Capital Gains Tax Bill, 1974: Committee Stage (Resumed).

Mr. Colley

I was dealing with paragraph 8 (3) of Schedule 3 when we adjourned the debate. I pointed out to the Minister that it seemed to contain a most extraordinary provision if I read it correctly. The subparagraph reads:

(3) Where any of the terms of the lease (whether relating to forfeiture or to any other matter) or any other circumstances render it unlikely that the lease will continue beyond a date falling before the expiration of the term of the lease, the lease shall not be treated as having been granted for a term longer than one ending on that date . . .

The question of whether it is unlikely that a lease will continue beyond a particular date is, on the face of it, a most peculiar provision. Here it specifically spells out that it is unlikely because of circumstances relating to forfeiture or any other matter and I am asking the Minister how it is decided in relation to a lease that the terms relating to forfeiture are such that it is unlikely the lease will continue beyond a certain date?

Mr. R. Ryan

If the condition under which forfeiture would take place is certain to be fulfilled at a specific time, clearly there would be an identifiable termination point.

Mr. Colley

Will the Minister state what kind of circumstances would produce that situation? The nature of forfeiture is not the ordinary termination of the lease. It is the compulsory termination of the lease by the lessor because of certain circumstances.

Mr. R. Ryan

If some very onerous imposition is placed on the tenant then it would be improbable that the tenant would continue. If, for instance, the tenant were to apply for permission to rebuild and the permission were given subject to some onerous condition, in such circumstances it might be open to construction that a forfeiture was likely to take place because the onerous condition would be unacceptable.

Mr. Colley

That raises a few questions but I want to keep to the main one for the moment. Surely, in the circumstances described by the Minister, what would be likely to happen would be that the tenant, finding the terms too onerous, would simply carry on without rebuilding. Why would forfeiture be a likely result in such circumstances?

Mr. R. Ryan

There might be a high expenditure bill.

That is the courts.

Mr. T.J. Fitzpatrick

(Dublin Central): We should try to avoid that if possible.

Mr. Colley

I strongly urge the Minister to look again at the thinking behind that subparagraph.

Mr. R. Ryan

The thinking behind it is sound. I do not think we can make it any more certain than it is. We have in mind circumstances in which people would be providing alternatives for the duration of a lease, ones spelt out in terms of years other than related to certain circumstances and events and so on.

Major de Valera

He cannot get an exemption until the thing really falls in.

Mr. Colley

Let us take the worst possible view of the situation. If there are alternatives provided, whichever one is operated for the purposes of the law, he is stuck with that. He cannot be chopping and changing from one possible course to the other, presumably. From the point of view of the Revenue Commissioners presumably what is sought to be prevented is a lease which is really a long one, being dressed up to look like a short one. On a long lease he could deduct the total expense of acquisition whereas on a short lease he could not. I presume that is what is behind this. This subparagraph, as phrased, is making it easier rather than more difficult to do that.

Major de Valera

Acting Chairman (Mr. Moore)

Schedule agreed to?

Major de Valera

It is very hard to agree.

Mr. Colley

On the basis of and in the confident expectation that the Minister will between now and the next stage come back with a substantially improved version of it, we agree.

Major de Valera

May I add "with understanding protest". I know the problems the Minister has.

Agreed. I take it all the stocks here are covered?

Mr. R. Ryan

Yes, they are. The reason we put it into the Bill itself is that after the preparation of the original Schedule some stocks were discovered.

Mr. Colley

And there will be more.

Agreed.

The amendment in subparagraph (1) makes for clarification as a consequence of the other amendments following—Nos. 55 to 59.

Mr. Colley

I have no objection to this amendment in so far as it clarifies what is involved. What I have the greatest objection to is the paragraph which is being amended. However, it might be more in order to raise that objection on the Schedule in relation to the paragraph. While I have no objection to the amendment I do not wish it to be taken that I am in any way in agreement with the paragraph which is being amended.

Mr. R. Ryan

I move amendment No. 55:

In page 76, paragraph 11, to delete subparagraph (3) and to substitute the following subparagraph:

"(3) Where any such payment as aforesaid is made by or on behalf of any person, that person shall forthwith deliver to the Revenue Commissioners an account of the payment, and of the amount deducted therefrom, and the inspector shall, notwithstanding any other provision of this Act, assess and charge that person to capital gains tax for the year of assessment in which the payment was made on an amount equal to one-half of the payment at the rate specified in section 3 (3).".

