Seanad Éireann debate -
Wednesday, 24 Jul 1963

Vol. 56 No. 19

Finance Bill, 1963 (Certified Money Bill) —Committee Stage (Resumed).

Question proposed: "That Section 48 stand part of the Bill."

Mr. L'Estrange

Section 48 specifies the persons who will be liable to pay this tax. When the Bill was introduced in the Dáil, a person whose receipts for the sale of goods did not exceed £500 per month had the option of not being accountable for this tax. On 16th July on Report Stage, the Minister moved an amendment to delete £500 and substitute £750 and it was agreed. Does the Minister know exactly what he wants in this Bill? First he said £500; then £250 was mentioned by members of the Fianna Fáil Party; and some of the Independents who supported the Government wanted the figure increased to £750 per month.

Seven hundred and fifty pounds per month is about £9,000 per year. Therefore, people on less than £750 per month will not be personally liable for the tax but they can purchase from the wholesaler who will undertake to pay the tax on their behalf. It means that there will be no inquisition as to their sales: they will be free from form filling and free from inspection by the Revenue Commissioners. But how is the Minister to know whether their sales are under or over £750 a month? If they are purchasing from the one wholesaler, that wholesaler will make the returns for them but if they are dealing with six or seven wholesalers, the position will be different.

We know that business is not static and that it varies from month to month. We know also that, due to inflation, money can lose its value very quickly. I should like the Minister to tell us how the Revenue Commissioners are going to deal with this matter if money should lose its value within the next few years. We are told that by increasing the figure to £750 a month, we exclude practically 80 per cent of the retailers. Then why have two sets of collecting machinery, one for the 20 per cent and the other for the wholesalers? We in Fine Gael are against this tax entirely. If the Government want to get this £11 million, surely they have other methods of getting it.

I should like to reply to the remark made by Senator Flanagan last week by saying that all the shopkeepers are not robbers, rogues or black marketeers. The majority of them are decent, respectable people. The money must come from the consumer and if that is the Government's aim, I think the best thing to have done would have been to extract it from them by the simplest machinery possible. Then why set up two systems of collection if the result is to be exactly the same? Under the complicated system now proposed by the Minister, 80 per cent of the retailers need not keep books or accounts but can purchase their supplies from the wholesalers and they will have to pay the wholesalers the 2½ per cent tax on the goods they buy. The retailers will have to pass that on to the consumers.

The other 20 per cent of the retailers must become unpaid tax collectors. They must keep accounts and be ready for inspection by the Revenue Commissioners. They must purchase from the wholesalers at a price different from that at which the other 80 per cent of the retailers will purchase. If they are to recoup themselves, they must add that 2½ per cent to the consumer price, keep their returns and pay the 2½ per cent to the Revenue Commissioners.

This will all add up to extra work and expense on the wholesalers as they must themselves sell at two different price levels. They must sell to the 80 per cent of the retailers at the cost of the goods, plus 2½ per cent and to the remainder of the retailers at the ordinary wholesale prices. The wholesalers will also have to compensate themselves for the extra cost and expense and perhaps, instead of charging 2½ per cent, they will have to charge 3 per cent or 3½ per cent to cover their expenses. All this is bound to increase the cost of living. There is little use talking about wages standstill orders because this increase will have to be passed on.

If the Minister is determined to collect this £11 million annually, why not do it in an efficient manner? Why not go the whole hog and allow it be collected in the same way as it will be collected from 80 per cent of the retailers? It was admitted in the Dáil that 80 per cent of the retailers can purchase from the wholesalers and that the wholesalers will keep the accounts and forward the tax to the Government. If the Minister is determined to get this money, why not let the wholesalers collect from all the retailers? It would be a much more efficient way of doing it.

Mr. McGuire

I think Senator L'Estrange has put his finger on something that requires elucidation and further thought before the machinery for collecting this tax is finally decided. When this tax was conceived, it was intended that everybody should come under it. Then the figure of £500 was arrived at as an exclusive figure for those who would be allowed purchase through the wholesaler and who would not have the burden of book-keeping. Now we have the figure of £750. These two figures are only arbitrary figures.

I believe there will be great confusion at the point of £750. Trade varies from month to month. Most people trade, if they are successful in business, on an upward scale. Then you get the transitional period when people will move from the £750 scale into another scale of business operations. It is well known we have creeping inflation in our economy, which will probably go on indefinitely. That can be seen in the banking figures. Over a ten year period, the amount of money handled by the banks has practically doubled itself. It is only reasonable to suppose, therefore, that the figure of £750 may be £1,250 in six or seven years. There is a good case for making whatever is decided applicable to everybody.

I cannot help feeling that some form of purchase tax would have been better, now that we are getting away from the original idea. If the original idea had been carried through, at least everyone would know where he stood, but we are now getting into the realm of confusion, as to who is to buy from the wholesaler and who is to be registered. If the purchase tax system had not been used, the tax would have been flexible. It could have been heavy on luxury goods, less heavy on the more commonly used goods and not at all on the essentials of life. We are interested to hear from the Minister if any decision has been come to as to how this will be carried out and how the demarcation line between the people of £750 and less and the others will be maintained.

Mr. McAuliffe

I can see difficulties for the people at the £750 and less level. Different categories of workers are paid weekly, fortnightly or monthly. Civil servants, Guards and bank officials are paid monthly and, therefore, they pay their accounts monthly. If the shopkeeper decides to pay the tax at source, he will have to carry that 2½ per cent for the month. Quite a number of farmers pay their accounts half yearly or even yearly. In that case, the shopkeeper will be forced to carry the tax for the year or half year. Teachers and road workers are paid fortnightly. In their case, the shopkeeper will have to carry the tax for the fortnight.

The shopkeeper who pays at source will also have to carry bad debts. He has to pay at source because he could not afford to keep a girl at nothing else but looking after the accounts. Forestry workers, Bord na Móna workers and Land Commission workers are paid weekly. They would not create such a problem. If everyone bought for cash, there would be no trouble, but the person who pays the tax at source will find he is paying much more and perhaps carrying a bank overdraft. We disagree with the tax completely, but if it is to be collected, there should be an allowance for people who have to give credit.

Mr. Fitzpatrick

I should like to support the plea made that the provisions of this section should be extended to all traders; in other words, that all traders should have the option of purchasing their goods tax paid. The Revenue Commissioners, who advise the Minister on these matters considered this whole question very carefully some years ago. They came to the conclusion that it would not be feasible to collect a tax at retail level. A Commission was set up to advise the Minister on income tax some years ago. That Commission was sitting in 1957 when the Government came into office. The Commission invited interested parties to submit memoranda of evidence. A number of people gave evidence, but the Revenue Commissioners submitted a memorandum dated 27th August, 1957, which read as follows:

Theoretically, the retail stage is the ideal level, i.e., the tax would be charged on the actual price at which the commodity is sold to the final consumer. In practice, however, because of the huge number of traders who would be brought within the tax net, a tax at the retail level would be costly and difficult of administration, and taxation at an earlier level is to be preferred. A tax at the wholesale level would seem to be feasible in this country. It would not be unduly expensive to administer and would be preferable to taxation at the manufacturing level.

That represents the considered views of the Revenue Commissioners in 1957, only a short time ago. I am sure they advised the Minister on this very point within the past 12 months. I wonder have they given the Minister different views now? The Revenue Commissioners have a vast experience of trying to collect income tax and I am sure they have found it very difficult to get individual returns from every trader in the country. I rather think it is the experience which the Revenue Commissioners have gained in their capacity as income tax collectors that persuaded them to put this memo to the Commission on Income Taxation in 1957. In their wisdom, they realised what a hardship this would impose on traders, that it would not be feasible and that this type of tax should not be imposed at that level. As I say, this Party are entirely against this tax in any shape or form, but, if a tax there must be, then we suggest it should be imposed in a way that will cause least hardship and in a way that will be workable.

Mr. Quigley

It seems certain that this tax will be imposed and I support Senator L'Estrange's recommendation that the wholesalers should charge it to the retailers. The big objection I have found as I go down the country is that of the small shopkeepers who would have to keep these accounts and collect the tax. Therefore, I would ask the Minister carefully to consider Senator L'Estrange's recommendation.

Minister for Finance (Dr. Ryan)

I explained in the Dáil on more than one occasion the difference between the £250 tax and the £750 tax, and I cannot make up my mind whether the failure of certain Deputies to understand it was due to stupidity or malice, both of which they are capable of cultivating, and the same applies here.

Mr. L'Estrange

You are starting off on a good note. All the wise men are on the other side.

An Cathaoirleach

The Senator will please address the Chair.

Dr. Ryan

I am sure Senator L'Estrange understands this very well. There is a difference between the £250 and the £750. Senator L'Estrange said the Minister should be clear in his mind what he is talking about and I am trying to be as clear as I can. The £250 refers to a retailer who buys untaxed goods and he may not sell more than £250 worth without registering. If he buys taxed goods, then he may sell up to £750 worth without registering. That is the difference and I wish Senators would understand that and not put to me that same question over and over again as they have been doing for the past few weeks.

There is a change of front in the Fine Gael Party in regard to this tax, They have come to admit it is inevitable. It is like RGDATA who sought, by political measures, to defeat this Bill in the beginning and who when they saw that was not possible, attempted to have it put on at the wholesale level. Fine Gael are adopting the same attitude——

Mr. L'Estrange

We are dealing with the section.

Dr. Ryan

——as they have from the beginning. It was not possible, as I explained to RGDATA when they came to see me, to change the whole structure of this Bill when they changed their minds in regard to the tax. I do not see it is any great burden on the wholesaler to keep two separate accounts, one where the tax is not paid and one where the tax is not paid by the wholesaler. I had deputations from the wholesalers and practically every wholesaler who came to me admitted they have different prices for different people, even at the present time. For a small customer, they have one price and for a big customer, they have another price.

Mr. Carton

Different prices for one article?

