Finance Bill, 1988: Committee Stage (Resumed).


Amendments Nos. 47b, 47c, 47d, and 47e may be taken together for discussion, by agreement.

I move amendment No. 47b:

In page 55, subsection (3) (a), line 46, to delete "£100,000,000" and substitute "£102,000,000".

Deputies will be aware that the Government have recently received an unanimous recommendation from the central review committee of theProgramme for National Recovery which brings together trade union, employer and other interests asking that the Government consider the £10 duty. The committee stressed their concern about the possible impact of the duty on the moves towards systems of cashless salary and pay transactions. Having considered the views of the committee and the views expressed in this House during the Second Stage debate, the Government have decided not to proceed with the £10 ATM card charge. I am therefore proposing an amendment to delete section 62.

I am also proposing amendments to section 60 in order to raise by way of an increase in the bank levy the £6 million which would have been raised from the ATM charge. The bank levy has not been increased for five years from the 1983 level of £25 million, despite the very significant jump in bank profits in that period. The increase to £36 million now proposed is justified, especially in the context of the low corporation tax contributions from the banking sector. The amendments to section 60 will secure this increase. This will be done by altering the first tranche of leviable resources from £100 million to £102 million and by increasing the co-efficient applied to leviable resources in excess of that amount from 0.36 per cent to 0.45 per cent.

(Limerick East): I thank the Minister for his explanation of the amendments. Naturally we are pleased that the proposal to impose a £10 levy on ATM cash cards is being withdrawn as a consequence of these amendments being moved. It would have been better if the Minister had found alternative means for raising the £6 million yield which he is foregoing as a result of deleting section 62.

I welcome the move to abolish the cash card levy. Our opposition to the measure was always presented on the basis that the Minister would have to find the revenue elsewhere. A better way of doing things might have been to nominate other bank charges as a substitute, but I understand why the Minister is raising the levy to give a corresponding yield. Is he outlining his intentions for the future in regard to the bank levy? Does he regard this as coming under the general heading of excise duties which will have to be harmonised as we proceed towards 1992? If so, is he not making life more difficult for himself or his successors by loading the levy in this manner rather than ensuring an adequate take from the banking sector by other means?

I accept the amendments and will not oppose the section, on the basis that it substitutes for section 62.

I agree with Deputy Noonan. The substitution of the increased levy for the stamp duty on ATM cards is a good idea in the circumstances. I am worried as to whether the particular hostility to the ATM card levy was based on temporary considerations such as the development of Irish banking now or more long term considerations. I know the Minister is withdrawing the section but I should like to ask what revenue effect the introduction of ATM cards had on stamp duty and other similar revenue items. Many people like myself use cash cheques as a means of generating revenue. Is there a noticeable decline in the unit of stamp duty on cheques by virtue of the wider use of ATM cards?

Will the Minister give some indication as to the way he sees the bank levy going in the years ahead? I know it is customary for Ministers for Finance not to give any indication of what they intend to do in any future year, which is quite convenient from the point of view of the administrators and quite politically expedient from the point of view of the Minister. However, it does not necessarily lead to good financial or fiscal planning. It seems that the continued reliance of Irish financial policy on bank levies will be, to say the least, short term in its duration. Remembering that we will have complete freedom of movement of capital as a result of the introduction of the Single European Act, I realise that the Government have put in certain derogation markers as far as that is concerned. I do not think this will survive very long. If we are, as we wish to be, recipients for the doubling of the structural funds, many of the derogations which we have claimed will prove to be as flimsy as the paper on which they are written.

Deputy Bruton appreciates that on Committee Stage we are required to deal with what is in the legislation. We are not allowed to theorise too far or search into the future.

I am a stranger to theory, Sir, in matters of this kind. The very practical consideration is that if the withdrawal of the ATM card levy is being financed by an increase in the bank levy, how long can the bank levy continue given that there will be complete freedom of competition between banks established here that will be paying the levy and banks established elsewhere that will not? The question I ask myself is: can this stratagem last, which the Minister has chosen to get himself out of this political difficulty into which he voluntarily went? If so, for how long?

How can it be reconciled with 1992 freedom of competition and the ability of people, if they want, to bank with the Banco Ambrosiano or with the National Westminster Bank in London, or any other offshore banking institution in which they can write their cheques and have their accounts — banks that are not paying the bank levy and are competing directly with the banks here who are running large overheads and bank structures in this country? How will we be able to make that levy stick?

I realise that we give a hostage to fortune straight away, that Governments other than that represented by the Minister have used the bank levy as a convenient method of filling up a hole in the budgetary arithmetic, usually rather late in the budget-making process. I am not claiming any superiority over the Minister in terms of the political side of the matter in this regard. We all know that the bank levy has been used and abused as a method of filling a gap. However, the fact is that it is not something that will last, or can last, if we are to have a genuinely competitive banking sector.

There is much worry here at the moment about 1992 but it is largely unfocused worry. People feel that they should be worried about something, but are not quite sure what it is that they should be worried about. In my opinion, one of the things about which we should be extremely worried is employment in banks here. Banking, far more than manufacturing industry, and the financial services sector generally far more than manufacturing industry, are those which have most to fear from 1992. They are the sector that are going to face the real competition in 1992. It is bad enough that most surveys have indicated that we have a rather inefficient banking sector, possibly a rather overstaffed, under-automated one. If, on top of that, we have a special, unique Government tax, that will add to the difficulty.

We have many firsts in this country in the area of taxation. We have been more ingenious in devising new taxes than most — that is credit to somebody but I am not quite sure who. One of our ingenuities has been the banks levy. It seems that will not have a very long life in the Europe of 1992, given that our banks are supposed to compete. I cannot produce the figure off the top of my head but given that there is a very substantial number of people employed in banking here, given that they are going to face the greatest threat, possibly, of all sectors in the post-1992 era, I wonder if the bank levy has a long-term future and if the Minister could — to use the American phrase — share with us his thoughts on this matter as to where this bank levy is going next year and the year after?

If the Minister is to have the bank levy excluded from the budget arithmetic for 1989, now is the time when he should be getting Government agreement to such course of action in view of 1992. There is not much point in leaving it hanging and allowing his colleagues in the last few days before the word processor has started rolling on budget documentation to say at that stage that they forgot to point out that the bank levy should be got rid of because it cannot be sustained for very long. If the Minister intends to get rid of the bank levy in view of 1992, now, or about now — possibly away from the budget process itself — the Government should be making a decision. I should like to press the Minister as to his intentions thereon.

As Deputy Bruton particularly will know, it is difficult enough to deal with one Finance Bill at a time without talking about what one may or may not do or consider doing in 1989. A number of Deputies have raised the question of what will happen in 1992. In that year it is hoped will come the harmonisation of indirect taxes, not direct taxes. The whole reason for the bank levy is the corporation tax contribution from the banking profits and other factors. That is why it was introduced in the first instance. How long term it might be one can only judge from the fact that it has been in place since 1981 and is being renewed again this year, 1988, and being increased. In that regard, I should like to put on the record that in the period between 1983 and 1987 the post-tax profits of the two main associated bank groups grew, by 65 per cent in the case of AIB and 76 per cent in the case of the Bank of Ireland. The bank levy, in contrast, has remained unchanged at £25 million since 1983 and is being increased this year to £36 million, which is a rise of 44 per cent.

Deputy McDowell spoke about the impact that the ATM cards may have had on other stamp duties. We could see that as only marginal. Stamp duty on cheques is steady so we did not think there would be any problem in that regard. It would be only slight if there was one. It was not taken into the arithmetic, anyhow.

The Minister is missing slightly the point I was making. I acknowledge that there is not a requirement to harmonise direct taxation. I know that corporation tax was left out of the White Paper.

There is one expected on it; it has not come yet.

I know that, but I know that it is not part of the 1992 process. However, that is not the point I was making. Perhaps I did not put it too clearly. It was that there would be freedom of establishment and free movement of capital in regard to banking and freedom of services as well as freedom of establishment, as I understand it, in banking. One does not have to have a bank here. One would be able to sell banking services into the market of another member state without having a bank here at all. At one end of the computer terminal one can conduct one's business. In other words, the big accounts that have that facility would be the ones that would be targeted by banks in other parts of Europe. The Minister says with justification that bank lending has not increased as rapidly as bank profits since 1983. On the other hand there is not a bank levy of this kind on any of the competitor banks with the Irish banks, so that puts them at an immediate disadvantage. In the very competitive environment in which they will now live, will they be able to easily bear such a levy? Whether it is required to be harmonised out of existence or not does not really matter. If the competitive conditions are such that the Irish banks cannot afford any extra levy, they will be at a disadvantage. That is really my point. In the era of the open playing field in terms of European banking can a levy of this kind be justified?

The Minister mentioned increases in profit levels in the banks between 1983 and 1987 and quoted figures for AIB of a 65 per cent increase and a 67 per cent increase for the Bank of Ireland.

It was a credit to the Government.

You could look at it that way. If I am not mistaken, it is probably something that happened with banks all over Europe and the world at that time. The rate of profit increase in this country was not exceptionally good.

Deputy Bruton will appreciate that what we are dealing with here is the presentation of the Finance Bill in respect of a particular year, this year. I suggest to the Deputy, in respect of making the case that the Minister might indicate what he will do next year, that that would be in breach of the whole budgetary spirit of not revealing budgetary strategy before the budget is reached. There is no great virtue in the Deputy developing his interesting theories on this section.

If I may relate my remarks directly to the section——

That is what the Deputy should be doing all the time.

They are related to the section. I have not kept re-establishing the link verbally but I will do so. This section and these amendments are replacing the ATM charge with the bank levy. This legislation, in the absence of amendment will have a lasting effect. Therefore, one is entitled to speculate about the viability in future years of the proposals being made here today and that is strictly what I am talking about. I would respectfully suggest to the Chair that I am keeping very much within order, for this once, anyway.

I am essentially worried that this is not a very viable proposition. I know the banks have expressed that view and they are well able to speak for themselves. I am not concerned particularly about the banks but I am concerned that we should not put a measure in place to make the budgetary situation for this year look good if this cannot last in subsequent years. My contention in this argument is that by replacing the ATM charge, which is a silly tax, with the bank levy which is essentially a temporary tax, the Minister is not solving anything in long term budgetary terms. The Minister has not yet answered that point.

A lot of points similar to those raised in the first instance by the Deputy have been raised, more or less implying that we can and should tell him what may or may not be done in future years. Nobody likes taxation. I am sure Ministers for Finance do not like imposing it or imposing levies for that matter. As the Deputy and the House will know, what will happen to this levy in future years will depend totally on the corporation tax contributions from banking profits. That will be the criteria in the end. Of course it does not matter what the issue is, when one is talking about increased revenue in whatever form it comes to the Exchequer. It is there for a number of reasons but mainly because of the high levels of expenditure we have and the high level of borrowing and debt and because we are still borrowing substantial sums of money.

Deputy Bruton mentioned the £10 ATM charge here and outside the House and referred to it as being silly, stupid and all sorts of other things.

I just said "silly".

I referred to outside the House as well, where people said it was stupid. The Deputy says it is silly and in the Deputy's term of office it was silly then to have a £10 duty on Access cards, Visa cards, charge cards for American Express and Diners Club cards, cheque cards and so on.

No, it was not. If the Minister does not know the difference between an ATM card and an Access card I will tell him.

I do not need the Deputy to lecture me. The Deputy was long enough there to do what needed to be done, and we know what happened, but we will not go into that.


If the Deputy says that one charge on one particular type of card is silly and on the others is not, that does not make sense.

It does, if you think about it.

So far as this issue is concerned, and the Deputy's apparent concern about the banks, although he said that he is not too concerned about them, the facts are that they were the people who opposed this £10 duty in the first instance and led to the disputes that arose from the introduction of the £10 charge.

How did you make such a mistake?

I did not make any mistake.

You have to reverse yourself.

Not really.

Yes, really.

Perhaps the next time the Deputy is talking about the great support they are giving to the Government he can claim credit for the reversal.

Certainly we will not claim credit for the idiotic proposal.

It is all very fine to come in here for five minutes in the course of a three week debate and describe something as being silly, when the Deputy, as a former Minister, was involved in the very introduction of this blooming thing.


Who introduced the levy in the first instance, only the Deputy in 1981. I hope you take credit for it.


I am very sorry to come back into this discussion, and I will not be very long, but the Minister seemed to misunderstand the difference between the ATM charge and the Access charge.

There is no obligation on the Deputy to give any explanation.


The Access card——

The Chair is not concerned with anytête a tête between the present Minister for Finance and a former Minister as to what——

Nor am I, but everybody will agree that in a cashless economy which we wish to have in order to avoid theft, an ATM charge was not the most inspired measure and the Minister has removed it in the light of not just representations from the banks but because of the onset of commonsense in his own mind.

The other measures the Minister mentioned are measures which have been in existence since 1981 and they have not been seriously challenged by anyone and are continuing under the present Minister so he can hardly parade these in aid of his initial error in this matter.

I would just like to say something I omitted the first time, perhaps because of interruptions. The kind of statements that have been made here and outside of the House over the last couple of months and even by banks have led everyone to believe that there was no charge whatsoever on the automated teller machine cards but the banks themselves are charging 12p per item of service in one instance and 14 to 16p in other instances. Therefore, the banks are charging and will continue to charge for the use of automated teller machine cards. Let nobody be under any illusion; the facts are that the banks are charging for the use of automated teller machine cards.

Let us get back to the position of 15 minutes ago when the House indicated it was accepting the Minister's amendment. I take it that amendment No. 47b is agreed?

Amendment agreed to.

I move amendment No. 47c:

In page 55, subsection (3) (b), line 47, to delete "0.36 per cent". and substitute "0.45 per cent.".

Amendment agreed to.

