Before the Minister commences, is there any recommittal involved in any of the amendments?
Corporation Tax Bill, 1975: Report Stage.
All the amendments before me are ordinary amendments. There is none for recommital.
In the special committee we had an understanding that if there was a desire for a relaxed debate on this stage, as far as I was concerned I would be willing to accede to any request from the Opposition, particularly having regard to the unavoidable absence of Deputy Colley from the Committee. I am sure we will be able to get through without infringing the rules.
I appreciate that, and the Chair can depend on it that we will not——
The Chair will accord discretion to the Members' wishes in that regard.
I move amendment No. 1:
In page 15, line 14, to delete "so" and after "resident" to insert "in the State".
This is a drafting amendment to meet the query raised by Deputy Colley in the Committee as to whether the words "is so resident" mean "resident in the State". The amendment makes this clear.
I appreciate the fact that the Minister has met the point I raised. It has been made clear by the amendment, and I agree with it.
Amendment agreed to.
Before we come to amendment No. 2 I should like to propose a minor textual amendment to the amendment itself. It affects subsection (5) (b), about half way down the green page. Paragraph (b) opens:
For the purposes of this subsection—
(i) "the average of branch liabilities for the accounting period...."
"the accounting period" should read "an accounting period"—the indefinite instead of the definite article.
What about the last line of (i) which states "for the accounting period,"?
That is all right. The Deputy will observe there are quotation marks at the commencement of (i) and the correct quote has the indefinite article, not the definite one. In relation to (ii), quotation marks are required from the commencement of it, before the definite article, and should end after "applies".
The words "the assets to which this subsection applies" should be in quotations?
Yes. I move amendment No. 2 as amended in that manner:
In page 46, to delete lines 52 to 58, and to substitute the following:
"(5) (a) Where the average of branch liabilities for an accounting period exceeds the mean value for the accounting period of the assets to which this subsection applies, the amount to be included in profits under section 13 (1), or that subsection as modified by section 37, shall be an amount determined by the formula
A × B
——
C
where—
A is the amount which apart from this subsection would be so included in profits,
B is the average of branch liabilities for the accounting period, and
C is the mean value for the accounting period of the assets to which this subsection applies.
(b) for the purposes of this subsection—
(i) "the average of branch liabilities for an accounting period" means the aggregate of the amounts represented by B in subsection (3), B in section 44 (2) and the average of the liabilities attributable to pension business for the accounting period, and
(ii) "the assets to which this subsection applies" are assets the gains from the disposal of which are chargeable to corporation tax by virtue of section 4 (2) (6) (8) (a) of the Capital Gains Tax Act, 1975, with the addition of assets the gains from the disposal of which would, but for sections 19 and 24 of, and paragraph 2 of Schedule 1 to, that Act, be so chargeable.".
Under section 43 (5) as it stands, an overseas life office would be chargeable to corporation tax in respect of capital gains on the Irish fraction of world gains rather than by reference to gains arising from assets situate in the State and referable to the Irish branch business. During the Committee Stage, I stated I had received representations on this point from the Life Offices Association and that as a result I was reconsidering the basis proposed in the Bill—I might mention these were the only representations received on the section of the Bill dealing with insurance companies. These representations were to the effect that liability should be confined to gains on disposal of assets in the State because the computation of the basis of the Irish capital gains tax legislation as applied to corporation tax would pose very serious difficulties for these companies. The companies felt that this requirement was all the more unreasonable having regard to the fact that only a very small fraction of the world gains would in general be chargeable here.
This amendment is designed to meet these representations while preserving the safeguards sought in the original subsection, namely, to ensure an adequate charge on capital gains where an overseas company do not invest in this country to an extent commensurate with the Irish business. The revised subsection deals with this situation by increasing the amount chargeable under normal rules by a fraction corresponding to the shortfall in Irish investments. I might add that the draft subsection is on lines which have been agreed with the Life Offices Association.
Paragraph (a) contains the main provisions, fixing the amount to be included in profits where a shortfall in Irish investment occurs. The gains on Irish investments are paid separately. If the Irish liabilities are in excess of the Irish assets the gains so computed are increased by means of the formula to what they would be if the Irish assets were equal to the Irish liabilities. For example, if the Irish assets represent only 80 per cent of the Irish liability the gains chargeable would be increased by 25 per cent—that is, to 100 over 80 multiplied by the Irish gains.
Paragraph (b) (i) brings in the average of liabilities of the whole Irish Life business—that is, life assurance, annuities, pensions, and so on.
Paragraph (b) (ii) brings within the scope of the subsection all Irish assets whether chargeable to capital gains tax or not so as to ensure the company which invested in Irish assets not chargeable to capital gains—for example, Irish Government securities— can include those assets to cover a corresponding amount of Irish liabilities. If this were not allowed the charge to capital gains tax would be increased with disincentive effects on investment here by the company concerned.
The reference to section 19 of the Capital Gains Tax Act, 1975, brings into the computation exempt Government securities. The reference to section 4 of that Act covers the possibility of an overseas company investing in prize bonds.
The reference to paragraph 2 of Schedule 1 of that Act covers the assets attributable to general annuity and pension business where the gains as such are not chargeable because profits from realisations form part of the trading income.
Might I ask the Minister if this amendment relates to representations received from one insurance company rather late, I think, if the Minister knows to what I am referring?
One company certainly came in rather late all right but the Life Offices Association made representations as well.
Was it on the same point? I have not got the representations made by the company.
It was on the same point. There was a particular company as well as the association.
And the association is satisfied this amendment meets the case they were putting to the Minister?
Yes.
Some of us who were members of the special committee had difficulty in dealing with amendments and, when it comes to the Fifth Stage, it will be in order, I take it, for me to comment on the unsatisfactory nature of the way in which the Dáil and the Committee had to handle this Bill. I want the Minister to appreciate that I fully appreciate the reasons for this but I think he will agree with me that the procedure adopted was totally unsatisfactory. Were it not for two factors—the very competent staff work that was done plus the feeling the Committee had that they could have complete confidence in that staff work—and, indeed, I would go so far as to say that we appreciated the Minister's attitude in the matter—it would have been a thoroughly objectionable procedure. The Committee was nothing more than a rubber stamp. We know the reason for this and it will be more appropriate to mention it on the Fifth Stage. I do not think going into detail here on this Stage would be satisfactory. It would really only be delaying the House. Speaking for myself, we can only take it in the same spirit in which we took it in Committee, trusting in the good faith of the Minister because in a Bill of this nature—be-hold the size of it—there are very many interrelated provisions and the whole thing is a consistent scheme. In many ways the Bill is a good Bill and so one hesitates to go into too much detail on this stage on isolated provisions and I would prefer myself on this amendment, therefore, to take an attitude of strict neutrality. In criticising I am not to be taken as not accepting good reasons why this amendment should be made. That is the only attitude we can adopt and so I will not delay the House by attempting to analyse this particular amendment but I presume I will be in order in dealing with what is in the Bill on the Fifth Stage.
Absolutely.
Amendment, as amended, agreed to.
I move amendment No. 3:
In page 53, line 7, after "interest" to insert "becoming due for payment on or after the 6th day of April, 1976,".
Section 52 prevents relief from tax being given in respect of interest on money borrowed for the purpose of a business carried on in the State through a branch or agency by a non-resident bank, insurance company or company dealing in securities and used for the purchase of exempt Government and certain other securities referred to in section 51. Such interest is not dealt with in section 51 (2) and is therefore dealt with as a separate matter by section 52 which provides detailed rules for exclusion in computing for corporation tax the Irish branch profits of such a company. Certain non-resident concerns made representations as a result of which I now propose by the present amendment to provide that the restriction on the amount of interest which may be deducted in computing the Irish branch profits will apply only to interest becoming due for payment after 5th April, 1976.
What is the effect of the Minister doing this?
The effect is a relieving provision. It means the restriction will apply only after the commencement of the operation of the corporation tax provisions and will not apply to interest which may have arisen prior to the coming into operation of the Act. I want to emphasise that the date is 6th April, 1976. Corporation tax, because of transition provisions, could be operative before that but the crucial date is 6th April, 1976.
Amendment agreed to.
Might I suggest that we discuss amendments Nos. 4 and 5 together.
I move amendment No. 4:
In page 144, to delete lines 19 to 41, and to substitute the following:
"(4) Where for an accounting period of a service company, the aggregate of—
(a) four-fifths of the distributable income, and
(b) one-fifth of the aggregate of the distributable investment income and the distributable estate income
exceeds the distributions of the company for the accounting period there shall be charged on the company for the accounting period an additional duty of corporation tax (in this section referred to as a surcharge) amounting to 20 per cent of the excess:
Provided that—
(i) a surcharge shall not be made on the company where the excess is equal to or less than the smaller of the following amounts—
(I) £500, or, if the accounting period is less than twelve months, £500 proportionately reduced, and
(II) where the company has one or more associated companies, £500 divided by one plus the number of those associated companies, or, if the accounting period is less than twelve months, £500 proportionately reduced divided by one plus the number of those associated companies;
(ii) where the excess is greater than the smaller amount on which by virtue of paragraph (i) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to four-fifths of the amount by which the excess is greater than that smaller amount.".
These amendments are in response to representations which were received and in response also to arguments that were advanced from all sides at the special committee. It is proposed that 20 per cent of the distributable professional and service income of a service company should be excluded from the scope of the charge. The amended subsection (4) secures in paragraph (a) that one-fifth of the total amount of the distributable income of the service company is to be excluded in computing the amount by which the distributable income of the company exceeds the distributions made. Paragraph (b) provides that the exclusion will not apply to the company's distributable investment income or distributable estate income. It does this by restoring the one-fifth of such income which is excluded by paragraph (a). The remainder of the amended subsection repeats the existing subsection (4) with the revised numbering of paragraphs in the proviso.
