The next item is the report from the Economic and Social Sub-Committee. Again, I think members have had a considerable opportunity of studying the report. In effect, our report is that the proposed operative date of 1st January, 1975 is hardly likely to be met and that accordingly we do not think it necessary for us to comment any further on the draft directive at this stage. We intend, however, to keep the matter under review. Are there any comments on the draft?
Consideration of Draft Report by Economic and Social Sub-Committee on Harmonisation of Value-Added Tax.
I was not a member of that sub-committee although I sat in on the last session. It struck me that at one level this report is useful in summarising the position in relation to value-added tax and in that the Committee proposes to declare itself in favour of the adoption of the Sixth Directive. However, it seems to me the Committee should ask itself what particular purpose it can serve in looking at the whole question of VAT and the draft directive. We must try to avoid the result of our activity being merely that we educate ourselves a little better on VAT but that we have very little impact on the Oireachtas in general. We should not just state in our report that this directive is unlikely to be implemented by a particular deadline and, therefore, that there is no special pressure about it. We should use this homework and the analysis of value-added tax contained in the report as a stimulus for a debate on the whole question of Ireland's participation in an economic and monetary union. We should assess the implications for the country of this participation and the significance of the various items set out in paragraph 7 of the report which comprise the areas of potential adaptation which will be necessary in our own taxation code.
The sub-committee have taken a rather neutral stand and have merely noted the various areas where there may need to be adaptations. Paragraph 7 says:
The adoption by the Council of the draft Directive in its present form would seem to the Joint Committee to raise the question of the extent to which the following provisions in our own taxation code would require to be adapted:
(a) zero rating of items other than exports and the continuation of the present two-tier system of the 36.75 per cent rate;
(b) the special provisions for agriculture and the level of exemption applicable to small traders;
(c) certain exemptions (e.g. passenger transport, legal profession); and
(d) the period allowed for making returns.
It seems to me that if this report is to have value it must in the very near future stimulate in one House or, preferably, both Houses of the Oireachtas a debate on the consequences of adapting to this draft directive. This debate could expose, if necessary, political differences as to its consequences. Otherwise, we in this Committee have performed a very limited function. As I say, we have to some extent educated ourselves a little better on value-added tax but we have not at all performed our primary function, which I believe is to try to create an awareness in the Houses of our assessment of the implications for Ireland of Community legislation. This is particularly important at the present point in time with the sort of action being taken by other member states such as Italy on its economic problems. Perhaps we ought to urge that, although the draft direction itself may not be imminent, the question of the harmonisation of value-added tax and its implications here be debated urgently in the Dáil and Seanad?
I find myself somewhat concerned with this matter of the Commission's proposal for harmonisation of value-added tax on the basis of assessment. I quite frankly confess—and it is not a criticism of the people who have worked on the report—that I think they are taking a rather easy attitude. I regard this proposal concerning harmonisation as a vitally important one. I would hope that the matter would be given very serious consideration and fairly continuous consideration by this Committee. I note that it says in the report:
It proposes to keep the matter under review and to report again to the Houses when the situation appears to so warrant it.
I know that since then recent events in Europe and other countries have been moving very fast and not necessarily forward. Paragraph 7 of the report is really the most important part of the report because it highlights the very serious implications those matters can have in the Irish economy. Those various headings, of their very nature, might have very restrictive effects on what any Government can or cannot do within the Irish context and within the Irish economy.
Really for the first time this is bringing home to us in this country that there are very serious implications in our membership of the Common Market.
I would be inclined to have the subject of this report as very much an ongoing matter. I would not like either House of the Oireachtas to feel that matters are, so to speak, under control because a great deal of work will require to be done on this proposal by the Commission, probably more so than in many other spheres of the activities of the European Community.
I agree with Senator Robinson without necessarily going so far as having a debate in the House at the moment. She referred to the fact that there is no deadline or that the deadline may not be kept and there is no pressure. I would be afraid that matters might be fait accompli before we had really woken up to the seriousness of the situation.
At page 2 of the report, paragraph 5 (2) reads:
The present proposed Sixth Directive is in the Commission's view necessary for two reasons—to serve as a further rung in the ladder to the attainment of Economic Monetary Union.
Is the Senator referring to the directive itself or to the draft report?
I am referring to the draft report. On page 3, sub-paragraph (2), under the heading " Progression to Economic Monetary Union ", it reads :
The commitment to a common VAT system was reinforced by a Resolution of the Council of 22 March, 1971. . . .
One needs to be careful about the impression that could be created, first of all, that one necessarily discusses a commitment to a common value-added tax system as an effective economic and monetary union which was, in itself, inevitable. To my mind it is extremely fanciful to discuss progression to economic and monetary union or even the techniques of such a progression, of which harmonisation might be considered to be one, outside a general consideration of developments within the Community itself. There is some merit in not at this stage discussing the mechanics of value-added tax harmonisation too closely. In fact, the Committee might direct its attention to the more general issue of whether a further progression to economic and monetary union is conceivable in the light of recent developments within the Community.
