Amendments Nos. 1, 2 and 3 have been ruled out of order.
6½ Per Cent Exchequer Stock, 2000-2005. - Finance Bill, 1967: Report and Final Stages.
I should like to raise a small matter. Unfortunately I misunderstood the Order of Business fixed in relation to the Committee Stage of this Bill and I was not able to move these amendments at that time. I see that Deputy Sweetman had forgotten his notes and Deputy O'Higgins was not here so I was not the only Deputy at fault. It seems to me that the amendments relate to a section of the Bill which deals with income tax matters in general.
I cannot allow the Deputy to move the amendments.
I tabled them on 7th June.
They are out of order and they were not moved.
I did not have an opportunity to raise this matter——
It could be recommitted by the Minister, if he wished.
I think it right to say that Deputy Lemass did mention this at an earlier stage of the financial discussions. It was not possible by reason of the Deputy's absence to have this matter discussed on Committee Stage and by reason of his amendment having been tabled, it was not possible or thought desirable to have other amendments tabled. I would suggest that the Minister might recommit it now, in view of an Opposition amendment which I think is more reasonable.
They cannot be moved now because they were not moved on Committee Stage.
They were not moved because Deputy Lemass did not turn up.
Had I been aware that the Finance Bill was to be taken that day, I would have arranged for somebody to move them.
Is it not possible for the Fianna Fáil Party to have some discipline in the Party?
I am not concerned with the Fianna Fáil Party but I am concerned with the amendments.
The Fianna Fáil Whips go to great lengths to facilitate the Opposition: that is why.
I am asking Deputy O'Higgins to move amendment No. 4.
The Minister could bring them in if he wanted to: he could recommit.
The Minister invited me to put down these amendments.
If he were serious at all, surely he would recommit? I find some difficulty in believing Deputy Lemass in that respect.
It is very important that justice should not only be done but should appear to be done. With regard to amendments, there are two grounds on which they can be ruled out of order. One is that they are calculated to raise a burden on the Exchequer and therefore cannot be moved, except by the Minister; the other is that not having been moved on Committee Stage, they cannot be moved on Report Stage. If it is the second ground on which you are ruling them out of order, then I think it is open to the Minister to ask leave of the House to have these amendments recommitted.
The order cannot be so easily upset as that.
I have no say.
Indeed you have. The Minister is not going to get out of it as easily as that.
If the Minister asks leave of the House to recommit these three amendments, is it not within Standing Orders to permit the House to recommit these three amendments?
It is not a matter of recommitting. The amendments were not moved at all. They are matters of substance.
Could the section not be recommitted?
You rule that the procedure does not permit it. I never believed the procedure of this House was of such a kind as to frustrate the lawful desire of Deputies to improve the law.
The Ceann Comhairle does not seek to abrogate the policy of this House.
The Minister could recommit if he wanted to. He could move the recommittal of the whole Bill if he wanted to.
I move amendment No. 4:
In page 7, before line 1, to insert a new section as follows:—
"Section 186 of the Income Tax Act, 1967, is hereby amended by the deletion of subsection (2)".
I want to assure the House in moving this amendment that this is an amendment which, unlike Deputy Lemass's, I have not been invited by the Minister to table. I have no doubt that, if I had been invited by the Minister to table an amendment and if, due to a lack of communication between the Whip of my Party and myself, I found myself unable to be here, I would find myself unable to move it. However, this is an amendment which we have tabled because we feel that the Income Tax Act of this year, which provides in subsection (2) for the provision of assessments or additional assessments to be made or amended at any time, is contrary to social justice and something which is unfair to ordinary taxpayers and ordinary people liable for tax who are entitled at least to a certain finality in relation to their liabilities to the State. The position is that under the law as it stands——
I would like amendments Nos. 4 and 5 to be taken together.
Certainly. I do not think that taking amendment No. 5 with amendment No. 4 changes what I have said up to this. The position under the law as it stands is that a person liable for tax has no assurance that whatever is eventually thrashed out between himself and the income tax authority with whom he is dealing and which leads to his writing a cheque or paying cash in respect of his income tax liability, that is the end of the matter. Under the law, at any stage, at any time, for any reason and for a reason that will not be conveyed to him, an additional assessment, an amended assessment, can be made on him in respect of this year, or last year, or ten years ago, or 20 years ago, or any number of years back to the foundation of the State. We feel that that cannot be defended on any principle of ordinary social justice, that it is wrong and that the law should be amended.
I know the Minister will say that this is a power which may be there but it is not exercised. With respect to the Minister, that is the bureaucrat's answer to power which the bureaucrat covets. I suggest that in seeking to retain this power, which is canvassed as being a power which will not be used, it is, in fact, a case of the dog in the manger that is holding on to the bone but is not quite sure what value the bone is to him. Here is the situation in which this power, like the bone with the dog in the manger, is being sought to be retained by the Minister for Finance on behalf of the Revenue authorities, though it is said it is not going to be used or abused.
If we legislate openly and clearly so that everybody can know it, we legislate against the case of fraud and against the case of wilful negligence. Where a person does not have regard to his responsibilities to the State, we legislate in relation to that and provide that the State may go back over whatever period is covered by the fraud or wilful negligence, but if we secure fairly and justly the man who has done what he thinks is right according to his own view, who has tried to play fair with the State, and assure to him some finality with regard to his obligations, I believe social justice will be achieved. It is because these particular sections offend our view of social justice that we are against them.
Indeed, I detected in what the Minister said the last day this was discussed that he is inclined to agree with the reasoning, but is not satisfied that if the law were changed, a deluge would not break upon the Revenue concerns of the State. I do not believe it would. I believe that if we change this law, if we ensure that the unlimited back assessment applies only to the case of established fraud and wilful negligence, while we will never make our income tax code popular, we will get it understood to some extent if people feel this kind of unlimited back assessment can apply only if actual fraud or wilful negligence is proved.
I wish to support Deputy O'Higgins because of the personal experience of a friend of mine who ran a small hotel. Each year he got the accounts audited, made a record and made a return to the income tax authorities according to what he thought was the correct assessment. After a number of years, his accountant died. Subsequently, on a check with somebody else, it was found that the accounts had not been made up in accordance with the regulations. The person who owned the hotel showed that all the money they were making each year had been spent on improving the hotel but, despite that, the Revenue Commissioners insisted on getting their pound of flesh amounting to £1,800 which had to be paid forthwith. This resulted in the break-up of the business because the money could not be produced at short notice. Possibly, if they had approached it in a different way, it might not have been necessary to do that, but that is the solution they found to it.
The point made the last day—I thought the Minister had accepted it— was that somebody, without fraud or without attempting to cover up what money is being made, might be in a better position to pay the money due at the time it became due than he would be subsequently. This creates a hardship on somebody who believes he is dealing honestly with the Revenue Commissioners. For that reason there should be a limit on the number of years. If somebody overpays the Revenue Commissioners, there is a limit on the period during which he can claim a refund. It should cut both ways. For that reason the Minister would be well advised to reconsider this. If he is not prepared to go the whole way and delete it, he might consider making some arrangements whereby a limit could be put on the period laid down.
This amendment was discussed at some length on Committee Stage, having been put down in the name of Deputy T.F. O'Higgins. But notwithstanding the frequent changes of business made by the Fianna Fáil Whips, communications on this side of the House are apparently better than those between the Minister for Finance and Deputy Lemass. Somehow or other I do not think any of us would be breaking any State secret if we said that the communications between the Minister and Deputy Lemass after Deputy Lemass's gaffe today might be even less forthcoming than apparently they are between Deputy Lemass and his Whip's office.
Section 186 of the Income Tax Act, and subsection (d) thereof in particular, come because of the change made in the law in 1936 by another Fianna Fáil Minister for Finance. It was a change that has been criticised from time to time over the years but which was very vigorously criticised in the Seventh Report of the Commission on Income Taxation. I read from paragraph 301:
time limit for making income tax and surtax assessments.
May I interpolate, for the benefit of those people who are not the people so detested by Fianna Fáil, that is to say, lawyers, that six years is the normal period for any simple contract debt to be due without being statute barred? The Commission go on:
It was then changed to allow assessments to be made for any year from 1922-23 onwards. According to the Ministerial statement on the matter in the Oireachtas in 1936, the time-limit was extended to enable tax to be recovered when, for some reason, such as delay in unearthing evasion, recovery within six years was not practicable.
The Commission go on, dealing with something that has already been done by the Ministers for Finance who preceded Deputy Haughey:
We have already made recommendations that the tax inspectorate should be increased, and the Revenue powers strengthened in certain respects, to counter evasion.
As well as I can recollect, the number of increased personnel in the Department of the Revenue Commissioners since the time this was introduced is something of the order of over 200. In addition, the Revenue Commissioners have very properly, in order to streamline their efficiency, installed a computer. Therefore, we may take it as fair to say that the powers of the Revenue Commissioners have been adequately strengthened as recommended by the Commission. The Commission go on:
We have also recommended that the penalty code should be fully reviewed to provide, inter alia, that any weaknesses in it regarding tax evasion should be remedied.
I do not know whether it has been strengthened or not, but I have certainly never heard anybody suggest that the penalty code was not adequate to deal with any matter that arose under it.
If these recommendations are adopted—
and certainly the first one has been adopted—
there will be much less reason than now to retain the wide, and growing, time-limit introduced in 1936 for making income tax assessments. The limit was then extended from six years to fourteen, but through the passage of time that fourteen has now become almost forty.
This report was issued in 1962. It is true to say that the limit which was introduced in 1936 was at that time 14 years and that it has now become 45 years. The 28th March, 1962 seems to be the date on which the main Report was issued. That is more than five years ago and 45 years is now the period.
The Report continues:
Reasonable latitude must be given to the administration to assess and collect all tax properly payable; and from the nature of things there will frequently be an interval of some years before the amounts of certain incomes chargeable to tax are correctly ascertained.
I do not think any of us would disagree with that statement. The paragraph continues:
But there should be a realistic time-limit to the making of assessments to income taxation even if it carries with it a possibility of some loss of revenue.
Nobody can suggest that the limit now of 45 years could be described as realistic. In fact, I think it fair to say that the attitude of the Minister for Finance in relation to this unrealistic attempt of his to retain this section in the tax code is shown by the fact that he has not got one Deputy behind him to support him in this. It must be a strange day that the Minister for Finance cannot get one person to come in and give him a hand out in respect of policy. The last time I can remember that happening, there was one Fianna Fáil Deputy in the House behind the Minister. That Fianna Fáil Deputy was attacking the Minister. Part VII of the Finance Act of 1965 was the issue and the present Minister for Finance has now agreed that Part VII was an anachronism that should not have been enacted and he is going to repeal it ab initio. I am not asking that he repeal section 186 (2) ab initio.
I have not said that yet. I think I explained to Deputy Sweetman that I had not quite decided which was the better way to proceed.
If the Minister looks at the report of the debate, I think he will see that he said it was going from 6th April, 1965.
Oh, I see, ab initio, I am sorry—yes. I misunderstood what the Deputy was saying. Perhaps, so that there should be no confusion about it, I should say that what I have said to the House is that I have not yet been able to make up my mind whether it is better to repeal Part VII or bring in entirely new provisions or attempt to do the job by way of amending existing provisions. I agree that I have said whatever changes I make will reflect back to 1965.
I was not trying to misquote the Minister. May I put it this way—the provisions of Part VII of the Finance Act, 1965, as they are, are going as from 6th April, 1965 and whether the Minister does that by way of amendment, whether he does it by way of putting a red line through the whole of the Part and bringing in entirely new provisions, is something that he has not yet said and something about which, he will agree, I have been consistently sniping at him to try to get him to declare his hand. We are now coming very near the end of the session and he still, from what he has said a second ago, has not absolutely made up his mind on that account. However, in relation to that, perhaps the Fifth Stage of the Bill might be a more appropriate place to discuss it rather than on this amendment.
I am looking at the list of distinguished people who said that there should be a realistic time-limit to the making of assessments to income taxation: Cearbhall Ó Dálaigh—it is since then—since 6th June—as well as I remember, he was made Chief Justice; Owen Binchy; P.A. Bolger; John Busteed; Patrick Cogan—I beg the Chair's pardon: I referred to "distinguished people"; I should have said "some of them distinguished, others of them extinguished." There were also Alan P. Dempsey—of course, Mr. Cogan was put on by a Fianna Fáil Minister in substitution for somebody whom I had nominated and whom the Lord called before he had finished his task—James Kavanagh; F. N. Kelly; James Meenan; Donal Nevin—most of them very highly distinguished people and all of them subscribing to the statement that there should be a realistic time-limit. Fianna Fáil Ministers for Finance have come and gone since 1962 and, in spite of that distinguished and extinguished list, we have seen no attempt to come back to the realistic time-limit. On the contrary, we are going forward adding it up year by year.
The real gravamen of the reasoning behind the Commission's Report is included in paragraph 304:
Officials should not normally be empowered to pursue tax inquiries for periods extending into the distant past for which it cannot be expected that business records, or satisfactory evidence of incomes or spendings or sources of receipts, in cash or otherwise, are still available.
It is not merely that officials in this way are empowered to pursue tax inquiries into the distant and growing ever more distant past, for which undoubtedly records are not available; it is the fact that the Revenue have, if they wish, all the cards in their hands. They can put the burden of proof entirely on the taxpayer and it would be utterly impossible for a taxpayer to dispute an assessment that was made under this provision when, as would almost certainly be the case, he had no records on which to found a case for dispute.
It would be bad enough that the Revenue would have the power to go back if, after going back, the burden of proof was then imposed on them, but the fact is, as the Minister knows only too well, that the burden of proof is not on the Revenue but on the taxpayer, because it is open to the ment and then it becomes a matter for the taxpayer himself to disprove, a thing which is virtually impossible when records are not available for years in the dim and distant past. The case that may be made by the Minister that the Revenue Commissioners would not dream of doing this is no justification. It is not right or proper for the law to be there permitting something like this after a body such as the Commission on Income Taxation has reported on it in these terms.
The report goes on:
Moreover the imposition of tax charges for long-past periods, in addition to the tax and perhaps the interest on it for the ten more recent years could often cause serious hardship.
I do not think that statement requires any underlining by us. It is factual and obvious.
Penalties are exigible in most cases of evasion, and the amount recoverable by the Exchequer in such cases should, in the normal course, greatly exceed the tax for the period for which assessments can be legally made. Where there has been no evasion the ten-year limit for assessment is usually more than ample.
Accordingly in paragraph 305, the Commission come down flat with the recommendation:
We recommend that, except in cases of fraud, assessments to income taxation should not be made later than ten years after the year for which the tax is chargeable.
The Seventh Report of the Commission represents the most exhaustive inquiry by any body that has been made since the State was founded, and this Commission put that recommendation solemnly on record:
Adoption of this recommendation, which the public interest requires, would involve that the administration should be more alerted to the need for ensuring that evasion is exposed and all appropriate assessments made within the ten-year period.
