It has been agreed that Items 4 and 5 be taken together. A separate decision may be taken on each.
Customs-free Airport (Amendment) Bill, 1958—Second and Subsequent Stages.
Question proposed: "That the Bill be now read a Second Time."
I think it would be more convenient if I referred first to the provisions of the Customs-free Airport (Amendment) Bill, which is the principal of these two measures, in so far as changes affecting Shannon Airport may result from them.
The purpose of the Bill is to amend and extend the Customs-free Airport Act, 1947. As Senators will remember, that Act provided for the establishment of the customs-free airport at Shannon. When the 1947 Act was being enacted it was explained that as there was no similar legislation in existence here, the Act might require amendment when experience had been gained of its working. In practice, however, it has been found that with the exceptions of Sections 6 and 13, the administration of the Act has not given rise to any difficulty. The necessary amendments to Sections 6 and 13 are provided for in the present Bill.
Shannon Airport was the first international airport in the world to have customs-free facilities. At Shannon, transit cargo and passengers and the aircraft which carry them may come and go freely without customs control. In this connection, I should acknowledge that the decision in 1947 to set up a customs-free airport at Shannon was taken with the full co-operation of the Revenue Commissioners and that co-operation has since been continued in all matters relating to the administration of the 1947 Act.
The establishment of a customs-free airport was a logical development of the aviation policy which has been followed by the Government since it was decided to provide an airport capable of catering for international air transport, at Shannon. The customs-free facilities available at Shannon have been welcomed by the airlines and by their passengers and continue to be fully availed of. The Government intend to continue the policy of providing the best possible facilities at our airports because air transport has come to stay and as far as this country is concerned, it can, and does, play a significant part in the national economy. In the case of Shannon Airport, it is well known that the introduction of jet aircraft may lead to a reduction in the use of the airport by transit traffic which would affect the airport's revenues and might cause a contraction of transit traffic.
It has been decided, therefore, to take time by the forelock and to do everything possible to create conditions which will maintain the level of activity and employment by developing terminal and freight traffic and to encourage suitable industrial activities at the airport. To that end, the Shannon Free Airport Development Authority was created. That body is now being reconstituted as a company under the Companies Acts and later legislation will be introduced to put it on a statutory basis.
The extension of the 1947 Act provided for in the present Bill arises from the desire to simplify the procedure for admission to and control of businesses in the airport. This is being done by replacing, by a simple licensing procedure, the obligation on the Minister to make regulations under sub-section 13 (1) of the 1947 Act governing the carrying on of businesses within the airport.
Under the Finance (Miscellaneous Provisions) Bill, 1958, which is being taken in conjunction with this Bill, provision is made for the grant of exemption from taxation on profits for a period of 25 years for new bona fide export businesses established at the airport. It is hoped that that concession will have the effect of attracting many new businesses to the airport. Already a number of firms have announced their intention of establishing businesses there. The licensing provision in the Bill will facilitate the grant of facilities to those and any other businesses that may be set up.
The section of the Bill under which licences will be issued, is Section 2. The need for licensing arises from the desire to facilitate the control of businesses within the airport. In particular, it is desired to have discretion in the issue of licences so as to safeguard existing businesses in the State outside the airport and to permit of preference for businesses which will use air transport at the airport. Finally, there is the point that businesses at the airport will be operating in a part of the State within which the normal customs controls will not apply. Some of these businesses may be handling goods subject to very high rates of duty. In these cases the licence, with suitable conditions attached to it, will be a means of preventing abuse.
While Section 7 of the Bill provides that no trade, business or manufacture will be carried on at the airport except under licence it is not intended that normal operations of airline companies and the activities of persons and companies already operating at the airport under a lease will require a licence. The exemption from licensing will not, however, extend to the supply of dutiable commodities for sale on, or for use on, aircraft; such activities must remain liable to any conditions the Revenue Commissioners may think fit to impose.
