Private Members' Business. - Income Tax (Amendment) Bill, 1967: Second and Subsequent Stages.

I move that the Bill be now read a Second Time.

In asking the House to give the Bill a Second Reading, I want to avail of the opportunity to clear up a great deal of misconceptions which have been circulating in the past few days with regard to this whole matter. I want to emphasise strongly to the House that I am under no embarrassment whatever in introducing this Income Tax (Amendment) Bill. There is no reason indeed why an embarrassment should attach to anybody in this House, anybody in the Seanad, anybody in the Government, or anybody who had anything to do with the preparation of the Income Tax (Consolidation) Bill of 1966. We are dealing here with what I would call a practical, sensible, parliamentary device to overcome a difficulty which has arisen.

I want to stress especially that the Standing Joint Committee which laboured so long and arduously over the Income Tax Bill of 1966 did its work competently and thoroughly. I want to repeat that we are all, and should all be, profoundly grateful to that Committee for the magnificent work it did. In particular, I have no hesitation in paying a tribute to the Chairman of that Committee, Deputy Sweetman, for the dedication he brought to his work on the Committee and, indeed, for the anxious way in which he watched over the development of this monumental piece of legislation from its earliest stages. That applies equally to all the other members of the Standing Joint Committee. Nothing could be further from the truth than that this Committee, or indeed the House, or the Government, overlooked in any way the question of the impact of the Constitution on the Income Tax Bill of 1966. I want to scotch any such erroneous impression.

The Report of the Standing Joint Committee has been printed and published and is available to anybody who wants to read it. Anybody who takes the trouble to read the Report will find that on Thursday, 5th January last, at a meeting of the Committee, Mr. V. Grogan, the Director of the Statute Law Reform and Consolidation Office, was called before the Committee and examined. I want to read you the Report of the Committee on that examination. I shall read it in full because I think it important I should do so.

The Chairman, Deputy Sweetman, posed the first question and said:

Mr. Grogan, you have examined the Bill, as apart from preparing it, and you have examined all the amendments submitted and passed by the Committee?

Reply: I have.

Question: Are you satisfied that the Bill as amended by the Committee, represents the present statute law?

Reply: I am.

Question: In connection with income tax?

Reply: Yes.

Question: And leaving out, of course, any reference to corporation profits tax but putting in references to income tax and sur-tax that might have appeared in a corporation profit tax Act or section?

Reply: That is so.

Question: Any member of the Committee is entitled now to put any question he wants to the witness.

Major de Valera: The Attorney General has certified that this Bill is in accordance with legislation as it stands. I take it that means that it embodies all provisions which are on the Statute Book and it is not a certificate as to what the law is at the moment?

Reply: I agree. The Attorney General's certificate is in conformity with the Standing Orders of the Dáil and Seanad and merely certifies that the Bill reproduces the existing enactments as they now appear on the Statute Book.

Question: Is there any implication that every provision in this Bill is good law at the moment?

Reply: No. That would be beyond the function of the Attorney General in connection with a Consolidation Bill.

Question: Is there implied any judgment as to the enforceable validity of such a section as section 483?

Reply: No. No such implication could be raised on the Attorney General's certificate.

Question: On constitutional grounds or otherwise?

Reply: The Attorney General's certificate is, I repeat, in compliance with the Standing Orders of the Dáil and Seanad in relation to Consolidation Bills and the Attorney General is entitled to do no more than that.

Question: As the Bill stands, the intention is that the law will be as heretofore on the Statute Book?

Reply: The intention must arise from the construction of the statute. The intention of the Oireachtas in passing this Act is to make no change in the law as it appears on the Statute Book.

Question: As it appears on the Statute Book?

Reply: Yes.

The witness then withdrew.

I have read this Report of the Standing Joint Committee because I feel I must make it abundantly clear that the Committee had regard at all times to the difficulties that might possibly arise in regard to the constitutionality or otherwise of some of the provisions of this Consolidation Bill.

I want to emphasise again that the Income Tax Bill of 1966 is a Consolidation Bill and the very essence of a Consolidation Bill is that it can do no more and no less than consolidate the statute law as it stands. A consolidation Bill could not attempt or purport to remove anything from the law; or put anything into the law. The Committee had to satisfy itself that it did precisely what it should do in accordance with our Standing Orders, namely, take all the statute law as we have it in this country governing income tax and put it into one statute. This is very valuable work indeed. I know from my own experience and from things said to me by accountants and lawyers during the past few days that many people are anxious to get this piece of legislation into law because it will be of very great assistance to a considerable number of people in our community if they can have all the law governing income tax available to them in one modern statute.

