Dáil Éireann debate -
Wednesday, 19 May 1976

Vol. 290 No. 11

Finance Bill, 1976: Committee Stage (Resumed).

Debate resumed on amendment No. 28:

In page 27, line 33, before section 32, to insert the following section:

"32.—(1) In this section—

‘society' means a society registered under the Industrial and Provident Societies Acts, 1893 to 1971, which is an agricultural society or a fishery society within the meaning of section 220 of the Income Tax Act, 1967;

‘period of account' has the meaning assigned to it by section 155 (5) of the Corporation Tax Act, 1976;

‘wear and tear allowance' means an allowance under section 241 of the Income Tax Act, 1967;

‘initial allowance' means an allowance under Chapter I. Part XV of the Income Tax Act, 1967;

‘investment allowance' means an allowance under section 22 of the Finance Act, 1971.

(2) In the case of a trade carried on by a society no transaction on or after the 6th day of April, 1976, shall be regarded as an exempted transaction for the purpose of section 220 of the Income Tax Act, 1967.

(3) Where a society comes within the charge to corporation tax in respect of a trade before the 6th day of April, 1976, an accounting period of the society shall end for purposes of corporation tax on the 5th day of April, 1976.

(4) Where a society carrying on a trade incurred before the 6th day of April, 1976, capital expenditure on the provision of machinery or plant for the purposes of the trade and that expenditure was either—

(a) qualifying expenditure within the meaning of section 11 of the Finance Act, 1967, or

(b) expenditure on qualifying machinery or plant within the meaning of section 26 of the Finance Act, 1971,

an allowance equal to the specified amount of that capital expenditure may at the election of the society be made in taxing the trade of the society for the accounting period which commences on the 6th day of April, 1976, as if it were an allowance on account of the wear and tear of the machinery or plant in that accounting period, and where such an election is made, the amount of the capital expenditure on the provision of the machinery or plant still unallowed as at the time of any subsequent event shall for the purposes of Chapter II of Part XVI of the Income Tax Act, 1967, be deemed to be nil.

(5) For the purposes of subsection (4) the specified amount of the capital expenditure means the amount of that capital expenditure together with any investment allowance in respect of that expenditure after deducting from the aggregate amount thereof—

(a) the amount, as diminished by section 220 (5) of the Income Tax Act, 1967, of any investment allowance made to the society in respect of that expenditure;

(b) the aggregate amount, as diminished by the said section 220 (5), of the wear and tear allowances and initial allowances made to the society in respect of that expenditure for all chargeable periods before the accounting period commencing on the 6th day of April, 1976;

(c) the aggregate of the amounts by which the wear and tear allowances in respect of that expenditure would have been diminished by the said section 220 (5) if the only wear and tear allowances for those chargeable periods in respect of that expenditure were the amounts which would have been made if a proper claim had been duly made by the society for each chargeable period without regard to section 11 of the Finance Act, 1967, or section 26 of the Finance Act, 1971.

(6) Where—

(a) a society comes within the charge to corporation tax in respect of a trade,

(b) the society was within the charge to income tax for the year 1975-76 in respect of the trade, and

(c) a period of account of the society commences before the 6th day of April, 1976, and ends on or after that date,

the income from the trade for the period of account shall be computed (in accordance with the provisions applicable to Case I of Schedule D) without regard to the provisions of section 220 (3) of the Income Tax Act, 1967, and the income as so computed shall be apportioned to the part of the period of account falling before the 6th day of April, 1976, and the part falling after that date, and for the purposes of subsections (3) and (4) of section 220 of the Income Tax Act, 1967, and section 70 (5) of the Finance Act, 1963, each such part shall be deemed to be a period of account and the income from the trade for that part shall be the amount apportioned to it under the provisions of this section.

(7) Any apportionment to different periods under this section shall be made on a time basis according to the respective lengths of those periods.".

—(Minister for Finance).

Mr. Power

I had almost completed my contribution on this section before I reported progress, but I would not like to stop without complimenting the Minister on one particular quality he has, the quality one sees in an Irish terrier that of standing alone with very little support from the rest of the pack. I can assure him that the finger of blame is pointing very much at him alone. When this matter is discussed down the country there is no mention of Government or Cabinet responsibility. He is the person who is disowned. Maybe, as a political animal, I should glory in this type of thing, but a sense of fair play prompts me to point it out to him; and a sense of equity, which he has mentioned as being so necessary in our present economic situation, prompts me to tell him that we should have a certain amount of equity in politics as well.

Last night the Minister blamed us for, in the words he used, "spreading manure around the country". He said that Fianna Fáil propaganda helped to call the farmers from the fields early to attend meetings. I can assure him that this is not so. I wish to point out that the IFA called a meeting in Naas last Monday night. Leaflets were distributed in the marts. The Fianna Fáil Party had nothing to do with it. Between 600 and 700 farmers attended the meeting to hear all about this section, the tax on co-operatives. The president of the IFA and other leading lights in that organisation and in the co-operative movement attended and contributed to the debate.

All the local TDs in Kildare were invited to attend. I attended but the two representatives of the National Coalition Government did not turn up. The extraordinary thing is that in their invitation they were asked that in their unavoidable absence they would appoint somebody of equal stature to represent them but they did not find anyone of comparable stature to attend on their behalf. I am not sure if this was a directive from headquarters or if it is an unusual show of modesty from these particular people. This is an example of the open Government which was promised to us by the National Coalition parties and, in the words of the Tánaiste, "an entirely new Government determined to solve the problems of all our people." How can you possibly solve the problems of the people if you are not prepared to listen to those problems?

Mr. P. Belton

We did not put them in gaol.

Mr. Power

I am glad to see that at least one member of the pack——

(Interruptions.)

Mr. Power

The Irish terrier should welcome very much that intervention by the bulldog in the background. It appears that the National Coalition are not prepared to listen to the problems of the people. They were afraid to face there the very people who helped to elect them three years ago. They spurned the hands that had given them No. 1 votes. Today we heard from the other Members who contributed from the opposite benches criticism of a former Minister who did not talk to the IFA. Now we have representatives who are afraid to talk to them at local level, afraid to hear of the problems besetting the farming community and the co-ops. If this is the idea of a National Coalition regarding detente, they stand condemned of being afraid to speak to those who elected them.

On that occasion, the Minister might well remember, two representatives of the Fine Gael Party spoke. One was a member of the county council. He disowned the Minister and said he did not agree with the policy being pursued by the Minister. He indicated that he was under the mistaken impression that co-ops in their trading were in direct competition with private interests and had an unfair advantage because they did not pay tax on their non-agricultural trading. This opinion is very much abroad in the Government benches and has never been denied.

Another member of the Fine Gael Party, a lady, who is National President of the ICA and a member of Kildare County Council also contributed and disassociated herself from this move by the Minister to tax co-ops. It is only fair to remind the Minister of the situation although he has probably already read the telegram sent to him on that occasion at the end of the meeting when there was a unanimous vote that three telegrams be sent—two to the two missing Deputies asking them to vote against this motion and one to the Minister to drop the legislation. Before the business was finished a delegate from Meath who is chairman of a farming organisation wished to be heard and said that not alone did the meeting speak on behalf of the Kildare organisation but was also representative of north Leinster and south Leinster. It was unanimously decided on his proposition that a further telegram be sent to the Taoiseach asking him to sack the Minister for Finance whom he described as "the greatest boob of all time."

This morning the Minister said he felt it was a very dangerous practice for certain people to compile dossiers on Deputies and the very words they might use could be used against them. Some of the words I use may be used against me but I am prepared to face the music and face the businessmen with whom the Minister threatened me last night. He can be happy in the fact that when Deputies do not appear their silence can hardly be used against them; but the fact that they had not the courage to appear and make the case for the Minister at the meeting indicates that there is something very wrong with the National Coalition.

I ask the Minister to reflect on what I have said. The silence from the Government benches on this section is deafening. The Minister is being picked out as a stool pigeon by his own colleagues. He decided, rather belatedly, to give a stay of execution for a year on this measure by allowing people to make certain charges against income which in fact means that they will not be taxed for a year. I ask him to go the whole way and withdraw this section altogether.

Mr. Lalor

I want to add my voice to the numerous voices on this side of the House protesting against this tax on co-operatives. The situation is that there is an outcry across the country and I cannot understand why more people have not intervened in the debate from the Government side in an effort to cover for the Minister for Finance on this issue. The Minister must be aware from the promptings he must get at parliamentary party meetings, particularly Fine Gael meetings—he will not, I suppose, get many promptings from Labour Party meetings—that this is a very unpopular political decision he is forcing through. More specifically, I want to talk of the untold harm the Minister will do to the future of the country by this imposition. The effective postponement of more than half of this taxation for 12 months by means of the amendment the Minister is introducing is a sort of sugar coating on the pill and, as I see it, is a direct result of promptings from back-benchers in his party who have to face meetings with interested people throughout the country.

I attended, like Deputy Power, a similar meeting in Laois where all the Minister's party representatives were present. Whether it was compensation or otherwise the Parliamentary Secretary to the Minister for Local Government who was adamant in his condemnation of the Fianna Fáil Government for their hard-hearted approach to farming stood four-square behind his Minister and said it was unfair that everybody should be punching poor Deputy Ryan, that he himself was willing to take some of the punches, and that full party and Cabinet responsibility was involved. His two colleagues were not as forthright in their condemnation of the farming presence on that occasion and conveyed that they would, as effectively but as unobtrusively as possible, do what they could to meet the wishes of the meeting having fully accepted the arguments that tremendous harm was being done to our food industry.

The points against this tax have been very effectively made by our spokesman on Finance and our spokesman on Agriculture and by Deputies on this side who have spoken from the heart on this issue. When Fianna Fáil were in Government we had to stand up to a great deal of abuse from farm organisations who felt we were doing them an injustice or not doing a sufficient amount for agriculture. At that time every abusive word hurled at the then Minister for Agriculture and Fisheries and the Government was backed by about 500 per cent by a vociferous Opposition. Now, we have the same party that cashed in solidly on complaints against the Government at that time hiding their heads obviously in shame. As Deputy Power said, there have been two speakers of a back-up group. I heard one, Deputy Coogan, this morning and his contribution was not the greatest. He flung the indecent remark across the floor at Deputy Gibbons that he left members of his family sitting on the steps of Government Buildings. One thing Fianna Fáil did—and it is no harm to draw attention to it—in their time in Government is that they brought country people and city people together.

Maybe one can criticise us for this but when I was Parliamentary Secretary to the Minister for Agriculture I recall city people queueing to sign and add their names to the farmers' protest. The Minister for Finance comes here today and flings across the House that every word uttered from this side in justification of the farmers' case is a criticism of Government policy. As I see it, they intend taxing the food industry, the only source left open to the Minister.

The Minister has taxed farmers by way of income tax. We are not making a case against justified taxation on farmers who can afford to pay. We are making the case against the taxation on basic raw materials which are helping to keep this country going. I cannot speak strongly enough in my opposition to the contempt evident in the Minister's words this morning when he was talking about the people who made up the co-operative movement and the contempt which he showed last night which unfortunately resulted in one of the Fianna Fáil Deputies having to be removed from this House. This is galling. A term I heard from my parents to describe perkiness and abuse was— a cocksparrow. The Minister for Finance is the Coalition Government's cocksparrow. If there was anybody who could less ill-afford to project himself in that way it is the present Minister.

I know it is wrong to talk about personalities in the House. I listened to the Minister this morning doing his damnedest to create a civil war between the city and country people. We have had enough of that. That is why I used the example I gave a few minutes ago. I do not say it is any credit to the Fianna Fáil Government, but we brought the city man very close to his country cousin. Now we have the contemptible conduct of this Government. In an effort to scrape the bottom of the economic pot— where the Minister for Finance is at present squatting—to get a miserable £2 or £3 million, he is willing to take a chance on killing the future of Irish agriculture and the food processing industry.

If I were to go into the necessary detail about this subject, I could go on at very great length. However, if I did that I would spoil my case. I could travel many different roads criticising what the Government are doing through the Minister for Finance. I fully accept the assurance of Deputy Flanagan, Parliamentary Secretary to the Minister for Local Government, not to blame "poor Richie Ryan" because this was full Government responsibility.

We know the Labour Party are fully behind this but there must be many people on the Fine Gael benches who are reneging on their heritage when they come in here to impose this tax on a section of the farming community which is not and should not be liable to taxation. There is no reason why any spokesman from the Government side should convey the impression that as far as the Dublin Corporation worker or any other worker in Dublin is concerned, he has a justifiable grouse if a ten or 15-acre farmer is not taxed.

Mr. Browne

I decided to make a very brief contribution on this section lest somebody might think that none of the four Deputies from Wexford county was prepared to add his voice to that of our front bench spokesman on Finance and other speakers. I am sure my colleague, Deputy Allen, will have a few words to say on this.

I come from a constituency that has a number of excellent agricultural co-ops and two or three very good fishery co-ops which have made a tremendous difference to the people who live by the sea in the southern part of Wexford county. Like my colleague, I can report that there is an outcry from farmers in County Wexford against the Minister's proposal to withdraw a concession which agricultural and fishery co-ops have had for a number of years. I do not speak for so-called co-ops. We have very big co-ops in Wexford and Enniscorthy towns but they are not the ones I have in mind. I am thinking of the Shelbourne Co-op in Campile. If the Minister suggests that that is a "so-called co-op", I suggest that he go down and say that in that area of New Ross. That co-op has brought about the greatest change that could be brought about in a typical rural area because it gives employment to about 250 to 300 people. It is supporting the families of a huge rural area in County Wexford.

There is another co-op in Bunclody. Deputy J. Gibbons's constituency. The Minister might regard this as a "so-called co-op" and put somebody on this side out of the House for trying to get him to withdraw that unfortunate remark. I think he will agree today that it was an unfortunate remark even for the present Minister for Finance. I remember Bunclody, a beautiful village about which poems have been written—the Slaney flows through it; it has delightful trees and streets. Nine or ten years ago the employment in that village was 15 or 20 people in local firms and a few men were employed by the agricultural community. The rest had to seek employment in Dublin or across the water in Birmingham, Liverpool, London or wherever they could find it. The Bunclody co-op was established. Thanks to a group of small local farmers, this is now one of the most thriving businesses in the country. That co-op is giving employment to between 80 and 100 people. It is supporting something like 100 families in that area of North Wexford.

