Committee on Finance. - Finance Bill, 1968: Committee Stage.
SECTION 1
I move amendment No. 1:
In subsection (1), page 4, line 15, to delete "seven shillings in the pound" and substitute "two shillings and ninepence in respect of the first £100 of taxable income, five shillings and sixpence in respect of the second £100 of taxable income and seven shillings in respect of any further taxable income."
Section 1 provides that income tax shall be chargeable for the coming year at the rate of 7/- in the £. The situation, as I recall it, was that up to 1959 it was the practice to have a reduced rate of tax chargeable on the first £100 of taxable income. At that stage the rate on the first £100 was 2/9d, on the second £100 of taxable income, 5/6d, and from that on, 7/-. In 1959 that system was altered to provide a flat rate of tax in relation to all portions of taxable income.
I believe everybody appreciates that the burden of income tax today is no longer the cross borne by those who used to be regarded as well off and in the moneyed classes. Income tax is a very definite known burden to thousands of workers who find the impact of the tax affecting their weekly take-home pay. It should be borne in mind that the personal allowance has not been changed since 1960 or 1961. The allowance in respect of a married person has remained at £394 up to the slight alteration which the Minister proposes in this Bill. With the fall in the value of money and in the case of personal allowances at the rate they have been, a situation has been reached in which a very heavy burden is being borne by the people who are earning the smallest amount of taxable income. I would urge the Minister to consider this matter favourably and to accept this amendment. It would be restoring the position which used to obtain and I think it would give relief where relief is certainly needed.
It would cost £13,500,000.
I am surprised at that. Will the Minister consider the position?
Not this year. All the various tables of allowances and so on have been made out. The differing rates of tax were abolished on the introduction of PAYE and the personal allowances were adjusted in compensation. The overriding consideration would be the cost.
Is the amendment being withdrawn?
Amendment, by leave, withdrawn.
Question proposed: "That section I stand part of the Bill."
In the absence of comment on this matter from my right hand, I feel constrained to say that I could think of far more urgent priorities in the matter of allowances and relief than relief for surtax payers. Furthermore, I wish, once again, to deplore the glib manner in which the Minister in his Budget Statement, and again on the Second Stage of this Bill, a fortnight ago, endeavoured to give the impression that the surtax relief being brought in was one solely for the benefit of technological executives. It is a relief which is as much for the benefit of shopkeepers, professional men and Dáil Deputies as it is for technological executives. If the Minister wished to bring in a surtax relief for technological executives, and encourage their employment in industry, he could bring in a relief which could be confined to technological executives. There are far more urgent priorities in the matter of personal allowances and reliefs than relief for surtax payers, great and all as their need may be. The Minister has no comment?
I regard the intrusion as unworthy of the Deputy.
Question put and agreed to.
SECTION 2.
I move amendment No. 2:
In subsection (1), page 4, line 30, to delete "industrial".
The section, as Deputies will recall, seeks to implement the relief and the concession provided, or indicated by the Minister in his Budget Statement, to deal with know-how — this awful new word — and the purpose of the section is quite clear. It is to give tax concession in relation to the use of know-how in industry. With the amendment which I propose, the section would read:
In this section "know-how" means information and techniques likely to assist in the manufacture or processing of goods or materials, or in the carrying out of any agricultural, forestry, fishing, mining or other extractive operations.
This matter of know-how and the development of research facilities for industry and for the commercial life of the country generally has been referred to in the Report on Science in Irish Economic Development and it appears from the information covered in that report that at present 76 per cent of industry, by output, does not in fact carry that under research or development. The research and development which in fact are carried on are mainly concentrated in the brewing and confectionery industries and they account for some 50 per cent of industrial research and development. That report states that with regard to these industries, brewing and confectionery, the present excise regulations are constraints on modern maintenance and technological development. In other words, the report makes the case that in the category of industry where most is being spent on development, the benefit is not reaped because of our excise regulations. I raised this matter by way of Parliamentary Question on 12th June; it is reported in volume No. 234, No. 7.
The Deputy is not confused between research, on which he has an amendment down later, and the operation of know-how?
I agree that to some extent it is overlapping, but, in relation to know-how, my object in this amendment was to suggest to the Minister that know-how as defined here will be confined to utilising the finished product, that in fact there is need, and a great need, for the extension of the term "know-how" to cover the necessary expenditure and development to acquire it.
That is an argument for the later amendment on research.
Perhaps we could deal with it to some extent. It seems to tie up here, but perhaps it will be more relevant on the later amendment. In any event, can the Minister explain why in this section it is necessary to confine know-how to industrial information? Is the section in any way impeded or made difficult if the word "industrial" is in fact deleted?
I do not think so. What we are concerned with here is encouraging manufacturing industry to acquire the latest techniques in the systems of production. At the moment, the expenditure on know-how is allowable, by and large, as a charge, and we are merely putting the matter beyond doubt and clarifying the situation by spelling out in so many words that the acquisition of know-how in manufacturing and processing industry is fully allowable for the charge.
Might I raise another point? I did not get an opportunity of drafting an amendment. Perhaps the Minister might advert to it.
Can we dispose of the amendment and then go on to the section?
Does the Minister want to retain "industrial"?
Amendment, by leave, withdrawn.
I move amendment No. 3:
In subsection (2), page 4, line 35, after "know-how" to insert ", including development expenditure in relation to the acquisition and exploitation thereof,".
This is what I am referring to. The object of this amendment is to insert in subsection (2) (a) the words which if accepted would make the section read:
Where on or after the sixth day of April, 1968, a person incurs expenditure on know-how, including development expenditure in relation to the acquisition and exploitation thereof, for use in a trade carried on by him...
In moving this amendment, I have in mind the limited use of know-how, the very great need that exists to encourage the development and the seeking of know-how in the industrial field. If know-how from the tax concession point of view covers necessary development of the service, the development of know-how should cover the research necessary to acquire it and so not merely be confined to its exploitation or use, although it would have quite a profound effect. What I fear, if the views contained in the report I have mentioned are correct, is that this concession will not in fact operate. It will be pretty well squeezed out of existence in relation to the industries which at present have developed know-how because of the co-existence of our present excise regulations. If we can encourage in the field where this service has not been sought a change of attitude in that regard by getting people in industry to appreciate the development of research and development, the search for know-how, that in itself will be regarded as entitling them to a tax concession because it would in fact add up in the national interest. The Minister is quite right in saying that it is in relation to this amendment that I seek these facts.
I can put the Deputy's mind at rest on this matter. What we are concerned about here is largely the acquisition of what might in some circumstances be regarded as a capital asset. The danger under existing legislation is that a firm expending money to acquire know-how might be told by the Revenue Commissions "That was an asset you acquired. That was a capital transaction and it is not allowed." Our concern is to express clearly that if money is expended on the acquisition of know-how, that money will be fully allowable in the books or the accounts of the firm acquiring it.
