Skip to main content
Normal View

Dáil Éireann debate -
Thursday, 15 Jul 1971

Vol. 255 No. 9

Finance Bill, 1971: Report and Final Stages.

Amendment No. 1 in the name of the Minister is consequential on amendment No. 2 Amendment No. 6 is related to amendment No. 2. Amendment No. 5 is consequential on amendment No. 6. Amendments Nos. 2, 5 and 6 may be taken together.

I move amendment No. 1:

In page 10, line 40, to delete "Acts.'." and to substitute "Acts.' and,".

Amendments Nos. I and 5 are drafting amendments consequential on the substance of amendments Nos. 2 and 6. These amendments are introduced to meet a point raised in the course of the debate by Deputy O'Higgins who pointed out that the Bill, as drafted, provided that there would be repayment of an overpayment of tax with interest by the Revenue Commissioners in cases in which there had already been a payment by agreement with the Revenue Commissioners but that there was no provision for repayment with interest where the taxpayer had not made such an arrangement with the Revenue Commissioners. In the course of the debate on Committee Stage I indicated that my intention was that interest be paid in all such cases and these amendments are designed to achieve that situation.

I appreciate the Minister's acceptance of the point made and his action accordingly.

Amendment agreed to.

I move amendment No. 2.

In page 10, between lines 40 and 41, but in section 18, to insert:

"(c) by the insertion after subsection (1) of the following subsection:

‘(1A) Where, in a case in which notice of appeal has been given against an assessment to income tax or surtax and in which there is no agreement of the kind referred to in subsection (1), the appellant pays an amount of tax on account of the tax charged by the assessment under appeal which is in excess of the tax found to be chargeable by the assessment on the determination of the appeal, the provisions of subsection (1) shall apply as if the overpayment of tax had arisen by reason of a payment made in accordance with an agreement of the kind aforesaid.'."

Amendment agreed to.

Amendments Nos. 3 and 4 are related and may be taken together.

I move amendment No. 3:

In page 19, line 12, after "property" to insert "other than an interest for a period determinable by reference to death".

These amendments, also, are ones which, on Committee Stage, I undertook to introduce in substitution for two amendments which had been submitted by Deputy O'Higgins and others. At the time, I pointed out that the phrase which had been used in Deputy O'Higgins' amendment was not defined anywhere in the law relating to death duties, whereas the phrase used in this amendment, that is, "an interest for a period determinable by reference to death", was so defined and that I consider this to be more appropriate. In pursuance of that undertaking I am introducing these two amendments.

Again, I appreciate the Minister's action but there is something I wish to query with him. Taking either of the provisos and with the amendment now proposed and taking the top proviso and reading from "or":

he became entitled to or acquired any interest in or benefit from the property or any right or privilege over or in relation to the property ... other than any interest for a period determinable by reference to death.

Is there any need to go any further? Is there any need for the words "and he had not divested himself of any such interest, benefit, right or privilege more than five years before his death"? It seems to me that if you put in "other than an interest for a period determinable by reference to death," the following words are not needed.

I am advised that it is necessary to have it in on the grounds that the first limb of the proviso would be too wide if those words were deleted.

There is no limited period.

I do not know why the words "and he had not divested himself" are necessary because that is included anyway.

If he had a life interest of which he had divested himself——

That would not matter.

——theoretically, he could do that.

Amendment agreed to.

I move amendment No. 4:

In page 19, line 25, after "property" to insert "other than an interest for a period determinable by reference to death,".

Amendment agreed to.

I apologise to the House for the lateness in the arrival of the additional amendments.

I move amendment No. 4a:

In page 22, line 13, to delete "of such arrangement" and to insert "of the death of such deceased person".

This amendment is designed to meet the criticism advanced by Deputy Cooney and others in relation to section 40 when it was pointed out that in the case of a family arrangement, if there were a sale, there could be a question as to the value and there could be a reassessment of duty and that this could stretch effectively for a period up to 12 years. I undertook to reconsider this if it did not appear that it would provide a loophole for evasion. I am advised that it would not so provide and, therefore, I am moving this amendment, the effect of which is to provide that even in the case of a family arrangement, the period in question would be six years as in a case where there is no family arrangement.

Amendment agreed to.

I move amendment No. 4b:

In page 23, line 7, to delete "£500" and to insert "a sum not exceeding "£500".

Amendments Nos. 4c, 4d and 4e form a composite proposal and may be discussed with Amendment No. 4b.

The criticism was made of the penalty section that the penalties were fixed and I indicated that it was my opinion that it would be better if they were not. Amendments 4b and 4d provide for the insertion of the words "not exceeding" and this meets part of the criticism that was made. Amendment 4c deals with the question that was raised as to the penalty being imposed where a person was negligent.

I like the phraseology —"after the excuse had ceased".

That follows to some extent a somewhat similar provision that is in another Bill in relation to income tax. It is designed to ensure that the person who makes a genuine mistake as distinct from either fraud or deliberate negligence is protected from the effects of these penalties. I think this was what was desired by Deputies who spoke on this in the course of the debate.

Amendment agreed to.

I move amendment No. 4c:

In page 23, between lines 12 and 13, to insert:—

"Provided that the person shall be deemed not to have acted negligently if he had a reasonable excuse for his action and the incorrect account, return, estimate, statement, information, book document, record or declaration, as the case may be, was corrected by him without unreasonable delay after the excuse had ceased."

Amendment agreed to.

I move amendment No. 4d:

In page 23, line 22, to delete "of" and to insert "not exceeding".

Amendment agreed to.

I move amendment No. 4e:

In page 24, between lines 4 and 5, but in section 42, to insert the following subsection:

"(8) The Revenue Commissioners may, in their discretion, mitigate any penalty under this section, or stay or compound any proceedings for the recovery thereof, and may also, after judgment, further mitigate or entirely remit the penalty."