That is the reason we demand the withdrawal of this section by the Minister. He has dithered, changed his mind and gone from one idea to another; but still he comes up with a section that will impose a certain amount of taxation on these agricultural and fishery co-ops in the years ahead. There may be a break for one year; I do not know whether there is or not. It is very difficult to understand what this legislation really means or how the Revenue Commissioners will operate it.

The reason we oppose this legislation so strongly is that these co-operatives give tremendous employment at a time when there are 120,000 people unemployed and when school-leavers cannot get a job of any kind. If the co-operatives are given the concessions they were given in the past they will be able to provide much more employment in the future. I believe there is a great future for agricultural and fishery co-operatives if the Minister keeps his greedy hands off them.

During the past week a group of farmers came to see me. They were mostly small farmers who would not be liable for tax, despite what the Minister or the people of this city might think. They told me that there was an outcry amongst the farming community against this section and the withdrawal of the concession. They had also been with the other Deputy for the county, Deputy Allen, and we explained what we were trying to do. They assured me that they had approached the Fine Gael Deputy for the constituency and that he favoured their case but that he found it impossible to get anywhere with the Minister and the Cabinet. Judging by the manner in which they have deserted him in this House I have a feeling that most of the Minister's backbenchers from rural Ireland are opposed to this legislation. They have not got the guts to say it.

I appeal to the Minister to withdraw this new section rather than to postpone the taxation for one year. I appeal to the Minister to withdraw it in the interests of rural Ireland where employment is so urgently needed and in the interests of the farming community who depend so much on agricultural co-operatives.

Mr. Cronin

The Minister for Finance is completely out of touch with rural Ireland. It is obvious from the proposed legislation that the Minister wants to get at the small farmers. Deputy Colley said that over 70 per cent of the suppliers were small suppliers. To be more specific, the figures for my own territory in north Cork, which is our primary dairy industry centre, show that 72 per cent of the suppliers to Mitchelstown Co-operative have under 23 cows. The average number of cows per supplier in Ballyclough is 24. These suppliers could hardly be regarded as being in the big farmer category. These are the people who form the membership of co-operative societies in the best dairy districts. When you take these figures into account they show clearly that co-operative societies are the business of the small farmers.

Over the years these societies have been developing and expanding to the advantage of their suppliers and the economy generally. A figure of 14,000 has been mentioned as being the number engaged in employment in co-operatives. In Mallow town alone the Ballyclough Co-operative Society employ on average 910 people. That is a fair contribution to the national economy. It is a sizeable figure when compared with the 800 unemployed people in Mallow at present. A factory in Mallow, which is a subsidiary of Ballyclough Co-operative, has laid of half its employees. I say this to stress the part which co-operative societies play in the development of our economy.

To say that the Minister is out of touch is an understatement. To say that their profits should be taxed is wrong. The surpluses which the co-operatives accumulated made their expansion possible, an expansion which produced employment and contributed to the dairy industry as a whole. You can talk about gas and oil, but our basic resource is agriculture. The Minister has succeeded in extinguishing almost every type of enterprise. There is high unemployment in every town in Ireland. The Minister has decided to have a go at the one industry on which we can bank. There is very little left for him to do. I would ask the Minister, even at this late juncture, to leave the dairy industry alone.

Since my childhood I have understood that the co-operative movement was the answer to our problems. I remember the formation of the Castlelyons Co-operative Creamery in the thirties. This was a difficult time for farming because credit facilities were tight. The society was formed by the farmers in the area. It provided a service enabling them to get reasonable credit facilities and that helped them to progress. They were able to buy their fertilisers, their animal feeding stuffs and have a little time in which to pay. I remember as an employee of the Beet Growers Association forming co-operative farming groups. The small farmers were formed into groups. I refer to those small farmers growing five or six acres of beet who could not themselves afford the big machinery needed to make the industry a viable proposition. Were it not for that co-operative movement in the 1950s the beet industry, about which some Government Deputies groan, would scarcely be in existence today. Co-operation was the keynote. Resources were pooled and machines were shared. In that way these co-operative groups were able to avail of the most modern and efficient equipment.

The Minister is after the small farmers now, the people who are the backbone of the country. It is a shame that a Minister who has no real rural experience should introduce legislation of this kind. It is all very well to tax profits. I know one co-operative which has a trading profit this year of about £1½ million but it is in dire financial trouble. How will the Minister sort out that situation? Rather than restricting agriculture we should be giving it every kind of support. At every meeting I have attended I have emphasised that the well-being of the farmer, of the agricultural community, is the well-being of the community as a whole. I have pointed this out in both urban and rural areas and the people know that this is true. If one were to take Ballyclough creamery, the chocolate factory and Cow and Gate out of Mallow what would one have left? Take out the sugar factory as well. The whole townland is based on agriculture and the well-being of agriculture. So is Mitchelstown, which manufactures cheese, and the Galtee tinned milk factory. These are all based on what the farmer produces. I would hate to see the farmer in the position of the business man at the moment who asks himself what is the point in working harder when Richie will be at the back door with both hands open to take whatever he makes away from him. This is the policy that has the economy in the position it is in today.

I never thought a Minister for Finance would stoop so low as to strike at our basic industry, but that is exactly what he is doing. I would appeal to him to think again. He may, with his city mentality, smirk at my appeal. He has smirked at most of the proposals coming from Cork. We have looked for concessions from time to time from the Minister but all the has done is to smirk and treat our proposals with arrogance. Now the farmers are being treated in the same way. Deputies on the opposite benches representing rural constituencies should have the courage to stand up like men and be counted. I am a townsman but I have some agricultural connections. I am opposed to this legislation. I am opposed to it on behalf of the milk suppliers. I know from personal experience that farmers regard this as national sabotage. This Government have closed down a great number of industries. This Government are thousands of millions in debate to foreign interests. All that we have is mess and in a short time we will have to take over once again and clean up the mess. I am sure the by-elections in Dublin and Donegal will point the way. We cleaned up the mess before and we will do it again.

Mr. Gallagher

Last night we heard the Minister, with the venom to which we have become accustomed, lash out at this party because of our opposition to this proposal. He said our arguments were political and that we had no real interest in co-operatives and the work they are doing. I would like now to quote from a document produced by Muintir na Tíre. It is an article on community development and the goals of regional development:

Muintir believes that the essential objective of all plans for economic development ought to be to help people to help themselves or, in other words, to help people to identify their social, economic, cultural and recreational needs, to exploit the organisation of their local resources, human, physical, financial to maximum capacity and to facilitate the integration of local community and voluntary effort with the national and regional plans for development.

These ideals are fully exemplified in the workings of co-operatives. More than any other organisation these co-operatives have helped to build up a spirit in rural Ireland and assist the general advancement of the economy. The Minister has tried to divide town and country. Co-operatives are a union of rural people getting together to help themselves and to provide better services for themselves, thereby helping their fellowmen and women in both town and country. These are the ideals about which the Parliamentary Secretary to the Taoiseach. Deputy Kelly, has been talking during the past few months all around the country. He has been encouraging this type of activity.

The Minister accused us of playing politics. We, in Fianna Fáil, recognise and have always recognised the value of co-operatives. We gave management grants to Gaeltacht co-operatives and to fishery co-operatives. Through the county development teams we gave grants to agricultural co-operatives to help them to employ fully qualified personnel to manage the co-operatives in a businesslike fashion. That is the practical way in which Fianna Fáil recognised the value of co-operatives and it is most unfair, therefore, of the Minister to come in here now and accuse us of playing politics in this matter.

Many rural organisations have been involved in the formation of co-operatives: Macra na Feirme, Macra na Tuaithe, Muintir na Tíre and local development groups of all kinds. If the Minister had any experience of the country and had any recognition of services, he would know that no group have done so much by way of voluntary effort in order to get these co-operatives moving. It is not easy for a person to go around among farmers, business people or others collecting share capital, and it is very often hard to get people to contribute or see that what is being done is in their own interests. Now the Minister by introducing this tax is going to kill all this spirit. People will feel there is no use trying to promote projects themselves or to promote the economy; they will feel they are doing it in order to give more to the tax man.

The co-operatives have provided a wonderful service for people. Let me refer for a moment to the fishing co-operatives which have been successful in arranging better marketing facilities for members. They provide gear for new members who are starting off and who find it hard to face all the costs involved in getting a fishing boat going. They have organised transport for members to market their produce and they have, through being competitive with other business people, arranged to get better terms in the purchase of gear and other equipment necessary for the industry. Here again we find the Minister breaking the spirit of the people who are anxious to help themselves.

In the west our farmers have the lowest income in the whole country, and were it not for the fact that a number of co-operatives were started a few years ago to help our small farmers, particularly in milk production, the position would be very much worse. Now, thanks to the co-operative movement, a number of these people are enjoying a much better standard of living and see a future for themselves in their little holdings.

In a speech last night the Minister implied that co-op workers were not paying tax. I do not know why he tries to come across with this kind of argument. He mentioned typists and other people working in Dublin. Typists or other employees working for co-operatives are liable to tax just the same as the city person. I cannot understand the reasoning in the Minister's argument, except again that he is trying to drive this wedge between rural and urban dwellers.

Mr. R. Ryan

I did not give the location of the typists or the industrial workers at all. Of course the position is precisely the same no matter what part of the country they work in.

Mr. Gallagher

Surely the Minister cannot compare a co-operative with a limited company, with a business where people who have money invest that money in order to gain profit from their investment. In the case of a co-operative, people get together not for the sake of making an investment as we ordinarily understand it but to provide a service for themselves. I happen to be a member of three co-operatives and I do not expect to collect any dividend, and I did not take my shares in these co-operatives hoping I might collect any dividend. Any profits that are made are used to expand the business of the co-operatives, as has been said already, and in this way modernise and generate more employment.

The Minister should bear in mind that this argument of city versus country is one that can backfire on himself. Most of the city dwellers are not that far removed from the country and they will realise that he is the one who is playing the political game in this matter. However, we have to realise, I suppose, that his handling of our financial affairs has been so bad that he has no choice but to scratch everywhere he can in order to get more finance to run the country.

The Minister should seriously consider the section, because our major industry, agriculture, is the one that is going to feel the pinch more than any other. I would join with my colleagues on this side of the House in asking the Minister to reconsider this matter, not in the interest of the co-operatives alone but in the interest of the whole economy and particularly of agriculture.

Mr. Allen

I want to add my few words to what has been said about the appalling situation which the Minister has now created. It is no harm to advert for a few moments to the last general election when we were presented with a 14-point plan. The only point that comes to mind concerning rural Ireland that has been implemented was that in relation to the abolition of death duties. Death duties have been abolished, but you now find yourself in the situation where you will pay all your taxes before you die so that whoever comes after you will not have to pay anything. We now have many new forms of taxation about which the people in rural Ireland were told nothing at the last general election. We were certainly given a glossy 14-point plan, but most of it has not been implemented.

Do the Minister and his colleagues in the back benches, many of whom have not been in for this debate, realise the part played by the farming community in the economy down through the years? I am convinced that neither the Minister nor the Revenue Commissioners realise the contribution such people have made to the economy. Certainly the Minister has not seen the light yet in regard to the economic drive that has been made by the farming community.

What has the Minister been doing for the past three years? He has killed any incentive the farming community has had, and he is now dotting the i's and crossing the t's for the implementation of a tax on co-ops which will seriously affect the farming community. The Minister baffles me at times and he also baffles the ordinary members of the co-operatives down the country. Last night here he accused the co-operative movement at large of robbing the countryside. In my own county there is a fish co-operative at Kilmore Quay which was set up to improve the livelihood of the fishermen in that area. They set up a processing factory and they provide gear and facilities for young fishermen. In the same village there is another fish factory that has gone bankrupt. As the Minister knows, because of the increased oil prices the fishing industry is on the road to ruin and the Minister has aggravated the situation by this new measure.

It is about time he saw the light and listened to common sense. Not one member of the Government side, including the Minister, has shown any sense in his contribution. Even at this late stage I would ask the Minister to reconsider the matter quickly. He is totally biased against the farming community and the fishing industry. He should spell out quite clearly where he stands. He chickened out last night and a Member on this side of the House was put out.

Mr. Ray Burke

It is the job of any Government to unite the people in the country. The behaviour of the Minister and some of the spokesmen on the Government benches has been appalling. They have been trying to drive a wedge between the people in the urban and rural areas. The only unity that seems to prevail is the combined aim of the Ministers huddled around the Cabinet table to hold on to their Mercedes and Peugeots at any cost despite the damage they are doing. They have destroyed incentive for private industry and the workers and they are now trying to destroy incentive for the farming and fishing co-operatives.

They say that this measure is being introduced to have equal taxation across the board. They maintain that the young typist in the city is being taxed while the co-operatives get off scot-free but this is unfair. It is immoral for the Minister to suggest such a thing. It is a downright lie and the Minister knows it.

An Leas-Cheann Comhairle

The Deputy may not use such a phrase.

Mr. Ray Burke

I withdraw the phrase. It is improper for the Minister to suggest such a thing. He is part of the Labour-Fine Gael Coalition. In the late sixties when the Labour Party were proclaiming the seventies as the era of the new Republic they put forward a manifesto on agriculture. One of the main items was that co-operatives were to be encouraged at all times. What Labour speaker has asked the Minister to assist the co-operatives, as was set out in their declared party policy?

It is obvious that this taxation will prove to be a disincentive and it will increase the cost of living across the board. The producers will get less or the people who buy the produce will have to pay more. Because of this measure, the situation cannot remain as it is. In my constituency there is the glasshouse industry. It is suffering because of the increased oil prices and because of unfair competition from our European partners who are sub-sidised by their national Governments. Our Government will not help the industry here and now they are imposing additional taxation. The same situation applies to the fishing industry and to agricultural co-operatives.

The Minister has not come forward with ideas that would give some incentive to workers and that would help to get the economy going. Even at this late stage I would appeal to the Minister not to go forward with this mad suggestion of taxing co-operatives.

Mr. R. Ryan

It would have saved a great deal of time if members of the Opposition could have sung like a choir. All of them said virtually the same thing, the only difference being to change the name of the town or the co-operative they wanted to have mentioned in the local Press.

Mr. Cronin

It means the same thing.

Mr. R. Ryan

I am glad there is so much copy for the local Press even if a great deal of it is inaccurate and not based on facts. Deputy Power was not being offensive. I do not regard any of the remarks as offensive even though I noted today on other occasions that a great deal of criticism is always directed at myself. Some people take a particular delight in developing forms of alliteration associated with both my surname and Christian name. So be it. I was compared to an Irish terrier. I think it would be fair for me to retort that the Opposition are like hounds hunting in a pack——

Mr. J. Gibbons

Or hunting mongrel foxes.

