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Dáil Éireann debate -
Wednesday, 22 May 1974

Vol. 272 No. 13

Committee on Finance. - Finance (Taxation of Profits of Certain Mines) Bill, 1974: Committee Stage.

Question proposed: "That section 1 stand part of the Bill."

If the Minister looks at line 35 page 2 of the Bill he will see the phrase "as such". Paragraph (c) of subsection (1) reads:

expenditure on works constructed wholly or mainly for subjecting the raw product of the mine to any process except a process designed for preparing the raw product for use as such.

Could the Minister explain that to me? It seems to me that it means preparing the raw product for use as a raw product. If that is what it means perhaps the Minister could enlighten me as to what kind of process that describes.

The use of these words is to make it clear that we are not including in this Bill any exemption in relation to smelter operations but we are including any borrowing or expense which is incurred for the purpose of reducing the bulk of the extract so that we get the bulk ore. We are not dealing at the moment with any smelter operation which we would conceive as an issue to be separately dealt with.

The Minister has answered the point I was going to raise, that is, if a smelter operation was covered by this. I take it from what he has said that the intention is if the decision is made to erect a smelter the position in regard to it and the taxation of that operation will be separately considered and separately dealt with.

Question put and agreed to.

I move amendment No. 1:

In page 4, after line 25, to add the following subsection:

"( ) No allowance shall be made under subsection (1) in respect of expenditure incurred before the 6th day of April, 1974, whether or not such expenditure is, by virtue of any provision of this Act, the Finance Act, 1946, or the Act of 1967, deemed to have been incurred on or after the said date."

Section 2 (1) provides for the immediate write-off against mining profits of exploration or development expenditure incurred on or after 6th April, 1974. The purpose of the amendment, which corresponds with a similar provision in section 6 (2), is to ensure that no allowance shall be granted in respect of exploration or development expenditure which was incurred before 6th April, 1974, notwithstanding that under certain specified enactments such expenditure may be deemed to have been incurred on 6th April, 1974 or some later date. For example, a person who commences to work a qualifying mine on or after 6th April, 1974, and who has incurred exploration expenditure in connection with that mine, will, in accordance with section 245 (9) of the Income Tax Act, 1967, be deemed to have incurred that expenditure on the date on which he commences to work the mine. The new subsection ensures that the deeming of this expenditure to have been incurred on or after 6th April, 1974, will not bring it within the scope of subsection (1).

As the Minister is aware, I have certain amendments down which will be dealt with later. I did not propose an amendment to this section because I did not attempt to cover all the areas in the Bill in which this problem arises. Perhaps I shall deal with the problem in more detail at a later stage. It seems to me that the effect of the Minister's proposed amendment is to make it quite clear that there is no intention of treating existing mines in the same way as new mines. I tried to make it clear on the Second Stage of the Bill that it seemed to me one should make a very clear distinction between existing mines and new mines.

As far as new mines are concerned, whatever arrangements seem to be appropriate, whatever arrangements will produce the maximum return for the community, consonant with retaining sufficient incentive to mine owners to carry on is absolutely justified; but in regard to existing mines the position is different not only because of the viability, or lack of it in the case of some of them, but particularly because of the fact that such mines have been operating on the basis of the statutory exemption. The effect of this proposed amendment is to make it absolutely clear that the Minister does not propose to allow to existing mines a number of the allowances which he proposes to make available to new mines. When I say that I mean that he proposes not to make them available to existing mines in respect of the period prior to 6th April, 1974.

This matter arises on other sections and other amendments and at this stage I do not propose to pursue it in full detail but I did refer to this point regarding section 2 on the Second Stage and I asked the Minister if he would explain the thinking behind this provision which is reinforced by this proposed amendment. In particular, I point out to him that it is proposed under section 3 to allow previous expenditure in the case of existing mines. Would he explain why it is not proposed to grant the allowance provided for in section 2 to existing mines in the same way as it is proposed in the case of abortive expenditure under section 3?

I think the Deputy is misreading the situation. We are not proposing any disadvantage to existing mines. Essentially, there will be no difference in treatment between existing companies and any new companies. The new scheme of allowances, so far as it applies to expenditure incurred on or after 6th April, 1974, applies equally to new companies and existing companies. The Deputy may have in mind that the new scheme of allowances does not in general apply to expenditure before 6th April, 1974, and therefore existing mining companies will not get the benefit of the special relief in respect of past expenditure. I think he would, on reflection, agree that it would be unreasonable to expect that they should now get relief for past expenditure which at the time it was incurred did not qualify for tax relief. We must recognise that existing mining companies have enjoyed full exemption from tax, some of them for periods up to eight years, and that this exemption more than compensates them for any expenditure incurred before 6th April, 1974, expenditure which would not qualify for tax relief at the time it was incurred under the general tax law.

I recall that during the budget debate Deputy Haughey said that he had introduced the 20-year tax exemption period because he was confronted, he said, with the complicated apparatus of income tax allowances to deal with the problem of the mining industry. As I said in replying to the budget debate, there was no need to avoid the simple exercise of devising a comparatively simple code to deal with the special problems of the mining industry. This Bill has a mere 17 sections, two of which are routine sections relating to definition and repeal, so that we have clearly demonstrated that it is possible to devise in a comparatively simple measure the kind of relief to which the mining industry can reasonably make claim on the basis of world experience. That is what we are doing but we are not putting any existing mines in a disadvantageous position compared to new ones. It would be wrong to believe that we are so treating them. In fact, existing mines will be able to carry forward the balance of the expenditure which they have had in the past against liabilities which will now arise.

I understand Deputy Colley proposes to argue this at greater length on some further sections and on his own amendments and I shall be only too glad to take up the argument with him then.

Acting Chairman

Amendment agreed to?

I want to oppose it.

Amendment put and agreed to.
Section 2, as amended, agreed to.

I move amendment No. 2;

In page 4, subsection (1), line 29, to delete "date" and to substitute "6th day of April, 1974,".

This is no more than a drafting amendment. The "said date" is intended to refer to 6th April, 1974, but there is also a reference to the 6th day of April, 1967," and in order to avoid any ambiguity I considered it advisable to specify the actual date.

I certainly do not object to this amendment in so far as it clarifies the text, although I have seen many other texts far less clear which were not amended. I had no great difficulty when reading it in working out what the Minister had in mind but I shall not oppose an amendment which makes it crystal clear.

What might be intelligible to lawyers might easily confuse others. I think it well to anticipate——

I suggest that a reading of it cannot give any other meaning than that which the Minister makes clear in this amendment.

To a reasonable person.

Amendment agreed to.

I move amendment No. 3:

In subsection (2), page 4, lines 37 to 39, to delete "but was incurred within a period of seven years prior to the date on which he commences to carry on the said trade,".

The Minister will recall that in speaking on the Second Stage I referred to this question of limiting the period in respect of which the allowance could be claimed to seven years. I said then that my understanding was that normal exploration may take five to seven years and the appraisal of that may take another two years and development after that may be five or more years. If this information is correct it would appear that the seven-year limitation imposed in subsection (2)—I think it is also referred to in subsection (1)—is unreasonable. It may be that the information given to me is not correct. I do not profess to be an expert on the technicalities of the mining industry but I do not think the Minister, when replying to the Second Stage debate adverted to this point. I would be glad to know whether the advice available to the Minister is to the effect that my understanding of this position is correct or not. If the advice available to him is that it is substantially correct would the Minister explain why he would still propose the seven-year limitation?

Obviously the period for exploration and development will vary from mine to mine. Two or three years might be a suitable period for one mine but it might take ten years or more for another. What we have to do is to try to strike a compromise. It so happens that if one takes a compromise between a short period of two or three years and a period of as much as ten one comes in with a figure of about seven. That is one reason for going for a compromise figure but it also happens to coincide with the period of tax exemption which was given under the 1967 legislation. Bearing these two factors in mind we considered that the commencing date should be 6th April, 1967.

We consider it was quite generous to allow people to accumulate exploration expenses over a period of seven years and to use those accumulated expenses as a set off in respect of future tax liability. The advice which I have does not seriously conflict with what Deputy Colley offered. I believe the Deputy went to 12 years in his suggestion so that we have not gone very far away. I believe we have struck what any person would accept as a reasonable compromise.

The Minister mentioned that in the case of one mine it may be three years while in the case of another mine it could be ten years. I wonder if that is correct? Is it true that in the case of some mines the process of exploration, appraisal and development could be completed in a three-year period, because if it could not then taking seven years as a compromise does not have much reality. On the other hand, the second point the Minister made may be of more importance. He said that the seven years coincides with the exemption period back to 1967. Could the Minister throw some light on this? Prior to 1967 if such expenditure had been incurred would the mine concerned already have got an allowance corresponding to this? If it had then it seems to me that the Minister has a stronger case.

The House should bear in mind that what we are dealing with here is abortive exploration. There was no allowance for abortive exploration prior to 1967. Clearly there must be a limit on what we can allow people to set off in respect of abortive exploration otherwise it would be open to somebody to go around buying up the rights to abortive exploration and setting those off against future tax liability. That would defeat the whole object of this legislation which is to ensure that the mining industry pays a fair share of taxation in the future. The figure we have chosen, having regard to the average experience, is a very reasonable one.

The Deputy asked me whether it would be usual for exploration, appraisal and development to be completed within three years. Probably not, but what we are dealing with here is abortive explorations which might be followed by appraisal but if exploration is abortive it does not take long to appraise that the wise thing to do is not to proceed. Obviously one could easily have exploration expense within one year, and completed within a year, which would turn out to be negative and would be abortive and which would be available for set off.

I agree that it would be totally undesirable that a firm could go around buying up the rights to claim abortive expenditure but I thought there was a provision in this section, and if there is not there is provision in another section, in relation to another kind of allowance confining the allowance to the person or company who actually incurred it, thereby precluding its being bought up. Is that solution not open to the Minister so that the genuine case where abortive expenditure has been incurred can be allowed?

We are providing against people buying up holes in the ground all over the place in order to set off but we are going to enable people to set off what they have incurred in the course of exploration because we want to encourage people to explore. This is one of the greatest incentives to the future development of the mining industry. Where there has been bona fide exploration in the past we also want to permit that to be set off but we must ensure that there is no avoidance here. The period we have chosen, seven years, is a reasonable compromise. It provides for reasonable exploration in the past and it does not lend itself to abuse. If we go beyond the seven-year period I think we do open the door to abuses.

Did I understand the Minister to say that this abortive expenditure allowance will, in fact, be confined to the person or company who incurred it?

