Finance Bill, 1974: Committee Stage (Resumed).

Debate resumed on amendment No. 6.
In page 7, line 55, to delete "3rd day of April, 1974" and to substitute "2nd day of July, 1974".
—(Deputy Colley.)

I hope the Minister has had a good night's sleep and that in the course of it he has taken another look at this amendment which we have gone into in some detail. We have established first of all that there are many people affected by the amendment and not merely a possible handful of people taking out large insurance policies. Secondly, we have established that the date in the Bill is related to the date of the budget but that in the budget speech not only did the Minister not make any reference to what is in this section but that he specifically stated the allowances in respect of insurance would be available in full. Therefore, it appears that a mistake was made or that there was an omission from the Minister's budget speech. No reference was made to this section although it is drafted as if a reference was so made.

That being so, we think it is selfevident, standing on the principle this House has always stood on and which the Minister affirmed last night, that there should be no legislation enacted, particularly in a Finance Bill, which would have retrospective effect. Therefore the date in this section should be altered, as is proposed in the amendment, from 3rd April to 2nd July, the date of publication of the Bill. As I have said, I hope the Minister has reconsidered the position and now finds himself able to accept the amendment.

No, I am not, for the reasons which I stated last night. To accept the amendment would facilitate large scale avoidance, large scale abuse of tax exemption which is provided to assist people in the normal income groups. For instance, if I were to accept the amendment we could have the situation, which is not improbable, that insurance policies could be back-dated to prior to 2nd July in order that people would be able to avail at the expiry date of the policy of very considerable subventions.

If they can do that they can go back to long before it——

The further back they go the less facility and opportunity there is for stamping a contract.

That is ridiculous. It is a cod.

It is not ridiculous. If Deputy Haughey had the same experience as the legal Members of this House he would know what are the time limits in relation to contracts. It would not be that easy to go back. I said last night that I was prepared to make a present to Deputy Haughey of the three days between April 3rd and 6th. I will go further now and say that I am prepared to take the 6th April as the commencement date.

Surely the Minister is changing his feet if he does that?

I am not. I am trying to meet the Opposition in a reasonable way. It is a well established legal principle that when a tax position applies from the commencement of the fiscal year, no element of retrospection arises. In case the beautiful theorists would be suggesting that there is retrospection in three days, I will give them a present of the retrospection they desire——

Changing the whole basis of the Minister's argument.

No, I am changing the commencement date to the commencement of this year, the date on which the new tax provisions become operative—6th April, not 2nd July. That is the date from which the new regime of taxes applies. To postpone this as the Opposition propose would open an avenue to tax avoidance which would be contrary to everything which the Government intend to do. We intend to close these gaps, not to widen them.

We heard last night, unfortunately we have heard it again this morning—one would have hoped the night's sleep would have cleared the Minister's head—this nonsense he has been talking about speculators and tax avoiders availing of life assurance. It is arrant nonsense?

Do you hear that?

Life assurance is a method of saving. It is a valuable method of saving. It is of great benefit not just to the families of the individuals but for the whole economy of the country. Life assurance companies carrying on business here have very heavy investments here. Most life assurance policies are paid when the proposer or the life assured dies. Not all of them, but most of them, are paid then. Most of them which are not paid on death are paid after ten, 15, 25 or 30 years from the time the policy was taken out.

For the Minister for Finance seriously to come in here and describe people who take out life assurance as speculators, people trying to make improper or over-large profits, is the height of nonsense and shows the depths to which the Minister for Finance is reduced in trying this morning, in the cold light of day, to justify the nonsensical arguments he made last night. If the Minister for Finance is prepared to acknowledge that what is in this section is wrong and that he is prepared to change the date by a matter of three days, he accepts the principle of what Deputy Colley, Deputy Haughey and all the rest of us on this side said last night.

If he changes it by three days the principle is established. He is trying to pull the wool over the eyes of Members by saying he is prepared to change the date from 3rd April to 6th April because that date is the beginning of the financial year. That has no validity whatever. It is the beginning of the financial year and, therefore, the date from which these reliefs or their abolition would operate but the principle that is involved is the date of the taking out of the policies and 6th April has no relevance whatever to that date.

The abolition of the reliefs on certain policies would date, as everything else must do, from the beginning of this financial year, 6th April, but that date has no relevance to the date of the policies. The Minister now apparently accepts that it is improper to limit them to 3rd April and the only date he can honourably and justifiably insert is 2nd July, the date of publication of the Bill. It was only on 2nd July that the public became aware of the limitations that were to be imposed on these policies. Of course, there is always the possibility of a leakage but we will have to disregard that for the purposes of this argument.

Anyone who took out a policy on or before 2nd July was invited and encouraged to do so by the statement in the budget speech by the Minister for Finance, and Deputy Haughey pointed this out last night. The Deputy quoted it at length and it is not necessary to read it out again. The Minister's statement was not merely neutral about life assurance policies in the post-budgetary situation; it was an act of encouragement to people, particularly those paying tax at the higher levels, to take out more life assurance because the Minister specifically told them they would benefit at the higher rate. Now he realises he made a mistake and that is fair enough. If he honestly admitted to the House that he made a mistake in the budget speech and that he wished to rectify it, that he was making a change in section 9 and bringing in a new limitation, but was not seeking to impose it on anyone who had acted on his budget speech, we would agree with him and would have no objection to the principle of this section provided the date of 2nd July was inserted.

The Minister is now trying to confuse the issue by talking about his willingness to change the date to 6th April. I wish to make it very clear to the House that that is only trying to cloud the issue and to confuse it for those who may not be clear in their minds as to the distinction between the date of the assurance policy and the operative date of the relief or the abolition of the relief. Any change made with regard to income tax in this Bill, not just on this topic but on any topic relating to income tax, operates from 6th April, the beginning of the financial year 1974-75. The date in question here is not when the financial year begins and the reliefs or their abolition begin to operate; what is in question is the date on which a policy of life assurance was taken out. Anyone who, subsequent to the budget on 3rd April, was paying tax at above the minimum rate of 26p in the £ was actively encouraged by the Minister for Finance to take out an assurance policy. The Minister is now welshing in a disgraceful fashion on the active encouragement he gave to citizens to act on his words.

If he admitted he made a mistake and told us he would not penalise anyone who acted on his encouragement, we would help him to rectify his mistake. The Minister is doing a very dangerous thing. Having made a mistake he is now trying to confuse the issue by talking about speculators making improper profits out of life assurance policies and that he will do all he can to screw such profiteers and speculators——

What about the single premium policy?

The principle is the same.

That is the one that has been used.

If someone was encouraged by the budget speech on 3rd April to take out a policy of life assurance, he is now finding that the Minister has gone back on his words. What is even worse, he is trying to mislead this House and the public——

He is trying to mislead the public into believing he is not doing it but people are being retrospectively taxed in a disgraceful fashion. It would be bad enough if the statement of the Minister in the budget speech was neutral so far as life assurance and tax relief on it was concerned. However, it was not neutral; it specifically said that the Minister could not avoid a situation that those who were paying tax at the higher rate would benefit in full while those paying at a lower rate, the new rate of 26 per cent, would lose out. He said he could do nothing about that. It was an encouragement to those paying at more than 35p in the £ to take out more life assurance. They have been disgracefully treated. There may be only a few hundred people involved but if there is only one the principle is being breached by the Minister. He encouraged citizens to do something as a result of budgetary policy and three months later he penalised them very severely in the Finance Bill for doing what he encouraged them to do. All the Minister's ideological talk about speculators and the "get rich quick merchants" will not cloak the fact that he has acted in a disgraceful fashion. Even if there was only one person involved, we have a duty to fight that to the last.

I have never heard such selective huffing and puffing by the Opposition in what can only be called their very special pleading for very special wealthy people who use life assurance policies as a means of tax avoidance.

The Deputy should stop the politics of envy.

I can assure Deputies Haughey and O'Malley that I feel positively discriminated against under this Finance Bill. I wish I could afford to pay immediately the £1,000 premium in order to qualify for income tax relief. On whose behalf are Fianna Fáil speaking? Are they speaking on behalf of the overwhelming bulk of ordinary working people who would love to be able to pay the amount of assurance premiums mentioned here? Deputies O'Malley and Haughey know there are people who have availed of loopholes; some are doctors, some lawyers, others are wealthy auctioneers, some are solicitors and some are wealthy accountants. They have availed of it religiously and assiduously and have made their fortune by doing this kind of thing.

It is great to enjoy money when one is dead.

Many of them are wealthy backers of the Fianna Fáil Party.

They have big parties up in Glasnevin to celebrate it.

They were very hopeful that the bold Fianna Fáil Party would come back into office and that this loophole would be allowed to continue. I commend the Minister for Finance for closing it. There are many egalitarian principles in the actions of Deputy Ryan since he became Minister for Finance in making sure that the new industrial rich of this country do not have it all their own way in the matter of tax avoidance. I have no objection to people accumulating wealth. If they wish to do so, that is their privilege. But they will not accumulate it at the expense of the vast body of taxpayers. I commend the Minister for his insistence on closing this loophole. I have never seen such special pleading as I have seen here from Deputy O'Malley on behalf of what can only be classed as the super sur-tax payers of the nation.