The amendment of subsection (6) (b) (ii) is consequential on the proposed new subsection (4) and is made to provide definitions of the expressions used in paragraph (b) of the amended subsection (4) and to fit in section 162 with section 100. For example, for an accounting period of 12 months the excess of a company's distributable income over the distributions made is £18,000, as follows: professional income £40,000, investment income, £20,000; total income, £60,000; corporation tax at 50 per cent, £30,000; distributable income, £30,000; distributions made, £12,000; excess, £18,000.
If the section were not amended, the surcharge would be 20 per cent of £18,000 or £3,600. By virtue of the proposed amendment the position would be: distributable income, £30,000 multiplied by four-fifths, £24,000; distributable investment income, 95 per cent of £20,000, which is the income, minus £10,000 for corporation tax at 50 per cent, which would be £9,500 multiplied by one-fifth, which is £1,900. The £24,000 is added to the £1,900 so as to give £25,900. The distributions actually made, it will be recalled, amount to £12,000, so the excess is £13,900 Therefore the surcharge is 20 per cent of £13,900, which is £2,780.
That compares with——
£2,780 compares with £3,600. The reduction in the surcharge is therefore £820. The reason for not giving total exemption, as has been urged, is that if partners were not forming themselves into a company they would be liable for the full rate of income tax on the profits of the concern, and it is obviously inappropriate to provide totally different treatments of taxpayers who are carrying on the same line of business. There is no good commercial reason and there is no taxation reason why they should be treated differently.
It can be argued validly that cases can arise where it is desirable that income can be withheld for the purpose of reinvestment in the company to cover expansion, improvement and so forth, perhaps to help a firm over a particularly difficult period. I am accepting that argument by providing this 20 per cent relief on distributable income, and I think that is a reasonable proportion to allow firms to withhold to meet the kind of contingencies we are discussing in the special committee and to which I have just now referred. If a greater percentage was to be relieved, it would simply enhance the massive avoidance practice to which I drew attention in the special committee whereby people could withhold massive amounts of profits in a company and from time to time liquidate the company and distribute the income so withheld tax free. They could then form another company and proceed with the same type of operation.
The members of the special committee were somewhat scandalised when they realised the extent to which this practice had grown and the very substantial profits which some people have been able to earn tax free by this manipulation of the tax system. There was an obvious need to close off that practice, but one does not want, as one prevents the evil, to do damage. The concession which is now given here allows a reasonable amount to be set aside to meet the kind of contingencies which are not unusual in practice and for which it is desirable to make provision. At the same time we must remember that even giving this concession puts those who are operating it in a preferential position over those who are not incorporated. The true rate of tax of such undistributed income will be 58 per cent against 77 per cent, which it well might be and which it would be in the majority of cases were the concerns in question not incorporated but operated by people in their personal capacity.
First of all, let me express appreciation that the Minister and his advisers should have tried to meet the views which, as the Minister quite rightly said, were genuinely expressed on all sides of the House, and I think the solution which the Minister is adopting is virtually the one suggested by the Chairman of the Committee. With a Bill of this complexity and with the necessity to preserve its homogeneity, to make amendments of the sort involved poses a very serious staff problem, and one can sympathise with the staff officers who have to deal with these problems if there is a certain cautious resistance to meeting them.
This section, 162, is one of the sections that gives cause for most debate on the Bill. I am slightly in a quandary as to whether to leave its content for more general discussion on the Fifth Stage or to deal with the content now. However, while appreciating the Minister's approach in bringing in this amendment, I think some of us disagree with the principle on which this amendment is based. Unfortunately we are at a certain disadvantage nowadays in dealing with the Fourth Stage after special committee. In the old days when you could have the printed verbatim report of the proceedings you could check your memory. Here we have not available to us the record of the proceedings of the special committee, which will come in due course; it is merely a delay in being able to produce the document. But because of that, one has to rely on one's memory. I am relying on my memory now and it is possible that it is not accurate. Is this where Deputy Haughey put in an amendment?
Yes.
That amendment set the ball rolling. Deputy Haughey stated that the approach required in this section was the removal of service companies from the 20 per cent surcharge. The Minister countered that approach, and rightly so, and used the word "scandalised". I cannot say we were scandalised but we sympathised and understood.
Some people were even envious.
There was undoubtedly, and there still is, a serious tax evasion problem here. No responsible member of the Committee could take any other attitude than that this tax evasion opportunity should be blocked. That is common between us.
The method adopted seems to be very like the operation on a patient who had a very intractable disease of the foot which his doctor was not able to sure and so he solved the problem by chopping off the patient's head. We have a little of this in the section. I realise that I am straying a little but I am getting to the principle of the section and the amendment. Although appreciating that the Minister met the majority opinion of the members of the Committee present on that day, we did not vote on it, although I am sure the Minister will concede that I was the dissenting voice. The reason I was, and still am, is that in my view the principle is wrong.
What I have said on previous sections also holds here and I will not repeat it and delay the House. There are so many ramifications tied up with this that all I can say is this: it is giving some relief. In other words, the Minister is probably trying to save the spinal cord but he is doing a great deal of damage to the neck. Basically that is not the solution. We are not opposing it here but there is a wrong principle in the approach. In my opinion, what we are doing is wrong perhaps for a very right motive and we are trying to minimise the damage and injustice we are doing. I do not like that, but there is not much we can do about it. It would be ungenerous not to acknowledge the two facts I have mentioned, namely, that the Minister went as far as he could at that stage in the special committee and he adopted the suggestion made by the Chairman, which was probably a majority decision of the Committee on that day. I would like to record here my continued minority objection to the principle and fear that this method, by simply reducing the liability which in the first place should not have been imposed in this way, is inadequate.
For reasons over which I had no control I am at a disadvantage because I was unable to be present in the special committee at the discussion on this section, from which the amendments the Minister put forward have arisen. Nevertheless, I find myself in very substantial agreement with what Deputy de Valera has just said. It is true that if there are methods of tax evasion they ought to be dealt with by the Minister, but, on the other hand, it is not true that in order to do so he ought to bring about a situation which can do serious damage to the genuine taxpayers concerned—who form the majority. I gathered from what the Minister said that the nature of the problem relates to profits being undistributed, the company then being liquidated and it being possible to get those profits in an untaxed condition. I doubt if it will be beyond the wit of the Revenue Commissioners to devise a solution to this other than that implied in this amendment and section, a solution which will not lead to the penalising of quite a number of genuine companies and which cause the Minister to bring in, as he had to do here, an amendment to give relief from an imposition which he is making in order to close a gap which exists. The implications of this, I believe, can be quite serious for certain activities, some of which are extremely important in the economic life of the country.
The Minister has, I am certain, received representations in this regard. It seems to me, it would be worth his while to give further consideration to devising another solution which could be put forward, if necessary, in the other House. He can be assured, if that happens, of no delay in this House in dealing, as would be necessary, with any amendments made in the other House. However, I am at the disadvantage that I mentioned. But if I am right in thinking that the nature of the problem relates to the manner in which profits were dealt with on the liquidation of certain private companies, surely it must be possible to relate the solution to the problem to that aspect rather than, as is being done here, imposing an additional charge on all the service companies every year.
The Minister said there should not be a distinction between the taxation of activities carried on by a company as against those carried on by individuals where it is the same kind of activity. I am paraphrasing what he said, but I believe that is the sense of what he said. Of course, he had to go ahead and admit that there is a difference. The real problem I see is that not only is there a difference, but as a direct consequence of what is being done here certain kinds of service companies which have been in existence perhaps for many years will now be subjected to additional taxation at a time when they can ill afford any further drain on their overheads, their cash flow. They are being subjected to this, not for reasons of revenue, not for reasons of the Minister taking the view that equity so requires it, but solely for the reason of trying to close a certain loophole of which they are not availing themselves at all. It seems to be a wrong approach to the problem.
I would again urge the Minister, even at this late stage, to see if it is not possible to devise a solution which will not affect the day to day working of ordinary service companies, who form the great majority of those being affected by this provision. Despite the relief proposed in the amendment I doubt if it is any great relief. In the example the Minister gave, while there is a fall in the necessary impact of the tax, nevertheless there is an increase in the impact of the taxation involved, which should not be involved under this section.
There is one other drafting matter, to which I wish to draw the Minister's attention, in relation to amendment No. 5. It occurs approximately half way through the amendment where there is a reference to section 100 (4) (5). I assume what is intended to be conveyed there is subsections (4) and (5) of section 100. If that is what is intended to be conveyed I suggest it might be worded that way. Perhaps I am misinterpreting it but I do not think I have ever seen a reference of the kind which appears to be in this amendment which reads:
have the meanings assigned to them by section 100 (4) (5).
It is purely a drafting matter but I believe that could be improved. If the Minister thinks so there would be no difficulty on this side of the House about doing it across the floor of the House.
I can understand Deputy Colley's point but I am assured that this is the formula which is invariably used by the parliamentary draftsman and if we were to depart from this formula we would generate more confusion than by continuing existing practices. The formula is used in the Income Tax Act, 1967.
What kind of formula?
The formula which is applied here, and which I understand Deputy Colley is objecting to, is the one which says the meanings which will be assigned to them by section 100 of the Bill. One either keeps the meanings here, which it is obviously unnecessary to do, because the meanings are already contained in the Bill or else one uses this reference form.