Section 4 of the Bill provides that conditions may be attached to licences. In practice, it will probably be found that the main type of conditions which it will be necessary to attach to licences will be those to which I have already referred, namely, conditions designed to safeguard the position of existing businesses and to provide the Revenue Commissioners with a means to control operations involving the use of commodities liable to high rates of duty. The Bill specifically provides that conditions may be attached to a licence requiring the holder to commence business before a specified date, fixed only after consultation with him, or requiring him when so directed, to terminate any trade, business or manufacture being carried on by him which is not specified in the licence.
If some companies should be established at the airport between now and the commencement of the Act an adequate measure of control will be exercised over them by virtue of special conditions to be included in the leases of premises to the companies.
Section 5 of the Bill makes provision for variation of licences. A licence once issued cannot be revoked unless there has been a breach of conditions attached to it or the licensee has been found guilty of an offence against the Customs Acts in relation to goods brought into the airport under the licence. A licence may be varied only with the consent of the licensee. As regards the transfer of a licence, there is to be no condition attached to the transfer of a licence other than a simple obligation on the transferee to notify the Minister of the transfer.
It is proposed to maintain a register of licences issued under the Bill and to have the register available for inspection by the public at a nominal fee. This is provided for under Section 6 of the Bill.
In the light of the licensing provision in this Bill, it is not considered necessary that the Control of Manufactures Acts need apply to the airport and Section 8 of the Bill provides accordingly.
I have already mentioned that it has been found necessary to provide for amendment of Sections 6 and 13 of the 1947 Act. Section 6 of that Act, which requires that goods intended for personal use or consumption within the airport or for retail sale therein shall be brought into the airport only from another part of the State, has been found to be defective in two respects. Firstly, while the section provides that it is an offence to bring or to be concerned in bringing or to assist any person concerned in bringing such goods into the airport in contravention of the section, it is not an offence for a person to use personally or to consume goods so brought into the airport by another person; neither does the section as it stands provide that it is an offence to dispose irregularly of goods so brought into the airport for personal use or consumption. It is proposed to remedy these defects by means of Section 10 of the present Bill.
The other defect in Section 6 of the 1947 Act is that it prohibits the bringing of goods directly into the airport from a place abroad for retail sale within the airport. Section 9 of the Bill provides for the grant of permission, subject to such necessary conditions as may be imposed, for the bringing into the airport from a place, other than another part of the State, of goods for retail sale in the airport for exportation—for example, for sale to transit or embarking passengers—or for retail sale for shipment as aircraft stores.
As I mentioned earlier, Section 13 of the 1947 Act is being amended by the removal therefrom of the obligation to make regulations under which businesses would operate within the airport. That requirement represents an unnecessary degree of control of businesses and is being replaced by the licensing provisions of the present Bill.
The provisions of the Bill as a whole taken in conjunction with the provisions of the Finance (Miscellaneous Provisions) Bill, 1958, provide a simple and straightforward system of control of businesses to be established at the airport. The restrictions on such businesses so provided are merely the minimum necessary to safeguard the interests of existing businesses outside the airport. I am hopeful, therefore, that the Bill when enacted will encourage the establishment of further business activities at the airport.
The Finance (Miscellaneous Provisions) Bill, 1958 and the complementary Customs-free Airport (Amendment) Bill are designed to implement the proposal, referred to in the Budget Statement last April, to grant a 25-year tax exemption of profits to bona fide export businesses at Shannon Airport. The Customs-free Airport (Amendment) Bill provides for the licensing of businesses to be carried on in the airport area while this Bill deals with the granting of the actual tax concession to companies operating at the airport. It contains also some customs and excise provisions relating to the airport to which I shall refer later.
Broadly, it is proposed to apply the tax concession in the following manner. Companies carrying on a trade at the airport may be given a certificate to the effect that their trading operations constitute what is described in the Bill as "exempted trading operations". A company to which such a certificate is given will quality for full relief from income-tax and also corporation profits tax in respect of those trading operations during a period of 25 years from the date of the passing of the Bill.
Sub-section (5) of Section 3 sets out the trading operations which may be certified as exempt. Certain trading operations are not to be certified as exempt and these are described at sub-section (6) of Section 3. Broadly speaking, the exclusions will secure that tax exemption will not extend to profits attributable to trading operations carried on in the State outside the airport, nor will it extend to profits from the sale of goods, or the rendering of services, to persons resident in the State even if the relevant sales are made in the airport. It is necessary also, arising from the basis of the double taxation agreement with Britain, to exclude from exemption profits accruing from trading in, as distinct from trading with, Britain and the Six Counties.
