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Dáil Éireann debate -
Thursday, 11 Jul 1963

Vol. 204 No. 6

Finance Bill, 1963—Committee Stage (Resumed).

Question again proposed: "That the First Schedule be the First Schedule to the Bill."

I want to direct the attention of the Minister to the fact that it will be impossible to carry out the terms of this Schedule in accordance with its provisions. Exempted activities are described as sales in bulk, as defined in Section 51 of the Act, of seeds, fertilisers and animal feeding-stuffs. The Minister says that the regulations which he proposes to make under Section 51 will provide approximately one cwt. and that his purpose is to bring within the scope of the tax packets of seeds and small parcels of fertiliser purchased by gardeners from garden supply shops. In his efforts to do that, he is creating an utterly insoluble problem for the ordinary distributors of seeds, fertilisers and animal feeding stuffs.

If this Bill is to have any reality, and this detestable tax is to be capable of administration, the only sensible thing to do is to exclude seeds, fertilisers and animal feeding stuffs. It is not credible that the amount of sales of seeds in packets and sales of 1-lb and 2-lbs of fertilisers made to gardeners in suburban areas can yield a revenue to the Exchequer sufficient to justify the creation of this ambiguity in regard to the sale of seeds, fertilisers and animal feeding stuffs at large. But that is not the end of the ambiguity in this paragraph. Another exempted activity is the sale of other materials and substances of a kind used in large quantities by farmers and fishermen for the purpose of their occupation.

Is there anybody in this House who can hazard a guess as to the meaning of the expression "materials and substances of a kind used in large quantities by farmers and fishermen for the purposes of their occupation." If there are, then I am not among them. I do not know what that means. I do not believe anybody knows what it means, but it will have to be interpreted by every shopkeeper in this country under penalty of the possibility of his being convicted of an offence under this section. I suggest the appropriate amendment here would be to exempt from this tax all sales of fertilisers, seeds and animal feeding stuffs. I do not think it matters whether the words "other materials and substances of a kind used in large quantities by farmers and fishermen" are in or out because, as at present advised, I have not the faintest notion what that phrase means. I should be glad to know if the Minister does.

I support Deputy Dillon in this. Taking the phrase "substances...used in large quantities", would weedicides used in spray form come under this? Would sheep dip be included? Would fencing wire? Would medicines used generally be included? If a farmer were to use a certain vaccine to inject all his lambs, 100 or 150 lambs, or even as few as ten or 15 lambs, would that vaccine fall within the ambit of this provision as a substance used in large quantities?

What does it mean?

These are practical questions to which we want an answer.

Can the Minister tell us what large quantities mean?

Every Deputy knows what "large" means.

The Minister is aware that there are different ways of lending money. The banks lend at the current rate of 5¾ per cent. The Agricultural Credit Corporation lends at six per cent. We have then the moneylender who charges any interest he likes, in some cases 100 per cent. There is no redress for the borrower unless he is prepared to face the publicity of court proceedings when the district justice will allow only the legal rate of 39 per cent simple interest. Unfortunately a number of people in the country find themselves in the hands of moneylenders. Now why should we exempt that type of money-lending? Why should the moneylender not be asked to pay the 2½ per cent turnover tax in the same way as the housewife will be asked to pay it. I agree that, if the banks or the Agricultural Credit Corporation had to pay the turnover tax on the interest they get for their money, they would in turn pass that on to the borrower. I maintain that the moneylender should be compelled to pay the 2½ per cent turnover tax.

The Deputy is complaining of the rate of interest on certain loans. It is obvious that the interest will be higher still if it is subject to turnover tax.

That tax will be unlikely to be passed on to the consumer. In some cases, he is paying 100 per cent.

I think all these things will be passed on. Some Deputies, when it suits, say it will be passed on, and then, when it does not suit, they say it will not be passed on.

Some Minister have been using that argument all the time.

It has been my opinion all the time that it will be all passed on and I still stick to that. In regard to Deputy Donegan's point, the description "large quantities" is put in to cover articles mentioned by him. It would be impossible to put everything into the Schedule so this clause is a general clause which will be covered by regulation and will cover materials used by farmers in large quantities. I may say that these matters are now being discussed in a reasonable way with the parties concerned. Mention has been made of the building trade and the builders providers are discussing these things with the Revenue Commissioners and are making very reasonable suggestions as to what is workable and what is not workable.

We have also had discussions with farming organisations and they have been reasonable in the things they thought should be exempted. We are all agreed that farmers' feeding stuffs, seeds, manures and fertilisers will be exempted but the other matters that come to fairly substantial amounts should be discussed.

I think it is dreadful that the Minister will not indicate whether the items I have mentioned will be included. When you leave the realm of foodstuffs, fertilisers, seeds and machinery, there are other large purchases which turn up every year and which represent substantial purchases on the part of the farmer. A farmer with 50 sheep must dip them by law and for that he has to buy sheep dip which comes to a substantial amount. A farmer may have to spray his potatoes four times in the year and, in some cases, he may have to use an expensive spray for his cereal crops. The cost can amount to quite a large sum of money.

Fencing may be a recurrent expenditure and another large expense to the farmer is bailing twine as you have more and more bailing being done now. You also have bailing wire. If there have been discussions on this at this level, then these matters must have been discussed. We have a duty to inquire and seek the answer as to whether a farmer will have to pay 2½ per cent on the price of his sheep dip, his fencing wire, his bailing twine and bailing wire. A farmer having 50 sheep may have 70 lambs and each of these will have to be injected with kidney vaccine. Is that subject to the 2½ per cent or is it not? We are entitled to be told that.

The Deputy is not reasonable and he does not want to be reasonable. I have said that all these matters can be discussed with the traders and the farmers concerned. Where it is practicable to include these matters, it can be done, but the Deputy mentioned on one occasion today that he had remembered another thing. What is to stop him from remembering yet another thing tomorrow?

From what you have just said, veterinary medicine is to be exempted but human medicine is not.

Feeding stuffs for animals are exempted but food for humans is not.