A difficulty has arisen and it is an understandable difficulty. This provision which is in the Consolidation Bill, in section 483, was in the Income Tax Act of 1918. Of course, we know that the situation was changed in this regard by the enactment of the Constitution. At the Committee, when the question of the constitutionality of section 483 was raised, I gave an assurance to the Chairman and the members that I was aware of their doubts about this section and their unhappiness about it but that I would avail of the first opportunity, namely, the forthcoming Finance Bill either to repeal this provision in its entirety, or to modify it in some way which would make it acceptable to Deputies and to the House as being in conformity with the Constitution and with, indeed, all our ideas as to how these matters should be conducted. I want to pay a tribute to the Committee and its members that they accepted that assurance on my part and agreed that this was a sensible parliamentary procedure; that the Consolidation Bill could be allowed to proceed as it stood on the basis of my assurance that this matter would be put right to everybody's satisfaction at the earliest possible opportunity.

As Deputies know, the Bill then went to the President for signature. The President, of course, who exercises a different function in regard to legislation from the function we exercise, apparently had doubts as to the constitutionality of some of the provisions in the Bill and had to consider whether or not it was his duty to refer the measure to the Supreme Court for a decision. In that situation, it seemed to me and to the Government that the sensible thing to do, at this stage, was to bring in this amending Bill to delete from the consolidation measure, when it becomes law, two provisions, to which exception might possibly be taken and which might cause difficulty as to their constitutionality.

That is simply what we are doing here. I am asking the House to pass the Bill, the purpose of which is to remove from the consolidation measure section 483 in its entirety and section 480, subsections (2) and (3). I am hoping the Bill will be passed by the Dáil today and by the Seanad tomorrow and will go to the President for signature tomorrow. I think this is a sensible, practical parliamentary procedure for getting out of this difficulty which has arisen. I again wish to emphasise that this House, this Oireachtas, is not here attempting to pass any new law. If we were attempting to do that, I would suggest it would be the duty of the Government and the Opposition and everybody else to be vigilant that we did not attempt to pass legislation which would be unconstitutional or which could be held to be unconstitutional.

I think that situation would apply to us if we were enacting some new provisions here; but as a House of Parliament, when we were consolidating a measure, a different obligation was placed on us. We were setting out to consolidate all the statute law as it stood in the Statute Book, and therefore, as the Oireachtas, we could not have regard to whether particular provisions in a consolidation measure were constitutional or not, because all we could do in bringing in this consolidation measure was to ensure that the measure was in accordance with Standing Orders. Despite the fact that the Select Committee in particular and the House also did not have to have regard to the constitutional provisions in regard to this measure, nevertheless they were sufficiently alert to advert to them as one can see from the Report which I have read.

I again wish to say to the House that this is an important measure from my point of view. I think it will be very useful, very helpful to many people. If we are not able to adhere to our time schedule and have a Consolidation Bill passed by 6th April this year, the whole procedure will have to start all over again and that would be a very great waste from my point of view, from the point of view of many others, particularly here in the House, and to many members of the staff of the Houses of the Oireachtas and the Revenue Commissioners. All the work would have gone to waste and would have to be started all over again. In order to try to obviate that, I am adopting this procedure, which I admit is somewhat unusual, but is in accordance with our Standing Orders and rules, namely, excising from the consolidation measure these provisions which might lead to difficulty and excising them in advance so that when the Consolidation Bill becomes law, they will not ever come into effect.

The solicitude being shown in certain quarters for the taxpayer in relation to section 483 is, to put it mildly, somewhat belated. We must remember that that section has been in our statute law for 50 years and that during a very large part of that period, more than 20 years, that solicitude was not shown by a person who was then in a position to bring an Act to the House, if he so desired. The Minister has given an accurate description of what transpired in the Committee but I do not think he has given quite a full description. I think there were added to the deliberations of the Committee two other things. One is that the Minister would repeal the section by which there was susceptibility entertained and that the Minister would not act on the section until then. It seemed to me, therefore, that once the Committee had that express undertaking from the Minister in his position as a corporate sole, there was not anything more than mere technicality in dealing with the matter otherwise. Two is that the Minister will remember that at the meeting of the Committee, I suggested to him that another way of dealing with the matter was to introduce a Revision Bill before the Consolidation Bill. That, in fact, was the order adopted by Deputy Dillion when he introduced the Fisheries Statute Law (Revision) Bill and subsequently the Fisheries Consolidation Bill. The Minister will agree that if similar procedure had been adopted in this case, the problem would not have arisen now.

