Section 207 is a major amendment to the Finance Bill. It runs to about 20 pages. There was a time when a Finance Act would not run to 20 pages. By any reckoning it is a series of very draconian measures. For example, references are made to "documents in manuscript, documents which are typed, printed, stencilled or created mechanically or in partly mechanical process, in use from time to time any documents which are produced by any photographs or photographic process". Another example is "a judge means a judge of the High Court". Like all representatives I have been approached by many people who are on pensions, have fixed incomes or have small savings and they asked me if they will be subjected to these new draconian powers being granted to Revenue. In other words, will Revenue have the right to trawl through their small accounts of £5,000 to £10,000.
Finance Bill, 1999 [ Certified Money Bill ] : Committee Stage (Resumed) and Remaining Stages.
Not without prima facie evidence.
The Minister says checks and balances will be in place and that specified and responsible people will work on behalf of the Revenue. However, there is nothing in the Bill to that effect and at the end of the day it is the legislation that counts. Revenue can apply these powers to any taxpayer, irrespective of the Minister's rhetorical answers. Revenue have told him that the necessary checks and balances will be put in place, but we want those checks and balances put into law—
For the compliant taxpayer.
—so that Revenue will know what they are. All I want is for them to be clearly defined in law.
The Minister has been legally trained in the taxation area. He is a taxation expert and he can understand what I said about Murphy's law, that what can take place will take place. If Revenue can do these things they will do them. I do not blame them because it is the law.
Old age pensioners have enough stress in their lives without having to worry about Revenue conducting a trawl through their small savings accounts. It is no good telling them that they have the right to be informed and to seek a judicial review. These provisions are no use to these people because they cannot afford judicial reviews. There should be a provision that people with certain levels of income are exempt. I regret that I have not been able to give enough thought to this issue in order to table a recommendation. Nevertheless it is not beyond the ingenuity of people to table an amendment that would meet the fears of the category of people I referred to.
It was reported in the media that the Minister heard all about this issue at his own party meeting.
The Senator should not believe everything he reads in the newspapers.
The Senator should not believe everything Fianna Fáil says.
Senator Norris does not need to tell me that. I believe that Fianna Fáil are terribly in error politically but when their public representatives get together they realise what the public are thinking and they can express a genuine fear like the category of people I talked about. For that reason I wish to express a genuine fear that has been expressed to me by dozens of people. One of the reasons that we are here is to express those fears.
The Minister's response is inadequate. It is not adequate to say that the Revenue have assured him that the necessary checks and balances will be in place. Their checks and balances mean nothing in law. If we include the checks and balances in his proposal and pass them in these Houses then they will become legal and can have full effect.
A Finance Bill is unique because it is reviewed on an annual basis. If there are any upheavals or if a little old lady is attacked by the Revenue Commissions as portrayed by Senator Connor then both Houses will bring about a major change in legislation next year. We have to acknowledge that there is a need for public confidence as a result of what has happened. The Revenue Commissioners have been granted the necessary powers to restore public confidence in the system and ensure that people pay their fair share. I reiterate there is an opportunity to review provisions within 12 months. Any such actions which are not anticipated at present and which affect certain categories of people can be changed at that time.
Yesterday I asked the Minister to give me information on the percentage of small businesses here that are being audited compared to large businesses. I would like to have those details. This new legislation which gives extra powers to the Revenue Commissioners is an attack on small businesses here because the majority of audits are carried out in that sector. However, history will show that the majority of the problems lie with large businesses.
This section is an insult to compliant taxpayers. The Minister can say that if you comply you will have no problems and that may be the case. However, there is every reason to believe that compliant taxpayers will be included in the net as a result of the extra powers we are giving to Revenue which enable them to trawl through third party accounts. I totally oppose this section which grants extra powers to Revenue.
The Revenue Commissioners already have extensive powers which they do not enforce. Every week it is reported in the national media that company directors owe thousands of pounds to the Revenue Commissioners but they do not always take action. The small business community raise their eyebrows when they witness new legislation being enacted while other sectors get away. Will the Minister give me those details?
My officials have given me a detailed note which relates to the queries raised by the Senator. The tax base of companies and the self-employed, who pay tax under the self-assessment system, is of the order of £370,000. These taxpayers can be subject to a single tax head audit such as PAYE or VAT, or to a comprehensive audit which takes in all tax heads.