I move amendment No. 47d:

In page 55, subsection (3) (b), line 48, to delete "£100,000,000" and substitute "£102,000,000".

Amendment agreed to.

I move amendment No. 47e:

In page 56, subsection (3) line 2, to delete "£100,000,000" and substitute £102,000,000".

Amendment agreed to.
Section 60, as amended, agreed to.
Question proposed: "That section 61 stand part of the Bill".

(Limerick East): Can the Minister tell us what is the purpose of reducing the rate from 6 per cent to 5 per cent and can he justify the fairly tight parameters within which it falls, between £50,000 and £60,000? Can he also inform us of whether there will be any additional yield under this section?

The stamp duty thresholds on houses and lands have remained unchanged since the mid-seventies despite increases in property values in the meantime. Because of the big cost involved there is no prospect at this time of any major downward adjustment in the duty. I am particularly concerned, however, at the rather drastic impact of the transition from the 4 per cent rate of tax to the 6 per cent rate on the threshold price of £50,000 and, therefore, I am introducing a rate of 5 per cent for houses and lands in the price range of between £50,000 and £60,000. This modification will cost the Exchequer about £700,000 this year.

I presume the Minister is aware that at the very least there is considerable avoidance and probably evasion of paying stamp duty under the guise of selling fixtures and furnishings and the like with premises in order to avoid thresholds such as this one. It strikes me that it might be worth the Minister's while to consider restructuring stamp duty completely and to introduce a flat-rate of stamp duty with a basic allowance. I think this is the position in England where the first X amount of money is disregarded and thereafter it is charged at a certain percentage. I think the rate is lower there than it is here but there might be fewer artificial transactions if there was a flat-rate of stamp duty and if the lower rates were effectively done away with or modified and replaced by an allowance of a certain sum of money to be disregarded in each transaction. I am interested to know whether the Minister would consider this as a more preferable way of approaching this problem. I agree with him that it is necessary to do something to stop these steps having an artificial effect on transactions. The right way to go about it would be to ignore, say, the first £10,000 or £20,000 and put a flat-rate of 4 per cent on everything above it with a view to arriving at the same level of revenue in overall terms.

I am sure the points which have been raised will be taken into account and perhaps one of the ways to overcome this particular problem would be to do as the Deputy suggests. I will examine this suggestion and what promises I can make remain to be seen.

Question put and agreed to.

I move: "That section 62 be deleted from the Bill."

Question put and agreed to.

I would like to draw the attention of the House to the fact that there is a minor drafting error in paragraph (b) of subsection (2) of amendment No. 48a in my name. The reference in that paragraph to subparagraph (i) should be a reference to subparagraph (ii).

I move amendment No. 48:

In page 58, before section 63, to insert the following new section:

"63. — The Second Schedule of the Capital Acquisitions Tax Act, 1976 is hereby amended by the substitution of `£30,000' for `£20,000' in subparagraph (b) of paragraph 1 of Part I of the Schedule.".

The purpose for putting down this amendment is to put the proposition to the Minister that the threshold in respect of certain capital transfers has not been amended for a significant period of time. The reason I raise this issue is that a man who lives in Blackrock and who is not a constituent of mine wrote to me to say that he was living with his sister in a house and that they were of very modest means. Because the threshold of capital acquisitions tax in respect of brother and sister inheritances has not been amended, he fears that the effect of the failure to index the amount of that particular limit — he owns the house — would be that his sister would have to sell the house on his death whereas she would not have had to sell it if he had died at the time the limit was fixed.

The failure to index the threshold for payment of that tax has led to a position where fairly modest transactions between brothers and sisters as opposed to between husbands and wives — both of these people are elderly and this house is their only abode — attract fairly heavy rates of taxation and in the circumstances there should be some effort made to keep the real value of thresholds in this area up to date with the real value which they had at the time the limits were fixed.

I am not in a position to estimate how much this would cost the Exchequer and I am not putting it forward on the basis that I am demanding this as a matter of urgent necessity but what I am saying is that the purpose of putting down this amendment is to try to elucidate why comparatively small transactions are becoming more heavily taxed at a time when the people affected by them are not in a position to meet the tax liability.

I would also like to say that I am not quite happy with the differentiation between brother and sister transfers of wealth and father and son or grandfather and grandson transfers of wealth. It seems that the direct lineal descendant is entitled to a far better threshold than a brother or sister — I think I am right in saying that — and that in some circumstances this can be a grave injustice. A grandfather and grandaughter transfer could be much more at arms length and a much more taxable transaction in moral terms than a brother and sister transfer in circumstances where they are an elderly couple dependent on their own home. I ask the Minister to quantify the cost of what has been proposed in the amendment and to indicate why it is that such transactions are becoming more and more heavily taxed.

The effect of the amendment would be to increase from £20,000 to £30,000 the class B threshold which applies in the case of gifts and inheritances taken by a lineal ancestor, a lineal descendant other than a child or certain grandchildren, a brother, a sister, a nephew or a niece of the disponer. The yield from capital acquisitions tax, excluding taxes on discretionary trusts, is in the order of £20 million. On average the tax from gifts and inheritances subject to the class B threshold has been around 55 per cent of the total and in a full year would amount to approximately £12 million. It is estimated that increasing the threshold from £20,000 to £30,000, would cost £5 million in a full year.

I cannot accept this amendment because of the cost involved and the fact that it would narrow the existing tax base of capital acquisitions tax.

In relation to the point about a brother and sister living together in the family home and when one dies the other inheriting a property which would have a market value of £50,000. In such a case the inheritance tax could be anything up to £8,000. There are two points which are of relevance here: first, the proceeds of approved insurance policies are exempt from inheritance tax where the insured took out the policy expressly to pay inheritance tax arising on his or her death. In other words, a person can insure against liability to capital acquisitions tax in the same way as they would for other potential liabilities arising on their death. Second, the scheme of capital acquisitions tax bases the taxable value of an absolute interest in property on the market value of the property but bases the taxable value of a life interest in property on the market value, reduced by a percentage, dependent on the sex and age of the life tenant. If the brother and sister referred to were to take the house as life interest rather than absolutely, the liability to tax would be reduced considerably. For example, the sister, if aged 75 years, on an inheritance valued at £50,000, would pay no tax if she took a life interest in the property.

I am grateful to the Minister for that observation because, in relation to the people I was talking about, it does afford them a way out. It is something I had not thought of and they had not thought of either. However, it does leave unanswered what is at the heart of all of this, that is that the differentiation between husband-wife transactions and parent-child transactions, on the one hand, and brother-sister transactions does not seem to me to be a very fair one. I know these things have to be crude, they have to be subjected to an objective test and cannot take into account the closeness of relatives; for example, sometimes a brother in Australia might never have seen the person to whose estate he was succeeding. It does seem to me that to fail to index link some of the thresholds which I believe are low and to leave what I believe to be unduly high thresholds as between the closer group to which I referred earlier, represents a value judgment difficult to defend in individual circumstances.

I agree with Deputy McDowell in regard to this aspect of thresholds. It has been brought to my attention that these thresholds may inhibit markets, say, for standing timber in forestry where there could be difficulties encountered with this £200,000 threshold. Has the Minister considered the effect that the non-examination of these limits would have on the creation of sales of forestry — which for this country would be a new market — between various finance houses in the future? I do not believe there has been any loss to the State to date in this regard because nothing has fallen due. However, in the future this may well occur. Therefore, I would ask the Minister to reconsider the threshold.

I will examine the point raised by Deputy Carey and communicate with him. But with regard to promising any reductions in tax liabilities, I could not do so at this stage.

(Limerick East): I believe there is merit in Deputy McDowell's amendment. If I understand the Minister he is objecting to it on cost grounds rather than on any grounds of principle.

That is because it would be narrowing the base.

(Limerick East): Is there any possibility of facilitating brother and sister transfers by putting some kind of age limitation on it, for example, where brother-sister transfers relate to people above a certain age, the cost should be confined substantially. Would the Minister examine that and ascertain whether he can do anything on Report Stage because there is a lot of merit in what Deputy McDowell is saying and I appreciate the high cost involved if it is done locally.

If we were to do what Deputy McDowell's amendment suggests it would amount to more than one-third of the actual cost. That is out of the question. We can all agree with further narrowing the tax base. That is very laudable but one must pose the question: can we do it in the context of the budgetary and financial circumstances prevailing generally? That is the issue and every single pound counts. As I have said, in many cases, people can insure against this liability. As I have outlined to the House they can also do it in a different way — take life tenancy rather than absolute ownership, overcoming what can be a very severe tax liability for them.

There are two aspects to the creation of the forestry market about which I speak. There is no loss at present under the current threshold. However, I contend relief should be granted under the provisions of section 61 for stamp duty on the transfer of semimature timber when this market is created. After all it should be remembered that the new forestry board being set up by the State will require to trade in this market, when it will be seen that this 6 per cent stamp duty will constitute a disincentive. I should like to table an amendment to section 61, seeking such exemption, on Report Stage if the Minister is not willing to concede an examination of the matter.

The last point raised does not arise now. We have dealt with that section. It is a matter for the Deputy what he wishes to put down for Report Stage; it is a matter for the authorities here in the House but in relation to the specific issue, quite honestly I do not know what is the issue in relation to some forestry enterprise about which the Deputy is speaking. If he will let me have the details I will have the matter examined and let him have a reply.

I thank the Minister, I will do that.

Amendment, by leave, withdrawn.
Question: "That section 63 stand part of the Bill" put and agreed to.
Question proposed: "That section 64 stand part of the Bill."

(Limerick East): I see that in the explanatory memorandum there is a separate note on section 64 (8) which reads:

Section 64 (8) will enable the Minister for Finance to use savings arising from debt management to directly reduce debt service costs. At present savings have to be brought into the Exchequer as Miscellaneous (Non-Tax) Revenue.

The Department of Finance always refuse to allow other Departments to operate in this manner. Is there to be one rule henceforth for the Department of Finance, with the other Departments still being debarred from dealing with transfers in this way?

I suppose it is best to put on record the note I have here on section 64. The system operated through the Capital Services Redemption Account is designed to amortise the expenditure on voted capital services over a 30-year period. The amortisation payments which are paid into the Capital Services Redemption Account each year, in respect of each year's voted capital services, are charged on the central fund, thus against the current budget.

Each year a new 30-year annuity is set up based on estimated expenditure on voted capital services in that year. In the following year when actual expenditure is known, the annuity is adjusted for the remaining 29 years. A portion of each annuity is earmarked as the interest element and a sum not exceeding the total of these interest elements may be paid from the account towards meeting interest on Exchequer borrowing each year. The balance of the annuities is used in any of the ways specified in the Finance Act, 1950, which set up the accountvis-á-vis, that is, for debt redemption or for investment in Government securities or in certain other specified areas.

(Limerick East): With regard to savings arising from debt management, how will they be shown now in the presentation of Government accounts?

In the capital services redemption account. We are expanding this year to enable the account to receive the income from debt management. I think that is the main point, that is, swop transactions and income from deposits undertaken by the Department. It will enable that account to receive these profits which it could not do before.

(Limerick East): Now that we have established what the section will do, may I ask the Minister why he is introducing it?

The expanded provision will enable these revenues to be used directly to reduce debt service costs.

(Limerick East): What was wrong with the other system?

There was nothing wrong with it. This is a more efficient way to do it and there will be greater clarity for all concerned. It is a simple exercise. It has been ongoing for the past number of years, the same as the local loans fund. This is something similar and it is a means of getting greater clarity into the operation of the system and of having greater efficiency between one account and the other.

(Limerick East): Will it make any difference on the current side? Is it a transfer from current to capital?

Question put and agreed to.
Sections 65 and 66 agreed to.
Question proposed: "That section 67 stand part of the Bill."

This is a proposal in relation to the securities of Board Telecom Éireann and Irish Telecommunications Investments plc. I understand that the purpose of this section is to enable those bodies to issue securities on the stock markets or whatever else to allow them to be traded. Am I correct?

I am sorry I did not hear the question.

The purpose of this section is to facilitate the issuance of securities by Bord Telecom Éireann and Irish Telecommunications Investments plc. I want to put a question to the Minister, and I know it may be a rather awkward one to bounce off him now. Do the provisions of the Companies Act, 1963, in relation to the issuance of securities apply to these two bodies and, in particular, do the set of provisions in the Companies Act, 1963, which relate to prospectuses accompanying the issuing of debentures by these bodies apply to them? Maybe I am not making myself very clear. Under the 1963 Act if a limited liability company issue debentures or securities they are obliged, if they resort to accompanying documentation, to comply with the rules of the Companies Act in relation to prospectuses. Any documentation issued to support the floating of debentures or securities is required to conform with the rules of the Companies Act relating to prospectuses.

The reason I am asking this question in relation to these two companies is that there has been considerable disquiet expressed on the part of some of our banks who find themselves unable to issue paper securities accompanied by relevant advertising or promotional material. They are unable to float these securities with any accompanying material because they are deemed to require a prospectus under the Companies Act. Does it apply to these companies? I do not expect the Minister to have this advice available to him now but could he indicate tomorrow whether the Government have any plans to relax the provisions of the Companies Act in relation to the issuing of debentures and securities by certain groups, including banks, so as to excuse them from the onerous liability of preparing a separate prospectus for each issue.

I understand that the issue raised by the Deputy does not arise under this section——

That is correct.

——but I will try to get the details for him and communicate with him later. If the Deputy wishes, I can put on the record what exactly is being done here and it might be no harm to do that.