I could think of a myriad of things a farmer must buy but I have deliberately not included those. When we leave the realm of feeding stuffs and other large purchases, we must remember that there are five or six other commodities which are generally used and the Minister knows as well as I do that these articles have to be bought every year. One of these purchases is potato spray and that may have to be used four times in the one year. In 1963, one of the purchases will be cereal spray which will be an expensive item. There is also the purchase of the injection for the lambs and these are all over and above the myriad of other items that farmers have to buy. They are bought by the farmers every year in relatively large quantities.

I want to come back to the question of building. I do not understand, and I would like to understand, what is in the Minister's mind. The Schedule is not clear at all. In the booklet that was issued, it is stated on page 11: "The exempted services are building and allied services including the installation of heating, lighting, etc.". I have got two different answers to questions I have put up and I want one authoritative answer now.

A company which is a substantial building company does a great deal of business not merely in Dublin but in various parts of the country. Part of the building which that company does is the building of houses. For the purpose of its own operations, and for greater efficiency and productivity, that company does some of its work under the umbrella of its main company. It owns its plant in a separate company and that separate company hires the plant to the main company. It does its joinery work in its own shops and sends it out to the job, invoicing it from one company to the other in the ordinary way. The ownership of the three companies concerned happens to be the same as regards the proportion in which the shareholdings are held.

It is a fact that when you have plant brought on to a job in that manner, there is a greater effort made on the job to get it finished and so prevent the plant lying idle. The segregation of various aspects of work into subsidiary companies has come to be accepted by all good managements as being a desirable method of increasing efficiency. I want to ask a simple question. If those three companies operate on that basis and the plant hire company hires the plant to the main company, has it to pay turnover tax on the hireage charge? That is No. one. No. two: if the joinery company makes all its doors—I exclude any question of furniture—for the house and the joinery works sends them out to the site so that they can be put up on the site, have they to pay turnover tax on the cost of the door invoiced out of the works where the joinery is done to the site where the main company operates?

The principle of the Act, as the Deputy is aware, is that a sale will be taxable unless it is a sale of an article that is exempt, or is sold to a registered person. A registered person of course would pay afterwards.

Would the Minister mind repeating that? It is difficult to hear him over here.

An article sold by one person to another is taxable unless it is on the exempted list or is sold to a registered person who pays tax on it. In regard to the particular item mentioned by Deputy Sweetman it depends on whether it is exempt or not. I explained that the Revenue Commissioners have had discussions with the builders providers——

These people are not builders providers at all.

I am talking about how the provision would come up. The builders providers have made very useful suggestions about what should be exempt or not, but there has been no decision yet regarding at what stage an article will be regarded as a raw material, as it were, for a builder. I have already said today that there is a distinction between what a builder would use in building a local authority house and what might be put into a very well finished house, say, in regard to mirrors. The mirrors would be subject to tax. We have to draw the line somewhere but I do not yet know where. That will be decided as soon as these discussions have been completed. I could not say with regard to doors——

Surely a house has to have a door. Let us restrict it to the halldoor.

It has to have a door— that is right—but I could not say——

There cannot be any argument——

——at what stage of manufacture it might be regarded as the finished article subject to tax, or as raw material for the house.

Surely in relation to the halldoor, it is basic as it goes into the house?

Is this not covered by exemptions?

That is what I am trying to find out.

If the Deputy can find that out he will be a great help to us.

I can only make a supposition. In regard to the point made by Deputy Sweetman, about the firm which contracts for building equipment, I should have thought that that would have been covered by the subparagraph at the top of page 65, the "provision of services provided for industrial or commercial purposes". That appears to me to cover it. That is essentially the provision in regard to earth-moving equipment and is consequently exempt.

I thought so, too, but without intending to be offensive to the Deputy, I would have preferred to get an authoritative opinion.

I am only making a suggestion. In the case of a joinery, I can see that point. Very often, window frames are fabricated by another contractor. If the joinery company invoices goods to the building company, that in itself is a sale of an article, not for the benefit of the building company but for subsequent resale as soon as the building is complete. I should have thought in this connection that it would be an exempted activity, being a sale of goods not for the benefit of the immediate purchaser but for subsequent resale by that purchaser to the final purchaser.

Who is that?

The man for whom the house or factory is being built. If you get a person who makes a contract for building a factory and he gets a building contractor to erect the shell and the contractor sub-contracts the joinery work, the joinery company will invoice its joinery work to the building company and the building company will subsequently charge the factory owner for the finished product.

So that in the case of a person purchasing a dwelling house, he would have to pay the 2½ per cent tax ultimately?

No, because the building contractor is covered by line 15: "Building, and the installation of heating, lighting, plumbing and sanitary fixtures..."

But on the theory on which you have been working, for resale?

There is nothing about the sale of a house being an exempted activity.

The actual building of the house is an exempted activity.

The purchaser of the house will pay.

That is not included in the First Schedule.

Perhaps the Minister would clear up that point? Is it correct that when the house is being sold, the 2½ per cent tax will be put on the purchase price?

That is what I want to hear. Is it exempt? I thought it was not going to be put on.

It is not included in the goods for sale.

It is not excluded, either. Deputy Booth, I think, is as confused about it as we are. It proves that he is human.

We will not admit that Deputy Booth is human.

That has always been the subject of some doubt. The First Schedule is exempted activities and the Second Schedule is a description of goods which are specifically liable to the turnover tax. The selling of a house is not an activity. If the question of a sale is excluded from the Second Schedule, then the sale of the house is specifically excluded also. The First Schedule deals with activity and the Second Schedule deals with goods.

"Goods" has the same definition as in the Sale of Goods Act, 1893.

Could the Minister read out the definition?

Section 45 lays it down but I have not got the Act with me.

Is it not in the brief? I am sure the Revenue Commissioners have put it in.

Will the Minister not agree that he has been unable to make clear whether certain items are exempt or otherwise? I assume that the regulations governing this Schedule have been provisionally drawn up and the Minister should be able to give the information to the House. If the regulations will be as vague as the Minister has been in his reply to a number of questions, it is not unreasonable to assume the courts will be referred to to determine questions arising from the Bill from time to time.

Everybody knows the costly nature of court proceedings and I think in framing legislation, we should make clear, in order to avoid the necessity for recourse to the courts, what the interpretation of sections and subsections is. Before the Bill comes back to us on Report Stage, the Minister should acquaint himself a little better with the terms of this Schedule so that he will be able to answer questions then which he is unable to answer now. What I mainly have in mind is the avoidance of court proceedings, where possible. As I have said already, if disputes arise on interpretation of sections, we know the courts will be called in to determine them. That is a costly business, not open to most people in this country with their small incomes, small resources.