The percentage of cases audited annually is in the order of 5 to 6 per cent, of which 1 to 2 per cent involves comprehensive audits. In tax districts outside Dublin all taxpayers in a particular area are within that district's remit. In Dublin audit districts are broken up into specialisations such as construction industry, property development, professionals, agri-business, financial services, corporate groups, PLCs, investment income, transport and light industry, the services sector, the wholesale and retail sector and directors.
The number of audits and investigations undertaken during 1998 totalled 23,942, which gave an additional tax yield of £156 million. Of this number 6,000 involved compliance visits to construction sites to ensure proper operation of relevant contracts tax. A spread of the tax yield from these audits is as follows: nil, 8,606; naught to £10,000, 7,319; £10,000 to £100,000, 1,861; £100,000 to £1 million, 105; £1 million plus, 11. Statistics are not readily available as to the number of audits carried out on particular sizes of companies or business. However, I am assured by the Revenue Commissioners that in screening cases for audit selection under the self-assessing system the largest cases are reviewed regularly. Cases where substantial tax is at risk are subject to even more frequent review than smaller companies.
I spoke on this issue yesterday on Second Stage and I was hoping that the Minister would be in a position to come back with something specific on Committee Stage in relation to these powers.
Yesterday the Minister referred to the fact that the Revenue would have to have reasonable grounds, but what the Minister might consider to be reasonable grounds, others might not consider to be so. "Reasonable grounds" is a very loose term subject to interpretation. This could be highly dangerous. Rather than aspirational statements, there needs to be something more specific in the legislation to deal with this issue.
The Minister said also that there would have to be prima facie evidence. I requested that he give a specific example of prima facie evidence before action is taken.
Another dangerous aspect of the legislation is that one particular Revenue Commissioner is empowered solely to make a decision on, and sanction, a court order. This would put a great onus on individual Revenue Commissioners and, given the nature of some of the investigations, it could jeopardise their safety. It would be prudent to make more than one person responsible for clearing particular orders. This needs to be considered.
Another inherent danger in the section is that decent honest people could inadvertently become the target of this legislation. The Minister of State is the Deputy for the constituency of Limerick East and Members are well aware that small to medium business people, who owe very little money, are easy targets, whereas people who owe millions of pounds in tax are in a position to escape the net.
Such as Mr. Haughey.
Unfortunately, desperate situations demand desperate remedies. This section has been brought about by the activities of the handful of professional gangsters who operated throughout the country over a number of years. The tribunals sitting at present have forced the Department to consider this type of action. This puts the constitutional protection of individual citizens at risk and is a highly dangerous section.
Constitutional protection for individuals already exists. Anyone who becomes a target of this legislation will have nothing to worry about if they are not evading tax.
Why will the Minister of State not protect vulnerable people?
I move recommendation No. 40:
In page 341, before section 212, to insert the following new section:
"212.–Sections 207 and 211 shall cease to be in operation on and from the 30th day of April 2001, unless a resolution has been passed by each House of the Oireachtas resolving that those sections, or specified provisions therein should continue in operation."
I made my argument on Second Stage and I do not propose to repeat it ad nauseam. I believe my recommendation fits into the general context of the debate on the desire to review procedures and monitor the situation to make sure there are checks and balances in place. It does not remove powers from the Revenue Commissioners; all it seeks to do is make sure that it comes up again for review so that we can see how it works, and if it has worked satisfactorily, put it into practice again.
This is a type of emergency legislation; it is draconian. I have no difficulty with it because I could not care less if the Revenue Commissioners go through all my accounts. They can look at my dentist's and chiropodist's accounts as far as I am concerned. My life is an open book. However, I believe it would be useful in this instance to have a system of review as in other emergency legislation which does not directly address tax issues. The emergency powers legislation must be reviewed regularly. It would seem a wise and prudent legislative practice when introducing new legislation of such strength and with such possibility for intrusion that it should be reviewed on 30 April 2001.
This recommendation seeks to put a time limit on the availability of the new powers granted to the Revenue Commissioners. It proposes that unless each House of the Oireachtas takes affirmative action on or before 30 April 2001, the powers will lapse.
In his Second Stage speech the Minister indicated that the wisest course of action before granting these new powers might have been to await the findings of the Moriarty tribunal. The tribunal was asked, as part of its terms of reference, to make recommendations on powers, particularly in the context of protecting the tax base from fraud or evasion in the area of offshore accounts. On balance the Government decided that public concern about tax evasion, in light of the various revelations of the past 18 months or so and the weaknesses apparent in existing Revenue powers in certain areas, was such that it was necessary to propose new powers at this time. The Minister also indicated that it is his intention to review the matter further when the report and recommendations of the Moriarty tribunal are available.