This section extends to securities issued by Bord Telecom Éireann and Irish Telecommunications Investments plc the same tax privileges which apply under Part XXXII of the Income Tax Act, 1967, and section 19 of the Capital Gains Tax Act, 1975, to national loans and securities issued by certain semi-State bodies such as Aer Lingus, Aer Rianta, Aerlínte, the ACC, the ESB, CIE, and Bord na Móna. Those privileges are first, the Minister for Finance may direct that the securities may be issued subject to the condition that the interest thereon may be paid without deduction of tax and, secondly, where a direction as I outlined has been given the securities may be issued with any or all of the following additional conditions; first, that neither the capital nor the interest on the securities will be liable to tax so long as it is shown in the manner directed by the Minister that the securities are in the beneficial ownership of persons who are neither domiciled nor ordinarily resident in this State; secondly, the interest on the securities will not be liable to income tax so long as it is shown in the manner directed by the Minister that securities are in the beneficial ownership of persons who, though domiciled in the State, are not ordinarily resident here; thirdly, the securities will not be chargeable assets for capital gains tax purposes. Those are the benefits which are being given.

Having had time to reflect on what I said, I want to ask the Minister if he could check on whether securities issued by these bodies fall within the definition of "debentures" in the Companies Act, 1963. That is the first point. Secondly, if accompanying written material is prepared by any of these companies to promote a flotation of such securities, does it require to comply with the rules for prospectuses under Part III of the Companies Act, 1963? If that is the case — and I think it may well be — will the Minister indicate tomorrow or as soon as he can whether the Government have any proposals to relax the provisions of the Companies Act in so far as they relate to certain securities issued by banks and semi-State companies of this kind? That is as clear as I can make my questions.

I understand the Deputy's questions. I will get the details and communicate with him.

Question put and agreed to.

I move amendment No. 48a:

In page 61, before section 68, to insert the following new section:

"68. —(1) (a) In this section—

‘the Acts' means—

(a) the Tax Acts,

(b) the Capital Gains Tax Acts,

(c) the Value-Added Tax Act, 1972, and the enactments amending or extending that Act,

(d) the Capital Acquisitions Tax Act, 1976, and the enactments amending or extending that Act, and

(e) Part VI of the Finance Act, 1983, and the enactments amending or extending that Part,

and any instruments made thereunder;

‘certificate' means a certificate issued under section 485 of the Income Tax Act, 1967;

‘county registrar' means a person appointed to be a county registrar under section 35 of the Court Officers Act, 1926;

‘defaulter' means a person specified or certified in an execution order or certificate upon whom a relevant amount specified or certified in the order or certificate is leviable;

‘execution order' has the same meaning as in the Enforcement of Court Orders Act, 1926;

‘fees' means the fees known as poundage fees payable under section 14 (1) of the Enforcement of Court Orders Act, 1926, and orders made thereunder for services in or about the execution of an execution order directing or authorising the execution of an order of a court by the seizure and sale of a person's property or, as may be appropriate, the fees, corresponding to the fees aforesaid, payable under section 485 of the Income Tax Act, 1967, for the execution of a certificate;

‘interest on unpaid tax' means interest that has accrued under any provision of the Acts providing for the charging of interest in respect of unpaid tax including interest on an undercharge of tax which is attributable to fraud or neglect;

‘relevant amount' means an amount of tax or interest on unpaid tax;

‘tax' means any tax, duty, levy or charge which, in accordance with any provision of the Acts, is placed under the care and management of the Revenue Commissioners.

(b) References, as respects an execution order, to a relevant amount include references to any amount of costs specified in the order.

(2) (c) Where—

(i) an execution order or certificate specifying or certifying a defaulter and relating to a relevant amount is lodged, whether before or after the passing of this Act, with the appropriate sheriff or county registrar for execution,

(ii) the sheriff or, as the case may be, the county registrar gives notice to the defaulter of the lodgment or of his intention to execute the execution order or certificate by seizure of the property of the defaulter to which it relates, or demands payment by the defaulter of the relevant amount, and

(iii) the whole or part of the relevant amount is paid to the sheriff or, as the case may be, the county registrar or to the Collector-General, after the giving of the notice or the making of the demand, aforesaid,

then, for the purpose of the liability of the defaulter for the payment of fees and of the exercise of any rights or powers in relation to the collection of fees for the time being vested by law in sheriffs and county registrars—

(I) the sheriff or, as the case may be, the county registrar shall be deemed to have entered, in the execution of the execution order or certificate, into possession of the property aforesaid, and

(II) the payment mentioned in subparagraph (iii) shall be deemed to have been levied, in the execution of the execution order or certificate, by the sheriff or, as the case may be, the county registrar,

and fees shall be payable by the defaulter to such sheriff or, as the case may be, county registrar accordingly in respect of the payment mentioned in subparagraph (iii).

(b) Paragraph (a) shall, with any necessary modifications, apply also in a case in which such a notice or demand as is mentioned in subparagraph (ii) of that paragraph was given or made before the passing of this Act if the fees concerned were paid to the sheriff or county registrar concerned before such passing.".

The existing legislation governing the fees and expenses to be paid to sheriffs and county registrars for their services in the execution of warrants for the recovery of civil debts, including tax debts, is set out in the various sheriff's fees orders 1926 to 1963. The sheriff is entitled in law to seize and sell the debtor's goods to recover the debt due. In most instances, however, seizure is sufficient to encourage the debtor to pay the debt without recourse to selling the goods. In either case the sheriff is entitled to poundage on the amount of the debt. The sheriff's rights and entitlements in this regard are not in doubt. However, because of the large number of warrants for tax debts that have been placed in the hands of sheriffs in recent years, the practice has grown up whereby sheriffs demand payment of the outstanding tax debt and the relevant poundage in a written application to the defaulter before moving to the seizure stage. I understand that the tax and the poundage are paid in most cases on foot of this application. This practice has certain positive aspects. It affords the debtor a final opportunity to pay over his debt before seizure, and it avoids the large-scale disruption and sense of grievance that seizure involves. However it now appears that there may be some legal uncertainty as to the entitlement of sheriffs to poundage in these circumstances. While the Attorney General has expressed the view that there is possible authority for the proposition that poundage is payable in respect of money collected by sheriffs on behalf of the State without recourse to seizure, nevertheless he considers that legislation should be introduced to put the matter beyond doubt. This is the objective of the provisions before the House which relate only to tax debts.

(Limerick East): I would like to thank the Minister for his information. I can see the necessity for moving this amendment. There is a fairly strong body of opinion that there is no legal basis at all for poundage on tax debts in the manner in which the Minister has described. For the benefit of those of us whose memories of sheriffs are a bit vague and for whom the relevance of sheriffs in our lives disappeared when we stopped going to cowboy films and have only become relevant again in the last 18 months or so, would the Minister outline the poundage rates which apply now when sheriffs proceed to collect tax debts? Second, would the Minister explain to me whether the poundage is an additional amount calculated on the amount of debt recovered but additional to that debt, or whether it is a deduction from the debt which is returned to the Revenue Commissioners? To put it the other way around, if the sheriff proceeds to collect £1,000, is the poundage which arises on that £1,000 an additional payment which the tax defaulter has to make to the sheriff, or is it part of the £1,000 recovered which the sheriff deducts before he transfers the debt to the Revenue Commissioners? I presume it is additional.

(Limerick East): If it is additional does it not seem to be carrying it a little bit too far to inflict the full poundage fee in cases where the Revenue Commissioners put a particular case in the hands of the sheriff and the sheriff proceeds to recover the debt and sends a letter or a warrant or whatever the legal term is to the tax defaulter, which encourages the tax defaulter to settle. I would have thought the poundage fee originated from the concept that a sheriff was entitled to be paid for the work he carried out, particularly if he seized goods and sold them. Obviously the difficulties created by that sequence of events and the amount of time and effort spend by a sheriff and his staff on that justified the poundage. Certainly the case could be made very strongly if the seizure resulted in the sale of goods rather like a sale by an auctioneer when a certain percentage would go to the sheriff who organised this. I can also see that, if the sheriff had gone to the stage where he seized the goods and then the debt was settled and the goods were recovered, poundage would arise. But it seems to be the practice now, and may be the Minister could throw light on this, that where there is no question of sale, where there is not even a seizure, once the initial move is made by the sheriff to recover the tax outstanding and the tax is paid over, the liability for poundage arises, and that liability can be quite large when the amounts due are large.

That is what is questionable.

(Limerick East): That is what is questionable and that is what the Minister is putting beyond doubt here in the section. Surely it is time to look at the whole question of poundage charges and relate them to the amount of effort that has been put into the process. It seems to me that quite large poundage charges arising simply from the delivery of a letter or its equivalent from a sheriff's office to a tax defaulter might suggest that the sheriffs are being overpaid in that respect. I would like the Minister to throw some light on that area. He knows what I am getting at.

I want to put firmly on the record of this House that I believe we must have an efficient system of tax collection. We must have a system which is business like and which does not mollycoddle those who are not complying with their obligations. I want that assumed for the purpose of what I am now going to say, which is that this measure as proposed by the Minister is highly unjust. It is not intended to be unjust but it is. The reason it is unjust is set out in 2 (a) on page 2 of the list of amendments before us. It provides that:


(i) an execution order or certificate...

that is, a certificate effectively of tax due from a relevant revenue official

relating to a relevant amount is lodged, whether before or after the passing of this Act,

and this is the first thing, that it is going to apply retrospectively,

with the appropriate sheriff or county registrar for execution,

(ii) the sheriff or, as the case may be, the county registrar gives notice to the defaulter of the lodgement or of his intention to execute the execution order or certificate by seizure of the property of the defaulter to which it relates, or demands payment by the defaulter of the relevant amount,

and I pause there to question whether that is retrospective because I do not think it is, and

(iii) the whole or part of the relevant amount is paid to the sheriff or, as the case may be, the county registrar or to the Collector-General, after the giving of the notice or the making of the demand, aforesaid, then, for the purpose of the liability of the defaulter for the payment of fees and of the exercise of any rights or powers in relation to the collection of fees for the time being vested by law in sheriffs and county registrars——

effectively the sheriff is deemed to have entered into possession and seized the goods and, second, the payment shall be deemed to have been levied by the sheriff and fees shall be payable accordingly, including poundage fees. What does that mean? Let us suppose that in relatively innocent circumstances — and I am not suggesting that every person who does not comply with their tax obligations is free from fault — due to non-availability of funds I owe the Collector-General, say, £100,000; I am putting together the wherewithal to pay what I owe the Collector-General, fully intend and am making strenuous efforts to pay it, and have negotiated a loan with the bank to raise it; on the day I go down to my bank manager to ask him for accommodation to pay the Collector-General this money, an envelope comes from my local sheriff notifying me that he has received this certificate and is demanding this money and by that very fact becomes entitled to commission even though I am on my way to pay the money and even though it is my intention to pay it.

I am picking out a hard case where somebody intends to pay and is putting his money together and while he is doing that a demand comes through his letterbox from the sheriff. The sheriff, as Deputy Noonan has said, has done nothing except fill out a form and send it off and he will become entitled to a percentage of the entire sum. I suggest that there is an easy way around this. I would ask the Minister to take on board the point I am making. If you allow some period to elapse, for example, seven days or 14 days, between the arrival of the demand note from the sheriff and the liability to pay poundage, at least, the person cannot claim that he was just on his way to pay the debt. There will be cases where people will get the sheriff's letter at a time when they had the money ready to give to the Revenue Commissioners and by an entirely artificial process of filling out a form they will become obliged to pay another percentage to a person whose efforts in recovering the money have been minimal.

I accept that I am taking a hard case. Hard cases make bad law and I accept that, too but we are here to make a just law. It seems to me that if the Minister were to amend subsection (3) to provide that the whole or part of the relevant payment be paid to the sheriff at a date later than, say, seven days after service of the notice on him then, at least, it could be said that the sheriff's threat was the casual factor in securing payment. Somebody receiving the letter would become aware that because the letter came through his letterbox he was liable, if he did not pay the debt within seven days, to poundage fees. It is unfair to allow somebody to take a commission on a debt simply by writing a letter, if it is not the causing factor in the payment of that debt. The best way, I suggest, to differentiate between cases where the payment was about to come and cases where the letter intervened by accident is to leave a time limit between the two. If the Minister would say seven days or some other period, injustice would be avoided. I have put down parliamentary questions on this matter. Some sheriffs are doing very nicely out of the whole arrangement. I do not criticise them because they took on an onerous job, and to some extent it is not a very socially acceptable job. Since the days of the Bible the publican or tax collector has been execrated as the lowest of the low. I do not deny them their percentage where they do the work because it is not pleasant work; it is hard and stressful work but by getting a clerk in an office to send off a standard form sheet they are to receive a percentage commission on a very large sum of money which the person who was obliged to pay fully intended paying anyway, and was about to pay, seems to me to be unfair. I would ask the Minister to put in a limit of, say, seven days for poundage and to restrict the rights of sheriffs to receive their poundage commission to cases where the payment was not made within seven days of the demand being made. That would, in my view, obviate unfairness.

The Minister may think this is nit-picking but I do not. I am trying to prevent an injustice being done. I would prefer not to have a vote on this amendment but as it is, it is a bald demand of a tax debtor. The mere fact that he receives another letter in the midst of his efforts to clear up his arrangements makes him liable to a further sum of money is too harsh. It is giving a benefit to the sheriff which is not due to him in any moral sense. The writing of a letter could not give rise to an entitlement to a percentage of the take unless there was a delay between the time the notice was given and the payment being made.

I would like to support Deputy McDowell in what he has said on the last section. I have very strong views about the appearance of the sheriff in the last year. I think it is a return to the penal days and I object to many of his activities particularly in the Border area, an area where the existing businesses should be given medals for endurance in the face of total neglect by all Governments in the past 20 years.

