Vol. 18 No. 31
I move recommendation No. 1:—
Section 2, sub-section (2). To delete in line four the word "five" and to substitute therefor the word "ten."
This was a case in which the Minister undertook to look into the matter and to make a statement before anything further was done.
When this matter was brought before the Dáil in the first instance sub-section (2) of Section 2 did not appear in the Bill. I was of opinion that there was no ground for granting allowances in respect of maintenance of let properties because valuations in this country make allowance for the cost of repairs and, as a general rule, these valuations are, in fact, so low in relation to the rents that I considered no injustice would be done by passing the clause as it originally stood. I was approached by an association of property owners who claimed that injustice would be done. I invited them to put up particulars of actual cases. They put up only two cases of let property. One of these was a case in which the ground landlord had not compelled the lessee to carry out the repairing covenant in his lease, and I rejected that case as being one which did not call for any concession. The other was a case in which cottages in the country were let at rents which, in effect, were uneconomic. I decided to meet this case and I believe that it has been substantially met by sub-section (2) as it stands. That was the position when we came to the Seanad. Since then the interests concerned in this matter have had further ample opportunity to bring under my notice any other cases of hardship, if such cases existed, and they have not done so. I have indicated that if such cases are brought to my notice within the next 12 months I shall be prepared to consider what legislation should be introduced to meet them. Further than that, I am not prepared to go.
Some mention has been made of local authorities. Senator Johnson made a point in that connection on the last occasion. In the time at their disposal since the last debate, the Revenue Commissioners have not been able to obtain complete information from all their inspectors but they have obtained reports from inspectors covering the City and County of Dublin, the City and County of Cork, the City and County of Limerick, the City and County of Waterford and the counties of Cavan, Louth, Longford, Meath, Monaghan, Offaly, Roscommon and Wicklow. In all that area only one claim for a concession on the existing basis has been put forward by a local authority within the past three years. In that case it is clear from the figures supplied that the aggregate income from let properties after deducting the cost of maintenance, is considerably in excess of the aggregate of the Schedule A assessments. There is no justification for any allowance accordingly and none will be given.
So far as the Revenue Commissioners have been able to ascertain it would appear that the concession is of no importance to local authorities and that they have nothing to gain by claiming it, because in general, where these charges exist, the money creating them has been raised by loan. Where the loan has been a Public Works loan, and interest is payable in respect of it, that interest is allowed as a set-off against Schedule A assessments. The same applies to bank interest. In the result, when these set-offs have been given, it means that in many cases there is no Schedule A tax payable in respect of property let. In other cases, as in the case of the Dublin Corporation, the Corporation deducts the tax from interest on stock issued by them for housing purposes. Where this exceeds the aggregate of the Schedule A assessments on the houses, and other sources of income which the corporation could claim as a set-off, the corporation has nothing to gain by getting the Schedule A assessments reduced, because the corporation must pay over to the State tax at least equivalent to the tax it deducts from the stockholders. The question is, therefore, of no importance to local authorities. The whole question of cottage property, and of the concession to which it might be entitled, is of no practical importance or interest to local authorities.
I have considered very carefully the question of enlarging the concession as it stands and as it is expressed in the sub-section of the Bill and I am satisfied that no case in equity can be made for the recommendation. As I have already indicated, if any cases of actual hardship are brought to my notice between now and the introduction of next year's Finance Bill, I shall be prepared to consider the matter in the light of such cases. The present position is that only two cases of actual alleged hardship have been brought to my notice since the present Section 2 was first drafted and became operative. Of these two cases only one was found to have any actual merits such as would warrant a concession. I do not know, as I have said, of any other cases. I am prepared to meet them if they arise. All I can say to the Seanad is that since this matter was first mentioned here, a greater opportunity has been afforded people interested to bring actual cases to my notice, so that, if their merits warranted it, we might devise some means of meeting them, but no such cases have been brought to my notice.