I think I am fairly summarising the Minister's view when he said there was some doubt about whether the hen or the egg came first but to suggest, as was suggested, that these matters were not considered by the Committee was irresponsible in the extreme. It is extraordinary that when it is in the Report of the Committee, when many members were available to have inquiry made of them, the Report does not appear to have been read and apparently no inquiry was made of any Committee member because if any member of the Committee had been asked, I cannot see how he would forget the discussion we had on the matter.

A consolidation measure re-enacts the statute law as it stands and the consolidation procedure does not permit the Committee or this House to make any variation in the statute law as it is. It was therefore incumbent on all of us to include these sections. I am not, as I have said, impressed by the solicitude for the taxpayer at this late stage. There are other problems far more pressing and to which attention could have been given with much better results for the community as a whole, particularly when the Minister very clearly not merely gave the Committee an undertaking that he would repeal the sections but in addition, that they would not be operated in the interim. It would seem to me, for example, that the divisions there are in the agricultural community could be solved and they would be more pressing for solution than to bring in a technical Bill like this purely to cover something that has in fact already been covered by the Minister's undertaking.

I do not know why those matters have to be dealt with in this way. It is a mistake and a pity that this solicitude should not have been exercised at an earlier date when power was there to exercise it. We should keep this matter in its proper perspective, that this section has been on the Statute Book for 50 years. It was adopted by the Constitution—I think, in Article 50—and comes in here merely as a re-enactment of something which could not be altered at that stage. Everybody concerned had indicated that they were going to alter it at the first available date. In those circumstances, the necessity for this Bill is not apparent to me, nor is the needless haste in relation to it.

It is not my wish to hold up the House. If this Bill was not brought in as an urgent measure, I would probably propose, on Committee Stage, an amendment on the same constitutionality, that is, that Chapter I, Part IX, of the Bill be taken out because Article 41 of the Constitution lays down that the State pledges itself to guard with special care the institution of marriage, on which the family is founded. In Part IX of this Bill, section 192, the position of the wife who happens to take up employment is seriously interfered with. It starts off in section 192 by deeming that a wife's income be her husband's, if she is living with him, and if she is not living with him, or is not married to him, will be treated as separate.

The Deputy may not pursue this line.

I want to make this point to obviate the necessity for my moving an amendment.

There is nothing about this in the Bill before the House. The Deputy must confine himself to what is in the Bill before the House.

Is it not in order to speak on the new section the Minister is incorporating in the Bill?

May I suggest I would be very happy to consider Deputy Lemass's proposal, when we come to deal with the Finance Bill this year, if he puts down any such amendment as he is suggesting now?

I accept that. This is a matter about which I am very concerned.

I should like to mention this about the Bill. I was a little disappointed that Deputy Sweetman, being such a model Chairman of the Committee, could not resist bringing in a political angle at the moment. I am sorry he did that. However, let us get down to this. This is merely, and quite rightly, a technical amendment and it should not take up the time of the House, once we understand what we are doing.

There were two simple issues in this. Many points were raised and as the Minister has given details in regard to them I shall not go into them. A very important point in regard to a Consolidation Bill was whether the Committee could amend it or could not amend it. I will not hold up the House by going into all the details. The Committee, by its terms of reference, could not do other than it did. The Minister gave the Committee his undertaking and the amendments were to take place simultaneously. This amendment Bill is merely a procedural matter. We should confine ourselves to that alone.

I would like to give my considered opinion that this whole matter was raised as a red herring to take the minds of the people away from the National Farmers Association dispute.

It would be more helpful if we tried to confine ourselves to this amending Bill rather than introducing irrelevancies such as Deputy Donegan has tried to introduce. We have heard it said outside the House that this objectionable income tax provision has lain on the Statute Book for so long without anybody knowing anything about it. Even Deputy Sweetman suggested it is entirely Fianna Fáil responsibility that it was not rejected many years ago. He overlooked the fact that he had ample opportunity himself, as Minister for Finance, to do this, if he so wished.

No Minister for Finance will ever divest himself of any power he has.

It is very hard to do it.

I did not object to the undertaking of the Minister for Finance. It is the person who objected to whom you should be addressing your remarks.

It was mentioned that Fianna Fáil over a period of 20 years never rejected this.

I never mentioned Fianna Fáil.