If it were not sufficient that this august body should have solemnly made that recommendation, the Minister has in his office a recommendation following along the same lines from two bodies equally important, perhaps, but with a practical knowledge of the results of the methods of administration of income tax. While the Commission on Income Taxation examined this problem from the aspect of theory, from the aspect of sifting evidence submitted to them by the Revenue Commissioners and by a variety of witnesses, perhaps no two other bodies would have quite the same practical experience in dealing with the administration of taxation from the point of view of the taxpayer as the Institute of Chartered Accountants and the Incorporated Law Society. These two bodies submitted a joint memorandum to the Minister for Finance on 20th February of this year. In that memorandum both the Institute of Chartered Accountants and the Incorporated Law Society urged strongly that the time had come for a review of the time limits in the making of assessments which, they say:
as the law now stands enable the Revenue Commissioners to make assessments for periods extending back over 44 years.
It would seem that there is a difference of one year in my subtraction and theirs, except perhaps that the 5th April has come and gone and we are now in another income tax year, though not in another calendar year. In the submission they made early in February this year, they referred to the fact, as I have already referred to it, that in 1936 when the change was made, it only meant going back 15 years, but as each year passes, the original year has remained as the first year for which an assessment can be raised and that accordingly, in their own words: "the period is now most unreasonably long."
They go on to quote the law in the United Kingdom, which is that assessments can be made only for six years unless fraud is established by the Revenue. They submit that powers of this nature should be adequate for the Irish Revenue. I must confess I found myself completely unable to understand why, if six years is adequate in the much more complicated circumstances of the British economy, it is not adequate here in Ireland. I should like to have some explanation for my simple mind as to why that is so, and why what is operative and adequate in their much more intricate incomes and taxation procedure is not sufficient for us here.
They went on in this memorandum from the Institute and the Society to quote the Report in relation to penalties and to accept the suggestion of a ten-year limit which the Commission had made, and they finished up by saying this:
While the Institute of Chartered Accountants and the Incorporated Law Society feel that a ten-year period is rather long when compared with the British period of six years which was originally in force here, they feel very strongly that there should be an immediate amendment in the law so as to curtail severely the present time limit of over 40 years. A ten year limit as recommended by the Taxation Commission would at least be tolerable compared with the present situation.
We would all feel that "tolerable" is very much an understatement and personally, I cannot see why it is necessary to go back beyond six years up to ten years, although I would willingly grasp at any straw, and if the Minister were prepared to accept a ten year limitation, I, for one, would not hold out for my pound of flesh of limiting the period to six years.
In the course of the discussion on Committee Stage, these points were made and when the Minister was replying, I fear he did not make any real effort to meet them. He seemed to think it sufficient to say that the Revenue people felt they needed these powers. The House is entitled to have a detailed exposition from the Minister as to why, in this regard, he is overriding the Seventh Report of the Commission. It is also significant that if one analyses the various recommendations made by the Commission, one finds overwhelmingly that the relieving ones are the ones that have not been implemented. I referred earlier to the strengthening of the inspectorate of the Revenue Commissioners. I think it is about 200 extra officers since the time of that Report: I cannot remember the exact figure and I should be quite happy to be corrected as to the additional number but there is a substantial increase. There is also the computer which, in ordinary outside business, is supposed to be a means of getting a very substantially increased volume of work done without additional personnel, and done more accurately. Of course, as regards accuracy, it depends on the human element and on the man who feeds the machine with the material.
And on the machine.
And, as Deputy Dillon says, on the machine not getting a nut loose. Of course, if it has to work much longer for Fianna Fáil, it will get more than one nut loose.
I was honestly surprised by the Minister on Committee Stage. I thought from his approach then, when he made no case whatever in support of the provision, that it must be distasteful to him, as it should be, and that he intended to introduce an amendment today to curtail the number of years. As he has not done so, I can only assume that he intends to oppose this amendment. Frankly, I think such opposition would be entirely unjustified and his attitude in that respect, having regard to what I said earlier, will scarcely be very greatly strengthened by the newest recruit.
Mr. Byrne
I have here a cutting from this week's Sunday Independent reporting a celebration in a provincial town last Saturday of the centenary of a substantial, old-established business. The firm in question is a highly respected one. The directors are highly respected as substantial employers and big taxpayers. One of the directors is reported in the paper as having referred to the recent Finance Act and saying it had been devised by a team of jealous civil servants and was a piece of legislation which might yet have telling effect. I believe that statement is symptomatic of a certain malaise in the business community, a trend which must cause us and the Minister grave concern because it is absolute nonsense to say that jealousy or bad faith of any sort motivated any of the Minister's advisers or has been the mainspring of any legislation put through this House. If the business community are growing so resentful of legislation which we as Members of the House have effected, that is not in the public interest, particularly in regard to the essential finances of the State.
Which Finance Act was he talking about?
Mr. Byrne
He was probably talking about the Finance Act of 1965.
The merger of the widows' pensions.
Mr. Byrne
Probably the notorious, iniquitous Part VII of the 1965 Act. But whatever Finance Act he was talking about, it is the general trend that matters.
That was the man who attacked Deputy Dillon's wheat policy many years ago?
No; that man is in Heaven and I suggest we let the dead rest.
Mr. Byrne
I have found in the course of my professional work, as the Minister will find when he returns to practice, that business people are growing more and more resentful of unjust tax laws. This is a most unhealthy trend and one which we must seek to arrest. It is worth pointing that out to the Minister because he may not be aware of this worrying trend.
I had tabled three amendments which were germane to the matter we are discussing now on a somewhat different front, amendments Nos. 8 to 10, but unfortunately they were ruled out of order as being amendments which would impose a charge on State funds. They sought to confer on the taxpayer equivalent advantages to those enjoyed by the Revenue in this matter of time limits. Simple logic and equity require that, if the Minister still feels unable to accept Deputy O'Higgins's amendment, he must at an early date remove the time limits as applied to the taxpayer who has forgotten to claim an allowance for a child, for an insurance policy or what-have-you. As Deputy Sweetman pointed out, all the arguments the Minister can advance against this amendment were gone into at great length by the Commission on Income Taxation which positively and in very certain terms recommended the amendment we now seek.
I heard Deputy O'Higgins speak hopefully of the accuracy of machines. I understand one of the afflictions of the arrears department of the Office of the Revenue Commissioners is that they had the misfortune to put in an immense computer which not infrequently produces the most astonishing results. I am obliged to say that when any of my constituents got these astonishing assessments made upon them, I had no difficulty when I referred the matter to the Revenue Commissioners, who usually groaned and said: "My God, that machine has gone wrong again, but we will put it right."
I remember an aged nurse who was introduced to one of these modern, most up-to-date hospitals which did everything at the press of a button in contradistinction to the antiquated procedures with which she had been familiar. When it was assumed she was completely dazzled by this new reform, she addressed the assembled multitude and asked: "What happens if the button does not work?" To that query there was no answer. I am not at all sure a machine will resolve our problems. Machines very often complicate problems, though as we grow to include more and more of the entire community in the tax net, it is. I suppose, impossible to recruit sufficient personnel to deal with the income tax affairs of the very wide section of the community now called upon to pay that tax.
The Minister must, I think, recognise the background to this amendment, even though he has only recently taken over office. Ever since I came into this House I have heard annually, and sometimes at more frequent intervals, what always seemed to me to be ill-informed and almost scurrilous attacks upon the Revenue Commissioners, portraying them as ravenous, unscrupulous, brutal, etc., etc., etc., savages. One would really think they were Balubas imported into this country from some remote part of the as yet uncivilised world to prey upon our people. The truth is the Revenue Commissioners carry out the laws we pass. Here is a case in point where we are putting on the Revenue Commissioners in the Consolidation Act recently passed an obligation which, I imagine, the bulk of the Revenue Commissioners consider to be quite unreasonable but, so long as we leave that provision unrepealed, they have the duty to carry out its terms.
Everybody interested in this matter seems to think that, unless there is fraud involved, a six-year term is a reasonable period for the Revenue Commissioners to revise assessments or raise queries. There ought to be some time by which a taxpayer can say: "As of today I am irrevocably clear of my liability for income tax since I know that I have been no party to any fraud." As I understand it, we are now in the position that there is no limitation, except the practice of the Revenue Commissioners to go on further back than 40 years. Deputy Sweetman suggests there are cases on record in which they have gone back further than 40 years. Does anybody in this House seriously believe that revenue is materially affected one way or the other by the imposition of a time limitation of six years, during which period the Revenue Commissioners can revise income tax assessments made in good faith?
It is vitally important that the House should have present to its mind the distinction between the fraud successfully operated on the Revenue Commissioners at some distant date and the honest return in relation to which, perhaps because of some oversight on the part of the Revenue Commissioners, there was failure to uncover a liability which could have been detected ten, 15 or 20 years ago. I have never heard anybody suggest that the man who escapes taxation by fraud should benefit by his fraud. I have never heard anyone object in a case of fraud that the Revenue should not go back 27 years, and further than that, in order to seek out the fraud and, having detected the fraud, should not pursue it. I do not think anyone would object to that because neither side of this House wants people to benefit by fraud. But I do not think anybody believes it is desirable to put upon the Revenue Commissioners a statutory duty to keep rummaging away for a period longer than six years in the hope of detecting a genuine mistake.
It is a sound principle of legislation that we should be allowed to live in peace. Suppose a small businessman is honestly putting his affairs year after year after year frankly before the Revenue Commissioners, is he to apprehend that, because somebody made a mistake 15, 20 or 30 years ago, the Revenue Commissioners may suddenly descend upon him with a claim of such dimensions as to cause him the most acute financial embarrassment and possibly lower his standing in the eyes of his neighbours, who may say : "This kind of thing does not happen to an honest man"? He cannot hang a notice on his window proclaiming to his neighbours: "My meeting with the Revenue Commissioners arises because the machine made a mistake 15 years ago" or "The inspector dealing with my claim did not adequately process it." His neighbours will say: "He committed a fraud and the Revenue Commissioners have now caught up with him." I know neighbours of my own who were engaged in fraud and, when the raid was finally made upon them, the neighbours all shook their heads and said: "The divil mend them," but that limitation should not attach itself to somebody who was never guilty of fraud.
There will not accumulate in the period of six years any burden which is likely to create a serious problem for the taxpayer if it is detected within the period of six years. I fully recognise the distinction between a commercial debt by a commercial debtor and the debt owned by a taxpayer to the Revenue Commissioners. Under the statute of limitations, a period of six years has, in practice, been sufficient to protect the lawful claims of creditors in the commerce and trade of the country.
Not really.
I do not pretend to have the same expertise in the matter of taxation as Deputy Sweetman is certainly entitled to claim but I have heard him say here that six years is acceptable. Perhaps Deputy Sweetman would confirm or correct that? Am I right in understanding that six years is the British Treasury acceptance with the Revenue Commissioners?
So I understand.
Except in case of "neglect", and they define "neglect" very widely.
I prefer to use the word "fraud." I think the Minister will agree with me that "neglect" in that context should mean "fraud". If people prepared their returns with such utter indifference to the truth as to create a situation in which no degree of vigilance on the part of the inspector of taxes could arrive at the truth, then in my opinion that amounts to fraud. I do not think anybody here is asking that a person guilty of fraud should be exempt from inquiry going back however long it may be necessary to deprive him of the benefit of the fraud which he has committed. As a public representative, I have always taken a considerable pride in the fact that when constituents come to me with income tax problems, I have always felt perfectly safe in saying to them: "Listen, the best possible thing you could do, if the story you are telling me is the truth, would be to put all your books in a brown paper parcel and go down to the inspector of taxes in Dundalk and tell him you want to pay your taxes". The Minister smiles at that.
I am smiling at the brown paper parcel.
Why Dundalk?
The country is divided up into areas.
Oh, yes, for your constituency.
Sligo is one. A horde of them there are in the perpetual process of pursuing me.
In my innocence, I thought they all came to Dublin or to Cork.
From Cork.
I have always been proud of the fact that I feel competent to say: "If you are telling me the truth, put your books in a brown paper parcel, go to Dundalk and put them down on the table in front of the inspector of taxes and say to him: `I want to pay what is due. Will you help me to determine truthfully what is due?' " I have pretty long experience and not a single person has ever come back to me and said he was discourteously received by the inspector of taxes or was not helped by him to get every benefit to which he was entitled under the law.
Hear, hear.
That is a fact that ought to be made known. I think it is a very valuable fact. However, it should make us legislators here in the House all the more vigilant not to impose on these public servants obligations to do things that shake the confidence of the ordinary simple person in the service of the State. I think we all have reason to be proud that I can say to the smallest businessman in County Monaghan or to anybody else in my constituency: "Your best friend is the inspector of taxes if you are telling the truth. If you are not telling the truth, then I warn you that if you try to put your finger in his eye, he will follow you like a dog because that is his business. He will assume you are a fraud and he will search your affairs as it is his bounden duty to do. Do not come to me if you do not intend to tell the truth. Go to some shyster who can get past him. There are plenty of shysters who can get past the Revenue Commissioners once but they keep grinding away there and, though they may get past them once, they will catch it later on and, if they do, they will remember it for years." The burden of these representations is that I think the ability to say to simple citizens of the State: "The inspector of taxes is your best friend" is something very precious.
I ask the Minister quite honestly if this provision requiring the Revenue Commissioners to look back ten, 15, 20, 30 years would not seriously abridge the relationship of confidence that ought to exist between public servants and the citizens. Is it seriously suggested that failure to go back more than six years in cases grounded exclusively on genuine mistake will impose any material burden on the Exchequer? If these two propositions are valid, I put it to the Minister that, by placing the limitation which the British Revenue Commissioners are accepting—and I would agree with that —in the concept of this provision the word "neglect" which the Minister says has very widely been interpreted in Great Britain should be "fraud" here. I should be quite prepared to agree that "fraud" should be redefined so as to encompass so reckless a degree of irresponsibility in making a return as to make it virtually impossible for a conscientious inspector of taxes to get a true result. If "fraud" were excluded in this concession, would the Exchequer and the public service not greatly benefit from its introduction?
I think it is proper to say that I was present when the matter referred to by Deputy Byrne took place. I do not think Deputy Byrne would wish me to elaborate on what he has reported to the House. Undoubtedly, the words were spoken but they had special reference to the 1965 Finance Act which aggregated widows' pensions benefits. They had special reference to that particular problem because the firm in question was one of the first in the country to introduce the system of widows' benefits. For many of their older employees the situation now is that the benefits are falling in and the impact of the 1966 Act is operating very harshly upon them.
People obviously felt very bitter.
Yes, I suppose we would feel the same. We opposed it very strenuously in the House.
Personalities would want to be avoided.
I do not remember any personalities being mentioned.
You spoke of zealous civil servants.
