Dáil Éireann debate -
Wednesday, 23 Apr 1975

Vol. 280 No. 2

Finance Bill, 1975: Committee Stage (Resumed).

Debate resumed on amendment No. 18:

In page 18, to insert a new section before section 34 as follows :

"34—Section 59 (1) of the Finance Act, 1974 is hereby amended by the substitution of `reasonably require' for `think necessary'."

—(Deputy Colley).

Mr. Colley

Let me briefly recapitulate on this amendment. It is one which was put down to last year's Finance Bill but was not reached because of the circumstances in which the debate on last year's Finance Bill was concluded. The amendment proposes to substitute the words "reasonably require" for the words "think necessary" in section 59 (1) of the Finance Act, 1974, that is, to require that the Revenue Commissioners or such officers as they appoint may by notice in writting require any person to furnish them within such time as they may direct, not being less than 28 days, with such particulars as they think necessary for the purposes of section 57, 58 and 60. The amendment is designed to change that to "to furnish them...with such particulars as they reasonably require for the purposes of sections 57, 58 and 60".

Last night the Minister quoted at some length from the judgment of an English court on a case arising on wording, as I understand it, similar to the wording contained in the section. As I understand it, the Minister's purpose in quoting this judgment was to demonstrate that, although it is an English judgment, it is reasonable to assume that the same reasoning will be applied here and that the Revenue Commissioners are required in genral to act reasonably. I think that was the point the Minister was trying to convey and that, therefore, this amendment was not necessary. I pointed out to the Minister that it seems to me that a different test would be applied by the courts if the wording were "reasonably require" as distinct from "think necessary".

I also tried to point out to the Minister that, even if in his view the words proposed to be substituted make no difference whatever, other people take a different view and feel that the substitution of the words "reasonably require" would give a greater degree of protection and access to the courts than would be the case if the amendment were not accepted. Therefore, since I assume that what the Minister wants is, in effect, what is sought in this amendment—but he says it is already provided—I am urging him to accept it even if it is his view that it does not make any difference. If it does not make any difference he has nothing to lose by accepting it, whereas some people believe, rightly or wrongly, that there is something to be gained by accepting it. I urge the Minister to accept this amendment on those grounds.

Minister for Finance (Mr. R. Ryan)

Might I ask this question? If some people think there is a gain to be made, by whom is the gain to be made? Is it the people it is intended to prevent avoiding tax? The sections in respect of which this power is given are sections of the Finance Act, 1974, which are directed towards preventing the avoiding by individuals of their tax liabilities. It is wrong that this Legislature should go out of its way to facilitate people in avoiding their tax liabilities.

As I indicated last night, I am satisfied both from rulings of Irish courts and rulings of courts elsewhere, that the legal position is that this power may only be used by the Revenue Commissioners in a reasonable way. If they act unreasonably the courts will condemn their action. If they use the power to acquire information they may use it only to the extent necessary to obtain the information for the purpose of stopping tax avoidance. If they extend it beyond that then the courts will block the action they want to take. I referred yesterday to the case of Clinch v. The Inland Revenue Commissioners and I will now put on the record the following observations made in the House of Lords as reported in All England Reports, 1925.

A person in whom is vested a discretion must exercise his discretion upon reasonable grounds. A discretion does not empower a man to do what he likes merely because he is minded to do so. He must in the exercise of his discretion do not what he likes but what he ought; in other words, he must by use of his reason ascertain and follow the course which reason directs. He must act reasonably. The words "as they think fit" do not mean "as they choose". The measure is not the volition of the person vested with the discretion. It is the suitability or adequacy or fitness of the amount in the reasonable judgment of the person vested with the discretion.

The wording of the 1974 Act ensures that the Revenue Commissioners will act reasonably and it is not, therefore, necessary to dress up the words in what Deputy Colley regards as softer and milder language in order to ensure that the power is exercised in a reasonable way. The amendment achieves nothing that the statute and the interpretation of the statute by the court achieves and, in the circumstances, I would suggest the amendment is not deserving of support.

Mr. Colley

The Minister asked who were the kind of people who thought that there was some advantage to be gained by inserting the proposed word and suggested that the only people who could be so concerned would be those who were trying to avoid, not evade, liability for tax—in other words, avoid liability in accordance with the law. I do not know if such people are concerned in this matter, but many people do not find any great difficulty in getting around any provisions introduced in a Finance Bill. However, I will tell the Minister the kind of people I know who are concerned. They are those who are concerned with the rights and protection of citizens and they are not prepared to say that unlimited powers may be given to the Revenue Commissioners to enable the Revenue Commissioners to deal adequately, in their view, with people who are avoiding tax liability by using the law as it stands—not acting illegally, mark you, but acting within the law. If the Minister does not accept that proposition, then logically he should simply have a section which says: "The Revenue Commissioners can do anything they like in order to ensure that people do not avoid tax liability."

I doubt if the Minister would be prepared to support such a proposition, though some of his proposals in other respects might make one wonder. If he would not support such a proposition, then he is saying there is a limit beyond which one should not go and, that being so, it is simply a red herring on the part of the Minister to argue as to whether or not it is people who want to avoid liability who are concerned. If the Minister is concerned for the rights of citizens, whether or not they are trying to avoid liability for tax, and if he accepts that there is a limit beyond which the Revenue Commissioners should not be given powers, then I suggest he is obliged to fall back on the argument he made himself that the amendment makes no difference. That is a reasonable point for the Minister to make but I am concerned when he tries by a side swipe to make the case, without actually arguing it, that there should be no limit to the powers of the Revenue Commissioners.

The Minister should be under no illusions about this. If one is prepared to grant unreasonable powers to the Revenue Commissioners—for instance, to get after the most blatant avoiders of tax—then it is only a short step until exactly the same powers will apply against all citizens, whether or not they are trying to avoid tax. I suggest there is an obligation on the Legislature in these matters, an obligation to try to hold a reasonable balance between, on the one hand, enabling the Revenue Commissioners effectively to do their job and, on the other hand, trampling on the rights of citizens. I suggest that to provide that the Revenue Commissioners may seek such particulars as they reasonably require for the purposes of the later section is an attempt to do just that. It is certainly not an attempt to cramp the activities of the Revenue Commissioners in any way whatsoever. Neither can it be so represented but equally it is an attempt to build in some degree of criterion which can be applied by the courts in relation to the activities of the Revenue Commissioners in the light of the sections.

If one ignores what I can only describe as the red herring introduced by the Minister, then effectively what the Minister is saying is that the acceptance of this amendment makes no difference whatever either to the Revenue Commissioners under this section. If that is so, and I have reservations about whether or not it is so, then I am putting it to the Minister again: what has he to lose by accepting this amendment? If the position is precisely the same whether or not the amendment is accepted, what has he to lose and why does he not therefore say : "Right, I will accept it. It makes no difference, but I will accept it, if it gives some people the impression they have greater rights and better protection under the law. Even though they are wrong in that, I will accept the amendment." That is what I would expect the Minister to say, but he is not saying that. On the one hand, he is saying it makes no difference and, on the other hand, he is saying he will not accept it. I do not think it is reasonable of the Minister to adopt that attitude if he really believes what he says : I would therefore urge him to consider the matter a little further and accept the proposition that this either makes some difference or it makes no difference beyond giving some people who are concerned for the rights of citizens grounds for believing that there will be greater protection for citizens in the courts if the amendment is accepted.

Mr. R. Ryan

I believe all taxpayers should receive equal treatment under the law in so far as it is possible to ensure that. The overwhelming mass of people are affected by section 178 of the 1967 Income Tax Act, under which all details of an employee's income must be furnished by an employer to the Revenue Commissioners. It is as simple as that. It must be done.

Section 59 of the 1974 Act says that the Revenue Commissioners may by notice in writing require a person to furnish the information which they think necessary for the purposes of preventing the avoidance by individuals of tax liability by transfer of assets. If the Legislature in its wisdom considers it necessary that employees do not avoid their tax liability and imposes on their employers the obligation of revealing full details of the employees' incomes, surely it is not unreasonable to require people who have information about the transfer of assets abroad for the purpose of tax avoidance to be under a similar obligation?

Mr. Colley

What section of the 1967 Act did the Minister quote?

Mr. R. Ryan

It is section 178 of the 1967 Act which says:

Every employer, when required to do so by notice from an inspector, shall, within the time limited by the notice, prepare and deliver to the inspector a return containing the names and places of residence of all persons employed by him and the payments made to those persons in respect of that employment.

Mr. Colley

That sets out precisely the information that can be sought. This section does not.

Mr. R. Ryan

This sets out that it is such information as is necessary for the purpose of stopping tax avoidance by the transfer of assets abroad.

Mr. Colley

Surely the Minister can see the difference between a section which sets out precisely the information which the Revenue Commissioners can seek and, on the other hand, a section like this which says they can seek whatever information is necessary? There is an enormous difference.

Mr. R. Ryan

I would like to point out to Deputy Colley that section 59 (3) sets out the information which the Revenue Commissioners may obtain. They cannot go beyond what this section gives them power to do. Deputy Colley is not seeking to amend that. All he is doing is seeking to replace words which achieve the objective which he says he has in mind. He says his only objective is to ensure that the Revenue Commissioners act reasonably. I am saying that under the law they cannot but act reasonably. If they depart from that the courts can condemn them for it. If we were to replace the words "think necessary" by the words "may reasonably require" the same test would be applied by the courts. It would be no more and no less than that. In fact what we are doing is having a general discussion on section 59 of the Finance Act, 1974, on its impact and its consequence and not really having any disagreement on the rights of the Revenue Commissioners to obtain this information.

Of course, from time immemorial, since tax was first imposed, there has been a battle of wits going on between taxpayers and tax collectors. If that battle is won by a person who is liable to tax, then the burden on other taxpayers becomes so much greater. If the Legislature accepts its obligation to maintain equity, if it accepts it has an obligation to spread the load evenly, then it must strengthen the hands of the Revenue Commissioners to prevent tax avoidance.

Mr. Colley

This amendment would not do any harm, according to the Minister.

Mr. R. Ryan

I do not believe it would. I do not believe it does anything and on that account I cannot see any point in accepting it.

Major de Valera

I support Deputy Colley in this but I can see where the Minister can take his approach. I can also see where Deputy Colley takes his attitude to this, as he also was a Minister for Finance. The Minister never misses a chance of trying to knock one section with the plea that the employee or the poor ordinary taxpayer will be caught anyway. I want to leave that kind of specious, political approach out of the matter as we are on the Committee Stage of a serious Bill. The Minister is doing a competent job on this and I do not want him to read any slur or slight in my saying this.

Does it not hang on what interpretations are there already? What would a judge ask for if he had to deal with this? The protagonists in this have legal experience. What are the judicial interpretations in this? The Minister has only mentioned one. There have been cases and there have been interpretations. What is the relevant state of the law from the point of view of interpretation in regard to this matter? Those Bills are coming so fast that it takes a lot of time to pursue such a point. The question of interpretation may cause trouble for all those Finance Bills which are before the House. I know this is a technical point but I would like to take up a point Deputy Colley has made.

I would like to give some background to what I say on this. I want, quite frankly, to confess my own conversion. I have already referred to this in the House and I cannot bring home the point too clearly in the public interest. I, like many others of the community, was too prone to adopt the point of view that the Revenue Commissioners were unreasonable publicans and tax gatherers in the gospel sense and that they should be anathema and defrauded and defeated at all points because they were grabbers. I was appointed by the House to the Committee that reviewed the various Finance Acts and then I realised the truth—that we had in this organisation a very responsible and fair minded organisation which did its duty to the State, carried out its responsibility and respected the rights of the citizens as best and as fully as it could. I am able to make this statement because in the course of the discussion, revealed to us in confidence without identification, were the actual problems the Revenue Commissioners had to face.

I come now to the second matter, about which I was very vocal in the past whether on the far side of the House or this side, namely, that Ministers for Finance under any Government always appeared to be rubber stamps for the Revenue Commissioners. Then I realised that the truth was that it was an unfair charge against Ministers for Finance. I realised that, with the information they had and the problems of the Revenue Commissioners, all the provisions, whether introduced by Deputy Colley or his predecessors or by the present Minister, had good reason and good ground. I realised that the real reason was that it was compelling. That is the background and we should not pervert that background by having undue suspicions.

The first principle for us should be to restrain the possibility for arbitrariness because there can be a slippery slope. That can be said without the least reflection on the Government or the Revenue Commissioners. I emphasise this because it is a bad approach on our part if we give the impression that it is a reflection on the integrity of either in a matter of this sort. In the public interest we should be careful about this. On good legal and legislative principle we should delegate as little arbitrary power as possible from this House. I believe that the public service who have the responsibility of executing the law would be glad to accept that principle. Arbitrary power is a responsibility that responsible and thinking people do not like to have and I am almost certain the Revenue Commissioners do not want to have arbitrary power.

On the other hand, the Revenue Commissioners have got to have the power to do their job fairly; it is important to emphasise the doing of the job fairly. In my view the Revenue Commissioners do the job to the best of any human ability. What is the approach to that? Where we have to make provisions of this sort the approach of Deputy Colley to err on the constrictive side and then to be prepared to meet the case where that is not sufficient is the better approach for this House. It may be a bit irk-some to the officer who has to execute it, but it is the safer approach. For a short while in the public service I carried some responsibility that had arbitrary powers attached to it and I realised the temptation of a manager or an executive to get a job done. That is one of the balances which on the constitutional scene is carried out by the courts.