The points raised in paragraph 7 and referred to by Senator Robinson could be debated when this report is presented to the two Houses.
Ideally that is what would happen. It is not our function to supplant the Minister for Finance or the Revenue Commissioners or the Executive in any way. Directive No. 6 is a draft directive at this stage and in the light of what Senator Higgins says about the state in which draft Directive No. 6 is at the moment I think we will have done our duty if we interpret the implications of the draft directive for Ireland and draw these implications to the attention of the Houses. Of course, if either House wish it, ideally they would have a debate on the basis of what we put before them in these reports. For my part, I am quite satisfied that we have done our duty, particularly in view of the situation in which this directive is, by studying its implications and putting them before both Houses.
The procedure is not established yet. As I understand it, the Houses are not confined to merely noting the report. They are quite entitled to debate the report and even reject the report. Consequently, if anybody wants to discuss any of the points in paragraph 7 and express reservations or fears about them, they are quite entitled to do so.
I think the problem with this report is that it does give the impression that we consider the matter dormant. It says that the Joint Committee is
. . . of opinion that, in the light of these considerations, the proposed operative date of 1 January, 1975 is not likely to be met and consequently does not consider it necessary to make any further comment on the draft Directive at this stage. It proposes to keep the matter under review and to report again to the Houses when the situation appears to so warrant it.
The minimum that we can do is what we are doing here: we are considering this draft directive, analysing it, looking at the possible implications and reporting to both Houses. I am convinced this is not really enough in the circumstances; that the Joint Committee, if it is going to fulfil a positive role and achieve its maximum impact in our parliamentary tradition, must not only report in this minimal sense but through its reports stimulate specialist debates in the Houses of the Oireachtas on European issues.
The great problem of the debates on the biannual Reports on Developments in the Community is that they tend to be much too general and too broad in scope. The whole question of economic and monetary union and, more specifically, the harmonisation of value-added tax is crucial to our continuing participation in Europe. It is an extremely important political and economic issue facing the citizens of the country and it warrants debate on its merits in both Houses. The instrument to stimulate that debate is a report such as this. We ought to take a more positive attitude and not just submit our report saying : " We have done our job: if the Houses want to debate this, they are quite free to do so by making time for the debate." I think we ought to add a rider to this effect, or else let this record of our deliberations today serve as a rider that, although this draft directive may be postponed in the light of present circumstances, these circumstances in themselves warrant a debate in both Houses on the subject of value-added tax in the Community and, in particular, on the whole question of progress towards economic and monetary union and its impact in Ireland on the more general lines that Senator Higgins mentioned. It is impossible under present parliamentary conditions, given the way we operate, to do this except in response to something like the report of this Committee. This Committee would be fulfilling a useful function if its report could be treated in this way and if we could urge the importance of a debate to consider the impact of a draft directive such as this and the other proposals for value-added tax even if they are not pending in the next few months.
I would hope that our report is sufficiently technical in itself to constitute the subject of a debate on both the broader and the narrower issues. Ideally, all our reports, particularly our more important ones, should stimulate such debate and discussion.
The difference between this report and the companies regulations report is that the latter is rather legal and technical and, once it has been agreed by the Joint Committee, it speaks for itself. It is directed to a particular objective which is the objective of having these company regulations reconsidered and amended. Whereas in relation to European Community secondary legislation, particularly draft secondary legislation, which is what we are considering here, it is not enough for us to examine and report on selected draft proposals without urging that the reason for examining and reporting is precisely to stimulate debate in both Houses. We ought to urge that time be given to debate the report so that the Oireachtas can participate in the process of European integration and can either reinforce the existing commitment to economic and monetary union or question it in the light of present circumstances and, in particular, examine its practical effects in Ireland.
There is the essential difference between the two reports that one deals with a regulation of the Irish Government which has already been made and the second report deals with a draft directive and confines itself to drawing the attention of both Houses to the implications of the draft directive. It also indicates the Committee's view that it is not likely to become a matter of practical politics for the moment. I would suggest that every report we submit contains implicitly an indication that it is worthy of consideration by both Houses. I do not think we should state in the report itself—perhaps that is not what Senator Robinson means—that it should be the subject of a debate. It is understood, I think, that all our reports are meant to be of assistance to both Houses as subject matters for any debates which the Houses themselves think it worthwhile undertaking.