It should go on record that in fact the Revenue Commissioners did not exercise this power directly, but, to my mind, what is rather sinister is that they have always advised the Minister that it would be desirable to retain this power which they had in terrorem, as a threat against those who are alleged to be evading or avoiding the payment of tax. I feel, at this stage, that we will save a great waste of time by putting this Bill through so that it shall not be necessary to go through the whole procedure of referring the Principal Bill for judgment by the Supreme Court. I suppose it is more than likely that the Supreme Court would have ruled that those provisions were unconstitutional. No useful purpose will be served by asking the Supreme Court to go through all that when there is an easier way to do it. We have power here to deal with this matter in this way. It can be done very rapidly and will improve the law enormously. There is no Party advantage to be gained on either side. This is something for which the whole House has a responsibility and the sooner and quicker we do it the better.

What we are doing may be slightly peculiar but we can all value this as an experience and maybe a new lesson learned as to what our approach should be to Consolidation Bills. I must frankly confess that I thought little about Consolidation Bills but I believe much more could be done. From what has emerged here in the past few days, our whole approach in matters like this will have to be changed. I do not know how that may be done but if there is to be consolidation of income tax law, or anything else, I believe the Committee appointed should have the power to make its own deletions and make necessary changes. As Deputy Sweetman has said, the peculiar thing is that we have lived with this for the past 50 years.

The past 100 years.

This refers specifically to the Act of 1918. How much more of our laws are unconstitutional? Under our present system of dealing with consolidation, are we going to find much more legislation unconstitutional? This is one of the first occasions —I do not remember any other—that a President, as distinct from Parliament, had an opportunity of deciding to challenge the constitutionality of a particular section. In the meantime, as the Minister has said, we have been living with these two sections for the past 100 years.

We have no objection to the terms of the Bill. As far as we are concerned, we want to give it to the Minister as quickly as possible. But it has taught us a good lesson with regard to consolidation and the examination of statutes enacted long before the present Constitution and long before the establishment of this House and of an Irish Government. I therefore think the whole matter of the revision of our laws should be tackled and not alone in regard to this legislation, because I am sure every Deputy can mention some section of some Act which is contrary to the Constitution of 1937.

I have argued many times in this House that much of the British tax law which has operated in this country is completely unsuited to our conditions and requirements. I believe this exercise which we are now engaging in very significantly proves my point, for we have had on our Statute Book for 50 years a tax law which, for most of those 50 years, has flagrantly violated the Constitution. I want to point out to the House that this British tax law, section 165 of the British Income Tax Act of 1918, has long since been repealed in Britain. It was repealed in Britain 20 years ago in section 26 of the Crown Proceedings Act, 1947.

Most people concerned about income tax are very well aware that successive Ministers for Finance and the Revenue Commissioners have almost invariably copied British law changes in respect of tax legislation. That was an essential corollary of the operation of the British Income Tax Act of 1918. I have said before in this House and I say again now, that we have copied the British when they plugged the loopholes, when they tightened the screw in respect of tax legislation, but failed to copy them in those cases where they lightened the legislative burden. I have said before that successive Ministers for Finance in this country have been too readily prepared to live with the maxim that equity is a stranger to income tax. It was open to any Minister over the past 50 years to bring in the required change in the annual Finance Bill.

Britain consolidated her tax law in 1952 and this offending provision was, of course, omitted from that British Consolidation Act, having been previously repealed in 1947 under the Crown Proceedings Act. I believe that there has been a dead hand of conservatism dominating successive Ministers for Finance in respect of tax reform. I believe that the exercise we are now engaging in proves that point. I believe that the people of this country have been badly served by successive Dála, by successive Governments and successive Ministers for Finance in respect of tax reform.

Finally, I invite the Minister to do something which to date he has not yet done, though there was vague talk about it when the Consolidation Bill was going through, that is, to indicate that the enactment of the Consolidation Bill and of this Bill is a preliminary step to a decisive programme of reform of our tax laws, which are so unsuited to our country and many of which, not only the offensive sections we are dealing with now but other vast chunks, have been deleted from British law.

I think this Bill is the easiest way out of the circumstances in which we find ourselves now. Otherwise, as the Minister has pointed out, it would be necessary to do a great deal of recasting, or whatever the technical term is, of the Consolidation Bill. I just want to mention one point. Deputy Booth said that the particular section had never been invoked. I want to point out to the House a very famous case where it was invoked. This concerned a gentleman who had done a tax fraud between this country and England. He had got English rebates on alleged payment of Irish income tax, which in fact had never been paid. But, before he left the country, he boasted of the fact he had never paid any Irish income tax. Apparently, as he went on the boat, he was seized under that section of the Act. I point that out to Deputies to show that it was used once at least and may have been used—I am sure it was—on other occasions, though perhaps very seldom.