I am putting this on a matter of principle. On the actual wording the Minister should be able to give a reasoned answer to the amendment from the point of view of legal interpretation. In that regard the Minister has not done enough. Deputy Colley is entitled to say that the safer form should be used on the principles I have outlined. This amendment is only one of a series of amendments and sections designed to give necessary powers. I agree that the powers are probably necessary. I use the word "probably" because I have not the information to say "certainly". I have no reason to doubt that, if I had all the information, I would not agree that the powers are necessary. Our Acts are now complicated by all this both from the point of view of the interpretation to be taken by the Revenue Commissioners for implementation, for understanding by the taxpayer and by Members but, above all for speedy administration.

If this is the position why not face the problem now and introduce a general provision? The Minister should take the safer course, safer from the constitutional and legal point of view rather than from the executive point of view, and accept Deputy Colley's amendment. It could be accepted conditionally on the basis that the question of the powers of the Revenue Commissioners would be examined in an effort to find a general format. The Revenue Commissioners can be trusted and we should remember that our Constitution is a control. This is not necessarily the complete abdication it might appear to be on the surface because our Constitution provides for the judicial function. The guardians of the judicial function, the judges and the courts, are jealous enough of their prerogatives and duties in this area and they would be quick enough to apply their correction if there was on overswing to the Executive side from the judicial side.

One of the arguments against the Minister's provision—even Deputy Colley's amendment will not meet it —is that the multiplicity of these decisions will provoke or invoke legal action. I imagine there is more on the Revenue Commissioners' files of legal difficulties and points and the solution of legal cases by settlement or agreement than ever appear in the courts, but that fact should not delude us. It should not prevent us seeing that that fact arises fundamentally from the position where the courts stand in this. With the multiplicity of these provisions and the fine distinctions the administrative process is greatly complicated. Therefore, I shall be bold enough to say here : why not consider what general powers can be given to the Revenue Commissioners in a simple way realising that those powers, when they step beyond the administrative level, trespass the judicial province and, accordingly, will be corrected? Were it my function to appeal to our Judiciary, to our Supreme Court in a matter of this nature I would say that their duty would be to apply the principles and the matter might be solved. Perhaps that sounds somewhat abstract but sometimes to get out of the maze of words and practical difficulties in which we get involved in this type of thing appeal to principle is the best course.

Would the Minister not at this stage accept Deputy Colley's amendment as being the safer course, pending a broad examination of the situation from the point of view of the overall powers of the Revenue Commissioners under all these Acts, in the matter of getting information, of surmounting obstacles of evasion which, again, must be divided into two parts, first, the obtaining of information and, secondly, the use of technical devices to evade a provision? There are two things involved here. Let us take the question of the obtaining of information. If one can work out a simple formula which will work—again one must work in a practical way to achieve that—a great deal of heartache, and unnecessary energy expended on the files would be obviated and there would result a broader system of equity. In other words, one would control tax evasion more surely and avoid the danger of trapping the honest. There would also be a better understanding between the Judiciary and the Executive in these matters. That is my suggestion to the Minister. I do not know if it is acceptable to him.

Thank you, a Cheann Comhairle, for allowing me such latitude on what is a section. I hope the Minister will appreciate that I am not merely trying to talk in the House. I am making, I hope, a very serious and important point to him and, through him, to all others responsible and affected by this as a matter of some deep public importance.

Mr. R. Ryan

I have no objection to a great deal of what Deputy de Valera said. Of course, one does not wish the administration of tax to be oppressive or burdensome. There is little evidence that, in fact, the administration of tax law here operates in that way.

Major de Valera

I agree.

Mr. R. Ryan

Certainly, I would be as anxious as is the Deputy to keep a careful watch on the situation. If occasion should arise which would indicate that its operation had acted oppressively, I would be only too anxious to invite the Oireachtas to change the laws.

We are at present being asked to consider amending a section of the Finance Act, 1974 which was introduced for the purpose of ensuring that, as we were taking steps to stop tax avoidance by transfer of assets abroad, we would give the Revenue Commissioners sufficient powers to ensure compliance with the law. It would be pointless for Parliament to enact a law and not give anybody the power to enforce that law. What we have done is no more than is necessary to enforce it. I think Deputy de Valera may not have been here last evening when I cited some legal references.

Major de Valera

I know the Minister did but they were not sufficiently complete for me.

Mr. R. Ryan

I can go back to 1938. I have a whole brief on the matter here. In fact, I can go back to 1936, because the section in our 1974 Act is not dissimilar to what was introduced in Britain in 1936. The wonder is that we took so long to move against tax avoidance by the transfer of assets abroad. This is a practice which is engaged in by such people as have wealth surplus to their immediate requirements. I saw quite recently where a journal read by financial people in Dublin carried large advertisements for a special magazine which gives people advice as to where they can get the best return in 37 tax havens in the world. There has to be a perpetual surveillance by Parliament of actions taken by people with the intention of frustrating Parliament's intention. Every Finance Bill, almost without exception, includes provisions to close off loopholes which have been identified. This perpetual competition is an aspect of life that will always be with us.

Major de Valera

It will always be there as long as there are accountants and lawyers.

Mr. R. Ryan

I would agree with the Deputy—as long as they have clients with an appetite sufficient to try to avoid paying tax. Of course, at the same time, nobody is under any obligation to pay any more tax than the law requires. But, because of the need to ensure that avoidance and evasion do not reach unacceptable limits, the Legislature must strengthen the hands of the Revenue Commissioners. It could well be that in exercise of the powers under section 59 of the Finance Act, 1974, the Commissioners might get information which would not disclose a taxable liability. Nevertheless, if they have reason to believe that assets have been transferred abroad, surely it is proper that the Revenue Commissioners should take details of such assets because such assets, if transferred abroad and yielding an income, are liable to tax. There is tax payable on the income derived from assets located elsewhere. The Revenue Commissioners must ensure that there is a proper return in that situation, just as they have to ensure that there is a proper return of income from activities or assets within the State. We have said that there should be no difference between them. I think that is the correct attitude.

I accept that there is no difference of principle between us. There is a request that the language be softened so that it might appear better. But I am saying that section 59 of the 1974 Finance Act may be used by the Revenue Commissioners in a reasonable way only. Before the Legislature agrees to make an amendment in the 1974 Act we would want to have evidence that section 59 was being used in a way which was oppressive or burdensome. That evidence does not exist and case law is against the possibility of the section being used in an oppressive or burdensome way. I think that is the best way in which to leave it and not to be introducing language which, because it has not yet been——

Major de Valera

Tested.

Mr. R. Ryan

—— may cause more complications than we would wish.

Major de Valera

I must say the Minister's latter arguments are more compelling than were his first ones. In this context I would like to refer to two points he made. This is more in aid of my general suggestion than the specific amendment and may be out of order. He used the word "burdensome". I agree that the ordinary honest, straightforward taxpayer has not any real complaint. It should be borne in mind that the system is terribly burdensome now to the Revenue Commissioners. The burden of taxation is burdensome to all of us. But, as I said, the increased burden of a provision like this is on the Revenue Commissioners. The second point is about disclosing information. I know confidentiality is remarkable but the bigger the organisation and the broader its activities, the greater the difficulty of preserving the standards of confidentiality which exists and the greater the risk of information slipping out in an unwarranted way. This is a great risk in modern life in the business world.

This has nothing to do with what we are discussing in this House but I came across reams of computer material—it had nothing to do with State business but belonged to a private company—that had fallen out of a car which contained a great deal of information, including names. Naturally, I returned the papers as quickly as possible to their source. I could not help thinking that if I had been in that line of business—which I was not—there were a few interesting items in these papers. As I said, the bigger the organisation, the bigger its ramifications, the more its administrative problems are itemised by legislation and so forth, the greater the difficulties in that regard. In a nut-shell, Deputy Colley's amendment is preferable to what is in this section. I earnestly urge the Minister to consider the proposition I have outlined in order to avoid amendments and provisions of this nature as far as possible in the future.

I want to refer briefly to something the Minister said. He suggested that unless there was evidence that the section as it exists is being abused we should not amend it. I suggest that that is a wrong approach. Our objective ought to be to ensure as far as we can that it cannot and will not be abused. To do that I am suggesting this amendment. The Minister says it will make no difference. I believe it will make some difference. It may be slight. It may even be difficult to grasp the difference it can make. I am satisfied, and so is the Minister, that it will not in any way inhibit the Revenue Commissioners in the exercise of their duties under this and previous legislation.

The general proposition that the Revenue Commissioners may not act unreasonably is one thing but the proposition that they must, in relation to these particular sections, "reasonably require information" is different from "information which they think necessary". It may be a slight difference but there is a difference. There is a level laid down which enables an aggrieved citizen to get some protection from the courts, in my view, a greater degree of protection than would be available to him if the section is as it is and at the same time, without inhibiting the Revenue Commissioners in the exercise of their functions in any way. I, therefore, suggest that the Minister ought to accept the amendment on his own argument that he has nothing to lose. In those circumstances, to refuse to accept it smacks somewhat of unnecessary stubbornness. Again, I urge him to accept this amendment.

Mr. R. Ryan

As a lawyer, I am impressed by precedent. I would prefer to use the language that is tried and tested than to embark upon a sea of novel language. Briefly, I would like to draw attention to a number of cases so that any person who wanted to pursue this matter further will see where the support for my argument lies. They will also see that I am not engaged in something which is radical and dangerous. I refer to the case of Howard de Walden v. the Commissioners of Inland Revenue, 25 T.C. 121 (year 1941). There Lord Greene said :

The section is a penal one and its consequences whatever they may be, are intended to be an effective deterrent which will put a stop to practices which the Legislature considers to be against the public interest. For years the battle of manoeuvre has been waged between the Legislature and those who are minded to throw the burden of taxation off their own shoulders onto those of their fellow subjects. In that battle the Legislature has often been worsted by the skill, determination and resourcefulness of its opponents, of whom the present Appellant has not been the least successful. It would not shock us in the least to find that the Legislature has determined to put an end to the struggle by imposing the severest of penalties. It scarcely lies in the mouth of the taxpayer who plays with fire to complain of burnt fingers.

Again, there is the case of Latilla v. the Commissioners of Inland Revenue, 25 T.C. 107 (year 1943). Viscount Simon said:

My Lords, of recent years much ingenuity has been expended in certain quarters in attempting to devise methods of disposition of income by which those who were prepared to adopt them might enjoy the benefits of residence in this country while receiving the equivalent of such income without sharing in the appropriate burden of British taxation. Judicial dicta may be cited which point out that, however, elaborate and artificial such methods may be, those who adopt them are "entitled" to do so. There is, of course, no doubt that they are within their legal rights, but that is no reason why their efforts, or those of the professional gentlemen who assist them in the matter, should be regarded as a commendable exercise of ingenuity or as a discharge of the duties of good citizenship. On the contrary, one result of such methods, if they succeed, is, of course, to increase pro tanto the load of tax on the shoulders of the great body of good citizens who do not desire, or who do not know how, to adopt these manoeuvres.

That was a judicial and not a political comment.

In a dividend-stripping case in 1961, Johnson v. Jewitt, T.C. 40, 231, Lord Evershed said:

I am quite unpersuaded that these transactions can properly, fairly, or sensibly be called anything but fantastic to the degree almost, perhaps, of impudence. I am bound to say that were it otherwise, it would seem to me that the English law, and particularly the Companies Act would have been made mock of; and I only, on conclusion, express great regret that the engineer of this extraordinary scheme should be a member of the profession of solicitor.

Perhaps Deputy Colley and I should bow our heads. Judge Dankworth agreed with the previous view and said that the loss which was alleged to have been suffered was purely fictitious, that it was not trading but juggling with figures.

Mr. Colley

I do not quite get the point of these quotations.

Mr. R. Ryan

The point of these quotations is to illustrate the judicial view that Parliament is justified in taking action to prevent tax avoidance and tax evasion.

Mr. Colley

That has not been contested.

Mr. R. Ryan

No, but what was being contested in the cases in question from which I have read quotations from the judgements was the powers used by the Revenue Commissioners to stop tax avoidance and tax evasion. There were objections expressed that the actions were unreasonable, but the courts took the view that the Legislature was doing no more than discharging its necessary obligations to confer appropriate powers on the Commissioners of the Inland Revenue to ensure that the law is enforced.

Major de Valera

The Minister has made Deputy Colley's case completely. The Minister has told us two things : first that on the word "reasonable" the courts are decidedly in favour of equity and therefore lean towards the honest discharge of their duty by the tax collecting authority, that the Revenue Commissioners can rely on the sympathy of the courts, and, secondly, that that sympathy can be invoked fully and absolutely by the word "reasonable". The word "reasonable" was recurring there as it recurs in all these things. If the Revenue Commissioners can rely on the courts' sympathy in this matter and not only the courts but the vast bulk of the public, and if the most of the legislation and interpretations are based on the word "reasonable", then surely that is the word to use and not the phrase "think necessary", whether that formula has been tried out or not.

There are three of us here who have had considerable experience in arguing in the courts, and we know that when something is claimed, particularly by the State, which seems to be in the oppressive category—using the word "oppressive" more in the legal sense than in the accepted sense —then the court is apt to be suspicious at the start and to think that the provision is unreasonable. The Revenue Commissioners and their legal advisers need have no fear but that in this context of tax evasion and tax avoidance the word "reasonable" will be interpreted very favourably towards them. I speak subject to any dictum or interpretation that the Minister may produce, because we should not be just debating here; we are making legislation and trying to help in this. As I said, I was very impressed by the Minister's argument at an earlier stage, but is there not a danger that by using words like "think necessary" a court might be put on its guard and feel a little bit nervous about that formula and might be tempted to interpret it more narrowly against the Revenue Commissioners than they would Deputy Colley's formula? In the case that the Minister has cited, the sympathy of the courts is towards the tax collecting authority when the word "reasonable" is applied to their powers. Therefore, I say Deputy Colley's amendment is desirable, apart from the principles earlier adumbrated. The courts might consider the words "think necessary" unduly restrictive and the Revenue Commissioners might be better off with Deputy Colley's formula.