What normally happens is that one firm would develop and exploit a process to the point where it was know-how and would then sell it to the other fellow. I am concerned with the acquisition by the second fellow. I am concerned that that acquisition of the know-how, developed and exploited by the first firm, is fully allowable in the case of the acquiring firm. The first firm develops and exploits some process and then sells it. The income from the sale would be regarded as taxable but the money spent exploiting the process would be fully allowable. I submit that that situation is not strictly relevant to this section.
Our concern is with a firm acquiring know-how. We are concerned to make sure that the money it expends on the acquisition is allowable in its accounts as a legitimate charge. If, subsequent to its acquisition, the firm which has acquired it goes on to do more development and exploitation work then that development is fully allowable. The only thing I am seeking in the section is to make quite sure there is no confusion about the case of acquisition of know-how. I am ensuring that it will not be disallowed by the Revenue Commissioners because of its capital nature.
Is the Minister extending this relief to cover professions? I have received representations that, as the section stands, it is confined to the acquisition of know-how for use in a trade or industrial undertaking. Nowadays, with modern developments in industry of one sort or another, professional persons — particularly engineers, scientists, architects and other skilled personnel of these categories — acquire professional knowledge or highly-skilled technical knowledge which is applied by them to industry or applied by the firms who engage them. As the Minister knows, many are employed in the firms on a permanent basis but, irrespective of whether or not individuals of that character are employed in a firm in a whole-time capacity, it has been suggested to me that the know-how acquired by professional people should qualify for taxation relief. If necessary, the section could be amended or a suitable subsection could be drafted which would allow relief only where the know-how is applied to industry.
I suppose it is conceivable that some scientific or technical knowledge might be used for other purposes — medical or other very desirable but not industrial uses. It has been suggested that the section should be amended to add the words "or profession" on the one hand or, alternatively, to extend it in such a way that professional knowledge held by persons and applied to industry would be included within the ambit of the section.
I do not know that I am quite clear on what the Minister said in reply to the points I was making. I am concerned principally with what is stated as an objective comment in the Report on Science in Irish Economic Development. Attention is drawn in that report to the fact that the failure of many public enterprises to give a sufficient lead in technological change is a major obstacle to proper progress here. What I had in mind, if I thought this concession in the way of an allowable expense is being confined merely to the use of know-how in trading, whether it is purchased or developed in the particular industry itself, if it is confined merely to the use of know-how then it is not a sufficient encouragement to those firms that, in fact, up to this, have not bothered at all about this essential equipment for the competitive situation now facing us. Does the Minister assure me that that is not so? That is all I want.
Yes. You see, in the case of any firm which sets out to equip itself properly to do its job, to do research and development work, and so on, all that expenditure would fully be allowable. The setting-up of a laboratory, the employing of technicians, scientists, chemists, anything of that nature, would fully be allowable. If in addition it goes out and buys somebody else's work, we are ensuring that the cost of the acquisition of that other work would be allowable.
Would the development of the vending company also be allowed for?
Normally, know-how would be some secret process which the purchasing company would pay so much for and then proceed to use itself. The acquisition of it is fully allowable. If, having acquired it, it then proceeds to work on it itself, and expands and develops it, it will be allowable.
Is the cost of the development by the company itself allowable?
Expenditure by the company on the development process would be allowable.
Is some of that not allowable at present? The question now is the acquisition from the initiator or the inventor.
There might be an Irish company which would go to one of the American giants and say: "We want to manufacture your product in this country. We shall pay you £10,000 for the rights, the know-how, of doing so." That would be allowable.
Amendment, by leave, withdrawn.
I move amendment No. 4:
To add to the section the following subsection:
"() This section shall also apply to a company which was set up in the previous year and which ended its financial year subsequent to the 6th April, 1968."
The purpose of this amendment is to ensure that where a company commenced business subsequent to 6th April, 1968, but where its financial year does not conclude until a later date, it will be entitled to qualify for the relief. As I understand it, the position at the moment is that if a company commenced operations, say, in May, 1967, and concluded its financial year on 30th April, 1968, or if a company commenced, say, any time between then and December, 1967, and does not end its financial year until as late, possibly, as November, 1968, it will qualify for the purposes of Case I of Schedule D. As the section is drafted, I think the companies which commenced within the dates I have mentioned, but whose financial year does not end until a later date, may not qualify. It is for that reason that this amendment is being put down, to ensure that the companies so circumstanced will qualify for the relief.
I was not aware what precisely the Deputy had in mind in putting down this amendment. I do not think he need worry about the accounts year here. Once the expenditure is incurred after 6th April, 1968, then it is allowable. It does not matter when the account year ends or begins.
Amendment, by leave, withdrawn.
Has the Minister considered the other points about extending this to cover professionals?
I was not clear in my mind about this but if the Deputy has a point, we will look into it.
I might ask for an amendment on Report Stage.
As you are giving notice that the point was adverted to, it is in order.
Section 2 agreed to.
SECTION 3.
I move amendment No. 5:
In subsection (4), page 6, line 12, after "repayment" to add "or adjustment of tax liability in the year of assessment and in subsequent years".
This is the section which deals with the payment made arising from redundancy or otherwise to compensate for——
It is not redundancy. We want to be careful here. There are special provisions in the Bill dealing with redundancy as such, statutory redundancy payments, but this is an allied area——
It is slightly different.
Arising from a re-organisation a loss of income can be allocated to some holder of an office and he gets payment related to that loss of income. The relief which the section proposes deals with such a problem. It is a relief which it seems to me operates only by way of repayment of tax. My object in putting down this amendment is really just to provoke a discussion as to why the same relief cannot be achieved by way of an adjustment of the tax liability if the circumstances so permit it. Why should the man have to pay his tax and then get it back if in fact the circumstances permit an arrangement for the adjustment of his tax liability along the lines envisaged by the section? Why not just do that?
The Deputy will be heartened to know that I also asked this question when I first saw the draft from the draftsman. The reason for putting it in this way is that the employers have to make deductions of income tax under the PAYE system and they regard this as a fairly onerous task, which it is. If we did not stipulate that this relief was to be given by way of repayment, it would mean that the employer would have to do these very arduous calculations in addition to the ordinary PAYE calculations which he has to do. The Revenue view is that it is better that the tax should be deducted and paid, in the normal way, repayment being made subsequently on a claim. In this way, the burden of making the calculations is borne by the Revenue authorities rather than the employer. I am assured that it does not mean that it can only be done by way of repayment; it could be achieved by an adjustment of future liability and, where this is possible, I am assured that it would normally be done.
I wonder is the Minister's advice correct? The subsection says that relief from tax under this section "shall" in all cases be given by way of repayment. It does not say "may" or anything like that, and as I understand it, "shall" in those circumstances does not allow for any discretion. I have in mind the unfortunate man who by reason of re-organisation is going to find his income reduced and is given £1,000 to compensate him for the loss of income involved. I can understand how advantageous it may be to the employers perhaps and also to the income tax authorities, but it seems a bit thick that they can deduct from him the full burden of tax attributable to the £1,000 and perhaps upset some little plans he may have had of his own. He has to wait, having first had to pay the tax, to get it back. I would urge the Minister to have another look at this.