Would the Deputy like to read what the Minister for Finance said in his budget speech and reconcile that with what is being done here?

Deputy Desmond, without interruption.

The susceptibilities of Fianna Fáil have been so upset by the retrospective provisions of the Minister that my heart bleeds for them in terms of their income tax liability under this section. For a party of the people, for a republican party, a broadly-based party, I have never seen such narrow selectivity as I have seen here in relation to taxation. My heart bleeds for Fianna Fáil this morning.

I wish Deputy Desmond would take this question seriously. He has asked on whose behalf Fianna Fáil are speaking. I am disappointed to find that the Minister himself has not done any thinking on this question and on the principle involved. He has talked again about largescale speculation. I suppose it is possible that between 3rd April and 2nd July there may have been a number of policies taken out of which nobody on this side of the House has any knowledge—the Minister may possibly have although how he would have I do not know. Would Deputy Desmond please understand that if the Government breach the principle of retrospection——

It is done every day of the week in every European country.

(Interruptions.)

If you breach the principle of retrospection in this way, clearly you have to answer for the consequences in other areas.

(Interruptions.)

Deputy Brugha, without interruption, please.

Over the past couple of years the Minister for Industry and Commerce has had expert personnel working on the Continent, in the US and in Canada trying to encourage industrialists to come over here to establish industry. They are working in an atmosphere of strong competition with other countries who are asking the same industrialists to come to their countries, whether they are the Asian countries or any others.

And who have much more vigorous tax provisions.

Why give your competitors a lever, a stick with which to beat you? They will say: "Why go over there? They are liable to change their tax laws any day. They are doing it all the time." Will that help the Minister for Industry and Commerce and the Industrial Development Authority to establish industries? Will it help if you create the atmosphere in the US, in Britain and in Germany in which it can be put forward that any Minister for Finance may go back to last year and the previous year, change his mind after he has made his budget speech? That is the principle involved. This is not a big enough or a strong enough country to take risks of that kind with our policy of financial integrity. I would ask the Minister to reconsider the situation. Leaving aside the moral principle, in which I believe anyway, since we are not the United States, Russia or West Germany we cannot afford to give our competitors sticks with which to beat us by introducing retrospective legislation. I do not believe there is large scale speculation. Surely there could not have been very much large scale speculation in April, May and June in the taking out of insurance policies?

You would be surprised.

Maybe there is. Perhaps the Minister would enlighten us.

You should hear the representations I have had from the Labour Party.

From the Seanad, was it?

Lord Iveagh.

(Interruptions.)

We should not have the names of Senators or, particularly, reflections on them in this House.

If the Minister had said in his budget speech: "I will deal with speculation in insurance policies in the Finance Bill" then I would stand by the Minister and tell him to go ahead with his 3rd April. But this was not said and that is what is going to weigh against the Minister and against the probity of the financial policy of this Government, of any Irish Government—that it can be said you have gone back on your word. I would ask the Minister to please take a look at it from that point of view.

I would again remind the House, and the Opposition in particular, that they are being irresponsibly unfair in choosing one paragraph of my budget statement and ignoring the one in which I gave the clearest possible unambiguous warning that I would be constantly vigilant in respect of all attempts at tax avoidance and would not hesitate to move against anyone who used the ordinary tax exemptions for the purpose of avoiding paying their fair share of tax. That is written in the budget statement. I have repeated itad nauseam. If people chose to ignore that and take a risk, they have no cause for complaint if we stop their little game.

Did the Minister not encourage people to take out life assurance policies?

Let us look at the legal position, which is well established. I would refer to the judgment in 1943 of Lord Greene in the case of Eastwoodversus the Inland Revenue Commissioners. It says:

It is notorious and indeed invariably happens that the Finance Act for a particular year does not pass into law until the then current financial year has, to some extent, elapsed. Nevertheless, the time unit within which the Finance Act invariably deals for the purposes of assessment is the financial year and it deals normally with the taxable income in respect of the then current financial year. That, of course, does not mean that it is retrospective. It is merely a unit of time in respect of which taxation is imposed.

That is what we are proposing to do and I have been more than fair in debating this at length, in explaining the position. If the Opposition wish to continue to obstruct it, that is their right. I cannot add anything to what I have already said and I do not propose to.

The Minister is most unfair to the Opposition when he says we are attempting to obstruct the passage of the Finance Bill. Nothing could be further from the truth. We want to ensure that statements made by the Minister at budget time, or indeed made by any Minister at any time, have some meaning and carry the weight they should carry. We are not merely talking about a clause in relation to life insurance but about a fundamental principle in relation to statements by Government Ministers or by the Government. Not so very long ago we had the further example of the type of poppycock indulged in by this Government when they practically reversed mining taxation.

The Deputy ought not to stray too far from the amendment.

This is related to the amendment.

I do not think so. Law on mining and profits would not be relevant.

Nevertheless, that created a tremendous lack of confidence in the Government because they welshed on the contracts entered into by a former Government. The Minister for Finance comes along in his budget speech and positively encourages people to avail of life insurance and the taxation clauses available to them in full and afterwards he comes to this House and talks about a further statement he made about tax avoidance. We all agree that those who evade paying tax should be brought to heel and asked to pay their full share but if the Minister comes into this House and, because of an oversight, a mistake or lack of ability, makes a gross error then I do not think the people who availed of the opening in these clauses should now be asked to pay the penalty for their act.

There is a question here of credibility that has ramifications far greater than just the number of people who may have availed of the Minister's statement in the budget. Any statements that come from the Minister for Finance and his colleagues in the future will be viewed with the greatest suspicion. We are afraid on this side of the House that credibility and confidence in the Government will be lost as a result of their activities.

I do not hold any brief for the wealthy people the Minister quotes or for the speculators referred to by Deputy Desmond. We on this side of the House do not hold any brief whatsoever for them. This is a deliberate tactic by the Government to distort this very clear issue. The Minister either means what he says or he does not mean what he says. If he comes into this House and makes statements in the future are we expected to wait for further statements to clarify his first statements? The Minister is asking this House to swallow too much if he expects us to sit down meekly and accept that a statement on budget day does not mean what he said at the time it meant.

This is fundamentally what we are arguing about. Despite the attempt by the Government to distract attention from that point we will still pursue it. I know Deputy Desmond and his Labour Party colleagues will be back using their old clichés about the rich, Fianna Fáil being backed by the rich and that we are only concerned about the rich. That is exactly what we expect from them. I would remind the Deputy that when his Government and his party attempt to get rid of the rich and the so-called speculators it is not they who will suffer. They are already well looked after. It is the poor people at the end of the scale who will suffer, those who will be denied employment in industries that would have come here if there was a certain credibility in the Government. They are the people we must be concerned about. I am surprised at Deputy Esmonde, who is a lawyer, and who is smiling very smugly in the back benches.

Yes, because the Deputy used the words "wealthy and well looked after" in the one sentence.

Yes, they looked after themselves.

Perhaps I am unfair to the Deputy. Perhaps it was an accidental remark.

The Deputy fits into both categories.

Deputy Esmonde is a lawyer and surely he should be concerned that when Ministers make statements they mean what they say and they do not come along months afterwards and try to reverse completely those statements.

This is partly the trouble. The Minister is putting it into action and the Deputy and his party do not like it.

He has said something and he is not putting it into action. That is what we do not like.

It is a complete reversal.

It must be made clear that the speculators and the rich are not the issue. The issue is whether the Minister for Finance in any statement means what he says or whether he will come along a few weeks afterwards and say something completely different and accuse us of being at fault.

It is a pity we are wasting so much time on this matter but nevertheless it is a very important one. There is a great deal in this Bill that we on this side of the House are anxious to get on with and have discussed. No matter what way the debate develops I am afraid we will not have the necessary time at our disposal to discuss the very important provisions in this Bill in regard to the taxation of farmers, the interest allowance restrictions and the anti-avoidance measures which the Minister is introducing. These are fundamentally important matters and I cannot see how we can discuss them as they should be discussed.

I want to reiterate my appeal to the Minister that he leave this Bill over until after the recess when we can discuss it in detail and give it the attention it deserves. It is particularly unfortunate, for that reason that we are wasting so much time on this one provision. I feel this side of the House have got to do this because it is a fundamentally important matter. It is completely misleading to introduce into the discussion on this matter talk about the rich, about avoidance, about evasion and about making quick kills. This is all irrelevant to this discussion. We are discussing the importance and the significance of the Minister's budget speech.

The budget speech of the Minister as I said last night, is the most important single pronouncement on economic and fiscal matters made during the entire year. It is awaited eagerly by all sections of the community. Important decisions are taken by different institutions, different organisations and different individuals on the basis of what is announced in the budget speech. It is fundamental to our whole fiscal structure that the budget speech be a solemn pronouncement beyond contradiction and that is what we are concerned with here.

Surely the declaration to pursue anti-avoidance measures is just as sacred as any other indication.

