Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Thursday, 20 Jun 1974

Vol. 273 No. 9

Finance (Taxation of Profits of Certain Mines) Bill, 1974: Report and Final Stages.

In regard to amendment No. 1 in the name of Deputy Colley, the Deputy will have heard already from the Ceann Comhairle's office that this amendment has been ruled out of order. Amendment No. 5 is cognate with amendment No. 2 and amendment No. 4 is related to amendment No. 5. Amendment No. 3 is related also and if Deputy Colley wishes, this amendment can be discussed at the same time as these amendments.

I take it that if we discuss these amendments at the same time it will be possible for us to speak only once.

If the Deputy wishes he may maintain his right to have his amendment discussed separately.

I do not wish to lengthen the discussion but it might be necessary for me to discuss my amendment separately.

Then we shall take amendments Nos. 2, 4 and 5 together.

I move amendment No. 2:

In page 4, line 9, to delete "seven" and to substitute "ten".

Section 3 (2) of the Bill provides relief for persons commencing to carry out mining operations after April 6th, 1974, in respect of abortive exploration expenditure incurred within seven years prior to the commencement of mining operations. During the debate on the Second Stage Deputy Colley suggested that exploration might go on for five to seven years, that appraisal might take another two years and development a further five years, giving a total of 14 years. Therefore, the Deputy claimed that the seven-year period as provided in the Bill was too short. The Irish Mining Association of the Confederation of Irish Industries have suggested also that the seven-year period as provided in the Bill was too short. The Irish Mining Association of the Confederation of Irish Industries have suggested also that the seven-year period is too short and they asked that the time limit be abolished but if this were not acceptable, they suggested that the period should be extended for a number of years at least.

During Committee Stage Deputy Colley moved an amendment for the purpose of removing the limit altogether but following my undertaking to consider the matter and as a result of discussions I have had I consider that this amendment—which goes a long way to meeting the point put forward by Deputy Colley—is one which is worthwhile and will meet the difficulties which some people contemplated. Therefore, I commend the amendment to the House.

I appreciate that in these amendments the Minister has made an effort to meet the points put forward. However, I was disappointed to note that while he said he thought that ten years in substitution for the proposed seven was reasonable, he did not go on to explain why he thought so or why there should be a limit. The more I have thought about this matter, the more convinced I have become that there should be no limit and it is for that reason that I tabled my amendment.

I would remind the Minister of the discussion on this point which took place during Committee Stage. At one stage he made the point that he wanted to ensure that people could not go around buying up holes in the ground, thereby being enabled to charge expenses against profits. We disposed of that in the course of the discussions because the Minister agreed that this allowance was claimable only by people who had incurred the expenditure. It seems to me that the granting of an allowance of this kind, when it is confined to the person who incurred the expenditure, cannot cost the Exchequer a penny unless the person or company concerned actually makes a profit. What we are dealing with here is an allowance in respect of development and exploration expenditure. In fact, we are taking the various amendments of the Minister together. We are also dealing with expenditure on abortive exploration.

I want to draw the Minister's attention to the fact, particularly in relation to abortive exploration, that the position is that a great deal of money can be spent on abortive exploration and on what is described in the Bill as development expenditure and exploration expenditure with no return at all. As there is no return for a company or person concerned then they have suffered that expense but they cannot claim it as an item of relief against tax liability unless they make a profit. Therefore no question of any cost to the Exchequer arises unless a company makes a profit, in which case it endeavours to set off the various items of expenditure against tax liability. The consequences of allowing it to be charged without limitation as to time would be that a company which is reasonably optimistic about making a strike and therefore making a profit, effectively could double its exploration activity because it would be liable to corporation tax at 50 per cent under the new regulations which are now coming in. Consequently if it can set off this expenditure against the profit it makes it can afford to double its activity for the same expenditure. Whereas on the other hand if it is not successful the Exchequer will lose nothing. There is no profit and therefore nothing against which these allowances can be claimed.

It seems to me that the Minister has indicated that what he wants to do is to encourage future exploration and effectively he is enabling companies to double their exploration activity for the same amount of money without any cost to him unless they make a profit. It seems to me on consideration that the Minister ought to agree that, while he is going some of the way here in substituting ten years for seven years, effectively there should not be a limitation in time having regard to the fact that these items can be claimed as relief against tax only by the persons or companies actually incurring the expenditure thereon. There is not therefore a danger of its being used to avoid taxation liability by people who did not incur such expenditure at all.

