Will the Minister say how many different items are involved in Section 3? There is a petrol substitute and the Minister said there were some other things as well. Could he give the House any information as to the number of commodities involved?
Finance Bill, 1942—Committee and Final Stages.
Sections 1 and 2 agreed to.
SECTION 3.
Question proposed: "That Section 3 stand part of the Bill."
I could not say that. Machinery for making paper of emergency types is one item involved.
Question put and agreed to.
Sections 4 and 5 agreed to.
SECTION 6.
Question proposed: "That Section 6 stand part of the Bill."
Would the Minister mind explaining Section 6?
This is designed to remove an element of hardship which, owing to the operation of the existing basis of assessment to income-tax, may arise in the treatment of a person for tax purposes in respect of the early years after his first entry to an office or employment. It is a corollary to the previous section.
Question put and agreed to.
Section 7 agreed to.
SECTION 8.
Question proposed: "That Section 8 stand part of the Bill."
Would the Minister mind telling us what he intends to cover under this section? This is a new power to customs officers to make inquiries, to take samples, and so on. What is it that it is intended to cover in this case or what is it that it is intended to prevent happening?
This clause has reference to hydrocarbon oils, generally referred to as heavy oils, chargeable with duty for customs and excise under the provision of Section 21 of the Finance Act, 1935, including motor spirit oils other than those in the petrol class, certain heavy oils, such as Diesel oil, used in motor vehicles, fitted with special engines or with special carburetters, some descriptions of heavy oils, like paraffin, ordinarily used for domestic purposes but also capable of use for combustion in the engines of motor vehicles. Duty is collected on heavy oils only when such oil is intended for use for combustion in the engine of a motor vehicle. A rebate of the duty is allowed in all other cases. In order to prevent improper use of these oils, when a rebate has been allowed, that is, in a motor vehicle, certain safeguards are provided in Section 21 of the Finance Act, 1935 and subsequently in Section 18 of the Finance Act, 1940. It has, however, been found in the light of recent experience, that further additional safeguards are necessary to circumvent evasion and this clause, (6), provides such power.
The Minister promised to look into the question of excluding tractors used for conveying beet pulp from the factory to the farm and having them included as agricultural tractors. I raised the point on the Second Reading. Could the Minister do anything in that matter?
I looked into the point raised by the Deputy as to whether these agricultural tractors could be used for taking beet pulp, for instance, from the factories to the farms. It has been customary to allow that and to allow the rebate. There is no intention to interfere with that.
I raised the point because, in a few cases last year, some attempt was made to charge duty on the oil used for that purpose.
There may have been some difficulty about the tractor concerned, that the tractor was a tractor that was generally used for purposes other than agricultural purposes.
No; it was an agricultural tractor.
Where there is evidence that the tractor is used mainly for agricultural purposes—exceptions have been allowed—the rebate has been allowed.
Question put and agreed to.
SECTION 9.
Question proposed: "That Section 9 stand part of the Bill."
Could the Minister tell us if there has been any agreement with any other Government concerning this matter of the concession that is made in this case? The first part of it would appear to affect persons in our own territory who are killed by reason of an act of one of the belligerents. The second part of it, as I read it, would appear to cover cases of persons outside the State whose death would be occasioned by reason of the war. I take it that the reason for the second part is that similar provision has been put into some of the British Acts?
That is right.
Has there been any agreement about it or is it that you are following much the same course so that there would not be a person with portion of his estate in one country and portion in the other who would be relieved in one and not in the other?
If it were not for Section 10, the reliefs permitted under the British Act would not be allowed here and we would be getting more than we would normally and properly, perhaps, be entitled to in the way of estate duty by reason of the reliefs allowed on the other side. Section 10 would in effect secure for the dependents the reliefs that have been allowed by law on the other side. Section 9 allows reliefs to persons injured in our own territory. Section 10 allows reliefs to people affected by the arrangement for double taxation.
I think Section 9 deals with death duties and Section 10 deals with estate duties. However, it does not matter very much.
Question put and agreed to.