If that is so then surely it will not be possible for people to go around buying up these rights and to get the benefit of them. If the allowance is confined to the person or company who actually incurred it is there not a strong case for having no limitation because it means they genuinely incurred the expenditure? As the Minister has clarified, prior to 1967 they got no such allowance and what my amendment is seeking in practice is to give the allowance to the person or company who actually incurred the expenditure. Therefore, we can assume it must be genuine expenditure incurred by them and they have to prove this to the Revenue Commissioners before they can get the allowance.

Basically my position is unchanged. We are dealing with a situation where we are primarily concerned with the future and not the past. The concession we are providing is to ensure that people who engage in legitimate exploration, which proves abortive, will be encouraged to proceed with their exploration and development because they will have this set off available to them. We should not go back too far, over a period when there was no right to avail of abortive exploration for any tax relief —going back now to pre-1967. I think the proper thing to do is to relate it or tailor it to the date of commencement of the tax holiday, which was 1967. I am prepared to have a look at this but nothing Deputy Colley has said leads me to any view other than that the date should be 1967.

We have made a little progress. Could I ask the Minister to examine it a little further still? If he takes the position that he is prepared to allow this expenditure where genuinely incurred for a period of seven years back—that is, during the period when the companies concerned had complete tax exemption—what justification is there for not allowing it earlier than that when they did not have the complete tax exemption for 20 years and when there was no such allowance? In other words, would the effect of the section, as the Minister has drafted it, not be unfavourable to companies who have genuinely incurred such abortive expenditure prior to seven years ago as against those who incurred it, say, six years ago? Is there any real danger of abuse if the Minister puts no limitation on it having regard to the fact that these cannot be bought up by people taking over the grant. They can only grant it to those who genuinely incurred this expenditure. Is there any real danger of abuse?

Mr. Ryan

Abuse in the past, I would say "No". I will take a look at it but, having regard to the fact that we are now bringing in a benefit which was not there before, we should tailor it to the 1967 date. I cannot see any particular reason why we should go back beyond that. I will certainly have a look at it and, if I am persuaded, I will consider an amendment on the Report Stage.

On the basis that the Minister is prepared to take another look at this, I withdraw the amendment.

Amendment, by leave, withdrawn.
Question proposed: "That section 3, as amended, stand part of the Bill."

I wonder if the Minister would explain why he distinguishes between abortive expenditure incurred during the past seven years on the one hand and, on the other hand, development expenditure incurred during the same period. Why, in other words, does he propose to allow the abortive expenditure to existing mining companies but not allow the other kinds of allowances provided in the Bill except to new mining companies or, at any rate, to operations after 6th April of this year?

We must bear in mind that we are dealing with a totally new situation. The existing mines had the concession of a tax relief for the last seven years and they have therefore enjoyed in the past a treatment which will not be available to any new company in the future. It is quite wrong to believe that they are now being put at any serious disadvantage. The truer approach to adopt is that they enjoyed concessions in the past which they and others will not enjoy in the future. That is the correct way of looking at it and not the way Deputy Colley is looking at it, as if existing companies are being punished in some way while new companies will get advantages not available to the old ones.

I understand the Minister's argument though I do not necessarily agree with it. I may have missed something he said. The question I asked the Minister was on what basis does he distinguish, granted the terms of the argument he has put forward, between abortive expenditure on the one hand and development expenditure on the other. He is allowing the abortive expenditure back for seven years but he is not allowing development expenditure. In what way does he distinguish?

The situation in the past was that development expenditure could be set off. There was a tax exemption holiday but, assuming that there was not, notionally it could be set off. You never until now could set off abortive exploration expenditure and that is the reason why these two have now to be treated differently as it were.

The Minister will admit that is a fairly theoretical argument in the context of tax exemption.

The tax exemption has existed but nevertheless, from the point of view of the notional accounts, we are still adding, and at the end of the 20-year period the expected setoffs and so on would have to be taken into account.

Question put and agreed to.
Question proposed: "That section 4 stand part of the Bill."

The point I want to raise on this section is in regard to the provisions for group relief. I understand that in Britain group relief is available generally where the shareholding relationship is 75 per cent as against the proposed 100 per cent in this section. It has been suggested to me that the requirement of the 100 per cent relationship can cause difficulties for some mining companies in dealing with very small minority interests. Has the Minister any information on this? Could he indicate whether a reduction on the 100 per cent requirement would present problems from the point of view of the administration or control of the relief being granted?

There is the difficulty, as I am sure Deputy Colley will recognise, that if we go down to fractions we leave the machinery open to a certain amount of abuse. We are anxious to facilitate people engaged in legitimate contractual arrangements and very sensible management and proprietary arrangements. But again we must ensure that, as we are bringing in this liability to tax, that liability cannot be avoided by arrangements which in essence are for the purpose of purchasing exemptions which could be set off against the tax liability of others.

The section is designed to cover a case where exploration expenditure has been incurred by one company in a group of wholly-owned subsidiaries and mining profits are earned by the parent company or by another subsidiary group. In such cases the exploration company may elect to have this exploration expenditure, whether abortive or successful, attributed to any other subsidiary in the group or to the parent company, so that the exploration expenditure may be set off against mining profits wherever they arise within the group.

Representations were made to have this facility made available and it was urged on me that where one company in the group carry out the exploration programme and another develop a successful mine, that the entity operating the successful mine should be able to claim in regard to the total exploration costs for the purpose of this section.

I appreciate the dangers of abuse if the requirement of shareholding relationships is set too low. On the other hand I would hope the Minister would appreciate that there could be problems where there were small minority holdings in some companies. As I have mentioned, I understand the relationship accepted in Britain is 75 per cent. I would think that even a considerably higher figure might not be unreasonable but that some reduction from 100 per cent would at least allow for small minority interests. Such a situation, I understand, arises in some Irish mining companies. I wonder if the Minister would have another look at this, perhaps even in terms of 85 per cent or 90 per cent. This might meet the difficulty and prevent the possibility of abuse.

I will certainly re-examine the position. We have had some information put before us but I do not think it convinces me that I should make any change. However I am prepared to re-examine the matter further.

Question put and agreed to.
Question proposed: "That section 5 stand part of the Bill."

This is designed to provide relief for exploration expenditure whether incurred before, on or after 6th April, 1974, by a person who finds a scheduled mineral deposit and then sells the assets representing the expenditure to another person who develops and works the mine. In such a case the purchaser will be able to claim in respect of the exploration expenditure incurred in connection with the mine.

Would this be so although the purchaser had not himself incurred the expenditure?

Yes, but of course the person who sells the mine will be liable to tax.

Question put and agreed to.

Amendments Nos. 4 and 5 are related. One decision should suffice.

I move amendment No. 4:

In subsection (1), page 6, line 32, to delete "on or after the 6th day of April, 1974".

The Minister will appreciate that the object of these amendments is to try to ensure that the investment allowance in respect of exploration expenditure would be available to a company that had incurred that expenditure before 6th April, 1974, as well as thereafter as provided in the section. I adverted earlier to some of the matters involved here.

As I understand it the case the Minister is making—this is a general proposition in regard to a number of sections—is that because the existing mining companies had tax exemption up to now, then it is not reasonable to suggest, now that it is being taken away, they should be given the allowances during the period when they had tax exemption.

First of all I would point out that during the debate on section 3 the Minister made the argument that he was providing there for a new allowance and he distinguished that from the development allowance which was already in existence, though he admitted it was a purely notional allowance because of the tax exemption. He used the notional allowance that he was talking about as an argument. It suited him at that time. I think that if it were true in that case, the same argument should be applied here and the Minister should have regard to the fact that if these companies had tax exemption they had it on foot of a statutory provision. The companies concerned and their shareholders formulated company policy and implemented it on the basis that they had this exemption provided for in legalisation and that they had raised the necessary finance for their operations on the basis of the exemption.

It is reasonable, having regard to the fact that it was provided for in legislation and that there were assurances given from time to time in regard to that exemption, for them to assume that this was in effect a contractual relationship and it was reasonable for them to operate their business and to raise finance on the assumption that they would be allowed and would continue to be allowed the exemption as provided for in legislation.

The Minister proposes to take away that exemption. Not alone does he propose to do that but he also proposes, except in the case of abortive exploration, not to allow the additional allowance in this case—the investment allowance in respect of exploration expenditure—except in regard to expenditure incurred prior to 6th April, 1974. I would suggest that at the very least the Minister is going to take away the statutory exemption on which these mines were operated and in which they believed, because the statute would operate for a 20-year period provided that the completion of it was before 6th April, 1986. When they were operating on that basis, and the Minister now proposes to take that away, the very least he should do is to grant to such companies, who had geared their financial operations and raised equity and loan capital on that basis, the allowance in respect of exploration expenditure which he is proposing to allow in respect of expenditure incurred after 6th April, 1974.

The object of these amendments is to create a situation in which this allowance will be granted whether the expenditure was incurred before or after 6th April, 1974. I would urge the Minister to consider very carefully the implications of these amendments. If he is not prepared to accept the later amendments which would allow existing mines—again, I would distinguish very sharply between existing mines and new mines—to carry on, as they believed they would under the existing laws, then I would press him very strongly not only from the point of view of doing justice to companies which raised money on the basis of existing statutory provisions but also in order to try to ensure that the reputation of this country is not adversely affected. If he would concern himself with that aspect of the matter and, if he is not prepared to allow the existing exemption to continue—for existing mines only; not for new mines—then I would urge him very strongly to consider applying the allowances which he proposes to give for operations after the 6th April, 1974 to those prior to that date.

Again, I think Deputy Colley is overlooking the immense benefit which was available to people who engaged in exploration prior to the 6th April, 1974. They enjoyed a tax-free holiday; they had total exemption from tax liability. In addition to that, Deputy Colley is suggesting that, on an historical basis, we should build back, as it were, this extra 20 per cent investment allowance. I have made some inquiries and I have not come across any case in which the investment allowance was ever paid by the State, here or elsewhere, in respect of past work. The whole point behind giving an investment allowance is to provide an incentive for future work. This is precisely what we are doing here. We are giving an incentive to people interested in mining to engage in further exploration. This incentive will apply equally to old and new companies to engage in exploration in the future. It could fairly be argued that this incentive is not as big an incentive as a total tax exemption. If that argument be a valid one—and I do not think Deputy Colley can seriously disagree with it—then one can turn the argument the other way and say: "That being so, you have no right to say that, in addition to total exemption in the past, there should also be an investment allowance of 20 per cent."