Dr. Ryan

Yes, for the same article.

Mr. Quigley

I have never heard of a wholesaler having different prices for customers.

Dr. Ryan

If the wholesalers are capable of keeping different accounts at the present time, I do not see that this will put an extra burden on them. They put it to me also they had these cash registers and where a person came and ordered a certain amount of goods which he took away with him, it would just go through the cash register. Again I asked them would it be a great burden on them to put down the registered number on the cash docket going out and they had to admit it would not be a great burden at all. They would have to sort out these small dockets, as they have to do at present for various reasons. Whether the wholesaler sells under £750 to a small man who is unregistered, or sells free of tax to those who are registered, would not create any great trouble for the wholesaler. It is true, as was said, that this £750 exemption would permit about 80 per cent of the retailers to avoid registration but it would cover only about 25 per cent of the volume of trade because those who are above the £750 a month have the greater volume of trade on their hands.

I explained very fully in the Budget speech and afterwards on more than one occasion my objections to the purchase tax. I said that by having a retail tax on a broad basis, the amount of tax can be low, a very small percentage. If certain items are left out and the retail tax is still adhered to, the tax must be higher, naturally, in order to get the same amount of money. If there is a purchase tax, it would be higher still, in fact, very much higher, in order to get the same amount of money. The big objection to that is that the goods taxed under the purchase tax would be practically taxed out of existence and the manufacturers, and so on, dealing in these goods would have a very lean time. It would lead to unemployment and would cause upset in the trade. Naturally, if the same amount of money could be obtained from a purchase tax and without touching such things as food and clothing which are essential, any Government would choose that method rather than the other. Therefore, there must be very good reasons for choosing this tax which was obviously going to be unpopular.

Senator McAuliffe was mistaken, if I heard him rightly, in thinking that the retailer who purchases his goods free of tax will be in any way hurt by having monthly accounts or yearly accounts. It does not matter as far as the tax is concerned because the tax will be payable only on cash received. If he does not receive the cash for 12 months, he does not pay tax until then, or if he does not receive cash until the month is up, he does not pay until then.

Mr. McAuliffe

What happens if he is registered?

Dr. Ryan

I am talking about the man who is registered. If he registers and pays his own tax, then he pays on cash received. If the cash does not come in for 12 months or a month, he pays the tax only at that point. As far as bad debts are concerned he is free of tax because he is never paid and, therefore, he has not got the cash. If he pays at wholesale level, then it is true that he does meet with these difficulties. Where he pays at wholesale level where the tax is paid he has paid his tax and he may sell his goods to a customer who does not pay him for a month or for twelve months. He may meet with a bad debt and he has paid his tax so he has no way out. All that applies to a retailer who buys from a wholesaler who has paid tax but it does not apply to a retailer who pays his own tax.

Mr. McAuliffe

He gets no refund if he buys from a wholesaler who has paid.

Dr. Ryan

From that point of view, it is better for a retailer to pay his own tax than to buy it from a wholesaler who pays it.

Senator Fitzpatrick referred to the Report of the Revenue Commissioners stating that though theoretically retail level was ideal, for administrative purposes it was not advisable. When this report was made, the Revenue Commissioners asked me what the intentions of the Government were regarding a retail tax. I said I would like to have it fully examined. The Revenue Commissioners did examine the matter and made inquiries in Continental countries where a tax of this kind was imposed. They then came to the conclusion that a retail tax was the most easily administered and certainly the most profitable as far as the revenue was concerned.

It is easy, of course, to see the case for such a tax as it is higher at retail level than at wholesale level. Two and a half per cent at retail level would get more money than at wholesale or manufacturers' level. It is also less trouble to administer at retail level than at any other stage in the process of trading. I, like Senators here I am quite sure, would have the idea that this was rather hard to understand but they did convince me. It was a fact that administratively they could do it better at retail level than at any other.

Mr. Fitzpatrick

There are two points I should like to make. The Minister would agree that the Revenue Commissioners did say in 1957 that a retail tax would be costly and difficult of administration and that a tax at an earlier level was to be preferred. They stated that view clearly and without doubt.

Dr. Ryan

Yes. They did say that.

Mr. Fitzpatrick

The Minister seems annoyed that I should question subsection (3) of this section but I make no apology for querying him on it because I was not clear about it. Maybe Senators on the Minister's side of the House know all about it but I must confess that I did not. The first £250 turnover is completely free of tax?

Dr. Ryan

No.

Mr. Fitzpatrick

I thought that was what the Minister said.

Dr. Ryan

I tried to explain. Perhaps I had better take an example and that might be easier. There are certain trades where a person buys goods from a non-taxed source. A butcher is a very good example. He buys from a farmer where tax is not paid. Some butchers, however, in Dublin especially, buy from a taxed source and it would be unfair if one man could have his cattle from an untaxed source while another was taxed and a limit of £250 is put on that type of trade. The small butcher is free if his business is under £250. That covers very few butchers but if he is not in excess of £250 he is free; that is coming from an untaxed source but he must register and pay tax above it. A person buys from a taxed source where he buys wholesale from a wholesaler who is paying tax. He can go to £750.

Mr. Fitzpatrick

Is the small butcher who buys from farmers and does not exceed £250 free?

Dr. Ryan

Yes, he is free.

Mr. Fitzpatrick

Anybody is not free for the first £250?

Dr. Ryan

I should say what I had in mind in making that exemption of £250. Very few butchers would be under £250. If a butcher killed one beast in a week he would exceed £250. I had in mind the small greengrocer throughout the towns of Ireland or people selling milk which came from farmers. We do not bother if it is under £250.

Mr. Fitzpatrick

Any person who can buy his goods from an untaxed source and whose turnover does not exceed £250 is free of tax?

Dr. Ryan

Yes.

Mr. Fitzpatrick

A person can continue to purchase up to £750 and not pay tax provided he buys from a taxed source?

Dr. Ryan

That is right.

Mr. Hogan

I wonder whether I could ask a question. I have in mind small shopkeepers who might buy from a number of wholesalers. What arrangements have you to check on their total sales in a month to know whether they were under £750 or over £750? There might be a number of cases of people getting stuff from wholesalers under different names and it would be difficult to keep a check on them. Is there any provision in the Bill for them?

Mr. L'Estrange

I asked that. I asked what will happen if he bought half a dozen things from one and a dozen from another. If we have inflation and money loses its value, can you change this by order or must you come back to the Dáil or what happens? Say money loses its value, how do you meet that situation?

Dr. Ryan

With regard to Senator Hogan, it is laid down in the Bill that a person who exceeds £750 a month for two months in succession—we do not say one month because that might be casual business or a big order—but over £750 for two months, he must register. The inspector of taxes will be in charge of this and those people are fairly good judges of matters of this kind. If they have a suspicion that a person is exceeding £750 over a long period, they may require him to make a return showing where he was getting goods and they would check with the wholesaler. Whether there was more than one wholesaler or not it would be all the same.

In reply to Senator L'Estrange, I have power by order to mitigate anything in the Bill but I have not power to make anything worse. I could do what the Senator says but I would not be inclined to. It would be a major matter and I think we would have to wait for another Finance Bill before I would do that.

Question put and agreed to.

SECTION 49.

Question proposed: "That Section 49 stand part of the Bill."

Mr. L'Estrange

Will it be necessary to register all persons—manufacturers, wholesalers or retailers—who for business purposes buy or sell goods or persons who provide services? There are about 40,000 retailers in the country at present and if 80 per cent are freed under this new provision there will be roughly 8,000 retailers, 5,000 manufacturers and wholesalers not to speak of the thousands of hotels, guesthouses, restaurants, boarding houses and bookies down to barbers, taxi drivers, jobbers, plumbers and general handymen. Having regard to the fact that this scheme is intended to govern retail transactions in goods and services throughout the country, is the Minister not unduly optimistic when he estimates that the cost to the State of administering this scheme will be less than one per cent of the yield? I remember the Minister for Agriculture stating that he would fill ten fields with inspectors but I think he will want a lot of inspectors now, if this tax is imposed, to collect the money. It is unfair to the traders of the country who are decent respectable people if they are to be made further instruments of collection of State revenue. They are to be unpaid tax collectors under this Bill. Senator Ó Maoláin cannot deny that.

Mr. Fitzpatrick

It is proposed to set up a register and each person will have to register. Perhaps the Minister will tell us whether any registration fee will be payable.

Dr. Ryan

No. They will not register unless they are going to pay tax so their tax will cover registration. Senator L'Estrange mentioned a few in his list who will be excepted such as taxi-drivers or jobbers—at least if he is talking about jobbers who buy cattle and sell them.

Mr. L'Estrange

No, doing handywork, carpenters and the like.

Dr. Ryan

They are included but there is a limit there, too, of £100 a month which will keep a lot of people out. A barber working on his own would not enter into it because he would not be earning that much as a rule. That will exempt a lot of those people. With regard to extra staff, we are getting in an electronic computor. I do not profess to understand it but I am told that it will do nearly all this work, and the Revenue Commissioners estimate that we will not need more than 100 extra people as far as this Bill is concerned.

Mr. L'Estrange

We shall see.

Question put and agreed to.

Section 50 agreed to.

SECTION 51.

Question proposed: "That Section 51 stand part of the Bill."

Mr. McAuliffe

There is something introduced in this section that is objectionable, and that is that goods brought into the shopkeeper's own house will be brought in at retail value for tax. That is something that never happened before. Many people have started shops and get nothing out of it except the goods at wholesale. I do not think the owner of the shop should be asked to pay on the retail value, but on the wholesale value.

Dr. Ryan

The Senator has a perfect right to argue the point, but it depends on whether we think that the shopkeeper should get off with a little less tax than another consumer, whether he should pay tax on the wholesale price or on what is called the current retail price, that is his retail price whatever it may be. This will not be gone into every week. What usually happens here with those who pay income tax is that there is an agreement made between the inspector of taxes and the shopkeeper and that agreement will hold for some time. If we take a grocer's shop, which is the type of shop where most would be taken for the household, the Inspector will agree with the shopkeeper that he will put down, say, £4 or £5 a week, whatever he thinks is fair, for the shopkeeper's own goods from the shop and that will cover the matter.

