Before the Minister commences, I should like to say that there has been a mix up over an amendment submitted by the Labour Party. The reason it was not submitted on the Committee Stage was that it was the subject of correspondence between the Party and the Minister. Would the Minister consider at this stage allowing the Bill to be recommitted for the purpose of dealing with this amendment?
Committee on Finance. - Finance Bill, 1964—Report and Final Stages.
The Bill need not be recommitted.
Only in respect of this amendment.
I cannot decide that. It is the Chair decides that.
The Minister decides it.
I do not object.
If the House is agreeable, the Bill can be recommitted in respect of this amendment.
I move amendment No. 1:
In page 6, between lines 28 and 29, to insert the following section:—
"In connection with any assessment to income tax where a person proves, to the satisfaction of the Revenue Commissioners, that he has incurred expense on himself, or on any dependant, arising out of disability or illness which is serious and against which disability or illness the Voluntary Health Insurance Board have refused to cover him under any of their insurance schemes, or have only agreed so to cover him at a premium in excess of twice their normal rate, there shall be deducted from the income to be assessed the vouched expenses so incurred in excess of £50 per annum per person and up to a maximum of £300 per annum per person."
On Committee Stage, we had discussion on another amendment to which this is generic. The purpose of the amendment moved on the Committee Stage by Deputy Byrne and supported by many Deputies on this side of the House was to ensure that, where a person had incurred substantial expense arising out of disability, he would get a tax allowance for such expense. What we had introduced at that time followed exactly the report of the Commission and in addition was something on the lines of the Australian system.
We had considerable discussion with the Minister on that occasion as to the cost here of that amendment and the cost, taken on a percentage basis, of the Australian concession in relation to the total Australian income tax. Many Deputies, including myself, found it extremely difficult to accept the figures the Minister gave in relation to the cost assessed here based on the same principles or proportions as in Australia. It would be desirable if the Minister would give us, when he is speaking on this amendment, a more considered view than he gave us on that occasion particularly in the light of the statements and the criticisms that were made of his figures.
Regardless of that, the Minister made two points against the principle of the amendment as set down on Committee Stage. The first was that it would be virtually impossible to determine what illness was serious and likely to be permanent. While perhaps one might not agree with him in that respect, at any rate the House is not now concerned because there has been included in this amendment a clear and specific test of the seriousness of the disability or the illness. The clear and specific test which is included is that the Voluntary Health Insurance Board has refused to cover the person concerned under any of their schemes against this illness for any premium that is not in excess of twice the normal rate.
Many of us have from time to time come across cases of very great hardship where people have tried to cover themselves through the Voluntary Health Insurance Board and have found the Board were not prepared to take them on as a risk. Nevertheless, they have in years afterwards incurred substantial expense because of illness and usually, because of that illness, have not been in a position to earn their normal salaries. Therefore, the hardship is on the double because while their earning is cut down they get no tax allowance for the heavy cost involved. We have made it clear in this amendment that the test of whether the illness or disability is serious lies in the certificate of the Voluntary Health Insurance Board. As long as that certificate and that test are there, there is the necessary preciseness about the amendment on which the Minister spoke on the last occasion.
As on the last occasion, the request is to permit an allowance where the illness has cost in excess of £50 a year and under £300 a year. With that preciseness because of the Voluntary Health Insurance Board certificate and because the band of expense is between £50 and £300, the amendment could not possibly cost any enormously substantial sum. While not costing a great deal to the revenue as a whole, it would be of immense importance in the relief of hardship in the type of cases we feel would be covered. For that reason, we urge very strongly that the Minister should accept the amendment.
The amendment is somewhat different from that submitted on Committee Stage. I must admit the Deputy has met some of the objections I raised on that Stage and probably come a bit nearer to making such a scheme administratively possible. At the same time, I must oppose the amendment for various reasons.
Three changes are made. First I pointed out on the Committee Stage that to decide whether an illness was permanent or not would be a very difficult matter for administrators. That difficulty is removed now. Secondly, this concession would largely be confined to those who could not secure cover from the Voluntary Health Insurance Board. Thirdly, there is the very useful safeguard that before payment is made the claim must satisfy the Revenue Commissioners.