I am not condoning tax evasion. I cannot do that but I object to the strong arm tactics of the sheriff and his henchmen, or deputies. I would like to describe them as latter day Gestapo people. They are using terror tactics to get their pound of flesh. I would like to ask the Minister to create a buffer zone similar to what Deputy McDowell was talking about so that people who are genuinely making an effort to offset their tax liabilities would not be subjected to what they are being subjected to by the Gestapo, by the sheriff and his staff, and that time be provided to allow for the orderly payment of money or, indeed, part payment of money.

I do not wish to interrupt the Deputy but I do not think he should refer to sheriffs as the Gestapo.

Only for where I am I could refer to them in more colourful language. I think I am letting them off the hook in referring to them——

Acting Chairman

I would be choosy of the definition of the people you are talking about.

I would also ask the Minister to encourage the Revenue to take a more compassionate approach to people in difficulty. In my part of the world almost everybody who has survived is in difficulty. I believe that a compassionate approach to people who are genuinely in difficulty but who are prepared to meet their obligations is needed. The Revenue Commissioners are using the strong arm tactics — and I cannot approach it in any other way — of the sheriff to extract revenue that, perhaps, has been owing for ten years. They are now making an effort to get that tax in in one year. In an area which has all but succumbed because of neglect by successive Governments, and this Government are no exception, to cram ten years of arrears into one year is impossible. That is why the sheriff has reaped a rich harvest in the Border area from the hapless people who are still carrying our business there.

The Minister should introduce some type of compassionate clause to allow the genuine people, who want to pay their debts and who are not running away from them, to pay them in a phased and orderly manner over a period. I am asking him to create a buffer zone to allow people to negotiate with the Revenue, through legitimate and certified accountants, and not to subject people to having the sheriff arrive on their door and demanding — in some cases kicking down the door — the goods belonging to wives and children.

People in this country are now being subjected, because of business failure, to the goods and assets of wives being seized. In many cases the assets are the remnants of old family businesses. The people concerned could have avoided their liabilities — as many of the sophisticated companies do — by seeking to go into liquidation. These people have to be protected from the ravages of the sheriff.

I must deal with Deputy McGahon's points first. Like the Acting Chairman before you, Sir, I say it was wrong that he described sheriffs in the way he did. They are only doing their job under the law as laid down by this House, no more and no less.

It is no harm as we discuss this issue to put on the record the position as we find it in recent times in so far as the level of compliance is concerned. It is far from satisfactory. The delays in remitting PAYE, PRSI, and VAT are at a chronic level. That is money collected by people from the public at large not being passed over to the Exchequer. In the course of a year about 900,000 monthly PAYE and PRSI returns and bi-monthly VAT returns are still not received six weeks after the due date. In some 400,000 cases payments are received between six weeks and 12 months after the due date. Deputies will appreciate the difficulties that will have on the cash flow for the Exchequer. Non-compliance in the case of taxes at present directly assessed by the Revenue Commissioners, that is non-PAYE income tax, corporation tax and capital gains tax, which are due once a year, imposes an additional burden on enforcement.

For income tax there are at present some 46,000 items where the Revenue Commissioners are pressing for payment and 444,000 items under or awaiting enforcement by sheriffs and the courts. For corporation tax 6,000 items are under collection and 48,000 at or awaiting enforcement. For the health contribution, youth employment levy and arrears of the income levy abolished since April 1986, 480,000 items are under collection and 790,000 awaiting enforcement. Due to the shortage of computer staff in the Revenue Commissioners and the lack of capacity at sheriff level up to now, no enforcement action has been taken in respect of the health contributions or the levies.

Let us look at what is happening here now and what has been happening since 1986 from that sort of perspective and background. I can tell Deputy McDowell that there is no doubt many hardship cases will be involved in those tens of thousands and even up to a million cases. No matter how we try, there will still be some hardship cases but we will do our utmost to alleviate in any way any hardship involved. Basically, we are talking here about huge arrears of tax due to the Exchequer. We have had, and we may even have before this debate concludes, crocodile tears for the PAYE sector and the amount of tax they pay, and the high levels of tax being paid by them at present. That tax is stopped by employers to be handed over to the Exchequer and in some 900,000 cases PAYE and PRSI and bi-monthly VAT returns are not handed over six weeks after the date they were due. How can anybody run the State and all its expenses with that sort of delay in payment?

From that sort of background we had the introduction in 1986 of this new regime. Because of the doubt that has been raised in relation to the levying of poundage we want to put it beyond doubt in this amendment here today for this new section in the Bill.

Deputy Noonan rightly raised the point in relation to fees and expenses payable to sheriffs and I will give the details as I have them. The fees and expenses which are in general payable by the debtor are set out in the Sheriff's Fees Orders, 1926 to 1963, and are broadly as follows: a lodgement fee of 35p on lodgement of the execution order with the sheriff; the poundage fee of 5 per cent on the first 100£ and 2.5 per cent on the balance of the amount levied on foot of the execution order: 75p for the services of the court messenger; travelling expenses of 7.5p per statute mile if the place of execution is more than five miles from the sheriff's office; 45p per day for a man left in possession of goods if he is boarded and 62.5p per day if he is not; the actual and necessary costs and expenses incurred in removing, maintaining, storing and selling the seized goods. Quite a number of those charges could be updated and modernised because I think nothing has been done with them since 1963.

I think most of the information was given in reply to a question some weeks ago but I will give the position, leaving Dublin and Cork out of it. Since the new sheriffs came in in 1987 there were 5,962 certificate warrants leading to a collection of £16,340 million. To 30 April 1988, 4,000 such warrants were issued and collection was made of £11,968 million approximately. Therefore, we can see enormous progress is being made.

One can appreciate the difficulties Deputy McDowell referred to in relation to people assembling all and waiting for payment. They would have had ample opportunity to pay prior to the sheriff being involved at all. We would obviously need to have the sheriff with all his powers before people would really take any notice even of the notification from the sheriff. I will give some further information.

Issues of section 485 certificates as they are called in recent years have been very heavy in order to counter the chronic late payments problems that have emerged. I have referred to those. In 1987 the numbers issued had risen to 122,809. Given volumes on this scale, clearly it would not be possible to seize in all cases but if poundage was not imposed on the defaulter the sheriff's sanction would be literally useless. A defaulter could with impunity ignore all warnings and threats from the Revenue Commissioners and the sheriff and delay payment until seizure was imminent. It is vital in order to secure collection targets that the deterrent effect of sheriff action is maintained. This requires that the poundage charge must be automatic and unavoidable once a charge is referred to a sheriff. I think in general that covers some of the points that have been raised.

I appreciate that and I preface my remarks by saying I want the system to work. I agree there has to be a certain deterrent aspect to the sheriff, otherwise the system will not work, but there are circumstances in which the Minister is now standing by a measure which is going to create injustice.

If I am a sheriff and I get a certificate for £100,000, say, for capital acquisitions tax from a family who are putting together the money to pay, which is not easy in this day and age if you own a property, the very fact that I send a letter through the post gives me, on what the Minister has told this House, the right to receive £2,500 for sending a letter. That is a scandal. One cannot support the fact that someone gets £2,500 for sending a letter. People talk about social justice but it would not be socially just to give a sheriff £2,500 at the expense of a family who are trying to put together £100,000 to pay capital acquisition tax because they received a letter to pay the money the week they were putting their affairs in order. It may be a deterrent — so is a nuclear bomb — but you cannot use disproportionate means to achieve unfair results just in the name of efficiency.

By adding the words "later than seven days" in subsection (2) (a) (iii) before the words "after the giving of the notice" it would mean that when the sheriff's letter came a person would know that, as an automatic consequence a week later, he or she would be liable to pay £2,500 in the circumstances to which I referred. It seems to be an enormity to provide for the fact that, irrespective of whether the letter had any effect and that you intended going to the bank to get the money together, you are liable for £2,500 to a man whose sole input in the transaction has been to send you a letter. There would be no injustice in a sheriff not getting his poundage until seven days after he sent the letter. It would not take away the deterrent effect.

I appreciate that the Minister, in many cases, is dealing with hard necks but, on a sum of £100,000 which many families have to pay on capital acquisition, it is wrong to give a sheriff £2,500 for writing a letter. Deputy Noonan made a very good point, that the amount the sheriff gets is supposed to represent the effort he put into getting the money. We are now deeming him to have made every effort to recover the money and to have done all the work by the fact that he sent a letter. If the Minister would allow a period of seven days to elapse between sending the letter and the sheriff's entitlement to receive the money it could not be an injustice to the sheriff. He could be given a fee of £30 for the letter and that could be contained in regulations.

The regulations at present are grossly antiquated. Giving people 40p per day to stand guard over goods is a laugh and giving them 7p per statute mile for travel is a joke. However, giving them £2,500 for sending a letter is a sick joke if it has no effect whatsoever except to intervene between what would be payment of money and the date on which the sum became due. I cannot see why the Minister will not accept the basic justice of allowing seven days between the sending of the letter and the entitlement to poundage. In most cases, in any event, the sheriff will not be out within the seven days. Deputy Noonan pointed out that the Minister is giving a man a commission rate of 2½ per cent on very large sums of money, in some cases, without any regard to the effort made by the person concerned. I cannot see why the Minister will not accept a basic measure of this kind, which is designed to create justice.

The Minister is giving people a licence to print money because when a sheriff knows that a debt is about to be paid — for instance, if he knows that Michael McDowell owes £100,000 and will pay it tomorrow — all he has to do is to get the letter to me before I pay and he is entitled to £2,500. He merely has to serve notice at a time he knows I intend doing something, get it in before I achieve it and he gets his entitlement. That is unjust, it is giving money to people for work they have not done and it is adding to the liabilities of people who, in many cases, through no fault of their own, are not in a position to bear an extra burden. A simple amendment of that nature would create justice and I ask the Minister to insert the words to which I referred. If he wants to change regulations in regard to the poundage fees for sheriffs, he could give them £50 or £100 for writing a letter, regardless of its effect, and then give them the 2½ per cent if the money is not paid within seven days.

During those seven days people will rush to pay the money because they know the 2½ per cent will go to the sheriff if there is a delay. The Minister's point is that the sheriff's letter has a deterrent effect but that is not so because they are liable to the 2½ per cent anyway. The amendment I propose would make the system more efficient and just.

Is the Minister aware, from reported cases, that money already sent in payment to the Revenue does not prevent the sheriff from calling? Does he get his commission in that case? Does the Minister accept that there is a need for greater liaison between various branches of the Revenue and the sheriff's office?

Has the Minister any plans to reintroduce the local tax inspectors who, for many years, did a very good job until they were dispensed with some years ago by the Department? That has been responsible for the terrible backlog of uncollected debts and there is a clear need for the reintroduction of local tax inspectors. Given the incidence of fraud within the Revenue Commissioners and the fact that many of the people in that section are under investigation, are tax assessments valid and legal?

I will come back to that point in a minute. Quite a lot was said by Deputy McDowell, particularly in regard to capital acquisition tax cases and the hardship involved. I have just been informed that in the case of capital acquisition tax, the sheriff would only execute the decree of a court for recovery of tax after plenty of notice had been given.

In general, in these cases, the tax inspector in the local area and their staff are available whenever they are required in relation to any query that a taxpayer may have about assessments and bills or delays they envisage in relation to payments of tax due, PAYE, PRSI or VAT I am sure that in some cases — it could not apply to all — the tax inspectors will be flexible. I am sure that sheriffs have in some instances made arrangements with clients for a reduction in the poundage. However, that is a matter for the sheriffs. What underlies all these arguments is the fact that the genuine taxpayer has nothing to fear and that is what we have to keep foremost in our minds. Some people pay when they know the sheriff is coming but that is too late. I am not aware of any cases where people would have paid prior to the sheriff being issued with a warrant for collection.

The procedure in the office of the Collector-General is to intercept payments of tax which have been referred to the sheriff and to divert the payment to the sheriff so that he can pursue the question of poundage. If payments for tax which had been sent to the sheriff were accepted by the Collector-General, a certificate would have to be recalled from the sheriff and the defaulter would not have to pay poundage. Such a practice would, effectively, undermine the sheriff's sanction because defaulters would deliberately send their payments to the Collector-General when they received a demand from the sheriff. The imposition of poundage on payments made to the Collector-General is defended on the grounds that the payment was made in response to a demand from the sheriff.

The logic underlying the proposition is that since the defaulter has delayed payment in spite of the issue of a reminder, an estimate, a demand and a certificate having to be issued to the sheriff, a payment is unlikely to be made without some additional stimulus. If the money comes into the Collector-General's office after the sheriff has communicated with the defaulter it is reasonable to treat the payment in the same way as money paid directly to the sheriff. The Revenue solicitor has advised that the procedure is sound legally provided the payee is informed of the diversion of his payment. It is a standard part of the procedure that payees are so informed.

I do not think we can change this because it would undermine the efforts made by sheriffs. It is my sincere hope, as I am sure it is the hope of any Minister for Finance, and all Members of the House, that we will reach the stage in the not too distant future when we will not require the services of sheriffs and that people will pay what they owe. There is little point in amending sections of the Bill to make it easier for those who have been evading and avoiding paying tax for a long time. Later we will be dealing with a section which introduces incentives to people to pay outstanding taxes. Since I was elected to this House almost 20 years ago I have been listening to Ministers and Members referring to this problem. From 1986 on efforts have been made to tackle the problem and I hope we succeed in dealing with the mess. If we succeed it will be of benefit to all taxpayers particularly the PAYE sector about whom we are all concerned. Surely we should not be asked to give any concession to those who collect PAYE and PRSI from their employees and do not hand it over.

I should like to reiterate that I do not hold any brief for tax evaders although I was sorry for Lester Pigott. I know the Minister is a compassionate person and I appeal to him to introduce some compassion into the system for genuine people. Deputy McDowell referred to people looking for £100,000 in a hurry. I do not know too many of those people in my constituency but people may look for £10,000 and have grave difficulty in getting it. I am referring to self-employed business people who find themselves in trouble. I am asking the Minister to introduce a system of phased repayments for such people — it could be in the form of a guarantee from a bank manager in regard to post-dated cheques — rather than closing down small businesses and selling the goods for a fraction of their cost, effectively giving them away, and putting people on the unemployment register. That is not a progressive way for the Revenue Commissioners to treat owners of small businesses.