That is the very point on which I am trying to elaborate. There is too much talk in this House about the Revenue Commissioners. I am trying to make the point that the Revenue Commissioners do not make the law. The Revenue Commissioners enforce the law. It is the Oireachtas, on the proposal of the Government, as advised by the Minister for Finance, who make the law. What the Revenue Commissioners do is enforce the law. That is one of the principal grounds upon which I urge the Minister to accept this amendment, bringing our law into line with the law in Great Britain in this regard, if necessary by more precise definition of fraud for the purpose of the Income Tax Acts, which would include such gross neglect in the making of a return as would render it virtually impossible for a conscientious inspector to get a true result.
I want, first of all, to say that there is not a great deal between us in this matter. The position as it stands at present is precisely what Deputies opposite would like it to be. We have the position wherein the Revenue Commissioners do not re-open assessments unless they are satisfied that there was fraud or wilful neglect. I think that position is acceptable to most Deputies opposite.
Provided we understand what the Minister means by "neglect".
Wilful neglect.
Amounting to fraud.
Perhaps wilful neglect could be equated to fraud in nearly every case. I mean the deliberate omission by a taxpayer to do something——
That is fraud.
——which he is compelled by law to do. I am not sure that is quite the same thing as fraud. I imagine that fraud would involve some positive act on his part—commission rather than omission. As I was saying, most Deputies opposite agree that in cases where there is fraud or wilful neglect the Revenue Commissioners should have the power to go back as far as they wish. However, Deputies opposite are asking me: "If this is the practice, why can you not put it in the statute? Why can you not stipulate that the Revenue Commissioners will be prevented by statute, and not simply by their own practice, from going back whatever period might be decided on?"
On Committee Stage I sought to answer that by saying it is very difficult in many cases to establish fraud. Fraud involves the notion of mens rea, the deliberate intention to defraud. This may be difficult for the Revenue Commissioners to establish. I suggested that the present position might well be considered satisfactory. On the one hand, we do not put by statute on the Revenue Commissioners this serious obligation of having to prove fraud before they can re-open a case and, on the other hand, we give all honest and law-abiding taxpayers an assurance that once they have not been guilty of fraud or wilful neglect their cases will not be re-opened under any circumstances after six years.
Ten years.
Six is our practice. That seems to me to be a reasonable compromise, a flexible working system. I promised the House that if the amendments on the Committee Stage were withdrawn I would have another discussion with the Institute of Chartered Accountants to see what we could decide upon between us. I have had that discussion—a very frank, useful and comprehensive discussion with a reasonable approach on both sides of the table, if I may say so. We finished in this way. The Institute of Chartered Accountants said that they would be satisfied to leave the matter over for another year and in the meantime both of us would seek to get as much statistical information about the situation as we could. They undertook to discuss the matter with the profession and to try to find out from their members exactly how serious a problem this was from the point of view of their members and clients, what its size was likely to be, and so on.
On the other hand, I said that we would seek to find out what we could about the reality of what we were dealing with here. Obviously, if the Revenue Commissioners can establish and show that the taking away of the power which they have at the moment would result in a serious loss of revenue and would, in fact, result in a fair number of people evading their legal obligation in regard to a fairly sizeable sum of money, then we would all have to think again about it. On the other hand, if it is shown that it is of no particular significance one way or another, then we could take a different view of it.
When talking on Committee Stage, I gave with appropriate qualification an attempted estimate of what it would involve. There, again, it is difficult to know what weight we should attach to the sort of estimate I gave because to a large extent the withdrawal of this power from the Revenue Commissioners might encourage people—I do not know—to attempt to evade their liability on the basis that if they were successful in their evasion for six years then they would go scot free for all time.
That would involve fraud.
My answer to that point by Deputy Dillon is that it would involve fraud but it would be difficult for the Revenue Commissioners to establish fraud in many cases. As I said on Committee Stage, I have no objection whatever to its being difficult for Revenue or the State or the administration to establish fraud where fraud would bring penalties in its train. If you are going to punish a person for committing fraud, it should be difficult for you to prove fraud.
All we are concerned with here is that the Revenue Commissioners should be able to abandon the restraint which they put upon themselves, and that if they were satisfied in their own minds that there was fraud, they could abandon their old self-restraint in that case. They would still have to establish to the satisfaction of all concerned that the tax was due, and if they were looking for penalties, they would have to establish their case. I suggest to the House that at this stage we might well leave over this point. I should like to see if this arrangement with the chartered accountants which I made will produce any information which would be of value to us in a further examination of the point. It may not. We may well have to come back and decide the issue simply on the question of principle without referring to the amount involved.
I want again to point out to Deputies that we will have a Miscellaneous Provisions Bill in the autumn. It might be possible, if we have additional information forthcoming about the statistical aspect of the matter, to consider doing something in that Bill. Naturally I am hesitant and reluctant to take a step in this regard which would seriously impede the Revenue Commissioners in the execution of their duty, because we all know that if some taxpayer gets away with not paying some amount of money which he should pay, the burden of taxation on the rest of us is greater than it should be.
Therefore, while one would like to think that the taxpayers were as satisfied as they could be that the income tax system was fair and equitable and one would like to go as far as one can to show that that is so, and make any easement which would help in that connection, nevertheless one must have regard to the overwhelming necessity of ensuring that all taxpayers meet their obligation in full, because I think we would all agree that if we had a situation where any number of taxpayers were successfully evading their obligation to the detriment of the rest of us, that would be the greatest inequity of all.
Evasion stinks of fraud, does it not, but avoidance is within the law?
We may deplore avoidance——
Yes, but it is not wrong.
——but there is nothing we can do about it except to try to close the loopholes as we discover them. These are the considerations which operate in my mind in this regard, and I put forward the suggestion to the House that we might well leave this matter over for another year, or if Deputies feel that is looking for too much, we might leave it over until we are dealing with the Miscellaneous Provisions Bill in the autumn. If I am not disposed to do anything about it then, or to put forward any proposal, it will not be beyond the ingenuity of Deputies opposite, I am sure, to frame amendments which would enable this to be discussed here again at that time.
I know we are on Report Stage but I should like to ask the Minister a simple question. He himself is a chartered accountant. He approaches this with a chartered accountant's professional knowledge of the problem. When he is re-assessing this, I would urge him, while giving due and proper weight to the views of professional men, not to forget my constituent going with his brown paper parcel to consult with the local inspector of taxes on a basis of uberrimae fidei.
I am concluding for Deputy O'Higgins. I must confess that I think the Minister assumes we are all much more innocent than we are when he talks innocently of an investigation by the Revenue Commissioners to see exactly what is at issue. He said that perhaps this could be dealt with in the autumn. This point was raised by the Commission on Income Taxation five years ago. The Minister must accept, as I certainly accept, that before the Revenue Commissioners went to give evidence before that Commission, they made the most exhaustive possible examination of this problem. It has also been raised on many occasions in the House, and I refuse to believe that the Revenue Commissioners did not examine the problem when it was raised in the House before. I am certain that the problem has already been examined as thoroughly as it could be examined between now and the autumn. I think the Minister is gambling on the fact that there will not be an election in the autumn, or when the Finance Bill comes in next year and he does not want to have a contentious ending to this Finance Bill at the moment.
Apart from that, the Minister failed completely to meet the case made by Deputy Dillon and myself that what was sufficient in Britain should be sufficient for us here. He failed utterly to draw any distinction which would necessitate greater powers here. I think we would all agree that our income tax code here could well be less cumbersome that the British one would have to be, with their complex position in relation to trade.
I am not at all convinced by the Minister's arrangement with the Institute of Chartered Accountants. I think he codded them. He codded them into believing that Revenue had not got at their fingertips all the statistics necessary in relation to this, and I venture to say that the reason the Minister has not produced these statistics is that they disprove his own case. The position cannot have changed very much since 1962. Two members of the Commission told me on one occasion that one of the significant things about their work was the volume of memoranda submitted to them by Revenue, the obviously thorough examination given to the various problems by the Revenue Commissioners, and the manner in which they were able to justify the views they took with statistics prepared down through the years. I believe that whatever statistics there are in relation to this matter are there now. I will go further and say they are under the desk in the brief if the Minister wants to bring them out, or else he indicated that he did not want them brought here today. Of course, a nod is as good as a wink, and when the Minister said to the Institute of Chartered Accountants: "You look at your statistics between this and next year and I will look at mine," and when that was being written down in the minutes, it was improperly taken as an indication to those concerned in making up the Minister's brief: "We need not put in any of the statistics we have put together during the past years; you do not need to see them."
It is utter nonsense to say that the Minister will get any more statistical information between now and the autumn. That is only a dodge for time to get the Bill through Report Stage and it is only a dodge for trying—how shall I put it? —to fob off the Institute, of which the Minister is a member. Indeed, I am surprised that a body of men like that were so innocent as to believe that Deputy Haughey as Minister for Finance was as innocent in this respect as he made out.
At least he did not leave the Institute sitting on the steps like he left the farmers.
He is a farmer, too, of course.
Question "That the new section be therein inserted" put and declared lost.
Amendment No. 5 has been discussed with the last amendment. Amendment No. 5 withdrawn?
Can we withdraw it? How could we have two amendments before the House at once?
Amendment No. 5 not moved.
Amendment No. 6.
Perhaps I could help Deputy Sweetman.
Do I understand the Minister to say that he is accepting the amendment?
Not exactly, but I could be helpful.
Then I had better formally move the amendment. I move amendment No. 6, in the name of Deputy T.F. O'Higgins:
In page 7, before line 1, to insert a new section as follows:
"Section 482 of the Income Tax Act, 1967, is hereby repealed".
I shall let the Minister make a statement.
It emerged during our discussions on Committee Stage that Deputy Sweetman did not object to some preference for the Revenue Commissioners in cases of this sort but he pointed out that the machinery was quite unsatisfactory. Indeed, he went so far as to suggest it was unreasonable. I was impressed by that argument. What I propose is that I will have a look at this section between now and the Miscellaneous Provisions Bill in the autumn and at that time, in that Bill, radically overhaul the machinery. I am not sure there is a great deal to be said for keeping this preference at all in a general way. However, it might possibly be necessary in some very restricted types of cases.
Such as?
It is reasonable to give the Minister time to catch his breath and get briefed.
There was a case some time ago. A person living abroad went bankrupt and so on and this power was successfully availed of by the Revenue Commissioners. It was necessary in that instance. By and large, I think the provision is not of any great value, certainly in the way it exists at the moment. The machinery needs radical overhauling and I propose to come forward with a specific amendment in the Miscellaneous Provisions Bill in the autumn.
I am glad to hear the Minister in that strain and in that case we withdraw the amendment. The reason I queried him about particular cases he had in mind was that I could not understand how there could be specific cases apart from the general ones. It may well be that there could be a specific case in respect of a foreign resident. I appreciate that and in the circumstances, I withdraw the amendment.
Amendment, by leave, withdrawn.
I move amendment No. 7:
In page 7, before line 1, to insert a new section as follows:—
"Section 439 of the Income Tax Act, 1967, is hereby amended by the insertion in subsection (1) of a further paragraph as follows:
`(v) or being payable to a charity for a period which exceeds or may exceed four years provided that the exemption provided by this paragraph shall not be effective for purposes of sur-tax'."
On Committee Stage we discussed at some length the position in relation to charities and I am afraid I made little impression on the Minister that day. I had better try today, in so far as I can, to make a better case to impress on the Minister the case I made on the previous occasion. I say this very deliberately because I think the case for this is so overwhelming that the failure to persuade the Minister on the last occasion must have been a fault in my presentation rather than in the facts concerned.
Before the passing of the Finance Act, 1922, if an individual covenanted to pay an annual sum out of his income to another person, or to a body of persons, or to a corporation, the sum thus paid was treated for tax purposes as the income of the recipient. It was, therefore, allowable as a charge against the paying person's income and if the recipient was a charity, and accordingly exempt from tax, tax paid on the sum by the donor was recoverable by the charity. Section 20 of the Finance Act, 1922, made some amendments in this. I have not gone back to look up whether the Finance Act of 1922 was enacted by us or was one of those we took over on 1st May, 1922. It probably was enacted by the Oireachtas.
Section 20 of the Finance Act, 1922, restricted tax relief in such cases as those to which I have referred so as to apply only to an irrecoverable disposition by virtue of which income would be payable for a period exceeding six years. The effect of that amendment in the law in section 20 of the Finance Act, 1922, was, to my mind, one of the permanent circumstances in which this could operate. There is general acceptance of the fact that the amendment which is contained in section 22 of the Finance Act, 1922, was designed primarily to prevent tax avoidance by certain types of settlement in favour of the taxpayer's children.
The next time this matter was considered was, as far as my research goes, in the Finance Act, 1937, when section 2 of that Act extended the restrictions in relation to settlements in favour of the settlor's children. One moved on then to section 3 of the Finance Act, 1940, which had some very drastic amendments of the 1922 Act. One must remember also that the Finance Act, 1940, was enacted at a time when there was a world war all around us and when revenue, as well as other things, was being very seriously curtailed and affected by the shortage of many items in which there was a large revenue content, such as tobacco, even spirits and so forth. In consequence of that, the Minister for Finance of the day was looking around, naturally enough, to find every possible method of getting extra income. However, those days have gone and it is therefore important for us to look at the Finance Act, 1940 and at the new position which has arisen consequent on the end of the war and the ending of the emergency.
The Finance Act, 1940, so drastically amended the law that income paid under a covenant as a result of that Act was to continue to be treated as the income of the covenantor, notwithstanding the fact that such convenantor had agreed under a binding disposition to part with that income unless that income was to be payable to an individual for his own use or to be applied for the benefit of a named individual. This had the specific effect of preventing charities in receipt of income of this sort from obtaining any tax reliefs in respect of such income. It was in that context that the Commission on Income Taxation examined this position again in 1962.
Before I turn to that, it is perhaps relevant that I should make some reference to what the Minister for Finance in 1940 indicated were his reasons for enacting section 3 of the Finance Act, 1940. In volume 80, column 77 of 8th May, 1940, he said:
There are a few societies which have made a practice of securing subscriptions by this method, and in the last two or three years that practice has grown at a very rapid rate. It is a method I do not like. It is not a fair method. It is the rich man's method of escaping surtax. He is generous, if you like; he undoubtedly gives a subscription but he also gets relief to the extent of one-third of his subscription at the expense of somebody else.
The Minister and the House will note that the Minister of that day was referring particularly to surtax and, of course, income tax and surtax were at a very much lower level then than they are now.
The amendment I have suggested negatives the complaint the Minister for Finance made in 1940 because I have not suggested that it would be a valid deduction from income for surtax purposes. I might have been disposed to recommend that but I knew I would have no chance at all of getting it through. I though it was better to endeavour to push hard for half a loaf. Indeed, the interpretation that in 1940 the Minister for Finance of that day was mainly concerned about surtax was not only my interpretation but it was so taken up by the Commission itself. The Revenue Commissioners, in their submissions to the Commission on 8th February, 1960, made it clear that one of the main objections they had to this method was the reduction the subscriber to a charity by this method got in the computation of his own surtax.
