I move: "That the Bill be now read a Second Time."
I am delighted to be able to introduce Second Stage of the Stamp Duties Consolidation Bill, 1999. The Bill consolidates the statute law relating to stamp duties which is contained in the Stamp Act, 1891, the Stamp Duties Management Act, 1891, and subsequent Revenue and Finance Acts. This is the first time in the history of the State that a Bill has been introduced in the Oireachtas which has the objective of consolidating the legislation on stamp duties into one comprehensive enactment. For this reason I am particularly pleased to be associated with the introduction of this Bill.
Almost two years ago to the day, on 14 October 1997, I introduced the Taxes Consolidation Bill, 1997, which consolidated the law relating to income tax, corporation tax and capital gains tax. The Taxes Consolidation Act was a milestone event; it was warmly welcomed by tax practitioners and has been of great assistance to all those who have to deal with taxation matters, particularly in the financial and legal sectors. At the time I said I was anxious that we should make progress in consolidating other areas of tax legislation. While I mentioned in particular the legislation on capital taxation I also spoke about the commitment of the Revenue Commissioners to undertake consolidation of other areas of tax law. The publication of this Bill is a tangible demonstration of the considerable work that has been done to turn into reality the undertakings given to this House. However, the work on the consolidation of our tax laws does not stop with this Bill. For example, the Finance Act, 1999, incorporated the first stage in the planned consolidation and modernisation of excise law, some of which goes back to the early part of the last century. In that Act, the law relating to the excise duties on mineral oils was completely recast. The Government's intention is that subsequent Finance Bills will consolidate a number of other aspects of excise law. These measures will deal with the general legislation in relation to excise duties and also provisions relating to the duties on alcoholic drinks.
Stamp duties were first introduced into Ireland 225 years ago in 1774 as a temporary measure covering 47 different types of documents. However, as in many other matters of taxation temporary became permanent over the years. It is interesting that while there were 47 different types of documents liable for stamp duty in 1774 by 1891 this had increased to 95 types of documents. The House will be relieved to hear that the number is now 15, so considerable rationalisation has been achieved over the past century.
From the time that they were first introduced and, indeed, until 1973, stamp duty remained a duty on written documents. In 1973, the duty was extended to cover transactions for the first time. The transactions, which then became liable to stamp duty, related to the issue of new shares by companies and the duty then introduced is more commonly referred to as companies capital duty rather than stamp duty. The next extension of the duty took place in 1981 when the Finance Act imposed a levy on credit cards and charge cards. There have been further developments so that today we have, in addition to the levies on credit cards and charge cards, levies on cash cards, non-life insurance premiums and so-called "section 84" loans. While the statutory background to stamp duty may have become complex it is fundamentally a form of taxation that is relatively straightforward in most respects and one that can be easily administered.
Stamp duties came face to face with modem information technology for the first time in 1996 when company law was amended to enable title to shares to be transferred electronically. The Finance Act, 1996, provided for the application of stamp duty in respect of electronic messages which are sent to the registrar of a company advising the registrar to update the register to reflect the new ownership interest. The brush with modem technology is not yet over. No doubt developments in e-commerce will permit electronic conveyancing in the not too distant future. Just as electronic share dealing was accommodated within the stamp duty system so too will electronic conveyancing.
Major changes are being made to the system for the administration of stamp duty in the future to introduce modem technology. The Revenue Commissioners are applying resources from their annual vote to invest heavily in the computerisation of stamp duties. A new system is nearing completion. The system will enable a comprehensive audit trail to be maintained in respect of each document presented for stamping. This will be very beneficial in improving the transparency and management of the system. A fresh modern look will be given to the new stamps, which will be impressed by new technology and will include the use of holograms. When the new system goes live, which is expected very shortly, the Revenue Commissioners will be in a position to provide its client base with a much more streamlined stamp duty service. The computerisation project and the consolidation project will together usher in a new stamp duty era for practitioners and the Revenue Commissioners alike and is a fitting beginning to a new millennium for a venerable form of taxation.
The House will appreciate that the preparatory work for the consolidation of this legislation, a significant portion of which dates back to the 1890s, was a matter of great complexity. It required the utmost patience and persistence. The officials of the Revenue Commissioners, who were assigned the consolidation project, were fortunate to have the model of the Taxes Consolidation Act, 1997, to follow. The same rigorous process that worked so well for that Act was applied to the stamp duty legislation. The aim at all times was to ensure the most accurate consolidation of the existing law, with nothing left out and nothing added. This is what has been achieved in this Bill. The Bill was considered by the parliamentary draftsman's office and has been duly certified as a consolidation of existing law by the Attorney General.
