This Bill has been duly certified by the Ceann Comhairle of the Dáil as a Money Bill.
FINANCE BILL, 1927—COMMITTEE
The Seanad went into Committee.
CATHAOIRLEACH
I desire to move the following recommendation:—
Section 1, sub-section (2). Before sub-section (2) to insert a new sub-section as follows:—
"(2) The revaluation made in the year 1924 by the Commissioners of Valuation of the tenements and hereditaments in the County Borough of Waterford shall not become operative for income tax purposes until the expiry of the present quinquennial Valuation Roll for the said County Borough."
The position is this. In the end of 1924 the Corporation of the City of Waterford requested a revaluation of the city. The reason they made that request was that the city had not been valued for the previous dozen years. In the interval some parts of the city had fallen away and other parts became more valuable, and the incidence of assessment there was all wrong. In order to get uniformity of assessment and to bring the valuation up to date the Corporation decided to make the application. The Corporation at the time desired to get the incidence of taxation or assessment adjusted. They did not anticipate any very serious increase in taxation. What happened was: the Commissioners of Valuation arrived, and after investigation they increased the aggregate valuation by fifty per cent. This appalled the citizens and appalled the Corporation, and they at once set to work to have the operation of this revaluation held over or suspended for a time.
The Chamber of Commerce quite well knew the conditions existing in Waterford at the time. There was considerable stagnation in trade, and some of the shopkeepers along the Quay were barely keeping their shutters from being permanently put up. There was great unemployment and about two thousand men were on the dole. They saw it would be a hardship on the ratepayers and income tax payers to be burdened with rates based on the increased valuation. The traders also recognised that they would be penalised in competition with brother traders in the neighbouring towns of Wexford, Kilkenny and Tipperary, the valuation of these places not yet having been accomplished. I refer, of course, to the new general valuation. They thought the operation of this new valuation should not be enforced in regard to rates and income tax until such time as these other areas with which they were in competition were also revalued.
A deputation made representations to the Minister for Finance, and finally the Valuation Department sent down a representative to examine the position. He told the Chamber of Commerce and the Corporation that the position was not so bad as they thought, because there was no suggestion of paying the income tax based on the new valuation until the expiry of the current quinquennial period, which would not be until 1929. That would safeguard them, at least for that time, and it was expected that in the interval the re-valuation of competing centres such as Tipperary, Wexford and Kilkenny, would be accomplished. That eased the situation for the moment. The rates, however, were based on the new valuation, and were forthwith demanded. The rates were not affected by the quinquennial period. The rates were grumblingly paid.
Time went on, and the 1924 and 1925 Finance Acts were brought in. It would appear from what afterwards transpired that by some addition to, or omission from, the Finance Act of 1925 these safeguards that had been mentioned to us were swept away, and that forthwith after the passing of the 1925 Act the taxpayers in Waterford would be liable for the full assessment based on the new valuation. There were meetings of protest held by the Corporation, the Chamber of Commerce and the Licensed Vintners' Association. There was considerable correspondence with the Ministry, and finally a deputation comprising representatives from the three bodies waited upon the Minister in Dublin. The Minister reviewed the whole position. He did not deny anything that was stated, and regretted that, owing to the Finance Act of 1925, the position was altered, and that no remedy could now be suggested. The deputationists came back to Waterford and there were further meetings. They could not allow the position to rest there. They contended that what a Finance Bill had altered a Finance Bill could remedy. They felt that a wrong had been committed by inadvertence. There was no advertence at the time the 1925 Act was passed to the conditions existing in the City of Waterford. The conditions there had been overlooked. As the Minister mentioned yesterday, had the position in Waterford been appreciated at the time of the passing of the Finance Act the whole situation would have been remedied. Surely a wrong that is admitted in that way should not be allowed indefinitely to endure.
Our codes are not so imperfect and the resources of the Ministry and of the Department are not so barren that an admitted wrong, caused by any inadvertence, omission or carelessness inflicted on the income tax payers of Waterford, should remain, and that the attitude now should be that there is no help for it; the thing is done; it is beyond recall and cannot be remedied. If that is the attitude taken up by the Minister I say it is absolutely illogical and unreasonable. The large income tax payers in Waterford are members of the Chamber of Commerce —a very honourable body of men with a very honourable history behind them. These men, in their trading relations or in any relations with the Government or anybody, would not think of acting in a dishonourable way. It is their pride, and to their credit be it said, that that has always been the reputation of the merchants and of the Chamber of Commerce in Waterford.