May I ask the Minister if he appreciates that existing mining companies—operating on the basis of the exemption provided in the law in force—raise money by way of equity and, in some cases, in addition by way of loan and if he changes that situation, if he takes away that exemption, he is altering the basis on which they raised this finance and is, therefore, adversely affecting their financing arrangements? It is not merely a question of taking away an exemption which they had but of affecting, in some cases, fairly fundamental financial arrangements which mining companies made, and made in good faith. If he cannot see his way to continuing that arrangement there is an obligation on him at least to show that he is conscious of the fact that the abolition of this exemption is adversely affecting not merely the question of additional profits or otherwise but the gearing basis of financing arrangements made by mining companies. As an acknowledgement of that and as a gesture towards remedying the position where, in the view of some mining companies and, indeed, of a number of other people with no connection with mining, a quasi-contractual arrangement is being broken unilaterally, he should go some of the way. If he is not prepared to continue the existing exemption, the easiest way for him to go about it is to grant those allowances to these companies in respect of the expenditure they incurred prior to April, 1974, and thereby go some of the way towards enabling them re-adjust their financial programmes entered into in good faith on the basis of a statutory provision enacted by this House.

I can reply very bluntly to Deputy Colley's question as to whether I accept that people entered into investment arrangements in the mining industry on the basis of a tax provision by saying I do not accept that that was the only reason people invested in mining. What Deputy Colley is arguing here is that a Government have no right to vary tax liability subsequent to the date on which any person, or persons, invested in a company and certainly have no right to vary tax liability to the disadvantage of investors in or owners of a company. I cannot accept that.

I would remind the House that in 1967 the mining industry expressed the view, through its own trade journals, that the 20-year tax exemption provided for in Irish legislation was too good to last and accepted that, within the life span of the 20 years provided for in the legislation, the democratic Government of Ireland would be obliged to mend its hand. I am quite certain that any person seriously considering investment in mining would have been aware of that view which was very strongly held and was expressed in the trade journals. Of course, people who invest in mines look at all the possibilities of making profit but they include not merely the question of the tax arrangement but also the minerals in the ground, the cost of extracting them, the market for them, the likely movements in markets, the prices to be obtained for the product and so on. Bearing all these factors in mind I cannot see that the argument Deputy Colley is advancing is a justification for giving preferential treatment to the people who have already enjoyed what they themselves regarded as exceptional and so exceptional that it was unlikely to last.

Even if Deputy Colley's argument bears further examination, even if some consideration were to be given to what he urges upon us, with respect, I do not think it is relevant to this section which is related very specifically and correctly to future mining. It is an incentive to exploration expenditure in the future and not in the past. It would be quite wrong, I think, to use an incentive which is supposed to encourage people to continue exploration in the future in order to compensate them for any real or illusory loss which they may have incurred by reason of a belief that the tax laws would never be changed.

If we were talking here about ordinary tax provisions which are a normal hazard subject to change from year to year, or even at shorter intervals in the annual budget, or in a supplementary budget, that would be one matter. In fact, we are not; we are talking about a statutory provision that there would be tax exemption for up to 20 years. That is a different thing from the ordinary income tax and other provisions that we deal with from time to time. Any company must, of course, calculate or allow for the possibility that these rates and conditions will be changed from time to time. But we are talking about something different, something that was inscribed in legislation providing for a 20-year exemption. I submit it is not reasonable to say that companies operating under that legislation should expect that it would be changed at any time. I doubt very much if the Minister can produce any-evidence, in any mining journal or anywhere else, to show that the trade expected this to be changed in relation to existing mines.

To expect it to be changed in relation to new mines is another matter. It was quite clear from the actions of the previous Government that in relation to new mines there would be a different approach but to expect that this would be changed in respect of existing mines operating under the existing law is quite another matter.

I do not know whether the Minister has grasped the major distinction there is between these two things. I wonder if the Minister has grasped the serious implications of changing the rules under which a company operated and raised money as distinct from the ordinary taxation provisions. Has the Minister grasped the serious implications of that not alone for the Governments concerned but also for the good name of this country and the consequences for us? We should be able to say that if this House, rightly or wrongly, in this case or in any other case provides a particular incentive those who commenced to operate under it would be allowed to carry on in the same manner. One can change the rules for a newcomer but not for those already operating.

If the Minister cannot see his way to do that, I would hope he would see that there is a strong case for amending this Bill in such a way as at least to show he is aware of the implications involved, is prepared to make a gesture to show he is aware of them, and that he is trying to do something to remedy the position which has arisen for companies who raised money on the basis of existing provisions and who now find that the basis on which they raised that money has been changed.

I accept the point the Minister made in relation to the particular allowance provided for in this section that perhaps in this case it would be appropriate that it should be confined to new expenditure. It is designed as an incentive for the future. However I should like to know whether what the Minister has said indicated that he would be prepared to think, in relation to the other allowances, of doing something on the lines I am urging.

Deputy Colley has asked me to furnish evidence of what I had alleged in relation to the expectations of the mining industry—that the 20-year exemption would not last that long, I would refer the Deputy to the issue of the Mining Journal, published in Canada, for 14th April, 1967, which stated:

In effect Mr. Haughey's budget proposals suggest that the Irish Government is prepared to forego profits tax revenue from its domestic mining industries for ever in order to encourage maximum foreign exchange revenue and employment opportunities—indeed, a remarkable situation.

It continues:

It must be recognised that after about ten years of vigorous government of capital development the Government of the day will probably find itself under considerable pressure to tax the profits of successful operations in order to satisfy the demands of the electorate.

They were only short by about three years. It only took seven years instead of ten to reach that situation.

I come to another Canadian journal, the Northern Miner which is quoted in The Irish Times of 16th October, 1973. It states: was generally acknowledged that some adjustment in the Irish Government's tax policy was to be expected. After all, nowhere else in the world could one expect a 20-year exemption from income tax and in Canada, after whose mining laws Irish ones were largely patterned, the exemption for new mines was a mere three years.

Now even that has been abolished despite strong objections from the mining industry.

It is pertinent that as far back as 1971 the Deputy's colleague, the then Minister for Industry and Commerce, Deputy Lalor, indicated that he was anxious to have this whole matter reviewed. He set up a committee to consider in what way to end the 20-year tax exemption. The fact that Deputy Lalor established that committee was made known. It was public knowledge. That was confirmed at the Fianna Fáil Ard Fheis in February, 1972. The Irish Press of 21st February, 1972, stated:

Mr. Lalor suggested that the 20-year tax free holiday for foreign mining companies may be coming to an end.

Then a gentleman of great wisdom and analytical capacity said—I quote Mr. James Healy of the Donogh O'Malley Cumann in University College, Cork—"The Government— and that is the Fianna Fáil Government—made their great mistake in extending the tax free holiday for mining to 20 years".

This clearly indicates that the posture now being adopted by Fianna Fáil is not one which is in keeping with their own analysis of their 1967 mistake. Within four years of giving the exemption they realised that there was a serious need to correct it and that it was a prodigal incentive. In that situation the exhortations to me now to provide in addition to the seven years' total exemption further exemptions is not one which carries a great deal of weight. The people who have enjoyed the seven years did so without giving anything very specific in return for that enjoyment. None of them entered into any new arrangement as a consequence of that 1967 legislation. They were all in the mining business before the 1967 legislation. That is very pertinent, particularly when one comes to deal with the point which Deputy Colley made about quasi-contractual rights which people might have had. Deputy Colley says they had been led into a situation of belief that the exemption would remain for 20 years. They did not act as a consequence of that, even if they had believed it.

From the quotations I have given it is quite clear that anybody who knew anything about mining was of the opinion that the bonanza was too good to be true and certainly too good to last. All that is happening now is that their reasonable anticipations have been fulfilled. I would not even call them gloomy forecasts because from what I have quoted there is no indication that it would be a dreadful or a damaging thing that the 20-year tax exemption would be qualified. It has been enjoyed for over one-third of the period. Those who enjoyed it have little reason now to grouse. Even as it is being terminated they will be able to enjoy concessions in the future in respect of their continuing interest in mining. That is what we are primarily interested in.

I do not know why it should be so difficult to bring the Minister to the real point. None of the quotations he has given bear out what he has said or contradict what I said. Furthermore, he referred to the announcement by the previous Government about setting up an interdepartmental committee to examine the incentives for mining. I had adverted to them before the Minister rose to speak. The whole point I am making is that it was clear from the announcements of the previous Government and, as the Minister said, to those engaged in mining, that as mines developed the incentives granted in 1967 would not be necessary to induce further development of mining and, therefore, the 20-year exemption given in 1967 was almost certain to be taken away, in some form or other, from new mines. That is the point I am making to the Minister—from new mines. There was never any suggestion from the previous Government in any of their announcements and, I submit, never any suggestion in the quotations the Minister gave us, that the exemptions would be taken away from existing mines.

The Minister made a legitimate point that existing mines started before the exemption was brought in. I do not know what went before that, whether there was any discussion between the then Minister for Finance and the mining companies. Whether there was-or not, the fact is that while a mine might be started there are developments which take place and financial arrangements have to be made. I have hard evidence in relation to one mining company, and I am informed that it applies to other mining companies, that financial arrangements were made based on the 1967 exemptions. Money was raised by way of equity or loan on the basis of that exemption. If that is so, I am sure the Minister can see that the taking away of that exemption in relation to those mines and companies is something which, at the very least, will create problems for them and may well damage our reputation which is vitally important to our future economic development. Therefore, I am urging the Minister, if he cannot see his way to maintaining the exemption for existing mines, at least to show that he is aware of this problem by giving the allowances to the existing mines in respect of previous development which he proposes to give new mines in respect of future development.

I should like to ask the Minister what is involved in this for the Exchequer? On Second Stage he gave an estimate of revenue to the Exchequer which made it clear that over a 20-year period the average revenue to be expected as a result of applying this Bill, as then drafted, to all mines present and future would be in the region of a little over £6 million per annum. He also made it clear that for the next few years there would be very little income. I wonder how much revenue is actually involved in this matter as far as existing mines are concerned. I want to make it clear to the Minister because I do not think he has grasped this point yet that I am talking about existing mines and not new mines, or the allowances to be granted to them. How much revenue would be involved if, for instance, the allowance provided for under section 6 were to be given to existing mines? I suggest that the amount of revenue we are talking about in this section and indeed, overall, in relation to existing mines is extremely small, particularly in relation to the damage done and the potential damage which can be done to our economy. He ought to reconsider his approach in regard to existing mines. I repeat, I am not talking about new mines.

