In my budget statement in January I stressed the overriding need to reduce price inflation and to limit the growth of public expenditure. Unless substantial progress is made in these matters the objectives—common to Government, trade unions and employers alike—of promoting economic expansion and safeguarding and increasing employment will be seriously jeopardised.
All sections of the community should by now be fully alive to the effects of upward trends in costs, particularly pay costs, on domestic price levels, international competitiveness and the general prospects for Irish industry. However, the House will understand my reluctance at this juncture to comment further on these matters because they impinge directly on national pay developments which are at a crucial point.
The main emphasis in the budget was on public expenditure. The steep increase in public expenditure that has taken place in recent years involved an equally steep increase in Government borrowing, which in 1975 rose as a percentage of GNP at current market prices to a record 17 per cent. It is widely acknowledged that a considerable proportion of this borrowing was directly attributable to the recession. The contraction in private demand had to be offset substantially by expansionary budgets unless we were to plunge further into recession. If that had been allowed to happen the problem of unemployment would have become far greater.
However after two successive years of rapid inflation and economic recession there are obvious limitations on the use of public finance as a flexible instrument for demand management. As well as adverse effects on revenue we have the fact that costs of public services have inexorably increased over these years. To maintain the recent trend in the rate of increase in public expenditure would imply either an unacceptable increase in the tax burden or further substantial borrowing.
In fact however Government borrowing in 1976 as a proportion of GNP at current market prices will not exceed the 1975 level. This is being achieved by a reduction in the rate of increase of current rather than capital expenditure and extra taxation. Current Government expenditure is projected to rise by about 25 per cent, as compared with an increase of nearly 43 per cent last year. It is Government policy to ensure that the rate of increase in current public expenditures is strictly contained and where necessary reduced, except where a significant contribution to increased economic activity and employment may be expected. This policy will free resources for productive investment both in the public and private sectors. Such a policy is intended to contribute significantly to achieving the Government's target of a phased elimination of the current budget deficit over a three-year period.
The 1976 budget contained measures to increase growth and protect employment, principally by increased capital expenditure. Capital expenditure under the public capital programme is up by an unprecedented £129 million, an increase of 27.6 per cent on last year. Almost half of this benefits industry, where the allocation is 71 per cent higher than last year, while spending on other sectors has also been stepped up significantly. The private sector is of course a major beneficiary of this State expenditure.
Business benefited also from a continuation of stock relief, while increases in personal income tax allowances were given to assist the hard-pressed income tax payers. It is important to remember that these increases were given at considerable cost to the Exchequer during a most difficult period.
Let me put the matter in perspective. The deficit on the current budget was £444 million. Tax reliefs for companies and individuals are estimated to cost £17 million, thereby raising the deficit to £461 million. I have already explained the basic need to contain the Government's borrowing requirement. Additional taxation was accordingly inevitable to reduce the deficit to more manageable proportions, that is, to £327 million.
I now turn to the various specific provisions, starting with those relating to personal income tax allowances.
Section 9 provides for the continuation for the tax year 1976-77 of the same rates of income tax as applied for 1975-76.
Section 10 provides, at a cost of some £10 million in 1976, for increases in personal tax allowances. A further measure affecting personal tax is section 2 which ensures as in previous years that the amount of the dependent relative tax allowance is not reduced because of recent increases in the social welfare non-contributory old age pension. The effect of section 4 will be that an application for the separate income tax assessment of a husband and wife will not have to be renewed each year as is now the case. In future such an application will remain in force until it is withdrawn. Section 11 provides that married women will be allowed to complete separate returns of their own income if they so wish.
Section 13 is aimed at reducing tax avoidance by wealthy individuals. It parallels and complements sections 101 and 162 of the Corporation Tax Act, 1976, which apply a surcharge to certain undistributed income of closely controlled companies. The combined effect of the 20 per cent income tax surcharge to be imposed under the section on the retentions of certain discretionary trusts and of income tax at the standard rate of 35 per cent will be income tax at an overall rate of 55 per cent, as compared with the present maximum personal income tax rate of 77 per cent. No relief or repayment will be given to any beneficiary of the trust in respect of the surcharge because this would negative the purpose of the section. Recipients of moneys from the trust will be treated for personal tax purposes as having received sums grossed-up at the standard income tax rate of 35 per cent with credit for or repayments of the income tax so included, as appropriate. The exclusions from the surcharge which are set out in the section are designed to cater for discretionary trusts set up for worth-while purposes and in accord with public policy.
