Seanad Éireann debate -
Wednesday, 28 Mar 2001

Vol. 165 No. 17

Finance Bill, 2001 [ Certified Money Bill ] : Committee Stage (Resumed) and Remaining Stages.

SECTION 78.

Question again proposed: "That section 78 stand part of the Bill."

Mr. Bonner

As I indicated to the Minister, my main complaint concerns the workload imposed on practitioners in the transitional period. The Minister's original intention was a filing date of 13 June. Most practitioners for small sole traders, however, work to an end of March date, practically coinciding with the end of the the tax year, following on from the introduction of self-assessment and the withholding tax on professional services. Normally, an end of March date would do; the difficulty is that we only have from March to October. We had to reorganise all our company returns in small practices to fit in with the changes to the tax system. We will now have to adjust them again, which may be difficult. What we are seeking is an extension of the first transitional period, perhaps until December, as requested by the institute, or, if this cannot be done in law, we ask that the Revenue Commissioners be lenient.

It has been suggested that the date on which balance of the previous year's tax should be returned should be the filing date, but I am not in favour of this. The Minister is aware of the pressure we are under to file returns, which in some cases we do not have time to finalise with the client concerned. How are we supposed to receive a cheque from him or her? It would be preferable to have one month in which to receive it. It all sounds fine in theory to lodge all the returns and the cheque at the same time, but this is not always possible in practice.

Many state that the easiest way around the problem would be to move backwards from the end of the accounts year, but this is not possible for all clients. We could do this for professional clients such as dentists and doctors and ensure they receive credit for withholding tax. Otherwise, there would be a gap in which they would be paying tax while losing credits.

On the last occasion this happened we encountered great difficulties with the Revenue Commissioners in local tax districts over refunds. When a person reaches the level of his or her previous year's tax liability, he or she can claim a refund of withholding tax. In the previous changeover I applied the law as I read it. It stated that refunds could be made when one reached the level of one's previous year's tax liability in the following year. I received letters estimating anticipated liability in the following year. As I said to the tax inspector with whom I dealt, I could find no reference to the phrase anticipated liability in the Finance Act. In theory—

Minister for Finance (Mr. McCreevy)

Was it a male or female inspector?

Mr. Bonner

She was God. While I can see where the Minister is trying to get to, it is what happens on the ground that matters. We are looking for leeway in the transitional period. There is a withholding tax issue for professionals. We do not want to encounter problems in calculating the tax if there is a review of liability in earlier years because of a change of accounting date.

The institute raised other matters with which I do not have time to deal, some of which will only come to light in practice. While I support the principle, I am looking for leeway.

Mr. McCreevy

This is a subject of which I have personal knowledge. I sympathise with the Senator on the volume of work practitioners have to do at a certain time of the year. Like him, I have been around for all of the changes. I recently saw a photograph of the two of us taken when we played on the same team. He would not recognise the two slim men in the photograph. As he is aware, we go back a long way.

Mr. Bonner

The filing date is at fault.

Mr. McCreevy

I have taken a personal interest in this matter for some time. We should align the tax year with the fiscal year. I announced some years ago that it was my intention to do this, and my original intention was to have it up and running by 1 January 2001. That was not possible, however, and I announced in the middle of last year that the date would be 1 January 2002. The changes that have to be made are fairly significant.

As I recently said, a group was established to consider the date on which we would deliver the budget. Due to a number of factors, I have decided to have this year's budget on the first Wednesday of December, as has been the case since I became Minister for Finance. No matter what date the budget is held on, it would not be possible to pay long-term social welfare recipients earlier. One would need to have the budget in late June or early July to have payments ready. The effective date for social welfare payments and tax changes will be 1 January and the budget will be held on 5 December this year. When I announced the alignment of the tax year with the calendar year, we had to look at a variety of things. The Institute of Taxation and the CCABI came to see me and made representations. I had originally planned on 30 June and 30 December as tax deadlines.