It is purely the manner by which it is done. It says section 100 (4) (5). Is that intended to convey subsections (4) and (5) of section 100? Is that the meaning of it?
Yes.
Has the Minister ever seen a reference in that way?
I would not think so from my own personal experience but I think there are other references of that kind in the Bill.
It says (4) (5) with no comma between them or anything else.
If the Deputy wants to be really confused I draw his attention to page 28, section 21, subsection (2), where there are as many sections and subsections there as there are leaves falling off a tree in autumn.
Section 21?
Section 21 (2).
The meaning of that is quite clear in the context. Perhaps I am raising an unnecessary point but to me the reference in the amendment is almost unintelligible. I have never seen a reference to it in that way. The one in subsection (2) of section 21 is not similar.
With respect, it is. The reference is to section 241 subsections (3) (4) (9) with no commas between them. I think it is sufficient for identification and reference purposes, and that is the purpose of it.
If the Minister is happy about it I am not making a major point of it. We had some amendments to the Capital Acquisitions Tax Bill yesterday, I think, which were worded in the way I am suggesting. In other words, subsection so-and-so this and subsection so-and-so that. I will not pursue the matter any further. If the Minister is happy with it, that is all right with me.
I was happy with it until the Deputy raised the question. Maybe I will be as happy about it when I think about it again. The further you go into this the more you wonder whether studying it helps you. At page 139 subsection (7) we see: "In the Corporation Tax Acts a reference to a Part, section or schedule is to a Part or section of, or schedule to, the Act in which the reference occurs, and a reference to a subsection, paragraph or subparagraph is to the subsection, paragraph or subparagraph of the provision (including a schedule) in which the reference occurs, unless it is indicated that reference to some other enactment or provision is intended." One sometimes wonders why it is necessary even to put that into the Bill.
It is normal, is it not?
These statements are no more than references to help people to understand the meaning. It is better to stick to established practices than to adopt new ones which might, perhaps, create difficulties. However, I will bring the Deputy's remarks to the notice of the parliamentary draftsman.
On the section generally, I mentioned in the select committee a number of cases which show there is a need to stop some very serious abuses. I do not want to go into them all again. I have 12 horror stories here. It is unnecessary for me to give full particulars again. It might be desirable to put some of them on the record so that people will see there is a good reason to try to do something to stop practices which have been developing. In a large number of cases the companies which have been formed are not necessary for the carrying on of the professions in respect of which the corporations are created. There are some professions in which it is not permissible to conduct the profession through the form of a corporation. To some extent this has been got around, as it were, while not in any way transferring professional responsibility to a corporation, by setting up service companies to such professions and putting aside into the service companies profits which are properly attributable to the profession rather than to the operations of the service companies.
The kind of operation we are trying to stop can best be illustrated by a partnership which I will call A B and Company. This is a firm which is carrying on a professional business which does not necessitate the formation of a company. It has four partners. In a recent year it had profits of over £400,000. The principal participators in these profits were Mr. M who took £12,000 and assigned £135,000 to his own family company, Mr. N who collected £30,000 directly and put £28,000 into his family company, Mr. O who was paid £20,000 directly and put £39,000 into his family company, and Mr. P who collected £7,000 and put £39,000 into his own family company.
The result of that operation was that there was a loss in taxation of £62,000, which is quite a whack. I do not think it is right that the Legislature should permit its intentions to be frustrated. The intention of the Legislature is that people in identical occupations and with similar incomes should pay similar amounts of tax, subject to whatever personal allowances they may be entitled to. The intention of the Legislature is being frustrated to a very serious extent by permitting the operation of artificial situations which people can design in order to avoid a very considerable amount of tax.
Another case concerns a partnership which made up its accounts to a date in a recent year and distributed £13,000 to one of the partners and put £19,000 into that partner's family company, £13,000 to the other partner and £19,000 into the second partner's company, making a total of £64,000. The after tax income of the first family company was £10,000, all of which was retained in the company. The second family company's share of the profits after payment of tax also amounted to £10,000, none of which was distributed. So, there was £20,000 which did not bear higherrate tax.
There are innumerable cases of service companies retaining massive sums and distributing them by way of non-repayable loans to the directors at purely nominal interest rates, which are massive advantages which are not available to people who conduct their business in a personal capacity. There are several cases of firms liquidating the service companies so as to give themselves very substantial tax free distributions. There is one such company which I shall call company O. It provides what are called services for a professional firm.
The accounts of the service company for a recent year disclosed profits of over £150,000 and the unappropriated profit at the balance sheet date was £192,000. No subsequent accounts had been lodged but it has now been stated that the company ceased business last year. A predecessor service company for the same accountancy firm ceased business about six years ago and on ceasing business distributed £146,000 to the partners of the professional firm by way of a bonus issue and its subsequent redemption. Five years ago £88,000 was distributed to the partners in the same manner by another such company. One may reasonably assume that the accumulated profits of £192,000 in the hands of the service company to which I have previously referred, together with whatever amounts have been accumulated by it over the last few years, have been or will soon be distributed tax-free by way of a redemption of a bonus issue.
Those are not practices the House can endorse. I am not saying the manner of dealing with them here is ideal in all respects but I suggest we are providing a measure of adequate opportunity for people who want to set aside a sum for the maintenance and development of a firm without allowing people to abuse the tax provisions and the legal system in order to give themselves massive tax-free gains.
The alternative to handling it in the way we are doing in this Bill is to look through all these service companies to see who are the ultimate beneficiaries and to apportion the respective profits which the beneficiaries in those companies hope to get and to tax them at the appropriate rate. In the cases to which I have made reference the appropriate rate of taxation would be 77 per cent, not the effective 58 per cent that will apply under this section. We are still leaving advantages to people who have service companies. We consider we have at least closed the floodgates against the avoidance abuses that have been growing recently. It will not be so attractive now to engage in many of these practices but it will be sufficiently attractive for those who genuinely want to provide means to develop a business to do so and pay a lesser rate of tax on income which is not distributed in order that it may be reinvested.
I commend the amendment to the House. We will see how it operates in practice and if there is a need to change it, either to tighten it or to provide some alternative system, I am certain that future legislators will be prepared to make the necessary adjustments. If it is deemed necessary to give reliefs, they can be given. I am not saying this because I consider one should avoid making the right decisions now or be indifferent even to the temporary consequences of legislation. I am saying that we need to have a period during which the law, as amended, will operate to see if it will be effective in allowing firms to withhold a reasonable amount for the maintenance and development of firms and will also be such as to discourage in future the kind of taxavoidance practices which have operated in the past.
Amendment agreed to.
I move amendment No. 5:
In page 144, to delete lines 56 to 58, and to substitute "(ii) distributable income, distributable investment income and distributable estate income of a company for an accounting period have the meanings assigned to them by section 100 (4) (5) with the substitution for the reference to a trading company in each place where it occurs in section 100 (5) of a reference to a service company.
Amendment agreed to.
Question: "That the Bill, as amended, be received for final consideration" put and agreed to.
Agreed to take remaining Stages today.
Question proposed: "That the Bill do now pass."
This Bill is a revision and amendment of the law and it is also in a sense a consolidation measure. Broadly speaking, the Bill takes corporate bodies, namely, companies and it purports to treat them separately from the income tax code—the House will note I have not used the word "removed". The Bill proposes to amalgamate the two taxes relevant to corporate bodies, namely, corporation profits tax and income tax. The Bill consolidates these two taxes and substitutes for them a new tax that will be known as corporation tax.
At first sight it appears we are doing here what we did more thoroughly with the capital legislation, namely, to remove the subject-matter of this legislation from the ambit of the income tax code and to set up a code itself. The House will recollect that with regard to the Capital Acquisitions Tax Bill, the Capital Gains Bill and the Wealth Tax Bill, there was an initiation of a capital code that to a large extent was made an independent and separate code from the income tax code. Here the intention was similar but, for practical reasons that can easily be appreciated, it has not been possible completely to separate them. It is to be appreciated at the outset that even though income tax and corporation profits tax are being amalgamated in the new tax, the provisions of the income tax code, so far as it impinges on corporate bodies, will still be relevant.
The income tax code will be more intimately associated with this legislation than it was with the capital legislation. This is inevitable. It was done in a commendable way in that the staff work avoided the mysterious method of legislation by reference and did it as explicitly as they could in the Bill. The Bill as a model pro tanto to that extent is to be commended. The staff work involved in its preparation is worthy to be considered a model. Nevertheless, in practical terms no accountant, lawyer or company could consider this Bill without keeping a watchful eye on the income tax code as a whole.
I say these things as statements of fact about the Bill and not in a critical manner. In the complexity of the situation it was a difficulty and, by and large, a practical and commendable solution to the problem was found. There are 256 pages in the Bill, 188 sections taking up practically 163 pages with the remainder being devoted to Schedules. Undoubtedly, some contraction in volume of this document could have been achieved but it would have only been achieved at the expense of legislation by reference. I have no doubt that the correct thing was done here. It will be appreciated that with a Bill of this size if the Parliament, and in a democracy such as ours, outside interests of vital economic importance to the community are to be consulted, opportunity to study the measure must be made available.
