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Dáil Éireann debate -
Tuesday, 21 Jul 1970

Vol. 248 No. 10

Finance Bill, 1970: Committee Stage (Resumed).

Debate resumed on the following amendment:
In page 21, before section 37, to insert the following section:
(1) Where in connection with a death occurring after the passing of this Act there arises by reason of subsection (4) of section 20 of the Finance Act, 1965, a claim for estate duty in respect of the assets of a company controlled by the deceased within the meaning of the said section 20, and estate duty is payable in connection with the same death in respect of stock or shares (other than debentures) in the company, then for the purposes of section 7 (10) of the Finance Act, 1894, the liability for estate duty in respect of the said stock or shares shall be deemed to be a liability in respect of the net assets of the company as if such assets had been held by it in trust for the members of the company taking the interests of such members as they subsisted immediately before the death of the deceased and the said section 7 (10) shall have effect accordingly.
(2) For the purposes of this section "member", in relation to a company, means the beneficial owner of any stock or shares in the company and the reference to a company holding its assets in trust for its members shall have effect as if the assets were held in trust for the members in accordance with the rights attaching to the stock or shares in the company and as if the company had acted in the capacity of a trustee only with power to carry on the business of the company and to employ the assets of the company therein.
—(Minister for Finance.)

The purpose of this new section is to avoid a double charge in cases where interests in private companies are liable to estate duty under section 20 (4) of the Finance Act, 1965, and shares in the company are also liable to duty. This is the proposed new section to which I referred a few times as relieving the liability to double duty with which Deputy O'Higgins was concerned.

Amendment agreed to.
Section 37 agreed to.

I move amendment No. 28:

In subsection (8), page 23, line 16, to delete "on" and substitute "in".

The purpose of this amendment is to correct a typographical error by substituting "in" for "on".

What securities are covered by this—I do not mean by the amendment but by the section?

Government securities exempt from taxation which are held by foreigners.

Is that part of the exemption in respect of the liability for double duty?

I am sorry. I do not follow the Deputy.

Is it part of the exemption from double duty or does it refer only to foreigners who are here and who hold Irish securities?

People domiciled abroad who hold Irish Government securities.

Amendment agreed to.
Section 38, as amended, agreed to.
Question proposed: "That section 39 stand part of the Bill."

I take it we will discuss the amendments to the Schedule on the Schedule and not on the section.

(Cavan): I understood there were amendments to section 39.

I think we are a little confused about the number of the sections because of the new section.

(Cavan): Does section 39 deal with stamp duties?

Is it not the Schedule?

(Cavan): Does not section 39 of the Bill, as circulated, deal with stamp duties?

Yes, that is right.

(Cavan): Are there amendments to that and, if there are, are they to be taken now or are we dealing with the section first?

There is no amendment to it on the amendment sheet.

(Cavan): If there are no amendments, I should like the Minister to tell us at this stage what exactly is the effect of section 39. An explanatory memorandum was circulated which really gives very little information. It says:

Section 39 provides, with effect as from 1st August, 1970, a new revised First Schedule to the Stamp Act, 1891, in substitution for the existing schedule. Some headings are being abolished. Under the headings which are retained the rates of duty now in force are where necessary, being adjusted to rates which will have exact equivalents on the change over to decimal currency.

The general effect of that memorandum is to convey to me that this is something to deal with decimal currency, but I understand that it is a very far-reaching section and that, in effect, it proposes to increase stamp duty on many conveyances and transactions from 1 per cent to 3 per cent. The Minister should clarify the position by telling the House what exactly is involved here and then we can discuss it.

By and large, the effect of this section is to make provision, as Deputy Fitzpatrick said, for the introduction of decimal currency, for the conversion of rates of duty which exist at present into decimal currency with the suitable equivalent to operate as from 15th February, which is Decimal Day. It also provides for the abolition of certain duties which are either related to transactions that are obsolescent, or unproductive of duty. Thirdly—this I think is what concerns Deputy Fitzpatrick—it proposes to apply the same rate of duty in the case of sales of businesses to the premises as to the goodwill.

And that is all it does?

I am speaking now in general terms. I do not want the Deputy to tell me afterwards that I omitted to mention one thing because there are numerous small items involved in this.

The Minister mentioned the extension of the rate of duty on property to goodwill. That clearly implies that it does not extend it to anything else. Does the Minister intend that?

I do not quite follow what the Deputy means.

The Minister has said the trebling of the rate of duty will apply to goodwill and that we shall now have to pay the treble rate of duty that is applicable to property, that is a rate three times as great as at present. When the Minister mentions goodwill and nothing else, does he mean to imply that there is no other item on which stamp duty is to be trebled by this section?

No, I do not mean to imply that.

The Minister's statement could have been misleading.

I took it this was what Deputy Fitzpatrick was primarily concerned with.

He did not mention goodwill.

Will the Minister admit that the information given in the explanatory memorandum is very misleading?

That is what I want to ask the Minister. I do not know if it is appropriate to discuss this on the section or whether it should wait for the Schedule, but as the Schedule is incorporated in the Bill by virtue of this section I suppose it is relevant to discuss it. As Deputy Fitzpatrick and other Deputies have mentioned, the position, as we understand it at present, is that a number of transactions attract duty at 1 per cent. Included in these transactions are items such as goodwill, copyright, patents and trade marks, I think, and benefits of contracts and insurance policies. As I understand it, reading this pretty lengthy Schedule which was issued by the Revenue Commissioners in August of last year—it is the table of ad valorem stamp duty —it lays down different rates depending on the term and on the amount. Taking it in broad figures at present, the change proposed as a result of this section and the changes in the Schedule will mean that transactions up to £6,000 which hitherto attracted duty at a rate of 1 per cent will now go to 3 per cent and transactions up to £50,000 will go from 1 per cent up to 5 per cent. It is not clear from the explanatory memorandum's reference to section 39 that this is so. What it says here is:

Section 39 provides, with effect as from the 1st August, 1970, a new revised First Schedule to the Stamp Act, 1891, in substitution for the existing Schedule. Some headings are being abolished....

I suppose that is literally true but they are being abolished rather emphatically. There are other items such as, I think, publicans' licences. The duty on transfers of publicans' licences at present is, I understand, 1 per cent and that will now be increased to 3 per cent. Stamps on patents or assignments which at present are rated at 1 per cent will, I understand, also be changed. As Deputy Fitzpatrick and Deputy FitzGerald mentioned, the phrasing here would indicate that under the headings which are retained the rates of duty now in force are where necessary being adjusted to rates which will have exact equivalents on the changeover to decimal currency.

An increase of from 1 per cent to 3 per cent or 5 per cent is surely more than could be attributed to the change-over to decimal currency? Perhaps the Minister would indicate the effect of this and what the estimated increase in revenue from it will be. It seems to be a very substantial increase because it applies to a variety of matters other than those mentioned in the explanatory memorandum, such as publicans' licences, goodwill, patents, trade marks, insurance policies and so on.

We are discussing section 39 and in order to discuss it properly the Schedule would have to be discussed. Is it proposed to take the Schedule now or can that be done? It would save much discussion at a later stage if it could be done.

I understand that there are amendments to the Schedule.

Could it be taken now?

No, it will be taken in its usual place. If we could dispose of section 39——

We cannot dispose of section 39 until we know what the final content of the Schedule will be.

I thought there were Rules of Order in this House. The other day I had occasion to ask Deputy FitzGerald to get out of my way so that I could ask a supplementary question. It is very rude if a Deputy interferes in cases like this and I should be obliged if Deputy FitzGerald would obey the Rules of Order just like everybody else in the House. Twice in two days I have had occasion to complain about this.

I should be glad to know if it is proposed to take the section on its own. If it is, let us dispose of section 39 and we can deal with the Schedule in its own place. Secondly, I should like to know if the Minister has an explanation as to why, as has been stated here this afternoon, section 39 contains information which does suggest that the only change is that the rates are being adjusted so as to have an exact equivalent on the changeover to decimal currency when, in fact, that is not what is meant. A very vital change is being made. But for the fact that some trouble was taken to look into this matter it could easily have passed through as a simple amendment and it would be extremely difficult afterwards to explain how it had gone through without comment.

(Cavan): I should like the House to know what I think is involved in this. I propose to give one example and the Minister can correct me if I am wrong. The explanatory memorandum dealing with this is simply a disgrace. It is also misleading, because one would never get the impression from reading the explanatory memorandum that the effect of it might be to increase, and increase very substantially, stamp duties.

I want to put to the Minister one case, that is, the case of the sale of a public house, the gross consideration being £20,000, the land being small and the buildings being old and in need of considerable modernisation. I would suggest to the Minister that, as the law stands at the moment, a very fair and equitable apportionment of the consideration in that case would be to split the consideration and to put £10,000 on the buildings and land— even that would be doing them well— and to put £10,000 on the licence and the goodwill. If my mathematics are correct—and they are not my strong point—that would mean that at the present time the stamp duty would be £400, that would be £300 on the buildings and land at 3 per cent and £100 on the goodwill and licence at 1 per cent.

If and when this Bill becomes law the entire consideration, that is, £20,000 will attract a stamp duty at the rate of 3 per cent and the duty will go up from £400 to £600. That is one of the provisions of this section, as I understand it, as from 1st August next, notwithstanding the fact, leaving out the merits of the case altogether, that due to the bank strike many sales would have long since been closed but will not be closed until the bank strike is over, but I shall leave that out of it for the time being.

I should like the Minister to say whether he agrees with me in the case I have given of a £20,000 sale, where the equitable apportionment is £10,000 on buildings and £10,000 on goodwill and licence, that stamp duty would be increased by this section from £400 to £600.

First of all, I should like to apologise to my colleague, Deputy Tully. He will appreciate that I addressed the Chair unaware that he was standing up or attempting to speak. Of course, I would have given way to him immediately had I understood. I think he knows me well enough to understand that.

On this point I agree with the other speakers. The explanatory memorandum could give no one any reason to suspect that taxation was being increased fivefold, not, as I suggested earlier, threefold in some cases. In view of the complexity of the problem, in view of the form the legislation takes, with the substitution of a new Schedule for an old Schedule, where it is possible to detect differences only by comparing them almost line by line, it is quite improper to introduce into this Bill a provision, which has the effect of quintupling taxation in some cases, in a way that could have slipped through this House without being noticed had not the Opposition been alert and read the Bill and compared the Schedule line by line with the previous Schedule. That is not a proper way to legislate and I think the Minister himself, on reflection, will agree with that.

It is also disturbing that, when asked what in fact was the effect, his reply, starting with those ominous words "by and large", which always alert one to look carefully at what follows, mentioned only the extension of taxation to goodwill. I sought to extract from the Minister whether there was anything else involved and his replies were hesitant and, I think, evasive. This may well have been—and I will accept this if it was the explanation—because he himself was unaware of the extent of the range of transactions upon which taxation is being increased up to fivefold. However, as Deputy Cosgrave said, the effect of this would appear to be, on our information, that it would increase taxation by up to fivefold on transactions involving publicans' licences, book debts, trademarks, patents, benefits of contract, insurance policies as well as goodwill.

It is doubly unsatisfactory that this massive increase in the rate of taxation should be put to this House in a form so difficult to detect, with an explanatory memorandum which so notably fails to explain and with an answer from the Minister which omitted references to six of the seven different items on which taxation is being increased. The Minister ought to explain to us whether it is his intention that the whole range of transactions I have mentioned are to be subject to this increase in taxation. If this has been his intention, as distinct from something which is either included unintentionally or has been included without his attention being drawn to it, will he inform the House what he proposes to do about it? He has given no reason whatever to this House for this increase in taxation to this amount.

I have always been puzzled as to the reasons for stamp duties of this kind. It is not clear to me what economic or social reasons exists for taxing such transactions. I fully understand the reason for taxing transfers of property from one generation to the next, to prevent the accumulation of capital, but I am personally unconvinced that our present estate duty code is designed in a sufficiently tight way to prevent the excessive accumulation of capital from one generation to the next. I do not see why stamp duties are thought to be necessary other than as a very dubious method of raising money. If they are necessary, I think increases of up to five times the rate of taxation require at least to be explained and justified, along with the economic or social logic, and indeed the financial logic—if it is simply a shortage of money—behind such taxation. The amount of money which this massive increase in the rate of taxation is designed to bring in should also be told to the House. Therefore, I would ask the Minister in his reply to deal with these matters fully and, if it is the case that he himself was unaware of this and did not intend that taxation should be increased over this whole range of transactions, I would hope he would then accept the relevant amendments when we come to the Schedule.

The most comprehensive way I can put this is that it is intended to revise the Schedule of duties so as to charge conveyances or transfers on a sale of any property other than marketable securities at the rates which now apply only to real property. I must confess that, looking at the explanatory memorandum, the criticisms which have been levelled at it are not unjustified. Nevertheless, it would be quite wrong to follow the line which Deputy FitzGerald appears to be following as though the first and only reference to this matter in this House was when it was raised by the Opposition now. In fact, I referred to it specifically on the Second Reading of this Bill.

Any suggestion of a massive increase in taxation is quite wrong. The estimated increased yield from this is £100,000 per annum, which will go part of the way, but only part of the way, to compensating the Exchequer for the loss of revenue involved in the proposed reduction in the duty on cheques, to mention just one item.

In regard to the point raised by Deputy Fitzpatrick, which he did not pursue but which I think I should mention, that due to the bank closure transactions which would otherwise have been closed will now be caught by this duty. I want to assure him this is not so, or at least it is not necessarily so, in the sense that where the contract for sale has been signed before the 1st August or the passing of the Act it may be stamped at the old rate of duty. The deed itself would not attract the new duty where the contract was entered into in writing before the relevant date. With regard to the example which Deputy Fitzpatrick quoted I did not follow his mathematics but I accept that they are correct.

(Cavan): The Minister might be taking a grave risk.

Well, for the purpose of illustrating the argument let me accept that his mathematics are correct. I want to suggest that the Deputy is not quite as naïve as to think that in most of these transactions the apportionment of the value as between the real property and the goodwill is done on what one might call a bona fide basis and that in fact it is commonplace now for the maximum amount possible to be put on the value of the goodwill.

Therefore it is reasonable to assume, in the example he took, that if the proper apportionment had been made the duty which would have been paid would have been much nearer to what will be payable under this provision than in fact would have been paid in the example he gave.

I have come to the conclusion that Ministers do not trust anybody. He is the second Minister in an hour who has made an allegation of gross dishonesty.

No, I am not saying that; but I do not think that Deputy Fitzpatrick will disagree with what I am saying. He knows by virtue of his profession, as I do by virtue of my profession, that this is what happens.

You must be dealing with very dishonest people.

I think this is a grey area. However, in regard to this concept of different rates of duty, for instance, as between goodwill and real property, I have been given some historical explanation for it but I have never quite understood why it should be a different rate of duty. Although Deputy FitzGerald seemed to think that I was obliged to justify applying the same rate of duty to these other items as is now applied to real property, I think that, in effect, the obligation and the onus is to justify not applying them. I am not aware of any good reason why the same rate should not apply because we are dealing here with property which is being transferred by deed, which is paid for in the same way as real property, and it is difficult to understand why they should be treated differently for stamp duty purposes. For that reason I do not think that I have any apology to make to the House except in relation to the explanatory memorandum for which I do apologise. I do think that it did not draw sufficient attention to this particular provision, though I repeat that I myself on the Second Stage did draw the attention of the House specifically to this item.