I must confess I am not quite satisfied in my own mind about the way it is spelled out and I shall have a look at it.
Yes, on that understanding.
Amendment, by leave, withdrawn.
Section 3 agreed to.
SECTION 4.
I move amendment No. 6:
In subsection (2), page 6, lines 34 and 37, to delete "wear and tear" and substitute "depreciation".
This is just a point of view I am putting. The word "depreciation" should be used instead of the words "wear and tear". It is the most appropriate term now rather than "wear and tear".
Well, it would mean an enormous change. The words "wear and tear" are by now firmly entrenched and established right through the whole income tax code. Perhaps "depreciation" is a better word to describe what we mean but the technical problem involved in changing to another word would be enormous.
I would ask the Minister not to change a meaningful English term to a Latin word.
We are getting very pro-English, are we not?
Amendment, by leave, withdrawn.
Question proposed: "That section 4 stand part of the Bill".
As I understand the section as drafted, it adds two or three further columns to the wear and tear computations. This was referred to in the Minister's speech and the suggestion was made — I think the Minister will remember — that the changes envisaged would simplify headings under which rates would be applied. As this section stands, the existing rates will apply to plant and machinery already in use as of 1st April, 1968, and all secondhand purchases of plant and machinery made after 31st March, 1968, so that there will be a continuation of the existing rates but also the computations in respect of wear and tear to comply with the wording of the section as drafted.
It is suggested to me, and I mention it now, so that if necessary I can insert an amendment on Report Stage, that, to prevent difficulties in future in distinguishing between different items, the new rate should operate for all plant and machinery in use as from 1st April, 1968. If necessary, instead of the phrase used in the section "provided for use", those three words might be substituted by the single word "used". I mention this now so that, having raised it, I can put in an amendment on Report Stage.
I shall be glad to discuss an amendment on Report Stage with Deputy Cosgrave, but I want to point out at this stage that I really have no option but to do it this way. What one would like to do is, of course, to bring these new rationalised rates into operation from 1st April and apply them to everything but, unfortunately, that would result in one of two things: either certain people who are on certain rates at the moment would lose or I would lose.
Whatever about the Minister losing, we do not want people to lose.
I agree, and I was not prepared to worsen the position of individual firms by putting them on to a rate which was lower than they are getting at the moment. On the other hand, I wanted to achieve rationalisation without any cost to myself and this was the only way in which I could do it. Admittedly, there will be a period during which there will be a great many rates in existence, but the old ones will die out fairly quickly and we will then be left with these three new rates which will apply to everything. However, there will be no harm in Deputy Cosgrave exercising his ingenuity in regard to an amendment on Report Stage.
Question put and agreed to.
SECTION 5.
Question proposed: "That section 5 stand part of the Bill."
This is the section which provides that no assessment under Schedule A or Schedule B shall be made as from next year. This relief was suggested in the White Paper in relation to direct taxation, with a limit of 30 years abolition. I should like the Minister to tell the House what exactly will be involved in this relief? Who will benefit from it? I asked the Minister a question, which he answered today, but I have not got the text. I think he indicated——
That appears to be a very much higher figure than the approximate cost suggested in the White Paper, £325,000. Do I gather that, as a result of this relief, owners of office blocks and buildings, which represent considerable capital investment, will now benefit from the abolition of this tax?
Because that change was made some time ago and all those premises were brought under Schedule D. The people now paying under Schedule A are, almost exclusively, owner-occupiers and the people who will benefit here are the owner-occupiers of residential premises, and farmers in respect of both land and buildings.
They are also paying Schedule A tax on land and buildings.
The Minister says that the income derived from large office blocks will be regarded as trading income and taxable under Schedule D in accordance with part of the recommendation made in the White Paper on direct taxation. I wonder would the Minister tell me, taking the abolition of Schedule A and Schedule B in the sense in which the Minister says it applies, what about the other part, the more or less quid pro quo suggested in paragraph 24 of the White Paper, which provides as follows:
If, on the abolition of Schedule A liability on owner-occupation, the reliefs in respect of interest on house purchase loans and in respect of premiums on endowment assurance by which such loans are secured continued to be given, the question of granting some measure of allowance to the tenant-occupier in respect of the rent he pays would have to be considered. An easement in this direction would be likely to entail very substantial cost to the Exchequer.
Can the Minister indicate that, in the proposition he makes in section 5, which takes the first step, as it were, the Government considered the recommended relief regarded as necessary in the White paper to deal with the position of tenant-occupiers and when may tenant-occupiers expect that relief to be given? There is, as the Minister appreciates, growing concern with regard to rents and the problems of those who, as tenants, occupy houses owned by others. If a concession of this kind is being given it would seem that the particular position of tenants should, in justice, attract the attention of the Government. Perhaps the Minister would indicate what the position is in that regard.
The only thing I can say is that the Deputy appears to be looking a gift horse in the mouth.
No. I like to see where the gift is going and what horse is running.
I think the Deputy might, at least, have prefaced his remarks by welcoming this great reform about which tax reformers have been preaching for many a day and congratulated the Minister on his progressiveness in introducing it and easing the burden of the owner-occupier, who is, we all know, bearing the burden of local rates. This, at least, will make a contribution towards easing the financial situation of that type of individual. I would have expected the Deputy to preface his remarks——
I know the Minister is disappointed.
——by a little prologue of welcome and congratulation. I could not contemplate doing anything for the tenant-occupier at this stage. This is a step forward and I am afraid I shall have to leave it at that for the moment.
The Minister is disappointed at my looking a gift horse in the mouth; I always do, particularly when we are dealing with the whole problem of income tax and at a time when we are concerned about the social injustice that exists. Fair enough, the Minister is giving relief here to the person of property, the person who owns and occupies property. I do not grudge that relief. It is understandable but, from a social point of view, this whole problem of the justice of our income tax system, and its projection into the future, was considered in 1961 and became the subject of a White Paper, and this very problem was raised, that if you deal with the problem of those who have in relation to property, if you give a concession in relation to Schedule A and Schedule B, you must remember the position of the tenant occupier who has not. I am sorry that the Minister is disappointed in my approach to this but I am a member of a Party who believe in our policy. We believe in a just society. The Minister may not be able to do it now but I should like an assurance that the position of the tenant-occupier arising from this will receive consideration.
I could not give any such assurance and I doubt if the Deputy has thought this thing out. I am afraid he is accepting a very theoretical point of view put forward in that White Paper.
It is not mine; it is the Government's.
If the Deputy and I got down to discussing this in all its aspects, I doubt that he would adhere to this proposition of his. There is a very real complaint by the man who occupies and owns his house at the moment and it is to this effect: he says: "I have saved money out of my income."