Mr. R. Ryan

I have never seen such a display of interest on the part of Fianna Fáil in Opposition on any matter. Matters of far greater moment to our people have never evoked so many individual speeches. I must say I found it quite refreshing to hear so many Members make, so far as I am concerned, their first contribution to any financial debate in this House. I suppose that in itself was quite exhilarating and worth while. However, there was a careful avoidance of the real facts, of the small charge that is to be made on a business that has a turnover almost comparable to the turnover of private companies. If the latter have a turnover of about £950 million they will pay tax. We are now being chastised because another form of legitimate business is being asked to pay a small contribution towards the total tax burden.

Any foreigner observing this debate would be astonished that there should be such a song and dance and demonstration when a request is made for a small contribution from such a tremendous amount of business. No attempt was made by the Opposition to justify unfair competition, and there is a great deal of unfair competition where many traders find that their legitimate business is being competed against by organisations which are free of tax while they are subject to tax. I do not think that is fair and the change we are making will go some way towards correcting it.

I have received quite a number of letters, but they are from individuals —I would not be free to disclose their names without their authority—since we brought in the amendment which will mean that the tax will not require any effective payment until October, 1977, and the tenure of those letters is to complain bitterly that, having made what they regarded as a courageous and correct decision to subject agricultural and fishery co-ops to taxation, the Government should delay the implementation of it. They say that they now find themselves in a situation where having been lead to believe that the unfair competition was going to cease they now realise it will last for some time longer.

Mr. Allen

The Minister will not be there in 1977.

Mr. R. Ryan

The purpose of the change, as I explained, is to facilitate those co-operatives with transitional problems related to the very high borrowing they made in the past and to the non-existence of a charge to tax. While some people made a song and dance yesterday about the use of the phrase "so-called co-ops" I noticed that Deputy Browne used it in relation to a number of co-ops that he then named in some of the larger towns in Wexford. He then went on to say that he did not consider that some of the smaller ones were "so-called co-ops". In my view that intervention by Deputy Browne speaks for itself.

Mr. Allen

That is not true. The Minister is taking Deputy Browne out of context.

Mr. R. Ryan

I know Deputy Browne well and I would never take him out of context because I have the greatest respect for him.

Mr. Colley

That is no problem to the Minister.

Mr. R. Ryan

Deputy Colley has suggested that there is a lack of consistency between having a tax exemption on the export of manufactured goods and removing the tax exemption which previously has been enjoyed by agricultural co-ops. Let us consider what is the tax exemption on the export of manufactured goods. Firstly, it is reasonable to attract business to Ireland which otherwise would not be here to generate business which otherwise would not be generated, to encourage people to find foreign markets. It was not until we had Fine Gael in Government that such a very sensible step was taken. It has had very beneficial results but —and this is important—the exemption lasts for only 15 years, phasing out then for five years. It lasts for 20 years at most and quite a number of firms are moving towards the end of that exemption. It was never intended that the exemption should last for ever.

What we are doing here is removing an exemption which has been enjoyed for more than 50 years. Exemptions are justifiable if they can bring about an improvement in economic performance and economic pattern, but it is wrong to allow exemptions and concessions to last indefinitely in such a way as to disturb the equity of the tax system. Exemptions related to small co-ops which were dealing with the production, purchase and marketing of agricultural produce or fishery produce is one thing and could be justified in the circumstances in which the exemption was first introduced, but to extend that into what are now major manufacturing and marketing organisations which are in competition with private enterprise is to argue for the operation of a system which will multiply the inequity as long as it is allowed remain. We have taken into account representations made to us. We have met the bodies primarily concerned. We have not allowed our judgement on this matter to be in any way coloured by some very rude criticisms that have been uttered.

Mr. Allen

Inside or outside of the House?

Mr. R. Ryan

I defy anybody to produce from my contributions to this debate yesterday or today anything in which I spoke offensively about any members of the farming community but it is possible to find a number of such contributions from the Opposition, particularly from Deputy Gibbons who spoke about citizens of Dublin in a very, very, rude way.

Mr. J. Gibbons

Tell me when and how?

Mr. R. Ryan

I ask the Deputy to have a look at it and if he does not recognise them I will blue pencil them for him. It is a pity that that should have happened. I have no wish to generate, and I will oppose all efforts by anybody else to generate, any hostility between town and country. We live off one another and we depend on one another. Even Dublin is composed primarily of people who have come from rural Ireland, including your humble servant, although the Opposition oftentimes tried to paint me as being as old an occupant of Dublin as the pillar which used be in O'Connell Street.

Mr. Ray Burke

It was moved as well.

Mr. R. Ryan

I trust that, much as they might dislike my presence here, members of the Opposition do not propose to use the same methods to dislodge me as they when in Government used to dislodge that beautiful Doric column in O'Connell Street. I want to return to the issue which has been raised wrongly and dangerously —the suggestion that there is any effort to generate hostility between one sector of our community and another. There is not, but one cannot avoid recognising that there is inequity if one allows a substantial number of people to avoid paying taxation when people with somewhat equivalent standards of living and incomes are obliged to pay and have no opportunity to avoid paying. That is wrong. As I have so often recognised, the process of change is a difficult one. One gets very little thanks from those who are not affected by changes because they are not upset by them. There is probably some little element of gratitude but they seldom express it when they see others being brought into the net. But one gets nothing but abuse, and a great deal of it vituperative, from those who no longer enjoy the exemptions and concessions they previously enjoyed. Deputy Colley experienced that when he was Minister for Finance and every Minister for Finance in this and other countries have experienced the same, but one must discharge one's duty as one sees it and have the courage to do it. If one is failing in that courage then one ought to quit the post. As long as I have the privilege of being Minister for Finance of Ireland I will pursue this course of equity in taxation and also pursue the other necessary policies to achieve here a just society.

Mr. Colley

It would be edifying, if one had not heard the Minister earlier, to hear him decry any effort to divide the rural dweller from the urban dweller, the farmer from the townee but it is almost impossible to avoid the conclusion that that is precisely what the Minister was trying to do earlier. In purely political terms one can understand this because he had run into such a barrage of criticism from what appeared to him to be rural elements that he thought the only thing they could do to salvage something from the wreck was to appeal to town relatives. But he is making a very big mistake, I would suggest, in approaching it in that way. That does not absolve him from responsibility for what he has just said. What he has just said is something with which I would fully concur, but having approached it in that way I suggest he cannot get out of his responsibility by saying the opposite today.

Furthermore, when he originally produced this proposal to tax co-operatives the Minister did not realise, and possibly even still does not realise, that co-operatives are in one sense more important to the people who live in towns than they are to farmers because they are the vital element in creating jobs in many parts of this country. They have provided many thousand jobs and any interference with their activities puts thousands of jobs at risk.

I suggest the Minister has been trying to mislead people in regard to this whole matter because, while he did not specifically say it, he certainly allowed it to be understood that the co-operatives did not pay tax. He did dwell at considerable length, as he did yesterday, on his allegations that co-operatives engage in unfair competition with other traders. Knowing, as he does, that of course co-operatives pay tax—as do all other traders—on what broadly might be called their non-agricultural activities, if he believes that there are many activities in which they engage on which they should pay tax, why is the proposal not before the House to apply taxation to those activities? Then we could discuss the liability which should apply to co-operatives in regard to those activities in a reasonable way.

But that is not what the Minister is proposing at all. I suggest that because that is not the proposal it is quite clear that this question of what they pay tax on and what they do not pay tax on and whether they are in competition with other traders is unfair. The Minister's proposal before the House is to apply taxation to all the activities of the co-operatives. That is the proposal, the Minister stands or falls on. If he believes that there is any truth in what he was saying in the other regard, his proposals should be quite different. The proposal before the House is to apply taxation to all the activities of the co-operatives.

I want to make it clear that as far as this side of the House is concerned we believe that the co-operatives should not be in a position to engage in unfair competition with ordinary traders and shopkeepers. But the activities of the co-operatives in relation to agriculture, particularly in relation to the small farmer, are a vital economic and social element. The food industry is what we are concerned with in particular—what is being done to it under this proposal, how much potential it has for our economy and the damage involved in this proposal to that potential. I am not speaking of its potential for farmers.

I am speaking of its potential for all the people, for exports based on home-produced materials with virtually no element of import involved, with all the added value done here at home, not just by farmers but by workers in factories in the processing and packaging and so on, all done here at home. That is the ideal kind of industry for this country. That is what we are talking about. That is what we on this side of the House are trying to protect. That is the kind of industry we believe the Minister should not alone not be attacking but ought to be encouraging and giving an incentive to.

As I indicated, there are aspects of the co-operative movement which could be greatly improved in the interests of the economy as a whole. We on our side, although in opposition, are now hoping to encourage this development. Deputy J. Gibbons, our spokesman on agriculture, will very shortly meet representatives of one of the farming organisations in order to discuss with them this very topic and try to see between us what we can do to encourage the development of the co-operative movement in order that it will contribute even more to the future of our people and to the provision of employment for the young people. One could reasonably expect this kind of approach in a much more intensified fashion from the Government in present circumstances, but what do we get? A proposal to apply blanket taxation, with no regard for the consequences.

I suggest that that difference in approach alone illustrates why this country is in the condition in which it is under this Government as compared with the condition in which it was under the previous Government. The Minister of course would have us believe that the world situation is such that he has no responsibility. Of course that argument has worn completely thin by now. When one finds, as one did within the last few weeks, the OECD processing a report showing that this country has had this year the highest inflation record of any developed country and when one realises that all the other developed countries who have been facing the same problems of the energy crisis and the world recession have done better than we did in handling inflation, that we have the highest rate of unemployment in the EEC and have as well the highest rate of borrowing in relation to our GNP, one is entitled to say that the Minister had better stop trying to hide behind the excuses he has been giving. Even if it were true that he could not do anything about this aspect of the world scene it would make it all the more necessary that he should be picking out the sectors of our economy which can be got to generate employment quickly.

Nobody who looks at our economy across the whole spectrum to pick out areas which could produce more employment and more exports quickly could overlook the food industry. When he looks at the food industry will his approach be to apply further taxation to it, or will it be how to use incentives to get this industry to contribute to employment and to growth?

It has taken me a long time to get the Minister for Finance to face up to the contradiction inherent in everything he has been saying about equity in taxation on the one hand and granting export tax relief on the other. Finally in this debate I have got him at last to talk about it instead of going on and on blandly, as he has done in the past, about equity of taxation. When we come to gross equitable provision nobody knows exactly how much tax is being saved in export companies. Some of them are far lower and some of them higher. Of its nature people cannot know how much is involved, but there could be little doubt that it is not less than £100 million a year. It may well be considerably in excess of that, but there can be little doubt that it is at least that much. Every single argument that the Minister has advanced on the grounds of equity for applying the taxation proposed in this amendment could be advanced with much greater force in favour of applying the taxation proposed in this amendment could be advanced with much greater force in favour of applying taxation to our industrial exports. For example, the Minister talks about the typist who is paying at least £3 a week in tax under PAYE.

Mr. R. Ryan

£6 or £7.

Mr. Colley

Depending on what she earns. Multi-national companies with millions of pounds capital and hundreds of thousands of millions of pounds turnover all over the world are getting relief from taxation in this country worth very easily in one case £10 million a year. Is that justifiable in pure terms of equity, which the Minister keeps trying to ram down our throats? Is that fair when the typist has to pay £6 a week? Does the Minister begin to see the injustice and the dishonesty of the arguments he has been making in this debate if I put it that way? The Minister knows as well as I do that this country needs to have export tax relief, that thousands of jobs depend on export tax relief. The Minister knows it is right that we should have export tax relief. I put it to the Minister that, if there were any honesty in this approach he would apply that argument to this proposal before the House and he would not compare this with the situation of the typist but would see what would be the economic and social consequences of applying this tax.

I listened carefully to what the Minister said in this debate yesterday and today and not once did I hear him talk about the economic or social consequences of what he proposes to do here. He talked about equity and unfair competition. Why did he not talk about the economic consequences? I would suggest that it was because the Minister knows that if he talked about the economic consequences he would find himself making the same arguments for retaining exemption from taxation for co-operatives as he made for retaining export tax relief. The Minister may say that there is only a small amount of money involved and that therefore it cannot be of major significance. But, even if the Minister did not know before, since this proposal was produced he has received sufficient representations to show him the detailed figures from various co-operatives, their commitments in regard to the repayment of huge loans which they had got to add to their reserves in order to expand, and provide more employment and more exports. The Minister knows that in a number of cases the proposal now before the House will mean that they will be unable to service the debts they have or debts they plan to have in order to expand.

The Minister also knows that in a number of cases hundreds, maybe thousands, of jobs are marginal at the moment and that the effect of this proposal could well be to throw those people out of work. I suggest that it is grossly misconceived to imagine that the workers in Dublin or in any other town have some kind of a vested interest in the introduction of a measure of taxation which will throw hundreds and thousands of other workers out of a job. No amount of endeavouring to mislead the public or to create envy between one position and another can obscure that fact. It is in the interests of all the people of this country, whether living in towns, cities, or farms, that we should encourage the co-operative movement in the genuine activities of co-operatives. I do not for one moment suggest that there should be any encouragement of or defence of activities by co-operatives which are not related to the agricultural industry and in which they are competing whether fairly or unfairly with other traders. That is another matter altogether which could be dealt with separately, if the Minister believed that that is so. That is not what the Minister is doing here. What the Minister is doing is striking a blow at all the activities of co-operatives and in particular at the food industry.

We have pointed out to the Minister that the bulk of the people who will be affected in this way are small farmers. The Minister has tried to obscure that fact by saying that of course such people are not going to be liable to income tax. We never said they were. What we did state, and what the Minister cannot deny, is that the application of this proposal will have the effect of reducing what is available to the members of co-operatives. The great bulk of the members of co-operatives are small farmers. These are incontrovertible facts.

I do not know whether the Minister has grasped the fact that the consequence of what he is doing is that either the value of the return in the form of credits or availability of fertilisers and so on to small farmers will decrease or, alternatively, that the price of the food sold by co-operatives will go up. Almost certainly the latter is the position. If the cost to the farmer of producing food goes up ultimately the cost to the consumer will go up. Therefore not alone are the jobs of people in towns and villages at stake but the cost of foodstuffs to people all over the country will be affected by the Minister's proposals. Furthermore, we reminded the Minister that one of the reasons co-operatives were founded was to enable farmers to save themselves from exploitation by merchants, large and small, by gombeen men, and by huge corporations. The only way the small farmer can be protected from such exploitation is through the co-operative movement. The Minister in this proposal is opening the door to these exploiters once again to come back and exercise the role from which the co-operative movement has banished them.