This amendment is new, but as Deputies will see, what it is providing for is that the Revenue Commissioners will have power in their discretion to mitigate any penalty or to stay or compound any proceedings for recovery of a penalty and also after judgment, may further mitigate or entirely remit the penalty. There are two reasons for this. One is that it really should have been in originally anyway and was overlooked. The other reason is that in the context of the debate in relation to the penalties it is clear that a situation could arise, even though we have provided for penalties not exceeding £500, and some of the penalties also provide in addition for double the amount of the duty, which is a very substantial penalty— it could so happen that a very heavy penalty would be imposed by the court and either it would be quite impossible for the person concerned to pay it or some circumstances might emerge which did not emerge in court and which would have led to a different decision. It is desirable that in such cases the Revenue Commissioners should have power to be reasonably flexible in their approach to the recovery of the penalty.

Amendment agreed to.

Amendments Nos. 5 and 6 have already been discussed.

I move amendment No. 5:

In page 26, line 47, to delete "tax.' " and to insert "tax.', and".

Amendment agreed to.

I move amendment No. 6:

In page 26, between lines 47 and 48, but in section 48, to insert:

"(c) by the insertion after subsection (1) of the following subsection:

‘(1A) Where, in a case in which notice of appeal has been given against an assessment to corporation profits tax and in which there is no agreement of the kind referred to in subsection (1), the appellant pays an amount of tax on account of the tax charged by the assessment under appeal which is in excess of the tax found to be chargeable by the assessment on the determination of the appeal, the provisions of subsection (1) shall apply as if the overpayment of tax had arisen by reason of a payment made in accordance with an agreement of the kind aforesaid.'."

Amendment agreed to.
Question proposed: "That the Bill, as amended, be received for final consideration."

If I am in order, I would like to refer to some of the points occurring on the debate on Committee Stage which I undertook to consider and to mention to the House the results of my consideration of these points. First, in regard to section 9 dealing with housekeeper allowance in the case of an unmarried mother, on Committee Stage Deputy O'Higgins raised the question whether the conditions which must be satisfied before a housekeeper allowance could be granted to an unmarried mother would exclude a case in which the mother while out at work paid, say a neighbour to look after the child in the neighbour's home and I undertook to look into this. Where this type of arrangement is made, it would be accepted by the inspector of taxes that no relative of the mother is able or willing to take care of the child. Otherwise, the arrangement would not have been made and as the person looking after the child during the mother's absence at work would clearly be employed by the mother for that purpose, the housekeeper allowance would be given. In the case of a person who is employed to take care of a child, the section does not require that the person be resident with the mother, so that the case envisaged by Deputy O'Higgins would, in fact, be covered.

(Cavan): Assuming that there was a case where a mother did not go out to work or where she had a small business and the child was living with her and it was necessary for her to devote her full time to the business, would she quality for a housekeeper's allowance in respect of someone living in the house with her?

Provided it is full-time employment—in such a case, yes she would be entitled. Another question that was raised was in regard to the income limit for the purpose of a dependent relative allowance. Deputy Cooney suggested that the income limit for the purpose of dependent relative allowance should be increased to a figure which would enable the full allowance to be given where the relative's income does not exceed the amount of the old age contributory pension. What we are providing at present, and have provided in the past, is that it is at the level of the old age non-contributory pension. We have amended this limit in previous years to keep it in line with the amount of the old age non-contributory pension.

I am afraid that, on consideration, I have decided that I could not agree to this. There are a number of reasons. One of them is that the cost is relatively substantial and I could not contemplate it certainly in the present financial year. The cost would be in the region of £300,000, but apart from that I have some doubts on considering it as to the advisability of it. An essential prerequisite to claiming the maximum dependent relative allowance is that, broadly speaking, the person in question must be dependent, and if his income rises above a certain level, the maximum allowance is automatically reduced by £1 for every £ of the excess. To link the maximum dependent relative allowance to the contributory old age pension instead of the maximum non-contributory old age pension, which is itself directly related to means would be to move away from the concept of dependency on which the relief currently operates. Furthermore, if the income limit for the purpose of claiming the maximum dependent relative allowance were raised, only taxpayers with relatives on incomes above the non-contributory old age pension level would benefit, and I think that other taxpayers with dependants on incomes which were on or below that level could justifiably demand a commensurate increase in their dependent relative allowance, so that for these reasons I am afraid I cannot accede to Deputy Cooney's suggestion.

Deputy O'Higgins raised a question in regard to section 16, which was section 14 of the Bill as introduced. He suggested that the lack of a reference in section 444 (a) of the Income Tax Act, 1967 to beneficiaries of a settlement, other than a child of the settlor, might have the effect in the case of a discretionary trust in favour of children, settlor and other persons of denying the relief provided by section 444 (a) in respect of income accumulated under such a trust, with the result that a charge under section 443 (1) would be created. The Revenue Commissioners have examined the position and they have assured me that there would be no question of section 444 (a) being interpreted by them in such a way as to have the effect referred to by Deputy O'Higgins.

In regard to section 17, or section 15 in the Bill as introduced, I undertook to look into two points raised by Deputy O'Higgins. First, the Deputy wished to know whether the practice would continue of not charging interest on tax which was being met out of a repayment of British tax arising under the residence agreement. In practice, where a taxpayer mandates a repayment of British tax to the Irish Revenue, interest is not charged during the period from the date of lodgment of the repayment claim to the date on which the Irish tax is satisfied out of the repayment, and this practice will continue.

The second point which Deputy O'Higgins raised in this connection was concerned with the imposition of interest in a case in which a taxpayer dies and tax cannot be paid until probate or letters of administration have been extracted. The position is that where a taxpayer dies during the period of grace, that is when interest has not begun to run, it is the practice to allow a similar period of grace from the date of extraction of the probate or letters of administration within which the tax may be paid without attracting interest.

That is not stated specifically in the Bill. That is what we were arguing about the other evening.

In another context. This, in fact, is what happens and I am putting it on the record of the House now that it will continue to happen.

Will the Minister ensure that the Revenue Commissioners read what he says about it?