When this amendment was put in last year I thought that if there were such a clause as the Deputy has put in here a person who was rejected by the Voluntary Health Insurance Board might get some relief. Then I was shown the great difficulties of this matter. One of them was that the Voluntary Health Insurance Board reject a person sometimes wholly and sometimes partially. The example given to me was of a person suffering from diabetes but otherwise healthy. It was suggested he might be accepted by the board but not in respect of illnesses arising out of diabetes. One of the great difficulties is that we are not dealing with voluntary health insurance——
I do not like interrupting the Minister, but the charge would be in respect of the particular illness the man was suffering from and, therefore, the diabetes case would be covered.
They say: "We will cover you for anything but diabetes".
Then the amendment would cover it.
One of the difficulties is they do not load the premium as life insurance bodies do. They impose the same premium but say they will accept anything but certain diseases. I shall come back to it in a minute. One great difficulty about the Voluntary Health Insurance Board is that under the Act which established the board there are about 60 registered bodies who are doing this health insurance business. The first difficulty, therefore, that would arise in this respect is that a person seeking coverage with another body and either partially insured or rejected, would be compelled to try also the Voluntary Health Insurance scheme and be rejected by the board before being given any relief by the Revenue Commissioners.
People insured with the various bodies other than the Voluntary Health Insurance Board may have some personal reason why they prefer to go to these people rather than the Voluntary Health Insurance Board and might resent being compelled to go to the Voluntary Health Insurance Board to offer their premium there. As well as that, there are bodies entitled to do this type of business under section 4 of the 1955 Finance Act. They were principally trade unions and friendly societies helping people to pay their medical expenses. There are many of these bodies also.
We have, therefore, a very wide choice in this country of bodies catering for sickness in addition to the Voluntary Health Insurance Board. There is the INTO, for instance. They have a health scheme but all their members are not bound to join it. In fact, some of them might have serious objection to joining it or to being compelled to join it if they were paying income tax and seeking some relief from income tax because of medical expenses.
The Deputy's proposal in the amendment would appear to have been prompted by the impression that if a person were suffering from a certain illness the premium would be loaded. What happens is that the illness would be excluded and no person would be paid by the board in respect of complaints arising from that particular illness. I mentioned on Committee Stage, as a general objection to providing this type of relief through income tax, that it does lead to inequities as between one person and another. I gave the example of a man with three children earning £1,450 a year. If he were to meet with an illness and had to pay £100 medical fees his relief would be £23 15s Od, but a man with six children would not get any relief because he would not be subject to any income tax.
Then there is the case of a man earning £10,000 a year. He would get relief of £69 3s 4d on every £100 spent. That goes to show that the person who really needs the help most is the most unlikely to get any benefit from a scheme such as that proposed. That is why, on Committee Stage, I argued that the relief which the Deputy has in mind would be better secured under a health scheme rather than an income tax system.
Under a health scheme, without any doubt it would be provided that the person who was worst off would get the better relief and the person best off would get small benefits. For that reason it is quite obvious that this type of scheme should be provided under a Health Act rather than through the income tax code. As I mentioned then, there is a Select Committee sitting on the health services and presumably recommendations will be made by that Committee that will give more help to those on lower and medium incomes to pay their medical expenses.
The Deputy asked me about the position in Australia. I mentioned on the last occasion that if the Australian scheme were applied here it might cost us £3 million, The amendment proposed on Committee Stage and today would not, however, cost anything like that because there are restrictions here which do not apply in Australia. The £3 million figure is based on the amount collected in 1963-64 by way of income tax in Australia, which was £830 million. Of that, £540 million was income tax from individuals. The amount the health concessions cost the Australian Exchequer was £35 million. If you take that £35 million out of the £540 million and work out a percentage, it would confront us with a very costly scheme if applied here.
Does the Minister happen to know if this is the only health concession in Australia? I do not know.
I am not sure.
Does the figure of £35 million in Australia cover any other income tax health allowances?