The fact that it was referred to on the Second Stage does not in any way lessen the substantial increase involved, for whatever reason, historical or otherwise—and most of these stamp duties and other duties have an historical basis—but at one swoop the Minister is increasing the duty from 1 per cent to 3 per cent. As Deputy Fitzpatrick said, this may, and indeed will, substantially alter the amount of duty in a case such as he mentioned. While I suppose it is true in the broad sense to describe this as applying to property, it is not property in the ordinary accepted sense. It may apply to assets or to wealth, if you like, as distinct from property, but included in the changed items are publicans' licences, patents, trade marks, benefits of contract, insurance policies and possibly even voluntary conveyance. Now the Schedule that I was referring to, and which I do not want to go through in full, would indicate the type of cases involved but does not cover all of them. It refers to conveyance or transfer and sale of lands tenements and hereditaments and leases where the consideration other than rents consists of any money, stock or security. Now, the duty which will be raised from 1 per cent to 3 per cent is referred to and it says that the rates of duty mentioned apply (1) in the case of considerations not exceeding £500 where the instrument contains a statement certifying that the transaction thereby effected:

does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration other than rent exceeds five hundred pounds,

and (2) in the case of consideration exceeding £500 but not exceeding £2,500 where the instrument:

contains a statement certifying that the transaction thereby effected does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration other than rent exceeds two thousand five hundred pounds,

and (3) in the case of considerations exceeding £2,500 but not exceeding £6,000 where the instrument contains a certificate, and so on, and then (4) where the consideration exceeds £6,000 but not £50,000, where the instrument contains a certificate and so on. Now, this particular change will affect many relatively small businesses, as Deputy Fitzpatrick said the other day. With the drop in the value of money, it does not need to be a very valuable business. He mentioned the case of a widow with a family being in the position of having to employ a manager or a person to run the business. The nominal increase in value will be easily caught by this and, as I said, this affects not only the goodwill but also the duty on publicans' licences. Does the Minister consider that it is fair to impose on relatively small business people—the type of people that the community generally is anxious to encourage—this very substantial increase in taxation? It is a very substantial rise. It rises from 1 per cent to 3 per cent, and 1 per cent to 5 per cent above £6,000, which must naturally apply to a great many cases.

The Minister apologised for the explanatory memorandum and his apology is accepted. Obviously, it is something we should be concerned to ensure will not happen again. Then he attempted to justify the failure to include this in the explanatory memorandum on the grounds that on the Second Stage he had drawn our attention to it. I have here the Second Stage debate and at column 1341 of volume 247, No. 9, he said:

In making these changes in rates care has been taken to ensure that as far as possible there will be no additional burden of duty. There is, however, one exception——

one exception—

——to which I wish to draw attention. At present, on the sale of a business premises, the transfer of assets, such as goodwill, attaching to the premises, attracts duty at a lower rate than the transfer of the premises. This has given rise to avoidance of duty by the placing of an inordinate value on the goodwill et cetera, thereby reducing the consideration for the transfer of the premises. In the first schedule this means of avoidance is blocked by bringing the rate of duty for such assets into line with that which attaches to the premises.

If I understand correctly the purport of the Schedule—and I have asked the Minister to confirm that the interpretation both myself and others have put on this is correct—it does far more than this. The Minister in his Second Reading speech was misleading in a different, perhaps more specific, way than either the explanatory memorandum or his statement in reply to my question earlier in this debate, because the Schedule applies the higher rate of duty to "any property other than stocks of marketable securities". There is no reference to business premises, or to premises of any kind, or to premises and assets attaching to them; it is all property, other than stocks and shares.

I am not familiar with these transactions but it seems to me that, while one might hold that a publican's licence necessarily attaches to his business premises, items such as book debts, trade marks or patents or insurance policies do not necessarily attach to business premises. If I understand the Schedule correctly, it would appear the Minister is quintupling in certain cases and trebling in other cases the rate of taxation on assets not attached to business premises. However, in his Second Reading speech the Minister said "There is, however, one exception to which I wish to draw attention". He went on to speak of the sale of a business premises, to the transfer of assets such as goodwill attaching to the premises and he concluded by saying: "This means of avoidance is blocked by bringing the rate of duty for such assets into line with that which attaches to the premises".

I should like to ask the Minister, before we pursue this debate any further, if I am correct in thinking that, as drafted, the Schedule quintuples in certain cases the rates of taxation on a number of assets not attached to a business premises and that not only was the explanatory memorandum and the Minister's reply to my first statement this evening misleading but his speech on Second Reading was also misleading. In that case, I should like to ask the Minister if he was aware of the effect of the Schedule. Knowing the Minister, it seems improbable he would have sought on Second Stage or in reply to my question to mislead the House. The fact that on both occasions he referred specifically to goodwill—on the former occasion to assets such as goodwill attaching to business premises and on this occasion to goodwill—suggests to me he was unaware that he was proposing to increase taxation on a range of other assets not attaching to business premises. If I am incorrect that this is the effect of this Schedule, I should like to know before we pursue the debate.

The effect of the provision is to apply to transactions in connection with the sale by way of conveyance or transfer of any property other than marketable securities the same rate of stamp duty as now applies to real property. The references I made earlier today and on Second Stage to goodwill are due to the fact that this is the bulk of the area affected—this is the heading under which most of the additional duty will be paid by virtue of this provision.

However, I should like to make it clear that what Deputy Cosgrave said is true, that some of the items concerned are not what are normally thought of as property, although they might technically be so. I would draw attention to the fact that we are dealing only with the transfer or conveyance of property by deed and in such cases transfer not only of goodwill but of benefits of a contract or patent is, in fact, the transfer of property—valuable property for which one is exacting a price in the same way one does with real property such as a house or premises. I am not aware of any good reason why such transactions should not be taxed at the same rate as the sale of houses or premises.

Reference was made to goodwill because this is an area that will be affected to a large extent. However, on Second Stage I did not refer only to goodwill; I covered other items, but stress was laid on the matter of goodwill. As Deputy FitzGerald has said, it is true I referred to the sale of a business premises and the transfer of assets such as goodwill. Strictly speaking, it is correct to say that that does not cover completely all the items which are affected by this. However, the main concern that will arise in this regard is in relation to goodwill on the transfer of business premises; it is from this area that the bulk of the additional duty would arise and for this reason I drew attention to this matter.

I might point out that there are quite a number of items in the Schedule which are so detailed that it would not be possible for me to deal with all of them. I did not purport to draw the attention of the House, either in the explanatory memorandum or in my Second Reading speech, to every single item that is affected in the Schedule either by way of amendment or repeal. I do not purport to have done that, nor could I purport to undertake to do so in the future.

Will family settlements that attract duty at 1 per cent be increased?

It will be a voluntary transfer, I take it?

(Cavan): Will the 1 per cent rate continue?

The rate of 1 per cent applies on the basis that it is voluntary and that it is between certain close relatives. That will continue.

What about book debts?

If they are transferred by way of deed they would attract the 3 per cent duty—it is the same rate of duty as the property.

This appears to be another example of the obsession that besets the Revenue Commissioners on this question of tax avoidance. We are now being asked to increase stamp duty on a so-called asset of a most intangible nature, called goodwill. The Minister, who is a solicitor by profession, will understand if one solicitor sells his practice to another there is an element of goodwill involved in that he has built up a clientele. In this instance there is a certain tangible element in that the vendor has his clients' files which he may pass on to the buyer.

As a medical man, I will refer to the sale of a practice by a dental or a medical practitioner. The practitioner may perhaps live in a small, inexpensive house and he may realise that there is no future in his practice, although the purchaser may think he will do very well in the area. The goodwill element will be taxed at a high rate although it may transpire that in a few years time the purchaser has not got a practice. Similarly, in the case of a small shop, the purchaser pays not only for the premises but also for the goodwill. He is going to pay increased stamp duty on that, In this era of the supermarket he may well find in a few years time that this goodwill amounts to nothing and the business is insolvent. The element of goodwill in our society is decreasing and yet the Minister has chosen to put a tax on it.

I think this is most unjust. The Minister has, in a very short time, become affected by the virus of avoidance from the Revenue Department. The Minister is concerned with the idea that when a deal goes through a disproportionate amount of that deal is credited to goodwill in order to step down the duty from 3 per cent to 1 per cent. The Minister has decided to catch them and put them all on 3 per cent, or whatever the figure might be. In an effort to catch the offenders the Minister is going to hammer them all and in the meantime we shall make a considerable amount of extra money.

(Cavan): I want to deal with one or two points. First of all, there is the date of coming into operation of this. When I suggested that many people were going to be caught with this new duty on account of the bank strike, the Minister stated that that was not so because if the contract for sale was signed before the 1st August it could be stamped and then the conveyance would not attract any stamp duty. I accept that although I confess many people may not think about it.

I have written to the Law Society and I am sure they have notified their members.

(Cavan): I accept that, I am sure the Minister is aware that for the last few months sales have been at a standstill and contracts which would have been signed during June and July have not been signed. Sales have not taken place because people who are buying businesses are not in a position to come to a decision as to whether or not they can afford to buy the businesses, not knowing what accommodation they can get from the banks. I do not think the Minister can seriously contradict that as a proposition. When business houses and private houses are advertised for sale, if any amount of money is involved nobody is interested. If the Minister insists on going ahead with this—I hope to be able to convince him that he should not—he ought to do what his colleague the Minister for Local Government is doing in relation to the Housing Bill which was affected by the cement strike. He put back the operative date until 1st January next to enable people held up with building because of the cement strike to get their buildings started and avail of the old grants for 1,500 square feet instead of the 1,200 square feet under the new Housing Bill. The Minister has a first class example of what should be done when a strike affects a situation. I suggest he postpone the implementation of this until the end of the year.

I do not agree with the Minister that there was wholesale avoidance and unreal valuations in apportionment between the premises and the goodwill. I could bring the Minister to a premises which changed hands within the past 12 months for £20,000. I am absolutely certain that if this building was a private house it would be well sold at £7,000 but because it was a licensed premises, fairly well situated, with a business attached to it, it went for £20,000. The effect of this Bill is to increase the stamp duty on £13,000 by £20 a thousand, which is £260.

The Minister seems to find it hard to draw a distinction between a publican's licence and the actual fee simple on the house or the goodwill on the house. I should like to ask the Minister how he draws a distinction between a publican's licence and stocks and shares? How does he draw a distinction between the goodwill of the house and stocks and shares? The stocks and shares will continue to attract the 1 per cent duty. I do not want to put any more devilment in the Minister's mind but if Guinness's were taken over for several million pounds, their assets, land, and goodwill would pass with the sale of the shares yet they would attract interest at 1 per cent, if I am correct in my thinking, whereas a small man down the country selling a pub at £7,000 would have to pay 3 per cent. If that is the case it is unfair.

I always have sympathy with people who have to borrow money in order to go into business or buy a house. Most of the people the Minister is hitting here by increasing stamp duty on goodwill by £20 a thousand will have to borrow considerable amounts of money from banks or other finance houses and pay 9 or 10 per cent interest on it. In recent years these people were dealt a severe blow when Land Registry fees were jacked up from a few pounds to £60. It appears to me that the idea now is to hit the man going into business and make it more difficult for him to start off. I should like the Minister to deal with the proposition I have put to him about large corporations selling their shares and assets consisting of all sorts of things because I understand the figure I gave of 1 per cent was too high and that it would, in fact, be less than that.

We are dealing with the section in a general way. I assume we shall have an opportunity of going through it with a fine comb later on. I see one item here on page 36 which appears to impose stamp duty at the rate of £5 per hundred.

Deputy Fitzpatrick will appreciate that he is now discussing the section in detail. We cannot have a detailed discussion on it at this stage.

(Cavan): I shall not do that, but I trust we shall have an opportunity of taking it item by item later on.

The sequence of events in this debate is increasingly disturbing. We start off with the explanatory memorandum which suppresses the truth. Then there was a direct question from me to which the Minister gave an incomplete reply referring to goodwill only which seemed likely to mislead. Under pressure, the Minister justified this reply on the grounds that he had covered the matter in his speech on Second Stage. The clear implication was that the Minister had explained the full purport of the Bill in that speech. We find in the Second Stage speech that the Minister did nothing of the kind, but referred only to one item. The Minister tells us he did not purport to be comprehensive in what he said in that speech, but I feel that the Minister did purport to be comprehensive. I do not think the Minister can possibly stand over the statement that he did not purport to be comprehensive because he referred to these changes as taking care to ensure, as far as possible, that there would be no additional burden of duty, with one exception. The Minister specified one exception. It was quite clear from that that the Minister meant one exception only. Nobody could have thought there were other exceptions. This speech purported to be comprehensive. The whole record in this matter is disturbing. The explanation may well be that the Minister may have been unaware, until this came out in this debate, of the extent to which this provision goes. This is the most charitable explanation because that series of evasions, if intentional, would disturb my confidence in the Minister's integrity in a debate of this kind. I will take it that the Minister was unaware of the extent to which the Revenue Commissioners were increasing taxation in an area outside that which was put to him as being necessary. I would suggest that the proper solution in this matter is to amend the Schedule in due course so as to confine the effect of this change to assets attached to business premises, which is what the Minister told the House was the only exception to the arrangements under which no additional burden of duty was being imposed in the redrafting of this Schedule.

I would ask the Minister to tell us why this extension to cases other than assets attached to business premises has taken place. The Minister told us the main reason for this is the possibility of avoidance of duty. On what grounds is the Minister deciding now to tax at a higher rate the other assets mentioned? The Minister stated that this is merely an incidental effect. I ask the Minister to indicate why it was found necessary to take this action and to agree to amend the Schedule so that it has no longer this effect. The Minister told us that the purpose of this was to apply the same rate to both business premises and the assets attached to them in order to prevent avoidance of duty. This seems to be a laudable aim and one which the House would wish to support the Minister in if he had confined himself to that. It is one thing to say that the same rate should be applied but it is another to treble and quintuple the lower rates so as to bring them up to the higher rates. If there is a problem of avoidance, the thing to do is to arrive at a rate which, taking the balance of relationship between business premises and other assets associated with them, will yield from the same number of cases the same amount of taxation, plus something extra because of the prevention of avoidance. There can be no justification for dealing with cases of avoidance of this kind by quintupling the rates of tax on one aspect of the matter and not reducing, in any corresponding way, the rate. If the Minister said that bearing in mind the general balance in relationship between business premises and assets attached to them that he believed that a rate of 2 per cent would produce from the same number of transactions, leaving avoidance on one side, the same amount of money as 3 per cent on business premises and 1 per cent on assets attached to them would produce, that would seem to us to be a very fair proposition. I find no justification for applying the same rate at the highest level which involves in some cases quintupling the rate of taxation. I ask the Minister in dealing with the Schedule to amend it in so far as to limit its application to genuine cases of assets attached to business premises but I ask him to apply to these cases rates which would tend to produce the same amount of revenue rather than rates designed to produce more revenue. It is not the purpose of anti-avoidance measures to produce more revenue from people who are paying tax properly. The purpose is to ensure that the people who avoid tax have to pay it. The effect of this measure is to impose a higher rate of taxation on people who have not been avoiding tax at all. I ask the Minister to reconsider the tax rates.

I should like to refer to the point made about the 1 per cent rate on the transfer of stocks or marketable securities. I am not clear as to what is meant by marketable securities in this context. Would the Minister assure the House that there is no danger of evasion by people owning business premises converting them into a company with shares which are theoretically marketable, and avoiding the rate of duty in that way? It seems odd, as Deputy Fitzpatrick has said, that a large company can avoid two-thirds of the tax which has to be paid by a private individual.

(Cavan): I have found out that it is worse than that. They can avoid the whole thing.

That is even more disturbing. This Schedule needs to be seriously reconsidered.

The Minister said that the extra revenue of £100,000 which would be derived from this very sharp increase in the rate of taxation—he tried to minimise the increase in the rate by saying that the total amount involved was only £100,000—is not a very heavy impost. One will not convince an individual who has to pay five times as much tax that it is not a very heavy additional impost, because the total amount secured from him and from other individuals is only six figures. It is a very big argument. The Minister said this only covered part of the money given away by the reduction in the rate of duty on cheques. That is itself stated to be £100,000 in the Minister's speech on Second Stage. It would appear that it would cover the whole of that amount. I am wondering on what basis the Minister suggested it would cover only part of it. I am suggesting that the Minister should look at the Schedule again in view of the fact that he might possibly have misled the House earlier on.