We are all agreed that the terms for new mines could be much more stringent than those which existed for existing mines. No new mining lease has been granted for about eight years. When we are talking about new mines, we are talking about a completely new situation. In regard to existing mines I suggest that the consequences of what the Minister is doing will be serious and that the return to the Exchequer will be relatively very small. Even at this late stage the Minister ought to mend his hand. There will be very little involved for the Exchequer but there could be a very great amount involved for the whole of the economy if he does not mend his hand.

There is very little more I can say which I have not already said. There is no ground whatsoever for this repeated irresponsible Fianna Fáil allegation that any damage has been done to our economy or to investment in this country. Deputy Colley has been waxing indignant about the high bids people are making for interests in Irish mining. The simple answer is that this shows the confidence the people have in Irish mining and in the very fair package which we have produced here which is on a par with what other comparable countries are offering in any part of the world.

If there is any criticism of the Government's proposals it is that we are being too generous towards the mining industry and that the £125 million, which I said would be gathered over the next 20 years, is too little and we should be taking more. That is on the basis of existing figures and existing prices. We could anticipate that over the same period there will be variations in price which could double that figure or bring it to something even higher. I would not feel justified in granting this particular request which Deputy Colley is making, which covers as much as £9 or £10 million. That would be taken off the £125 million which a large body of responsible opinion feel is an inadequate recovery for the economy for the immense wealth which is being taken out of Ireland by the mining industry.

Having listened with some understanding to the arguments advanced and having listened very sympathetically over several months to representations from the mining industry. I believe we are correct in confining an incentive which is intended for future exploration to future exploration, and not using that particular incentive as a device to give compensation in respect of what I respectfully express as "illusory" losses by people who invested in an industry primarily because it had inherent in it a capacity to make a profit. They invested in it irrespective of the fiscal arrangements applicable to the industry.

What is the approximate basis for the £9 million quoted by the Minister? Is he referring to existing mines and all the allowances? Over what period is he speaking?

This is related to the existing mines, expenditure for exploration and pre-production development which has already taken place. I understand this is what Deputy Colley has in mind, that everything that would have occurred before April, 1974, would qualify for this particular incentive allowance.

The Minister is not speaking solely of the investment allowance provided for in section 6 but of the various allowances provided in the Bill?

There are other allowances. I have not got a breakdown——

Is the Minister speaking of them all?

——but there are other items of expenditure which are not contained in that figure, including plant and machinery. That would be as near as I could make a calculation at the moment. It is a very substantial figure against £125 million.

Over 20 years?

It is just ten as against £125 million over 20 years on present costings.

(Dublin Central): The basic question here, as Deputy Colley put it, is that of undermining confidence. Can a Government, even the Government now in power, give an undertaking to industrialists coming into this country that any concessions given will not be withdrawn? It is quite obvious now that any Government can break contracts. I agree with Deputy Colley that any undertaking given from now on as regards new mines could contain far more stringent conditions. However, if a businessman enters into a contract with a bank or any other financial institution it is important that he be assured that such a commitment will be honoured. The Government may have undermined confidence abroad, especially, because the finger can very easily be pointed at this country that with a change of Government here undertakings, especially financial undertakings such as this, can be broken very easily.

The Deputy is not relating his remarks to the amendment.

Mr. T.J. Fitzpatrick

(Dublin Central): I am dealing with the basic principle involved in this section. It will be seen from Deputy Colley's amendment that he is seeking exemption prior to a certain date. Therefore the principle I am invoking has a bearing on the amendment. What Deputy Colley has in mind, if I follow his argument properly, is that commitments prior to a certain date should be honoured. This is important from a business point of view. Businessmen always like to be assured that even with a change of Government the contracts they enter into will be kept. As regards future arrangements in regard to new mines I should think the Minister would be entitled to lay down any regulations he thought fit, but I would be concerned that confidence would not be undermined in this field.

I said something earlier and perhaps the Minister may not have heard it, because I think at that stage he was checking up on quotations which he gave us earlier. If I might briefly repeat it. I got the impression from something the Minister said earlier he felt in relation to this amendment that it was inappropriate because this investment allowance was designed to encourage future development. I conceded to him that I thought there was a certain logic in what he was saying. I asked whether, from what he had said earlier, I could take it that he would consider applying in some way the other allowances proposed in this Bill to pre-1974 expenditure. If he gave an indication of that kind, our attitude in regard to this and other amendments might perhaps be different. I may have misunderstood something he said earlier.

No. I think Deputy Colley is trying to put his interpretation on something I said. We are on Committee Stage and we shall deal with the Bill section by section.

Question put: "That the words proposed to be deleted stand."
The Committee divided: Tá, 58; Níl, 54.

  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bermingham, Joseph.
  • Burke, Dick.
  • Burke, Liam.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlon, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Costello, Declan.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Crotty, Kieran.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Dockrell, Henry P.
  • Dockrell, Maurice.
  • Donegan, Patrick S.
  • Donnellan, John.
  • Dunne, Thomas.
  • Enright, Thomas.
  • Esmonde, John. G.
  • FitzGerald, Garret.
  • Flanagan, Oliver J.
  • Governey, Desmond.
  • Griffin, Brendan.
  • Harte, Patrick D.
  • Hegarty, Patrick.
  • Hogan O'Higgins, Brigid.
  • Keating, Justin.
  • Kelly, John.
  • Kyne, Thomas A.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McDonald, Charles B.
  • McLaughlin, Joseph.
  • McMahon, Larry.
  • Malone, Patrick.
  • Murphy, Michael P.
  • O'Brien, Fergus.
  • O'Connell, John.
  • O'Donnell, Tom.
  • O'Leary, Michael.
  • O'Sullivan, John L.
  • Pattison, Séamus.
  • Ryan, John J.
  • Ryan, Richie.
  • Staunton, Myles.
  • Timmins, Godfrey.
  • Toal, Brendan.
  • Tully, James.
  • White, James.


  • Allen, Lorcan.
  • Andrews, David.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Breslin, Cormac.
  • Briscoe, Ben.
  • Browne, Seán.
  • Brugha, Ruairí.
  • Burke, Raphael P.
  • Callanan, John.
  • Carter, Frank.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard.
  • Crinion, Brendan.
  • Crowley, Flor.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Fahey, Jackie.
  • Farrell, Joseph.
  • Faulkner, Pádraig.
  • Fitzgerald, Gene.
  • Fitzpatrick, Tom. (Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, Denis.
  • Gibbons, Hugh.
  • Gibbons, James.
  • Gogan, Richard P.
  • Haughey, Charles.
  • Healy, Augustine A.
  • Herbert, Michael.
  • Kenneally, William.
  • Kitt, Michael F.
  • Lalor, Patrick J.
  • Lemass, Noel T.
  • Leonard, James.
  • Loughnane, William.
  • Lynch, Celia.
  • Lynch, Jack.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Murphy, Ciarán.
  • Nolan, Thomas.
  • O'Leary, John.
  • O'Malley, Desmond.
  • Power, Patrick.
  • Smith, Patrick.
  • Timmons, Eugene
  • Tunney, Jim.
  • Walsh, Seán.
  • Wilson, John P.
  • Wyse, Pearse.
Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.
Question declared carried.
Amendment declared lost.
Amendment No. 5 not moved.

I move amendment No. 6:

In page 6, line 45, to delete "Act of 1956" and to substitute "Finance Act, 1946,"

The reference in the Bill as drafted to the Act of 1956 is a drafting error. The intention was to refer to the Finance Act of 1946. Mine development allowance was originally provided for by section 6 of the Finance Act, 1946, both for income tax and corporation tax purposes. It was an error of drafting to refer to the 1956 Act.

Amendment agreed to.
Section 6, as amended, agreed to.

I move amendment No. 7:

In page 7, line 8, after "may" to insert, "at the election of the person,"

This amendment meets the point which Deputy Colley raised on Second Stage. At that time I told him we already had it drafted to make it clear that the election would be at the option of the taxpayer concerned.

I am glad the Minister has introduced this amendment. It is necessary and, as the Minister said, I drew attention to it on Second Stage and he indicated that he intended to bring in an amendment. So far as I am concerned it is quite satisfactory.

Amendment agreed to.
Section 7, as amended, agreed to.

I move amendment No. 8:

In subsection (1), page 7, line 28, to delete "after the 31st day of March, 1974,".

If I can avoid it I do not wish to go back over the ground we have been covering on previous amendments, although the principle involved here is the same. I might perhaps be able to short-circuit the matter somewhat if I were now to put to the Minister the question I put to him on a previous amendment. Was what he said earlier intended to indicate that he would be prepared in some way to grant to existing mines in respect of expenditure before 31st March, 1974, the annual allowance for mineral depletion provided specifically in this section, and indeed in other sections, and to allow it to operate in regard to pre-1974 activities?

As I said already, I regard the exemption which has previously existed as providing relief for previous expenditure. It would be indefensible to add to that magnificent exemption already enjoyed, incentives and further concessions which are really being provided in order to ensure encouragement for the mining industry in the future. If I understand Deputy Colley's amendment correctly, he is seeking to ensure the depletion allowance in respect of scheduled mineral assets acquired before 31st March, 1974, that is, assets acquired by any existing company.

On Second Reading Deputy Colley suggested that if a mining company now sells a scheduled mineral asset it would be subject to a tax charge on the receipts from the sale, notwithstanding the fact that it receives no relief under section 8 for the cost of acquiring it. It is to be noted that, in the first place, it is provided in section 11 (3) that where a scheduled mineral asset which is sold by a person was bought by him the receipt on which he is to be charged tax is to be reduced by the amount paid by him for the scheduled mineral asset. This is an important matter which we have to bear in mind.

I wonder would the Minister develop that last point. I do not quite follow it.

Section 11 (3) provides:

Where the scheduled mineral asset sold by a person was acquired by him by purchase and the price paid consisted wholly or partly of a capital sum, subsections (1) and (2) shall apply as if any capital sum received by him when he sells the asset were reduced by the amount of that sum:

There is a certain proviso.

Is the Minister saying that the effect of that is to give to an existing mine the allowance being granted by section 8?

What I am saying is that the liability will relate only to the difference between the purchase and the sale price. The depletion allowance here is a new provision. As the Deputy will appreciate, it is being given post-March, 1974. It would be quite inappropriate to apply this to any period before that.

I wonder if I could ask the Minister—because it has escaped me—what was the point of his reference to section 11 (3)?

Where a person sells under section 11 he will be subject to tax on his receipt but that receipt would be reduced, as it were, by the amount which he paid for the asset which he sells. First of all he purchases the asset, and sells it later. The liability would relate only to the difference between the two figures.