The Minister entered into an honourable undertaking—it is over his signature. In his letter to the Chamber of Commerce he endorsed what had been undertaken by his official. He reiterated that the present quinquennial roll for Waterford would be in force for about four years more—that is, the year 1929—and except in the case of new or improved premises revaluation would not become operative for income tax purposes until the expiry of that period. There is reservation except for new and improved premises. That is a reference to the ordinary annual valuation where a new building or addition to a structure was put up and an additional assessment was put on. That additional assessment did not begin to operate for income tax purposes until the end of the quinquennial period. Any casual assessment made during the five years' period was held in suspense as a basis for income tax until the quinquennial period ended, and then all came in on the same mark on the higher assessment. That had no relevancy at all to the present valuation, which was a special general valuation, called for for a specific purpose, to make an adjustment in the incidence of taxation in Waterford city. Attached to that was the special condition given in the Minister's letter that it would not operate for income tax purposes until the end of the then current quinquennial period. It was in a department by itself, apart from any clause in any Finance Bill. It was a valuation brought on and accomplished by special request for a specific purpose hedged round and safeguarded by this condition, that it would not operate until a particular period had expired. That is all the Chamber of Commerce asks this House to do. Failing any satisfactory explanation from the Minister, or any indication as to how they can get any formal redress, their only resource was to wait upon me, and ask me to bring this matter before the Seanad, the members of which are business men and possibly most of them members of Chambers of Commerce. They will see the matter in the light in which the Waterford Chamber of Commerce sees it, as an honourable undertaking. If it is possible to remedy it they are sure the Seanad will make the necessary recommendation. They will see the equity of the position, and I am sure will make a recommendation to the Dáil, that some exemption clause should be inserted in the Bill. If it is stated that that cannot be done, I advance this argument that the title of the Finance Act of 1925 and the scope of it is word for word with the title and scope of the Finance Bill of 1927. If a wrong were perpetrated under that Act, which has the same caption as the Bill of 1927, clearly it is the corresponding instrument, this Bill, that should be availed of to remedy that wrong. The Minister has already given his final answer—a most unsatisfactory and illogical one—that the thing was done through inadvertence, and there was no remedy. I repeat that that is no answer at all. The Minister admits all I said. He admits the promise, and it is now for this House to urge upon him to do this, and, no matter what may be the view in the Dáil, this House will then have done its duty. The Minister, having made an honourable contract with the city of Waterford, should be held to it.
I should like to oppose this motion, and I think the Senator is somewhat illogical in bringing it forward. This evening he spoke at great length against any relief being given to the people of Clare, in another case. I think the weighty arguments he used then would apply equally well against the recommendation now brought forward.
If Senator Kenny had omitted the references to hedging around, guarantees, redressing wrongs perpetrated, and honourable understandings, he would have been nearer the facts. What happened was the Corporation of Waterford, finding that the valuation was very out of date or very irrelevant, asked for a re-valuation of the city. That set the machine in operation. The re-valuation was carried out by the Valuation Department; the appeals were heard, and it was found the valuation, besides being redistributed over the premises of the city, had actually been increased by about 50 per cent. The Corporation, the Chamber of Commerce, and various other people in Waterford, made attempts to stop the machine. They made attempts to set aside what had been already done. They asked the Government to suspend until Tibb's Eve the coming into operation of the new valuation. We were not able to do that. We told them we could not do it. We made the valuation explaining to them the effects. There was no such thing given as a promise or any inducement held out to them to take some new line. We simply told them what the position was at the time. The revaluation raised the assessment not merely on the income tax but the duty based on the valuation of licensed premises, and so on. They were told as clearly as they could be told what the position was at the time. There was no wrong done. What happened was simply that for a long period the people of Waterford have been escaping that valuation, which was very much below what it ought to be.
This revaluation of the city was carried out on the 1914 basis. It was not a bit above what the pre-war valuation of the premises would have been. It was carried out as the re-valuation of the city of Dublin was carried out under the 1914 basis. Actually no wrong was perpetrated by bringing that valuation into effect. Undoubtedly the people in Waterford who moved for revaluation were nonplussed when they found that the total valuation had gone up, and, because they were so vehement about that—not because they were suffering a wrong— and felt so astounded, that if their case had been considered when the change was made, we would have, probably, postponed the change. But it was not adverted to, and consequently the change was not made.
The change was made because the system of quinquennial rolls was a system not applicable to Irish conditions at all. It was used here simply because it was necessary in England. In England, the poor-law valuation is the basis on which Schedule A income tax is collected. A special valuation is made for income tax purposes, and that special valuation is made, as far as can be, for five years. Sometimes the period is exceeded. It cannot be made every year. It is a big job. It is supposed to be made every five years and consequently the assessment on Schedule A tax is only changed every five years. Here we have a different system. We have poor law valuation and continual revision. There was no need for the British system here. We have, without undertaking big changes in income tax law, tried to simplify and get rid of certain anomalies. In the process of bringing about certain small simplifications in the 1925 Act we decided to drop what was called the continuation clause, and let the new valuation of premises come into effect for income tax purposes with that for rating purposes.