The Deputy can be quite assured that they will. Where the taxpayer dies after the period of grace, that is, when interest has already begun to run, the interest charge is maintained up to the date of payment on the basis that the tax should have been paid prior to the taxpayer's death. That practice will continue also.

A question was raised in regard to section 19 and a similar point was raised in regard to later sections in regard to the question of the taxpayer, or perhaps the executor in case of estate duty, having to pay the amount assessed to be due pending an appeal to the circuit court and if it is found that he has over-paid getting a refund with interest at 9 per cent. This was objected to by some Deputies. The first point that needs to be made about it is that in the case of an appeal to the High Court on a point of law section 428 (9) of the Income Tax Act, 1967 provides that notwithstanding the appeal tax shall be payable in accordance with the determination of the appeal commissioners. Section 17 of this Bill merely brings the provisions regarding the payment of tax where an appeal is taken to the circuit court into line with those which apply under existing law in cases of appeal to the High Court. There is no new principle being introduced.

A bad one is being repeated.

I do not think so. It was suggested that if the appeal is not pursued interest at the rate of 9 per cent would still have to be paid anyway. While it is true I think it is understood that the primary purpose of the section and similar sections and different provisions of the Bill is to secure prompt payment of tax. Again I would remind the House of the provisions in section 17 whereby any overpayment which emerges is refunded with interest at 9 per cent. In these circumstances I do not think any injustice is being done nor are we creating any precedent.

In regard to section 20, that is section 18 of the Bill as introduced, arising out of two amendments to section 18 of the Bill which were put down by Deputy O'Higgins and others I undertook to look again at the definition of "neglect" which is applied by the section having regard to the criticism made that it would embrace a simple failure to make a return or an innocent omission from a return. Deputies will recall that we have just passed an amendment on a similar point in relation to death duties. This is in connection with income tax. I indicated in response to the case made by Deputy O'Higgins that I wanted to ensure that somebody who is not guilty of fraud in its strict legal sense but is guilty of more than neglect in the sense that the layman understands it would be liable to the interest provided by the section. I referred to the definition of "neglect" which is set out in section 186 (2) (d) of the Income Tax Act, 1967, which has been imported into this Bill. I do not want to complicate the issue unduly but I think the best thing I can say is this: Two kinds of cases can arise. If it is the case of an incorrect return the inspector will have to show that this was not the result of an innocent mistake but that the taxpayer was guilty of negligence in the making of the return. It may be taken that the appeal commissioners or the court to whom the taxpayer has recourse will not be lightly satisfied on this point. The other case that can arise is one of failure to give a notice, to make a return or to furnish a list of documents or other information. In such a case the inspector will have to show that the requirement was not complied with within the allowed time and the provisions about a reasonable excuse apply. In either of these cases the Revenue Commissioners are advised that the proviso to the definition of neglect would operate so that if the taxpayer had any reasonable excuse for making the incorrect return or for his failure to give the required notice or return it would not be possible to show that he was negligent.

In addition to what I have said I want to draw the attention of the House to the fact that when this original definition was before the House a discussion took place in which the late Deputy Sweetman was making the point that an ordinary mistake would not be excused under this definition. At that time my predecessor gave a certain undertaking by which I am bound and which I am now repeating. Deputy Sweetman said:

If the Minister is prepared to come with me in this respect and is prepared to say that if it is held that this does not cover a genuine mistake will he, in his corporate capacity, not come in with amended legislation and do that?

Deputy Haughey replied:

I will do that.

I am repeating that undertaking. I want to make it clear that no such case has arisen. The Revenue Commissioners are advised that it should not and could not arise but to make assurance doubly sure I am making it clear that if any such case should arise I am undertaking in my corporate capacity, in other words, to bind my successor, that amending legislation will be brought in to cover that point.

In regard to section 32 Deputies Fitzpatrick and Cooney inquired as to how interest would be computed having regard to delays in the assessment of duty. An example was given of an account being lodged in respect of personalty within three months of a death and subsequently assessed after a delay of, say, six months. The position in such a case is that as the account was lodged within the four-month interest-free period and as interest is not charged while delay occurs in the Estate Duty Office no interest would, in fact, be payable. If the account was lodged nine months after the death, five months outside the interest-free period, interest would be charged for that five months only, irrespective of the date of assessment. If, however, the date of the case had to be queried and unreasonable delay took place on the parties' side in dealing with it interest would be charged for the period of the delay. In other words, taxpayers are not prejudiced by delay on the part of officials in dealing with cases.

Another point was raised by Deputies Fitzpatrick and Cooney which concerned section 32 (2) (b) which, it was suggested, was ambiguous. Under existing legislation interest on death duties in arrears is payable at 4 per cent. The section provides that interest accruing due after the passing of the Act shall be paid at 9 per cent. The subsection provides that interest on death duties payable in connection with the death of a person who died before the passing of the Act in cases where the duty is not being paid by instalments shall continue for a period of four months after the passing of the Act to be payable at 4 per cent.

I pointed out at the time, on Committee Stage, that the word "continue" could, I think, be interpreted as making clear that the rate continues at 4 per cent but, apart from that, the section specifically imposes the 9 per cent rate only on interest accruing after the passing of the Act. So, it is quite clear that there is no ambiguity, that in all cases where there are arrears the question of charging 9 per cent on the arrears back over a few years cannot arise.

Deputy O'Higgins made a suggestion in regard to section 21 (5) of the Finance Act, 1965 that the rate of interest in that should be increased from 6 per cent to 9 per cent but that, in fact, would be to the disadvantage of the taxpayer because section 21 of the 1965 Act deals with discretionary trusts and makes liable to duty benefits payable to a deceased who was an object of the trust. The extent of that liability is limited to the proportion of the capital of the trust which is equal to the fraction which benefits which the deceased received in a certain period, represents of the entire income of the trust over the period. In other words, the slice, if the person had reserved the right of residence, that slice related to the over-all amount of the estate, would be the amount on which duty would be assessed. His income would be deemed, under this section to be 6 per cent arising on this slice which is chargeable. If we adopted the suggestion to make it 9 per cent we would in fact be making the position worse for the taxpayer. I do not think that is comparable with what we have been doing in the Bill. I think, on consideration, Deputy O'Higgins will agree with me that we should not raise it to 9 per cent.