Sections 4 to 10 of the Bill contain the technical tax provisions to give effect to the proposed exemptions. I might mention that in the case of exempted trading operations Section 7 in effect substitutes the new 25 years' tax exemption for the exports tax concession available under the Finance (Miscellaneous Provisions) Act, 1956. The latter concession is available, however, to any export business in the airport that might fail to secure the 25 years' exemption.
Certain customs and excise matters relating to the airport are dealt with in Part III of the Bill.
Goods imported from the airport into the State are treated, under the Customs-free Airport Act, 1947, as imported from abroad and are liable to customs duty accordingly. The provisions of this Bill will not change the customs status of the goods; they will still be imported goods but Section 11 will, in the case of products manufactured in the airport, substitute for the ordinary customs duties, if any, applicable to the finished products a duty equivalent to the sum of the duties on the materials used in their manufacture. These goods, therefore, will be placed on an equal footing as far as possible with goods made elsewhere in the State. It is necessary, however, to look to the possibility that goods might be made in the airport from materials subject to quantitative import restrictions in the State. The manufacturers of those goods would have an advantage over manufacturers elsewhere in the State in that they could freely import the restricted materials into the airport area. The Bill proposes, therefore, that such goods will remain liable to the duties applicable to finished products but, under Section 12, they will be eligible for the most favourable preferential rates of such duties granted to like goods originating in the rest of the State.
Because of the danger of diversion to dutiable purposes of high duty goods brought free of duty into the airport for further manufacture or for export, the Bill provides (in Section 13) that duty will be payable on such goods where they are subsequently reported missing and when there is no satisfactory explanation therefor.
The Bill, as Senators will appreciate, is very largely a technical finance Bill, but the main—indeed the sole purpose of it, apart from a couple of minor amendments to existing legislation, is to give effect to the arrangement under which businesses carried on under licence at Shannon Airport will enjoy the tax exemption foreshadowed in the Budget statement of 25 years' total exemption of profits.
I do not want to say very much except to welcome the Bill for several reasons. I think the Bill shows the right approach to the problem of bringing industry to a part of Ireland which needs it and which is well removed from Dublin. This will be a happy way of decentralising industry. The first thing that strikes me is that the approach is by way of incentives. I think we are giving the right incentives here, the main incentive for private enterprise—as should be the case also for public enterprise —being the earning of the profits. This has always proved in the history of economics to be the right way to get people to work hard and build up strong and healthy businesses.
I also welcome in this Bill the approach by incentives to private enterprise as distinct from State enterprise. To a very great extent—far too great, I think—we have been relying on the State for our enterprise here for many years past and it has been stated and repeated that private enterprise had, in fact, failed to provide the employment and production in industry that we need for our people and our economy. I feel that public enterprise, although it may not have actually failed, has failed to live up to what people expected from it. Public enterprise was expected to do too much. The ideal would be a proper balance between State enterprise and private enterprise. I think the public enterprises we have did not get sufficient money to finance them properly so as to give the employment and production we need. We need a highly developed private enterprise here also and I think this is a step in the right direction in bringing private enterprise up to the standard we require.
The Bill provides many facilities and incentives to companies to come here but I should like to ask the Minister a question. I notice that the wording used in the Bill is "qualified company". Does that mean that private individuals or family businesses do not come within the scope of the Bill? It would seem important to me that in a country like ours, where there are so many good family businesses and such a good tradition of family businesses, such private companies should be welcome also. Am I right in thinking this is not the case?
A company is defined as any body corporate carrying on trade.
I saw a letter in the papers last week in connection with the incentives given to exporters, pointing out that these were available only to limited companies. Is there the same confusion here?
No. It is quite clear that both tax exemptions are confined to companies.
That is outside this area?
No. The export tax concession given in the Finance Act to all exporters is confined to companies. That is done for technical reasons. I do not think it would be practicable to give exemptions in respect of the income of a private individual.