I thought I had answered every question put to me. If the House did not understand me, I do not see what I can do about it. What question did I not answer?

For the past hour and a half, we have been asking questions——

And I answered them.

And changed your replies.

I did not change my replies. The Deputy will make that sort of dishonest assertion. I did not change any of my replies.

What about the question on joinery I put?

The Minister could not explain what he meant by a "large amount".

If the Deputies wanted to be reasonable, which they do not, of course, I would have pointed out to them that we have been discussing these things with the trades concerned before coming to a definite decision.

It should have been discussed with the trades concerned before the House was asked to pass it.

Why should it? Some of the trades refused to discuss these matters for as long as they were able to intimidate people in this House to vote against the Bill.

Since the Minister has brought up that point, he only got a 50 per cent vote in favour of the Bill and then he lost one of them today on the division on foodstuffs. The foodstuffs provision is being imposed by a minority vote.

By a majority vote.

The Deputy is very brave now that the division is over.

With all due respect to the Minister's lengthy service to the country, my chances in an election would be far superior to his.

The Deputy will never stick it as long as I have.

Will a builder have a registered number?

Not if he is building alone—if he is in the business of building only, not if he is a builder's provider as well.

Does he have a registered number to show he is exempt? A person who goes to build a house is exempt from the tax, and when he goes to buy his raw materials, it is intended that these materials for the building of a house will be exempt. How does he show the person from whom he buys that he is exempt?

All the materials he buys for housebuilding are exempt.

Are they exempt to anybody?

The materials themselves.

Is not the open sesamé to being exempt a registration number?

Then my ears deceive me.

Would the Minister say if everything the building contractor buys for housebuilding is exempt? Is that what he said?

No. Certain materials such as cement, sand and certain categories of timber, as well as sanitary ware, are exempt and the Deputy can go in and buy them free of tax. He need not be a builder to get them free of tax.

Did the Minister say anybody at all can buy building materials without being taxed?

Certain building materials.

You cannot build a house with certain building materials. There are certain things which have to be used in the building of a house which are not exempt and I wonder if the Minister would be kind enough to tell us what they are.

The Deputy is only confusing himself.

When the Deputy comes over here and he is opening a housing scheme, he will get a golden key. That will not be exempt.

I am afraid there have not been many golden keys presented for some time.

Housebuilding has been on the decline in recent years.

Even golden scissors are becoming scarce.

(South Tipperary): Surely the Minister can tell us the things that are not exempt in relation to the building of a house.

The golden key.

(South Tipperary): This is a very important thing.

It is a very important thing.

When did the Deputy build a house last?

Let us take a person who builds one house and does nothing else. When that person has completed that house, he will not have to pay turnover tax on the sale price, nor will the purchaser. Having completed the house itself, he wants to leave the timber portions, the windows and doors, in good condition so he proceeds to paint it. Is the paint exempt from tax?

I am afraid there has been a change there in the past five minutes.

If he has to pay tax on the paint, then the pamphlet issued by the Department makes confusion far more confounded. I understood that when he went to buy the paint, the position was that he was exempt. I want to know how he proved he was buying something for an exempt activity, without having a registered number to prove it. I thought every builder, properly so called, would get a registered number that would mean that that was an exempt number and that, in relation to any of his activities under that registered number that were exempt, it was all right, but if he got raw materials for any part of his business that was not exempt, then he would be a person who would pay tax. Apparently, that is not right, however. I do not know where I am.

Building materials are exempt.

Then the paint is exempt?

Not all paint may be exempt. It can be used on things other than a house.

(South Tipperary): Will everything in a bill of quantities be exempt?

I do not know what would be in a bill of quantities.

Say, a fireplace. Can anybody use a fireplace for anything other than lighting a fire? I know jackdaws build nests in them. A fireplace can be used only in building a house.

You might put it into an old house, too.

Then it is a crime to put it into an old house without paying the tax?

All these will be considered. Deputies are most unreasonable. They are looking for trouble, not for information.

I am surprised that the Minister should make such a statement. I am trying to elicit as much information as possible. We may be asked by the parties concerned what goods are exempt and what are not. Possibly, also, we would be asked for assistance and advice. I am sure every member of the House would desire to be as conversant as possible with legislation such as this in order to be able to convey information. Therefore, the Minister should not attribute an ulterior motive to the members on this side in seeking information on these very important points. I am rather surprised at the Minister because he is a man for whom I have a good deal of respect.

Would it be possible for the Minister to consider the fourth item in the First Schedule, making some reference to sales in bulk of building materials such as earthstone, gravel, sand or cement? The Minister has already stated that he proposes to discuss with builders suppliers exactly what items will be exempt from this tax. At the moment, the fourth item there refers only to earthstone, gravel, sand and cement. I presume that that is all in respect of those substances as used for building. If that is so and if the Minister is prepared to agree with builders suppliers for possibly the exemption of timber, either finished or light, sanitary fittings, glass, slates, gutters, and so on, I think it might be an improvement if that item were clearly specified as being sales in bulk of building materials and then, by all means, leave it to the Minister to discuss with the builders suppliers exactly what items will or will not be covered.

Is it not a fantastic situation at which we have now arrived? There are in this country a large number of respectable merchants whose only offence is that they earn their own living and employ our neighbours' children. We have now reached a point at which the Minister for Finance responsible for this Bill, fortified by all the resources at his disposal, finds himself exasperated to the point at which he says he is being persecuted by being asked what this Bill and Schedule mean. Yet, this is the document which is going to be put in the hands of every shopkeeper in Ireland who is constrained to ask himself these questions 40 times every day.

The only information we have so far is that a situation can arise in which a shopkeeper in respect of the sale of one commodity may necessarily keep four distinct categories every day for a credit sale, a cash sale, a credit sale and a cash sale, according to whether his customer is a hotelkeeper, a lodging-house keeper or a guesthouse proprietor. Every time a farmer comes in to buy seeds, he must ask himself: "Is my sale bulk sale or a non-bulk sale?" If the farmer comes in to buy a cwt of pollard that will be determined as a bulk sale. But if somebody buys six stone of pig meal that might not be a bulk sale. These two transactions must be segregated for on one he must charge sales tax and on the other he must not. That refers to only one department of a country shop.