I would hope that on reconsideration of this matter the Minister would see the force of the argument I have been putting forward and consequently would find himself agreeable to accepting the amendment which is standing in my name and which we are not discussing at the moment. If the Minister cannot see his way to do so I would hope he would explain precisely why he feels it necessary that there should be a time limit set, whether it be seven or ten years, and the ill-consequences which he sees stemming from there being no time limit.

I am being quite frank. I would have difficulty in justifying the loss of revenue which might arise if the liberal attitude of Deputy Colley was to be translated into this legislation. There would be a situation in which a company might have spent £100,000 on exploration, say, in Kerry in 1957. The exploration might have proved abortive. The company might not have engaged in any other activity in Ireland since then. Twenty years after 1957 they might have a strike in some place like Donegal or Cavan. The question arises of whether it would be justifiable to give that company the concession of setting off the abortive expenditure which occurred in the distant past and which had no connection whatever with the operation in Cavan.

In fact, I do not think that the presence or absence of this concession will determine whether a company would engage in further exploration. It is only when there is a prospect of a strike that exploration will be made at all. It is only when the exploration proves successful that this concession could cost money to the Exchequer. Having regard to the liberal allowances which we have already granted in this Bill to the mining industry this further concession should not be justified. Abortive expenditure has not at any time been available for set off against the profits of a successful mine. Under the 1946 legislation relating to allowances for exploration and development, each mine was looked at separately. Only the exploration in respect of that particular mine could be taken into account. We are now going to allow exploration, including abortive exploration on mines other than the particular mine which will enjoy a profit, to be set off in future against profits. We are going a long way towards meeting the argument that seven years was too short a period for setting off having regard to the fact that exploration took some time and that there had to be an evaluation in connection with the mine and so forth. We have gone to ten years, which by any measure is a long and generous period.

It could be argued that this is to be an incentive to future exploration and that we should not provide this benefit for any period before, say, April, 1974. I take the view that there has been exploration in this country since 1967 in anticipation of the benefit of the tax concession available in the event of profits resulting and that it would be reasonable that such people should enjoy this very special concession of setting off abortive exploration expenditure. We are taking 1967 as a starting point and in all future years ten years to set off abortive exploration expenditure. This will mean that any company which starts in 1977 and onwards will have the full ten years period of abortive exploration available as a set off against profits. Having regard to the other generous allowances which have been given, this is as much as could reasonably be expected in the circumstances.

Amendment put and declared carried.

I move amendment No. 3:

In page 4, line 33, to delete "on or after the 6th day of April, 1967, but".

This amendment, as has been pointed out, has a certain similarity to the one with which we have just dealt. I acknowledge again that the Minister has gone some way to meet the case I made. He pointed out that if there was no time limit, which is the effect of the amendment I am now moving, there could be a company making an expenditure of, say, £100,000 in one part of the country and say, in 20 years later having a strike in another part and able to set off the earlier expenditure against the later profits. This is true in theory. In practice, as the Minister knows, it does not work like that. A company which spent £100,000 on abortive exploration is most unlikely to come back 20 years later, having done nothing in the meantime, to start in another part of the country and be successful, although this is theoretically possible. It is also theoretically possible that the same thing could happen after an interval of ten years, as proposed by the Minister. I do not know how he distinguishes between the undesirability of such a thing happening after 11 years and not after ten years. As I pointed out, no question of cost to the Exchequer can arise unless the company concerned is successful.

I have here some details of the costs of exploration. When one takes them into account one can see why there is a case for doing what I am urging and thereby, as I tried to indicate earlier, effectively doubling the amount of exploration. I understand that, based on world-wide experience, in any given 1,000 exploration tries, with an average expenditure of £12,000 per try, approximately 200 of these prospects will reach the drilling stage with less than 50 in the extensive drilling category. Of those, ten will involve mineral discoveries requiring evaluation at a cost approaching £200,000 on average. Of these, three will reach the development stage with expenditure in excess of £600,000 in each case. Of these one prospect will become a viable profitable mine. For these reasons the costs of finding a mine is estimated in Canada at $32 million Canadian, and in Australia at $12½ million Australian.