The cessation of relief for this in relation to surtax was dealt with by the United Kingdom Government in the Income Tax Act, 1952, and, indeed, I think in so doing, they dealt with it in an extremely bad and improper way because I think they dealt with it retrospectively, as far as I recollect, and I certainly would not like the Minister to take their provision in that respect as a precedent.
A point we must consider in this case is the amount of the loss, as there would be some small loss of revenue to the Minister, on the one hand, and on the other, the amount of the benefits that will accrue to the various charities. I think it is undoubted that if this particular form of covenant is restricted so as not to be a valid deduction for surtax, the amount of loss there will be to the revenue will be very small indeed compared with the benefit that will arise to a variety of charitable organisations.
I do not think anyone can make the case that these covenants in favour of charities are not genuine. There are people who would make a firm promise over a period of years, and it is much easier for the charity itself to plan where it stands if it has the certainty of income arising in this way. I accept that in relation to six years, there might perhaps be some balance in favour of the more well-off members of the community and, hence, as the Commission on Income Taxation did, we have in our amendment reduced the period for which such a promise must be valid so as to be effective for a period in excess of four years.
The Minister of the day in the Finance Act, 1957, did introduce the first of the modifications to the 1940 Finance Act. In section 3 of that Act, income that is covenanted for a three-year period in favour of any university or college in the State for purposes of research, but only for purposes of research, was declared to be acceptable. I accept also at once that the phrase "research purposes" has been widely and generously interpreted by the Revenue Commissioners. That exemption for research purposes was extended by the Finance Act, 1959. In section 5 it is provided that covenants for a three-year period will be acceptable if the proceeds are used to assist in teaching the natural sciences, and I think I am right in saying that this section applied not merely to universities and colleges but also to schools.
The Commission on Income Taxation, and the Report to which I have referred, indicated that there was no published information regarding the amount of income that was covenanted in this way, nor were there any statistics of likely effects. I do think, however, that the estimates made by the Minister on the last occasion were miles wide of the mark and I cannot help feeling that in this respect there must have been some other provision in the mind of the Minister when he was making the estimate that was included on 13th June.
£¾ million.
While the amount that would be involved would be different, I agree, from what it was in 1962, it seems utterly unreasonable to suggest that there would be any basis in fact for the figure of £¾ million given by the Minister. Indeed, I think when the Minister had to reply again as reported at column 336, he ran away from the estimate he had given before to a very large extent, and based his estimate on an average covenant of £13 a year by 150,000 taxpayers. Everybody must realise that that is utterly unrealistic. First of all, I would imagine that an average amount would be very much more in the region of a fiver a year, and, in addition to that, to suggest that 150,000 taxpayers would enter into a covenant of this sort is so futile and silly that I am surprised at the Minister, to whom Deputy Byrne paid a tribute the other day with a sideways swipe at other people, suggesting such a figure.
I do not think the Minister can believe that, nor is everyone else in this House who reads the debates on this so utterly foolish as to accept that it is within the bounds of probability, even on Mars, that 150,000 taxpayers would avail of a covenant of this sort. Let us be clear that if we are going to have a covenant, the burden on the donor will be twice the burden on the Exchequer and it will have the effect obviously of people being circumspect and restrictive in the amounts they give.
As I said earlier, we must judge this section largely on whether the benefit to the charity will be more than any danger there may be due to Exchequer receipts. The benefit to many charities in this county by reason of having a provision of this sort would be inestimable. People on all sides of the House on the last occasion paid their tribute to the work of many of these charities, work that is done by people without thought for themselves, giving up their time, giving up their leisure, and giving up in many cases a great deal of their income to do the work of the charity involved.
They are not able themselves, however, adequately to do that task and it is not much, I think, for them to expect that we would make it easier for them to get the wherewithal with which to carry out their work which is the admiration of us all in and outside this House. Our praise of them, our admiration of them, and our tribute to them are hollow in the extreme unless we provide the means by which they can do their job. That is one of the ways in which we do provide, and I would urge on the Minister very strongly indeed to remember that we are not asking him to come the whole way. We are asking, in fact, only for a compromise, allowing him to retain the restrictive provisions on surtax there were in the earlier Acts, as they have been retained in England, and asking merely that convenants for charity be omitted, to enable the income tax on them to be utilised for the purpose of the good work the charity is trying to do.
I was greatly struck during the Committee Stage discussion of this section by the fact that it was the Minister himself who, in my judgment, produced the most telling argument in favour of this amendment, because he told us that a concession of this character was made in Great Britain. I had said to him: "When you are talking about a liability of £750,000 evolving on the Exchequer, you could always come back to the House and say: `our concession has proved to be much more liberal than we can afford' ". The Minister replied: "But they did that in Great Britain; when they came back, they could not get the concession withdrawn". Now, Great Britain since 1945 has been a welfare State.
For a great part of the years which have elapsed since 1945, Government after Government have been wedded to the principle that all social services should be encompassed by the State schemes. When any lacuna has appeared, they have hastened, by legislation, to fill it up. They have reached the point in Great Britain of saying that they have a National Incomes Board to which you are entitled to go, if you are an ordinary citizen, and say: “My income is still insufficient.” That board has a general discretion to say, in the special circumstances of this individual: “All available assistance is inadequate and we will simply give him £2, £3, £4 or £5 a week more to ensure that he does not suffer anything approximating to destitution.”
Yet, when the Chancellor of the Exchequer in Great Britain returned to the House of Commons and said: "This concession in regard to charity is becoming an excessive burden on the Exchequer", and laid before the House of Commons the considered opinion of the British Revenue Commissioners, supported by all the expertise, and their knowledge of how the plan was working, the British House of Commons said: "We fully appreciate the Revenue Commissioners' approach to this problem—their obligation is to protect revenue— and they sent the Chancellor in to us to say that the Revenue is being called upon to bear an excessive burden under this concession." But 620 Members of the British House of Commons said: "We know something that the Revenue Commissioners do not know; we know that despite all the social services, despite the National Assistance Board, despite our repeated attempts to fill every loophole in the welfare legislation of the State, there still remains a sphere of social welfare work that needs the ministration of the voluntary charity; having had all the implications of this growing burden on the Exchequer created by this concession made in the past in favour of charities, we still think the community is getting value for what it cost."
Now I urge the Minister for Finance to think a moment on what that implies. There is not a Deputy who has not had experience of the specific situation arising which is not covered by any social service, after you have exhausted them all. The Minister, I think, will agree with me that the Department of Social Welfare is not an unsympathetic section of the bureaucracy. It is anxious to help, as I am sure are most Departments of State concerned with the administration of the social welfare code. They want people to get their rights under the law and if anybody has failed to get them, they are very willing and anxious to go back and give them that which, through inadvertence, has been withheld. But having exhausted all that, is there a Deputy who has not had the experience that he has had to go to the Vincent de Paul Society, the Legion of Mary, the Rehabilitation Association, or the one hundred and one others?
Or put his hand in his own pocket.
Who of us has not made a loan to the impecunious friend, with the benediction that if he does not get paid back, he need not scruple on his deathbed of deeming it an absolute gift. Nobody but a fool has ever made a loan for any other reason. I am talking of the charities which have flexibility, which have peculiar devoted personnel who will do the excess job. There is a temptation for any elderly Deputy to start reciting anecdotes of his own personal experience but this really is not necessary, because young or old Deputies will have found occasions on which a situation has matured where public money is not the remedy, where it is necessary to get the flexible devoted care of a charity.
I am always amused that the moment you mention the word "charity", Deputy James Tully—who at the moment is not present—will erupt, as it is his custom to erupt. I think it is the loveliest word in our language; I think it should be the most cherished institution of our society——
And our political life.
I am proud to depend upon the charity of my friends and of my enemies; of course they love me with a very special love, which they manifest most eloquently. As you will remember, the Minister for Local Government was moved to it no later than last Wednesday or Thursday; if the Minister for Finance wishes me to introduce that note of controversy into our decision, I would wish to have it for the records, Sir, that it was the Minister for Finance who introduced that note into the discussion, which I think is, on the whole, inappropriate.
I was merely supplementing the Deputy's remarks.
I was merely illustrating the Minister's charity. Fortunately, the illustrations to which I refer never succeeded in getting on the Official Report of Dáil Éireann and thus the Official Report was spared the contamination of the words involved.
I hope all this is relevant.
I think it was the Minister who chose to expand the significance of charity, and we are discussing charity. I think we ought to sustain them and I think the Minister's admission of the problem of the Chancellor of the Exchequer vis-à-vis the ordinary Members of the House of Commons, is the most eloquent argument that could have been advanced for this amendment. I understand and sympathise with all the Exchequer arguments against it but I believe that the ordinary Members of Parliament, the ordinary Deputies of Dáil Éireann, have a better understanding of this problem than those charged with the protection of the revenue. We ought to bear in mind that these admirable Jekylls and Hydes are themselves, individually, some of the most active participants in these charities.
Hear, hear.
While they assume the role of Mr. Hyde in urging the Minister for Finance to withhold from these charities the benefit this amendment is designed to bestow on them, in their role as Doctor Jekyll, they are themselves filling up the deficiency by their voluntary work. I am asking the Minister to bear that in mind and to think rather of the mind and opinion and firm resolution of ordinary Members of Parliament in England who ought ordinarily to be more inclined to assert the adequacy of State provision for the unfortunate than we are in this less socialist State.
The Chancellor, Sir, in Britain found the House of Commons less accommodating than the Minister for Finance found Dáil Éireann in 1940. I ask the Minister for Finance in 1967 if the Minister in 1940 had not been speaking in the context of a national emergency, when revenues were very precious to the State and were being mobilised by the community as a whole, could he have hoped to receive as sympathetic a reception of his proposal to withdraw this concession to charity? If the Minister of 1940 had based his case for the withdrawal of this concession to charity on the basis exclusively of income tax and not, as he did, on the basis of surtax, would the House have received it sympathetically? I think not. I think the House would not have received it sympathetically because the average Deputy, no matter what side of the House he sits on, knows that the local charity is doing something no one else could do.
What State service can the ingenuity of man devise which will provide for somebody who is old, inebriate and undeserving? Remember, the most precious object of charity is the undeserving poor. It is easy to find someone to rush to the assistance of the relatively deserving poor. What State system can be devised by the ingenuity of man which will go into the home of such a person and wash the floor, change the bed linen and wash the person of so unsympathetic an object of true charity. Yet who amongst us has not turned either to the religious or to the lay body and asked them to do just such a chore? I give that one illustration to indicate the vital function that that kind of charity discharges in any society, socialist, capitalist, wherever human beings gather together as a social unity.
I suggest to the Minister that he should accept this amendment, which, as Deputy Sweetman points out, is a via media, in the certainty that if the extremity he envisages of this involving a burden of £750,000 to the Exchequer in any given year should eventuate, he can, with perfect confidence, come back and consult Dáil Éireann and say to them: “Come now, are we getting value for this or have we allowed sentiment to unseat our judgment? Is the money being wasted; is the Exchequer being unreasonably burdened by futile expenditure?” What better guarantee can we have of value for money than that the donor is paying £2 for every £1 that the Exchequer has to pay? Is this country so crowded with improvident, wealthy men and women that we have to shelter the Exchequer against the dangers of multitudes of such persons besieging the Exchequer to give £2 to charity so that the charity may benefit by £1 at the expense of the Exchequer? It is not a convincing picture but if it does transpire, come back here and discuss it with the House. They will agree with the Minister if the thing has become an abuse because, mind you, the undeserving poor do not dispose of many votes. Most of them do not vote at all and it is for the undeserving poor the charities primarily function.
I suggest the Minister might well make an act of faith, bearing in mind that he is sustained by a Parliament no less percipient than that which sits in Westminister and they will ask him to undertake no improvidence which British legislators cannot in their conscience justify, but they may see the truth more clearly than the Revenue Commissioners as they wear their official mask of Mr. Hyde. He may be astonished at the reverberating rejoicing that might sweep through that austere division of his Department as, for a moment, they relaxed in their natural capacity of Doctor Jekyll.
One cannot fail to be impressed by the eloquence of Deputy Dillon and in so far as he is advocating the cause of private charities, he finds me entirely with him. I know from going about my own constituency that what he says is true. No matter how efficient official social services may be, there are always areas which, certainly up to now, they have not succeeded in covering. However, as a modern approach to social welfare becomes more widespread, even these areas will become smaller and smaller as time goes on. Indeed, I see very welcome signs that Dublin Health Authority, for instance, with which I am most familiar, are very flexible in their approach to the problems of human poverty and misery and certainly are not in any way rigid in their methods of dealing with problems of that sort.
But my objections to this proposal are, I am afraid, still unassailed. I have objected to it, first of all, because of the cost to the Exchequer it could conceivably bring in its train. The experience in Great Britain indicates that the cost can skyrocket, and I gave figures here during the debate on Committee Stage to show that.
Provided anybody with any sense could accept them.
I gave the British figures.
Expressed as a total. For us they would have to be expressed as a percentage of revenue.
I was concerned with the relationship between one year and another, how the figures had multiplied as between 1956 and 1966. That is the important thing.
May I interrupt the Minister? Is he going to speak now of charity or of charity in its widest sense like endowments of education?
These covenants to charities.
As we define them?
Yes. They increased from £11 million in 1956 to £33 million in 1966. That is a threefold increase. If you take between 1960 and 1966, that is a five-year period, they doubled from £16 million to £33 million. If that is any indication, I think we would have to expect some similar sort of progression here, because these modern methods are making headway here just the same as they are in Great Britain. This is a very popular form of activity with these professional promoters. It has many advantages from their point of view and they push it very strenuously.
It is a good selling point for the charity.
It is a good selling point. From the point of view of the charity, it has the advantage that the giver is committed for a certain period.
Therefore the administrative cost is much less because you have not got to keep on coming back.
Exactly. Therefore it would be very popular. A great deal of money which in the normal way goes to charities would switch over to this system if we were to make this concession. We could anticipate a fairly serious strain on the Exchequer in regard to these subscriptions. I cannot go with Deputy Dillon when he says to me: "Do this anyway. If it transpires it is going to cost a great deal, come back here and wipe it out." That is not being realistic. The Deputy knows that, once you introduce a concession of this sort, in our type of society, it is almost impossible to do away with it. First of all, there is no doubt if we were to do it, a great number of charities would spend a lot of money, time and energy bringing it into operation. We could not in all fairness come along in a year or two and suddenly cut it out, because they would in the meantime come to rely on the income they were getting from it.
You could very well say: "We will not allow any more after this date."
Then you would be holding the scales unevenly as between one charity and another.
No. I do not believe it would happen.