If you go over to the hardware department of the same country shop the proprietor must make the same series of determinations not only in respect of seeds and fertilisers but if a man comes in for a lb. of maize he must ask himself whether it is being sold for a domestic purpose. One would imagine the Deputies of this House had been born on Mars or on the moon.

Take a person who is a painting contractor in rural Ireland. None of us call him a painting contractor. We call him by his name. We spend our time trying to get him to come to carry out painting work. He tells us that today he is in the convent and that tomorrow he must work somewhere else. Eventually, he comes to us. That fellow is a painting contractor. He comes in and starts painting somebody's house. Do you seriously imagine that that man goes down and places an order for a quantity of paint? He goes in every morning and gets a can of paint which he wants to use for painting his neighbour's house. According to this they must stop him and say: "Are you going to use that paint for a contract of work or on your own backdoor?" If it is for his own backdoor, he must pay tax; if it is for his neighbour's house, he does not pay tax.

He is not even sure of that.

If it is a new house.

If he is a painting contractor, I assume——

I thought so, but I was told not.

Do Deputies realise that you are trying to apply to an economic set-up in our country a procedure which is as daft as a halfpenny watch? The thing will not work. What is particularly maddening to me is that you are creating a situation in which a certain body of people who have consistently complied with the law, and who want to comply with the law, whether or not they agree with it, will be driven almost insane and the bulk of the people will ignore the law and there is no conceivable means open to you of enforcing it. If there is any more damning condemnation of law than a law which creates a thousand problems of conscience every day for an honest man and which is demonstrably unenforceable against a man who is indifferent to the law, I do not know of it. It reduces the whole process of law-making to the lowest kind of degradation. We are doing that simply because the Minister for Finance came to the conclusion that this was a form of tax collection which he hoped would yield a large revenue and the responsibility for which he hoped he could pass over to the shopkeepers.

In the end, the impact of this tax must fall on the consumer. The Minister makes pious affirmations of that from time to time. In the process of doing it, we are making an attack on a law-abiding and public-spirited section of the community of the most scandalous character. I do not want to multiply examples as I am peculiarly qualified to do, because I am intimately familiar with the whole procedure relative to the administration of a sales tax of this character. Far from trying to bewilder the Minister, I am deliberately refraining from multiplying dilemmas—not by the dozen but by the hundred—I could propose to the Minister to expose him to the problems he would find himself unable to resolve.

What kind of law are we enacting? Is there a Deputy on any side with knowledge of the retail trade, particularly in rural Ireland who will challenge me when I say we are creating a position of utter impossibility for a man who wants to abide by the law? If that proposition is true, when will we open our eyes to the quality of the legislation we are passing? It is bad and it is evil. It will beget every kind of abuse. It will drive conscientious people into an impossible position, which will involve them in crushing expense in the effort to give effect to the law. It puts the unscrupulous person, indifferent to his obligations, in a position of great advantage.

People may say you have to be practical in these matters, but it is not an easy thing. If you are sending certificates to the Revenue Commissioners relative to factual statements on foot of which the Revenue Commissioners will reckon your tax liability, you are not entitled to sign a document which is not true. People talk about the moral obligation to pay tax, that it is not morally due to the Government until they have got it. But, whatever happens, you are not entitled to tell a lie. This Bill is riddled with the obligation on individuals to make returns relative to grave matters in respect of which they are not morally entitled to lie, and to tell the truth is being made virtually impossible.

I cannot make up an honest return to the Revenue Commissioners to determine whether the feeding stuffs, the seeds and the fertilisers sold in my shop are sold in bulk or not. Nobody in Ireland can do it. I cannot, and no country merchant can make an honest return as to whether every quarterstone of nails he sold was for the purpose of domestic repairs or was a contract within the meaning of the Act. If he sells a can of paint, he cannot make a return as to whether it is sold to a man in his personal capacity or in his capacity as a painting contractor. Anyone with any understanding of rural business knows that to be true.

I cannot make an honest return as to whether tea, sugar, bread and butter is sold to a woman who is a lodging-house keeper or a guesthouse proprietor. No merchant in rural Ireland can do it. It is an illusion to say to us that all such persons have accounts and are well-known to the persons with whom they are dealing. That is not true. It has no relation to the ordinary conditions obtaining in the towns of this country. I assure the Minister that, far from multiplying dilemmas for the purpose of exposing him to embarrassment, I have not spent one hour compiling questions of that kind. Under that Schedule, I could produce a thousand insoluble dilemmas for any conscientious merchant in this country.

I say legislation of that character is evil, bad and the by-product of a lazy approach to a solemn duty and a grave reflection on those who introduced it. I allege the reason it is being introduced in this dishonest form is to try to obscure from the people the real impact of the law and to deceive them as to where the burden of this tax will ultimately fall. The net result is that the people have not been deceived, but we have created a wilderness of ambiguity through which no honest person can conscientiously find his way.

I wish Deputy Dillon would be more objective for a while and try to get above the difficulties of the shopkeepers. Surely we are not going to make our national policy to suit the shopkeepers?

Why not? Are they not honest people? Are they not entitled to justice?

We must suit the people of the country.

Are they not the people?

They are some of the people. We must suit the people. If the shopkeepers are put to a little inconvenience, they will have to put up with it, as they can put up with it. How is it that shopkeepers in other countries are able to carry on their business?

This is a madhouse. In Sweden, all foodstuffs are excluded.

They are not.

They are.

I tell you they are not.

They are.

I have just had confirmation to-day from a Swede that foodstuffs are not excluded.

Are you sure he is truthful?

I am sure Deputy Dillon and his Party will not try to persuade me that the shopkeepers in Sweden and Norway are more intelligent than the Irish shopkeepers or can do their business better. They are able to do it because it is for the good of the country. Deputy Dillon is speaking for a group who are not prepared to do it because they do not give a damn about the country.