(Cavan): I understand that the position regarding the purchase of property in a company by shares is even worse than I thought. It appears to me that the whole trend of recent stamp duty legislation seems to be weighted heavily in favour of the large business tycoon. I believe that on the take-over of the entire assets of a company by another company, even if the assets of the company being taken over are £1 million, and if £500,000 of the assets of that company consist of fixed assets like land, houses, goodwill, publicans' licences, the entire transaction is subject to a nominal stamp duty of 10s. I must say I have not been fortunate enough to be involved in a take-over bid, but I am told by those who have that the entire stamp duty is only 10s. I should like the Minister to discuss this, and to discuss the other point which I raised about the value. If that last assertion is wrong, I should like to know whether the Minister agrees that there could be £500,000 worth of land, buildings, et cetera, in the transaction and that that would only attract 1 per cent duty, whereas if it was a transaction between two small individuals the duty could be 3 per cent.

Deputy Hogan referred to the sale of a medical practice. I would like to make a few comments on what the Deputy said. The Deputy spoke about the intangibles involved in a goodwill in a doctor's practice but he is not the only one who thinks of that. The purchaser obviously thinks of it too. The purchaser allows for its intangible nature and the possibility of not obtaining the goodwill in arranging the price he is prepared to pay. I understand that it is very unusual in the case of the sale of a premises in which a practice is carried on to have included in the deed the sale of the goodwill of the practice.

With regard to the point made by Deputy Fitzpatrick about the sale of the assets of a company by way of the transfer of shares, the point the Deputy made about the fixed duty of 10s is not correct. This applies where there is reconstruction and the two sets of shareholders are the same. In other words, it is a formal transfer. It is the same people who are involved. That is the only case in which this duty would apply, but the Deputy is correct in saying that it is not a genuine transfer in the sense that was referred to. The reason for this difference is that, if we were to apply the same rate as we applied to real property, virtually all stocks and shares would disappear from this country to the London Stock Exchange.

If the section goes through as it stands, the Minister will know that subsection (2) might or might not be all right under normal circumstances but he will appreciate that, even if the protracted bank dispute is resolved, the banks will not be ready to reopen for business by the 1st August. Therefore, would the Minister consider bringing in an amendment that would ensure that the change would not take effect until he makes an order and that it would be possible to postpone the order until it was obvious that people would not have had their transactions caught because of the bank strike?

I did mention earlier —perhaps Deputy Cosgrave was not in the House then—that contracts entered into this. I omitted to deal with the point raised by Deputy Fitzpatrick on that. He suggested that because transactions were not entered into at all and people could not be sure as to whether they could get accommodation we ought to postpone this. He suggested that I follow the precedent set by the Minister for Local Government in relation to the cement strike. However, there is considerable difference between the two sets of circumstances. I recall, from recollection, that the effect of what the Minister for Local Government did was to extend the time in relation to houses which would otherwise have been completed but could not be completed because of the strike; whereas here we are talking about transactions that might have taken place but which in fact did not take place because people did not know whether accommodation would be available. There is a great distinction between the two and it would be impossible to decide in what circumstances or at what point of time one could deal with this problem, even if one were disposed to deal with it. It is so nebulous to decide whether people would have entered into transactions if it had not been for the bank strike that I do not think it is practical to try to deal with it.

(Cavan): On that point, what the Minister for Local Government is doing is to reduce the lowest space which will qualify for a grant from an area of 1,500 square feet to 1,250 square feet. That was to operate in respect of houses which were commenced after the 1st August, but the Minister recognised the difficulty in commencing houses because people could not get cement. He introduced an amendment in the Seanad to the effect that the reduction in floor space would not come into operation until the end of the year, thereby giving those people who want to build houses an opportunity of getting in the foundations before the end of the year.

Here, it is only necessary to substitute money for cement and we get the exact same position. People cannot build houses without cement and people cannot buy houses without money. The position here will be that, because a person could not buy a business or conclude a contract, he will have to suffer an increase of from 1 to 3 per cent. I think that in a case like this, where the Minister proposes penalising people who are going into business for the first time, it would be better to err on the side of being soft rather than on the side of being harsh. The old principle in relation to the criminal law should be applied that it is better that a great number of guilty people escape rather than that a few innocent people be convicted. That is what I invite the Minister to do here. It is alarming to hear the Minister say that in the case of companies these will still continue to be liable only to the extent of 1 per cent in relation to fixed assets and goodwill. The Minister says that, if he were to do otherwise, the Dublin Stock Exchange would close down and all transactions would take place on the London Stock Exchange.

As the Minister knows well, the trend, especially in business, is very much away from the individually owned business and is in the direction of businesses owned by a company. Such businesses are multiplying year after year. A few years ago the formation of a company by a country solicitor was a rare occurrence. Now, however, every country solicitor would deal with a few such cases in any one year. That being so, sales of land, goodwill, publicans' licences, debts, insurance policies and so on can pass from one ownership to another at stamp duty of 1 per cent in certain cases, whereas in other cases, it will be 3 per cent. This policy is neither reasonable nor equitable. In my view, it is unjust; to use the word that is very much in vogue at the moment, it is discrimination at the worst level.

Surely the answer is to render all property transactions subject to a stamp duty at 1 per cent? As I say, people are being taxed at this rate of stamp duty when they are only starting up a business and when the money could be spent better on the business or on the improvement of it. This matter should be postponed. The Minister should at least think about it. Secondly, it is really alarming to hear from the Minister that we will continue to tolerate in this country a stamp duty of 1 per cent on some transactions and 3 per cent on exactly the same type of property changing hands. That state of affairs does not bear exposure to public opinion.

Does the Minister realise he is quite likely to be faced next year, if he is still here in his present capacity, with another avoidance section, a pageful of archaic language devised by the Revenue people to differentiate and to catch people who would probably succeed in avoiding what he is trying to do in this particular measure? I have already mentioned the person who sells his small premises for, say £20,000. Heretofore, he paid 3 per cent on £10,000 of it and 1 per cent on the other £10,000, assuming it was assessed on a 50 per cent basis for goodwill. That 1 per cent will now become 3 per cent. If a person is a much more well off individual and if he has property worth £200,000, on the sale or transfer of it, in order to avoid paying 3 per cent on the whole amount of money, he forms a company and he then gets in under the 1 per cent level. Will we have a situation next year where the Minister will have to draft a new measure trying to differentiate what may be termed bona fide stocks and shares and some of those people can have solicitors running around the country forming those ad hoc companies——

(Cavan): It would pay them to form those companies.

——with a view to selling property? The effect will be that the small man will not be able to afford that and will not understand it. He will have to pay the higher rate. The well-off individual who takes first class legal advice will proceed on those lines and will be able to avoid the higher taxation. The Minister will be compelled next year to come along with another new section and we will have section on top of section, avoidance and counter-avoidance legislation from year to year. I suggest the Minister will be faced with that possibility. Does he think it is unlikely?

I confess the possibility of coming along here next year with another counter-avoidance section had crossed my mind because I could see the possibility the Deputy referred to. I did not intend to say this but perhaps I ought to mention that, while I have not examined this in any detail, it strikes me that there are possibilities of abuse here which might be dealt with in any number of ways. Perhaps the most popular way would be to reduce the rate of duty all round to the 1 per cent. This, as Deputies will realise, has a certain snag attached to it. Another one would be, as Deputy Hogan suggests, to try to examine the transactions to distinguish between those which might be called bona fide and those which are not. A third way would be to approach it in the way you had to approach present transactions involving companies in estate duty: that is to look behind the shares to the actual assets and decide on the rate of stamp duty in relation to those. I am not saying we are going to follow any of those courses. If there are abuses it would not daunt me to have to bring in another section next year to deal with this matter.

This is reminiscent of Mr. Seán Lemass when, as Minister for Industry and Commerce, he was always prepared to amend one Act by bringing in another Act.

The Minister should be allowed to speak.

He was allowed to speak without interruption from anybody.

I was about to deal with the question of postponing the operation of this Bill. I am afraid I am not convinced that the case for doing so is sufficiently strong to justify my doing it. I can see there is a certain case for it, but I do not think it is nearly as strong as Deputies have conveyed to the House. I can see there are certain people who might have entered into transactions before the banks closed, but I am not satisfied there are very many people in that category who have not at least entered into a contract. I am sure there are some, but I do not think there are very many. In order to meet what is almost certainly a relatively small number of cases I would have to exempt quite a number of other people who would not otherwise be exempt. I do not think I am justified in doing that.

It is very bad to legislate by saying: "Right, if it proves to be wrong, we will amend it next year". That is not the way this House should behave. I do not mind who puts up this proposition to the House because it does not hold water for one moment.

There are two questions I want to ask. First of all, the Minister made the concluding point that we have not put up a sufficient case. He says there could be some transactions which might have taken place but he feels in a number of cases a contract would have been entered into for it. Is it not the case, where there is a transfer of property and a contract is entered into, that it is necessary to have the deeds for it? Is it not the case that in many instances deeds are locked up in banks and cannot be got? Quite apart from the cases mentioned by Deputy Fitzpatrick of people not being able to get accommodation and not knowing what their financial position is—those cases are very numerous—there is also the problem of inaccessibility of documents.

It seems to me there is a compelling case in those circumstances for avoiding injustice in a significant number of cases. This can be done by the Minister simply taking the power to fix the date himself. We are not trying to tell him what is the right date. We will leave that to his discretion. One thing which is evident is that the date which is wrong is the 1st August because it is quite impossible for that date to be employed for this purpose without inflicting injustice on a significant number of people. The Minister may choose to fix an alternative date if he is sure the bank strike will be settled. I would think the best thing for him to do would be to take power in an amendment on the Report Stage to fix the date when the bank strike is over and people have an opportunity to enter into those transactions. I again urge the Minister to do that.

I would also ask the Minister to clarify his intentions with regard to the Schedule. We are in difficulty in voting on this section when we do not know clearly the Minister's intentions in the Schedule. It seems to me he is resisting any amendment of this, but before acting on that assumption I should like to be clear that he is prepared to accept the reasonable proposition I put to him with regard to the limitation of the effect of the Schedule to transactions involving assets attached to business premises and to a compounding of the different interest rates rather than having them on a higher level in all cases. Could the Minister tell us his intentions with regard to the Schedule because on that will depend our reaction to the section?

(Cavan): I would appeal to the Minister to exercise his professional experience in relation to this particular matter rather than be guided by his civil servants. He is not very long out of touch with his profession and if he exercises his professional experience he is bound to know that since the strike began in May——

It began on the 30th April. It has made a big difference.

(Cavan): Since then things are at a standstill in so far as sales are concerned. In one small area I know there are two or three public houses on the market and there has been no real interest in them. Another few public houses are being withheld and not even advertised until the bank strike is over. If the Minister gives this consideration he will see that a very reasonable case can be made for postponing it until the first of the new year.

I do not know what the stamp duty brings in, but I think the Minister himself has made an excellent case for reducing stamp duty to 1 per cent all round because he practically concedes that it is impossible to operate it equitably otherwise. There will be 3 per cent and 1 per cent——

I did pose an alternative.

(Cavan):——even in bona fide transactions, in transactions where there is no sharp practice. As I say, I do not know what it brings in, but we should reduce it to 1 per cent rather than increase it.

I notice that my colleague, Deputy Fitzpatrick, for whom I have much regard, referred to the bank strike. Of course, it is not a bank strike; it is a lock out. I believe in being accurate in this House. I want to come back to what the Minister had to say about it. Of course, the banks are closed illegally, as I have demonstrated conclusively, and, since they are closed illegally, it is completely wrong that we should be told in relation to any legislation in this House that if it is wrong it will be fixed up next year and that it should also be based on illegality.

The Minister did not say to me that the banks were not closed illegally. He avoided the question I asked him. He said: "You take an action against the banks." The banks do not owe me any money and, therefore, I am in no position to take an action against the Irish commercial banks. In fact, it is the other way around, as befits a politician, that I should owe the banks money. I do not agree with an approach in this House which seems to give any appearance of legality to what is, in fact, an illegal closure of the Irish banks.

I do not know in what way Deputy O'Donovan thinks——

——that this section is giving any semblance of legality or illegality to the closure of the Irish banks. I really cannot see how that arises. He may have demonstrated conclusively, as he said, that the closure of the banks was illegal but, if he did so, it was to his own satisfaction and not necessarily to the satisfaction of everybody else.

By chapter and verse.

He purported to state what I said in this regard but I think he did not represent accurately what I said, which was to the effect that there was not a breach of statute by the banks in their closure, but if there was a question of any breach of contract I was not prepared to pronounce on it, that this was a matter for the courts, not for me. That is all I said. I did not say whether there was, in fact, a breach of contract.

In answering the question the Minister said the banks were not obliged to be open on any particular day. That is what he said. I remember well. The Minister said the banks were not obliged to be open on any particular day.

The Deputy may not intervene at this stage.

They are obliged to be open on particular days.

I do not want to pursue this red herring any further. I think I have put on record what I wanted to say in that regard.

So have I.

In regard to the points made earlier. I want to say that, where people wish to enter into a contract for the sale of property and the deeds are not available because they are locked up in banks which are closed, this does not necessarily preclude them from entering into a contract. They may do so, subject to the insertion of certain provisions covering the title. It does not prevent them entering into a contract.

As I have said, I am not satisfied that the number of cases involved here would be such as to justify the exemption of people who should become liable to this. The furthest I am prepared to go is to say that I will make further inquiries in this matter to see if I would feel justified in postponing the operation of this section. I am not prepared, though, to suggest to the House that I am likely to do this. In fact, I am most unlikely to do it because I do not think the case for it is anything like as compelling as the case for not doing it. I will undertake to look at it although it presents certain practical difficulties in the timing of the Bill. However, I will look at it as well as I can, but I am not undertaking at all to do it.

I asked the Minister about the Schedule.

I am not disposed to agree to changes in the rates proposed in the Schedule. That is the question the Deputy asked.

That was one question. The other question was: would the Minister be prepared to limit the operation of this to the assets attached to business premises, which was the stated purpose of the amendment?

We know where we stand then.

Question put.
The Committee divided: Tá, 54; Níl, 49.

Tellers: Tá, Deputies Andrews and Meaney; Níl, Deputies Dr. Byrne and Cluskey.

  • Andrews, David.
  • Barrett, Sylvester.
  • Boland, Kevin.
  • Boylan, Terence.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Brennan, Paudge.
  • Briscoe, Ben.
  • Browne, Patrick.
  • Browne, Seán.
  • Carter, Frank.
  • Carty, Michael.
  • Childers, Erskine.
  • Colley, George.
  • Collins, Gerard.
  • Cowen, Bernard.
  • Cronin, Jerry.
  • Crowley, Flor.
  • Davern, Noel.
  • Dowling, Joe.
  • Fahey, Jackie.
  • Faulkner, Pádraig.
  • Fitzpatrick, Tom (Dublin Central).
  • Foley, Desmond.
  • French, Seán.
  • Geoghegan, John.
  • Gibbons, James.
  • Gogan, Richard P.
  • Healy, Augustine A.
  • Herbert, Michael.
  • Hillery, Patrick J.
  • Hilliard, Michael.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael F.
  • Lalor, Patrick J.
  • Lemass, Noel T.
  • Lenihan, Brian.
  • Lynch, Celia.
  • Lynch, John.
  • McEllistrim, Thomas.
  • Meaney, Thomas.
  • Moore, Seán.
  • Nolan, Thomas.
  • Noonan, Michael.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Malley, Des.
  • Power, Patrick.
  • Sherwin, Seán.
  • Smith, Michael.
  • Timmons, Eugene.
  • Tunney, Jim.


  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bruton, John.
  • Burke, Joan.
  • Burke, Liam.
  • Burke, Richard.
  • Burton, Philip.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Creed, Donal.
  • Desmond, Barry.
  • Dockrell, Henry P.
  • Dockrell, Maurice E.
  • Donegan, Patrick S.
  • Dunne, Thomas.
  • Enright, Thomas W.
  • Esmonde, Sir Anthony C.
  • Finn, Martin.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Fox, Billy.
  • Governey, Desmond.
  • Harte, Patrick D.
  • Hogan, Patrick.
  • Hogan O'Higgins, Brigid.
  • Jones, Denis F.
  • Keating, Justin.
  • Kenny, Henry.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • Malone, Patrick.
  • Murphy, Michael P.
  • O'Connell, John F.
  • O'Donnell, Tom.
  • O'Donovan, John.
  • O'Sullivan, John L.
  • Pattison, Séamus.
  • Ryan, Richie.
  • Taylor, Francis.
  • Timmins, Godfrey.
  • Tully, James.
Tellers: Tá, Deputies Andrews and Meaney; Níl, Deputies R. Burke and Cluskey.
Question declared carried.