Deputy Cosgrave and Deputy O'Higgins made the complaint, particularly in relation to section 36 which deals with the difficult problem of controlled companies, that this suffers from a lack of definitions and in support of this contention they referred to the fact that the British Finance Act, 1940, which has somewhat similar provisions, incorporates several definitions. The whole question here is one of approach to what is admittedly a very difficult and complex problem. We have attempted to deal with it in as simple and straightforward a manner as possible. The alternative to this is comprehensive sections with watertight definitions and that also is open to objection and might well defeat its own purpose. It is well to remember that the British legislation, where they have so many definitions, had to be amended at least eight times and their legislation has been repeatedly criticised for its complexity.

Definitions in themselves can create difficulties and often provide loopholes. On the whole, while admitting that all the right is not on one side I think we have adopted the better course. I should also say that since the matter has become quite complex and since there are references in a number of different Acts, if in the course of time further amendments of this legislation relating to controlled companies should become necessary, we shall give further consideration to this matter and also, perhaps, to the question of incorporating them all into one section because I think the matter is becoming rather difficult for anyone to follow.

Would the Minister consider introducing an entirely separate Bill and incorporating them all in that?

Some day some Minister for Finance will do this. Unfortunately, the pressures which operate all the time tend to prevent this being done but no doubt it is a very desirable thing if it could be done. Deputy Bruton raised a question about the statutory authority for the interest-free period of 12 months in relation to real property. Section 32 of the Bill increases the rate of interest which accrues after the passing of the Act. This is effected by amending section 18 of the Finance Act, 1896 which reads, in so far as it is material, as follows:

Simple interest shall be payable on all estate duty from the date of the death of the deceased or, where the duty is payable by instalments, from the date on which the first instalment of the duty becomes due.

Section 6 (8) of the Finance Act, 1894, provides that estate duty on realty may be paid by instalments and that —I quote:

... the first instalment shall be due after the expiration of 12 months from the date.

Since the duty on realty is payable by instalments interest commences to accrue only from the date when the first instalment is due, whether the duty is, in fact, being paid by instalments or not and that is on the expiration of 12 months after the date of death. This is the authority for the 12 months grace period on realty, and is so accepted in all the authorities on this branch of the law. The section in this Bill which gives four months interest free on personalty does so in relation to death duties other than these so that I think the statutory authority from the interest-free period is clear.

Question put and agreed to.
Question proposed: "That the Bill do now pass."

This Bill as it comes for consideration now is somewhat improved as a result of the Committee debate and the Report Stage just concluded. Nevertheless, it is not a Bill which we can commend in view of the measure it contains. As Finance Bills go, it is undoubtedly a Bill which contains many penal provisions. It is also distinguished by the removal of concessions given in previous Finance Bills which were of significance and value to the less well-off people. Section 2 of the Bill ends a relief which was given only last year under which every person, in relation to the first £100 of his taxable income, obtained relief. This was of considerable benefit to those with smaller earnings and perhaps smaller tax bills. They certainly appreciated the value of the concession much more than those with larger incomes or earnings and larger tax bills. As a result of the ending of that concession—which had been in operation for only 12 months —there has been imposed on everyone, irrespective of income or means, precisely the same increase in taxation of the order of £11 per year.

This Bill contains provisions whereby for the first time gifts made in consideration of marriage are regarded as voluntary gifts. The social view has obtained for many years that this kind of gift should be encouraged by equating it to a transfer for valuable consideration. This has been ended, according to the Minister in the interests of tax avoidance. I should have thought that the need at the moment particularly would be to encourage the transfer into active hands of agricultural land so that it might be more energetically used, that it might yield a larger income and, as a result, that the country might be better equipped to meet our entry into Europe. The provision in this regard renders the Bill objectionable.

There is also the increase in the rates of estate duty. We discussed the provision in this respect on Committee Stage. It is proper to point out that the Bill provides for a punitive increase in the rate of estate duty applicable to estates valued £55,000 and upwards. The increase in these rates has taken place at a time of inflation, when money values have fallen, when the paper value of estates has risen, and at a time when without any increase in the rate of estate duty, by reason of inflation there would be a perceptible increase in the revenue from death duties.

The Bill also provides for the abolition of another concession made a few years ago. As a result of debate, argument and dialogue in this House, it was provided that in relation to the liability to death duties or voluntary transfers, a sliding scale should apply and that the nearer to the five-year period a donor or the person who transferred property lived, the lesser would be the rate of estate or death duty. This ending of a concession that was valued is symptomatic of the approach adopted in this Bill. With the cry of eliminating tax avoidance, all these little concessions whereby the lot of the smaller people and the taxpayers could be made easier, are being abolished.

The Bill is a revenue-raising Bill but under the guise of eliminating tax avoidance more money is being raised. Concessions, perhaps not of great significance to the richer people but of value to the poorer sections, are being ended. It is proper that these matters should be pointed out at this stage.

During the course of the debate there were suggestions that certain relatively minor changes in some cases, and major changes in a few cases, in the tax law should be introduced. In the last hour I commented by way of interruption, that this kind of thing should not be done by way of such a Bill. It is unfair to the Minister and to the House to bring in legislation which is introduced with the object of putting into effect the Budget proposals and then including in it many unrelated items which have been thought up in the interval between the introduction of the Budget and the introduction of the Bill.

Like Deputy O'Higgins, I am surprised at some of the things that have been done in the Bill. I am particularly appalled that the Minister should decide in his first full year as Minister for Finance to take away the concession which had been heralded with many trumpets last year—the first £100 of earned income to be taxed at 4s 8d. The Minister tried to cover it up in a way unworthy of him. He spoke about the extra people who are being put outside the tax net and implied that in a peculiar way this compensated for the removal of the concession.