We on this side of the House do not believe that any of these consequences are justified. We believe that the argument about equity is specious and has been shown to be so and that in so far as there is unfair competition the matter could be dealt with in quite a different way. This proposal does not deal with unfair competition at all, and it will have serious consequences which are even more serious because of the present appalling state of the economy. That being so, we are opposed to the proposal contained in this amendment. As we have indicated, we intend on returning to office after the next general election to repeal this measure should it be passed now by the Minister and the Deputies who sit behind him.

In this regard I wish to say how much I deprecate the efforts that are being made by many people who purport to be supporters of the Minister to denigrate the Minister personally and to give the impression that he personally is responsible both for this proposal and for the appalling mess in which the country finds itself. Of course he is responsible, but that responsibility is shared by every member of the Government and by every Deputy behind them who votes with them. These efforts to denigrate the Minister imply that everything in the garden would be rosy if he were replaced. Each individual on the benches opposite is responsible for the present situation and will so be held by the people at the next general election.

There are a few technical points in relation to the section which the Minister might clarify for me. In particular can the Minister say what kind of activity is envisaged in relation to subsection (3)? How does a society come within charge to corporation tax? In regard to the reference at the top of page 15 to "any subsequent event" is that phrase defined in the 1967 Act?

Mr. R. Ryan

The kind of activities that would come into charge to tax would be any which were liable previously to tax. The Deputy knows that all activities were liable save those that were exempt. The phrase "any subsequent event" is in the 1967 Act.

Mr. Colley

Why does the amendment not propose to grant the kind of allowance in respect of industrial building that is granted to manufacturing industry generally and can the Minister say if the effect of not granting this allowance will mean no relief in respect of livestock marts which do not have plant and equipment?

Mr. R. Ryan

If they are industrial buildings as defined they would get the treatment appropriate to industrial buildings; otherwise, they would not get any such treatment. Commercial or business premises in the distributive trade, for instance, have never been classified as industrial buildings and have never qualified for the relief which is given in respect of such buildings.

Mr. Colley

May we assume that the wording of this amendment is such that the ordinary livestock mart will not get relief?

Mr. R. Ryan

Generally speaking that would be the result of the application of the provision.

Mr. Colley

Regarding subsection (6), I would point out that the earlier part of paragraph (c) refers to income computed without regard to the provisions of section 220, subsection (3) of the 1967 Act, but later in the paragraph it says that each part shall be deemed to be a period of account for the purposes of subsection (3) of section 220 of the 1967 Act. In other words, while the latter seems to be excluded at the beginning it is brought in at the end. I think I know what is sought to be achieved here but I doubt if the wording is such that it will achieve what the Minister has in mind, at least not without causing a great deal of confusion.

I would point out also that at the end of subsection (6) it says that for the purposes of the Income Tax Act, 1967, and the Finance Act, 1963, each such part shall be deemed to be a period of account. I do not think that the phrase "period of account" appears in either subsections (3) or (4) of section 220 of the 1967 Act although it says here that for the purposes of those sections each part shall be deemed to be a period of account.

Mr. R. Ryan

The Deputy will see on page 14 of the sheet of amendments that a period of account is defined as having the meaning assigned to it by section 155 of the Corporation Tax Act, 1976. What we are dealing with here are cases where periods of account straddle one another.

Mr. Colley

I appreciate that, but it says that for the purposes of section 220 of the Income Tax Act, 1967, each part shall be deemed to be a period of account but section 220 does not contain any reference to "period of account".

Mr. R. Ryan

The phrase has the same meaning as that in section 155 of the Corporation Tax Act, 1976.

Mr. Colley

I hope the Minister is right but I consider the drafting to be rather loose. However, since it will not be in operation for too long, I shall not concern myself with it further.

Mr. R. Ryan

It will be there for a good many years, after which time it will have become respectable so that no one will think of changing it.

Mr. Colley

We shall see.

Amendment put.

The Committe divided: Tá 66; Níl, 58.

Tá

Barry, Peter.Barry, Richard.Begley, Michael.Belton, Luke.Belton, Paddy.Bermingham, Joseph.Bruton, John.Burke, Joan T.Burke, Liam.Byrne, Hugh.Clinton, Mark A.Cluskey, Frank.Collins, Edward.Conlan, John F. Enright, Thomas.Esmonde, John G.Finn, Martin.FitzGerald, Garret.Fitzpatrick, Tom (Cavan).Flanagan, Oliver J.Gilhawley, Eugene.Governey, Desmond.Griffin, Brendan.Hegarty, Patrick.Hogan O'Higgins, Brigid.Jones, Denis F.Keating, Justin.Kelly, John.Kenny, Enda.Kyne, Thomas A.L'Estrange, Gerald.Lynch, Gerard.McLaughlin, Joseph.

Coogan, Fintan.Cooney, Patrick M.Corish, Brendan.Cosgrave, Liam.Costello, Declan.Coughlan, Stephen.Crotty, Kieran.Cruise-O'Brien, Conor.Desmond, Barry.Desmond, Eileen.Dockrell, Henry P.Donegan, Patrick S.Donnellan, John.Dunne, Thomas. McMahon, Larry.Malone, Patrick.Murphy, Michael P.O'Brien, Fergus.O'Connell, John.O'Donnell, Tom.O'Sullivan, John L.Pattison, Seamus.Reynolds, Patrick J.Ryan, John J.Ryan, Richie.Spring, Dan.Staunton, Myles.Taylor, Frank.Thornley, David.Timmins, Godfrey.Toal, Brendan.Tully, James.White, James.

Níl

Allen, Lorcan.Andrews, David.Barrett, Sylvester.Blaney, Neil T.Brady, Philip A.Brennan, Joseph.Breslin, Cormac.Briscoe, Ben.Brosnan, Seán.Browne, Seán.Brugha, Ruairí.Burke, Raphael P.Callanan, John.Carter, Frank.Colley, George.Collins, Gerard.Connolly, Gerard.Crinion, Brendan.Cronin, Jerry.Crowley, Flor.Daly, Brendan.Davern, Noel.de Valera, Vivion.Dowling, Joe.Farrell, Joseph.Faulkner, Pádraig.Fitzgerald, Gene.Fitzpatrick, Tom (Dublin Central).French, Seán.

Gallagher, Denis.Geoghegan-Quinn, Máire.Gibbons, Hugh.Gibbons, James.Haughey, Charles.Healy, Augustine A.Hussey, Thomas.Kenneally, William.Kitt, Michael P.Lalor, Patrick J.Leonard, James.Loughnane, William.Lynch, Celia.Lynch, Jack.McEllistrim, Thomas.MacSharry, Ray.Molloy, Robert.Moore, Seán.Noonan, Michael.O'Connor, Timothy.O'Kennedy, Michael.O'Leary, John.O'Malley, Desmond.Power, Patrick.Smith, Patrick.Timmons, Eugene.Walsh, Seán.Wilson, John P.Wyse, Pearse.

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

Amendment declared carried.

An Ceann Comhairle

Acceptance of this amendment involves the deletion of section 32.

SECTION 33.

Mr. R. Ryan

I move amendment No. 29:

In page 28, subsection (3), line 10, to delete "(2)" and to substitute "(3)".

This is a drafting amendment. It arises from the fact that the last three subsections are erroneously numbered (2), (3) and (4) instead of (3), (4) and (5). This will be corrected in the next print of the Bill. Consequently the reference in line 10, to subsection (2) should be to subsection (3) and the amendment secures this. It is much to do about a little.

Mr. Colley

How will the Minister change the other numbers?

Mr. R. Ryan

Those changes are effected, I am not certain, under some power or other. These are effected by the office.

Mr. Colley

I shall not inquire too closely but anyway we agree to this amendment.

Amendment agreed to.

Mr. R. Ryan

I move amendment No. 30:

In page 28, subsection (4), line 13, to delete "power conferred on him" and to substitute "powers conferred".

This is a drafting amendment which I think is self-explanatory.

Mr. Colley

I would suggest not quite self-explanatory. As it stands, the subsection reads:

(4) When exercising any power conferred on him by this section...

The Minister proposes to change that so that it will read:

When exercising any powers conferred by this section...

Mr. R. Ryan

Of course, the only powers that can be exercised by an officer are those which are conferred on him. The words "on him" are not necessary.

Mr. Colley

That is all that is involved. It is not self-explanatory; it is just getting rid of some tautology. Is that correct?

Mr. R. Ryan

That is correct, yes; improving the language.

Amendment agreed to.

Question proposed: "That section 33, as amended, stand part of the Bill."

Mr. Colley

I do not know whether the Minister wants to say anything about the section. We will have a few things to say.

Mr. R. Ryan

I thought we had exhausted speech for the day.

Mr. Colley

No, there is lots more where that came from.

Mr. R. Ryan

I am sure, yes, no shortage of wind; nothing offensive. This section empowers an officer of the Revenue Commissioners authorised by them for the purposes of this section to enter business premises and to inspect books, records, and documents relating to the business. Where necessary, they may remove books for a reasonable time for proper examination. I may say that this power is similar to that in relation to value-added tax and is contained in section 18 of the Value-Added Tax Act, 1972.

Mr. Colley

Would the Minister indicate what is unsatisfactory in the present powers enjoyed by the Revenue Commissioners?

Mr. R. Ryan

The present powers are not as extensive as these new ones. The House will recall that in my budget speech I said that steps would be taken to give the Revenue Commissioners the necessary powers to enable them to ensure that taxpayers kept proper records to meet their obligations. I said in relation to this section in my budget statement and I quote:

Cases which appear to warrant special attention will be subjected to intensive investigation.... The Revenue Commissioners will also take special measures as regards those taxpayers who have an obligation to keep records.

The provisions which we are making here now are a lot less stringent than apply in many other countries but are, I consider, the minimum we must give to the Revenue Commissioners in order that they may have the power to ensure that the proper records are being kept and that the information furnished to them is also correct.

Deputies will observe, in subsection (1) that there is a definition of "an authorised officer". Normally such an officer would be an inspector of taxes appointed by the Minister for Finance under section 161 of the Income Tax Act, 1967. However, an officer of the Revenue Commissioners, other than an inspector, may be authorised for the purposes of the section. It is proposed in the first instance to authorise only inspectors and accountants in the Investigation Branch of the Revenue Commissioners for the purposes of this section, that is to say, persons who, in the course of their work, are engaged in examining the records and accounts of persons in respect of whom the orders will be issued. It is imperative that they have this power in order to carry out detailed inspection of records.

Deputies will observe that banking business is excluded. That is done deliberately in order to remove any possibility of a suggestion being made that there was an invasion of the confidential relationship between banker and customer. What we are doing here is empowering the Revenue Commissioners to make detailed inspection of records in cases which have come to their notice.

Mr. Colley

Did the Minister say that it is proposed to appoint inspectors of taxes and accountants in the first instance?

Mr. R. Ryan

In the Investigation Branch of the Revenue Commissioners. When I say "in the first instance", I do not at present visualise that others would be authorised. The Deputy will recall that in order to, as it were, reduce the possibility of persons being appointed at will, and too many being appointed, we undertook to make an amendment which would be coming in on the next Stage to provide that any persons authorised in this regard would have to be authorised in writing. As the Deputy knows, he himself —when in office—appointed inspectors of taxes. They must be mandated and given their authority under seal of the Minister for Finance, likewise in relation to accountants.

Mr. Colley

Would that amendment apply to this section as well as to the earlier section?

Mr. R. Ryan

You will see that when exercising any power conferred on him an authorised officer shall if so requested by any person affected, produce to that person a certificate of the Revenue Commissioners that he is authorised to exercise the powers so conferred. Any persons exercising these powers will have a certificate to establish their authority to do so.

Mr. Colley

Does the Minister see any objection from his point of view to confining the authorised officers envisaged under this to inspectors or accountants in the Revenue service? He did, as I pointed out, preface that by saying "in the first instance". He will understand the concern that this could develop into a situation in which people could be appointed much too freely. They are being given enormous powers under this section. I do not see any reason why the Minister would not undertake in the House at least, if not in the section, that the powers would not be given except to an inspector of taxes or an accountant employed full-time by the Revenue Commissioners. If it were desired to change that afterwards I suggest that the matter could be brought before the House but I do not think it is right that such powers be given and be, theoretically at least, conferrable on people who might even just be engaged for a particular job by the Revenue Commissioners. I do not say that is what is envisaged at the moment but I do not think we should leave it open to have that happen.

Mr. R. Ryan

I can sympathise with the view expressed by the Deputy. It would not be my wish that what he visualises could happen should happen. I would like to make it clear that when we talk about accountants in the Investigation Branch of the Revenue Commissioners these are full-time officers of the Revenue Commissioners. An officer of the Revenue Commissioners is, in fact, defined in the Acts. He is employed by the Revenue Commissioners and paid by the Minister for Finance. There would be no question of empowering some person who was in a temporary capacity——

Mr. Colley

There could be if one goes on the basis of what the Minister said, in the first instance, that it would only be inspectors and accountants, as he has described them. In the second instance if it was not confined to them, could it not extend to the kind of people I have mentioned?

Mr. R. Ryan

In fact, though I can see it might not appear so on reading it, the section is drafted the way it is because it is not proposed to empower all inspectors to exercise the powers conferred by this section. It will be only those who are involved in the special work of surveillance in the investigation branch. If we include inspectors of taxes there is the possibility that it would be extended too widely. I am prepared to give the Deputy an assurance that as far as I am concerned I will be at pains to impress on the Revenue Commissioners that this power is to be exercised very carefully and that only people who are in the investigation branch or work which is necessarily related to this particular branch should be given this power. We can be assured that the Revenue Commissioners will not proceed to use this power recklessly or widely because they would not wish that junior officers should have power of this kind which obviously is one which must be exercised with very great caution in the interests of the taxpayers and those of the Revenue Commissioners themselves.

Mr. Colley

What the Minister has said goes some of the way to meeting the concern I have expressed. I dealt with this matter because it appears first in the section. I may be putting the cart before the horse because, basically, what I want to say to the Minister is that I do not think the power proposed in this section should be necessary at all. Is it not the position under present law that there is power to require the production of the records which are sought to be made available under this section? If that is so why is this additional power necessary?

