The principles and details of this Bill, have, as the House knows, been already very widely discussed and, accordingly, it does not seem necessary that I should burden the Seanad by traversing at length the ground covered when I was introducing the Bill in Dáil Eireann. I shall, however, be prepared to enlarge upon any particular aspects of the Bill later in reply to such questions as Senators may see fit to address to me.
The basic principles of the Bill are simple and straightforward, but, as taxation is involved, drafting these principles into legislative form has resulted in some degree of complexity. The basic principles may briefly be stated as follows:—
(1) The Bill applies to profits from mining non-bedded minerals, which operations involve risks and expenditures quite different from those arising in the case of bedded minerals;
(2) As the purpose of the Bill is to act as an incentive, the benefit is given to new mining operations, while, at the same time, existing operators whose present business commenced in the relatively recent past are given the benefit of certain provisions of the Bill from now on but without retrospective effect. To be eligible for relief new mining operations must commence production within the next five years, commencing on 6th April, 1956, thus providing an inducement not to delay development unduly;
(3) The relief is confined to Irish companies. The restriction of the concession to companies, which is administratively necessary, does not create any hardship, for the reason that it can scarcely be expected that persons would work non-bedded deposits of minerals on a scale of any magnitude without the protection of limited liability;
(4) The concession takes the simple form of exemption from tax on profits for the first four years after production has commenced and for the next four years thereafter, a 50 per cent. exemption from tax on profits.
These, then, are the underlying principle of the Bill. In operation, income-tax and corporation profits tax will, subject to certain modifications, be assessed in the ordinary way as if the proposed legislation had not been passed. The income-tax assessed for a year of assessment to which the legislation is to apply will, for the purpose of arriving at the amount which ranks for the total or partial relief, be reduced by income-tax on debenture interest, royalties and similar charges from which income-tax may be deducted and retained by the company in making payment of the interest, royalties, etc., to the persons entitled to receive them. Income-tax on so much of the profits as represents the amount of the interest, etc., is essentially the liability, not of the mining company, but of the persons entitled to the interest. It, therefore, does not properly qualify for the relief.
The income-tax assessed, reduced by income-tax on the charges, is the amount of income-tax which the mining company would effectively bear were it not for the Bill; and such income-tax—called in the Bill "net income-tax"—is the amount which ranks for total or partial relief. The amounts of corporation profits tax assessed for periods to which the legislation is to apply are similar in nature.
The dividends payable out of the profits to which the Bill applies will be taxable to income-tax in the hands of the shareholders only to the extent, if any, to which income-tax has been suffered by the company for the relevant periods.
The Bill contains in Section 1 the main definitions necessary for its interpretation. I do not think that I can, at this stage, usefully expand those definitions. They are as clear as we can make them, but if anyone would wish, as I have already said, any amplification, I shall be happy to endeavour to give it.
So far as the other sections are concerned, the only one I might make any reference to is Section 11. Section 11 is the section which provides that a resident Irish company working an existing mine, as defined, may be given relief, computed on the lines laid down in the case of new mining operations; but the relief in any case will extend only to any balance, as at 6th April, 1956, of a period of eight years reckoned from the date on which the company commenced to work the mine. If there was, in relation to an existing mine, what is termed a "permanent discontinuance" of operations, then the commencement date would be the date on which operations were begun again after such discontinuance. No relief will be given for any year or period prior to 6th April, 1956. This is, of course, because such relief would be retrospective, or, perhaps, retroactive would be a better word. Thus, where a company has begun to work an existing mine on, say, 6th April, 1952, it may be given relief for a total period of four years from 6th April, 1956. For those four years, the company may be granted relief to the extent of one half of the income-tax and corporation profits tax which would otherwise be effectively borne by it.
We had in the other House some discussion in respect of the difference between "temporary cessation" and "permanent discontinuance". I think it would be quite impossible that the present Bill would cover and grant relief in respect of temporary cessation, but the Bill does, in fact, grant relief where there has been permanent discontinuance. I should, perhaps, explain the phrase "permanent discontinuance". It is a phrase that has a well-known connotation in the ordinary income-tax law and it will be that connotation that will govern the interpretation of this Bill.
I believe this Bill will act as an incentive to people who would be interested at all in mining enterprises to move along within the limited territory provided by this Bill to see what minerals there are in our country that can be gainfully obtained. If it is successful—I believe it will have some success in that regard—then, I think, it will have fulfilled a useful purpose as an incentive. I certainly commend it to the Seanad for that reason.