Given the importance of Revenue powers in underpinning the whole tax administration system, and the strength of feeling engendered by recent extensions to powers in 1992, 1995 and again this year, I believe that a thorough and wide-ranging review of powers could be useful. The Minister has indicated that he would be prepared to consider recommending to Government the setting up of an independent review of this whole area following the report of the Moriarty tribunal.
Such a review could look across the whole range of existing Revenue powers, as well as corresponding powers available to tax administrations in other countries. A review mechanism of this sort would be helpful in assessing all the issues in this controversial and complex area.
This approach is eminently sensible and is preferable to that suggested by Senators Ross and Norris. Their proposal could lead to all sorts of difficulties in the future which none of us sees at present. There is no need to take such risks. I, therefore, cannot accept the recommendation.
The Minister of State spoke vaguely of all sorts of difficulties. He indicated the strength of the case being made when he said that the Minister originally intended to wait for the report of the Moriarty tribunal, but then decided that there was too much strong public pressure. We all understand that matters of serious tax evasion must be addressed immediately. We are told that the Minister will establish a review commission after the Moriarty tribunal has reported. This seems to support my case that these powers should be reviewed in 2001. They will not lapse unless the Houses of the Oireachtas decide that they should. However, I will not press the recommendation because I understand from the Minister that there is at least a moral commitment from Government to review all these procedures in the aftermath of the report of the Moriarty tribunal.
Is the recommendation withdrawn?
If the Minister is in a position to go that far, I will not press my recommendation.
The recommendations of the Moriarty tribunal might oblige us to do something different, but in the absence of such a provision it is the Government's intention to set up a general committee to review all those powers on a continuous basis.
Is the recommendation withdrawn?
In light of the Minister's commitment, albeit provisional and contingent on certain eventualities, I am happy to withdraw my recommendation. My concerns will be considered under this review and I thank the Minister for his gracious reply.
Will the Minister explain in more detail what he means by "additional people" in this section. A person who holds a liquor licence has to have a tax clearance certificate. Therefore, when one receives a liquor licence, the person handing on the licence would also have had a tax clearance certificate when he or she had the licence in his or her name. If that were the case, this section would not be necessary for those people to comply.
Section 109(4) of the Taxes Consolidation Act, 1997, sets out the circumstances in which a tax clearance certificate is to be issued by the Collector General for the process of obtaining various licences, including a liquor licence. The person who is the beneficial holder of the licence must be the person who applies for the tax clearance certificate. To qualify for a tax clearance, the person who applies for a certificate and any other person connected with that person must be tax cleared. As an anti-avoidance measure, the section provides that if the licence were transferred to the applicant within the previous 12 months, certain additional connected persons must also be tax cleared.
Who might they be?
I will come back to that. However, under the legislation governing liquor licensing, an applicant can require a new licence to replace one that has lapsed within the previous five years. The anti-avoidance provision does not apply to the renewal of lapsed licences and this constitutes a loophole in the provision.
In recent years a number of cases of renewal of lapsed liquor licences have come to light where the transactions appeared to have been engineered primarily to escape significant tax liabilities. Examples include renewal of a licence by a relative of a first owner, or where the licence was first held by a company and then renewed by a second company in the same ownership. To close this loophole the anti-avoidance provisions which apply to licences transferred within the previous 12 months are being extended to cover renewal of a licence which has lapsed within the previous five years.
Recommendations Nos. 41 and 42 are related and may be discussed together.
I move recommendation No. 41:
In page 383, between lines 27 and 28, to insert the following row:
No. 5 of 1952.
Foyle Fisheries Act, 1952.
This line has been left out of the stamp duty provisions and other legislation that is being repealed by this schedule. This time last year, I tabled similar recommendations and the Minister agreed to take the opportunity today to bring forward a list of items of legislation that were in need of repeal arising from the changes that had come about. I am simply tabling two additional provisions that are redundant and should be added to the list.
I thank the Minister for taking on board my recommendations from last year in presenting this schedule. It would be more comprehensive, however, if he took on board these recommendations.
Schedule 6 repeals a number of redundant stamp duty provisions, including various exemptions from the charge to stamp duty imposed by section 12 of the Finance Act, 1895. Section 12 was repealed by section 125 of the Finance Act, 1998. The Senator lists two exemptions from the charge imposed by section 12 which are not contained in Schedule 6. With regard to the proposed repeal of section 9 of the Foyle Fisheries Act, 1952, I am informed the Department of the Marine and Natural Resources is working on a number of amendments to that Act which will include the repeal of section 9. Consequently, I do not see any need for this recommendation. The entire National Social Service Board Act, 1984 will be repealed shortly by my colleague, the Minister for Social, Community and Family Affairs. Consequently, there is no need to accept recommendation No. 42.