SECTION 10.
Question proposed: "That Section 10 stand part of the Bill."
Section 10 is the section that covers the point raised by Deputy Cosgrave in connection with people who are entitled to certain allowances on the other side.
Question put and agreed to.
SECTION 11.
Question proposed: "That Section 11 stand part of the Bill."
This is to correct something that was wrong last year.
This section is a slight verbal amendment of Section 26 of the Finance Act, 1940—a drafting amendment.
Question put and agreed to.
Section 12 put and agreed to.
SECTION 13.
Question proposed: "That Section 13 stand part of the Bill."
This is to cover a point raised by Deputy Cosgrave on a previous debate—a successor to a company by a company.
Question put and agreed to.
Section 14 put and agreed to.
SECTION 15.
Question proposed: "That Section 15 stand part of the Bill."
This is to correct a slip in the Finance Act, 1941.
Question put and agreed to.
Section 16 put and agreed to.
SECTION 17.
I move amendment No. 1:—
At the end of the section, page 20, to add a new sub-section as follows:—
(3) In the case of a company electing to take the figure of £2,500 net profit for any year during the emergency, instead of the provisions of 9 per cent., etc., the company can so decide which basis to select.
There have been some concessions granted to companies in the Finance Bill this year, mainly to companies which began business since 1934; the concessions amounted to somewhere about £150,000 as far as the revenue is concerned. As the matter stands, I am not clear with regard to the rights of a company prior to the granting of this concession being carried on since the concession was made. As the provisions stood last year, the standard income which was taken before any excess duties were charged was £2,500. If the profits of a firm were £2,500 in 1939-40, and remained at that figure down to date, as the law stood up to the introduction of this year's Budget there would not be any assessment for excess profits in that case. Now the Minister is proposing to change the basis of assessment, and is allowing to those companies a profit amounting to approximately 9 per cent. on the issued capital.
I have been looking up the number of firms that got trades loans or were otherwise helped by the Industrial Credit Corporation. I find that the number, as recorded in the Banking Commission Report, so helped by the Industrial Credit Company was something like 80, and of the 80 not more than five would appear to be benefited by this new concession. I will not bind myself to the number either on the one side or the other; I mention that number as a result of a rather hasty glance at the figures regarding the capital of the companies. Whatever position a company was in up to the time of the introduction of the Budget this year—that is a company started since 1934 or even prior to that —if the starting point was £2,500, I do not think it was intended by the Minister to reduce that figure, as far as we heard, and I have brought in this amendment in order to ensure that the position of those companies, most of which would be the smaller ones, will not be worsened by reason of this concession which has been granted. It will be obvious to anybody who is accustomed to looking at balance sheet figures that, in the case of a company concerned in a matter of this sort, assuming that the £2,500 were to remain as the standard, the capital required to be employed in order to provide 9 per cent. dividend would be anything from £25,000 to £30,000, probably somewhere in the neighbourhood of £27,000 or £28,000. Now, a number of the firms have a smaller capital than that, and, if we were disposed to be generous towards them and to grant a concession, it was surely not the intention that, while a concession was being given to one set or one class of companies, another and a smaller class, one less able to bear the brunt of heavy taxation, should be brought within the net and exposed to a higher charge in respect of those excess profits duties.
I agree with the Deputy that it was not the intention that the concession granted in the Finance Act of 1941 to those smaller companies with smaller standard profits, within the minimum figure of £2,500 mentioned, should be withdrawn, and it is not being withdrawn. There is no intention to withdraw it in the Finance Bill of this year or in this section. If the Deputy will look at Section 38 of the Finance Act of 1941 he will find that in the case of a company which has either one, two or three trading years before 31st August, 1939, the standard profits are either the profits of the best year, or a substituted standard, or £2,500, whichever is the greatest. If the company has not one such trading year—and there are one or two such cases—the company can get either the substituted standard or £2,500 whichever is the greater. That £2,500 was a concession granted last year, and, as the Deputy properly suggested, it is not intended to penalise those smaller companies, but to leave them the concession. That is provided for in the 1941 Finance Act, and we do not propose to alter it this year.
