There is a phrase in line 19, page 125 of the Bill which states: "‘records' includes information in a non-legible form;". What exactly are we talking about here?
Finance Bill, 1992 [ Certified Money Bill ]: Committee Stage (Resumed) and Final Stages.
Question proposed: "That section 89 stand part of the Bill."
Computer records.
Question put and agreed to.
Sections 90 and 91 agreed to.
SECTION 92.
Question proposed: "That section 92 stand part of the Bill."
Section 92 (e) reads:
in the case of beer delivered for consumption in the State, withdrawn from the market because of its condition or age renders it unfit for human consumption;
Who benefits from the repayment of duty, the importer, the brewer or the retailer?
The beer would be returned to the brewery, so no duty arises.
Duty would be already paid on it so there is a refund involved.
Yes, there is.
The brewery would benefit from this?
The brewery would benefit.
What is meant by "unfit for human consumption"? That is a wide ranging definition in terms of its implications. Many beers may taste very badly, they may be unpleasant, but they may not be unfit for human consumption. At the same time they may not be fit to be sold to customers who would expect a high standard. I worry about that definition. It is wide ranging and may result in retailers having to hold on to a product and dispose of it, in other words, waste it when it would not match this definition.
The best before date is not a test of whether the beer is good, bad or indifferent. Once the best before date has passed the duty is considered to be refundable. It is not a definition of whether the beer has gone off or anything else.
When foods have passed the date where it is desirable to consume them it does not follow that they are unfit for human consumption. It follows that the most desirable thing would be that they be consumed by that date but it does not mean there would be unacceptable side effects as a result of consuming them. Indeed, many items which are consumed after best before dates are still all right. It may not be particularly wise to use them but they still would not be unfit for human consumption. What concerns me about that definition is that it opens the possibility of publicans being left holding a barrel of beer they would not be able to sell.
The point is that it is not sold for public consumption and the duty is refundable at that stage. One must have a cut off point and that is a fair one.
Basically, the duty is refundable.
Yes. We are trying to get a date from which to refund the duty.
Question put and agreed to.
Sections 93 to 98, inclusive, agreed to.
SECTION 99.
Question proposed: "That section 99 stand part of the Bill."
I require an explanation of two matters arising under section 99(1). The end of subsection (1) mentions a penalty of £1,000; that appears to be a mandatory penalty. Is that the maximum fine or can the court exercise discretion in imposing a fine? Are we simply specifying that it is £1,000 with other option?
It is a fine of £1,000 but the district justice can mitigate the fine by one half.
Would it not be preferable to say: "a fine not exceeding £1,000" rather than this mandatory figure? The line between the legislature and the judiciary is becoming more blurred as time goes by, but I have always felt that we should not take from a presiding judge the discretion to decide on the gravity of an offence, especially have heard the evidence.
He cannot go above £1,000 but there is some flexibility.
We will not pursue that aspect further. I made my point and will leave it at that. Regarding subsection (2) Senator Upton might consider that this is another matter not unrelated to the previous matter we spoke about. I often wonder what becomes of the beer that is forfeited. There must be a disposal factor involved. Spirits are disposed of by putting them up for auction. They do not have a sell by date.
The Minister has a large vat in the Department.
Let us not be disorderly.
The Chair encourages this unreasonable behaviour at times.
I am joking Senator Doyle, on this occasion and she should accept it in that spirit.
Stick to the beer.
We are legislating and saying that it will be forfeited. Let us know what becomes of it.
Anything that is forfeited by the Revenue goes to the Revenue auctions. I do not think anything has been forfeited from publicans, but in the case of smuggling, if it is forfeited then it goes to the Revenue auctions.
The beer?
Anything. I am not too sure how quickly they would organise an auction to sell perishable goods.
Would it be fit for human consumption? Is it consumed by humans?
Whether it would or not it would be consumed.
It goes into intervention.
That is the theory.
I do not wish to question the Minister's sincerity in the reply he has given but there is a widespread belief among the trade that the beer which is forfeited never comes back into the system. What becomes of it if it has a sell by date? There is a point beyond which it is no use for consumption.
It is destroyed if it has gone beyond the date. It is like the other question in the trade where, in some publicans' records, one cannot find records of them buying Guinness or Guinness products in the Republic, but still they sell large amounts of Guinness. That is extraordinary and I have not got to the bottom of it yet.
And probably will not.
I am not opposing the Minister and that would be the position for many publicans. If there are people operating illegally, they have an unfair advantage over those of us who trade legally. I have no pity for them if they are in difficulty.
I accept that. In fairness to the Senator who is putting forward points on behalf of the trade, these points have been raised by the trade and they are identifying these areas for me but I have not found a solution. It intrigues me that some of the biggest pubs which serve thousands of customers only buy a few barrels of Guinness a month. When I get to the bottom of this problem I will be delighted to let the public know how that happens.
We wish the Minister success.
As I was a publican for 27 years, I am entitled to comment on this.
There are as many publicans as teachers here now.
I am not one now; I am a full-time public representative.
Is this a state the rest of us are meant to aspire to?
I do not know where the Senator is going, but I know where I am.
The trade have had difficulty with this for a long number of years. There are cowboys in this trade as in any other. It is interesting to hear the Minister say he is aware of big pubs only buying so many barrels of Guinness. They were there in my time too and the organisation Senator Howard represents tried to rout them out but the licensed vintners and previous Ministers for Finance were not successful. With regard to section 99 (2), would it not be better to leave that beer with the publicans rather than throwing it away?
On the same point, the subsection says that any beer in respect of which an offence was committed shall be liable to forfeiture. That does not mean it is mandatory; there is discretion there. How is the discretion exercised? What constitutes the necessity for forfeiture? How is it decided? Is it possible for this beer to go back into the system?
Mr. Doyle
Could the Minister indicate in the last year for which we have records the amount of beer on which duty was repaid? What quantity are we talking about? He also indicated that beer which has passed the best before date was no longer fit for human consumption — there are many who would be prepared to take a chance on that — and that it is auctioned off but he said later that it was destroyed. What happens to it? Have we any evidence of when an auction has taken place? I recall auctions where goods seized are sold by the State but I do not recall auctions where beer with outdated best before date is sold by the State.
As regards Senator Costello's point, normally the beer would be seized and the courts then would decide whether it was to be returned. The number of times the beer would be confiscated and forfeited are small. The customs officials would seize it and the courts would decide whether it was to be forfeited.
I do not have figures Senator Doyle asked for but not a great amount of beer is sold off at auctions because of its perishable nature.
Is there a dye inserted when the duty is refunded because it has passed the best before date?
No.
Would that not be an idea to stop it coming illegally back into the trade? As the kegs were sealed before the duty is refunded a dye could be inserted.
We will look at that. With regard to figures, Senator Howard knows better than I that if this did happen the duty would not be refundable. It would be offset. That is why the figures are not readily available.
Question put and agreed to.
Sections 100 and 101 agreed to.
SECTION 102.
Question proposed: "That section 102 stand part of the Bill."
Section 102 states:
This Chapter and Part I of the Third Schedule shall come into operation on such day as the Minister for Finance may appoint by order, and different days may be so appointed for different provisions or for different purposes.
I object in principle to that degree of discretion and flexibility being left to the Minister in relation to the implementation of provisions in legislation; it means that it might or might not happen. It means that in relation to relief in respect of oil exploration or natural energy sources, payment of duty on various items, inspections and so on there is no specific date for their implementation and an order has to be brought in. It is not stated how this order is to be introduced. Will it come before this House? Will we have an opportunity to discuss it? Is it simply by the diktat of the Minister? Would it not be more appropriate to specify the nature of the orders and the manner in which they are to be introduced or to state a clear date which would give the Minister a reasonable amount of time so that certain provisions could be implemented?
The reason for this is that the proposed EC target date for the changeover to end product taxation for beer is 1 January next. Everybody is agreed that is the system we are moving towards from the worts in pre-fermentation to the end product. Even though the relevant directive has to be adopted, we are working towards this date as are a number of other member states who are currently operating the wort system of beer taxation. The industry are anxious to have legislation now to signal what is happening. In preparing for the change-over the Revenue Commissioners will continue their discussions with the Irish brewers. The actual transition date will depend on the adoption of the directive and the resolution of the many technical issues that are still outstanding. They changed the technical proposals which were causing difficulties for the brewers. We must keep the competitiveness of Irish brewers in mind in this process. The rate of duty to apply to the end product and the system of beer taxation is a budgetary matter for determination at the appropriate time. The advantage of including it in the legislation now is that the industry will know what is happening. The discussions with the brewers and the Revenue Commissioners on the technical aspects will go ahead. As soon as every member state of the EC is satisfied that the directive can be adopted it will be enacted, it will become law. It will operate from the effective date.
Question put and agreed to.
Sections 103 to 105, inclusive, agreed to.
SECTION 106.
Question proposed: "That section 106 stand part of the Bill."
I have done my best to find the appropriate section which would clarify this matter. I raise this query on this section and I will put this in simple terms to the Minister. We are dealing with the movement of excisable goods. As a retailer, it is very unlikely I would attach a trailer to my car, drive to Newry or Derry and load it up with 10 or 15 kegs of beer and come back and sell them in my premises. What will be the position of somebody in the licensed trade after 1 January 1993 who decides to drive over the Border, into another state as it were, and purchase beer there? For example, Senator O'Reilly from County Cavan is quite near the border. If Senator Costello was back in his native Sligo he would be near the border. They could drive over the Border and purchase beer. If there is a financial advantage in doing this, it will de done. If a person retails the beer on his premises, what must he do to keep within the law as a result of the new situation as and from 1 January 1993?
Somebody who does that will be liable for duty.
Does he pay that in Newry or in the Republic?
He will pay the duty in the Republic. He will pay the full Irish rate.
What about the English rate?
If he buys it in Newry, the person from whom he buys it can claim a refund of his duty. He must pay the full duty in the Republic.
He can, as it were, go to a wholesaler in Newry, purchase it quite legally and then come back here. Is the Minister saying that the obligation is then on that person to declare to the State that he has purchased this product?
He is meant to declare it in advance.
Mr. Doyle
That he is going to do that?
Yes, that is the law.
Taken together with the provisions of section 106 where no duty will arise for individual use of such goods, there comes a point when it is unreasonable to say that alcohol or tobacco could only be for the individual's use. Quantatively, what has the Minister in mind in terms of what he would accept as a reasonable amount for individual use? When would the scenario arise, which was pointed out by Senator Howard, where it is obvious it is for resale? There would appear to be a difficulty in defining what would be reasonable.
I think I have answered Senator Howard's question in that the excise duty is refunded to the person who sold the beer. The person who brings it across the Border must then pay the duty here. The section deals with duty paid excisable products coming from another State. The general position is that such products are liable to duty in the State. However, where alcohol and tobacco products are acquired in another member state by a private individual for his or her own private use, no liability to duty will arise in this State. Fuel in the fuel tanks of vehicles entering the State will likewise attract no further liability.
The main requirements of the section are, therefore, focused on persons commercially importing duty paid products and for these there are stringent requirements to be followed. They must inform an officer of the Revenue Commissioners in advance of the dispatch of the goods from the other member state of their intention to acquire the goods. They must also provide a financial guarantee in advance to cover liability of duty on the goods in this State. The section also provides for penalties for breaches of the section and for the forfeiture of goods imported in breach of it and by any vehicles used to carry the goods.
Dealing with duty paid goods in open circulation, the provisions of the section are necessarily stringent because of the risk that such goods might cross frontiers to the high duty member states without being declared for duty purposes. In our own case, this risk has been considerably reduced in recent years to a combination of indirect tax rate reductions. There is a liberal policy of restraint regarding duty increases in the case of named excise duties.
At present private persons are restricted in the amount or volume of duty paid goods they may import without further tax payments from another member state for consumption in their own state. These limits on travellers' purchases are set out in the EC Directives. They are absolute and they cannot be exceeded in any form. Importations above the limits are illegal, if not declared at Customs. In the Internal Market the transition of concept and application of travellers' allowances will no longer apply. Private individuals will be allowed to purchase goods in other member states, virtually without limit, for consumption in their own state.
In the case of excisable goods, however, the authorities in determining whether the goods in question are for private consumption or have been bought in the State for commercial reasons may take a number of factors into account. These include the status of the person involved, whether he is a private individual or a trader, the mode of conveyance being used, whether a car, a van or truck, and the actual volume of the goods in question for tobacco and alcohol products. Indicative guidelines have been established by the Community in this regard.
Regarding indicative guidelines, they are not absolute limits. There would be a presumption by State authorities that quantities under these minima would be for private consumption, although flexibility and judgment are allowed. Where the quantities are greater there would still be no duty charged if the person could show that the goods were for his or her own use. The balance is with the individual. As there will be no systematic border checks after the end of 1992, enforcement will be through mobile customs patrols. A person may be stopped by a customs patrol in the midlands and may be queried about goods and drink purchased in Northern Ireland. This is the concept which I explained in great detail in the Dáil. The whole concept of the Single Market is that there are no frontiers at the point of entry into the country but that the frontier does not disappear. The frontier is everywhere and to protect your revenue base you must have controls and checks. The Customs officers about whom we spoke last night, by and large, will be redeployed by the Revenue service elsewhere. We will hear about some of the Revenue Commissioners powers later. This is the reason you have to give what were the powers of Customs and Excise people at the frontier to these people, whether it be Rosslare or the Border.
The yield from VAT is £2 billion and two thirds of that is taken at the point of entry. With the Single Market changes all of us can see the threat to the Revenue base and it is only with stringent powers being implemented that we can protect that base, not to mind talking about extending the powers. Most of the powers given in the Bill to Revenue officers are in the area of VAT.