Mr. R. Ryan

There is power in section 174 of the 1967 Act to call for records. For handy reference in section 3 of this Bill there is a table containing the amendment of section 174. That states that "where a person who has been duly required by an inspector to deliver a statement of the profits" fails to deliver it or where the inspector is not satisfied with the statement he may serve on that person a notice in writing requiring him to deliver to the inspector copies of such accounts and so on and make available within such time as has been specified in the notice for inspection by the inspector, all such books, accounts and documents in his possession.

The Deputy will appreciate that conferring of that power does not mean that the right records are produced. I consider it necessary that the inspectors should have power to enter premises where business is conducted to satisfy themselves that the books are being properly kept and that there are not, to put it quite bluntly, two sets of books, which is something which has been known to happen in the past.

Mr. Colley

The Minister will appreciate that what is proposed in this section goes very far and that there is an obligation on him, I submit, to justify the giving of such power. The kind of general statement he has made does not justify it. He must tell us from the practical experience of the Revenue Commissioners that there have been quite a number of cases in which they have found the existing power unsatisfactory before he seeks the kind of power sought in this section. It may be that that is so but the Minister has not said it and I rather doubt, if in fact, that is the position.

Mr. R. Ryan

The Revenue Commissioners have had cases, probably accidentally, in which more than one set of accounts has been produced to them in respect of the same trading period. Therefore, it is considered necessary that the Revenue Commissioners should have the power to satisfy themselves that books and records are being properly kept, that they are a true reflection of the business and that there is not, in fact, more than one set of books. Even the right to inspect may not detect the presence of two sets if one set is very carefully concealed. It is considered that we cannot effectively ensure an end to evasion practices unless the Revenue Commissioners are given stronger powers than the ones they have at the present.

This power already exists in relation to VAT for the simple reason that no doubt Deputy Colley when he was introducing the value-added tax in 1972 was of the view that it was necessary that the Revenue Commissioners should be able to enter premises where business subject to value-added tax was being conducted so that they could inspect any books, invoices, credit notes, debit notes, receipts, accounts, bank statements, vouchers or other documents whatsoever relating to the delivery of goods and the rendering of services and he also obviously considered it necessary at that time that they might remove and retain any such books, invoices, credit notes, debit notes, receipts, accounts, vouchers, bank statements or other documents for such period as might be reasonable. I consider that Deputy Colley was right in so providing in the value-added tax Act. That is a power which can be used there much more extensively than it is proposed to exercise the powers being conferred now by section 33.

The powers in section 33 will be used only where the Investigation Branch of the Revenue Commissioners have reason to believe that they will be justified in sending in an inspector or accountant to premises to establish that the returns made are valid in accordance with the business. The Revenue Commissioners are aware that they have received accounts which have not been in keeping with the actual position of firms and the only way that can be ultimately determined is by having power of this kind. Mere calling for accounts does not ensure that you will get the correct accounts.

Mr. Colley

What the Minister is seeking to achieve here may well be defeated by the provisions of this section. In regard to value-added tax he will appreciate that the records required in the case of a business, broadly speaking are all the records of the business, of purchases and sales. The chances of a second set of accounts detailing all the purchases and sales of a business being kept and being kept falsely, I suggest, are much less than the chances of a second set of accounts the object of which is to keep an account of the actual profits of a business which is what the Minister is concerned with in this section. I do not know if the Minister has considered this but the position at present is that if the Revenue Commissioners are not satisfied they may serve a notice calling for the accounts showing the profits. It is plausible to say: If there are two sets of accounts the taxpayer may produce the wrong set, but it is not quite as simple as that because, to produce the wrong set of accounts deliberately in response to a notice means that the taxpayer is exposing himself to a charge of fraud with very serious penalties. The great majority of taxpayers will think twice before exposing themselves to that risk, whereas with this power if the Revenue Commissioners exercise it and move in and take away the accounts, the odds are that they get the wrong set of accounts but the taxpayer will not have produced them to them and will not be guilty of fraud. The Minister may find that this section will defeat the purpose he has in mind. I urge him to think again about it because I think it is a little more subtle than it seems and he may be better served in what he is trying to achieve by the existing provisions than by this apparently more onerous and rigorous provision in section 33.

Mr. R. Ryan

As in all things, one must assume that the Revenue Commissioners will act reasonably. The courts so assume but if they act unreasonably the courts will correct any action taken by them which the courts consider to be unreasonable. I cannot honestly see how the Revenue Commissioners can effectively police the tax system unless they have power such as this. The mere right to call for records is not sufficient. The revenue from value-added tax may, in some cases, be smaller than that in relation to income tax and if it is considered necessary to have this power for VAT purposes, I consider it is also highly desirable to have it for income tax purposes. The innocent person who is correctly keeping accounts has nothing whatever to fear—nobody can deny that. Those who would have any reason to be upset by it are those who have not been keeping accounts properly and have not been furnishing proper accounts.

Mr. Colley

Has the Minister taken my point that if the Revenue Commissioners move in under this section and take away accounts and get wrong accounts the taxpayer in those circumstances is not guilty of fraud? He can keep accounts for fun if he likes and they can deal with anything. They are chasing them here, not calling on him to produce them and the Revenue Commissioners' position may be much weaker under this section than the Minister thinks.

Mr. R. Ryan

It is not just a question of going into premises to collect accounts which the taxpayer is under an obligation to deliver in any case but a question of going into premises to check whether accounts already furnished are correct—quite a different thing. I am not certain that I would follow Deputy Colley on all he says about the absence of moral turpitude on the part of a taxpayer who might allow the Revenue Commissioners to leave premises——

Mr. Colley

I am not talking about moral turpitude but about legal liability.

Mr. R. Ryan

——with accounts which, by his silence or otherwise, he might lead the Revenue Commissioners to assume are the correct ones. We need not enter the field of criminal law but I do not think the situation is a black and white one such as Deputy Colley was illustrating.

Mr. Lalor

The Minister has made what to him appears to be the valid comment that the man who keeps only one set of books and has sent in a proper return has nothing to fear. Apart from what Deputy Colley has said, I think there is more in this that the Minister should look at. If the Revenue Commissioners move in on the honest trader and find nothing but confirmation of what that trader has already submitted what will be his position? They will have the right to remove the books for what is called a "reasonable period" but what they consider reasonable may not seem reasonable to the trader. Presumably the man has a staff who know the Revenue Commissioners have been in; the word gets about that Joe Murphy's business merited a call by the Revenue Commissioners who feel that he is fiddling his books. If officials call under section 33, it means that they have found him guilty before they considered it necessary to move in. I assume the authorised officials will not demand to see books or ask anybody in the employment of the proprietor to produce books for examination without having some reason to believe they have not got proper accounts.

The Minister says the section is only frightening from the viewpoint of the man who is fiddling his books but that it should not frighten the honest trader who is giving fair accounts. I suggest that if the Minister is dealing with me as an honest trader and sends in authorised officers, in the normal way the staff and a number of people doing business with me will become aware that I am held under suspicion by the Revenue Commissioners. Depending on one's point of view, that can do damage to one's business. On the other hand, I appreciate the fact that people can give credit to the man who can put one over on the Revenue Commissioners, but I do not think the Minister would use that argument.

Mr. R. Ryan

I would not like to use the argument but I am glad the Deputy outlined the position.

Major de Valera

Earlier the Minister conceded the giving of a warrant to an authorised officer. In a criminal proceeding the principle would have been that, before my house could be searched or my property could be confiscated by the police, a warrant would have to be secured. That warrant would have to show cause as to why this was necessary. Here we will have the Revenue Commissioners' authorised officers going in on a general warrant and nobody is to know whether there is cause for this or not.

I want to mention something which might be a sobering thought. It is a well-known fact that legislation dealing with driving tests has induced widespread suspicion among the public as to the bona fides of procedures and the integrity of the system. We are now going to legislate and put something into our revenue law that will have a similar effect. For obvious reasons I will not spell out the details, but the way the Minister is going, sooner or later it will be necessary to spell them out. I am approaching this case from the point of view of the good name and the undoubted untarnished reputation of our tax gathering and revenue administering system and organisation.

If we put legislation like this on the record we are going a step further. This is something the Minister has been consistently doing, that is, passing his own responsibility for making decisions, and the odium for these responsibilities, back to an agency that has served this State well, an agency which over the years has been conspicuous, as anybody who has examined the accounts of this country or had anything to do with the Committee of Public Accounts will recognise, and outstanding as a model of the public service both in integrity and efficiency.

The return per pound from tax collected by the Revenue Commissioners over the years has been, until recent burdens were accumulated and thrown upon them, extraordinarily good. To put it another way: the net return to the Exchequer, after you take the money collected and the expense in collecting it, has been very high. I have taken that in conjunction with integrity.

A Leas-Cheann Comhairle, it may appear that I am wandering from the point and perhaps I am, but those two facts have a bearing on this section in this way. Firstly, its mechanisms and provisions of power, on the surface may seem to be arbitrary and without the protection which the custodians and guardians of the law have in normal procedures. They are not here. We are bringing about a situation where more and more, following on the Minister's attitude, the Revenue Commissioners eventually will be in a position in the eyes of the public comparable with the legendary position of the publican in the New Testament. That is a very serious matter. In the long run it can only bring disastrous consequences for all concerned. That is the relevance of my first point dealing with integrity.

The relevance of the second point is that the more one multiplies these procedures the more staff will be required, the more administrative expense will occur and will have to be paid out of revenue collected, and the net return of the Revenue Commissioners per pound will fall. I am aware, as chairman of the Committee of Public Accounts, of many of the difficulties facing the Revenue Commissioners and their officers in collecting revenue in certain Departments through the fact that mechanisms and demands for taxation have been imposed on them and they have been left with the responsibility of collecting them. I know that that is a serious enough problem for them to consider. Indeed, I can very well see and sympathise that some of the present pressure about tax evasion may stem from just that situation. My point is that this section is not going to help, that we are getting lost and the Minister is getting lost in an obsession that perhaps one or two errors might occur and that they must be caught.

The Minister has been preaching about equality of taxation. That is all very fine but that is not what he will achieve. What he is achieving is expense to the community, a diminishing net return to the Exchequer, the creation of a monstrous organisation where before there was model efficiency, the destruction of the confidence of the public and consequently, the loss of any degree of co-operation there was in the system, particularly for the Revenue Commissioners. All these things I regard as extremely serious.

On another section the Minister talked about social and political consequences and tried to suggest that political and social disturbances in other countries are largely attributable to taxation inequality. May I quarrel with the word "inequality" and say "taxation imposition"? The more taxes are imposed in this way and the more people are bound with unproductive taxation, the more the revenue authorities are put in the position of being agents for an unproductive system which in the end is basically unfair to all taxpayers, a system that is introducing friction and destroying mechanisms that should work. This is what we have to contend with. This section has all the elements and is characteristic of this as it stands. I would ask the Minister to seriously reflect on the consequences.

I have talked about general public consequences. Let me talk about the economic consequences of this section if passed. The Minister, in company with certain other elements in the community seems to have completely forgotten that economic activity, prosperity, the maintenance of standards of living, even the provision of the wherewithal to live, depends on productive and useful economic activity and is not a product of academic or literary efforts, or of administrative provisions, or of accountancy, law or anything else. We have got our priorities wrong. Accountancy, law, revenue and the State service itself are auxiliary and ancillary to, and depend utterly upon a basic economic activity that support it.

The Minister is in a jam today. He may get the plaudits of administrative staffs in public as well as in private for his wonderful efforts, but basically the country is in the state it is in today—and it is well known what state it is in—because the Minister and the Government have failed to realise that all this is supported by economic activity. I am not wandering when I say this because I want to show the impact of the section.

This section is bad enough at present. I can assure the Minister from personal experience—and anybody who is engaged in any kind of productive activity other than one of these service auxiliary jobs, whether as employee or employer, manager or worker, will realise it—that the effect of this administrative burden that is coming upon the community from all angles is that everybody's time is being absorbed in this kind of work and in preventing problems arising. As a result of this, productive work is suffering. When this is done, what will be the effect? Everybody in business, whether retail or productive, is going to be very concerned that anybody can walk in—and the Minister conceded me a general warrant earlier— and demand not only the production of what you might call regular books but can demand documents, correspondence, and carry out a general search. They could even search a manager's pockets under the terms of this section.

What is the practical effect of that going to be? First of all, it will stifle all activity because there will be an immediate reaction to deal with a section like that. Even a company's auditors, statutorily appointed under the Companies Acts by the shareholders of a company, cannot walk in and do that. They can see the authorised books of account. Their function is to see that accounts are adequate and sufficient. They can see the minute book of the company, ledgers, various contract documents, wage records and things like that. But under this section the Revenue Commissioners can come in and inspect even correspondence dealing with a tentative contract or negotiation. Are we going to create a dictatorship which can do practically anything it likes economically in this way and force that dictatorship on a people who do not want it? If the Minister goes on like that, let us appoint a revenue minister, a minister who will take public responsibility. Let us pass simple legislation to put the public responsibility in the hands of the Revenue Commissioners and cut out the farce of putting the responsibility on this House. That is the logic of it and, of course, it is a reductio ad absurdum.

The effect of this section is going to be not only stifling but positively conducive to two most undesirable things: first of all, the adjustment of all accounting, all management, to the requirements of this section. Talk about tax evasion; you will be creating the temptation and atmosphere for a massive concentration on methods of tax evasion that will require an army of administrators to cope with. You are already starting your fraud squads. It will not be squads, it will not be platoons, it will not be battalions, it will be divisions you will want of them before you are finished with this kind of legislation.

A day of reckoning will come. Again it was not I but the Minister who talked about political and social consequences in other places and other countries. The complete abdication of the Minister to points dealing with tax evasion, his obsession with this, will have the most disastrous effects along lines like this. While the Revenue Commissioners are being gradually put in an intolerable position— because this is what will result from it —the whole economic fabric will be further disrupted and destroyed.

The second consequence of this is that you will have to legislate—and you will not get reciprocal tax agreement on this—for where documents are kept and where they are not kept. The stage will be reached when an authorised officer will have to be sent along with every negotiator from the country, because he is going to go out of the country, carry out the business, keep the books elsewhere and only keep certain things at home. You cannot beat that unless you send an officer out with him and have him present at his negotiations and what he is doing outside the country.

The Minister may smile, but the Minister smiled when we talked about his deficits. The Minister smiled when we talked about his borrowing. The Minister smiled when we talked about what was going to happen inflation and employment. The Minister stopped his smile when he went out appealing to the unions for restraint, appealing to the public, and then finally the Minister abdicates and surrenders his whole function to an organ of State set up by the House, the Labour Court. Incidentally, who is going to examine the accounts of the State. For instance, in this, can an authorised officer, authorised by somebody else to carry out Government policy, go in and examine the Revenue Commissioners themselves? Will some other Minister or maybe the Taoiseach bring in that?