He says: "I have purchased my house with it. You did not give me any allowance at all to help me to purchase the house. I have to earn the income and I have to save some money and then I buy a house and now you are taxing me for owning the house. You are taxing me because I had sufficient thrift to save money to buy my house. Now you are taxing me for the very fact of owning my house and you are saying that there is some notional income arising out of it. This is nonsense." It is very difficult to explain to a man who is in that position that there is some theoretical income accruing to him because he owns his own house on which he should be taxed. I, certainly, have never been able to persuade the ordinary man-in-the-street of the justice of that position and, of course, there is the further point that, very often, indeed, I would say, in the vast majority of cases, the man who owns and occupies his own house has borrowed the money to purchase the house and is paying back mortgage and interest on his house. I think, and I have always thought, that it is a little theoretical to say to that man, "You have a notional income arising out of the ownership of that house and we are going to tax you on it."
I know that the views of the Government change from time to time but I am sufficiently fairminded to assume that the views contained in this White Paper were fully and responsibly considered by the Government at the time they laid it before Oireachtas Éireann in April, 1961 and in paragraph 24, they are dealing with the social need that exists in our society to get a roof over a family's heads. With regard to the person who gets that roof by obtaining a loan to purchase his house or gets it through an insurance company, or whatever it may be, and who then, of course, has the liability, and will continue to have it, for Schedule A and Schedule B tax, our code says, "We will make him an allowance in respect of the loan charges or the insurance premiums" and that is perfectly understandable and perfectly fair. That is one type of person.
He gets an allowance for the insurance premiums anyway.
Yes, but he gets a concession.
If they are life insurance premiums, he gets allowance for those, whether he has a house or not.
I am talking about an endowment policy as referred to in this paragraph. He gets an income tax allowance in respect of the loan purchase charges or his endowment insurance charges because he is fulfilling a need which society recognises as being a proper need, and that is, to secure a home for himself and his family. Under this proposal—and again I am not grudging it, I would like to see it——
May I say that I think there is a fallacy there, too?
Just let me finish. Under this proposal now, a person who purchases is relieved from tax. There is the other class of persons, and there are hundreds of thousands of them in our cities and towns, who set out to do exactly the same thing— provide a home and house for themselves—but they do it by means of paying a rent to somebody else. They are making the payment for precisely the same purpose — to provide for themselves and their family a roof and a home, frequently merely a room. Why have we not reached the stage where an allowance should be made from an income tax point of view in respect of the payment which such person makes when he makes it as rent? That, I understand, to be the recommendation made in paragraph 24 of the White Paper of 1961.
I think the Deputy is under a misapprehension here. At present, we create a fictional income for a man who owns his own house simply because he owns his own house and we proceed to tax him on that. I do not care what any White Paper says, I have my own views on income tax. We are making certain changes that were not visualised in former years. The Deputy then goes on to say that we allow that person the interest that he pays and the insurance premiums, and so on, but that has nothing to do with his ownership of his house or the fictional income that we create in regard to his ownership of the house. We are in any event allowed interest paid against our income tax. Any of us who pays bank interest is allowed that bank interest against his income in any year, whether he owns a house or whether he does not. If we have insurance premiums, we are given an allowance in respect of those insurance premiums, whether we own a house or whether we do not. The allowance which one gets for income tax purposes for interest payments or insurance premiums in any year has nothing whatever to do with the ownership of a house or the payment of income tax on a fictional income which one is supposed to derive from the ownership of the house.
I have never been satisfied in my mind that it is a right thing that, because a man, out of taxed income, bear in mind, out of income which is fully taxed, saves a certain amount of money and buys his own house should be taxed again because he owns his own house and lives in it. It is time to get rid of that anomaly and that is what is being done here.
The Deputy can put forward arguments for all sorts of desirable allowances for income tax purposes. Deputy Tully has a favourite one which he always speaks about, that is, an allowance for the cost of travelling to and from work. That is a perfectly arguable case. I think it is far more arguable, indeed, than the case the Deputy is making, that the tenant-occupier should be allowed to charge his rent against his income, because one man will occupy a very small house and perhaps pay a small rent and another man may occupy a mansion and pay an enormous rent. Where is the social justice between those two? I think it is altogether a separate issue from what we are dealing with in section 5. We are simply getting rid of this, as I think anyway, old-fashioned concept and, indeed, unfair idea, that because a man is sufficiently prudent and thrifty to save or to borrow money and buy and occupy his own house, he should be deemed to be driving some income therefrom on which he is taxable.
Could the Minister clarify my mind on this? I personally am in favour of this abolition of Schedule A tax, but up to about five years ago if one owned a house and let that house, the income tax payable on it was on Schedule A alone. Subsequently, I think when Senator Ryan was Minister for Finance, he introduced a system whereby the owner of the house paid tax on Schedule A and paid tax on the profit rent as well. In other words, he paid a double tax. Am I right in saying that what section 5 proposes to do now is to abolish the tax entirely on Schedule A and that the residual profits tax still remains?
The provision regarding profits from rents is not being changed. They will still be taxable under Schedule D.
Deputy O'Higgins's point, to take it a bit further, is that he does not object to the removal of the Schedule A tax; but what he maintains is that the person who is occupying the house, who does not own it himself but is paying the rent to the Minister for Finance, if he owns it, or to Deputy O'Higgins or myself, should be allowed a remission of income tax for the rent he pays. That seems to be a reasonable point. I gather from the Minister he does not accept that?
I know you get inconsistency everywhere and I suppose you get it in particular from the Fianna Fáil Party, but here are the Government of this country saying in 1961——
Consistency is the hobgoblin of little minds.
Repeated by some members of this House from time to time.
There is something else said about those who repeat things, but we will not go into that. Paragraph 24 of their White Paper envisages relief, and I do not accept what the Minister said. The Government refer to relief in respect of the interest on house purchase loans. If that kind of relief is to be continued after the abolition of Schedule A and Schedule B tax, in other words, if a person who purchases his house is to continue to get relief in respect of the interest on his purchase loan, this says in effect that in fairness in respect of the person who has not bought his house, who is merely a tenant in a house, some measure of relief should be recognised with regard to the rent he pays.
I think that is eminently fair and reasonable and I have no doubt that sooner or later it will be done. That is not to suggest that every wage earner should be entitled to deduct this weekly rent as an income tax allowance from his income tax liability. The recommendation here is that some percentage allowance should be recognised on such grounds. What each income tax payer is doing is precisely the same thing. He is providing for himself and his family necessary accommodation. One is doing it through a capital investment, secured either by loan or otherwise; the other is doing it by means of a weekly or monthly rent. What each is doing is precisely the same. Each is providing for himself and his family. I am referring the Minister to the solemn declaration of the Government contained in the White Paper.
But you are interpreting it incorrectly.
May I give my version of it?
After I finish, the Minister may certainly. Here is what it said:
If, on the abolition of Schedule A liability on owner-occupation, the reliefs in respect of interest on house purchase loans and in respect of premiums on endowment assurance by which such loans are secured continued to be given
—now they are being continued, of course—
the question of granting some measure of allowance to the tenant-occupier in respect of the rent he pays would have to be considered.
It continues:
An easement in this direction would be likely to entail very substantial cost to the Exchequer.