Mr. R. Ryan

Maybe there is something to be said for both sides.

Major de Valera

That is a point, and it is no harm to have debated it, but, on the basis of my last remark, I am more strongly in support of Deputy Colley now than I was at the beginning.

Mr. R. Ryan

The Deputy did accept the merits of using language which has stood the test of time.

Major de Valera

Of course, and the word "reasonable" is at the base of all that language.

Mr. R. Ryan

At the base of all legislation there is an assumption that the Executive will act reasonably.

Major de Valera

I do not know whether the words "think necessary" have been judicially interpreted. If the Minister can convince me of that, that modifies my opinion. I do not want to detain the House any longer with the argument, but if the Minister would have a serious look at the points that have been made——

An Leas-Cheann Comhairle

Amendment No. 18?

Mr. Colley

Is there any response to what Deputy de Valera has just said?

Mr. R. Ryan

I did not realise there was a further question being put.

Mr. Colley

What he was urging was that the Minister would have a serious look at the points raised.

Mr. R. Ryan

Yes.

Major de Valera

A serious look.

Mr. R. Ryan

Yes. I looked at it last year. I have looked at it again, and I shall keep looking at it.

Mr. Colley

That is not very hopeful. I do not think the Minister is acting reasonably but acting as he thinks necessary.

Mr. R. Ryan

I consider it necessary that I should think and act reasonably.

Mr. Colley

But he does not do it, unfortunately. The danger is, though this is unlikely, that some official of the Revenue Commissioners might be endowed with the same kind of mind and approach as the Minister in which case the necessity for this amendment would be seen clearly. However, it is clear that the Minister does not intend accepting the amendment and, consequently, I withdraw it.

Amendment, by leave, withdrawn.

Mr. Colley

I move amendment No. 19:

In page 18, to insert a new section before section 34 as follows:

"34—Section 59 (2) (b) of the Finance Act, 1974 is hereby amended by the substitution of `with respect to which the Revenue Commissioners or such officer as the Revenue Commissioners may appoint may reasonably require information' for `which in the opinion of the Revenue Commissioners or of such officer as the Revenue Commissioners may appoint it is proper that they should investigate'."

There is a considerable similarity between this amendment and No. 18 but there is also a difference. This amendment also relates to the same section of the 1954 Finance Act. Like the previous amendment it was tabled last year but was not discussed because of the guillotine motion used to terminate the debate on the 1974 Act. Section 59, subsection (2) (b) of the 1974 Act reads:

As to transactions which in the opinion of the Revenue Commissioners or of such officer as the Revenue Commissioners may appoint it is proper that they investigate for the purpose of sections...

My amendment proposes to delete the words "which in the opinion of the Revenue Commissioners or of such officer as the Revenue Commissioners may appoint it is proper that they should investigate" and to substitute for that "with respect to which the Revenue Commissioners or such officer as the Revenue Commissioners may appoint may reasonably require information." This is slightly different from the last one in that in this case the section refers to that which in the opinion of the Revenue Commissioners or an officer of theirs, it is proper that they should investigate, whereas the amendment proposes words to the effect "with respect to which they may reasonably require information." The object here is to try to provide a basis on which the courts may act in the case of an aggrieved taxpayer.

If the amendment is accepted any officer of the Revenue Commissioners who, perhaps for reasons of excessive zeal or otherwise, may be tempted to go beyond what is proper, would find that he must consider how the courts would interpret his action. I suggest that he would be less inclined to be concerned with the question of whether the courts would interfere with his activities under the section as drafted than he would if this amendment were accepted. There is no restriction involved on the legitimate activities of the Revenue Commissioners in their pursuance of the various sections. All I am proposing is the laying down of some criteria to which the courts could have regard in judging the activities of the Revenue Commissioners in their investigations in cases where taxpayers might complain of their activities and believe that they had gone beyond what was reasonably required for the execution of their duties.

I assume the Minister would agree that the Revenue Commissioners should not go and are not entitled legally to go beyond what is reasonably required for the execution of their duties. Therefore we ought to set that out clearly. By so doing in the way proposed in this amendment we will be making it clearer to the taxpayer who wishes to consult the law with regard to his rights and also, making clearer for the benefit of the courts, if they are called on to interpret the activities of the Revenue Commissioners in the light of this section, the standards required by the Legislature. The mere fact that this provision as amended would be in the law would tend to operate to prevent the over-zealous activities of the Revenue Commissioners which would amount to exceeding what is intended should be done by them in the exercise of their powers and duties in relation to transactions of the kind dealt with in the subsequent section.

Mr. R. Ryan

The debate we had last night and this morning applies in full to this amendment as it did to the previous ones. The same issues are involved. The question is that of the reasonableness of the actions of the Revenue Commissioners. The constraints or the propriety of any investigation are set out in the 1974 Act. The Revenue Commissioners may not investigate anything other than that for which they are given power in sections 57 to 60 of the 1974 Act.

If a person to whom notice is addressed considers himself aggrieved, that the Revenue Commissioners are overstepping their power, he can challenge the propriety of any such notice. Section 59 of the 1974 Act contains a safeguard to ensure the confidentiality of the relationship between solicitor and client. There is even a limit on the amount of information which the Revenue Commissioners may obtain from a solicitor, who is confined to giving the name and address of a client, of a transferee of the person concerned, of a body corporate involved, of a settlor or of some person resident or domiciled outside the State to whom assets are transferred for tax avoidance purposes. The wording of section 59 is taken from the statute of another country and has been well and truly tried for 39 years. Obviously there is merit in using language which has stood the test of time.

Mr. Colley

The wording is not precisely the same.

Mr. R. Ryan

There are slight variations. Language used by parliamentary draftsmen must change from generation to generation in the same way as generations tend to replace yesterday's orthodoxy with today's slang, which tomorrow becomes respectable. There is this continuing change in the use of words but, in effect, the wording we have used here is that which has stood the test of time and which achieves what Deputy Colley attempted to achieve in the amendment.

I should prefer to rely on the words which, as Deputy de Valera said earlier in relation to the other amendment, could be interpreted by the court more readily against the Revenue Commissioners than the wording suggested by Deputy Colley. However we should endeavour to be precise in our language and there is more precision in the Act of 1974 than in the amendment suggested.

Mr. Colley

The Minister referred to the provision in this section relating to solicitors but, with due deference, I think those remarks relate to the next amendment. This amendment relates to transactions which, in the opinion of the Revenue Commissioners or an officer they may appoint, it is proper that they should investigate. It is not confined to investigation of activities by solicitors.

The point made by Deputy de Valera on the previous amendment probably has some validity, and the Minister accepts that also: that it is possible that the amendment might result in a more favourable interpretation by the courts for the Revenue Commissioners. That is possible and I have no objection to that. What I am concerned with is that the Legislature should lay down clearly for the courts what the Legislature wants and not depend unduly on decisions, particularly decisions by foreign courts, on texts which are slightly different from the texts of this Bill. The Minister knows that a slight difference can make all the difference in the interpretation. I believe it is far preferable that we should lay down in the legislation we enact sufficient to indicate without any doubt that we want to ensure that the powers being given to the Revenue Commissioners are exercised reasonably, that the specific powers as in this case to investigate certain transactions, are exercised in such a way as is reasonably necessary for the purpose of carrying out the duties of the Revenue Commissioners under this legislation.

There is a certain risk in relying unduly on interpretations in other countries of statutes which are slightly different. The Minister may have available interpretations given by our own courts although he did not refer to them. I think any applications he referred to were in English courts and related to legislation very slightly different in wording, but the difference in wording could make a considerable difference in the application of the legislation here.

I see no valid objection from the Minister's point of view to this House spelling out clearly that what we want is to give these powers to the Revenue Commissioners but to make it clear that we are not giving absolute power to them, that we are not saying: "Anything you think should be investigated, you may investigate no matter what the circumstances." We want to say: "You may investigate anything which you reasonably need to investigate to carry out the duties laid on you by these sections." That is what both sides of the House want to say but it is not precisely what we are saying. We would approach much closer to that if amendment No. 19 were accepted.

Mr. R. Ryan

I cannot add to what I have already said other than that I have now checked the wording of the 1936 British Act and find it is on all fours with the wording to which Deputy Colley takes exception, that is that it requires the opinion of the Board of Inland Revenue and it would relate to matters which an inspector thought it proper that they should investigate. So, in fact, we have the value of the support of experience for the words we are using.

Mr. Colley

On the previous amendment when the Minister was quoting cases the wording of the British legislation is not precisely the same as that with which we are dealing. In the sections for which these powers are proposed to be given, sections 57, 58 and 60 the wording is not precisely the same as the corresponding sections in the British legislation although it is very similar.

Ruairí Brugha

It seems there is a distinction between "in the opinion of the Revenue Commissioners or of such officer as the Revenue Commissioners may appoint it is proper they should investigate" and what is proposed in the amendment. It is, of course, a matter of interpretation and lawyers interpret things differently. It seems to be pretty broad. The opinion of the board of the Revenue Commissioners may be one thing and the opinion of any officer could be something else. This is very similar to the previous amendment in regard to anything one thinks necessary. It would seem better if the Minister were to require the commissioners to spell out what they would think necessary. There was a debate in this House some years ago which ran into many days over the word "encourage". Here, there is a distinction between anything that one might think and Deputy Colley's amendment what may be reasonably thought to be—may reasonably require information. It is a matter of legal interpretation but it is important that the Minister should require that the matter should be reasonable at all times rather than that it should be— without any reflection on any officer— anything that any officer might think, bearing in mind that you would have different people carrying out the functions from time to time.

Mr. R. Ryan

I am unable to put the matter any further.

Mr. Colley

I suggest that is because the Minister has made up his mind that he will not accept the amendment no matter what arguments are put forward and that he had his mind so made up before he came in. That being so, there is not much point in prolonging the debate. Of course, we would be accused of delaying the Bill but the real cause of the delay is the Minister's unwillingness to consider the case put forward. I shall not press the amendment.

Amendment, by leave, withdrawn.

Mr. Colley

I move amendment No. 20.

In page 18, to insert a new section before section 34 as follows:

"34—Section 59 (4) of the Finance Act, 1974 is hereby amended by the deletion of all words after `business' to the end of the subsection and the substitution of `nor on a solicitor, barrister or accountant acting in his professional capacity to give any particulars whatever concerning any advice given by him to, or anything done by him on behalf of, a client'."

This also is an amendment which was put down to the Bill last year and which was not reached for the reasons I mentioned earlier. It is an amendment to section 59 (4) of the Finance Act, 1974. The effect of the amendment would be that subsection (4) would read as follows:

Nothing in this section shall impose on any bank the obligation to furnish any particulars of any ordinary banking transactions between the bank and a customer carried out in the ordinary course of banking business, nor on a solicitor, barrister or accountant acting in his professional capacity to give any particulars whatever concerning any advice given by him to, or anything done by him on behalf of, a client.

The purpose of this amendment is to ensure that the relationship between a solicitor, a barrister or an accountant and the client should not be interfered with in any way; the relationship between a solicitor and client is a matter that has received special legal recognition for many centuries. The Minister may say the information that may be sought from a solicitor, for instance in circumstances such as are envisaged here, is limited and certainly it is limited in a certain way in an earlier part of the section. There are two points: first, such information can be obtained by the Revenue Commissioners in other ways and, secondly, what would be lost if one were to interfere with the relationship of a solicitor and client—I am picking those two people as an example of what we are dealing with in this amendment— would far outweigh anything that could be gained by this section if it is amended.

The effect of interfering with that relationship is not merely what is done in the section. If it is done in this section it is only a matter of time until it is pushed further and further and such a relationship ceases to exist or to have any special meaning, particularly in law. The consequences are that a person will find he cannot consult with his solicitor for advice in regard to certain courses of action because even consulting for advice without taking action ultimately could be something on which the solicitor would be obliged to report.

The development of this kind of law may appear in the short term to benefit the Revenue Commissioners but, in fact, it is doing the exact opposite. Apart from the much wider implications which apply far outside this measure, if the people whom these sections are designed to get after are of the belief that consulting their bank, solicitor, accountant, or a barrister through their solicitor, will mean that information concerning their activities will be given to the Revenue Commissioners by these people, naturally they will not consult them. Any possible advantage that might have been envisaged disappears because such people will ensure that the activities they engage in will be unknown to their solicitor or their bank.

There is a grave danger here but I suspect the Minister has not grasped it and this is illustrated by something he is proposing to do in other legislation before the House. There are a number of trusts which have been set up in this country, whose sole purpose is to ensure that the tax to be derived is paid to the Irish Revenue Commissioners and not to foreign revenue commissioners. That is their sole purpose and yet the effect of a proposal before the House will be that they will be closed down and the revenue will go to other countries. I am mentioning that to try to draw the Minister's attention to the fact that what may appear to be something that will aid the Revenue Commissioners may do a great deal more damage than any benefit that might accrue. I believe that would be the result in this case.

The advantage to the Revenue Commissioners involved in the section is, to say the least, minimal and that is as high as I can put it. I do not think there is any real advantage but if there is it will be minimal. However, the disadvantage to the Revenue Commissioners ultimately will be far more than minimal, it will be very extensive. In the meantime the whole question of the relationship of solicitor and client will have been attacked and undermined and that has implications far outside any Finance Bill or any activity of the Revenue Commissioners. It can extend right across the board to the various activities in which our citizens engage, whether under the purview of the criminal or the civil law.