I do not accept another thing Deputy Dillon says to me. He suggests it is these fine old charities who do the best type of work who would benefit from this. I do not think that would necessarily be the case. I am afraid it would be the slicker, more modern, borderline type of charity that would be quicker to avail of this than the traditional old charities which had their own way of operating and would be slow to change perhaps.
I want to make the point that the word "charity" in our law at the moment is a very imprecise term and covers a variety of things. It includes certain things which the ordinary Deputy would not regard as being particularly charitable and excludes others which he would. Because of the way in which the doctrine of charity has grown up over the years, this is the situation. Therefore, to try to help charities by this device would be a haphazard, imprecise and unscientific way of doing the job we want to do. If there are charities who cannot carry on their fine old traditions and who cannot do the work now to the extent they have been able to do it in the past, then the right approach is for the State and the local authority to come to their aid without any strings attached and to give them the resources they need. It seems to me the State and the local authority would recognise that these people have a particular skill and expertise in identifying problems and solving them in the proper way. The right thing is for the State and the local authority to say to them: "Here is a sum of money. You know better than we do how to distribute it where it will do most good. All you have to do is to give us a receipt for the total amount of the grant-in-aid. That is all we ask."
As I pointed out on Committee Stage, there are some organisations which receive money from the State in the form of a grant-in-aid who do not have to account to the Minister or the Comptroller and Auditor General for its expenditure. All they have to do is to present accounts, usually and almost exclusively, for the purpose of getting another grant next year.
Therefore, my objection to this still stands on two grounds. One, the cost it might lead us into and, secondly, because I do not think it is right and proper that an individual should be able to take 10/- from the Exchequer and add it to his own £1 to give to a charity.
If he is a surtax payer in the top bracket, he will have to have £5 before he can get that £1.
That is true. But I am not so much concerned about the amount as about the principle. Why should any individual come along and say to the general body of taxpayers: "I am going to take a sum of money out of the Exchequer and donate it at my discretion to the charity of my choice"?
He can do it at the present moment if he is concerned with the remotest investigation into coryza or the common cold.
I admit there is a breach in the situation in regard to these covenants for science and teaching, but I do not think the fact that they exist at the moment should persuade me to make the situation worse. I do not think that breach should have been made: I say that quite frankly. I think it is a mistake, but it is there now. On the principles I have been enunciating to Deputy Dillon, I am not going to abolish it. It exists. But I do not think just because it is there it should be used as an argument for the extension of this sort of thing to vastly wider areas.
Before the Minister sits down, would he mind giving us the present figure here because he has based his argument on the fact that the United Kingdom figure has increased threefold? What is the present figure here?
In relation to——?
To covenants.
To the University, scientific and teaching covenants? I am afraid I have not got that information.
It would be negligible.
We would not have any figure of covenants for charity, would we?
Purely for research purposes.
Apparently, the research science provisions cost us £70,000 to £80,000 a year.
£7,000 to £8,000.
£70,000 to £80,000.
That arises because of one particular family, I imagine, in one particular place. That is hardly a general one. Can I reply, Sir?
I must confess quite candidly that I am left completely speechless by the Minister. For the Minister to suggest that he disagrees even with the provision for covenants for research, though I accept of course what he has said, that he is not going to change the system as he found it, seems to me more retrograde even than I believed him possibly to be. He knows that my thinking on this subject is pretty wide. On the last occasion we discussed this on Committee Stage, the Minister made an effort to suggest that this was a position peculiar to Great Britain and implied, and not merely implied, but suggested, that it was one that was not followed, for example, in the United States of America.
The position in the United States of America is that each taxpayer is allowed to take a deduction from his income for income tax purposes and for their equivalent of surtax—they have it on a graduated scale—a specified percentage for charitable purposes. I would be perfectly happy to accept in lieu of this amendment any proposal by the Minister that we would follow the American system. Indeed, it is accepted beyond question that the American system whereby a rich man can set aside a percentage of his income for the benefit and provision of research and education there is one of the reasons why the United States of America is undoubtedly one of the leaders in that respect. I do not think the Minister did his case any good at all by making a reference of that sort to the position in America.
I might add that not merely in the United States of America but in Canada also people are allowed to take a stated proportion of their income by way of relief for income tax purposes if they give that proportion up to a certain limit for purposes of charity. It is at least retrograde, if not worse, that we here in Ireland are not prepared to follow either the arrangements made in the tax code in the United Kingdom, on the one hand, or the arrangements made in the United States of America and in Canada, on the other.
I have not got any figures for the amount that is made available in the States or in Canada as regards how much it costs the Exchequer in each country but it is particularly noticeable that when Canada the other day had their Commission on Income Taxation presided over by Mr. Carter, Mr. Carter made no suggestion that they should wipe out the charitable percentage concession in relation to his country, although, as the Minister is aware, he made certain other suggestions that are the subject of heated controversy at the moment over a wide field ranging from industry to mining. He did not suggest at all that there should be any change in the charity law concept.
It does seem to me unfortunate that here in Ireland we are in the position that we are creating a deliberate disincentive towards charities being able to make a planned arrangement for the future. The Minister is at one with me when I say—and it is one of the reasons why I advocate this change— that the effect of it would be that people would determine for periods ahead what they could afford to do. To suggest, however, as the Minister has suggested, that it would be of the order of an average £13 a year and that one-fourth of our taxpayers here in Ireland would accept such a method, is quite nonsensical.
Why?
One hundred and fifty thousand taxpayers. The Minister does not know his taxpayers if he thinks that 150,000 out of 600,000 are going to adopt this method.
They are all parishioners.
I am not going to suggest for one second that we are going to be—how shall I put it—less charitable than others but figures of that size are quite beyond the realms of possibility, much less probability in the future. I can see that there might be some argument in this respect if we had a pattern of that type of thing here but the amount that there is here at present is very small and, even accepting the British acceleration, would be far from serious here.
Again, may I say in respect of this that this is another case in which one of the relieving provisions recommended in the Commission's Report has not been accepted. Other sections have been. It is as well that we would have on the record some of the remarks of the Commission in this respect. The Report which dealt with it said in paragraph 344 rather the converse of what the Minister just said:
Seeing that charities were the main beneficiaries of the type of covenant which the 1940 tax legislation disallowed it may be mentioned that in this country the legal concept of charity has remained in reasonably close accord with the general sense of the community on the subject.
That is not what Gavan Duffy said.
I am more interested in what the Commission on Income Taxation said. We are discussing income taxation at the moment. Perhaps the next phrase in the Commission's Report refers to the particular case that the Minister has in mind:
Some instances to the contrary can be traced, but it is the character of the genus, rather than of the exception to it, which must be kept in mind.
We could divert quite a long time on that, but it is the next part of this Commission's Report which I think is the operative one and which has been completely ignored by the Minister in his approach to this problem:
The loss, or the potential loss, of tax revenue from a covenant system in favour of charities cannot be looked at in isolation. There must be set against the tax loss the encouragement it gives to a desirable redistribution of income.
The Minister has completely ignored that in the case he has made here this evening.
Some of the advantages arising from covenants in favour of charities accrue to the well-to-do, but most of the advantages reach the less well-off members of the community. Revenue from a progressive system of income taxation is admittedly greater when the formal redistribution of income which covenants promote is disregarded for tax, yet it is good social policy to encourage such redistribution.
It is a pity that the Minister completely ignored that suggestion put forward by the Commission. Paragraph 347 went on to say:
We consider that, to overcome, so far as practicable, the criticism that a person with a moderate income cannot avail himself of the covenanting procedure, one particular restriction which may greatly affect income taxpayers having only moderate incomes should be eased.
An obstacle to the use of the convenanting system by such taxpayers is the six-year minimum period which has to be provided. Many persons in the middle-income and low-income groups may be reluctant to bind themselves by covenant for as long as six years, but would be less so if the periods were shorter. In our view they should be facilitated in this respect.
The Minister, of course, will realise that in the amendment before us we have deliberately come down to the four-year period. Paragraph 349 says:
We consider that covenants in favour of Charities should be admissible for income tax; and that the minimum period which should apply to them should be four years. That would make the covenant system more convenient for the middle-income and low-income taxpayers, while providing reasonable continuity of payments.
The Commission went on to point out that the reduction from a six-year minimum period to a four-year minimum period would make some extra administrative work, but not of great substance. Indeed, the Minister has never suggested that administrative work was one of the objections to the covenant system, and I am interested to see these remarks of the Commission in paragraph 350 which appear to be in direct contradiction of the case made by the Minister:
Loss of surtax, rather than income tax, has apparently been regarded as the principal drawback of the covenant system. Any such loss would now be much less than in the Nineteen Forties, because the number of surtax payers has been almost halved within the last few years.
I am not prepared to say without considerable further research whether that would still be operative or not, but it was apparently operative in 1962. I do not know whether one of the objections the Minister would have to the amendment would be that my phraseology might not provide for an actual transfer of income. If so, I willingly give him a present of the point, because, as I think I stated the last day, I am more interested in ensuring that we have a discussion on the principles rather than on the actual wording. Finally, in paragraph 355 the Commission come down flatly:
We recommend that formal dispositions of income, under covenant, in favour of charities for a period which may exceed four years should be effective for income tax, but not for surtax.
In the light of the arguments advanced by Deputy Dillon, in the light of the arguments made in the Report by the Commission, I do not understand how the Minister can set his face so firmly against this, especially when he admits himself that some of the objects may be those which he and I and everyone in this House would be anxious to benefit.
Amendment put and declared lost.
Amendment No. 11.
Are amendments Nos. 8 to 10 ruled out?
Yes; they are out of order.
Is it because they might create a charge?
This is so.
If the Minister is retaining the 45 year limit to go back for taxation, he could also accept these amendments so that we can go back 45 years on the claims.
We can hardly discuss them now.
No, but the Minister could, if he wished, recommit.
You would never know what I might do. If we have a nice, long, pleasant summer, you would not know what I might do in the autumn.
We shall wait and see but when you have a Miscellaneous Provisions Bill coming up, it would be a likely means of getting through a supplementary Budget.
I am sure we shall slip in a few things but we will not do that. We will not have a supplementary Budget.
I hope not while I am away.
There will be no supplementary Budget. I move amendment No. 11:
In page 10, line 7, to delete "qualifying" and to substitute "qualified".
In line 7 on page 10, the words "qualifying person" appear. This is a drafting error because this is meant to define the words which appear in line 30 and which in fact are "qualified person", so that "qualifying" in line 7 should be "qualified".
This is so epoch-making and earth-shattering but I think it is the only amendment to the Finance Bill that I cannot agree is in order because it was not referred to on Committee Stage. Would the Minister not have to recommit the section before he would be in order in introducing it because it was not referred to in any shape or form in Committee? I should be perfectly satisfied to agree if he did recommit but I think he is not in order in moving the amendment as it is.
The amendment is perfectly in order.
How is it? It was not referred to on Committee Stage. There was no reference whatever to it and nobody, not even the Minister, is allowed to introduce anything on Report Stage unless it was referred to on Committee Stage.
I distinctly remember the Deputy and myself having quite a discussion on Committee Stage as to the wording and the meaning of "qualified person" in subsection (2) (a).
I am ruling that the amendment is in order.
In subsection (2) (a), yes, but not in line 7.
But the two are cognate.
I have all the reports here. Would the Minister not like to make assurance doubly sure by recommitting the section?
Not at this stage.
Amendment agreed to.
Bill received for final consideration.
Question proposed: "That the Bill do now pass".
On the Fifth Stage, does the Minister not move it and then let the House discuss it?
I take it the Minister has moved it.
Yes.
I do not know if the Minister would like me to make any reference to the special arrangement we have made to ensure that the provisions of Standing Orders and the Constitution in relation to the Bill will operate. If we were to finalise this Bill tonight, it would have to be dealt with by the Seanad within seven days and next week the Minister will be in Bonn, I think.
Did the Deputy say in Bonn or in quod?
In Bonn. His luggage may be in bond when he comes back and he may be in quod as a result of not having declared things that are in bond. To facilitate matters and to ensure that the Finance Bill can go to the Seanad immediately on his return, we agreed to take the Fifth Stage tonight on the understanding that so far as we were concerned—I think this was put afterward to the Labour Party; they will be able to speak for themselves—that when we had discussed the Fifth Stage, if that were reached, the Minister would reply and when he had ended his reply, would move the adjournment of the debate so that the Fifth Stage of the Bill could be put without further discussion on this day fortnight and then the Bill would go to the Seanad immediately on that day without interfering with other business falling to be discussed then. Having regard to the fact that the Bill must be taken in the Seanad within seven days, there does not appear to be any other reasonable way of doing it.
On this Stage, I want to refer to the effect of Part I of the Bill and the poor result it will have as far as our people are concerned. So far as I understand Part I, which is the income tax portion of it, it means to a person with an income level of £1,000 a year or £20 a week, not a very great sum in these days, that of every extra £1 such a person obtains at that level in Ireland, 26¼ per cent of it will be taken by the Minister for Finance. When one compares that taxation with the taxation in some other European countries with which we hope to be associated, we see the penal measure of taxation on the less well-off people in this community. Here 26¼ per cent is taken, or roughly 5/3d out of every £. Only 11 per cent is taken in France, or about 2/- in the £. In Germany, where the Minister is going next week, only 13 per cent is taken in that category, half of what the rapacious Minister for Finance takes in Ireland, 2/6d instead of 5/3d, leaving for the worker concerned 17/6d out of his £ in Germany compared with only 15/- here. In the USA, only 19 per cent is taken.
Going up to a higher level, let us take the income level of the better-off white-collar worker earning £2,500 a year. At that level the Minister here, out of every additional pound, will take 35 per cent. In America, only 20 per cent is taken; in Germany, only 25 per cent; in France, only 18 per cent. Yet, there are times when those who are concerned here with Government are inclined to suggest that we have a tax haven under a beneficent Fianna Fáil Government. I got a letter the other day from a man whom I know well. This is what he told me: "Very recently an Irishman who came in for some property in Australia was unable to make any compromise relevant to the payment of double taxation in Ireland, though he offered to pay half the amount. In the circumstances, he found it necessary to sell his Irish holding and take his wife and family to Australia."
He wrote to the papers about it.
I do not know whether he did or not, but not the man who wrote to me anyway.
The other man did.
I did not see it in the paper. I heard, too, of two residents in the Clonmel district who are considering leaving as a result of the recent tax impositions by the Minister for Finance. It seems to me that is cutting off your nose to spite your face. It is having the effect of the Minister losing substantial revenue, killing the goose that lays the golden egg.
In Part I of the Bill, these provisions in regard to income tax do not appear to accord at all with the provisions operative in Europe and, in particular, in those Common Market countries in relation to which the Minister is anxious to obtain certain information. The Minister is, I think, going to Holland tomorrow. In the Netherlands, there is a concept of income in relation to taxation which depends virtually entirely on sound business practice and a consistent approach from year to year. We have heard many things so far as income tax practice in Ireland is concerned. I do not think anyone has ever-described the practice here as sound business practice. The most frequent reference in relation to it is "the jungle". In Business and Finance there was a heading “Income Tax Jungle”. The examples given under that heading did not do much credit to anyone, though I will admit at once that the Minister has accelerated slightly the position in that respect.
