Dáil Éireann díospóireacht -
Tuesday, 22 Jul 1969

Vol. 241 No. 7

Committee on Finance. - Finance Bill, 1969: Report and Final Stages.

Dr. FitzGerald

I move amendment No. 1:

In section 3 (1) to add the words "or such proportion thereof as may be appropriate to the proportion of the year of assessment during which the incapacity existed."

The amendment arises out of a discussion on the Committee Stage. It arises, really, from the Minister's intervention with regard to the question of the married allowance. He very helpfully pointed out that there is no reason why this particular problem cannot be got over, that is, the problem of the application of a benefit of this kind during the year in question. In the case of the married allowance he says it applies for the whole of the year, retrospectively. I am suggesting here something less extreme though I am prepared to go to that extreme if the Minister wants to, and apply it to the whole of the year. It seems to me that there is no reason why the allowance should not be proportionate to the proportion of the year during which the incapacity exists. What are the precise technical problems which would impede this amendment from being implemented? I can quite see that the income tax code is complex and cumbersome. I can quite see that the introduction of certain changes during the year gives rise to difficulties. At the moment. I am not convinced, in relation to this particular matter, that any impossible problem exists. I should like the Minister to explain to me on this amendment precisely why he would have difficulty with it or preferably I should like him to accept the amendment if he finds it possible to do so. It is something on which we could have a brief discussion.

Mr. Haughey

I do not think I have much to add to what I said on the Committee Stage. It is a well-settled principle of all these personal allowances that they are for the year as a whole. I foresee enormous administrative difficulties, out of all proportion to the benefit we would be giving to particular taxpayers, if we introduced this kind of thing into the granting of personal allowances. If we grant it here I think we should have to grant it for all the others. This is a new thing. It is a new concession to taxpayers to meet a particular difficulty. We want to stick strictly to the principle of total incapacity. If we do not, we go into great difficulties in deciding who should get the exemption and who should not. I think we must be very rigid on this matter of total incapacity.

Dr. FitzGerald

In fact, that is not affected by my amendment, I think.

Mr. Haughey

I realise that. It is a point the Deputy made before. It is a new provision in easement of the lot of a certain type of taxpayer who has a particular problem. I think that, in the normal circumstances, such a person must be totally incapacitated the whole year. I do not need to point out to the Deputy that there are a lot of days in the year — 365 — and his amendment would mean——

Dr. FitzGerald

Normally.

Mr. Haughey

Sometimes 366 days. His amendment would mean that you would have to be prepared to apportion these allowances out over any number of that number of days. I think it would be enormously expensive for us to do it. I have not had time to discuss with the Revenue Commissioners as to how cumbersome and difficult it would be but I imagine it would be very formidable. But this other principle of having the allowance for the whole year is so long-established now that there must have been a very good basis for it. It has never been challenged before. I really believe it would be, administratively, terribly difficult and expensive for us to do this.

Dr. FitzGerald

The Minister will forgive me for saying that his defence seemed a bit weak. Perhaps he has not had time to prepare it and therefore it is understandable. I am always unhappy when I am told there are insuperable administrative difficulties about doing something. When that defence is put up, I think one is entitled to ask what these administrative difficulties are. In this House, we all too easily fall into the trap of accepting this argument without exploring it. If we had a more adequate committee system in this House we should have more opportunities of exploring this excuse that is put forward.

Why are there insuperable difficulties? The Minister has really fallen back fundamentally on the defence that it has always been done this way and we cannot change it now. I am inclined to accept that it would be difficult for him at this moment, in the middle of this debate, to accept changes of this kind but I want to use this opportunity to suggest to him that this whole question should be re-examined. The income tax code is extraordinarily antiquated in its present form. While many things have been done to improve it, and some things done to disimprove it from the taxpayer's point of view, the whole concept of it is still very much out of date.

Mr. Haughey

It is trying to do things like this to help particular taxpayers who are in difficult circumstances that contributes to making it complicated.