They are arguing against the abolition of Schedule A.
This is a recommendation——
This is a comment on the Commission's recommendation——
Go to paragraph 30 of the same Report. It says:
In present circumstances, therefore, the Government are not convinced that owner-occupiers should be relieved of income tax where there is a liability under existing law.
They recommend against the abolition of Schedule A, but I am abolishing it.
What the Government said at that time was: "We will not abolish Schedule A as the Commission recommended, the reason being that, if we did it, in justice we would have to consider making some allowance in respect of the tenantoccupier's rent."
That is not what they said.
What about the fellow paying £1,000 a year for a penthouse flat?
That is an argument put forward by the Government ten years ago against the acceptance of the Commission's recommendation that Schedule A and Schedule B be abolished up to £30 valuation. The Government said, in effect: "We cannot do it now. If we did it now, in justice we would have to consider making an allowance in respect of the tenant-occupier who pays rent."
That is not what they said. What they said was: "If Schedule A is to be abolished and the interest on premiums continued." It is not the abolition of Schedule A that would necessitate considering the position of tenant-occupiers.
Let us not be playing with words. I am raising this seriously. The position is that this welcome relief — the elimination of Schedule A tax—takes place against a background from the point of view of income tax that the person who benefits will continue to get income tax relief in respect of his house purchase interest charges. He gets it now; he will get it tomorrow and he will get it next year.
It has nothing to do with the ownership of his house. He gets it whether he has a house or not. The tenant-occupier about whom the Deputy is talking gets a similar allowance for insurance premiums and interest payments.
I am perfectly aware of what the Minister has in mind. I am referring to the position of taxpayer A who borrows for one purpose only, that is, to purchase his house. Because he borrows for that purpose, irrespective of whether it is for that purpose or to put the money on a horse——
I must ask the Minister to stop shaking his head and saying "No".
You do not understand anything about it.
Maybe I do not, but I am going to continue in my ignorance until I get this off my chest.
The situation is that anyone who borrows money from the bank or anywhere else and who uses the borrowed money for the purpose of purchasing his house gets, as is set out in the Government White Paper of 1961, relief in respect of the interest he is charged. I agree that he would get it even if he used the money for some other purpose. In fact, he gets it in relation to using the money for the purpose of purchasing his house. It was that particular social problem which the Government seven years ago had in mind and solemnly suggested that they could not give this concession at the time because, if they did, in justice they would be forced to consider the position of the tenant-occupier. Litera scripta manet: these words remain. They are written down there and on the record. The Minister has now proceeded to abolish Schedule A and I am reminding him of the Government conscience and the scruples that were written down seven years ago and I am asking him, what about the tenant-occupier.
There is today throughout the country mounting anxiety in regard to the very high burden which rents mean in so many families and it appears to me that in social justice the Government should now, having considered the recommendation with regard to Schedule A, bear in mind what they foretold they would have to do seven years ago and bear in mind that the position of the tenant-occupier still requires attention and some measure of relief should be given.
At this stage to do something along the lines that Deputy O'Higgins suggests would be the least socially just thing we could do because it would mean that we would give an allowance to a millionaire occupying a mansion in preference to making some far more justifiable concession such as giving relief to those in whom Deputy Tully was interested in regard to their travelling expenses to and from their place of employment. I think it is a completely phoney proposition.
If so, I want to ask why this relief in relation to Schedule A and Schedule B was not given seven years ago? It was recommended by the Commission on Income Taxation. It was turned down by the Government—on a spurious reason, according to the Minister for Finance now, a phoney reason. The situation now, out of the Minister's mouth, is that successive Fianna Fáil Governments and Ministers for Finance are convicted. They would not listen to the Commission on Income Taxation seven years ago. They would not do it and they said they could not do it because if they did it, they would have to give a concession to tenant-occupiers. The Minister says that is all cod and rubbish, that it was a spurious reason.
I am saying that the Deputy's interpretation is cod and rubbish.
I am referring precisely to the reason given by the Government in the White Paper on Direct Taxation laid before this House of the Oireachtas on 18th April, 1961. They said they would not give the relief recommended by the Commission to abolish Schedule A up to a valuation of £30 because if they did it, they would have to give some allowance to tenant-occupiers. That was a phoney reason, according to the Minister. If it was, why for the past seven years has liability to Schedule A and Schedule B tax been continued? The millionaire who rents a house would get an allowance in respect of his rent but the millionaire who owns a house is now getting his Schedule A and Schedule B liability wiped out. That does not mean that there is not a social purpose in the relief given in section 5, nor would it mean that if some allowance were given in respect of tenant-occupiers, merely because some who might not need the concession might benefit, there was not a real social need for it.
The plain fact is that, according to the Minister, now we know that the Government seven years ago turned down the Income Taxation Commission recommendation for a reason which the Minister says was phoney. The Minister says it was phoney, I suspect, merely because I raised it here and it is for that reason he says there is no social justification for it. I suggest to the Minister that there is a problem of tenant-occupiers paying increased rent merely to provide a home and accommodation for themselves and having to pay their income tax out of their weekly wage. This problem is going to engage the attention of a Minister for Finance at some time.
Question put and agreed to.
SECTION 6.
I move amendment No. 7:
In page 7, line 19, after "other activity" to insert ", including capital gains, appreciation of assets and business expenses,".
Amendment No. 9 is cognate and may be discussed with amendment No. 7.
This is the section providing an obligation to keep records and in subsection (1) (a) an obligation to keep records "including books of account relating to all sums of money received and expended in the course of the carrying on or exercising of a trade, profession or other activity...".
In this amendment I suggest that the "other activity" should be expanded to include capital gains, appreciation of assets and business expenses and that records in that connection should be kept. May I remind the House that this particular section comes from the NIEC report and the recommendation which they made in relation to an incomes policy? It was in the context of a prices and incomes policy that they recommended that this statutory obligation regarding the keeping of records should be imposed. In regard to incomes, the position in relation to capital gains and the appreciation of assets and business expenses generally is something which would have to be considered fully in relation to the development of any sound incomes policy. I move the amendment in order to ensure that the expression is expressly extended to include these particular matters.
It would be most undesirable and completely unnecessary at the moment. We have no such thing as a capital gains tax in operation here. I have given my view that in our circumstances, the introduction of any such tax would be entirely inappropriate. For a country that is seeking capital, seeking investment and seeking development as we are, to introduce a capital gains tax at this stage of our development would be bordering on lunacy, in my opinion. Therefore, if we are not going to have capital gains tax—and I do not think we should have it—why should we put an obligation on people to keep records relating to capital gains or transactions of that sort?
The Minister might eventually come around to the idea that it was a sensible thing to do.