Three measures in Part I of the Bill are specifically concerned with the equalisation of income tax burdens under Schedules D and E. As Senators are aware Schedule D, broadly speaking, relates to profits, rents and investment income while Schedule E is applicable to employees.
Schedule D tax is assessed on the basis of the preceding year's profits and is not payable until on average about 18 months or so after the income has been earned. Thus taxpayers under that Schedule clearly enjoy considerable advantages vis-a-vis employees whose PAYE tax is assessed on the current year's income and is deducted straight away from their wages. Section 6 modifies this unduly favourable position of Schedule D people by providing that the due dates for payment of their tax are to be advanced by six months, in two steps over the next two years. It must be borne in mind however that this tax is not being increased nor is the preceding-year basis of assessment being withdrawn.
An associated measure is provided by section 30. Up to now the payment of substantial amounts of Schedule D tax could be delayed in appeal cases until long after the due dates for payment. Interest charges could be avoides in such cases by payment "on accountd of an agreed sum based on previou" years' liabilities. Section 30 therefore provides that if the payment on account is less than 80 per cent of the final liability an interest charge will apply to the amount of the underpayment. The section also incorporates a Dáil amendment which provides that the time limit for appeals against assessment to income tax be increased from 21 days to 30 days. This 30-day limit will apply also to corporation tax, as it already does in the case of appeals against wealth tax and capital acquisitions tax assessments.
Another measure to equalise tax burdens is provided for in sections 15 and 16 of the Bill. Under section 15 over 100,000 taxpayers who were formerly outside the scope of the PAYE system are being made liable to PAYE with effect from 6th April, 1976. The decision to make this change was announced in June last year. Those affected include Members of the Oireachtas, the Judiciary, civil servants, national teachers, the Garda, the Army, employees of the Central Bank, of the Commissioners of Irish Lights, of the Dublin Ports and Docks Board and certain employees of the Bank of Ireland. The decision affects both serving staff and pensioners.
When PAYE was introduced in 1960 the groups I have mentioned were left outside the scheme with the result that their tax liability in any year continued to be based on their income in the preceding year. The inflation of recent years has meant that employees excluded from PAYE were paying less tax than those of comparable means who were under PAYE.
The Government decided that this inequity should not be allowed to continue and I announced this decision in June last year. The effect of the change is to increase the gross 1976-77 tax liability of the groups affected by about £14 million, or some 23 per cent, over and above what it would be in 1976-77 if the old basis of assessment on preceding year income had been allowed to continue.
As already announced the Government decided to allow some easement of the effects of the transition to PAYE on the taxpayers concerned. The total remission allowable to each taxpayer now affected will be equal to one-half of the tax assessment for 1975-76, which is based on 1974-75 income, and will be set in three equal instalments against PAYE tax liabilities in 1976-77, 1977-78 and 1978-79. Provision accordingly is made in section 16 of the Bill.
Even when one allows for the value of the remission instalment of some £6 million in 1976-77, the Exchequer still stands to gain some £8 million in 1976-77 from the change made. The Exchequer gain in later years will of course be greater.
In deciding on an easement of the transition to PAYE for those concerned I took into account that a similar concession for this purpose was given in 1960 before PAYE deductions began. There is also the point that, as the change will involve a considerable increase in tax liabilities, there could be hardship in the absence of any remission in cases where heavy financial commitments had already been taken on.
I now turn to section 33 of the Bill. In the budget last January, I announced the Government's decision to terminate the exemption enjoyed by agricultural and fishery co-operatives with effect from 6th April, 1976. The effect of this special treatment for these concerns had become quite inequitable to ordinary traders and firms, who of course are subject to normal taxation.
