I would wish to make it clear that in this debate I am not discussing, much less defending, the delinquencies of defaulting taxpayers. I am merely discussing the delinquencies of the major offenders, the Commissioners of Revenue. I think I have already discussed that Department of the Revenue, which has for its motto: "We care a damn neither for the Minister for Finance nor for the Executive Council," and that we might now usefully proceed to discuss the second great department of the Revenue, which has for its motto: "We do not care a damn about the law." A very striking instance of that has occurred within the last month or two. As Deputies are aware, there is a statute of limitations to the assessment of income tax, and it became impossible after the 4th or 5th of April last to make an assessment in respect of the year ending 5th April, 1924. What did the Commissioners do? Did they think for one moment they would be bound by that or any other statute? The letter of that statute forbade them from assessing income tax more than six years due. The spirit of that statute clearly forbade them from doing anything of the sort, but during the month of May they invented a new system of torture, and all over this country they sent hundreds of documents of a most malicious and cruel nature. To anybody against whom they had any suspicion that any arrears of income tax were due they sent around what they call protective assessments. They sent around assessments running into thousands of pounds, assessments illegal in their character and brutal in their results. I would ask the Minister for Finance to let this House know whether he stands for a performance of that sort, whether the Revenue Commissioners are to know from him that it is the considered policy of the Government that if the Statute of Limitations be placed on the assessment of income tax they can suspend that statute for all time by making these assessments and sending them out long after the appointed date and using them or not using them at any time in the future they may so desire, holding this weapon over the heads of these unfortunate people, and if he does approve of that extraordinary course of procedure. I would be glad to know when will these unfortunate people be released from torture. For how many years will those assessments from which they have appealed, and which have remained in most cases without any justification whatsoever, continue? When will they be released from torture? Will there be any statute of limitation to them, and in the case of appeals also, will it be open to the Revenue Commissioners to give those so-called protective assessments for when and so long as they please? We were told by the Minister on another occasion in this House that he proposed setting up a departmental inquiry into the working of the office of the Revenue Commissioners.
We do not know whether he has done that or not, or, if he has, with what result. But I do not think that any Departmental inquiry that the Minister may set up will be viewed with any confidence in the country if the members of the committee are those who are at present administering the income tax laws. They would, of course, find, and they would be bound to find, that they have discharged this duty fairly and equitably, but any finding of that sort would meet with no respect in the country. In view of some of the Minister's observations to-day with regard to losses to the revenue, I would ask him to consider the loss to the revenue that the present system of income tax collection is daily causing. If the Minister could only realise the loss to the revenue which he is permitting the Revenue Commissioners to cause, I do not think that the injustices which the taxpayers have to complain about would be allowed to continue for one moment.
I am aware that incorrect returns have been made and that they are continuing. I am sorry to say that that is so, and so far as I am personally concerned I have done whatever I could, and I have done it since 1922 and before that, to impress upon every taxpayer that his duty is to make a full and a complete return. What answer am I to give to taxpayers? I have had men coming to me and saying: "I would like to increase my return by a little investment that I have across the water which brings in £200 or £300 a year that I would like to bring home. Do you think I would be safe with the income tax?" What answer could I, as an honest man, give to a query like that? I know well that if any man did amend his return and showed an increased income of £200 a year, which would mean a corresponding increase to the revenue, he would expose himself to the tortures of hell at the suit of the Revenue Commissioners. These are not individual isolated cases; they have been going on, I am sorry to say, up to the present time, and they will continue to go on until such time as the Minister for Finance will come to realise that the present methods are reducing the revenue and not increasing it.
There are a few matters in connection with individual instances of what I think are hardships that I would be very glad if the Minister would listen to. I will give him one instance which comes to me from one of the ablest of the inspectors of taxes in Dublin Castle, and I am quite certain that he would not put before me anything that was not absolutely justified. I make no such suggestion. I take the case of a man who up to April, 1918, was possessed of property on which he regularly paid income tax. In April, 1918, he sold it and placed the proceeds—£2,000—on deposit receipt. For the year ended April, 1929, a sum of £45 had accumulated as interest on that deposit. He returned that sum, with the accompanying certificate from the bank, to the inspector of taxes. He was assessed at £45 and he paid tax on £45. Since then and up to April 5th last the interest was reduced from £45 to £23 owing to the fact that some of the money had been drawn out and expended on property which pays income tax separately. He offered to pay income tax on the £23. What is the result? Under the law as it stands he is asked to pay income tax on a further sum of £45—that is, while he has received in all £68 income the Commissioners of Inland Revenue say to him: "You must pay income tax on £113." That may be the law, and coming from the source where I got it I do not challenge it. But surely the Commissioners have power to get relief, and if it has come to this, that if in a case where a man has received £68 and has paid, or is willing to pay, without any default or non-disclosure, income tax on the sum he receives, surely things have come to a strange pass if the Commissioners will not grant relief in respect of £45 which he did not receive and which he will not receive.