It may be said it is a gross exaggeration to talk in these terms when the section does not deal with such matters. The Minister should know a frontal assault on this relationship would be unsuccessful but a small assault on just one section of the relationship can be followed up by an extension of that beachhead further and further until the whole relationship and its position in law is eroded. Therefore, it is our duty to resist any such encroachment, in particular to resist it when the alleged excuse for it —in other words, the benefits that may accrue through the Revenue Commissioners getting certain information—is artificial and fictitious. There is no benefit for the Revenue Commissioners from what is provided here in regard to the information that can be sought. It is fictitious, something which will have no practical benefit for the Revenue Commissioners but which provides the beginning of the erosion of the relationship particularly between solicitor and client but also between banks and their customers. Both are vitally important not alone from the point of view of the rights of citizens but, in the case of a bank and its customers, to the effective operation of our economic system.

We ought to be extremely slow in doing anything that would interfere with that relationship: we should be certain that what is being done is essential and that there is no other way of approaching the problem. Even then, one should hesitate before touching these relationships. In this case, the alleged justification for it does not exist. There are subsections of this section which appear to play down the information that can be required, but when you examine them there is nothing involved. The Revenue Commissioners can get the information otherwise and it appears to me to be a very thin excuse for what comes later, what amounts to an attempted erosion of the relationship between solicitor and client and bank and customer. It is misguided to have the sort of provisions we see in this section.

Mr. R. Ryan

One would think from what Deputy Colley has said that section 59 of the 1974 Act did not provide special protection for relationship between solicitor and client. Of course it does. It specifically guards that relationship. It would be very interesting for any student of parliamentary manners to study why it is that emotion seems to spurt out of the mouths of Members of Parliament when seated in Opposition benches and that realism tends to be the order of the day on the part of those in Government benches. That is part of the parliamentary experience.

I wish to make clear what the position is in relation to the provisions of the 1974 legislation. The section Deputy Colley is seeking to amend provides for a limitation of the information to be given by solicitors to the Revenue Commissioners. No professional gentleman is entitled to any privilege whatsoever other than the privilege of his client—no solicitor may go into court and seek privilege for his own protection. He may claim, and the court grant, privilege in relation to the protection of his client's interest.

The people against whom this section is directed are those who are believed to be engaging in tax avoidance, who are failing in their statutory obligation to furnish information to the Revenue Commissioners, and it would be totally wrong for Parliament to allow any person who has an obligation to pay tax to shield behind a professional adviser. That would be making a mockery of legislation, it would be creating a pretence of having an efficient tax system which could not be seriously entertained.

Under the existing general law, lawyers, whether solicitors or barristers, are allowed to claim that information supplied to them in the course of consultation enjoys the privilege of confidentiality, and advice given by lawyers is under the general law and under the 1974 Finance Act absolutely privileged: no lawyer can be called on to give details of the advice.

Mr. Colley

Therefore, no person may hide behind his professional adviser?

Mr. R. Ryan

Advice is one thing, information is another.

Mr. Colley

Can we stick to what is in this section?

Mr. R. Ryan

The Deputy is seeking to insert the word "advice". The amendment states:

`nor on a solicitor, barrister or accountant acting in his professional capacity to give any particulars whatever concerning any advice given by him to, or anything done by him on behalf of, a client'.

Advice is not something which the Revenue Commissioners can demand particularly. They may demand in respect of solicitors only the names and addresses of the transferor or transferee associated in certain operations, in other words the names and addresses of persons engaged in tax avoidance practices, so that the Revenue Commissioners may then go after the people themselves in the same way as they would pursue any person who is liable for tax. I use the word "pursue" not in the sense of giving chase but in the sense of contacting people who have an obligation to furnish information.

The only information being sought is that which would identify persons who may be liable. That is all. The professional person need not furnish any information unless and until the person concerned has the authority of his client to do so.

The traditional privilege between banks and their customers in relation to transactions between them is also well established in law. Because of the privilege that obtains between solicitors and their clients and banks and their customers, subsections (3) and (4) were inserted to protect that privileged position. To that extent, therefore, the Deputy's amendment in relation to advice given by a solicitor or barrister is met and is clearly seen to be met. Where, however, a solicitor has acted in connection with the actual transfer or any associated operation, then he must give the particulars I already mentioned, the names and addresses of persons involved.

I mentioned last year in the Seanad that I was disappointed the solicitors' profession did not acknowledge that their position was being protected under the Act. Instead, some solicitors, and Deputy Colley today, have done a public disservice by insinuating that there was improper interference with the confidentiality that should exist between solicitors and clients. Our neighbours in Britain are no less jealous of the confidentiality of relationships between solicitors and clients. There has been no lack of trust in solicitors or barristers in England where the section to which such emotive exception has been taken here has been in operation for 39 years. Both Parliament and courts in England have said that it was a duty of everybody to pay a fair share of tax and that Parliament had a duty to ensure that consultation with professional people did not give a protection which ordinary citizens did not enjoy. The unrealistic nature of the criticism levelled against the provisions of the 1974 Act is illustrated by the fact that whereas Deputy Colley and some others on behalf of the solicitors' profession said that the section is unacceptable, the Institute of Chartered Accountants have sought to have applied to them the very exceptions and privileges which the section confers on solicitors. It would be strange, if it was challenging a confidential relationship, that accountants should seek to enjoy the same privileges as have been conferred on lawyers by the section.

Mr. Colley

Privileges were not conferred. Privileges were taken away by the section. In the case of solicitors the privilege existed and the Minister knows that.

Mr. R. Ryan

Subsection (3) specifically limits the information which can be obtained from solicitors.

Mr. Colley

And without the section no information could be obtained from solicitors. Is that not right?

Mr. R. Ryan

The legal profession, like every other profession, have a duty to tell their clients what the legal position is and that duty involves informing clients if steps about to be taken by them infringe the tax law. I am sure the Deputy would not wish to put the integrity of the solicitors' profession in doubt by suggesting that they should facilitate tax evasion.

Mr. Colley

The Minister should be quite clear on this. He is talking about solicitors advising clients to break the law. Can he not visualise a situation in which they are advising them as to what the law is and how to comply with it?

Mr. R. Ryan

Yes, I have said that it is the duty of a solicitor to tell the client what the law is and that any action which he intends to take which is against the law is against the law.

Mr. Colley

Or is not against the law, if it is not.

Mr. R. Ryan

Yes. That is a solicitor's professional duty and that is what he is trained to do. Deputy Colley used the word "accountant". The word "accountant" like the word "engineer" covers a multitude of activities. "Solicitor" is defined by law. They are the only profession to be statutorily defined as gentlemen. It has been said that was necessary or it would not be accepted. "Barrister" is also clearly defined by law. "Accountant" is not defined by law and if one includes accountants should one debar tax consultants, tax practitioners, some of whom may not have an accountancy qualification of any kind? The word "accountant" could be extended to book keepers just as "engineer" is a title sometimes assumed by mechanics. It is much too loose a term to use in a statute apart from other reasons why it should not be included at all. The law does not recognise that the same degree of confidentiality exists between accountants and their clients. The legal profession have a privileged position because it is the privilege of the clients which is being protected. That cannot be extended to activities which involve tax evasion and we could not contemplate extending to the accountancy profession a privilege which does not apply to the legal profession nor could we entertain at this stage or in a Finance Act the question of what should be the appropriate area of confidentiality existing between accountants and their clients. If there is to be legislation to counter tax avoidance by means of transfer of assets abroad, the Revenue Commissioners must be empowered to seek information to enable them to establish whether an avoidance operation has taken place. That is axiomatic. I trust nobody in the House would challenge that.

As I said, the information which the Revenue Commissioners will seek under section 59 ought to come from the taxpayer himself. If he employs an accountant or an agent to look after his tax affairs and to deal with the Revenue Commissioners on his behalf, there is no reason why the information, which in the ordinary way would be sought from the taxpayer, should not be sought from and given by his agent. There is no question of the accountant or the agent being required or expected to give the information without the taxpayer's knowledge. If the Revenue Commissioners seek information about tax avoidance operations from an accountant or agent, the accountant or agent will undoubtedly so notify the taxpayer and inform him that there is a legal obligation on him to furnish the information requested.

If a taxpayer sets out to plan a tax avoidance device it would be expected that, in the course of the planning operation, his accountant or agent would advise him that the Revenue Commissioners were likely to look for information about the operation. In the light of the purpose of the legislation, it is difficult to see why the Legislature should set up any barriers or obstacles to the implementation of the legislation by authorising a taxpayer's agent to withhold information or to refuse to give information in relation to avoidance operations.

For these reasons I cannot accept the Deputy's amendment which would simply open the door to avoidance and evasion a year after we took action to close the door. The undersirable possibilities which Deputy Colley has illustrated here have not materialised in Britain in 39 years. I do not expect them to materialise here. Considerable benefits have accrued to the Exchequer and consequently to the general body of taxpayers, because loopholes which facilitated avoidance by transfer of assets abroad were closed and because the information net had a smaller mesh and was cast further. That is what this section in the 1974 Act achieved. It ensures a better supply of information.

No person who is not liable to tax has anything to fear from the powers given to the Revenue Commissioners to collect information. The only person who may be disappointed if the sources of information to the Revenue Commissioners are improved are people who have a liability to pay tax and who avoid it by withholding information which they have a clear statutory obligation to give and, indeed, a moral obligation as well. Democracy has long since asserted that every person should pay his fair share of tax. Democracy requires that the Legislature will provide the means whereby the Revenue Commissioners can ensure that everyone pays a fair share of tax. If we failed to give them that means we would be engaging in a sham and, quite frankly, I am not prepared to do that.

Mr. Colley

The Minister said this amendment would open the door to avoidance and evasion. I am quoting his exact words. That is nonsense. Evasion is always illegal and nothing in this section or this amendment affects in any way the position in relation to tax evasion. In regard to tax avoidance, when I was proposing this amendment I mentioned that I believed that the information which is being sought here from solicitors is available to the Revenue Commissioners anyway from other sources. Of course, it is perfectly obvious that, in order to be in a position to put a question about a particular taxpayer to a particular solicitor, the Revenue Commissioners must have something to go on. They can put the question to the taxpayer and, if he gives false information, he leaves himself wide open to very serious penalties.

I indicated that I was not particularly tied to the wording of the amendment. I am conscious of the difficulties in regard to the definition of "accountants". The Minister is welcome to any point he wishes to make on that. What the Minister is glossing over very carefully is the fact that this section as a whole, without this amendment or something on these lines, is taking away existing rights, existing privilege in the legal sense. He spoke as though it were granting such. Of course, it is not doing any such thing and the Minister knows that as well as anybody else.

For very good, sound, historical and legal reasons, the relationship of a solicitor and client has a special position in law. It is true, of course, as the Minister says, that a lawyer has no privilege himself beyond the privilege of his client. That privilege was built up for good reasons over many years. When I hear the Minister saying he presumes everybody will accept the proposition that, in order to tackle tax avoidance, privilege of that kind must not be allowed to stand in the way, I wonder has the Minister thought about what he is saying and what he is doing.

If someone commits murder and consults with a solicitor and discloses what he has done in the course of his consultation with his solicitor, I assume the Minister does not believe that the solicitor should there and then report the matter to the Garda—or does he? The position in this regard has been built up over centuries with the experience of what can happen. The proposition that a solicitor—and I am taking him merely as an example; it extends further than that—who receives information in the course of his professional duties is obliged to hand over that information to the authorities is a most dangerous proposition.

This is the thin end of the wedge. Without this section the information sought could not be obtained by the Revenue Commissioners. The Minister seeks to justify it on the grounds that we are all against aiding tax avoidance. We are all against a great many other things too and yet the privilege of a client who consults his solicitor is preserved in law, and is jealously preserved. If the Minister has his way, there will be another section which will go further and it will all be justified on the grounds that we are against tax avoidance.

There should be no misunderstanding of the position. This section is taking away rights which exist in regard to the relationship of a client to his solicitor. It is taking them away and whittling them down. It will be extended further if this is allowed to go on. The Minister may talk about the position in Britain. I am subject to correction but I think the provisions are not precisely the same but, even if they are, I assume the Minister knows what has been happening in Britain and that certain kinds of activities have developed which do not exist in this country which aid and abet tax avoidance. The Minister is devising a formula here for the hothouse growth of such kinds of activities in this country. He is driving people into that position. That is precisely what will happen. He will get no information of any value whatever from this section. He will create a situation in which people will not go to their solicitor, or their accountant, or their bank, and the Revenue Commissioners will know far less about what is going on than they do at the moment. They will be far less effective in getting after such people. It will go totally under ground with a number of undesirable consequences flowing from it.

The Minister should know of some of the things that have happened in Britain as a result of this kind of legislation. He will have to reconcile himself to the fact that, in this perennial battle between those who are trying to avoid liability for tax—I say avoid, not evade; that is a different proposition— and the Revenue Commissioners, there are no final victories. It goes on and on. If the Minister pushes the situation too far, as I believe he is doing here, he is so altering the ground rules that these people are getting out from under the ken of the Revenue Commissioners. If it is not pushed too far the Revenue Commissioners can at least become aware of what is happening and close the loophole. People will open further loopholes, but that is getting more and more difficult. When you try to get information which is of no use to the Revenue Commissioners anyway by undermining the relationship between a client and a solicitor, as is being done here, all you are doing is driving the whole thing completely out of the ken of the Revenue Commissioners. You are losing out on a number of scores, and what have you got to show for it? A section which says the names and addresses of people involved in those transactions are to be given to the Revenue Commissioners by the solicitors concerned. Is this rational? Is this a real approach to this matter?