I do not think so. Deputies will see from that figure that the average amount allowed to each of the taxpayers who contributed £540 million in Australia was £30. If that scheme were applied here it would cost from £3 million to £4 million. On the other hand, if the percentage were allowed as a percentage of the amount paid in by taxpayers it would be £2 million a year. Then, if the restrictions we impose were applied it would be much lower than that. Of course, Deputies will realise that where a limit of £300 is inserted, as Deputy Sweetman has proposed here, there would be demands every year to have that limit raised until eventually the limit would be very high and, of course, the scheme would cost more and more. Principally because I think it is not the way to give this benefit— under the income tax code instead of under the health scheme—I am opposing the amendment.
I am interested to this extent. At present I know somebody who has worked all his life in a very responsible position and has a pension of £1,000 per annum. This person is now extremely ill with an illness of long duration. It has already lasted for the past year or two and it will last for the remainder of his life. It costs him £20 a week. It is fantastic to think that there is no relief for such a person. It is amazing that the law of any Christian country would allow such a situation to exist.
There is no more experienced or wily parliamentarian in the House than the Minister for Finance and, with the greatest respect, I am sure Deputies will agree with me when I say, as others before me have said, he is a past-master at begging the question. This talk about Australia and about it costing £3 million to implement this amendment is grotesque fraud. Implementation of the amendment would probably cost less than £100,000 a year to the State. The amendment is highly restrictive and represents a considerably watereddown version of the report of the Income Tax Commission, our own commission which sat for many years and considered the matter at great length. It heard the views of the Revenue Commissioners on the proposals and it still recommended the principle of this amendment.
The Revenue Commissioners went on record before the Commission as opposed to the principle of this amendment because it cuts across the theoretical conception of income tax as a non-discretionary tax. There are many academic, theoretical grounds for opposing this and the Minister has produced them all. But Deputy Clinton who spoke a few moments ago so very briefly summed up the position. It is an appalling thing that in a Christian country a modest relief for the dying—that is what it amounts to—should be so persistently opposed by the Minister. Was there ever a greater fraud perpetrated on the Irish people than the Health Services Committee of this House which is now sitting and which has sat for over two years?
Surely the Health Committee does not arise.
The Minister referred to it.
That does not open a debate on the health service.
The Minister made the existence of such a Committee his defence for not accepting the amendment.
We cannot discuss the workings of the Committee.
I am not discussing the workings of the Committee but repudiating the Minister's argument that we should await the report of the Committee in its sterile effort to provide us with adequate health services. It is gross irrelevance to this amendment to bring in that matter. As to the further theoretical reasons produced by the Minister on this occasion we have heard some which have not been produced before. We have heard of the bodies other than the Voluntary Health Insurance Board catering for medical insurance. The Minister said there were sixty of them. They are of no consequence; for all practical purposes, the Voluntary Health Insurance Board has a statutory monopoly of medical expenses insurance in this State and, to the extent that these other bodies exist, they can be provided for in a recast version of the amendment.
As I said in relation to other amendments, I can always respect the point of view of the Minister for Finance who says: "I have not got the money", but to produce the doctrinaire grounds the Minister has used in justification of his rejection of the Commission's recommendation is, I think, a rather dishonest performance.
I am disappointed with the view expressed by the Minister and with the attitude he has taken up. Over the years there has been a very honestly held view—that goes without saying—that it is wrong to use the revenue taxation code in this way. That view was put up to me very strongly when I introduced the incentives for exports. It was said it should be done in another way but I think time has shown that my disagreement with that doctrinaire view and the decision I took at the time was right. I think the Minister would be taking the same right course if he accepted the amendment on the lines we have been discussing.
There is no use in the Minister trying to conjure up a great case against the amendment on the basis of a person with a salary of £10,000 a year without reference to the rest of the story as to how much the Minister takes out of that and how much the man has left for himself. My own view is that rates in relation to direct taxation of that sort compare unfavourably with those of other countries.
It happens that I have before me the rate of federal income tax on individuals in Canada. I suppose the Minister will agree that we can take roughly 30,000 dollars as being the equivalent of the figure he quoted. It is not quite three in the £ but it is as near as makes no difference. As far as I can see, from 30,000 dollars, the Canadian Government take only 11,000 dollars. Here, first of all we take 6/4d in the £ in income tax which is virtually £10,000, as near as makes no difference. Then we take surtax on top of that and this would mean that the person concerned would be left, in the Minister's own case, with considerably less particularly when we take into account that in Canada the exemption for a married person is 2,000 dollars, personal allowance, which when reduced would again be substantially above the figure that we have here.