Paragraph 11 of Schedule 5 is designed to provide a means whereby tax charged on non-residents who are liable to capital gains tax on certain assets in the State and who sell such assets may be recovered out of the purchase money paid by the purchaser.

The series of amendments, Nos. 55 to 59, proposed in relation to paragraph 11 is intended to give a more effective machinery of collection in these cases and to enable the vendor to apply for a certificate of clearance where he has accounted for the liability arising on the sale of the asset. The substantial changes are those relating to subparagraphs (3), (4), (5) and (6).

Specifically on amendment No. 55, as the charging provision stands in subparagraph (3), an assessment could be made on the purchaser of the assets in the amount of half the purchase consideration. The subparagraph does not make it clear that it is intended that the assessment may be made without waiting until the expiry of the year of assessment and that it is distinct and separate from any charge on the purchaser on gains from the disposal of his own assets. The subparagraph proposed in substitution for the existing subparagraph (3) would leave the latter substantially unchanged up to the point where it is required that tax should be deducted from the payment, that is, to the words "deducted out of the payment" in the existing subparagraph and "deducted therefrom" in the revised subparagraph.

The final part of the new subparagraph specifies that the year of assessment for which the charge is to be made is the year in which payment is made for the asset and that one half the payment is to be charged at the flat rate of 26 per cent provided in section 3, subsection (3). This puts beyond doubt the intention that the charge is a special one distinct from the purchaser's liability on any disposals of his own so that he cannot set off against this special assessment any losses or reliefs for which he may be entitled personally.

Mr. Colley

Again, some of these amendments are going very much to the root of what is intended to be achieved in paragraph 11. As I have indicated, I have grave objections to paragraph 11 but, while within the rules of order one might pursue some of those points on these amendments, it would be more satisfactory to do so on the discussion on the paragraph where one can consider the overall picture of what is involved. Subject to that I am not raising any objection to this amendment or to the others associated with it, but I wish it to be clear that that is on the basis that the real objection I wish to express remains, that it applies to the whole paragraph and that acceptance of the amendment does not in any way imply agreement with what is sought to be achieved in paragraph 11.

Mr. R. Ryan

The amendment can be agreed subject to Deputy Colley's reservations which I accept.

Mr. R. Ryan

I move amendment No. 56:

Yes.

Mr. Colley

Is that a realistic possibility, that he would pay the tax before he actually got the money on which tax is payable?

We are dealing only with assets which are within the country, not with assets outside the country. Could I give an example? Suppose there is a consideration of £200,000; the original cost to the vendor was £160,000; the gain is £40,000 and the appropriate capital gains tax on that gain would be £10,400. Subparagraph (2) imposes on the purchaser the obligation in the absence of a certificate to deduct from the consideration the tax on half of the total consideration. Tax on one-half would be £26,000, the amount the purchaser would have to deduct.

Mr. Colley

Twenty-six thousand pounds?

It could be called a useful way. If someone can think of a better way that will ensure that people outside the country will not avoid their liability by having the full consideration sent outside the country I would be very pleased to hear it. In the absence of some better way to ensure the tax is paid, I think this is a reasonable and a fair one.

Major de Valera

It will certainly ensure that people will not invest in the country.

Certain mischievous interpretations have been put on his remarks by Members on the opposite side and I thought it necessary to put on record my admiration for the intelligent questioning by Deputy Belton.

Mr. Colley

Apart from patting Deputy Belton on the head, would the Minister care to answer the question?

This has already been a problem where income tax is concerned and it will be a double problem under the Minister's next three Acts. In implementing subparagraph (2) of paragraph 1 is the Minister prepared to take the necessary practical precautionary measures to ensure that the undesirable consequences I have suggested do not follow?

Mr. R. Ryan

I am sure the Minister for the Public Service will bear all the relevant facts in mind in determining what is the most appropriate remuneration.

Major de Valera

Might I inquire whether I am addressing Dr. Jekyll or Mr. Hyde? I am not primarily concerned with the individual but with the smooth working and the continuity of the State machinery for the collection of revenue. The fairness and the justice of the administration and also the efficiency in collecting the revenue depends very much on this. I do not think there is any further comment to be made on subparagraph (3) of paragraph 1 although the comments made on the other two subparagraphs are relevant.