On the last question, guidelines will apply. They will apply in Ireland's case for cigarettes, 800; cigars 200; smoking tobacco, one kilogram; spirits, 10 litres; intermediate products, 20 litres; wines, maximum 45 litres, that includes a maximum of 30 litres of sparkling wines, and beers 55 litres. If you have all of those in the boot of your car, then you are safe.
I wish to refer to the point the Minister made about the litres of wine. There is an inconsistency here. Let us extend the argument to France, for instance. If I go to France as a private individual in a small car I can travel to Bordeaux where I can get wine at a fraction of the cost of what it is in Ireland. The case could be argued that I could buy a container load of wine and ship it in a container for my private use. To my mind, that would be in accord with the Single Market ethos, whatever about the provisions. It would be legitimate for me to do that, whereas the imposition of a restriction of 45 litres would seem to be inconsistent with that.
The only difficulty is that you have to carry it in yourself. You would hardly carry in the full cargo of wine.
I submit that if I were to put it in a container it still could be for my own personal use. I could argue that case.
You can argue it, but if you are travelling with the container, then the officer would have to take it into account.
I hope that it is not going to be ruled out.
It would be a bit suspicious.
If he went to that trouble, he would get away with it.
I hope that in the course of this debate it has been purely coincidental that there has not been a reference to Annie Murphy.
I was going to make the same point as Senator Dardis. If you read section 106 (2), there certainly seems to be a degree of flexibility for an individual consumer in that it states it is for his or her own use and not for commercial purposes. That is the distinction that is being made. It is not the quantity but it is the purpose. If somebody can argue, irrespective of the quantity, that the purpose is for his or her own use and can argue that adequately, it would seem that would satisfy the requirements of this section.
There is the other point about transportation. It must be transported by such private individual. It does not mean that the private individual must have it in a haversack on his or her back, but it is to be transported in the company of that private individual. It would seem possible that it could be on a trolly or it could be an adjunct to a vehicle for transportation so long as the purpose is being fulfilled.
Obviously ignorance of the law is no excuse but I presume there will be quite an amount of documentation circulated in relation to the regulations implementing this section.
What is meant by one's own personal or private use? Is that restricted to the individual in question or does it extend to his family or friends? If it is restricted to the individual in person, then there is obviously a very clear limit on the amount one can consume, even in a lifetime. If it is extended to what would be a normal lifespan, it still is fairly restrictive. If it is broadened to the extent of family, friends and acquaintances, then it seems to be unlimited at that stage.
Christmas presents.
The purpose of the series of questions I asked was to try to clarify the position of the commercial operator, the retailer, the publican. My understanding of it is that if I am within reasonable distance of the Border and I can purchase beer in, say, Newry, at a wholesale price that makes it worthwhile to go there, provided apparently that I inform a Customs officer that I am about to embark on this exercise and provided I make suitable arrangements to pay the duty on the beer when I take it in, then I am perfectly entitled to drive up there and take the goods across the Border. It appears as if certain quantities of beer are being brought across the Border and those of us who are trying to trade legally are in competition with this. The new arrangement is going to be looser than the existing situation. I am concerned that what is now happening, which should not be happening, is going to occur on a larger scale.
We are often concerned about the fly-by-nights who come into the trade. There is the person who leases a pub and is suddenly selling his product 10p a pint less than what I am selling it at, and I am losing customers. We find that in about two years he bails out. He has not paid VAT, he has not paid tax, he has not paid PRSI, he has not paid anything. He is gone and his lease is up. The next thing you find is that he has started up another business in another part of the town. He has leased another pub but by the time the Revenue catches up with him he is gone. Perhaps I am preaching a bit too much on the problems about which I am concerned. I believe from the information I have received that some of us can now legally go across the Border, buy goods and bring them in here. Others can always take the chance and they will probably have a better opportunity of escaping when taking a chance now.
The free movement of goods and services is there. That is the whole purpose of the Single Market for individuals. What is meant by "own use" would be the extended one of your domestic family — your own house use.
What about the case of a politician coming up to an election?
We know what house to go to with the crate loads of wine. It is not a case of having to drink all the wine yourself and the officers having to breathalyse you to check whether you had all the drink, rather than whether the rest of the people in the house had some.
I would say to Senator Howard, who I know has a great deal of knowledge in this, that this is far stronger than the position at present, none of the local publicans I know would consider going to Northern Ireland and bringing down large quantities of drink. Let us assume for the purpose of debate that one of them had that terrible thought. They could go to Northern Ireland if the price differential and everything else was right. Senator Howard knows the products that are worth bringing down. If publicans go to the North at present and collect their goods they have no obligation to check with anybody until they are back here. What happens is that we normally hear rumours of what is happening. That will not be the way under the new law. If the person carrying the goods is 100 yards on the other side of the Border and they are stopped, they are open to the full powers of the law not on what they have, but why they did not inform the Revenue in advance. That is a very strong power.
Question put and agreed to.
SECTION 107.
I move recommendation No. 15:
In page 139, after line 50, to insert the following:
"(7) Any person who has been refused approval by the Commissioners as a State vendor will have the right to appeal to a Tribunal, consisting of the following three persons: (i) the Chairman of the Revenue Commissioners or his nominee (ii) the Secretary of the Department of Finance or his nominee (iii) the President of the High Court or his nominee. The operation of such an appeal procedure shall be governed by regulations which the Minister may make under section 117.".
This provision provides for an appeal against a decision by the Revenue Commissioners to refuse approval to a State vendor. It is a fairly straightforward recommendation which makes provision so that a variety of reliable people — very much establishment figures — should be in a position to review the case of somebody who feels aggrieved. It is important that somebody who feels aggrieved in relation to being refused approval by the Revenue Commissioners should have the entitlement to a second opinion and to be able to take the case to somebody else who would be distinct and different from the people who refused him in the first place. For the most part, I do not think there would be any great problem but, inevitably, there will be people who will feel they have been discriminated against or that they have been treated badly. It is very important that those people should have the right to take their case to another court.
I second this amendment. A right to appeal for somebody who might be refused approval should be a basic entitlement. There seems to be no criterion in section 107 where a State vendor would be appointed. In other words, section 107 (2) (a) states that "the Commissioner may approve a person as a State vendor." and then they may apply certain conditions, as they think fit, for the operation. There are no criteria laid down for the appointment. Clearly, it would seem that somebody might have a grievance because they were not appointed to carry out business as a State vendor in a member state. In implementing this directive it would be proper that those appointed by the Revenue Commissioners should have authority to become a State vendor, and that those who are refused appointment should have access to a tribunal, not necessarily an independent tribunal, but certainly a knowledgable tribunal that would include a representative of the Revenue Commissioners, and also an independent person from the High Court. That would be a reasonable proposal.
Section 107 deals with distant sales trade and duty paid goods. The subsection to which the recommendation relates covers trade originating in the State and going to other member states. In such cases, Council Directive No. 92/12/EEC places clear obligations on the authorities of member states in relation to the control of its vendors. These have been incorporated into subsection (2) of the section which provides for the approval by the Revenue Commissioners of such vendors, subject to the conditions in question. The operation of an appeals procedure assumes discretion on the part of an authority in a particular area. In this case, however, there is no such discretion under the directive.
We are bound by Community rules to ensure that Irish traders who engage in distant sales activities involving other member states must comply with clearly specified rules. These rules have, in turn, been merely translated into conditions of approval under this section of the Bill. There is no discretion to compromise them in any way. Once they are met, approval will be automatic. In the circumstances, the Senators will see that an appeals procedure is, therefore, not appropriate because there is no discretion.
Surely things cannot be so black and white, almost like the laws of physics or the principles of mathematics, that there are not questions of interpretations there? I would be very surprised if that were the case.
I am advised the conditions are set out in the directive and the member state has to comply with the conditions.
Would the Minister clarify what he means by "the conditions"? As I understand it, the conditions refer to the activities of the person who is appointed, not to criteria for appointment. It is the Revenue Commissioners who make the appointment of a State vendor. Who is entitled to apply? What are the criteria for application? What happens if they are refused? Are they not entitled to appeal the refusal by the Revenue Commissioners?
When a person complies with the conditions set out in section 107 (2) (b) (i) and (ii), approval will be automatic, and the conditions apply to them.
I think that it is the same point; we are referring to conditions on appointment to comply with certain regulations that are specified once they are appointed. What is the criteria for appointing State vendors? Do the Revenue Commissioners off their own bat say "you, you and you and not you"? Obviously, this is a new area where people can bring excisable products into the State. It may be a profitable and sought after appointment. We do not seem to have any defined criteria whereby the Revenue Commissioners can decide that one person is more appropriate, or better qualified to become a State vendor than another.
The Revenue will not select people. People will apply because if they do not, they cannot trade.
Revenue make the appointments?
Yes, provided people comply with the conditions.
What happens when Revenue feel somebody has not complied with the conditions and the applicants feel they have? This kind of thing happens regularly in all walks of life. In those circumstances I would like to see the people who feel aggrieved having the option of taking their case to a second court, and getting another opinion.
This is an EC dimension. If the conditions are clear, people will or will not comply with them. If people put forward their cases and they meet the conditions, Revenue will accept it. Revenue would have no vested interest in stopping them trading once they comply with the conditions.
I am still unhappy with the interpretation the Minister puts on section 107 (2). A State vendor shall not be approved unless he secures, prior to the dispatch of excisable products, the duty payable in respect of those products, and second, he agree to keep such accounts, records and other data or information. That is a regulatory process. One agrees that that would be part of the conditions of taking on the job, but it is not part of the qualifications for the job. We need some criteria on which the appointments are made. Nevertheless, there is still the question of a person who was not appointed and who feels aggrieved, even if they are prepared to abide by all the conditions, and have done so. Are they going to get the appointment? The position in relation to the appointment remains unclear. Where somebody is refused there appears to be no opportunity to air a grievance.
There is a Community dimension to this. We are undertaking our role in protecting the duty base for other member states. The Revenue Commissioners will already have received the revenue and will have no vested interest. The conditions are laid down and people will inform themselves so as to be able to trade. I quote from the Official Journal of the European Communities, 23 March 1992, No. L/76/6:
The member state in which the vendor is established must ensure that he complies with the following requirements: Guarantee payments of excise duties under the conditions set out by the member state of destination prior to despatch of the products, ensure that the excise duty is paid following arrival of the products and keep accounts of delivery of products.
We have no discretion here; this is our community contribution. Other states will do this for us. We have to comply. This is our obligation from an Irish point of view.
Recommendation, by leave, withdrawn.
Section 107 agreed to.
SECTION 108.
Question proposed: "That section 108 stand part of the Bill."
May we be informed if the tax representative mentioned here is a new "operator"? The commissioners may appoint a tax representative to act on behalf of, first, the non-state vendor referred to in subsection (3), or a person authorised by the authorities of another member state to operate a tax warehouse. Subsection 3 states:
A tax representative shall be liable for the payment of excise duty on excisable products delivered to the State on behalf of the person specified in paragraphs (a) and (b) of subsection (1)...
Are we talking about a solicitor, an accountant or a bank? Is this a new position?
We are talking about a new breed here. The advantage is that they will be operating within the State. The concept of a tax representative as provided for by the Council directive is new to us. This section provides for the approval by the Revenue Commissioners subject to conditions of such representatives representing suppliers of excisable products established in other member states. The section provides that liability for duty will fall on such representatives. It also provides for penalties for contravention and non-compliance with the section.
The presence in the State of a person representing a supplier from a member state is seen as an advantage, lending extra security to the system in the event of any difficulties or disputes arising with regard to transactions. The Senator can see how these might arise with free movement of goods in large quantities. Rather than have wranglings over all sorts of things, a representative from another member state should be able to clear up difficulties.
Could it be any importer?
It could be anyone within the State appointed by an importer from abroad.
Question put and agreed to.
Sections 109 to 112, inclusive, agreed to.
SECTION 113.
Question proposed: "That section 113 stand part of the Bill."
Would the Minister clarify "under the diplomatic arrangements in the State", "international organisations" and "for consumption under any agreement" between member states?
Let me reply to a matter raised by Senator Howard; I passed over the page and left a note in it. The Senator raised the matter of the phoenix companies. I dealt with that in this year's budget. Section 186 in the VAT section provides for security which should deal with the fly-by-nights. I hope the phoenix company syndrome has been dealt with.
Section 113 provides for an exemption from excise duty for excisable products delivered to diplomatic missions or international organisations based in the State. The provision is necessary to honour our obligations under international conventions and agreements to which we are party and broadly reflects what happens at present. There is provision to give effect to the section by way of repayment of duty where those entitled to exemption purchase excisable products which are already duty paid. The section provides for penalties for fraudulent claims for exemption.
Does it refer only to personal use by the diplomatic service? Are there any regulations governing the extent of the concession?
It will mirror the current situation.
Question put and agreed to.
Sections 114 and 115 agreed to.
SECTION 116.
Question proposed: "That section 116 stand part of the Bill."
My sentiments here are similar to those underlying recommendation No. 23 which I put down to section 232. I am concerned about the lack of provision in this section and in section 232 for a record to be taken of any documents, books or accounts that may be seized by an officer of the Revenue Commissioners entering a premises where excisable goods may be held, that a record of anything taken by the authorised officer is not given to the owner of the premises or the person in question, and that the person in question who owns the goods in question apparently does not have right of access to those records while they are in the possession of the Revenue Commissioners. This may be an omission but in other countries, such as the US where they have a strict self-assessment system, a record of any goods, documents, computer software etc. seized is given to the person who owns them so that they know exactly what has been taken. The person in question has right of reasonable access either directly or through a professional representative, whether solicitor or accountant, to those records while they are being held.