I am not suggesting that an effort in that line was not made. The White Paper was published in ample time and the Bill, taking everything into account, was circulated in sufficient time. Representations were sought from affected bodies and this was all done in an open-handed way. Deputies had the Bill long enough to be able to make a study of it. However, the real study of a Bill of this nature takes place on Committee Stage. It is only during Committee Stage that we have a debate although Deputies can form their opinions after reading the Bill. A Bill like this is extremely technical for most of us and there are very few, if any, who have experience of the whole field. We largely rely on the give and take on Committee Stage to clarify our own thoughts. If we do sufficient home work in these circumstances then the Parliament can be an effective instrument in perfecting legislation. That Parliament should be in such a position of preparation and have such opportunity is particularly important on a measure of this nature. I venture to say that years of careful study by experienced and competent staff preceded the issue of such a document. This measure is the product of careful and honest work by experts who knew what they were doing and took the trouble to study the matter.
If we are to play our role in it we should be able to avail of this staff work and inject the political and other broadly social aspects in it. I feel that one of the defects of our democratic system as it is developing is the lack of sufficient prior indication in detail to those staffs of policies to be pursued. Therefore, they are left in the position to assume policy which, in prudence, for any staff officer would mean that he is taking, more or less, a continuation of continuing views. That is a criticism of us and not of them. I should like to add that I had a little experience as a staff officer and of the preparation of certain types of documents. I am making my statements aware of the necessity for leadership in policy at the early stages coupled with an understanding that keeps the policy finger out of the work that staff are doing.
This seems a little abstract but it is vital for the House and the public to understand where we stand with this Bill. This is a very good document, and, in all the context, a very fair document. However, in regard to this very fine piece of work, we have served and are serving no other function that that of the proverbial rubber stamp.
I want to mention a dilemma the Opposition were in from the beginning. The Bill took a long time to prepare and was slow coming before the House. A Second Stage debate can never be more than a preliminary, designed to give the House and through it the electors an opportunity in general policy terms to say what should not be in the Bill but more important what should be in the Bill and which is not in it. What is in the Bill is mainly commendable in many aspects but it is what the Minister has produced and we are here reduced to the role of saying either yes or no when we should be in a position to give a critical analysis.
I mentioned the dilemma the Opposition were in. Obviously if you have a measure which is generally good you would not be justified in obstructing or rejecting it simply because you wished some matters of detail adjusted, perhaps even some fundamental matters. All an Opposition can do is hope to be able to prevail on the Minister at Committee Stage to accept certain amendments. On the other hand, if an Opposition do not play their role it is a very bad thing for democracy. I hope the Minister will not mind my making a political remark here on a measure which I do not think should be brought into the political field. If there was one criticism I could offer of the Government parties when they were in Opposition it was that they completely failed as an Opposition to oppose legislation constructively. We are here now trying to learn from their mistakes. I do not know how many times I had to sit behind the Government then, feeling that I had to supply the Opposition which was not forthcoming from the opposite side of the House.
Those remarks were interjected merely to emphasise the role we have in the House in regard to legislation and which we have to try to discharge in the difficult circumstances of modern time.
The public should know the reasons advanced by the Minister for the urgency of this legislation, namely, that it is desirable in the interests of the country's commerce that the Bill should become law in this financial year. I understand as well there were external considerations. We are not an isolated country any longer, because we have relations and agreements with other countries and it therefore became desirable that this legislation should become law as quickly as possible. The Minister put that point to us before we went into Committee, and reluctant though we were to allow the Committee to become merely a window-dressing operation, that is what the facts made the Committee.
The Committee went through the Bill in a short time, relying on the advice which the Minister gave to the Committee and which he in turn had available to him. I am glad to say every member of the Committee had the greatest confidence in the advice given to the Minister and to the Committee, and even though we were a rubber stamp, will still put our imprimatur to the Bill confidently because of that advice. One thing perturbed me in this respect. We were singularly fortunate in being able to deal with two branches of the administration, the Department of Finance and the Revenue Commissioners, in this matter and I regret to say I would not feel the same confidence in regard to other Departments, other areas.
The Bill comes before us very much an instrument of the Minister. We had some difficulty in proceeding at Report Stage because we did not have the verbatim report of the proceedings of the Committee. Therefore at this moment I am forced to rely on my memory and we all know our memories can be inaccurate sometimes. Therefore I ask the indulgence of the House, the Minister and his advisors, if I inadvertently misunderstood some of the Committee proceedings.
Let me take the Bill now and what is in it. I have already mentioned it combines income tax payable by corporate bodies with corporation profits tax and charges it at the rate specified in the Bill. From the point of view of financial impost there is little change but I think it is only right to remark that what little change there is is, as one might expect, will be in favour of the Revenue. I think it is marginal but I think a little more will accrue to the Exchequer as a result of this legislation. I shall come back to that in a moment. I am talking about the incidence of the rate of tax. I think the rate struck is marginally, shall I say, in favour of the Revenue or, to put it in another way, nothing is given though there are reliefs later.
The next point is that companies managed and controlled in Ireland, whether incorporated in this country or not, will now be captured for the purpose of corporation tax on a world profit basis. The situation in regard to companies outside Ireland, and agencies and so on, is complex and I do not think I could attempt an analysis now. It does not call for detailed discussion here but it certainly does call for study by all interested parties. Not only have you got the tax but you also have embodied here the provisions of capital gains tax where corporate bodies are concerned for corporate capital gains. They are dealt with in the Act.
As I have already mentioned, the income tax code and the rules under it remain very relevant. So far as large companies are concerned that will be largely a matter for their accounting advisers. In the imposition of corporation tax where the 50 per cent rate applies, there is a relief on profits up to £5,000 which would be 40 per cent and then an intermediate scale between £5,000 and £10,000. This is evidence of an attempt to face the realities.
The payment dates and accounting periods are again a matter for consideration and should have been a matter for more detailed debate than we could give it in the Committee. All I can say is that accountants will have the problem of dealing with this. There are certain provisions that may, so to speak, put forward, if I may put it in very general terms, the payment of tax in certain cases which could conceivably in the case of an individual company raise an additional cash flow problem at a particular time. Whether or not that would be serious I am not in a position to say.
With regard to capital allowances the position is essentially the same as it was but again there is a change in the time element and whether that is advantageous or disadvantageous may depend on the particular case. There are procedural changes which do not go to the substance. There are certain changes in regard to provisions for the declaration of dividends. The most important warning here is that the income tax code cannot be ignored and all these matters are in the nature of adjustments by legislation and I think a particular judgment would be that they in themselves do not affect the existing situation very materially. In regard to dividends or distributions, however, there is a major policy matter to which I should refer. Capital distributions are strongly discouraged. Revenue distributions, except for changes in mechanics, appear to remain more or less the same. It would be very advantageous from a commercial or taxation point of view to prefer revenue dividents and I rather think the reason for this policy is the consciousness of tax abuses and essentially this approach is a tax avoidance measure.
One can sympathise with the Revenue Commissioners here and perhaps this is the occasion to make a remark which many people feel should be made and the remark is directed as much to the advisers of companies as it is to the directors. It is a very unfortunate fact that company law and the advantage of a limited company has been so frequently used and abused in an effort to avoid the payment of tax and to secure a financial advantage through the evasion of tax which, if not legally, would be equitably due.
If the Revenue Commissioners and Ministers from time to time have had to bring in legislation which has created hardship and difficulty for genuine trading companies and have had to introduce provisions which were restrictive on legitimate and commendable economic activity, it is because there has been far too much ingenuity in the past in seeking devices by which the payment of taxes can be unfairly avoided or using the code and the advantages of limited liability to defraud the Revenue.
This is basically one of the reasons for Bills of this nature and annual Finance Acts. Both the Minister now in office and the former Minister now sitting beside me will not contradict me when I say this: it is not bloody-mindedness on the part of the Revenue Commissioners or Ministers or politicians that have imposed the restrictions; it has been the amoral attitude of a minority of people who have been using the legislation provided for limited liability for wrong purposes, and in that indictment I am sorry to say one cannot exonerate all professional advisers on such matters.
I am labouring this because it has a great bearing on the content of this Bill, on the understanding and appreciation of what is in this Bill. I am labouring this because the bona fide trading unit which is of benefit to the community and particularly to high employment content industries suffer from restrictions that come about in this way. Furthermore, the tendency to hold the revenue-collecting authorities of this State up to odium stems very largely from the same cause. As far as legitimate trading and economic activity is concerned, I think that within the constraints of reality a very good job has been done. With regard to the complaints, I can only say that if there is to be blame it should be put in the right quarter.
These remarks, a Leas-Cheann Comhairle—and I thank you for your indulgence—are not, as I hope to show, irrelevant to the Bill, because there are a couple of sections in it which, even at this late stage, I want to urge the Minister to reconsider, if not now when this Bill is going through, at a later stage. At least it will be on the record that there was an appeal for reconsideration in the light of experience. I want to make it quite clear the reasons why I am doing this so that the representations I make and that have already been made in another way to the Minister will not simply appear to be those of interested parties made for selfish purposes, but will be seen as being for genuine public purposes and in the public interest. I do not have to say we are not opposing the Bill, but the criticism I am going to make of certain sections is necessary and desirable. In so doing let us keep a balance and see the good things, too.
When I was talking about the incidence of the 50 per cent and pointed out that there was perhaps a tilly for the Revenue in this change, I should also, in fairness, say that, generally speaking, the relief for losses in the Bill is more satisfactory than it has been, and questions of set-off and various matters like that have been very fairly considered and treated. There are reliefs, and there was a sympathetic attitude shown to the remarks we had to make in the Committee. Existing reliefs like export sales relief, Shannon relief and other such things continue unchanged. There is little effective change in the treatment of corporate capital gains, and perhaps, on balance, if there is any change at all it is not unfavourable. I am trying to highlight some of the things that strike me here in regard to the content and effect of the Bill as a whole. In summary one can say that the measure is commendable.