Under the heading "Application of income tax administrative provisions". Paragraph 2 (1) reads:

The provision of the Income Tax Acts relating to the care, management, assessment, collection and recovery of income tax shall, subject to any necessary modifications, apply in relation to capital gains tax as they apply in relation to income tax chargeable under Schedule D.

That is simply a general provision which says that the existing mechanism, duly adjusted and expanded, is to be invoked; it is merely a mechanical supplementation of subparagraph (1) of paragraph 1. I think I am right in that?

Mr. R. Ryan

Yes.

Major de Valera

I agree with Deputy Colley in regard to subparagraph (2). Although it may be of some help in a handbook or anything else, I doubt the wisdom of particularising certain sections, because when one particularises there is always the suggestion, from the point of view of legal interpretation, that what is not particularised is omitted. There is, shall I say, a prima facie assumption that if you particularise like this, this is what is intended and nothing more, and therefore the remainder is excluded.

"In particular, and without prejudice to the generality of subparagraph (1), the provisions of the said Acts . . . " and so forth—that does not help you. At best, you are trying to have it both ways; at worst, there is an ambiguity. Like Deputy Colley, I do not think it is necessary. I take the Minister's point that there is a certain advantage in having such a list but I think it would be better catered for in say, a simple handbook or explanatory memorandum issued by the Revenue Commissioners through the Stationery Office for anyone who wanted one, rather than to embody it in an enactment of this House. I know that when the Minister proposed his capital gains White Paper, and later when the texts of these Bills were circulated, many of the larger accounting firms in Dublin furnished very intelligible and relatively simple digests of the content of the legislation and of these Bills. The Minister himself furnished explanatory memoranda. All these are helpful but I would strongly endorse Deputy Colley's point that, perhaps, to have the generality might be the safe legal course and if that generality is not sufficient, to supplement it and would, to an infinitesimal extent, I am afraid, having regard to the volume of the Bill and the Schedule, give some appearance of simplicity.

"Returns and information", is in itself a section. The application of law is a relatively simple thing for which to legislate, but for returns and information a certain discretion is needed. A general and fair criticism of the State in recent years, not only under the Minister's Government but in the past, is that there has been a tendency for the State service—in that I include the Government, and the responsibility rests with the Government and with the Minister who puts through the legislation and ultimately, with this House—to yield over-much to administrative convenience and almost to pander to fear; in other words, to get a fixation on evasion and other such problems and finally —it started with PAYE—to turn the citizen himself and private organisations into the tax-collecting agency.

I know the difficulties of tax collection and nobody will quarrel with requiring all reasonable returns, but in our approach to this part of the Schedule we should be on our guard against going too far. This is going very far now. On the one hand, the individual is being completely exposed and, on the other, people are required to be agents, where they are not personally liable, for the State, even to the extent of being intelligence agents. This is a very bad mentality to develop and it will surely bring adverse results. I make that comment under the heading "Returns and information".

However, paragraph 3, relating to the making and delivery of income tax returns, is a fair provision. Before we pursue this in detail I shall content myself with making these general points on the Schedule so far, so that we do not mistake the wood for the trees.

Paragraph 3 adapts the penalty provisions of the Income Tax Acts to cases where there is failure to furnish returns for capital gains tax or where through fraud or neglect incorrect returns are furnished. In the income tax code the amount of the penalty is graded depending on the type of offence and the person who is liable for the penalty. For example, if an individual fails to furnish his personal return he is liable to a penalty of £100 and a further penalty of £10 for each day in which the failure continues after judgment has been given against him.

I would suggest to the Minister that, although I have not got section 174 in front of me at the moment and without even seeing it, it does not correspond to this.

Section 174 says that where a person was being duly required to deliver a statement of the profits or gains arising to him from any trade or profession fails to deliver the statement, or the Revenue Commissioners are not satisfied, they may serve on that person a notice in writing requiring him, and so on. I want to suggest to the Minister that there is no comparison between that and subparagraph III which requires a person on whom a notice is served not only to give information regarding his affairs but if the notice relates to income or charitable gains of some other person of any assets acquired by that other person. I am trying to find out where is the corresponding provision in the Income Tax Acts. Section 174 is not a corresponding provision.