I urge the Minister to take this point on board; and it has been pointed out by the professional bodies also. It may be a case of "methinks they doth protest too much" but this is a reasonable point in the interests of natural justice. If one is in trouble with an official and one's documents are seized on which a case is going to be made against one, one should at least be told what documents they take and the person or his professional representatives should have reasonable access to those documents. I ask the Minister to make a provision in section 116 to comply with what I say. I will make the same case in respect of the recommendation to section 232.
The section is designed to counter evasion or attempted evasion of excise duty. The section empowers an officer of the Revenue Commissioners to enter premises in which excisable products are produced or held and to inspect and take account of the products. Under the section an officer may also require the production of any documents relating to excisable products and may take copies of the documentation or remove any documents for further examination. The section also empowers an officer of the commissioners to question anyone on the premises about the excisable products and any documentation in relation to them. It places an obligation on a person questioned by an officer to give such information as an officer may require. The section provides for penalties for breaches of this section or for obstruction of an officer acting under the powers conferred on him by the provisions of the section. I am advised that if an officer of the Revenue Commissioners were to visit a premises and were to seize particular books or aspects that the individual would have right of access for the date seized. A record is maintained of what a Revenue Commissioners' officer takes.
The owner of the documents should be given details of what has been taken.
I am advised that a person would be told.
It should be included here.
It is the practice and if the person so requires, they will be given copies of any data seized.
They may. They do not have to. It says "or". They may take the documentation. It would be a simple matter to put the minds of many people at ease in an area where I have been generally supportive.
We have given a commitment to accountants and tax people generally that on the passing of this Bill a statement of practice will be worked out in consultation with them as to what these sections mean and what the Revenue will require. That was done after the 1972 Act and has worked extremely well; there have been no complaints or difficulties. I do not know off hand if this section is covered in the sections included in that agreement but we will have no difficulty clarifying it. If these practices prevail it is better to put them into the statement of practice so that accountants, tax advisers, and in some cases legal tax advisers, know what is at issue.
I support this section of the Bill but I share many of the concerns expressed by Senator Doyle and by other people outside this House. The powers are wide-ranging and it is very important that people would be given assurances and left in no doubt that these powers will not be abused. I do not suggest they will be abused on a wide scale but inevitably a small proportion of people in any job who, for one reason or another arising from prejudices or bad experiences in other areas, may decide to take an unacceptable and heavy-handed approach. I welcome the idea of a statement of practice but it still does not assuage the worries expressed. As this Bill now stands many things are possible with few safeguards which is my main concern. I am in accord with the notion of what is involved here and do not want to give a different impression.
The majority of powers accorded under this legislation already exist in law and are not additional powers. They are re-enacted here because of the Single Market and because Customs and Excise have gone, which people find difficult to believe as I do; from I January that will be the case. If one excludes the security consideration, when one hits the Border one will not even have to change gear in a car. Here we are re-enacting Customs and Excise powers and the 1972 powers into legislation. On the later sections only do new powers arise.
By and large, business persons do their own books because they have the knowledge or employ accountants, tax advisers or other specialised people who may not be qualified at all. The Revenue Commissioners are anxious to work with these people and to have an understanding with them. That is what makes the system work. I spoke to Mr. Norman Judge, Head of the Taxation Institute and to Mr. Tom O'Higgins, the former President of the Chartered Acountants Institute about this matter and they are anxious, as representatives of two main national bodies concerned to work closely with the Revenue Commissioners. If in regard to any of these sections, they want to raise discussions or seek clarification about what Revenue want, that can be done.
There was an extensive report in yesterday's newspaper that the Revenue Commissioners attended a conference with the tax practitioners last weekend where they explained their side of the story. People can be assured that we are trying to protect the Revenue base on one hand and to ensure equity on the other. We are not interested in being unduly unreasonable to anybody.
People need to understand the real concerns as we face the Single Market. The VAT we collect is £2 billion and two-thirds of that, £1.3 billion is collected at the point of entry. The system that allowed us to collect that goes on the I January 1993 and the same applies to DIRT. We have £13 billion in reserves on DIRT; £8 billion in the commercial banks and £5 billion in the non-commercial banks. We collect £260 million from that system and we collect £11 million other moneys that people are obliged under law to pay tax on, we collect £11 million so one can see why one would be fearful for the Revenue base. On cars and excise, which we discussed last night at great length, we collect between £140 and £150 million on VAT and excise and the system that returned that has now been discontinued.
If I did not re-enact the Revenue powers and look for new powers for Revenue I would be failing in my duty. We must be clear on what we are talking about. If a handful of people feel beleaguered I will deal with them. If one person has been badly treated by Revenue I will deal with it.
We have a bigger problem in this country dealing with a minority of people but a large proportion of wealth holders, non-compliant tax people who use every trick in the book, every expert on earth and every device that can be found to find a way around our tax laws. Our duty in this Finance Bill is to protect the Revenue base and to give adequate powers to the Revenue Commissioners. The Chairman and Board of the Revenue Commissioners have given a clear statement on trust that these powers will be implemented properly. These powers which I hope will be put into legislation later this evening come under the Ombudsman Act. If people are not satisfied with the method of appeal to the Revenue tribunals they can appeal to the Ombudsman who has full powers, on his own initiation if something is brought to his notice and if a person appeals to him.
My concern is not regardless of what is being said outside, that the powers of this Act have gone over the wall but that they may not have got to the wall. We are trying to protect a Revenue base that we should be expanding. This morning concern was expressed about what would happen if driving a car and instead of using a tow to carry the cases, one carried a load of wine. These are the kinds of concerns we have to face up to. If any Senators have hard information such as names and addresses of evaders I will privately examine them but I have listened for four months, since the publication of this Bill to people — I do not blame them — who say to me; "If you are closing down all the loopholes, it is harder for me to sell my services". It is like a doctor who specialises in arthritis; if we could do away with arthritis he would have a problem too. We are closing doors and loopholes and making life more difficult for tax dodgers, evaders and avoiders and that is my job as Minister for Finance.
If people have genuine concerns we look at them but the vast majority of the concerns I have heard are from people with vested interests. I know many of them and know the profession, but I am obliged to protect the Revenue base and see that there is equity. I am not going to put this House through what I put the other House through when I was asked to put various cases on the record where people with huge salaries pay 1 per cent tax by using various avoidance mechanisms. There are people earning £150,000 per year who pay nothing and people with a few million pounds who pay £40,000. We either want a society of compliant taxpayers or a society where people who can afford legal people, top-class accountants and experts, pay no tax while ordinary earners have to pay 48 per cent. The House has to decide what kind of society it wants. These moderate powers with plenty of protections and understandings with the profession might go some way towards dealing with non-compliance but I have my reservations.
Other Ministers for Finance will no doubt have to come back here and deal with what at times is an epidemic of tax evasion. As soon as the various conditions in this Bill are passed, people are going to be finding ways around them; that is the game and the profession which is fair enough, and is not illegal. Next year, my officials and the Revenue people will have to find ways of tightening up those loopholes but next year we will have another problem because of the figures mentioned. I genuinely appreciate the support I got from Deputy Noonan of Limerick East in the Lower House and from Senator Doyle and her party here, along with my own colleagues.
Let us not get carried away by a few people's sob stories because we are closing a few loopholes. We have to realise what we are dealing with.
The entire House agrees with the Minister's wish to deal with tax dodgers and with anybody in non-compliance with the law in relation to any items in this legislation. That being said, it is extremely important that we ensure that the due process of law is adhered to. Section 116 contains strong language such as "an officer may at all reasonable time enter premises". That may mean entering the home of a person; small trading premises or business premises often incorporate the home of a person and if we look at section 106——
One cannot enter the home of a person without a warrant.
I appreciate that but home and business premises may be identical. Where the distinction is made one would only get into the premises.
If it is the home of the person the Revenue officer needs a warrant.
If the entry to the premises is through the home, how is that difficulty countered? Does there have to be a separate warrant?
Yes.
I did not realise that.
Everything will be kept under the bed from now on.
I showed a tape in the other House of what we are dealing with in tax avoidance and evasion. The stories are quite horrific. Revenue officials nowadays are threatened, abused and have dogs set on them. Yesterday Senator Hourigan told us about what goes on in America where people see the Revenue official coming they cross to the other side of the street. In this country the Revenue official has to go to the other side of the street to avoid being attacked and abused.
May I take it that you are introducing a loophole here so that somebody who moves documentation into their home remains free from questioning and documentation or books that would have to be produced cannot be inspected if it is not on the business premises? In cases where Revenue officials would haver to go to the gardaí and get a warrant, people may store the goods in a part of their home which cannot be entered or keep the ledgers there. They can keep their own persons there also or any persons who might be wanted for questioning.
Would the Minister clarify what is meant by "on all reasonable grounds"? Is "reasonable" left to the discretion of an officer? "Reasonable times" I presume, refers to daytime or to times regarded as reasonable, but what about reasonable grounds? Where are they specified and how are they determined? Is it the opinion of an individual officer?
I support Senator Doyle's point. If we are to give substantial powers to the Revenue Commissioners, and the Minister may say this is the only way of doing it, then it might be best to provide sufficient caveats and safeguards, and one of them would surely be to give a receipt for any documentation or item covered by this legislation that may be taken by Revenue officers. We may be counter-productive if we come over too strongly. We must streamline the procedures and one of the best ways of doing that is to ensure that there is at least a receipt of any material that may be taken by an officer.
Senator Doyle was concerned that documents taken from a trader by a Revenue inspector would be available for inspection at all reasonable times and that a receipt or a list of the documents would be available. I understood the Minister to say that in the course of four months he looked for many of the problems I listed, but they had not arisen. As far as I am aware, they are on their way. They will include — this is a very good example of the problem Senator Doyle is concerned about — a case from Longford where the documents were taken by a Revenue inspector to Athlone and retained for a period of three months. While these documents were in the possession of Revenue officials the trader was asked to produce linking or supporting documents for some of the figures. Because of the system he operated, he needed access to the documents taken to discover where he could search for the information he was being asked for. He was denied that access until the documents were eventually returned to him.
I agree with the Minister's approach of pursuing tax cheats but, even under existing legislation, cases have arisen that are disturbing. There is need to provide protection for the rights of the compliant taxpayer, and we are attempting to do that in recommendation 22.
I was impressed last evening when the Minister said he is putting in the new powers but that if they are abused he will take them back. He also said that if a case was brought to him where there was abuse he would see that justice was done. I trust the Minister to do that, but, should destiny decide that he is for higher things, another Minister would not be bound by his commitment.
You would have a double assurance at that stage.
That is why I am saying the Minister may — I cannot anticipate it — agree to give the force of law to the assurances that he accepts are necessary, and it would leave us all happy.
I appreciate what the Senator is saying. I could change a word here or there and the draftsman could change a word here or there. These powers are there 20 years; there is a statement of practice for the existing powers. There have been few or no complaints or difficulties for 20 years. That is not a bad test of legislation. In the Department of Social Welfare these changed every year. That is a good test. There was an understanding between practitioners and the Revenue Commissioners and it worked very well for 20 years.
There is no problem between the practitioners and the Revenue Commissioners. It is when the Revenue people deal with the ordinary trader that the difficulty has arisen over a two year period. The Minister indicated yesterday that the accountancy organisations and the Revenue Commissioners would be meeting to set up a fresh charter. The trader who can afford the fulltime accountant is all right because that is dealt with at a professional level but there should also be a charter at the lower level for the trader who cannot afford to employ the expertise that can be used in the wrong way on occasions. There is also need for that.
I listened with great care to the Minister. He is approachable and one can discuss individual cases with him but there can be a change of Ministers. I believe everyone should pay tax but, like Senator Howard, I have had representations that powers have been abused. Party politics do not come into it. The people are from different parties. Documents have been taken, premises have been entered and extraordinarily detailed information asked for. I have always had great co-operation from the Department of Finance, and not everybody in this House can say that. I am talking about the time when Dr. Jim Ryan was Minister for Finance. At that time the officials were great; they did not abuse the system or abuse their positions. The Minister talked about a training period or a course for Revenue officials who carry out inspections. Various Senators referred to this, as did Deputy Noonan in the Lower House. At the end of his speech, the Minister said we should bring specific cases to him and bring the people who had been on the receiving end to talk to him. That might be the solution. I do not think the Minister believes this is happening but he knows as well as anybody——
That may not be quite true.
Politically.
I do not criticise the people in the Department of Finance. I was the first publican in Ennis to register for VAT, and nearly organised a meeting to make sure the rest of them paid it.
That was successful.
It was successful. Anything I did in Ennis was successful.
I did not know the Senator was a sheriff for a while, but we learn something new every day.
The person about whom I am talking has paid his tax, as has his father before him. In the case of which Senator Howard is speaking, a girl runs a family business and she and her father have paid their taxes. Both of those people have had the same treatment. Perhaps these are isolated cases. The public think that we here pay no tax; we pay tax the same as everybody else. I have no sympathy for wealthy people and professionals who try to avoid paying taxes but I am concerned for people who are running small family businesses and chambers of commerce.
I thank the Minister for his considered response to this point that I raised some time ago. It is worth spending a little time on this because the public at large, the technical advisers and indeed the Institute of Taxation who are not a bit convinced of the Minister's arguments as of now in terms of safeguards for the public in the area of increased powers to the Revenue Commissioners, need assurance from us, and from the Minister in particular, that sufficient safeguards will be built into the legislation to ensure that all of us can support totally the extension of the powers to the Revenue Commissioners in order to catch those who are not complying with the system at the moment. When you spread the net wider you will inevitably catch some who have always complied and who are not outside the law in any sense.