The process for the Taxes Consolidation Act involved a comprehensive consultation arrangement with the bodies representing the practitioners who are among the major users of the legislation. This was recognised to have been of immense value and so it was decided that for the Stamp Duties Bill the same consultation process should be employed. To that end, drafts of the Bill were made available for comment at different stages to interested parties such as the Law Society of Ireland, the Institute of Taxation in Ireland and the Consultative Committee of Accountancy Bodies – Ireland. In addition, two independent expert referees were appointed to examine the accuracy and structure of the Bill. The comments received added greatly to the final product and I extend my thanks to the parties concerned.
Another area of similarity is in the structure of the Bill. Like the Taxes Consolidation Act, 1997, generally applicable provisions, such as definitions and the charging section, have been placed first. These are followed by more specialist provisions, for example, provisions relating to particular documents, which in turn are followed by enforcement and management provisions. At the end of the Bill the commencement and transitional provisions are set out. The use of archaic language and the old-fashioned device of using provisos to change the meaning of a section have also been eliminated in the Bill.
Another feature of the approach adopted for the Taxes Consolidation Act, 1997, was that provisions to facilitate a more orderly consolidation were enacted in advance of consolidation in the Finance Acts, 1996 and 1997. This also happened on the stamp duty side. The Finance Acts, 1996, 1998 and 1999 contained measures designed to tidy-up the stamp duty code in advance of consolidation. These measures consisted to a large extent of the repeal of provisions which had become obsolete or which were no longer required.
To facilitate readers of the Bill, statutory derivations for the legislation provided for in the Bill, which I will refer to as the "new legislation", are set out in the margin opposite each section. These entries show from where each section in the new legislation comes. In addition, the memorandum published with the Bill sets out the old legislation in chronological order and shows the reader where it is located in the new legislation. If a provision has not been enacted in the Bill, this memorandum explains why. The most common reasons for not including a provision in the Bill are that the provision in question has already been repealed or is unnecessary for some reason, for example, it might be redundant.
The Bill is the culmination of many years of work. The need to consolidate stamp duties has been self-evident for some time. First, the two basic Acts, the Stamp Act, 1891, and the Stamp Duties Management Act, 1891, were enacted before the foundation of the State. In addition, the Stamp Act, 1891, has been amended almost annually since 1891. In more recent years the stamp duty code has been amended and extended not by way of amendment to the 1891 Act itself, but by way of self-contained sections in Finance Acts.
Understandably, this overall fragmentation of the stamp duty law made it difficult for anyone advising in the area to know the position regarding a liability to stamp duty in a particular set of circumstances. Perhaps the greatest benefit which will result from this consolidation will be the restructuring of the stamp duty code in a clear, coherent and logical way. This will make it more accessible and user-friendly for all users, including Members of the Oireachtas, who have to cope with annual changes to stamp duty law.
The consolidation of stamp duties legislation will also make it possible for future changes to stamp duties to be slotted into the Consolidation Act by way of amendment in the annual Finance Act. It is intended that this should happen and I wish to give a commitment to that effect to the House. Another benefit is the reduction in the number of stamp duty provisions which has been brought about by this Bill and the repeals effected in the Finance Acts, 1996, 1998 and 1999, to which I referred. As a consequence of these measures the size of the code has been reduced by almost two-thirds.
I do not intend to go through every section of the Bill. The explanatory memorandum which was published with the Bill sets out in summary form the purpose of each section of the Bill. However, I wish to give some flavour of the overall structure of the Bill which contains 164 sections and four Schedules. It is divided into 12 Parts.
Part 1 consists of definitions and rules of construction. Definitions of terms which are used throughout the Bill are now all contained in this Part. Definitions which only apply to a particular section are contained at the beginning of that section. This is in line with the structure adopted for the Taxes Consolidation Act, 1997.
Part 2 contains the charging section – section 2. As I stated, stamp duty is, in general, a duty chargeable on written documents; not all documents are liable to stamp duty. To be liable the document must be listed in Schedule 1 of the Bill and must also either be executed in the State or, if executed abroad, must relate to Irish property. Schedule 1 contains an alphabetical listing of all the documents which are potentially liable to stamp duty. Schedule 1 also contains the rate of duty which applies to each document.
Part 2 also contains other general provisions relating to the payment and recovery of stamp duties on instruments. Documents which are liable to stamp duty must be presented to the Revenue Commissioners within 30 days of their execution, otherwise penalties for late payment arise. Surcharges may arise where property is undervalued for stamp duty purposes.