Aiken, Frank.Allen, Lorcan.Andrews, David.Barrett, Sylvester.Boylan, Terence.Brady, Philip A.Brennan, Joseph.Brennan, Paudge.Briscoe, Ben.Browne, Patrick.Browne, Seán.Burke, Patrick J.Carter, Frank.Childers, Erskine.Colley, George.Cowen, Bernard.Cronin, Jerry.Cunningham, Liam.Davern, Noel.Dowling, Joe.Fahey, Jackie.Faulkner, Pádraig.Fitzpatrick, Tom (Dublin Central).Foley, Desmond.French, Seán.Gallagher, James.Geoghegan, John.

Gibbons, James.Gogan, Richard P.Healy, Augustine A.Hillery, Patrick J.Hilliard, Michael.Hussey, Thomas.Kenneally, William.Kitt, Michael F.Lalor, Patrick J.Lemass, Noel T.Lenihan, Brian.Lynch, Celia.Lynch, John.McEllistrim, Thomas.Meaney, Thomas.Molloy, Robert.Moore, Seán.Nolan, Thomas.Noonan, Michael.O'Connor, Timothy.O'Kennedy, Michael.O'Leary, John.O'Malley, Des.Power, Patrick.Smith, Michael.Timmons, Eugene.Tunney, Jim.

Question proposed: "That section 40 stand part of the Bill".

What change does this make?

It is providing for the conversion of the duty as and from decimal day on bills of exchange and promissory notes to one new penny. It also provides for exemption of bills and notes drawn outside the State. That exemption will come into operation on 1st February, 1971. That is the date on which the charge of duty on bills and notes will cease and the inconvenience which would be caused if it were necessary to fix stamps to cheques, et cetera, coming from Britain and Northern Ireland before they are negotiated in this country——

What is the purpose of the change in respect of bills of exchange drawn outside the State?

As and from 1st February, 1971, they will cease to be liable for duty in Britain and in Northern Ireland.

The purpose is to bring us into line with that?

As from that date we are ceasing to apply duty on bills or notes drawn or negotiated outside our jurisdiction.

Do we lose anything on that?

£10,000 or £15,000.

Question put and agreed to.
Question proposed: "That section 41 stand part of the Bill."

On Second Stage, the Minister explained this and a number of other sections as being provisions arising out of the introduction of the new First Schedule after the change over to decimal currency. I should like some further explanation of this particular section.

This provides for the charging of duty on loan capital issued by any local authority, corporation, company or body of persons formed or established in the State at the rate of 5s per £200 instead of at the rate of 2s 6d per £100.

Is it the position that the Minister is doubling the duty here and is it an adequate explanation of that to tell us once again——

I do not know why Deputy FitzGerald says I am doubling the duty; it is 2s 6d per £100 at the moment and we are making it 5s per £200.

I accept that. I just could not hear the Minister.

Question put and agreed to.
Question proposed: "That section 42 stand part of the Bill."

This arises out of the insurance company provision in the Schedule.

That is right.

Would the Minister explain what the effect of this provision in the Schedule is? Does this apply something to insurance companies that was not previously applied? Is that the reason for the section?

No. It was previously applied.

Then what is the necessity for the section?

It was 6d and that is something which will not be available to us. The minimum duty will be five new pence, which is equivalent to 1s. The existing duty on these particular kinds of insurance policies is 6d.

For a year?

No—up to two years.

This is an increase in the rate of duty.

There is an increase in this rate of duty.

What percentage would it be?

From 6d to 1s.

100 per cent.

What is the reason for this?

Is this because it is decimalised?

Yes, to avoid operating in half new pence.

It is perhaps a good opportunity, but it is not a good excuse.

I do not think it is an opportunity. I would remind the House that in the case of cheques, a much bigger item, we are in fact rounding down rather than up. We are reducing the duty. The amount involved here will be negligible.

Then what is the point of it?

It is simply a question of convenience to adjust to decimal currency.

I am very sceptical of arguments that you have to adjust to decimal currency by doubling.

The Deputy was not sceptical when I said we were reducing.

No. I am in favour of that.

Why not make it three new pence?

Deputy Tully's suggestion is a very good one.

It does not make enough money, I suppose.

The money involved in this is not substantial at all. It is much more a question of trying to reduce the number of different rates.

That is still not a good argument.

Question put and agreed to.
Question proposed: "That section 43 stand part of the Bill."

Could the Minister state what he has in mind about improving the marketability of semi-State body securities? The section seems to apply only to loan stock. What loan stocks are involved? Does the Minister think this will have an important effect?

I would not think it would have a major effect, but I think it will have some effect. The section provides for the exemption from duty of transfers of stocks of such bodies as the ESB, CIE, et cetera, where payment of the interest on the stocks is guaranteed by the Minister for Finance. We have reason to believe that the existence of this duty is, to some extent, inhibiting activity in the market for these stocks and the elimination of it should, we think, stimulate greater activity in that market.

The Minister is saying that only loan stocks of State-sponsored bodies are guaranteed by the Minister for Finance. There are no privately owned companies, are there, whose loan stocks are guaranteed?

I am not aware of any such.

Surely there must be?

Some of the industrial incentives might involve guarantees of loan stocks.

It would guarantee the loans but not the loan stocks.

Question put and agreed to.

Amendment No. 29 (a) is consequential on amendment No. 29. The two might, therefore, be discussed together.

I move amendment No. 29:

In page 25, lines 14 to 19, to delete subsection (1) and to substitute the following subsection:

(1) Section 50 of the Finance Act, 1969, is hereby amended by the addition of the following paragraphs to subsection (7):

(d) in relation to the construction, alteration or enlargement of a building for use as offices if the greater part of the building is intended for occupation by the owner of the building;

(e) in relation to the construction, alteration or enlargement of a building for use as offices if the owner of the building is a body corporate and the greater part of the building is intended for occupation by a body corporate which is associated with the owner to the extent that either is the beneficial owner of not less than ninety per cent of the issued share capital of the other or that not less than ninety per cent of the issued share capital of each of them is in the beneficial ownership of a third body corporate.

The purpose of this amendment is to extend the relief from stamp duty provided for in section 44 to contracts for the construction of office buildings where a member of a group of associated companies erects and owns an office block which it rents to another member of the group. Amendment No. 29 (a) is consequential.

In the section itself there is a provision dealing with the change in the status of the building arising out of the sale of the building within five years. This amendment introduces the possibility of a building being occupied by people in an associate company but that association itself might be terminated in five years. Would the Minister not feel, in regard to this five year provision in subsection (2) in relation to the occupancy of the building by a particular company, that something similar should apply to the 90 per cent interest in the associate company which is covered by this particular amendment? Otherwise, there will be room for evasion here.

The wording of the section is rather interesting. Sub-clause (d) says:

in relation to the construction, alteration or enlargement of a building for use as offices if the greater part of the building is intended for occupation by the owner of the building.

Does that mean that it does not matter what use he puts it to afterwards; if it is intended for occupation by the owner when the actual work is being done, it does qualify?

No. Subsection (2) of section 44 takes care of that where it provides that if there is a change in the occupation of the building within five years the duty becomes payable. They may have had the intention originally but if they did not adhere to that intention, then the duty becomes payable.

Is this part of the machinery for industrial buildings' allowances?

No, it is not.

Could the Minister deal with my point? It seems to me that there are two ways of evading this and one would be to get the benefit of this duty exemption and then to have somebody else occupy the building within five years. Another way would be to make an arrangement with another company associated with the first company for this purpose, so that it occupied the building and would remain in occupation of the building but would cease to have a 90 per cent association with the original company. In such a case it appears to me there is no provision for payment of the duty.

I am just examining subsection (2) to see if it covers this point.

I do not think so. I am not sure whether this is a likely possibility. The Minister might like to think about it.

I understand it is most unlikely but it is a possibility.

If the Minister thinks it is a real possibility he might like to introduce an amendment on Report Stage.

I am in some difficulty technically about this. The Deputy will realise that I must conform to a strict statutory time limit in regard to the passage of this Bill through the Dáil and Seanad. If I give too many undertakings to look at points and bring in amendments I shall run into difficulty under the Standing Orders and also in regard to the passage of the Bill. I should prefer if the House would bear with me while I look at the section a little longer to see if this point is covered.

I fear I am not in a position at the moment to give a precise interpretation of this but my feeling is that we are providing in the section that we will give this exemption where it is intended to occupy the premises for the company's own use. Then we provide that if this does not materialise or if it changes within five years the duty becomes payable. Under the amendment, what we are allowing in is the group of companies. The claim arises on the basis that the premises were to be occupied by a company or group of companies associated with the applicant and if there is a change in that situation it amounts to the same thing as a change of occupancy as dealt with in subsection (2).

I respectfully submit that if the Minister looks at the paragraph he will see that this would not be the case. In line 22 subsection (2) there is a reference to change of occupancy. My suggestion is that you might have a situation where the company which occupied the building from the beginning would claim an indefinite occupation of it but the ownership of that company which, for the purpose of this transaction had been closely linked with the company constructing the building, might change. But as long as the associate company remain in occupation, change in the capital structure of that company would not come within subsection (2). For that reason I think the Minister might have another look at it.

I shall have a look at it.

Could the Minister say what will happen where, as has happened in some industrial estates, a firm constructs the building and then lets it or sells it to another firm? They might never actually occupy it.

That would be one that would be subject to duty. The original intention was to deal with the building of office blocks as a form of speculation or investment. In this case the exemption will apply only to companies building for their own use.

Amendment put and agreed to.

I move amendment No. 29a:

In subsection (2), page 25, line 21, after "paragraph (d)", to insert "or (e)".

Amendment agreed to.
Section 44, as amended, agreed to.
Question proposed: "That section 45 stand part of the Bill."

Could the Minister explain what is involved here?

This section provides for minor amendments in four sections of the Stamp Act, 1891. These four sections contain specific references to duties which under the new Schedule will be altered or abolished. It is, therefore, necessary to make consequential amendments in these sections and this is what the present proposed section does.

Are there any increases in taxation in any of them?

Question put and agreed to.
Question proposed: "That section 46 stand part of the Bill."

Again, could the Minister explain this?

Section 7 of the Finance Act, 1907 provides that a hire purchase agreement under hand shall be chargeable as an agreement under hand. Amendment of the section is consequent upon the proposed abolition of duty on agreements under hand. A hire purchase agreement under seal will continue to be charged as a deed, as it is at present, with a duty of 10s.

At the same rate?

At the same rate as at present.

That will not be affected by the change?

No, it is only the hire purchase agreement under hand.

It will not be affected by the change in the rate of duty under section 39 and in the Schedule?

Question put and agreed to.

I move amendment No. 29b:

In page 26, before section 47, but in Part IV, to insert the following section:

(1) An instrument being a grant or contract for payment of a purchased life annuity shall be chargeable with stamp duty under paragraph (3) of the heading "Bond, Covenant or Instrument of any kind whatsoever" in the First Schedule to this Act and not otherwise, whether or not the annuity is a superannuation annuity as defined in that paragraph.

(2) In this section "purchased life annuity" means a life annuity granted for consideration in money or money's worth in the ordinary course of a business of granting annuities on human life.

The purpose of this amendment is to provide for the charge of stamp duty on purchased life annuity policies at the same rate as that applicable to policies for superannuation annuities. The rate of duty chargeable will be 1s for every £10 and also for any fractional part of £10 of the annuity. The section limits the application of the reduced charge to such policies as are granted by companies issuing this type of policy in the ordinary course of business, that is, life assurance officers. Purchased life annuity policies are at present chargeable with stamp duty at the rate of £1 per cent on the lump sum paid in purchasing the annuity. Under the First Schedule proposed in the Bill stamp duty will become chargeable at rates varying from £1 per cent to £5 per cent on the lump sum.

In Britain for some time now purchased life annuity policies have been chargeable on the same basis as superannuation policies, as we are proposing to do here. However, it has been represented that in certain circumstances Irish companies catering for this class of investment business would be at a competitive disadvantage unless provision is made for the charging of duty on the same basis as that obtaining in Britain at present. It has also been represented that the lower rates will be helpful in reducing the cost of providing pension schemes.

Will this reduce the rate of duty?

In every case?

From the figure proposed in the First Schedule of the Bill or from the existing situation of £1 per cent?

Yes, the latter.

Amendment agreed to.
Question proposed: "That section 47 stand part of the Bill."

This section deals with one of the major changes in the Budget. I have expressed the view before that there are a number of matters dealt with in the annual Finance Bill that are of a very technical kind and involve changes in legislation not directly concerned with the Budget. In fact a number of provisions with which we have been dealing up to now have not been directly attributable to economic or financial changes in the Budget. Some of them were undoubtedly consequential on certain changes but in a number of cases they are extra matters. This may not be the occasion to discuss it at any length, but I think there is a case for considering, apart from the Finance Bill, changes of this character because they are technical and, in view of the tight time schedule involved in the discussion and enactment of the Finance Bill most years—the exception hardly ever occurs—it is in many ways unsatisfactory to have to deal with these matters in the context of such a time schedule.

This section we are now discussing deals with the imposition of the turnover tax at the rate of 5 per cent compared with the 2½ per cent which existed prior to the Budget of this year. One of the matters which have been the subject of considerable discussion not merely in the course of the Budget debate but in a number of debates and have been raised on a number of occasions in the House, is inflation and the rising cost of living. I do not suggest and I do not think anyone will seriously argue that one factor alone is responsible for price rises. The Minister for Transport and Power today tried to create the impression that particular organisations or sections of the community exercising their powers were responsible for it. They are undoubtedly responsible for part of it but if the cost of living rises it is a natural reaction for organisations or groups representing sections of the community to seek compensation for the rise in the cost of commodities by wage or salary adjustment.

The Government have responsibility for the turnover tax and the Government also have an obligation to set an example. The price rises which have occurred in the last 12 months and which are reflected in figures that were given to me by way of answer to a Parliamentary Question the week before last, have been some of the steepest ever and indeed have affected a wide range of commodities. It is to these increases that I wish to direct the Minister's attention and in turn the attention of his colleague, the Minister for Industry and Commerce.

Let me deal with the price changes that have occurred between mid-May of 1969 and mid-May of this year, before the increase in the turnover tax or certainly before any sizeable influence had been exerted on prices by the turnover tax increase. Beef went up by between 10 and 12 per cent; Mutton went up as much as 8 per cent. The increase in bacon ranged from 6 per cent for uncooked and 16 per cent for cooked ham. Certain types of beef went up even more than I mentioned, by as much as 14 per cent. Fish increases ranged from 11 to 13 per cent. With regard to vegetables, one of the most phenomenal rises was in the case of potatoes which increased by 50 per cent. I need not quote the full list because it has been published, but these increases indicate the astonishing rise in the cost of living.

Going to another part of the schedule of price changes you find rises in the cost of clothes ranging from 8 to 13 per cent, and in the cost of drink averaging 8 to 10 per cent. Rent increases ranged from 9 to 13 per cent. Fuel increases ranged between 13 and 14 per cent, less for briquettes—as low as 3 per cent. Gas and electricity increases were between 6 and 7 per cent. Footwear increased by amounts ranging from over 5 per cent, in respect of certain articles of childrens footwear, to 9 per cent for men's footwear. Then there were variations in respect of women's shoes, for fashion shoes, from between 5 to 9 per cent. All medicines showed a substantial increase and hospitals charges increased by 15 per cent.

These price increases show the substantial rise in the cost of living in the space of 12 months, but what people are concerned about is the fact that when the turnover tax was raised from 2½ per cent to 5 per cent the increases in very few cases were limited to the extra 2½ per cent. Experience has been similar to what it was when the turnover tax was introduced originally. It was stated to be 2½ per cent but with very few exceptions the 2½ per cent was the minimum and the actual increase was substantially more.