We must have safeguards in the law, as distinct from a statement of practice, that will allow only those two relatively small points, but very important to the individual concerned (1) that a record of any documents or other files seized be given to the person concerned and (2) that reasonable access be allowed to any further documents seized by the Revenue Commissioners while they are in the custody of the Revenue Commissioners.
Obviously the statement of practice from the two cases which were outlined this morning, is not working, as the Minister intends it to work, in all cases. There should never have been a situation in which goods and documents were seized and a record or receipt for same not given to the individual concerned. Obviously there are problems in that area. According to Senator Howard, people have been refused access to their documents and records in certain instances.
Given the goodwill of the Minister and that he agrees with the points raised, I ask him to incorporate his statement of practice and the concepts in it into the legislation. It is very important that that be done. If the Minister does this he will immediately have the Institute of Taxation, the accountancy bodies, chambers of commerce throughout the country and various others on side with him. These arguments will also apply to the new powers given later in this Bill but they are very important in this section.
The Minister referred to the Ombudsman being a court of last resort. The Ombudsman can only act according to the legislation. I stand to be corrected on this but I do not think the Ombudsman would have powers under a statement of practice which was outside legislation in this area. In otherwords, if on this section or a later section if the Minister does not amend it, there is a complaint from an individual that he was not given a record or receipt for documents seized and that he was not given reasonable access and he then appeals to the Ombudsman, having tried and failed through any other procedure involved in the Bill, I do not think the Ombudsman can over-rule legislation just because there is a statement of practice that the Minister issued some time after the legislation was passed. I would like some clarification on this. I do not think the Ombudsman is the answer if we do not put the safeguards I have requested — and I got support from all sides on this — into the legislation. In the UK — it may not be an exact comparison because they have a different taxation system — in the US and in other countries, these safeguards are in legislation. They play an important part in keeping the trust of the compliant public with one in terms of extending one's powers.
There must be no reason for anyone, particularly professional bodies, to be able to complain about what is done. They should be 100 per cent behind the Minister. There should be no complaints, particularly when the Minister can remove their concerns in this area, and he obviously can if he is prepared to put them into a statement of practice. I am asking the Minister to give that statement of practice the force of law. If we fail in our arguments in this regard — and I hope we will not — I ask the Minister to indicate the statement of practice before this legislation is enacted. In other words, it will be quite clear to the Revenue Commissioners, to the professional advisers and to all exactly what code of practice is envisaged in terms of the extension of powers to the Revenue Commissioners.
Can the Minister assure me that the two points I make will be specifically detailed in any statement of practice, that a record or receipt for any goods or documents seized will be given to the individual and that the individual and/or their professional adviser will have reasonable access to all those records while they are in the possession of the Revenue Commissioners?
It is general practice at present for Revenue officials to give a receipt for any books and records taken and certainly this would be given where requested. That is the present position and the instructions the Revenue work under. The powers in these sections are not new. I am no quite sure of the reason for this debate. Debate on the Bill generally has been good and I have no difficulty with that but neither the professionals nor the tax officials were talking about these sections. They were talking about the later sections of the Bill which are new powers. They have worked with these for 20 years as have ordinary people. Many people have been reading these powers as if they are new, either mischeviously or because they did not understand the powers have been there for 20 years. I am not sure which; I am not talking about Members of this House or the people outside the House. These powers have been there and have worked well. They are being re-enacted now because of the changes as a result of the Single Market.
There may be more use made of these powers because of the changes. Perhaps they will become more relevant and more widespread.
Perhaps, but I would also say that the tax consultants made it clear and it was made clear in the Dáil that they were not talking about these sections. They are not talking about VAT as they are not worried about that area. They have made that very clear. I spoke to Norman Judge and others. I had the honour of attending their dinner last Friday night and I had a good opportunity to talk to the profession then. They understand fully the argument about VAT and that is not their concern. They are concerned about other areas. Their concerns are mainly about three or four areas. On Tuesday I brought in amendments to the House. They believed that the limit in money terms we were looking for was too low and that the extent of the information we were looking for was far too much. We agreed to make amendments to that which we did in the House on Tuesday, with the support of all parties.
In the other areas of concern, the profession asked that we would draw up a statement of practice to which they would be party. Senator Doyle asked me to put on the record what they are talking about. That statement of practice is in the new areas of powers but perhaps it is as well to deal with it now, in case we do not get to it.
That is what I am afraid of.
The statement of practice in the areas of new powers would cover where Revenue state they need information in certain areas that the interpretation would be worked out in consultation with them of what information precisely Revenue are talking about and that the professionals would have an input. It would be ridiculous, for example, if in the area of third party, every item over £500 in a large business had to be returned and all the data was returned to Revenue. If every employer were to return all this information, Revenue would have warehouses full of information and they would only need 2 per cent of the information. It would be ridiculous to have business people complying with the law and sending in information which is not necessary. It is a matter for Revenue and the professionals to work out precisely what they are trying to get at. That is what they are going to do after the passage of the Bill. In other cases where agreements have been reached they have worked very effectively. We agreed last Friday that this would be undertaken and the professionals have since said that they are happy with it.
However, they had other concerns which we will deal with later in the Bill. They felt it was unfair of me to ask them to retrospectively comply with certain data, and to go back a year. We made changes that they will start supplying information from current dates, in other words, they will have to start sending in returns from 5 April next year. Their accountancy system was based in a certain way and they will have a fair opportunity to set up the new system rather than having to go back a year. I will answer generally some of the questions asked. The Ombudsman's covers the Revenue area, so that any alleged maladministration could be examined by him. His powers are broad——
Within legislation?
Yes, within legislation.
A statement of practice would not come within the ambit of the Ombudsman?
No. The statement of practice is to help the professionals when companies send in huge amounts of information. It would not arise in the case of a shopkeeper.
Will the statement of practice include access to records held by Revenue?
It is my understanding that if Revenue have taken records from Mr. X, and he wants access to those records, he would either be given copies of them or would get access to them. That is the present practice. If a person was trying to get information to answer Revenue's questions, it would be inappropriate if he was not allowed reference to his own books.
I made a point earlier about the kind of things that happen. You can have your accounts on computer. That small tape represents 1.5 million characters, about 1,000 pages of records. If the Revenue officer arrives at the door, somebody can slip out that tape and put it into his pocket. That is the record and that is the access to the audit trail. This is not an exaggeration. This happens every day. Records are put onto a floppy disc and the disc can be removed.
The days of massive accounts books are gone. I was on the audit trail long enough to see how the old system worked. As Senator Howard would tell you, now even in a medium sized pub, stock control has become automated.
My business has not reached that stage yet.
That is because you are a Senator; you are a compliant taxpayer. You would not be a Member of this House if you were not. These are the controls that apply to some people. I wish that the same controls applied to others. People understand what the difficulties and fears are.
All decisions of Revenue officials may, in the first instance, be appealed to higher authority within the office of the Revenue Commissioners itself. Some people will say, not many, that that is one group examining themselves but the case of Revenue that practice has worked effectively over the years. The professions agree with that and the ordinary individuals agree with it also. An initial appeal can be made to the local office. If a dispute cannot be resolved locally, it can then be referred to the head office of the commissioners and, ultimately, to the board of the Revenue Commissioners. There are three steps on the trail.
The procedure is free and is widely used in the Customs and Excise area and follows on to other areas. The Commission on Taxation in their fifth report when reviewing the appeal procedures concluded that the existing appeal arrangements are sufficient to deal with any appeals which might occur in the Customs and Excise area. This included the possibility of appeals against seizure of goods and search of persons. It has been independently examined since the changes of 1967 and 1972. In order to ensure that citizens are fully aware of their rights, the Revenue Commissioners have introduced a taxpayers' charter. This charter sets out in clear and unambiguous terms, the rights of every taxpayer is his dealings with the Revenue Commissioners, including the right to seek a review of his case.
The exercise of the powers in this Bill when enacted, will be subject to review by the Ombudsman and any person aggrieved by a decision of the Revenue Commissioners may seek a review of the decision. A measure of the care with which the Revenue Commissioners exercise their inspection and audit powers in relation to VAT and the direct taxes is that there has never been a complaint made to the Ombudsman in this area. This is significant. It is not that people do not know about the Ombudsman, there is not a day that we do not hear about him in one form or another. Over 12,000 visits are made by Revenue officials annually to carry out detailed examinations of traders' records. In addition, a further 20,000 visits are carried out annually in relation to specific queries. In fairness to my colleagues in Revenue, that has to be put on the record.
A wide range of matters in relation to VAT may be appealed to the Appeals Commissioners. Appeals can be made in relation to a charge to tax, refusal of repayment, the determination of VAT rates and compulsory registration. In this Bill, additional appeal grounds are being provided against the security provisions in section 186 and the treatment of an agent as a taxable person in section 193. The Appeals Commissioners are an integral part of the VAT system and provide an important independent avenue of appeal which is easily and cheaply accessible in relation to a wide range of issues.
The exercise of all Revenue powers are, of course, open to judicial review. The new powers in this Bill are subject to the Constitution and any citizens aggrieved with their operation can seek a judicial review. It must, however, be borne in mind that the powers of search and arrest provided for in this Bill in relation to VAT can only be exercised by an officer who believes that a criminal offence has been committed. The sole purpose of arrest powers are to ensure that a person is brought before the courts and any person who is arrested must be brought before a district justice without delay and charged. Abuse of the arrest provision will be open to challenge.
There are four different mechanisms by which an aggrieved party may appeal against a decision of the Revenue Commissioners, that is, apart from what we are talking about and in addition to the statement of practice worked out between the professions and the Revenue Commissioners. In relation to the search, seizure and arrest provisions, appeal to the Revenue Commissioners and the Ombudsman provide a straightforward and free review system. Furthermore, the full legal protection of the Constitution and the courts system is always available to an aggrieved citizen.
The point can be validly made that these powers are already available to Revenue officials and their exercise is not giving rise to complaint. The sections in the Bill have been drafted in a restrictive manner to ensure that a balance is struck between the rights of the individual, on the one hand, and the interest of the State and compliant taxpayers, on the other. I am satisfied that the existing review and appeals procedures are sufficient to protect the rights of the individual. I noted the concerns that have been raised by Senators. Senator Howard has been kind enough to acknowledge that if I believe there are appropriate measures to be brought forward in the future, I will do so.
My colleague, Senator Honan, who has been here right through the debate knows me very well because she detected from my tone of voice that I do not believe this is a major issue. I have been involved in the tax area for a long time. My closest friends are involved in that area and when out socially the conversation always turns to the tax system. I am not saying there are no difficulties in the tax area. Many people feel aggrieved because they have to pay tax. Nobody likes giving away something for nothing. They find it hard to relate this money to the payment of pensions, unemployment benefit, the hospital services, the health services and so on. People believe if they pay a few pounds towards the running of those services that should be sufficient and this is understandable; I feel that way myself from time to time.
The policy I try to pursue in the Department of Finance is one in which I have strongly believed for over 20 years, that if everybody pays some tax, than all taxpayers will pay less tax and the system will be fairer for everybody. People do not feel nearly as aggrieved if they see equity. The public get upset if they are paying 48p in the pound, are driving a 1984 car and living in a small house and they see others, who they know are paying little or no tax, driving a 1992 registration car and living in a big house on the hill.
It has nothing to do with who is rich or who is poor. If people pay their fair share of tax they are entitled to be as rich as they like. My problem is with non-compliant taxpayers who try to either evade it or dodge payment. Equity can only be achieved in a fair tax system and that is what I seek to do.
I am anxious to move on, we have given a lot of time to this matter. Perhaps we could have two or three final questions from Senators Costello and Howard.
The Minister has convinced us all that it is his desire to include in the tax net all who are fraudulently depriving the State of much needed tax. In our contributions on Second Stage we referred to the need to clamp down on tax evasion. Are we now in a position whereby we will have a code of practice or a statement of practice in relation to powers being granted to the Revenue Commissioners to enter premises and take goods?
Is this what the Minister proposes? It need not be specifically stated in the legislation. The concerns expressed here are not in regard to the intent and function of the powers, but to ensure that due process is seen to be done.
The wording of section 116 is extremely strong. If there is a belief that a criminal act has taken place, in other words, if goods have been taken without adhering to the law — there may be documentation on the premsies that would give rise to that belief — Revenue have the authority and right to enter. Can that entry take place forcibly? Must it be voluntarily? Is the person to be consulted or is there any advance procedure? Can an official of the Revenue Commissioners who believes that goods are on the premises use a sledgehammer to break down a door in order to seize goods? In some circumstances the goods may not be on the premises. What procedures will be adopted in carrying out the powers under this Bill?
Surely a record should be taken by the Revenue Commissioners of goods that have been seized. If they inspect a premises, question somebody, take a document or a piece of computer data, surely a record should be taken? They will need a record if the matter goes to court, which is provided for in the legislation. It is a simple matter to give a copy of that record to somebody. Whatever about having access to data, surely it should be part and parcel of the code of practice to ensure that a receipt is available.
Basically, I want to comment on the Minister's list of appeals procedures which provide legal recourse for an aggrieved taxpayer. I accept that a mechanism is in place to deal with decisions, but there are no structures or methods to deal with the attitude and approach of inspectors to the premises. The Minister stated that this procedure has been in place for 20 years, but he is well aware, as I am, that three days ago his five Oireachtas colleagues from Donegal discussed this issue with the Chairman of the Revenue Commissioners. It was a serious oversight on their part if they did not approach the Minister before their visit to that official.
I was aware of my colleagues visit. They were on a briefing session to discover how the system works so effectively in Donegal.
That is a rather creative version of what actually happened. That is not what they told their constituents.