Therefore, I do not think it is fair for the Minister to take one figure out of the income bracket and build his whole case around that, without taking into account how much of that particular income he already takes away under the income tax and surtax now in operation. I think the Minister is wrong in refusing to accept this principle. I do not suggest for a moment that my drafting is completely watertight, but I think the Minister will agree with me that it is sufficient to make the principles which we are urging on him sufficiently clear. It is entirely wrong, as Deputy Clinton said a moment ago, that where a person has his whole income, or a large part of his income, going on costs arising from permanent illness, serious illness or serious disability, there should not be some allowance in the income tax code for that. Although the Minister has intimated that he will oppose the amendment now, I shall urge him most strongly, indeed, to have another thought about this matter. I believe, if he does, he will find that the objections to it are founded in the doctrinaire point of view, honestly held of course, but wrong.
Amendment put and declared lost.
Amendment No. 2 recommitted.
I move amendment No. 2:
In page 14, after line 43, to insert a new section as follows:—
12A. The exemption from income tax liability granted under the Finance Act, 1963, to agricultural and fishery co-operatives shall be extended to cover industrial producer co-operatives.
This matter was raised by Deputy Corish on Second Reading. It arises because of the fact that the Minister for Industry and Commerce set up a Commission on Co-operative Societies in 1957. It should have produced excellent results because it did not bring in any recommendation until June, 1963, and, in the course of six years consideration, I am quite sure they looked at every angle of this problem. When they brought in the recommendation they said, and I quote from the Report of the Committee on Co-operative Societies, page 41:
The present position is satisfactory in so far as genuine co-operatives are concerned. There is, however, a probability of abuse by societies which, though holding themselves out as co-operatives, do not observe true co-operative principles in their activities. This situation could lead to the withdrawal of the tax privilege from all societies, including the genuine co-ops. The arrangements which we recommend for restricting the use of the term "co-operative" to genuine co-operative societies would provide a means of eliminating these tax abuses. While having regard to the recommendations in the Fifth Report of the Commission on Income Taxation and to the intentions of the Government as indicated in the Second White Paper on Direct Taxation laid before the Oireachtas in April, 1963 and in the Financial Statement of the Minister for Finance when introducing the Budget, 1963, we feel generally that the current tax exemption should be preserved for genuine co-operative societies.
The word "genuine" appears on several occasions. This is a genuine co-operative society. The Minister, however, for reasons of his own, decided that he would only include the agricultural and fishery co-operatives in the scheme, and would not include industrial co-operatives. We can see no reason at all why a genuine co-operative society, as recommended by the Commission on Co-operative Societies, after six years' labour, should not have been included. This society, which is a genuine co-operative society, being made liable for income tax, while they are trying to pay for a heavy capital commitment, are, in fact, almost being put out of business. I do not think that is what the Minister intended. I think a genuine mistake was made, and I suggest to the Minister that it can be remedied now. The Minister should include genuine industrial co-operatives as well as agricultural and fishery co-operatives. I do not wish to delay the House in discussing the amendment because I think the Minister is well aware that it should not be necessary to do so. I should like to ask the Minister, in view of the facts I have given him, and of which he was already aware before now, to consider this matter and allow the amendment to be included in the Bill.
First of all, we must look at how we stand with regard to income tax in connection with co-operative societies. The Commission made a recommendation with regard to the relief of income tax for certain societies and the imposition of income tax on all other co-operative societies in their Fifth Report. The Government gave their views on this in the Second White Paper on direct taxation. Last year in Part VII of the Finance Act, 1963, the legislation was implemented by the Government, as forecast in the White Paper. Generally speaking, following the recommendation of the Income Tax Commission, agricultural co-operatives were exempted. Fishery co-operatives which had not been mentioned by the Income Tax Commission were also included. Were all other societies excluded because there had been rather undesirable results from the exemptions from income tax up to that time?