Mr. R. Ryan

The ordinary obligation that lies on the employer to deduct tax and keep records of income of his employees is in itself a disclosure of information.

Mr. Colley

But this is not a provision relating to employers giving relevant information concerning the capital gains of employees—that is not what this says. This is why I am asking whether the Minister can point out a corresponding provision under the Income Tax Acts to this?

Major de Valera

There is not one.

Mr. R. Ryan

We are applying the Income Tax Acts in so far as they can be applied to the capital gains situation.

Major de Valera

The Minister has to extend them to take in assets that would not be covered by the Income Tax Acts.

Mr. R. Ryan

Yes.

Mr. Colley

I would suggest that it goes a good deal further than that. I must confess that I cannot regard this subparagraph, or indeed subparagraph VI which ties in with it, with anything other than the gravest suspicion. The whole import of this portion headed "Returns and Information" is that the Income Tax Act provisions are being applied to capital gains tax. This subparagraph refers to a notice under any of the provisions of the Income Tax Acts as applied by this paragraph. Any ordinary person reading that could—and I think is calculated to believe—that what is being done here is what is already in existence under the Income Tax Acts. That is not so at all. There is a wide and major extension being proposed in subparagraph (3), an extension which would impose an obligation on any person to furnish information, if they receive a notice requiring it from the Revenue Commissioners, relating to the income or chargeable gains of some other person and of any assets acquired by that other person. This is a totally new requirement going far beyond anything in the Income Tax Acts. I suggest that it is being done in this subparagraph in a way that is totally misleading because it is prefaced by the notice, "under any of the said provisions of the Income Tax Act, as applied by this paragraph". I regard that as totally misleading.

If one refers to subparagraph (6), we find that there is provision for penalties. It begins with the words "Where any person has been required by notice or precept". It is not the person who is liable for the tax; not even an agent of that person, but any person who is served with a notice by the Revenue Commissioners requiring him to give information about some other person's capital gains or assets acquired by him and where he fails to comply with that he is liable to penalties. At the end of subparagraph (6) dealing with these various penalties, it says that they shall apply to that person for the purposes of capital gains tax as they apply in the case of a like failure to act for the purposes of income tax.

I suggest that that is a further step in the misleading facade which is being built up in this Schedule to pretend that what is being done here is only what is already in operation in relation to income tax, when, in fact, that is not so. It would have been a great deal more forthcoming, to use the least offensive word I can find, to have picked out the new powers that were required and to set them out clearly, and not in the Schedule, but in the Bill. I take an extremely poor view of the way this matter is being handled in these subparagraphs. I am not blaming the Minister for this, because he did not draft it, although he is, of course, responsible to the House. I am not personally blaming him. I am not saying that he directed that this should be drafted in this way but I am saying it is totally misleading to draft subparagraph (3) in the way that it has been drafted and, indeed, a great deal of ingenuity went into it to have it suggest that the powers contained in subparagraph (3) are already in existence under the income tax code when they are not.

This impression is further strengthened by the phrase at the end of subparagraph (16) dealing with penalties, where it refers to the case of a like failure or act for the purposes of income tax when what we are dealing with in subparagraph (3) is something quite new and quite without precedent under the Income Tax Acts. Indeed the ingenuity which went into it raises a question in my mind, from a legal point of view, as to whether in fact any penalty can be imposed on a person who fails to comply with such a notice because there is not provision for a like failure under the Income Tax Acts.

I want to point out in this context also that subparagraph (4) says:

The particulars required under this paragraph may include particulars of the person from whom the article was acquired and of the consideration for the acquisition.

Read that in the light of what goes before it and you are being asked to give details and particulars of the person from whom the article was acquired and of the consideration, in relation to another person's business, another person's acquisitions, not a person for whom you have been acting as an agent even but somebody about whom you might happen to have some information, a neighbour, say. You are being obliged under pain of penalty here to furnish to the Revenue Commissioners, if you are given a notice, details of that neighbour's acquisitions of property, from whom he bought them if you know it, what he sold it for and what he bought it for, if you know that, and any other information the Revenue Commissioners consider relevant.