This is where we are going, and if my language seems extravagant and if I seem vehement today, it is to warn against the dangers that this is gradually sliding us into. If I use graphic and perhaps over-graphic descriptions, it is in a very earnest desire to impress upon the Minister that proportions are being lost sight of. Coping with tax evasion is something with which we fully agree, and we have always wanted to give the Revenue Commissioners discretion in this regard. The only occasion on which I demurred against this principle was when I felt they were being asked to be judges in their own case, which is not fair to anybody.

Again, that has a very big bearing on the approach here. It was being urged on the Minister to give a discretion in a certain case and it was remarked that I did not support it. I think I said silence might be more eloquent. In face of this section maybe I should give my reason for that remark. The remark was precisely this, that it would be grossly unfair to impose that discretion on them in that case. The imposition of this responsibility—because in the last analysis it is a responsibility, not a privilege—may seem to the man in the field a help, but let the thinking top staff look at it—and I think they will—and it might be a chalice that they might prefer to have pass.

This is what is in this section and in the whole Bill, and with the greatest sympathy for much here, I earnestly ask the Minister to reconsider what is being done here. It would be much better to have a special squad in the Garda Síochána to whom these things could be referred than to turn the Revenue Commissioners into a police agency and a secret police agency at that.

I know what the Minister is trying to get at here in this section. I know that books can be "cooked". I know that partial information can be given. I can well understand the frustration of an inspector or anybody dealing with these matters who has circumstantial evidence for believing that somebody is getting away with something substantial. Incidentally, in fairness to the Revenue Commissioners it must be remarked in passing that they have always been most reasonable and sensible in dealing with matters that were not serious, if you know what I mean. They could take a very sensible view of things. In other words, they would not spend £100 to get a halfpenny or they would not upset the whole apple cart because one apple was a little bit off; nor would they cut off a nose to spite a face.

I am quite ready, therefore, to accept that the intention of this is governing substantial cases. The intention is to deal with cases where there is turpitude and malice—I use the word "malice" in its legal sense—and, using the words of another Act, something that is material. There is, in other words, gravamen. Now, although I may have been a bit hard on the Minister, I want him to accept from me that what I have said I have said objectively. I do not want him for a moment to think that what I have said is meant in any petty sense.

Consider those cases then. If you have a situation of that nature it will be clear and you will want more circumscription. You must approach this very much in the spirit in which one has to approach criminal law because, in effect, Revenue law is becoming criminal law. There are two well-known facets of a well-known principle in criminal law: everyone is innocent until proved guilty and the accused is entitled to the benefit of the doubt.

Mr. R. Ryan

Will the Deputy give way for a moment? It is also an aspect of criminal law that the police are given power of investigation.

Major de Valera

I was coming to that. That is the principle but, as cases developed right up to certain crimes, with which we are all too familiar in this country, where one has, so to speak, to go to extreme lengths in the criminal law, one can visualise the same kind of problem, an analagous problem, facing Revenue law. However, the point I want to make is that the basic principle is there and there is a movement away from it. It may be necessary, unfortunately, as one moves out more and more to circumscribe this principle—erode it, if you like— and I am not saying that the circumstances and the temptations now built into our tax law are not producing and will not produce that situation. What I am saying is that it should be an outward extension.

Here we are putting in in omnibus form a complete sweep across the board which is equivalent to obliterating rights, equivalent to saying in the criminal law that it is too difficult to administer because there are too many fellows getting with it and so we will give the Commissioner of the Police and the police power to do whatever the devil they like. That is what this section is doing—giving power to do whatever the devil they like. It is that I protest against and I ask the Minister if there is any way by which there could be circumscription of this power and, if there is not, then I think it is necessary to show more cause as to why a power of this width should be given.

Again, notice must be given. Can it not be specified? In the Income Tax Acts and in other Acts, even in Acts that are not ostensibly for the purposes of the Revenue and the Minister for Finance, there are provisions in aid of the administration and collection of tax. Take, for instance, the 1963 Companies Act. When that Act was being passed I was guilty of commenting that it should be subtitled "An Act in Aid of the Revenue Commissioners". There was a great deal of bluff about the rights of shareholders, what accounts were to be given and so forth. I was on that Committee and all the pressure was from the Department of Finance and its representative on that Committee, though the Act was emanating from another Department, in aid of revenue collection. How has it worked out? It has certainly worked out in aid of revenue collection but it has also worked out in aid of speculators buying and selling and dealing in productive companies. This kind of legislation we have here will do precisely the same thing.

I am sorry for talking at such length on one section but can we not face the problem posed by this section? We must talk in global terms if the legislation is phrased in global terms, but can we not say specifically what we are aiming at here? Can we not say specifically what the difficulties are? Can we not confine the powers given to the minimum necessary? Can we not make the procedures definite? Can we not give certainty even to the accused?

On a further analogy with criminal law, when an accused is indicted in an ordinary criminal case he has an opportunity of preparing a defence and the prosecution are constrained by certain rules of evidence. Take the protection an accused has if he is interrogated by a policy officer. It is a very well-known objection, indeed, that the statement given by the accused was not a voluntary statement or that the evidence to be tendered was got in an irregular way. There is no such protection for the ordinary citizen in this.

This section is worthy of the OGPU at its worst. I am, perhaps, talking extravagantly but now is the time to face some of the issues and I am saying all this in defence of the Revenue Commissioners and in protection of the Revenue Commissioners. I do not want to see them thrown into this position, given indiscriminate powers of this nature, with all the odium and responsibility attaching thereto, plus the inevitable necessity for multiplying staffs and effectively diminishing the net return of the tax collected. These will be the inevitable consequences of the section as drafted and, indeed, of many other sections of the same genre in the Minister's tax code. My appeal to the Minister is made on the grounds of the good name and the confidence the public have in the efficiency and integrity of the Revenue Commissioners. This must be maintained. But this section is putting that in jeopardy. It is also putting in jeopardy the dignity of the citizen and the right of the citizen to function as economically as possible as a part of the community and not to be reduced to the position of a slave of the machine. I am putting it on the grounds of going beyond what even our criminal law does and creating a situation where, instead of minimising the crime, it is going to be an incentive towards tax evasion, a multiplication of red tape, a multiplication of expenses in collection and a further distraction towards administrative detail at a time when all our energies should be given to productive activity.

The whole community of the State has many analogies with an army in action and it may be because the life of the community is always a battle. In an army the essential thing are the fighting troops. The administrative services, the paymaster, the quartermasters, the adjutants and the ancillary corps are essential to the good administration and working of an army but in the final analysis all these staffs depend on the fighting troops. An army can have the finest staffs and services and the most efficient back-up organisation, but if the fighting troops are not there the opponent soon sweeps away all the services and the personnel are destroyed.

Again, I come back to the Minister's remarks about political, social and economic consequences. In a Europe when there is a ring around from the Mediterranean that, under this Minister, is coming rather near this country, it is well for us to reflect that the army of the State, the fighting troops of the community, are the productive workers and managers and those engaged in economic activity that is providing the wherewithal for us to live and to maintain and improve our standards of living. The ancillary services, what I might call the general category under Schedule D, including the State services and State agencies are dependent on this. Let the administrative mind see it as it likes and plan it from any point of view. If the support fails, they fail also. They are utterly dependent on it. It is a sober thought that when we talk about remuneration, tax and what the tax is collected for, the source of that tax can erupt and be destroyed. Too late those who are dependent on the return from tax will realise that what I called the Schedule D category will not stand up without the support of the rest.

This section hits right at the root of the productive elements, as do other sections and provisions. We need something else here. Let us face the problem. We are with the Minister and the authorities on this. Can we not limit it? We must make it definite. We cannot simply say to someone: "Here is a warrant; you can do what you like, you have more power than the Commissioner of the Garda Síochána". Are we going to say this in this House? Then the Minister, the Government and every Deputy who goes into the lobby must take responsibility for that before the public. It will not be long before other people, talking in a different vein and tone, will say what I am trying to say now by way of a friendly warning.

Let us think twice about giving such lethal presents and responsibilities to the people to whom we are delegating responsibility for doing our work, because they will prove to be lethal presents. Each dose may be small and tolerable and seemingly insufficient but the poison is cumulative. I want everything I have said here today to be taken as a friendly warning to all of us and a friendly reminder to Members of this House because we have the responsibility here.

We should not embark on this. We are behaving irresponsibly and damagingly to the people who have been most efficiently serving this State. In fact we are administering cumulative doses of very lethal poison to the State organisation and for this reason I ask the Minister to reconsider this section, make it specific, bring in limitations.

I believe we would make a start by putting a limitation. Perhaps we have got tired trying to deal with the specific and there is the temptation to deal with the general, but that is a fatal mistake. Let us first deal with the specific and when the point comes up let us see how we can meet it. We then have to see whether it is worth meeting it or not. That is the way to approach penal legislation and Revenue legislation has now become penal. This section is a penal section and the person in contravention of it is liable to a fine of £500. If a crime is established and it is sufficiently grave to warrant any provision like this, then the penalty should be big. But putting in sanctions against a crime of that magnitude is like providing for imprisonment for a petty offence such as not having a light on a bicycle. We have had it in history where men were hung for stealing sheep, and that is the answer to the Minister on that matter.

There is something wrong in the principle of our approach here. The way it is being presented is almost an insult to the House. We should be given some closer view of what the problem to be faced is. We should have an opportunity of debating what is necessary, an opportunity of dealing with the problem in less general terms than I have been forced to deal with. However I realise that the secrecy of the Revenue will come into this but that is all the more reason why such a section should be avoided. A complete re-think is needed on the section. I hope the Minister will take what I have said, vehement and all though it was, as a warning to him before the undesirable consequences of this type of thing built up to proportions that we will all regret. It should be remembered that up to this the Minister has been attracting odium and I have had some sympathy with him in this regard. At the same time I must confess that it is his own fault. But all I hear said about the Minister around the town and in the pubs is not very complimentary.

I have a great deal of sympathy for the Minister. I wish he did not work as hard and I think he should have a holiday. We will try and arrange to give him one as soon as possible. What I have said is an undoubted fact and it will not be long before this is being said about officers of the State, about permanent servants of the State. That would be a diabolical situation to introduce, but the fault would be ours. We as a Parliament do not deserve to exist and democracy would not deserve to survive here if we allowed this to happen. The Minister is paving the road to that very undesirable situation with this kind of legislation and that is why I called it a lethal present.

It will not be long before that kind of thing happens if the Minister carries on with this. I plead with him while things are all right, bad and all as he made them in that regard, to reconsider this type of legislation. Even at this late hour he should withdraw the section. Although I have no authority to say this for this side of the House—Deputy Colley has that responsibility—I would go so far as to say that if the Minister withdrew this section and introduced a short Bill later to deal with the problem in proper terms, I would be glad to give it to him.

I want the Minister to believe the spirit in which I am pleading with him. I do so in the hope that things I have been forced to say may be listened to and may not be said in another way—I believe the Minister knows what I am saying—on a much wider network. The Minister was good enough to accept the point I made about the warrant, but here he is doing something to the person who receives the warrant, to the people doing something to the person who who give the warrant, and to the whole State. If the trend continues it can only end in a major disaster. My warning is meant to be a friendly warning but I urge him to withdraw the section, even temporarily. I am sure the people concerned are not going to press him too hard merely on the grounds of administrative convenience. That has never been the tradition until recent times when considerations of this nature, not only administrative convenience but administrative necessity, have been forced upon us. It is not too late yet to save the situation, but time is running out.

Mr. R. Ryan

If I were to mark Deputy de Valera for his contribution I would give him full marks for eloquence. I would fail him on consistency and I would give him about half marks for practicality.

Major de Valera

From the Minister that is not a bad score. I thank him. What would it be, a bronze medal?

Mr. R. Ryan

Maybe. What are we dealing with? We are dealing with cases where the Revenue Commissioners would have reason or cause to belive that possibly they are not getting a full and adequate account of profits. Deputy de Valera has himself said he knows the Revenue Commissioners never contemplated wasting £100 to chase a penny.

Major de Valera

They have been marvellous in the past.

Mr. R. Ryan

And they will I am sure be the same in the future. They would not dream of using these powers unless they had reason to believe the exercise of them would be likely to yield a reward. They might be wrong of course in their suspicions in the first instance, in which case the taxpayer would be in no way disadvantaged by the exercise of these powers. However, if they had reason to believe that closer examination of the accounts, books and records might lead to the disclosure of information which had been withheld then they would exercise these powers. It would be right that they should do so. I cannot see any way in which we can effectively combat evasion unless we give the Revenue Commissioners powers of this kind.

It is interesting that in the great democracies of the world, in Britain, the great democracies of western Europe with whom we are so proud to be associated in the EEC, the USA, Canada and Australia, the powers of the Revenue Commissioners are much greater than they are here. I have had a look at some of these powers and I have hesitated—Deputy de Valera will be glad to know—at introducing powers of an equally draconian nature here. I am not certain what Deputy de Valera had in mind when he spoke about the need to condition, as it were, the exercise of these powers. Perhaps I am not using his exact words, but he seemed to feel that we should specify the circumstances in which these powers should be used. That worries me. I do not like to write into legislation of this kind that if the Revenue Commissioners were of opinion that a certain person was possibly not giving an adequate return of income then these powers would be exercised. That would be tantamount almost to charging the taxpayer with the commission of an offence.

Deputy de Valera has drawn some comparisons between what he considers is the criminal code and the tax code. I pointed out to him and to others on several occasions that there are many lines upon which there are departures. The most critical line of departure, the most unique and original is that very one which is a cardinal principle of our criminal code, that every person is innocent until proved guilty. If that was the code on which the tax laws operated how on earth could the Revenue Commissioners ever draw up an assessment in the absence of information from the taxpayer? The Revenue Commissioners must, when they make assessments in the absence of information from from the taxpayer, assume that the taxpayer or person named has an income. This could be regarded as being comparable to a declaration of guilt, as it were. It certainly throws on to the taxpayer the onus of establishing, if such be the case, that the income assessed against him does not exist and has never existed and that the Revenue Commissioners were wrong in levying the charge or the assessment in the first instance.