Senator Bonner gave a good exposé of what has happened over the past 13 years or so. I am well aware of the pressure that accountants are under and I know that the Revenue Commissioners appreciate their co-operation. As Senator Bonner said, the commissioners deserve the praise they have received over recent years. It is beyond me how the system did not collapse in the 1970s and 1980s. I have given chapter and verse regarding the funny things that used to happen, but the system had more or less collapsed, as a colleague in the Revenue Commissioners said. The changes that have occurred in tax administration in the past 14 years are astounding for people like Senator Bonner and me who have seen the bad days and the new days.

In 1988, the former Minister for Finance, Mr. Ray MacSharry, announced a special tax amnesty. It was not the same as the amnesty in 1993 as it was an interest amnesty. Other provisions could have been made along the lines of the other amnesty, but he did not want a special kind of once-off payment. The amnesty allowed people to get their VAT, PAYE and income tax affairs in order for once and all. Every time they had tried to give a cheque to the inspector general of the Revenue Commissioners, they took it off the interest, so that the original payment was caught up with.

Either the Department of Finance or the Revenue Commissioners estimated that the measure introduced by Mr. MacSharry might bring in £50 million, at best. It transpired that between £500 million and £750 million was collected by 30 September, which was the date in that year by which all information had to be produced. Most small accountancy practices were involved at that time, not the big ones. Like Senator Bonner, I often think that the ideas of the big practitioners are held in higher esteem by the Revenue Commissioners. Small accountancy practices deal with a myriad of clients while big practitioners deal with big clients who have very efficient systems.

In the year of Mr. MacSharry's amnesty, every accountancy practice was up to its ears in work until 30 September. I remember clips being shown on television of accountants arriving at the offices of the Revenue Commissioners to hand over cheques. In the same year, the system of current year basis of assessment came into practice – as far as I remember, it was on 30 December 1989. By 31 December, a certain amount of money had to be in accounts or there would be a surcharge. Accountants, having worked until September to get accounts in order, ended up working very hard during October, November and December. I remember working until after midnight many nights in November and December, including after Christmas. I worked until 3 or 4 o'clock in the morning, as did everybody else. The Revenue allowed a few days after 31 December, perhaps the first week of January, until sense prevailed and the closing date was extended to 31 January. That is the background to all this.

I practised as an accountant when not in the Cabinet, even if it was not a very significant amount of work. My partners used to tell me I was there, in any event. When I was realigning the tax year, I was determined to have a single date for the various deadlines. It is desperately confusing, even for tax practitioners, that there are three separate dates, 1 November for preliminary tax, 31 January to begin accounts or returns of income and three further months until 30 April to pay the balance of one's preliminary tax. In my practice, if not in Senator Bonner's, the client often did not have his accounts up to date by 1 November. In that event, preliminary tax would be paid, which involved dragging out a file to send it off. A lot of work took place in January, as a pile of accounts had to be sent in by the end of the month. The amended assessment would then come back and the file would have to be taken out once more. One would ring up the client to say that the balance of tax was due on 30 April, and the whole process would start again.

I thought it would be good to have one date, as the file would only be taken out once, the payment of the balance of tax for the previous year would be made and the accountant would know exactly what the preliminary tax for the following year would be. At least 100% of tax for the preceding year would have to be paid to avoid a surcharge. About 95% of the estimate can be paid, but most people pay 100%. A single date would be simpler and therefore we have come up with 1 October.

When the original proposition was made, all hell broke loose, as usual. I met accountancy bodies and the date of 31 October was agreed. Funnily enough, it is also a date which was in my first Finance Act, although I was not aligning the tax year. The date was put in subject to a commencement order which was not activated. My original intention was not to activate the commencement order, as it was my intention to align the tax year. It would not have made sense to activate the order, so I did not do so.