There is a phrase: Tempora mutantur et nos mutamur in illis. The taxation policy should be a flexible instrument, an instrument that would change and evolve in accordance with the change in our situation and in our economic growth. Let us not have this silly old Fine Gael nonsense that what you said in 1924 is going to be around your neck for ever more. I used to hear Deputy McGilligan, when I was a young fellow, quoting here from old yellow pieces of paper what Deputy Seán MacEntee said in 1928 or 1929, as if that were relevant today. The sooner Fine Gael get away from that codology the better. There may come a time when various considerations will necessitate the introduction of a capital gains tax here. I do not rule it out forever, but at this point of time and in our circumstances, it would be quite disastrous.
Furthermore—and I do not like criticising the activities of friendly Governments—I think some countries who have introduced this type of taxation have got into serious trouble in the administration of it. I should like to see how the thing worked out elsewhere before we would even think about it. However, there is no question of our introducing a capital gains tax at the moment. Therefore, to compel people to keep records would be placing a completely unnecessary obligation on them. In fact, one of the doubts I have on the section is that it will perhaps put an obligation on people to keep records which will be unnecessarily onerous on them because they would be people in a very small way of business and might not be liable for taxation in any event. On the whole it is desirable to bring in this provision, but certainly I do not think it should be extended in the way Deputy O'Higgins suggested to cover something which we will not be taxing in any event.
Amendment, by leave, withdrawn.
I move amendment No. 8:
In page 7, lines 21 and 23, after "goods" to add "and services".
I think the Deputy has a point here and we shall look at this proposal. I would suggest the amendment be withdrawn and we can look at it between now and Report Stage.
Amendment, by leave, withdrawn.
Amendment No. 9 not moved.
I move amendment No. 10:
In subsection (2) (a), page 7, line 28, to delete "enable true returns to be made" and substitute "enable a professional accountant to prepare a reasonable estimate of profits".
The purpose of this amendment is to deal with the matter which the Minister mentioned a moment ago. The obligation to keep records is one which reasonably-sized or large firms can undertake because they have an adequate staff to carry out the work, but the House appreciates and the Minister is aware, and certainly the Revenue Commissioners are aware, that a great many small traders find it extremely difficult to keep the various records required, particularly nowadays with the problem of covering both the wholesale and turnover taxes. In cases where the turnover tax only applies, the obligation to keep records places a very considerable burden on small traders.
With the change in the type of business operated nowadays and with the growth of supermarkets, the prospect of many small traders surviving is by no means rosy; indeed in many areas throughout the country, in cities and towns and even in villages, the advent of the supermarket, while conferring some advantages on customers, nevertheless, has caused very serious problems for small traders unable to adapt themselves and to provide the services which supermarkets are in a position to provide. These people are faced with mounting difficulties of one sort or another. In most cases the size of the business is not sufficient to justify the employment of a bookkeeper or other person who would keep the necessary records.
The purpose of my amendment is to make the type of accounts or records kept flexible enough to enable a professional accountant or other person who would be engaged by the trader concerned to prepare a reasonable estimate of profits. I know it is difficult to differentiate between large and small businesses in the keeping of records, but there is no doubt that the obligation to keep the same type of records places a much heavier and more onerous duty on a small trader than it does on a large one. I think there is a case for some alleviation such as I suggest.
I have some sympathy with the Deputy in what he is trying to achieve, but I am not sure if he would really succeed in this amendment in doing what he wants here. The first consideration which strikes me about it is that the people we are concerned with here, the small trader and so on, will probably not be employing professional accountants at all, and the incorporation of the notion of professional accountants is really going away from what the Deputy is concerned about. I have set out to keep the section as simple as possible, and if Deputies would refer to subsection (1), paragraphs (a) and (b), they will see that what is required to be recorded is very simple indeed. Furthermore, there is a proviso at the bottom of the page, in subsection (5), to the effect that a penalty shall not be imposed under this subsection if it is proved that no person is chargeable to tax in respect of the said profits or gains for that year of assessment. In other words, if a trader is not liable to tax, he does not have to keep records at all.
I would be against Deputy Cosgrave's amendment, even though, as I say, I sympathise with what he is trying to achieve. I do not think it would be helpful to the people he is concerned about. All we are asking them to do is to keep very simple records so that true returns can be made. Deputy Byrne will probably agree with me that this does not even involve the concept of profit or loss. So long as a trader would be in a position to make the bare bones, as it were, of the return of his trade, he would not even be required to produce an estimate of profit or loss. Presumably the inspector of taxes would do that if the very minimum of records were kept.
On the whole, I think the section is reasonably fair to this type of person. I do not think it will place any exceptionally onerous obligation on him or her. I do not think I would be too happy about accepting Deputy Cosgrave's amendment, particularly as it seems to bring in the idea that a professional accountant would have to be employed in every case.
I did not intend that. I am not wedded to the form of the amendment.
It is not a concept with which I would be entirely unsympathetic in another context.
I would be opposed to Deputy Cosgrave's proposal for the same reason as the Minister has just stated. It appears to me that it would be necessary to bring in a professional accountant if the amendment were inserted. We all know that throughout the country there are hundreds of small traders, many of whom have their books done by their wives——
——and many of whom have their books done by youngsters leaving school who are able to do a rough balance sheet. Because they are able to do that, there is a rough idea of profit or loss. That does not suffice if the section is amended. If the amendment were accepted, the traders would be tied down to employing a professional, and they would probably be required to pay more than their takings for the whole year.
Subsection (2) (a) as it stands is onerous enough. That is why I put down this amendment. I do not know whether the Minister was correct when he mentioned that it did not specify profit or loss. It does. It says: "... under Schedule D shall keep such records as will enable true returns to be made, for the purposes of income tax and surtax, of such profits or gains." So, as it stands, the trader is obliged to keep records.
He wants to know whether he is making money.
He will probably know that anyway.
Occasionally we meet some who do not.
(Dublin): I want one point clarified by the Minister with regard to the keeping of records. Does this mean that if you go out of business, you must keep records?
Even though you have gone out of business, you might be liable for the last year in which you were in business.
(Dublin): You will have to keep them for six years.
Does this mean that we can look forward to the abolition of unlimited going back on income tax?
The Deputy is out of date. We did that last year.
Does it not come into this?
It is related. I thought the Deputy was saying we could look forward to it.
You are obliged to keep them for six years because that is the period that can be looked at.
This was recommended by the Commission on Income Taxation.
Can the Minister go back now on the books?
For ten years actually. Up to now he could go back forever—back to 1922. It is now reduced to ten years. In practice, it only went back six years.
It would be better if he could not go back at all.
Has the Deputy any worries?
Amendment, by leave, withdrawn.
Question proposed: "That section 6 stand part of the Bill."
I feel this section is necessary. It was recommended both by the Commission on Income Taxation and the commission referred to by Deputy O'Higgins. I should just like the Minister to clarify what I believe to be the case so as to put it beyond all doubt that it will not be necessary to preserve any more the books set out at clauses (a) and (b), that an obligation is not being imposed on business people to retain their vouchers. In other words, they will retain their book sheets but not their pay cheques; they will retain their sales books but not their multitudinous copy invoices. Would the Minister confirm that my understanding of the position is right?
That is my interpretation of the section.