In fact, I have to congratulate our Revenue official in Denegal who had the ability to get 1,200 people to go to a public meeting and when Senator Costello and myself try to get a crowd to a public meeting in our constituency we can hardly get 200. Obviously, Revenue officials have great pulling powers. My colleagues from Donegal were extremely impressed by the understanding nature of the Chairman of the Revenue Commissioners and his concern in trying to allay their unfounded fears about any difficulties with Revenue powers in Donegal.
Senator Costello asked in regard to the right to enter a premises under the section. It is usually on foot of information received by Revenue. Only certain premises would be targeted. It does not take place in a haphazard manner and they do not bring sledge hammers with them either. It is an offence to obstruct a Revenue official in checking the premises, but rather than fight about that, they normally pursue it in the courts. Under Customs and Excise laws currently under discussion, it is an offence to obstruct a Revenue official.
Question put and agreed to.
Sections 117 to 130, inclusive, agreed to.
SECTION 131.
Question proposed: "That section 131 stand part of the Bill."
I would like the Minister to give us a little of his time — although he has done so quite generously to date — on this section. This chapter was not in the original Bill as published and there is a great deal of confusion as to how the new registration of vehicles will be implemented. What implications will this new taxation and registration system have on the cost of cars next year? I would like the Minister to put his views on the record in this regard because there is a great deal of public concern what exactly the implications might be. Will the radical changes, resulting from our entry to the Single Market, cause a dramatic drop in the car sales this year? Are people waiting in expectation of a better price regime next year? Is that warranted? Would they be as well to get the higher trade-in value on their second-hand car this year against the higher price of a new one as distinct from the lower trade-in value of the second-hand car next year with, perhaps, a lower price on a new car?
I would also appreciate if the Minister would indicate what the relationship will be between local authorities and their ongoing registration and licensing of vehicles and the new offices for registration and taxation of vehicles? I understand the first licensing of unregistered vehicles will be done by the new registration office. From thereon, if I understand it correctly, it will be done as it is at present, through the local authority motor taxation offices.
This Chapter deals with the same issue so, perhaps, we could discuss a few poionts which can be raised on any section. In relation to the transfer of residence and the difficulties attached to the importation of cars, there are many rules and regulations which must be adhered to. I could not begin to recall them all. People who have tried to comply with them and got advice from local offices in the UK or contacted Rosslare or other ports, but on their arrival here they found they could not bring in their cars because of a misinterpretation of the rules on the importation of cars. Before I January next could we clarify the procedures that will be in vogue and which will keep people on the right side of the law when transferring their cars, registered in their own names, to this country? In what circumstances can that be done? The Minister will tell me that the matter is laid down in present law but if the new system is as difficult and complicated for the ordinary person to interpret as it is at present, the confusion will continue. That practice is against the spirit and ethos of the Single Market. In terms of free trade and free movement of people and goods, the rules must be clear, simple and obvious. Therefore, I ask the Minister to put on the record how the matter will be handled post-January.
I thank Senator Doyle for welcoming the overall thrust of this section and she has invited me to give some details. I signalled in my budget speech my intention to replace the existing excise duty on motor vehicles with a first registration charge designed to produce equivalent revenue. The price structure has not changed very much. The recent arguments about the pre-tax prices are another matter. The EC Internal Market obligations mean that the current excise duty cannot be maintained because it is reliant on Border controls for enforcement. Budget considerations rule out any foregoing of the substantial revenues arising from that source, which is about £150 million.
The purpose of this section is to establish the legislative framework for the new vehicle registration tax in keeping with EC requirements and for the consequential administrative arrangements arising from the transfer of vehicle registration functions to the Revenue Commissioners who the Government have decided should handled the collection and enforcement of the new imposition. Responsibility for the road tax will remain with the local authorities, as will the other functions which are performed in the motor taxation offices. It is just a division of the functions, the new registration tax on the first charge is at the Revenue base and all the ongoing work remains with the motor taxation offices.
Under the new system provided for in this chapter there will be a single registration charge subsuming the current flat rate administrative charge for registration imposed at present under the road tax regime. In the case of new vehicles, the chargeable basis will be the open market selling price, inclusive of VAT and the vehicle registration tax, as declared to the Revenue Commissioners by the authorised manufacturer or distributor. The tax will also be based on the open market selling price for second-hand vehicles which are liable to tax and registered in the State for the first time. This is a significant change from the present system which uses predetermined depreciation scales. Specifically assigned Revenue officers will be employed in determining the open market selling price for second-hand cars. They will have reference to trade guides, various depreciation scales and backup from the central valuation unit. Provision is also made for an appeals system in relation to the tax charged.
For motor cycles a framework will be provided to allow for the continued taxation. The tax will be levied at the dealer stage rather than at the importer-distributor level as at present. Instead of having 21 importers a larger number of distributors will be involved. The system will also cater for individuals registering vehicles which they purchased outside the dealer network. Discussions are taking place between the Revenue Commissioners and the trade on the details of the system as it will operate at dealer and distributor levels.
Broadly speaking, provision will be made for maintaining the current scope of reliefs which apply to excise duty, for example, in the case of transfers of residence and temporary importations, while there would be no effective change in the disabled drivers' scheme. To answer Senator Doyle's question — which annoys us all from time to time — on the transportation-importation arrangements, for years our system has been based on the fundamental that there are frontier controls and, we were following Community law, because you have to protect your own Revenue base. Those controls are gone; it is now an internal matter. Whether we have temporary importations is a matter for ourselves. As I indicated, we are going to keep them, but it is our decision how we keep them. I will be introducing new regulations later in the year which will allow us to simplify the system.
Does the Minister accept there is confusion and difficulty in this area?
I do.
I have representations the length of my arm at my clinics on this issue from reasonable people who cannot cope with the system.
My previous post outside politics was in the Mater Hospital where doctors and other paramedics moved in and out of the country on an ongoing basis. I spent my time dealing with such issues. My first priority would be those who are trying to comply with the system. We will endeavour to simplify the system.
That it is transparent and that people know the rules.
With the absence of Border controls from January next, there will be no customs official to stop the non-compliant person who arrives at Rosslare in a car. The abuses of the system that take place at present include that of the stolen car, the burned out car and the missing registration plate cases and we will be far more open to such abuses next January. I agree with Deputy Doyle, it is necessary to have a system that is easily understood by the compliant taxpayer yet ruthlessly tough for those who do not comply with the regulations.
To ensure compliance with the new tax system, in the absence of Border controls Revenue officers will be given the powers necessary to secure the tax, including the power to stop vehicles and check the registration status. This is not at the point of entry. As I said this morning, frontier controls are no longer at the frontier, they are everywhere. People can no longer be stopped coming off the boat, traps will have to be set up elsewhere, more effectively with the back-up of the Garda and the Customs people who will now move into the Revenue section.
Provision is also being made for penalties, including forfeiture of vehicles in the case of defined offences, and for the making of administrative regulations. The actual rates of vehicle registration tax to apply will be set out in the autumn Finance Bill following discussions with the interested parties.
I have reservations in relation to the registration tax which the Minister proposed to introduce in the autumn Finance Bill. I have been buying five year old cars outside the country since 1985. One of them was only the second such vehicle to be imported privately in that year and I have been through the system three times. I discovered that the duty payable was based on the recommended retail price of the car here by the motor importers. It was very clear they inflated that figure. It may well be that they are now in conflict with the Competition Act. I took the deliberate step of going to the importers and said I was a cash customer for that new model. On a £28,000 car the price to me was £3,200 less the recommended retail price. Yet because of the system I had to pay duty on that figure which was an artificial raising of the price level. I ask the Minister to look at that racket which has been going on since 1985. Is it his intention to base the registration fee on the recommended retail price as given by this self-perpetuating body?
I have two questions, first, will the Minister clarify the position in regard to the liaison between local authorities and the Revenue Commissioners and, second, is there a possibility that dealers or garage owners might use this provision to increase the price of cars?
In regard to Senator Howard's query, that old system will be gone and I hope the new one will be simpler.
This provision should not result in an increase in car prices. Statistically, at present we have no proper single system of registration. Revenue will now operate that system and all vehicles will be registered with them. There will then be access to all that data on the new registration charge and that information will be available to all motor taxation offices. As I said in the other House, the data, and statistics available should be far better from now on
We will have to wait and see how the system operates for vehicles that are outside the system, or for secondhand vehicles. It is more complicated for such vehicles because one is not dealing with the distributors. For new vehicles which are being imported the relationship between the distributors and Revenue should provide us with a good registration record base.
When we consider section 104 and all of the areas on which that excisable duty has to be paid we come again to motor vehicles. It appears that the dismantling of borders will not give any great advantage in terms of a reduction in prices. Presumably, when the Oireachts sits in the autumn to agree this new vehicle registration tax it will be equivalent to the present excise and, therefore, we are unlikley to benefit from it. As certain exemptions are given for alcohol, petrol and beer, the Minister might consider a certain model of car that could be exempt if there was very low fuel consumption or if it was environmentally friendly.
If a person imports a vehicle they will have to go through the procedure outlined in section 106, whereby they have to give prior indication to the Revenue Commissioners that they intend to go abroad to bring in the vehicle. If it is done by a State vendor, I presume that is their responsibility but who is responsible for ensuring that the vehicle is registered? Is it the importer who does it in a collective sense, is it the individual who may import it on an individual basis or is it on each of them, depending on the process involved?
The payment system will be dealer-based but whoever has the vehicle in their possession bears the responsibility. In the case of the majority of the vehicles that will come through the distributor, the distributor will probably do the paperwork and register the vehicles under the new registration tax. However, if a person from outside the distributor system imports a car and is stopped at a patrol check, the obligation to comply with the regulations is on the individual concerned. The powers will have to be tougher because people in this system are taken more and more on trust. In many of the Single Market systems a great deal of paperwork has been discarded, there is far less administration and the onus is placed on the individual.
Question put and agreed to.
Sections 132 to 134, inclusive, agreed to.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
SECTION 135.
Question proposed: "That section 135 stand part of the Bill."
Section 135 deals with the temporary exemption from registration of a vehicle brought into the State for a limited period. What I am looking for here is some sort of definition, or at least a guideline, as to what constitutes temporary. Subsection (a) says that a vehicle is exempt from registration if it is brought into the State by a person established outside the State for private or business use. That would appear to apply to somebody who is not a member of the State, but who is a member of the European Community and is bringing his vehicle here for private or business use. Can that operate in practice, considering the new developments that are going to take place if we approve Maastricht? There will be many joint ventures, and businesses will operate jointly in different member states with the ease of finance and business concerns. Has the Minister anything in mind in terms of defining the temporary exemption from registration of a vehicle brought into the State for a limited period?
Section 135 (c) refers to a vehicle designed or specifically adapted as professional equipment brought into the State. What does "professional equipment brought into this State" for a temporary period mean?
As I said earlier about the general issue, regulations will be worked out later in the year on all the details and some of the questions Senator Costello is asking will be answered then. The section broadly provides authority for the Minister for Finance to regulate for temporary admissions of vehicles without the need to register here and pay the new tax. Precisely what kind of definition we would put on that will be in the regulations. The regulations will cover vehicles brought into the State by foreign visitors for private use. They will also cover vehicles brought into the State by foreigners and foreign companies for business, including vehicles to be temporarily exhibited or demonstrated or used in a competition, and specialised vehicles used by them or under their supervision. The intention is to broadly maintain the existing reliefs.
The last question was about the type of vehicle we would be talking about. Mobile workshops were mentioned. Vehicles designed or adapted for a professional purpose could be brought in by a visitor. Such a vehicle would be used exclusively by the foreign visitor who imported it under his personal supervision. Relief from excise duty on specially designed or adapted vehicles for professional purposes is available at present, so this is continuing that relief. Regulations will be made under the section 141(1)(b). We have described the conditions under which this exemption may be availed of, for example, length of stay, or any other conditions.
The mind boggles to think of visitors bringing in mobile workshops. It is not a category of vehicle I am accustomed to. I am not accustomed to regularly seeing visitors travelling around in mobile workshops. Why would the importation be of a temporary nature?
It would apply to something like the exhibitions in the RDS over the last week, where people were attending Italian and Swedish food fairs.
Is that not included in section 135 (b)? It would seem that this refers to some other category. Another problem arises under section 137.
Racing cars.
There are all kinds of examples — a mobile studio, TV crews etc. There are people passing through all the time.
These can be exclusively for the use of the person under their supervision. May I refer to the wording of section 135 (a): "brought into the State by a person established outside the State for his private or business use". Does that mean that a company director can send a fleet of cars into a member state that would be used for the benefit of the directors or the employees of a company or for the business use of that company on a temporary basis, on the grounds that they have valid and proper business operations in the country, and that as long as the importation is defined in terms of a business use such vehicles can be brought in? It is important that we would be able to define the quantity of the import and what constitutes the temporary nature of this exemption.
The regulations will do that. One could not bring in the vehicles without defining what they were going to be used for. The relief replicates the existing reliefs, they are not new reliefs. The regulations will set out details; they will stipulate and specify precisely how they will operate for people who are bringing in the goods or vehicles.
Do I take it that subsection (8) applies to new unregistered vehicles, or does it mean vehicles not registered in this State? I take it that it will be possible, as on the Continent, to drive freely from one country to another.
We are talking about vehicles that will be unregistered, coming from outside the State.
Question put and agreed to.
Sections 136 to 140, inclusive, agreed to.
SECTION 141.
Question proposed: "That section 141 stand part of the Bill."