I will give one other instance of the peculiar methods of the Commissioners of Inland Revenue. I know a case where the profits of a lock-up business, the owners of which did not reside there, are so carefully kept that every penny that goes in is noted, every penny that goes out is noted, and a full return is made of the difference to the very penny and handed over to the Commissioners of Inland Revenue. During some years there were times when the partners who owned that business and who lived at some distance away from it, did not draw their full shares of the profits until the end of the year and in consequence there were some small sums on deposit which earned interest. To the knowledge of the inspector of taxes and without any protest from him, that interest has, for some years, been returned as portion of the profits of that business; the Commissioners have got tax under the heads of the profits of the business and of that interest, as the inspector of taxes knew, because he investigated the accounts, the matter was fully explained to him, and the circumstances explained when the case was on appeal some time ago before the Circuit Court. What happened?
My observations have no reference to the present inspectors of taxes in the City of Cork, two of the three of whom I know are gentlemen of the highest ability and absolutely courteous and careful in the conduct of their business. But one of these inspectors is now compelled to ask that income tax be paid twice over, even admitting that his predecessors knew that they got the tax before. I respectfully submit that, apart from any legal question that an assessment in respect of that interest should be made separately from the assessment in respect of the profits of the business, that it is not only law but fair play that when it was discovered by the Commissioners that they had already received the tax they ought not to proceed to charge it twice over by a subterfuge. I give the Minister for Finance two instances where the Commissioners are trying to do that. I do not in any way blame either of the inspectors of taxes who are concerned in these two cases: I simply give them as instances because these cases occurred within a very short time.
Some of the other methods adopted by the inspectors of taxes are very cruel. Without any inquiry as to whether they are right or whether they are wrong, without giving any opportunity for an explanation, they send people queries and requirements that would involve them in several hundred pounds of expense. I will give an instance that came under my notice the other day in which, I think, as cruel a thing was done by an inspector in Dublin as I ever had experience of. A young man had been in business from about 1912 or 1914. In addition to his business he had got a private income, which was increased at a certain period by a legacy, and yearly sums had been coming in from that source. Each year that man submitted full accounts of his business, each year he submitted full accounts of his investments, and the trust fund from which he was drawing this money which was added to his income were submitted to different inspectors of taxes, to the Special Commissioners and to the Circuit Judges. The man never withheld a thing from them. His bank books were at their disposal. He had before the Commissioners two bank books, one of them dealing with his investments. They had full knowledge of the source from which his money came, and each year he paid the sum for which he was assessed. He died very suddenly and very tragically. He was lying dying in a hospital in Cork, and his wife, two days before the birth of the two children and five days before his death, was lying ill in bed, when from some source there came in to him a large sum of money, partly accumulated during the time he was ill, of about £180. That money a kindly neighbour took and lodged in the bank on deposit receipt, in the name of the man who was dying. Would you believe that that money, which was deposited five days before the man's death, would be made the foundation of a charge of fraud by an inspector of taxes in Dublin?
I wonder if the Minister for Finance will stand over that? I wonder if he will stand over it when I state that down to this day, with the facts fully and clearly before this inspector of taxes in Dublin, the Revenue Commissioners directed that this man's widow should be served with what they call a protective assessment and an additional assessment running into thousands of pounds. Without any notice, without one word of explanation to the solicitor who was acting in the matter —and my firm was not concerned in it—this inspector writes a cruel letter, portion of which I will quote: "I understand you are acting as executor. I have examined the position for the past few years and I find that the deceased invested considerable sums." So he did, but every sum that he invested was disclosed and explained to the inspector year after year. "The sources from which these sums were obtained must be explored." They were, year after year, by the inspector of taxes and by the Special Commissioners, explored by Circuit Judges and verified by the chartered accountant of the trust out of which he received the money. Look at the torture that is put upon this poor woman and the penalty which this inspector takes on himself to impose. "The sources from which these sums are obtained must be explored. Moreover, the deceased had money on deposit prior to his death...." I have told you the only sum of money that was on deposit to his credit at the date of his death. Without a word of explanation he hurled that charge amounting, as the Minister for Finance will tell us, to a charge of fraud, against the dead man who knew no more about the deposit receipt than he did, and who was then lying on his death bed in the City of Cork.