A moment ago, when I referred to that Australian case, the Minister said it had been mentioned in the papers. That put me off my stride, though I do not think the Minister did it deliberately. I meant to ask why cannot we be far wider in our double taxation arrangements, particularly in regard to income tax and death duties. The slowness with which we are taking up double taxation agreements with other countries is not helping the community as a whole. The grumble in the Australian case arose largely from a double taxation angle. I mentioned earlier the position in relation to the announcement of the double taxation agreement with Canada. The Minister made the point, reasonably enough, that the delay was due to the fact that we were making some changes consequent upon the consolidation measure. That may be so, but it does not excuse the fact that Canadian citizens were informed of what was in this new Convention in November last but no effort whatsoever was made to disclose the contents of the Convention here until the matter was raised, very reasonably, by me.
Worse than that, when specific inquiries were made in relation to the context of the Convention, we were told categorically that it was not yet open for public consumption. Yet, some four or five months earlier it had been publicised officially and widely in Canada and to all Canadian Embassies. The delay at this end made people feel utter fools. The Canadians were amazed that we did not know the provisions of the Convention, which will be operative fairly soon and which was signed, I think, some time last autumn.
I am a little worried in one respect at the prospect of the Minister's visit abroad; he may get some new ideas for new taxes, particularly in relation to the turnover tax.
They have scrapped that on the Continent. They put on an added value tax now.
Added value tax in France and corporation tax in Germany seem likely to be the basis for future taxation.
Turnover tax at the end is quite an acceptable part of added value tax.
No, because the turnover tax does not permit of any exemption of taxes that have been paid earlier. One of the principles of the turnover tax operated here by the Minister is that we pay tax on tax. In relation to spirits, one pays turnover tax not merely on the cost of the spirits but on the customs duty or excise duty paid on those spirits when they are taken out of bond. That is one element that does not arise in relation to added value tax.
There has been no effort in this Finance Bill to bring our system of income taxation into accord with the method of taxation on the Continent. There has been no effort to bring our system nearer to that of the Continent or to make it easier for the changeover to take place, if there is to be a change to the method abroad.
The provisions in Part II include an attack by the Minister on beer and on tobacco. It has been the history of every Minister for Finance in the past few years that, coming up to Budget time, somebody makes a speech suggesting all sorts of bloodcurdling things. Then the Minister is not quite as bad as all that. There is a sign of relief and what is a bad Budget almost gets away without criticism. This year, it was Deputy Lemass who started that, before he went out of office. Away back in early November last, he started telling us how the position would be quite impossible for the Minister for Finance. I do not know whether it had then been planned that his son-in-law would be in the hot seat. If so, if that had been planned, the alleged competition was only so much fraud, but, whether it was or was not, it was part of the normal tactics to do this for the purpose of making people feel that it was not as bad as it might have been. If it had not been for that, the additional duty on beer included in section 13 and the additional duty on tobacco included in section 14 would have received—much more so—the criticism and the attack they deserve.
In the Budget speech and Estimate, and in the paper explanatory of the current Budget, we see that the Minister aimed to get an increase of £1,250,000 from tobacco and an increase of £1,250,000 from beer. I should be interested to hear from the Minister the basis on which these two figures are arrived at. Are they on a straight line of the same consumption in relation to tobacco and in relation to beer as last year, or does he make any allowance for the cut-back in consumption that may arise as a result of the increased duty and necessarily increased cost? I suspect that the weather in the past three weeks has probably had a good effect on the revenue from beer. Whether any weather as warm as that which we are having at present brings a consequent reduction in the revenue from spirits is something about which I am sure the public would be interested to know.
This Finance Bill can truthfully be said to be a colourless document. It is not doing anything worth while, not making any real impression on the tax and finance legislation of the country. It is not altering any of the tax provisions which many of us hoped and expected would be altered. Today, at Question Time, we had a discussion and a most improper reply by the Minister for Local Government. As we said then, the past couple of weeks is the first time I have ever heard any Minister of any Government attempting openly and brazenly to make a political Party case in what should be the factual reply to a question.
How can we discuss that here now?
I shall show the Chair in a minute. The facts, of course, are that the Minister was making a bad local elections speech. This Bill is based on the Budget. It consolidates the Revenue enactments in relation to motor vehicle duties but it provides this year that a sum of £1½ million out of motor vehicle duties will be paid to the general Exchequer instead of being paid to the Road Fund. Whether or not one calls that a raid on the Road Fund seems entirely beside the point. The Minister for Local Government seems to think that the effect of its being syphoned off before it reaches the Road Fund makes a great deal of difference. The fact, of course, is that this Bill we are discussing here today takes from funds that would otherwise be available through the Road Fund a sum of £1½ million and, because of that abstraction, every local authority in the country will get substantially less this year for its road works. Every local authority will, in consequence, seriously have to cut down its employment content. Kildare County Council, for example——
Surely we are not entering into a discussion on local government?
No, Sir; we are entering into a discussion on taxation as set out in the estimate of receipts and expenditure in the White Paper submitted by the Minister for Finance on foot of which this Finance Bill is framed. Kildare County Council, for example, is getting £110,000 less and there is nothing in this Bill that will make up the additional employment which will be lost in that respect.
That would open a very wide discussion on the Finance Bill.
The Minister for Finance opened it very wide by providing in the last column of Part 1, in the summary of estimates of receipts and expenditure, a sum of £11½ million as receipts from motor vehicle duties but only paying into the Road Fund, in the same column lower down, £10 million, thereby abstracting £1½ million.
That document was circulated with the Budget, not with the Finance Bill.
Ah, but the only basis of the Finance Bill is of the Financial Resolution based on the Budget. Otherwise, the Finance Bill cannot be introduced. No Bill of a finance nature can be introduced without a Financial Resolution on which to found it.
There is nothing whatever in this Bill about road tax.
We are discussing the Fifth Stage of the Finance Bill, 1967, that is, what is contained in it. If the Deputy were allowed to continue along the lines on which he has been speaking, it would re-open the question of every Estimate before the Dáil.
I am not talking about the Estimates; I am talking about payments to the Central Fund which is entirely different from the Supply Services.
An Leas-Ceann Comhairle
Road grants.
I am not entitled to go into a break down of all these items but I am entitled to deal with the moneys that have been abstracted from the Central Fund by the Minister for Finance and not transferred over to the Road Fund. I am not suggesting that the Minister has taken this out of the Central Fund. As I said before, the Comptroller and Auditor General would see that that did not happen.
An Leas-Ceann Comhairle
The allocation of road grants is a matter for another Minister, the Minister for Local Government, and would relevantly arise on his Estimate, but certainly not on the Finance Bill.
Are you saying, Sir, that we cannot discuss the raiding of the Road Fund?
I think the Chair is objecting to the fact that I mentioned Kildare. I had not got the Donegal figures.
There is nothing in the Bill about road grants. This Bill is not concerned with road taxation at all.
The fact remains that the Minister for Finance by another name has raided the Road Fund to the extent of £1½ million and that is why the Minister refused to allow the Minister for Local Government to make larger allocations. I will not upset the Leas-Cheann Comhairle by mentioning any details from any area. I will keep entirely to the Estimate of receipts and expenses which is incorporated in this Finance Bill. The Finance Bill has also provided the tax revenue that is set out in this summary, and in the table explanatory of the Budget, in which the various provisions of tax revenue are also included, and again the Minister admits that motor vehicle tax will likewise include £11½ million and only transfers to the Road Fund £10 million, a difference of some £1½ million. We had a discussion on an earlier Stage about certain other sections of this Bill. I doubt whether this Bill as a whole is one properly attributable to the circumstances of our time and to the circumstances of 1967-68. For example——
This is a filibuster.
What is that?
That is what the Minister for Agriculture was doing last week when he did not want to take his Estimate—getting people to filibuster. It was easily recognisable.
The Minister has put me out of my stride. This Bill contains provisions which are unfair to many lower paid sections of the community and which are certainly disincentives towards earnings, production and productivity. The new method of free depreciation which has been introduced this year is, I accept, an improvement. It is an improvement which I urged strongly on a predecessor of the Minister and which I had seen from a Swedish model. The then Minister for Finance was not impressed. I am glad this Minister for Finance has copied the Swedish model and my only regret is that in many other respects he did not also copy the model in relation to taxation.
A good socialist government.
That is just what I was going to say. Curiously enough, most people imagine that Sweden is more socialist than other countries. They have a Government that goes by the name of being socialist but their percentage of production in relation to nationalised industry, for example, is far less than ours.
Obviously, private enterprise there is doing a reasonably good job; it is not doing it here and therefore they have to be replaced by nationalised industry.
I do not think the spokesman for the Government the other night made much of a case in that respect. One thing which I should like the Minister to discover when he goes to Bonn next week is how the policy of Dr. Erhardt as Chancellor worked in the early 50s, particularly. If he is able to get some instruction on that when he is over there and bring it back and put it into operation here, there might be a real expansion within the economy during the current year, instead of the lack of growth which appears evident on all sides and which stagnation seems to be what we must expect in 1967, and perhaps even in 1968. A more realistic and inspired Finance Bill might have done something to clear the way for greater growth in the community. Unfortunately, this Bill does not do so.
First of all, I think the Ceann Comhairle made a mistake because I have a copy of the Whips' Report in which it is clearly said that the Minister for Finance will adjourn the Fifth Stage of the Finance Bill until 4th July. I assume that still stands. One point which I should like to make on the Bill is that I cannot understand how some effort has not been made to remove a number of anomalies which exist. We supported the Budget in this House and, if necessary, we will support this Bill; nevertheless, the Minister has not made any effort in the Bill to remove the arrangement whereby if somebody is working for a living and becomes ill, he can draw social welfare benefit even if it is higher than his tax free allowance, but if a person is working and gets the old age pension, he immediately becomes liable to income tax. Income tax on old age pensions must take in a very small amount of money but it does hurt those in receipt of them. Perhaps the Minister would have a look at this at a later stage and do something about having it altered in the future.
My second point is that no effort has been made to deal with a situation which has grown up over the years. Eleven years ago the income tax allowance for a single man was around £6 while the average wage earned by a rural worker was about £5 or £5 10s. In other words, the single rural worker could earn £1 or more in overtime before becoming liable for income tax. Now the average income is around £9 but income tax remains at £6 or £6 10s. The Minister must admit that there is something wrong with that kind of thinking. I should be glad if he could do something about it, because it is causing great hardship.
The same applies to a married man. At that time he had a tax allowance of ten guineas. He still has a tax allowance of ten guineas for himself and his wife. That is wrong. I do not know why down through the years, Ministers for Finance did not do something to straighten this out. There must be a reason, but I cannot understand what it is. Another thing which has caused a lot of annoyance is that the pattern has changed so much. Ten years ago people tried to find employment within four or five miles, or even ten miles, of their home. Now it is common for three or four men to club together, take a car and drive 40 or 50 miles to work. They are not given one cent off their income tax because they have to travel these long distances. They pay the same tax as if they worked next door to where they live. That is wrong. It is a shocking thing for a man, who gets out of bed at 6.30 a.m., has his breakfast and goes to work 50 miles away, works hard all day and drives home at 7.30, having had the physical work of travelling and working at his job for 12 or 13 hours, to find that he is taxed on everything over the £6 or £6 10s, or ten guineas, if he is married. Perhaps the Minister does not agree, but if concessions are to be given, these are the cases in which they should be given.
The Minister must also be aware of the family unit of a man and his mother or father or sister. Perhaps one of his sisters remained at home to look after the father and mother, and when the old people were gone, she remained on to housekeep. She is now looking after the house but she is not working for hire. Whatever small wage the brother has, he cannot claim an allowance for her. Unless he is married and has children, he cannot claim an allowance. Surely that is wrong. There should be some way in which this person could get an allowance. The same applies to a single man whose mother is not ill. If she is not ill or old, a single person cannot get an allowance for her on his tax-free certificate. There must be an answer but I do not know what it is. In a Bill like this, some imagination should be brought to bear to an effort to find a remedy for a situation such as this.
There is also the question of the person who goes to work in England. Many people have gone from this country and worked for a long time in England. When they come home, it is almost impossible to work out what their allowance is between the income tax people here and the income tax authorities on the far side. It is almost impossible to straighten out the refund on the tax allowance. Something should be done about that. There is also the person who has been working and who has ceased his employment during the year and should have got a P.45 but did not get it, and there is the person who should get a P.60 to claim a refund. The income tax authorities do not do anything to publicise this.
Deputy Tully will appreciate that we are concerned only with what is in the Bill, and not with what the Deputy would like to see in it.
I appreciate that that is so. I could go through the Bill section by section and relate my remarks to it. I said I would be brief and I will be as brief as I can. I am simply stating facts. I do not intend to detain the House very long but these are things about which nobody is worrying, apparently. As I said to the Minister some time ago, of course these people are only working people and do not matter to many other people. They should matter to the Government and to the Minister because——
They do.
——in my book, they are the salt of the earth and without them, this country would not tick. In the Budget there is this provision for extra taxation on cigarettes. I mentioned this twice before and I want to repeat it now. Is the Minister satisfied that there will not be a substantial rake-off for the cigarette manufacturers as a result of the way in which this tax has been imposed? The Minister told me that the cigarette manufacturers will not make a profit on this and that it will go to improving cigarettes in some way. I suggested that this would be by way of coloured picture cards. This arises because of the tobacco content in tipped and plain cigarettes.
If there is a fiddle—and I am suggesting that there is a fiddle, as there was last time—the Minister should see to it that this is passed on to the cigarettes or passed on to the Exchequer. We have no objection to supporting the Government to get the money which they require for the purpose of running the country, but we do not agree to support the Government for the purpose of making rich men richer. The Chair has ruled out the question of the county by county Road Fund allocations, but I should like to place on record my dismay at the fact that because of the taking of £1½ million from the Road Fund, members of my trade union and all the people who work in local authorities now have a Sword of Damocles hanging over their heads and may be out of their jobs before the end of the year.
The Minister has no responsibility for the administration of the Road Fund.
He has responsibility——
I am pointing out to the Deputy that the Minister has no responsibility for the administration of the Road Fund.
He is responsible for the increase in motor taxation which was put on last year and which he stated here was put on for a specific reason.
Not in this Bill.
It was put on in last year's Budget and is collected one way or another. Let me point out something else. The Road Fund is not the only thing affected. Every imported part and everything attached to motor cars are taxable. Petrol is taxable, and the tax goes as revenue to the Government. I drive a car, and I buy almost £40 worth of petrol per month, of which the Government get approximately £30. The Government have taken action against the weakest section of the community, those who they thought could not defend themselves. I hope that if the Government do not change their mind, the people who are affected will show their dissatisfaction in the very near future.