This is totally unacceptable. It is reprehensible to seek to have it put through in this guise because that is what is happening when it is being put through in the Schedule under the guise of corresponding to the provisions of the Income Tax Acts. It is unacceptable and reprehensible. As far as I am concerned, unless the Minister can indicate that he is prepared to delete these provisions, I for one am not prepared to support or accept the provisions in subparagraphs (3), (4), (5) and (6) of this Schedule.

Mr. R. Ryan

If one looks at the Income Tax Acts of 1967, one will find the provisions there. They are just as extensive as the provisions in this Bill. I am not aware of anybody having challenged them as being repugnant.

Mr. Colley

I did ask the Minister to point out one of them that corresponded and he did not do so.

Mr. R. Ryan

There is in subparagraphs (3) and (4) of this paragraph a very disturbing situation. These two provisions are tucked away near the end of a terribly long and complicated Bill as subparagraphs in a remote Schedule. They are in a kind of cave that people reading the Bill might not look too hard at. They are shoved in here, I suggest, so that they will be glossed over, so that their implications will not be realised. These are the kind of major new provisions which should appear as sections in the body of the Bill proper so that they get the attention they deserve, but instead of that, the Revenue Commissioners and the draftsman—and the Minister must take responsibility for the activities of both— tuck away these ominous provisions on page 72 of a long Bill in the middle of the Fifth Schedule, in the hope that by the time the Members of Dáil Éireann come to deal with the Fifth Schedule so much time and talk will have passed that they will be weary and will not bother with them.

In particular, it is hoped that because by now the country is totally bored with capital gains tax, the Press is totally bored with capital gains tax —they do not report anything of what is said in the House about it—and because everyone is bored and tired and sick of it and waiting for it to end and because it is in the Fifth Schedule that this sort of thing might be slipped through. We cannot stop it being slipped through because the Minister has 70 people who will follow him blindly through the Division lobbies even though half of them know in their hearts that all these taxation measures are disastrous and that before they are passed at all have a serious effect on the country.

I wish that some of the people who used to be eloquent when they sat on these benches would apply their minds to the implications of subparagraphs (3) and (4). The situation is that not alone can the Revenue Commissioners under these provisions serve any notice they like on anyone to obtain any information in relation to his affairs and his financial transactions, they can serve any notice they like on anyone to find out about someone else's affairs and financial transactions.

The Minister introduced last year and guillotined through when we could not discuss it, the concept of doing this in relation to solicitors and their clients. He is now proposing to extend it to every one. If through some chance or otherwise an individual happens to know something about the financial affairs of his neighbour, whatever the source of his information, a notice can be served on that person and he is obliged by law and will commit an offence if he does not disclose to the Revenue Commissioners what he knows about his neighbour's affairs. Is this House going to allow this type of thing to go through to get no satisfactory explanation from the Minister but just because we are all tired and bored let this happen?

I have no doubt that the Revenue Commissioners of Soviet Russia have this kind of power. I doubt very much if any civilised democratic country has this kind of power.

Subparagraph (4) reads:

The particulars required under this paragraph may include particulars of the person from whom the asset was acquired and of the consideration for the acquisition.

This is a whole new concept in snooping by the Revenue Commissioners. If it was not, it would not be necessary to put it in because it would have been applied by the general application of the Income Tax Acts. Because it is set out specifically it is new. If the Revenue Commissioners now discover that you have a motor car they are entitled to find out from you how much was paid for it. They are also entitled to find out from you from whom it was bought and the amount paid for it and when it was paid. They can then ask the vendor where he got it and how much he paid for it and when he bought it, and so on. If somebody sells property to me, in particular moveable property other than land, they will not be very pleased if I inform them that under the provisions of this paragraph I will be obliged to inform the Revenue Commissioners that they sold it to me and what I paid for it and if I fail to do so I commit an offence. This forced snooping by neighbours on one another may be all right in the eyes of the Minister for Finance, Deputy Ryan but I venture to think that if a large number of people were aware that these provisions were in the Bill they would not think it all right. Unfortunately they do not know. It is very difficult in such a technical Bill to get across to people that there are such provisions. If they could or would read the Bill they would see them. It might be necessary in many cases to explain the provisions to them. The provisions are totally new.