The straightforward repealing provision in the Finance Bill, 1976, as published would have meant that the co-operatives' profits becoming chargeable to corporation tax would in most if not all cases have been those which arose after the basis period for the 1975-76 income tax assessment, namely, profits which arose anytime after the end of the co-operatives' 12-month accounting period which ended in the 1974-75 income tax year. While no revenue gain from the termination of the exemption was expected in 1976 it was expected that the gain could be up to £3 million a year thereafter.
In the submissions made to me over the past few months representatives of the co-operative movement drew attention to financial problems facing many co-operatives. I agreed that some special provisions were called for and I introduced on Committee Stage an amendment which made major concessions to meet the representations made to me. The effect of that amendment will be twofold:
(a) The termination of the exemption will only affect those profits of co-operatives which arise on or after 6th April, 1976. Earlier profits will not be taxed; and
(b) Co-operatives which have undertaken investment will have the option of claiming the balance of unused tax capital allowances—that is, those allowances remaining after normal allowances for wear and tear have been taken into account—for plant and machinery and buildings used for production, for offset against tax on the profits arising on or after 6th April, 1976. This will also help to ease the transition to the new position.
Co-operatives availing of this option will of course be able to carry forward the excess of capital allowances over taxable profits. If this option is not availed of, only normal allowances for wear and tear will be available for offset in any accounting period. As a result of the foregoing concessions little or no tax will be payable by co-operatives until 1978. Even in that year the total tax take from them is expected to be of the order of only £2 million, as compared with the £3 million originally envisaged in each case.
I should also like to stress that no change is being made in the existing position whereby share or loan interest paid by co-operatives is deductible in computing their profits for tax purposes.
The tax arrangements now provided for in section 33 must be regarded as a sympathetic approach to the special circumstances of co-operatives, given however that elementary fair play demands that they must be phased— however gently—into the tax regime which has always applied to their competitors.
The tax take now envisaged from the co-operatives is indeed a very modest contribution from a group of concerns whose turnover in 1974 totalled £750 million.
Sections 12 and 26 are concerned with stock relief. Senators will recall that this relief when introduced last year had to be withheld, for practical reasons, from unincorporated traders. However as promised then the relief is now being extended to them with retrospective effect. This is provided in section 12. Furthermore the relief in the form of a deferral of tax is also being continued for a third year for all qualifying trades whether incorporated or not. The question of what future changes may be desirable in the form of stock relief will of course be kept under review.
As announced last year, payments made to employers under the premium employment programme are to be exempt from tax, and section 25 provides accordingly.
Section 28 provides for a reduced rate of tax on interest on housing loans made by banks at specially reduced rates of interest under approved schemes. The effect of the reduced tax rate is that the net return to the banks will be the same as if they had made the loans at their ordinary commercial rates.
The purpose of section 27, which was inserted in the Bill on the Committee Stage in Dáil Éireann, is to close a loophole in existing law relating to exports tax relief. It will ensure that all sales of goods to intervention are outside the scope of exports tax relief. As the House is aware, the purpose of exports tax relief is to encourage Irish firms to seek and develop markets abroad for Irish goods. Sales to intervention cannot be regarded as exports in that connection. Without this section that purpose could be frustrated where manufacturers selling to an intervention agency could arrange to transport the goods to the agency's stores abroad while retaining ownership of the goods during such transit. Such a situation would of course be quite anomalous.
Section 17 is designed to ensure that PAYE tax will reach the Exchequer in good time. Section 1 enables a certificate signed by a Revenue officer to be regarded as evidence, unless the contrary is proved, that a defendant in proceedings under PAYE was an employer during a stated period.
A considerable part of this Bill is taken up with steps to combat evasion of tax. During the last three years a number of measures have been introduced which have had the effect of eliminating many possibilities for avoidance of tax by means which although artificial were not illegal. The closure of these legal loopholes must however be associated with a determined drive against the illegal evasion of tax. Hitherto traders' tax liabilities could be checked against their business records only if no returns at all, or unsatisfactory returns, had been made. The position obviously left an opening for evasion. Section 34 will enable authorised officers of the Revenue Commissioners to inspect at reasonable times trading records on business premises. This follows a similar existing legal provision in relation to value-added tax. Section 3 will enable a specifically authorised inspector of taxes, rather than the Revenue Commissioners, to serve notices on traders requiring the delivery to the inspector of business accounts and books.