Mr. Fitzpatrick

Am I to understand that at the moment at any rate it will not be an offence under the regulations which it is proposed to make for a shopkeeper to fail to keep records of his drawings, so to speak, because what this means is goods taken from a grocer's shop by the owner for his own use, which would be regarded as part of his drawings from the business?

Dr. Ryan

That is right.

Mr. McAuliffe

As the Minister has told us, heretofore in small businesses or even in bigger ones where books have not been kept, the inspectors have accepted an estimate. Will that continue to be the way?

Dr. Ryan

Yes.

Mr. Fitzpatrick

I can see under the next section of this Bill elaborate provisions made for all sorts of regulations, and it could happen that one of those regulations would compel a person to keep records of his drawings and that if he did not keep them he would be guilty of an offence and could be prosecuted. Is it clear that there will be anything like that introduced?

Dr. Ryan

We have to give the inspectors power to insist on records being kept if they think it is necessary. I know a colleague of mine, a doctor, who had not any more complicated records as regards income than I have but he was compelled by the Revenue Commissioners to get audited accounts. They did that because they had some trouble with him. If they have trouble with a shopkeeper they may insist on him keeping more records than the ordinary shopkeeper, but in 80 or 90 per cent of cases the shopkeepers will be making an honest estimate of their sales and there will be very little trouble given to them with regard to keeping records.

Mr. Fitzpatrick

If the Minister were to issue a general direction like that to inspectors of taxes it might be helpful, but it is a fact that under the regulations all-embracing regulations could be made which, if strictly enforced, would make the life of a businessman a hell upon earth.

Dr. Ryan

That is right.

Mr. Fitzpatrick

The Minister will agree that if all the proposed regulations he can make under Section 52 are made and are strictly enforced the lot of the shopkeeper would not be happy.

Question put and agreed to.

SECTION 52.

Question proposed: "That Section 52 stand part of the Bill".

Mr. McAuliffe

I see that under this section stamps may be affixed. Will it be provided that if a shopkeeper decides not to pay the tax at source he could pay it through stamps? I should like to know if it will be possible where a person buys 10/- worth of goods to affix a stamp for 3d on the receipted bill, or where he buys a £'s worth to put on a 6d stamp and let him have no further records.

Dr. Ryan

I am afraid that the Senator is reading this as if the retailer will put a stamp on the invoice he is giving to his customer. It will not be like that. This provides that where a shopkeeper has a rather small account at the end of the month and maybe has no banking account, instead of sending a money order he may send stamps if he wishes. If he has only to pay 5/- he would put a 5/- stamp on it and that would be all right.

Professor Dooge

I might refer to a point raised on the Second Stage by Senator Cole, the question of annulment by the Dáil which comes under subsection (3) of this section? The Minister indicated in a reply on the Second Stage that in Finance Bills in the past there have been variations in practice and in many Bills there has been annulment by the Dáil alone. I should like to raise this not only in regard to this Bill but in that so far as it is allowed to be passed in this Bill we might be consolidating a precedent which might be undesirable. The position is that though the powers of this House in regard to money matters are limited, nevertheless, this House does have the duty and right which are exercised at all times to make recommendations to the Dáil on money matters. If regulations are made under any of those Money Bills a similar situation exists in regard to those regulations as exists in regard to every section of the enabling Act.

In other words, it would be only reasonable that this House, if not being given power to annul regulations under Finance Bills, should at least be given power to make recommendations to the Dáil that they be annulled whenever this House thinks fit. What is being done here is, as the Minister says, what has been done in the past and is perfectly legal, but I do not think it is in the spirit of the way in which financial business is transacted by the two Houses of the Oireachtas. With regard to regulations of this type, this House should have power to make recommendations with regard to annulment whenever the Seanad thinks it should, otherwise it is possible to put things in regulations and let them pass into law without adverse comment from the Seanad.

Mr. Sheldon

I hope I am as jealous of the rights of the House as Senator Dooge but I think he is labouring under a slight misapprehension. The difficulty in this case is that this House has not the right to make recommendations on a Money Bill except under specific circumstances. That only applies to a Bill because the Bill has come from the Dáil to the Seanad and it is duly allowed for in Standing Orders because the Bill has to go back to the Dáil and the Seanad can make recommendations.

Under Section 52, the regulations are made by the Revenue Commissioners. I cannot see how this House, because of its constitutional position, can make recommendations to the Revenue Commissioners. The powers of the House are not taken away from it in this respect. It does not really matter that the Revenue Commissioners are concerned because the power of the Seanad to recommend to the Dáil that something should be annulled exists by means of a motion, so it is only a matter of wording. The machinery already exists to recommend to the Dáil to annual anything. The Seanad can pass a motion so while it may not look very well that one House is left out of the section, in practice, it does not make any difference to the actual powers of the Seanad.

Mr. Cole

I want to support what has been said on this point by Senator Dooge. This House has the power to examine Bills and make either amendments or recommendations. These regulations will be made by the Revenue Commissioners. I wonder what is the necessity for their being made by the Revenue Commissioners and not the Minister? If they were made by the Minister, I presume the House could then make recommendations on the regulations, as is the case with other Bills. The House has power in other money Bills to examine the reports of companies.

Senator Sheldon has said we can put down a motion, have it debated here, and sent to the Dáil. We know that is a long process. Apart from that, the same could be said about any piece of legislation. It could be said: "Do not let it go to the Seanad, and if the Seanad like, they can put down a motion asking the Dáil to annual it."

We should have power to consider any legislation the Dáil has power to consider. When I use the word "consider", I include making amendments or recommendations, where they are necessary. We should have the power to consider any important piece of legislation. To my mind, Section 52 is just as important as any other section of the Bill. Senators may be experts on certain aspects of legislation and surely it was intended by the Constitution that for that reason the Seanad should have power to examine any regulation made under the Finance Bill? It has been pointed out that this has happened before but I do not remember coming across any instance of it. I feel the matter should be looked into, if not in this Bill, certainly in future Finance Bills.

Professor Stanford

I should like to support Senator Dooge and Senator Cole on this point. I would not approach it from the point of view of the rights of the House; I would approach it from the point of view of what is best for the country. There is a certain amount of knowledge, experience and wisdom in this House. It is for the benefit of the country that is should be applied in any matter of importance dealing with Government. The wisdom of our legislation may lose a little if this House has no direct opportunity of considering and recommending on these matters. I do not imagine we can make any change in this Bill, but I urge the Minister to consider, in future, whether it is not worthwhile, even on the off-chance of getting, some useful and sensible information from us, making provision that matters of this kind should come before the Seanad. The country may lose something if they are not laid before the Seanad.

Mr. Fitzpatrick

I support the attitude of Senator Dooge, Senator Stanford and Senator Cole on this issue. I fully support the attitude that this House has the right to rescind regulations. Under Section 52 (1) (f), the Revenue Commissioners may make regulations providing for:

the production to and inspection and removal by persons authorised by the Revenue Commissioners of invoices, receipts, books, records, accounts and other documents for the purpose of satisfying themselves as to whether tax has been duly paid.

As I understand it, the collection of this tax will be largely a matter for the inspector of taxes. Am I to take it that the inspector of taxes, being human, will be at liberty to use information which he may get under a regulation made under paragraph (f) for the purpose of determining the liability of a business man to income tax? If that is so, it seems to me that it is putting the business community in a worse position regarding income tax than the rest of the community. The inspector of taxes in dealing with the accounts of a professional man will not have the right to invoke regulations such as I have mentioned, whereas if he is dealing with the accounts of a business man he will be able to have regard to the information which he will extract under a penal regulation made under paragraph (f) of Section 52. If that is so, it is hardly in accordance with fair play or justice.

Dr. Ryan

I have looked back over the history of regulations being laid before the two Houses and I find that in some cases the Seanad was mentioned as well as the Dáil. I was trying to think how the draftsman would draft it. He would have to say: "...laid before each House of the Oireachtas ..." and then he would have to say: "It can be annulled by the Dáil, or the Seanad can make recommendations". I presume that if the draftsman tried it, he gave up in despair and said he could not draft it any better than it is. As I said before, I certainly have no desire to take from the powers of the House. I can only make a note of it, and see what the draftsman thinks of it, if he is the proper person to advise, and see if in future we can arrive at an acceptable solution to the problem.

These regulations are made by the Revenue Commissioners, not by the Minister, which is rather unusual in these Bills. I should say that it is not unusual in Finance Bills for the Revenue Commissioners to make the regulations although in Bills generally it is the Minister who makes them as they deal only with procedure and administration. That does not take from the point made by Senator Dooge, Senator Cole and Senator Stanford that this House may be as wise in these matters as the Dáil, but this House has not power to annul.

With regard to Senator Fitzpatrick's point, the inspector will be the same inspector. He will be dealing with both income tax and turnover tax and I suppose we can hardly expect him to forget what he has learned when dealing with turnover tax when he is dealing with the other matter.

Mr. Fitzpatrick

Does the Minister not agree that this will put the trader in a less favourable position regarding income tax than the professional man?

Professor Stanford

I do not think the draftsman should decide this. If the Minister decides it is the right thing to do, he tells the draftsman to find the proper formula. If the draftsman does not do so, he is sacked and the Minister gets another draftsman.

An Cathaoirleach

The Chair feels this discussion is not in order.

Dr. Ryan

I did not say that the draftsman should take the decision. I would like a report from him.

Question put and agreed to.

Section 53 to 57, inclusive, agreed to.

SECTION 58.

Question proposed: "That Section 58 stand part of the Bill."