The Minister must be aware that increased wages and salaries during the year brought many more people into the tax net than those who were excluded. There was the suggestion in the Minister's speech a short time ago when certain concessions were being suggested that this was not the time to grant the concessions. May I tell the Minister that if concessions for the lower income people are not introduced now they will never be introduced. Last year there was a very substantial increase in the amount of direct taxation by way of income tax taken from the people's wage packets and, if my figures are correct, the Minister proposes to increase the amount of income tax taken from the workers. It is the lower paid group who pay the majority of the income tax. The amount will be increased from £129 million in the financial year to £141 million.

Does the Minister not consider that in a year when he will get an extra £12 million in taxation that he could give a little concession to the people who are contributing this money? The Minister gives a few minor reductions in taxation or increases in the amounts of benefits but he does not make any effort to deal with the badly paid persons. As has been pointed out in this debate, 15 years ago these people were able, on their tax free allowance, to earn some money on overtime without paying tax. Now they are being taxed on about one-third of what even the Agricultural Wages Board laid down as the minimum wage required to keep body and soul together. The whole thing has gone completely screwy. I was hoping that the Minister would be the man who would do something to redress the wrongs that have been done over the years. He has not done that.

Not alone has this extra taxation been put on, but no effort was made to deal in a reasonable way with the increased cost of living as it affects taxpayers. A few minutes ago the Minister said that he could not take into consideration the contributory pension as a basis because he felt this would affect the general tax structure dealing with allowances for pensioners. Does he suggest that a married couple who have in their house aged parents, or one aged parent, can keep those people on £5 per week? That is what he is saying, that they can maintain them on £5 per week in 1971. If he goes amongst the poorer classes and the lower income groups he will discover that they are finding it extremely hard to keep body and soul together. Yet, all the time the State is looking for more and more out of their small incomes.

The Minister missed an opportunity when he did not do something substantial this year. I made this comment before and I will make it again. I hope it does not happen, but if for any reason war were declared, we would find £50 million or £60 million in one year for defence and the next year nobody would remark on the extra taxation. It would be completely forgotten. We have a national emergency every year because our poor people are not being treated properly and our lower paid workers are not getting a "fair do" with regard to taxation. Yet the Minister has not done anything about it.

The incidence of taxation on overtime is all wrong because somebody who is working overtime and earning money, if he is paying tax, has to pay 7s in the £ and, if he is living in a local authority house on a differential rent, he will possibly be paying another 3s 6d per £ rent on top of that. For every £ he earns in overtime wages, the ordinary wage earner can bring home only 9s 6d to help to rear his family. The State takes 7s and the local authority take 3s 6d. Even on the 9s 6d taken home the State collects turnover tax and wholesale tax, and tax after tax. The amount of money which ordinary working people can really call their own is terribly small. We must do something about this. There is no point in just allowing it to go on from year to year. That is one reason why I feel the Government have fallen down badly on the job they were given to do.

The marriage grant has been referred to by many people and because of the fact that we argued about it for so long I do not propose to delay this House except to say that it appears obvious that when this was introduced the idea was to get at the million-pound parents. I suggest that there are no million-pound parents in this country. The people who were giving marriage grants to their children were people who had made a reasonable amount of money: relatively small farmers, middle size farmers, small shopkeepers, business men and sometimes ordinary artisans who had a few pounds and decided they would help their children to set up homes when they were getting married. Yet the State feels that they are a source of income, that they are people who can be "got at" and that some of this money must be taken from them if the generous parent dies within five years of the grant made on marriage.

The State wants a portion of what was given to the children even though the children may only have a house or a small farm. What are they to do? Sell portion of the house or portion of the farm in order to get the money which the State says it requires? The Minister admitted that a relatively small sum will be taken in here. The biggest objection I have to the Finance Bill is that there are so many niggling proposals in it which, according to the Minister, will take in relatively small amounts of money but, we are told they are included to prevent tax evasion. This is a rather ridiculous argument. There must be some other reason for doing it.

I had hoped that in this Bill the Minister would have tried to help the people who have to travel to work. I am sure the Minister is sick and tired of hearing me suggesting to him that he should do something to try to alleviate the hardship caused to people who, rather than stay unemployed and go to the labour exchanges and draw whatever paltry sum they would get, travel long distances to work. To do that they must purchase a motor vehicle of some kind. They must pay tax and insurance on it. They must pay for the running costs, repairs and everything else. Many of my constituents start off for work at 6.30 a.m. or 7 a.m. They drive to a building site and work hard all day. Very often in the summertime they barely get home with the light. Yet they are required to pay income tax on everything they earn over a certain amount. They are given no allowance whatsoever for travelling up and down. This must be wrong.

The Minister's predecessor, Deputy Haughey, admitted it was wrong. The reason he gave for not doing anything about it was that it would cost too much and would cause too much trouble. He did not try to justify it by saying it was right to tax these people. He said it would cost too much and cause too much trouble. If the people who drew up this income tax code were put in the same position it would not be too much trouble for them to try to remedy it. A section in a Bill was introduced—I wondered how the Minister got it into the Bill—to deal with a group of people called "lumpers" employed on building sites. When the Bill was going through, it was specifically stated that the section was intended to deal with those who were employed on contract work on building sites.

When the Bill was passed on that basis, the Revenue Commissioners decided that they would not administer it that way. When they got the names of those people who applied for a tax certificate on the grounds that they were sub-contractors, it was ruled that they were not sub-contractors and would have to pay PAYE. I do not know whether the Minister is aware of that. The people who were engaged in that work simply packed up and left the country. They left the job. Because they had not got tax certificates they were involved in a lot of expenditure which they just could not meet. All the little petty regulations which could be thought of were used to prevent them from getting a tax free certificate to which they were entitled.