One area in which there has been substantial evasion of tax in the past is the construction industry. Senators will recall that measures were introduced in 1970 with a view to the deduction of tax, on a provisional basis, from payments to certain subcontractors. However these measures have been shown in practice to be defective. Accordingly, section 21 provides a much tighter scheme of tax deduction in that a principal contractor will be obliged to deduct tax from a payment to a subcontractor unless both of them have received specific Revenue authority not to do so. This new scheme is to come into operation on 6th December next, and in the meantime the abuse of the existing scheme will be severely curtailed by some transitional arrangements which are provided by section 20. Section 14 provides that tax deductible from payments to subcontractors shall have the same priority in bankruptcy and liquidations as other taxes due to the State.
Sections 22 and 23 are concerned with the taxation of benefits-in-kind enjoyed by employees. Hitherto employees who are resident in this country but paid from another country have not been liable to taxation on benefits received by them because they do not come within the PAYE system. Section 22 rectifies this anomaly by providing that the benefits-in-kind legislation applies to all employees.
Section 23 provides a more realistic measurement of the benefits-in-kind enjoyed by some employees arising from the availability to them for private use of cars provided by their employers. As well as the cost of providing a car such an employee is saved the fixed motoring costs of depreciation, road tax and insurance. Section 23 therefore provides that, irrespective of the extent of the private motoring done, the benefit to the employee shall be assessed for tax purposes at being not less than some minimum level. The minimum level stipulated is £300 or, if greater, 15 per cent of the cost of the car.
Sections 31 and 32 are concerned with the deductions for tax purposes which may be claimed in respect of expensive motor cars used for business or professional purposes. The capital allowances limit of £2,500 which was introduced in 1973 is now being increased by section 31 to £3,500. As an associated measure a restriction in the running expenses, as distinct from the capital allowances, of expensive cars is now being introduced by section 32 and this restriction will also apply to cars costing more than £3,500.
The effect of sections 5, 7 and 8 is to correct some minor drafting flaws in previous legislation. Section 29 provides that interest paid to the Revenue Commissioners because of late payment of wealth tax and capital acquisitions tax will not qualify for tax relief and will therefore be treated on the same basis as interest on other overdue taxes.
Section 24 continues for the year to 5th April, 1976, provisions whereby an Irish resident is chargeable to tax on any tax credit received under the 1973 double taxation agreement with the United Kingdom, as extended in 1975 for one year. In this connection I should like to mention that our present double taxation agreements with the United Kingdom required to be renegotiated following the introduction of corporation tax in this country. It is expected that the new convention will be signed shortly on behalf of both Governments. Because the convention has not yet been signed it would not be appropriate to include necessary consequential amending provisions in the Finance Bill this year, although the revised arrangements will in general have effect as from the current year. The necessary amending legislation arising from the introduction of the new convention will be included in next year's Finance Bill to have effect from 6th April, 1976, except in relation to remuneration from employments where the operative date will be 6th April, 1977.
The Bill also contains a couple of provisions in relation to the taxation of farming profits. Last year, following an agreement between the Government and the Irish Farmers' Association, the National Economic and Social Council were asked to examine the whole question of farmer taxation. The report of the council was received by me some months ago and it has been under consideration in the Departments concerned. In the meantime however certain measures in relation to the taxation of farming profits have to be provided for in this Bill. These concern the notional basis of assessment to tax and certain anti-avoidance measures.
Section 18 extends for 1976-77 the option of the notional basis of assessment and also contains an anti-avoidance provision. The purposes of the provision is to eliminate a doubt which has arisen as to whether a farmer who opts for assessment under the notional basis can claim loss relief where the notional basis calculations produce a minus figure, that is, where the total of rates, wages and depreciation exceed 40 times the rateable valuation. It was of course never the intention that loss relief should be available in such circumstances.
Section 19 counters attempts to avoid tax by the fragmentation of farm holdings. The section is aimed mainly at artificial arrangements and will not affect genuine transfers of ownership, as for instance in the case of a father transferring the ownership of part of his farm to a son.
I now come to Part II of the Bill which deals with customs and excise.