What inspired the Minister to raise the figure from 6 per cent. to 9 per cent?
There were companies, whose case was brought before us, that would be seriously hurt because they had not been long enough in existence to build up any kind of reserves. Some of them, even though making a nominal profit which might be put at 6 per cent., had no reserves, and some of them had not paid out those dividends.
There are some companies making capital expenditure these times——
There may be, and if they are making excess profits we are getting the lion's share of them. But representations have been made to me, even by members of the Labour Party, about some companies that were in the position I have mentioned, and in order to ensure that those companies would not be put out of business, with consequent unemployment, I agreed to the concession.
Amendment, by leave, withdrawn.
Section 17 put and agreed to.
Sections 18 and 19 agreed to.
SECTION 20.
Question proposed: "That Section 20 stand part of the Bill."
There is a misprint of a word in line 20. The word "real" should be "read."
Question put and agreed to.
Section 21 agreed to.
SECTION 22.
I move amendment No. 2:—
Before Section 22, page 20, to insert a new section as follows:—
(1) In order to remove doubts, it is hereby declared and enacted that the application by Section 29 of the Finance Act, 1940 (No. 14 of 1940), to the Irish Post Office Savings Bank of the statutes and statutory orders and regulations mentioned in that section operated to authorise the investment (whether before or after the passing of this Act) of moneys of the said bank in any one or more of the stocks, funds, and securities which are, at the passing of this Act, prescribed by law for the investment of balances to the credit of the Savings Certificates (Interest Charge Equalisation) Fund.
(2) In this section the expression "the Irish Post Office Savings Bank" has the same meaning as it has in the said Section 29 of the Finance Act, 1940 (No. 14 of 1940).
This amendment is designed to remove doubts concerning the investment of Post Office Savings Bank funds having regard to Section 29 of the Finance Act, 1940, which applied to the bank here the entire code of law, which up to 1922 applied to the Post Office Savings Bank of the then United Kingdom, subject to certain modifications in the field of administration. When making this alteration in the law a couple of years ago, we thought we had covered all the points necessary. We are advised by the legal adviser that to remove doubts it is necessary to put in this amendment.
Amendment agreed to.
I move amendment No. 3:—
In sub-section (2), page 21, line 13, to delete the words "enacted and declared" and substitute the words "declared and enacted".
This is a drafting amendment.
Amendment agreed to.
Section 22, as amended, agreed to.
Section 23 agreed to.
SECTION 24.
Question proposed: "That Section 24 stand part of the Bill."
This is the first intimation we have got from the Government that it is proposed to discontinue these assessments from the date of the passing of the Act.
I mentioned it in my Budget speech.
Yes, but this is the first time we are taking statutory authority, if such were necessary, for stopping them. I take it that this refers only to future assessments and that the Minister does not intend to wipe the slate clean from this moment? I am speaking from recollection, but I think the policy of the previous Government was to discontinue assessments under this code which in some cases went back over a period of 30 years. That is a very long period and in certain cases evidence is rather difficult to produce. One case has been brought to my notice which is at present sub judice. The person affected is prejudiced by reason of the fact that he can procure no evidence from authoritative sources which would help him. In these cases in which, on one side, are the Revenue Commissioners and, on the other, an unfortunate and dejected citizen, the Revenue Commissioners need only make a charge and the citizen has to prove himself innocent. In the normal course, the onus of proving guilt is on the State, but this code is so arranged that the onus is on the individual, and he really has no chance.
In the case brought to my notice, it would appear that the man is not himself at fault, the difficulty arising from the fact that certain amalgamations took place in a business, or in a series of businesses and no records of the transaction which would give him an opportunity of escaping the assessments were made. In consequence, he may be liable for a sum of a couple of thousand pounds. I think it unreasonable to put a responsibility of that sort on a person who has no chance of meeting or rebutting the case made against him. I am told that in this case this citizen had settled up his accounts some years ago in respect of this matter, but this decision to discontinue these assessments comes not a moment too soon. I am not at all sure that it might not be good if it applied to cases which are sub judice, and certainly to cases in which there was a doubt regarding the assessments made and in which it would be practically impossible for the person affected to produce proof.