In this country, based on experience, approximately 2,300 prospecting licences were issued. Exploration expenditure between 1966 and 1972 was about £14.8 million. The number of mineral discoveries was 19. All of these 19 mineral discoveries were the subject of extensive exploration activity with considerable expense, principally in the field of diamond drilling. Eleven of those 19 prospects proved to be abortive during the drilling stage, with expenditure ranging from £700,000 in one case to £40,000 in another. Of the remainder, eight reached the development stage. At that stage two proved to be abortive. In the abortive cases the expenditures were, respectively, £1.2 million and £1.5 million. At the moment we have five producing mines and the potential production in Navan. Two of the existing five mines are regarded as marginal, Avoca and Gortdrum. They may repay capital invested. The other three have, in fact, repaid the capital costs and returned dividends to their investors.

Navan, which is not an existing mine, is clearly a bonanza-type mine. More than £7 million have been expended on it in the continuing development stage and a further £32 million, which is likely to be increased, is estimated as the capital cost of the proposed production facilities there. That is a very exceptional situation.

We started off with 2,300 exploration licences and a great deal of expenditure along the way. Leaving aside Navan, which has not yet started, we end up with five existing mines, two of which are marginal. In the light of these figures I suggest the Minister should accept that the vast majority of the total exploratory expenditures are abortive. Under the provisions in the Bill they would not qualify for tax relief because the relief provided in the Bill is for existing mines, less than 10 per cent of the total.

If you consider this kind of expenditure and the results achieved, I would suggest that the Minister has nothing to lose by agreeing to this amendment which places no time limit on the period during which this kind of expenditure can be claimed. He has nothing to lose because, as I have indicated, unless it is successful there is no cost to the Exchequer. If it is successful there is a cost to the Exchequer in setting off this expenditure, but the effect of allowing it to be done is to make exploration work on mines more attractive. Indeed, it would double the attractiveness of it to a company if they are successful because to the extent that they can claim relief for expenditure it is a saving of tax at the rate of 50 per cent. Of course, if a company do not succeed there is no cost to the Exchequer.

I suggest the Minister would be well advised to consider this very seriously as a method by which further development and further exploration can be induced to take place more quickly and more effectively without cost to the Exchequer, except on the basis of success. Certainly, I think it is fair to say that the risk of loss to the Exchequer, if the Minister were to do this, would be as slim as the chance of finding a successful, viable mine for somebody starting from scratch to do so, and that it would be sound business for the Minister to accept this, thereby increasing the amount of exploration and the amount of investment in it beyond its present level. It would encourage the full exploration of our mineral resources. We are all agreed that it is almost certain that nothing like the full extent of our resources has been discovered.

What Deputy Colley is saying is an argument over nothing, because there is nothing involved.

Unless there is success.

There may be successes. Success will occur irrespective of this proposal of Deputy Colley. As far as can be calculated—after all, these calculations can be no better than information, and some of them are historically based—about £7½ million was spent on exploration prior to 1967. In the event of success by one, or a number, or by all, it could cost £3¾ million to concede what Deputy Colley has been saying. It would cost that amount in tax loss if this concession were to be given—if all the people concerned with exploration since 1967 were to make successful strikes.

If they were all a success? Oh, now.

The Deputy may say that on the balance of probability that will not occur. When he and I went to school we were told there was no mineral wealth in Ireland but a considerable amount has been discovered since. A great deal of the exploration that occurred prior to 1967 was, by modern standards, inefficient and certainly not as sensitive as current exploration. Therefore, it is not at all improbable that we could yet discover something which would entitle the people making the explorations to get this not insignificant sum as far as the revenue is concerned. If they are going ahead with these explorations, they will do so realising that a general scheme of concessions that we have is generous by international standards.

In relation to existing companies, I do not think we can overlook the fact that they have enjoyed a tax holiday during the past seven years. It could be argued that because they have, they should not get any exploration set off from 1974. I think there is a great deal in that argument. However, I am by nature generous. I am prepared to be generous to a degree even where I think it is not required to promote further exploration. Accepting that it takes 10 years or thereabouts, sometimes less, occasionally more, to bring a mine on stream, I think that in fairness the mining industry would appreciate that this is by no way of a bonanza and not a restriction. Therefore, I find myself unable to accept the amendment.