Like Deputy Dillon, I have not tried to produce impossible situations for the Minister. I referred to such items as fencing wire, binder twine, sheep dip, which have to be bought every year, weedicides, vaccines for lambs and so on. Nowadays, if you have 100 lambs, you buy 100 ampoules, because it is proper practice to inject every lamb. The Minister, in reply, tells me we have to pass legislation here, although he admits he has not yet arrived at an arrangement with the people concerned. I do not believe he is really making arrangements with the people concerned. I think he is vaguely pushing this through in bulldozer fashion. In paragraph 10 of the first Schedule there is an item "provision of services provided for agricultural, industrial or commercial purposes other than services provided in the course of carrying on a business which consists in whole or in part of selling goods by retail." If a farmer who has a spraying machine goes out and sprays farm crops and charges a price per acre including the application of spray, is he in fact "carrying on a business which consists in whole or in part of selling goods by retail"?

May we accept that as an absolute guarantee by the Government?

Yes, but that is all the guarantee you will get.

If a farmer buys 100 ampoules of vaccine to inject sheep with kidney vaccine, he is buying—and I quote paragraph 5—"materials and substances of a kind used in large quantities by farmers...". Will he pay 2½ per cent or not? Can the Minister answer that?

The Deputy knows very well. I am not going to go through the whole range of agricultural produce and answer on each item.

This is the Committee Stage and it is our duty to go through these things in detail. I am doing my duty.

Perhaps I should explain that I think the approach to this should be that we set down the principles in the Bill and that the detailed application of any tax after that is a matter for the Revenue Commissioners.

The trouble is the Bill does not set out the principles.

Surely in a matter so important if the Government have decided to apply the tax in a certain way there should be an answer to a simple question put to the Minister or whoever is in his place as to whether something like potato spray which may cost a farmer as much as £4 per year per acre of potatoes if he sprays four times is subject to tax. Is that included in the tax or is it not? Can we get an answer? No answer.

Would the Minister say if the principle has been established in this schedule that one can purchase veterinary medicines for animals free of tax but if one has to buy medicine for one's family, one must pay tax on it? Is that principle enshrined in this Schedule? Perhaps the Minister would answer?

That is not the principle.

It is the principle. The first Schedule sets out clearly activities exempt from tax. Veterinary medicines are not subject to tax but medicines for human beings are subject to tax. Is that not right?

That is the Deputy's particular gloss on the matter.

The Minister knows it is right.

Here is a difficulty which I think the Minister would be wise to note, in view of what the Minister for Finance said an hour ago about a proposal that hotels should be exempt...

That is the Second Schedule.

How does the Minister say it is the Second Schedule?

It is food and drink but it is covered, I think, by the First Schedule. The point is that the Minister last night indicated he would accept an amendment which would exclude 80 per cent. Of retail distribution points in the country from paying the tax. They will buy goods at taxed prices. Quite a number of these shops will be the normal suppliers of the hotels and the effect of the situation now developing is that you will preclude them from supplying hotels or else you must make some arrangement for them to obtain a rebate of tax from the suppliers for the goods they sell to the hotels. It sounds unimportant but it is a difficulty.

Hotels normally buy from wholesalers.

Mr. Barry

No, from the local shops as often as not. In every town hotels buy from the local stores.

If such a shop has such a problem, it can register and buy its goods free of tax.

It seems a bad thing to turn the hotel business away from him.

If such a shop has such a problem and the hotel is important to him, he can register.

How does the Minister mean, "he can register"?

He has an option, if he is under £750 he can buy his goods at taxed prices but if he has the problem Deputy Barry refers to, he need not avail of that exemption. He can register and get his goods at tax-free prices.

Yes, he can. It is optional. He can register and buy free of tax from the wholesaler.

Did the Minister say £750?

Whatever the figure decided upon. I understand it is to be £750.

Did the Minister accept the amendment which he voted against? He voted for £250 last night.

No. That is a different limit.


Surely the essential point is that the tax in that case is paid by the wholesaler and the shopkeeper gets the goods after the wholesaler has paid the tax?

The shopkeeper, between the limits — whatever they are fixed at—has the option of not registering and going to his wholesaler and buying goods at taxed prices. In other words, the wholesaler pays the tax and charges it to him.

The Minister has given way on that point because it was an advantage to the small trader.

In the case the Deputy is talking about, he will have to choose whichever course is more beneficial to him.

If he chooses to let the wholesaler do the work, he cannot sell to the hotel. He has to give up his hotel customers.

On this matter, the House has laid down the principle, and the question of medicines was raised. What principle applies to the situation where a man goes into a shop and buys a bag of flour to feed his children? He has to pay 1/6 tax on that but if he buys a sack of pigmeal, he pays no tax. Have we put the pig back in the parlour?

Does the Deputy really want an explanation or is he just making a point?

I want to know what principle arises.

The underlying principle is that this is a tax on consumption and, generally speaking, raw materials of any sort for industry or agriculture are exempt. So far as anything is for consumption and comes under the heading of consumer goods, it is in.

What about medicines for human beings?

They are for consumption.

But they are subject to turnover tax, while medicines for animals are not.

They are material for industry.

Is it not more important to keep a person alive than to feed a pig?

I was asked to give the principle and I am doing that.

It is a bad principle.

The Minister has excluded advertising. We have heard a lot about Sweden. Is advertising excluded in Sweden? Why is it excluded? Is it not a fact that a lot of advertising on which the big money is spent is undertaken by firms who are using it as a means of avoiding tax because they have a surplus ?

It is, in effect, a raw material of business.

It is a way of avoiding income tax.

The idea of this tax is that it is levelled at the point of consumption.

Would the Minister say if it is taxed in Sweden? Would the Minister also say whether medicines are taxed in Sweden because if we are to make comparisons with other countries, it is only fair we should know. There is one other thing. The debate here this evening ranged around different types of building materials. If I go into a shop and buy paint, must I tell the person who sells it to me what I need the paint for because if I need to paint a new house, apparently, it is not taxed.

No; he would not give you that assurance.

In the normal course of events, if Deputy Tully, when an income tax Bill is going through here, says to me: "I earn money from such and such a source. Is that taxable?" All I can say is that it is not part of the Legislature's job to say whether it is or not. The Legislature lays down the principles and the Revenue Commissioners apply those principles to each case as it arises.