The Revenue Commissioners will have achieved a major step forward in their powers and abilities to obtain information in relation to people if this Bill is passed in its present form. Paragraph 4 sets out in detail in respect of three particular classes of persons how that information can be obtained and the extent to which notice serving and snooping by the Revenue Commissioners will be carried on if this Schedule is passed. An issuing house, a stockbroker or an auctioneer will have to return to the Revenue Commissioners on notice being served on them, details of property sold by them, to whom it was sold and for how much.

I ask the Minister what he thinks the consequences of this will be, for example, for stockbrokers. If I am aware that my stockbroker will give full information about my affairs and activities to the Revenue Commissioners I will not employ him. I will go to England and employ a British stockbroker who will not give this information to the Revenue Commissioners because he cannot be compelled to give it. Do stockbrokers realise the obligations that will be imposed on them and the damage that will be done to their reputation and their business by the provisions of paragraph 4? Do auctioneers realise the implications for them? Do issuing houses issuing shares on behalf of other companies realise the consequences of this? Do people who are now subscribing to issuing houses for shares in Allied Irish Banks and in Waterford Glass under their recent rights issue realise that before they have those shares in their hands the Revenue Commissioners will know all about them? All the Revenue Commissioners have to do is send a two-line letter to the registrars of issuing houses concerned—Allied Irish Banks in respect of their own issues and the Bank of Ireland in respect of Waterford Glass—and get a list of where the ten million shares in each case were issued. Are people aware of this and what the consequences will be? Does the Minister realise what the consequences will be? We will have the most perfect information gathering machine in the world. There is no doubt about that. That will be Deputy Richie Ryan's legacy to the country. The Revenue Commissioners will be as efficient in obtaining information on every citizen as the KGB or the CIA. Will that do the country any good? Possibly the Minister for Finance thinks that it will. I do not think so.

Hundreds of thousands of people, if they realised what the Schedule contained, would not think so either. This will not worry the Minister unduly. He will regard it as his great achievement that no one can have any form of secret any more in the country. No longer will it be possible to have any form of privacy without the Revenue Commissioners being entitled to find out. If they see your neighbour looking over your fence they are entitled to serve a notice on your neighbour compelling him to disclose what he saw, how many chickens there were in your back garden. If somebody inadvertently finds out something about someone else a notice can be served on that person compelling him under penalty of law to disclose what he inadvertently found out. We had in this House a few months ago an effort by Deputy Colley and various Deputies on this side of the House to put a stop to what the Minister had done to the relationship between solicitor and client but it failed. The Minister stoutly defended the right of the Revenue Commissioners which he was giving them to compel solicitors to disclose anything and everything in relation to their clients' business. The Minister finally put the seal——

Mr. R. Ryan

That is not so and the Deputy knows it.

Mr. O'Malley

He put a seal on the end of the confidential relationship between a solicitor and his client. At that time we pointed out here that if the Minister was prepared to terminate the privileged and confidential relationship of a solicitor and client in aid of the Revenue Commissioners trying to collect more tax, then if he were logical he was far more entitled to do it if he or the Government were trying to find out something about a serious crime, for example, which is far more serious than simply the collection of tax. Of course we were pooh-poohed and told it was all imagination and so on and it could never happen. We pointed out that there were other confidential relationships which could be smashed when the relationship between a solicitor and client had been successfully smashed by statute of this House and we were pooh-poohed again.

Here we have a situation in paragraph 3 or 4 in which the relationship of solicitor and client is no longer necessary. It can apply also to any relationship. It can be the relationship of confessor and penitent, of doctor and patient. People who are ill and worried have been known many times to discuss aspects of their financial affairs with their doctors, apart from solicitors or accountants or anyone else. I am sure doctors regularly in the course of their practices acquire information given to them in confidence about the financial affairs of their patients. They will be compelled under these sections to disclose that information to the Revenue Commissioners when notice is served on them. Does the Minister seriously seek to stand over that kind of situation? Does he approve of it? Did he realise what was in it, and now that he does realise, does he propose to do anything about amending it? Are we going to have the ridiculous situation once more that 70 people over there will walk through the division lobbies behind him, half of them revolted in their stomachs at what they are forced to do and a lot of them not slow to tell one in the privacy of the corridors of this House how revolted they are? Are we going to go through this charade again? Are we going to pass into law measures that abominate us, which the present Minister for Finance would have spent hours on his feet trying to stop if he were on this side of the House and Deputy Colley or any other Fianna Fáil member were on that side?