The new section to which the Minister referred provides that where the valuation is £5 and under, and where proof can be given by the owner of the property he will then only pay income tax upon his actual income. That is the thing the Minister refers to continuously as a concession. In his speech he told us you are only to pay income tax upon the actual income. When he agrees to do this in the case of a total of £5 we have in his speech the cry of "concession, concession." The Minister refuses to consider this according to the question of principle. He says if cases were brought to his notice to show that in the past the total expended under this Bill is such that paying income tax on valuation would be higher than if a man paid on the actual rent received he would be prepared to consider it. There is, of course, an association representing certain rent owners and the people reside in many different districts. When I was asked, with others, to bring this matter forward in the Seanad I brought it forward because it did seem to me that there was a case that might conceivably be unjust. Last week the Minister said that we should bring forward any cases we had. Now of course it is a very difficult thing to get those cases together, and I do not pretend that I spent the whole week looking after people and asking them to give me their accounts and report about their property for last year. I only succeeded in getting one case where the owners were told that £5 would not be adequate. I am sure that that is by no means a single case and that there are properties which are small and where this would be a hardship. I contend there are landlords with small properties willing to keep them in repair even though their incomes therefrom would be very substantially reduced, but if such cases come along there is always the danger that you will aggravate these people and so they will say: "I will only spend what I can and no more." I can only mention one case— I cannot mention that by name and even if I did mention it by name I could not prove it—but I believe there are a number of cases. I do not know whether the Minister would lose by setting up a valuation of £10, if there are a number of properties that would come up to £5. My own impression is that £10 would cover all the smaller properties and that £8 possibly would cover them but £5 certainly would not.
I have a case here. There are 30 cottages or houses with tenants. The total valuation is £146 10/-. The average would be £5 as mentioned by the Minister. Seven of these cottages are over £5 and some are under, but for the average number, definitely, the figure is £5 mentioned by the Minister. But in the case of several of these cottages under the section as inserted they will not be allowed to claim assistance upon actual income, because they are above £5. I think £8 will cover that case. I do not know how the Revenue Commissioners will deal with this. I presume they will find some reasonable way of making an average. They will find a way; they will take the 23 and, probably, find the average of the expenditure. My case is this. This is all cottage property, and it should be treated in the same way for the whole 30 cottages if it adopts the same rate of expenditure in keeping the property in repair. The figure given as total rent received is £318; the total rent due £340, but in the last couple of years only £318 was collected. Some of the people have not been able to pay and the owners have not gone after them. Valuation, £146 10/-; the rates borne by the owner for the whole 30 cottages is £108; £130 was spent on repairs; insurance £4 6s. 9d., and management and collection for the 30 cottages was £32. That was not an excessive sum. If I was agent and went round collecting these weekly rents I would like to be paid more than that for them. That makes £274 6s. 9d. revenue whereas the actual income was £43 13s. 3d. That man would have to pay—but for what the Minister calls a concession, but that I call ordinary justice, which was introduced on an amendment—the full income tax on £146 10/-. Now he will have to pay, on the full valuation of seven cottages, above £5. I do not know and cannot tell the exact valuation of these seven cottages except that they are definitely over £5. I think if the Minister will not agree to £10 he might well at least extend it to £8. I suggest if he follows out my information, and if there are only four or five cases no harm will be done. The principle is right. The Minister made reference to certain claims sent in before. I do not profess to be an expert on income tax, but I think I am correct in stating that under the previous law it was never possible to maintain, under Schedule A, anything, but on the actual rent and that was where the valuation was not more than one-sixth of the actual rent. That would eliminate a number of cases. Thus, where the rent was £24, if the valuation was less than £20, you paid upon the valuation, and you could not claim adjustments. If the valuation was more than £20 you could claim. Now, therefore, the information which will be in the Income Tax Department as to these classes will, naturally, be the information they received in cases where they could have claimed. Otherwise, if there was no right to claim there was no object in giving figures with regard to management, repairs and everything to the income tax authorities, because you could not get benefit in any way. The Minister said he would have to go to a number of inspectors for information. But even if he did so he would have only a limited amount of information. I, therefore, urge him to meet us by going above £5 to £8. Otherwise, I suggest that the Seanad should pass the amendment and show that the difficulty arose in the way that we had warned the Minister.