As far as I am concerned and as far as the Labour Party are concerned—I do not mind about what anybody else does here—we want to ensure that when legislation is passing through this House, we know exactly what we are passing. It is most unfair for any Minister to come in here with a whole pile of suggestions and to say: "All you have to do is to pass these and we shall discuss them afterwards with outsiders who have no connection with this House and decide in what way they will apply." I believe such discussions should have taken place before the debate in this House.

If the Minister made hard and fast arrangements with trade organisations, then he could very properly be criticised in this House for tying the hands of this House because Deputies would not be free to amend the Bill.

Of course they would.

It makes no difference what way his hands are tied. If the Revenue said afterwards: "This is what we must do", where is the freedom of hands there?

May I say at this stage that advertising is not taxed in Sweden but medicines are by and large.

What does the Minister mean by "by and large"?

There are some exclusions.

Will the Minister consider at all the exclusion of medicines supplied by prescription?


The Minister has covered up for the Minister for Finance by stating that the House will lay down certain principles and each case will be determined by the Revenue Commissioners as it arises.

I am only saying what is the usual procedure in this House when we are putting through a Bill of this kind or any taxation measure in any year. Deputies here cannot be expected to visualise every possible eventuality and all we can do in the Bill is to lay down the principle as to where the tax is to fall and then the implementation of that in detail and in particular cases is a matter for the Revenue Commissioners. That is the way the business is normally done.

The final decision on these matters, exemptions and so on, will rest with the Revenue Commissioners?

That applies to all taxation legislation.

The questions that have been raised on these matters will be dealt with by the Revenue Commissioners? Even this week the Minister crossed swords with a leading member of the judiciary on the interpretation of regulations, and the learned judge stated that the regulations should be interpreted in a particular way. The Minister felt very annoyed and issued a statement in this House that his own interpretation of the regulations was correct.

He backed down on that since.

I did not.

The Minister backed down yesterday.

I did not. I dealt with the petition.

And he turned it down. The Minister made a mistake. He was wrong.

I dealt with the petition on its merits and turned it down.

We are dealing with the First Schedule to the Bill.

How did the petition arise?

I received a petition from the defendant himself.

That is not what changed the Minister's mind.

I received a petition from the defendant; I received a Garda report and the comments of the trial judge, and on its merits I rejected the petition.

The Minister took action on the word of a Deputy?

I did not.

This does not arise.

The petition which I received was received from the defendant himself in writing.

Is it not a fact that a Deputy, after voting for the Minister in the big debate asked him——

That is completely untrue.

Is it not a fact that he asked the Minister to suspend the jail sentence?

Deputy McQuillan will resume his seat. This is not relevant to the First Schedule.

The Minister has described what I charge him with as being an untruth. I say the Minister is telling an untruth.

I want to state solemnly as Minister for Justice——

Nobody believes the Minister anyway.

——that in the case under discussion, I received in writing a petition from the defendant in the case.

The Minister did not make any telephone call?

The first thing I received was a petition in writing. I will produce the file to Deputy Sweetman. The first thing I received was a petition in writing from the defendant in the case and that petition was sent to the Garda and to the trial judge.

The Minister did not ring anybody up, the way he did in another case?

Deputy Murphy, on the First Schedule.

That is the second case in a fortnight, one for each Deputy who has kept you there.

The matter is not relevant.

Deputy McQuillan has no regard for truth or justice.

The Minister knows perfectly well he took deliberate action against the law officers of this State——

That is a lie.

——and that is two cases in the last fortnight.

It is a lie—that is a lie.

Has the Chair heard the expression used three times by the Minister for Justice?

I withdraw the word "lie".

The Chair has been pointing out that this matter is not relevant.

Having regard to the normal Parliamentary procedure of requiring words to be with-drawn——

The Minister has withdrawn it.

A Deputy

Deputy Sweetman said the Minister told a lie.

Told an untruth.

What is the difference between a lie and an untruth?

There is a big difference.

It would take some of you to know.

A lie is a deliberate untruth. That is the difference.

Let us come down to earth. The word "lie" is unparliamentary. The Minister has withdrawn it and that is the end of the matter.

Will the Deputy come back to the First Schedule?

On the First Schedule, the Minister has said, if I interpret him correctly, that the Deputies of this House should not trouble themselves too much on these particular matters, that we lay down the principles and that the Revenue Commissioners will be the sole authority to determine the interpretation of these regulations. We are further to assume from the Minister's statement that the Revenue Commissioners are a kind of infallible body. My belief is that this House is the absolute authority in the country. We cannot delegate any function of ours to the Revenue Commissioners without giving them clear-cut directions. Every Deputy is entitled to elicit information from the Minister on any point mentioned in the schedule. I mentioned earlier that we were unable to get clarification on many matters. If the Minister were to say that next Tuesday before the debate on these items concludes, he will be able to give us more information, we would be as helpful as possible, and accept the fact that he is not as conversant with the measure as he might be.

Everyone knows this is a very important measure. In view of the different interpretations that will be put on it, many people will have to go into the courts for an interpretation of matters that might be in dispute. I want, so far as possible, to have legislation defined here in such a way that no necessity need arise to have recourse to the courts for an interpretation of a particular section. Everyone knows that is a costly procedure. We all know that people in the lower income groups cannot go to the courts for a determination of their grievance, even though they may have a justifiable case. We should not delegate our functions to the Revenue Commissioners to iron out all these matters. That is all right on small details, but as members of this House we should clearly understand the different sections, sub-sections and items in the Bill.

I agree with the Deputy.

We had reached some little clarification before we got away from the business under discussion. I heard the Minister say in reply to the Leader of the Labour Party that the reason why veterinary medicines will be exempt is that they are the raw material of the agricultural industry. If I put a direct question to the Minister and ask whether veterinary medicines are exempt, will he reply and say they are?

Not necessarily.

I will go further and ask him if these veterinary medicines are used in a bulk way are they exempt? For instance, 100 ampoules to inject 100 lambs——

The fifth paragraph is clear enough. It mentions seeds, fertilisers, animal feeding-stuffs and other materials and substances of a kind used in large quantities. That should be clear enough.

The Minister is a farmer himself. Would he now define 100 ampoules bought to inject 100 lambs as a substance of the kind used in large quantities by farmers?

Thank you.