It is strange how the journey of five yards from one side of this House to the other side can cause a man to forget so quickly much of what he espoused for so long. The earlier provisions of this Schedule are bad enough but there are provisions in paragraph 11 that Deputy Colley will deal with later that are even more appalling. I do not want to deal with them now; I am dealing simply with paragraphs 3 and 4 and with the situation that arises under them, where anybody can be compelled now to give any information about anyone else.

Mr. Colley

It is not just for capital gains. It specifically says income as well.

Mr. O'Malley

The Minister made a lame attempt a minute ago to suggest that somewhere at the beginning of this Schedule it stated that a notice can be served for the purposes of this measure—I think it was in section 51 or one of the earlier sections—and he tried to suggest that the information that would be obtained on the service of all these notices could or would be used by the Revenue Commissioners only for the purpose of assessing people to capital gains tax. I will pay the Minister the compliment of believing that he is naïve enough to believe that. I do not think anyone else is.

It is a well known fact that if the Revenue Commissioners obtain information under any of their various branches or headings they will distribute that information to all the other sections or divisions of the Revenue for the purposes of trying to screw the taxpayer under every possible heading. There is the example which I deal with daily—the question of death duties—where as soon as the local inspector of taxes becomes aware that somebody has died he starts writing to the executor or the solicitor concerned looking for the schedule of assets. This is examined and if anything turns up on the schedule which the inspector did not know about a big investigation is held and, as I well know and have seen it happen to a number of people, the deceased man's financial affairs going back to six or 12 years if necessary are scrutinised. His estate is reassessed for income tax right back over that period. The Minister cannot be serious in suggesting that the information that would be got under all these notices, that can be served on literally anybody, would not be used for any reason other than for the purposes of capital gains. Of course it will be used. It will be used for income tax, for wealth tax, for inheritance tax, for gift tax and for VAT. It will be used for anything else that the Revenue Commissioners can rake up and let nobody be under any illusions in relation to that.

I hope that if any small fraction of what Deputy Colley and I have had to say about these paragraphs is reported that people will come to realise what they do not know already. They do not know that there are huge, sweeping new powers proposed to be given here in paragraphs 3 and 4 of Schedule 5 to the Revenue Commissioners, compulsorily to make inquiries under legal penalty from anybody in this country to find out anything about the financial affairs of anyone else. I cannot stop that. We cannot stop that. All we can do is to point out, which we are doing to the best of our ability, that this is happening and hope to goodness that the Minister will see reason or that some of his backbenchers if not publicly, will at least privately go to him and point out the foolishness of this and the resentment it will cause throughout the country and see if these paragraphs can be dropped or amended in some way.

I ask him in particular to think of the situation of people like stockbrokers, who are now going to be compelled by the Revenue Commissioners to return every transaction to them, with the names and addresses of everyone who buys or sells shares through them and the amount involved. I ask him to think of the position of auctioneers selling moveable property, who will have to give exactly the same information and who will suffer all the penalties of law if they refuse. I ask him once again to think of the position of issuing houses. Who will have to give all this information in relation to shares that are being issued? On this very day— ten million rights issues of Waterford Glass and the Allied Irish Banks are being issued. Is everyone who takes up his rights in Allied Irish Banks or in Waterford glass going to have his name and address on the table before the Revenue Commissioners before he even gets the shares themselves.

These are serious and important matters; they are matters which we should not now be discussing in the recesses of the Fifth Schedule to this Bill. These are matters that should be discussed in the open as sections in the main body of the Bill so that people would realise what is involved and we could have a proper debate on each of these paragraphs. As it is, we are restricted from voting against the paragraphs individually; we must take the whole Schedule which, like all the other Schedules, is a very lengthy one, running into 9½ pages. Because the speeches must range over the whole Schedule and because only one vote can be taken on the provisions in the Schedule as a whole, a quite false view can be obtained by many of the real effect of the Schedule because a great deal of it may be innocuous enough.

Dáil Éireann debate - Wednesday, 4 Jun 1975

Acting Chairman

Acting Chairman

Dáil Éireann debate -
Wednesday, 4 Jun 1975