Is the Minister seriously suggesting that this section will aid in any way the efforts of the Revenue Commissioners to get at people who have indulged in tax avoidance? Does the Minister not know that these provisions are totally ineffective in so far as they relate to people who do not want to be caught? He must know that from his own experience and, if he does not, then if he consults with some of his former professional colleagues, they will tell him very quickly what is happening. This is totally ineffective but there is a price being paid for this ineffective result, a price which could be very high in the future. The price relates to the privilege of a client who consults his solicitor—a privilege which has been preserved over centuries for very good reasons—and if that position is eroded the rights of citizens under the criminal law as well as under the civil law will disappear. To say that this is going too far, that it is an exaggeration, may appear to be plausible, but the Minister must know that this section is taking away existing rights and if this is allowed to go unchallenged then it will only be a matter of time until it is carried further. If that can be done, then why not further again? If the justification for taking away these rights can be the duty of everbody to assist in preventing tax avoidance, are there not very many other far more compelling reasons which can be put forward from the point of view of civic duty, far more compelling than that, which would justify further erosion of this position?

I would ask the Minister not to take this step on this slippery slope and not to try to justify it by talking about an obligation to assist in combating tax avoidance because, if that is a good enough reason for taking away these rights, I can give him ten times more compelling reasons for taking away far more rights and we will then end up with no rights at all. A very dangerous precedent is involved in this section. It is one which, as the Minister said, has been resisted by many solicitors. It is not being resisted by them because they have any privileges. They have no privilege—it is their clients have the privilege— but they know better than anybody else what this kind of step can lead to in the long run. I repeat that the value of this step to the Revenue Commissioners is minimal but the implications of taking it and attempting to justify it are enormous. I am disappointed that the Minister has not seen the full implications and I do not want it to happen that this House would allow a section like this to pass without clearly enunciating the dangers involved and, in so far as it can be done on this side of the House, resisting this encroachment and the implications of the encroachment.

It happened last year that we never got a chance of discussing this matter. That is why I put down this amendment because I regard it as vitally important that we should get a chance here of discussing this matter and its implications and make our position as clear as possible.

Mr. R. Ryan

One man's evasion and another man's avoidance increases the tax others have to pay.

Mr. Colley

Do not equate the two. It is very dangerous.

Mr. R. Ryan

Would the Deputy hear me out? I do not share the high moral disposition some people have in regard to differentiating between evasion and avoidance.

Mr. Colley

Ah, I see.

Mr. R. Ryan

Would the Deputy hear me out? Many forms of avoidance are no more than operations by the clever to avail of weaknesses in administration or imperfections in the language of the statute to frustrate the clear intention of the Legislature to collect tax arising out of certain profits or capital possessions. I do not think Deputy Colley would deny that. If I am wrong in that contention, why is it that one Finance Minister after another year after year used the Finance Bill to stop avoidance practices? Avoidance is not a transgression of the law but not infrequently it is a brutal bending of the law. It conforms with the law because it slips in between the dot above the "i" and the "i" itself. Many of the practices of avoidance by means of transferring assets abroad are such as to run so close to evasion as to be properly termed evasion. Indeed, since the 1974 Act obliges people to pay tax on income earned from assets abroad, not to do so is evasion and it is illegal. I will not accept that it is contrary to practice and that there is an encroachment on the necessary confidence which exists between clients and their solicitors. I would equally refuse to accept, speaking as a lawyer as well as a parliamentarian, that lawyers should permit their professional status to be used for the purpose of evading tax. If that were to happen—it has happened to some extent—and if it were to encourage or facilitate evasion then the whole standing of the legal profession would come under a cloud.

As far back as 1939 the same arguments Deputy Colley makes were produced in the British House of Commons when similar provisions were being discussed. I was glad to note, however, that there was less emotionalism and more realism in the criticisms offered then in the House of Commons. The Solicitor General replying to the criticisms had this to say:

...we are dealing here with an area where we are trying to prevent tax evasion by the transfer of assets abroad, and the Clause is really purely declaratory of the existing law. It suggests that certain particulars must be furnished by persons or by their agents in relation to these transactions so that the transactions may be identified. Subsection (2) to which the Amendment of the hon. Gentlemen applies preserves for solicitors the privilege that they enjoy at present. The only information that the Commissioners may request from solicitors will be information as to names and addresses and nothing else. They are not required to disclose documents or the instructions that they have received. This is a privilege which the profession of solicitors enjoys under the existing law by reason of a long history of case law. The accountants enjoy no such privelege under the law.

The hon. Baronet is asking for a privilege for accountants which no other agent would be permitted to have, and which solicitors only enjoy by reason of the existing law. Privilege is a valuable thing to conserve, but it is a very dangerous thing to extend. Privilege by its very nature means the obstruction of the truth. It is a barrier between the investigation of the truth and the actual arrival at the facts. It is not easy to justify in an area where you are dealing with deliberate evasion, and were it not for the fact that the privilege exists enabling a person to go to his solicitor for advice, and while it might be difficult to justify it, I should find it impossible to stand here and justify its extension to one particular kind of agent, who, in many cases, is the very man from whom you want to find out what he knows about the transfer of assets abroad.

I believe those words can be used with as much justification in 1975 as they could be used in 1939. We can also use them with the value of the experience of what has happened in Britain in the intervening years. Confidentiality has been maintained between solicitor and client. The Exchequer, the general body of taxpayers, have not had to bear the enormous costs of some avoidance practices which would have gone unchecked if that power were not there.

If we want to discourage people from running contrary to the spirit of the legislation as well as to the letter of it, then we must ensure that if we are imposing obligations to pay tax we provide the Revenue Commissioners with the means to enforce those obligations. If we fail to do so then we are continuing an unjust system in which the person of small means, who is an employee working for an employer who supplies information about the income would have to pay his or her share of the tax while the clever and the rich, engaging consultants, could shelter behind them and avoid paying their share. That is not a desirable thing to happen. It need not happen as long as the powers conferred in the 1974 Act are not tampered with.

Mr. Colley

Surely the Minister is not serious when he says that?

Mr. R. Ryan

I am saying the anti-avoidance action of the 1974 Act will ensure that, to a greater extent than was possible before then, the clever and the rich will not avoid their fair share of tax. I am prepared to acknowledge now, as on many other occasions, as Deputy Colley said, that the battle of the Revenue Commissioners against tax avoiders and evaders will go on forever. There will never be a victor. At most there will be a pyrrhic victory on one side or the other or a short-lived one. As the courts have said on numerous occasions, people who engage in avoidance practices must accept that as they engage in them they are likely to suffer sooner or later the wrath of the Legislature, which will take action to prevent the continuance of the avoidance.

People who engage in avoidance do so knowing that one of the occupational hazards is that legislation may be introduced to destroy their fun. It has to be introduced, not for the sake of being a kill-joy of the person engaged in avoidance practices, but out of a sense of fair play to the general body of taxpayers who have no opportunities of avoidance, no discretion in the matter and no knowledge or skill which would enable them to avoid paying the full share of tax which the Legislature intended them to pay. The people against whom this section is directed, the people engaged in the transfer of assets abroad, have a liability under the law now to pay tax. This is one of the necessary weapons that must be given to the Revenue Commissioners to ensure that obligation is complied with. Failure to do so would create a sham, as I said earlier, and I could not be a party to that.

Mr. Briscoe

I recognise it is the duty of the Revenue Commissioners to collect as much tax as they can. I appreciate they are told from time to time by Ministers to be less merciful than they might be if there was a better economic climate. Pressure is very often put on them to be a little bit harsh.

Mr. R. Ryan

That is not so. The Revenue Commissioners act independently.

Mr. Briscoe

I am left with nothing else but to believe this because of the kind of legislation which is before the House now. The Minister said he morally sees no difference between tax evasion and tax avoidance. In fact the basic difference is that one is illegal and the other is legal. It is illegal to evade and it is quite legal to avoid.

I do not think there is anything wrong in a person seeking advice on how to make his or her tax return. The Revenue Commissioners can be co-operative but it is not their job to tell people what they can claim relief on. In my view there is nothing whatsoever wrong in a person going to a tax adviser, who very often is a solicitor. If the Minister was out of government tomorrow and back in his practice or decided to give up politics and went back to his practice, would he refuse to act in an advisory capacity on a tax matter with a client? From what he has said here it seems to me he would refuse to talk to any client about how he might avoid a heavy bill for tax because he equates it with tax evasion.

I believe, having listened to Deputy Colley and others, that the Minister will breed a new kind of shyster lawyer, a person who will not comply with the will of the Legislature in this instance. A number of companies will probably start business because they see a profitable venture in being tax advisers. They may even be outside the country, where clients could go to consult them. Those companies would be authorities on particular tax systems throughout the world.

I want to make it quite clear that I believe as earnestly as the Minister does that people should pay their just taxes but I think it is wrong to state that a person is morally wrong if he seeks ways and means of avoiding tax payments. A lot of the big taxpayers wish that the tax system was as simple for them as it is for the PAYE people who get their wages after tax has been deducted and have no worries about income tax later on. It is important to stress here that it is not immoral for anyone to seek advice on tax avoidance. I believe in the Bible it is considered not to be a sin. The Minister should give further serious consideration to the situation in which he is putting lawyers. They are honest for the most part. I do not think there is profession that is free of its rogues. We have the good and the bad in every profession but in the main lawyers serve their clients well and they should be encouraged to do so by not divulging what is primarily a matter between the lawyer and his client.

Ruairí Brugha

The difference of opinion between Members on this side of the House and the Minister seems to hinge on the belief on this side that different professional categories will be required to disclose information on behalf of their clients. The Minister says they are not. The Minister agrees with Deputy Colley that the battle will go on. He said that Ministers for Finance come to this House annually and try to add to the number of means of closing loopholes. That is correct and it is the function of the Minister on behalf of his financial and legal advisers in the Revenue Commissioners. On reading subsection (4) of section 59 of the 1974 Act it seems that the Minister is requiring professional organisations or people to provide information.

If the Minister requires this, I believe that organisation will cease to carry out the function. It is correct that the Commissioners have the power to require any person to disclose information regarding tax evasion but the argument here is whether it is right for the Minister to give the power to require professional people to disclose information. Deputy Colley's argument is that that is what is required here. Professional people have to retain the confidence of their clients. In effect, if our argument is correct, the professional person, a solicitor or counsel, will have to say to the client: "I do not want to know." How can a solicitor who has traditionally acted on behalf of his client continue to do that if he also must act on behalf of the State? There is a conflict here which has not been resolved by the Minister. He is acknowledging loopholes have to be closed and that he is justified in trying to do that from year to year as his predecessor did but he seems to be admitting also in his argument that in order to close the loopholes he is requiring people in a professional capacity to disclose information which is traditionally confidential. If the Minister is not doing that, I do not see any fundamental argument against Deputy Colley's amendment.

The power is with the Revenue Commissioners at any time to direct an individual or the responsible officer of any corporation to disclose the information they want. Does the Minister not see a difference between a responsible officer or a person who is engaged in activities which the Revenue Commissioners wish to bring to an end and the person who is employed in a professional capacity, a solicitor, accountant or barrister, to advise an organisation, company or an individual?

Mr. Colley

Deputy Brugha put his finger on the point I was trying to convey earlier when he said that this kind of section put professional advisers in the position that they just did not want to know. That summarises the position. The Minister should consider the consequences. What happens if the professional adviser does not want to know? Where does the client go then? The Minister is taking a shortsighted view of this.

Earlier I suggested to the Minister that he should not equate evasion with avoidance but he went on to explain that that is precisely what it does.

Mr. R. Ryan

I said it was very difficult in some forms to differentiate between evasion and avoidance.

Mr. Colley

I put it to the Minister that that is a most dangerous doctrine and he should disabuse himself of it quickly. If we reached the stage where we do not distinguish between evasion and avoidance, in particular if the Minister for Finance does not, we will have reached a stage where somebody vested with authority by the people is trying to say that something which is a breach of the law is in exactly in the same category as something which is not. If the Minister thinks this is high-faluting theorising I will give him an example which I hope will bring home to him that it is more than that. The Minister recently indicated his intention of taking the EEC Regional Fund and using it in the Exchequer. The Minister may be within the letter of the EEC directive in doing that but clearly he is in breach of the spirit. I suggest to the Minister that that is a perfect analogy of the Minister engaging in avoidance, not evasion.

If the Minister's theory is to be accepted, he should be treated as being in breach of the EEC directive because he is engaging in evasion. I hope that example brings home to the Minister the dangers of the doctrine he is advancing; that it is the same whether one breaks the law or not if, in the view of the Minister for Finance, the things one is doing are equally reprehensible. It is true that some avoidance activities are reprehensible. I have no doubt about that. Nevertheless, to try to say that they are to be regarded and treated in the same way as matters which are in breach of the law is a most dangerous doctrine. I would urge the Minister very strongly to get that idea out of his mind or we will run into a great deal more difficulty than we have in the past.

In a number of things he said the Minister suggested that there is nothing in this section that is not in accordance with the law as it has obtained. I want to put to him that if this section did not exist the Revenue Commissioners could not, and would not, seek information from solicitors, for example, which they now seek and obtain under this section. If that statement is true, then this section is not a restatement of the law. As I said earlier, it is an encroachment on the existing privilege, a privilege which, as the Minister correctly pointed out, is one of the client, not of the solicitor. If it is an encroachment, if it is being sought to be justified by the Minister on the grounds that it tackles tax avoidance—which, in his view, is the same as tax evasion; in other words, a breach of the law— then how on earth is there any basis for saying that that privilege has any right to existence at all?

Logically, should it not be abolished rather than, as I indicated earlier, enable people who are guilty of crimes to be more easily and conveniently convicted by the State? In fact, taking what appears to be the Minister's point of view, the existence of this privilege is unjustified socially in so far as it is a hindrance to the prosecution of offences and, in some cases, may indeed assist people in avoiding liability for their offences. That is the logic of what the Minister is saying. That might appeal and make sense to a number of people who do not understand the implications and importance of the existence of the privilege. But there is no such excuse for the Minister because he is, by training, a lawyer. He knows just how important is that privilege to the rights of the citizen and the maintenance of democracy. It extends to a far wider field than this Bill or any matter to do with the collection of taxes and the avoidance or even the evasion of taxes. It is a much more fundamental matter than that and the Minister must know this.