Am I not right in saying that in the case of a person commencing to work a qualifying mine after 31st March, 1974, such a person operating under section 11 will also be entitled to deduct the mineral depletion allowance, whereas those commencing before that date will not? Is that the position?

Yes. It will apply only after March, 1974.

So the position is as I have stated it?

People beforehand have had the benefit of the total exemption, and people after this date will get the benefit of this depletion allowance.

Does the Minister accept that existing mining companies may have raised money on the basis of the existing law and that the taking away of that exemption can certainly cause difficulties in regard to the financing of such companies? If he accepts that, does he also accept that the position is not simply: "You had the tax free allowance. Now you have not. Because you had the tax free allowance you are not entitled to any other allowance in relation to the pre-1974 period."?

All the existing companies have had their cake. Do they want to have it forever? They have enjoyed a bonanza which others have not enjoyed and there is no reason why, having enjoyed it, they should get in addition the fringe benefits which will be available to the mining industry in the future and which have not been offered to other industries.

I have with me a letter from one of the mining companies in which they state quite specifically:

... the policies of my Company and their shareholders have been formulated and implemented on the basis, not merely of that legislation, but on the explicit understanding with the then Minister for Finance, and subsequently emphasised by several Ministers to the effect that the mining companies would enjoy an exemption from income tax and corporation profits tax for a period of twenty years from the date on which a mine is brought into commercial production, provided that date is prior to April 6, 1986.

Substantial financial commitments have been undertaken including the issue of equity shares, based on the belief that a contractual relationship existed between the Government and the companies in relation to this exemption.

If the legislative provisions were not tantamount to a contractual relationship, then the availability of a tax exemption expiring on the specified date should not have been held out as a long term incentive to mining companies. It would seem vital that the country's credibility in relation to the many people and financial institutions who have invested in existing operations, should be preserved.

I take it that the Minister at least accepts that there is one company, and probably more, which did raise money on the basis of the existing exemption and that if one changes or takes away the existing exemption problems can arise for such a company. Does the Minister accept that?

Not necessarily. If problems arise for a company the company will be entitled to marginal relief. We have very specifically provided for that. There may be a reduction in profit but that is what taxation is all about—to relate the obligation to contribute to the revenue according to capacity to pay. We are providing that no company should be in difficulty on account of the tax liability because it will be given relief which will be available for any mines which would be in jeopardy because of the tax liability.

But does the Minister appreciate that these financial arrangements were entered into and that they were entered into with foreign financial institutions on the basis of the existing law and that, as I pointed out earlier, this is not analogous to the ordinary income tax provisions. This was a specific statutory provision giving a 20-year exemption not analogous to the ordinary income tax provisions, which are of course subject to change at any time. Does the Minister appreciate the distinction between these two things? Does he appreciate that the consequence of what he is doing is not only to create problems for the mining company or companies concerned but also to damage this country's credibility? Surely this factor cannot escape the Minister's attention?

It is not escaping the Minister's attention. The Minister would point out that the special plea in a letter that Deputy Colley referred to—although I noticed that he did not tell us what company it was that wrote it and that might be a matter of some interest——

I am prepared to tell the Minister privately but I think he will understand that I do not want to refer to the particular company here.

Yes, but the Deputy will also understand that the authority of the letter remains questionable as long as it is not disclosed. It does contain a number of inaccuracies. Perhaps the remainder of the letter can be tested by the fact that it refers to the undertaking of the Minister in 1967 to give tax exemption for 20 years, an undertaking which it is said was confirmed by a number of his successors. If "a number" is one that might be correct, but I think the phrase used led one to believe that there had been more than one successor giving that confirmation, which Deputy Colley knows would be incorrect because he was the only successor to the Minister who gave the exemption.

It is unfortunate that the Minister raised that because I rather suspect that what he had in mind was that at least one of the present Ministers gave such an undertaking.

I suppose everything is open to a different interpretation but I am not aware that any such undertaking was given nor do I consider it likely that it would have been given.

He was not a Minister at the time.

I see. The ground is changing somewhat all the time. Deputy Colley has canvassed this idea. I cannot say any more by way of reply to it other than to point out that he is asking us to give a further benefit to people who have enjoyed seven years total exemption. I cannot accept that that principle is applicable to this or any other particular concession or exemption which is being given in order to promote future development of Irish mines.

I regret that the Minister unless he changes his tune radically when we come to the last two amendments, which I do not anticipate, is not alone welching on a statutory undertaking given by this House and by the other House and supported by both sides, but that he is not prepared having done that even to apply, by way of some compensation for welching on such an arrangement, the allowances he proposes to give for future mining operations. I think it is very unfortunate. It already has had adverse consequences, and the persistence in this attitude can only have adverse consequences for the future with no even reasonably commensurate benefit for the Exchequer.

I would guess that if the Minister were starting all over again he would not adopt this approach, that he realises it was a mistake and that he is now stuck with it. If I am right in that, it is unfortunate that he should persist in his error, because it seems clear to me that it has always been the approach on both sides of this House that in cases like this where you are changing the rules of the game you change them for future entrants, not for those who are already in there and operating on the basis of the provisions already agreed to I do not want to labour this point, but it is very unfortunate that the Minister cannot see his way even to make some compensating gesture for the very misguided action which he and his colleagues have taken in this matter.

Question: "That the words proposed to be deleted stand" put and declared carried.
Amendment declared lost.

I will not press it at this stage because we will be dealing with this on a later amendment.

Section 8 agreed to.
Question proposed: "That section 9 stand part of the Bill."

I take it that this is a purely technical provision?

Yes, section 69 of the Finance Act, 1959 provides that where an allowance under specified provisions is given for income tax purposes the corresponding allowance is to be given for the purpose of corporation profits tax. The purpose of the present section is to add in allowances introduced by this Bill to the list of allowances specified in section 69 which would operate for corporation profits tax purposes.

Question put and agreed to.

I move amendment No. 9:

In subsection (2), page 8, lines 6 and 7, to delete "The Minister for Finance, after consultation with the Minister for Industry and Commerce," and substitute "The Revenue Commissioners, on production to them of a certificate from the Minister for Industry and Commerce under subsection (1)".

The Minister will recall that on the Second Stage I referred to this section and expressed some misgivings about it as drafted. Perhaps I would be permitted to quote briefly what I said on that occasion, which is reported at column 538 of the Official Report for Wednesday, 1st May, 1974.

I said:

With regard to section 10, which deals with marginal mines, I am somewhat unhappy at the vesting of the power provided in that section in the Minister for Finance as such. On the face of it this would seem to be quite inappropriate. I note also that there is no provision for an appeal against whatever decision the Minister would make. Indeed it is difficult to see how you could provide an appeal if one adheres to the Minister's proposals to vest this power in the Minister for Finance. It would seem to me that a better arrangement would be to give the power to the Revenue Commissioners with the right of appeal to the Appeal Commissioners. It may be that the Minister will be able to show us that there is something wrong with this approach and that it is necessary to have the power vested in the Minister himself, but the reasons would want to be very compelling to justify a provision of this nature.

I do not think it could fairly be said that in replying to the Second Stage debate the Minister gave any very compelling reasons to justify this. It is undesirable, if it can be avoided at all, to have a situation in which the Minister for Finance, as distinct from the Revenue Commissioners, in effect decides on the amount of a taxpayer's liabilities. That of itself is objectionable, not alone from the point of view of the general public, but from the point of view of the Minister. It is not the kind of duty, obligation or power any reasonable Minister for Finance would want to have. It has the consequential effect I have adverted to, that by doing it in this way it seems to preclude the possibility of any appeal against the decision.

I tried, as Minister for Finance, to introduce the right of appeal in any case of any decision on tax matters by the Revenue Commissioners. It is a good principle and I do not think we should depart from that if we can avoid it. As I indicated on Second Stage it may be that there is some tremendous difficulty involved here which prevents the Minister from accepting the kind of suggestion I have made which is that the Revenue Commissioners would make the decision on the basis of the certificates given by the Minister for Industry and Commerce provided for in subsection (1). You could then provide for an appeal to the appeals commissioners. It may be there is some very substantial reason why this cannot be done but if there is I do not think the Minister has told us yet. Perhaps he will do so now if he does not accept the amendment.

Deputy Colley is criticising the section as drafted because he says it would empower the Minister for Finance to decide what a person's tax liability would be and that this is not a function of a Minister for Finance or one that any reasonable Minister for Finance would want to have for himself but that it is a function of the Revenue Commissioners. A good debating point and I acknowledge it as one but I will give him a good debating point, which is this. The Revenue Commissioners are not policy makers. It is not right that they should be. They should not seek to adjudicate on the management of a business. Their statutory function is a neutral function, which is to assess a person's tax liability on the basis of profits made, not whether a business would close down if tax is gathered.

The decision which has to be taken in this case is whether or not a mine would be unworked if tax had to be paid. That is a commercial decision which has to be made in the light of many considerations other than pure tax considerations. That is why we are very much in the field of policy, commercial and industrial decisions. It is not the Minister for Finance who will make the major decision in this case. The research would have to be conducted by the Minister for Industry and Commerce because it is he who will have to certify that the mine is unlikely to be worked or will continue to be worked. It is only after those consultations have been held with the Minister for Industry and Commerce that the Minister for Finance may direct in respect of such a mine that the tax might be remitted.

One point is as good as the other but the weight of the argument falls very much, it seems to me, on the side of the section as drafted because it is primarily a policy decision which is beyond the ken of the Revenue Commissioners.

I am not sure that the Minister is right in saying that this would be a policy decision. I think he is right in saying that the fundamental decision in a matter such as this would be made by the Minister for Industry and Commerce. I assume the practical effect of a certificate from the Minister for Industry and Commerce would be that in relation to a particular mine the prospects were that its profits would amount to so much, over a certain period of years perhaps, and, therefore, the decision to be made by the Minister for Finance, as envisaged under the section, would be whether no tax should be payable or whether a reduced rate of tax should be payable, the object being to produce a situation in which there would remain sufficient profit to induce the mine-owner to continue the operation and not to close down because the operation was non-viable.

It seems to be stretching the situation somewhat to say that that is a policy decision and one appropriate to the Minister for Finance. It is true that certain commercial expertise is required to make the correct decision but I do not think one can assume commercial expertise as such in a Minister for Finance. There is not much doubt, I suppose, that some holders of the office have had considerable expertise but it is not a necessary ingredient in the holder of the office of Minister for Finance. It seems that to a great extent the decision that has to be made would be made by reference to what was happening in other mines, what kind of returns were being obtained in other mines, particularly those that were getting close to the marginal situation and ultimately perhaps by some form of negotiation with the owners but backed up with these kinds of figures.