Is the Minister happy with the system adopted by the Revenue Commissioners of returning cheques? Is the Minister aware of the tragic circumstances surrounding the death of an Ashbourne garage owner who had had a substantial cheque returned to him? Undoubtedly, that played on his mind.

I would prefer if the Deputy did not refer to persons outside the House.

This case is well known and there is no point in ignoring it. Surely we should deplore the returning of the cheque.

There is a convention in the House that we do not refer to persons outside it.

It has been mentioned in every public house in the country. I want the Minister to take cognisance of this and ensure that we do not have a repeat of such a tragic event.

(Limerick East): I accept the burden of the Minister's arguments. The Government of which I was a member extended the practice of the Revenue sheriffs in 1986 and I believe they have been working efficiently since. They create difficulties in certain areas and Members have brought that to the attention of the Minister. Is it the Minister's intention to update the regulations he has just read out in regard to fees, 7p per statute mile and 63p if watching over property requires boarding and so on? In my view they should be updated. Does the Minister intend to move from poundage to flat rates in the circumstances as outlined by Deputy McDowell where the input of sheriffs into the tax collection process involves no more than filling out the standard form and sending it to a tax defaulter?

When a sheriff collects tax due from a defaulter, together with the poundage, is there an obligation on the sheriff to return it immediately to the Revenue Commissioners? I understand that it has become the practice for sheriffs in certain circumstances to top up the poundage by lodging the tax collected for a period of time at the best interest rates available and, subsequently, forwarding a bulk sum to the Revenue Commissioners. Has this been brought to the attention of the Minister and, if so, will he say whether there are obligations on sheriffs to return tax collected forthwith to the Revenue Commissioners? If there is a delay in returning the tax, on the basis of the Columcille precedent, to every cow a calf and to every book its copy, would not the interest accruing be the property of the Revenue Commissioners rather than of the sheriff who collected the outstanding tax? In the event of a delay in returning the tax would it not be proper that not only the tax collected but the interest earned while on deposit should be returned?

The section is a good one and it to be welcomed. I have reservations about the powers of sheriffs. The Minister said that genuine taxpayers did not have anything to fear but we are all aware of the garage owner referred to by Deputy McGahon. I should like to refer to an interview with a widow which I heard on the Marian Finucane programme, "Liveline". I was saddened by that interview. The widow outlined how industrious her husband had been during his lifetime. He got into arrears with his tax and was making genuine efforts to pay the amount due. He tried everything but was not succeeding in sorting out his financial problems with the Revenue Commissioners, with tragic results. That was one interview on the Marian Finucane programme. There are many other widows in similar circumstances.

These problems are experienced by small shopkeepers, small farmers and big farmers, the owners of factories and many very respectable, hard-working people. I recently came across a businessman who would not be "good on books" and would not know anything about company law, yet he was an excellent worker who employed quite a few people. The sheriff came and withdrew some machinery from his premises. That machinery was later returned in a damaged condition. I spoke to the individual concerned who had spent a lifetime building up his industry. He was a very sad man.

Law enforcement can on occasion do harm to the institution of the State if it is not carried out with common sense. The man to whom I am referring said that approaches for the collection of tax can drive young men into the Provisional IRA, especially when the seizure of machinery causes the loss of their jobs. I understand in some instances that VAT and PRSI have not been paid. I do not condone this but I understand that many small shopkeepers and business people are finding it very difficult to make a living. I know people who are attending doctors and psychiatrists and turning chemists into millionaires by the amount of money they are spending on medicines.

The Companies Bill has been in the Seanad for so long that I do not know what Stage it has reached. The draconian powers in this Bill will succeed only in hitting the small shopkeeper, factory owner or farmer. The sheriff is not affecting the fly-by-night operators who are beating the system by forming companies and then liquidating them. We are not gearing the system to deal with such people. This amendment will help to compound an already difficult situation. The Companies Bill must be pushed through the Seanad to get at the people who are ripping off the Revenue Commissioners. Big companies are setting up which are catching the decent people down the line, the suppliers and so on. They liquidate and a few days later start the same rip-off again. This is wrong. Instead of putting through legislation such as that before us it is incumbent on us to catch the people who are beating the system. This Bill is hitting the small business people who do not understand company law and never go near a solicitor or an accountant if they can manage it. These people need assistance, not the big stick. I meet them right across my constituency and they are to be found in every county. Shopkeepers are in real difficulties. I do not know how many publicans are also in difficulty but I would estimate that 50 per cent of them are living below starvation level. I visit people in my constituency and talk to them. Anybody who walks down the main street of a small town can see what is happening to the shops. Emigration has devastated the young population.

The Deputy is straying from the amendment, which deals with poundage fees. He is making something of a Second Stage speech.

Many of these people are unable to cope with the threat of a sheriff coming to seize their goods. Regarding this amendment, there is no point in making millionaries of a few. The Minister should pay the Revenue sheriffs a really generous salary. I have grave reservations about paying them on a percentage basis. That system was used in the past by another Government and we should not allow it to happen again. They should be paid a fixed salary. I am against the payment of poundage.

I must live in the same real world as Deputy Enright and Deputy McGahon since I agree wholeheartedly with what they have said. There is an extraordinary anomaly in the existing law and I have a fair amount of practical experience in this regard. The people who are really ripping off the system will not be caught by this measure. The Minister may think that the appointment of Revenue sheriffs will make a great difference. The ordinary small business person who does not have limited liability is attending the doctor or the hospital, just as Deputy Enright said.

I wish to declare an interest in the matter as I am a practising chartered accountant. I deal with many small business people. If a person was cute enough, he would start up a limited company at a cost of £250 or thereabouts, take two shares run up an extraordinary VAT liability and corporation tax and every other type of tax, go into liquidation overnight and, as the law at present stands, start up the next morning doing the same job and all the taxes would be just written off. The Revenue Commissioners do not bother at that stage and more power to them because it is not much use. They do not even bother to turn up at liquidators' meetings because there is nothing there for them to get. I have acted in such liquidations. The ordinary shopkeeper or publican who had a decent business down through the years, perhaps successful once and still reasonably successful, did not go to the bother of forming a limited liability company. He built up his tax liabilities over good times in the seventies and early eighties. Now, when retail sales are down according to statistics and business is very bad, he has enormous tax liabilities to meet. These people are being put out of business.

At present if you want to find out information from the Collector-General's office about what you owe them they will not answer the phone because there is a go-slow once again. Let us suppose that six weeks ago you wanted to clear up your liabilities — and I am not talking about enormous sums of money — and you sent in six post-dated cheques, it takes about five weeks to get a reply. I have got back post-dated cheques at times saying that they cannot be accepted because they have gone to the Revenue sheriff. If you ring the Revenue sheriff's office, they have not received the warrant. You again ring the Collector-General's office and they will not answer the phone because of the go-slow.

No matter what business I was in, whether it was standing on the street corner selling papers or outside Punchestown racecourse selling race cards, if a fellow wanted to pay me in pound notes or tenpenny pieces I would accept them. The outcome depends on individual people in the Collector-General's office. That office is in total disarray and has been for a long number of years. Even individual inspectors of taxes, whether dealing with VAT, PAYE, income tax, schedule D, or corporation tax, cannot get answers from the Collector-General's office. There are very nice people in that office, but there are some there who do not care about anybody. There does not seem to be a boss there. Each individual can make a decision in each case. Some withdraw the warrants from the Revenue sheriffs, but others will not bother. What kind of a system is that? Unbelievable figures have been put out and it is a case of cloud-cuckoo land. Officials of the Department of Finance and the higher officers of the Collector-General's office can tell the Minister for Finance anything they like. They tell him the same old stuff, that everything is grand, but the practical reality is that it is not.

Deputy Enright has asked what we are going to do about the ever-increasing draconian measures given to the Revenue sheriffs, powers of attachment and everything else. They are not going to catch the big boys. They might get the odd one who will slip up, but it is the ordinary, decent people they put out of business. I have grave reservations about these exceedingly draconian powers which have been given since the 1983 Finance Act. As Deputy Enright has pointed out, we are paying the Revenue sheriffs on a poundage basis. I must say that the Revenue Sheriff for Carlow and Kildare is a very decent, practical person, not like some others throughout the land. He uses his head. There is a ridiculous system in regard to the powers given to the Revenue sheriff.

With regard to the tax amnesty, you have until 30 September to pay your taxes to qualify for the interest grants. Some people can pay by seven or eight post-dated cheques on 1 January, others cannot. Perhaps they could not get the amount in one application to their bank. If some of the warrants are in the hands of the Revenue sheriffs they qualify for the interest amnesty, but some officers in the Collector-General's office were interpreting this as being that you would have to pay the tax in the Revenue sheriff's hands plus the interest on that and then when you have paid your taxes on 30 September, the Collector-General's office may refund you the interest. Many officers are interpreting the matter like this, but others are not. If a man has to pay, say, £3,000 a month over six months, that is a lot of money to a small businessman when sales are going badly. If he is expected to pay £4,500, he will not be able to do so. He might have the option of getting something back, but the banks may not be disposed to let him write cheques so what would be the use?

I take the opportunity of putting on record the absolutely chaotic state of affairs. As Deputy Enright says, we have gone from the sublime to the ridiculous. The reason the system in the Collector-General's office fell into disrepute was that, under the old system with the county sheriffs, the collection procedures were not followed up and people just ignored them. We have gone from that easy-going method to the new system of collecting the amount there and then at a time when business could not be worse. I appeal to the Minister for Finance and the Revenue Commissioners to recognise that basic fact. People in this House, both Deputies and Ministers, and officials in the Civil Service, are paid out of the taxes of those business people down the country who are not on the dole and who are keeping things going. They are not drawing benefit from any arm of the State. An easier system should be developed.

The only way we are going to have a decent tax system or a decent system of tax collection is to have, all in one place, the people who deal with income tax, corporation tax, directors' tax and PAYE tax. A person running a shop nowadays would find that there were 12 different agencies of the Revenue Commissioners dealing with his affairs and they are in buildings spread throughout Dublin and everywhere else and one arm does not seem to know what the other is doing. The only way to have these affairs straightened out is to ensure that everything is done in the one place in towns throughout the country. That is the only solution. The collection procedure at the moment is total chaos. I do not want to see more draconian powers being given to any arm of the State with regard to the collection of tax. The only booming industry in the next six months will relate to doctors and chemists because I know of many people who are attending them due to the pressure they are under because of the chaos in the tax system. I agree with Deputy Enright that that is pure fact.

We have had a long range of debate here.

The Chair is beginning to wonder whether it was all in order on this section but I will invite Deputy McDowell to indicate now——

The Leas-Cheann Comhairle always enjoys Deputy McCreevy's speeches.

I invite Deputy McDowell to indicate to all and sundry how he can contribute and be in perfect order on section 68.

We are dealing with an amendment proposed by the Minister at a very late stage and its purpose is to regularise the position of Revenue sheriffs and their entitlement to receive certain fees for the work they do. Section 2, paragraph (b) gives retrospective effect where sheriffs have already received these moneys and pocketed them under the impression, on the part of the payer to the sheriff, that he was obliged to pay these moneys to the Revenue sheriff. They are now being told by this paragraph that they were always deemed to be liable to pay them and that the Revenue sheriff is entitled to keep money even though at the moment as things stand it is more than likely in legal terms that the Revenue sheriff was not entitled to receive such money at all. We are giving people retrospective entitlement to keep that which they got from others under a mistake in the law. It is a draconian thing to do, but maybe it is well deserved since people who have paid it up are probably not whinging to get it back now.

Revenue or any other sheriffs are entitled to fees for work done. Their fees were called poundage and that arose from the term of the sheriff's pound, that one impounded goods, collected them, disposed of them and liquidated the proceeds and gave them to the judgment creditor. That is the origin of the thing. Subsection (2) is deeming certain fees to be due to a sheriff as if he had done his work, where he sends a letter. Where a sheriff sends a letter and the money is paid whether to him or the judgment creditor it is deemed that he has carried out his work and done the needful and that he is entitled to his 2½ per cent.

I believe in a percentage system. I do not agree with Deputy Enright on that. Deputy Enright is on very thin ice in this because no solicitor would collect a debt except for a percentage of the amount, and they would not glue it to 2½ per cent either. No solicitor could in conscience look to his client for a percentage of a large sum of money if he had sent a letter and the next day without knowledge of the letter the other person was already engaging to pay the sum due.

I proposed in relation to this, that there should be something there to reflect the reality that the sheriff should not be entitled by merely putting an envelope in the post, to get 2½ per cent of moneys whether or not he was involved thereafter in their collection. The seven day delay which I suggested should be put into this section, was proposed in the interest of justice. It does not take away from the deterrent effect. At the very most it delays the deterrent effect for seven days. As Deputy McCreevy will agree, when one sends in cheques to the Collector-General at the moment, if they are dealt with in the month it is an amazing fact. Time is not of the essence in Earlsfort Terrace.

It takes three months to get a receipt.