I am just going to deal with what the Minister said about anti-avoidance measures. I am afraid the Minister has forced himself into a dialectic corner on this matter, and unfortunately because of the way the debate has developed he is forcing himself to use irrelevant arguments to try to defend this indefensible position. The words of the budget speech are categoric. They are not open to any other interpretation except the one we are putting on them. The Minister in his budget speech was right. His approach and his philosophy were right. When he was making that budget speech he was in favour of life insurance. He was recognising the value of life insurance. Life insurance is an important thing in our modern community. It is something that prudent people take out in the interests of themselves and their families. Do not let the Deputies on the Government side, for the sake of this one single argument, try to castigate the whole system of life insurance.

Agreed. We are not saying——

Deputy Esmonde interjected and asked "What about the single premium?" The single premium was dealt with in the Finance Act of 1973. The Minister for Finance brought in provisions in 1973, which still apply and which will apply to this situation, dealing with any attempt by people to use the insurance premium provisions for tax avoidance purposes. It has no bearing on this situation. The Minister's approach in his budget speech was right. He was carrying on the provisions of successive Ministers down through the years in encouraging life insurance by making appropriate income tax provisions in regard to it. On budget day he said: "While I am unifying income tax and sur-tax I shall make a provision whereby life assurance premiums will get a further benefit now by virtue of this unification. The premiums will be allowed in full no matter what the rate of tax applicable to the taxpayer."

Subsequently somebody got at the Minister—I suspect in his Department or in the Revenue—and said: "This will be too costly and we must restrict it." The Minister then, perhaps rightly, perhaps wrongly, took a decision to bring in this restriction. We are not quarrelling with his decision to restrict the concession he announced on budget day. All we are saying to him is: "If we are going to restrict the concession which was announced on budget day we can only restrict it from the date on which the Finance Bill was published. Otherwise you are taking away from the importance and the solemnity of the speech the Minister for Finance makes in this House on budget day."

The Minister in a desperate search for arguments to bolster up his untenable position—because it is an untenable position—is resorting back to his budget speech and saying: "I announced in the budget speech I was going to close every loophole and eliminate all attempts by taxpayers at tax avoidance." Even that does not stand up. If the Minister looks at his budget speech again he will see that he cannot rely on what it said about tax avoidance to defeat our arguments in this regard.

The Minister dealt at some length in his budget speech with tax avoidance, but he enumerated in his budget speech the exact measures he intended to take to deal with tax avoidance. Not alone did he spell them out one by one and indicate what he was going to do in each area, but he quantified them. He gave in his budget speech an estimate of the amount that he hoped these itemised anti-avoidance measures would bring in. In the precise litany he gave of the measures he intends to take there is no reference to life assurance. Therefore he cannot rely now on an argument to the effect that in his budget speech he said he was going to introduce a whole lot of anti-avoidance measures and anybody about to take out a life assurance premium should have had regard to that warning and should not have taken out a particular sort of life assurance policy. I do not think that is a legitimate argument, but particularly when you examine what he said in his budget speech it does not stand up at all.

It is getting late in the day. We have a great deal to do in this Finance Bill. This is almost certainly not an important matter from the point of view of the Exchequer. I doubt if there is any significant revenue involved in it, so the Minister cannot be taking up this attitude in defence of the Exchequer. Therefore I urge the Minister, despite the untenable position into which he has unfortunately manoeuvred himself, to think again about this matter. It is only a matter of changing the date from 3rd April to 2nd July. However the important principle we are trying to uphold is the validity of the Minister's budget speech. As there are no Exchequer implications of any significance involved and as there is this important aspect of his words given in the budget speech, let the Minister agree to what we are proposing and let us get on with the other vital matters in the Bill.

There is something like three months involved in the difference in the date given in the section and the date in the proposed amendment. The Minister explained quite clearly—certainly I fully understand what he said—the reason for picking the particular date in this case. We all know that when an avoidance technique is being used and if the Government of the day seek to close off the loophole, they do not give a long-distance warning. You cannot do that if you want to block a loophole, if you want to catch the rat that is going to escape out through the hole.

You block it as of the day you publicly propose to block it, that is, 2nd July.

The Minister was very clear in his budget statement in saying that he was going after avoidance schemes.

That is the way I read it.

I have the budget speech here.

The Deputy may have seen it, but that is the way I read it, and I think that most practising lawyers would read it that way. Generally, what they used do—I say "used do" and I think they still do—when the Minister made his budget speech the lawyers would get around to find out how many loopholes had been obviously blocked. But if a Minister for Finance says that in principle he is going to move against avoidance schemes, then you do not make firm decisions until you see the Act but you take it on the basis that there will be a closing of loopholes. That will not necessarily be spelt out in detail in the Minister's scheme because possibly that would defeat the whole object.

This is what is worrying me now when I hear so much heated argument and exercise in this House over a period of three months and the effect of the earlier date is definitely to block a possible move to avoid paying tax. This is what worries me and what points to the fact that there must be something on or there must have been some scheme on to do this. Why the exercise? Why the excitement that has gone on all last night and this morning?

The Minister is going back on his word.

He is not going back on his word. Was not Deputy Haughey the person who engaged in something in the public Press saying something about the date when certain parts of the Financial Statement could take effect? I think the Deputy was interpreting the 1927 Act in a certain way. I have a recollection that this matter was debated somewhat in the Press.

This matter?

I think so—the principle. I think the Deputy was involved in that.

What is the Deputy talking about? Come out with it.

It was something about the 1927 Act which gives the date from which Resolutions take effect.

It was farming tax that I was talking about.

That may be so but I think the principle is somewhat the same.

I was right. I said the Minister should have brought in a budget Resolution about farming tax and I was right. He brought it in yesterday.

Quite wrong.

I thought the Deputy was making the case that he could not and if people took him up that way, as possibly people did, they would then try to dive in and use any loophole they could find that was not specifically mentioned in the Financial Statement.

It was not a loophole. This was the Minister's statement that he was going to allow insurance premiums in full on budget date.

The rates in full.

I think the Deputy is getting over-exercised but I am getting a little bit suspicious, as the public must be, as to who has been trying to get away with something.

Very suspicious of a Minister who frequently breaks his word. It is a disgrace.

Obviously, there is somebody who is bitter.

Deputy Tunney rose.

We did not have the words of the Minister formally quoted.

Deputy Tunney was offering. Deputy Tunney.

I was going to add my few words to this discussion. There is a joke among old-timers in Dublin about the two shawly ladies meeting each other, commenting on the inclemency and uncertainty of the weather and one saying, "Isn't it terrible? You would not know what to pawn." That is a fair comment to be made by the people in respect of the Minister for Finance. He is as changeable as the weather. He cannot be credited with encouraging a citizen who might be disposed to thrift or prudence to have any sense of security or stability. I realise it is hoped that there would not be any long contributions on this matter.

I do not want to make a long contribution but I do want to confirm what I am saying and to refer to the Minister's consistency last year on the point, say, of the claw-back, where he accused every speaker on these benches of being interested in giving to the rich, of not being interested in giving to the poor and suggested that his recommendation in respect of the clawback was to take money from the rich and to give it to the poor and that he would continue to do so. That is less than a year ago. Nevertheless, in his budget of this year the same Minister, who last year expressed such concern and displayed such consistency in the matter of what he would do in regard to children's allowance, this year gave £180 per month to the so-called rich in respect of children's allowance and gave 30p per month to the so-called poor people.

I am sorry to interrupt the Deputy but he must address his remarks to the amendment. What the Deputy says is clearly not relevant to the amendment the House is now discussing.

I am indicating the Minister's inconsistency. I am showing the stand he can take on one point in one year and change it the following year. I am trying to show that, as sure as I am standing here, there will be another departure from the stance he is adopting at the moment. I would hope that in the interest of security and of inspiring confidence in the people in any Minister for Finance the Minister would resist the temptation which here exists for him to change from a statement in his budget speech and would not take refuge under the very flimsy cover that Deputy Esmonde was endeavouring to provide for him.

Deputy Esmonde knows as well as I do that the Minister indicated in his Financial Statement, unambiguously, that what he is doing now would not happen. Deputy Esmonde in his professional capacity is occasionally called upon to plead lost causes. I think he realises that in this particular case he is trying to support a Minister in doing something which is indefensible. I appeal to the Minister now to change his mind, as he has done in the past on matters which had much less merit than that which is being discussed in the amendment.

(Dublin Central): What we are discussing here this morning is not whether there is a revision of tax or not. We are discussing the integrity of the Minister's budget statement. The Minister's budget is the most important item that comes before the House. Is the Minister aware of the number of persons who seek admission to the House on budget day? The Minister should ask the Superintendent of the House, or any Deputy, the number who seek admission on that day. I have personal knowledge that members of the NFA, members of the commercial life of the city, industrialists, leading members of financial institutions come here on budget day to listen to the Minister's statement.

On last budget day a leading executive of an insurance company in this city asked me for a pass so that he could hear the Minister's budget statement. I duly obliged. After the Minister had made his statement I met this executive in the lobbies and I asked him what he thought of the budget speech. This executive told me that as far as his business was concerned he was very satisfied. I asked him what particular part of the budget favoured his company most and he replied that the most favourable part was where they could now qualify for the higher rates. This executive asked for a copy of the Minister's speech before he left the House.