There are a few matters that I would like to deal with at some length. There is a recognition, and there has to be a recognition, that we are now in a wider area of economic activity than we were before our entry into Europe. Not only is there the question of our relation with the EEC but there is also the international trade. The development of the so-called multi-national companies, the closer association of the foreign companies in trading in our area and so on, have all posed problems. An attempt has been made to be realistic about this. We will have to accept the fact that in the give and take of trading there are advantages conferred, or rationalisation achieved, where non-Irish based companies are concerned. I would characterise that approach as common sense but there may be people who, in a failure to appreciate the realities of commercial life, feel that we have not been restrictive enough in relation to purely home activity. To them one has to say that we are not living in an isolated world any more and if there are criticisms of this Bill, its provisions can be justified.
The Bill recognises the modern tendency—I am now talking about normal commercial practice and not abuse—to group companies and to develop an organisation of companies. Until relatively recently, particularly in Ireland, the company was a corporate body, in contemplation of law, analogous to the individual and it functioned with certain legal rights and privileges. Gradually the system has grown up of organising companies into groups and agglomerates for a concerted legitimate commercial purpose. This growth was not visualised when the 1908 Act was passed or even when the 1963 Act was passed. During the last decade this has obviously assumed different proportions. It was likely to cause problems for the companies themselves, for the trading interests concerned and for the revenue authorities. This was rationalised in this Bill, reliefs are given and an element of order has been imported into this so far as taxation is concerned.
Of course, this raises what I call the philosophical question about the desirability of the encouragement and development of these large agglomerates. Of course, that is as much a social as an economic question. It is a particularly important question from two points of view that are not directly relevant to this debate, namely, the points of view of the employee and the consumer. So far as taxation is concerned, an element of order is introduced here, reliefs are given where they should be and loopholes have been closed where possible. That was the correct thing to do.
The broader policy aspect may arise when a revision of company law is introduced. There is a deep social question here but I would not like any feeling of confusion about the function in this Bill in that regard to emanate from this House. This Bill deals only with a very restricted area and seems to be confining itself to its own business and making definite provisions.
There was ample food and material in this Bill for debate in Committee and possibly for disagreement on detail. If I were to make a general statement about the Bill as a whole I would say that we have not been in a position to balance the very natural and correct attitude of one aspect of the Minister's advice, namely, the need for preventing abuse and tax avoidance. We were not in a position to carry out this examination and, in that sense, we were not in a position to help. Not being in a position to help would not justify us in hindering it now.
There are some provisions in this Bill on which I would like to comment, I tried earlier to put our views into perspective in proportion and I will give the reasons for this now. I want to deal with section 84, with section 94 which makes provision for close companies, and section 162. It would not be in order if I were to deal with them in a Committee sense, but a comment and our attitude to what they do would be in order on my part.
This is not simple legislation. I should really go back to sections 10, 11 and 12 but I cannot open up the Committee Stage debate nor do I want to. Representations have been made to the Minister and to the Opposition that section 84 has a certain discriminatory provision against non-resident lenders. It raises the question, first of all, of homogeneity of our thought with the European Commanity and also the practical question of inter-relation of foreign trade in the world today.
This section would probably have the effect of making borrowing more expensive in certain circumstances because interest would not be allowable as a deduction in computing profits. It has been urged on the Minister—I will not repeat the argument—by accountants and others that this section should be reviewed. I will content myself now, within the confines of this debate, in referring to this section, which deals with matters to be treated as distribution, by suggesting that when the Minister brings this Bill to the other House, which is a Money Bill——
It is.
The debate in the other House will, therefore, be rather restricted. Unless the Minister feels it is necessary there is no need, in curtesy, to reply to me unless he wishes to correct a misstatement on my part or wishes to make a public statement. I will not take it in any way as a slight if he does not reply to some of the things I am saying. I will leave section 84 with the simple exortation that the Minister still has an opportunity to consider the representations in this matter that have been made to him particularly by the accounting profession. This is customary in a Bill of this nature. The Minister consults such people and, also, as is customary, such bodies and interests submit their comments, recommendations and provisions to the Minister. In this case the comments and submissions have been very carefully considered by the staff dealing with them.
It is also a natural democratic and parliamentary procedure that the Opposition are very often informed of those points as well in order that they may raise them and press them. That is a correct function of the democratic process. We are aware of those representations but we were only able to touch on them in the committee, which disposed of as many as 100 sections in a session. When any committee dispose of up to 100 sections while you are looking around you need to have a very active arm to put the stop down in time. Would the Minister consider having the points that have been made on section 84, even at this late hour, looked at and approached in the same spirit as he approached the amendment that we had on the Report Stage, although I am afraid I took it with rather bad grace?
The next part of the Bill I want to comment on is Part X, section 94, Close Companies. Here we should also recognise that those provisions are made necessary because of the abuses in certain quarters formerly. One fears one cannot hope for a sudden reformation of human nature in this regard. The section refers to the abuses which could be achieved if some such provision were not included. Every member of the Committee, including the Opposition members, wish to support the Minister and his administration in setting their faces against the improper use of legislation to avoid the payment of tax. The Minister said in the Committee that we were scandalised. May be we were not scandalised, or even surprised, but we could well understand and realise that what the Minister was telling us was a problem, the type of ingenuity that could be used to effect a very substantial degree of tax evasion which would hit the ordinary taxpayer.
When people avoid paying large sums of tax—and this should be realised all round—other people have to pay for that. In the same way the taxpayer has to pay for social services, and so on.
I mentioned on Committee Stage the person who had a refractory disease of his foot and the doctor solved the problem by chopping his head off. That would be too strong a statement in regard to the provisions about close companies. The Minister may very well capture a wider area than he intends to. There may be cases, within the technical and strict meaning of the law as defined in company law which may be close but are functioning perfectly bona fide, and very much in the interests of the public in their economic and commercial activities, and very much in the interests of their employees and public shareholders. In such clearly bona fide cases, I should like the Minister to consider a suggestion made in committee. Perhaps an element of discretion should be allowed to the Revenue Commissioners. The Revenue Commissioners require a firm and unequivocal power which will not commit them to any inconsistency of precedent but will enable them to deal with the type of abuse the Minister has in mind but they should have sufficient discretion to deal with genuine cases also.
As I said, perhaps a larger area will be captured than was intended. The intention is to capture the private company mechanism which was being abused. This is a problem we met on the three Bills dealing with the taxation code. It is also intended to cover the case of a public company within the definition of the company law which could be used to accumulate undistributed profits, or something of that nature, for tax evasion purposes. The consequence may be that some bona fide and desirable cases may be harshly captured in the same way as the old death duties code impinged with ferocity on the ordinary family. That code might have been fair enough in dealing with very large estates of a certain type, which were common enough when the income tax law was initiated, but it operated very harshly, indeed, on the ordinary middle class testator's family when he died.
The definition of a close company and these provisions could conceivably cover a wider field than was intended, and may have unfairly restrictive and penal effects on companies which otherwise are absolutely in the clear, and primarily concerned with the interests of people other than those who are technically in control. The Minister has tried to meet what I am saying by making provisions in relation to stock quotations. But not every company is on the stock exchange. Perhaps I speak heresy when I say what does and does not go on the stock exchange in modern circumstances may be reviewed in the near future.
The other night one of the EEC Commissioners made the point that, particularly in large companies and groups of companies, the shareholders have not got real control now. They are entitled to certain remuneration and, in theory, they have control at the annual meetings. The reality is that their control has been whittled down to the right to receive monetary distributions. In the long term, the employment of the workers must be safeguarded. I have a feeling rather than something I can pinpoint that the Minister's provision in regard to close companies may be a little more restrictive than he intends. I am not impugning his intentions.
I come now to section 162. If I say anything which is a misrepresentation or a mistake on my part, I will be obliged for a correction here and now to prevent me taking up the time of the House, and so that the Minister will not have to explain in detail afterwards. We had an amendment to the section. The Minister showed his anxiety to meet this point. I believe it is wrong in principle. It is particularly harsh on service companies. In what I said this morning I may be considered to have been severe on professional advisers. On the other hand professional advisers fulfil a very important role in commercial activities. They are indispensable. They are a very important element in maintaining standards and the public interest. I want to emphasise that because it applies to the majority and also because earlier I criticised the facility with which ingenuity and advice can be used for misguided purposes. Whether it is the lawyer, the accountant or someone else, they play an important part in maintaining public standards. Therefore, I make no apology for referring to their recommendations to the Minister and pressing them on him, even at this late stage.
Responsible bodies, representing reputable professions, such as the Consultative Committee of Accountancy Bodies, the Irish Auctioneers and Valuers Institue, the Royal Institution of Chartered Surveyors and others, have been almost unanimous in making these recommendations to the Minister. To some extent, the Minister's own profession will be affected by this legislation also. The reason I am quoting them is that it would be too easy to charge them with self-interest. I am pressing their case now, not ex parte but because the merits and equity of the case demand that it should be presented in this House. It is our job as parliamentarians to do this. In our community it is too easy to impute unworthy motives. One of our weaknesses is a lack of a certain generosity in attributing motives to those among us. It was Johnson who remarked that the Irish were a fairminded people, they never spoke well of one another. We have that virtue to a fault.
In the case of a close company a surcharge arises in certain cases. I agree with the Minister that such companies can be set up and that they have in certain cases been used for wrong purposes but it is unfair to penalise the whole class. One of the organisations pointed out that the 20 per cent surcharge which bears particularly on the service companies by virtue of section 162 was intended to deal with transactions that were in the nature of tax avoidance devices. That is the kernel of it.
