from the employee. Through the courtesy of the Minister, I have seen a copy in draft of the tax deduction card which is to be issued in respect of the employee. Has the Minister considered what is to happen in rural Ireland when a small business employing 50 people——

Fifty—the kind of substantial business you would get in a small country town. The employer is furnished with 50 of these cards and is required to make them up. Are there any proposals to provide any financial assistance to cover the increased costs which will come in course of payment for employers of that character? I do not know what the expenses of administering this will be for a large firm, but whatever the expense, it does seem to me that employers, for the general good, are being asked to take over part of the ordinary functions of the Revenue Commissioners whose primary function it is to collect the revenue. If that is socially desirable, so be it, but there should be some regard to the charge that is being put upon the people, who, after all, are the people who provide the employment.

I understand that in Great Britain, and even in Northern Ireland where the P.A.Y.E. system has been introduced, some effort has been made to meet the cost of operating the system by employers by some percentage allowance on the collection they make on behalf of the revenue commissioners. I do not know whether some scheme of that kind can be operated here but in this House we are continually unloading burdens on to unorganised employers. I mean the kind of employers who are to be found in the country towns and who, if the truth were known, are the greatest providers of permanent employment in the country because unlike the impersonal firm, the relatively small country business does not hire a man to-day and let him go to-morrow. Ordinarily, it carries him the 52 weeks of the year when, if the strictest methods of economy were employed, he would be out of employment when he was not economically necessary. That is what the big firms do.

This small type of firm is having unloaded on to it from time to time, quite casually by this House, small additional burdens of charge and they are all piling up and becoming a very serious problem. The social relation between such firms and their employees, where there is recognised a kind of social obligation to carry a man for 52 weeks even though you may want him for only 49 or even 45 weeks, is a good relationship and worth preserving but it is being made more difficult to preserve if a multitude of small additional charges is to be laid on these employers without any credit compensation for the work they undertake.

I do not know if it is present to the mind of the Minister for Finance that burdens of this character exist but I would remind him that it is within relatively recent years that firms of this type were requested to fill out quite formidable returns for the Statistics Branch in regard to production, output and a variety of matters into which they inquire. There are other returns also in connection with quota orders and licences to import goods which require quite an extensive amount of clerical work. Up to now, most of these have come forward for performance at regular stated intervals of six months or, at the most, every quarter but here is a duty that will devolve on employers every Saturday night and it has to be completed in order that the employees may be paid.

So far as I can judge extra clerical assistance will have to be got to keep up to date in regard to it. You cannot get clerical assistance in a country town on the basis of calling in somebody to fill up these forms and then letting them go. You must either find someone who has not sufficient work to occupy his time and give him this job in addition to fill out his normal working time or else you must employ another man or girl to do it. That will cost the firm about £260 a year. You may get a young girl for £4 a week but if you want a competent girl it will cost you £5 a week at the least.

It is perfectly true that filling up that form once a week will not occupy all her time but you may not have other work to give her because you already have on your staff the clerical assistance you require. It may be in certain cases that existing available staff will be able to carry this additional burden but I think in a good many cases they will not. I suggest to the Minister that he should search the precedents in operation in Britain and Northern Ireland with a view to finding whether some basis of compensation could not be worked out to help to pay the cost of administering this scheme on behalf of the Revenue Commissioners by the employers.

I want to go back to the point I raised. Perhaps in his anxiety to get this Bill through, the Minister does not appreciate how real the hardships can be, particularly in turf areas. So far as I know, turf workers get a week's notice—some-times less—of the termination of employment. In cases where they are paid off and transferred from a condition of full employment with overtime into a condition of no employment, living on unemployment benefit, could some special steps be taken, if possible by the employers, when a man is leaving to refund to him what it is likely he would be entitled to if he were to make application for refund to the Revenue Commissioners? In these turf areas you may take it that, in the main, paying a man off at the end of the turf season is equivalent to saying to him: "There is not much chance of your getting work until we start again." He is compelled to live on unemployment benefit.

I am quite satisfied the Minister will say, having regard to the type of persons who must be dealt with in these circumstances, that some steps will be taken to make the refund with the utmost expedition.

In reply to Deputy Norton, it will be quite within the competence of the Revenue Commissioners to make special arrangements for that type of case. It must be understood however that it would not be possible to deal with the small individual concern in precisely the same way. First of all, they would not, perhaps, have the resources to repay tax that they had already deducted and paid over to the Revenue Commissioners. So far as organisations like Bord na Móna are concerned, I am sure arrangements will be made to deal with the position of those who become unemployed.

That satisfies me.