The people who would have this information in regard to other mines would be the Revenue Commissioners, not the Minister for Finance. He should not have the information in relation to other mines and again would not want to have it. There is quite a strong case for the amendment I am proposing. There is also a point I raised earlier, and to which the Minister did not advert when replying, that is by giving the decision to the Minister for Finance one seems to be effectively precluding the possibility of an appeal. I would accept there should not be an appeal from a decision of the Minister but I hope he will accept that as far as it is possible we should provide for an appeal on all decisions as to the amount of tax which a taxpayer has to pay. Here we are excluding it.

I feel the Minister is exaggerating the degree of policy in the ordinarily understood sense of that word that is involved in this decision. I feel to make the decision it is necessary to have other information which would and should be available only to the Revenue Commissioners. It is inappropriate that such power should be vested in the Minister for Finance, inappropriate and unacceptable unless the Minister can give very compelling reasons for it and on his own statement I think he would only put his counter-argument at about the same level as my argument. Certainly, even on his own say-so it would not be regarded as a compelling reason. I urge him very strongly to consider the implications, not just in this particular case but possibly for different situations which would arise apart from mining and to adhere to what I might call the normal practice, I think, that decisions of this kind would not be made by the Minister personally but by the Revenue Commissioners and with a consequent right of appeal.

I do not think the matter is of vital importance from the point of view of the argument put forward by the Minister but it could conceivably be of vital importance looked at from the point of view of the argument I am putting forward. If there is not all that much in it the Minister should come down on the side of the Revenue Commissioners with right of appeal rather than that of the Minister alone.

I think the Chair would need to have a balance in order to adjudicate on which side the greater weight of argument really lies. It is no discredit to the Revenue Commissioners to say that if they have a discretion they usually use it in favour of the Exchequer rather than the taxpayer so that if this discretion were to be conferred on them I doubt very much if the principal beneficiary would be the person or persons Deputy Colley seeks to benefit. I expect Deputy Colley considered that his amendment would have conferred upon a taxpayer a right of appeal but, in fact, it does not provide for any such right, nor could there be a right of appeal in the circumstances of this case because that right only arises where there is a statutory title to a particular tax remission. No statutory title, no absolute right exists in relation to this provision which is a concession. It is a concession similar to that contained in the Petroleum and Other Minerals (Development) Act, 1960, in which power was conferred on the Minister for Industry and Commerce. Section 55 of that Act provides that if the total amount paid by the holder of a petroleum lease in respect of rent, royalties, taxes and rates exceeds such amount as the Minister for Industry and Commerce, with the consent of the Minister for Finance, may determine, the Minister for Industry and Commerce may make a payment to the lessee of the excess.

There is a difference between that situation and the one which arises under this Bill in that in this Bill the only issue which arises is the question of relating a tax liability. There is no element of rent, royalties or rates; it is simply concerned with tax which, I suppose, is affected to the extent that the profits of a company will be measured only after other liabilities have been taken into account. But it is clearly a case where it is primarily a question of a tax concession and as such the Minister for Finance is obviously appropriate to make the final decision as to whether the concession should be given.

It might help if we look at the way the scheme will actually work. First, a person who is operating a mine which he considers to be marginal will ask the Minister for Industry and Commerce to adjudicate the mine as marginal and to issue a certificate to the Minister for Finance. In such a case the Minister for Industry and Commerce would examine the circumstances relating to the mine, cost of operation, likely output, price of metal, capital investment and level of profits likely to be derived from the mine and if satisfied that the level of profit is such that it is unlikely that the mine will be worked or continue to be worked, the Minister would then give a certificate that it is a marginal mine. The question will arise each year as to what extent, if any, there is to be a remission of tax on profit. This position could change from year to year depending on the price obtained for ore sold and the level of profits.

When the company makes up its accounts for a particular year it will then, if it considers it appropriate, apply for relief under this section. At that stage the inspector will examine the accounts and prepare a draft assessment of tax for the particular year of assessment to income tax and accounting period for corporation tax. At that stage consultation will take place between the Minister for Finance and the Minister for Industry and Commerce as to the extent to which tax for the year of assessment and the accounting year ought to be abated. Quite clearly a policy decision will then have to be made which only Ministers are competent to make. It would not be a decision which would fall within the competence of the Revenue Commissioners. Therefore, I suggest to Deputy Colley that on reflection he might see that the Bill as drafted confers this power to grant the exemption in the right quarter, the policy-making quarter. As I said earlier, I think it would be a disservice to the industry to suggest that this policy-making decision should lie in an area which has not until now a right to make policy and is ill equipped to test various factors which would have to be borne in mind in the issuing of a certificate as to whether a mine would be likely to be worked in future.

I do not think there is any point in pursuing this. I do not agree with the Minister's argument but it is not at the moment a vital matter and I trust it will never become one because if it does I think the wrong decision is being made by the Minister. I shall not push the matter.

Amendment, by leave, withdrawn.
Section 10 agreed to.
Question proposed: "That section 11 stand part of the Bill".

I adverted to this section on Second Stage, taken in particular in conjunction with section 8, and we have dealt with some of the consequences of taking it in conjunction with section 8. But there is another matter to which I adverted and it arises in connection with the consequences of the Minister's proposals, adjusted though they have been, in relation to capital gains tax. It is appropriate that we should consider this in relation to this section because under the Minister's original announcement, although we have not passed the legislation, capital gains tax is now in operation.

It seems that under this section if land is sold to a mining company the proceeds of the sale will become liable to income tax at the normal rates. However, if the same land was sold for any other purpose, for instance to a builder, the result would be, under the capital gains tax provisions, that the amount by which the sale price exceeded the value of land as at 5th April this year would be subjected, under the recent changes announced by the Minister, to capital gains tax at 26 per cent. On the face of it this would appear to be an anomalous consequence and I wonder why there ought to be a difference in the approach to the taxing of the proceeds of the sale of land on which there are minerals from the sale of other land to be used for any other purpose.

I have demonstrated under this section that the consequences would be quite different and the effect could well be, if there was a mineral deposit which was not excessively valuable and might be marginally worth developing, to induce the owner not to part with the land because the amount of tax he would suffer would be so much greater than if he disposed of the land for any other purpose. I accept that that is a fairly remote possibility but it is one that could occur.

I am also concerned about the apparent anomaly of imposing what would almost certainly be a much higher rate of tax on land sold for mineral development purposes as against land or any other property sold for any other purpose. Perhaps the Minister would indicate why there ought to be this difference in approach.

I would refer to section I which defines a "schedule mineral asset" as "a deposit of scheduled minerals or land comprising such a deposit or an interest in or right over such deposit or land." If a person having such asset was to decide to make a profit by taking royalties from a mining company then such royalties would be liable to income tax. If the owner of the mineral assets was to choose to work the mine himself he would become subject to income tax on the profits. The connection between section 8 and section 11, to which we referred earlier, lies in the fact that under section 8 the purchaser of a scheduled mineral asset would be able to claim a depletion allowance in respect of the expenditure involved in the acquisition of that asset against his mining profits over the life of the mine, or 20 years if shorter.

It is only logical that if the person who acquires the scheduled mineral asset is to get the benefit of a depletion allowance a corresponding charge should be made against the vendor. If we did not do this then the person who sold mineral rights as distinct from the person who worked them or took royalties from them would be in an extremely favourable position. The State, having regard to the depletion allowance provision of section 8, would be the loser. I should like to illustrate it with a hypothetical example. Somebody could own a mineral asset worth £15 million and sell it for £50 million. As a consequence of the depletion allowance the State would end up in such a case £25 million the loser unless the vendor were to be subject to income tax on the sale. If the vendor is to be subject to income tax on the sale, as we propose, then the State would have a set off against what would otherwise have to be allowed in respect of the depletion allowance.

There is a precedent for this and I think it is a good one. The Finance Act of 1959 provided the making of a charge in the case of the sales of patent rights and this charge is confirmed in sections 284 to 293 of the Income Tax Act, 1967. Here we are providing that the profit made on the sale of a scheduled mineral asset can be spread over a number of years to avoid hardship. It can be spread over six years and this is quite a generous provision. The sale of patent rights which are subject to a tax liability could also be spread over a number of years. Deputy Colley will see that if we did not make this provision here a greater anomaly and injustice could arise.

I acknowledge that Deputy Colley had a good debating point when he asked what the difference was between the sale of land which contains a mineral asset and the sale of land which does not. There is a difference between land which contains mineral and land which does not. The land which contains the mineral asset was bought primarily not for the land as land but for the wealth which is underneath it and that is what is being taxed here; it is not the land as such. The depletion allowance is being given because it is assumed that in the course of the working of a mine the land above it will become depleted in value. Essentially it is the mineral wealth which is being taxed and not the land itself. Perhaps "the area" is what we should be describing this as. It is the wealth that is being taxed and not the area above it.

Why should it not be subject to capital gains tax?

It could be subject to capital gains in addition but that would only be in respect of the accretion in value after 1974.

Surely it could not be subject to both? If it is liable to income tax at the standard rates I assume it is not liable to capital gains as well.

If we take this £50 million sale and if that sale took place after April, 1974, in such a case there would be no capital gain or there would be no calculable capital gain between now and the commencement of the capital gain liability period. Nothing would arise now. In future, if it is a cardinal principle of the capital gains law that one would not subject a profit to a capital gain and to income tax at the same time it would not arise. The Deputy will appreciate that in relation to capital gains it is only the gain that is subject to the tax and not the value below the gain.

That is the point I was making. The consequence would seem to be that the tax payable by, for instance, a farmer, on the sale of land containing mineral assets would be very much greater than that on the sale of land for any other purpose. He might be selling land in certain circumstances, say for building, and making a very handsome profit on the deal but, nevertheless, it would appear that under this provision the amount of tax he would pay and the rate of tax he would pay would be very considerably higher if it was the sale of a mineral asset as distinct from land sold for building purposes. Would the Minister agree that that would appear to be the consequence?

Yes. But, of course, no depletion allowance would arise in the case of the sale of land without a mineral asset but a depletion allowance arises here and the Revenue would be at a considerable loss by reason of the depletion allowance being given to the purchaser. It is only equitable in such a case that the vendor would be brought within the liability for tax. It would appear from what the Minister is saying that the vendor, the farmer, is going to have to pay because the mining company is getting a depletion allowance which the farmer is not getting. The farmer does not have to sell.