Sections 35 to 39 confirm the budget increases in excise duties on beer, spirits, tobacco and wine. I should like to emphasise that in determining the increases in duties to recommend to the Dáil the Government carefully balanced both the necessity to increase revenue and the capacity of individual forms of consumer expenditure to bear additional taxation.
Section 40 increases the duty on mineral hydrocarbon light oil by 9.36p per gallon. This section also imposes an excise duty of 2p per gallon on all hydrocarbon oils other than dutiable petrol and diesel. Section 41 imposes a new excise duty of 2p per gallon on gaseous hydrocarbons in liquid form and contains the legal and administrative framework necessary for the implementation of the duty. The section also provides for the imposition of the duty at a rate of 10p per gallon at a date to be appointed by order under the provisions of section 42. A rebate system will ensure that the 10p per gallon rate will apply only to gas intended to be used for automotive purposes and other gas will continue to bear duty at a rate of 2p per gallon. Section 42 also provides the legal and administrative framework to implement the duty.
Section 43 increases the penalty for the irregular use of rebated hydrocarbon oil in road motor vehicles from £100 to £500 and makes provision for the forfeiture of a vehicle (a) on the occasion of a second offence, or (b), where the vehicle contains a concealed tank or similar device. Section 44 increases the indictable limit for customs proceedings in the District Court from £100 to £500. The present limit of £100 was fixed in 1963. Section 45 makes specific provision for customs entry of imported dutiable aircraft, ships and the like and for payment of the appropriate duties thereon. A penalty of £500 and forfeiture of the vessel is provided for failure to comply with these requirements. Section 46 confirms five orders made by the Government under the Imposition of Duties Act, 1957, as amended, details of which were outlined in the explanatory memorandum.
I now come to Part III of the Bill which makes some stamp duty provisions. Section 47 will extend from two years to six, the period within which a person may claim a refund of stamp duty. Section 48 does two things: Firstly it continues the exemption from duty of those types of new houses which would have qualified for a State grant prior to 1st January, 1976. Senators will remember that with effect from 1st January the Government restricted eligibility for Exchequer new house grants. Since the existing legislation provided that exemption from stamp duty was conditional on getting a grant, the exemption would have been lost in some cases but for the provision of section 48 of the Bill. Secondly, the section restricts the exemption from stamp duty which applies to sales by local authorities under the Housing Act, 1966, in order to confine it to sales of houses by the authorities to their tenants. The effect will be to make sales of building land by the authorities liable to duty in the same way as are other sales of land for housing purposes.
Part IV of the Bill contains provisions in relation to value-added tax. The principal purpose of Part IV is to give legislative effect to the VAT changes effected by Financial Resolution in Dáil Éireann on budget day, 28th January, 1976. Part IV also contains a number of provisions designed to clarify and tidy up some aspects of existing VAT law and to remove opportunities for tax avoidance.
Section 53 ratifies certain VAT rate changes which took effect on 1st March last. The principal changes were the replacement of the 6.75 per cent and 19.5 per cent rates by new rates of 10 per cent and 20 per cent respectively. The new 10 per cent rate also replaced the special rate of 11.11 per cent on dances. In addition two new rates have been substituted for the former two-tier rate of 36.75 per cent; the new two-tier rate of 35 per cent applicable to motor cars and motor cycles is equivalent in effect to the old 36.75 per cent rate; the two-tier rate now applicable to radios, television sets, gramophones and records is 40 per cent.
Other budget measures relating to the removal of the exemption for short-term car hire and the application of the 20 per cent rate to fur clothing are covered by section 60 of the Bill. Following the budget, tourist interests generally represented that the increase in VAT rates and the ending of the exemption for short-term car hire would adversely affect them. However it would have been less than equitable to allow one industry to continue operating pre-budget VAT rates while the rest of the community was adjusting to the new rates. A concession could also have led to serious trade distortions and anomalies.