If I thought the Minister was doing what he has done in this section as amended today because he was generous, I would be totally opposed to it. That is no reason for a Minister for Finance to do anything. His approach should, of course, be based on whether it is good for the economy or not. If it is good for the economy to do something he should do it. If it is not, he should not do it. The whole basis of my argument to him was that it would be good for him, in the interests of the economy of this country, to concede the non-limitation which I have been urging in this amendment. I think the Minister will agree it is ridiculous to suggest that one should take a figure like that which he mentioned—I think it was £3½ million — based on the assumption that every one of the exploration efforts would be successful in producing a viable mine. I have already given him figures to show that of the approximately 2,300 prospecting licences issued, what emerged eventually were five mines two of which were marginal, plus Navan.

To suggest figures based on an assumption that all efforts at exploration would be successful is so far removed from reality that it is merely confusing the issue. The issue involved in this amendment, and generally in our approach to this Bill, should be as far as possible based on known facts, on reliable calculations and on the principle of what is good for the economy and what is not. I am rather perturbed when I hear the Minister put forward a figure of that kind based on a totally unrealistic assumption that all exploration efforts will be successful.

It reminds me, unfortunately, of the figure that the Minister put forward here when we were dealing with the Bill on the last day, when he said repeatedly that the estimated yield to the Exchequer from existing mines was £125 million. We have had to drag out of him today and out of his Parliamentary Secretary answering for him last week, that that is simply not true. We have been unable to get a correct figure from the Minister. I would have preferred if the Minister had tried to confine himself to reasonable assumptions in his approach to this, if he had tried to confine himself to estimates of figures as accurate as they could be made and to the general principle as to what is good for the economy. I am certain the approach the Minister is making on this occasion is misguided in the sense that he has been saying that exploration will go on anyway. If he believes that to be true, he should not be giving allowances and concessions that he is proposing to give. It is totally inconsistent of him to give them if he believes the efforts will go on at exploration whether they are given or not. Indeed, he is totally unjustified from the point of view of the taxpayer.

Equity—surely the Deputy will concede that.

If the Minister's theory is correct these people, with no inducements at all, will go on exploring and discover all our mineral wealth. If that is so, it does not seem to me that equity enters into this. The Minister's approach should be based on what is good for the economy and he does not seem to have yet grasped the fact that a Minister for Finance on occasions can give concessions which can be costed sometimes by the Revenue Commissioners but concessions which can effectively produce a far greater return for the Exchequer and, therefore, for the citizens of this country if he approaches it in a businesslike way. Unfortunately, the Minister is not approaching this problem in a businesslike way, considering that he thinks that concessions are not necessary in order to bring about extra remuneration and that, on the other hand, he thinks there should be a ten-year limitation but cannot see the importance of being able to say: "there is no limitation. It is not going to cost me anything unless you are successful, and if you are successful, then, of course, while you get these concessions I am going to get a considerable yield for the Exchequer".

I regret that the effectiveness of this approach seems to have escaped the Minister. I have endeavoured to draw his attention to it, and if he cannot see his way to accepting it I have done my best and in due course I am sure the Minister will see the error of his ways.

Amendment put and declared lost.

Amendments Nos. 4 and 5 have already been discussed.

I move amendment No. 4. In page 4, line 41, to delete "before the said date" and to substitute "on or after the 6th day of April, 1967,".

Amendment agreed to.

I move amendment No. 5.

In page 4, line 43, to delete "seven" and to substitute "ten".

Amendment agreed to.

I move amendment No. 6.

In page 5, line 51, to delete "all" and substitute "seventy-five per cent".

The Minister will recall that I referred to this matter on the previous discussion on this Bill. What I am endeavouring to achieve by this amendment is to provide that the allowance of exploration expenditure of section 4 will be available to a body corporate a subsidiary of which have incurred the expenditure concerned provided that the holding of the parent company was not less than 75 per cent in the subsidiary company, whereas the provision in the Bill is that it must be 100 per cent.

