The basic purpose of the Bill is to change the Exchequer financial year and the local financial year, both of which end on the 31st March under present law, so that as from the 1st January, 1975, they will coincide with the calendar year. As a transitional measure, the Bill provides that the nine-months period from the 1st April, 1974, to the 31st December, 1974, will form a separate financial period for both Exchequer and local authority purposes. The nine-months financial period will have its own estimates, budget, accounts and local rates.
The Government have also decided in principle to change the income tax year, which ends on the 5th April, to coincide with the calendar year but provision for this is not however included in the present Bill. Having regard to the complexity of the income tax code and of the detailed arrangements which will have to be made for a transition to a calendar income tax year, it will be appreciated that lengthy preparatory work will be needed. An example of a practical aspect involved in a change of income tax year is the effect on the agreements which we have negotiated with other countries for the avoidance of double taxation. Of particular interest would be the implications for our agreement with Britain where the authorities have not yet indicated a timetable for adopting the calendar year.
Even without a change of tax year at this stage the change of Exchequer and local financial years will be in our best interests, nationally and internationally. Our own budgetary preparations will of course be facilitated since much of the economic statistics and projections which guide policy formulation is already on a calendar year basis. The finances and accounts of the original six member states of the European Communities and of the EEC Commission are on a calendar year basis so that a change to the same basis in our case will be of considerable practical advantage to us in our dealings with the Communities and the Commission.
More important still, the changeover will help in the co-ordination of the economic and budgetary policies of the member states which is an accepted aim of the Communities and is of course essential for progress towards economic and monetary union. I am sure that our changeover will be welcomed by the Communities.
Because of the very close relationship between the Exchequer and local authorities it is obviously necessary to continue to have the same timing for financial and accounting purposes. Otherwise unnecessary complications would arise which would impede the smooth operation of the work of the Exchequer and of the local authorities. The inter-relationship between local and central finances in this country is illustrated by the fact that over one-half of the moneys spent by local authorities and health boards is derived from State grants. This proportion may be expected to increase.
At this point I should like to mention the arrangements approved in respect of health and housing charges in the nine-months period. As Senators are aware, it is the policy of the Government to relieve the rates of liability in respect of health charges and local authority housing. The first instalment of easement towards this end was provided by the Exchequer in the present financial year 1973-74. As a result, local authorities needed to levy a rate for health charges and housing subsidies in 1973-74 equivalent to only 75 per cent of the rate levied in respect of them in the year 1972-73. For the transitional nine-months period from 1st April, 1974, to the 31st December, 1974, the Government have decided that the rates contribution towards health charges and local authority housing will be cut to 37½ per cent of the rate levied in these respects in the year 1972-73.
Senators will, I am sure, be interested in the implications of the proposed changeover for the business of the Seanad. As I indicated earlier, separate Estimates and a separate budget will be prepared for the nine-months period from the 1st April, 1974, to the 31st December, 1974. The Finance Bill will come about the usual time. The Appropriation Bill, 1974, will need to be enacted before the close of the nine-months period.
As regards calendar financial years from 1975 on, assuming that the budget is presented in the other House within the first couple of months of the financial year—as has been the usual timing—this would mean that the budget would be introduced in January or February each year. If there were Financial Resolutions involved the annual Finance Bill would then require to be enacted by about May or June. Following enactment of the present Bill I propose to have aspects of the change in financial year affecting parliamentary business referred to the Committee on Procedure and Privileges of both Seanad Éireann and Dáil Éireann for consideration.
As regards the effects of the proposed changeover of the local financial year on local authorities and ratepayers, the position will be as mentioned earlier that a separate rate will be struck based on the requirements for the nine-months period from 1st April, 1974, to the 31st December, 1974. The rates for the period will be payable in two parts—two-thirds on demand and the remaining one-third on the 1st October, 1974, except of course where arrangements for the payment of rates in monthly instalments apply. A substantial number of ratepayers usually have their full rates paid by the end of December. For those ratepayers there can be no difficulty about the transitional nine-months period. People who have in the past been often late in discharging their rates liabilities will have to make an adjustment but in the vast majority of cases this should be readily possible. Local authorities and rate collectors will as usual exercise discretion and will endeavour to avoid any element of hardship.
Needless to remark, local authorities must rely on the prompt payment of rates to meet their bills as they arise and to ensure that no disruption occurs in services or employment. Prompt payment of the full rates for the transitional nine-months period will improve the cash flow position of local authorities. In 1975 and subsequently such improvement can benefit ratepayers by reducing local authorities reliance on costly overdraft facilities the need for which is increased by delays in payment of rates due.
As the Bill is accompanied by an Explanatory Memorandum I do not at this stage propose to comment in detail on the individual sections of the Bill. However, I should like to mention one provision in which Senators may be interested, namely, section 5 which provides for the making of orders to effect a wide variety of consequential adaptations to existing statutes and statutory instruments. This is necessary so that the changeover to a calendar financial year for Exchequer and local authority purposes takes place smoothly. Examples of the matters to which such orders will apply are the statutory provisions relating to the making and collection of rates, the dates for the submission of estimates, demands and accounts, the apportionment of sums of money over the transitional nine-months period and the adjustment of provisions relating to rates remissions for housing and industrial buildings to compensate for the fact that in the transitional nine-months period a full year's rates remission of the appropriate amount will not be available.
The number of statutory references to be amended is considerable and while all Departments and offices are completing checks to ensure that all are identified it is impossible to guarantee that no such reference requiring amendment will escape notice for a time. Provision is therefore included in subsection 7 of section 5 to make a change retrospective if necessary. This is essentially a precautionary measure to ensure that no anomaly or inequity, particularly one which might affect adversely a member of the public, will be allowed to arise.
I commend the Bill to the House for a Second Reading.