I shall not pursue that now but perhaps we might find some other way of giving an incentive to a private company or individual. I welcome the Bill and I hope it will bring many prosperous companies to this area round the Shannon.
I wish to join in welcoming the Bill as being in keeping with the originality of the scheme that launched the free airport in 1947. Our future depends to a great extent on the way we can anticipate and show originality because, not possessing great material resources, we must think, and we must be original. I do not wish to say much except that our hope is that we shall see arising along the west coast in the next 25 years great centres which will match Dublin in industrial development. This start could very well be made at Shannon Airport and around that area. Should such development take place, then it would not be very long until prosperity would spill over into Galway. In Cork things are definitely moving. There is the oil refinery, and we are hopeful that shipbuilding will start very shortly. Should development take place along these lines, we would have at last that equilibrium which has been so sadly lacking in the country as a whole up to now.
Shannon Airport does seem to be the ideal centre from which to develop and expand an air freight mail service overseas, especially the United States of America. During my recent visit there I found considerable criticism voiced because Irish goods were not available in the quantity or with the frequency that people desire. That is understandable to some extent because when output is limited one cannot fill every corner store. It would appear that a large mail order service operated from Shannon Airport may be vitally necessary in the future.
Since we are on this matter of development, perhaps the Minister would offer some incentives to another type of industrialist, the returned emigrant who is anxious to come back here to spend with us his last years and his money. There are people who, having made their fortunes in the hurry and bustle of life in other parts, would like to return in their declining years to the peace and quiet of this country.
I would suggest that, having gone so far in the development of a free airport, the Minister might now take the next logical step and extend the privilege to shipping, with Cork harbour as our first free port.
I have one question which might possibly be more appropriate on the Committee Stage. In Section 2, it is provided that the Minister may grant, or refuse to grant, a licence to "a person". Why is "person" used there and not "company"? A person might be appointed by a company to apply for a licence. That person might not be resident in the State and would not, therefore, be within the jurisdiction. If it became necessary to prosecute such a person for some offence, how would the Minister proceed?
I appreciate the welcome the Seanad has given to this Bill. Special measures to deal with the position in the Shannon Airport area are justified. By "special measures", I mean inducements to industrial development, or other facilities, which are not generally available elsewhere.
Shannon Airport is by far the largest single employer in the West of Ireland and one could easily imagine the social and economic consequences which might flow if, in the course of time, there should be a contraction of employment there. Now, it is almost certain that, as technical developments in aircraft design proceed, transit traffic at Shannon—that is to say, the landing of aircraft for operational as distinct from traffic reasons—will tend to contract and that will have its effect upon the airport revenue and upon employment in the operation of the airport. In view of that it is desirable that there should be put in train now new measures which will promote terminal traffic. This Bill is one of the steps now being taken to that end.
I agree with Senator Quinlan that one of the possibilities for development at Shannon relates to the mail order business. Apart from the existing mail order operations of the catering controller, this is the kind of development one can visualise. A mail order service is being operated at the airport. It is developing and it is being pressed forward with great vigour. It is not confined, it is true, to Irish-made products although Irish-produced goods figure very largely in the catalogues and, where they are available, only Irish goods are offered. A substantial volume of business is already being produced and the volume seems likely to grow.
Senator Quinlan made a passing reference to a customs-free seaport. There are facilities at all our major ports for transit traffic and there are bonded stores to facilitate that traffic. The fuller development of a customs-free seaport is a matter which has been under consideration for a long time. I have personally been unable to find any evidence of a commercial demand for such a seaport and, clearly, the existence of a commercial demand would be the first thing to look for before taking any action in that direction. If the Cork Harbour Board have proposals to make in that regard, I shall be very glad to receive them.
I think Senator Cole somewhat misunderstands the references to "a person" in the Customs-free Airport Bill. That Bill relates to the granting of licences for the purpose of operating industries there. The Finance (Miscellaneous Provisions) Bill provides for the inducement, and the tax exemption applies only to companies.
Question put and agreed to.
Bill put through Committee, reported without amendment, received for final consideration and passed.