The Institute of Taxation, the CCABI and I agreed the common deadline of 31 October, which is ten months from the start of the year. Senator Bonner spoke of the problems associated with the transition year, which will have its dead lines on 31 October 2002. I accept the Senator's argument that difficulties will be presented in the first year. Many clients in the Senator's accountancy practice, as well as my own, seem to have year ends of 31 March for the reasons he alluded to. Talks have been going on for some time between the Revenue Commissioners and the Tax Administrative Liaison Committee – TALC. While I do not intend to change legislation, the Revenue Commissioners will try to agree a reasonable period. I will not say what such a period will be, as I know that neither tax practitioners nor clients will operate on that basis. The new deadline will be 31 October and we will try to stick to it.

I do not know what is wrong with Irish people as regards tax, but they seem to leave it to the last minute to file their returns. I assume the situation is the same in Senator Bonner's practice as it is in mine. Even if accounts are done months previously, many people will not sign the tax return and will wait until the last date before they send it in. I do not think that 31 October is an unreasonable date considering that in the United States, whose tax year is synchronised with the calendar year, tax returns must be filed by 15 April. There are headlines in US papers, and sometimes on Irish television, which refer to people queuing at their local tax office all over the US, as their returns have to be in on that date which is not long after the end of the year.

I admit that there will be difficulties in the first year, but my officials tell me that the anticipated liability that Senator Bonner spoke of is not now expected. The Senator won his point with the esteemed inspector of taxes in County Donegal. When the new system is up and running, the calendar year will make everything far simpler. As Senators know, I will eliminate many provisions from previous Finance Acts. In this Finance Act, I have started tax relief at source for medical insurance and mortgage interest, which will eliminate a lot of paper-chasing and filling out of forms. The simpler I make the system, the easier it will be. I accept that there will be difficulties in the first year, but discussions between the Revenue Commissioners and the TALC are ongoing. I am sure they will make some progress and I hope we will come back in two years' time and say this was a great idea.

Question put and agreed to.

SECTION 79.

Question proposed: "That section 79 stand part of the Bill."

Mr. J. Doyle

I am a member of the Dublin Docklands Authority. Has the Minister a note on this section clarifying the advantages to the authority under this measure?

Mr. McCreevy

I will get my officials to send the Senator my briefing note on that.

Question put and agreed to.

Section 80 agreed to.

SECTION 81.

Question proposed: "That section 81 stand part of the Bill."

Mr. Bonner

I raised the matter of capital allowances for hotels on Second Stage and have since discussed it with Department officials. The section itself does not bother me because it is simple. It provides that discussions which have been finalised with the European Commission are covered. The situation I wish to address is the elimination of capital allowances where a grant has been received for any part. A hotel building which is normally entitled to industrial buildings allowance but now if a grant is received—

Mr. McCreevy

It would be expenditure incurred on or after 20 March and would only apply for expenditure incurred from that date.

Mr. Bonner

I appreciate that but the point I am making is that in a hotel one could have an industrial building which would qualify for a grant and which would therefore lose out on the capital allowances. One could also have plant and machinery.

Mr. McCreevy

No. It would only be for enhanced capital allowance, which is a seven year write-off of capital allowances.

Mr. Bonner

If one gets a grant for an industrial building, that will not affect one's capital allowances for plant and machinery. The other point relates more to section 80 and with the indulgence of the Chair I will refer to it here.

An Cathaoirleach

Briefly.

Mr. Bonner

I raised the issue of rural renewal relief for west Donegal before with the Minister. I have pushed the Minister for Tourism, Sport and Recreation on the issue of small family-run hotels because there have been no grants available for them for at least four or five years. In five years I do not know where the fishing industry will be but in west Donegal we have relied entirely on fishing and tourism. We have been far behind with our tourism product when compared to Kerry, which was well up on the grants available when Donegal was far behind. I can say that because Senator Fitzgerald is not here.