Here is another portion of the document: "...with the result that such interest escaped taxation." Why in the name of Heaven do not inspectors, before they send out documents of this sort, go down and investigate? Why should they assume that everybody is guilty of fraud? "The income tax position is, therefore, as you will see, unsatisfactory and must be fully examined now so as to arrive at a final settlement." And then the gentleman pronounces sentence—sentence in advance: "I would suggest that you seek the services of a qualified accountant duly approved by this office." She must not merely have the accountant, but he must be one who is willing to bow the knee to the Commissioners of Inland Revenue. "I shall be glad to hear from you that you are prepared to do this, and also the name of the accountant whom you propose to employ"—I want the Minister to listen to this—"so that he can be suitably instructed."
The unfortunate widow and orphans have got the pleasure of paying the piper, but the tune is to be called for by the Revenue Commissioners. The accounts are to be taken up and examined by an auditor nominated by them, and we know what will happen the auditor in the event of the audit, paid for by the widow, not being satisfactory to the Revenue Commissioners. I could burden Deputies with many cases of cruel torture of this sort.
Let me show you the class of inquiries they are sending broadcast through my constituency. This is not an isolated case; I have seen scores of them. "Please furnish a detailed list of your total capital as at 5th April, 1914." Sixteen years later a West Cork trader was asked "Please furnish your balance sheet as on 5th April, 1914." And again; "Please furnish a corresponding detailed list of your total capital as at 5th April, 1929." Here is another request: "Kindly give particulars of the purchase of furniture, household effects"—cups and saucers, I suppose—"pianos, gramophones, wireless sets, motor cars and the like in the period from 5th April, 1914, to 5th April, 1929." Does the Minister for Finance approve of rubbish of that sort—asking a man to send a list of every basin and every cup he has purchased, and every gramophone from 5th April, 1914, to 5th April, 1929? And here again: "What was the total cost, estimated to the best of your ability, of the living expenses of yourself and your household for the years from 5th April, 1914, onwards to 5th April, 1929, taking into account holidays, medical and surgical expenses, if any..." In other words, you have to tell them what you had for breakfast, the nature of your appetite, what you had for dinner and how often you got supper over a period of fifteen years. Queries of that sort only tend to turn the income tax into ridicule.
I will give the House one more instance. One unfortunate man placed his bank books before the inspector of taxes, and there was an examination of the books made by the inspector of taxes. As a result of appeals that he submitted he went to the City of Cork, and it was discovered there that during a long period he had received something like £80 interest on deposit receipts. Just like many thousands of people he had not included that directly in his returns, believing, as a great many people believe, that interest on deposit receipts was not chargeable with income tax. But the interest which he got on the deposit receipts was included in the bank books which he showed in order to indicate the proceeds of the business on which he paid income tax. To show the man's innocence, during that period he had repeatedly paid interest on overdrafts, and he never took credit for them as an outgoing. He was as ignorant of one as of the other. What happened to him? He was put into a state of terror. An accountant made out a bill and nobody ever could know how it was arrived at. The poor man came home suffering from shock because he had with him a bill for something like £450, which he was to pay the next day, or he would be brought to Dublin and he would be swept for all time. Instead of going to Dublin, however, through the kindness of a Deputy from my division the matter was placed before the Minister for Finance, who was good enough to see that it would be properly investigated. What was the answer the man got? He was in the inspector's office a few days later, and he was told there that he would be salted well because he had exercised his constitutional right of appealing in his deep disgust to the Minister for Finance. They were not even satisfied with that. The following Christmas Eve into that man's house came a messenger—an assistant from the office of the inspector of taxes—to repeat the threats they had made to him. He told the poor man that he would have to pay doubly now what they asked him to pay before. That was the Christmas greeting he got from the inspector of taxes. I ask the Minister for Finance if he approves of operations of that sort?
In addition to the question of income tax the Revenue Commissioners have to deal with estate duty. I will give you two simple instances of estate duty; they are so simple that they require no legal knowledge to understand them. The House can judge for itself the methods of the Revenue Commissioners so far as those methods are adopted in the Estate Duty Office. A trader dies and leaves goods which have been purchased for £500 and which could again be bought in the morning for £500. What has he to pay estate duty on? The deceased bought the goods for £500 and his executors could sell them for £500. In this and in every other country, so far as I know, and I can speak for adjoining countries, the executor would be asked to pay estate duty on £500 less a reasonable discount for the re-sale if he had to get rid of the goods on the spot. What did the Revenue Commissioners hold? They said: "No; do not think you are going to get off with £500. You must pay £500, plus the retail price, plus the retail profit of the goods on the assumption that you sold them over the counter, less overhead charges." The value for estate duty would be the price that the stock would realise in the opinion of the Commissioners. They are the lords of the situation. It was explained to them that the executor could buy the goods again for £500, but they would not take that. That is not the law in this country or in England, Scotland, Northern Ireland or Wales. The same laws and regulations on this matter govern all these countries. What do you think of Revenue Commissioners who have not sufficient capacity to be able to answer a simple question like that? What do you think of Commissioners who arrived at a conclusion so ridiculous and nonsensical as to tell a man that he would have to pay estate duty on a larger figure than he could buy the goods for? Any Commissioners who come to a conclusion of that sort are unfit for their job and the quicker they are got rid of the better for all of us.