While there is a natural tendency, particularly with us lawyers, to think in a legal fashion about laws and their enforcement and the investigation procedures, there are several departures, and have necessarily to be several departures, between the criminal law and the tax laws. There must be a balance in a sensible and sound society between the efficiency of the tax laws and the right of the individual to privacy. Deputy de Valera is good enough to accept that I respect the need to strike that balance and that I would not wish to err in such a way as would unnecessarily interfere with the right of the individual— by whom I mean not just the person but businesses—to adequate privacy. At the same time there is no point in our passing laws creating liability to tax unless we provide the Revenue Commissioners with the means to ensure that the laws are equitably, evenly and efficiently applied.

As I said earlier, the Revenue Commissioners have received evidence which indicates that the powers they already have, merely to send for records, is not sufficient. In 1972 my distinguished predecessor, Deputy Colley, was of a mind similar to my own today. He saw the need to empower the Revenue Commissioners to enter premises and examine records for the purpose of value-added tax and, indeed, the right to obtain information and documentation is, I would think respectfully, greater in the value-added tax of 1972 that it is in this section.

Major de Valera

It should be.

Mr. R. Ryan

I am not going to argue on that. Deputy de Valera has suggested that we should be more specific in section 33 than we are. The dangers about being specific about the kind of documentation that can be obtained is that a person can then escape, as it were, from the impact of the section by putting the documentation in some other form.

Major de Valera

It will be some other place now.

Mr. R. Ryan

Possibly some other place, but in that connection too the net is closing, because the EEC and, indeed, the Council of Europe, are considering ways and means in which the avenues of evasion and avoidance which can be easily operated on an international plane can be closed. The Deputy will be glad to know that as far as Ireland is concerned, while we are anxious to close these, we are not disposed to go as far as some of the very draconian powers existing in other countries. We are insisting upon the preservation of the secrecy and confidentiality of our system of tax collection. He need have no fears on that score. Anxious as we are to close off evasion, we would not wish the principles upon which we operate here to be tampered with simply because other countries have drifted further down the road that Deputy de Valera fears we are going. I do not believe we are on that road. If we want people to respect our tax system and to feel reasonably content that others are not evading their obligations, we will have to empower the Revenue Commissioners in such a way as to enable them to check that information furnished to them is correct. That is the purpose of these powers. The people who would be empowered in this way will be senior officers of the Revenue Commissioners' staff—inspectors, accountants in the investigation branch, people who are directly involved in examining the accounts. I am sure it was simply one of his oratorical flights when Deputy de Valera said that he would prefer these powers to be given to the police rather than exercised by the commissioners.

Major de Valera

There was more substance in that point than the Minister is giving me credit for.

Mr. R. Ryan

I am prepared to accept that, but nevertheless he took flight in that direction, which left it open to the interpretation which I am putting on it. I am not putting that interpretation on it maliciously but God knows we want to preserve privacy in relation to persons' incomes and that information must be available to the Revenue Commissioners and nobody else, except in relation to the wrongdoer who will ultimately be brought before the courts. In this country there has been a tendency to treat wrongdoers in a kid-glove fashion which they do not always deserve. There is a practice in other countries —which I am not proposing to introduce here—whereby a list of the names and addresses of tax evaders who are caught is published annually.

I have given fair warning that for these who come before the courts it is intended to use those powers that are already there, and such names will be published. In other countries names that have not come before the courts, but where settlements and so on are arrived at annual lists are published which give this information. That is no doubt a great inducement to make people to behave properly. What we are doing here is providing a means wherby records furnished to the Revenue Commissioners can be checked. The people who will be empowered to do this will be responsible officers of the Revenue Commissioners. They will seek to exercise these powers in the first instance towards the owners of the businesses in question, towards the managers of the businesses in question—if they make themselves unavailable obviously one cannot let the Revenue Commissioners' inspection be frustrated—and then the powers will be directed towards other persons. We are not seeking power to enter private premises. We are conferring power to enter premises and places where a trade is carried on and where anything is done in connection with a trade. In other regimes, in other jurisdictions, powers already exist and in others powers are being sought to enter private premises. This is not the intention of this section. It is in relation to businesses, and I consider it an essential weapon.

Mr. Colley

It does not say that. It does not confine it to private premises.

Mr. R. Ryan

It does. It says:

... may at all reasonable times enter any premises or place where any trade is carried on...

and then it goes on "in connection with the trade".

Mr. Colley

"Or anything is done". Or where any trade is carried on.

Mr. R. Ryan

If a person does not want his private residence to be searched he can conduct his trade elsewhere. As Deputies know, the section is drafted in such a way as to relate to places where anything is done in connection with the business. If it was not done in that way, there would be innumerable ways of escaping from the impact of the section and it would be futile for the Dáil and ultimately the Seanad to bring in a section which would leave a multitude of easy avenues of avoidance. I do not want to curtail any other Members speaking on this Bill but I would like to remind the House that we are under a Constitutional and a statutory obligation to have the Finance Bill through both Houses and signed by his Excellency, the President, by 29th May and we have an understanding that we would complete all stages of this Bill tomorrow. On that account I would impose silence upon myself.

Major de Valera

The Minister has represented this section as only being a case where there is suspicion. One of the objections to this is that it is a "spot-check" system. It is a deliberate inducement to "spot-checks" which is a very undesirable thing. I am afraid to say that the spot-check technique can be all too easily resorted to under the section. I mean by "spot-check" technique that certain people will be sent around from firm to firm at random to make a check on things. It is not confined to what the Minister said. The Minister said that it was confined to trade premises. Deputy Colley quite rightly pointed out that the wording is:

An authorised officer may at all reasonable times enter any premises or place where any trade is carried on or anything is done in connection with the trade....

That section is wide enough to enable the Revenue Commissioners to raid the house of a managing director or any other executive of a firm under suspicion, or even raid, on a "spot-check".

Mr. R. Ryan

There would have to be evidence that trade was conducted from the place.

Major de Valera

The evidence might be found there. There would be enough to substantiate that to find a managing director had brought home his bag with him with some of his homework.

Mr. R. Ryan

That might be his lunch.

Major de Valera

It might also be some files. What top executive of any busy organisation has not brought work home, even State officers have had to bring home their work. State servants will never bring a file or an official document out, but many of them have had to take work home.

Mr. R. Ryan

After hours would not be a reasonable time.

Major de Valera

If it is not the section is ridiculous. The point is that either the provision has or has not this power, that either it can or cannot be evaded. The question of a motor car, for instance, raises a fine legal point: is it a place? In regard to official records there arises the question of auditing, of accounts being examined and compiled by a reputable firm of auditors. In such circumstances I cannot see either the usefulness of or the reason for this provision but where accounts are not kept one must find an alternative way of dealing with the situation. However, this section is such that the authorised officer would be entitled to come to my desk at my place of business and inspect every document or communication on it. Not only that but he would be entitled to come to my home and ask whether I had there any document relating to my business and if I answered in the affirmative, he would be entitled to demand to see that document. From my reading of the section, I am not sure that he would not be entitled to arrest me in transit and demand that I hand over my briefcase. I am not saying that an authorised officer would take this action but the power to do so is being conferred on him by this section. I challenge the Minister to deny that the powers being bestowed are as I have outlined. Might the authorised officer not be entitled to stop me on the street and demand that I hand over for inspection any document concerning my business?

Mr. R. Ryan

That could only happen if the Deputy conducted his trade on the street.

Major de Valera

If the Minister puts that construction on it, he is caught in another trap. I have outlined what I read into the section but I am taking the Minister to confine this provision since he said at the beginning that it would not affect private houses. He now says that I could be apprehended on the street only if I conducted my business there. Is this not equivalent to the possibilities I have outlined? If the powers are limited to where I conduct my trade —my office or my factory—there arises the point as to whether I am conducting my business at home. To take that to its logical conclusion one might as well stay at home but ensure that the documents which are produced are only those which he wished the authorised person to see. Regardless of how one views the section, it is objectionable. The Minister mentioned rightly that it has been necessary elsewhere to follow up such legislation with other powers. I commend him for his anxiety not to have to do that but if he does not do it and we take his construction of the section, the whole thing becomes futile.

No matter how one views the section it is bad law. It is bad if it is restricted as the Minister says, bad if it is intended to be a mechanism for sampling and spot-checking. I find it very difficult to see in what way it might be good law although I sympathise fully with what the Minister has in mind. However, he is going about the problem in the wrong way. The way to cope with it is to use the regular procedures. In this regard I have mentioned auditors. Where there is a firm of competent auditors there should be no problem provided that the confidence and co-operation between auditors and the Revenue Commissioners will not be destroyed by what the Minister is doing. Where there is a problem it should not be dealt with as the Minister is proposing.

As it stands any letter, confidential or otherwise, in relation to trade could be demanded by the authorised officer. We are all human so there is always a certain risk in this regard especially in relation to big organisations. The commissioners have been most commendable in maintaining secrecy but the more their organisation is multiplied and the greater the number of people they employ, the greater will be the danger to secrecy. The section should be withdrawn and anything the Minister may say in defence of it can only stimulate further objections to it.

Mr. Colley

Assuming the accounts of the trade or business are taken under this section and retained for some time by the Revenue Commissioners for inspection and that the trader requires to inspect the books— it is easy to think of a number of reasons why on occasions he would want to do so: for instance, he might get a pressing bill and wanted to show from his records that he did not owe it—what provision is there for him to inspect his account while they are in the possession of the Revenue Commissioners.

Mr. R. Ryan

I do not think it is necessary to spell into the Act a provision which would enable the person to look at his own accounts. He may be assured that the Revenue Commissioners will allow him to inspect them while in their possession. I am satisfied that if the Revenue Commissioners declined to allow the person to inspect his own account there is a very easy and immediate remedy available because the courts would insist on the commissioners making the accounts available for inspection. The whole purpose of writing in this clause is that the commissioners may have the accounts for a reasonable period and to ensure that they may not keep them indefinitely. If they keep them for a period that is longer than reasonable it is open to the owner of the accounts to apply to have the accounts returned to him. It is the principle of our law that the courts would readily enforce that a person would not be denied access to what is his own.

Mr. Colley

I would hope the taxpayer in those circumstances would not have to have recourse to the courts. I do not think the Minister meant that he would. I think he was outlining the extreme case. What I wanted to get on the record was the Minister's assurance, which he has given, that in circumstances like that, the Commissioners would make the record available. There are two other points I want to have clarified. In subsection (2) (a) there is a phrase "any person who is employed by the person carrying on the trade". Can that include a caretaker employed by the person, an apprentice or an office boy?

Mr. R. Ryan

I doubt whether a caretaker is carrying on a trade. The Deputy's contention could apply to a gardener at home, if a person were lucky enough to have one. What this has been interpreted as meaning in the past is a person who is employed in a certain capacity. The Revenue Commissioners cannot apply to a person who has no responsibility.

Mr. Colley

That is what I should like to see written into the section but it is not there.

Mr. R. Ryan

I cannot say whether this has been so interpreted by the courts in this country but it has been elsewhere. The Revenue Commissioners could not command an employee to do something which was beyond his duties or powers. We must assume that the commissioners will act reasonably. In all these cases they will require in the first instance the owners or the managers. If the owners and managers have been made aware of their obligations then the commissioners must be empowered to require others to discharge the duties because if that were not so the commissioners could be frustrated by the simple refusal of the owners and managers.

Mr. Colley

Subsection (3), described at the moment as subsection (2), provides for dealing with persons who wilfully obstruct or delay an authorised officer, but can paragraph (d) of the previous subsection place an obligation on persons involved to give to the inspector or authorised officer all reasonable assistance? How far does that extend? Suppose a person hands over the books, is there any obligation on him over and above that which would be deemed to be reasonable assistance or would be deemed to be withholding reasonable assistance?

Mr. R. Ryan

Obviously the conditions in which an officer of the commissioners could be obliged to work could make it very difficult for him to work, and such reasonable assistance might mean leaving him a place, a table or a counter or a chair, in which to conduct the work. A mere entry in the record might not in itself be self-explanatory and reasonable assistance would involve giving an explanation of such an entry. There are illustrations of what reasonable people would understand to mean reasonable assistance but obviously we could not proceed to spell them out in the Act because if we tried to do that we could leave out several cases where reasonable assistance could be offered and yet, because it was not in the Act, no offence would be created because it was denied. For instance, if the Revenue Commissioners were to call in the late afternoon and were denied the aid of artificial light for the purpose of inspecting the books, the person would not be rendering reasonable assistance.

Mr. Colley

The Minister is raising some beautiful hares.

Mr. R. Ryan

The Deputy asked me to give illustrations of what we had in mind. A person could say: "Yes, you may inspect the records but down in the basement or in the strongroom", into which no natural light enters. It is obvious that no unreasonable hinderance should be put in the way.

Major de Valera

The Minister will put people in personal danger by the time he has finished. I should not like to be an authorised officer by the time the Minister has finished. These are the thoughts that will occur in regard to this dangerous occupation. The Minister spoke about the light. It is very easy to contrive a power failure which cannot be traced to the person who did it.

Mr. Colley

I suggested earlier that the exercising powers were adequate and that this section might reduce the powers of the commissioners. I do not think the Minister has justified the case for this section because either the powers conferred by it will go way beyond what they should do, certainly beyond what is needed on the basis of the Minister's case, or this in practice will not add to the commissioners' powers and may indeed reduce them. Either way, I think the section is objectionable and the Minister has not made an adequate case for it.

Question put.

The Committee divided: Tá, 64; Níl, 57.

Tá

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Joan T.
• Burke, Liam.
• Byrne, Hugh.
• Clinton, Mark A.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Corish, Brendan.
• Cosgrave, Liam.
• Costello, Declan.
• Coughlan, Stephen.
• Crotty, Kieran.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• Donegan, Patrick S.
• Donnellan, John.
• Dunne, Thomas.
• Enright, Thomas.
• Esmonde, John G.
• Finn, Martin.
• FitzGerald, Garret.
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Hegarty, Patrick.
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Keating, Justin.
• Kelly, John.
• Kenny, Enda.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerard.
• McLaughlin, Joseph.
• McMahon, Larry.
• Malone, Patrick.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Connell, John.
• O'Donnell, Tom.
• O'Sullivan, John L.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Spring, Dan.
• Staunton, Myles.
• Taylor, Frank.
• Thornley, David.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Níl

• Allen, Lorcan.
• Andrews, David.
• Barrett, Sylvester.
• Blaney, Neil T.
• Brady, Philip A.
• Brennan, Joseph.
• Breslin, Cormac.
• Briscoe, Ben.
• Brosnan, Seán.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Daly, Brendan.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Molloy, Robert.
• Moore, Seán.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Kennedy, Michael.
• O'Leary, John.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzpatrick, Tom (Dublin Central).
• French, Seán.
• Gallagher, Denis.
• Geoghegan-Quinn, Máire.
• Gibbons, Hugh.
• Gibbons, James.
• Healy, Augustine A.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael P.
• Lalor, Patrick J.
• Leonard, James.
• Loughnane, William.
• Lynch, Celia.
• Lynch, Jack.
• O'Malley, Desmond.
• Power, Patrick.
• Smith, Patrick.
• Timmons, Eugene.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Tellers: Tá, Deputies Kelly and B. Desmond; Nil, Deputies Lalor and Browne.