Mr. Fitzpatrick

This is a section which provides penalties and I should like to refer again to the point I made recently about proceedings in these cases being on indictment. Where the penalty exceeds £100, it will be triable on indictment by judge and jury.

Dr. Ryan

As far as I understand the law, that is correct.

Mr. Fitzpatrick

Again, I would suggest that in the interests of the proper administration of the law and with a view to avoiding unnecessary work for the courts, this offence should be made a summary one.

Question put and agreed to.

Sections 59 to 106, inclusive, agreed to.

FIRST SCHEDULE.

Professor Dooge

I move recommendation No. 5:

Between lines 26 and 27, page 66, to insert "Sales of bread, butter, tea, sugar, milk, flour and meat."

The purpose of this recommendation is to remove from the scope of the turnover tax certain commodities, namely, bread, butter, tea, sugar, milk, flour and meat. It was suggested during the Second Stage debate in this House that there was an element of dishonesty about the opposition to the turnover tax because nobody would die of starvation as a result of it. I want to make it clear, once again, that we object to this tax and to any tax put on food. We feel that this opposition is justified and that we do not think it is necessary to wait until a coroner's jury returns a verdict of death from starvation before we oppose such a tax in this House.

We believe this tax is fundamentally bad and we believe that no adjustment of social welfare benefits will ever compensate for it. The Minister has repeatedly put forward the argument that increased social welfare benefits will more than compensate the recipients for this two and a half per cent increase. If we take the position of the social welfare beneficiaries now as compared with 1st November next, when this tax comes into operation, we shall find that they will not be compensated. There has been an increase of over five per cent in the cost of living since the last time social welfare benefits were increased. I do not know what increase there will be between now and the beginning of next year, apart from the inevitable increase in the cost of living due to the imposition of this tax on food.

The position is that those who oppose the introduction of this tax consider the inclusion of essential foods as particularly deplorable. Even those who accept the Government's thesis that the turnover tax is unavoidable are disturbed at the inclusion of essential foods. This final extension of the tax to cover essential foods is objectionable not only for what it is doing but also because we believe the Minister has not proved the necessity. We believe it was away back in the Government's investment policy that the decision to impose this tax on food was made.

The Minister says he has no alternative. We believe if the Government's investment programme had been more carefully carried out, this would not have arisen. Nobody on this side accuses the Minister of taxation for taxation's sake, but I am afraid there is a very dangerous tendency among the Minister and his colleagues to indulge at times in investment for investment's sake. The Government's capital programme has been argued always on its size. We hear about how much is invested in this and that, but we hear very little about the merits of the proposals and about the criteria on which these proposals are judged. For this reason, we believe the Government are particularly open to criticism on this point.

If we take the Third Report of the Commission on Income Taxation, where they discuss the advantages and disadvantages of a purchase tax, whether at wholesale or retail level, we find, when we examine the advantages they cite and apply them to food, that they become very hollow indeed; and when we take the disadvantages and apply them to food, we find these disadvantages become greatly magnified. If we take the list of advantages and disadvantages given in page 30 of the Report, we get, first of all, at A:

The person who pays a tax as part of the cost of an article is not usually as conscious of the tax as he is of income tax the amount of which is set out on a demand note or pay slip.

There are many people in this country who never were conscious of income tax but who will be extremely conscious of the effect of this taxation on food from 1st November next. By placing it on essential foods, which is unavoidable expenditure, it means these people are certainly not going to illustrate this advantage.

Advantage B is:

A purchase tax, unlike income tax, allows an option of spending either on taxable articles...

or on alternative non-taxed articles. But there is no alternative to expenditure on essential foods. On what non-taxed article can a person spend as an alternative to milk, bread and sugar? This supposed advantage vanishes utterly when food is included.

Advantage C is:

There is less scope for evasion of purchase tax than income tax.

This advantage certainly holds. There is no scope whatever for the evasion of the tax on food. When people are making out their family budgets, they can cut down on clothes and many other articles, but food they cannot cut down. The parents of this country will bear this tax on food for their children's sake, but they should not be asked to do so.

The final advantage is:

A purchase tax is a flexible instrument for effecting changes in social and economic policy.

It is as well it is a flexible instrument, so flexible, indeed, that this tax on essential foods can be removed as quickly and as easily as possible. Indeed, we all look forward to that being done.

If we look at the disadvantages listed, we see these are all magnified when we consider them in relation to food. The first is that such a tax would be regressive. This is discussed at great length in the Report. Howover, they do not bother to discuss food at all, because they never believed any Minister for Finance would tax food. The whole discussion is on commodities other than food. Is there any doubt that a tax on food is the most highly regressive tax of all? This is unavoidable expenditure. Food is the item that bulks as a higher proportion in the budgets of the poor than in the budgets of the rich.

Another disadvantage listed is that the tax will be inflationary. What could be more inflationary than a tax on food which cannot be avoided? The objection to this tax is not that anyone is going to starve but a fundamental objection that, by including food, the Minister has imposed hardship in an area in which it can hardly be borne. The Minister has shown great flexibility in making exceptions and in introducing devices to cover special cases. Surely here is one thing he could use his imagination on? It is no defence for him to say he does not like doing it but that he has no way out. We agree he does not like doing it, but we believe he has failed in his job by not being able to find a way out.

Professor Jessop

I should like to support Senator Dooge. There is an impression generally current that the people in this country have more than enough to eat. A survey was done by the Medical Research Council in 1947-48. It showed there was a very high level of food intake in the general population. While that may be still generally true, there is definite evidence that sections of the population, not inconsiderable either in numbers or importance, are not in this happy state and that they will be very definitely adversely affected by the increase in the cost of the more essential foods.

I am thinking particularly of the evidence I know to exist of the very high incidence of anaemia in adolescents and pregnant women in Dublin. All the maternity hospitals know this very definitely, and our studies into these problems have completely confirmed the knowledge they have clinically. This affects not only the women concerned, but the children they are bringing into the world. We have in this town a higher instance of congenital deformities of the nervous system than exists anywhere in which accurate records are kept. At the moment there is no definite evidence as to the cause of it, but it is not improbable that malnutrition or defective nutrition has a good deal to do with it. These conditions lead to expenses in various directions. Productivity is bound to be reduced if you are not feeling well or if you are undernourished. Illness occurs which leads to hospitalisation and expenses are incurred in the community which may go a fair length towards offsetting the amount of money collected under this tax. I wish to support Senator Dooge in this recommendation.

Mr. L'Estrange

For the first time in the history of this State, an Irish Government propose a tax on bread, butter, tea, milk, flour, sugar, meat and all the other necessaries of life. We could bring our minds back to the promises made by Fianna Fáil away back in the past, 1950.

Tomás Ó Maoláin

Do not start that again.

An Cathaoirleach

The Senator may not go into matters dealt with on Second Stage. He must concern himself with the recommendation.

Mr. L'Estrange

I am concerning myself with the recommendation and the promises the Government made as to the maintenance of subsidies. We know how they promised in the past to retain the subsidies on food.

An Cathaoirleach

The Senator will have to concern himself with the present and this recommendation.

Mr. Fitzpatrick

Surely the Senator is entitled to make a case for the exclusion of the commodities mentioned in the recommendation?

An Cathaoirleach

Quite.

Mr. Fitzpatrick

With respect, I submit that is what he is doing.

An Cathaoirleach

I am afraid not. However, Senator L'Estrange, to continue.

Mr. L'Estrange

The Government have no mandate to impose this additional taxation on the necessaries of life, especially when we take into consideration the promises they made in the past and are making even at present. They are speaking about moving to the left. I am surprised that a Party who are supposed to be moving to the left are putting the same taxes in this Budget on bread, butter, tea, milk, flour, sugar and meat, on the necessaries of life, as they are putting on the man who can buy caviare, gin-and-it, a fur coat or a second car for his wife. That is what the Government are doing in this Bill.

We differ from Fianna Fáil and people will see the difference between the two Parties. We believed in the past that subsidies should have been maintained in the interests of the poor people. We have never taxed food; we have never taxed the necessaries of life. As a matter of fact, the inter-Party Government in 1954, when they came back to power, took 5d. off the lb of butter. Fianna Fáil replaced it and then increased it by 5d. We believe that necessaries should not be increased in price. The Minister has told us and will tell us that the 2/6 increase that has been granted will cover the increases in the cost of the necessaries of life. We all submit that is completely wrong, that it will not cover them.

In any case, last year in the Dáil, Deputy Sherwin, who supported the Government, then stated that he had been given a categorical promise by the Government when he looked for a 5/- increase for the old age pensioners and the widows and orphans. He got an increase of only 2/6 and when he was taxed in the Dáil as to why he accepted that, he said he was given a promise that the extra 2/6 would be given next year. This is the next year he spoke about at that time. If it is the 2/6 that was promised to Deputy Sherwin and if the cost of living has increased since then, as we all know it has, how can the Minister claim now it is enough to cover the unfortunate people for the increase in the cost of living which this undoubtedly means?

Éamon Ó Ciosáin

Senators opposite who have spoken on this have entirely exaggerated the effect of the First Schedule, under which certain activities are exempted from this tax, on the poorer section of the community. Senator L'Estrange has tried to persuade us that the increased social welfare benefits will not compensate the poorer sections for the tax on food. He is quite wrong in that. They will more than compensate them and, furthermore, will benefit nearly half the population of the country. He shows great concern for the poorer section of the people but we know exactly what his colleagues did in the past for the poorer section of the community. I do not propose to go into that now but merely to say that their objection to this Schedule is entirely unrealistic.

Mr. McAuliffe

I am in full agreement with this recommendation by Senator Dooge. It is the most important recommendation made so far, in view of the fact that the Government have apparently decided that the turnover tax is to become a reality. As Senator L'Estrange said, the inter-Party Government subsidised food. At the present time, we are subsidising food in England and every other country in the world to which we export food and yet at home we tax the food of our own people.