I am blowed if I can understand how the Minister has succeeded in facing the House with the proposition that the Road Fund is not the Road Fund when he does not want to call it the Road Fund and in keeping a straight face in the process. He says: "I am not doing that because I am not doing it in the Bill." That is part of the deception.
We are talking about the Bill here.
We are talking about the Bill and I shall read the Long Title:
An Act to charge and impose certain duties of customs and inland revenue (including excise), to amend the law relating to customs and inland revenue (including excise) and to make further provisions in connection with finance.
Motor taxation is not included.
No, but all other taxation is included, and the total sum here provided in the Bill has been provided in the light of the fact that we have raided the Road Fund to the tune of £1½ million. Will the Minister deny that if he had not raided the Road Fund, he would either have had to provide the money by borrowing or by taxation through this Bill?
I have already pointed out that the administration of the Road Fund is not the responsibility of the Minister for Finance and if the Deputy proceeds with a discussion on the administration of the Road Fund as it relates to individual counties he will find it is not relevant.
Perish the thought that I would refer to the reduction for County Monaghan by more than £40,000 this year in the allocation of road grants. I am talking of the fact that there is £1½ million revenue provided for the purposes of Government which is not specifically provided in the Bill because the Minister is raiding the Road Fund. He says he is not, and surely I am entitled to ask what has the term the "Road Fund" come to mean? I have listened for 35 years to the term "Road Fund". I can remember you, Sir, as a young Deputy, sitting up there in the fourth bench, and the roars of you could be heard from here to Donegal denouncing the inter-Party Government—
Surely he was over there.
He was up there somewhere in the fourth bench. He was always a modest Deputy. I can remember his voice. It was not only heard here. It echoed in every valley and round every hill in County Donegal denouncing the inter-Party Government for raiding the Road Fund. What did he mean? He meant that he was instructed to believe, as I have been instructed to believe, in what has become a generic term in this House, "the Road Fund", which consists of the duty derived from a tax on motor vehicles.
Deputy Dillon is well aware that, in the Finance Bill, 1967, there is nothing about motor taxation.
Not a whisper, except that there is £1½ million that the Finance Bill would have to raise——
That is not in the Bill, either. You cannot talk about what is not in the Bill. You can talk only about what is in the Bill.
One of the greatest gaps in this Bill——
That is a gap.
——is the failure to raise the money for which you must raid the Road Fund. There is agreement that you must raid the Road Fund——
Certainly not.
On the Fifth Stage, members can discuss only what is in the Bill. What is left out may not be discussed.
I have made the point very effectively.
With his reputation as a parliamentarian, I should not like to see Deputy Dillon——
Stray from the rules of order, but I can assure the Minister that the Standing Orders of this House were never designed as rags to cover the nakedness of his financial indecency, and raiding the Road Fund is financial indecency. There are other aspects of his indecent posture which I propose to deal with at some length. Meanwhile, there is one detail in this Bill on which I should like clarification. Section 12 introduces a scheme for making allowance for the relief of health expenses. When does this begin to operate?
This year.
Any health expenses, as from 1st April 1967?
From 6th April, 1967.
All medical expenses, all drugs purchased and vouched by a receipt from the medical practitioner or the pharmaceutical chemist from whom they were purchased, are included, and receipts for these should be sent to the Revenue Commissioners with the income tax form.
At the end of the year, there will be a simple form which will be sent in to claim the allowance.
With the appropriate vouchers, so that if anyone pays a doctor's bill, he should secure a form of receipt which he will be in a position to attach to the appropriate form which would issue?
He would be well advised to do so.
That urgently needs to be made known to the general public, because nothing has been said in the course of the debate so far——
As soon as we get the Bill finished, if we get finished with the Bill, advertisements dealing with all this will be published in the newspapers.
Even that announcement is of value, but it is of great importance that the public at large should know what it means. It means that any person who contracts medical outlay in the terms of section 12 of the Bill should furnish himself with some evidence of that outlay so that he may be in a position at the end of the financial year adequately to fill up the form which will issue to him in order to claim the rebates to which he is entitled under section 12. What the Minister has said now means that at the earliest possible date after the enactment of the Finance Act, 1967, advertisements will appear in the public press directing people's attention to it.
There is one other point which I should be glad if the Minister would clear. What happens to persons who are already in receipt of tax abatement on foot of premiums paid to the Voluntary Health Insurance Board? As the Minister is aware, unless one sojourns in a hospital or nursing home, one is not eligible for benefits under the voluntary health insurance scheme, but supposing one does sojourn in a hospital and becomes entitled under one's policy of insurance to recoup one's expenses——
This deals only with unrecoupable expenses.
Supposing one sojourns in a home, leaves the home and then must meet expenses thereafter, one makes a separate claim for rebate of tax in respect of expenses which have not been covered under the terms of the policy, and one has——
In so far as medical expenses are not recoupable from any source.
That is the general outline of the details and I hope the Department of Finance adequately disseminates them in the form of an advertisement for general consumption.
I wish now to speak a few words on a fundamental issue affecting every citizen. We are dealing with the Fifth Stage of the Finance Bill and according to an earlier statement of the Minister today, he is about to initiate a "tap" Government loan. In the light of that, I find it extremely difficult to think of getting even the most sophisticated Members of this House to face the situation affecting not only the matter of the Government role in public finance but the daily livelihood of every citizen of the State by the progressive inflation that is proceeding throughout the country.
Even today, the Minister thought it necessary to say, apparently with a degree of assent with the general proposition, that he feels a little inflation is a good thing, and that, in fact, he would appear to have regard to the view that without that kind of inflation, economic progress is virtually impossible.
We seem to be entering into a very wide debate.
I did not give any personal opinion; I merely said that this view was held.
I make no apology for this.
There is nothing about the Road Fund in this. I am pointing out what, according to Standing Orders, the Deputy and other Deputies may debate on the Fifth Stage.
If we cannot speak about inflation on the Fifth Stage of the Finance Bill, I do not know when we can speak about it. I suggest that inflation goes to the whole root of the present situation and that Government policy on taxation is at the root of this. For instance, I can point to the positive measure in this Bill which contributes to an increase in the cost of living which is merely one manifestation of the common root of this matter. The appalling dilemma that anyone concerned to challenge inflation is faced with is that so few people understand what it is all about. One man may talk about the cost of living, another man may protest about the wild speculation in land and somebody else will deprecate the growing burden of taxation but none of them seems to face the fact that all the manifestations are of no avail when inflation continues to grow.
One man tries to control prices because he thinks that is the way to restore order. Another man will want to restrict the sale and purchase of land because he thinks that is the remedy for the situation. Somebody else says we should reduce taxation because he thinks that will remedy the situation. Most of them are causes. They are all the result of something far more fundamental. Mind you, I would almost despair of a hearing for those views if I had not a powerful authority to turn to and to quote from. Let me quote from the lecture of Mr. Maurice Frere, the Chairman of the Belgian Central Bank in his Per Jacobsson lecture who has this to say:
It would be a profound and dangerous illusion for the Government of those countries to believe that of the many problems facing them that of maintaining monetary stability is of secondary importance and that it is still possible in the world of today to ensure such stability by strict exchange and price control under cover of which inflation can freely take its course.
He goes on to say:
It is certainly still possible by means of such control to preserve the semblance of monetary stability for a limited period of time, but, if the inflation gathers strength, such stability, which is based on constraint, soon ceases to have any meaning and leads to an impasse. The course of events is always the same no matter what country is involved. Under the effect of persistent inflation the supply of foreign exchange declines because the holders want to obtain for it—quite rightly—the full value, which the official rates, fixed by authority, can no longer give them. To preserve a certain degree of equilibrium in the market, there is soon a move to restrict and subsequently to stop the transfer abroad, first of amortisation payments and then of income from capital invested in the country.
This has nothing to do with the Finance Bill. I must again point out to Deputy Dillon and to other Deputies that we are concerned only with what is in the Bill. We cannot have a wide debate along the lines Deputy Dillon would wish to travel.
What an extraordinary situation. The Minister himself today in this House announced that in order to persuade insurance companies not to seek money abroad he is providing them with a tap loan which they can avail of now to keep the money at home lest perhaps they might not be inclined to invest in annual national loans. This, again, points to what Mr. Maurice Frere says:
To preserve a certain degree of equilibrium in the market, there is soon a move to restrict and subsequently to stop the transfer abroad, first of amortisation payments and then of income from capital invested in the country.
I am putting it to the Minister for Finance and to the Government that in this Finance Bill—Finance Bills should avail of a variety of devices to correct situations—we are, in fact, promoting instead of correcting inflation. It is like pruning a rose bush: you cut bits off it but any expert horticulturist will tell you that the only result is that it grows more abundantly. The Minister says it is necessary for the purpose of the economic policy he seeks to build up and I do not suppose that anyone in 1967 can say that the Finance Act has not some part to play in the general economic policy of the Government or of the nation, but when the Minister says that a little inflation is necessary——
I never said that.
I understood the Minister to use words earlier on today which were capable of that meaning.
I said that the view is held.
Very well; the view is held. I will go no further than the Minister. I put it to him that it is like a man with an addiction to heroin who hopes to confine himself to one injection per day. It is as inevitable as the dawning of the day that inflation feeds on itself and that a nation which commits itself to that course is faced ultimately with the ruin which overtakes the person who believes that he is only starting on marijuana but inevitably goes on to cocaine, and then on to heroin.
Again I must point out that Deputy Dillon's remarks might be relevant to a Budget debate or a debate on the cost of living but are not relevant to the Finance Bill. All I can do is to point out to the Deputy that this is not relevant.
The remarks of Mr. Maurice Frere are relevant when he says this:
In the field of monetary policy, in fact, mistakes and inaction invariably work in the direction of monetary inflation and rising prices. When the first signs of such inflation appear, one always hesitates on one pretext or another to take action, because, rightly or wrongly, one is afraid of halting or slowing down an expansionary movement that is to everybody's satisfaction.
That is the cause of the inflation and its effect gathers greater momentum until the time arrives——
I feel that Deputy Dillon has been unfair to the House in proceeding along those lines. He is well aware that this discussion is not in order. On the Fifth Stage we are committed to a debate on what is in the Bill, not what the Deputy would like to see in it, or what will arise in the future. That does not arise.
Surely the Bill operates to raise the cost of living. I believe it does. Is that not inflation? It relates to the whole problem of inflation. Are we not now faced with the horrible situation that that is the real evil eating into the foundations of this community? To my mind, this is, in fact, the only relevant consideration which should be uppermost in our judgment of the merits or demerits of the Bill which we are at present debating. I freely acknowledge that it is something of great complexity and great difficulty. It is a subject on which to expound but it is almost impossible to do so because the more one is concerned with remonstrating with regard to inflation the less popular one tends to become.
The very reliefs designed by this Bill to cure are reliefs strongly indicative of the operation of inflation. I think what the Minister says is quite true. Medical costs are rising so steeply that it is no longer possible to ask the average person to bear them. I think it is necessary to come to an arrangement and to help them to pay the doctor's bill. I think it is necessary to come to their aid and help them to pay for drugs and medicines but I ask the Minister why, when down through the ages we have been able to pay our doctor's bills and to buy whatever drugs and medicines we needed, it is necessary now that we should come to the relief of the community and say to them: "You will bear this burden no longer because these things have grown so dear"? Why?
That would be a matter for another Minister.
Why is section 12 in the Bill?
Section 12 deals with reliefs. The Deputy is now discussing the high cost of medicines.
Why are the reliefs provided? We are not providing them as an inducement to people to chew aspirin or to swill syrup of figs.
We cannot have a discussion on the health services.
Surely we can have a discussion on the services we are subsiding on the grounds that nobody can afford to pay for them.
Not on the Finance Bill. It is totally irrelevant. The Minister for Finance has no responsibility for the administration of the Health Act. The Deputy is now discussing medicines, and this is not relevant to the Finance Bill.
The Deputy's reputation as an ordinary Parliamentarian is not what it was.
Section 12 illustrates the point I want to make.
"health care" means prevention, diagnosis, alleviation or treatment of an ailment, injury, infirmity, defect or disability, and includes care which is received by a woman in respect of a pregnancy other than routine maternity care, but does not include routine ophthalmic treatment or routine dental treatment;
"health expenses" means expenses in respect of the provision of health care, being expenses representing the cost of—
(a) the services of a practitioner,
(b) diagnostic procedures carried out on the advice of a practitioner,
(c) maintenance or treatment in a hospital,
(d) drugs or medicines supplied on the prescription of a practitioner,
(e) the supply, maintenance or repair of any medical, surgical, dental or nursing appliance used on the advice of a practitioner,
(f) physiotherapy or similar treatment prescribed by a practitioner,
(g) orthoptic or similar treatment prescribed by a practitioner, or
(h) transport by ambulance;
"Hospital" is then defined and "practitioner" is defined. Heretofore, we have always had sufficient to provide under our various Health Acts medical care of the kind here set out for what can be described as the lower income group or even the middle income group. Now we have reached the point where we are to provide a tax relief for the upper income group because we declare that it is unreasonable to ask them to bear the cost. Is that not true? Is that not the purpose of section 12? It is simply another manifestation of the disastrous inflation in our society. In fact, the medicines we need are by definition passing out of the reach not only of the lower and middle income groups but even out of the reach of what were heretofore regarded as the well-to-do.
A discussion on the administration of the Health Act is entirely irrelevant.
Surely you cannot say that a discussion on section 12 is irrelevant?
In so far as it deals solely with relief for health expenses. The Deputy cannot continue a discussion on the administration of the health services.
May I not ask the House and the Minister for Finance why we cannot provide for relief for health expenses for the upper income bracket of our people?
Why do we have a Committee Stage discussion?
The Minister's Parliamentary reputation is now beginning to fall short. We have a discussion in order to find out what this Bill is going to do and then we discuss what is in the Bill, not what ought to be in the Bill. I am discussing what is in section 12. I agree with it and I think the Minister is right in making this decision. I think that Deputy P. Byrne was right when he agitated for it, but the interesting thing is that it is being made not for the poor, not for the middle income group but for the well-to-do taxpayer. Surely that in itself must be evidence——
That is not so. There are 600,000 taxpayers, all of whom will qualify for this.
Perhaps the Minister will agree that the lower income group have no expenses. They are on a blue card and get all these things for nothing. The middle income group, if there is any argument, are covered by so wide a range of medical benefits that the impact of this section is relatively unimportant. The medical scheme provides for the lower income group and the middle income group and the Minister has said that he is trying now to do something for a group which heretofore has not been catered for. He has pointed out that a person who claims relief in respect of a premium paid to the Voluntary Health Insurance Board is admittedly getting some recoupment, but his policy does not cover the cost where his condition does not render hospitalisation necessary and it to to meet this situation that section 12 is provided.