What one wonders is: in very extreme cases—I would ask the Minister this—what would the procedure be now where somebody, we will say criminally-minded, was endeavouring to leave the country, having evaded his just obligations? One can imagine that there are cases, although very rare, when the law would like to have certain powers. In fact, a certain very famous case in this country comes to mind. I will not go into any details, but it was a famous stamp case which is known to us all. If some spectacular arrest could have been made on a boat or aeroplane, certainly many people in this country might be happier and, indeed, better off at this moment. I would ask the Minister what steps, if any, have been taken to fill the lacuna caused by the excision of these sections of the Bill.

I shall perhaps deal with this last point of Deputy Dockrell's first because I agree it is important. I have already said that I gave the Select Committee a solemn undertaking that we would ensure that the Revenue Commissioners would not operate this particular offending section, pending its repeal or its modification in the forthcoming Finance Bill. Deputy Sweetman is quite right to remind me of that. I am sorry I omitted to mention it in my opening remarks but it is perfectly true that it was given.

Do the Revenue Commissioners agree to accept the Minister's instruction?

Yes. The question posed by Deputy Dockrell must be answered in this way. In the interim, the Revenue Commissioners would have recourse to the normal processes of the law. They would have recourse to the courts and so on, if they wished to apprehend any defaulters. The question of what procedure we might put into the new Finance Bill to replace this particular procedure is one to which we are giving a great deal of thought at the moment. It was always in my mind that something should be substituted for this particular provision. I hope we may be able to hammer out a procedure which will commend itself to Deputies, in the first instance, and be acceptable to all concerned as constitutional, in the second. This is a matter to which we are giving attention at the moment. That is the reply to Deputy Dockrell. First, this procedure will not be operated at all between now and the forthcoming Finance Bill and the Revenue Commissioners will have available to them only the normal processes of law. We hope to devise some procedure instead of the procedure we are hoping to get rid of here.

Deputy Corish is quite right when he says this does throw a spotlight on our methods of consolidation. Part of the difficulty we are in arises from that very fact. I doubt if anybody ever visualised that a consolidation measure would be the subject of reference to the Supreme Court. I think most people would have thought that reference to the Supreme Court would be applicable to new legislation where this House was attempting to do something which might not be in accordance with the constitutional provisions. The constitutional provision in respect of reference to the Supreme Court would be clearly applicable to such a situation. The difficulty that has arisen here is that on the one hand, we are governed by the requirement not to amend or change the law, and, on the other, the President has a duty to ensure that any Bill he signs conforms with the provisions of the Constitution.

Deputy Sweetman says, and he is perfectly entitled to argue, that he does not see any necessity for this piece of legislation. I suggest that if he does not see any necessity for it, perhaps he might go the step further and say: "Even though I see no necessity for it, if the Government regard it as necessary, and in the interests of this excellent piece of legislation which we all hope to see enacted, I am prepared to accept the Government's proposal in regard to this Bill which is now before the House." I urge Deputies to see this proposal in that way, that we are in this difficulty which has arisen through no fault of anybody's, a difficulty to which our various procedures have given rise and that we have here, I hope, a way out of the difficulty which should meet everybody's point of view. I would again point out how necessary it is that we get this consolidation measure on the Statute Book as quickly as possible. It would be a very great pity if it had to be abandoned at this stage for many reasons but particularly I would say that because of all the valuable work that has gone into its preparation and getting it to this stage, it would be a tragedy to abandon it now. For that reason, I urge Deputies to give me this measure and so enable the House to overcome these technical difficulties in which we find ourselves.

Question put and agreed to.
Agreed to take remaining Stages today.
Bill considered in Committee.
Question proposed: "That section 1 stand part of the Bill".

I understand there is a provision in the Local Government Act similar to section 480 under which entry can be made to a person's premises in order to distrain for rates. To use Deputy Sweetman's words, now that we are showing this belated solicitude for taxpayers, is it proposed to show the same solicitude for ratepayers?

That is a very good question but I am a bit inhibited from replying fully and frankly because it is not in my province but in the province Government. I agree that provision is there. I also understand it has fallen into disuse and is not really of any practical significance. I would certainly be prepared to undertake to the House that I would suggest to my colleague, the Minister for Local Government, that he should consider bringing proposals before the Government to do something like that.

Question put and agreed to.
Section 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported without amendment.
Bill received for final consideration and passed.

This Bill is certified as a Money Bill in accordance with Article 22 of the Constitution.

If this Bill is a Money Bill, I fail, for the life of me, to see how the Consolidation Bill was not a Money Bill.