I teach in a rural school to which children come at 8.30 in the morning and from which they do not arrive home until four or 4.15 in the afternoon. I have never seen those children eating a ham sandwich at school. Nine out of ten of them belong to workers' families who have meat about once a week. They may have a couple of sausages or something like that for the rest of the week but in a worker's house, the main food is butter, bread, tea and sugar. I cannot understand how any Government could bring themselves to tax food in those circumstances, in view of the fact that a few years ago all these items were subsidised.

I doubt very much if the social welfare benefits will compensate for the tax on food items but I do not see any great benefit in giving a half-crown, with one hand, and taking it back with the other. It is my opinion that increases in social welfare benefits should be given in order to improve the standard of living, not just to keep the standard of living as it is. For example, when we collected an extra £2 million or £3 million from the people in taxation we gave 2/6d. Now we are collecting £11½ million extra and we still give 2/6d. It does not seem to add up.

Another matter the Minister is not worried about is the control of prices. As he said, he does not care where the tax is collected as long as they get it, and he no longer stands for control of prices. If he wants a wage pause as he asked for in the White Paper and still wants this tax but is not prepared to control prices, he is going to start something new in this country in the line of very strong agitation for big wage increases. I have no doubt that there will be an all round increase in the cost of living of at least five per cent in November. It will be impossible for shopkeepers to collect tax on these goods unless they overcharge. That is going to be difficult but they will have to overcharge. Take a bottle of milk which costs 6½d. It will go to 7d.

Mr. Lahiffe

They would never do a thing like that.

Mr. McAuliffe

They must do it if they are to live. The result is that you will have the round nine wage increase. We have been accused of being concerned only with the problems of the shopkeepers but we are very much concerned with the problem of the consumers and I think the Minister should seriously consider the recommendation made by Senator Dooge.

Dr. Ryan

Just one little historical correction: Senator L'Estrange said that no Government taxed food. He said they never did it, but in the first Budget we brought in in 1932, we took a tax off sugar. Therefore this is not the first time that food was ever taxed in this country.

Mr. L'Estrange

There was no tax on home-produced sugar.

Dr. Ryan

Does that make a difference?

Mr. L'Estrange

It makes a great difference.

Dr. Ryan

By taking off the tax, we made the price go down by a penny a lb.

Mr. L'Estrange

It was done because that was the time the factories were white elephants.

Dr. Ryan

They went on to a better stage under us.

Mr. Fitzpatrick

Does the Minister think the Government were wrong in taking off that tax?

Dr. Ryan

No.

Mr. Fitzpatrick

Is he wrong then in what he is doing now?

Dr. Ryan

Senator L'Estrange was wrong in saying that it was never done before.

Mr. L'Estrange

That was foreign sugar.

Dr. Ryan

No; Irish sugar was taxed.

Let us get back to the 2/6d. on the social welfare benefits of 35/-. If the tax is 6d. in the £, the amount to be paid on 35/- is less than a shilling so 2/6d. would be a very good cover for that—more than a cover. Children are getting about a shilling a week on average. That should cover expenditure of £2 on each child. Senators will admit that a working man with five or six children cannot possibly spend more than £2 on food for each child so they will be covered also. We have to admit therefore that the compensation in social welfare benefits is ample to cover increased costs as far as they are concerned.

I have been arguing since this tax came in that the most desirable tax of this kind is a tax at retail level because it gives the highest possible yield to the Exchequer at the smallest possible cost to the consumer. Obviously, if it were put on at a lower level, it would have to be higher in order to get the same amount of money. Wholesale prices are likely to be 18 per cent lower than retail prices and if the tax were put on at manufacturers' or wholesalers' level, margins would be increased up the whole way so the consumer would pay a good lot more in order to produce the same amount of money.

Arrived at the conclusion that a retail tax is the most desirable type of tax in this particular case, we have, I think, to come to the next conclusion that it is also necessary, or, if not, necessary certainly most desirable, that it should be on a broad basis, that everything sold by retailers should be taxed. For one thing of course, it would be almost impossible to check on retailers' sales if a large amount of goods were exempt and, secondly, the tax would have to be higher.

It was suggested by the Commission who examined this that food and clothes should be exempt. If they were exempt, I calculate that the tax would have to be six per cent, not 2½ per cent, and that would be a high tax on many other articles as well as making it very difficult to collect.

I do not think I have any more to say. We have gone over the ground so often that I would only be repeating myself if I said any more.

Mr. McAuliffe

The Minister has said that if food and clothes were exempt, there would have to be a tax of six per cent on other things. If food were excluded, however, would he have any idea what the percentage would be? We did not ask for clothes.

Dr. Ryan

About double—about five per cent.

Mr. McAuliffe

So clothes would bring in only one per cent?

Dr. Ryan

Roughly, that is the case.

Mr. Fitzpatrick

I think this tax on food will affect the cost of living considerably. At earlier stages of the debate on this proposed tax, there seemed to be some doubt whether it should be borne by the consumer or by the trader, but at later stages it became perfectly clear that the Minister accepted that the trader would pass the tax on to the consumer. If the trader is to indemnify himself completely against this 2½ per cent tax, he will have to add more than 2½ per cent to the cost of commodities such as food, clothing, et cetera. If he adds 2½ per cent that becomes part of turnover and he pays tax on that 2½ per cent. To indemnify himself, he must add considerably more than 2½ per cent.

The Minister at some stage stated that competition would see to it that high charges were not imposed as a result of this tax but the Minister is aware, I am sure, that in many parts of the country, there is really not much competition between traders. Because population has fallen to such a degree and there has been so much emigration from rural parts of the country, there are many little villages and crossroads where there is only a one-man shop. If that one-man shop at the village or crossroads accepts the invitation—that word is perhaps too harsh—the licence of the Minister to pass on to the public, he will certainly do so and to indemnify himself completely: instead of increasing by 2½ per cent, he will make a substantially higher increase in the cost of food. Then bang goes the cost of living and all will come for higher wages.

Tomás Ó Maoláin

The bogeyman.

Dr. Ryan

Is that not assuming that the shopkeeper without any conscience will put up prices to any price he can?

Mr. Fitzpatrick

He will indemnify himself by adding more than 2½ per cent.

Dr. Ryan

If he does increase by more than 2½ per cent, he is doing it according to his conscience and if he has no conscience, why does he not do it now.

Mr. Fitzpatrick

To indemnify, he must increase by more than 2½ per cent.

Recommendation put.

The Committee divide d: Tá, 14; Níl, 29.

Tá

• Brosnahan, Seán.
• Carton, Victor.
• Davidson, Mary F.
• Dooge, James C.I.
• Fitzgerald, John.
• Fitzpatrick, Thomas J.
• Jessop, W.J.E.
• L'Estrange, Gerald.
• McAuliffe, Timothy.
• McGuire, Edward A.
• Mannion, John.
• Prendergast, Micheál A.
• Ross, J.N.
• Stanford, William B.

Níl

• Boland, Gerald.
• Brady, Seán.
• Brennan, John J.
• Browne, Seán.
• Cole, John C.
• Connolly O'Brien, Nora.
• Farrell, Joseph.
• Fitzsimons, Patrick.
• Flanagan, Thomas P.
• Hayes, Seán.
• Healy, Augustine A.
• Hogan, Daniel.
• Killilea, Mark.
• Lahiffe, Robert.
• McGlinchey, Bernard.
• Mooney, Joseph M.
• Nash, John Joseph.
• Nolan, Thomas.
• Ó Ciosáin, Éamon.
• Ó Donnabháin, Seán.
• Ó Maoláin, Thomás.
• Ó Siochfhradha, Pádraig.
• O'Sullivan, Ted.
• Ruane, Thomas.
• Ryan, Eoin.
• Ryan, Patrick W.
• Ryan, William.
• Sheldon, William A.W.
• Yeats, Michael.

Tellers: Tá, Senators Fitzpatrick and L'Estrange; Níl, Senators Farrell and Ó Donnabháin.

Recommendation declared lost.

Tomás Ó Maoláin

No doubt about that one.

Mr. L'Estrange

The same as Dublin North-East, only the reverse this time—two to one.

Éamon Ó Ciosáin

That is a clear decision.

Mr. Ross

I move recommendation No. 6:

In line 21, page 67, to delete "otherwise than in connection with" and substitute "including".

If a man who is purchasing a motor car or a washing machine does not pay down his own money, he has to borrow the money from some source or other. Should I wait for the Minister?

An Leas-Chathaoirleach

This general conversation must cease.

Mr. Ross

If a person wants to buy a motor car, a washing machine or a wireless set, with moneys which are not his own moneys, he has various ways of raising the money. He can go to a bank and borrow it; he can go to a moneylender and borrow it; or he can go to a finance company and get the article on hire-purchase or credit. In the First Schedule of the activities exempted from the turnover tax, there is a specific exemption of banking services. Similarly, there is a specific provision for the exemption of moneylending, but after moneylending, there is added: "...otherwise than in connection with hire-purchase or credit-sale transactions."

Possibly the reason the Minister made an exception of hire-purchase and credit-sale transactions is a legal reason. Possibly the reason was that in the Hire-Purchase Act, 1946, there is a definition of "hire-purchase price". It is defined as being "the total sum payable by the hirer under a hire-purchase agreement in order to complete the purchase of the goods to which the agreement relates..." In other words, the hire-purchase price is not merely the price of the article, but the price, plus the hire purchase charges of the finance company. It was defined in that Act purely for the purpose of arriving at a simple definition. It is a legal definition, but I submit it has no real relevance outside that Act. It is not the real price of the goods.

The real price is the cash price, plus nothing else. The hire-purchase charges are added on afterwards. It is the same as if a man goes into a bank, borrows money, puts down money for the real price, and pays the bank interest. It is the same in a moneylending transaction. There is no difference between any of the three transactions. Yet, for some reason—it can only be the legal reason of the definition in the 1946 Act, I think — the exemptions in this Bill differentiate between articles bought with money which is not, initially, at any rate, the purchaser's money.