Since I dealt with this matter on the last occasion I have made some further inquiries and it now appears to me that, in fact, even my own amendment is much too rigorous and that there are many examples of companies at the moment operating exploration activities in mining where there is a considerable diffusion of shareholding, although substantially mining companies are the parent companies. The Minister presumably is aware that very often mining companies themselves do not engage in exploration. It is very seldom that they do; it is usually subsidiaries of the mining companies who do this. The whole structure of this industry is very high risk and, therefore, the requirement of high risk capital is such that one gets a sharing of the expenditure involved in exploration between different companies and different syndicates. This is understandable. It is a question really of sharing the risks and, I suppose, consequently and ultimately sharing the profits if there are any.

Since it is such a high risk expenditure business it is understandable that it should be a considerable diffusion of investment in the exploration companies, and the actual pattern of what is happening seems to conform to what one would expect when one considers the nature of this business. I have a number of details of various exploratory ventures in this country and the make-up of investment in them and it would appear that, as I have said, that the amendment that I am proposing is too rigid, not to mention the provision in the Bill, and that there is a strong case for accepting as a minimum the 50.1 per cent shareholding as being sufficient for the purposes of the section we are dealing with here. However, I am only entitled to advocate 75 per cent which is in my amendment.

I would hope the Minister would find it possible to accept this amendment. He did not indicate, as far as I recall when I mentioned this matter before, that he anticipated any great dangers of tax avoidance by relaxing this figure, and I think I indicated to him that my understanding was that 75 per cent is what operates in Britain. Apparently it can be satisfactorily policed and controlled. There is a strong case, I believe, for relaxing the 100 per cent requirement of the Bill if one is to gear this legislation in any way to the actual position as it operates on the ground, and I would hope the Minister would be anxious to do that as far as he could.

There is one other matter that is not mentioned in my amendment but that I want to put to the Minister. Whether he accepts this amendment or not, I think there is a great deal to be said in regard to the provision we are discussing here in subsection (2) of section 4, for the proposition that in the event of any State investment in mining as holding part of the equity, say, in exploration and so on, any State investment should be excluded totally from the consideration involved here, whether it is to be 100 per cent or 75 per cent. State participation is certainly desirable, and if the State were participating in this it might be much clearer to the Minister what the actual structure of this business is and why it is that you would get sharing of the cost of exploration and I would hope that the participation of the State in a joint venture with mining companies, in the way of exploration, would come about and that the State participation would not operate—as it would under the Bill as it stands—to prevent the company, or companies, in the joint venture with the State from getting the benefit of the reliefs provided for in this Bill. Therefore, I am urging the Minister to accept the 75 per cent, I would urge this amendment. Indeed, if he accepts the principle, he might think of going further. But whether or not he accepts the 75 per cent, I would urge him to ensure that, in the event of State participation, the State equity or share should be excluded totally for the purpose of this provision in subsection (2).

I am sure Deputy Colley will accept the principle that there is no such thing as a fraction of a hole; a hole is a hole; the only difference between one hole and another is the size of the hole. There cannot be half a hole or quarter of a hole.

So far I am with the Minister.

We made it clear that we were not going to permit people to go round buying up holes in the ground to set off the cost of digging—the abortive digging, if you like — against the profits of successful mines in the future. What Deputy Colley is suggesting here is that interests other than those who dug the hole should be able to buy a quarter of the hole and get the benefit of the tax concession.

Is it not confined to the people who actually incur the expenditure?

Yes. But, as I understand Deputy Colley, he is suggesting that as long as they do not dispose of more than a quarter interest to somebody else, they can enjoy the full benefit. That would be selling a quarter of the hole, selling something that is impossible.

Section 4 of the Bill allows exploration expenditure incurred by one company in a group of wholly-owned subsidiaries to be set off against mining profits earned by the parent company in that group. That is a very significant concession and a new development in our mining code. In such cases the exploration company may elect to have its exploration expenditure, whether successful or abortive, attributed to any other subsidiary in the group, or to the parent company, so that the exploration expenditure may be set off against mining profits wherever they arise within the wholly-owned group.

