The first item of business is the election of a Chairman.
Business of Joint Committee.
Clerk of the Committee
I propose Deputy Michael Ahern.
Clerk of the Committee
The question is, "That Deputy Michael Ahern be elected Chairman of the Committee".
Question put and agreed to.
I thank Members for nominating me as Chairman. The first item of business relates to verbatim official reporting. The practice has been not to have a verbatim report of the proceedings of this committee and this precludes the admission of the press and visitors as it is not desirable to have proceedings reported outside when no official record of proceedings exists. However, the committee may decide to have formal sessions reported with the press and visitors admitted and private sessions which will not be reported. Is that procedure agreed?
Can the precedents be outlined? The Chairman stated it is not customary to have the proceedings of the committee reported but the committee has been constituted to deal with legislation.
Prior to the taking of the last such Bill, it had been the practice that proceedings dealing with consolidation Bills were not reported because there was no verbatim record of the proceedings. The proceedings on the last consolidation Bill here reported and the press and public were admitted. We propose that a similar format apply on this occasion.
Proceedings will be fully recorded?
That is correct. Is that agreed? Agreed.
Taxes Consolidation Bill, 1997: Committee Stage.
I call the Minister to make his opening statement.
I wish to be as helpful as possible in making some brief introductory remarks. The Taxes (Consolidation) Bill, 1997, is the largest single Bill in the history of the State. It consolidates the law relating to income tax, corporation tax and capital gains tax. It is widely recognised and accepted that these three taxes have a large measure of integration and interdependence. For example, income tax and corporation tax share a close commonality of rules and concepts and capital gains tax rules are applied for the purposes of charging corporation tax in certain circumstances.
This Bill is the first consolidation of tax law since the Income Tax Act, 1967, an Act which was, as the title suggests, confined to income tax. Since 1967 the Capital Gains Tax Act, 1975, and the Corporation Tax Act, 1976, have been introduced. These three codes of law have been amended annually and occasionally twice or three times per year by various finance Acts and other fiscal legislation. There are 40 separate Acts containing income tax, corporation tax and capital gains tax law. In addition, much of the legislation introduced in recent years has been increasingly complex in nature. There is no doubt but that the difficulties of interpretation and administration which users of the tax code experience have been compounded by the absence of consolidation.
Since the last consolidation of income tax law in 1967, legislation governing income tax, corporation tax and capital gains tax has grown to over 2,000 separate sections and some 50 related Schedules. The Taxes Consolidation Bill, 1997, has succeed in reducing this vast volume of legislation to 1,104 sections and 32 Schedules. More importantly from the perspective of the users of the legislation, the Bill organises this law in a coherent and logical manner making it possible to confidently navigate the legislation, something not possible in the past.
The purpose of a consolidation Bill is to consolidate all existing statute law on a particular subject or subjects. The only permissible amendments are those which remove ambiguities and inconsistencies from the Bill, substitute modern for obsolete or inconvenient machinery, achieve uniformity of expression in the Bill or adapt the Bill to existing law and practice. A consolidation Bill may not make substantial amendments to the law. It must also be certified by the Attorney General as a consolidating measure. The Taxes Consolidation Bill, 1997, has been certified by the Attorney General as such and I assure Members that the Bill makes no substantive changes to the law and has been so certified by the Attorney General.
It may be asked why this mammoth task is being undertaken if it does not make any changes in the law. However, this is to miss the point as the Bill will deliver many benefits to the business community, tax practitioners, administrators, legislators and, to an extent, the public. It will transform the way in which accountants, tax practitioners and the legal professions deal with their clients affairs, allowing them to ensure that the services they offer are efficient and cost effective. The Bill will also have a significant impact on young people who are training in these professions by simplifying their research tasks.
One of the principal benefits of consolidation will be to reduce the volume of income tax, corporation tax and capital gains tax by almost half. Other benefits which can be anticipated include the fact that all income tax, corporation tax and capital gains tax legislation will now be available in a single up to date Act in a coherent, orderly and more simplified format. Legislation will be more accessible and user friendly for the business community, tax practitioners and Members of the Oireachtas. This will be of particular advantage to smaller firms of tax practitioners and smaller businesses. As part of the consolidation process a significant amount of deadwood and obsolete material has been eliminated from the tax codes and there has been considerable simplification of its content. All future changes to the taxes involved should be capable of being slotted into the consolidation Act by amendment. Our tax legislation will be more coherent to foreign investors and their advisers, and the task of future simplification of the tax system will be facilitated.