Part 3 sets out how property is to be valued for the purposes of stamp duties. The most common area where valuation is required is where property is transferred by way of gift – basically, open market value rules apply. Where there is a doubt concerning the valuation submitted, the Revenue Commissioners use the services of the Valuation Office. A taxpayer who is dissatisfied with a valuation may appeal to the Appeals Commissioners in the case of property other than land and to the Land Values Reference Committee in the case of land.
Part 4 contains provisions relating to the assessment of stamp duty and appeals against such assessments. A taxpayer has the right to appeal against a stamp duty assessment. Subject to what I said earlier in relation to appeals on valuation matters, appeals against stamp duty assessments are heard in the first instance by the Appeal Commissioners. The decision of the Appeal Commissioners is final unless the appeal is required to be reheard by the Circuit Court or is submitted to the High Court on a point of law.
Part 5 consists of a number of sections which explain and/or supplement Schedule 1. This Part is arranged in the same order as Schedule 1. By far the biggest component of Part 5 is chapter 2 which relates to stamp duty on conveyances on sale. Chapter 2 has an internal logic in that it first covers documents which fall within the definition of conveyance on sale in section 1. It then covers documents which are treated for stamp duty purposes as if they were conveyances on sale, although they do not come within the definition of conveyance on sale in section 1. These are known as deemed conveyances on sale.
In the main the sections which deal with deemed conveyances on sale are anti-avoidance provisions. Chapter 2 also contains provisions relating to the consideration which is chargeable to stamp duty. In stamp duty terms consideration is not only cash; it also includes shares and the assumption of debts. In addition, chapter 2 contains a number of miscellaneous provisions such as the exclusion of value added tax from the computation of a stamp duty liability.
Part 6 imposes stamp duty on securities title to which is transferred electronically via the CREST system. The CREST system enables trades dealt on the Irish and UK stock exchanges to be settled electronically. In the absence of this charge, transfers through the system would have escaped liability to stamp duty because no documents are produced by the system.
Part 7 contains exemptions and reliefs from the charge to stamp duty on instruments. In so far as it was possible to do so, the exemptions and reliefs follow the same sequence as Schedule 1. Part 8 imposes companies capital duty. This applies on foot of an EC Council directive and arises in the main where new shares are issued by a limited company. Part 9 imposes a number of levies on cash cards, credit cards, charge cards, non-life insurance premiums and section 84 loans.
Part 10 sets out how the payment of stamp duties is to be enforced. As stated previously, payment of stamp duty is compulsory and late payment will give rise to penalties. In addition to this, a document which is liable to stamp duty and is not properly stamped may not be given as evidence in most court proceedings. Stamp duty is a particularly effective type of taxation because in many respects it is a self-enforcing tax.
Part 11 contains those provisions previously contained in the Stamp Duties Management Act, 1891. As I said, there were two Acts in 1891, the Stamp Act, 1891, and the Stamp Duties Management Act, 1891. These two Acts have now been incorporated into one Bill. However, the integrity of the Stamp Duties Management Act, 1891, has been maintained by giving it a Part of its own in the Bill. Nothing has been added to that Act or taken from it except for the deletion of redundant provisions and the modernisation of language. This is an important point. As legislation for which other Departments are responsible relies on the provisions of the Stamp Duties Management Act, 1891, it was necessary to ensure that those provisions remained intact and this has been done.
Part 12 contains provisions relating to the commencement of the Stamp Duties Consolidation Act, 1999, repeals and the Short Title of the Act. It is my intention that the Bill will be made available on CD-ROM once it is enacted. In addition, the Revenue Commissioners have prepared guidance notes on the Consolidation Act which they will publish as soon as possible after the Bill is enacted. I also understand that these notes will be made available on their website. For the information of Deputies, the guidance notes follow the format and style of the guidance notes published for the Taxes Consolidation Act, 1997. Where relevant, they contain cross-references to other legislation. In addition, they refer, where appropriate, to stamp duty forms, leaflets, statements of practice and practices.
With regard to the timetable for the passage of the Bill, it is proposed that it be referred to the Standing Joint Committee on Consolidation Bills for consideration. A number of motions will be included on the Order Papers of both Houses to comply with the various rules and procedures as set out in Standing Orders in order to achieve the timely passage of the Bill. These motions will facilitate the taking of Committee, Report and Fifth Stages and shorten the minimum time periods allowed for in Standing Orders.
I wish to place on record the Government's appreciation of the amount of work which went into the preparation of this Bill. The staff of the Revenue Commissioners and the parliamentary draftsman's office are to be congratulated on a job well done. The input from the private sector was invaluable and demonstrates what can be achieved with a team approach. I commend the Bill to the House and I look forward to its co-operation in its speedy enactment.