I take it this is an entirely new section which deals with what many motorists in the country have been looking forward to. With regard to the regulations on registration, I noted in the last week of March the European Commissioner on Taxation, Mme. Schrivener, produced a directive which aims for a substantial reduction in the rates of excise duty on bio-fuels derived from agriculture. This is tied in with vehicles where some of the bio-fuels are being developed for usage in ordinary vehicles. There are other types of vehicle specially designed for the use of multifuels. Do the Department or the Commissioner propose to provide any incentives for people to import multi-fuel vehicles, particularly vehicles which use bio-fuels derived from agricultural sources or non-food crops here. Is the Minister providing for the reduction of 90 per cent on excise duty on bio-fuels, as announced by the Commissioner, to take effect from 1 January next?
I take it the Senator is saying that Commissioner Schrivener was talking about a lower rate of duty on some of the vehicles used?
No, the lower rate of duty on hydrocarbons or oils.
The provisions are neutral. There is no increase or reduction specified. Are these recent proposals?
The last week in March.
They have not been discussed formally. Any incentives for the use of such fuels would be matters for decision. Were they talking about the pre-tax rate on cars also? I have seen documents on that. It is not envisaged in the legislation. There are no changes from the present position.
Do I take it the Minister does not propose to implement the 90 per cent reduction on bio-fuels from 1 January next, as agreed at the meeting on 24 June last year, and as announced as a directive by the Minister at the end of March?
I am not too sure precisely what proposal we are dealing with. It is not covered under this section. Any rates of duties or excise are budgetary matters and are not covered under these sections. The Commission proposals on the bio-fuels have not yet been discussed formally. The paper by Commissioner Schrivener has not come before the ECOFIN Council. The proposals in that will still come up. Many of the proposals adopted last year are on excise matters and will be implemented from 1 January next. The proposal on bio-fuels is not one of those.
I am in difficulty. I may not be speaking on the appropriate section but the point I was raising was agreed politically by the Council of Finance Ministers on 24 June 1991. The directive was to come into force on 1 January next. It related to the reduction of 90 per cent on the duty payable on bio-fuels. I anticipate that those bio-fuels could be readily imported into this country from 1 January next. There will also be a reduction in the price of fuel oils.
The ECOFIN decision of 24 June did not deal with the issue of bio-fuels, so it is not part of the 1991 decisions. The Commission proposals on bio-fuels have yet to be discussed formally by ECOFIN.
I was reading a press release from the Commissioner on 25 March last.
There may have been some proposals. I have checked the position, and it definitely was not part of it.
I thought it referred to bio-fuels. The Minister is correct. It does not. The matter refers solely to the registration, managing, securing and collecting of vehicle registration tax.
My query is in relation to subsection (5) about regulations, and how they shall be made. Subsection (5) states that: "the regulations under this Chapter shall be laid before the Dáil". Subsection (1) (a) states that they shall be made by the Commissioners. There are some very important regulations here. There are many new regulations in relation to identification marks in relation to the method of charging, securing and collecting vehicle registration tax. The basic principle we should enunciate in relation to the making of regulations is that they are made in this House and that the Minister presents them to this House. We must have a positive approach to discussing, debating and adopting such regulations, rather than having them made by an external body and where they pass into law almost automatically. Would the Minister consider taking a more positive approach?
Senator Doyle raised the issue of disability benefit and felt that it should have to come before the House. It involves major changes but most are technical regulations. They are worked out by people involved in the industry. They are purely technical. Having made some of those changes in previous Bills over the years works against one. I remember at one stage that I agreed when Deputy Quinn asked me to bring in regulations on worker-directors, or sub-board directors in semi-State bodies. The Deputy said I would have to lay the regulations before the Dáil. It was the worst thing I ever did. It was impossible to get the Dáil or Seanad to debate them as nobody thought the matter was relevant. It meant asking Opposition spokesmen to provide five minutes here or there. It was usually agreed to take them at 12 midnight at the end of the session. I have already conceded to Senator Doyle's request. These are technical regulations and should be left to the technical people to sort out. They are introduced under the general regulation specified in the Act. The Dáil can deal with them in that way. To lay technical and complicated regulations before the House is not right.
Question put and agreed to.
Sections 142 to 149, inclusive, agreed to.
SECTION 150.
Question proposed: "That section 150 stand part of the Bill."
Section 150 deals with hydrocarbons. Perhaps it would be appropriate to put the press release from the Commissioner for Taxation, Mme. Schrivener, on the record of the House. The Minister may be able to give me some guidance on this. The press release stated:
On a proposal from Mme. Schrivener, the Commissioner with special responsibility for Taxation, the Commission today adopted a proposal for a Directive which aims at a substantial reduction in the rates of excise duty on fuels from agricultural sources, or "bio-fuels".
Mme. Schrivener said:
The aim of this tax incentive is to develop a very promising branch of agro-industrial production. It will be a decisive factor in the future of agriculture and for the Community's policies on energy and environmental protection.
The aim of the Directive is to bring about a Community-wide reduction in excise duty on bio-fuels, when they come into commercial use. It lays down that, from 1 January 1993, excise duty in each member state may not exceed 10 per cent of the rate in that same member state for the fuel being replaced (petrol or diesel). This thus amounts to a compulsory reduction by 90 per cent or more in the excise duty on bio-fuels in each member state.
The aim is of course to reduce the total cost price of bio-fuels to a level where they can be competitive with petroleum products. The proposal follows on from the political agreement reached on 24 June 1991 at the Council meeting on economics and financial affairs, concerning excise duty on fuels. Its basis is the same as the one adopted by the Community in the case of lead-free petrol, where a minimum rate of ECU 50 below that for leaded petrol was decided on.
Perhaps I could bring that to the attention of the Minister. I anticipate that it will be possible to have available in this country early next year supplies of bio-fuels, if we are to take diester which is being produced in Germany, France and Austria. I hope that the Minister can give the House an assurance that this country will be in line with the taxation proposals as adopted not only by the Community but by the Federal Government of Germany and the French President who have given very positive indications of their desire to promote the production of bio-fuels and environmentally friendly fuels and the promotion of non-food crops as part of the new strategy for a unified Europe.
I would like a comment from the Minister on Mme. Schrivener's directive.
Before I do, may I say that the section on hydrocarbons provides for a reduction of 2p, including VAT, on a litre of petrol? The equivalent would be just over 9p a gallon with effect from 1 May this year. It also provides for a 50 per cent reduction from 17p per gallon to 8.5p per gallon, which is the rate of excise duty on non-automotive LPG from 1 July next. The Exchequer cost of these measures is estimated to amount to £15.7 million this year, and £25.3 million in a full year. The duty reduction on petrol will have a number of positive effects.
First, it means that the rate of duty on leaded petrol in this State is now 8p a gallon lower than the corresponding rate in Northern Ireland, taking the exchange rate of 91p sterling to the punt. The total tax content is practically the same in both cases. While it is difficult to make price comparisons between prices North and South, as both are now decontrolled, there seems to be a small difference in favour of the Northern product due to the differences in the trade content. The incentive for people to travel to the North for petrol is now virtually gone. This will result in a further improvement in the competitive position of retailers in Border areas. Second, the measure will be of benefit to the motor trade and motorists generally as it is a directive reducing costs. Third, the timing of the reduction will provide a useful boost to the tourist sector.
On the non-automotive LPG, the halving of the duty should encourage consumption of this environmentally friendly fuel. It also takes account of the reality that no duty applies to the product in Northern Ireland.
On Mme. Schrivener's proposals, the June 1991 decisions dealt only with conventional fuels such as petrol and diesel. Senator McDonald was talking about the adoption of the proposals by the Commission. I think we have clarified that. The Commission have adopted proposals, but the proposals have not yet been discussed by the ECOFIN Council. Most of these discussions on outstanding points of excise duties and VAT related issues will be completed at meetings arranged in Brussels and Luxembourg in June and July. The intention is to have these matters concluded before 1 January 1993. Naturally, matters of excise duties, VAT and taxes have a budgetary context, but the ECOFIN Council will deal with them during the summer. If we are to prepare and be ready for an autumn Finance Bill, they will have to be ready before the holiday period in August in Europe.
We will implement whatever is adopted in due course with regard to these fuels.
Question put and agreed to.
Sections 151 to 154, inclusive, agreed to.
SECTION 155.
Recommendations Nos. 16 and 17 are related and will be discussed together.
I move recommendation No. 16:
In page 170, subsection (2) (c), in the third row of the Table in the entry relating to £300,000 to delete "£500,000" and substitute "£400,000".
Bearing in mind that the Cathaoirleach appealed for brevity, if the Minister is accepting my amendment I can see no need to speak on it.
Perhaps the Senator wishes to make his case first. I will wait to see how I feel about it this time next year.
I assume that the intention of these two recommendations is to reduce the rates of licence duty in the £500,000 range. I have moved a long way on this and Senator Howard has been kind enough to acknowledge that. I have sought to replace the flat rate system of charge with a system structured on a progressive element. The rates and the bands have been pitched at levels to take account of the needs of the Exchequer and also the effect on licences. The effect of these recommendations will be to reduce the Exchequer yield and will add to the complexity of the system. I am satisfied that the system and the rates and the bands are reasonable and meet the objectives in this regard. Naturally I am not prepared to accept the recommendation but, by and large, as Senator Howard knows, I negotiated these with the trade. We will see how they work out. I hope they will be satisfactory. They are not unreasonable.
I think the Minister, with the assistance of Senator Howard, has moved in the right direction in relation to the imposition of duty here. Certainly the £100 annual charge or any increase in that would be inequitable. A move towards the rateable valuation on individual premises would have caused the same problem because it would have created an inequitable situation in terms of turnover. The turnover seems to be the appropriate area to be subjected to the duty. I am happy to see this change in the original proposals that were made by the Minister, although I would regard them as perhaps pitched too low considering the turnover that is there.
However, there is a slight element of schizophrenia in relation to the two proposals. The first amendment seeks to delete the figure of £500,000 and to substitute £400,000. The section sets out the rates of duty at £900 on a turnover of between £300,000 and £500,000. The effect of the second amendment will be to reduce that so that you will have £200 duty under £150,000; £400 between £150,000 and £300,000; £900 between £300,000 and £400,000 and £600 between £400,000 and £500,000. In fact, we are going backward before we go forward.
There is a certain contradiction in the two amendments. I am in favour of the first amendment but I do not agree with the second amendment.
There is a widespread feeling among publicans that in the category £300,000 to £500,000, with the cost of the licence rising from £400,000 to £900,000, was a sharp jump. The view was expressed that it might be more equitable if there was another tier included and my amendments seek to do that. I am simply reflecting a point of view that has been expressed in the trade. I have no apologies to make for putting down the amendments.
I acknowledge that this proposal in the Finance Bill is a much fairer system than what was originally proposed in the budget. I acknowledged last evening the response of the Minister to the representations made to him. I also made a point, but the Minister happened to be taking a telephone call at the time, that I believe there is an unfortunate tendency on the part of many people who are not familiar with the licensed trade to look at only the top 5 per cent. We had a number of examples of that here last evening and we have had some of it again today. That is unfortunate and it is doubly unfortunate if only the top 5 per cent of the Dublin trade is looked at.
I do not want to say anything that could be interpreted as a rural versus city division but the reality is that if you relate the number of licensed premises in Dublin city to the population and you do the same exercise in the rest of the country the difference is a multiple of nine. That shows it is unfair and unreasonable to judge the trade by the top 5 per cent.
I would like to put on record the findings of a very reputable firm of accountants and management consultants, Stokes Kennedy Crowley who have completed an investigation into the industry for the Vintners Federation of Ireland. They made the following comments:
1. When wages are charged to the accounts for the publican and/or his family, 43% of Vintners would show a loss in 1989 and 25% would break even.
2. When wages are charged to the accounts, Vintners with a turnover of less than £195,000 display consistent losses.
3. There is a significant and increasing reliance on food sales to maintain overall profitability in thr trade.
4. Over the period 1986-'89 drink turnover decreased in real terms by 2% while overall costs increased by 6.3%.
5. Average trading hours have increased from 82 hours in 1985 to 88 hours in 1989.
6. From 1982 to 1989, Vintners turnover declined steadily in real terms by 14.7% while individual personal consumption of goods and services has increased 14%.
7. Drink volume and value declined by 30% and 12% respectively over the period 1979-1989.
8. The volume of business in rural areas has declined steadily, Demographic trends underline the need to rationalise the over-supply of rural pubs.
Nobody will question the integrity and the capacity of Stokes Kennedy Crowley to do an objective assessment of the trade. I have talked a lot about balance and fairness during this debate. It is important to recognise that once you look outside the top 5 per cent you are looking at a totally different scene. If you look at the bottom 5 per cent, then you might say they should not be in business. I put down the amendment in response to a feeling that there might be a threshold there. I do not intend pressing the amendment. I simply wanted to air the matter and get the Minister's reaction to it and perhaps pursue it on another occasion.
I support the recommendation. I welcome the fact that the Minister has altered the original poposal. The increase from £400 to £900 when somebody exceeds £300,000 per annum turnover is very dramatic. There is definitely a case for a sliding scale there. That sort of increase will be viewed as being inequitable.
The Minister spoke earlier about the problem of tax evasion. I would be very much in sympathy with the thrust of his views, that we must at all times eliminate tax evasion and ensure there is equitable participation in the tax-paying process by everybody. There is an inbuilt temptation in this for a person who is on the border of £300,000 to adjust their books so that they would fall below the £300,000 level. I see a real risk there and I ask the Minister to consider it. Given that the publicans already produce their turnover books — for a publican it is part of the VAT process that they have a set turnover book — it should not be difficult to operate the sliding scale on one to ten points and still achieve the same level of money for the Exchequer.
There are a few hidden costs for publicans which are often overlooked. Publicans are very involved in community sponsorship, sponsorship of clubs and athletes. They also have to pay for VAT collection costs, they have high accountancy and book-keeping fees and, of course, there is the performing rights aspect. They also have a big tourism input. They are part of the tapestry of Irish life.
