Vol. 236 No. 4
I move amendment No. 1.
In page 7, line 21, after "goods" to insert "and services".
Attention was drawn to this matter on Committee Stage and I think this amendment will, in fact, help to make the section a great deal clearer. I think it was Deputy O'Higgins who suggested that the word "services" might be inserted here in the first place.
Amendment No. 2 is consequential.
I move amendment No. 2:
In page 7, line 23, after "goods" to insert "or services".
I move amendment No. 3:
In page 10, between lines 42 and 43, to insert the following section:
"Section 138 of the Income Tax Act, 1967, is hereby amended by the deletion in subsection (3) of `£45' and the substitution therefor of `£100'."
This amendment is intended to deal with what I regard as an injustice and anomaly in the income tax code. I have not the Income Tax Act before me now but section 138 of that Act re-enacts a section of the 1920 Finance Act which provided then that the earned income allowance in respect of a wife's earnings would be £45. That figure was fixed 48 years ago and it does not need any words of mine to emphasise that if at that stage in 1920 £45 was regarded as a reasonable allowance, it is very hard to justify the continuance 48 years later of precisely the same figure. I suggest in the amendment that the £45 be increased to £100.
This is not the first time this matter was raised. It has been raised in one way or another in recent years and I think an amendment seeking a greater allowance was tabled last year by Deputy Noel Lemass. I ask the Minister to consider the matter sympathetically.
This is a proposal for an effective increase in a personal allowance under the income tax code, and consequently the first thing we must look to is the cost. I am sure Deputy O'Higgins will be a little dismayed when I tell him it would cost about £750,000, so on budgetary grounds alone, it is completely out of the question at this stage and in this year.
Is the £750,000 related to the £100.
It is the cost of increasing the £45 to £100.
Does that mean the £55 would cost that much? Is the Minister referring to the whole figure?
No. I am referring to the effect of increasing the figure from £45 to £100. There is another aspect to which Deputy O'Higgins may not have adverted, that is, where directors of family companies claim to have paid £100 to their wives for services rendered to the company and automatically gain this £45. It is very difficult to disprove that the wife of a director does not actually render services to the company and very difficult for the Revenue Commissioners to combat this device in respect of this personal allowance. Deputy Byrne was smiling up there because, I am sure, he has very often advised client companies to adopt this device. For that reason this personal allowance is not the first I would be inclined to increase if I had extra money at my disposal.
I had not in mind any situations such as the Minister refers to in relation to directors' wives earning fees. The cases I have in mind are genuine cases where a wife, by reason of limited circumstances, is earning and has to earn. It is that kind of case that has been brought to my notice over the past two years, and it is in the interests of that approach that I have tabled the amendment. I had not realised that the amount would be as large as that, but I would ask the Minister to consider this problem over the coming 12 months.
I will do that.
Amendments Nos. 4 and 5 have been ruled out of order.
May I inquire from the Minister——
We cannot have any discussion on these amendments.
I only want to ask a question.
In the interest of general harmony, perhaps I could answer it.
With your permission, Sir. The Minister indicated on Committee Stage he was sympathetic to giving some allowance for a housekeeper where a person was disabled. Can he indicate at all what the cost would be if such an allowance were granted? That was the purpose of my amendment.
I have no idea. We would have to go into that pretty carefully.
The Minister will have to go into the whole question of the housekeeper where somebody is keeping house for a breadwinner.
I move amendment No. 6:
In page 18, lines 9 and 10, to delete "after the passing of this Act" and to substitute "on or after the 1st day of April, 1968".
I put down this amendment in response to a number of representations which have been made to me by Deputy Andrews and others; of course Deputy Tully and Deputy O'Higgins had their own amendments down. The amendments put down by Deputy Tully and Deputy O'Higgins suggested we might bring the operative date for these new reliefs back to the Budget. On thinking it over, I agree there is something in the case put up, and I am actually going further and going back to the start of the financial year which is probably a more logical thing to do.
The Minister is reasonably familiar with the provisions of the Succession Act. Under section 29 (3) of the Finance Act of 1965, there is no distinction between children where the deceased and his wife die simultaneously; in such a case there is no widow. It is suggested that the Minister might consider abolishing the distinction, because I understand that in cases of that sort the relief which would be given does not apply. Perhaps the Minister would consider making it possible to aggregate and apportion it.
I should like to thank the Minister for introducing this amendment at my request. My reason for requesting that the Minister go further than proposed in the well-intentioned amendment in the names of Deputy Tully and Deputy O'Higgins was to cover a number of widows with young families whose husbands met their deaths in tragic circumstances earlier in April in one case and at the end of April in the second case, and who, but for the introduction of this amendment, would have been unjustly excluded from these excellent provisions. I should like to put on the records of the House my thanks to the Minister for acceding to my request.