It is my intention to have the Taxes Consolidation Bill made available in CD-ROM format once it is enacted. To assist in the consideration of the Bill, the Revenue Commissioners arranged to have a document outlining its provisions published with the Bill. This very useful outline gives a brief, straightforward description of each section of the Bill and should be a useful aid to Members in their examination of the Bill. In addition, the Revenue Commissioners will be publishing detailed notes for guidance on the legislation as soon as possible after its enactment. This publication will be made available in CD-ROM form.
The Bill is divided into 1,104 sections, comprising 49 Parts, dealing with different aspects of the income tax, corporation tax and capital gains tax codes. However, in order to facilitate the reader and to simplify the language and presentation, a number of novel features are introduced. These features include the concept of superheadings, or families of related subjects, the placing of definitions in all cases at the beginning of provisions, and the elimination of archaic language and of the old-fashioned and complex device of provisos to qualify the meaning of a section.
Briefly, the superheadings are, first, the interpretation and basic charging divisions in Parts 1 and 2; second, the income tax and corporation tax main provisions in Parts 3 to 18; third, the taxation of chargeable gains in Parts 19 to 21; fourth, transactions in land in Part 22; fifth, other special provisions in Parts 23 to 36; and, sixth, the management provisions in Parts 37 to 47.
To assist Members in their deliberations, the Bill is accompanied by a memorandum, as required by Standing Orders, which shows the enactments which are proposed to be repealed by the Bill, and the section of the Bill in which these enactments are reproduced. If a particular provision has not been re-enacted in the consolidation Bill, the explanation for that will be found in the remarks column of the memorandum. As can be seen, this memorandum is not the usual type of explanatory memorandum which accompanies a Bill and with which Members will be familiar. Members will find an explanation of abbreviations used in the memorandum on page 2.
Column 1 of the memorandum, headed "Provision of earlier Act", contains a sequential list of every provision of an earlier Act relating to the taxes being consolidated. Column 2 of the memorandum, headed "Provision of Bill", shows where a corresponding provision to a provision listed in column 1 appears in the Taxes Consolidation Bill. For instance, the provisions of section 1(1) of the Income Tax Act, 1967, may be found in sections 2(1) and 3(1) of the Bill.
In contrast, the provisions of sections 1(2) to 1(6) of the Income Tax Act, 1967, are represented by a blank, indicated by a dash, in column 2, which indicates they are not provided for in this Bill. The reasons for this may vary. In the example shown it is because the provisions in question were repealed in the case of section 1(5), obsolete in the case of section 1(6), or unnecessary for the purposes of the Taxes Consolidation Bill because they relate to construction in the case of section 1(2), or to interpretation in the case of section 1(3) and section 1(4), and the Taxes Consolidation Bill has its own provisions dealing with such matters. Where a blank entry occurs in column 2 of the memorandum, an explanation for the absence of the provision in question from the Taxes Consolidation Bill will be provided in column 3 of the memorandum.
I wish to place on record my appreciation of the time and effort which Deputy Ferris has obviously spent examining this Bill. Deputy Ferris has tabled a large number of amendments. I know some of them have been ruled out of order on the basis that they represent a substantial change to the underlying legislation which is outside the remit of this committee. I am unable to accept a small number of other amendments for reasons which I will expand on during the course of the committee's work. However, I will be accepting quite a number of the Deputy's amendments which will improve the form of the Bill or remove inconsistencies from it without affecting the underlying legislation.
I mentioned the Bill is divided into six superheadings. I suggest that the committee consider the Bill under these headings and that it adheres as closely as possible to the proposed time schedule which has been circulated. Of course, this does not preclude the committee from dispensing with the Bill before 4.30 p.m. In any event, I respectfully suggest that the Bill be dispensed with today so that Members, and my officials and I, are not required to finish it tomorrow.