I believe the Minister would not be at odds with this recommendation if we achieved the same financial return to the Exchequer. As I said, there will be a great risk that a person who would normally have a turnover of £330,000 will now return £295,000, thus denying the State the proper amount of revenue. That is something that needs consideration. I ask the Minister to take the recommendation on board to see if it could be given practical implementation. The recommendation is not intended to deny input into the taxation system but rather to make it more workable.
Senator O'Keeffe, I would like Senators to heed the request of the Chair because the proceedings have to be brought to a conclusion at 4 o'clock and there are eight or nine recommendations and more than 100 sections to go through.
I will accord with your exhortation. It is interesting to hear Senator Howard putting his point of view on behalf of the vintners. He has done this very well over a period. However, he puts his point of view in a smug manner. He now feels that the publicans have done well under this new provision as against the rateable valuation. My understanding from most publicans is that they are well satisfied with the provisions as they have been put in place.
He caused trouble last night and he will cause it again.
Is Senator Doyle interrupting me again?
The Senator is introducing a tone that was not in the House all day and it was unnecessary to refer to Senator Howard's contributions as smug. He should withdraw that remark. They have been excellent and considered. He put his interest on the line.
Acting Chairman
Senator O'Keeffe, without interruption.
In effect, I was paying Senator Howard a compliment for the excellent manner in which he conducted himself negotiating on behalf of the licensed vintners, but Senator Doyle has a facility for not listening but rather for mouthing.
I object——
May I just ask the Minister two questions; one relates to turnover. I understand from the Minister that he is talking in terms of bringing in £1 million this year and £2 million next year. To an extent, I go along with Senator O'Reilly when he asked if the Minister has reservations that we may not achieve the targets he set in this Finance Bill, and how does he propose to go forward if that situation did pertain? Given that we now have a major investigation into direct sales or cash sales in drink, has he any knowledge of the extent of cash sales and the loss that would accrue to the Exchequer.
Senator Howard has done a good day's work for the vintners and perhaps he should relax now that he is ahead. I want to ask the Minister two questions. First, is it not true that approximately three-quarters of the licensed vintners are below the £150,000 ceiling?
Yes.
And that all they are paying in turnover duty annually is £200?
Four pounds per week covers the licence to sell beer, etc.
And that covers the vast majority of licensed vintners?
Over 75 per cent.
Second, on the definition of "turnover", is it based on the actual beverage turnover rather than entertainment and other activities?
"Turnover" in a pub includes all turnover — pub grub, food, entertainment and cover charges.
The turnover of most publicans is less than £150,000. One has to realise that the value of a pub is its turnover — it is the volume of business that it is doing. If a pub is trading to the tune of £1 million or more I do not think a rate of duty of £3,000 is excessive. There has been a tremendous level of inflation in the price of public houses.
I would be prepared to accept and understand the position that publicans are taking if there was open, free competition in the market. The reality is, of course, that there is not. There are parts of the city of Dublin where there is a small number of public houses to serve huge populations, and that situation has been allowed to develop and sustained arising from an anomaly in the law. The reality is that in south County Dublin there are five, six or seven public houses serving an area the same size as the city of Limerick where, I understand, there are 150 public houses.
If there is a little extra being asked by the Government in those situations where the law has greatly facilitated the making of profits and the developing of businesses in very restrictive circumstances where, as far as I am concerned, free competition is not taking place, I cannot see too much wrong with £3,000 being collected from people in those very happy circumstances.
If everybody is worried about the plight of publicans in Dublin, all one has to do is to look at the prices which public houses fetch. In that context, this sort of money seems quite small. Most of the pubs in those areas are worth over £1 million.
I support the point made by Senator Upton but would remind him that we are talking about the 5 per cent to whom my colleague Senator Howard referred. We are not pressing this recommendation; this is our way of getting the Minister to put his views on record so that the industry can understand the table that was agreed. I thank the Minister for changing his procedure of assessing licensed premises to set the licence fees. I would like him to put on record what the issues are that might make him change his mind. Rather ominously yesterday, I think it was in his reply to Second Stage, he suggested he would monitor very carefully the changes he has agreed to since budget day and if they did not work he would very quickly revert to what he had originally in mind. That is what he implied. What is the Minister looking for? What might make him change his mind? What did he tell the licensed trade now that he expects from them in terms of implementation of this new procedure?
I listended carefully to the trade. I am not saying they precisely mentioned these rates in the normal discussions. I can accept that maybe somebody can feel either hard done by or others can get away with it. Any changes are a matter for budgetary decision in future years.
It is not possible to be precise on the revenue as Senator O'Keeffe has asked me but I am confident we will be in the ball park estimated in the budget. I am confident the figures can be met. On Senator O'Reilly's question on whether people would adjust the figures to remain under a certain threshold, I have two answers. If they do it by reducing the price of the pint for the drinkers I will not mind. In fact, I would strongly recommend them to do that because they have room to manoeuvre.
The Minister will have full support from this side of the House.
Senator Howard might even support me.
If the Minister will reduce the VAT and the tax I will reduce by a similar amount.
If it is for any other reason naturally we would have to look at it. I talked ad nauseam to the trade and to the industry. The trade, as Senator Howard has said, is agreed that it can be abused, that some people may not play the game and if it were to lead to a position where Revenue figures over the past number of years for certain public houses showed a decline then we would have to move. I moved on that clear understanding. That is what I am saying. It would be very easy for that to show up working on a turnover basis.
Yesterday, I spoke about the current investigations. I do not think I need to say more other than they are ongoing. Like any trade, that is cash-oriented there can be difficulties but those discussions and examinations are being undertaken at present. On the question of £4 per week for a licence, regardless of what part of the country it is in I have never seen anyone giving a licence away for nothing. In the city, the few which were sold in 1992 have all been in excess of £100,000.
If a rural licence was allowed into Dublin it would come in at one tenth of that figure.
I accept that if it was a rural licence but Galway has the same problem as Dublin. Perhaps we could just talk about the top 5 per cent. In some parts of the country almost every public house is a family house, with the pub as part of the dwelling. I think they would manage to make the £4 per week to pay the licence in those public houses but we will not get into that. We will look at the Dublin scene.
As I said last night, the number of pubs in this city has remained the same since 1908 and there are now 600,000 more people living here. Still, they were up in arms about looking for £4 per week. That is the answer to the second question. I was hoping for a recommendation from the House but Senator Upton has at least given me an idea. If lobbies were to object to the £4 per week, instead of doubling the licence fee we might double the number of pubs.
A splendid idea.
I do not intend to do that yet but if the situation were to continue where increases in excise or on the VAT on drink were passed on to the customer and the Programme for Economic and Social Progress rates were passed on to the customer we would have to look at that. It is very unfair. Let us not talk about the small public house in rural Ireland that sees tourists for six weeks, that sees a mart every second Monday and only makes a few shillings when the GAA, the soccer club or the political parties or other functions have their night out once a year. Let us talk about the public houses in west Dublin or in other parts that have absolutely exclusive trade and then get upset over paying a maximum charge of £3,000. We are not even talking about £3,000. That is allowable against their tax. We are talking about far less. The same public houses are charging rates for drinks that are 20p or 25p more than Senator Howard. Let us be quite honest and blunt about it, the people serving in many of them would not know what PRSI meant and the lounge boys would not know either. Some people who led the campaign into this House were up in Dublin for the soccer match and came over here afterwards to lobby Senators and TDs and drove them all half mad at the parliamentary parties. I had to stay back for two hours on behalf of my own party and I know spokesmen of other parties also had to do that. These are the kind of issues we are looking at.
Because of decent, honourable Members of both Houses of the Oireachtas I went soft this year, probably too soft. These are issues that have to be monitored. Nobody is chasing the small family public house in rural Ireland or on the quays of Dublin, that is making no money but I am certainly chasing the massive public house that has a huge pub-grub trade, and rooms to let. I was checking the other day and a room let for a Sunday night function costs £100. At least that will now be regarded as turnover and I will get some satisfaction from it. Having said all that at the end of this long debate about drink, I still look forward at the end of this Finance Bill and four weeks in the House to having a pint.
There were a number of anomalies and misrepresentations in the discussion that took place in the last half an hour. From the Minister's statement it would appear that the publicans are not going to find favour with him in the next few years. I do not object to an increase in the licence fee but the reason for few pubs in County Dublin is that they cannot get a licence which is in the Minister's hands. Outside the city area one is restricted by one of the Minister's predecessor's provisions 20 or 30 years ago which made it impossible to get a licence unless one was over a mile from the nearest licensed premises. That is a ridiculous regulation. Ten years or so ago, in the other House, I spoke two or three times on this matter. County Dublin should be enabled to increase its number of licensed premises. I urge the Minister to rectify that situation.
It is a matter for the Minister for Justice. The Senator may think the lobby over the licence fee was bad but to try to extend the number of licences——
I hope the Minister will not consider going back to his budget proposals because some premises in County Dublin have had their valuations trebled this year and on top of the budget proposals that would put them out of business. It is not correct to say that when a pub comes up for sale the sky is the limit. Pub prices are dropping. It is exceptional now if a pub makes £1 million; none of them makes £1.5 million which is an indication of the times. I am not here to defend publicans but when a Minister for Finance puts his eye on something where money can easily be made, he overdoes it, which is what is happening here. The Minister would need to be careful and give every consideration to it before he goes back to increasing the valuation. Are we discussing sections 155 and 156 or only 155?
Acting Chairman
We are discussing Recommendations Nos. 16 and 17 which concern section 155, and if Senators keep making contributions like that we will never get to section 156.
I am pleased at the general tone of the Minister's reply, particularly in relation to the pubs with large turnovers. I hope his ideas will work their way into realities which are long overdue, although some reforms have been made in that area. The real problem is not in Dublin city centre where the population is reasonably similar to what it was when the law was introduced, but in the suburbs of Dublin, in the new expanding towns where everything has changed except the number of pubs. It is high time something was done about it.
I was interested in what the Minister said about the lobbies he met. I do not have any doubt about the power and the lobbying ability of the publicans, and I talk from experience. In the past I have made statements about public houses and I was highly impressed at the level of attention, knowledge and understanding that publicans had of what I said. As I said in this House to the Minister yesterday, I was impressed at his communicating ability when I went to a saloon bar in the evening and was met by the publican who seemed to be au fait with the most minute implications of what the Minister had proposed a few hours earlier. I began to wonder was it the Minister's brilliance as a communicator or what he was saying that governed the manner and the rapidity with which publicans respond to something that affects the amounts they have in their pockets.
That was not bad seeing that RTÉ were on strike.
Recommendation, by leave, withdrawn.
Recommendation No. 17 not moved.
Section 155 agreed to.
SECTION 156.
Question proposed: "That section 156 stand part of the Bill."
The Minister is aware that I referred yesterday to the first time requirement here to produce a tax clearance certificate. The time span from the passage of the Bill until renewal requirements begin to take place from July onwards is short. Perhaps a lead in time of one to two years may be allowed to enable everybody to come within the system.
I also raised the question of the in-pocket licence on which I would like clarification. These are licences of rural people who have retired or who no longer trade but because they have a valued asset these licences are renewed each year. Owners have retired and may be drawing the old age pension and are not in a position to provide a tax clearance certificate at renewal time. If they cannot produce this document, can their licence be renewed? If not the licence will lapse.
I foresee great difficulty for a bereaved person who at such time could not supply the tax clearance documents necessary or obtain them from the licence holder or the licence holder's representative. In many cases women are bereaved. Would it mean then that they would have to cease trading? Some provision should be made for people who may be in difficulty at licence renewal times.
Regardless of whether a person is trading, they will still get tax clearance or a letter to say they are not trading and will pay the licence in the normal way; they will not be refused a licence. In relation to the point raised by Senator McMahon, if a person has not fully regulated themselves into the system even though from 29 January to 1 October is a fair amount of time, a person refused a licence may appeal and they hold a licence while they are on appeal. I hope people will have their affairs in order by I October but, as I said in the other House, we are more anxious here to get people into line rather than drive people underground or out of business, so we will adopt a sensible attitude in this regard.
Question put and agreed to.
Sections 157 to 160, inclusive, agreed to.
SECTION 161.
Question proposed: "That section 161 stand part of the Bill."
Regarding the question I raised with the Minister yesterday in relation to the bringing of clubs into the same regime in regard to availability of a licence I refer to clubs outside Dublin mainly. Many of these clubs have been funded at the taxpayers' expense and have received enormous grants. There is often an exclusive ambience about them. They are in direct competition with pubs with the advantage that they can trade during hours when pubs are obliged by law to close. They have a distinct advantage there. I would like to see that advantage being removed or the same opportunities given to all engaged in the retail sale of drink. I think the Minister is moving towards bringing clubs within that regime and I appreciate that.
All clubs will now pay £400 at licence renewal time which is the same as a pub with a turnover of £300,000 per annum and few clubs are likely to exceed such a turnover. The law on sales of drink by registered clubs are very strict and the main area of complaint against clubs would appear to centre on breaches of these rules and complaints which have to be taken up with the Department of Justice. Late-night drinking clubs are subject to the same £70 charge per night which is being increased to £90 per night. This applies also to hotels except that clubs are only entitled to 15 extensions per annum. Club licences are non-transferable and their issue is restricted only to the number of clubs that meet certain criteria regarding activities and number of members. These rules were tightened up in the 1988 legislation.
Question put and agreed to.
Sections 162 to 188, inclusive, agreed to.
SECTION 189.
Recommendation No. 18 not moved.
Section 189 agreed to.
Sections 190 to 211, inclusive, agreed to.