The section was motivated primarily with that objective in view. That is very well but is it fair to apply that surcharge to a company that is merely a service company and is carrying on a profession? One must take the historical circumstances into account. Where formerly there were partnerships, the structure of such partnerships is becoming less and less appropriate to modern conditions and we should realise this. Where partnerships were appropriate organisations in another age, today in a modern environment of complex commercial activities—instanced by the tendency to organise companies into groups—and coupled with the complexity of fiscal and other legislation it more and more makes the concept of a simple partnership unworkable in a real sense. This is true to such an extent that the professional bodies I referred to have found it necessary to encourage their members to acquiesce and condone, later to recognise and perhaps now to encourage members legally to constitute themselves as corporate bodies. This has been happening where the great number who have been carrying on that type of business have become incorporated during the years. In these cases there was no question of tax avoidance. It was a question of commercial desirability, the requirement of giving the service that was needed.
They are service companies but they have to be organised in the modern world to give service. The old partnership and the indefinite organisation that was sufficient heretofore is not sufficient now. In order to give efficient service and to play their part in a modern complex community these service companies are a desirable part of the economy and should not be penalised. I will try to bring home the point by an army analogy. In the old days soldiers went out to fight with swords and spears, one section of them on horses and another section on foot. It was a very simple operation and the food was just carried up but nowadays in a military organisation there are staffs and services of a multifarious kind, all sorts of communications. The same thing is happening with commerce and business.
It is all in the one army.
Yes, and so are they all in the one army.
They are not.
There I disagree with the Minister. Even the Minister's own profession, which sets its face against its members being anything but either partners or individual practitioners in the older sense, is finding it necessary to have incorporated bodies developed in rather close association with them. These bodies are not provided merely for selfish or profit-making purposes; they are a necessity to give the service that should be given.
If they are the one army they should pay the same rate of tax.
That is just what they are not.
A moment ago the Deputy said they were.
The surcharge is what I am talking about. The Minister knows the case that has been made by the Auctioneers and Valuers Institute. Another institute said much the same thing. That institute said that the proposal may go so far as in many cases to lead to firms having to dispense with staff. It claims that it will even contribute to the inhibition of the recovery of the economy. Because of the importance of their service I would not discount that claim completely. The Minister has said they are all the one army but I should like to quote another point made in a case to the Minister:
We would point out that were professional firms which are incorporated treated as any other company, full tax at the highest rate applicable to the individual will be recovered when and if such retained income can be and is destributed, particularly in view of the more stringent conditions now proposed in respect of distributions of any kind.
If they are the same army they should be treated the same as any other company.
The surcharge on service companies is, in a sense, a discrimination against professionally qualified people practising corporately in the service sectors as against persons without any professional qualifications operating corporately within the service of any other sector.
It is discrimination in their favour against people——
The representations are made very much on the other.
I know they are because they are special pleadings.
I am glad the Minister took my invitation but I am sorry to hear him say that. It is unworthy of the Minister. This is a case where it is unfair to impute too far the motive of special pleading. I have no interest in any such service companies and I want to make the case on its merits. The stark facts—a phrase used by another body who made representations to the Minister—are that professional businesses have the same requirements for retaining profits to finance working capital as other trading entities.
On Committee Stage the Minister made the point that these companies did not require the same capacity to retain profits for finance working of capital as other trading entities. On the other hand, many of these professional businesses are now major undertakings with international ramifications which are very important for this country. It is important that the elements of these service companies here which are associated with corresponding elements in other countries should be strong and influential. It is they who are keeping up that end of our economy as against the advisers and people in other parts of the world. If we have a service firm here which is properly linked, whether in formal association or by a trade agreement, with a corresponding body in the United States, the UK, or in Europe, it is very important that the Irish company should not only have the same expertise, the same prestige and standing, but comparable resources at its disposal. It is important so that the interests of the commerce of this country and of the productive firms who require these service companies, and who are maintaining the basic economic activity of the country, should be adequately catered for.
I fear—I do not mean to be slighting in saying this—that the administrative approach, the so-called administrative mind, may be a little out of touch or judging the thing on the "file" rather than the reality when it makes the judgment. I feel the same about the Minister when he makes a judgment. I fear that because the tangible outgoings of these companies appear to be mainly in the area of the payment of salaries and wages they have not the same claim to have their profits treated as trading profits as other companies. That, I suggest to the Minister, is a fallacy, a wrong and dangerous approach, detrimental to the overall economic situation of the country. Many of them are now major undertakings, labour intensive in an area where we require expertise.
Let the Minister for a moment reflect on the present feverish activity over the discovery of oil and the need for administrative, legal and financial advice and think of what is involved in that. A moment's reflection should convince him of the importance of such companies and how the expertise that is there should be developed, and that far from being less useful members of the community, they are playing a comparable role with administrative entities, whether State-employed or otherwise. Of course they have to face inflation. I could go on at great length on section 162 but I would probably be infringing on the rules of order by imperceptibly going into Committee Stage.
This surcharge is a discrimination, unfair and unwise. I know that to try to find a solution that will avoid abuse is difficult, and the Revenue Commissioners and the Minister have my sympathy and I hope my understanding in their problem. I cannot fault them for their approach but I suggest that the wider basis of this was not appreciated. We are all the one army and I would say to the Minister in the friendliest way that we would not be living up to our reputation as a very fair people if we took the easy way out and said these representations I have highlighted on this section were made merely for self-interested purposes. That would be unworthy of us and I do not think the Minister would want to press that point. It is a psychological element against which we should be on our guard. The fact that a person presses an inequity or a disadvantage because it happens to come within his own purview should not preclude him from making a reasonable representation and that should not be taken to mean that self-interest is the only motive or justification for him doing so.
If that were to be the case there would be very few of us who could talk about anything with any authority. When all is said and done none of us can talk sense about anything with which we have not come in contact. Our judgments must be realistic, otherwise we are indulging in doctrinaire academics which have done so much awful damage in the western world in the past decade—the bees-in-the-bonnet mentality. Either we are doing that or we are soap-boxing without knowing what we are talking about.
I have been critical about professional advisory people who have misused their ingenuity, and while talking about these service groups I should like to see greater rapport between them and the State organisations so that there will be more working together rather than an atmosphere of cowboys and Indians. I suppose a little of the latter game is inevitable.
Speaking from my knowledge, the abusers and the slick workers are in the minority and there is very real and constructive and useful co-operation between these service professions and the organisations of the State to the common good of the community.
On section 162 I have quoted these reputable bodies which are not individual firms but the bodies that represent them. I am not for a moment suggesting that the Minister or his advisers have not considered the representations but if we take note of the trade union organisations, the employer organisations, the farmer organisations, we should immediately in fairness take note of the representations of professional bodies when they talk in general terms and resist what I fear is a tendency in the modern world to treat the professional man and the individual engaged in private business—I am not talking of the individual entrepreneur engaged in big company activities but the professional man, doctors, lawyers, and so forth and the men in individual businesses—as if they had not a very stabilising and important role to play and as if they were not a very important element in the matter of the custody and the preservation of human freedoms and individual dignity. We should very strongly resist anything in the way of penalising them.
Such representations are worthy of reconsideration. I thank the Minister for what he did in relation to this amendment and I urge him to look at the principle I am propounding. There are two things in this Bill which can amount to discouragement of capital distribution. I can understand that—a case can be made on the basis of keeping money invested in industry. I am not objecting, but when it comes to the surcharge on investment, I wonder is this not going a bit far simply to avoid—I am back in principle to section 162 but I am on wider ground— the possibility which undoubtedly is there that undistributed profits can be accumulated and subsequently distributed in such a way that they are either tax-free or subject to an altogether too low rate of tax, quite apart from the fact that there is a delay, a deliberate keeping out of Revenue money that should be paid for a number of years.
I think that is the gist of the Minister's case on that point and that I accept. On the other hand, cases can arise for close trading companies doing a bona fide trade, whether within the technical category of a private company or a public company, which are close because of the element of control or anything else, who may have certain possible investments which are never intended to be used for defrauding the Revenue, which in fact are, so to speak, a minor provision for liquidity and also a minor source—I am talking about genuine trading companies now—of welcome revenue in the form of a dividend return on their investments. This can happen for good business reasons. I find it very difficult to see in a case like that why that should be surcharged. A particular case in point can happen. It is not unusual for a fairly large company to be doing business with say, its bank—and banks have now gone into the category of company groups, many of them multinational—and to have shares in the bank with which it is operating. One thing that seems to be thriving in this modern world is the international financial industry. It has happened, perhaps following inflation too, that you have had bonus issues or rights issues on attractive terms by such institutions to existing shareholders. You may have a company, which had some shares in such a banking institution for very good commercial reasons, that avails itself of such a rights issue and is getting a dividend that may be a small proportion, or a small proportion of its turnover, still something not to be sneezed at. That this should be subject to a 20 per cent surtax seems to be indefensible, that is, if everything else is in the clear. It simply means that a company cannot do that kind of thing. It means that that rights issue, if given at an advantageous rate, would have to be declined. It means that what would be essentially an Irish investment in another case would have to be declined. Altogether, when one follows it through from that point of view, there is reason to fear that the provisions in regard to this close company may have unforeseen and undesirable effects because the concept of the close company has been extended so far in order to catch the person who is behaving amorally or even dishonestly.
That is one aspect of it. There is another aspect of what can happen, so much so that it would be a debate in itself on what I might call "held securities" of that nature. What about a company that has some funds on deposit? I know that in the present economic recession it is very much the rule that companies are in an overdraft situation. Indeed, you could also say to me, and I would have to concede, that in periods of expansion overdrafts are very popular because everybody has the wherewithal and goes after them.