It is true that if an individual walks into a store and buys a bag of meal to feed two pigs he will pay no turnover tax on the grounds, according to the Minister, that is a raw material, and that there is an export purpose behind it. Let us be quite clear. There was a situation some years ago in which a number of people in the greyhound industry were feeding bread to greyhounds. Supposing an individual walks into a store and says he is going to feed his pigs with flour, does he pay turnover tax on that flour if it is to be fed to pigs?

It is the particular item that one buys. The definition here is of a general kind. It says, "substances of a kind used in large quantities by farmers and fishermen". It is a question of fact as to whether or not the substance used is one which is normally used in large quantities by farmers and fishermen. If it is that sort of substance it is out.

In other words the House is not entitled to lay down the lines of approach. That is to be finally interpreted by the people who administer the Act.

We are saying that this type of item shall be exempt, and whether or not a particular item comes into that category is a matter of detail for decision by the Revenue Commissioners in their interpretation of the Act.

That is not what happens in the ordinary tax law. What happens in the ordinary tax law is that rules are laid down precisely, and the case of an individual taxpayer is ultimately decided by a circuit court judge on appeal. There is no segregation of categories. This is an entirely new approach.

(South Tipperary): It seems to be the usual objection, that is, legislation by regulation. I come back to the question of building houses. We find here that earth, stone, gravel, sand and cement are covered, and the installation of heating, lighting, plumbing and sanitary fixtures and fittings are also covered. What about flooring, doors, windows, slates, tiles, glass, gutters, bricks, which will all be used? If I want to build a house I will employ a contractor. Will there be turnover tax on those items, and if so who pays it?

I am afraid I cannot help the Deputy.

Who decides? Is it the Revenue Commissioners?

All building is exempt.

I have been trying to get a ruling all afternoon as to whether that is the intention, and every time I put up a specific case I was told it might or it might not.

Deputy Sweetman could not get a ruling on a halldoor.

It includes every operation in the building of the house.

That is more than the Minister for Finance said.

(South Tipperary): Does it include the flooring?

And the halldoor?

It certainly includes the flooring.

Continuing with this question of the position of the animal vis-à-vis the human being in our society, we have now been given to understand that it is important that a substance which is to save the life of an animal should be made readily available to a farmer. In order to make it available the tax will not be imposed, because it would be made difficult for him to provide that substance, but, where the human being is concerned——

Deputy Browne knows full well——

I am not finished. Do not interrupt.

Do not be so dictatorial.

Do not be so damned imperious.

This is arrogance indeed. I was only trying to be helpful.

Do not be so supercilious. Sit down and behave yourself.

There is the Communist mentality.

Would you, Sir, ask the Minister to withdraw that remark?

I will not. I said that is the Communist mentality, and that is what it is.

Would the Minister like to use a knuckleduster?

I suggest that is an indication that I am a Communist.

It is not. It is an indication of the Communist mentality.

I do not see any implication that the Deputy is a Communist.

I say the Minister's behaviour is the behaviour of a Fascist.

That rubs off me much more lightly——

To continue what I was saying before I was interrupted, are we to take it now that this new elevation of the animal in our society is to be continued to the question of the provision of medicines? Is it to be considered more important to ensure that it will be possible for a farmer to buy medicine for pigs, than to buy medicines for his sick child?

Deputy Browne knows full well that we have all sorts of social welfare and health service arrangements whereby medicines are available to people who need them.

Is it not a fact that there is no question whatsoever of a scheme under which the white collar worker can, generally speaking, get free medicines? Now it is true that, in relation to the farmer, no matter what economic sector he belongs to, he will get these medicines free of tax. To that extent, there is discrimination against the white collar worker in respect of his children, since he will have to pay tax on essential medicines for his children, while the farmer will get medicines for his cattle free of tax. A nice exhibition of Christian principles.

We cannot get any information, so what is the use of discussing the Schedule?

Oh, we have got information. As far as I am concerned, the Minister has told me that if a farmer buys 100 ampoules to give his 100 lambs by way of injection, that purchase will not be subject to this 2½ per cent tax, and I am sticking to that.

I have no hesitation in saying that, in my opinion, flooring is building.

What about the halldoor?

There are some slates missing over on the Government Benches at the moment.

Question put and agreed to.
Question proposed: "That the Second Schedule be the Second Schedule to the Bill".

I was in a business premises the other day. I was in the main office of the managing director. It was furnished with old period furniture, soft armchairs and a sofa.

That is office furniture.

Is there a definition of office furniture? Does furniture become office furniture when it goes into an office?

Presumably, yes.

Are antiques liable for tax?

If they are furniture. The Second Schedule is not exempted goods.

Other than office furniture is—Item 3.

I want to know what is office furniture?

Furniture which is normally used in an office.

The imprecision that surrounds this Bill is simply astonishing.

Does office furniture and equipment include tape recorders?

I would say so.

Gramophone records are out but tape recorders are in.

Gramophone records are in.

Tape recorders are out and gramophone records are in.

Question put and agreed to.

I move amendment No. 60:

In column 2, to delete "Rule 5 of the Rules applicable to Case III of Schedule D".

The necessity for this amendment arises from the fact that Rule 5 of the rules applicable to Case III of Schedule D, which deals with business rents, ceases to have effect from 1963/64 and, therefore, the mention of it in the Third Schedule is inappropriate.

Of course the Third Schedule is not lined. There are no lines there at all.

Is that not unusual?

We shall have to have somebody sacked for that. There is a number five down here. Presumably all the first part is treated as one line.

The Minister's practice of reading his brief in these matters is highly to be commended. It resolves a problem which is perfectly clear; the extracts from the brief only serve to make confusion worse confounded.

Amendment agreed to.
Third Schedule, as amended, agreed to.

I move amendment No. 61:

In paragraph 2, page 67, line 13, to insert "of" before "one".

This is a drafting amendment.

A clerical error.

Amendment agreed to.

I move amendment No. 62:

In paragraph 4, page 67, to insert "chargeable" before "in" in line 41 and to delete "chargeable" in line 42.

This is also a drafting slip. The word "chargeable" was misplaced in the original.

Amendment agreed to.

I move amendment No. 63:

To insert the following new paragraph before paragraph 8:

"8. Subsection (4) of section 55 of the Finance Act, 1920, is hereby amended by the substitution of `to a fine of' for `on summary conviction to a fine not exceeding'."