I might refer Senators at this stage to section 63, which provides transitional relief in respect of motor vehicles. As I mentioned, the two-tier rate of 35 per cent—effectively 25 per cent at manufacture or import level plus 10 per cent subsequently—is intended to leave the effective burden of VAT on cars and motorcycles unchanged. However motor vehicles which were held in stock by dealers immediately before 1st March, 1976, could have borne additional tax through a combination of old and new VAT rates. The section ensures that vehicles which had borne VAT at the effective 30 per cent rate on the first tier and which were in dealers' hands on 1st March, 1976, would be liable on subsequent sale during the March/April accounting period at only 6.75 per cent.
Section 60 consolidates and re-enacts the first four Schedules to the Value-Added Tax Act, 1972. These Schedules deal with the tax classification of goods and services and have been amended substantially since 1972. This consolidation should be of considerable assistance to traders as well as to public representatives and members of the legal and accountancy professions.
Another budget measure involved the abolition with effect from 1st March last of the 1 per cent flat-rate credit for farmers and fishermen and this is covered by Part II of the Fifth Schedule to this Bill. I should explain that the purpose of the flat-rate credit of 1 per cent was to compensate unregistered farmers and fishermen for VAT paid by them on their purchases of taxable inputs by enabling their VAT-registered customers to pay them a slightly higher price for their produce. However the Government considered that in view of the demands which it was necessary to place on taxpayers generally it would not be unreasonable to expect a modest contribution from farmers, having regard particularly to the favourable treatment of farming income under the income tax code.
Senators will be aware that in any case most farm inputs are relieved from VAT. Fertiliser, electricity, tractor and marine diesel, animal feeding stuffs and oral medicines and most seeds are already zero-rated. In addition the scheme of direct refunds of the VAT on certain grant-aided expenditures on farm buildings, land drainage and reclamation and fishing boats is being maintained.
I will now deal with the remaining provisions in Part IV of the Bill.
Section 51 redefines and clarifies the circumstances in which a trader becomes liable for tax on a "self-delivery" of goods. The existing provision is somewhat vague and does not cover certain situations. For example, where a VAT-exempt business decided to manufacture its own requirements of stationery it would bear VAT on purchases of machinery and raw materials but would escape tax on the manufacturing costs. Equity requires that it should pay tax on the same basis as an independent supplier and the proposed amendment will ensure that this is so.
Section 54 limits to 10 per cent, which is the new second tier of the top two-tier VAT rates, the deduction available to manufacturers of top rate goods who buy such goods for purposes other than resale. The amendment will ensure that the first tier of VAT cannot be avoided by a practice of hiring rather than straightforward selling. As a consequence of this change section 59 slightly alters the definition of stock-in-trade so as to make it clear that stock-in-trade does not include goods held for self-delivery.
Section 52 is aimed at removing an opportunity for tax avoidance. Where goods such as alcoholic drink are sold in bond by a dealer VAT is payable on the price exclusive of excise duty. When the goods are subsequently released from bond, while excise duty would be payable VAT would not be payable on the excise duty element. Apart from the tax avoidance aspect of the practice it gives such dealers a competitive advantage over wholesalers without a warehouse. The amendment provides that in future the taxable amount for VAT on sales of goods in bond will include the duty payable.
Sections 56 and 57 parallel provisions already made in relation to PAYE to ensure that there is not undue delay in payment of VAT.
Section 58 will enable the Revenue Commissioners to provide for an adjustment over a five-year period, instead of over a one-year period as at present, of the initial apportionment of the input tax relating to investment goods acquired by a person who engages in both VAT-taxable and VAT-exempt activities. This will ensure that a true apportionment will be made as between taxable and exempt activities.
Section 62 will give VAT the same priority in bankruptcy and winding-up proceedings as currently attaches to income tax deducted under PAYE. The provision will apply only to tax in respect of VAT accounting periods ending after the enactment of this Bill.
Section 55 is a technical provision to bring the VAT definition of value of goods into line with the customs definition of value. It does not represent any significant change in current practice.
The remaining three sections in Part IV are merely incidental to those I have mentioned.
I now turn to Part V of the Bill— sections 64-79—which deals with excise duties (road tax) on mechanically propelled vehicles.
A significant amount of revenue is lost every year through the evasion of road tax. Although one cannot put a precise figure on it, about £4 million a year would not be far off the mark. This is over 16 per cent of the road tax paid in 1975. Apart from the loss of revenue involved there is also an injustice to the substantial majority of motorists who pay their tax as required. The Government have decided therefore that it is time to introduce new and stronger anti-evasion measures.