Why should he be paying for the allowance being given to the mining company?

He will get a far higher price.

Higher than what?

The building, and that is high enough.

There is an anomaly here. In effect, the Minister is applying to the farmer concerned a rate of tax which is, as I said, vastly higher than would be applied for any other purpose and the main justification he is giving for it is that he proposes to give a depletion allowance, not to the farmer but to the mining company.

Would the Deputy not agree with me that it would be a greater anomaly not to subject this property to tax but to subject to tax the royalties of a person who accepted the purchase price by instalments over a period of years? Indeed if the person decided to work the minerals himself he would become subject to tax, but if he abandoned the assets to somebody else he would be scot-free.

I am not suggesting he should be tax free. He should be subject to capital gains tax.

But that would only arise in respect of any increase in values since April, 1974.

I do not know if the Minister has inside information and is shortly expecting some very valuable strikes, but there is the interesting point that if minerals were discovered on someone's land today whether its value on 5th April, 1974, would be deemed to be the value when one did not know about the minerals or, using hindsight, whether you valued it as having the minerals in it. I can see I am making no impression on the Minister. I do not suppose many citizens will be affected by this. It may be, speaking from past experience, that if there are citizens affected by this they will be in the Acting Chairman's constituency in Galway; and I hope, if what I am arguing happens, the Acting Chairman will be in a position to tell the taxpayer concerned that I did my best with the Minister but he would not agree.

I know of one asset where a gain running into seven figures could be made unless this provision is in the Bill.

Question put and agreed to.
Section 12 agreed to.
Question proposed: "That section 13 stand part of the Bill."

This section amends section 387 (2) (a) of the Act of 1967 consequential on the termination by section 15 of the 20 years' income tax exemption. The section which is being amended provides for the case where a dividend is paid by a company holding, and the profit is exempted under the mining exemption, partly out of such profits and party out of other profits and it includes a reference to the exemption period of 240 months.

Section 13 and 14 are consequential on sections 15 and 16. I shall have something to say on these sections and there is no point in my saying what I have to say on those on either this section or the next section.

Question put and agreed to.
Question proposed: "That section 14 stand part of the Bill."

As Deputy Colley has pointed out, this section is related to section 15. It is a consequential technical amendment.

Question put and agreed to.

Amendments Nos. 10 and 12 are cognate and can therefore be discussed together.

I move amendment No. 10:

In page 10, line 30, to delete "whether" and substitute "where"; and in line 31 to delete "before".

As the Acting Chairman has pointed out, these amendments are cognate though they relate to two different sections. They have precisely the same purpose, namely, to undo the Minister's proposal to take away the tax exemption from existing mines. From the point of view of orderly debate we should, perhaps, have discussed these first, in which case most of the other amendments I tabled would not have arisen had these been accepted.

Once again, as far as we are concerned, I want to make it quite clear that the treatment of new mines is quite separate and should be quite separate from the treatment of existing mines. When we were in Government we made it quite plain that the development of mining here had reached a sufficient level to ensure that we did not need to continue the exemption given in the 1967 Act for new mines; in other words, with smaller inducements, we could get mineral development continued at a satisfactory rate. As was said earlier, we set up an inter-departmental committee to examine closely the kind of return the community could hope to get from future mineral development and still leave such development sufficiently profitable to induce mining companies to embark on mineral development. A considerable amount of work had gone into that when we left office and more work went into it after the present Government took over. That committee duly reported to the Government and I understand decisions were then made. It is our contention that the decisions made were, to say the least of it, mistaken. There may well be a case for applying more stringent taxation proposals now to new mines than are provided in this Bill. I would have been making this case much more strongly if I did not believe that the Government may well have it in mind to supplement the taxation proposals by the level of royalties levied on new mines.

I want to make it quite clear that, again as far as we are concerned, we believe the level of mineral development is such that our approach now can afford to be much more stringent than it was. We are in a much stronger bargaining position than we were when the last lease was granted eight or nine years ago. Whatever we do about new mines, and whether we want to argue that these provisions are too stringent or not stringent enough, whatever view we may take on that, the question of the treatment of existing mines is a quite separate and distinct question. Some people have endeavoured to misrepresent our position in this matter as though we thought that the existing exemptions should continue to apply to all new mines. The fact that we set up the inter-departmental committee and made announcements about this shows that that is totally untrue and that our approach was to try to get as much as possible for the community from new mines.

However, when one comes to the question of existing mines one is faced with the position that an exemption for a 20-year period was agreed to by this and the other House. In this House, and I think in the other House, it was agreed to on both sides and was built into our legislation and operated by existing mining companies who geared their financial arrangements to that provision, written so solemnly into our legislation. I think it is an extremely serious matter that this Government would consider welching on that arrangement not just in relation to the mining companies concerned, though I believe we have an obligation to any individual or company operating under laws enacted by the Oireachtas, whether Irish citizens or not: we should not decide to deal with them inequitably or unjustly—not to do so knowingly, anyway.

Apart from that aspect the consequence of the Government's decision as embodied in these two sections, and which the amendments I am moving are designed to cure, is that an existing statutory exemption for a 20-year period, held out as an inducement to mining companies, is to be withdrawn not just from new companies but from existing companies who were operating under it. I think this was a mistaken decision by the Government. Even if the amount of revenue involved were enormous, taking a long term view of our economy and of our dependence on attracting foreign investment if we are to solve our unemployment problem, it would be wiser and more profitable in the long run to stick to a deal made and written into legislation for existing companies. The fact is that the amount of revenue involved is relatively quite small, and for that relatively small amount of revenue, I believe we have done ourselves considerable damage and are leaving ourselves in a position where further damage can ensue for us.

It is a well known fact, adverted to once more today at Question Time by the Minister for Industry and Commerce, that we are in a very competitive business in trying to attract investment from abroad. As the Minister for Industry and Commerce said, people considering investing here can look almost all round the world and find inducements offered to them in various places. That being so, we should not be putting at risk the good name of this country in attracting investment. We should not be destroying the reputation, hard earned over long slogging years, that this country, unlike a number of other countries, had abroad that if a deal were made with an Irish Government it was kept. It is vitally important that that reputation should be maintained and this far transcends the mining industry in Ireland.

The Minister may say it is wrong, and possibly that it is mischievous, to say that damage has been caused to us in this way. But the fact is that after this announcement of the Government's and the Minister's intention to withdraw the statutory exemption from existing mining companies, almost immediately one member of the Government, the Minister for the Gaeltacht, spoke about the decision and went out of his way to assure potential foreign investors that the existing tax exemptions for profits on industrial exports would not be withdrawn. Subsequently the Minister for Industry and Commerce, I think the Minister for Finance, and certainly the Taoiseach, made similar speeches, going so far as to say they would personally undertake in writing that the exemption from tax on profits of industrial exports would not be withdrawn.

There is only one other possible explanation for this, which I referred to on another occasion and rejected. The explanation which I reject is that the Government were so inept and incompetent that they did not realise that by offering these written undertakings they were drawing attention to the danger people thought might exist. I have a pretty low opinion of the Government in many fields but I do not believe they would be so inept or incompetent as to make that mistake. Consequently I am left with the only possible conclusion that those speeches by Ministers and the Taoiseach offering written undertakings that the statutory exemption in regard to profits on industrial exports would not be withdrawn were offered because the Government had discovered, having made the announcement of the provisions contained in this section, that numerous potential foreign investors in industry in this country took fright, that they needed reassurance, and great efforts were made by the Government to give that reassurance, the latest being by the Minister for Finance on the Second Stage of this Bill.

I submit that kind of reassurance would not have been necessary if potential foreign investors had not been frightened by the Government's announcement, and that potential foreign investors should not have been freightened—that the Government should have looked ahead to the consequences of what they were doing.

If the Government had announced that this taxation provision would apply to new mining in Ireland there would have been no problem—no basic problem would have arisen. The real problem arose because the Government made it clear they were going to apply the new mining regime to existing companies and take away the statutory exemption. A little thought on the part of the Government would have shown precisely what would happen if they made that announcement, and clearly no thought was given to the consequences. But when it happened then we had this— I think it would be reasonably fair to describe it as a frantic effort—frantic effort by members of the Government, including the Taoiseach, to provide reassurance, to offer written undertakings in regard to something that was inscribed in the legislation of this State. To say the least it was an anomalous situation. It was a situation which should never have been allowed arise. It was a situation which, potentially, would be far more damaging to the economy of this country than any revenue that would be brought in by applying this Bill and its provisions to existing mines. It was a mistake. I think the evidence is there that it was a mistake. The Government have tried, rightly in my opinion, to reassure people so that they would not be frightened off because the consequences of that could be extremely serious for employment in this country. But the most effective reassurance that the Government could give, by far the most effective reassurance, would be to accept these amendments with the consequence of continuing the existing exemption for existing mining companies only.

I have had a number of years experience as Minister for Industry and Commerce. I know just how delicate can be the situation in regard to the attraction of industries from abroad to the kind of image that potential investors have of the economic climate in a country, and the image that was created prior to this announcement in this country was an extremely good one. One of the greatest assets—and this was repeated to me by numerous foreign industrialists—we had was the understanding that if one made a deal with the Irish Government that deal stood. I hope that, by now, the Minister has recognised the mistake of that announcement. I hope he will not attempt to argue, in face of all the evidence to which I have referred, that no damage has been done. The real question is: what is the best way, in so far as one can, to undo that damage? I would suggest there is no better or more effective way than that suggested in these amendments.

The 1967 20-year tax holiday was an inducement. I think Deputy Colley agrees that it was an inducement to people to explore and develop mines in this country. Nobody acted on foot of that inducement. Therefore there can be no question of anybody having been done a disservice by reason of the 1967 inducement or the withdrawal of it. The position is absolutely static as far as the development of mines is concerned on foot of the 1967 inducement. I consider it particularly fortunate for Ireland that we should have in power a Government that have the will to bring that improvident inducement to an end before somebody acted on foot of it. I would accept that there might have been some difficulties had somebody acted on foot of that inducement but the fact is that nobody has so acted. They are particularly lucky that the Government changed last year and came to this decision before we ended up in a situation where irreparable damage had been done.