One of the factors that have affected us, as well as the disturbed state of the country as represented by newspaper, radio and television reports of the situation that has persisted here for some months, has been the very substantial increase in the prices of a variety of commodities and these have been aggravated further by the increase in the turnover tax. When the turnover tax was being discussed here during the Budget debate and on the Second Stage of this Bill, I said that the turnover tax was a convenient method of getting in a large amount of revenue without specifically putting a tax on named items at a particular rate, that it had the advantage of catching everybody in the net and raking in a substantial amount of money.

If that is the method applied to raise revenue there is an obligation on the Minister for Finance, on his colleague, the Minister for Industry and Commerce, as well as on the Government as a whole, to ensure that the changes made as a result of the introduction of the turnover tax will be confined to that and that the public will not be exploited by any section. Indeed, I see here "Substantial increases in transport charges." There have been substantial increases in fares and, in addition, since then there has been a rise in the cost of petrol and other charges affected by the turnover tax and which have been passed on by direct charge to the consumers of the various brands of petrol. The effect on our own people has been severe but it has also affected visitors, whether they are Irish people taking holidays at home or visitors from abroad coming to spend their holidays here.

I have never believed in the idea that price control alone can keep costs down. There is absolutely no confidence in the existing machinery for examining prices. A promise is made that prices will be looked into and time passes and nothing happens. I do not want to quote again the announcement made by the Minister when he was Minister for Industry and Commerce that there would be a standstill on certain things until the matter was investigated. Nobody ever heard the result of the investigation and in the meantime the announcement that there was to be a standstill was forgotten. Yesterday or the day before the Minister for Industry and Commerce issued some sort of statement on the radio to the effect that prices should not go up until he had a chance of looking at them.

If the machinery was functioning properly these applications would be considered by a prices advisory body or by the prices section of the Department of Industry and Commerce and if the facts were presented it would be possible to get an authoritative statement either that the price was justified on the basis of the claims made and sanctioned or was not justified. Instead we have this sort of public competition between organisations and groups and a particular Minister, whoever happens to be there, to give the impression that the matter is being investigated when in fact the investigation is illusory. This is bad and creates confusion. It involves some traders in conflict with their customers because prices vary from one place to another. In fact, it is merely a temporary arrangement until the storm passes and then the price rises are reflected on a similar level throughout the economy.

Undoubtedly the substantial price increases in the last 12 months have very seriously affected the value of wages and salaries but more particularly the value of pensions and allowances paid to retired persons. It has been rightly said that the increases advocated in the Budget, and being implemented by the Social Welfare Bill, are higher than those given in the past but they are to meet a substantially higher cost of living. When they are compared with the wage and salary demands made by different sections we can see the gap between the thinking and the gap between the approach in dealing with pensioners and retired people and the demands being secured by other sections of the community who have the power to exert influence and pursue their claims in a more vigorous and effective manner than retired persons or persons on fixed incomes. There is an obligation on the State to ensure that if tax changes, such as those incorporated in section 47, are made—and which in effect mean the imposition of 5 per cent turnover tax compared with 2½ per cent heretofore—the increases will not exceed the appropriate amount in section 47.

The increases in prices this year have not merely meant hardship for retired persons and pensioners and others on fixed incomes but they are inevitably putting this country into a less competitive position compared with our principle competitors on export markets. There is a very serious obligation on the Minister to ensure that the increase in turnover tax is not exceeded or abused. There is another very serious aspect of this tax and that is its effect on small businesses. I know that there are changes being made to make provision for small traders but I do not think it is ever adequately understood what difficulties small traders have.

In view of the extent of their trade, supermarkets and larger concerns are able to employ qualified staff— accountants and bookkeepers—to keep the books and to deal with Revenue not merely in connection with turnover tax but in regard to PAYE and other such matters. However, in the smaller firms the owner or a member of the family has to do this work and the increased amount of bookkeeping necessary imposes many onerous duties on traders. There is a certain exemption allowed in respect of limited turnover as a recognition of the extra work imposed but the range of commodities covered by turnover tax and the volume of transactions involved create considerable difficulties for small traders. Therefore, further special consideration should be given to them.

Undoubtedly turnover tax, particularly as it has operated in this country, is a major contributing factor to the high cost of living and this year it must have had a further serious inflationary effect on the economy. This is particularly the case when it is taken into consideration that the data regarding price changes to which I have referred, which compare the rise in prices between mid-May of last year and mid-May of this year were collected prior to the change in turnover tax from 2½ per cent to 5 per cent. The effect on the cost of living of the rise in prices which will result from the increase in turnover tax is bound to be considerable this year; it has already manifested itself in a number of price changes far exceeding in effect and amount the actual increase in turnover tax. I consider the turnover tax has a direct contributing influence on the price changes and on the inflationary situation and is bad from the economic and social point of view.

In my opinion this section 47 is the nub of the 1970 Finance Bill. On the evening of the Budget I described the turnover tax as a "lazy man's tax" and I repeated this comment in a television interview. At that time many people thought it was unfair to the then Minister for Finance and some of them said that prices were not being increased. However, my reply was that all prices were being increased and in a short time the truth of what I said became apparent.

In 1963 when the turnover tax was introduced, the people in favour of this tax said that the increase in taxation would be so small that nobody would notice it. However, the reverse was the case and it had an amazing effect on prices. At that time, the kite-flying Parliamentary Secretary, now the Minister for Transport and Power, adopted the same tactics as he adopted here today. We all remember his famous statement in Roscommon that only fur coats, expensive cars, speedboats and jewels would be included in the turnover tax. Subsequently, he found he was wrong—not for the first time and I am sure it will not be the last—and he looked for a scapegoat.

In this House the Minister for Transport and Power today attempted to blame the fantastic increase in prices in the last couple of months on the trade unions. He said deliberately that proposed increases were being demanded from "unionised houses." For his information, and for the information of the Minister for Finance who is now in the House, I should like to point out that all types of houses, and particularly those who do not employ trade union labour, have been picking up quite a tidy penny throughout the country as a result of turnover tax. In fact, it was just the excuse some of them required.

As I am a teetotaller I am not personally concerned, but I was amused when I heard the comments by the Minister for Industry and Commerce in regard to the price of drink: he said the increase could not be allowed and he ordered that the price remain the same as previously. For the information of the Minister, I would inform him that in some country towns when turnover tax was imposed the price was increased by 3d per bottle or pint and 6d per glass for spirits, in addition to the increase imposed in the Budget.

This has happened in the country and yet we have comments from the Minister for Transport and Power about prices being forced up by trade unions. I would point out that the increase in turnover tax from 2½ per cent to 5 per cent has been interpreted in practically all cases as giving a right to the trader to charge an extra 5 per cent. I do not know how they calculated it, but it appears many of these businesses have persuaded themselves and their customers that they carried the initial 2½ per cent in 1963. Obviously they hope the customers will have forgotten that they increased their prices at that time.

A man getting £20 per week is in receipt of only £19 because with a spending power of £20 he is taxed at the rate of £1. People wonder why trade unions are looking for increased wages but when the wages are deliberately reduced by the Government by means of this tax surely they are entitled to compensation. In addition in many cases local authorities have collected addition amounts of 2s 6d to 3s 6d in rents so that any increase in wages is eroded by all the extra charges. If we consider the £2 10s per week the public servants are reputed to be getting, by the time the increased turnover tax and income tax are deducted those people will have very little left to compensate for increases in commodities. The old story of increased wages being responsible for the rise in prices is still trotted out. If that is the case, surely the people who have to pay for the goods must get some compensation and it is no good for the Minister for Finance to present a budget which increases prices by at least 1s in the £.

I know that Deputies from all sides of this House when discussing in private the matter of prices have admitted that something has gone wrong with the taxation system. We can say that the present Minister for Finance was not responsible for this lazy kind of budget. However, it was decided that £20 million extra was needed and it was found that 2½ per cent tax would produce in excess of £22 million.

Whether the present Minister for Finance drew up the Budget or not the onus is on him to ensure that no more than 2½ per cent extra is being collected. When Deputy Colley was Minister for Industry and Commerce he was asked if he would do something about it. He said if complaints came in they would be investigated. I should like to know how many complaints were investigated. I have not heard of any complaints being investigated and I have not heard of anyone having to reduce their prices as a result of investigations.

The Minister's predecessor brought in a Budget last year which was supposed just to balance. Before the end of the financial year that Minister brought before this House supplementary estimates amounting to £35.8 million and he subsequently balanced his Budget with £½ million to spare without adding on extra taxation this year to make up for the extra money spent last year. I suggest the Minister could easily strike out the 2½ per cent turnover tax he has added on because this year the situation is even worse. As a result of wage increases, we have so much extra money coming to the Government that I am quite sure they can very easily raise the money they require. They do not have to scatter it all over the place to please either their friends or anyone else before the year is out. They could easily replace the turnover tax with the £35.8 million which was so easily obtained last year and which will so easily be obtained again.

The doubling of the turnover tax was a scandalous act. When the turnover tax was introduced in 1963, we on this side of the House said that the biggest temptation was that when somebody wanted easy money some Minister for Finance would double it. I am suggesting to the Minister that while we hear talks of substituting an added value tax for some of the taxes we have, as long as the temptation is in the hands of the Minister for Finance to increase the turnover tax every time somebody wants a big amount of money quickly and easily for them, but fairly hard for those who have to pay it, that temptation will be used. This is not the end of the turnover tax. It will be increased again and again. I would ask the Minister, who is new to this ministry, to consider this very carefully before he proceeds along that road. It was presented to him on a plate and he hopes the money will be presented in the same way. If the Minister checks with his own backbenchers he will find the same objections to the turnover tax from them as he finds from these benches because they being ordinary people living with ordinary people all over the country must understand that the turnover tax is the greatest curse on this country for many years.

I should like to refer to the speeches made by Deputy Cosgrave and Deputy Tully on the turnover tax. I am sure Deputy Cosgrave's figures are quite accurate but he did not expand on them fully in order to make a fair case. We have no control whatsoever over the prices of things like fuel oil which we have to import. I am sure there has been a steep increase in the price of oil whether it has come from the United States, the Middle East or Russia, which are the three places we import oil from. This is bound to affect the costs of many of our manufacturing industries and as a result the end product will cost more than it did this time last year. We have to face the fact that inflationary tendencies are not confined to this country. The United States Government are fighting a collossal battle against inflation. Britain and most European countries are also fighting against inflation.

Even if turnover tax had not been increased I feel sure there would have been some price increases. I do not accept Deputy Tully's statement that this was a lazy man's way of getting the money we wanted. I recognise that this was the only way so far shown we could get the necessary money to increase old age pensions, blind pensions, widows' pensions and children's allowances. Because of the inflationary tendencies throughout the world today it is our duty to offset as far as possible these inflationary tendencies so that they will not affect the weaker sections of our people.

By putting up prices? That is an interesting way of offsetting an inflationary tendency.

The Deputy spoke without interruption and I would ask him to allow me to make my brief con tribution without interruptions.

I was interpreting what the Deputy said.

I do not want the Deputy to interpret what I say. I want him to listen.

I know that.

The point is that nobody has shown us how to raise the necessary finance to increase social welfare benefits. I do not suggest they are adequate.

I did point out that the Government got £35.8 million last year for nothing. They could have done something with that.

I am sure it was used to good purpose.

The Deputy has great faith. I am afraid I do not have that faith.

The Budget was balanced.

We want to find out how it was spent. That might be embarrassing.

The question I should ask the Opposition is: if you were in power tomorrow would you abolish the turnover tax?

We would abolish it on food straight away.

It is a very laudable thing to take it off food but once exceptions are made all kinds of things start happening.

Did not the Government make exceptions for animal medicine?

No one has yet worked out a model tax which will hit the people with money and help the people who do not have money. What I do say is that the Government made the best possible attempt——

The worst.

——to help the less better off sections of our community by taxing the people who can pay tax. If any Opposition speaker can show——


Deputy Moore without interruption.

——that they have an alternative to this system I am sure the Minister would be glad to hear it. He would probably even try to implement the suggestion. Unfortunately, all we have heard from Opposition Deputies is criticism of the turnover tax and unworthy motives attributed to the Minister and the Government but no realistic approach to the question of how, if turnover tax is not increased by 2½ per cent, to get the money to pay increased social welfare benefits. I shall be convinced of the sincerity of the Opposition when I hear some intelligent suggestion along these lines. Until I hear such a suggestion, I regard with suspicion the Opposition's great concern for the less well-off sections of our people.

Deputy Lemass said it was no business of the Opposition to write the Budget.

Deputy Moore's contribution and the contributions made from the other side of the House on the turnover tax sounded like an old record with a rusty needle about it, like the old record of Deputy Paddy Burke saying for the 16 years I have been here, with a slight sojourn upstairs, that every time one voted against the Budget one was voting against increased benefits for old age pensioners.

I would remind the Government that there is more than one way of doing a job. The challenge put across the House by Deputy Moore as to what, in fact, the Opposition would do if they were in power, is one that can be taken up.

This was a lazy man's Budget, as Deputy Tully has said. This was the great error in it. It was so global and it meant such a general increase that it made price increases far greater than the 2½ per cent which was indicated. The figure of 2½ per cent when related to a coin, particularly for items bought in small units—the poor do buy their items in small units—does lend itself to a possible increase to 3 or 4 per cent because it makes a convenient part of the coinage. Indeed, when we get our new coinage it might be even more difficult.

When this tax is added on globally at the point of sale a bad situation in so far as prices are concerned is created. The argument has been put forward that those who have more spend more and therefore pay more tax. The argument against that is that they are able to pay more and they should pay more in indirect taxation because they have more to spend. The truth is that this is the lazy man's way of collecting tax. Instead of introducing turnover tax the application of the 2½ per cent indirect taxation if it was necessary—and we on this side of the House do not say it was necessary—should have been of a specialist kind. It would have been better if food had been excluded and if medicines had been excluded, as was suggested. One could then see some merit in the imposition of taxation if money was required for good purposes. There should be selectivity and the working man or the poor man should get the greater advantage. Turnover tax has the great demerit that it does not give that selectivity. I would remind the House that no matter how much the rich man pays for his lunch or his dinner he can only eat one meal and the limit of the increased taxation which can be levied on him is the percentage increase in the price of that meal.

The increase in the turnover tax of 2½ per cent was a follow-up to the introduction of the 2½ per cent tax and this was a mistake. What was needed was a selective type of taxation, if such taxation was necessary at all and we do not admit that it was necessary. As a practising politician and a pragmatist I can see that it is extremely difficult to write it out now. To my knowledge in the history of this State there was only one major change made in relation to a big item in a Budget and that was in 1948 when £9 million of food subsidies was removed by the Fianna Fáil Government. This was in 1948 and the Budget was introduced before this party went into power.

Immediately after we went into power that £9 million of food subsidies was restored. I was not a politician because I was too young but I remember that during the election campaign the then Leader of the Opposition, Deputy John A. Costello, remarked on the price of butter. Having been returned as Taoiseach he said that the thing which struck him most in his election tour was that the poor people spoke to him about the price of butter. As Taoiseach, Deputy Costello restored the food subsidies. It was possible for him to do so because they had not been written into the economy. Once something is written in and left in over a period of years it is extremely difficult to take it out. When the Government changes, as it inevitably will because of the behaviour of some members of the present Government——

Hope springs eternal.

Hope may spring eternal, but there are forebodings and foreshadowings which were never there before. We will say no more about that. One of the jobs which will come before the new Government will be the changing of this legislation. There is no use in saying that it can be wiped out or that these things can be done with a stroke of the pen. It is more difficult than that. It is wrong that the increase should be made in respect of a widowed woman with five or six children who is living poorly on the children's allowances and the widow's pension. It is quite wrong that if any of us in this House, who are quite well paid now, walk out and go to a first-class restaurant we will pay the same percentage on our meal as the widow will on her poor meal. I do not want to advocate taxation from this side of the House but it is a fact that the application of added value tax at the various stages from manufacturing stage to point of sale should allow for the variations which will be necessary and proper so that there will be fair play.