The situation, as I remarked on another Bill, at the present is that we do not have people taking up the overdrafts that are available. In any case, is it right—if you are in overdraft you are paying interest and I am not quarrelling about how that is dealt with for tax purposes—that when it is bona fide, and the Revenue Commissioners can easily check whether it is bona fide, and I have no objection to standards being laid down for the matter at all—to say simplicitor that because a company has, and it may be only temporary, a sum on deposit, or is in credit with its bank, it must be surcharged and no company that is in credit with its bank is going to leave it there and not put it to earning interest. If you have a bit of cash that you are not using immediately, surely the sensible thing would be to make it earn money for you. But if the effect is going to be that when you are in that position, and it can often be only a temporary position, you have to pay 20 per cent surtax on it if you do not distribute it, then that is crazy. What about a company that has made provision for money to buy machinery, a prudent institution that is not just recklessly taking chances on overdrafts, or maybe cannot get an overdraft, and delivery times or some dispute means that they keep that money on deposit temporarily, why should that money be subject to surtax? I have warned the Minister I can be wrong. In certain respects I can be misreading, but this is the way I see it. Lastly, on that particular point, is it good public policy to insist that moneys are distributed in dividends? We listened to a great deal about this and I think we even heard the Minister on other elements of this Bill talking about the discouragement of capital distributions and about ploughing back profits. We heard a great deal of talk inside and outside the House about keeping the money in the business. This is more than ever necessary now. The social evil, the motivation to tax evasion which the Minister is seeking to block, and rightfully so, is the desire by individuals to get cash into their hands for private purposes. Surely to have a provision in a Bill designed to force the distribution of dividends is, to say the least of it, out of line with the concept of ploughing back and encouraging the ploughing back of profits. If a close company has other investment interest that cannot be brought within the category of trading profit or has a deposit in the course of its business on which it is earning interest—that could happen temporarily—I can conceive that in the course of business it would be perfectly possible and, indeed, in the old economics it would have been desirable, to have a liquid reserve all the time.
I know fashions are changing but I believe Dickens' economic theories are ultimately proving to be sounder than those of the moderns. If a company has a monetary return it has to distribute it in dividends to its shareholders or else pay a 20 per cent surtax on it. In other words, it is purely a case of the Revenue wanting the money or the Minister wanting the money and the social purpose is put completely in the background. If the Minister cannot get the money because the dividend is distributed he will take the other way. I would like him to recollect that in taking the money the other way he is encouraging the distribution of money which, from the point of view of the public and from the point of view of the enterprise and those employed in it, would be better kept in the company working for the company.
This provision is in the Bill for two fiscal reasons. One reason is quite understandable and we give it full support. It is to prevent the abuses and I am with the Minister there. However, I think those abuses could be prevented without going as far as the Bill does. The second reason I would like to argue and would have argued on Committee Stage is that the Minister wants the money now. If the profits are accumulated then whatever tax payable on distribution will be deferred. That is arguable and I do not think I would subscribe to it.
Finally, having been vehement enough in presenting the case in the way I did, I wish to say in a balanced way that what I have said is pleading the case strongly without, perhaps, adequately adverting to the whole structure of how the tax is taken out of the company. When I talked about the second element, namely, getting the money now, the fact that the profits are maintained in the company, we have to go back to earlier sections providing for the manner in which dividends are paid and the relations between companies where one company has an investment in another. I want it to be quite clear I recognise all this but unfortunately we are not on Committee Stage and we could not deal with the matter in Committee and so the Bill has not been properly handled in Committee. It had no Committee Stage at all really. However, I shall not delay the House or the Minister on this.
In conclusion, I should like to make one or two comments. When we were finishing the Capital Acquisitions Tax Bill we felt we should say it was a good Bill and a proper Bill. In my earlier remarks I have said what is to be praised in this Bill particularly in regard to its drafting and its presentation. It is desirable that such a Bill should come. I believe it is the product of years of preparation. It is generally in accordance with the White Paper, another point to be noted because it shows a certain consistency of thought and there is no element of surprise. That will be acknowledged by everyone. There are naturally, as with all new Bills of this nature, elements of uncertainty and incidental elements of a little hardship maybe here and there and maybe a little indulgence here and there. With the exception of the matters I mentioned, particularly the close company section 62, this seems to me an acceptable Bill by and large.
This Bill is the product of staff work and effort of which this Parliament and the country can be proud. It is, perhaps, unusual for us to do this but, having regard to the burden that the Revenue Commissioners, the Department of Finance and the Minister's advisers had in this revision of tax legislation, it is only right to recognise the strength, the ability and the objectivity of those who prepared this legislation. I would have liked a little more clearsighted policy at the beginning which would possibly have made the task of these people easier but, within their terms of reference, they have done a really excellent job. Unusual as it is for us to comment on such matters here I, as a Member of the House, believe that the presentation of this Bill is in no way inferior to the best produced anywhere else. Perhaps it is very much akin to corresponding British legislation but, fortunately or unfortunately, depending on the way one looks at it, our economy and conditions here generally are closely akin, perhaps too close in the financial sense in the light of what has happened and is happening across the water at the moment; but, be that as it may, a good job of work has been done and all I can say to the Minister is that he and the House have been well served.
In view of the very full exposition given by Deputy de Valera there is very little I want to say or, indeed, could say that would not be repetition of what Deputy de Valera said. However, the first point I want to make is a repetition of something he has just said, that is, to endorse fully and wholeheartedly a tribute which Deputy de Valera has paid to the staff involved in the preparation of this legislation and in advising the Minister at all stages and, through him, making their advice available to the House.
I want to make it clear, least there be any doubt about it, that this Bill had its genesis quite a few years ago. There was a White Paper issued in 1972 and, as a result of representations then received and further thought being given, there was a further White Paper in 1974 followed eventually by this Bill. The matters contained in the Bill are so numerous that if one were to take them in any detail one would be here for a very long time, but basically what the Bill is doing is bringing into one code, and making necessary changes, the taxation of companies. In the process it is bringing us much nearer into line than we were with the taxation of companies in the European Economic Community. That is of itself desirable.
Inevitably there are aspects of this Bill with which we are not happy, and Deputy de Valera has explained what those elements are. But, subject to that, the Bill is a worthwhile measure. I am not in a position to comment on the complaints which Deputy de Valera felt obliged to make in regard to the Committee Stage of this Bill, because I was unable to be present at most of the meetings. However, I do know that the speed with which it was dealt with, having regard to the content of the Bill, is a situation in which, as the Taoiseach would say, res ipsa loquitur.
If one looks at the sheer volume of this Bill and then opens it at any point and reads a section of it, one has some concept of the technicalities involved. If one then recalls the principle of the law, that ignorance of the law is no excuse, and therefore that all our unfortunate citizens are deemed to have full knowledge of the contents of this Bill and act accordingly, one realises how true it was for Dickens when he said, "The law is an ass". It also makes one wonder about the whole system whereby we carry on this fiction. The fact of the matter is that, apart from a handful of experts, perhaps one or two in the Revenue Commissioners and probably not many more outside, there is going to be nobody in this country who will know in full detail what this Bill is all about.
I am not saying that as a criticism of this Bill. It applies to all Bills. We are tending to enact legislation which is more and more complex and which has long since passed not only out of the ken of the ordinary citizen but out of the ken of many experts who are only experts in certain branches of these enactments. I am afraid that the whole area of taxation may soon become the preserve not of the experts but of culled branches of the experts that are made up of a handful of people who, because they are advising the Minister, whoever he may be, because they are advising taxpayers, particularly large-scale taxpayers, are, in effect, determining to a great extent the practical application of our code of taxation.
I say this because it is a matter that is causing me concern, because it is a matter that is becoming of increasing importance. It does not apply only to this Bill but it applies with particular force to this Bill. I do not suggest that the Minister has any remedy in his hands for this problem. I am simply drawing attention to the fact that it is a problem and that it is becoming more acute. I think it behoves all of us to give some thought to the dangers and to some method whereby we could devise a simpler system that would give control back into the hands of a much wider section of citizens.
The answer lies in the phrase I have used, to "devise a simpler system". The degree to which these matters are becoming so complex and technical is the degree to which control in this area is being lost to a very small number of people. As I say, I do not suggest that I have or that the Minister should have the solution to this problem ready at hand, but it is important that we should be alerted to the growing danger and that we should begin to give serious thought to how the problem may be tackled.
Subject to that and, speaking of this Bill itself, with the reservations already outlined, we believe this Bill is worth while, that it will be of assistance generally in the administration of tax on corporations, assistance not only from the revenue side but in many instances also from the point of view of the corporate taxpayers. Anything that does that is worth while, and therefore this Bill has our support.
I anticipate, I think not unreasonably, that while we have debated this matter since half past ten this morning, most media attention will be given to the remarks of Deputy Vivion de Valera on the question of the status and standing of Parliament, and endorsed at somewhat shorter length by Deputy Colley. Deputy de Valera is a well-known champion of the rights, power and duties of this House, and he deserves credit for that. On a number of occasions, as he said, when he was on this side of the House he was critical of the Government of the day for their failure to consult sufficiently with the House or to have sufficient regard for the rights of individuals as against the Executive. On a number of occasions he was generous enough to pay tribute to the Opposition of the day for their criticism of various governmental measures. But I suppose his period in Opposition has led him to be less generous than he used to be in acknowledging the attitude of the Fine Gael and Labour Parties when in Opposition.
Maybe he has less cause to be generous.