I am convinced that that man was justified in telling his insurance agents the following morning that this was how the law stood and that they would be entitled to sell policies on the strength of what the Minister had stated in the House. This is the type of situation I am concerned about. Can we trust the Minister's budget speech? The executive I have spoken about, having genuinely asked his agents to sell policies along those lines, now finds two months later the Minister contradicting his budget statement. That is a serious situation and it undermines confidence. This is what the Minister should concern himself about and not try to cloud the issue with his avoidance of large taxes.

The Minister should accept this amendment because it is of vital importance to his credibility. Anybody listening to a budget statement by any Minister for Finance should be left with the clear impression that the Government of the day will stand behind that statement. The executive I was speaking about was entitled to tell his agents, having listened to the Minister, that they could on the following morning sell policies on foot of the Minister's statement. This is the danger we have in this type of legislation. I ask the Minister to consider his own position, to consider his own integrity that the people respect. The Minister is not going to do any harm to the Opposition but he will do a lot of damage to his own integrity and that is what he should try to protect. There are people who, having read closely the Minister's budget statement, operated on it the following day. The Minister should consider seriously the implications of what he is doing in this legislation.

First, I should like to draw the attention of the House to the fact that we had a slow, carefully reasoned exposition of the precise situation that exists given about 20 minutes ago by Deputy Haughey. When the Deputy finished we waited for the Minister to make a reply, if any, to it. I am the third Member to have spoken since Deputy Haughey and we all waited to see if the Minister would intervene, to see if the Minister would contradict one word of what Deputy Haughey said. The Minister has neglected to do so, and anybody is justified in accepting that the situation as set out by Deputy Haughey, Deputy Colley and others is correct.

The Minister is in a position which is indefensible. His own arguments have made it even more indefensible. The Minister has now, wisely, ceased to try to defend. We had his words in the budget speech quoted last night and, for the benefit of those who were not here then and so that we can be clear on what we are talking about, I should like to quote the relevant two sentences from Volume 271, column 1447, of the Official Report of 3rd April, 1974:

Under the existing dual system of income tax and sur-tax, some reliefs, namely, life assurance relief, health expenses, wife's earned income relief and age allowance applied for income tax only. As it would be anomalous to maintain this distinction under the unified system now proposed, these reliefs are being placed on the same footing as other reliefs and allowances and will be available in full to income tax payers whatever their marginal rate of tax.

The full relief of the rate, if the Deputy understands English. There are ceilings on all those allowances.

"...whatever their marginal rate of tax," is what the Minister said. That means, in simple English, whatever their top rate of tax is. The top or marginal rate is the relevant one. I pointed out, as did three or four other Deputies on this side of the House in the subsequent budget debate, that that provision favoured the rich at the expense of the less well off. I pointed out that instead of, as in the past, everybody getting relief at the standard rate of 35 per cent the very rich would now get relief at 80 per cent and those who were in the £1,550 taxable income bracket would only get it at 26 per cent.

The Minister for Finance told us then that we were wrong and he pooh-poohed the case we were making. He said this was not so. However, the Minister came along on 2nd July and published the Finance Bill which accepts the case we were making but flies totally in the face of what he said at column 1447. The Minister cannot deny what is down in the official record in black and white. Likewise, in case anyone thinks there could have been a misunderstanding about that and that this present Minister for Finance just made one error and decided to try to bluff his way out of it, I invite the attention of the House to column 1454 of the same volume and of the same speech. The Minister for Finance said that every farmer or land owner who had a nonfarm income, and who was not liable under the provisions of the budget for income tax, would lose half of his allowance. That was changed very rapidly. It was changed in the Finance Bill.

Again people were totally misled in regard to that. I am not complaining that the Minister changed that because it was to the benefit of the taxpayer that it was changed and he did so when he realised he had made a grievous error. I am complaining, as we all are, legitimately on behalf of the taxpayer who was led up the garden path by being foolish enough to take the word of Deputy Richie Ryan, the Minister for Finance for the time being. I do not care tuppence for the credibility of a Government, or the lack of credibility of a Government, which consists of Fine Gael and Labour. In fact, the less credibility they have the better as far as I am concerned. But, as an Irishman and an Irish resident, I care greatly that the credibility of an Irish Government, whoever forms it, should be suffering so heavily in the world today as a result of precisely the kind of things that this present Minister for Finance is trying to get away with, trying to bluff his way out, trying to cod the people and bring in irrelevancies.

The position is perfectly clear. At column 1447, Volume 271, of the Official Report for 3rd April, 1974 the Minister for Finance in his budget speech gave active encouragement to people to take out more life assurance and told them that reliefs and allowances would be available in full to income tax payers whatever their marginal rate of tax. He went out of his way specifically to tell those who would be paying at the higher rate in the new unified tax that they would get full relief. Now he comes along in this Finance Bill and goes back on every word he said. That is contemptible. I regret very much that we have to delay the House and hold up consideration of this Bill because of the contempt and arrogance of the Minister for Finance. If he would grow up, admit his error and make the change that has to be made whether he likes it or not, we would get away from this to deal with more important matters.

As Deputy Haughey said, the revenue involved in this is minimal, perhaps only a few hundred pounds, but, by God, the principle is involved that the Minister for Finance will not be allowed to lie to the people and get away with it. That is what he is doing at column 1447 seen now in the context of the Finance Bill. There are many more important things with which we should deal. This is trivial from the revenue point of view but involves a great principle and we would be in dereliction of our duty if we were to let the Minister get away with it.

Last year we were put in the position that the final 20 or 25 sections of the Finance Bill had to be allowed through in half an hour as there was no time left to debate them. We shall be in the very same position this year as things are going and the Minister is responsible for that through holding up the House by trying to bluff or justify his way out of his own errors. I have great respect for any man who says he made a mistake and asks the co-operation of the House to rectify it. We would do that in five seconds but we will not allow him to lie his way out. We shall find ourselves at 10.30 tonight being told again that the Bill must go through, that the Government are sorry that there is no time to discuss the final 30 sections. This is the most important annual Bill to come before the House and it should get months of discussion if necessary to be properly teased out. Instead it gets two days on Committee Stage and these are used up because of the activities and the mentality of the Minister.

In view of the fact that tax free certificates are being issued I am not certain that this Bill must go through tonight. I do not see why we should not continue to insist that the Minister for Finance change his mind about this and not get away with totally misleading people who were foolish enough to believe that a Minister for Finance would mean what he said and would not blatantly break his word. We have debated thisad nauseam. The Minister has declined to make any reply to what was said by Deputy Haughey, Deputy Fitzpatrick, Deputy Tunney or myself. It is quite clear that what we have said is right. If the Minister wants it that way let this country know and let the world know that the office of Minister for Finance in the Irish Government is held by a man who has no regard for honour and has no word.

The Minister, in trying to bluff his way out of this, has concentrated time after time on his allegation that what is involved and what we are trying to do on this side of the House is to benefit people whom he alleges are making "a kill" in regard to life assurance. The absurdity of that in regard to life assurance has already been dealt with. We, on this side of the House, know of no case which could possibly answer to that description. Last night I asked the Minister if he knew of any such case and we got no answer. But what he has endeavoured to do is conceal the fact that what is really involved is much more than any such mythical figure—I doubt if there is such a person: whether there is or not the Minister has endeavoured consistently to cloud the issue—that there are numerous people—there must be—who took out insurance policies following the budget statement, which has been dealt with in detail here and who, as a result of this section, if this amendment is not effected, will find that the tax relief they are getting will be different from what the Minister said it would be in his budget statement.

They entered into these insurance contracts in good faith. These contracts could be for premiums of £20, £30, or £50 per year. There must be numerous people in that position and not only are they affected as regards the tax relief which they will get under this section and what they thought they would get on the basis of what the Minister said in his budget statement but, in addition, the differential existing between Irish and non-Irish companies is affected and considerably widened by this section. Therefore, the choice of a person taking out a policy would necessarily be affected by the position as he thought it was when he took out his insurance. Here, the Minister changes the whole position and wants to change it retrospectively as of the date of the budget. He said in his Second Reading speech in relation to this very section:

One section which was not mentioned in my budget speech is section 9 which makes a change in regard to the amount of life assurance premiums which may qualify for tax relief.

To me the position is perfectly clear: the Minister made no reference to this in his budget speech—as he confirms himself—but he has a section here which is framed as though he had referred to it in his budget speech. Surely it is not beyond the ability of the Minister to acknowledge that because no reference was made to it in his budget speech—although perhaps he would prefer to have made such a reference; I am not suggesting that he personally was responsible for its omission—the consequence is that he cannot ram through a section framed as though he had mentioned it in his budget speech.

The first mention of it, as he confirmed, in his Second Reading speech came when the Bill was published. The amendment is designed to provide that anybody who took out an insurance policy—not somebody taking out, as the Minister alleges, a huge policy; I am talking of hundreds if not thousands of people who must have taken out ordinary small policies—based on what the Minister said is not adversely affected. In that interval, why should the Minister retrospectively change the rules for people who acted on what he said in his budget statement? Is there any possible justification for this?