The Government may be running into very difficult times in relation to this turnover tax. I would remind the Government of the activity which toppled the Government of France some years ago when M. Poujade got his millions of small shopkeepers together. They were protesting at that time against a form of taxation at point of sale and they toppled the Government because of it. This Government are running into that sort of situation. I do not like the reason. The reason worries me. If they run into that sort of situation they are running into disintegration and that will not worry me a bit.

In respect of turnover tax there is a feature which is clear to any one in trade. It affects the small shopkeeper in a way which some of them are not aware of yet. When supermarkets reach a stage in their turnover on goods where they can demand preferential terms from manufacturers and where the size of their turnover is such that they can buy the necessaries of life at a cheaper rate and dispense them from their stands at a lower price, where they can put pressure on the supplier so that the supplier increases the price to the small shopkeeper and decreases it to the supermarket, the supermarkets can very often, in the most artificial way, because the shopkeeper is paying too high a price and the supermarket is paying too low a price advertise that they charge no turnover tax. The supermarkets will then sell the articles as cheaply as or cheaper than the shopkeeper. This will lead to the absolute destruction of small shopkeepers by a business practice which is improper and which might merit a jail sentence in the USA.

The cause of this situation has been the global introduction of the turnover tax. I believe sincerely—and I speak at this stage not for my party and not as producing the ex cathedra policy of my party as stated—that it will be a very obvious duty of the next Government—and please God they will come soon—to look at this whole system of indirect taxation and to produce a far more selective system. There are many commodities which, after the addition of wholesale tax and turnover tax, bear 17½ per cent tax payable to the Government at point of sale. This system created such inflation, discontent, and so many acts of aggression and riots in France that they had new governments every month of the year. Let us hope that the next Government will be able to do a good job by replacing this tax, if it has to be replaced and cannot be removed in its entirety, by a tax which will be fair, equitable, selective, and appreciated by our people.

One of the repercussions of the fact that there is a condition of great distress in both parts of our country at the moment—in the north and in the Republic—has been that the extent of the distress which exists in this part of Ireland is being overlooked because of the need for most of us to concern ourselves with what is happening north of the Border to certain sections of the community there. While all this is going on, there is no doubt that it has, from the point of view of the Government, had a very useful and valuable effect in distracting attention from the very great hardship which has occurred as a result of the indirect taxation in the Budget and embodied in this section of the Bill. This whole change in the fiscal policy of the Government party represents a change in the social consciousness of that once great party who were concerned with the social issues in our society. It is a change from their attitude of the 1930s when they did concern themselves with taking money from those who were better off in order to give it to those in greatest need. That is a very significant departure in Fianna Fáil policy. The introduction of the turnover tax meant that they were giving expression to their allegiance to a completely different section of society than to the sector which once elected them as a popular government concerned for the underprivileged in our society.

The doubling of the turnover tax now has meant a doubling of the pressure on the section of our community which are least capable of bearing the financial impositions implicit in this new increased taxation and the real distress which has followed this increase. This taxation imposes in a brutal and painful way an increase on essential consumer goods and if it were not for the extraordinary emergency situation north of the Border with which we are concerned, the Government would be in great peril from the electorate because of this tax if they were forced to go to the country now or at any time within the next six months.

We all hope the northern situation will be clarified so that we might be allowed concern ourselves with our domestic policies and with the grave deterioration that has taken place in the standard of living of the ordinary people—white collar workers as much as the industrial workers—but, above all, in relation to the dependent classes whose needs have been discussed under the Social Welfare Bill, the widow, her children, old people, the unemployed and all these other classes which should be the first consideration of any conscientious democratic government in a society such as ours.

Other speakers pointed out that a number of traders attempted to carry the 2½ per cent turnover tax. A number did so but they cannot and could not be expected to carry the 5 per cent. For that reason, they are passing it on so that we are now being subjected to a great extent to the impact of this taxation on essential consumer goods. These taxes have been imposed on the ordinary individual. They have been imposed on the fathers of large families and on those dependent groups about whom we have talked during the discussion on the Social Welfare Bill and who are still waiting for compensation for the repercussions of this tax on the basic essential commodities of life— bread, flour, tea, sugar, milk and so on. These people are not buying power boats. They are not buying fur coats or diamond rings or any of these other commodities that were mentioned by the Minister for Transport and Power. They merely buy the essential commodities of life. Increase taxes but increase capital gains tax, wealth tax, sur-tax, corporation profits tax. In other words, increase the tax of those people who are not concerned with what is the price of bread, butter, tea or sugar but who might worry about what is the price of fur coats or diamonds. Increase their taxes until they begin to squeal and if money is still needed, then other taxes could be considered. However, that has not been done because the new political logic of Fianna Fáil is that if there is a tax on dividends, capital levies and so on, there will be a disincentive to increase production and all these foreign entrepreneurs will disappear overnight; industrialists will stop working and manufacturers will stop turning out goods. What is sauce for the goose is sauce for the gander. Why should the builder's labourer, the carpenter, or the clerical worker make a sacrifice in order to ensure the continuance of the Government's concept of an efficient and private enterprise capitalist economy?

Why should a father turn to his family and say: "We will have less bread, less milk, less tea or less sugar because the Minister for Finance wishes to continue the operation of private enterprise capitalism here so that he might keep these wealthy people wealthy and help them to become wealthier still?" Why should they make sacrifices? The days are long gone when the trade unionist, the ordinary worker, was prepared to make sacrifices to perpetuate private enterprise capitalism. You believe in it, you make it work but do not turn to the worker to ask him to make it work. We will encourage the trade union movement to ask for compensation, to insist on getting it, for the depreciation in the weekly or monthly income of the worker. We will see that you give it to him and disrupt the economy until it is borne in on you that, if you want to work private enterprise capitalism, you can soak your own friends but you will not go on soaking the workers. The worker, to the extent that he can be responsible for the dependent classes in his society, will continue to ask for bigger increases for the widow, for the old age pensioner, for the unemployed —who are unemployed because you continue to operate private enterprise capitalism.

The Deputy will surely agree that we cannot discuss the whole economic fabric on this section which deals with turnover tax? This is turnover tax. It is section 47.

I have been asked by Deputy Moore where we are going to raise the money if we do not increase taxes. I shall tell him.

The Deputy would not be in order. Deputy Seán Moore was not in order in asking the Deputy.

You should have told him so.

I was not in the Chair.

The Deputy was not told he was not in order.

I am telling the Deputy now he cannot discuss the whole economic structure on section 47. It deals with turnover tax.

We have been told by Deputy Colley, the Minister for Finance, on repeated occasions: "All you people do is criticise; all you people do is ask for increases, but you never tell us where you are going to get the money." I am telling you where you are going to get the money.

The Deputy should keep within the rules of order.

I am within the rules of order. If Deputy Moore was within the rules of order in asking the question I am within the rules of order in answering it.

The Deputy is not in order. This section deals with turnover tax. The Deputy must relate his remarks to turnover tax.

I am talking about turnover tax. I am talking about nothing else except the turnover tax. If you will listen carefully you will hear me talking about the turnover tax.

I have been listening very carefully. The Deputy perhaps mentioned it once.

If you listen to me you will hear me making the case that the provision in this Bill we are now discussing——

Perhaps the Deputy should listen to the Chair.

——in section 47——

It deals with turnover tax.

Yes, which has so increased the cost of living that we in the Labour Party intend to insist that the trade union movement will ask for compensation for all their workers.

That does not arise on the section. It would arise on a general debate on the economics of this country but not on turnover tax.

The turnover tax is responsible for the demands by the trade union movement. It is responsible for increasing taxation and for the inflationary trends which those people continually talk about.

The Deputy should relate his remarks to the section, which deals with turnover tax and nothing else.

On a point of order, could the Chair explain to me if it is contended that, since the section refers to the turnover tax, an argument cannot be made to prove the effect of the increase in the turnover tax? Is the Chair ruling that that is not admissible?

The Chair is ruling that the Deputy was going wide of the section.

Is Deputy Browne not entitled to make an argument to show the effect of the 2½ per cent turnover tax increase which is what he was trying to do? With all due respect to you Sir, that is what he was trying to do.

The Minister has introduced his increase in turnover tax in order to raise enough money to pay for certain services in this community. We are making the case that this tax increase is unnecessary and undesirable. We are making the case that it is both unnecessary and undesirable because we believe there are alternative sources of wealth. That is what I am dealing with. I have outlined the various sources of wealth which I believe are there. We believe this Government have failed to tax people who are better able to pay than the people they are now taxing.

The increase in the turnover tax has eventuated in the recent increase demanded by the Licensed Vintners' Association in relation to drink prices. We have the Minister for Industry and Commerce saying to those people that they may not have those increases in drink prices. The scandalous part of it is that he is concerned about the increase in drink prices, not because the widow, the old age pensioner, the unemployed or the average ordinary Irish consumer is concerned about the increase in the price of drink. He is concerned simply because of the fact that we are in the process of pricing ourselves out of the tourist business. They are concerned for the visitors, who will, as they have been doing in increasing numbers, express their views by refusing to come back to this country because of the appalling increases in prices. The unfortunate thing is that there are so many of our people who are captives in this kind of economy and who cannot get away.

We are opposed to the general principle of the turnover tax. We are opposed to the principle whereby essential commodities are taxed at the expense of ordinary people, while considerable sources of wealth held by minorities in our society are still not taxed to their full capacity. We further believe that what they call the necessity to tax the mass of the people—we do not share that view—in order to preserve the great wealth of the minority is a direct and logical consequence of their putting their faith in the whole concept of private enterprise capitalism. They say they want the increase in the turnover tax in order to help the less wealthy.

Our answer is that if you had ordered the economy over the years, if you had increased the wealth potential of this society, if you had used to the maximum land, labour and capital to the extent that that was possible in the last half century, then the wealth would be there. Then you would not have to do this Robin Hood in reverse role—that of robbing the poor to make things easier for the rich. The wealth would be there. But because you have emigrated one million of your people, because you keep 70,000 continually unemployed, because you keep your lands unused and because you believe you must go on doing this so that you will retain private enterprise capitalism and protect the wealth of a minority in our society, you are faced with this retrograde, conservative, Tory, fiscal policy for which, I hope, when the next general election comes, you will be rightly rewarded by the electorate and put out of power for the rest of your political life.

I want to make a few brief comments on this section. We, in this party, will never approve of taxation on food, never, It does not matter what way taxation is wrapped up, what pretence is made for it, we will never, under any circumstances, give any support in this House to any group of people who tax food. There is not a writer on the theory of public finance who supports taxation on food, not a single writer that I know of, and I think I know most of them pretty well.

I agree with everything Deputy Dr. Browne has said. We opposed this tax when it was introduced originally. As Deputy Donegan said, it is now written into the economy and it will be very hard to take it out when the present Government are put out of office, but it will not be difficult to get rid of the turnover tax on food. As I said on Second Reading, as far as I could make out from the not easily read reports of the Revenue Commissioners the loss of revenue would be about £3 million a year and there would be, therefore, no difficulty in getting rid of the turnover tax on food. Because of the harsh burden it creates for large families not too well off we will, under no circumstances, tolerate it for one moment.

Hear, hear.

I agree with all those Deputies who say that this increase of 2½ per cent in the turnover tax, making it 5 per cent, is an unimaginative, lazy way of finding a large sum of money without bothering to think of other ways of securing the same amount of revenue, other ways which would create less hardship for the poorer sections of our community. We had Deputy Moore telling the House that it was essential to increase this tax so that pensions and social welfare benefits could be increased.

And we are going to stop inflation, too.

Of course. I am wondering does anybody ever stop to think of the unfortunate widows who have half of their late husbands' pensions, who get no increase of any kind and who have a total income of £5 or £6 a week on which to live, to buy food, to clothe themselves and pay whatever outgoings there are on their homes. They cannot escape paying this 2½ per cent increase which of course, does not end, as everyone admits, at 2½ per cent. Deputy Tully made a very strong case to prove it is 1s in the £ and not 6d in the £ and I think it has been everybody's experience that, when it was first introduced, there was no place in which it was not 3 per cent and, in many cases, it was 5 per cent. The increase is having the same effect now. Recently on a television programme in which a number of people here on holidays from Britain were interviewed on their way back, almost without exception—I think there was one exception—they said that what shocked and surprised them most was the cost of everything they had to buy in the shops. Surprisingly enough, they did not complain too much about hotel prices but it was quite obvious that the increase in the turnover tax had a direct bearing on the cost of everything they had to buy.

This turnover tax operates in a peculiar way. I came across a case recently in which an importer of sheet tin for a particular job had to pay both turnover and wholesale tax, 15 per cent in all. If an importer is bringing in steel, or anything else, which is over ? of an inch thick that does not carry either tax. It is quite extraordinary the way in which this tax operates and I should like an explanation from someone as to how this sort of situation is arrived at in which tax is chargeable on one commodity and not on another though both are used for manufacturing purposes.

With regard to tourism, I heard a very strong argument made. If an industrialist is exporting industrial products he does not charge turnover or wholesale tax. Tourism is, in fact, an export industry but it has to pay both turnover and wholesale tax. This is a lazy man's tax and everyone must carry the burden irrespective of whether or not he is able to bear it. All must pay it. It is the easiest way in the world in which to collect taxation and there is a great temptation for a Minister for Finance to double this type of tax whenever he needs a large sum of money. It is a tax which has been universally condemned. It has a great deal to do with the increase in the cost of living, an increase about which everybody is complaining.

It is amazing to discover the income brackets which have suffered a lowering in their standard of living as compared with some years ago. These people have now to decide to go out less often and to give up certain luxuries, despite the fact that their salaries have been increased. Salaries are just not keeping pace. The reason why they are not is because of the turnover tax. Unscrupulous traders certainly increase the tax substantially and I asked the Minister for Industry and Commerce by way of question the other day if he would supply a list showing the turnover tax that should be charged on commodities costing 1s, 2s and 2s 6d. Traders tell me they have an impossible job trying to convince their customers that they are, in fact, being just and honest in their application of the tax. They want an official guide list to display. There has been no effort to examine the effects of this tax on small traders. Because of the hardships this tax has caused it is wholly unacceptable to most of us in this House.

(Cavan): The turnover tax has been described as a lazy man's tax. There can be very little doubt but that it is a lazy man's tax. The Minister obviously did not give any thought to the effect his budgetary proposals would have on our tourist industry, an industry which is alleged to be our second biggest source of income. We are not blessed here with guaranteed weather. We cannot assure tourists that they will have sunshine or that they will not have rain. Tourists who go to the Continent know in advance the type of weather they will have. The same cannot be said about our weather here. What we could offer to tourists here, up to recently, was reasonably cheap motoring; reasonably cheap drink; reasonably cheap food and reasonably cheap hotel accommodation. But, under every one of these headings, we are proceeding to price ourselves out of the tourist market.

The first reaction to the Budget was that it increased practically nothing; that it taxed practically nothing. However, when people got down to consider it, it was obvious that it taxed petrol to the tune of about 2d a gallon; cigarettes; drink; food. In other words, it became obvious that it taxed every blessed thing that the tourists had to buy when they came here. I am really speaking about the tourists in so far as they are a source of income here as they provide a part of the economy here. However, apart altogether from the unsettled conditions in Northern Ireland, and the fear of unsettled conditions here brought about by the Minister's own colleagues, the Budget has done a great deal to discourage tourists from coming here. Under that heading, it must be condemned.

The Minister for Finance, when drafting the Budget, did not give any attention at all to what should be taxed or to the effects of taxation. He simply decided, in effect: "Let us tax the lot". He could really have been on a binge for the previous 12 months or he might have been spending his time in no way connected with his post as Minister for Finance and simply decided to double turnover tax irrespective of the consequences.