It seems to me that it is an unfair distinction. It is unfair, in the first place, because it puts the hire-purchase company in an unfair position when competing against a bank or a moneylender. Ultimately, there is no real difference between the transactions. It is also unfair because it puts the person who is supporting an article on hire-purchase in the position that he is paying more for goods he is getting on hire-purchase than the person who gets the same goods from a bank or a moneylender. He is paying more in tax because the tax will be passed on to the ultimate consumer. More tax is being paid on a hire-purchase or credit-sale transaction than is being paid on an ordinary banking or money lending transaction.

Therefore, I put down this recommendation to delete the words "otherwise than in connection with" and substitute "including" so that the exemption would read, as amended: "moneylending including hire-purchase or credit-sales transactions". That seems to me to be the only fair and proper way of dealing with these transactions. In the normal way, it is the poorest person who has not got a bank account who goes to a hire-purchase company, and he is the person who will be hit. He will be hit harder than the wealthier person who has a bank account and can finance the purchase of a car, a washing machine or a wireless set, by borrowing from his bank.

Dr. Ryan

It is a bit difficult to enter into a legal argument with the Senator. So far as I understand, the position is that the hire-purchaser hires an article from the retailer who eventually sells it to the purchaser. Strictly speaking, in that case, we should regard the hire-purchaser as the retailer, and charge taxation accordingly, but for convenience as between the retailer and the hire-purchaser, it was decided to charge tax on the retail sales from the retailer to the hire-purchaser, and then tax the hire-purchaser on the added value, as it were, of the goods. That is fair and in line with the general principle underlying the turnover tax. I think it is different from borrowing money from a bank or a moneylender.

There is one analogy I should like to give. If a retailer has an article for sale, cash down, he says: "The price is so and so, and if you want credit, it will be more." The retailer may well say the cash price is £100, and if a person wants to pay for it over 12 months, it will be £110. In that case, we have no hesitation in charging the tax on the £110. That would be the cash received by him and it would, therefore, be taxable. It would be very much the same type of deal in respect of a retailer charging £110. He could pass the article on to the hire-purchaser for £100 and they could sell it to the eventual purchaser, say, for £110 in 12 monthly instalments. I am not sure whether that would be the right price but let us say that was the position. Therefore, we are logical in the way we approach this and say that the tax will be put on the hire-purchaser at whatever he gets for an article, less what is already paid by the retailer.

Mr. Ross

With great respect, I think the Minister misunderstands the actual position at the beginning of the transaction. As I understand it, the retailer sells the article to the hire-purchase company, and at that point there is a sale. The hire-purchase company says to the hirer: "You may hire this article with the option to purchase it," at certain monthly rates which are part of the repayment of the original price, part interest charges and part services provided by the company. There is an actual sale to the hire-purchase company but there is no sale to the purchaser. There is no question of an element of hire-purchase at that point until the hirer gets it with the option to purchase.

There is a distinct difference between that position and the position where the retailer says: "You may buy your motorcar or washing machine or wireless set at a certain price." The retailer in fact receives £110. In a hire-purchase transaction, the retailer receives the same price as he would receive if he were selling for cash. The transaction is no different from a banking transaction or a moneylending transaction.

Dr. Ryan

I agree with the Senator. It is a very difficult question to decide but, in so far as I have discussed the matter with the Revenue Commissioners and with my Department, I have agreed that this is the logical way to do it. I am still open to persuasion in the matter and I am quite prepared to discuss it again with the hire-purchase companies which I did meet on one occasion and probably will meet again.

Mr. Ross

Can the Minister give me any indication of how open his mind is on this particular point? If we allow it to go through at this point, hire-purchase will not be an exemption in the Schedule.

Dr. Ryan

What I said was that as far as I have an understanding of this problem, which is a very difficult one, and in so far as I have discussed it with the Revenue Commissioners and my Department, I think I am right in saying that we must tax the hire-purchase company on the selling price, less what is already paid. I said I was quite prepared to listen to further arguments on this matter and, if I am convinced the Senator is right, I have power to make concessions where I think concessions are warranted.

Mr. Ross

In that case, I am prepared to withdraw the recommendation.

Recommendation, by leave, withdrawn.

Mr. Ross

I move recommendation No. 7:

To add at the end: "Provision of services and entertainment provided by the Royal Zoological Society of Ireland."

I set down this recommendation because it appears to me that the Zoological Society stands in a peculiar position in relation to our cultural life. It is a national asset. We have only one Zoological Society and it seems to me that it should be wholly exempt from the turnover tax. Since I put down the recommendation, it has been whispered to me that the Minister is prepared to make some concessions but I would like to ask him if he would consider making a concession to the Society in respect of all its proceeds. I had a look at the accounts of the Society for last year and it is calculated that if all the proceeds were taken into account for turnover tax, there would be about £2,200 payable on receipts from members' subscriptions, entrance charges, services provided by the restaurant and so on.

On the other side of the scale, the Government already grant £1,500 a year to the Zoological Society through the Department of Education and there has always been an annual grant from that Department. They appreciate it to be an educational and cultural asset. It seems pointless to me to charge turnover tax on any portion of the proceeds of that Society and then find an appeal made to the Department to have the grant increased. Would the Minister consider giving an assurance to the House that he will exempt all the proceeds of the Zoological Society from the tax rather than that they should be broken down into parts which would be liable to tax and parts which would not be liable?

Professor Jessop

I support Senator Ross on this recommendation. I have the honour to be a member of the Council of the Society and I know we put a great deal of work voluntarily into making the gardens a success. The Zoological Society is on a par with a number of other institutions in the country, such as the National Museum, the National Gallery and others which have a very important part to play in the educational system of the country. These other institutions are run by the Government or by some local authority and, therefore, the cost of running them falls entirely on the State; but in the case of the Zoological Society, the only charge which falls on the State is the £1,500 grant which I believe was increased to this figure this year for the first time. It was usually £1,000. This is the sum which is produced yearly by the State for the Zoological Society and it is the only extent to which the State is at a loss for the enormous educational value of this organisation to children and adults.

The Zoological Gardens have a very important value where the tourist traffic of the country is concerned. A very large number of people come there who are visitors to Dublin. They enjoy the gardens and they are part of our tourist traffic so that the Society is also contributing to that extent. The Department of Education, in conjunction with CIE have been organising trips from various parts of the country, from the west and south-west, to bring school children in large parties to the gardens.

The income of the Society comes mainly from members' subscriptions and from catering which is done in two sections, the provision of lunches and snacks for visitors and the dances and entertainments which are run in the hope of producing some profit which is ploughed into the income of the Society and goes towards the purchase of animals and the payment of staff. If we cannot make ends meet, we will have to ask for an increase in the grant given by the Government or cut down on some of the activities of the Society. Cutting down on the activities of such a Society is a sort of folding-up process because if you cut down it means that fewer people will come to the gardens and so the income will continue to decrease.

I support Senator Ross in putting it to the Minister that this organisation is in a special position and that it is doing work of sufficient importance to warrant its receiving special consideration in this regard.

Professor Dooge

I should like to put it to the Minister, in support of the recommendation, that if the Royal Zoological Society of Ireland did not exist, it would be necessary for the State to institute something of a similar nature. If the Society were to collapse, the onus would fall on the State to fill the gap. It should be treated as something that is of an educational nature and something that has a national purpose. The Dublin Zoo has a reputation which extends far outside the country and for that reason, I support Senator Ross's recommendation.

Mr. Fitzpatrick

I also support the recommendation. I should like to say that the imposition of the turnover tax on the takings of the Zoological Society demonstrates, if any demonstration were needed, the absurdity of this tax. The Zoo, as has been pointed out, is an educational amenity. It is a tourist attraction. It is something that is being carried on by voluntary effort. I am sure the Minister would like to exempt the Zoo from this tax. As I say, it demonstrates the absurdity of the tax. When you think that you have the takings of what is really a voluntary effort such as the Zoo, being taxed, on one hand, and food being taxed, on the other, it is very difficult to see how members on the opposite side of the House can so wholeheartedly support this Bill.

Dr. Ryan

Of course, educational activities are exempt from the tax and therefore I would have no hesitation in saying that admission charges to the Zoo will be free of tax. Subscriptions and members' fees will also be exempt but there is one reservation I must make, that is, the restaurant, because the restaurant is a trading business. It is there for the sale of food. Other restaurants are taxed and therefore I am afraid that this restaurant must be taxed, too, because if prices in restaurants go up generally as a result of this tax, it might be claimed that it was leading to unfair competition if the Zoo restaurant were exempt. I do not think there are any activities in the Zoo where the tax would apply, other than the restaurant.

Mr. Ross

Unfortunately I have not got the accounts with me but so far as I remember, the restaurant takings were about £31,000 or £32,000 last year so that the tax would be around £800. I wonder could I get the Minister to stretch his generosity? I know that it is trading but they make a very small profit, I think it was under £2,000, and if they have to pay £800 turnover tax to the Minister, they will have to come back to the Minister for Education and ask for a grant of £2,300. Could the Minister not stretch a point and be generous? It is really a very small amount of tax.

Mr. Brosnahan

I should like to support Senator Ross. The Minister has made a very generous gesture and should not spoil it for £800. The trading is designed to provide income for the Zoological Gardens and I feel he should go the whole hog and exempt the trading in the restaurant as well. The Zoological Gardens provide immense pleasure for young people. They are highly educational and the Minister should go the whole way in the matter.

Professor Jessop

Trading in the restaurant is not really to provide income. We run the restaurant primarily to enable children who have come there in the morning or early afternoon to have tea or a meal because there is no other place anywhere near the Zoo where they can get food. If we did not provide the restaurant, these children, and visitors generally, would have to go into the city to obtain food and therefore would have to cut short their visit. It is really an amenity rather than a trade.