One week to sort out the differences between people who are being forced by the sheriff to pay and people who are not, seems to me to be a just differentiation. If the Minister refuses to change this section and put those four words into that subsection, he should at least give the House an undertaking to positively consider Deputy Noonan's suggestion which is that he must update the regulations as to the basis of remuneration of sheriffs, as they are a joke. The Minister could easily say that where the payment to made within a week of a letter being sent out, and that is the only involvement of the sheriff, a flat-rate such as £250 or 2½ per cent of the sum due, whichever is the lesser, would be payable in respect of such an operation by the sheriff. It would be easy to bring in just regulations to prevent the injustices about which I have spoken, and it would be easy to put in place a fair system which does not add to the indebtedness of somebody who is already crippled and already on the ropes financially, by adding another debt of 2½ per cent of the amount due just because he got a letter. We are giving people 2½ per cent of sums due where a letter was sent out and nothing more was done and we are deeming all the work of revenue sheriffs to have been done where that letter is sent and the money is subsequently recovered. We could easily put a flat-rate sum there and say that that, or the percentage, whichever is the lesser, will be payable if the money is paid within a week of the sheriff's demand. If the Minister was interested in doing justice to those people who are often at breaking point psycholigically and financially, when they are at the receiving end of a sheriff's letter, he would accede to what I am saying by indicating that he would be positively disposed towards reforming the system of sheriff's fees to give effect to a small liability, where the effect of writing a letter secures relative and immediate payment. No sheriff could complain if he got £250 for writing a letter and the payment was made within a week.

Deputy Noonan rightly pointed out that sheriffs get a very good break at the moment. They are entitled to put the money they receive on deposit and pocket the interest. Solicitors, under the Law Society regulations are not entitled to do that. I am amazed, if the Minister is serious about getting every last half penny out of the tax collection process, that there is not something here about making the Revenue sheriff liable to him for the interest on the moneys due to the State. Why should those sums of money accumulate interest in a deposit account or in some Merchant Bank, for the Revenue solicitor? It is an injustice. It is money not due. The 2½ per cent is often far too generous when it comes simply by virtue of sending a letter. If the Minister is not prepared to accede to what I am asking by way of amendment to subsection (2) (a) he should at least give an indication that in the context of revising these sheriff charges, which must be revised, because they are a joke, he will give serious thought to providing a flat-rate where there is immediate and voluntary response to a sheriff's letter. That is required by justice and no injustice would result and no dilution of deterrent effect would result either.

(Limerick East): I suggest that we come to some agreement now about how we continue for the next hour as that is all we have left. Certainly section 68 on the amnesty and section 69 on the power of attachment have caused a lot of concern. I am interested that we should have adequate debating time, particularly for section 69. I suggest that the Minister should reply briefly to the points we have raised so that we can dispose of the amendment. This would give us until 7 p.m. to discuss the power of attachment in particular.

I have endeavoured both yesterday and today to remind Deputies that there is a closure time.

I would like to say that I am the least offender in this regard. I have been very reluctant to intervene and have only done so where it was necessary for me to respond to some of the points which had been raised. I have avoided repetition as far as possible throughout the course of this debate. There is one general point I would like to make before going on to deal with a number of points which have been raised.

During the course of this debate and over the past 20 years I have had to listen to arguments on our high levels of PAYE tax and on the amount of uncollected taxes. We have been taking action since 1986 and yet we still have Deputies crying crocodile tears in respect of those who have defaulted in paying their taxes. Let us make no mistake about it, those whom we are talking about here are those who have not paid their taxes. Those on PAYE, who will receive their pay cheque on Thursday or Friday of this week, will have had their tax and PRSI deducted. Those we are speaking about here are those employers who have stopped that tax and PRSI and have kept it for between six weeks and 12 months before handing it over to the Exchequer.

I cannot understand the argument which has been put forward that people will be put out of business simply and solely because those who we are talking about are those who withhold PAYE, PRSI and VAT which is due to Exchequer and not to the individual who collects it and which has been collected from the consumer or the worker. The other kind of taxpayer we are talking about are those who have made profits from their businesses and who have not paid tax on those profits. Therefore, I cannot understand the argument which has been put forward that people will be put out of business. These taxes are due to the State. The PAYE worker will not get a letter in the post, their tax will be stopped at source on a Thursday or Friday.

Deputy Noonan raised the question of fees and poundage. This is a matter for the Department of Justice and I will ask the Minister for Justice to consider this question to see if any changes are warranted such as introducing a flat rate, poundage or income. All these matters would arise in such a review but it is a matter for the Minister for Justice.

In relation to the payment of interest, the position is that the sheriff must pay over the amount due. He can keep the interest as it has always mounted to part of his fee. He can keep the interest but he must hand over the moneys collected by the middle of the following month to the Revenue Commissioners. It is no harm to put on the record what a typical sheriff's office might be like. It might perhaps have four office staff and two full-time staff on the road. I think most solicitors would agree that a solicitor's office whose business would involve the activities of a sheriff would not attract other kinds of legal business. I do not know whether that is true or not but it has been suggested that that is the case. The cost of running an operation on this scale would be in the order of £100,000 per annum and this would not include any personal remuneration for the sheriff. In order to cover his running costs the sheriff would have to recover poundage in respect of debts amounting to some £4 million. Some do and some do not. In fact, most sheriffs cannot meet their running costs out of poundage alone and that is why they receive the interest.

Deputy Enright referred to some aspects of company law and sheriff law. This is being examined at present by the Law Reform Commission. Among the issues being considered are the limitations on sheriff action because of various legal devices such as retention of title and appointment of receivers. The Revenue Commissioners have made submissions on these points to the commission and I am sure that they will be taken fully into account.

Deputy Enright also raised the question of paying fixed salaries to sheriffs. If poundage were not leviable, sheriffs might have to be paid significant fixed salaries. The cost of these salaries would have to be met by the Exchequer and, consequently, by the general body of taxpayers, including complying taxpayers. Being fixed, the salaries would not have the same incentive effect for the sheriffs. The advantages of poundage are that the expenses of collection are borne by the defaulters who occasion the expense and, being related to the amounts collected, represent a very efficient form of performance-based remuneration.

Some of the contributors over the last hour referred to draconian powers being taken under this amendment. We are doing no such thing. What we are doing is regularising the position which has existed for some time, no more and no less. I would like to refer Deputy Enright who spoke about draconian powers to the statement of the former Taoiseach, Deputy FitzGerald, who announced on 23 October 1985 his Government's decision to appoint the Revenue sheriffs in the context of a more rigorous approach in dealing with tax abuse. He made the following statements and I quote from the Official Report, vol 360, col. 281.

Public opinion must be mobilised to improve tax compliance. It is important that the defaulter should be identified and punished. Payment of taxes is a civic obligation and delays due to inefficiencies and for other reasons help to shield defaulters who exploit slackness in the system.

It is a fact that in our society, among the majority who pay what they owe honestly and fairly, there are still more than a few prepared to rip off the rest of the community for the sake of their own gain. These "cowboys" are a contributory factor in the burden that honest working people carry.

The measures I am announcing are a further phase in eliminating this scandal, and in ensuring that the people who are robbing the ordinary taxpayer are dealt with.

I would now like to refer to some of the points raised by Deputy McCreevy. As the Deputy is aware, the whole thrust of the Government's measures in this Bill is to eliminate tax arrears. We are moving towards self-assessment and introducing an incentive and the power of attachment. I agree with Deputy Noonan that we should now go on to discuss the power of attachment because I am as anxious as he is to discuss it and have the various views put on the record.

The purpose of this amendment is to regularise the taking of poundage and thereby ensure the sheriffs' sanction. All of these measures will help to solve the administrative problems referred to by Deputy McCreevy. I have taken careful note of the points he made and I can assure him that the Revenue Commissioners and the Collector-General are working on behalf of those of us in this House who pass legislation imposing taxes. They are working on our behalf to ensure that sufficient revenue is brought into the Exchequer to run the services being provided as a result of decisions made in this House.

We are all aware of the difficulties which many honest and genuine taxpayers are confronted with and the high levels of tax which they have to pay. It is interesting to note that Deputy Mac Giolla has not made any contribution on this part of the Bill. During the past couple of weeks he spent hours talking about the problems facing the PAYE sector and on the amount of taxes which they have to pay. Now when we are dealing with those issues in an effort to help the genuine taxpayers, we note his silence.

I am quite happy about it.

The Deputy could have said that.

I am prepared to withdraw my objection on the Minister's express statement to this House that he is prepared to make submissions to the Department of Justice that a flat rate in respect of early payment demands from the sheriff be considered.

Is the amendment agreed to?

Can I make one very brief point?

These promises of brevity are never fulfilled, Deputy.

For my part, they are, a Leas-Cheann Comhairle.

I thought we had agreement with Deputy Cooney, before Deputy Enright came in, that we would endeavour to move——

The Minister quoted the former Taoiseach. I should imagine that the comments of some of his own colleagues on that occasion, and I do not know whether he has any of them he wishes to put on the record——

It is up to the Deputy to have them.

— would be interesting, because I would imagine their viewpoint would have changed.

(Limerick East): The cowboys were over here and there was no sheriff.

In regard to the cowboys and the rip-off in regard to limited liability, they obtain. We are catching the ordinary person, the small man. It is he who is being hit. That is the tragedy as I see it.

If I might reply to Deputy Enright, the present Taoiseach said at the time that if these measures improved collection, well and good. He could not have been any more positive.

Is that an edited highlight of what he said?

Amendment agreed to.

We move to amendment No. 49. I think Deputy Noonan will agree that amendment No. 50 is related. Therefore, for discussion purposes, amendments Nos. 49 and 50 may be taken together.

(Limerick East): I move amendment No. 49:

In page 61, between lines 23 and 24, to insert the following:

"(v) the Capital Acquisitions Tax Act, 1976."

The purpose of this amendment is to extend the amnesty to capital acquisitions tax. On first reading I thought the provisions of the section did extend to capital acquisitions tax. I do not think they do now, which is my reason for moving this amendment, to enable the Minister to tell us why it applies to all other taxes with the exception of capital acquisitions tax. I am particularly interested that it would apply to the inheritance aspect of capital acquisitions tax. I cannot see any good reason that somebody with a liability to inheritance tax would not come within the terms of the amnesty when everything else seems to.

I presume the Revenue Commissioners feel that, in cases of default of payment of capital acquisitions tax, they will always get the defaulter anyway, that they are fairly sure of collecting eventually, so that they do not extend it this far. However, I do not intend to delay the House on the matter.

The fundamental reason for not including capital acquisitions tax under the incentive scheme is that it is not subject to the same collection problems as are the other taxes covered by the provisions of that scheme. The majority of claims for capital acquisitions tax or for inheritance tax arise in respect of benefits payable on the death of a person either under a will or in a case of intestacy. An application for a grant of probate or administration of a deceased person's estate must be accompanied by an inland revenue affidavit, certified by the Revenue Commissioners, to show that disclosure had been made of potential claims for tax arising on that person's death. Before the inland revenue affidavit is certified the Revenue Commissioners ensure that all necessary information is supplied to enable claims for capital acquisitions tax to be prepared.

Assessments of capital acquisitions tax are made by the Revenue Commissioners on returns received from the taxpayer. Over 75 per cent of the tax so assessed is paid within 30 days. Unpaid capital acquisitions tax remains a charge on the property comprising the gift or inheritance. A vendor of a moveable property must obtain for a purchaser a certificate from the Revenue Commissioners to show that there is no outstanding claim for capital acquisitions tax on that property. While the tax due in a specific case may be substantial, tax arrears and the collection of tax are not problems associated with this tax. For that reason it was not considered necessary to provide, in relation to capital acquisitions tax, the incentive to clear up arrears of tax provided for in section 68. In line with that neither was it considered necessary to attach the financial assets of defaulters in paying capital acquisitions tax which might have been done under the provisions of section 69.

The effect of the amendment proposed might well act to the detriment of a taxpayer. Section 68 envisages that all tax arrears must be paid before outstanding interest charges and penalties will be waived. There is a statutory provision for payment of capital acquisitions tax by five-yearly instalments. Consequently, it might not be possible for a taxpayer to pay all outstanding instalments of capital acquisitions tax due by him in order to be in a position to avail of the incentive in relation to other outstanding taxes due by him.

The final point I would make is that waiving outstanding interest on capital acquisitions tax would reduce the yield from that tax since interest is an integral part of the yield, collection of which causes no undue difficulty. From the point of view of the Exchequer it would not make sense to forfeit something which would normally be collected, thus reducing the already low yield from the tax by getting nothing in return.

(Limerick East): On the basis of the Minister's contribution, I will withdraw these amendments. I may reenter them on Report Stage. I should like the Minister to reconsider the position. I know there is not the difficulty of collection in the case of inheritance tax that applies in the other tax areas but it is anomalous for the taxpayer, on whose inheritance tax a large amount of interest had accrued when they see other tax defaulters, frequently in better circumstances, availing of the terms of the amnesty and they in a position — frequently after a family bereavement — in which a large amount of interest would have accrued.

I urge the Minister to consider extending the amnesty to this area, not for the purposes of collection but in ease of the taxpayer.

Deputy Noonan will appreciate that I am not being over-meticulous when I say that I will now put the amendments.

Amendment, by leave, withdrawn.
Amendment No. 50 not moved.
Question proposed: "That section 68 stand part of the Bill."

(Limerick East): We indicated our approval of the amnesty when the Minister announced it in his Budget Statement but it is anomalous. It tends to apply the parable of the labourers in the vineyard to tax collection. I was never too impressed by the idea that if one came at the eleventh hour one should get paid as much as those who had laboured all day long. There are circumstances now created in which people who settled their tax affairs and paid their interest prior to the Minister's budgetary announcement are feeling fairly sore and frustrated. At the human level it is understandable that they should because people who made no attempt to settle are now availing of the terms of the amnesty, the interest and the penalties being waived, whereas those who settled earlier, for example, in the last six months of last year, paid their interest in full.

In particular I should like the Minister to consider the possibility of extending the terms of the amnesty on non-publication of the names of tax defaulters and to people who settled, say, between 1 July, 1987 and the end of that year. From the defaulter's point of view it is bad enough to have settled and paid the interest due without seeing others availing of the amnesty and not having to pay interest. But to be held up to public ridicule as a tax defaulter as well by having one's name appear in the national newspaper — in circumstances in which the terms of the amnesty are being availed of quite widely — is anomalous.