Surely nobody—and I include Deputy Esomnde in this—could possibly justify what the Minister is trying to do here. Deputy Esmonde should not allow himself to be fooled by the Minister's smokescreen about large policy holders. We do not know if there are any such: and apparently the Minister does not know, because when we asked him he did not tell us. But we do know there must be small policy holders who acted in good faith as a result of what the Minister said on budget day. Is it too much to ask that these should be protected to the extent that the Minister's change in the law should apply from the date on which he published this Bill, which was the first intimation anyone outside the Minister's office had of it, and not from the date the Minister proposes? Is that an unreasonable request? I submit it is not; the only reason it has not been granted long ago and the only reason why we have had to spend so much time on this is because the Minister apparently finds himself unable to acknowledge what the position is, to stand up and be man enough to acknowledge it, and let us get on with the important outstanding business of this House in regard to this Finance Bill. All this very serious business is being held up because the Minister is being stubborn—another adjective springs to my mind—but, at the very least the Minister is being stubborn. Surely it has been demonstrated beyond all doubt now that the right course, the course that was always followed in this House in the past and should be followed now, is to make the section operate from the date of publication of the Bill.

As Deputy O'Malley said, there is probably little or no revenue involved, but there is a vitally important principle involved. Why should the Minister hold up the important business of discussion of the Finance Bill to stick on a point like this when he knows, as well as we do, that he has not a leg to stand on. It is sad—I am choosing less emotive words than I might otherwise—that so much time should be spent in trying to establish a principle the Minister said last night he accepted. But we have to spend this time in this way because of the stubbornness of the Minister and because of his apparent inability to acknowledge the fact that a mistake was made and this was not referred to in his budget statement. Why can he not do as any reasonable Minister would and acknowledge that it was not mentioned in his budget speech and, therefore, whatever the consequences, he must accept the fact that it should operate from the date on which notice was first given of this provision, namely, the date of publication of the Bill? Is that an unreasonable request and, if it is not, would somebody on those benches, for God's sake, talk sense to the Minister and not be wasting our valuable time and the valuable time of the public in regard to the very important matters still to be discussed simply because the Minister will not come down off his high horse and have a bit of common sense?

Is the amendment being withdrawn?

No, it is not. Is the Minister still persisting in his attitude and, if he is, would he justify to the House why he is trying to do this? I challenged him last night: will he admit now there are far more people involved in this than the alleged numbers the Minister said who are taking out huge policies? Are there not small holders involved in this section?

It is 15 hours since we started debating this and I think we should now have a vote. I have no more to say. I will not assist the Opposition in obstruction of this critically essential legislation designed to reform our tax laws.

Will the Minister acknowledge that small policy holders are affected by this?

"yes" or "no".

It is a simple question. I put it to the Minister last night, will he acknowledge it?

I made my contribution and I will say no more.

It is quite clear that the Minister is now acknowledging, by implication, that what we say is quite correct and this allegation about people taking out huge policies is totally untrue, and the Minister knows that, and it is up to him now to justify his stand. He refused to do it last night and he has refused again today. He stands condemned. He deliberately tried to mislead this House. He is standing on something for which there is absolutely no basis. He is coming in here and trying to ram through a section which takes away the rights of small policy holders, who acted in good faith as a result of what the Minister said on budget day. That is what the Minister is trying to do. Let us all understand it. We certainly, on this side of the House, will not co-operate in any way with the disgraceful performance of the present Minister. It is in keeping with numbers of other things he has done in the past.

I should like to say something on the principle involved. I have been a long time in this House and I can remember when the Minister's party on this side of the House castigated retrospective legislation. I remember Members on both sides very concerned indeed at times—I am sorry to say in the past as well as now—at attempts to legislate retrospectively either because of an administrative mistake or because of ministerial incompetence in dealing with the particular matters in the first instance. A very important principle is involved here. I shall not go into the details of the section.

What I am concerned about is the deterioration in a system in which the citizen will, apparently, have no idea what the law is and will be at constant risk of having the law, which affects him financially, socially and in every other way, changed by either a ministerial or an administrative whim. There will be no security. In his days in Opposition the Minister was one of the most vocal Members of this House that I can remember on these subjects, a lawyer who made a great parade of legal principles. He is sitting there now, the victim of his own incompetency and mistakes or else the puppet of administrators who tell him what to do.

The Deputy was not here earlier. Would the Deputy give way? I want to deal with the principle.

Let the Minister take his medicine now.

He has only to say "yes" or "no".

I quoted the legal principle this morning when Deputy de Valera was in bed.

The Minister quoted legal principles but he did not live up to them.

Deputies opposite are waiting for Fianna Fáil Deputies to get out of bed in order to have a vote on it.

The Minister quoted legal principles but he did not live up to them.

I quoted them this morning.

The Minister could have said "yes" or "no" when he was asked.

The Minister refused in a high-handed way a few minutes ago to have the courtesy of answering Deputy Colley.

I answered him last night.

The Minister did not. He never answered.

He can answer me when I have finished.

I will not say any more. Let us end this charade.

Acting Chairman

Would the Deputy give way for a moment? The Chair would appeal to both sides to make their contributions in a manner befitting both sides.

Here is something brought into the Finance Bill about which no prior notice was given in the budget. Fair enough. It is often that details are dealt with in a Finance Bill, particularly to stop loopholes. There is nobody on this side of the House who will complain about that. We are complaining about whether in the Finance Bill or in anything else, without some very good, justifiable reason, there should be retrospective action. Here there is retrospective action. The first we, the public or the House, know of this proposal is when the Bill is published. All Deputy Colley wants is that the date will be amended. There is no dispute whatever as to putting this into action. If it is a loophole by all means let us close it.

The principle of going back in time is not justified. No case has been made. If it was a terribly serious thing, that could be argued. If it is to be argued, full information should be given to the House. The Minister is arrogantly refusing to give full information to the House when asked.

I said I was concerned with the principle of restrospective legislation here. The net question that I am putting—and I would like to take the whole thing in the spirit of which we have been asked to take it—is this: even granted that the Minister has a point and that there are a few cases which do not affect the Revenue very much—it may mean possibly that one or two people got away with something—is that fact alone enough, even though no damage has been done to the State and no financial damage done, to override that very vital principal which has been adumbrated by Deputy Colley and his colleagues here today.

Is this sufficient to override that principle? Is this sufficient to add to the already disturbing precedents which exist? Too many of them already exist. All of us, on various sides of the House, including respected and competent lawyers on both sides of the House and one of the Minister's own leaders who steered the House on such questions are concerned about this. Is there enough involved to make another inroad? If the Minister continues as he is going it means that a Minister may get up on budget day to make a budget statement. Heretofore, that was taken as a lead to the economic community and to the ordinary citizens and a declaration of certainty for a year about the taxation position. It was often taken as a lead to the whole economic position of the country for a year. People waited anxiously for the budget. When it was announced they acted upon it. It was followed and implemented by the Finance Bill. It was accepted that many administrative things were dealt with. One knew up to the budget that the law was such-and-such and after the budget in the main the changes would be such-and-such and that, when it came to the Finance Bill, there might be some more changes in matters of detail.

I hope we are not entering an era when we have a budget statement and then a budgetary revolution in the Finance Bill. I hope we are not slipping along that road. I hope we will not have one statement in the budget and another in the implementation of the Finance Bill. This is the start on the slippery path. Will we have this situation with the result that between budget day and the publication of the Finance Bill which may be delayed as it was in this case, there could be uncertainty? People will be open to injustice. Apart from the legal principle and the constitutional principle involved in this, there are practical and economic points. I would appeal to the Minister to reconsider the position in spite of the heat between us. If I said something which I should not have said I am sorry. I said it; but I do not think I was unjustified in taxing the Minister with his attitude. However, if my language was intemperate, I am sorry. I still say that it is inconsistent with the Minister's former attitude and protestations. It is dangerous.

I am afraid I cannot withdraw the suggestion—if it is not a charge— that either by mistake or through lack of foresight at the beginning this is being done by a Minister under pressure. Having said that, I want to say that the principle which Deputy Colley is adumbrating here is all the more important because of what I see will happen in the future. Look at that Bill. It is getting very complex. The whole financial structure is very complex. Everyone can sympathise with the difficulties of the Minister and his advisers in producing a Bill to implement the budget quickly. Having regard to the necessary secrecy that must exist for the budget, this is an administrative problem with which we can all sympathise.

The logical result is that we can expect to have substantial delays between the budget and the appearance of the Finance Bill. If in those circumstances one is to expect surprise packages of this nature—and there will be surprise packages—and if they are going to be retrospective and if they are going to affect the period between the budget and the Bill, this is a serious matter and another step in sliding down that slippery road that many of us, including the Minister, have fought against in the past. It is the slippery road towards retrospective legislation.