There were other places affected. Waterford was the only place in which there was a general revaluation, but in the township of Howth the rating authority did not confine itself to sending forward for revaluation merely the premises which had undergone structural alteration. It sent forward a list of other premises so that in a period of three or four years, almost all the houses in Howth were revalued, and the new valuation has come into effect there. I think there are certain other cases throughout the country. It would certainly be altogether wrong to give a concession to Waterford without giving it to the other places. There is very little money in this because most of the houses upon which the valuation was increased were business houses occupied by the owners. Where the additional Schedule A tax is charged that would be allowed against the tax payable under Schedule D. As far as can be seen, with a 3/- income tax the net increase in Waterford would be perhaps £750.
Nonsense.
That is allowing for the rebate. There will be delay, of course, owing to the three years' average, but that is about what the increase will be. I think it is trivial considering that since this change was effected the income tax rate has gone down 2/-, so that the increase in valuation is very much less severe to the people, and considering that the Corporation has increased expenditure and its demand on the ratepayers by £20,000. I think if some of the energy devoted to getting rid of the results of the city's demand for re-valuation were devoted to inducing the Corporation to reduce its demands the energy would be much better expended. Administratively this change would be a most serious matter, because 6,000 assessments have been made in Waterford alone. Other assessments in Howth and elsewhere would also have to be dealt with. All the steps have been taken. In many cases the tax has been collected and undoubtedly tax has been deducted from ground landlords, and payments made to people who have mortgage interests. It is possible we have even repaid some of that tax to people living in England. If we were to undo the whole thing and go back over it, it would require not a simple section like this, but a complicated section. It would cause very great difficulty. If it was right that this city should be revalued when it was asked for, and on the 1914 basis, it is not too much that the people should pay tax on that valuation.
I have a good deal of sympathy with Senator Kenny because exactly the same thing happened to myself. An alteration was made in premises of which I am part owner, and as a result we found, unfortunately, that there was a revaluation and the valuation was increased. In or about the same time the Finance Bill came in the quinquennial period ended, and the result was that we had to pay income tax on the increased valuation.
There was no promise in that case.
But I do not see why Waterford should be treated differently from persons in similar circumstances in other cities.
Both the Minister and Senator Douglas have evaded the crux of the whole matter—the promise. In these other cases—the Minister travelled over a wide range—there were no promises at all. It is the promise, the actual undertaking given by the Minister over his own hand, that is the gravamen of the whole position. He says that when his representative went down to Waterford very many matters were considered—the licensing duties and things of that sort. They all have a bearing on this particular thing, because the income tax of licensed vintners is affected by this, and very seriously affected. Their licence duties are based largely on the valuations. The Minister tried to whittle this matter down to £750, but it runs into thousands of pounds. Overtaxation in 1926 on the increased valuation meant £5,000, at 4/- in the £ on the extra £25,000, and in 1927, on the 3/- basis, instead of the £750 that the Minister referred to, besides the extra taxation and income tax on the licensed trade, it will amount to about £3,500. Finally we asked the Minister—and he has not yet replied to it—on what clause of the 1925 Act he relied in making the statement that the promise made to the citizens of Waterford could not be observed? That Act was submitted to the solicitors of the Waterford Chamber of Commerce and they said that they could not see exactly what the Minister's argument was. The Minister said that the 1925 Act as far as the city of Waterford was concerned altered the whole situation, but they cannot find that that is so.
The Minister said that there was no wrong and no hardship, that the re-valuation was made on the 1914 basis, and all that. We do not say that there was any wrong. It simply lies as between one individual and another. If A makes a promise and gives an honourable undertaking to B and afterwards repudiates the whole thing, the wrong is there; B is certainly wronged if he has to pay several thousand pounds a year as a result, and it would be quite reasonable that B should be very emphatic in stating his wrong. The Minister also tried to buttress up his position by saying that matters had now gone too far, but he never dealt with the promise at all. He has no consideration for the people who are harassed by the income tax collector with final notices and threats of proceedings. He now says that things have gone too far, the income tax has been largely collected, and some payments have been sent to England. But the Minister had very considerable notice; this agitation has been going on for a couple of years, and it was open to him at any time to put a stay on the collection of income tax.
Of course the income tax collector had his duty to perform. When asked about sending the final demand notices to those merchants in the city of Waterford he said: "What can I do? I must collect my warrant. Once I get my instructions I have to go ahead. I am responsible for the collection." The Minister never tried to put a stay on him, although we asked him to do it. He allowed the whole machinery to work. Senator Douglas has sympathy with me personally, as I am one of those affected, but I have no sympathy with him. If the Minister had promised him that he would be exempt, at least for four years, and then if he told the House that the promise was thrown aside, and the Minister repudiated the whole thing, what would he think? That is our position here. In order to ventilate the matter, at any rate, we, as honourable men, should pass this recommendation. If it does not do any good, it will not do any harm. We, at any rate, vindicate ourselves.
Recommendation negatived.
Remaining sections agreed to.
Bill ordered to be reported.
The Seanad went out of Committee.
Bill reported.