Financial Resolutions. - Financial Resolution No. 4: Income Tax and Sur-Tax.

I move:

That income tax shall be charged for the year 1971-72 or any subsequent year of assessment on income arising from securities and possessions outside the State which is applied outside the State directly or indirectly in or towards the satisfaction, or so that the money or property representing it is available for the satisfaction, of a debt for money lent in the State or interest thereon, or of a debt for money lent outside the State if the money is (whether before or after the income is so applied) received in or brought to the State:

Provided that the provision aforesaid shall have not have effect in relation to income applied in or towards satisfaction of a debt for money lent before the 28th day of April, 1971, or of a debt incurred for satisfying in whole or in part any such debt, unless it is so applied after the year 1971-72.

This is also a tax avoidance measure dealing, in the main, with cases of people who are employed here by foreign companies whose income is received from abroad. The device used is to obtain an overdraft in a bank in this country which is a branch of a bank outside the jurisdiction, to transfer the overdraft from here to outside the jurisdiction, pay it off with the income from outside and thereby avoid the tax for which they would be liable in the normal way within the jurisdiction.

How much is involved in this?

It is difficult to estimate it accurately, as the Deputy will understand, because all the cases have not come to light. However, we do estimate at least £20,000 to £25,000 a year is involved in tax. It may well be substantially more, but we are pretty sure it is at least that.

It is part of the Minister's £2 million?

Yes, but I am sure Deputies will appreciate that, apart from the money, it is our duty in this House, as far as we can, acting reasonably, to deal with tax avoidance, because to the extent that people succeed in tax avoidance they are throwing a greater burden on those who are paying their taxes.

This is a part of the revenue on which the Budget was based?

That is true.

Will it not be very difficult to implement it?

I am advised that it can be implemented.

It can only be implemented by a process of assessment if correct figures are not given to the authorities. Would that not have the effect of driving out some of these people whose skills we might need?

I have no reason to believe that the making of such people liable to the normal tax which will relate only to that part of their income spent in the normal way in this country would drive them out. It does not mean they will be made liable to Irish tax on the whole of their income.

It applies only to people employed here?

It is not confined to them but substantially they are the group that are involved.

Surely it would mean that instead of providing extra income, these people would make other provisions?

This might be so.

If they are clever enough to think of this in the first place, this is what they will do.

Question put and agreed to.