Dr. FitzGerald

I did not say it was complicated. I said it was antiquated. The Minister misheard me. Of course, it is complicated. It will always be complicated. My concern is that it is a system which has been built on certain out-of-date principles. We have now introduced PAYE and we have introduced computers but we have not begun to draw the logical conclusions from the existence of a PAYE system and the existence of computers. The logical conclusion of that is that this whole concept of the calendar year being taken as a whole should go by the board. I would accept that it will take the Minister and the Revenue Commissioners a little time to work out the full implications of this but I would urge on him to forget the past completely and to sit down and think out a new code of income taxation based on the realities of the present day.

Mr. Haughey

If the Deputy ever lets me out of this House I promise to sit down and think about it.

Dr. FitzGerald

The Minister appreciates that I enjoy his company so much that it is difficult to depart from it.

Mr. Haughey

It is mutual, of course, in different circumstances.

Dr. FitzGerald

Earlier today the Minister showed signs of irritation which made me doubt that. I am glad that they were ephemeral. I would urge on him to rethink the whole system and to think it out from scratch, not to keep adding this and changing this but to go back to first principles and say: "Here we are now. We have a PAYE system. We have a computer available for the purpose. How should we now arrange to redistribute income drawing it from some and giving it back to others?" I feel that what is involved here is a fundamental reappraisal of the system. I urge on him, therefore, in withdrawing this amendment, to undertake such a reappraisal.

Amendment, by leave, withdrawn.

Mr. Desmond

I should like——

Mr. Haughey

The Deputy is out of order.

An Leas-Cheann Comhairle

The Deputy has withdrawn his amendment.

Dr. FitzGerald

I move amendment No. 2:

In section 50, subsection (7) to add a new clause:

(d) in relation to the construction, alteration or enlargement of a building or part of a building to be occupied by the person making the contract and the employees of that person provided that if at any subsequent date the building or any part thereof is transferred to the use of other persons the duty shall be payable.

The purpose of this is to deal with the point I raised in the debate that this tax should not fall on people who are building office accommodation for their own use. The purpose of this amendment is to show how it would be possible without insuperable administrative difficulties in this instance to get over that problem. It seems to me that where a building is built by a person — I am using the terminology of the Bill, a person standing, of course, for a company as well as for an individual person — where a person or company build office accommodation for their own use to the extent that it is for their own use and remains in their own use and is not diverted to any other use the stamp duty should not be payable. If at some stage they dispose of it in any way or permit other people to use it whether on terms of sale or lease or any other terms, for whatever consideration or without consideration, if they cease to occupy it, then at the point at which they cease to be in exclusive occupation of the building or part of the building the stamp duty in respect of that building or part of the building would become payable.

This is a fairly simple and straightforward way of getting over the problem and I should like the Minister to consider whether, in fact, he really wants to catch firms building office accommodation——

Mr. Haughey

The Deputy is forgetting my subsidiary motive in this, diverting resources away from office block building——

Dr. FitzGerald

But there are two quite different things here. I share with the Minister his concern to slow down the building of office accommodation as against other forms of building but these are two different things.

Mr. Haughey

The Deputy knows that the business world goes in fads. Suddenly everyone wants new office blocks and I feel that even in the case of people who are building for themselves it is not a bad idea to put some inhibition on them just to keep them within reason. I think it is temporary madness. Everybody now suddenly wants nice, shiny, new office blocks.

Dr. FitzGerald

What the Minister is saying is that he was not, in fact, aiming this particularly at speculators, something I had suspected, because of the ineffectiveness of this tax in catching up profits and it is, in fact, designed primarily to discourage office building.

Mr. Haughey

Both.

Dr. FitzGerald

The both I doubt.

Mr. Haughey

What I hoped to get out of this was enough to pay for my concessions in regard to stamp duty on houses. Ten per cent is a fair amount of tax and I wanted to get some of these profits which the Deputy agrees are, because of the situation, inordinate at present. At the same time, I wanted to inhibit to some extent the building of office blocks per se.

