A question arises on this section which I raised on section 12. The problem arises because under the wholesale tax code a provision was made that, where the scale of trade in goods liable to wholesale tax was so large that the retail business was on a wholesale type scale, the Revenue Commissioners might require the retail to register under the wholesale tax code. This has been applied in a number of cases in regard to department stores and this raised the problem in regard to the method of payment of tax because as such stores would be selling goods on such a scale it was agreed they should be charged on the basis of purchases rather than sales, and they are so paying. This section deals with relief for stock in trade held on a specified day but omitted to make a provision for these traders. On a specified day such traders could hold substantial stocks running into hundreds of thousands of pounds and they would have to pay wholesale tax on these goods—in the absence of any adequate provision in this section they would have to pay VAT on the goods and not recover the wholesale tax paid.
This is clearly grossly inequitable. The amounts are substantial for individual stores. They could run into £60,000 or £100,000 in some cases and it is wrong that any business should have to pay double taxation because of unwillingness on the part of the Commissioners to deal with this matter. Various arguments could be made against this but, to my mind, they do not seem to hold water. The fact is that the tax is repaid on the purchases because the Revenue Commissioners require these retailers to register for wholesale purposes. If one compares the business of one of these stores with a store not operating on the same scale, one will see the comparative disadvantage.
There are various ways of achieving this relief. One would be to insert a new section—it would need to have been done after section 14 or 16—to provide that VAT shall be levied at only 5.26 per cent on any goods shown to have already borne wholesale tax. Another way would be to include in this section an additional paragraph in subsection (2) which would include a further category not already included under paragraphs (a) or (b) to cover a seller of goods accountable for wholesale tax under section 3 of the Finance Act.
They are two alternative ways and there is a possible third. Undoubtedly something has to be done about this because I do not think the Minister could sustain a position in which these firms are taxed twice. It is only by an extraordinary jumble of words that they are shown to be taxed twice. I am therefore asking the Minister to agree to an amendment at Report Stage to deal with this.