I think non-members of the Committee would quibble with you if you suggest that the report is not sufficiently technical. I would agree that it certainly is technical in that it goes on to discuss value-added tax and the harmonisation of the VAT system among the members of the Community. However, if the Committee is to provide an instrument which will ensure the fullest debate, the instrument should not only describe the implications of the draft directive should insofar as it proposes to be the instrument of debate in Parliament, draw attention to the atmosphere and the context in which the directive is being considered. For example, if you go straight into a discussion of the effects of progression to economic and monetary union without realising that there is a re-formulation of basic aims suggested by recent developments in the Community you are simply being na�ve. The Sixth Directive assumes an importance now that it would not have if the Community's development was not completely bogged down. Even consideration of the harmonisation of value-added tax is affected by recent developments.
I submit these are all matters for substantive debate in either of the two Houses. I do not think we should usurp or preempt the functions of either House. It is important to realise what our function as a committee is. Here we have a draft directive. We are drawing the attention of both Houses firstly to its existence; secondly, we are indicating what is in it; thirdly, we are indicating the implications these contents have for our system here and finally we are saying that we do not think this directive will become operative for the moment. Having done that it is up to the Houses themselves to decide whether the subject is worth debating and, if so, the extent of the debate they should engage on. We cannot be both Houses of the Oireachtas here.
It is worth comparing what you are now suggesting as the role of the Committee and the role of a similar committee in another country. I respectfully suggest that committees similar to this, particularly the British one, have decided to do exactly what I have suggested, namely, to have a general introductory paragraph drawing attention to the position of the directive in the general atmosphere of the Community at the present time and then goes on to discuss the directive specifically.
Mr. Chairman, I should say that we have done that. We have gone beyond the bare statement of the bare facts, but we have not usurped the role of either House, though we might be tempted to; if we did we might, of course, be told where we got off.
We have gone a fair distance in this report to elaborate the lead up to Directive No. 6.
This Committee deals with the secondary legislation and that is our main purpose whereas it is quite right to put our report in the context of the background of the policy of the Community, but we should not move too far in that direction. Both Houses have an opportunity twice a year to discuss policy in the European Community and that provides the occasion for the Houses to refer to economic and monetary union and the extent to which advance has been made in that direction and so on. We should devote ourselves to the secondary legislation and only refer in passing to the background against which secondary legislation is being proposed.
I am a little bit out of the picture as against the time we were dealing with the regional policy of the EEC. At the time the projected views of the EEC came before us in relation to regional policy we dealt with the proposals in considerable detail. The present report was prepared by the sub-committee for the full Committee's consideration and it gives a very good exposé of the lead up to this proposal and to the possible matters that will be covered. In this report, however, there is no, what one might call, detail as there was in the case of the regional policy. We appear to be adopting a different role in relation to this proposal of the Commission. I regard this proposal as a very serious one from the point of view of our economy and it is, I think, every bit as serious as the proposals concerning regional policy because it goes right through the veins and arteries of our economic system. It will have implications. It will have the effect of saying to our Government : " You may go so far and no further " or " you must go a certain distance and you must go in a certain way". That is what concerns me in regard to this proposal because this appears to be the implementation of the two previous important directives from which all the others derive. It seems to me to be the completion of what was set out to be done under the first two directives and I am wondering are we taking the right course in just going as far as we have gone without a more detailed examination of the implications of the proposed directive and, if we are going to take on that function in this Committee, we should decide at this stage whether or not we will do this in all cases or stop short, as we have done in this case. I am not saying this by way of criticism.
No. I recognise we went further in our report on regional policy.
And I think we did a good day's work on that report at the time.
It was a different sort of issue. I have no objection at all on some other occasion to the Economic and Social Sub-Committee having a much broader examination of progress towards economic and monetary union and, indeed, the whole concept of harmonisation of value-added tax. The only sugestion I would make is that we adopt this report for the time being as adequate in the context of our consideration of Directive No. 6. It is important that we should report on Directive No. 6 to both Houses. This report does that adequately for the moment. We can then, in the sub-committees, avail of another opportunity to have a much wider discussion and, indeed, if members think it necessary, a much wider report.
We have done a very full report on the companies regulations. That is final so far as we are concerned. We will not come back again on that. We have done a full day's work and the heading is " Draft Report by Oireachtas Sub-Committee on European Communities (Companies) Regulations, 1973." That is finished. So far as harmonisation is concerned, we should, I think, describe it as a preliminary report, in fairness even to ourselves.
Interim.
Yes—interim. I think that would be a fair description.
That would be acceptable to me. It can be indicated to be an interim report.
That is only fair to ourselves.
Very well, then.
Does not " interim report " carry the meaning that we are working towards a final report?
We have said that. We are leaving it for final consideration.
It is proposed to keep the matter under review.
This is the terminology Cabinet Ministers use. It is an interim report and may be referred back to the sub-committee and if something further requires to be done it will be done.
Paragraphs 1 to 7, inclusive, agreed to.
Draft Report adopted.