I would ask the Minister to consider introducing an amendment on Report Stage which would at least back-date the terms of the amnesty in so far as they extend to non-publication of tax defaulters' names in the national newspapers.

I agree with Deputy Noonan in relation to the last matter. It would be very unfair that some people should be singled out for public opprobrium whereas others, who come in afterwards, receive kid glove treatment. I do not believe that one should excuse or feel sorry for the people who paid interest prior to the amnesty, because there is the labourers in the vineyard parable to deal with them. People who paid cannot complain if others are treated more lightly afterwards but if names remain unpublished it would be very unfair to single out those people for public oppobrium when the people who came in later get more favourable treatment. The last point made by Deputy Noonan is a fair concession to the equity of the situation without undermining the nature of the amnesty.

I support any measures being taken to ensure that taxes are collected. I regret the Minister expressed some annoyance that I did not speak on the last amendment. I fully support it and I wish to put that on the record.

I was not annoyed, I was just making the point.

It was interesting to listen to the debate and to see Deputies McGahon and McCreevy coming out of the woodwork in response to the Minister's amendment and opposing it. This is apparently a measure which will ensure the collection of outstanding taxes. I think there were two previous amnesties. There was an amnesty about 18 months or two years ago — I believe it was the amnesty given by Deputy Bruton — which was a total flop and I do not think anyone would say that it was anything else.

When people go into the area of the black economy it is very hard to pull them out of it. Things are too good, too free and too easy for the people in there. In 1987 the chances of somebody being caught in the black economy were reckoned to be 100 to one. Those are fair odds so people are prepared to take that chance of carrying on in that business without being caught. The Minister is trying to catch the people he does not know about and who have not disclosed the non-payment of taxes. Surely he is not after the people whom he knows owe tax and interest already? That money is properly due and if the Minister knows the people who owe those taxes he should use the stick he has at his disposal to ensure that they pay.

This amnesty is being introduced to try to bring out those people who are afraid they may be caught. Perhaps things are getting hot for them at this stage and they may be prepared to come out and disclose the crimes they committed during the past number of years because they owe a huge amount of interest. If the total amount of the taxes they owed during the past number of years was disclosed a substantial amount of interest would be involved. Those are the only people who may be interested in this type of amnesty. The amount of interest involved would need to be almost as high as the amount of taxes involved.

As soon as Coopers & Lybrand heard about this amnesty they started to tell people how they would sort things out for them. They said they would provide, free of charge, a totally confidential initial consultation to consider the implications of availing of the amnesty. People can tell them what they have been up to in total confidentiality. They can tell them what kind of income they have been earning in what areas and, if it is found out by the Minister, how much tax they will owe. Coopers & Lybrand will tell those people how much interest they will have to pay. At the end they could say that the amount of interest they owe would not be as much as the tax they owe and they should hang on and take a chance because they may not be caught for another five or ten years.

I do not think this amnesty will bring many people out of the black economy. The people who will avail of it are those who are known already and who, because they are having difficulties, are in arrears and interest is accumulating. They will now have an opportunity to get rid of the interest payment and paying off the tax they owe.

I do not believe it was the Minister's intention in bringing in that amnesty to let off the people whom he know owes taxes from having to pay their interest payments. The interest payment was the penalty which would make them pay their taxes in time. That was the purpose of the interest payment — the longer people held on to the money the more interest they would have to pay. During the time of high inflation people held on to the money because it was to their monetary advantage to do so. Interest charges were put on the outstanding amounts in order to force people to pay up in a hurry. Now the Minister is giving this amnesty which will abolish that interest and people will say: "It paid us to hang on for a couple of years. We will get rid of the interest we owe for the past six or nine months while the people who paid up have lost out".

I do not believe this scheme will bring in the taxes which are due. I am all for getting in the taxes due as quickly as possible but I do not believe this scheme will bring any new people out into the open. It is going to let off those who are already out in the open. I do not think it will encourage more people to come out of the black economy. The only way to root them out is to put more people to work on the ground so that they can discover who they are and impose the strongest possible penalties on them. There should be no amnesty for them when they are found. They should receive the full rigours of whatever powers are available.

I want to reply to the question raised about publication in the past and the fact that those who pay up from budget day will not be caught by that. There has to be a cut-off point in any situation and that is the position here. All of the people who were listed in the publication which was issued some months ago can feel aggrieved because it has already been published. As I stated already, I could not do anything from budget day. I appreciate the problems raised by Deputy Noonan and supported by Deputy McDowell. I deal with these every day and I am as sympathetic to them as are the Deputies. If we do it from 1 July, what about the people before that? Some of their names may not have been published already and we would have had to go back to the names which were published for the years 1986 or 1987. As a public representative I had dealings with people regarding clarification of arrears who had settled earlier this year. In fact, some had settled their arrears just days before the budget. Substantial amounts of interest were involved in those settlements. Obviously those people were not too anxious to talk to me a few days after the budget when I met them because they could have settled for a lot less a week later. People can be caught in a system that has changed or a new scheme that is brought about. I could not consider waiving publication in cases prior to budget day.

In relation to the point made by Deputy Mac Giolla nobody can have a glass ball and say what is the reasoning behind any particular individual paying up, whether he is in the existing regime and is a known defaulter or is in the black economy. All the matters that are contained in this package of measures since the budget and now being legislated for in this Finance Bill are for the purpose of streamlining the collection procedure, of bringing in arrears and releasing staff to get after more people in the black economy and so on. We have already beginning to emerge a totally different climate in relation to tax arrears and tax default. I am sure that by this time 12 months it will be right into the heart and mind of every single individual that it does not pay, from here on to default on payments of tax.

Question put and agreed to.

(Limerick East): I move amendment No. 51:

In page 69, between lines 50 and 51, to insert the following:

"(19) Nothing in this section gives a right to the Revenue Commissioners to act in a manner, which would deprive an individual or family of an income sufficient to provide for their individual or family needs."

I appreciate that many Deputies want to contribute here so I will set my amendment in the context of what the section proposes and do it as briefly as possible to allow a number of Deputies to contribute.

The power of attachment is being given to the Revenue Commissioners in this section. It effectively means that if a tax defaulter is owed a debt by a third party, the third party can be required, by a notice of attachment, to pay the money to the Revenue Commissioners rather than to the tax defaulter to whom the money is owed. It would apply, to a large extent, to tax defaulters other than PAYE tax defaulters because I notice that wages and salaries are exempt. I would like the Minister to clarify exemptions, other than wages and salaries, to the power of attachment. How widely cast is the idea of a contract of service? It seems it would apply to agricultural co-operatives of all sorts and that money owed on foot of the supply of milk, for example, to a farmer by a co-operative could be attached and the co-operative could be required, under penalty, to pay that money to the Revenue Commissioners. I understand that it would also apply, in similar circumstances, to the sale of cattle at a cattle mart and the sale of cattle to a meat factory.

It also applies, according to the section, to money on deposit in financial institutions, and I would like the Minister to deal with this in some detail. Does it apply to all money in financial institutions, regardless of the circumstances? What is the position of the bank if there is a prior liability? What is the situation if one account in a defaulter's name is in surplus whereas the other one is in deficit where two accounts are held by the one person in a bank? What is the position in regard to wages and salaries that are paid directly into a bank account? Do they cease to be wages and salaries when they are paid directly into a bank account and do they become money on deposit in a financial institution? Consequently, are wages and salaries not completely exempt? In circumstances where they are paid into the bank do they fall within the terms of this section?

In the operation of the section, will the Revenue Commissioners have the right to direct notices of attachment to the head office of the financial institution rather than to the individual branch? Will the onus be on the management and the directors of the financial institution to establish whether, in any of their branches in the State or outside the State, money is held to the benefit of a tax defaulter? Is it the case that this may be attached and the bank will be required, under penalty, to make the returns to the Revenue Commissioners within the ten days specified in the section? I would like the Minister to clarify that because it is extremely important.

I would like the Minister to deal with the powers of disclosure which are being taken by the Revenue Commissioners. How extensive are they? Will this be on a kind of trawl basis? I know that it is customary in the accounts of companies to specify the bank of the company, so the Revenue Commissioners will not have a problem in identifying the appropriate bank in the case of corporate tax. But on the collection of individual tax under the power of attachment, how will the Revenue Commissioners acquire the knowledge that a tax defaulter (a) has money on deposit in bank (b) in town (c) somewhere in the country? How does that relate to the concept of non-disclosure? The Minister informed the House on Second Stage that there was no extension of disclosure envisaged in the introduction of this section.

What is the position of normal trade credit? What, in the Minister's opinion, will be the effect on normal trade credit of these provisions? Will the Revenue be a prior creditor in each and every case where a notice of attachment is sent out? Specifically in a situation where, in the traditional manner in Ireland, the co-operative is carrying the farmer over the winter, will the Revenue Commissioners have a prior right over the co-operative itself in situations where money is owed, on the one hand by the farmer to the co-operative and, on the other hand, by the co-operative to the farmer for milk supplied, for example, what is the relationship? It seems to me that the prior right is with the Revenue Commissioners and even in situations where money on the second account is owed by an individual to the co-operative the Revenue could require the co-operative, against their own interests, to treat them as the prior creditor and to return to them moneys requested under the power of attachment.

The last point, to come to the precise amendment, is that I notice that if sufficient money is not available in a bank account or in a co-operative or in a company that the notice of attachment remainsin situ and can operate over a period of time until enough money accumulates to pay the debt to the Revenue Commissioners. In circumstances such as this it is possible that a small shopkeeper or publican or, in particular, a farmer would be in a situation where a notice of attachment arrives to the co-operative in the month of April and runs on to April, May, June or July and, in effect, all the creamery cheques, to put it bluntly, are sucked into the warrant of attachment and there is no family income left? There is nothing there to require the Revenue Commissioners to act in a manner that would not deprive an individual or a family of an income sufficient to provide for their individual or family needs.

The first indication I had of powers of attachment operating under the law here was when the ACC discovered that they had some power under a mid-nineteenth century Act. But the ACC, in cases of liquidation, instruct the liquidator to make provision for family income and the liquidator is required to ensure that no injustice is done, to put it bluntly, that families are not left destitute by the operation of the section. There is nothing of a similar nature in this section. In the way it is drafted, whereby a warrant of attachment remains in place until the full amount required under it is paid — and it can remainin situ over an extensive period of time — it could operate in a manner which, in effect, would eliminate family income for three months, six months or a whole year.

I would press the Minister to accept the amendment that I have suggested here. I am suggesting it as a subsection (19) at the end of the section that "Nothing in this section gives a right to the Revenue Commissioners to act in a manner which would deprive an individual or a family of an income sufficient to provide for their individual or family needs." It is up to the Revenue Commissioners then to operate under that direction and to establish the regulations which would be required to ensure that no injustice along the lines I have suggested would occur.

There are two final questions I would like to ask the Minister. First does the warrant of attachment extend to the Post Office and post office savings funds? Second, is it intended that the powers of the section would be devolved to the Revenue sheriffs under this section? I notice that one of the subsections in the normal way, gives power to the Revenue Commissioners to devolve the power. Have they the power under the section to devolve it to Revenue sheriffs?

(Limerick East): Is it that they do not have the power or is it that they do not intend to use it?

The Revenue sheriffs are not officers of the Revenue Commissioners.

(Limerick East): They are not officers of the Revenue Commissioners so it would not arise. That is my contribution. I know I have asked a lot of questions but I have done it as briefly as I could because time is moving on.

If you wish I will reply to some of those questions, and in fairness to Deputy Noonan I know that other Deputies will not mind. Amendment No. 51 seeks to prohibit the Revenue Commissioners from applying the power of attachment where such application would deprive an individual, or family, of income sufficient to provide for his or the family's needs. At the outset it must be said that attachment may only be applied where a taxpayer has failed to pay to the Revenue Commissioners tax due under the law. In the case of the fiduciary taxes. that is, PAYE and VAT, the tax will already have been collected by the taxpayer from his employees or customers, while in the case of Schedule D income tax or corporation tax, the tax will have been determined on the basis of the profits of the business. There can be no doubt, therefore, that the taxpayer should have had the money to pay over to the Revenue Commissioners the tax due under the law. Because he has failed to do so, he leaves himself liable to have debts due to him attached. This, in effect, puts him in no worse a position than the PAYE worker who suffers deductions from his wages every week or fortnight in respect of his tax liability.

As to the precise wording of Deputy Noonan's amendment, it must be said that such wording is entirely without precedent in tax law. The amendment is also ambiguous, to say the least. Individual and family needs vary considerably from case to case. Who would decide or, indeed, who could decide on whether a certain level of income was sufficient for the needs of a particular family? I appreciate that the Deputy may be worried about the effects of attachment on individuals and families. The remedy, however — if I can call it that — is entirely within the taxpayer's hands. If all taxpayers paid their lawful tax liabilities attachment would never be used.

I must also point out that under the legislation defaulting taxpayers will receive ample warning that if their tax bills are not paid, the amounts involved may be subject to attachment. In the circumstances I am not prepared to accept the amendment.

There are a number of points I want to reply to and I hope that Deputies will bear with me. I will give the information because I am anxious to put this on the record of the House for the proper interpretation of the operation of this scheme by all concerned.

The question of the abdication of the power of attachment in situations where credit is advanced was raised by Deputy Noonan during the Second Stage debate and it has since been raised by the ICMSA. The matter may, therefore, come up in some detail. There is no question, under the legislation, of the Revenue Commissioners attaching normal loan repayments made by the defaulter to a person who has advanced credit to him. In such an instance there is no debt due by the third party to the defaulter. Situations may arise, however, where a defaulter both owes and is owed money by the same third party. For example, a defaulter may have both a deposit and loan account with a financial institution. In such instances it may be that the outstanding loan is being repaid by instalments from the proceeds of the deposit account and the outstanding loan may, in fact, be in excess of the deposit account balance. The Revenue Commissioners will take the view in such circumstances that the legislation will allow them to attach to amounts in the deposit account.