I am moved to say that. I was not going to intervene in this debate at all, but when the Minister adopted the attitude he did towards Deputy Colley I had to speak. If this comes to a vote the House should have the courtesy of full information. There is another point which I will mention in absolute finality. A practice which used to obtain in this House has been discontinued. If there was confidential information of a certain detailed type or in regard to individual cases which the Minister hesitated to disclose in public it was not unknown for a Minister to convey confidentially to the Opposition the information he had and the good reasons he had for keeping it confidential. Such a Minister would make an arrangement in order to help the House to function. If this House is now reduced to being a rubber stamp and to passing legislation of this nature it is time for us all to think of the principles that Deputy Ryan, the Minister for Finance, was so strong about himself in the past and to think also about the whole question of the operation of parliamentary democracy.

I wonder if any of the Deputies behind the Minister who have been listening to this debate have anything to say?

Let us have a free vote on this.

It would appear that the Minister is persisting in his attitude despite all that has been said. To say the very least, this is regrettable. This section, if passed in its present form, will be a monument to the intransigence and the lack of care of the present Minister for Finance for a very vital and important principle. It will also be a monument to the willingness of the present Minister for Finance to do down small policy holders who acted in good faith on what he said on budget day. If that is the kind of monument he wants he is welcome to it.

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

  • Barry, Peter.
  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Dick.
  • Burke, Joan T.
  • Burke, Liam.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Cosgrave, Liam.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Dockrell, Henry P.
  • Dockreil, Maurice.
  • Donegan, Patrick S.
  • Dunne, Thomas.
  • Esmonde, John G.
  • Finn, Martin.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Governey, Desmond.
  • Griffin, Brendan.
  • Harte, Patrick D.
  • Hegarty, Patrick.
  • Hogan O'Higgins, Brigid.
  • Kavanagh, Liam.
  • Kelly, John.
  • Kenny, Henry.
  • Kyne, Thomas A.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McDonald, Charles B.
  • Malone, Patrick.
  • O'Brien, Fergus.
  • O'Connell, John.
  • O'Donnell, Tom.
  • O'Leary, Michael.
  • O'Sullivan, John L.
  • Pattison, Seamus.
  • Reynolds, Patrick J.
  • Ryan, John J.
  • Ryan, Richie.
  • Spring, Dan.
  • Staunton, Myles.
  • Thornley, David.
  • Timmins, Godfrey.
  • Toal, Brendan.
  • Tully, James.
  • White, James.

Níl

  • Allen, Lorcan.
  • Barrett, Sylvester.
  • Blaney, Neil T.
  • Brady, Philip A.
  • Burke, Raphael P.
  • Callanan, John.
  • Calleary, Seán.
  • Carter, Frank.
  • Colley, George.
  • Collins, Gerard.
  • Crinion, Brendan.
  • Cronin, Jerry.
  • Crowley, Flor.
  • Cunningham, Liam.
  • Daly, Brendan.
  • Davern, Noel.
  • Farrell, Joseph.
  • Faulkner, Pádraig.
  • Fitzpatrick, Tom (Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, Denis.
  • Geoghegan, John.
  • Gibbons, Hugh.
  • Gogan, Richard P.
  • Haughey, Charles.
  • Healy, Augustine A.
  • Brennan, Joseph.
  • Breslin, Cormac.
  • Browne, Seán.
  • Brugha, Ruairí.
  • Herbert, Michael.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael F.
  • Lemass, Noel T.
  • Leonard, James.
  • Lynch, Celia.
  • Lynch, Jack.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Moore, Seán.
  • Nolan, Thomas.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Malley, Desmond.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Tunney, Jim.
  • Walsh, Seán.
  • Wilson, John P.
Tellers : Tá, Deputies Kelly and B. Desmond; Níl, Deputies Browne and Healy.
Question declared carried.
Amendment declared lost.
Question proposed: "That section 9 stand part of the Bill."

The Minister indicated last night that the section, as it stands is unsatisfactory and that he intends changing it in the next Finance Bill. My understanding of his intentions in regard to the change he proposes making is that he will retain the limit of £1,000; that he will retain the differential between Irish and non-Irish life offices up to and including the 35 per cent standard rate of income tax and that, above that rate, the differential would be abolished. However I understand that the non-Irish life offices were under the impression that, in addition to that, he would agree to introduce next year a special income tax allowance, the effect of which would be to provide retrospectively a refund of one-sixth of the excess of the tax rate over 35 per cent in the current year 1974-75.

I should like to ask the Minister whether or not he intends to include that latter point in the next Finance Bill. Furthermore, as the House is aware, I withdrew amendments No. 3, 4, 5 and 72 on the Minister's assurance that the course he was proposing to follow was the one most acceptable both to the non-Irish and Irish life offices. I want to ask the Minister in that connection if he would say when and with whom consultations were held at which it was agreed on behalf of the Irish offices that the course he was recommending was the most acceptable.

I think the Deputy will appreciate that it would be invidious for me to mention particular persons or organisations here in the House. But we had fairly extensive consultations with the interests involved. There are a number of matters which have yet to be decided as to what would be the best way of dealing with this problem which, as I emphasised, is a temporary one, because of the EEC obligations. At this stage I would not wish to spell out all the refinements which may be necessary but I am satisfied that by and large our general approach to the matter is one that is acceptable. There may be requests for further refinements of it but I would be prepared to consider these. Therefore, because of the need to study any such requests and to consider the matter further it would be inappropriate to try to find an instant solution to this difficult problem. It is difficult because of the concession which exists in favour of Irish policies. It is one of these typical anomalies which will arise as we proceed with the system of refining taxation, but this is no reason why we should not try to do better than we have done in the past.

Our approach is one which will not give any increased material advantage to the Irish offices compared with the non-Irish offices, and that is what matters. Should there be a temporary advantage of some size for, say, 12 months that would not mean that there would be any real material advantage, so there is no need to be alarmed by any temporary deviation from the absolute advantages which existed previously.

Normally, I would not have put those queries to the Minister but I have been obliged to do so in this case because, as I have said, I withdrew the other amendments relating to this matter on the Minister's assurance that the course he was recommending was the one which was most acceptable both to the Irish and to the non-Irish offices. However, since the Minister made that statement it appears to me, from inquiries I have made, that so far as the non-Irish companies are concerned they would go along with what the Minister recommended except in so far as they expected the additional matter I mentioned, that is, a special arrangement in next year's Finance Bill to give a retrospective additional allowance to their policy holders, to be part of the course the Minister was recommending.

So far as I can understand what the Minister has said now, he has not committed himself to that course. Therefore, it would appear that the consent and agreement of the non-Irish offices is doubtful, to say the least. I have made inquiries also in regard to the Irish offices, and the result of these inquiries suggests that these offices did not in any way agree to the course recommended by the Minister and in particular to the course recommended by him with the addition that the non-Irish offices expected. Therefore, I am concerned about this and am obliged to ask the Minister questions which I would not ask normally, but he will appreciate that in these circumstances I am endeavouring to establish beyond any doubt that the Minister, when he informed us of the agreement of the Irish and non-Irish offices to the course he was recommending, was not, inadvertently or otherwise, misinforming the House. I wish to establish that the Minister was correct when he said that the Irish offices have agreed to this course. Perhaps the only way in which the Minister can do what I ask is by making inquiries from his officials, but I want to know precisely when this agreement was reached with the Irish offices and, what precisely was agreed with them.

I cannot give names in the House but I shall certainly be in touch with Deputy Colley for the purpose of letting him know when the consultations took place.

Since I raised this question has the Minister inquired as to whether such consultations took place, as to when they took place and, if they took place, what was the result?

There have been consultations.

With the Irish offices as well as the non-Irish offices?

Certainly, there were consultations with some Irish offices but I am not sure as to how many.

There are not very many.

I know that.

Therefore, the Minister will appreciate that if not all of them were consulted he misled the House last night by suggesting that the Irish offices had agreed to the course he was taking.

I am satisfied that what I said last night represents what would be an acceptable compromise, by and large. Of course, everybody in this world wants everything to be to his own advantage, but there must be compromise and I would not expect either side to be entirely happy with the compromise.

So there was not agreement.

So far as I know there is an acceptance of there having been a fair compromise.

The Minister is correct in saying that no solution will result in every party being entirely happy, but the point is that I withdrew my amendments on the Minister's assurance that the course he was recommending was the one most acceptable both to the Irish and to the non-Irish offices. That does not mean that both sides were satisfied fully with the recommendation made by the Minister but rather, that of all the courses open, it was the one that was most acceptable.

From my inquiries it appears that the course recommended by the Minister is not the one most acceptable to all the parties involved. I have a grievance here because if I had been aware of this last night I would not have withdrawn my amendments but would have argued very strongly for them in the belief that they would be a better solution than the one which the Minister is recommending. I indicated that at the time.

It appears that the Minister's statement was not correct. There is no point in the Minister communicating with me later if, when he does so, it is to inform me that, for instance, the Irish offices did not agree to the course he recommends or if it emerges that only some of them were consulted. If that should be the case the Minister must appreciate that my amendments were withdrawn under a misapprehension created by him. It is important that we should establish, in so far as possible, here and now what precisely happened, to what extent was there agreement with the course recommended by the Minister both on the part of the Irish and the non-Irish offices. I have tried to indicate to the Minister that the result of my inquiries suggests that the non-Irish offices agreed to the Minister's recommendation but with a very important addition which so far the Minister has not indicated he is prepared to accept. If he is not prepared to accept that addition it can be taken that the non-Irish offices did not agree to the course recommended by the Minister.

