Dáil Éireann díospóireacht -
Wednesday, 4 Jun 1930

Vol. 35 No. 4

Public Business. - Additional Financial Resolution, No. 4.

The Dáil went into Committee on Finance.

Minister for Finance (Mr. Blythe)

I move:—

(1) That in order to remove doubts it is hereby declared and enacted that for the purpose of determining liability for assessment to and payment of income tax, the Electricity Supply Board is not and never was the State or a branch or Department of the Government of the State.

(2) That the annual value with reference to which tax is to be charged under Schedules A and B of the Income Tax Act, 1918, in respect of any tenement or hereditament in the exclusive possession or control or the occupation of the Electricity Supply Board and for the time being exempt from assessment to poor rate shall be ascertained according to the surveys and valuations made under the Valuation Acts.

It was always intended that the Electricity Supply Board should be liable to income tax. That was stated by the Minister in this House and in the Seanad, and, of course, it was also told to the Board, but, in consequence of legal advice which has been received, there seems to be some doubt as to whether the intention was carried out or not. While the Board is apparently advised that it is not liable to income tax, the Revenue Commissioners are advised that it is liable, and whatever the decision of the Court may be, the position is, that without legislation litigation would take place and this resolution, which will be embodied in an amendment to the Finance Bill, is introduced. We are quite clear that the Electricity Supply Board ought to be liable to income tax. In the first place, it is to a certain extent in competition with private firms. It is in competition, for instance, with gas companies which are liable to income tax. It is in competition with firms which are engaged in the wiring of houses and the selling of electrical appliances which are also liable to income tax. It has taken over a number of private concerns which are making profits to the extent of about £120,000 per annum and which are liable to income tax. It is felt on all grounds that the Electricity Supply Board should have the same liability to income tax as these competing firms and as concerns whose works it took over and as, in fact, an ordinary commercial firm running a scheme of this nature. As I say, the object of the resolution is to remove doubts which have been raised and to give effect to an intention which has been on previous occasions expressed in the House.

Mr. Lemass

We are agreeable to the passage of this resolution. As the Minister has said, it would not be right that a concern which is in competition with privately owned concerns in the State such as gas companies and electrical equipment suppliers should be subsidised by the taxpayer in order that it may be able more effectively to compete with its rivals. We also support the resolution on the ground that it would be wrong to ask the general taxpayer to subsidise the consumers of electricity in the State and thus make it possible for them to get electricity at a lower rate if the subsidy were sufficiently large. I would like, however, to ask, if many more resolutions of this kind are to be tabled, that Ministers would refrain from criticising Bills from private members on the ground that they are badly drafted. If Ministers, with the assistance of large Departments and the official draftsmen, are unable to produce Bills which will not give rise to doubts as to their meanings, private Deputies cannot be expected to do so.

Mr. Flinn

Might I ask whether or not this income tax relief applies to interest and sinking fund in connection with the money issued for the use of the Electricity Supply Board and what the total amount of tax involved in the matter is? Before we do pass a resolution of this kind we certainly ought to know the size of the sum involved. I would also like to know whether or not any application has been made to the Electricity Supply Board for income tax and if they have in fact declined to pay it.

Mr. Colohan

I would like to know if I would be in order in bringing a matter before the Minister. This is a financial resolution and perhaps I would be in order. There has been a protest made by the urban district council of Athy and by all the residents there against the erection of a transformer station in the market place——

An Ceann Comhairle

I am afraid it it difficult to transform this into income tax.

Mr. Colohan

We are giving them advantages in the way of income tax and I do not see why——

An Ceann Comhairle

We are imposing income tax here, but we are not discussing the administration of the Board.

Mr. Colohan

It is very hard to get a crack at this Electricity Board.

An Ceann Comhairle

It is nearly impossible.

Mr. Flinn

I understand what is at issue here is a conflict in the matter of the interpretation of an existing law. I would like to know if in fact the law is as apparently the Board has been advised it is a resolution of this kind is sufficient to void that law.

An Ceann Comhairle

The Deputy is not asking me.

Mr. Flinn

I do not mind whether you give the information or somebody else. I want to know what the position is. Here we have a retrospective resolution which says that the Electricity Supply Board are not and never were, in fact, exempt from income tax. That is introduced by saying it is to remove doubt, but if, in fact, the advice which apparently has been given to the Electricity Supply Board that they were in fact exempt from income tax under the existing law is sound, what is the position of that law when we have simply passed a declaratory resolution which says they are not and never were exempt? Does a resolution of this kind take precedence of the law?

An Ceann Comhairle

The effect of passing this resolution, if it does pass, will be to enable the Committee on the Finance Bill to incorporate in the Finance Bill provisions of this particular character. They will then become law by virtue of being in an Act.

Mr. Flinn

This particular resolution in itself does not alter the law. That is the point.

An Ceann Comhairle

It is a part of the process of altering the law.

Mr. Flinn

This particular process does not in fact alter the law.

Mr. McGilligan

No more than a Second Reading of a Bill.

Mr. Blythe

The position is that it was never intended to exempt the Electricity Supply Board from income tax and that was repeatedly stated, but there has been legal advice offered to the Electricity Supply Board that the electricity supply undertaking constitutes a State undertaking or is in the position of a Department of State and consequently is not liable to tax. There was an application made to the Electricity Supply Board in respect of income tax on the undertakings which they had taken over and they stated that they were advised that they were not liable. If the Electricity Supply Board were advised by their legal advisers that they were not liable to pay, of course it was their duty to act on that advice. The position therefore has arisen that litigation in default of legislation carrying out the intention of this resolution would necessarily ensue. It might result in the Board being found liable to income tax or it might result in the Board being found by the courts to be not liable to income tax. We are not waiting until that litigation has been fought out at considerable expense. We are introducing this resolution in order that the position might be as it was always intended it should be, that the Board should be liable to tax.

There are various reasons why it is difficult to say what amount exactly is involved and we are really concerned here with the principle that this Board should pay the tax for which they are liable.

Mr. Flinn

Surely the Minister before asking the House to remove a liability——

Mr. Blythe

It is not proposed to do that. It is the other way round.

Mr. Flinn

"The loud laughter that bespeaks the vacant mind." Put it the other way. Before the Minister asks the House to put upon the Electricity Supply Board a liability surely he ought to have taken the trouble to find out what that liability is. Do I understand the position is that the Electricity Supply Board have refused to pay income tax until it shall be made clear to them that it is legally due. If that is the position when does the Minister propose to proceed against the Electricity Supply Board for embezzlement? The word embezzlement is applied generally to those who refuse apparently, according to the Minister, to pay debts until it has been ascertained that those debts are legally due. As far as I can understand from the Minister now the Electricity Supply Board set up by him is in precisely that position. Does he intend to apply to them the term "embezzlement" which he applies to his political opponents in precisely the same circumstances? Again, I ask what is the amount? As far as I know the Board will have directly to pay the interest and sinking fund on about nine millions of monies. What is the income represented by the interest and sinking fund on that amount and what is the amount of income tax which they are now going to put on the Electricity Supply Board by this means? Before the House is asked to put on the Electricity Supply Board a loan of that kind, which, apparently, has not been put upon it by law, it is the business of the extremely lazy Minister for Finance to take a little trouble to ascertain what that amount is and to tell the House.

Question put and agreed to.

The Dáil went out of Committee.

Question—"That the Dáil agree with the Committee on Finance in this Resolution"—put and agreed to.