I am extremely disturbed to hear the Minister put forward the kinds of arguments he is putting forward to justify this. It is one thing if the Minister says: "Look, what is being done here is of minor importance", but if he tries to justify what is being done on the grounds that everybody has an obligation to assist in tackling avoidance of tax, then we are getting into much deeper water altogether. When the Minister adds to that some forms of avoidance which in his view are exactly the same as evasion and are to be treated similarly, then the matter becomes more serious. The implications of the Minister's thinking are extremely disturbing. This seems to me to represent a total disregard of the rights of citizens. One cannot justify ignoring the rights of citizens by saying: "Look, we are dealing with people who are avoiding liability." What the Minister is saying is that we are dealing with people who are acting in accordance with the law. As he said, they may be bending the law. They may be very clever and may have advisers who are very clever assisting them in doing this but, because what they are doing is reprehensible and, in the Minister's view is the equivalent of breaking the law, he is advising the doctrine that everybody has the obligation to get after these people irrespective of what that costs in the way of citizens' rights, in the way of the loss of the privilege attaching to the relationship between solicitor and client built up over centuries for the protection of the individual and the citizen.

The Minister could not have thought out the implications of what he is saying or he would not have said what he did because from his own professional training he knows the importance of this matter. I want to suggest again that the information, in the case of solicitors, which may be obtained under this section is that available otherwise to the Revenue Commissioners. The actual information being obtained from solicitors under this is virtually useless to the Revenue Commissioners. That is not the point. The point is, if one can justify this encroachment on the grounds put forward by the Minister, then one can justify much greater encroachments on much more compelling grounds. Once we start on that, there is no end to it. The Minister cannot even justify it on the grounds of the necessity to obtain this information.

Before the Revenue Commissioners would even seek to obtain such information from a particular solicitor they would have to have a particular client in mind about whose activities they wanted information. If they have that, they are going to get no information from the solicitor that is not available to them in other ways. Yet, we have this serious encroachment, serious in its implications, being built into this section for purposes totally ineffective so far as the Revenue Commissioners are concerned.

In my view it is completely unjustified. As I indicated earlier, I am not tied to the wording of the amendment. The reason for the amendment is to try to indicate as clearly as we can that we do not support any action which is designed, for whatever reason, to erode the importance of this relationship to the citizen and to his rights.

Mr. O'Malley

I want to support this amendment and what Deputy Colley has said. This amendment, in substance, is almost precisely the amendment which he and I had down to the Finance Bill last year, which in fact was never discussed by the House or taken because the whole second half of the Finance Bill was guillotined through by the Government without any discussion, coming up to the end of July, after there had been an abnormal delay in the publication of the Bill. It illustrates the danger of not discussing Bills of this nature adequately in the House because that section we sought to amend last year got through. We are now, on this year's Bill, endeavouring to amend it by changing the wording, as has been suggested by Deputy Colley. Unfortunately this is a Committee Stage of a particularly complicated Finance Bill. It creates no public interest. At the moment there is nobody in the Public Gallery. There are probably one or two pressmen here. As a general rule they do not report more than a few lines of what is said on the Committee Stage of a highly technical Bill, such as the annual Finance Bill.

I want to point out to anyone who might read the Official Report of this debate that the principle which Deputy Colley and this party are seeking not to establish but to uphold, is one of the most vital, fundamental principles that has run through our way of life, not just since Independence but long before that. It was recognised for centuries in the common law that there were certain people to whom ordinary citizens could go for advice and could open up their hearts about their problems and troubles. The ordinary citizen had confidence that, come what may, whatever he said to his solicitor, barrister, confessor, doctor or anyone else in that position, that confidence would never be broken.

Under a statute of the Oireachtas brought in last year by the Minister for Finance, that confidence and trust can no longer be regarded as being in accordance with the law. If a solicitor, accountant or barrister does not disclose what was told to him privately on a totally privileged and confidential basis by his client, he will break the law. Deputy Colley validly pointed out that this is simply a matter which is sought to be remedied in the eyes of the Minister by section 59 of the Finance Act, 1974. This is simply a matter of tax avoidance. It is regarded by the Minister as so serious from the point of the view of the State that he is prepared to force this House to legislate against the retention of that confidential and privileged relationship.

I want to suggest to the House, and in particular to the Minister, that if he retains only one per cent of the liberal traditions on which he prided himself when he sat on this side of the House, to reflect on the significance of what was done in section 59. If the State feels entitled to legislate away this confidentiality and privileged relationship in relation to a comparatively trivial thing like tax avoidance, a fortiori is not the State entitled to legislate it away in more important things, such as the crime of murder? If the police force have reason to suspect a certain individual of having committed a very serious crime, watches him, sees him approach a priest of his religion and discuss privately with the priest some matter, whether in the confessional or a situation that would be akin to it, is there not, on the basis of the Minister's argument, a greater justification for the police being given power to compel that priest to disclose what was said to him than there is under section 59 to compel a solicitor to disclose information because the Revenue Commissioners suspect tax avoidance on the part of his client? Murder is a far more serious matter than tax avoidance. If the intervention of the State under section 59 is justified in relation to tax avoidance, can any of us say, if we agree with that, that it would be wrong to compel a priest, a solicitor, a doctor, or somebody who, in the course of his professional activity, learns something of relevance to a very serious matter?

Can any doctor feel 100 per cent sure that if this Government forced through section 59 of the Finance Act, 1974, that the Minister for Health who is a member of the Government and presumably approves of this legislation, will not bring in comparable legislation to compel doctors to disclose certain facts which should be confidential between the patient and the doctor? Is there any relationship left, after this principle is established, that can be regarded as safe, as sacred or as privileged? The whole doctrine of a common law through the centuries preserved, often at great cost, the sanctity of a privileged relationship. Section 59 of the 1974 Act destroyed that, and for the most trivial of reasons. Therein lies the force of our argument. If it is destroyed for a trivial thing like tax avoidance, surely one would be more justified in destroying it for more important things?

On the benches opposite there is one person, the Minister for Finance. He has 72 or 74 Deputies who support him. We have rarely seen any of them. What we see now is the normal procedure in this House with this Government. I cannot talk to those Deputies. Perhaps if I could I might have some effect on some of them. I can only talk to the Minister. I can only remind him that when he sat on this side of the House we had long tirades from him about the protection of human rights, not alone in Ireland but in obscure countries all round the world. Has he forgotten those days? Has he forgotten the sentiments he expressed so eloquently and forcefully then? Was that all a show or a charade? Now that he is in a position to do things and control matters, can he find nothing better to do but to destroy, at the request of the Revenue Commissioners, a privileged, deeply confidential relationship between solicitors and their clients? Let him remember this: he is not doing any great harm to solicitors. All they have to do to comply with the law is to tell the Revenue Commissioners. The people being harmed are their clients and they are not all rich men. Every client of every solicitor is potentially at risk now and not necessarily in relation to tax avoidance.

But this principle having been established last year by default—because this House never approved of it; it was guillotined through—is it going to be continued? We have come in here on Deputy Colley's amendment, the earliest opportunity we could get, which was the succeeding year's Finance Bill, to ask that what went through by default last year be taken out. I cannot appeal to the empty benches I see opposite me. I can appeal to only one individual, and I say to him that if he has even a fraction left of the sentiments he used to express on this side of the House, let him act on that fraction and accept this amendment.

Mr. R. Ryan

We have had a perfect example of mob oratory.

Mr. O'Malley

There was not much of a mob to talk to.

Mr. R. Ryan

This law is not intended to deal with a mob, and it is not intended to deal either with the people described by Deputy O'Malley tuppeny-ha'penny tax avoiders. We are dealing with tax evasion, an illegal activity. Under the 1974 Act a person who has the benefit of assets which are transferred abroad is obliged to pay tax on them; prior to that, no, although it would appear that in any other country that I have had a look at, the Legislature has endeavoured long since to tax income from assets which were placed outside the domestic jurisdiction. However, for some reason we went from decade to decade allowing people to place their money abroad to avoid paying tax here, but since last year they could do that no longer without committing a breach of the law. They would be evading tax. There is wrong being done by any person who now fails to disclose his right to the benefit flowing from assets placed abroad.

Deputy O'Malley has been very severe in his strictures on people who were not here during lunch time. If he was here earlier, he would hear several arguments which I advanced against entertaining the amendment, including the one that section 59 of the 1974 Act contains privileges and exemptions which are enjoyed by the solicitors' profession and by nobody else——

Mr. Colley

It exists in law.

Mr. R. Ryan

——and so generous and so proper are they considered to be that the accountancy profession are seeking to have them extended to themselves as well. The obligation on solicitors is to furnish names and addresses. If the people liable to pay the tax, if the people who have transferred assets abroad, discharge their obligations in the first instance by making the proper returns, there will be no question of having to obtain names and addresses from anybody else. If they break the law and if other people have the information which would identify them, I cannot see that there is anything reprehensible or anti-liberal about it. To my mind, the liberal ethic requires that one must not tolerate a situation in which certain people can get for themselves privileges that are not enjoyed by the masses. There is no infringement of anybody's rights. There is a weapon to ensure that people discharge their duties, that and no more.

Mr. Colley

Does the Minister think that anybody who transfers assets abroad is guilty of evasion? Does he not know that certainly a great number of them are not?

Mr. R. Ryan

A person who transfers assets abroad and fails to disclose is guilty of evasion.

Mr. Colley

Yes, but there are many who transfer their money abroad and do not fail to disclose.

Mr. R. Ryan

And in such cases the Revenue Commissioners would not be chasing anybody else for the information. It is only when they have reason to believe the information is not being disclosed that they will avail of this power. Nobody has any reason to fear if they are complying with the law. If they are not complying with the law, all we say is that the law should not afford them privileges and protection which are not available to others.

Mr. Colley

The Minister is not right there.

Mr. R. Ryan

I am quite certain. I was challenged because I enunciated views regarding some forms of avoidance. It was suggested that I was saying something radical that had not been sufficiently thought over. I would like to quote from an editorial in The Times of 1st April, 1938, which states as follows:

A noble defender of the ethics of tax avoidance comes forward today in the person of the Provost of Eton. No one will attribute to Lord Hugh Cecil an insensitive conscience, but when he writes that if the tax-avoider "acts openly" and above board, and clearly conforms to the law, I can see no reason why he should not do anything the law allows in order to lighten the load of taxes. It may be that he uses the word "law" in an over-technical sense. Law is the will of the people as expressed in Parliament; it is also the rules of conduct enforced by the courts. The two senses should coincide, but in practice they often diverge because Parliament has failed to express itself with sufficient accuracy or completeness. The opportunity for legal tax evasion proceeds solely from this divergence and he who exploits it can only be defended on the ground that what is binding on the conscience of the good citizen is not the well-recognised intention of the Legislature, but the technical imperfection with which it is expressed.

There are some areas which so closely resemble evasion as not to deserve the impassioned moral defence that sometimes is advanced in their favour. The fact that many of these practices are not defensible is recognised by the accountancy and legal professions themselves. From time to time they suggest ways of avoiding tax, but they accompany their advice with a warning that a person who engages in a particular practice may well find the Legislature taking a different view of the legitimacy of the practice in which they are advised to engage. Therefore, I do not think any practitioner or any parliamentarian could seriously challenge me when I say there is a grey area.

Mr. Colley

Nobody has.

Mr. R. Ryan

It was suggested today that there was a line that could be very clearly drawn between evasion and avoidance.

Mr. Colley

It was suggested that they were not the same, and that is not what the Minister has been saying up to now.

Mr. R. Ryan

I have said I cannot share the tremendous moral indignation that some people tend to express at any criticism of tax avoidance. There are those areas which run so close to being illegal that they are not defensible from the point of view of the intentions of Parliament which, in turn, defends the intentions of the people.

Major de Valera

The courts are the proper judges of that.

Mr. Colley

Nobody here is defending them.

Mr. R. Ryan

The courts are the judges of the law as Parliament has recorded it, but if Members of Parliament experience cases where people are frustrating the wishes of the Legislature, then they have a right, indeed I would consider it a duty, to bring it to the notice of Parliament in order that the necessary amendments should be made in the law.

Mr. Colley

But not to treat them as if they had broken the law before that is done.

Mr. R. Ryan

No, I have not said that. What I am saying is that they are not deserving of the tremendous moral benediction that some people would seek to give them, to make it something that is noble and beyond criticism.

Mr. Colley

Maybe the Provost of Eton was doing that, but it was not done in this House.

Mr. R. Ryan

Perhaps the Deputies opposite do not realise the height of moral indignation to which they rose in the course of their emotive orations, but it certainly sounded very much like it from this side of the House that such a defence was being made. However, if they come down from their moral high horse, I am sure they will endorse at least some of my remarks regarding the more reprehensible forms of avoidance activity. When one sees the wishes of the Legislature being frustrated, as a legislator, one must take steps to correct the situation and when one is giving power, as the Dáil and Seanad gave last year, to tax the profits on assets that are sent abroad, one must give power also to the Revenue Commissioners to enforce that law. It is for the Revenue Commissioners to collect the taxes that the Legislature says should be collected.

Major de Valera

We have been invited to come down from our moral high horse. At last the Minister has succeeded in convincing me that he is utterly amoral. Why should we come down off our high horse? This suggestion of the Minister is an admission on his part that he is being pragmatic and amoral in his approach.

Mr. R. Ryan

I think the Deputy is still on his high horse.