We have a great opportunity but it will be very difficult to get tourism up and running in these circumstances. I accept it is not possible for the Minister to change this because it is the Commission which makes many of the rules and the Minister must adhere to them, but capital allowances and a rural renewal scheme will not resurrect a place like west Donegal. We need some grant structure, though I know the Commission is totally against that at this point. However, our peripherality has left us behind. The Minister of State at the Department of Public Enterprise recently said at a meeting about natural gas that in a meeting with Enterprise Oil the Taoiseach is supposed to have said that Donegal has been neglected since the foundation of the State.

I am looking for preferential treatment and I will raise this issue every time we debate a Finance Bill. Going through towns like mine in west Donegal I meet people who ask me what is happening. I tell them about the national development plan and the money allocated for road infrastructure, but much of that has not come on stream because of design work and we will be left behind again.

I am seeking a rural renewal scheme, though I know the Minister says that 2003 will be the next chance to look at it. In future negotiations for these schemes for peripheral regions like west Donegal should be considered. I am on a committee of the CMPR which deals with the peripherality not just of areas like west Donegal but regions in the Balkans. West Donegal has been left far behind even with all the Structural Funds over the years, such as the £8 billion. I am not hopeful that there will be much of an improvement in the BMW region either – that measure will not lift a sinking ship. If the Minister is to improve the status of peripheral regions in the country, we need grants, capital allowances and, if possible, the rural renewal relief scheme.

Mr. McCreevy

As the Senator said, this is the result of long negotiations with the European Commission and to get the town renewal scheme off the ground we had to make some compromises, otherwise this would have gone on for another few months. The Minister of State at the Department of the Environment and Local Government, Deputy Molloy, announced the town renewal scheme some time ago and while the residential element has been allowed to go ahead none of the business elements have been allowed to progress because it was subject to European Commission approval. I would have had to send replies to Deputies and Senators explaining that it would take many months more so we put in a big effort with the Commission in January, February and early March to try to get something up and running, otherwise it could be another year before we get agreement. This is the compromise that was reached.

The European Commission looks at tax breaks above the norm and grants in the same light as distortions in the State aid regime. It is very difficult for people to appreciate how a small business in west Donegal could distort the location of business from Germany to west Donegal. It is impossible in my view to see that but the European Commission has taken such a strong line on Ireland and other countries in relation to taxation and State aid that it is very difficult to get anything by them. Two or three budgets ago I brought in a small relief for capital allowances on crèches but it took 14 months to get agreement for that and very few people availed of that small relief.

The problem is the aggregation of aid. A new regional aid map of Ireland was drawn which applies from 1 January 2000. As Senators will know, we cannot grant aid above certain ceilings. The lowest ceiling is in Dublin and the highest is in the BMW region. However, one must aggregate these and there is a formula for working out tax breaks and what the normal grant aid is. Problems arise with the aggregation of aid from different sources. The State aid guidelines which the Department of Enterprise, Trade and Employment negotiated have limits for different regions and those cannot be breached by a mixture of aid and tax relief which is the grant equivalent of tax relief. The limit is higher for peripheral areas.

We have included provisions here and in other sections ensuring that there is aggregation, so when one is making one's claim to the inspector of taxes one must notify him or her that one has received grant aid. Most of the regions in Donegal should be within the ceilings but that is part of the procedure that has to be gone through. It was very important to get the town renewal scheme off the ground, or else we would have been playing around with it for another year with no success.

Senator Bonner has raised the rural renewal scheme since becoming a Senator. I included a circular area around Carrick-on-Shannon in such a scheme, though I omitted south Roscommon, as Senator Finneran will testify – it is a sore point with him. The scheme seems to work well there and it is so attractive that other places want it. We will see when it finishes how it might be extended to other regions. Every part of Ireland wants it because it is attractive and I will bear that in mind at the appropriate time. I concede it is difficult to relate how things which happen in west Donegal are supposed to have the effect of dislocating investment throughout Europe, but those are the rules and they apply everywhere.