SECTION 212.
I move recommendation No. 19:
In page 222, line 27, after "them" to insert "or transferred between adults who are living together as brother or sister or who are living together as husband and wife and who have been in continuous occupation of the property in question for a minimum of two years".
This recommendation is to allow for the transfer of property between people who are, in effect, married, who have divorced perhaps and are now living together in a new relationship which is the same as if they had remarried. Given our inability to face up to the question of divorce in this country, we should be able to make this allowance for people who find themselves in new stable relationships who should not be penalised when, for example, one of them dies if transfers of one type or another have been arranged between them. That is essentially the point we are trying to make.
I second this reasonable amendment, an important one because many couples are not officially wed, but may be living together in a stable relationship for a long period of time. Numbers in this category of relationship are increasing here and in other countries throughout the world. It behoves us as legislators to recognise that fact and we should broaden the exemption clause to include not simply spouses but those in a stable common law arrangement. It is a logical request. One could argue that this provision might be open to abuse but marriages of convenience are open to abuse as well. As long as it is established that the relationship is stable the provision should include those couples.
In the second part of the amendment the provision for "brother or sister" is equally necessary particularly throughout rural areas where such arrangements are common. Provision for exemption should be made when transferring a beneficial interest in a property to another person. The recommendation contains two reasonable proposals and I would like the Minister to take them on board.
I support the thrust of this area on which we will all have to change our views rapidly. I point to the social welfare treatment of couples living together who are not married. They have conceded the principle in the Department of Social Welfare so it would appear unjust that the Department of Finance do not concede the principle as well. It may not suit the Department financially to concede it which may be why it is not being done, even though the principle must ultimately be accepted. I urge the Minister to take on board the recommendation proposed.
I support this important recommendation.
Stamp duty legislation already provides for a 50 per cent reduction in duty for transfer between brothers and sisters on the point that Senator Costello raised. The reduced rate is not subject to any conditions such as continuous occupation of the property being transferred. Apart from brothers and sisters the 50 per cent reduction in the stamp duty rate also applies to parents, grandparents, step parents, children, uncles, aunts, nieces, nephews and grandchildren. It is fairly extensive and a generous provision and there are no grounds which would justify its extension to 100 per cent relief for brothers and sisters whose occupation of the property is of two years or more duration.
It does not mean they are actually brothers and sisters. It just means they are living in separate bedrooms in one house but they need not be related.
Transfers between spouses are exempt from stamp duty since 1990 and it would not be appropriate to extend the exemption to couples who have been in continuous occupation of a premises for two years or more. Great difficulties could be created for those charged with the administration of any exemption and this would require proof of cohabitation and continuous occupation.
As I said in the Dáil when this matter was debated, I have great sympathy for couples unable to regularise their position before the law. The greatest tax problems for these couples arise in the income tax and capital acquisition tax areas rather than stamp duty.
This is a principle.
I need not emphasise to the House that this is an area involving complex difficult issues and that any potential solution would have to be subject to a thorough legal examination of the constitutional aspects. In addition I would point out that the White Paper on Marital Breakdown is to be published shortly. It would be putting the cart before the horse to attempt to tackle the taxation problems arising from marital breakdown in advance of the publication of and the debate on the White Paper. The ideal solution is for the tax law to follow and not lead the general law relating to marriage.
I can assure the House that when the White Paper has been published at that stage we will have a clear indication of what way arguments are going. On Committee and Report Stages in the Dáil we can start looking then for a solution to our tax laws.
Can the Minister give us an indication of what it would cost if he accepted this recommendation?
There are no costings available because the way the amendment is worded renders it totally unworkable and open to all kinds of abuse. Neither is there a figure for the tax law area because it would require the same understanding in all our tax legislation.
If it is not going to cost anything——
The first part of the Senator's amendment, the brother/sister part, is unworkable.
We are more interested in the second part.
A costing has never been done on that.
Certain figures are available from the social welfare code to give an idea of costs of a common law relationship to a degree, it would be possible to cost it from that point of view. The Minister mentioned the problem of capital tax and acquisitions tax. I welcome the fact that the White Paper is examining that area but we have to look at it more carefully on the grounds that this is becoming the norm in society and will have to be addressed sooner or later.
I am advised that the costs may not be great but the issue is not cost but legality.
How did the Department of Social Welfare get over that?
Social welfare is a different case.
Because it suits the Government. They pay less if people cohabit. Of course they got over it.
If you work out the figures the difference is not great.
It is a principle of the Constitution to protect the family. When it suited the Government they got over the difficulty but because financially it does not suit the Department, they are not attending to it.
The issue is the legal aspect.
Social welfare had no trouble on the legal basis. Cohabiting couples are denied full social welfare rates.
Acting Chairman
Is this recommendation being pressed?
Will the Minister come back on this next year?
As soon as the White Paper is available the Department of Finance can plan. People raise this issue all the time and we would rather deal with it.
Recommendation put and declared lost.
Section 212 agreed to.
Sections 213 to 221, inclusive, agreed to.
NEW SECTION.
I move recommendation No. 20:
In page 226, before section 222, but in Part VI, to insert the following new section:
"222.—The provisions of the Capital Acquisitions Tax Act, 1976 shall not apply in relation to agricultural property."
It is punitive to continue applying capital acquisitions tax in the case of somebody inheriting a family farm because what happens is that a young farmer goes into debt to pay the tax which is difficult to recover from. They either sell part of their estate or borrow from a finance company. If they are in a viable position they will ultimately come into the tax net and the money will come to the Exchequer. The present tax does not make sense. I will rest my case to allow other Senators to participate.
This recommendation is too broad but we have a serious problem in relation to children inheriting from their parents. When the original capital acquisitions tax on agricultural property was brought in, it was designed to penalise people with large estates. What it is now doing is penalising farmers with small holdings, who are well stocked with no borrowings.
Hear, hear.
I ask the Minister to consider exempting lineal descendants from this tax. It would be in the national interest to do so given the reform of the Common Agricultural Policy, where it is important that land be passed to a younger, more vigorous generation who will farm it in the national interest and contribute to the national wealth. The cost to the Exchequer would be modest and I strongly urge the Minister to take this into account.
At the Progressive Democrat national conference in Waterford a resolution was passed to the effect that children should be exempt where they are going to continue farming. It would be in our interest to encourage mobility and the transfer of land to the next generation.
I sympathise with Senators Dardis's and O'Reilly's sentiments. Looking at Commissioner MacSharry's continuation of the family farm plan, why should we tax a father handing on a working farm to his son so that the young farmer has to get a loan or sell a site in order to meet the tax? We must be concerned about the continuation and maintenance of family farms. I would ask the Minister to look at this next year and to grant an exemption.
The thresholds here have not been adjusted for some time. Basically what is wrong here are the thresholds that have existed for quite some time. They have not been adjusted. There is a specific threshold and allowance for agricultural land.
I regret I must interrupt the Senator. As it is now 4 p.m., in accordance with the order of the House today I am putting the question "That the Bill is hereby agreed to in Committee and is reported to the House without recommendation; and Fourth Stage is hereby completed and the Bill is hereby returned to the Dáil and the motion regarding the earlier signature of the Bill by the President is hereby agreed to."
The Seanad divided: Tá, 18; Níl 13.
Tá
- Bennett, Olga.
- Byrne, Seán.
- Cassidy, Donie.
- Conroy, Richard.
- Dardis, John.
- Doherty, Seán.
- Farrell, Willie.
- Finneran, Michael.
- Fitzgerald, Tom.
- Haughey, Seán F.
- Keogh, Helen.
- Kiely, Dan.
- Kiely, Rory.
- Lanigan, Michael.
- Mullooly, Brian.
- Ó Cuív, Éamon.
- O'Keeffe, Batt.
- Wright, G.V.
Níl
- Cosgrave, Liam.
- Costello, Joe.
- Doyle, Avril.
- Hourigan, Richard V.
- Howard, Michael.
- McDonald, Charlie.
- McMahon, Larry.
- Manning, Maurice.
- Norris, David.
- O'Reilly, Joe.
- Ross, Shane P.N.
- Staunton, Myles.
- Upton, Pat.
Tellers: Tá, Senators Fitzgerald and Haughey; Níl, Senators Cosgrave and Neville.
Question declared carried.
I thank the House for the time and attention it has given to the Finance Bill. In particular, I would like to thank the spokespersons who were here throughout the debate — Senators O'Keeffe and Doyle, who put in two long days, and Senators Upton and Costello who were here throughout the debate. I would also like to thank the other Senators who contributed. Senator Howard fought a good battle for his declared interest. I thank the Cathaoirleach and the staff of the House for their work last night when we had a late session. I thank also all the Senators whose journeys home have been disrupted. I know these Friday sittings are not very popular.
This Finance Bill has been debated over four weeks between both Houses and the Special Committee. I thank the Seanad for the opportunity to use the Chamber for the meetings of the Special Committee, it was appreciated despite the fact that we had a slight hiccup. It meant that the time spent on this year's Finance Bill was more than double that has been spent on any Finance Bill for the last ten or 15 years. The Bill itself was treble the size of any Finance Bill over the last ten or 15 years. I thank the House for their co-operation and for passing the Bill. With the help of the staff over the week-end the necessary work on the legislation will be completed within the time limit.
I would also like to thank the officials from the Department and from Revenue who, not only today but over the last five or six months because of changes that will be brought about by the Single Market, put in a huge effort and worked many late nights. I thank everybody for their help and co-operation.
I sincerely thank the Minister for his time and detailed attention to the Finance Bill in the Seanad, because he could easily have handed over to a Junior Minister or another Minister and left us for even half the time; however, he spent all the time the Bill was before us in this House. That is the way we believe it should be done. I thank him for his patience and his detailed replies. I regret that, because of the ordering of business, we did not get to complete all the sections. Many interesting sections were not gone through in detail. I also thank the Minister's large army of advisers who accompanied him. He did not leave himself open to any risk of a lack of information. He was well guarded and well supplied with advice and information. I ask him to thank the staff of the Department and those who supported him in this House.
I would also like to thank the staff of the House and the staff of the Seanad who sat late last night and today, being a Friday. We appreciate very much being able to continue our business when we have a busy schedule.
Would the Minister take with him the recommendations that were not reached and make himself familiar with the recommendations to sections 226 and 232? I am sure other Senators would like their recommendations to be looked at. I would like him to look particularly at the anti-avoidance and anti-evasion recommendations. These two areas are causing some concern. I would ask the Minister to take on board the points made on section 116. Again, I thank the Minister and his staff for the time and detailed attention he gave us in this House.
I will look at them.
I would like to thank the Minister for the pleasant and courteous manner in which he conducted the debate. I want to especially thank him for the fact that he has stayed with this debate throughout yesterday and today. It has been a very long session. I greatly appreciate the respect he has shown this House and, indeed, the attention and the courteous manner in which he treated all our recommendations and our points of view. That is very welcome.
I also want to allude to the fact that he was very well spoken. This is the first time that I have seen a full array of officials on this side of the House waiting to bail him out if he got into any difficulties. Indeed, if you thought that was all the support he had when we went next door there was another army of senior officials from the Department watching the proceedings on the monitor. The Minister did not have a thing to worry about.
A phalanx of concerned people. I thank the Minister for his presence here over an extended period. In my experience, I do not think we have had a Cabinet Minister preside over all stages of legislation going through this House. He is to be congratulated. This is a significant and complex piece of legislation and he dealt with it with his usual expertise. I thank him for his patience and expertise in answering all the questions that were raised. I wish him and the legislation well.
We do not want Second Stage speeches.
We all know Deputy Ahern to be a very amiable and approachable Minister. Like other Senators, I commend him on his commitment, and particularly his respect for this House. He stayed here throughout the debate, having already had four days in the other House and showed patience and a willingness to elucidate every problem that was presented to him. Despite some interventions, it was a very amiable discussion.
I commend the other speakers to this debate. I thank the stenographers for the patience they showed in staying long hours above the call of duty. Finally, I am delighted that we got through this Bill in a very courteous and effective manner.
On behalf of the Independent group, I would also like to thank the Minister, his advisers and the staff of the House for the very courteous and efficient way they dealt with this matter. I would ask the Minister, in support of what Senator Doyle said, whether he will consider the recommendations that were not reached. In particular, I have in mind what I think is an excellent recommendation in the name of Senators Howard and Doyle — amendment No. 21. It is, in fact, a kind of citizens' charter. I believe the Revenue Commissioners, by and large, already abide by the terms of this charter and it would be very good if this became an almost automatic part of legislation. It is very like the citizens' charter that the British Prime Minister, Mr. Major, has been talking about introducing. I wonder if the Minister would consider this, with no implied criticism of the Revenue Commissioners.
I would like to congratulate the Minister on his first Finance Bill. While we disagreed with certain aspects of it, we certainly recognise that it is very substantial legislation. I want to thank the Minister for his courtesy in dealing with the debate. It was good to see a Minister stick with the Bill from the very beginning to the end in the Seanad. Too often that does not happen.
Before I call the Leader of the House, it occurs to me that this Chamber played a very important role in what was very important legislation, hiccups and all. We were pleased we could facilitate the Minister, and that the Bill has been so successful.
I would like to inform the House, with regret, of the death today of the Cathaoirleach's wife's father. On behalf of the House I would like to extend our sympathy to her, and I hope you, Sir, will pass on that message. May he rest in peace.
On behalf of my party, I would like to join in that expression of sympathy and to say how much we appreciate it that you, Sir, stayed here today for this Bill in spite of your bereavement. I would like you to convey to your wife the sympathy of this side of the House.
Thank you. When is it proposed to sit again?
At 2.30 p.m. on Wednesday, 27 May 1992.