What really annoys me is that when this section was going through the House the Minister said—and he is on record—that it was put in specifically to deal with these people we refer to as lumpers, men who take a lump job on a building site. Yesterday evening the Minister admitted that, in his estimation, this was the reason why it was put into the Bill. Now it is being twisted around and suggested that it deals only with contractors who have a set business place, who have a billhead and who, in addition to doing contract work, are supplying material, and what have you. These people are supplying the tools which do the job. They are, in fact, sub-contractors; they are lumpers; they are entitled to be covered.

There are so many other things wrong with this Bill that we could talk all night about them. I know the time is limited because most people are anxious to get other legislation through. Therefore, I do not propose to detain the House any longer except to say that I am bitterly disappointed that the Bill does not do the many things the Minister could have done with it in the light of the amount of money he will have available to him out of the pockets of those with whom this Bill deals. The Minister has not taken that opportunity and I regret that he has not done so. I cannot say to the Minister, as I did on a previous occasion, that I hope he will do these things next year because, frankly, I hope he will not be there to do them next year.

Disappointment has been expressed with this measure by both Deputy O'Higgins and Deputy Tully on this Fifth Stage. Deputy O'Higgins says that the Bill is still completely unacceptable, even with the slight improvements that have been made in it. I, too, want to express my disappointment. I tried very hard, not only this year but in years past, to get the relief of income tax on exports extended to a wider group. I regret to say that, even though the time could not be more opportune and even though the Minister had no real opposition to the case I was making, I still got nowhere with my recommendations. I think this was because the Minister for Finance invariably seems to come in here in a rigid frame of mind; the Bill he is bringing in is the Bill that must go through the House and, whether or not a good case is made, he will accept no amendment.

Deputy Tully referred to overtime. I think nobody could make a better case for those who, in many cases, are almost compelled to do overtime, for those who might even lose their jobs if they refused to do overtime, and, while I do not propose to cover the same ground, I do want to say that not only is this a hardship on the people to whom Deputy Tully referred but it is also an embarrassment to employers in many cases because, with PAYE, an employer may hand out at the end of the week different amounts to two men who did exactly the same work, one getting more than his fellow-worker or vice versa. There is no relationship between the two sums.

I want to come back now to the extension of tax reliefs on exports. Sometime subsequent to the point at which I raised this here a deputation came to see me. It was then too late for me to do anything about their problem but I said that if I could raise it within the Rules of Order on Fifth Stage I would mention it to the Minister and ask him if he would consider their position before he brought the Bill to the Seanad. Again, it is an extension of the relief of tax on exports, but it is of peculiar sort of extension, if you like. Nevertheless, this is a very real request. The deputation was a deputation from people engaged in the hotel business, people who cater entirely for foreign visitors coming in here. They claim they are working package deals and they are dealing in an export business. They are getting money indirectly from outside the country. As well as that, when these people come in here, they are fed on Irish food and they get Irish services for which they must pay. This is bringing in money from outside. That is the purpose behind exports. The tourist business is in very bad shape at the moment and this relief would be a great fillip to it. The point made was that, if this were conceded, you would be paying for performance; you would not be giving money to a group that did not deserve to get it. They have the proof that this is, in fact, money that is brought in from outside. I would recommend very, very strongly to the Minister that, before he goes to the Seanad, he should consider if something could not be done for this very deserving group, a group which is in a very poor way at the moment.

I intend to confine my remarks solely to income tax. I went up and got the Estimates for Receipts and Expenditure. One would think that on the basis of the taxation imposed on incomes last year, with an increase in yield from £113 million to £133 million, an increase of about 18 per cent, the Minister would not have dreamt of interfering with the system, except to improve it—that is to say, to give some further concessions. Instead of that he took away the miserable concession given last year. This is deplorable. The result is that there will, in fact, be an increase arithmetically of 25 per cent in the amount that will be taken in income tax this year. Of course, as I said on Second Reading, section 2 of this Bill now puts back into the income tax net people who should not be in it at all, people who are below subsistence level. What shocks me is that this is happening despite the inadequate provision in the Budget for the transport companies, some semi-State transport bodies and for education. When this House comes back, if it does come back here after the recess, what will be displayed will astonish the people. As I said the other day, there will be at least £20 million required for a subsidy for the transport organisations. The Minister did in a way try to minimise certain things of which he was well aware. That was obvious from his reactions here. It was obvious he was well aware of certain matters and he did try to get over them as best he could.

I do not know that this is a very good approach. He did say in his Budget speech that by keeping down costs he was restraining inflation to 12½ per cent. That, of course, was not true at all. Suppose we allow that he understated a bit at that stage, had he told the whole story the House could reasonably be satisfied, but he did not tell the whole story. There is no question about that. There will be massive losses which will have to be met by further taxation in the autumn. I must say that any reasonable person would regret the fact that a man paying £100 in income tax last year will this year have to pay £110, instead of it being the other way around. The cost of living is up by about 12 per cent and the amount of income tax a man should pay should be down instead of up. I am assuming his income has not changed, but the yield is such that it is obvious that most people's incomes have, in fact, changed. Although the Minister professed to deplore inflation, in fact, he utilised it all the way along. But even this massive inflation shown by this yield from income tax was not sufficient for the Minister's purpose and he had, therefore, to do this miserable business about income tax and, having done that, running right through the Bill there are all these small, niggling, as they were called by Deputy Tully, bits and pieces.

We ought, I think, express our appreciation here of the hard work the Fine Gael Party put into a relatively unremunerative effort politically on this Bill. I certainly think it is a poor Bill, but it is one degree better now than it was when it came into the House.