Mr. Burke

I appreciate Senator Bonner's position. Many of the western counties are much the same. Regardless of the tax incentives offered, a company would not locate along the west coast. There needs to be a change of tactics. There should be an onus on the Government to put in stand-alone projects, which might attract people and the other facilities could come from the private sector. I appreciate where the Minister is coming from on this. It is a problem.

Belmullet, for instance, has a fabulous golf course but needs a good hotel to attract visitors. The financiers will not put up the money for people to build a hotel unless they believe it will be viable. I do not believe tax breaks are the answer.

All Governments have failed to bring projects to the remote areas like Donegal or west Mayo and if people travel to those areas they only go for one day. It is a problem but there has to be a solution. If we are to protect and improve the livelihood of the people remaining in those areas then the Government will have to put in stand-alone projects to maintain the numbers there and other investment might follow.

Question put and agreed to.

Sections 82 to 91, inclusive, agreed to.

SECTION 92

Question proposed: "That section 92 stand part of the Bill."

Mr. Burke

This section seems to allow people to sell existing property that they have rented; they can then buy further property and if it includes any residential units, they can roll over the capital gain on it. I welcome this. It is an initiative that is needed because it will help people that have capital to invest their money in residential property. There is a shortage of such property in many areas.

I do not understand why this section is included and the Minister is still proceeding with the 9% stamp duty for second-hand residential properties.

Mr. McCreevy

Up to this change, it was not possible to have capital gains tax deferred by the use of roll over relief unless it was in a trading asset. It was not available to people who sold rented residential property. The commission on the private residential sector, which reported recently, recommended this roll over relief in order to encourage people to stay in the rented residential market. There were other changes also and these have been incorporated into the Finance Bill.

Senator Burke mentioned the change in the stamp duty regime. I spoke about this at Second Stage last night. We are keeping the 9% for that category to encourage the supply of new properties into the residential market. This is the third time we have tinkered with this area and I hope this will remain for some time to give certitude to the market. It should encourage people to build for the rented market.

Mr. J. Doyle

I mentioned in my speech yesterday that 70% of houses bought are second hand. There is 9% on—

Mr. McCreevy

The 9% will only apply to someone buying a second hand house for investment purposes.

Mr. Burke

Some of the section 23 or section 48 properties must be held for ten years before being disposed of.

Mr. McCreevy

A person can dispose of them at any time but would lose some of the relief.

Mr. Burke

If someone has a section 23 or section 48 property which they want to sell and they intend to buy further property, do they have to pay the clawback on any benefit they got?

Mr. McCreevy

The section 23 clawback relates to the clawback on the capital allowances. This is roll over relief on capital gains tax. Someone could have the whole roll over relief but lose some of the clawback.

Question put and agreed to.

Sections 93 to 194, inclusive, agreed to.

SECTION 195.

Question proposed: "That section 195 stand part of the Bill."

Mr. Burke

This section deals with VAT returns paid by direct debit. I do not agree with everything contained in the section. A person's VAT liability can increase or decrease for various reasons such as a business near him or her closing down resulting in an increase in business, or he or she may have a better year than anticipated and may not realise that he or she owes more money. The section, as drafted, is very harsh in that it penalises people even though they are doing everything above board. A person's turnover in the public house business, for instance, may increase as a result of advertising and so on and they may not be aware their VAT liability has increased. I ask the Minister to redraft this section or to let the status quo remain.

Mr. McCreevy

This section provides the statutory basis for charging interest when VAT is underpaid through the direct debt scheme. Where more than 20% of the annual tax is underpaid through the direct debit system, interest accrues from half way through the accounting period. The section has effect from the date of the passing of the Act.

This amendment, together with section 19, deals with taxable persons who pay VAT on the basis of a monthly direct debit. The amendment to section 19 provides a legislative basis for direct debit payments. The amendment to section 21 provides that if the balance of tax remaining to be paid by a person at the end of his or her annual accounting period is more than 20% of his or her actual liability for that accounting period, interest is chargeable on the balance.