Major de Valera

Yes. I am on a very important high horse. The Minister will have no complaint with what I said on an earlier section when dealing with certain principles in relation to my desire to help the Revenue Commissioners and the collecting authority but I am appalled that a Minister who, like two of his colleagues in this House, should appreciate the importance of what is involved, would take the casual, the amoral and the pragmatic attitude he has taken in this matter. The Minister can hardly fail to appreciate the point I am making. Therefore, in technical terms I must attribute to him, malice afore-thought. By a peculiar coincidence the people engaged in this debate so far are members of the legal profession, two of whom are practising. As a barrister, I am a member of the other aspect of the profession although I have not practised for many years. Therefore, I should be absolved from any suspicion that I might be indulging in special pleading in an area of special interest.

As Deputy Colley pointed out, there is a difference between the legitimate evasion of tax and criminal tax avoidance. The Minister must appreciate that. Secondly, the right of the Minister and the State to impose and collect tax rests solely on the statute, outside the legal content of which there is neither crime nor right. That being so, the rest of the right is with the taxpayer and the State has no further right to interfere beyond the taxation rights conferred by statute.

Surely, then, the citizen is entitled to seek legal advice and to try to ascertain his rights. Furthermore, having ascertained his rights, he is entitled to act on them. If a mistake is made—if he has overstepped the boundary where the State is concerned —the State has ample opportunity, much more than has the individual, for dealing with the case. The first principle on which the privilege is grounded is that the citizen must have some protection against being penalised in the ascertaining of his rights and in protecting himself from an unreasonable infringement of his rights. The question is whether a breach of this privilege is less important than the possible disability of the collecting authority of the State to get their facts easily.

Deputy O'Malley has put the situation totally in perspective in this regard. It is the whole tradition of our laws that a man is innocent until proven guilty. The whole spirit of our law is that even the worst criminal is entitled to the best help he can get and there rests the privilege of solicitor and client in criminal matters. Extending that to civil rights, there has been the equal principle that a man as against the State should be in a position to preserve his rights as against the dominating power of the other side. That was the whole spirit of Magna Carta. The Minister will probably say that while he agrees with everything I say the position is that, in effect, a solicitor or the person concerned is an agent in the committing of the offence.

I cannot see how you can escape the privilege without implying that the solicitor or the adviser involved is an accomplice. If it is a question of fair enforcement and ascertaining of rights, if there is a doubt and if the solicitor or other adviser is in the clear himself, presumably he will not do anything that is a crime or even unlawful. You can include penalties if you like for a solicitor who co-operates but you should go for the solicitor: do not go through the privilege. You can only defend the section by going the whole way logically and what you are saying, in effect, is that the man is an accomplice. If you adhere to the principle that the citizen is entitled to certainty and enforcement of his rights in the law and that the State is only entitled to infringe his rights in law in accordance with the powers given by statute, the principle of privilege follows. As Deputy O'Malley said, if it is to be breached for tax evasion—which he described as a most trivial purpose— what would happen in a serious case?

I once took part in a murder defence case and I had some experience of how a matter of privilege could and did arise and the authorities on that occasion behaved with the utmost propriety. But if we begin breaching the privilege that exists, on these grounds, we are opening a flood-gate as Deputy O'Malley said. If the solicitor is acting bona fide professionally or any other professional adviser is acting bona fide and doing it in accordance with professional etiquette and presumably is not breaking the law—if a solicitor makes a client commit a crime he is an accomplice—there is no defence for breaching the privilege. Without going into the actual wording, the clauses in subsection (3) here are dangerous. The Minister should really think again on this matter. The fundamental mistake being made is trying to get at the client through the solicitor by breaching privilege when surely it is the business of the Revenue Commissioners, if they find the law against the client to get after the solicitor directly as an accomplice.

I agree with everything Deputy Colley and Deputy O'Malley said but before leaving the question of the citizen's rights, it should be quite clear what his legitimate rights of action are. He should not be the butt. The Minister is doing this in another Bill. I know the Minister's line of thinking here: the onus of proof is being quietly completely shifted by the Minister in the whole financial code. It is being done also in the Capital Gains Bill where the onus is being shifted from where it should lie—on the people enforcing the statute to ensure that they are within the terms of the statute and within their rights and proving that they are, if necessary—to the other side so that the State can do what it likes and it is up to the citizen to prove that the State is wrong. That is what the Minister is doing, and in another Bill when he makes taxpayers assess themselves, that is what he is doing.

The State is now being put in the position of the big bully and the ordinary taxpayer has to prove that the State is wrong with the whole probability being that the big fellow has all the advantages. This is completely and absolutely foreign to the spirit of our law and I make no apology for being on a normal high horse in regard to this.

I think this gallop will be halted in another way and I hope our judges will take note of what is developing now. When you breach a principle of such a fundamental nature touching on the rights of the individual in the criminal and civil spheres you are getting very near fundamental rights and thereby coming very near constitutional issues. Up to this, because of the correct behaviour of Parliament and the Executive over 50 years, our Supreme Court has always taken a conservative view and as narrow a view as possible of its construction rights. Beware that in a section like this you are not starting another process—one can thank God one has the Constitution—where the courts will do what the Supreme Court of the USA did and exercise its wider rights as the Judiciary and interpret its place in the Constitution as it is meant to be in principle as the guardian of the rights of both State and individual.

This section and particularly this amendment touches an absolutely vital point. Instead of helping law enforcement, instead of avoiding legal action, instead of bringing about harmony and preventing tax evasion, you may very well produce a situation where very restrictive elements may be introduced that may restrict this House as well as the Executive. That may seem an alarmist statement but that situation can arise. I hope our judges take note of their power. Sooner or later a case will be brought and I am glad our Supreme Court has a mind of its own, as we saw in some recent cases. As sure as I am here, a case will arise where new principles will be developed and the Minister and his successors will rue the day that this approach was taken. He may call that a moral high horse but I stand on the principle. I thank the Lord we have a Constitution and our Supreme Court to protect principles from amoral attitudes on ministerial benches.

Mr. R. Ryan

I can be as moral as the rest. Perhaps it is because of the moral stand this Government have taken against tax evasion that they have come in for so much abuse. I have heard against me all kinds of epithets, both colourful and doctrinal, which are not justified and which history—which will speak more kindly —will not find merited either.

I shall not endeavour to defend what was wrong by quoting another wrong because two wrongs do not make a right. However, I should like to draw the attention of Deputy de Valera and others to section 176 of the Income Tax Act, 1967. That section incorporated sections from the Acts of 1918, 1958 and 1963. The 1967 Act was a codifying measure and Deputy de Valera was an active and useful member of the committee that prepared that Act for the House.

Major de Valera

It was only a consolidating committee.

Mr. R. Ryan

Yes. I am not saying he was a party to the decisions made but I suspect he voted with his feet in 1958 and 1963 for a section which is found in section 176 of the 1967 Act. This section does not contain any savers whatever in regard to solicitors' privilege. There are savers in the 1974 Act. I wrote in special provisions which limited the information that could be sought from solicitors and, to that extent, I identified the privilege and respected the need to retain it. Section 176 of the 1967 Act states:

Every person who, in whatever capacity, is in receipt of any money or value, or of profits or gains arising from any of the sources mentioned in this Act, of or belonging to any other person who is chargeable in respect thereof, or who would be so chargeable if he were resident in the State and not an incapacitated person, shall, whenever required to do so by any general or particular notice, prepare and deliver, within the period mentioned in such notice, a list in the prescribed form, signed by him and containing (a) a statement of all such money, value, profits or gains; (b) the name and address of every person to whom the same shall belong; (c) a declaration whether every such person is of full age, or a married woman or is resident in the State or is an incapacitated person.

There is no question there of saying the solicitor would only give the name and address of persons to whom money is given. The full value of the money had to be given. It was an anti-avoidance measure to ensure that the Revenue Commissioners obtained particulars of income or money that people received in respect of activities within the State.

Mr. Colley

It was in respect of money received.

Mr. R. Ryan

Yes. Section 59 of the 1974 measure provides that where money is transferred abroad for the purpose of tax evasion or for the purpose of avoiding liability to tax, the name and address of the transferor or transferee be given. It is not a terrible departure from section 176 of the 1967 Act, from section 66 of the 1958 Act or Part III of the 1963 Act except that I provide for limitation to the information that can be sought from solicitors.

Words mentioned in the confessional box and the relationship between doctor and patient have been mentioned in the course of this debate. A certain parallel has been drawn between the criminal law and the tax law. There are many aspects of the tax law that do not conform to the criminal law. For instance, under criminal law every person is deemed innocent until proved guilty but under the tax law everyone is not deemed to be without income until the Revenue Commissioners are in a position to prove he has an income. If that were a principle of tax law the Revenue Commissioners could not issue assessment notices in advance of information received. They would have to wait until they got information and I am sure every Member would be honest and pragmatic enough to admit the tax law would be wholly unworkable if that principle were introduced.

It was unfair to introduce elements in respect of criminal law and religious practices in the course of this debate or to suggest that what we did in the 1974 Act was the thin end of the wedge that will be tapped further and further until more fundamental principles of human liberty or of religious convictions are offended. It may be a good debating point to suggest this but it is unreal. We are simply providing the Revenue Commissioners with the weapon necessary to collect the tax that the Legislature, in its wisdom or otherwise, says should be paid. It is no more and no less.

Mr. Colley

The Minister is breaching the seal of the confessional in that section. I hope he is aware of this.

Mr. R. Ryan

No.

Mr. Colley

It provides for serving notice on any person who may have information.

Mr. R. Ryan

I am not aware that anyone has suggested the confessional box is used for the purpose of transferring money abroad with the intention of avoiding tax liability. I will not mention anyone by name but even some of the daftest accusers of the Roman Catholic Church in this island and elsewhere have not yet made that accusation.

Major de Valera

The Minister has made some interesting points and, for the second time, I have to thank him for giving me my most cogent argument. The section he has accused me of voting for states "...every person in whatever capacity...". It says nothing about solicitors or clients. It is for the courts to interpret what the content is. The only intent of Parliament that is taken cognisance of is the court's interpretation how far it goes. Otherwise we would not have the provisions of this section.

I would go so far as to say that if the Minister is to stand on this section it should be enough for him to do so on his own argument and that he would not need to bring in a specific section to try to capture lawyers and so on. "Every person" should be sufficient. The courts would be careful to distinguish such socially and legally important principles in the relationship between solicitors and clients. What the Minister has thrown back at me does not answer one point. By giving me this section he enables me to make the point as to why he did not take the simple course. The answer is that it is not sufficient and that the Minister had to go specifically after the solicitor-client relationship to try to enforce his line of approach here.

Perhaps in the contest of debate we all are somewhat over-emphatic and extravagant of phrase and when the Minister talked about moral high horses I was quick enough to come back at him but I was careful to attach my remarks to the office rather than to the man.

In relation to this section, why not have it tested? Sooner or later it will be tested. Sooner or later issues of this kind will go to the Supreme Court and it is a good thing that what we say in Parliament will not be evidence of intent or of the slightest use in the courts. I hope there will not be a Bill brought in to bring me before the Committee on Procedure and Privileges to impeach me before the House for advocating tax evasion because it is a good thing that our ideas on this should be fully ventilated. As Deputies O'Malley and Colley have said, one of the objectionable features about the way the section went into the Bill this year is that it went undebated last year and that justifies the debate on this section now.

I should like the Minister to take all this in the spirit in which it is given. I do not think he or the authorities concerned can complain about our anxiety to assist the Revenue Commissioners in the use of their functions. Deputy Colley, as a predecessor of the Minister, cannot but share his concern to get after tax evasion, mainly because it places an undue burden on the remaining honest sector of the community but also because of the cost to the Exchequer. All these things are equally valid. However, I do not think this will be of much use in getting after evaders. I would ask the Minister to restore fully the privilege I tried to trace earlier and I suggest there should be a trial before a morass is created in this area because I have a feeling that sooner or later some cases will come before the courts and there might be very peculiar results. I say that this is a step towards initiating a situation which I should not like to see develop, namely, that the Legislature in its anxiety to support the Executive would be compelled by the Supreme Court to undo it because of inroads on fundamental human rights. That statement may appear to be extravagant but any of us who are lawyers, and the Minister himself, will know that the matter of privilege between solicitor and client is not by any means a trivial thing.

Ruairí Brugha

We contend that section 59 requires persons engaged in a professional capacity in advising clients to reveal information concerning clients and thereby to break confidentiality. That is part of the structure of the relationship between solicitors, accountants and their clients. The Minister earlier denied this was the effect of the section but later he said that persons should not be allowed to protect what he called evasion.

I said earlier that the Revenue Commissioners have the power to direct any persons engaged in evasion of tax, whether he be a representative of a company or an individual, to provide whatever information the commissioners require. We contend that a totally different issue is involved here and that is that a person employed in a professional capacity would be required to disclose information about his clients. That seems to be a fundamental issue. It has been covered amply by Deputy de Valera and other speakers. The Minister has not yet satisfied me that this section does not require that of persons engaged in a professional capacity. If it does not require it then there is nothing wrong with the amendment. If it does require it, that should be disclosed. The Opposition maintain that it does require it.

Mr. Colley

Can the Minister give us any information in regard to how this section has operated since it was enacted?

Mr. R. Ryan

It has only been enacted since last year. I understand that a number of facts have come to light which would warrant the use of this section but it has not yet been used. It took some time also to put into effect section 176 of the 1967 Act. We have, of course, ample experience of how it has been used and challenged unsuccessfully across the water. Deputy de Valera suggested that section 176 of the 1967 Act was unimpeachable because it did not mention solicitors whereas the 1974 Act did mention solicitors. The 1974 Act mentions solicitors only to restrict the information which can be obtained from solicitors. There is no restriction in the 1967 Act but there is a specific limitation on the information which can be obtained in the 1974 Act.