With regard to the point made by Deputy Dillon, I think he is under a misapprehension in relation to the hypothetical reimbursement of persons who operate this scheme in Northern Ireland. I think there is no question there of any reimbursement for the employer in respect of any expense to which he may be put in operating this scheme. I am sure it would be regarded by the Revenue Commissioners as a legitimate expense against his profits and, accordingly to that extent, he would be reimbursed in that he would not have to pay tax on any expenditure that may have been involved, but I think Deputy Dillon is rather too apprehensive as to the difficulty of working the scheme.

I have in front of me here the reply given to an inquiry addressed to the Belfast Society of Chartered Accountants by our Commission on Income Taxation and what they said was: "Without doubt there are considerable difficulties arising on the installation of the P.A.Y.E. system and many problems arose when the system was first introduced in Northern Ireland. Once the employers become educated in the system, there appears to be little difficulty in the actual operation of it, particularly when the firms employ more than six or seven employees and a competent wages clerk, or book-keeper, looks after the actual preparation of wages and tax deductions."

That is the experience in the Six-Counties and I have no reason to believe that a concern employing 15 —I think it was 50 employees to which Deputy Dillon referred—would experience any great difficulty, or incur any great expense in making the tax deductions. Again, it has got to be remembered that the Revenue Commissioners at present have powers under statute to compel employers to deduct from——

Only arrears.

——the remuneration which they are paying to employees—where those employees happen to be in arrears in regard to their income tax payments. That, I think, is very often much more embarrassing, and much more inconvenient and costly to the ordinary employer than will be this very simplified system of P.A.Y.E. now being introduced.

Question put and agreed to.
SECTION 6.

I move amendment No. 3:—

In subsection (1), page 3, to delete in line 49 ", accountable for it, and liable to pay it," and substitute "(whether or not made), accountable for the amount of the tax, and liable to pay that amount," and to delete in line 51 "to be paid it" and substitute ", if it has been made, to be paid it, or given credit for it,".

I think I can describe this quite legitimately as a drafting Amendment. The purpose is to ensure that the intention of the Legislature in introducing P.A.Y.E. will not be defeated by an employer who could simply refuse to deduct tax from his employees' pay, and who would not be held accountable for the tax which he refused to deduct. If the amendment is accepted, as I assume it will be, then the relevant portion of Section 6 would read:

"For rendering persons who are required to make any such deduction or repayment, in the case of a deduction, (whether or not made) accountable for the amount of tax."

The operative words are "whether or not made." The person who is required to make the deductions, whether he makes deductions or not, will be accountable for the amount and liable to pay it and, in the case of repayments, be entitled to be given credit for it by the Revenue Commissioners.

As the subsection stands, if he had not made the deductions it would have been all out?

If he neglected to make the deductions he should have made?

Yes. There is also an amendment to Section 9 which is consequential, to delete the word "deducted" and substitute the word "deductible".

Amendment put and agreed to.

I move amendment No. 4:—

In subsection (1) (b) line 53, before "to" to insert "on reasonable notice."

I want to ensure that the employer would get some type of notice before he has to produce all these documents. I want to make it clear that in my experience, professionally and otherwise, I have found 99 per cent. of the Revenue officials with whom I have had to come into contact most reasonable people—people with a difficult and unpleasant job to do, and they do it most reasonably. This amendment is not in any way necessary for that 99 per cent. but I am sorry to say I have occasionally found an odd official most unreasonable, and I can see a situation in which the odd official like that would come into a shop employing some 50 or 60 people while they were in the middle of stocktaking, or something vital like that, and say: "I want to see these record cards here and now." Particularly would that be unreasonable in country areas. In the city here, or in Cork, an unreasonable attempt like that would be shrugged off and the people concerned might be able to deal with it but there must be some point, so to speak, at which this stops.

There must be some point at which it is made quite certain that inquiry cannot be inquisition, and unless there is something like this to ensure that if it is at an impossible moment the employer concerned can say to the official: "I am in the middle of a job now. That cannot be done but, if you come back in a couple of days, this job will be finished and I shall give you all the information you want." Ninety-nine per cent. of the officials, if they were approached in that way, would agree without question. The other one per cent. would not, and there could be quite undeniable hardship if some provision is not made to cover such cases.

I do not think this amendment would have any effect against an official who was disposed to act in the very arbitrary way that Deputy Sweetman suggested, particularly in view of the fact that he says it is a very rare occasion in which an officer in any way acts so as to embarrass the Revenue Commissioners. It is quite clear that any employer fulfilling his obligations under this section has nothing to fear, and would not be dealt with in the way the Deputy suggested.

On the other hand there may be employers who, the Revenue Commissioners have sound reason to believe, are not fulfilling their obligations. If one were to give that type of person reasonable notice, then I fear one would only give him the opportunity of evading his obligations under the Act, or of concealing the fact that he was evading them. In the circumstances, I suggest the Deputy should not press the amendment.

I do not see how it would give a person an opportunity of evading his obligations.