Interest is chargeable at 1% per month from a day six months prior to the date on which that person is required to furnish his or her annual return. However, where that authorised person can show that if the interest charge were calculated according to the rules applicable to non-authorised taxpayers and the result would be a lesser amount, that lesser amount of interest is payable.

This amendment will not affect the vast majority of taxpayers in the direct debit scheme who pay their VAT liability on time. Many businesses have found that paying their VAT returns by the direct debit system is of great benefit. The taxpayer is obliged to keep the amount paid by direct debit under constant review and should increase the amount if his turnover rises during the year. The direct debit system is a great idea and it speeds up processing. Many small businesses find it an attractive way to deal with their VAT returns. People using this system should know that if their turnover increases they will need to pay more. I cannot be seen to give major concessions in that area.

Mr. Burke

I compliment the Revenue Commissioners on their change of tactics over recent years. They operated very ruthlessly in the past. They do their work in a businesslike fashion. They have changed again quite recently in that they are applying surcharges every chance they get. They are ruthless in their dealings with people who do not produce their accounts on time. This section is included to further assist Revenue in penalising those whose VAT liability increases and is not properly provided for in the direct debit system. Those people will pay their dues at the end of the tax year anyway. This is unfair. The Revenue Commissioners are being provided with another instrument to use against many hard-pressed people. People would be better off doing their VAT accounts bi-monthly if this section is to be included. It should be deleted because it is merely another instrument for the Revenue to come the heavy hand on those who have elected to pay by direct debit.

Mr. McCreevy

I have just learned something I did not know. No interest is charged for VAT on direct debit cases at present. There has been no legislative basis for so doing. This section will now provide the legislative basis to do so. That anomaly led to abuses, with some direct debit cases paying far less than they should. There is a 20% margin of error in place which should cater for all bona fide cases. If a person has underpaid by 20% at the end of the year on the direct debit system he or she will not be penalised with the interest charge. It is a reasonable provision.

I was around when the Revenue's system was in chaos. For the past couple of years Revenue has operated a system whereby if a person is a few days late with his or her returns, it immediately rings up the person looking for the money. People are expected to pay up quickly as a result of the lower tax levels and the professional man ner in which the Revenue now deal with such matters. Business people must regard paying their taxes as a bill and must pay it as they would pay anyone else. If Senator Doyle owes Senator Burke for a business transaction in Castlebar he expects to be paid under the trade terms, be it 30 days or ten days. For many years – I have been involved in this business for about 30 years – the taxman was the last person to be paid. That was the business person's way of dealing with such matters. It was the climate in which we lived. A person's tax bill must be dealt with in the same manner as other bills. They must pay it up-front and no leeway is granted. This change has come about having tried to bring the system up to date by introducing amnesties and so on.

There is a new climate now. Senator Burke is correct, the Revenue Commissioners go after people quickly now. Gone are the days when three, four or five years could pass before anyone came looking for money. Those days are gone.

Mr. Bonner

I was surprised to hear Senator Burke referring to the change by the Revenue Commissioners in collecting interest charges. They have been very lenient in this area since the amnesties. They only come down heavily when there is a huge shortfall in a person's preliminary income tax payment.

I am the secretary of a charitable, voluntary organisation which has trading income and I completed its VAT return. Due to the nature of the organisation, a seasonal business relying on me to complete the return, it was very handy, given my workload, to do it when I was doing accounts at the end of the year. In the first four or five months of the year the income was very low, due to the seasonal nature of what was involved, and I calculated that £400 for every two months would be a reasonable amount to pay. The direct debit would then need to be upped substantially to thousands of pounds for the last period. The Revenue Commissioners could not do that if I did not do it, and I did not have time to look at it – as I think of it, the same direct debit for £400 is going through and I pay a cheque for the monthly amount. I therefore ask the Revenue Commissioners to help small businesses, because they have enough to do to trade without watching all this legislation. Something should be put in place at the start of the year if direct debits for the first three periods are X and for the last are Y, rather than leave it to the individual to go back to the bank, because it is very easy to forget about it.