I was somewhat perturbed by the reference in subsection (4) to books and papers. We know it is in another context but nevertheless it is there.
Of course the provision is also there that a person can go to the inspector and satisfy him: "Provided that this subsection shall not require the retention of records in respect of which the inspector notifies the person who is required to keep them that retention is not required..."
I wonder would the Minister look at subsection (5) to which there is a proviso which seems to me to be clumsily worded:
Any person who contravenes subsection (2) in respect of any records in relation to a return for any year of assessment or contravenes subsection (4) in relation to those records shall be liable to a penalty of £100:
Provided that a penalty shall not be imposed under this subsection if it is proved that no person is chargeable to tax in respect of the said profits or gains for that year of assessment.
"If it is proved that such a person is not chargeable to tax...", surely it cannot depend on whether any person other than that person should commit an offence and be charged.
That is a drafting point.
Subsection (2) says: "Every person who, on his own behalf or on behalf of any other person, carries on or exercises any trade ..." A person could be carrying on a trade, or carrying it on on behalf of someone else, and it might be the first person who should have put in the return and did not.
That might be the explanation.
In the case where the wife is the trader, the husband would be assessed.
Would it be a defence to say that he was not the person carrying on the trade in fact? The wife carries on the trade for the husband. If the husband does not keep records, can he say it was the wife's job and that she was supposed to do it?
The wife might not be assessed but the husband would be.
Question put and agreed to.
SECTION 7.
I move amendment No. 11:
In subsection (2), page 8, lines 18 and 19, to delete all words after "Commissioners" and substitute "subject to a right of appeal to the Circuit Court".
This is really to seek an assurance. Maybe it has precedent but I am disturbed by the provisions in subsection (2) (a) which provide that in the circumstances set out the claim shall be referred to the decision of the Appeal Commissioners and there the decision shall be final and conclusive. I thought the position was that up to now there has been a right of appeal to the circuit court. Under this proposal it would appear that in this respect no circuit court review of the Appeal Commissioners' decision is contemplated and I propose an amendment providing for such a review.
I do not think the Deputy's amendment is necessary here. This is a new thing. The situation at the moment is that a person is supposed to calculate the money he owes under PAYE and to send in the calculation to the Revenue Commissioners and say: "I owe so much under PAYE and here is my cheque." At the moment, if the person does nothing, sends in no return, there is nothing the Revenue Commissioners can do about it. What we are providing here is that in future if the employer does not send in any return the Revenue Commissioners may make an estimate of the amount due. If the person wishes to dispute the estimate he can go to the Appeal Commissioners. He cannot just send in a return saying there is nothing due. The Revenue Commissioners will decide whether there is or not. If he sends in a return with a cheque saying, "I calculate that this is the amount I owe ..."
This is the tax liability he has stopped from the employee?
Yes. He says: "I calculate that I stopped £10 from my employee which is the amount I owe you and herewith is my cheque", and that is the end of the matter—it just dies. It is really the machinery of the collection of PAYE that is involved— it is money which an employer has deducted from his employee and is due to hand over to the Revenue Commissioners. It would be unnecessarily cumbersome to bring the courts in at this stage. What happens is that at the end of the year the total for the year is added up, reviewed and revised, and at that stage the employer can appeal to the Appeal Commissioners or to the courts or to anybody he wishes, but in the intervening period——
That appeal will not be affected by this?
No. The only thing we are concerned with here is the monthly return and a calculation of how much is due month by month. The whole thing is calculated and revised at the end of the year and at that stage the employer can appeal to the courts if he wishes. That right of appeal is not affected.
Amendment, by leave, withdrawn.
Question proposed: "That section 7 stand part of the Bill."
Sections 7 to 11 contain provisions enabling the Revenue Commissioners to make estimates of sums which the employer should submit under PAYE regulations. In the event of an employer saying he was not liable to an assessment in any given month—this comes up in section 7—it is laid down that he may appeal within a period of 14 days. I can think of circumstances in which the stipulation of 14 days may result in an injustice to the person who is running a small business. He may go away on two or three weeks holidays and the manager or supervisor may not be in a position to make the return. The Minister might consider having another look at it.
This has been raised somewhere else already. I am not sure whether it was raised by one of my colleagues in the Government or by a Deputy during the Second Stage. However, it was adverted to by somebody and I took the view—I think it is probably correct—that, after all, this is money that does not belong to the employer, money which he has deducted from his employees, and he should be especially careful about it.
As well as the 14 days, could there be a couple of months involved?
There would be a whole month first of all, and then a period during which the Revenue Commissioners could make an estimate.
When the employer claims he is not liable?
Then all he has to do is to send in a communication to the Revenue Commissioners that he is not liable, that he does not owe them anything.
That gives him only 14 days.
I am not sure that is not plenty of time in these circumstances. First of all, he is deducting money, presumably alleged to be deducting it, from his employees, money which is not his, which the Revenue Commissioners believe should be handed over to them. They make an estimate of the amount of money due, they give him details and they give him 14 days during which to say yes or no.
If he happens to be on 21 days holidays, the statute will not allow him to appeal when he returns.
That applies to jury summonses and in several other circumstances.
I am suggesting that the period should be 21 days.
Might it not be coincidental that the employer had gone away for 21 days?
(Dublin): His manager or somebody else may be running the business during the period. In such circumstances, the employer himself should be held responsible. I cannot see a case arising where the manager might be entitled to a month's holidays. In such circumstances, Deputy N. Lemass would have a case.
The Minister could give the Revenue Commissioners power to extend the time. It seems a short time.
There is provision for late appeals.
He is supposed to appeal within 14 days. If he does not adhere to that condition, if he sends in his return later on——
This is only an interim arrangement. It will be balanced out at the end of the year.
Sections 7 and 8 are designed to permit the charging of interest under section 9. The Minister is aware that in a number of private concerns the directors' fees are often settled for after the amount of profit has been estimated, and decided at the end of the year. It has been suggested to me that sections 7 and 8 could be applied to directors' fees voted at the end of the financial year and that interest would then be chargeable on the basis of the fees having been received and paid during each month of the financial year. That raises a problem in respect of section 129 of the Income Tax Act, 1967.
I am advised that, under PAYE, directors' fees come into operation when the fees are actually paid, not when they are voted.
Therefore, if they are not paid until the end of the financial year, they are not chargeable in respect of each month?
The Minister is aware that interest payable under section 129 of the Income Tax Act is admissible like bank interest for relief from taxation and that it is, in fact, payable out of taxed income which, in effect, means that the effective rate of interest can amount to as much as 18 per cent gross per annum. In some cases, because of the failure to meet commitments—this applies very often even to State concerns and local authorities where there is delay in payment—the taxpayer may be assessed tax on the basis of the business done or the income, but in actual fact because of the delay in payment, has not been paid. That is the reason I mentioned that interest should be allowable for a reduction in computing liability to tax.
I shall look into the implications of that.