It was not possible in the 1974 Act to spell out the several different types of situations which can be developed to engage in tax avoidance by transferring assets abroad so the information which the Revenue Commissioners are authorised to get is such as they think necessary for the purpose of determining whether or not funds have been sent abroad with a view to avoiding liability to tax. Having said that it then puts a limit on the information which a solicitor may be required to give. There is much emotive comment about the fact that solicitors are mentioned, but people overlook the fact that they are mentioned in order to put a restriction on the information which can be sought and the information which must be furnished is only such as would enable the Revenue Commissioners to proceed to contact persons who prima facie are liable, people who under the law have an obligation to furnish the information in the first instance themselves. That is not a horrific provision.

The situation has now been fully ventilated. I can express considerable sympathy and understanding with the various views that have been expressed here today. No doubt we will be strengthened by this ventilation of views. If any person feels aggrieved because of the use of the section if and when it is applied he will have his remedy. I personally would not feel any sense of disappointment if the courts took a view different from that taken by the Legislature as to the appropriateness and constitutionality of this section. I accept that they are there as defenders of the liberty of the people. I do not think that absolves us from the obligation of looking upon every piece of draft legislation to ensure that it does not offend against basic principles. In the light of the 1958, 1963 and 1967 legislation which contains no safeguards so far as solicitors are concerned, we are entitled to say that this weapon is a very necessary one in the hands of the Revenue Commissioners and that it contains the protections which are necessary to ensure confidentiality of relationship between solicitors and their clients. I am unable to accept the amendment.

Mr. Colley

Did I understand the Minister to say that this section has not been used as yet?

Mr. R. Ryan

As I understand it, that is the position.

Mr. Colley

Since Deputy de Valera is not here I owe it to him to point out that the point he was making was that the 1967 Act phrase is: "Every person who in whatever capacity..." His point was why was that phrase not used in this section if it is one that covers everybody, including solicitors.

Mr. R. Ryan

It says: "any person" and then subsection (3) goes on to say:

A solicitor shall not be deemed for the purposes of paragraph (c) thereof to have taken part in a transaction by reason only that he has given professional advice to a client in connection with that transaction,

It is a safeguard. I do not think anybody can suggest that: "a person acting in any capacity" excludes solicitors.

Major de Valera

The court might.

Mr. R. Ryan

It would be tantamount to saying that solicitors are not persons.

Mr. Colley

The question was raised by Deputy de Valera and in his temporary absence I was merely pointing out what I understood to be his case. It seems to me that there is a major distinction between the 1967 Act and this provision in that the 1967 Act is dealing with a case where a person is in receipt of money. That does not arise at all in the section we are dealing with. It seems to me that that constitutes quite a difference in the approach to the matter. If the Minister is contending that this subsection which refers to solicitors was introduced in ease of solicitors, he is implying in that that if that subsection had not been brought in a client's privilege in consulting a solicitor would have been totally taken away. Is that a reasonable interpretation of what the Minister said, that without subsection (3) the privilege would have gone completely?

Mr. R. Ryan

Only in so far as a solicitor was engaged in transactions to transfer assets abroad for the purpose of reducing tax liability.

Mr. Colley

If the Minister is saying that the whole privilege would have disappeared in relation to such transactions or advice concerning such transactions——

Mr. R. Ryan

Not advice, because subsection (3) deliberately excludes the giving of professional advice.

Mr. Colley

I am afraid that is not correct, as I understand it. It provides that a solicitor shall not be deemed for the purposes of paragraph (c) of subsection (2) thereof to have taken part in a transaction by reason only that he has given professional advice. That is the exclusion in relation to professional advice. He is not deemed to have taken part in the transaction. Subsection (3), which is the one we are concerned with here, includes him if he has given advice.

Is the Minister saying that if subsection (3) were not there the privilege of a solicitor and client relationship would have disappeared completely in so far as it related to any transactions, or advice in relation to transactions, which could have been affected by sections 57, 58 and 60?

Mr. R. Ryan

No. Section 59 refers to the purpose and the nature of the notice and the particulars which must be furnished in reply— that and no more. Then there is a further brake as to the information which the solicitor may be required to give.

Mr. Colley

The Minister was representing that subsection as being in ease of the solicitor and client relationship. Does it not follow from that, that if it were not there there would not be any easement of the solicitor and client relationship?

Mr. R. Ryan

I suppose that follows.

Mr. Colley

In view of all the Minister has been telling us about the obligation and necessity to stamp out this kind of activity, how does he justify preserving the solicitor and client relationship to the extent that he says he has done so under subsection (3)?

Mr. R. Ryan

Because the information which must be furnished is sufficient to identify the persons engaged in avoidance practices. Then the Revenue Commissioners proceed to contact the people who are so engaged. Once information is given which identifies these people, it is possible to proceed after them. If they withhold information, at least they are identifiable and accountable to the law. The opportunity of concealment is frustrated by the section, which was the intention of the Legislature. There were remarks here that this had not been passed by the House. It was.

Mr. Colley

That it had not been debated.

Mr. R. Ryan

It was debated on Second Stage. I stayed up all night to afford the Opposition an opportunity to make whatever comments they wished to make.

Mr. Colley

That was because the Minister brought in the Bill too late. It is a pity he did not do his job and bring it in in time.

Mr. R. Ryan

It was debated at length in the other House and the matter was also aired in the newspapers. It has been fully debated last year and this year and, no doubt, we are all the wiser for having heard each other's views. While respecting the right of Deputies, and having enjoyed the debate myself, we might move on to deal with the Finance Bill, 1975, rather than pursuing this matter. I have discussed the merits of every argument put up by the Opposition and I think they are pretty well exhausted by now.

Mr. B. Desmond

I wish to support the Minister. I would have thought that by now the Fianna Fáil Party would have seen how flimsy are the very exclusive and special pleadings they have been making here. I have to declare my income to the Revenue Commissioners. Three-quarters of a million workers have to declare their incomes, wages and salaries to the Revenue Commissioners. We know the all-pervasive powers of the Revenue Commissioners to obtain such information from employers. It strikes a rather hollow note to hear the Fianna Fáil Party claiming virtually absolute privilege for the special relationship between the client and solicitor.

Mr. Colley

Is the Deputy against it? Let us get it clear where he stands. Is he for or against it?

Mr. B. Desmond

Behind it all there is an ambivalence——

Mr. Colley

Where is the ambivalence, here or there? Is the Deputy for or against the solicitor and client privilege?

Mr. B. Desmond

There is a clear ambivalence——

Ruairí Brugha

There is no ambivalence.

Mr. B. Desmond

It is suggested by the Fianna Fáil Party there should be special criteria of exemptions given to the transactions between solicitors and and their clients vis-à-vis their relationship with the Revenue Commissioners.

Mr. Colley

No, in relation to the State in general. It has existed for centuries. If Deputy Desmond had been here earlier he would have heard about it. It is for the protection of the citizens. Is he for or against that?

Mr. B. Desmond

I was listening in my room. I read last year's debates. I have read what I would regard in relation to tax avoidance as the rather spurious arguments put forward by Deputy O'Malley last year and this year. How Fianna Fáil can countenance this——

Mr. Colley

What spurious arguments is the Deputy talking about? Spurious arguments were put forward by Deputy O'Malley in relation to what?

An Leas-Cheann Comhairle

Deputy Desmond on the amendment.

Mr. B. Desmond

The spurious argument that protection should be given in the Finance Bill to this special relationship. I know the intent and purpose of this approach.

Ruairí Brugha

Was this debated last year?

Mr. B. Desmond

There is a certain element of hypocrisy in the approach by the Fianna Fáil Party to this section. I wish Deputy Colley would go out to what will be the new Clontarf constituency where he intends to stand and meet an audience of professional workers, public servants, wage and salary earners, and the whole host of people who must fill in their forms without the aid of solicitors and who must declare to the Revenue Commissioners all their income and earnings and who are obliged to pay tax.

Mr. Colley

Every taxpayer is obliged to do that.

Mr. B. Desmond

Except those who get special advice from special people and special solicitors. The people who are handling such transactions, especially property transactions, could now be caught if the Revenue Commissioners wished to exercise their powers. I have no doubt that in future some will be caught. Not so long ago Deputy O'Malley said he would never disclose any client's transaction to the Revenue Commissioners.

An Leas-Cheann Comhairle

The Deputy should keep to the amendment.

Mr. B. Desmond

I suggest that Deputy Colley would not be very wise in pressing this too publicly because, the more the public become aware of the exigency of this special relationship, particularly in relation to tax avoidance, the more acutely they will become aware of the double standards being applied by Fianna Fáil. The Minister is perfectly right in having this in the Bill. I do not think Deputy Colley is doing much good to his party, as a broadly based political party, in advancing that kind of special plea.

Major de Valera

The point is that the use of the words "any person" is not sufficient to capture it and the Minister is assuming that it is. I say that if the matter were tested that would not be broad enough. The Minister probably realised that possibility and solved this problem by assuming the general phrase removes the privilege and this writes back in three-quarters or most of the privilege and puts in a saver. That is really what happened and that is really what the Minister is basing his case on. As I say, this may provoke a chain reaction. As well as that, the fundamental assumption that underlines that privilege is not valid. For these reasons, apart from the other cogent reasons in relation to the section, we think it would be much better the other way, especially if it is a question of someone being an accomplice.

There is a different approach. I am talking now about those who participated in the debate and who knew what they were talking about. There was, I think, an inversion in the approach but it does not get over the fundamental point made earlier and what the consequences may be even from the point of view of revenue collection. Everybody is with the Minister in seeking to have fair tax enforcement and not tax evasion. The question is will the section do what it purports to do, if it is tested? Will the consequences of the section being there be worth the disadvantages entailed? I referred earlier to the possibility from the point of view of fiscal policy generally of the desirability of this but, in the last analysis, it is a question as to whether the courts will take one view or the other.

Mr. R. Ryan

Have we to wait until this is challenged?

Major de Valera

I am saying to summarise.

Mr. Colley

The Minister has made it clear that he will not accept this amendment and there is no point, therefore, in delaying the House any further. I hope Deputy Barry Desmond's constituents in Dún Laoghaire-Rathdown will have noted his total opposition to the rights of citizens, in particular the rights of citizens to consult their solicitors without the State moving in to find out precisely what was discussed. He told us he had listened to the debate. Had he not told us that there might be some excuse, but he knows precisely what is involved here and his support for the section and opposition to the amendment means that he is supporting the first steps on the slippery slope at the bottom of which no citizen will have the right to consult a solicitor about any matter confidentially without the solicitor being obliged to disclose it to the State.

Mr. B. Desmond

Deputy Colley is not suggesting that anyone has the right to consult a solicitor in order to evade tax?

Mr. Colley

The Deputy cannot get out of it like that. He heard the debate and the attacked the privilege because he thought it was a solicitor's privilege. It is, in fact, the privilege of the client, the privilege of his constituent, and he is trying to take it away. He is welcome to do that if that is what he wants to do. We do not agree with him. We think every citizen is entitled to this protection and we are doing our part to give that protection to him.

Mr. B. Desmond

No citizen has, in my opinion, the right to avail of a solicitor's exclusive advice to evade legal tax obligations.

Mr. Colley

That is what the Deputy is saying now.

Mr. B. Desmond

I knew Deputy Colley as a young man in charge of joint labour committees in the Labour Court. He was chairman of committees like the flour-milling committee. He was an up and coming young man in the Fianna Fáil Party arguing for clean public life and clean open Government. He tried to create that image in the early sixties. I am sure he would not support the view that a constituent of mine or his should have the right to go into a solicitor and set out in a privileged position to evade tax obligations. It is to prevent evasion that this section is designed and the Government have set out to ensure here that essential information required by the Revenue Commissioners must be forthcoming. Deputy O'Malley reacts hysterically and undemocratically to this; he said he would never obey the law in relation to these provisions. Deputy Colley knows my views and the views of the Government. I would dearly love to hear him arguing, as he did here, before the cumann out in Donnycarney; he would have his ears pinned back by the wage and salary earners who cannot understand why they cannot get away with a few quid. They have to pay through the nose.

Mr. Colley

The Deputy is making a good effort to retrieve his position.

Mr. B. Desmond

I am quite happy with my position.

Amendment put.

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

Tá

• Barrett, Sylvester.
• Brennan, Joseph.
• Breslin, Cormac.
• Briscoe, Ben.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard
• Crinion, Brendan.
• Cronin, Jerry.
• Cunningham, Liam.
• Daly, Brendan.
• de Valera, Vivion.
• Farrell, Joseph.
• Fitzgerald, Gene.
• Fitzpatrick, Tom. (Dublin Central).
• Gallagher, Denis.
• Geoghegan-Quinn, Máire.
• Gibbons, Hugh.
• Gibbons, James.
• Gogan, Richard P.
• Healy, Augustine A.
• Herbert, Michael.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael P.
• Lalor, Patrick J.
• Lemass, Noel T.
• Leonard, James.
• Lynch, Celia.
• McEllistrim, Thomas.
• Meaney, Tom.
• Moore, Seán.
• Murphy, Ciarán.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Power, Patrick.
• Smith, Patrick.
• Timmons, Eugene.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Níl

• Barry, Peter.
• Barry, Richard.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Byrne, Hugh.
• Clinton, Mark A.
• Dockrell, Maurice.
• Donegan, Patrick S.
• Donnellan, John.
• Dunne, Thomas.
• Enright, Thomas.
• Esmonde, John G.
• Fian, Martin.
• Fitzpatrick, Tom.
• (Cavan).
• Gilhawley, Eugene.
• Harte, Patrick D.
• Hegarty, Patrick.
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Keating, Justin.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Corish, Brendan.
• Cosgrave, Liam.
• Costello, Declan.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Lynch, Gerard.
• McDonald, Charles B.
• McLaughlin, Joseph.
• McMahon, Larry.
• Malone, Patrick.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Donnell, Tom.
• O'Sullivan, John L.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Taylor, Frank.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.

Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies B. Desmond and Esmonde.

Amendment declared lost.

Debate adjourned.