As I am on my feet I mention PAYE, or P35, as the annual return is called, where the deadline has been extended from 14 April to 30 May. Many small businesses which have been making monthly returns cannot just drop everything and deal with the P35. I have seen people getting the statutory fine of £1,000 or £2,000, which is the maximum. I dealt with a case where I made representation to the Minister. The Revenue Com missioners in Nenagh look on a multi-million pound business the same way as they look at one with a £400,000 turnover in west Donegal or Mayo. The penalty was greater, nearly, than the actual return and, though I succeeded in getting a waiver on £500, the person still had to pay £1,500 plus £30 or £40 to the State solicitor for collection. I know you cannot legislate individually and that there must be general laws, but there should be a certain amount of leeway in dealing with small businesses like that.

Mr. McCreevy

I have just been passed a note to say that the Revenue Commissioners will accept a variable direct debit, but the taxpayer must arrange this with his bank.

Mr. Bonner

That is what I am saying and it is very easy to forget.

Mr. Burke

It is obvious from the Revenue Commissioners that people are paying substantially less than they should. Is that the outcome from the Minister's Department?

Mr. McCreevy

I am informed that there were some cases.

Mr. Burke

Rather than implement this section would it not be easier to inform the client that over the preceding 12 months they have paid substantially less on their direct debit and that they are now being asked to—

Mr. McCreevy

There was no statutory basis up to now for charging interest on direct debit VAT cases. That is the problem. That is a loophole of which I was unaware. If someone paid only half of what he should during the year, there was no statutory basis for charging him interest.

Mr. Burke

He had to pay what he owed before the start of the next year.

Mr. McCreevy

He was supposed to.

Mr. Burke

The Department must feel it cannot carry on without having this instrument to come the heavy hand. It looks as though it needs a stick to wave over the client.

Mr. McCreevy

We always need a stick.

Question put and agreed to.

SECTION 196.

Mr. J. Doyle

I move recommendation No. 33:

In page 311, line 18, to delete "fourteen" and substitute "30".

Mr. McCreevy

Section 22 of the Value Added Tax Act, 1972, enables the Revenue Commissioners to raise, and serve notice of, an esti mate of the tax payable by a taxpayer who has failed to submit his or her VAT return on time. The aim of my amendment to section 22 of that Act is to align the period within which an appeal of the estimation of VAT can be made with the PAYE provisions in this area. The PAYE provisions set a period of 14 days for an appeal of this type and the current period is 21 days. The taxpayer has the right of appeal against any estimate raised under section 22 of the Act, but only on very restricted grounds. These grounds are that he or she is not a taxable person, is not required to register for VAT and is therefore not to be required to make a VAT return. This has only been the case if the person concerned was below the turnover threshold for VAT registration. Given such straightforward grounds for appeal, a 14 day period is considered to be adequate. There is no reason a taxpayer would need 30 days to lodge such a simple appeal.

Mr. J. Doyle

Perhaps the Minister will be good enough to send a speaking note to Senator Costello.

Recommendation, by leave, withdrawn.

Section 196 agreed to.

Sections 197 to 208, inclusive, agreed to.

SECTION 209.

Question proposed: "That section 209 stand part of the Bill."

Mr. Bonner

This section deals with stamp duty on second houses and I thank the Minster for what he has done. In June last year, when the second Finance Bill was introduced, I was the first or second speaker to ask the Minister not to consider this legislation for places like Donegal. There has been a total downturn in the property market, particularly in new property. Pressure came from auctioneers and builders through a group that was formed, but long before they got involved I raised the issue with the Minister in this House and I appreciate what he has done.