Since the last occasion on which this matter was under discussion I have followed up some of the Minister's inquiries regarding the position of local authorities. I think the Minister stated the position as I found it. The fact is broadly this. The rent is in fact interest on loans and recipients of the interest finally are charged tax on this interest instead of being paid by the local authority. I think it might be well to inform the Minister that from my information I found that a large proportion of the local authorities' houses in the country, leaving out Dublin, are valued at over £5. If they are comparable with cottage property held by private owners of the same character, then his figure of £5 is probably not high enough. I think if he took the urban districts he would find probably more than one-third of the houses erected by local authorities valued at over £5. I do not know what proportion of the cottage property held by private owners such as referred to by Senator Douglas would be comparable to the cottage property held by the local authorities.
What happens in the case of local authorities when the amount is paid off?
That is what I asked. some of them will be paid off before the inquiry that the Minister promised takes place.
I do not think any of these small houses owned by the local authorities can be valued for over £7, but there are a number over £5.
As I pointed out on the last occasion and as I repeat now, this is not in practice applicable to the majority of the houses owned by the local authorities.
Not immediately.
Nor is it likely to happen. I do not know that I can change the attitude that I have taken up.
Make it £7 and let us agree.
It is merely a question of principle.
I am afraid the Minister has given that away.
In one clear case that we had on principle to examine. That is why I did not like to depart from the attitude I have already taken up. In that case we had an opportunity of examining and seeing the true position. We have had an opportunity of examining in every case mentioned. I promised that I shall reconsider the matter if cases are brought to my notice. We shall meet them during the course of the year. But I did not consider that I would be justified in jumping at this figure blindly. There may not be much in it, but we would be establishing it if we were to start by a statutory concession. Senator Douglas challenged me because of the use of the word "concession," but we embodied what is done in certain cases and we are now embodying it in the statute and on a statutory basis. I do not think I would be justified in going further than what the actual cases presented would warrant. For that reason, I cannot see my way to depart from the figure of £5. I promise to consider it during the course of the year. The amount involved may not be very large. Meanwhile I have promised to reconsider any cases brought to my notice in the interests of small owners in general. I would like the Seanad to accept my undertaking to examine the cases which are brought before me between now and the end of the year.
The Minister has promised to examine cases brought before him in the course of the year. If he finds that there is hardship is he prepared to deal with those cases?
He will have no power to do so.
I shall deal with them in next year's Finance Bill.
There can be no redress during the current year?
I am afraid not. The amendment of the income tax law was made operative by a resolution which was passed after the introduction of the Budget. Between then and the preparation of the Finance Bill there was a fairly considerable period, during which I met representatives of two associations. We have also had the advantage of the discussion in the Dáil and the discussion here last week. I have had only one case brought to my notice, and I do not think that it would be quite right to jump at a decision without examining the position more closely.
This is a matter for the Minister and I do not propose to argue with him any further. This is a recommendation and I think that we would be making a mistake in withdrawing it. The Minister did not convince me and evidently he did not convince the two deputations who saw him. The Minister is, of course, very eloquent, but I am sure he was equally eloquent, equally smiling and equally persuasive when he saw the deputations. If this were a question of delaying a Bill for a few months the Minister would have a very good case and I do not suppose I could resist it. But a case has been made on a principle of justice and if there are cases affected by that principle—which, I am assured, there are—the Seanad should send forward this recommendation. It will be, at all events, a guide to show that, if people have grievances, somebody did their best for them. Those who are doing their best with property of this class will find very cold comfort in the promise that the Minister for Finance will try to do something for them next year. If there be such cases I am anxious that there should be more than just that promise. If we cannot do anything better I ask the House to pass this recommendation. I am doing so, to a large extent, because I believe the reduction to one-sixth was a mistake and that this proposal is a mistake. That is one reason why I think it should be put clearly on record that this House did not accept the proposal.
I move the adjournment of the debate.
I second the motion.
Would it not be possible to finish the Finance Bill this evening?
There is a lot to be said on the remaining sections.
I am not accepting any of the recommendations.