Some minor corrections to the Bill are required. In page 107, lines 44 and 48, the word "Iompair" is mispelt. In page 293, line 32 the comma after the word "Act" is surperfluous. I ask the Cathaoirleach to direct the Clerk of the Seanad to make the corrections under Standing Order 103.
Could the Minister apply that Standing Order to the park and ride provision as well?
Bohan, Eddie.Bonner, Enda.Callanan, Peter.Cassidy, Donie.Cox, Margaret.Cregan, John.Farrell, Willie.
Finneran, Michael.Fitzgerald, Liam.Fitzpatrick, Dermot.Gibbons, Jim.Glynn, Camillus.Henry, Mary.Keogh, Helen. Kett, Tony.
Kiely, Daniel.Kiely, Rory.Lanigan, Mick.Leonard, Ann.Lydon, Don.Mooney, Paschal.Moylan, Pat.
O'Brien, Francis.O'Donovan, Denis.O'Toole, Joe.Ormonde, Ann.Quill, Máirín.Ross, Shane.Walsh, Jim.
Burke, Paddy.Caffrey, Ernie.Coghlan, Paul.Connor, John.Coogan, Fintan.Doyle, Avril.
Hayes, Tom.Manning, Maurice.O'Dowd, Fergus.Ridge, Thérèse.Taylor-Quinn, Madeleine.
I do not wish to delay the House as this has been a very long debate. As a nominee of the Library Association of Ireland, however, I acknowledge the welcome public librarians have given to the decision of the Minister of Finance to extend section 48(5) of the Bill relating to relief on gifts to third level institutions. He has added public libraries to this section by regulation. This means anyone in the corporate or private sector can now contribute up to £10,000. I welcome that decision.
On a point of order, people have laboured here all day. This is completely out of order.
At this stage we allow short contributions dealing with what is in the Bill.
That was very ungracious.
I thank everyone for their participation in the debate and their contribution to its constructive tone. Many useful suggestions were made today and I regret they could not be taken on board at this point. I will ensure they are communicated to the Minister and will speak to him about many of them.
The Finance Bill might be a landmark legislative occasion but it is not historic because it occurs every year. We will have the opportunity to review and revisit the entire tax code again next year. I thank Members for their contributions and will ensure they are passed on to the Minister.
I thank the Minister and his civil servants for their work. The Minister of State did an excellent job and is obviously fully on top of his brief.
It would be a greater compliment to this House when the Minister for Finance is genuinely unavailable, and I accept the Minister, Deputy McCreevy, had to be abroad at an EU Council of Ministers meeting, for the Department of Finance to service this House, particularly when the Finance Bill is being debated. Having said that, Deputy O'Dea did an excellent job and was probably better informed than other Ministers of State at the Department of Finance might have been. It should, however, be the duty of the Department of Finance to service this House. I was a Minister of State and I recognise the "rent-a-Minister" syndrome. The Finance Bill is serious legislation and even though this House is impotent in effecting change in it, something which has always been a matter of frustration to me, the House should be treated with respect.
I thank the Minister for his courtesy. He could not accede to our strongly expressed requests but I would like him to bring them back to the Minister for Finance. The Minister will agree that we might have made more progress on another Bill in another Chamber. I regret that we could not, but I thank the Minister and the Cathaoirleach for the courtesy extended to us all.
I would like to be associated with the remarks made by Senator Doyle in relation to Minister of State, Deputy O'Dea. We were disappointed that the Minister, Deputy McCreevy, could not be with us on Committee Stage but Deputy O'Dea has responded to all of the points raised in a most satisfactory manner. There could not have been any improvement in the manner in which he dealt with them. He was courteous, constructive and very well informed. I thank him for that and broadly welcome the legislation.
I thank the House for agreeing to the amendment of the Order of Business at such short notice. We appreciate that consideration to allow the Bill to be finalised.
I join the other speakers in complimenting and thanking Deputy O'Dea for the very efficient and courteous way in which he dealt with Committee and Report Stages of the Bill. He is a very able deputy for the Minister, Deputy McCreevy, who is representing the State on national business. I thank the House, the Minister and his officials.
I misinterpreted the situation earlier and my intervention was incorrect. I apologise to Senator Mooney for misinterpreting his intentions.