Mr. McCreevy

From the time we mooted the second Finance Bill for 2000, which provided for these changes, the Senator pointed out that this would have a detrimental effect on a whole range of activities in the west, particularly Donegal. I readily accept that he was proved to be correct.

Mr. Burke

I compliment the Minister for having a change of heart in relation to stamp duty and I appeal to him to reduce the 9% rate on second-hand residential properties. There is still a number of properties, some of which are derelict, that people would acquire and renovate for residential units if this disincentive were removed. On a second-hand house, for a person who would acquire and renovate it for letting pur poses, there is a 9% stamp duty, that is £9,000 in £100,000. In many cases it deters the small investor from supplying residential lettings which can be of benefit to small, provincial towns. In view of the fact that the Minister has changed his mind on part of this, I ask him to have a look at the second-hand residential property sections, especially for provincial towns and rural areas, where a person might acquire a second property unit.

Mr. McCreevy

In my reply to Second Stage I referred to housing. While I leave everything open to review, I hope this is the last occasion I have to revisit this area before the next general election. Stamp duty raises considerable funding for the Exchequer, approximately £700 million per year. The Exchequer needs money to pay Senators, run hospitals, pay teachers, build roads and so on.

Mr. Burke

Including Deputies and Ministers.

Question put and agreed to.

Sections 210 to 243, inclusive, agreed to.

First to Fifth Schedules, inclusive, agreed to.

Title agreed to.

Mr. J. Doyle

I thank the Minister and his staff and the staff of the House for piloting the Bill through the Seanad. It is one of the largest Finance Bills to be presented to the Seanad There was a difficulty with having Committee Stage follow so soon after Second Stage. I hope next year there will be a longer break between the two Stages. The Minister has the gift of a good sense of humour, which I have always admired.

Mr. McCreevy

I would want to have.

Mr. J. Doyle

It is something a politician needs. The Minister's reply to Second Stage was one of the best speeches I have heard in the Seanad It was robust, interesting and clear. I thank him for the attention he has given to the House and to the issues raised by Members. I hope he will give the Wind Energy Association some relief in the near future.

Mr. Finneran

Without adding to the wind of the House, I join Senator Doyle in complimenting and thanking the Minister and his officials, the staff of the House and you, Sir, on the passage of this important legislation. This long day was marked by the good humour of the Minister. He gave lengthy responses to even minute questioning and he elaborated beyond the call of duty. That is in the best interest of the working of the House. Those who have an interest in important legislation like this would have to be impressed with the Minister's detailed grasp of his brief.

Mr. McCreevy

I thank all Senators for their contribution to the passing of the Finance Bill. It is very important legislation. This Bill is a major tome, the biggest I have introduced, apart from the Taxes Consolidation Act, which is an amalgamation of Acts dating back to 1967.

I thank the officials from my Department and the Revenue Commissioners. I also thank the Bills Office. A raft of Committee and Report Stage amendments had to be produced by the office before the start of Committee Stage in the other House, when on one occasion officials in the office worked until 5 a.m.

I thank the Senators for their good humour. I enjoyed attending the debate on the Bill in this House. Passage of the Bill is a long drawn out procedure. From 1 September each year until the passing of the Bill by the Seanad intensive work is done.

Statutory time limits are laid down regarding the passage of Finance Bills in terms of when Second Stage in the Dáil should be taken after the date of the budget and when all Stages must be passed by both Houses. That sometimes make it difficult to allow appropriate periods of time between Stages. I will see what can be done in future years within those parameters. The date of this year's budget is fixed for 5 December and we have compiled a tentative time scale for the passing of the next Finance Bill.

As on previous occasions I picked up ideas which might be implemented in future budgets and Finance Acts. I thank the Cathaoirleach and his staff, including the Clerk and her staff, for the efficient way in which they took today's business.

Bill reported without recommendation, received for final consideration and ordered to be returned to the Dáil.