Deputy Colley is suggesting that all would be well if we merely applied the removal of the tax exemptions in respect of future companies. I think it important that the people should see what Deputy Colley is at. The effect of doing that would be that what we have, very modestly, estimated as a revenue of £125 million over the next 20 years would be totally lost. Deputy Colley is saying that we should not collect £125 million, minimum, from mining companies over the next 20 years. One hundred and twenty-five million pounds is probably a very conservative estimate. On the basis of the very substantial increases in prices for ores over the last few months and what we can anticipate will be the likely rise in prices over the next 20 years, the not improbable figure runs into a few hundred millions, maybe several hundred millions. That is on the basis of all existing mines. Deputy Colley is saying here, and the Fianna Fáil Party are saying: Forget it all. Do not provide that relief for the Irish taxpayer because that is in fact what the collection of this tax from the mining interests means for all other taxpayers in this country—some element of relief, because if the mining industry did not pay its share of taxation, taxation would have to be got from some other source. God knows our people are taxed heavily enough already without exempting a particular industry in a better position to pay tax than many of the unfortunate people still in the taxation net.

I would recall, from February to November, 1973, there was not a spark of life to be found in the Fianna Fáil Party; they could not find any issue upon which they had any heart to attack the Government.

This Government only brought in our measures.

Once we announced our intention to remove the tax exemption from the mining industry they got fire in their bellies and came out loud in continuous condemnation of our measures. They withdrew from that position after a while when they saw that public support was on our side and against them.

Prove that. That is not true. Can the Minister quote something to support that?

They have tried to keep a balance between what they know the public wants, on the one hand, and pleasing some of their contacts in the mining industry, on the other. But the reality of the matter for the vast majority of our people, who considered it a scandal that the mining industry should be exempt for 20 years from mining taxation, is that the Fianna Fáil stance tonight on the last sections of the Committee Stage of this Bill is that everything that we have done so far is wrong, that we were wrong to bring within the net all the existing mines. The only calculations we have made so far are on the basis of the mines that exist, the mines about which we know something. Those are the only ones upon which we can now make an assessment of what the ending of the tax holiday really means for the future of all other Irish taxpayers. I have given that figure on a very conservative basis. But if, as it is reasonable to anticipate, other mineral deposits become available in this country for exploration and development over the next few years, the profit will be even greater. What that profit may be we do not know, but certainly it was justifiable that we should ensure that, whatever that profit might be, it would be caught for the benefit of the Exchequer here, because operating for the benefit of the Exchequer it operates to the benefit of all other Irish taxpayers. Fianna Fáil are now with us in that; they are prepared to go that far along the road. But I would point out to Deputy Colley that even that —to use his own words—is a breach of the provisions of the 1967 Act which was going to operate for 20 years.

It is a breach.

To say that henceforth you will not provide any tax exemption is to go back on what was written into the 1967 statute.

Not to go back on it for anybody who was operating under it.

Ah, but nobody has operated under the existing one; nobody has operated on foot of the 1967 inducement.

No. I will prove it to the Minister.

If that is the test, Deputy Colley is now showing that his arguments are without any foundation because nobody has acted on foot of the 1967 one. That is why we are completely justified in the stand we are taking and why the Fianna Fáil argument has no foundation whatsoever. Let nobody be under any illusions, Fianna Fáil believe that the tax we propose to collect from existing mines should not be collected. That means that we should let what, on a conservative estimate, is £125 million go out of the country altogether and the figure is more than likely to be £400 million or £500 million before the 20-year period is up.

What is the Minister's assessment of the cost of what we are suggesting?

The most conservative estimate of the cost is £125 million.

The Minister said earlier this evening that it was £9 million.

No. At that stage you were dealing only with the investment allowance. The Deputy is now suggesting that under amendments Nos. 10 and 11 the income tax liability should not apply to existing mines.

That is correct.

The effect of that would be a minimum loss of £125 million and if the price of ores keeps rising as it is at the present moment the cost could be several hundred million pounds before 20 years have passed.

Would the Minister have any figures available or be prepared to make them available to show how that figure is arrived at?

That figure of £125 million is based on what we know of the potential of the existing mines on the basis of figures which daily become out of date because of the price of the ores.

Would the Minister be in a position to make figures available?

I am not sure whether I could make them available in detail without identifying the potential of individual firms, which the firms themselves would not wish me to disclose.

It would be appreciated if the Minister could do so. If those figures were made available it would help a great many people. I want to point out that the Minister claims that nobody acted on the inducement of the 1967 Act. Is the Minister saying that from 1967 to now no exploration took place or no further development of existing mines was carried out? The Minister cannot be saying that, but why does he say nobody acted on the inducement? Is the Minister not aware that millions of pounds were expended on exploration in that period? Is he not aware that further development of existing mines resulted from this inducement and, as I pointed out earlier, that money was raised both by way of equity and loan capital based on this provision on which he is now welching?

Within the mining sector alone, apart from the wider consequences of what he is doing here, I personally know of one case in which a company was about to expand more than £1 million on exploration over quite a short period and this was cancelled on hearing the Minister's announcement. The company may go ahead when this legislation has been passed or it may not do so. I do not know. In that case the new work was cancelled immediately. No confidence was inspired in that company when they saw the cancellation of a statutory exemption in relation to existing mines.

The Minister referred to the attitude taken by this party when the Government made their announcement. He said that we had changed our tune and that we had originally opposed the Government's proposals entirely. I defy him on that and I challenge the Minister to produce one iota of evidence for that statement. I suggest that the Minister will find, if he bothers to look, that the statements made by us following the Government's announcement and ever since then have been absolutely consistent and that he and some of his colleagues have deliberately tried to misrepresent our position by suggesting precisely what he suggested tonight, but the fact is that we opposed taking away the exemption from existing mining companies. We did not oppose the imposition of a new regime on new mines. We made it clear that we ourselves had been engaged in this process when in Government and that this Government completed the process when they got the report of the inter-departmental committee on mining. We did not set up that committee for fun. We set it up because we wanted to change the position in regard to new mines. I hope that this gross misstatement of our position will not be continued further, at least by the Minister for Finance, who should now know better.

The Minister referred to this party's contacts in the mining industry. I am not aware of any such contacts. Any information that I have on this Bill or that has come from mining industries to me has come from people with whom I am not acquainted but because I am the spokesman for Finance in this party. I personally have no contacts of the kind the Minister is talking about. Since the Minister raised this matter I presume that he is aware that his own Government are not without close contacts with the mining industry. I am not accusing them of anything in that regard; but, since the Minister seemed to be accusing us, let us get the facts right. The Minister knows very well that one of his colleagues at least has a very close family connection with one large mining company. There is nothing wrong with that, but if the Minister wants to make innuendoes about this party let us get the facts right.

The Minister talked about the cost of accepting the Fianna Fáil proposals and of continuing the exemption for the existing companies. Did the Minister make any assessment of the cost to the economy of what he has done and what he is proposing to do? Did he make any assessment of the cost to the economy of the industries, apart from mining, which we lost? The Minister cannot make that assessment because he cannot assess, except in a very limited way, what he does not have. I would venture to suggest that if one could estimate it the cost would be vastly greater than the figure the Minister is talking about. I hope it will be noted that the Minister made no reference whatever to the point that I spelled out about the assurances given by various Ministers and by the Taoiseach and the offers of undertakings in writing not to cancel the existing exemption of tax on profits from industrial exports. That happened only because of the serious reaction which was created by the Government's announcement in relation to mining.

The Minister did not comment on that. I do not blame him because the facts are incontrovertible. The Minister comes in here and tosses estimates around in relation to the cost of this but he makes no reference at all to the possible cost of what the Government did, or to what they have been scrambling around trying to remedy ever since, or to the fact that the Taoiseach and Ministers have been trying to remedy the situation with their offers of written undertakings. The Minister himself tried to speak on this again in the Second Stage debate on this Bill. What is the cost of that? Is it not at least possible that many jobs which would have been created in this country will at the very least have been postponed as a direct consequence of what is being done in this Bill and of its announcement?

If the Minister wants to toss figures around about costs, he might at least advert to the possible cost involved in this gross mistake which was made by the Government in regard to this announcement. I repeat, our attitude has been from the beginning, and continues to be, that we have no criticism of changing the tax regime for new mining companies. We were in the process of doing this ourselves. What we object to is the welshing on the existing arrangements under which various companies engaged in exploration and raised money on the strength of that undertaking written into the legislation and supported on both sides of the House. We object to that on the basis of what this is doing to the companies concerned and of the inequity involved. But most of all we object because of the very serious potential consequences for our whole economy, for those who are unemployed and for whom it is our duty to provide employment as soon as possible.

We believe that the Government approach in this matter has been totally misguided and that damage has been created which cannot be undone. In so far as one can undo the damage, the way to do it is by these amendments. The Minister has made it clear that he does not propose to accept these amendments. That being so, the consequences are his and his colleagues. I trust that those consequences will not be such—we will all regret them—that members of the Government will have to go round again offering written undertakings in lieu of undertakings written into our legislation. As I said, this was a misguided decision and is potentially very damaging. We have done our best to highlight this and to get the Government to change their attitude, even at this late stage. If the Government fail to do so the consequences lies on them and those who support them.

I want to write this information into the record. The Industrial Development Authority having seen the allegations of Deputy Colley and others relating to the effect of the Government's announcement on taxation of minerals, have certified to me on 13th May, 1974, that no company in discussion with the IDA either deferred or withdrew its proposals because of the mining proposals. That information came from the IDA who would know and it effectively repudiates all the Fianna Fáil mischiefmaking in this and other areas.

Again, for the information of the House, I want to put this on record. I would remind the House that by way of a news release on 11th April the IDA certified that for the year ended March, 1974, the total number of new jobs approved was 22,000 which was significantly higher than the estimated figure of 16,000 for the same period. Their expectations for the coming year are even greater. All of this shows that fact is a lot more comforting and reassuring than Fianna Fáil mischiefmaking.

Of all industries, the mining industry is the most worldwide. It is the one about which the people involved know precisely what incentives and opportunities are available in any country on the globe. The mining industry has little roots or attachments to particular areas. It operates wherever it can make the best profit. The mining industry is, I suppose, at least free from the mischiefmaking of Fianna Fáil because it knows that the new tax situation, the new opportunities for making profits in Ireland out of the mining industry which will apply after this Bill is enacted, are exceedingly favourable and that, as a consequence, there are very great opportunities for people in mining here. Therefore, Fianna Fáil are endeavouring to get the best of both worlds by suggesting to the people that they are not against the taxation of mines for the future, but they are against the taxation of existing mines. What they are saying is that it is wrong to do what we are doing when we know that by this measure we will collect anything up to £200, £300 or £400 million from existing mines. Fianna Fáil say we are wrong to do that. I am sure the people will not approve of their stand in that regard.

May I have the permission of the House to interrupt Business at this stage to hear a statement from the Taoiseach?

Progress reported; Committee to sit again.