Dr. FitzGerald

I was taking the Minister, perhaps, more literally when he said that these were his two objectives and I was assuming that he attached importance to the question of profits. It is clear to me now, the more I look at this, that it will not have any effect on speculative profits. I accept that it will have some effect on inhibiting the building of office accommodation but the principal impact of that is on the Government. There is something paradoxical about a Government who are imposing a tax to discourage the building of office blocks and are themselves one of the principal renters and, indeed, arguably the principal renter, perhaps, even the renter of the majority of office accommodation. If the Government are serious about discouraging the building of office blocks they should stop renting a large part, if not most of the new accommodation. That would be far more effective than taxing it and putting up costs for industry and for business generally. The Government have a responsibility in this and I hope the Minister, in another aspect of his corporate capacity, will be as serious about this matter of discouraging office building as he purports to be here.

In so far as this is the purpose of this Bill rather than taxing speculative builders I accept that the exemption of offices built by people for their own use would reduce the value of the measure and to that extent I withdraw the amendment.

Amendment, by leave, withdrawn.

Bill received for final consideration.

Question proposed: "That the Bill do now pass".

Dr. O'Donovan

Since the Minister did not have the privilege of hearing me on Second Reading he will have the privilege of hearing me now and he will have to bear with me in patience. I intended to speak on Second Stage but the debate collapsed before I expected it to.

This is the manner in which the revenue was raised. Apart altogether from the printing of money which goes on in all western countries nowadays, as much here as anywhere else, I reckon that this Bill this year is somewhere in the region of £350 million. What interests me about the economy in the last six months is the number of people with no connection with financial or economic matters who talk about inflation. I hear continuous reference to an increase in prices. If I search out where this arises it arises primarily from Government expenditure. I made a rough estimate some few months ago and I found that Government expenditure has been going up at the rate of 16? per cent a year for the last three or four years. We are told that the value of money has been going down at the rate of about five per cent and, of course, these two put together by economists give us a lovely growth figure, a growth figure of four or five per cent. Of course, the whole thing is a fraud and a fake of the very lowest sort.

Mr. J. Lenehan

This speech is completely out of order.

Dr. O'Donovan

It is completely in order.

An Leas-Cheann Comhairle

The Deputy appreciates that it is only matters in the Bill which can be spoken of on this Stage.

Dr. O'Donovan

I appreciate that. At the same time, one can make roughly the same kind of speech as one can on Second Reading and that is what I am doing.

An Leas-Cheann Comhairle

On the Final Stage of a Bill it is only what is in the Bill that can be spoken of.

Dr. O'Donovan

What is in the Bill, in fact, is the raising of the revenue for this year.

Mr. Haughey

Would the Deputy not write me a long letter about it?

Dr. O'Donovan

I am beset on all sides. I am going to speak on the effect of the Bill on the economy. The Minister was asked during the Second Reading debate by Deputy Corish if he would guarantee that there would be no mini-Budget this year. He did not answer that question.

An Leas-Cheann Comhairle

That is not in order. We cannot go back on questions put on Second Reading.

Dr. O'Donovan

I am asking the Minister whether he is prepared to guarantee that there will be no mini-Budget this year?

An Leas-Cheann Comhairle

That is out of order.

Dr. O'Donovan

Very good. What is in the Bill is a great deal of amending of the law relating to many forms of raising of revenue which involves a great deal of work for a great many people outside Government circles. I cannot understand why each year the Finance Bill must be about 60 pages in extent. One of the amendments down today was purely a verbal one which could have been taken without having been put on the Order Paper. I think this Bill will be shown before the end of the year to be inadequate for the purpose for which it was introduced and that, in fact, there will be a mini-Budget or, alternatively, we shall have the cry that such has been the balance of payments difficulty that the unfortunate lowest-paid workers cannot get their status increase. The Minister's colleagues have begun that already.

Question put and agreed to.

An Leas-Cheann Comhairle

This Bill is certified as a Money Bill in accordance with Article 22 of the Constitution.