The Minister knows that a very vexed position exists in relation to taxation of directors' fees. As far as I know, there is a decision pending in the courts in respect of a test case. Directors' fees are currently assessed under PAYE with double effect and this is terribly unjust. We will have to wait to see the outcome of the case at present before the courts. I am somewhat behind in my information on that because it is several months since I heard of the case but I am aware that many people are eagerly waiting to hear of it.
It is true to say, and the Minister knows, that in the case of small businesses, about the only real service which the professional accountant can give to his client is to say: "Siphon off so much profits in directors' fees so that you will get earned income relief on the income in question rather than leave it in the company to be taxed." This is a perfectly proper exercise. The directors in question may have drawn money from their company during the year by way of loans, payments on accounts, call it what you like. It is wrong that such payments should be brought into the PAYE net because the final outcome of the year may show a small profit or a loss position which will not sustain the directors' fees up to the maximum for earned income relief purposes of £2,000. I feel it is a hardship to restrict this exercise in any way. It would be a hardship on small business people.
I am worried about these provisions because I apprehend a situation arising where the Revenue Commissioners might be empowered to say to a company: "You have charged in your accounts for the past two years directors' fees of £2,000 for the proprietor and because of that we apprehend that you are going to have a similar fee charged in your current account and we want PAYE on one-twelfth of £2,000."
Only if it is paid month by month.
Would the Minister bear in mind that what is being paid month by month may be an advance to the director which he does not choose to regard, rightly, as remuneration until he has taken out his final accounts at the end of the year to ascertain whether or not his company can afford to pay him remuneration. In those circumstances if he is having a bad year why should he not borrow from his company rather than create a liability on himself under PAYE, creating a loss in his company for which he does not get relief? This is a vexed situation. I believe that there is a case in the courts. I am aware that the same remuneration can be taxed twice pending review perhaps a year later and I would like the Minister to look into it further.
Yes, I shall, but it seems to me that at the moment if he pays himself a salary month by month, the company very properly must return PAYE in respect of that amount. PAYE is not deductible in regard to advances made to a director or borrowings by a director. I can see that the line between advances made and a month by month salary is probably very thin from time to time but the position is that if it is an advance, strictly speaking, then it should not be brought within the PAYE net at all, only if it is a salary paid month by month should it come in for PAYE.
I am very glad to have that assurance by the Minister.
Sections 7 to 9, inclusive, agreed to.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill".
This refers back I suppose to what has been said about appeals in section 7. What exactly does section 10 mean?
It is a very good question. I think it just means that the general provisions with regard to appeals apply to this type of appeal also.
In other words, if the question is the amount of tax liability it falls into the income tax net?
All the provisions of the Income Tax Acts as to appeals against income tax assessments, appeals to Appeal Commissioners, hearing by a Circuit Court judge, appeal on point of law to the High Court, apply to appeals against assessments made under sections 7 and 8 of the Bill, subject to this, that in relation to section 7 the decision of the Appeal Commissioners is to be final. I have already adverted to that.
So it is stopped at the Appeal Commissioner?
Yes; in other words, everything else applies.
Question put and agreed to.
SECTION 11.
Question proposed: "That section 11 stand part of the Bill".
The priority for income tax in bankruptcy and insolvencies entitles the Revenue Commissioners, as far as I can recall, to pick the highest year as liability out of a number of back years. They can only pick one year. Does the same position apply under this section?
It always seems to me to be a most unreasonable privilege which the Revenue Commissioners have in this connection. They are already highly privileged as compared with small creditors.
Whatever about normal things, this of course is the borrower's money. This again is PAYE money.
But it is a punitive measure. If they do not pay, the Revenue Commissioners have the right to pick the highest year.
What we are dealing with here is rascally employers, as Deputy Tully would no doubt describe them.
Which I object to strongly, but they may in fact ask for much more than he has deducted. That is what Deputy Byrne is getting at.
Question put and agreed to.
NEW SECTION.
I move amendment No. 12:
Before section 12 to insert the following new section:—
"Section 134 of the Income Tax Act, 1967, is hereby amended by the addition at the end of the section of `or in the case of a married couple, the sum of £1,000'."
Will the Deputy move to report progress?
Could I, on a point of information, ask what time this will resume?
When we conclude on the following Bill, the Electricity (Supply) (Amendment) Bill. There is no fixed time.
I thought it was 7 o'clock.
Can I have my tea? I missed this amendment three times before. I do not want it to happen again.
We must adjourn until 7.30. The sitting was to resume on this Bill at 7.30.
This was a very informal arrangement made on the Order of Business.
If the House so agrees, we can continue on the Finance Bill.
I would not mind that, but when an arrangement was made, it will have to be kept. The arrangement was that we would resume business at 7.30.
That was not my understanding.
It was to be resumed at 7.30, if the other business was not completed.
If this Bill is finished soon, can we resume on the Finance Bill?
There was a lot of talk on a matter like this the week before last.
It is a matter for the House.
Did the House not decide?
My understanding was the House decided very informally on the Order of Business we would interrupt at 6 until 7.30, unless this Bill terminated in the meantime, when we would resume on the Finance Bill.
I have no objection to that. My recollection was that the Taoiseach agreed to this at the suggestion of Deputy Cosgrave.
If there was no order of the House——
It was a purely informal arrangement. If Deputy Tully agrees, when we finish this Bill we could resume on the Finance Bill if the House agrees with that procedure.
How long will this take? How long will the Minister speak?
Not very long: I have seven pages.
Before the Minister proceeds, what is the arrangement now? It was Deputy Cosgrave who arranged the time today.
The agreement was that we adjourned at 6 until 7.30.
I would point out to the Deputy that there was no order of the House. It was purely an informal arrangement. The House now agrees that when we terminate the Electricity (Supply) (Amendment) Bill, we resume on the Finance Bill.
The suggestion originally made by Deputy Cosgrave was that we would adjourn from 6 to 7 o'clock but on a suggestion by somebody, the Taoiseach agreed to 7.30. It is a cod making an arrangement and altering it again a few hours afterwards.
It was agreed on both sides of the House that it should be 7.30.
It was definitely agreed to be 7.30. There is very little use in making arrangements unless we are prepared to see they are kept.
I understood the House agreed before Deputy L'Estrange came in that we would resume on the Finance Bill. It is a matter for the House, not for the Chair.
If those things are agreed on the Order of Business, and it was agreed between Deputy Cosgrave and the Taoiseach and Deputy Tully was here representing the Labour Party, they should be kept. First, it was agreed that we would suspend business from 6 to 7 o'clock. Then somebody suggested 7.30 and the Taoiseach agreed to 7.30.
If there is a prior agreement, I am afraid I will have to withdraw my earlier agreement.
What is the position now?
The position is that when we conclude on this Bill, we adjourn until 7.30.
It was not agreed. It was agreed that the Finance Bill would be adjourned from 6 to 7.30.
If the ESB Bill is finished before that time?
We could take the next one, the Turf Bill.
I am willing to take that.
We are quite prepared to do that.
The House agrees that when the Electricity Bill is finished, we take the next Bill.
Progress reported; Committee to sit again.