One of the main features of the anti-evasion campaign will be the introduction of a system of continuous liability. This is provided for in section 70. Basically it means that the owner of a vehicle will be liable for road tax, irrespective of the use made of it, in much the same way as a person is liable for a television licence. Because of the need to prepare regulations and to revise administrative procedures locally it will not be possible to introduce continuous liability right away. But the intention is to introduce it as soon as possible. Section 69 provides that the classes of vehicles to which continuous liability will apply will be specified by Government order, to come into effect only after it has been approved by both Houses of the Oireachtas. There are circumstances in which continuous liability will not apply—for example, a vehicle kept by a motor dealer in the course of his business or if a vehicle is destroyed, stolen, and so on. It is also intended that the provision will not apply to vintage cars.
Apart from continuous liability, there are other measures in this part of the Bill designed to combat evasion. These measures can be introduced very quickly and should ease the evasion problem pending the introduction of continuous liability. In the longer term a number of these provisions, while applying to all vehicles, will be of particular importance in the case of vehicles not subject to continuous liability.
Section 65 provides for the making of regulations by the Minister for Local Government pursuant to this part of the Bill. Section 66 specifies the general application of this part of the Bill to all vehicles liable to road tax subject to the exemption from certain provisions of vehicles used by motor dealers under the authority of a trade licence.
A person who keeps a vehicle is required under section 67 to notify the local licensing authority of that fact and also to notify any transfer of his interest in the vehicle. This section confirms the existing legal requirements which have previously been provided for only in regulations.
Section 68 provides that where road tax is not paid within 14 days of the expiry of the previous tax it shall be recoverable by the local licensing authority as a simple contract debt. This section will enable the authorities themselves from their own records to take proceedings in cases of unpaid tax. However, this will not affect the existing powers of the Garda to prosecute those whom they find using untaxed vehicles.
At present only the user of an untaxed vehicle can be prosecuted for unlicensed use of that vehicle. As a result the unsatisfactory situation at present exists that if an untaxed vehicle is parked in the public road the Garda can only prosecute for unlicensed use where they can identify the user. Section 71 removes this anomaly by providing that henceforth the registered owner of the vehicle, if he has authorised its use, will, as well as the user, be liable in respect of the use of an untaxed vehicle. An employee will not be liable if he is using the vehicle on the orders of his employer.
Fines imposed for the use of an untaxed vehicle are often not a sufficient deterrent to repeated evasion. Section 72 provides that the court shall, in addition to any penalty which it may impose, order the payment of the arrears of road tax due to the licensing authority.
Section 73 provides that both the user and the keeper of a vehicle shall be subject to prosecution for the non-display of a current tax disc. Section 74 brings an offence under section 73 within the scope of the "fines on the spot" procedure.
Section 75 puts the onus of proof on the defendant in any proceedings for an offence under this part to show the existence of a current road tax licence or that the vehicle was not subject to continuous liability or that he had not authorised the use of his vehicle, as the case may be. This section will enable cases to be dealt with quickly by removing delays arising from the need for the licensing authority to provide documentary evidence which may not be readily accessible.
Evasion of road tax is a sufficiently serious offence to warrant a sizeable maximum fine. Sections 76 and 77 provides for this, £100 in each case. Section 77 also provides for the settling by regulation of the fee payable for a duplicate registration book. Up to now the maximum fee of 25p has remained as fixed in the 1920 Roads Act. Under section 78 liability for road tax relates to use of the vehicle in a public place, whereas up to now it was confined to use on the public roads.
Section 79 provides for the new annual rates of road tax for private cars which came into effect on 1st March, 1976. It also specifies that the additional proceeds arising from these new rates will not be taken into account in determining the amount to be paid into the Road Fund in respect of road tax and related charges.
Part VI of the Bill contains four routine sections. Section 80 is the annual provision relating to the Capital Services Redemption Account, section 81 gives effect to the repeals specified in the Fifth Schedule and sections 82 and 83 are self-explanatory.
I commend the Bill to the House for a Second Reading.