(Limerick East): And to post office savings funds.

I would like to say also that it includes all financial institutions such as post office savings. A somewhat similar instance has been raised by the ICMSA and by Deputy Noonan involving transactions between a farmer and his co-operative. Apparently it is common practice for co-operatives to extend credit to farmers for purchase of feed, fertiliser etc. This debt is then paid off by offsetting amounts due to farmers for milk deliveries etc., to the co-operative. The ICMSA have queried if the Revenue Commissioners could attach the amounts due in respect of milk deliveries which the co-operative was offsetting against the farmer's credit facility. The Revenue Commissioners have confirmed to me that the legislation does not preclude them seeking to attach, in such instances, as the value of goods supplied by the farmer would be a debt due to him by the co-operative. If there were agreement that the payments due would simply go to reduce the farmer's debt to the co-operative, in the final analysis it would be a matter for the co-operative to decide how it would respond to a notice of attachment in such instances.


As I said, it would be a matter for them to decide how they would respond to a notice of attachment.

(Limerick East): That is not clear from the section.

That is why I wanted to put this on the record here because it is the interpretation of it.

(Limerick East): It is not in the section.

No amendment has been down to this effect either. It is a question that has been raised here by Deputy Noonan on Second Stage and outside by the ICMSA, and Deputy O'Keeffe. I am responding to it and I am putting the matter as clearly as I can on the record of the House.

Deputy Noonan's amendment deals with the power of attachment and brings it into focus. Regarding the power of attachment I want to make a general point and then a specific point. The general point is that it is an easy method of collecting tax arrears, it is free of court procedures, it does not have any bureaucratic difficulties about it and it does not appear, at this stage, to be fraught with constitutional problems. Time will show whether that is so. Obviously, it must be a very attractive weapon to the Revenue Commissioners and there will be a great temptation to use it widely. It will also establish a priority in advance of winding up. Obviously there is a great attraction to use it and to use it widely.

By way of general comment, I would like to urge the Minister to recommend to the Revenue Commissioners that it is a power to be used exceedingly sparingly, particularly in the commercial context of this country today; I do not say within the economic context because we have all been bamboozled by the good performance of a very narrow sector of manufacturing industry who have distorted the national statistics and give the impression that we are in a situation of economic growth.

One narrow sector of the economy is showing growth but it is a distortion of the real position. The proof of that is that, notwithstanding the good national statistics, there has been a drop in employment and there has been a shortfall in income to the Revenue Commissioners. Obviously, there is something wrong. This narrow sector of the economy is not contributing proportionately to its performance because of the tax holiday it is on, with the result that the commercial sector of the indigenous economy — and the Minister must be aware of this as he comes from a country town just as I do — and the people who are manufacturing for that sector are on their knees, and if there is indiscriminate use of this power of attachment I have no doubt that it will put a great many businesses over the cliff by interfering with critical cash flow.

I heard the Minister read out, a little sanctimoniously, the response to the accusation that this power might be draconian or difficult. He said it would be exercised only in relation to cases where tax had been established and found due and had been deducted. He talked about VAT also having been collected. However, he did not take into account the cases of VAT payable on invoice and not on collections. That can be very serious for many firms who in turn have not been paid because of difficulties of cash flow. I warn the Minister that this power must be used extremely sparingly, otherwise it will put many businesses over the brink by interfering fatally with their cash flow.

I want the Minister to comment on the position of a person in my profession who has given an undertaking to a financial institution in respect of funds in his hands on behalf of a client. That undertaking does not bring with it any liability to be used by the financial institution. The sanction, if it is not complied with, would be imposed by the professional body concerned and could even lead to striking off and there is no indemnity that I can see in the section for a solicitor who has given an undertaking in respect of funds in respect of which notice of attachment subsequently comes in.

They will not be attached. In those circumstances it will not arise.

It is not in the section. Will it come into the section?

It is a client's account.

But it is a debt due by the solicitor to the client. Consequently, according to this, it can be attached. Once the money is received by the solicitor he is liable to account for it as a debt due. He is in a fiduciary relationship with his client and has to account. He can be sued on foot of it and, on that basis, it is of the nature of a debt and if it is of the nature of a debt it can be attached.

(Limerick East): Shaking heads do not appear on the record.

Can I reassure my colleagues that they can safely ignore a notice of attachment in respect of the purchase price of any other funds that come in to their hands and are subject to an undertaking or, indeed, from what the Minister says are not even subject to an undertaking?

The account in question is not for the sole benefit of the solicitor, therefore it cannot be attached.

The solicitor is holding funds for his client and the Revenue Commissioners serve a notice on the solicitor to pay over to them tax due by the client. What is the solicitor's position?

He is required by law to keep a client account.

A law which I brought in.

Other things the Taoiseach did we will not talk about. If the money is in the client's account, it is exempt from attachment?

Yes, that is what I said.

There is a problem there and I think the Minister is taking a bit of a run at that last matter. The person could not possibly be totally exempt just because it is in a client's account in a solicitor's office. Nobody could immunise his or her assets from this by solely doing that. Deputy Cooney was asking the Minister whether, if there was a prior undertaking to another institution which conflicted with payment out to the client, he would be safe to resist payment out to the Revenue Commissioners and pay it to the person in whose favour he had made an undertaking. That exposes a slight defect in this procedure.

The Progressive Democrats said, at the very beginning before this was ever produced, in one of our tax documents that we were in favour of a power of attachment. I am not running away from that now, but one thing that strikes me is that where there is a power of set off or counter-claim this legislation is totally inadequate to deal with it. It talks about a debt and a dispute. I might owe somebody money and have no dispute about the fact that I owe him that money, but I might have a perfectly valid counter-claim or other head on which he owed me a counterbalancing sum. In those circumstances there would be no dispute about the debt and, whatever the Minister thinks, a court will hold that there is no dispute about the debt but it still will be the subject matter of a setoff or counter claim. Deputy Cooney will agree with me that nothing in this procedure deals with set offs, counter claims or prior equitable interests in any debt. I ask the Minister to think long and hard between now and tomorrow or whenever about what happens in regard to an equitable assignment of a debt or a legal assignment of a debt. Is that to immunise that debt from a power of attachment? If the Minister is wobbly on that it will be used wholesale to defeat this measure. He may give his answer now to Deputy Cooney about client accounts but I think a court interpreting this section will interpret it as I have suggested.

One thing I welcome about this provision is the fact that only one notice of attachment can be used at any given time in respect of any individual person. That suggests to me that at least the Revenue Commissioners cannot use it in a scattergun way just to pepper all targets and seek repayments from a number of people at the same time. They must go from one individual who owes a substantial debt and have that debt paid over.

The phraseology of it is defective. The Minister has not taken sufficient account of the right of set off or counter claim. One instance of this is his admission just a few moments ago that a bank which has money in a deposit account on a back-to-back basis with an overdraft would be liable to pay out the deposit account moneys to the Revenue Commissioners. That is crazy. No bank could operate on the basis that, when they are on what appears to them to be a contractual basis with one of their customers, with money in one account setting off another debt, they can be obliged to part with half of that money and be left holding the baby. That could not possibly be. It would not make commercial sense. It could not be fair. Banks would be in chaos if every time they gave a right of set off between two accounts the Revenue Commissioners were able to plunder whichever account happened to be in credit and leave the bank holding the baby. The interpretations the Minister is receiving now may be the Revenue Commissioner's views on these matters, but a court would take a different view, that because it is not a sum due to the individual, if a bank is entitled to a set off between two accounts it is entitled to say, "No, we will not pay out on your deposit account. We are taking all the money and applying it to the current account." I think the Minister is wrong in that and time will prove him so.

I want to deal quickly with that, but before you, Sir, put the question and perhaps rule me out of order, I will draw the attention of the House to a minor drafting error in the first line of (b) in subparagraph 2 of Amendment No. 53 relating to the Third Schedule. The word "subsection" is incorrect and should be replaced by the word "subparagraph." Also I want to notify the House that by virtue of the removal of section 54 from the Bill this morning I will table an amendment on Report Stage to remove the reference in italics to section 54 in section 71 which, of course, has now no relevance.

Dealing with the points raised by Deputy McDowell and Deputy Cooney, in a house or land purchase transaction the solicitor for the purchaser will receive money from his own claimant in respect of a deposit and from the client or lending institution in respect of the balance of the purchase money. The solicitor is required by law to keep these moneys in a client account. This means a current or deposit account in the name of the solicitor and in the title of which account the word "client" shall appear at a bank or any other financial institution authorised by the client in writing. It follows, therefore, that a client account is not for the sole benefit of the solicitor and as such it would be outside the scope of attachment.

I am glad the Taoiseach is in the House tonight. I believe the amendment put down by us is a reasonable one and should be accepted. The Revenue Commissioners have sufficient powers to utilise and avail of. This measure is wrong. It is fraught with danger. I will give a simple example. If a farmer puts cattle through a livestock mart on which the Revenue Commissioners have already served a notice of attachment and the farmer goes in to collect his money——

I am sorry, as it is now 7 o'clock I am required to put the question in accordance with the order of the Dáil on 3 May——

(Limerick East): On a point of order——

(Limerick East): I intend to withdraw the amendment in my name. I intend to vote against the section, I realise it will be a composite vote and I have no objection to sections 70, 71 and 72. This vote will be strictly on section 69 and I will have further amendments on Report Stage.

The question is: "That the amendments set down by the Minister for Finance and not disposed of are hereby made to the Bill and that the Bill, as amended, is hereby agreed to in Committee and is reported to the House."

Question put.
The Committee divided: Tá, 70; Níl, 48.

  • Abbott, Henry.
  • Ahern, Bertie.
  • Ahern, Dermot.
  • Ahern, Michael.
  • Andrews, David.
  • Aylward, Liam.
  • Brady, Gerard.
  • Brady, Vincent.
  • Brennan, Matthew.
  • Daly, Brendan.
  • Davern, Noel.
  • Dempsey, Noel.
  • Dennehy, John.
  • de Valera, Síle.
  • Doherty, Seán.
  • Ellis, John.
  • Fahey, Frank.
  • Fahey, Jackie.
  • Fitzpatrick, Dermot.
  • Flood, Chris.
  • Flynn, Pádraig.
  • Foley, Denis.
  • Gallagher, Denis.
  • Haughey, Charles J.
  • Hilliard, Colm Michael.
  • Hyland, Liam.
  • Jacob, Joe.
  • Kirk, Séamus.
  • Kitt, Michael P.
  • Kitt, Tom.
  • Lawlor, Liam.
  • Leonard, Jimmy.
  • Leyden, Terry.
  • Lynch, Michael.
  • Lyons, Denis.
  • Brennan, Séamus.
  • Browne, John.
  • Burke, Ray.
  • Byrne, Hugh.
  • Collins, Gerard.
  • Conaghan, Hugh.
  • Connolly, Ger.
  • Coughlan, Mary T.
  • Cowen, Brian.
  • McCarthy, Seán.
  • McCreevy, Charlie.
  • MacSharry, Ray.
  • Morley, P.J.
  • Moynihan, Donal.
  • Nolan, M.J.
  • Noonan, Michael J. (Limerick West).
  • O'Dea, William Gerard.
  • O'Donoghue, John.
  • O'Hanlon, Rory.
  • O'Keeffe, Batt.
  • O'Keeffe, Ned.
  • O'Leary, John.
  • O'Rourke, Mary.
  • Power, Paddy.
  • Reynolds, Albert.
  • Roche, Dick.
  • Smith, Michael.
  • Swift, Brian.
  • Treacy, Noel.
  • Tunney, Jim.
  • Wallace, Dan.
  • Walsh, Joe.
  • Walsh, Seán.
  • Woods, Michael.
  • Wright, G.V.


  • Barnes, Monica.
  • Barry, Peter.
  • Bell, Michael.
  • Boland, John.
  • Boylan, Andrew.
  • Bruton, John.
  • Bruton, Richard.
  • Burke, Liam.
  • Carey, Donal.
  • Connaughton, Paul.
  • Cooney, Patrick Mark.
  • Cosgrave, Michael Joe.
  • Crotty, Kieran.
  • Crowley, Frank.
  • Deasy, Austin.
  • Deenihan, Jimmy.
  • De Rossa, Proinsias.
  • Doyle, Avril.
  • Dukes, Alan.
  • Durkan, Bernard.
  • Enright, Thomas.
  • Farrelly, John V.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom.
  • Flanagan, Charles.
  • Griffin, Brendan.
  • Harte, Paddy.
  • Hegarty, Paddy.
  • Higgins, Jim.
  • Higgins, Michael D.
  • Kavanagh, Liam.
  • Kemmy, Jim.
  • Kenny, Enda.
  • Lowry, Michael.
  • McCartan, Pat.
  • McGinley, Dinny.
  • Mac Giolla, Tomás.
  • Mitchell, Jim.
  • Naughten, Liam.
  • Noonan, Michael (Limerick East).
  • O'Brien, Fergus.
  • O'Keeffe, Jim.
  • Shatter, Alan.
  • Sheehan, P.J.
  • Sherlock, Joe.
  • Stagg, Emmet.
  • Taylor, Mervyn.
  • Taylor-Quinn, Madeleine.
Tellers: Tá, Deputies V. Brady and Browne; Níl, Deputies O'Brien and Flanagan.
Question declared carried.

In accordance with the order of the Dáil on 3 May, the Fourth and Fifth Stages of this Bill will be taken tomorrow.