I really think it rather amusing to note the concern of the Minister for Industry and Commerce about the increase in the price of drink. What did he expect? I do not say that the increase in the price of drink is reasonable but surely the Minister for Industry and Commerce was warned, weeks ago, that the "pint" would be 3s 7d within a short time and that it would go up again before the end of the year. Did the Minister for Finance not play his part in bringing about the increase which is complained about now? Did the turnover tax not play its part in that directly and, indirectly, did it not put up wages; did it not justify demands for wages by those working in the liquor business? What was the Minister for Industry and Commerce to expect but that publicans would increase the price of drink. He appears to have been shocked — whether he was shocked that there should be any increase or shocked by the amount of the increase, I do not know. Certainly, he should not have been shocked by the fact that there was an increase and he, and other members of the Government, must accept responsibility for that.

We have been suffering in this country for a considerable time from industrial unrest, from strikes, from lock-outs. We are told that all these are damaging the economy severely. Is the system of taxation not part of the cause of these strikes that we have here, the system of taxation that puts up the cost of living and drives the workers of this country to try to cushion themselves against these increases? We have heard the Minister for Social Welfare speak here over the past few days about his Social Welfare Bill. As a matter of fact, this afternoon, when somebody requested a Committee Stage for that Bill, the Minister for Social Welfare said a Committee Stage was not necessary because it was that perfect it could not be improved. The paltry provisions of the Social Welfare Bill do little more than cushion the social welfare classes against the increases in the cost of living, against the increases in rates, brought about by this turnover tax which will put up rates in so far as the cost of institutional services in hospitals, and so on, will go up.

It is really difficult to define or to see where the effect of a stupid, thoughtless tax of this nature will end. I am surprised indeed that the Cabinet tolerated this proposal to double the turnover tax from 2½ per cent to 5 per cent. Without becoming very controversial, I think it is fair to say that neither the Minister for Finance who was responsible for drafting the Budget, nor the Cabinet who sanctioned it, were attending to their business. They did not analyse this. They did not consider it as businessmen would consider it whose minds were intent on the jobs they were appointed to carry out——

They were too busy.

(Cavan): We know, from the events that happened and from the facts which have come to life——

That does not arise on this section.

(Cavan): I am entitled to look around for a reason for this tax. This is the section which imposes the turnover tax.

The Deputy said that he was not going to be controversial.

We know the Minister is not happy with this increase——

(Cavan): Maybe the Minister is in a minority and did his best. There must be some reason for a thoughtless, stupid tax like this which is damaging our tourist industry; putting up the cost of living; bringing about industrial unrest; causing strikes and lock-outs. The only sane explanation is—as we know now— that the Government were not attending to their business; that the Minister for Finance was not attending to his business. If they had been attending to their business, they would have excluded food from the provisions of this tax; they would have looked around and found some way or another— whether by coloured petrol or otherwise —to exempt the petrol used by tourists from this tax so as to encourage them to come here. They would have made some provision in the Budget or in this Finance Bill.

Notice taken that 20 Members were not present; House counted, and 20 Members being present,

(Cavan): I was just concluding my remarks on section 47 of this Finance Bill which confirms the turnover tax at 5 per cent instead of 2½ per cent. It is obvious that no thought was given to the effects this tax would have on the economy of this country in general. It shows a complete lack of imagination. The Minister concerned should have found ways and means of exempting food from the provisions of this tax. If he had exempted food, he would have avoided a general demand for an increase in wages and general industrial unrest. If he had excluded or exempted petrol used by tourists, he would have encouraged the tourist business and full use could have been made of the car ferries. Already there is machinery for allowing certain categories of people to use petrol on which excise duty is not payable.

The Minister did not see fit to do this and, as I say, the Budget was introduced by people who simply had not got their minds on their job. The country will pay for that. It will pay for it in the ways I have outlined. The Minister must take his share of the blame. He is put in the position that, although he did not draft this Finance Bill and did not prepare the Budget proposals, he has to stand over them. Things will go from bad to worse. The cost of living will go up, then wages will go up, and the cost of living will go up again. That has been happening in this country for the past number of years.

Since the turnover tax was introduced, followed by the green light for the 12 per cent on the eve of the Cork and Kildare by-elections, it has been a political game all the way. It is not what the effect of these proposals will be on the economy but what their immediate effect will be on the political welfare of the Fianna Fáil Party, which concerns the Government at Budget time. It is right to expose these things. I believe the people realised some weeks after the Budget was introduced that it was a bad Budget and a dangerous Budget. We certainly realise it. That is the reason why we are pledged to oppose this increase in the turnover tax and that is why we are doing so.

About an hour and a half ago or, perhaps, two hours ago, Deputy Moore spoke on this section and drew the attention of the House to the various benefits in the Budget, the social welfare benefits, the benefits and reliefs in respect of income tax and the various other benefits in the Budget. He posed the question: how could this money have been found except by increasing the turnover tax? Deputy Donegan speaking after him said this was an old record played with a rusty needle.

A Cheann Comhairle, when I was speaking you pointed out that it was improper to discuss this.

To discuss what?

To the extent to which the Deputy went into the question, yes.

You ruled it out of order.

The Deputy did not agree with me.

But you ruled it out of order.

May I point out that I was quoting two statements made by Deputies previously? I have not made my own statement on this yet. I am about to make it.


I know Deputies do not like this but I will be finished in one moment. All I wish to say is that this reference to a rusty needle on a record is such an apt description of what we have heard from the other side that I do not propose to reply further.

The Minister will not shout us down.

The Ceann Comhairle ruled Deputy Browne out of order.

The Chair did not rule the Deputy out of order. The Chair asked the Deputy to come to the section.

The Minister should come to the section.

I have finished. I was just about to finish when the Deputy intervened.

The Minister was out of order.

The Minister was disorderly and I had to bring him to order.

Question put.
The Committee divided: Tá, 54; Níl, 50.

  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Browne, Noël.
  • Bruton, John.
  • Burke, Joan.
  • Burke, Liam.
  • Burke, Richard.
  • Burton, Philip.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Creed, Donal.
  • Crotty, Kieran.
  • Desmond, Barry.
  • Dockrell, Maurice E.
  • O'Donnell, Patrick.
  • O'Donnell, Tom.
  • O'Donovan, John.
  • O'Sullivan, John L.
  • Donegan, Patrick S.
  • Dunne, Thomas.
  • Enright, Thomas W.
  • Esmonde, Sir Anthony C.
  • Finn, Martin.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Fox, Billy.
  • Governey, Desmond.
  • Harte, Patrick D.
  • Hogan, Patrick.
  • Hogan O'Higgins, Brigid.
  • Jones, Denis F.
  • Kavanagh, Liam.
  • Keating, Justin.
  • Kenny, Henry.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • Malone, Patrick.
  • O'Connell, John F.
  • Taylor, Francis.
  • Thornley, David.
  • Timmins, Godfrey.
  • Tully, James.


    Question declared carried.
    SECTION 48.
    Question proposed: "That section 48 stand part of the Bill".

    (Cavan): The proposal here is to increase the lower limit for registration from £750 to £1,000. It strikes me that if the lower limit of £750 was fixed when turnover tax was first introduced and if it was reasonable then, a much higher limit than £1,000 is now called for.

    There is an argument to the effect that there should not be any increase in this at all, but in response to representations made in this regard I decided to increase it to £1,000, and from my observations and the reactions I got from small traders I think this is appreciated and realistically realised as being about as far as we can go without making a considerable inroad in revenue to be derived from turnover tax.

    The Minister says there was an argument against increasing it. We should like to hear it.

    I am not making the argument. I do not think I could go into it. I am increasing the limit.

    It is not worth an argument.

    It is one of the better sections of the Bill.

    Question put and agreed to.
    SECTION 49.
    Question proposed: "That section 49 stand part of the Bill".

    Does this mean that if somebody collects money which he is owed he is entitled to collect the turnover tax he has to pay on the money?

    (Cavan): It means that if a man was owed £100 six months ago he may collect £105 because he has to pay turnover tax.

    It relates to moneys due on foot of contracts entered into before the increased turnover tax and provides that in those cases the increased tax may be added to the amount due even though the contract did not provide for that.

    That is what I suggested it was.

    This is one of the more objectionable sections of the Bill.

    Question put and agreed to.
    Section 50 agreed to.
    SECTION 51.
    Question proposed: "That section 51 stand part of the Bill".

    I should like to say a word on this if I may. I did say something on this in relation to section 18 but I want to say a little more in pursuance of what I undertook to do at the request of Deputy Cosgrave on the Second Reading.

    Section 18, to which I have referred, provides for exemption from income tax, including surtax, on any bonus or interest paid under a savings scheme. This section provides for the operation of a scheme by the Minister for Finance, a bank, trustee savings banks or a building society. A scheme other than that operated by the Minister for Finance must be approved by him and all schemes must be certified by him in order to qualify for tax exemption under section 18.

    The scheme which I propose to establish on 1st September next will be managed on my behalf by the Department of Posts and Telegraphs. Under this scheme a person will undertake to save through a trustee savings bank, post office or direct through to the appropriate section in the GPO, Dublin, a stated instalment each month for 12 consecutive months and to leave the total so saved on deposit for a further two years. The instalments must be in complete pounds subject to a maximum of £20 per month. For each £12 saved and left on deposit for two years a bonus of £3, that is, 25 per cent, will be payable. If employers and employees so agree instalments may be paid by deductions from pay, the employer transmitting the deductions to the post office. A person who has saved the maximum amount permitted, that is, £240, will receive a bonus of £60. The bonus is equivalent to 9 per cent per annum compound interest tax free, or, in the case of a person liable to income tax at the standard rate of 7s, nearly 14 per cent per annum gross. If a saver completes the 12 monthly instalments but withdraws his savings before the subsequent two-year period has passed, interest at 4 per cent per annum tax free will be payable for each complete calendar month following that in which the final instalment was paid with exemption from income tax at the standard rate. This is equivalent to 6 per cent per annum gross. If the saver does not complete the 12 monthly instalments, he may withdraw his savings but no interest or bonus will be payable. The proceeds of the scheme which I propose to establish will accrue to the Exchequer and form part of the Central Fund.

    Is it intended that the scheme would be continued year after year? So that the saver who has completed his 12 instalments can proceed to save another £240 in the second year?

    Even though he would have reached the maximum in the first year?

    Is it a fixed amount each month or may the person save £8 one month and £16 another month?

    No, it will be a stated instalment which he will have contracted to pay each month.

    And interest will be payable from the time the first instalment is paid?

    There are three situations.

    Provided he leaves it in for the three years, from the first instalment?

    Yes, the interest will be on the basis I have mentioned, that is on each £12 saved and left on deposit for two years a bonus of £3 will be payable.

    But as Deputy Cosgrave says, if £8 is paid the first month interest will be payable on that amount from the time it is lodged?

    In effect, yes, that is so.

    There is one other matter which may not have any bearing on this but which I should like to raise. Why is no effort made to bring up to date the interest rate for ordinary post office saving? Why is there no encouragement given to the small saver who cannot afford to leave money by for three years but who will from time to time, if encouraged, put it into the post office rather than under the bed? The present interest rate is ridiculously low.

    There are complications about this but all I can say is that the figures for last year were fairly well up on the previous year.

    The Minister means the amount invested?

    Would the Minister not agree that the amount would be very much more if the small saver got a chance? The small saver is not getting a fair deal because he is not being treated as he would be if he had a substantial amount of money which he could lodge for a period. It would encourage saving among young people if they were paid a decent rate of interest. As I say, the present rate is ridiculous.

    The Deputy will realise that under the post office scheme money can be withdrawn on demand.

    In the scheme I have outlined if money is withdrawn during the first 12 months no interest at all is paid.

    It is entirely different.

    I agree.

    Does this apply to building societies?

    A building society may operate such a scheme provided they get the approval of the Minister for Finance and they will then qualify for the tax exemption.

    If the money is left there for the whole period is it entirely free of tax in all cases?

    In all cases, no matter what the liability for tax of the saver is?

    Yes. The Revenue Commissioners do not come into it at all.

    And the maximum is £240 for one person?

    For one person for one year.

    For some people this may to some extent replace the post office saving scheme.

    For some people it possibly would.

    For most people who are able to afford only small sums it is just not an alternative because they will not be in a position to put the money in.

    For a great many.

    Question put and agreed to.
    SECTION 52.
    Question proposed: "That section 52 stand part of the Bill."

    I want to draw the attention of the House to a peculiar anomaly. In section 50 "the Minister" is defined as having the same meaning as in the principal section. In section 51 "the Minister" means the Minister for Finance. In section 52 "the Minister" is just mentioned. In section 53 it is "the Minister for Finance is of opinion". What is the reason for this peculiar type of drafting? The Minister cannot get away by referring me to the side note because on an earlier section he told me that the side note has no legal significance. I do not understand why you define "the Minister" as Minister for Finance in sections 50 and 51, you do not define him as the Minister for Finance in section 52 but you define him again in section 53. Why is there this mixum-gatherum?

    I cannot undertake to explain the reasons for the different methods of drafting but I would suggest that in those sections the meaning is quite clear, which is what we are mainly concerned with here.

    The meaning is quite clear in all the other sections just as well. This is a Finance Bill and this approach is "all wet." Why was the usual method not adopted at the beginning of the Bill by saying that "In this Act the Minister shall be the Minister for Finance"?

    There are some sections which refer to other Ministers.

    It is possible that Homer nodded.

    Maybe there were some Ministers moving around at that stage.

    If what the Minister says is correct it makes it all the more peculiar because section 52 refers only to "the Minister" and if other Ministers are referred to it is necessary to say "the Minister for Finance". We all know to whom it refers but——

    The whole thing is stupid because the Minister's amendment to section 54 says "The Minister for Finance, after consultation with the Minister for Agriculture and Fisheries..." To use his own word, which he used about this party, it is a glib explanation.

    Some day the Deputy must give me the reference to what he says I said about the Labour Party. I have no recollection of it whatsoever.

    I will have no difficulty giving it to the Minister because he said it on a number of occasions.

    I would appreciate it.

    This is a serious matter if my point is correct. "For the purpose of raising money for the Exchequer, the Minister may ..." I suggest that between now and the Report Stage the Minister should put in "the Minister for Finance may ..." I just want to make these four sections consistent.

    If we put down an amendment and it was out of line we would be pulled up very fast, would we not?

    I have not endeavoured, in relation to any amendment put down, to take any technical line on it. I am dealing with the substance and I am much more concerned with the substance of the Bill and the fact, as I submitted to the House and I submit again, that the meaning is quite clear in these sections.

    If the meaning of an amendment was not clear the Minister's draftsmen would very soon draw his attention to it and the Minister would come in with his brief and draw our attention to it.

    I had that case made to me about some of the amendments and I did not make the case in this House.

    If "the Minister" has to be defined in sections 50, 51 and 53 and if the Minister says the reason for that is that other Ministers come into the Bill then clearly "the Minister" should be either defined or named in section 52? The Minister should look at that between now and the Report Stage.

    I think we are wasting time.

    Is section 52 agreed?

    Subject to that being looked at.

    I do not undertake to look at it.

    Question put and agreed to.
    SECTION 53.
    Question proposed: "That section 53 stand part of the Bill."

    (Cavan): Section 53 provides that——

    I had intended to raise a point on section 52 when we had finished with the other matter. I did not realise we were passing on.

    The Chair put the question a number of times.

    (Cavan): Section 53 provides that the Minister shall have power to make an order postponing the redemption date in respect of certain Government loans which fell due for redemption on 15th July because it has not been possible to redeem them on that date because of the closure of the Bank of Ireland. A subsection provides that interest shall be paid from the date of redemption until actual redemption. That is reasonable and it is particularly reasonable since the holders of these securities, many of them small holders, have for many years been receiving a very low rate of interest and were not able to dispose of their capital without suffering a very severe loss. I hope that the Minister will provide a reasonable rate of interest and I would like him to indicate what he has in mind. It should be the best rate which these people would have got if they had redeemed their securities on the 15th July and lodged them in one of the banks or in a finance house.

    It is a pity the Minister when introducing this worthwhile section did not make provision for the payment of interest on overdue dividends, dividends which are overdue from the 1st May and on which people will be losing interest because they have not been paid. They are not all millionaires or wealthy people who have been deprived of these dividends. Many of them are people who do not even own the capital — widows and others who have only a life interest in the moneys invested and have to live on the dividends. They have been deprived of their dividends since 1st May, on which date many were payable. It could well be that a widow's only source of income would be, say, £500 per annum obtained in this manner and she has been deprived of half this amount since 1st May. On the other hand, the State or the Bank of Ireland have had the benefit of this money.