The Minister knows well what I am talking about. All these separate difficulties tell one tale which few people understand. Gradually the tide of inflation is rising around us, we are putting on patches and we are raising the bulwarks here, there and everywhere else by a variety of devices introduced from year to year but inexorably the tide flows in. Until we face that fact, we will continue getting annually into greater and greater difficulty. And the horrible danger of it all is that the more acute those difficulties become and the more our approach to the ultimate end is accelerated, the more the people generally are inclined to feel they are well off and that there is plenty of money circulating. But all the time there is operating the constant complaint that the cost of living is going up, the cost of everything else is going up but nobody relates the two things, except those who have some understanding of public finance. I believe the Minister knows as well as I know of the dangers that lie ahead. I believe that not only he but quite a number of his colleagues know the fundamental fact which Monsieur Frere summarises in this passage:
Thus the causes of the inflation persist and its effects gather strength, until the time arrives when deficits appear in the balance of payments, gold begins to leave the country in consequence, and the threat looms up of a possible devaluation of the currency. As it is known that such a step would be fatal, recourse has to be had to deflationary measures. These are never popular. In our social system they meet strong opposition and can generally only be applied for a limited period of time.
That is what I think used to be described in Great Britain as stop—go. Deputy Jack Lynch, the then Minister for Finance, was given the disagreeable assignment of introducing the Finance Bill that provided deflationary measures. The present Minister—landing on what some of his colleagues, I imagine, concede to be the hot seat— with a flourish of optimism provided £8 million of relief. I suppose he is praying to God that by hook or by crook, by chance or by devaluation elsewhere, he may be relieved from the obligation of facing the problem his predecessor in office had to face. I do not know what plans are circulating in the ranks of the Government which would embarrass the Minister for Finance, or the counter measures he hopes to devise for his own protection; I am concerned only for the country, for my own neighbours and for myself. I am concerned only with the right to go on living in my own country independently, fit to earn my living and not having over me constantly the Sword of Damocles, of being wiped out. I am certain that inflation creates these dangers for me and for every other citizen of the State. It is constantly present in our minds. Inflation is the prince of thieves because it invariably robs the poor and enriches the rich. Somebody recently called me the Cassandra of economists; but it was by the knowledge that Cassandra had that she warned the Trojan people of the dangers of the wooden horse. They could not see; they could not believe and the Greeks destroyed them. When you talk of the consequences of inflation to people whose wages are going up consequent on defensive measures taken by trade unions, when you talk of inflation to people the value of whose land is rising, when you talk of inflation to people who think their bank deposits are safe, they just will not listen. It is not until the consequences of inflation strike home that they discover it. Overnight the worker, the pensioner, the person who has put by savings through a long life of selfrestraint is robbed and it is the speculator who has shifted his assets either out of the country or into bricks and mortar or land who can escape.
I want to put it to the Minister for Finance whether he likes it or not— I do not envy him his job; I know it is a difficult one—the day he accepted the office he now occupies—the accepted guardianship of the integrity of the currency—he accepted responsibility for maintaining stability of money in our society. If he should fail—I do not believe he will fail through ignorance; I never thought him to be a stupid man—the only grounds of failure which could be valid for him are cowardice or dishonesty, but if he allows either of those to deter him from his duty, he will have to answer for the subsequent social instability that follows, as inevitably as day follows night, when the currency and economy of a country are undermined by the horrible eroding effects of inflation.
Sometimes one is discouraged from trying to expound some abstruse facts because one is very conscious that no one wants to listen. It is not a comforting story to tell; the warning of a coming storm's tumult when the sun is shining and the sea is smooth is not a rewarding occupation. However, I have the obligation to utter that warning. The Minister has the much heavier obligation of enacting it and I know the difficulties he must encounter. If he is to answer for his own integrity, if he is to justify himself in the public life of this country, he has got to be able to say, when he looks back over his life, he did not contribute to all the horrors that can overtake a country where inflation is allowed to get out of control. That is progressively happening in this country.
England has been brought to a low ebb. She has lost her political power, has lost her significance in the council of the nations of the earth and her Prime Minister is faced with diminution in the eyes of the world, the result almost entirely of the fact that she allowed herself to sink into a position in which she could not pay her way. There are many people in this country living in a daft euphoria who believe that our balance of payments is relatively insignificant compared with what went before, but who are oblivious of the fact that one of the factors keeping that balance of payments at relatively—I use the word "relatively" deliberately—modest dimensions is the progressive sale of our assets to foreigners who have come to buy us out. I could expound at some length on the consequences of that on the ordinary people of this country but Deputy Byrne earlier referred to a celebration we had in an old-established business in Ardee. As I was looking round me there, I joined with the principals of that establishment in rejoicing that if they were 150 years in trade in Ireland, my family had been——
I am sorry to have to intervene but I think the Deputy is travelling very far.
God knows, he is pretty near the end of his travels now, but you have arrested the fluency of what I regarded as a rather effective peroration.
I hope that having brought him back on the track now, he will keep on it.
A dangerous thing to do—to interrupt a peroration—it often gives rise to another speech. I have been there 16 years but I said that if we looked about one another in our respective spheres of activity, we watched with some amazement and dismay people landing on these shores from the other ends of the earth and gradually taking over our neighbours as they progressively found it impossible to carry on. Perhaps the Minister has heard that complaint before. He can travel the country towns of Ireland and he will see that hateful progress moving forward every day. It is the result of inflation. Fire and sword never destroyed the independence of this country: inflation can. I would sooner be subjected to fire and sword than bought out of my birthright, and only under inflation can that be done. If the present trend continues, there is nobody left in this country who can feel his birthright safe.
Is this the final Stage?
This is the final Stage but the division on it is to be postponed until this day fortnight.
At this stage one holds a review as to what we have done on the previous stages on the Bill as it leaves us. I think it fair to say that in relation to the Finance Bill this year, as indeed in relation to Finance Bills in recent years, we have endeavoured to amend the Bill, to express points of view by way of amendment which would bring our financial legislation closer to our views with regard to social justice.
On Committee and Report Stages, we tabled amendments which have been debated here and have been resisted by the Government, by the Minister, with the usual promise that perhaps in the interval between now and the Finance Bill next year, he would consider what had been urged. That is all very well. It does mean, however, that this Bill now, as it leaves this House, is a Bill which continues in legislative effect the very objectionable provisions of the income tax code, provisions which have been challenged and objected to over a number of recent years. As this Bill leaves this House, it will continue to be the law of this land that individual taxpayers are completely at the mercy of a bureaucratic machine which can be relentless and without mercy, and which has no regard, at times, to any of the canons of fair play or justice. We endeavour to prevent that. We can only hope that the efforts made on the different Stages of this Bill will make more potent whatever arguments it may be necessary to put forward next year, that is, if those in charge of the present legislation are still in charge of similar legislation in the year to come.
Deputy Dillon referred to the financial situation with which this legislation is designed to deal. One should not forget that in the Finance Bill, we are, in effect, legislating for the policy which the Minister announced some months ago in his Budget Statement. Reference has been made to the dangers of inflation and it is right that such reference should be made. It is well to remind Deputies that now in 1967 we may incline to forget the euphoria created for all of us who were then Members of this House by the inflation that arose or was permitted in 1964, an inflation which led in the ensuing year to the very restrictive Budget of 1965 and the finance legislation of 1965 and 1966. I do not know whether we are now beginning to repeat the mistakes of 1964. I hope sincerely that we are not, and I would hope that with the experience of 1964 so fresh to all our minds, and in particular to the minds of the Government, that such a situation will not be allowed to recur.
Having said that, I think it fair to say in relation to this Bill and to the financial policy it contains that perhaps we have spent too long in discussing it. Perhaps it would have been better to let this Bill go through with a few comments here and there because it is a very little thing. There is very little in this Bill and it is designed to achieve little. It is not, as far as one can gather, intended to give any intimation of the financial policy of the Government. It is designed to interfere as little with possible with the economy.
That may be a good thing in the Minister's mind, because I think the Minister's mind is a mind which is a complacent one, as, I fear, is the mind of the Government. The Government are complacent about the present state of our economy. They think that this kind of measure is all that is required. They obviously are operating on the basis that the inflation of 1964, the "go" of that particular year followed by the "stop" of 1965 and 1966, can be replaced now by another period of economic advance and that one just does not need to control that kind of situation.
That represents a paucity of thinking and a deplorable lack of policy on the part of the Government. What is being done now in relation to this Bill and the Budget it is intended to implement is symptomatic of the general malaise affecting the Government and the country at the moment. We are drifting along, hoping that things will get better, hoping that problems which appear real and very close to us at the moment will disappear, not by anything we are planning to do but just by something that is bound to turn up. Many of the problems endemic in our economy have been long-fingered by the Government in the belief that we are going to get into Europe and that they will look after agriculture. Something will happen which will remove the problems which, if they remain, will require some planning to deal with.
That may be a fair approach if one is certain about this country's future. I do not believe anybody is or can be. We can learn in this country what other small countries have done or are doing, countries that have a definite sense of where they are going, what they are trying to achieve and setting out to make their own future. I do not believe we are endeavouring to do it and I do not believe this Bill or the policy it enshirines will achieve that. It is a stop-gap effort. It is intended to tide over one period, to tide over the situation created last year, hoping that the economy will have some sort of internal resurrection this year.
The fact is that the Minister in legislating in this Bill is asking the Dáil to pass it as the instrument of financial policy this year at a time when our economic policy—I am talking about the economic policy of the Government —is in complete disarray, when the Second Programme for Economic Expansion has crashed in complete disorder, when we are facing a situation wherein there is gross unemployment and not only a flight but at times a stampede from the land of Ireland, a situation in which we have rising unemployment and continuing emigration. There is nothing in this Bill which can provide any hope or any indication of the Government's concern for these real problems.
As I say, perhaps we should not have discussed the Bill for so long. It does not do a great deal of harm, but it certainly does not do any real good. It is a Bill which, unlike other Finance Bills when they become Acts, will never be remembered. I do not believe anyone will recall the Finance Act, 1967. It will be something about which perhaps somebody may say——
It was the year of the local elections.
That is about all. It is intended to tide over this period. Perhaps people will recall better in years to come the Finance (No. 2) Act, 1967. I do not know whether there will be a second one or whether there will be a second Budget this year. The Minister alone knows—or does he? It is quite surprising but true of Fianna Fáil Ministers for Finance that they do not know from week to week or month to month what is really going to happen.
We remember what happened when you were there.
I do. Does the Minister? I am sorry: of course, the Minister was not in the House at the time.
I was in the country though.
He was a member of Dublin Corporation. I remember meeting him when he was a member of Dublin Corporation, and a very keen corporator he was. I recommend him back to that course.
You had us in right trouble then.
We certainly had the Fianna Fáil members of Dublin Corporation in right trouble. I would advise the Minister not to make pretentious interruptions of that kind, because he is only provoking me.
Carry on.
I do suggest this. The Minister succeeds the present Taoiseach as Minister for Finance. Last year the Taoiseach said in introducing his Second Budget, as I recall it, that he really did not know what had gone wrong. I hope the Minister for Finance this year will not have to say that later on in the autumn. I hope we will not have a situation in which a provision has been made, budgetary or legislative, designed merely to cover a particular period, designed to create a situation which is not, in fact, true, designed to paper over a period which is going to end at the time the people vote next week, because if that happens, I can assure the Minister that he will face very serious condemnation from these benches.
No trouble.
Maybe the Minister is developing a thick skin.
What about the new policy you brought out the other day? You bring out a new policy for every election.
Let us get back to the Bill.
Is the Ceann Comhairle reprimanding the Minister?
I am merely making a statement—whoever the cap fits.
It does not fit me. My head is not as swollen as the Minister's.
What is this new gimmick about rates that you brought out for the elections?
I suggest we discuss the Finance Bill, 1967.
We have strayed far from it, a Cheann Comhairle.
On the basis that this is all the Minister is going to do this year, on the basis that he has not done too much in a harmful way, expressing regret that he has not acceded to some of the proposals we have made here which might have made our taxation code a little more just, on that basis, we say you may have your Bill, but we hope, as I have said, that this will be the only Finance Bill this year and that we will not have a repeat performance after the elections when the votes are counted and everything is over and the true story is told to the Dáil and the country.
I do not intend, in concluding, to attempt to deal with all the many, largely irrelevant, things that have been said on this Stage by the members of the Opposition who clearly, for some purpose of their own, have decided that this debate should be dragged out until this late hour. I must, however, say that this Finance Bill must be considered against the background of the Budget and the Government's financial and economic policies as outlined in my Budget Statement.
The Budget was designed to endeavour to assist the process of reflation which we decided on as a matter of Government policy at the beginning of this year. We sought in the Budget and in this Finance Bill to make a contribution towards the stabilisation of costs and prices. We sought to avoid any substantial increases in taxation because we felt that at this time that was the best contribution we could make towards that policy of stabilising costs. At the same time, there were a number of socially desirable improvements in our taxation system we wanted to make. There were a number of incentives to industrial and economic progress which we wanted to make. All of these have been and are incorporated in the Bill.
I, quite frankly, do not believe that Deputy O'Higgins really means what he says, that there is nothing in this Bill of any significance or nothing for which it will be remembered. For instance, the provision with regard to the increased wear and tear allowances for machinery and plant are significant and important. They are significant in so far as they are applicable to the country as a whole and they are specially significant and important in so far as they are applicable to western areas where now, for the first time, a system of completely free depreciation will apply. And this Bill will be remembered because it has for the first time introduced relief for medical expenses.
The Bill also makes a valuable contribution to solving a problem which has become apparent in recent years, that is, the difficulty of attracting the best type of manager and technologist into Irish industry, in regard to the changes it makes in our surtax structure. There are many people throughout the country who will be grateful for the various easements which are enshrined in sections 2, 3, 4 and 5.
The Fine Gael Party always pay lip service to the notion of social justice. There are quite a number of provisions in the Bill which are designed to make a contribution towards the objective of social justice and there are a great number of others which were outlined by me in the Budget Statement which do not necessarily form part of this Finance Bill.
In the entire Bill, there are only three things which are not of benefit to the taxpayer as distinct from the Exchequer. I refer to the comparatively minor increases in beer and tobacco and the increased surtax payable on unearned incomes. These are the only three items in the whole Bill which, as I say, are to the benefit of the Exchequer as against the taxpayer. Everything else in the Bill in one way or another goes to benefit the taxpayer and help the process of economic development which is vitally necessary at this time.
As I said, a number of my colleagues are anxious to come into the House with various measures which they hope to get on with this evening. Therefore, I will confine my remarks to these few words and will not attempt to deal in any detail with all the very nonsensical statements which have been made from the Opposition benches and with your permission, a Cheann Comhairle, I now move the adjournment of the debate.
Debate adjourned until Tuesday, 4th July, 1967.