He was referring this morning to our behaviour in Opposition. He used to regard us as defenders of the liberties of the people. He has been critical of me, in particular since I crossed the House, and suggested that I had a change of personality because I defended certain Executive attitudes, stands and proposals which caused him some surprise.
Out of total respect for this House, its institutions and the way it works, I want honestly to refute Deputy de Valera's suggestion that this measure has not received adequate consideration. Deputy Colley and I put our signatures to white papers which preceded the introduction of this legislation. In November, 1972, Deputy Colley issued the white paper on Company Taxation in Ireland, 150 pages long and 12,000 copies were printed. I am not sure how many were bought or used. In March, 1974, I issued another white paper, of which 7,000 prints were made. The interest in the original paper must not have materialised to the extent of 12,000 copies. Our white paper presented the criticisms which had been offered of the first white paper and gave the Government's reactions to various submissions which had been made, and listed approximately 20 very reputable bodies and organisations which had made specific representations.
It is probably true to say that very few Bills received such detailed examination before it was even put in draft form as this Bill. It was circulated on the 27th November last. Out of regard for the need to allow an adequate amount of time for the reading of this legislation before the debate took place, a few months passed before we even had the Second Stage.
For reasons which people who understand corporation tax and general taxation will realise, it is necessary to have this legislation passed before the end of this financial year so that those to whom the law applies will be in a position to put their affairs in appropriate form. We referred this matter to a Special Committee. Unfortunately, they had to work during the absence of Deputy Colley. He understood the urgency relating to the passage of the Bill, but his colleagues and members of all parties made their contributions. It is of interest to note that when this Bill was debated in the Special Committee, which was only a small proportion of the total number in this House, the number of Members present exceeded the number in this House this morning. The quorum of that Committee, was six. Therefore, we had twice the number at any time in that Committee, and most times we exceeded the quorum, than we have in this House now.
The Bill was examined in detail. It was not passed through without amendment. There were 60 amendments to the Bill on the Committee Stage. Some of these arose out of deliberations and comments made on the Second Stage; some came from the Opposition—two were quite significant and I was happy to circulate them. I issued 47 amendments before the Committee met; 11 further amendments arose during the course of debate in Committee; ultimately there were five amendments on this Stage. Considering this Bill had been in gestation for three and a half years before it came into this House for debate, in my view it is very significant that we had such a number of amendments.
The moral of a Special Committee is that we can work faster and with greater precision because the Committee is held in a room where everybody is on the one level, literally and metaphorically. People sit around a table and, as a consequence, individual contributors are not so prone to deliver orations as they might feel compelled to do when addressing the nation in this forum. When one is in a stadium there is an inevitable feeling of confrontation in the air.
We had a very workman-like passage of this Bill through the Special Committee. We were greatly helped by the facility of having direct advice available to all the members of the Committee from our distinguished advisers from the Revenue Commissioners and the Department of Finance. While some people might feel that this Bill has been rushed through without ample consideration, I would hope that on reflection they will realise that as much consideration was given to this Bill as to many other Bills of similar size, notwithstanding the fact that the actual time between the commencement of the debate on the Second Stage and now is not very great. The Committee worked quite hard and very efficiently.
A large proportion of this Bill is not creating any new law. While the volume is large, to some extent it is a consolidation measure because it brings together in one volume existing law. There was a need to adapt the new suit to the old body, but fundamentally, most of the law in this Bill when passed will be no more than a reflection of existing provisions, but tidying them up for the purpose of the corporation tax which itself is intended to be a tidier version of company taxation than the old combination of three separate taxes—income tax, corporation profits tax, and capital gains tax. It is a much more efficient system born out of a desire to make its operation more easily understood and to have the tools which will be used under one cover, and they are all brought together in this Bill.
There are two matters I would like to deal with because they were dealt with at some length. First is section 84 and the suggestion that we should amend the Bill to permit the deduction for the purposes of a trade of interest paid by a resident company to a non-resident company even where the resident company is a 75 per cent subsidiary of the non-resident company. The purpose of this provision is to prevent the non-resident company from financing the Irish subsidiary by way of loan capital and extracting in the guise of interest, which is tax-deductible, funds which in reality are distributions and not tax deductions. A deduction for interest accords relief to the paying company at the full corporation tax rate of 50 per cent, whereas if there is a full distribution of the profit the tax payable by the company which they cannot inpute to the shareholders, is 23 per cent.
The provision in section 84 is to prevent the loss of revenue which would arise if there was no restriction of the allowance of interest to a non-resident company which control the Irish company and which in respect of the interest is outside the ambit of corporation tax. It should be noted that for purposes of corporation profits tax, which is not imputable to the shareholder on a distribution, interest paid to a person in control of a company is not deductible. Another consideration is that if the country of residence of the parent is one with which there are double taxation arrangements on the OECD model— that is the position in respect of most companies operating in Ireland— credit would normally be given against the tax of the parent for the full Irish tax underlying any distribution. Accordingly, to accede to the request would involve the Irish Exchequer in a loss of revenue which would inure to the benefit of the Exchequer of the country of residence of the parent. I suspect that that would not appeal to the national loyalties of Deputy de Valera, Deputy Colley or anybody else in the House.
We have discussed section 162 at some length and I do not want to prolong the debate. We had a debate on it on Report Stage but I would like to put a few further remarks on the record to tidy up what I consider are still a number of loose ends. The purpose of the section is to go some way towards reducing the tax advantage enjoyed by a successful professional person who carries on his profession through the medium of a company where the profits are retained in the company or are extracted in capital form or in liquidation, as compared with another comparable person who carries on a similar profession as an individual or as a partner in a partnership.
In the first case, the retained profits would, in the absence of section 162 bear tax at the rate of 50 per cent as compared with the rate of 77 per cent in the case of an individual or partnership. The section goes some way—this is generously acknowledged by the Opposition—towards achieving equity between the two comparable cases mentioned by increasing the rate of tax on the retained profits from 50 per cent to 58 per cent under the section as it has now been amended. That 58 per cent is still 19 per cent below the 77 per cent that would apply to an individual carrying on such a profession.
Section 162 is restricted in its application to professional activities because those activities depend on the professional skills and personal qualities of individuals and therefore do not require the substantial amounts of capital which are required for the generality of ordinary trading companies to finance stock in trade, plant and machinery and generally to finance the maintenance and development of the business. I consider much of the remarks of Deputy de Valera this morning as more appropriate to a trading situation than to a professional situation. In so far as they are related to a trading situation, the Bill is not harming such trading operations because they are not caught by the surcharge of section 162.
Experience has shown that there is a substantial and growing problem of tax avoidance through the medium of companies of the kind which section 162 is concerned about. I have given examples, a few here today and more in the Committee, which show that, contrary to what is claimed, not only have the shareholders of the service companies in question been able to extract substantial sums from the companies but they have also done so in tax free form. If we were to extend or to remove the surcharge I cannot visualise that it would be possible to prevent such continued distribution of profits in tax free form without setting up the most elaborate system of assessment which would involve fully looking through all these service companies, as I mentioned earlier today, to see who the ultimate beneficiaries were and taxing them to the full income tax level.
As already indicated, what is proposed in section 162, as amended will result in a rate of 58 per cent as respects retained profits. This is the same as the normal combined rate of income tax and corporation profits tax, for instance, in the years 1970, 1971 and 1972 when corporation profits tax was not allowed as a deduction for income tax purposes. The removal from the scope of section 162 of companies carrying on professional activities would necessarily involve the introduction of alternative provisions which in principle would then have to be applicable to all close companies and I think we might not be thanked if we were to adopt that line.
I have done my best to meet the representations. I believe we have provided a measure of relief. There are very few Bills which will ever pass through this or any other Parliament which will satisfy all interests and very few tax measures, except those that give relief. If you give relief only to some and not to others, you generate a sense of grievance which otherwise might not exist. I am sure we will never achieve a world in which all will be equal and all will be treated equally because we will never be able to agree on what is the appropriate measure of equality. Even if we reached that ideal we would probably be bored with our existence subsequent to the achievement of that degree of perfection. We have done our best. Dáil Éireann can be proud of its handling of this Bill. I am sorry Deputy de Valera was not here earlier.
Major De Valera
I was unable to be present as I was called away.
I am sure of that. I know that the Deputy, both because of his loyalty to Parliament and his personal courtesy, would have been here. I believe we have given the Bill a very full examination in a comparatively short time, because those who were interested in it and in a position to contribute to it were here. Let us face it: a large number would not have been in a position to contribute to it just as there are measures which come into the House to which we would not be able to make very helpful contributions. Those who were in a position to contribute to it contributed very well. We were certainly greately strengthened, as I said earlier, and as I am happy once again to record, by the marvellous advice, skilful knowledge and personal dedication of the officers of the Revenue Commissioners and of the Department of Finance. Those people are often called the faceless people that are resented by the public. The public should know that they are very well served indeed by the Revenue Commissioners and by the personnel in the Department of Finance.
One does not have to be Minister for Finance, or indeed a Member of this House, to know that. Most people dread the tax inspector and the tax collector, but most people who have had the wisdom to resort to their tax inspectors have found that those people they dreaded so much were, in fact, exceedingly helpful and on more than one occasion people have found that by going to their tax inspector they got advice which gave them reliefs and concessions they had not previously known were their entitlement. That is the way in which the Revenue Commissioners always work and that is the way in which, both in relation to the personal problems of individual taxpayers or in the preparation of legislation, they operate, and they are proud to do so. They serve us well and I am delighted indeed that this has been so generously acknowledged from all sides of the House.
Question put and agreed to.
This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.