    Before the next stage of this Bill, the Minister should add a subsection to section 53 giving him power to make an order to pay interest in the cases I have mentioned. It is not the fault of those people that they have been deprived of their money. By way of a supplementary question recently, I said that this bank strike was unlike any other strike; Deputy O'Donovan corrected me and said it was not a strike but was a lock-out. I am not concerned about the nicety of trade union terms——

    (Cavan):——but it is depriving people not only of services but of their property, as this section points out. Recently I heard of the case of a man who died and it may be that he was not buried in the cemetery of his choice because the person who drew up the will could not remember what provision it contained and the will was not available as it was locked up in the bank. It may well be that the deceased was buried in a cemetery other than in that he had named and perhaps he is perpetually turning in his grave as a result.

    In fairness and equity the Minister should indemnify against this loss persons who are being deprived of their money. I agree with the Minister that this is a good section but he should have taken the opportunity to compensate those who have been deprived of their dividends since 1st May last.

    On Second Stage I drew attention to the fact that it would have been easy to have drafted this section in a quite different manner and to have dispensed with all the mumbo-jumbo about making orders and so on. A simple section providing for payment of interest until such date as the Minister could redeem the loan, would have done the job. I realise it would be necessary to make one order, namely, stating that the date 15th July should not operate.

    I should like to ask the Minister a few questions. First, why have the holders of these loans not been notified as they should have been? Of course, the Minister will say the registers are locked up in the Bank of Ireland. However, in view of the number of large businesses the bank have facilitated, I am sure they would be prepared to facilitate the Minister for Finance. I must be careful lest I accuse the Minister and his staff in the same manner as I accused the Department of External Affairs at Question Time recently, but I am convinced the Minister for Finance has adequate staff to look into this matter. Stockholders had a right to be informed by the Minister that, due to circumstances, he was precluded from paying the redeemable value of the securities.

    Normally there is a conversion scheme attached to all such loans but on this occasion there is no such scheme. Can the Minister say why this is so? I presume it is part of the campaign the Government have been conducting this year to defuse the inflationary situation by not providing for another loan.

    I consider the rate of interest should have been fixed in the section. It may be said the rate varies from one week to the next and that in view of the high rate in recent months we might save a little money. However, we should not forget that in this instance people have not been paid on the date fixed by the Minister's predecessor. There is some point in Deputy Fitzpatrick's remark about interest on interest: nowadays, the rate is approximately 1 per cent per month and if a dividend is not paid for a number of months after falling due, that could represent a sizeable loss of money.

    Very little regard seems to have been shown for certain people who have had a tough time. The holders of the 3 per cent Exchequer Bonds who have held them to redemption have been receiving 3 per cent on the money for the past 20 years, which is an extremely low rate. They have not been compensated in any way for the fall in the value of money; they have received interest at only 3 per cent, and it is a bit much, to put it mildly, that at the heel of the hunt they should be deprived of their money. The 3 per cent and 3½ per cent groups comprise the majority of the cases involved. To the best of my recollection, there is only a bagatelle left of the 3½ per cent Fourth National Loan group but the two other groups are quite large. It is very rough treatment for people who originally subscribed to these loans that they are now being deprived of their money. I disagree completely with the method of making and rejecting orders. There could have been a quite different approach by the Minister to the matter.

    I should like to mention two points in relation to Deputy Fitzpatrick's plea. First, the Minister does not state the rate of interest and it has been suggested by Deputy Fitzpatrick and Deputy O'Donovan that this should have been done. Stockholders have rights and it appears to me a situation might develop whereby a stockholder might sue the Minister for Finance if the amount of stock he held was large enough, if he was dissatisfied with the rate of interest offered. As this is a gilt-edge investment and the stockholder is guaranteed the return of his money at a certain time, responsibility devolves on the Minister for Finance to return the money. At that stage the stockholder might have decided to take an investment at risk, to put the money into an industry on the grounds that there would be an increase in the value of the shares. The stockholder might point to shares he intended to buy but which he was unable to purchase because he had not got his money back, which shares had increased considerably in value. The Minister might find himself in the law courts on this issue.

    (Cavan): Along with the best of company.

    The worst of company; it depends how one looks at it. There arises the question as to whether or not it is constitutional to make an order overriding the Minister's word. One may look on this as a temporary embarrassment, as something which the Minister may correct afterwards by producing a rate of interest which will satisfy every stockholder who wishes to re-invest, but it will not satisfy the stockholder who was entitled because it was a gilt-edged investment, to get his money on a certain day but did not get it. We have all seen the clauses at the bottom of business contracts which state that war, strike, civil commotion, stoppage at docks and all such things are excluded, but there is no such exclusion here. As far as I understand it the meaning of Government stocks is that they are gilt-edged. There is legislation in this country, and indeed in every other country, whereby wards of court and others who have investments made for them and insurance companies investing the premiums we pay them must invest a certain proportion in gilt-edged investments. It must be faced that it is the money invested by insurance companies and that invested on behalf of wards of court and persons under 21 years of age which fills our national loans. Other people, who are prepared to take a slight risk, prefer to try to combat the fall in the value of money by investing in sound industries which are a very minor risk. Therefore, as the fall in the value of money proceeds, the value of the industrial company in which they have invested increases and cushions them against this fall in the value of money.

    There also arises, apart from the legalistic approach — and this is the kernel of the problem — the question of the person who did not get his or her money and wanted to buy a farm or invest in stocks and shares, which may have increased in value, but was precluded from doing so because he did not have the money. He may have wanted to buy the farm next door and because he did not have the money somebody else bought it and he will not have the opportunity again. A son or daughter abroad may have needed money to purchase a business abroad or needed money for health reasons but he could not be sent that money because the parents could not get back their principal. The Minister may find himself in trouble here because he has not lived up to his gilt-edged word. The fact that he found himself in a difficulty and was almost unable to do anything is one thing, but during the bank strike Deputies have been afforded facilities in the Department of Finance to cash their monthly cheques. The Minister may have been precluded from providing cash on this scale but it does not let him out of his liability that a gilt-edged investment is a guilt-edged investment.

    The constitutionality of this action is something that will have to be thought about. I would have thought that it was necessary under our Constitution to provide an absolute guarantee of repayment by the State of a loan on its due day. In this instance civil commotion, strike, lock-out, call it anything you like, did not preclude that from happening. I am not saying the Minister could have done it or could not have done it, but from the point of view of the stockholder he was entitled to his £10,000 on that day and because he did not get it he could not buy the farm or send money to his son or daughter abroad in order to get medical assistance and he or she might have died. Neither could he invest the money in another stock which he knew was going to appreciate in value nor could he make a contract which he had arranged on the basis of having the £10,000 on a certain date. These are serious matters which when the banks reopen the Minister may be able to gloss over and satisfy the people concerned. I hope, from the point of view of the country and the proper conduct of affairs that he will be able to satisfy everybody, but the Minister may find himself with some dissatisfied people who have a serious claim upon him.

    (Cavan): Another situation arising out of what Deputy Donegan has said, has struck me. Because the gilt-edged security holder did not get his money on 15th July he was unable to buy a pub and he will be deprived from buying the pub until well into August. By that time the Minister will look back at section 39 and he will charge him on the goodwill of the pub and put the duty up from 1 per cent to 3 per cent.

    We cannot go back to that section now.

    (Cavan): It is very relevant.

    It is a good try.

    It is a good succeed.

    If there are stockholders who because of what Deputy Donegan has said, or for any other reason, decide that that calls for action against the State, it is a matter only the courts can decide; this House cannot decide that. I am concerned that these stockholders have been unable to have their stock redeemed. As Deputies are aware, the section provides that as and from 15th July, which was the redemption date, interest will be paid until the new date of redemption. I had intended to announce at this stage, but Deputies got in ahead of me, what the rate of interest was. The rate I propose is 8 per cent per annum which is roughly ½ per cent above the yield to redemption on short dated Irish and British Government stocks and is nearly 3/4 per cent above the Exchequer bill rate. If it had not been for the bank closure a conversion would have been offered and indeed a conversion will be offered at the time when these are being redeemed. I cannot agree to the suggestion that interest should be paid on the dividends outstanding because a distinction must be drawn between the capital and the interest. The interest is in the same category as many other current payments which people cannot obtain or cannot cash at the moment. But the capital is in a different category and it is for that reason I intend to ensure that interest is paid at 8 per cent per annum from the 15th July until the actual date of redemption.

    Can the Minister say how much stock is outstanding from these loans?

    £41 million.

    This does not cover the case of a person who lost an opportunity through not having the money. I should like to know why cheques could not have been issued by the Department of Finance encashable in London or any other major money market in the world.

    We did not know the people. There were 41,000 of them.

    That is a fair answer. Would it not have been better to have had the list of stockholders duplicated or triplicated and put it in different places? I am aware of businessmen who are lodging their cheques in Newry and in Belfast for safe-keeping. Before they do, they put them through a copying machine so that they have a copy of each cheque, and they put them in a different place because of the danger of fire or explosion or anything which might destroy them. In this day and age one would have thought it would have been necessary to have a list of stockholders and of the amount of stock held recorded, duplicated and kept in different places.

    The Deputy will realise in regard to his last suggestions that there are continuous dealings in stocks and that stockholders change every day. What the Deputy is suggesting is that not only the original stockholders list but all the changes every day should be recorded, duplicated and kept in different places.

    It is another reason why he and his colleagues should try to end the bank strike.

    In the White Paper the Minister referred to the possibility of an offer of conversion. The White Paper reads:

    Section 53 enables the Minister for Finance to postpone the date for redemption of certain Government stock if, because of the closure of the Bank of Ireland, he is unable to effect redemption of the stock on 15 July, 1970, or to make an offer of conversion.

    That was not issued before the bank strike — I mean the bank lock-out.

    I think "closure" might be a more accurate word.

    It is a neutral word. It is in the official document. Let us give them praise for using a neutral word. Does the Minister intend to make an offer of redemption? Did he not put it into the section because he can be in no way definite about it? It is in the White Paper.

    I have said definitely that there will be an offer of conversion when these stocks are in fact being redeemed. I have said this

    I did not understand the Minister to say that. The Minister said he intended but that owing to the bank closure——

    I said it had been intended to have an offer of conversion on 15th July. I went on to say that there will be an offer of conversion on the actual date of redemption.

    Question put and agreed to.

    I move amendment No. 30:

    In page 29, before section 54, to insert the following section:

    (1) In this section—

    "the Commission" means the Pigs and Bacon Commission;

    "licence" means a licence within the meaning of section 23 of the Pigs and Bacon Act, 1935, or a pork exporter's licence within the meaning of section 12 (2) of the Agricultural Produce (Fresh Meat) Act, 1930.

    (2) The Minister for Finance, after consultation with the Minister for Agriculture and Fisheries, may by order do any one or more of the following:

    (a) impose a levy of such amount as he thinks proper on every pig brought on to premises to which a licence relates and provide that the holder of a licence shall pay to the Commission the amount of any such levies on any pigs brought on to the premises to which the licence relates,

    (b) provide for the payment of levies imposed under this section at specified intervals and in a specified manner,

    (c) impose different rates of levy on pigs of different classes and provide that levies shall not be payable on pigs of a specified class or classes,

    (d) authorise the Commission—

    (i) to grant exemption, if and whenever it so thinks fit, from payment of levies under this section (either for a specified period or without limit as to time) on a specified number of pigs or on pigs of a class or classes specified under paragraph (e) of this subsection or on pigs of any category or categories specified by the Commission (by reference to such matters as it thinks fit) in the exemption, and

    (ii) to revoke, if and whenever it so thinks fit, an exemption granted by virtue of this paragraph,

    (e) specify, for the purposes of paragraphs (c) and (d) of this subsection, different classes of pigs (by reference to such matters as the Minister thinks fit),

    (f) apply the provisions of section 38 and section 39 of the Pigs and Bacon (Amendment) Act, 1939, to levies payable under this section,

    (g) revoke or amend an order under this section.

    (3) Any levy payable pursuant to an order under this section shall be in addition to and not in substitution for any levy payable under the Pigs and Bacon Acts, 1935 to 1961.

    (4) All moneys received by the Commission in respect of levies under this section shall be paid into or disposed of for the benefit of the Exchequer in accordance with the directions of the Minister for Finance.

    (5) Every order under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution is passed by either House within the next twenty-one days upon which that House has sat after the order has been laid before it annulling the order, the order shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder.

    The purpose of the enabling powers in this proposed new section is to deal with the illegal importation of fat pigs. There are grounds for suspecting that numbers of pigs have been illegally imported over the past two years. Smuggling would lead to an increase in pig-slaughter and to a rise in the amount of pig-meat exported with consequential cost to the Irish taxpayer and to pig producers who, between them, provide up to £5 per pig in export subsidy. Everybody would agree that this subsidy should go to our own pig producers. Pig smuggling exists because the prices for certain classes of pigs are higher here than in the north. This section will empower the Minister for Finance, after consultation with the Minister for Agriculture and Fisheries, to impose a levy that would reduce the incentive to smuggle. A levy, if introduced, would reduce price differentials to a point where pig smuggling would be no longer worthwhile. Such action as may be needed if there should be continuing evidence of smuggling, is likely to be directed at very light and very fat pigs — the type of pigs the industry could well do without. Pig producers who have expressed concern over the smuggling will appreciate that these measures are intended to protect the market for good quality pigs and to ensure that they, and not producers outside the State or pig smugglers will get the full benefit of the Exchequer subsidies.

    Amendment No. 31 is a related amendment. Could amendments Nos. 30 and 31 be discussed together?

    Yes. Amendment No. 31 is consequential on the introduction of amendment No. 30.

    I would like to hear the Minister saying clearly that this amendment applies to smuggled pigs only, because it was not quite clear from what the Minister said that fat pigs produced within the country would not be subject to the same levy in certain circumstances or that thin pigs would not be subject to levy.

    They should be. They would be covered by this new section. If I could apply such a levy to smuggled pigs only I would be happy to do so.

    Why not introduce a section dealing with smuggled pigs only?

    How do you identify smuggled pigs?

    How can the Minister say to this House, first of all, that he wants to catch smuggled pigs and that all the smuggled pigs are fat pigs?

    I have not said that.

    This is a levy on pork pigs. How can the Minister say, first of all, that he wants to catch smuggled pigs? He sets out in this amendment to catch a proportion of the pigs. It is sheer nonsense and is the most feeble attempt one has ever seen to deal with the problem. The attempt made by the Minister's predecessor to employ anti-pig smugglers would have been more effective than this. This amendment is an absolute cod.

    It is dynamite.

    It is something that every Member of this House should resist. We are giving power and authority to the Pigs and Bacon Commission to decide that the pigs of any man whom they do not like can have a levy imposed on them. It is a way of getting revenue from the pig producers in this country without laying down any specific conditions or terms but leaving it absolutely to the discretion of the Pigs and Bacon Commission. This is the most extraordinary piece of legislation which has been proposed in this House for a long time. It is not even at ministerial discretion. It gives discretion to the officers of the Pigs and Bacon Commission to say that they do not like any man's pigs or that he is not a supporter of the Government and that they will put a levy on his pigs. There could be discrimination against any producer's pigs. No standards are laid down which could be measured by anyone. I am amazed that the Minister has allowed an amendment of this kind to come into this House in his name. At one time we were depending on smuggled pigs to fill our quota for the British market and were it not for them we would be in a worse position than we are now.

    The Deputy is not in favour of smuggled pigs?

    I am not, not so long as we can produce our quota ourselves. We are not in favour of a piece of legislation of this kind which would allow any official of the Pigs and Bacon Commission to say that he does not like a particular man's pigs or even to say "they are too dirty" as was said in Northern Ireland to one producer. The Pigs and Bacon Commission are taking the whole job to themselves and will be in a position to say "We do not like the look of a certain man's pigs".

    Progress reported; Committee to sit again.