I should like to refer to the high level of taxation imposed in this Bill but, before I do so, I should like to thank Deputy O'Donovan for the praise he has given the Fine Gael Party. I do not mean that I would share in that praise; it was my fellow Deputies sitting here in front of me who put in a great deal of work on this Bill. They have highlighted certain aspects of the increase in taxation and the difficulties these increases are causing sections of our people. I am glad that Deputy O'Higgins and Deputy Fitzpatrick, as well as other Deputies, adverted at various Stages of the Bill to the proposed increase in death duties. I am sorry that the Finance Minister has seen fit to increase those duties and that he has gone back on the concessions that were made to people who made inter vivos gifts. Those people who have made gifts of the money which they, perhaps, saved from their hard won earnings and who wish to pass this money on to their children or to relatives, now find that the State is stepping in and that the five year sliding scale is being discontinued.

It is particularly hard for elderly people who wish to be able to leave some money to relatives who may be in need of such money and who believe that they themselves can dispose of their own money in a way that is more acceptable than the way in which the State would dispose of it. Those of us on this side of the House would be very much in agreement with their line of thought.

The Labour Party have adverted to the question of overtime and have expressed the opinion that there should be some concession in relation to income tax payable on money earned as a result of overtime. This is a dangerous road to travel. Much as I would wish to see concessions being given to people under almost any grounds especially people who have worked hard for their money, I would not consider this to be a practical proposition.

The alternative is a substantial increase in the overtime rate, which is what must come next.

That, in itself, will carry it. I have heard people say that they did not wish to work overtime because it was not worth their while. That is rubbish because this would apply too to every other taxpayer to a greater or lesser extent. What is the difference between a man who is paid, say, £5 per week extra for overtime and a man who, without doing overtime, but because of his exertions too, also earns an extra £5 per week? Is the exemption to be denied to the latter who may have worked equally as hard as the other person but, perhaps, in a different capacity, because his work was not designated as overtime?

A substantial property owner would not be depending on an extra £5 per week in the way that a person who works overtime would be depending on it.

Deputy Tully is always defending those people here.

I must say that in this respect, and this is a sideways slap, the Labour Party have come a long way because for years here they practically cheered whenever there was an increase in income tax. Now, they are finding that the shoe pinches.

The Deputy is the one who is cheering this evening.

The Deputy compliments us as our numbers are going down.

I suppose a late conversion is better than no conversion at all. I am sorry that the Minister has not given more tax concessions and that he has increased the burden of taxation both in relation to industry and on the individual.

I do not propose to detain the House very long but there are a few remarks I wish to make. First, Deputy Tully said that I tried to cover up the effect of what was being done in relation to the withdrawing of concessions that were made last year in respect of income tax.

They were not the words I used.

I do not know what the Deputy meant by that.

Neither do I because these were not my words.

Let me remind the House that I spelled out in detail what was involved—it would involve for taxpayers a sum of less than £12 per year. The fact that I referred also to the increased allowances being made in the old age allowances and in the small income allowances and that the effect of this was to take 20,000 taxpayers out of the net and to reduce the tax liability of 40,000 other taxpayers was not an attempt to cover anything up. It was a factual statement in relation to a provision contained in the Bill. Deputies who have spoken have been eloquent about the additional taxation proposed and about the effects of inflation. I did not hear any Deputy talk about the effect of inflation on the expenditure of the Exchequer. Neither did I hear any Deputy talk about the fact that approximately 25 per cent of the work force in this State is paid either directly or indirectly from the Exchequer.

The difficulty was that such references would have been out of order.

Deputies were able to talk about the amount of increased income tax that is accruing to the Exchequer but did they mention how that would be utilised? Deputy O'Donovan spoke as if here was a vast sum of money being made available but that we should give it back.

They did not wish to make the Minister's case for him.

If they did not, I shall make it myself.

Even if it is not in order.

It is in order as was Deputy O'Donovan's contention.

This Bill relates to taxation.

Does Deputy O'Donovan consider it fair to talk about the increased taxation accruing as though it were available and that we should have taken taxation from the lower paid sections of the community, ignoring what was done anyway? The point I wish to make about all this is that one cannot comment on it with any degree of rationality without referring back to the economic situation in which these changes were made.

I do not intend going back over them now but I want to put on record that any consideration of the taxation changes in this Bill must be considered in the context of our overall economic situation and in the light of the objectives we have been trying to achieve and which, I am glad to say, as evidence indicates, we are on the way to achieving. Apart from these income tax allowances and the changes in income tax and apart from the allowances to blind people and others— small concessions and fairly substantial concessions to widows and dependent children in the case of death duties—apart from these things, I would suggest that the main theme of this Bill is not what has been suggested by Deputy O'Higgins. It is that there is a clear concern to ensure as far as we can that people who have heretofore been able to avoid liability for tax or death duties are being served with notice that we are determined to try to prevent them from doing so.

These changes have been referred to as niggling changes because they are not going to bring in very much money. I have conceded freely that they are not, but I make no apology to anybody for trying to ensure as far as I can that there is equity as between one taxpayer and another, and that people who are succeeding in getting away with it in relation to paying their taxes should be got after, and one of the categories in respect of which action was taken in that regard were the people known as lumpers. Deputy Tully referred to this, and I did mention before, but I want to remind the House, that so far the indications are that this has been extremely successful and that many thousands of people who were engaged in lumping, not paying tax, not paying social welfare contributions with all the attendant problems that have arisen for everybody, including trade unions, have gone back into their jobs and are now paying tax and social welfare contributions.

Deputy Tully complained that the Revenue Commissioners are administering this in a way which was not intended or indicated in this House. I want to ask Deputy Tully to go back and have a look at the Bill. He will find there set out the basis on which the regulations under which the Revenue Commissioners are operating, and there is a specific reference to the question of having a fixed place of business in the Bill. It is not something imported by the Revenue Commissioners.

Read the debate and see the reference to "fixed place of business." It is entirely different from the interpretation now being given.

I do not agree, but I do not want to pursue this——

You were here, as I was, when it was discussed.

It is not something the Revenue Commissioners have imported. It is in the Bill, as passed by this House.

I do not agree. It is a misinterpretation of it and you yourself said that you realised that it was introduced for the purpose of dealing with people who were lumping jobs, and these are the lumpers. The others are a different group altogether, who are rightly caught, but the lumpers are an entirely different group and you are misapplying the Bill to them. However, we will discuss that matter another day.