I thank the Minister for his introductory remarks. I am glad some of the modest suggestions made on Second Stage have been taken up and that the guidance notes which have been drafted by the Revenue Commissioners and the introductory sections will be available in CD-ROM format. I compliment the Minister and his predecessors. I also compliment those who were responsible for the manner in which the business was conducted. The White Paper was as extensive as the volumes we now have before us and was of great benefit to everyone with an interest in the Bill.
I compliment the officials in the Department of Finance and the Revenue Commissioners on actively and positively engaging in a consultative process which has resulted in a Bill which consolidates all existing tax law and has the support of the professions. This Bill, when enacted, will be of great benefit to the accountancy and legal professions and also to legislators and, through the brokerage of the professionals and the legislators, to the public. The long and intensive consultative process has left us in a position where we can deal quickly with the Bill today. I am quite happy with the Minister's statement and the certification of the Attorney General that no change in the law as it exists is being proposed. I do not intend to move any amendments.
I would like the Minister to clarify a point he raised. Will the Finance Bill, 1998, be published in the format of an amendment to the Taxes Consolidation Bill, 1997? Does he, therefore, not envisage a situation of further tax law being enacted after this Bill which a future Minister will have to consolidate in 30 years' time? Is the intention that all new tax law will fall within this framework and that every subsequent Finance Bill, which ranges across the subheads of this Bill, will be published as a Bill to amend this one?
In respect of the suggested timetable, the Minister is a busy man and I appreciate his reluctance to return to the committee tomorrow. We are also a bit pressed for time on this side because we have less help than we used to. Would the committee agree to breaking for lunch at 12.45 p.m. to allow Members to contact their secretaries to see if there is any major crisis in their constituencies? Could we also amend the finishing time to 4.15 p.m.? From 3.30 p.m. to 4 p.m. would be sufficient time to discuss the management provisions and the last stage could be taken from 4 p.m. to 4.15 p.m., always bearing in mind the Minister's advice that we can finish earlier.
Subject to the agreement of the committee, the time schedule proposed by Deputy Noonan is acceptable to me.
I propose we take the sos at 12.30 p.m. We would need an order of the House to set a finishing time but I propose we work towards 4.15 p.m., as suggested by Deputy Noonan.
Changes made in the Finance Bill, 1998, will refer to the Income Tax Consolidation Act, 1997, to fit in with this legislation. It is hoped that the Finance Bill, 1998, and subsequent Finance Bills will follow the same general format of the consolidation legislation. Amendments will be made to this legislation.
In a couple of years it will be necessary to consolidate Finance Bills passed by the Oireachtas. It is my intention to consolidate every four to five years, otherwise we will end up with legislation like this. When Deputy Quinn was Minister he started the process. It was a major task. However, future legislation of this kind will be easier because the format has been decided.
The Finance Bill, 1998, will indicate that specific amendments are relevant to the consolidation legislation. Would it not be possible to consolidate within this legislation as a matter of routine to ensure that there is an up to date consolidated edition of tax law available to practitioners?
That is a good suggestion. I see no reason it cannot be done. Tax practitioners — I was one for a long time — would prefer that arrangement and if it can be done it will be considered. Hitherto the practice has been to consolidate Social Welfare and Tax Acts every couple of years. The Deputy's suggestion would obviate much unnecessary work.
There would be a cost involved, albeit not an extravagant one, if the practitioners had to buy annual volumes. The Minister's commitment to putting everything on CD ROM will make it easier to proceed because the technology is easier to amend.
Yes.
It is worth looking at.
It is a good idea and I will consider it.
I thank the Minister for his introduction. I compliment him and his predecessor and the staff in the Department. I have no difficulty with the suggested amended timetable. We are all anxious to pass the Bill.
I have only received a list of the amendments which are considered to be out of order. I will take an opportunity to discuss the reasons with the staff during the sos. I provided an explanatory memorandum with each amendment. We worked hard with legal advisers to ensure that we could play an active role to improve the legislation as much as possible. I am glad the Minister has accepted a number of my amendments in the spirit in which I submitted them, that is, to avoid ambiguity in the legislation. It is not practicable to proceed if acceptance of the amendments ruled out of order means that the Bill will have to be referred back to the other House.
Section 1 agreed to.
Amendment No. 1 is deemed out of order as it is of the nature of a substantive amendment of the statute law.
Amendment No. 1 not moved.
Section 2 agreed to.
Sections 3 to 6, inclusive, agreed to.