The Revenue Commissioners, I may say, have assured me that the inquiry staff will be limited in number and will be specially selected for the purpose of ensuring that they are both tactful and reasonable. In the circumstances, I ask the Deputy if he would be satisfied with that assurance?

I am satisfied with that administrative assurance.

Amendment, by leave, withdrawn.

I move amendment No. 5:—

In subsection (1) to delete paragraph (h).

To be perfectly honest, I put down this amendment because I could not understand what the relevant paragraph was intended to cover. I thought tabling an amendment was the simplest way to ensure that the Minister would be fully briefed on the subparagraph and would explain it satisfactorily to us.

It is designed to empower the Revenue Commissioners to treat as an employer a person who, though paying the emoluments of another person, is not the employer of that person in the strictly legal sense. Take the case of a building contractor, for instance, with a large housing scheme. He may enter into an arrangement with a plumbing contractor under which the employees of the latter will carry out the work but will be paid for the work by the building contractor. Regulations made under paragraph (b) will authorise the building contractor in that case to make the necessary deductions under the P.A.Y.E. scheme.

Amendment, by leave, withdrawn.

I move amendment No. 6:—

To add to subsection (3) a new paragraph as follows:—

"(d) Nothing in this subsection shall authorise the Revenue Commissioners to disclose (save with the consent of the employee) on any tax deduction card either expressly or by implication any information concerning any income of the employee liable to tax other than that payable by the employer to whom such tax deduction card is furnished.

The principle underlying this amendment was debated pretty widely on the Second Reading. There is very considerable apprehension abroad that one of the effects of the P.A.Y.E. system will be that employers will learn from the certificates of allowances issued by the Revenue Commissioners private details about their employees. If, for instance, an employee has some other income, the certificate of allowances will disclose by implication, since the amount of the allowances will be stated, what that private income is.

The matter can be dealt with in either of two ways. All the allowances can be offset against his pay, and therefore set out on the certificate of allowances, and a separate assessment can be raised in respect of the outside income without the allowances being credited against the outside income. Alternatively, the employee could have the option of deciding whether he wished for one, or two, assessments. If he opted for one assessment, as I understand is sometimes done at present on Schedule E. assessments, and to lump in the small investment income and have the allowances set off against it, that would be his own business; if the employee chose to do it that way and to let his employer know he had some other income, that is his own affair. But, in the absence of consent by the employee, it would be very wrong that his private personal details of income should be disclosed to his employer. If an employee is earning £800 a year direct from his employer and has another income of £200 a year, instead of allowances of £530, to which he would be entitled, his employer will see on the certificate of allowances that the employee is credited with only £330 by way of allowances and he will therefore know that his employee has £200 elsewhere. I do not think the system should be open to the disclosure of that type of private personal information.

The Deputy is overapprehensive in that regard, because details of the allowances will not be shown on the card.

The total will.

But the total can be arrived at in a multiplicity of ways. The employee will be entitled, first of all, to his personal allowance. Children's allowances also come into the picture. There are dependants' allowances; bank interest; mortgage interest; life insurance premiums. All these will go to determine the amount of the allowances to be deducted in the first instance by the Revenue Commissioners in order to arrive at the taxable income. It seems to me that it would be very difficult, indeed, for an employer to determine what additional sources of income, if any, an employee might have—income which tended either to increase or decrease the allowances. There is very little, if any, possibility that the secrecy normally attaching to a tax-payer's transactions with the Revenue Commissioners may be effectively breached. There might be surmises. Beyond that, one could not concede that there would even be a remote possibility of an employer being able to compute for himself the sources of his employee's income. It is, of course, always open to the employee, if he wishes, to apply for a direct assessment. In the majority of cases, however, that might not be to the advantage of the individual concerned, but he is entitled to do that if he wishes. It could mean that he would be paying larger sums during the course of the year for income tax and he might be involved ultimately in taking the necessary steps to have the overpayment recovered.

If he applies for a direct assessment, can he take the allowances for P.A.Y.E. taxable income rather than have them put against Schedule E?

Then I am satisfied.

While I agree with the Minister that it would be extremely difficult for an employer to ascertain from these cards exactly what the bank overdraft, or other income, of the employee might be, at the same time, it is difficult to see how this section would in any way interfere with the working of the Bill. It would help, I think, to allay a certain amount of fear, particularly on the part of commission agents— that is, commercial travellers—who may occasionally, on the side, as it were, purchase and sell on behalf of some of their customers. I think there is a certain fear, too, on the part of members of the Defence Forces. Members of the Defence Forces have been known to take part-time employment. If the money they earn in that way is divulged to the Minister for Defence, is there not a danger that they will be discharged?

Persons in public employment do not come into this Bill at all as it stands at the moment. There may be an amendment in the Finance Bill next year.

Amendment, by leave, withdrawn.
Section 6, as amended, agreed to.
Progress reported; Committee to sit again.
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