So far as the Irish offices are concerned the Minister has told us that some of them were consulted. How many were consulted? Offhand I can think of three Irish life companies but how many were consulted?

I understand that two were consulted, but I do not wish to give any particulars which might be at variance with the facts. I am satisfied that the companies concerned, whether Irish or non-Irish, prefer to have the full availability of the different rates right across the board up to whatever ceiling there might be rather than Deputy Colley's suggestion that it be limited to 35 per cent.

As far as I am aware, there is common ground between both sides of the industry as far as that aspect is concerned and that is why I said, and I have not any reason to believe that I was wrong, that what I will be doing in next year's Finance Bill will be more acceptable than what Deputy Colley was suggesting should be done this year. There are other areas for further discussion. We have to try to maintain a very delicate balance of advantage for Irish companies over the non-Irish ones without increasing this advantage in any significant way. I am sure we shall be able to reach a reasonable compromise and that the interests of both sides will be met. That is as far as I can usefully and sensibly go at this stage.

I am not at the moment arguing the merits of one line of approach to this problem as against another. I might have done that in my amendments last night, but what I am engaged in now is to try to establish whether the course recommended by the Minister and accepted by the House is, as he stated, the one most acceptable to both the Irish and the non-Irish offices. I have indicated precisely where a divergence appears to arise between what the Minister recommended and what the non-Irish companies expected. In regard to the Irish companies, of which only two have been in the business for many years—one very recently entered into it—the Minister was somewhat imprecise when I asked how many had been consulted. I do not blame him personally for that because he was not personally involved in the consultations—any consultations that took place were between officials and these companies. I am not sure whether they were with officials of the Department of Finance or of Industry and Commerce. What I am anxious to learn is what precisely happened, with whom were consultations held—by that I do not mean the names of the people but between officials of which Department and representatives of how many Irish life companies. Could the Minister give me that information?

I cannot because I do not honestly know myself and I am not in a position to ascertain immediately on whose behalf the various representatives who were interviewed were speaking, whether it was their own companies exclusively or whether they were representing the views of other companies. I have said this matter will be dealt with in next year's Bill. The consultations are not concluded. The pattern of next year's legislation is not yet finalised but I would visualise that all interests would be contacted. There simply has not been the time to process this matter in full.

I appreciate that, but surely the Minister will appreciate that in the circumstances with which we are faced, in which there was not time, then was it not open to argument as to whether the course the Minister recommended or the course I suggested was the better one? In fact the Minister did not argue that because he assured the House that the course he was recommending was the one most acceptable to both the Irish and non-Irish companies. I have reason to doubt that statement and therefore I am questioning the Minister to try to establish what the facts are. For instance, did the consultation take place with the officials of his Department or of Industry and Commerce?

I believe they took place with both. I may be wrong in that.

When the Minister made his statement last night, by whom was he briefed?

There were consultations with both parties. There is a mixture of proposals. Deputy Colley's proposal is open for consideration if in the light of further debate it is considered to be more acceptable.

I am not arguing the merits of one course as against another. The point I am getting at is that I withdrew my amendments on the Minister's assurance but it would now appear that the assurance was not correct. In the circumstances I am entitled to explore this possibility in view of the indications given to me.

I have given the House my understanding of the position. I cannot take it any further than that, but I will make inquiries and contact the Deputy.

Is the Minister concerned with the possibility that he might have been given information on which he based his assurance last night which was not correct?

Of course one must always be concerned whether the information one gets is correct. I have no reason to believe the information is not correct. With respect to the Deputy, I think he is pushing this further than is warranted. Next year's Finance Bill can rectify any anomalies which appear to require rectification. If it requires retrospection, I trust the Opposition will not attack me.

Has any Minister ever been attacked for having given retrospective benefits?

I do not know.

I can tell the Minister he has not.

Before we pass on to discuss the merits or, more appropriately, the demerits of this infamous section we should clear up this matter. We had a situation last night that Deputy Colley had four amendments, Nos. 3, 4, 5 and 72 which would have added considerable substance to the section. At a very early stage in their discussion he withdrew them because he was told by the Minister for Finance that the arrangements made in the section had the agreement of the Irish and the non-Irish life offices. On his own admission this morning, to say the least, the Minister was very vague as to whether any agreement was reached with anyone.

As an outsider who was not involved in any discussions with any life offices, it seems to me the Minister may well have misled the House last night; in particular it seems highly likely what he told Deputy Colley was not correct, and even if it were partially correct he had no grounds for making the statement. Therefore, he had no grounds for making the statement which caused Deputy Colley to withdraw the four amendments before the House.

I know this appears to be a matter of little concern to the Minister but is a matter of concern to this House and will have to be shown to be such. We have had the experience of hearing the Minister for Finance not only on the budget and the Finance Bill for this year but for last year also and we know he will glibly make any statement in this House, whether or not he has grounds for it, if he thinks it will ease the passage of legislation for him. We should come back to what was said last night which caused Deputy Colley to withdraw four amendments.

We have now clearly established two points. First, that the non-Irish offices were agreeable to this course of action only provided they had a guarantee from the Minister for Finance, for what that is worth with the present Minister, that they should get retrospective benefit in next year's Finance Bill. Secondly, we have established that the Minister for Finance is not aware what, if any, consultations took place with the three Irish life offices. He was asked by Deputy Colley when these consultations took place; he does not know. He was asked who took part in them on his side; he does not know. He was asked with what company or companies they took place; he does not know.

Having established all of this by the Minister's admission this morning, let us consider what he told Deputy Colley last night. He gave an unequivocal assurance to the Deputy last night that all the offices, Irish and non-Irish, were agreeable to this and it was because of that the four amendments were not moved. We may not have established all the precise truth of what exactly happened but we have established, even on the Minister's own admission, that all the offices concerned have not agreed to what the Minister suggests in the Bill.

No matter how flippantly the Minister for Finance may take questions of truth or falsity, it is a very serious matter. Even though it cannot now be proved exactly what took place, it can be proved out of the Minister's mouth that agreement was not reached on the lines he indicated last night and that, therefore, Deputy Colley was caused to withdraw his amendments under a misapprehension that was given to him by the Minister for Finance. The Minister may pooh-pooh this as he did similar things last year but I want it clearly recorded that the regard for truth of the present occupant of the office of Minister for Finance is a slight one.

Hear, hear. Filleann an feall ar an bhfeallaire.

If anything I have said is inaccurate, I am sure the Minister would like to correct it.

Deputy O'Malley may take it I disagree with him.

I can only find myself in full agreement with what Deputy O'Malley has said. To say the least, it is very unfortunate that the Minister gave an assurance, as he did last night, that induced me to withdraw the amendments when, on his own admission this morning, he was not in a position to give any such firm assurance. Even if the position were to turn out eventually to be as he stated last night, it is clear that the Minister did not then have available to him the information which would have enabled him to give this assurance. I might add he does not have it now either.

It is unfortunate that the Minister, lightly and without regard for the facts of the situation and the care with which any Minister must weigh his words when he gives an assurance of this kind, gave this assurance without having the necessary information. It is unfortunate in that it caused me to withdraw amendments when, in the circumstances now arising where it appears there was not agreement by the offices, I would strongly have argued in favour of my amendments as against the course the Minister recommended in the special circumstances obtaining even for this year. The opportunity to argue the case has been lost because I accepted the Minister's assurance, an assurance that was given without any real basis or firm grounds on which it could be given without equivocation. That is one unfortunate consequence.

Another unfortunate consequence is one that has been adverted to by Deputy O'Malley and it is a serious one. It seems to me that if you reach a stage where, when you get an assurance or an undertaking from a Minister for Finance you are in the position where you cannot accept it automatically, that you have to look behind it and check on it, that is a position that becomes intolerable. If that situation is now arising, the Minister has only himself to blame.

Despite certain past experiences with the Minister, as I indicated last night, I was quite prepared to accept the assurance he gave at its face value. In view of what has happened, and what he has told us this morning, I must confess reluctantly that if I receive any further assurances from the Minister for Finance I will not be able to accept them at face value. I will have to go behind them and inquire the basis for the assurances. That is an unfortunate situation, one that should never occur. It is unfortunate in relation to the Minister for Finance personally and it is most unfortunate in relation to the office he holds. I regret this situation has developed but there is nothing much I can do about it except to record my protest at the manner in which the Minister gave an assurance last night which he was not in a position to give and thereby induced me to withdraw my amendments. I must record my regret at the consequence of that approach by the Minister.