Having gone to the trouble of putting down an amendment, I should thank the Minister, but I am wondering whether I should thank Deputy Andrews. It would appear that his intervention has been responsible for the alteration in the Bill.
All the Deputies concerned can share in it.
We put down the 8th April because the 5th April is usually the start of the tax year. Anyway as 8th April happened to be Budget Day also we felt——
Eighth of May.
Yes, 8th May. Anyway we are grateful to the Minister, and many people who are affected by it will be grateful to the Minister and to the House.
Aontaím leis an méid atá ráite ag na Teachtaí.
The relief about which Deputy Cosgrave speaks and which he asked me to consider would, in fact, be given administratively.
Irrespective of whether the husband and wife died together?
Yes.
I move amendment No. 7:
In page 18, between lines 10 and 11, to insert the following section:
"Section 10 of the Finance Act, 1894, is hereby amended by the substitution of `fifty thousand' for `ten thousand' in subsection (5)."
Again in an excess of sweet reasonableness, I have listened to the case put forward by Deputy Patrick Byrne. He pointed out with some cogency that the figure of £10,000 fixed in 1894 might well be revised upwards. It is now proposed to revise the figure up to £50,000.
This will not cost £750,000. Would the Minister say how much it will cost? Could the Minister give any idea what an average year would yield?
This figure refers to the jurisdiction of the courts.
What would the difference be if it were £50,000?
If the estate duty exemption limit were increased to £50,000, it would cost a fantastic amount. The vast majority of estates would be under £50,000.
I move amendment No. 8:
In page 19, line 21, after "may" to insert ", after consultation with the Revenue Commissioners,".
Deputies will recall that on Committee Stage I undertook to look further at the provisions of section 26. The power which the Minister will now have will be exercised by him only after consultation with the Revenue Commissioners, and any exercise of the power will be published in Iris Oifigiúil.
It is well to point out, now that the Finance Bill is about to pass, that there are grounds for dissatisfaction with some of the contents of the Bill, in the sense that under the Bill we are carrying on, from the point of view of income tax liability, scales of allowances which are out of date in relation to the real value of money. As was pointed out in the course of the debates on Second Reading and Committee Stages with inflation, with rising costs and a falling value of money in many instances that inflation itself may operate as a tax gatherer for the Minister.
It is true that personal allowances and earned income tax reliefs were fixed a comparatively long time ago at a time when money had different values, and since then the allowances were continued at the same rate. It is well to point out that they are out of touch with the requirements of the people. I should like to express the hope that after the passing of this Bill, the whole problem of a fair and just approach to the allowances made to taxpayers who are no longer a special group of the community and who are to be found in all walks of life, and particularly amongst the thousands of manual workers, will be examined by the Minister in an up to date and modern way. I cannot feel the allowances are just and fair at the moment.
I made many appeals to the Minister when the Bill was going through about certain improvements which I think he or some other Minister for Finance should try to make in next year's Budget. There is something which has to be dealt with, and I wonder could the Minister deal with it now? There is general dissatisfaction in the country at the fact that old age pensioners who have to work for one reason or another have their pensions taxed. Is there any way in which the Minister could deal with this matter without waiting until next year? After all, we introduced a Bill to deal with pensioners who receive pensions from the United States and it was accepted. Surely our own old age pensioners could be dealt with? Would the Minister say if he would be inclined to deal with this matter between now and next year?
I could not possibly undertake to deal with it between now and the next Budget. There are merits to be argued with regard to it. Whatever would be done would cost money. I am quite certain that if I sat down with Deputy Tully and said I had so much money to spend in this area, he would agree it should be spent on increasing the basic allowances for all old age pensioners rather than, in effect, giving additional benefits to old age pensioners who are fortunate enough to be able to draw the old age pension and work at the same time.
Unfortunate enough to have to work.
Still they are better off. An old age pensioner who can work and draw the contributory old age pension will certainly be a great deal better off than a non-contributory old age pensioner. There are merits to be argued. I will not argue them now but it would be technically impossible to do anything between now and next year.
I can only repeat in reply to Deputy O'Higgins that any substantial and worthwhile changes which could be made in the personal allowances could be made only in the context of some general and fairly radical revision of the total tax structure. I will invite Deputy O'Higgins to co-operate with me and put forward alternative sources of revenue from which the deficiencies caused by increasing the personal allowances could be made good.
This Bill is certified a Money Bill in accordance with Article 22 of the Constitution.