Professor O'Brien

I should like to support this recommendation. Even if the restaurant succeeds in making a profit of £2,000, anything obtained in the way of taxation will have to be got elsewhere. Either admission fees or the annual subscription will have to be increased. I certainly would ask the Minister to consider this. This is really part of the outing and it is very hard to draw the line between looking at the animals in their cages and having tea. As an old member of the Zoological Society, I must say that the Minister might stretch a point in its favour.

Dr. Ryan

The point is that it is not easy to consider a matter like this because the restaurant is a trading concern in competition with other restaurants. It has been contended here generally by Senators that this tax will be passed on. I think that is true, that it will be passed on. I presume other restaurants in the city will be putting up their prices slightly in order to meet this tax and it will be possible for the Zoo to do the same, as far as the restaurant is concerned. I might say that although it might appear silly to say: "We will take the £800 from you and you may go to the Minister for Education and make your case," I am afraid that is the way it must be done.

Professor Dooge

The Minister said that the Society is in competition with other restaurants. It is not. The experience of everybody is that this is an amenity and a means of giving a full day's outing, particularly to children. This has been my experience. You bring children to the Zoo and they can have a full day's outing, due to the fact that the restaurant exists within the gardens. If the restaurant were to close down, it would mean the visits would have to be contracted. I would ask the Minister—possibly now in the atmosphere of this House when the Minister is tired at the end of the session is not the time to ask him—to look at this point again the next day he is feeling in a really good humour.

Tomás Ó Maoláin

Could the Senator who has just spoken tell us whether the restaurant confines itself merely to feeding people who go there or is it engaged in taking contracts for outside social functions?

Seán Ó Donnabháin

Actually, wedding breakfasts are given in the Zoological Gardens. There are members on this side of the House who would be quite as enthusiastic in support of the recommendation but the realities must be faced. There have been wedding breakfasts in the Zoo.

Mr. Carton

Is there anything wrong with that?

Tomás Ó Maoláin

The point made is that the Zoo restaurant confines itself to trading with visitors and I want to bring out the fact that the restaurant engages in outside social activities which make money.

Professor Jessop

I would say that the catering activites of the Zoo are divided into two sections: the provision of meals in the restaurant, lunches, teas and so on, for visitors who have paid at the turnstiles, and for members and the immediate guests of members. If they did not have this amenity they would have to cut short their visit or bring their sandwiches, and so on, with them. This is a recent activity. We certainly do make use of our catering activities for this other type of activity which Senator Ó Maoláin has mentioned, namely, wedding breakfasts. We have a popular dance each year and we have other dances throughtout the winter. Money is charged. Of course, there is a fee for coming to these dances and suppers and the profits there go to the society. Perhaps the Minister would care to look at these two sections of the catering activity separately. I think we would have a very strong case for the maintenance of our amenity free of this tax. I do not know what he would say about the other. We might easily have to pay a sum of money in respect of the other part to him on the tax and ask for it back from the Minister for Education.

Professor O'Brien

I suggest to Senator Jessop that the activities of the Zoo fall into three sections. He has forgotten that the large amount of catering in connection with the involuntary inmates of the Zoo will be free of tax, apparently, while the voluntary visitors will be subject to tax. That seems a little strange.

Mr. Carton

No reference has been made to the animals' weddings there.

Recommendation, by leave, withdrawn.

Mr. Ross

I move recommendation No. 8:

To add at the end:—

"Sales of books."

I put down this recommendation to add to the schedule of exemptions the sales of books—in practical support, I hope, of Senator O'Brien's suggestion on the Second Reading that the Minister should exempt books from the turnover tax.

At the end of the Second Reading, the Minister told us that, when considering the turnover tax, the two countries he and his advisers had looked at most closely were the United States and Sweden. It is interesting that both of these countries exempt books from sales tax completely. There are numerous precedents in other countries for the exemption of books from sales tax or turnover tax—Norway, Switzerland, Finland and recently Ceylon which has brought in a 10 per cent sales tax has exempted books. So has Canada. Even during the very worst period of the war, when the British introduced a purchase tax, they put no tax on books.

I believe that one of the difficulties which the Minister's advisers have in relation to the exemption of books from this Schedule is that it would be difficult to administer an exemption for books in a store which was selling, say, a number of other commodities besides books. I do not think that should present too much of an administrative difficulty.

Even the First Schedule itself has a number of cases in which the trader must make out separate accounts. Therefore, I should like to ask the Minister to consider this last point. It concerns me very much that in an age when people are listening to the wireless, are going to the cinema, and are constantly looking at television, ideas are planted in their minds without their having to make any real mental effort or, if they make it, it is very much more difficult for them to do so than if they read.

However small the amount of a 2½ per cent tax on the sale of books, it is to me a tax on reading and learning. My feeling is that apart from the reading of novels, fewer books are being read today and there is a greater temptation not to read books than there was ever before. I, therefore, ask the Minister to exempt books from this tax. If he does not feel he can exempt books as such from the tax, perhaps, he would consider exempting educational books because the cost of educational books is constantly rising. Even for the primary school, the cost of books is something which parents have to bear. However, when it gets to the stage of technical education, university education and professional education, the cost of text books increases with almost every month that goes by.

The Minister may say that those who cannot afford books can go to the public libraries. I do not believe this is so. In my experience, I have never found that going to public libraries constantly for books is practical. If you are a student, you must have certain books beside you. All books for post-secondary education are very expensive indeed. Therefore, I ask the Minister to reconsider the matter along the lines of this recommendation.

Professor Stanford

I should like to support this recommendation from the point of view of school books and text books. If this recommendation is not accepted it means that would-be scholars, and scholars, are paying a double taxation here in a sense. They have to pay for their food and everything of that kind and also for books that the normal person in the country will not be reading. It is putting a tax on learning for school books and text books.

As a matter of practical politics, I can see that there is very little chance of changing the point at this stage. Therefore, I would urge the Minister to put it to the Minister for Education that, perhaps, next year he would find some means of making it easier for schools to purchase text books, particularly, and also, perhaps, universities to purchase text books. The fact is— this will come up more properly on the next Bill, perhaps—that in Northern Ireland and across the water text books and school books are free. It is a little hard when school children or parents have to pay for books in this country, which they would not have to do elsewhere, if they have to pay another 2½ per cent. There is something of a grievance here. I hope the Minister will do his best to meet it.

Éamon Ó Ciosáin

I would urge upon the Minister the importance of exempting text books and educational books for schools and colleges. I would not go as far as Senator Ross has suggested that reading books should be exempted from this turnover tax. I would confine myself to asking the Minister to consider including text books and books of educational value for schools in his list of exemptions. I think he has the power to make an Order to that effect.

Mr. McAuliffe

I would make a special appeal to the Minister at least to consider text books for primary schools and vocational schools. The sixth class boy is in the position that his books cost him in the region of 35/- to £2. If he gets the books he really requires in the sixth class, another 2½ per cent on the cost may not look big but still the difficulty is to get that amount from the parent for the child. Teachers find they get the money in dribs and drabs. They must wait for it because people find it hard to get 30/-. This morning I got a note from Messrs. Browne & Nolan telling me that orders supplied on credit after the 1st August, 1963 will be subject to 2½ per cent tax unless paid for before the 31st October and that orders supplied for cash or on credit after the 1st November, 1963 will be subject to tax.

I make a very strong plea to the Minister to do something about text books for primary and vocational schools, especially. In vocational schools we find the children of the workers or, at least, that has been the case up to now. There may be a change in the new conditions, as a result of the Apprenticeship Act and so on. These children's parents found the books were costing a lot, vocational school books costing up to £5 per year. Any addition to that would be a hardship on the parents.

Professor O'Brien

There is one particular aspects of this matter that I should like to mention and that is public libraries. Public libraries are largely financed by the Government but they spend a considerable amount of money on books and it seems very hard that they should have to pay tax on books available for the general public. I shall just give one example. There has been a certain amount of correspondence in the newspapers about the Ormonde Deeds. They were purchased by the National Library out of a very generous grant provided by the Government of £30,000. If this 2½ per cent purchase tax was applied, the purchase would cost the Library £500 more.

Mr. Brosnahan

I should also like to support the suggestion that books used in schools should be exempt from this tax. The Minister should realise that in Northern Ireland school books are free to all children at all levels of education, whereas here the only contribution made by the State is the provision of books for necessitous children, as set out in the Estimate, £5,000. If the Minister had to face the position that exists in Britain or Northern Ireland it would cost the State a considerable sum. It would be very wise to exempt school books from this tax as, obviously, if the cost of books arises any more parents will be unable to meet it and a very heavy demand will be made on the State to meet the entire cost of these books, as in Northern Ireland and elsewhere.

Dr. Ryan

I had a discussion on this matter with the Irish Booksellers' Association. My approach was that you start with the newspapers which I do not think we can claim are very educational. The same would apply to many periodicals. Then we go to the cheaper novels which are not very educational either. The difficulty is to know where to draw the line. Text books would have to be included if we were to do anything about this matter. It is much easier to draw the line in regard to the type of shop dealt with rather than the type of book. The people who discussed the question with me did not push that point, although it might have suited them. They mostly dealt with the type of book that might be regarded as educational.

I am very sympathetic to this request for exemption but I find it difficult to know how it can be done. However, I am considering it very carefully to see if we can find a way of exempting what might be regarded as educational publications, including text books, and, at the same time, not exempt publications that are not, or could not be classed with the educational group. This is difficult. As Senators know, the customs duty is applied to periodicals coming in, including newspapers. The Revenue Commissioners are required to give a permit for what may be regarded as educational and they find it very difficult to administer that particular clause. It is very hard to get agreement on what is and is not educational. I might think something was not educational and the Seanad might think it was. It would depend to some extent on our approach and to some extent on our prejudice. That is our difficulty. I assure the Seanad that I am very sympathetic in this matter and I shall see what can be done.

Recommendation, by leave, withdrawn.

Question proposed: "That the First Schedule be the First Schedule to the Bill."