I will give another instance which again will require no legal knowledge to appreciate. If a man domiciled in this country dies in this country but leaves property in England his executors or their representatives have to take out two grants— one in Ireland and one in England. The one in England is necessary by reason of the fact that some of the property is situate in England. In the ordinary course, the representatives have been allowed the costs of the second grant as part of the expenses under the Finance Act, and the same Finance Act applies to England. The law in England is the law that applies to us now. It applied to this country for something like thirty-six years—over thirty-five years, at all events. If a man dies domiciled in England but with property in this country English estate duty will, as a matter of course, be arranged as common sense dictates.
A point, however, arises as regards the expense of taking out a second grant in Ireland by reason of the fact that the man though domiciled in England would have property in Saorstát Eireann. The Revenue Commissioners whom we now have have decided against the arrangement that I have quoted in the case of England. They say that they are advised that no claim lies in cases such as this where a deceased person domiciled here dies possessed of assets in Great Britain and (or) Northern Ireland. The section provides for the additional expense incurred by reason of the property being situate outside Saorstát Eireann. This is the Commissioners' judgment: "In cases such as this any additional expenditure incurred is not caused by reason of the property being so situate but because it is associated with property in the Saorstát in the ownership of the same person. The costs of Probate, etc., are practically identical in all three countries and such costs are consequently not an additional expense within the meaning of the section." Where is the distinction? If a man wants a second grant he has to get it by reason of the property in England—he has died domiciled in Ireland—and for no other reason. That is the reason they have been allowing it in the past. That is the reason the English Estate Duty Office puts no penalty on the estate of a man who dies domiciled in England but who has property in this country. Our Revenue Commissioners have come to that extraordinary decision, upsetting the practice and the experience of their predecessors and of their brother Commissioners across the water.
There is another point to which I must draw attention. It is to these Commissioners that the vast powers are given in respect of excise penalties. They are given powers of casting people into prison for an unlimited time. That is a very large power and I submit, for the sake of the liberty of the subject, that it should not be given to men who have shown themselves so absolutely devoid of judicial capacity as not to be able to understand that goods purchased for £500 and which can be bought again for £500 are only worth £500. I say that it is a very grave responsibility to hand over to these Commissioners the safety and the liberty of the citizens of Saorstát Eireann. I speak on the authority of the chief district justice of the city of Dublin who, within the last few weeks, publicly registered his protest against this. He declared in reference to cases coming from him, on which he had brought to bear his vast experience and great legal ability, that having had before him the witnesses and heard them viva voce, when he sends the cases up to the Commissioners of Inland Revenue they are turned down. In one case when he recommended that a penalty of £200 be reduced to £12 10s., the answer came back that the law must take its course and the man must go to jail for an unlimited time. I could quote another instance in which the Commissioners have done something even much worse than that in respect to a memorial submitted to them which showed on the face of it that the person concerned was not merely entitled to get the penalty remitted, but that, on the facts stated and endorsed by the Justice who had decided the case, it was shown that he had felt he had done what was wrong and that he made a mistake. When this case came before the Commissioners of Inland Revenue with a recommendation that the penalty of £25 should be reduced to 10s., or wiped out altogether, the Commissioners sent it back with the usual stereotyped answer that the law must take its course.
That power had to be taken away from the Commissioners of Inland Revenue in England over 50 years ago, at all events to some extent. At that time a law was passed to give the then justices in England power to limit the period of imprisonment. Unfortunately, that law was never extended to this country and the Commissioners here still have this power which they are wielding in this awful fashion and the sooner it is taken away from them the better for the security of the citizens. In conclusion, I would beg the Minister for Finance to consider the capability of the existing Revenue Commissioners to carry on and discharge the very serious functions entrusted to them, and if he finds himself forced to the opinion that everybody else in this country has been forced to long ago, that they are unfit and unable to discharge their duties properly, that he will not hesitate to say so, and, if necessary, will clean out the Augean stable.