Section 55 of the Finance Act, 1920, prohibits a company from entering into or carrying out any fictitious or artificial transaction for the purpose of avoiding payment of corporation profits tax. Contravention of the provision renders a company liable on summary conviction to a fine not exceeding £500. Paragraph 8 (1) of this Schedule provides for the recovery of a penalty incurred under Section 55 of the Finance Act, 1920 as a liquidated or fixed sum and accordingly the present amendment is designed to substitute a fine of £500.

Can the Minister explain why?

We have to have a liquidated sum.

Why? Surely a fine not exceeding is the proper way of doing it. The effect of the section, if amended, will be that the court will have no discretion in determining the amount of the fine. That is the exact thing that was commented upon most unfavourably by the Income Tax Commission and commented upon again, and again unfavourably, by the Supreme Court.

In the Sixth Schedule to this Bill, there is a partial repeal of Section 55, subsection (4) of the 1920 Act, which I have mentioned, but through a drafting error that repeal merely deletes the words "on summary conviction" and that will be cancelled by amendment No. 67 later.

Is it not a fact that at present the court has a discretion and the effect of this amendment is to remove that discretion?

That would seem to be so.

Is that not all wrong? It was commented on most unfavourably by the Income Taxation Commission and has been regularly commented on most unfavourably by all courts from the Supreme Court down.

This is only in respect of the recovery of a penalty already imposed.

No. If it were, it would not be fixed at £500.

This is definitely referring to carrying-out fictitious transactions.

And it fixes the penalty at £500, and does not leave any discretion whatever to the court.

Where do you see that?

You have to have the Finance Act, 1920, before you.

I have it here.

Under the new procedure we dealt with earlier—Sections 72, 73 and so on—all the penalties are fixed sums because, as Deputies know, there was a case recently in which the capacity of the Revenue Commissioners to elect for sums was unfavourably decided upon by the Supreme Court.

That was a different story, surely. That was where the Commissioners had taken an alternative penalty.

If the section says that a person shall be liable to a penalty of £100 does that leave in the hands of the court the right to impose a penalty of less than £100, or is there only a statutory penalty of £100?

It must either fine him £100 or not at all?

It must dismiss or else impose the fixed penalty.

Is Section 55 of the Finance Act, 1920, normally an income tax Section?

No; it is Corporation Profits Tax.

Then it is not in Shannon and Armstrong. I was trying to get the section. I am unhorsed by that.

Amendment agreed to.

I move amendment No. 64:

In paragraph 8, page 69, line 16, to delete "section," and substitute "Schedule,".

Amendment agreed to.
Fourth Schedule, as amended, agreed to.
Question proposed: "That the Fifth Schedule be the Fifth Schedule to the Bill".

These are just the various forms.

There seems to be no difficulty whatever in being precise when you are going to get the right to levy, but every difficulty in being precise when you are trying to say what he is levying for.

Question put and agreed to.

I move amendment No. 65:

In Part III, in the second entry in the third column, to delete "subsection (3) of section 34;".

The existing subsection (3) of Section 34 is being replaced by a new provision and is therefore unnecessary. We are deleting the words "subsection (3) of Section 34" from the schedule of repeals.

You are leaving subsection (3) of Section 34 standing— is that it?

No. It is unnecessary to repeal it now.

It has been repealed by a section?

Subsection (3) of Section 34 is replaced in this Bill by Section (3) (a).

Of this Bill.

Section 3, paragraph (a), of this Bill?

Is it not the reverse? Is it not the situation that we are leaving the old subsection (3) of Section 34, which is retained in this Bill? Why should it not be repealed?

It is not necessary. It is repealed, in effect, by Section 3 (a).

Would it not be better if it were repealed expressly?

There is a full section substituted for it.

The normal procedure in drafting is: "In section such and such the words so and so shall be deleted and the following substituted for them."

I suppose that that would be the normal way but that is not the way it is done here. I assume that it is quite effective.

It is odd, is it not, that if you are repealing a subsection of Section 34 of the Income Tax Act, 1918, repeal is not included in the Schedule?

Except that it would be doing it twice, I suppose, if you were to include it in the Schedule of repeals.

Does the Schedule of repeals not frequently simply refer to the consequential repeals arising out of the statute we have been considering?

I think not. The normal procedure is that one puts in new provisions and repeals the old, two separate operations. Here the old is repealed by the substitution of a new section for it. We can ask the draftsman to have a look at it.

The whole of Section 34 is going now, not merely subsection (3)?

If you have the draftsman look at it, that is all that needs to be done.

Amendment agreed to.

I move amendment No. 66:

In Part III, in the third entry in the third column, to delete `in subsection (4) of Section 55, the words "on summary conviction";'.

This is consequential on amendment No. 64.

That is because of the recent Supreme Court case that you cannot go on summary jurisdiction, is it not?

I do not think that that is the point here.

If it is not, I should be glad to know what it is.

This particular amendment is consequential on amendment No. 64.

No. 63 surely.

Yes, I am sorry.

And it arises because of the decision the other day?

No, I do not think so. The new practice involves High Court procedure in most of these penalty cases, so the words "on summary conviction" are deleted.

The Minister referred on amendment No. 63 to the court decision the other day. I thought that one of the things the court decided was that you could not go on summary procedure for a penalty of this sort.

And in so far as the whole procedure is being changed, this amendment is consequential on the change in procedure.

Following the decision of the court?

It is consequential on the changes made by these new sections.

Changes made as a result of the court, as a result of other matters or as a result of the Rules of Court—which?

Mainly, I suppose, because the Income Taxation Commission recommended these changes in procedure.

I understand that this was exactly what it did not recommend. If the Minister says that this is justified by the Commission's report, I will be perfectly happy, provided he gives me the reference.

Is that not in paragraph 291? We discussed it earlier.

That did not say so. We had that discussion a few minutes ago. This is CPT, not income tax?

That is all, yes.

Amendment agreed to.

I move amendment No. 67:

In Part III, in the eighth entry in the third column, to insert "and" before ` "said" '.

This is another drafting amendment.

Amendment agreed to.
Sixth Schedule, as amended, agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage ordered for Tuesday, 16th July, 1963.
The Dáil adjourned at 5.50 p.m. until 3 p.m. on Tuesday, 16th July, 1963.