I know the society the Labour Party has in mind. It is a deserving society, but, unfortunately, neither my legal advisers nor I can think of any form of words that would give relief to that particular society and not include many others, which we would not like to include. I suppose Deputies will say we can name the society and say it could be exempted, but that would not be desirable. My objection, therefore, is that to include any type of industrial society would lead to the inclusion of others which we certainly do not want to include. We do everything possible, in fact, to keep them out.
As long as we can remember co-operative societies generally were relieved from income tax and it came to the stage where something should be done because people were taking advantage of that fact, and were forming co-operative societies for the purpose of evading income tax and not for the purpose of co-operation. In 1963 for the first time income tax was extracted from co-operative societies, with the exception of the agricultural and fishery co-operatives.
Therefore, we have embarked on a new conception of the treatment of co-operative societies and I think we should give it a few years. I would ask the Deputy to look at it in that way. It is a bit soon to amend it. It is only for one year. Perhaps, when we have a little more experience, after another year or two, we might be able to consider some variation of the scheme already there. I am not promising that we shall: I say it might be possible when we have a bit more experience but certainly not at the moment.
This is the most extraordinary thing I have heard for a long time. The Minister admits that there is a case for it. He admits that the society is a genuine society and that, but for the fact that his legal advisers cannot find the words, it would be exempt, and, for that reason, that they must pay income tax.
We assume from the Minister's statement that all the other societies—the fishery co-operatives and agricultural co-operatives—are Simon Pures. We assume that, when the Act was passed, not one of those societies that was allowed in, was not a genuine co-operative. The Minister knows as well as I do that that is a lot of cod. He knows that, because it had to be worded in that way, the chancers got in, as they would in any other case. Despite that, the Minister—and rightly so—included fishery co-operatives and agricultural co-operatives.
The Minister now says that the fish and flesh are all right but the good red herring is out. He says the red herring cannot be treated the same as the remainder. That is a terrible approach on the part of the Minister. If he even said he would be prepared to go into the matter to see if he could find the words, it would be some step forward.
This is the first time I have ever heard a Fianna Fáil Minister for Finance say he could not find the right words. Just think that the Minister for Finance admits he could not find the words which would describe this adequately in order to keep the others out.
I think the Minister could have done it in the same way as he did it for the other co-operatives. He could have included these people who, he conceded, are genuine co-operatives and very deserving. It will be small consolation to them if, two or three years hence, the Minister or his successor decides to amend the Act when these people have gone out of business because they were unable to meet the heavy income tax commitment. Surely the fact that they are a genuine cooperative—and there is no question about it—means that there should be some way in which this matter can be dealt with. Before it is finally written off, would there be any possibility of the Minister's getting a dictionary and getting his legal advisers to go through it to find, as they will, a word which will allow him to include a genuine industrial co-operative society and to have such societies included as well as the other two types of societies he has mentioned?
We know that, over the years, there were abuses. I cannot understand how this has come about in view of the fact that the recommendation by the Committee, after their six years' labours, did not say that industrial co-operatives should be excluded. It said that genuine co-operatives should be included. This is a genuine co-operative and the Minister says, in effect: "We cannot find the words and, therefore, they must pay".
Will the Minister again try to have a look at this to see if there is something he can do about it because a grave injustice is being done to this co-operative society? No encouragement is given to other producer co-operatives to come into existence if this is the way the one at present in existence is being treated.
It will go down on record that it is the only case in which the Minister for Finance, Deputy Dr. Ryan, was short of words. It is the only time it has ever happened.
Short of legal words.
There are other sorts of words the Minister is not short of at other times.
The co-operative concerned will find words to describe the action.
The Minister means legally short of words.
Amendment put and declared lost.
I move amendment No. 3:
In page 19, between lines 39 and 40, to insert the following section:—
"Section 1 (4) (d) of the Finance (Excise Duties) (Vehicles) Act, 1952, is hereby amended by the insertion of the words `including machinery used in a quarry or pit solely for the purpose of raising material for the construction or repair of roads."'