I do not know anything about the case the Deputy has in mind. It is very rarely—strange to say, perhaps—that representations have been made to me, since I became Minister for Finance, by industrialists as to the heavy hand of the Revenue Commissioners, the tax collecting authorities, coming down unduly upon them. I think I could count on the fingers of one hand the number of cases in which representations as to hardship have been brought to my notice. Whenever they were, I consulted the Revenue Commissioners, and I must say, as I have said before, that I found the Revenue Commissioners sympathetic and anxious to meet the industrialists or the companies concerned and anxious to try, especially in difficult times and in respect of difficult cases, to temper the wind to the proposed-to-be-shorn lamb. If Deputy Cosgrave will send me particulars of the case, I shall certainly look into it sympathetically, and, on the merits as put forward, will do my best to induce the Revenue Commissioners to take a sympathetic view, if the facts, as Deputy Cosgrave has stated them, be borne out.
There is still a not inconsiderable amount which has been already assessed under this old tax to be collected. It is not proposed to make any new assessments when this Bill passes. It may be said that the tax will end then, that is, that so far as I am informed, no new assessments will be made, but there is an amount already assessed—a not inconsiderable sum, as I say—which I would hesitate to forego, especially in these hard times. An effort will have to be made to collect that amount already assessed, but if Deputy Cosgrave, or any other Deputy, knows of cases of individual hardship, I shall be happy to look into them and to do the best I can to get sympathetic consideration for them.
Question put and agreed to.
Sections 25 and 26 agreed to.
Title agreed to.
Bill reported with amendments.
Agreed to take remaining Stages now.
Bill received for final consideration.
Question proposed: "That the Bill do now pass."
The amount of money which will be realised as a result of the provisions of this Bill will fall substantially short of the amount which will be expended during the year. I wonder could the Minister tell us by how much it will fall short? Could he tell us now, or at least when dealing with his own Estimate, in view of the apparently general admission that we have got from all sides of the House—that we have to pay rather high rates for the amount of money that has been borrowed in the past and that, under present circumstances, at any rate, we ought not to have to pay as much—the amount of money that he proposes to borrow during the year, at what time, approximately, he proposes to borrow it, and what arrangements he thinks he could make to advise the House beforehand as to the rates at which he proposes to borrow the money?
I could not deal now with any of the matters raised by the Deputy. The Budget statement disclosed that the balance I would have to borrow would be about £4,500,000—that is, taking the figures in the Book of Estimates, as printed. Last year, I expected to have to borrow nearer £4,000,000 than £3,000,000 when the Budget statement was made, but it turned out, at the end of the financial year, that the amount I had to borrow was considerably less, and I am hopeful that perhaps the same may happen this year, and that we may not have to expend the full amount that had to be provided in the Estimates. However, I know that there will be Supplementary Estimates this year, just as there were last year, but how many there will be, or what their extent may be, I have no means now of knowing, or of knowing how the financial year will wind up eventually, and therefore I could not say how much I will be on the wrong side. I am afraid I cannot give even a rough estimate, at this stage, for the financial year.
As to the question of borrowing, I have not gone into that matter during the last month since the Budget statement, happily because the position will not arise for a few months. I have to keep the financial situation under close review from day to day, and when I see that the time is, let us say, within measurable distance of having to seek for a loan, I shall have to consider the methods and all the other details necessary in connection with the floating of a loan. The matter of the rate of interest to be paid, the time, and all the other details, as I say, will then have to come up for close consideration. My Estimates will not be under consideration for a few weeks, at any rate, and I am not quite sure that even then I shall be able to give the Deputy even a close approximation of the information he seeks. However, I may have another opportunity of dealing with that matter later on.
Question put and agreed to.
This is a Money Bill within the meaning of Article 22 of the Constitution.
Seanad Eireann to be notified accordingly.