Question declared carried.

SECTION 34.

Mr. Colley

I move amendment No. 30:

In page 28, after line 16, to insert a new section as follows:—

"34.—Section 115 (3) of the Income Tax Act, 1967 shall have effect, in relation to a payment made on or after the 6th day of April, 1976, as if for ‘£3,000' there were substituted ‘£8,000'."

This amendment is designed to increase the figure in section 115 of the Income Tax Act, 1967, approximately in line with the fall in the value of money since it was fixed. That figure relates to payments made on retirement. This section provides that a payment not exceeding £3,000 made to a person on retirement would not be subject to tax. This amendment seeks to raise this figure to £8,000, approximately in line with the fall in the value of money since it was fixed. If it was justifiable then this figure, or something around the figure in the amendment, is justifiable now. I do not think the Minister should have any great difficulty in dealing with it and accepting the amendment.

Mr. R. Ryan

If there is a case for changing the figure now there was a case for changing it in earlier years too.

Mr. Colley

My attention was not drawn to it when I had the opportunity of doing this but it was this year.

Mr. R. Ryan

I know that in Britain the figure was fixed in 1964 and it has not yet been changed. The real reason we have a figure at all is that it is purely a matter of ministerial convenience to avoid having to look at all cases. It is not so much a question of relief to the taxpayer as simply a question of avoiding unnecessary examination of small sums. Deputy Colley says his attention has been drawn to the possibility that maybe the time has now come to increase it. I am not saying that it should forever remain at its existing figure but at this point on the Committee Stage of the Finance Bill, 1976 I do not feel I can give adequate consideration to the change which Deputy Colley recommends. I might well have a look at it in relation to the Finance Bill, 1977. In relation to the actual need for doing it in 1976 there certainly is no need on the administrative side to provide the relief which it would grant on the administrative side and as far as the general body of taxpayers is concerned I do not think it is a crucial matter. I suggest that we have a look at it now that the seed has been sown by Deputy Colley in his amendment.

Mr. Colley

I would, of course, agree that this is not a crucial matter to the general body of taxpayers but it is crucial to any taxpayer who is affected by it. However, in the light of the Minister's undertaking to examine the matter I will withdraw the amendment.

Amendment, by leave, withdrawn.

Section agreed to.

SECTION 35.

Question proposed: "That section 35 stand part of the Bill."

Mr. Colley

Could the Minister indicate the total amount of the increase in the price of a pint of beer since the date of the budget arising either by virtue of the increase in tax imposed by him or the increase in price authorised and sanctioned by his colleague, the Minister for Industry and Commerce?

Mr. R. Ryan

I hope I have those figures correct. First of all, as far as the impact of the budget is concerned, the increase was 5p. Subsequent to the budget the National Prices Commission recommended an increase of £1.86p for brewers. As the Deputy knows, one brewery applied that increase and another brewery did not. Subject to correction on this, although I think I am right, the vintners, of their own volition, without authority from the National Prices Commission or the Minister for Industry and Commerce, increased the price of a pint of beer by 2p so 3.86p would be the increase which is not attributable to any budgetary action. There was a VAT increase related to the increase imposed by the vintners and brewers which carried its own related VAT and also the VAT adjustment itself, giving a total increase of 10p altogether.

Mr. Colley

That is 10p arising from the budget, VAT and the increase authorised by the Minister for Industry and Commerce and imposed by the vintners. Is the total increase 10p?

Mr. R. Ryan

Yes, but the actual budget increase was 6p. The other items follow as a consequence of the decisions of the vintners and brewers.

Mr. Colley

The Minister for Industry and Commerce authorised the brewers' increase?

Mr. R. Ryan

The National Prices Commission recommended an increase.

Mr. Colley

And the Minister authorised it? It is not being done illegally, is it?

Mr. R. Ryan

No, but the other increase by vintners was put on without the approval of the National Prices Commission or the permission of the Minister for Industry and Commerce. The actual budget increase as a result of the decisions which were verified in the Dáil on 28th January last is 6p which I am sure everybody would like to bear in mind instead of succumbing to the temptation, as some people are doing, of trying to pin a 10p increase on the Dáil which never voted it.

Mr. Colley

Is it not true that the increase in taxation is more than 6p per pint because the budget called for an increase of 6p and VAT operating on the 3.86 increase that the Minister mentioned is an additional tax increase?

Mr. R. Ryan

Yes, there is an increase of .14 which is attributable to the decision of vintners and brewers to increase their profit margin but it was not part of budget policy or decision and was not in mind when we voted on this matter on 28th January last.

Mr. Colley

I know it is not the Minister's direct responsibility but can he throw any light on what action, if any, has been taken in regard to the increase of 2p which he says was un-authorised?

Mr. R. Ryan

The position is rather difficult there in that legal action was taken in connection with this. Offhand I cannot say what the position is but I know that the Minister for Industry and Commerce is actively considering steps to regularise the position in relation to the ex parte increases which the vintners have from time to time granted to themselves on beer price lists but it is a very complicated matter and not one on which I should like to talk at length at present but it is the Government's intention that the same price control that operates in relation to other commodities should be applicable also to liquor.

Mr. Colley

Whatever the legal position is, is it the situation that the consumer is obliged to pay an extra 10p per pint for the various reasons mentioned and that that is the figure which is included in the calculations on the consumer price index?

Mr. R. Ryan

As I pointed out, one brewery decided not to increase the price of beer and therefore in regard to that particular brand which I am not in a position to mention here the price increase is not in operation. There may also be cases in which vintners have not themselves imposed an increase of 2p and so, in such cases where neither the brewers' increase nor the vintners increase has been applied, the actual increase in the price of the pint is 6p.

Mr. Ray Burke

The Minister must have been aware, when introducing the budget that an application was before the prices commission for an increase on the lines eventually approved and in the light of that surely it was ill-advised, considering the effect it has on the consumer price index, to impose such taxation as the Minister imposed knowing it would result as it eventually did? Or does the Minister for Industry and Commerce not tell the Minister for Finance what applications are before the commission?

Mr. R. Ryan

I do not blame the Deputy for not knowing it as he may not have been in the House when the National Prices Commission was set up but applications made for price increases remain confidential to the commission and are not necessarily known to the Government or the Revenue Commissioners or the Minister for Finance. When the Government determined the pattern of tax increases to be proposed to the Dáil they were not in a position to contemplate that there would be further increases in the price of the commodity resulting either from a desire by brewers or by vintners to increase their margins. We were justified, I believe, in the decisions which we recommended to the Dáil and which the Dáil took because the impact of the increases proposed as a consequence of the budget were not material in relation to the consumption of beer.

Mr. Ray Burke

The Minister helped Deputy Colley with some figures. Could he assist me by giving the figure for March, 1973 for the average price of the pint and the figure today?

Mr. R. Ryan

Yes. Those figures indicate, as best I can calculate them, an increase of about 15p in the pint of which the trade took 7p and tax 8p. Of that increase 8p was returned to the public in the form of revenue redistributed but the other 7p was taken to the trade itself.

Mr. Wilson

What about the workers?

Mr. R. Ryan

Of the 15p, 8p went back to the workers; the other 7p went to the trade.

Mr. Wilson

But there are workers in the trade also.

Mr. R. Ryan

When I say the trade, I mean brewers, vintners and employees.

Mr. Colley

Why does the Minister say that it went back to the public? Why does he not say that it went on servicing the debt that he incurred? Could he not just as well say that?

Mr. R. Ryan

All that is for the public benefit. I am just emphasising that of the 15p, 8p was expended for the public benefit and the other 7p was siphoned off for the interests of the trade. I do not say that they did not require it. Roughly speaking, half was returned to the public and the other half went to the trade.

Mr. Ray Burke

The decision of the Minister and of the Minister for Industry and Commerce in approving the increase has had an effect which none of us want to see and that is that the pint has now become more expensive than the short drink. This is an undesirable situation. If young people decide to buy drinks the inclination would surely be to go for the cheaper drinks and so, perhaps, they are inclined—I shall not say forced—to start by drinking short drinks rather than pints. I think this is anti-social and undesirable. I do not suggest they should start with pints either; it would be better if they did not drink at all probably but the incentive should not be to drink short drinks at an early age.

Mr. R. Ryan

I fear I have inadvertently given some wrong figures. I was making calculations from a number of tables here before me but the difference in price between March, 1973 and now is 20p.

Mr. Ray Burke

That is what we thought; we were taking the Minister's word.

Mr. R. Ryan

I am sorry. Of that 20p tax was responsible for only 8p so that 12p has gone to interests other than the Exchequer in the public interest.

Mr. Colley

The actual increase in the pint since March is 20p.

Mr. R. Ryan

Tax is responsible for only 8p and those who have been invoking my name in less than respectful terms in taverns and other places might like to realise that of that 20p the Exchequer collected only 8p and others who might be adding to the chorus of ridicule that goes with the other initials of my name might like to realise that the Exchequer were responsible for 8p of that 20p. The Exchequer have handed it all back to the benefit of the people.

Mr. Ray Burke

Who handed it to the gnomes of Zurich?

Mr. R. Ryan

I agree with Deputy Burke that it is desirable that beer should be cheaper than spirits. That was a consequence of a budgetary decision. Following the budget beer was cheaper than the usual measure of spirits. If beer is now dearer than spirits for the normal measures the reasons are not attributable to the budget but to the vintners and brewers' increases, not to the increases imposed as a result of the vote of Dáil Éireann. Therefore Dáil Éireann, both sides of the House, should be careful not to allow themselves to be put into the position of accepting blame for that situation.

Mr. Colley

We accept no blame.

Mr. Ray Burke

The Minister is to blame.

Mr. R. Ryan

That situation developed from increases which did not receive the authority of Dáil Éireann.

Mr. Ray Burke

For the very short time being Deputy Ryan, Minister for Finance, is part of a Government who were given authority by the people of this country to govern. He cannot now stand up like Pontius Pilate, wash his hands, and say: "Although beer has gone up by 20p in three years, we are not responsible". If you are the Government, you should take action. You came in on a 14-point plan, one of the main points of which was at least to hold prices and to reduce them as far as possible. You cannot say the Dáil and the Government are not responsible, but the big, bad, publicans are responsible.

Mr. R. Ryan

I have not so described them. Those are the adjectives of Deputy Burke.

Mr. Ray Burke

That was the Minister's clear suggestion.

Mr. R. Ryan

Those are the Deputy's adjectives.

Mr. Ray Burke

That was the clear suggestion made by the Minister. If somebody has broken the law it is up to the Government to take action. The Government are either responsible for prices or they are not. They cannot wash their hands of the situation as the Minister has attempted to do. In the three years since the Government came into power the ordinary man's pint has gone up by 20p. That is an appalling indictment of the Government.

Mr. R. Ryan

Deputy Burke knows well that this matter has become a very important legal issue. If it has become a legal issue it is because we inherited the legal and pricing system.

(Interruptions.)

Mr. Colley

We were able to work it.

Mr. R. Ryan

The indecision in that area is attributable to the very bad law originally provided by our pre-decessors——

Mr. Colley

You had three years to change it if you thought it was wrong.

Mr. R. Ryan

——which we had to apply until such time as the matter is ultimately determined.

Mr. Callanan

The Minister admits that the ordinary man's pint has increased by 20p but that he is responsible for only 8p.

Mr. Colley

We, Dáil Éireann are responsible.

Mr. Callanan

We are not responsible for the position where it costs more than £1 to buy three pints. The Minister's explanation does not cut ice with me. When he knew the real position why did he tax the pint in preference to spirits?

Mr. Colley

He taxed both.

Mr. R. Ryan

I did not do it in preference; both were taxed.

Mr. Callanan

Why did he make the ordinary man's pint dearer than spirits? This is the first time that has ever happened in this country. Everybody is talking about it. He might ask what difference that makes to me when I do not drink but the people who vote for me take a pint.

Mr. R. Ryan

The Government are not responsible for it being dearer.

Mr. Callanan

Of course they are. The Minister cannot get away with that.

Major de Valera

Who is?

Mr. Ray Burke

Tell that to the man standing at the bar counter.

Mr. R. Ryan

I have already done so.

Mr. Ray Burke

Is that where he made his famous speech?

Mr. Colley

In this little exchange of views here we have had a perfect example of the approach, not just of the Minister for Finance but of the Coalition in general, to responsibility and trying to get out from under. You will have noticed, Sir, that the increased taxes in the Minister's view were not the responsibility of himself and his colleagues who voted for it, but of Dáil Éireann, not even the majority of Dáil Éireann but all of us were responsible. He is sliding out there. Then the increase which was not the result of increased taxes, he said, was the responsibility of the publicans, the brewers and so on, ignoring the extent to which that had been sanctioned by the Minister for Industry and Commerce and then saying that they were not responsible for the fact that people had increased the price illegally and the Government had not been able to do anything about it.

Fianna Fáil were responsible for that because the law was not good enough. The Minister knows that this kind of problem never arose in the past. If the law was ineffective, he had three years in which to change it, but he did nothing about it. He cannot win that argument either. The fact is that this Government came into power saying they were going to stabilise prices and halt the price rise.

Mr. Ray Burke

And reduce prices.

Mr. Colley

Stabilising prices was one of the headings in their 14-point plan. The pint has increased by 20p. If the Minister remembers pre-decimal money he will realise that there has been an increase of 4s. on the pint in three years. If one were to listen to the Minister for Finance one would imagine that no responsibility attaches to the Government for this. When we were in Government we were responsible for every single item of increase. Suddenly even tax increases are not the responsibility of the Minister because he is recycling them back to the taxpayer. He is also, as Deputy Burke said, recycling them, broadly speaking, to the gnomes of Zurich, but he does not like to talk about that. The fact is that the pint has gone up under this Government by 20p. and there is very little to show for this enormous and inordinate increase except that it underlines the failure of this Government in this as in so many other areas to do anything effective even remotely like what they promised to do when they went before the people looking for their votes in the last general election.

Progress reported; Committee to sit again.

The Dáil adjourned at 8.30 p.m. until 10.30 a.m. on Thursday, 20th May, 1976.