I do not want to pursue it but I do not agree. I want to say, too, that one of the alleged examples of niggling provisions of which complaint was made was the provision in this Bill dealing with gifts in consideration of marriage. I have heard what I can only describe as the most exaggerated claims made in relation to that provision. When one realises that we are talking here about, first of all, a very limited number of cases in which there is any gift in consideration of marriage and of those, we are talking about the very small percentage where the person making the gift dies within five years of the gift—that is what we are talking about in terms of numbers —but when you have regard to the effect of it, both on the rural and non-rural community, I have already explained about the application of the artificial valuation system on the rural side—but if you look at the situation on the non-farming side, I think Deputy Tully illustrated here a few months ago the heights of absurdity to which people will go on a matter like this. He may not recall it but I wrote down the words he used when he was talking about the non-rural side. He talked about an ordinary artisan being affected by this. I would ask Deputy Tully does he know any ordinary artisan who can afford to give a gift of £5,000 to one of his children, not to mind all of the children, because I do not.

The Minister does not move around in ordinary artisan circles. I do, and that is the difference.

If ordinary artisans in this country can afford to give £5,000 to even one of their children on marriage, they are a great deal better off than Deputy Tully has been pretending to us. They are in fact better off than they were but nothing like as well off as that.

They have spent all their lives saving up their money and when they come to die——

I am not talking about when they die. I am talking about when their children are getting married.

Many of them, when their children are getting married, particularly if the parents are getting on in life, do this. The Minister may not be aware of it, but I am sure that some of his colleagues behind him could give him instances all over the place.

I hope it will go forth from this House that Deputy Tully believes that the ordinary artisans of this country give gifts of £5,000 to their children on marriage.

Those who can afford it do, and many of them do.

The Minister should get to his point—he is holding up the House.

That is a point Deputy O'Leary does not like, of course—I know that.

I am not a bit ashamed of the fact that artisans do in fact save their money.

I would be delighted if it were so, but it is not.

The Minister thinks it is a shame that an artisan should have £5,000. It may be annoying people in his circle.

The Deputy may try to twist it any way he likes, but what he said was that the ordinary artisan can give £5,000 to his children on marriage.

I gave it as an instance of people who do it. I do not deny it and it has been done.

I want to suggest that there is some particular significance in the fact that on these sections in which an effort was being made, as in that case, to close loopholes to try to make a more equitable system of taxation, there was a united opposition from Fine Gael and Labour.

What is wrong with that?

I think the message will also go forth from this House when it gets down to brasstacks as to what is the difference in approach between these benches and those benches opposite. I hope that message will go forth loud and clear as to what happened in this House on this Bill, as to the approach taken not alone by Fine Gael, who are more or less expected to take it, but by the Labour Party who pretend that they do not take that view, but there they were solidly defending every effort to get at the rich people who were avoiding taxation in this country and they opposed every one of them. The message is going forth and I add to it as much as I can.

Having said that, I will not delay the House much longer. I want to say this final word, that I would like to add to what was said by, I think, Deputy O'Donovan when he referred to the contribution of members of the Fine Gael Party. I would add, by some members of the Labour Party also. Whether we agreed or disagreed, some Members who took part in this debate worked very hard at it and I would like to acknowledge that contribution and to acknowledge also that as a result of their efforts, the Bill has been improved—whether substantially, I do not know—and I think that is seen in the amendments brought in here today. Deputy O'Leary was not in on it and did not do any work on it so that he is not involved in this little homily I am giving at the end, one way or another. I do acknowledge the efforts of these Deputies and I do agree that in so far as the Bill has been amended on foot of that debate, it has been improved and Deputies can take at least that much satisfaction from their efforts.

Question put.
The Dáil divided: Tá, 54; Níl, 38.

  • Aiken, Frank.
  • Allen, Lorcan.
  • Andrews, David.
  • Boylan, Terence.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Brennan, Paudge.
  • Briscoe, Ben.
  • Brosnan, Seán.
  • Browne, Patrick.
  • Browne, Seán.
  • Burke, Patrick J.
  • Carter, Frank.
  • Childers, Erskine.
  • Colley, George.
  • Collins, Gerard.
  • Cowen, Bernard.
  • Cronin, Jerry.
  • Cunningham, Liam.
  • Davern, Noel.
  • de Valera, Vivion.
  • Fahey, Jackie.
  • Faulkner, Pádraig.
  • Fitzpatrick, Tom (Dublin Central).
  • Flanagan, Seán.
  • Foley, Desmond.
  • 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.
  • McEllistrim, Thomas.
  • Molloy, Robert.
  • Moore, Seán.
  • Moran, Michael.
  • Noonan, Michael.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Malley, Des.
  • Power, Patrick.
  • Sherwin, Seán.
  • Smith, Michael.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Wyse, Pearse.

Níl

  • Barry, Richard.
  • Belton, Luke.
  • Browne, Noel.
  • Bruton, John.
  • Burke, Joan.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Crotty, Kieran.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Dockrell, Henry P.
  • Dockrell, Maurice E.
  • Donegan, Patrick S.
  • Dunne, Thomas.
  • Fitzpatrick, Tom (Cavan).
  • Governey, Desmond.
  • Jones, Denis F.
  • Kavanagh, Liam.
  • Keating, Justin.
  • Kenny, Henry.
  • L'Estrange, Gerald.
  • Malone, Patrick.
  • O'Connell, John F.
  • O'Donnell, Tom.
  • O'Donovan, John.
  • O'Higgins, Thomas F.
  • O'Leary, Michael.
  • O'Reilly, Paddy.
  • Pattison, Séamus.
  • Ryan, Richie.
  • Taylor, Francis.
  • Timmins, Godfrey.
  • Tully, James.
Tellers:—Tá: Deputies Andrews and S. Browne; Níl: Deputies Bruton and Kavanagh.
Question declared carried.

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

Top
Share