I have very little more to say on this amendment other than what I said on the Committee Stage. I put down the amendment again to give the Minister an opportunity to consider it further in the interval and in the light of explanations we gave him on that occasion. The fact is that I happen to know of one case where a man has a lorry so specially constructed that it has built on it a special type of crusher mill for the purpose of breaking up road material in a pit. If that man had that machinery on a low loader, the low loader would not bear road fund taxation. But, because it is on a lorry instead of being on a low loader and because he takes it, therefore, on the roads from one quarry to another, always using it for the sole purpose of raising road making materials, he is subject to the £1 per horse power tax for which he would not be liable with a low loader. It seems to me that that is all wrong.
The case in point that I know of is a case where a man, for the county council, takes around his machinery in this way about half a dozen times in the year and that is that. For those half dozen or so trips, the existing law provides that he is charged £75 a year tax. The Minister will not get anything for the Road Fund by keeping this because the man concerned will obviously sell the lorry and utilise the type of low loader that would be exempt for such carriage. In the circumstances, I think there is nothing to be gained by the Minister's retaining the section and that there is everything to be gained by accepting the amendment.
I must admit that this is rather a difficult and technical problem. I did study the matter since the Committee Stage. As far as I can see, the underlying principle which applies is the use to which the vehicle is put on the road—not the use to which it is put when it is off the road.
The amendment suggested by the Deputy lays particular stress on the use to which the vehicle is put when it is off the road. The determining factor is, therefore, the use to which the vehicle is put when it is on the road. That is why certain vehicles are exempt when used for road-making.
I think the Deputy is not correct in his plea that if the particular person he mentioned had loaded this equipment on a low loader the low loader would be exempt from duty. I asked my friends in the Department of Local Government to give me examples of those vehicles that are exempt and those that are not exempt. They assure me that vehicles are exempt only if used solely for road-making and only if special road equipment is permanently built in or permanently attached to the vehicle. It must be permanently built in or permanently attached to the vehicle. If it is a low loader used merely for the conveyance of equipment. which is not permanently attached or built in, it would not be exempt.
This is permanently attached.
If it is permanently attached or built in, it would be exempt.
As a low loader?
Yes; otherwise not. I thought the Deputy suggested his equipment had been transferred to a low loader.
Perhaps I did not make it clear. If, instead of being built on a lorry, it is permanently built on a low loader it would not be liable.
Another example which illustrates the point is a tar tanker used only for the carriage of tar; it would not be exempt, but a tar sprayer, fitted permanently with pumps and a spraying barrel, and so on, would be exempt. First of all, the vehicle is used for road repairing and road making and, secondly, it must be fitted permanently on to the carrier before exemption can be given. These are the two tests. They are two simple tests and I do not think we need go beyond them.
I have said all I can. I cannot persuade the Minister and so I may as well withdraw my amendment.
Amendment, by leave, withdrawn.
Bill received for final consideration.
Question proposed: "That the Bill do now pass".
When does the Minister propose to give the tax collectors the ninth round?
He has done worse. Has he not closed down individual tax collection? Has he not sacked them?
If the Deputy is in touch with some of these people, he probably realises that they are in a state of change——
The KO in the ninth round.
——from one position to another. Because of that a certain amount of investigation is necessary before the ninth round is implemented, but it will not be denied them.
Before we leave this subject for this year, I want to make one last point. I had intended making it on an earlier stage but I think it is relevant here and now. In recent years, an increasing interest has been manifest in tax affairs by both sides of this House. Very frequently, questions have been put to the Minister which he has been unable to answer because of lack of information. There seems to me to be a good case for the establishment of some kind of statistical section or research section is the Office of the Revenue Commissioners. I pointed out some years ago the contrast in the information available in the report of the Revenue Commissioners here as compared with the report of the Inland Revenue Authorities in the United Kingdom in which there is a wealth of useful information for those who wish to appraise the tax system. That information is not available here.
I am sorry to interrupt the Deputy but only matters contained in the Bill are relevant and may be discussed on the Fifth Stage.
I do not wish to pursue the matter, but I urge the Minister to consider the point for what it is worth.
We have not, perhaps, as big a staff as we should have and it is, therefore, sometimes very difficult to collate certain figures and give the information Deputies require. I have mentioned here already that we have now a computer and, when it is working for the whole country—it is only on trial working a pilot scheme for part of the country at the moment— we shall be in a much better position to get statistics and figures.
Question put and agreed to.
This is certified as a Money Bill in accordance with Article 22 of the Constitution.