The arguments on the section as such rested on the amendment the Minister has succeeded in defeating in the last division. There are no new arguments on it but it is perhaps worth noting that here in one section of this Bill alone, section 9, one eighty-fifth of the Bill, less than that if one takes into account the Schedules, the Minister for Finance has succeeded in breaking his word twice. He has broken his word to this House last night which, if not given dishonestly was at the very least given negligently and not caring whether it was true or not, and secondly in the section itself he has broken his word which he solemnly and specifically gave in the budget speech of 3rd April last. Twice in one section of one Bill the present occupant of the office of Minister for Finance has flagrantly flown in the face of the truth.

We in this House are now expected to legislate in a situation where the man facing us is prepared to wallow in untruth and deception. We as an Opposition do not know where we stand. The people of this country, who would expect that they could accept the word of a man who holds the office of Minister for Finance, do not know where they stand. The problems are not just confined to the Members of this House or the people of this country, because perhaps in the long run the most serious damage of all to this nation will be done by the fact that there are industrialists and other investors abroad who would be prepared to put money into this country but who are increasingly beginning to fight shy of a country, the Government of which contains a Minister for Finance who will make statements negligently and carelessly, neither knowing nor caring whether they are true. What can any foreigner think of a country which has as its Minister for Finance a man who makes a precise and solemn declaration in his budget statement on 3rd April, 1974, with regard to life assurance, who, without saying anything whatever in the meantime, comes along and publishes a Finance Bill on 2nd July, 1974, in which he goes back on everything that was said in relation to life assurance on 3rd April, and this without any attempt to excuse or to justify it?

The House heard this morning the experience of a friend of Deputy Fitzpatrick who came into the Public Gallery at Deputy Fitzpatrick's invitation on budget day, heard the Minister for Finance say what he did say in relation to life assurance and in order to make assurance doubly sure that gentleman, who was involved in life assurance, asked Deputy Fitzpatrick if he would procure for him a copy of the Minister's speech so that he would have it in black and white and would be under no misapprehension. Deputy Fitzpatrick got it for him. The man read precisely what the Minister had said and on the strength of that went away and advised his own employees and agents as to what they could do in selling life assurance during this current year. I do not know how many policies were sold as a result of that, but presumably there must have been some at least. The agents of that company, through no fault of their own, have gravely and grossly misled the people who purchased those policies from them and they have done that because those agents and that man himself were grossly and gravely misled by the Minister for Finance, who makes not the slightest apology for the contemptible effort at breaking his own word that is contained in this section.

If the statements of the Minister for Finance in relation to life assurance reliefs in the budget had even been neutral, one could still legitimately complain but perhaps complain less vehemently than we do now about what the Minister proposes to do. But the statements of the Minister for Finance in the budget speech were not neutral. They were an active encouragement to people, particularly those paying tax at higher than the standard rate, to avail of as much life assurance as they could possibly get. They were told at column 1447 of the Official Report that reliefs and allowances will be available in full to income tax payers whatever their marginal rate of tax.

All this has been clearly spelt out this morning by six of us from this side of the House but the Minister for Finance has not made any effort to deny that what we are saying in relation to this is true. Perhaps the only more serious reflection on somebody and somebody's honour than to have no honour is to be continuously told it here in Parliament and not even to bother to try to deny it. At least in his favour it can be said that he does not try to compound his untruth by trying to deny the dishonour which he has brought upon himself and upon his Government but much more seriously upon this country as a whole.

We are now being asked to enact into law a section which in itself is the living embodiment of a lie of the Minister for Finance. We cannot stop that enactment because we have not, as matters stand, enough Deputies to stop it. But perhaps there are at least a few people sitting on the benches opposite, who would have the honesty to walk the other way, and they have plenty of precedent for that now, when the division on this section is called. If they do not they will enshrine into the permanent financial legislation not just one but two deliberate efforts by Deputy Richie Ryan, Minister for Finance, to mislead the public and to mislead this House. The passage of this section and its enactment into law will give the approval of this House to those two deliberate attempts at misleading, neither of which has been denied.

Both of which have

Question put.
The Committee divided: Tá, 60; Níl, 54.

  • Barry, Peter.
  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Dick.
  • Burke, Joan T.
  • Burke, Liam.
  • Byrne, Hugh.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Cosgrave, Liam.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Dockrell, Henry P.
  • Dockrell, Maurice.
  • Donegan, Patrick S.
  • Dunne, Thomas.
  • Esmonde, John G.
  • Finn, Martin.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Governey, Desmond.
  • Griffin, Brendan.
  • Harte, Patrick D.
  • Hegarty, Patrick.
  • Hogan O'Higgins, Brigid.
  • Kavanagh, Liam.
  • Kelly, John.
  • Kenny, Henry.
  • Kyne, Thomas A.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McDonald, Charles B.
  • Malone, Patrick.
  • Murphy, Michael P.
  • O'Brien, Fergus.
  • O'Connell, John.
  • O'Donnell, Tom.
  • O'Leary, Michael.
  • O'Sullivan, John L.
  • Pattison, Seamus.
  • Reynolds, Patrick J.
  • Ryan, John J.
  • Ryan, Richie.
  • Spring, Dan.
  • Staunton, Myles.
  • Thornley, David.
  • Timmins, Godfrey.
  • Toal, Brendan.
  • Tully, James.
  • White, James.

Níl

  • Allen, Lorcan.
  • Barrett, Sylvester.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Breslin, Cormac.
  • Browne, Seán.
  • Brugha, Ruairí.
  • Burke, Raphael P.
  • Callanan, John.
  • Calleary, Seán.
  • Carter, Frank.
  • Colley, George.
  • Collins, Gerard.
  • Crinion, Brendan.
  • Cronin, Jerry.
  • Crowley, Flor.
  • Cunningham, Liam.
  • Daly, Brendan.
  • Davern, Noel.
  • Farrell, Joseph.
  • Faulkner, pádraig.
  • Fitzpatrick, Tom (Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, Denis.
  • Geoghegan, John.
  • Gibbons, Hugh.
  • Gibbons, James.
  • Gogan, Richard P.
  • Haughey, Charles.
  • Healy, Augustine A.
  • Herbert, Michael.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael F.
  • Lemass, Noel T.
  • Leonard, James.
  • Lynch, Celia.
  • Lynch, Jack.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Moore, Seán.
  • Nolan, Thomas.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Malley, Desmond.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Tunney, Jim.
  • Walsh, Seán.
  • Wilson, John P.
Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Browne and Healy.
Question proposed: "That section 10 stand part of the Bill."
SECTION 10.

This is the section that provides for the abolition of sur-tax with effect from 1974-75.

I would like to ask the Minister is it the position that following the abolition of sur-tax, interest on an investment in a building society will now be free of tax in the investor's hands.

It will be same position as before except that, of course, it will be the higher rate of tax and not sur-tax that will apply.

I would like to be a little clearer on this. As I understand the position, at present because of the special arrangement with building societies, societies pay tax in lump sum form to the Revenue Commissioners on a specially worked out basis and are thereby enabled to pay interest to their depositors free of tax, that is, free of income tax.

Without deduction.

Yes, without deduction, and in fact free as far as income tax is concerned because it has already been paid by the societies. People who are subject to sur-tax were in due course assessed for sur-tax on that interest, but since sur-tax is being abolished under this section, I would like to know whether an investor in a building society will receive his interest from the building society and will thereafter have to pay no more tax on that interest.

The interest of the building societies is deemed to be at the standard rate, and you would have to take into account the interest earned by a person in a building society in order to calculate what his appropriate rate would be. If the appropriate rate would be in excess of the standard rate, then he would be liable for that rate. We are not providing that this would be a new benefit so that people would get a higher concession in regard to income tax from the building societies. You have to take their total income into account in order to assess what their appropriate rate of income tax would be.

Then the consequence of this is that it will no longer be possible for the building societies to pay and to advertise that they are paying interest free of tax, meaning free of income tax?

It will be free of the standard rate. In other words, any person who has an income from a building society will continue to get the concession they got in the past. It was never free of sur-tax. It was free of the income tax rate. It will continue to be exempt from the payment of the standard rate of income tax, which is 35 per cent.

Question put and agreed to.
SECTION 11.
Question proposed: "That section 11 stand part of the Bill."

This is a consequential amendment section.

Question put and agreed to.
SECTION 12.

I move amendment No. 7:

In page 8, between lines 2 and 3, to insert a new section as follows:—

"Where, in any of the provisions of this Chapter and of Part I of the First Schedule, a specific sum is mentioned as a deduction falling to be made from the total income of an individual for the year of assessment 1974-75 such sum shall, for each subsequent year of assessment, be deemed to be increased by such percentage sum as is equal to the percentage sum by which the Consumer Price Index has increased during the 12 months period ending on the date to which the Consumer Price Index is calculated next preceding the commencement of the year of assessment".

Whatever one might have to say about the technical wording of this amendment—indeed one could say quite a bit about it, I would imagine, and perhaps find flaws in it—the principle involved is quite clear. If the Minister accepts the principle of it, I do not think we shall have any difficulty in establishing the correct technical wording of it. The principle involved is that in relation to the various allowances set out in this chapter of the Bill and Part I of the First Schedule for various income tax allowances, they would be automatically altered and increased by the same percentage each year as the consumer price index had increased in the previous year. I move to report progress.

Progress reported; Committee to sit again.