Mr. Fitzpatrick

This Schedule gives a list of exempted activities among them being sales of earth, stone, gravel, sand and cement subject to such limitations, if any, as may be specified by regulation under Section 52 of the Act and sales of seeds, fertilisers, et cetera, subject to the same limitations. What has the Minister in mind? What type of limitation does he propose to enforce by regulation?

Dr. Ryan

The general policy is to exempt, first, building materials and, secondly, raw materials for farming. Fertilisers and seeds are certainly not difficult to define. The only trouble is that it would be inadvisable to give a total exemption because a shopkeeper, who has very little to do with farming requisites, might sell a very small quantity, say, a few packets of flower seeds or, perhaps, a pound or two of sulphate of ammonia for some purposes. It would not be worth while recognising that and complicating the accounts. That was the principal reason why we wanted to make some definition of the quantity that might qualify for exemption. There would be no trouble about the ordinary country merchant dealing in feeding stuffs and fertilisers. He will get exemption without question. The genuine merchant dealing in these commodities has nothing to fear. I do not yet know how this is going to be qualified. The Revenue Commissioners have discussed the matter with me on a couple of occasions but I have not got a final recommendation from them on this matter.

In the first instance, in the case of machinery, it was to be in bulk but we found that inadvisable because a very small part, such as a moving machine section, could not be used for anything else and I think we should exempt it. It is different when a person buys something which might be used for farming purposes——

Mr. L'Estrange

Such as a bucket.

Dr. Ryan

Yes, such as a bucket. A man who engages in pig-feeding might buy six buckets but townspeople going in and buying a bucket should not, I think, be exempt. There are cases like that in which some definition will have to be arrived at as to what constitutes a sale that should be exempt and one that should not be exempt.

Mr. Fitzpatrick

The bucket will have to be branded. I gather from what the Minister has said that he was afraid some shops might go into this line of business simply to gain exemption and complicate accounts?

Dr. Ryan

That is right.

Mr. Fitzpatrick

I should like to be satisfied that the intention of the Minister is not to take away exemption from a man who goes in to buy a small amount of sand, or cement, for doing some repair to his own house.

Dr. Ryan

It is plain that sand and cement cannot be used for any purpose other than building.

Mr. Fitzpatrick

That could apply to earth, stone, gravel and sand. Is there any necessity then to have a proviso for regulations at all?

Dr. Ryan

Regulations may say they are exempt without respect to quantity at all.

Mr. Fitzpatrick

Would it not be just as easy to say "the sale of earth, stone, cement and gravel", and leave it at that?

Dr. Ryan

At first, the words "in bulk" appeared in the provision. We removed those and we can now define either on quantity or price—say a pound's worth or ten shillings' worth —or not at all. We may say: "Buy as you like. There is no limit."

Mr. Fitzpatrick

To come back to the bucket for a moment, will it not be impossible to enforce that? Suppose a man goes into a shop to buy a bucket, is the shopkeeper to ask him if he wants the bucket for feeding calves, or something in connection with his trade or business, or carrying water to his private house? Is the whole thing not a little absurd?

Dr. Ryan

I do not know if buckets would come into this.

Mr. Fitzpatrick

There are other things. Take a brush. Would the shopkeeper have to find out whether he wanted the brush to sweep out the piggery or sweep up the bog?

Mr. Lahiffe

There are brushes and brushes.

Dr. Ryan

The shopkeeper will not have to put that question because, if it is done by quantity, more than one bucket can be sold free of tax. Or a shopkeeper may sell a pound's worth of buckets free of tax. In that case the shopkeeper will not have to ask any questions.

Mr. Fitzpatrick

It is pretty clear, I think, that the Minister or his advisers have not really decided how this will work.

Dr. Ryan

A great many of these things have to be worked out. These matters are being discussed with the people concerned. Farming organisations have agreed in a good many instances as to what should be done from their point of view. Traders will have to be met as well to see if it is workable as far as they are concerned.

Mr. Fitzpatrick

If that is the present state, I can easily understand why the Minister resented being so closely questioned on his Budget Statement the day he made it.

Question put and agreed to.

SECOND SCHEDULE.

Question proposed: "That the Second Schedule be the Second Schedule to the Bill."

Mr. Fitzpatrick

All through this Bill, there seems to be some difference as between motor vehicles designed for the conveyance of persons by road and other motor vehicles. Perhaps the Minister will clarify the position?

Dr. Ryan

Generally speaking, it is consumer purchases that are taxed in this Bill. Anything used for increased production will not be taxed, or anything used by a trader in his business, and that, of course, would include a farmer. Lorries and tractors are exempt. That is fairly obvious from the definition. The vehicles not exempted will be those used for other purposes.

Mr. Fitzpatrick

Will five-cwt. vans, pick-up trucks, lorries, anything that can be used for conveying goods, animals or merchandise, any type of vehicle other than a passenger vehicle, be exempt? Some of these, such as the pick-up vans and the five-cwt. trucks, are used for carrying goods, but they can also be used for carrying passengers. In order to be subject to tax, am I to take it that the vehicle must be primarily intended for the the carriage of passengers?

Dr. Ryan

That is correct. In another part of this Bill, it is stated that a registered trader is entitled to the requisites for his trade free of duty. A retail shop, for instance, would be entitled to a van free of duty because that van is required for the shopkeeper's trade.

Mr. Fitzpatrick

I was thinking in terms of the large garage proprietor with a huge turnover. He would be exempt in respect of commercial tractors, vans, and so on, and taxed on private cars.

Dr. Ryan

Anything used for passenger transport would be taxed.

Question put and agreed to.

Third and Fourth Schedules agreed to.

FIFTH SCHEDULE.

Question proposed: "That the Fifth Schedule be the Fifth Schedule to the Bill."

Mr. Fitzpatrick

This is a legal matter but its effects are far flung: this Schedule provides the type of execution order which shall be issued by the High Court or the circuit court in respect of a judgment for tax. If a person falls into arrears with his income tax, or turnover tax, presumably, and is sued in the court, and judgment is given against him, an execution order will be issued, directed in the first instance to the county registrar or sheriff. If the county registrar or sheriff is unable to collect from the defaulter because he is, or has become, a pauper, through his own fault, or through circumstances beyond his control, the county registrar or sheriff has to so certify. He sends the execution order to the local superintendent of the Garda Síochána, who is commanded to arrest the defaulter, irrespective of whether or not he cannot pay, through his own fault or because of circumstances beyond his control, bring him to Mountjoy, or some other prison, and lodge him there for six months.

I know this type of provision has been incorporated in past legislation for this type of execution order. I also know it is very seldom put into operation by the Revenue Commissioners. It was, I think, challenged recently in a case in Drogheda and it is now doubtful whether it is constitutional. It is very undesirable that one should try to get blood out of a stone and it seems wrong that an unfortunate man who cannot pay should be put in prison for six months. It is not reasonable; it is not fair. I should like the Minister's views on it.

Dr. Ryan

I must confess to the Senator I have not studied the legal implication of this document very closely. I know the power is there already because I lost a very good friend owing to that power.

Mr. Fitzpatrick

Did the Minister lose him for six months?

Dr. Ryan

I was not able to get him out, anyway.

Mr. L'Estrange

The Minister must not have had the present Minister for Justice there.

Dr. Ryan

It is not he; it is the Revenue Commissioners. I was told by the Revenue Commissioners they were taking the same powers, and I said I agreed with that. The powers are not extended in any way. They are as they were. I think they have been used reasonably. As I say, I lost a good friend, but I think the Revenue Commissioners were right in putting him in because he had the money but would not pay it.

Mr. Fitzpatrick

I feel very strongly about this, because I think it is fundamentally wrong. There is adequate machinery for dealing with a person who has the money but will not pay. There is the Enforcement of Court Orders Act. Under it a man can be brought up and an instalment order sought against him. He can be put into the witness box and cross-examined on oath. If the district justice is satisfied he is able to pay, he can order him to pay; and if he refuses, he can send him to prison for six months in respect of each instalment.

That is only if the man has the money to pay but is determined not to pay. Under this form of execution order a man can be sent to prison for six months irrespective of whether he can or cannot pay. I violently object to that because I believe it is unjustifiable. It could be a man who was liable for income tax a few years ago and did not make a return, or a man who did not make a return but did not pay. His circumstances could deteriorate and he could find himself in the position that, although he owed the money, he could not pay it. Yet that man can be sent to prison. It is placing the State in altogether a privileged position compared with the ordinary plaintiff owed money. It is placing in an impossible position the person who owes money to the State.

In a case like this it is no answer to say this power will be used with discretion or used very seldom. It is wrong, and there should be a safeguard put into the certificate to the effect that the man is able to pay but will not pay.

An Leas-Chathaoirleach

It is now after six o'clock. What does the House desire to do?

Tomás Ó Maoláin

Continue until we finish the Bill and then adjourn for tea.

Mr. McGuire

Perhaps we would continue until 6.30 and see if we could finish it.

Tomás Ó Maoláin

That would be the sensible thing to do.

Professor Stanford

I do not think we could quite agree with that form. Arrange either to finish the Bill before 6.30 or adjourn. We earnestly hope to finish the Bill, but something might arise.

Mr. Fitzpatrick

No limit should be put on Senators.

Professor Stanford

I suggest we resume in an hour or an hour and a quarter after the adjournment.

Tomás Ó Maoláin

We had hoped to do quite a lot of business today. If this is going to be the procedure, then I think we shall not do the business.

An Leas-Chathaoirleach

It is normal to adjourn from 6 p.m. to 7.15 p.m.

Tomás Ó Maoláin

If there is no prospect of finishing the Bill by 6.30, I have no objection to adjourning now until 7.15 p.m.

Question put and agreed to.

Sixth Schedule agreed to.

Title agreed to.

Bill reported without recommendation.

Business suspended at 6.5 p.m. and resumed at 7.15 p.m.