The purpose of the section in the Bill is to treat the wholly-owned group as if it were a single company, in which event, all its exploration expenditure would be set off against its profits. The purpose of the amendment is to enable this treatment to be given to companies where one company holds only 75 per cent of the capital of another company. Any watering down of the 100 per cent principle would be contrary to the provision which, as I have indicated already is to put the wholly-owned group in precisely the same position as if it were one company. Where there are outside interests to the extent of 25 per cent, it cannot be said that it is tantamount to one company since a 25 per cent holding in any company by an outside interest fragments the very unity which is essential if we are not to have tax avoidance. Indeed, it is our intention that only the person who incurs the exploration expenditure is to get the allowance in respect of that expenditure. There must be absolute adherence to this principle—that the wholly-owned group only will be treated as if it were a single company.

Deputy Colley referred to British law where a 75 per cent holding is sufficient to entitle groups of companies to relief in respect of losses sustained by and, indeed, capital allowances due to one of the companies in the group. But the position is not quite the same as the one visualised in the Deputy's amendment. In Britain there is relief available under existing law, to a particular company incurring expenditure or losses but which may not itself have sufficient profits to benefit from the relief. But there is no provision, under the law, for abortive exploration either by individual companies or any companies within a group. What we are doing now is making special provision to enable the abortive expenditure incurred by an individual company to be set off against its mining profits whenever it discovers a successful mine. While this relief is being provided as an incentive towards exploration, it is necessary to safeguard it by ensuring that abortive exploration expenditure incurred by other companies—even where there is a substantial relationship — should not be set off against the profits of the successful mine.

If this were to be permitted there could be a significant loss of revenue from successful mines, the amount of which would depend upon the extent to which we gave relaxation from the 100 per cent principle which we feel convinced it is necessary to preserve. We are giving this very substantial concession. To open it in the way Deputy Colley has in mind, I think, would lead to the buying up of the impossible and, that is, shares in holes in the ground.

I think it is somewhat unfortunate that the Minister should approach this matter in the way he has done. I have the greatest respect for the Revenue Commissioners, their staffs and the Department of Finance. But their job—particularly in the case of the Revenue Commissioners—is to protect the revenue and, of necessity, that job produces a certain cast of mind. That cast of mind was very clear in some of the things the Minister was saying which I know he was taking from his brief. I have the greatest respect for the people who prepare that kind of brief but their job is one thing. The Minister's job is another. The Minister's job is to listen to what they have to say, to weigh it up, but also to apply to what is being said to him and the advice being tendered to him and the general knowledge that he has of the operation of business.

I have tried to point out to the Minister something I think he is aware of already, that is, the general pattern of investment in exploration for minerals in this country, something that would be obvious if one thinks about it—because of the high risk involved — and something that is obvious if one examines what is actually happening on the ground. Companies, of necessity, share the cost of expenditure for exploration, so much of which is abortive, so much of which will never be recovered because a successful mine, yielding profits, does not ever emerge. That being the pattern which one would expect in theory and which one finds in practice, it simply is not good enough for the Minister to describe that as having a share in a hole in the ground. What we are talking about is expenditure on exploration and development of mineral resources in this country. I have previously given some details of the kind of thing that has happened in this country, the amount of expenditure that has been involved, 2,300 prospecting licences and a relatively very small number of mines which have emerged. Because the pattern is as it is—that people share the expenditure involved—the provision in the Bill that this relief is available only in the case of a subsidiary company, to a wholly-owned subsidiary only, is virtually useless as far as the mining industry is concerned for the reasons I have mentioned. Industry is not built in that way and does not operate in that way.

The Minister made a point regarding what happened in Britain when I cited that as an example of where they operated a 75 per cent provision as urged in this amendment. With the greatest respect to the mentality behind that comment it is not a mentality that is geared to trying to make a tax system work in conformity with life as it is lived, in this case with mining exploration as it happens; it is concerned with a theoretical possibility. The Minister ended by saying that we could not have people going around buying up fractions of holdings of land in order to achieve relief under these provisions. We dealt with this situation a long time ago. The Minister has conceded that it is not possible under these provisions for people to get relief unless they actually incur the expenditure. If you had a 75 per cent provision as is urged in this it still would not be possible for them subsequently to buy up a 25 per cent interest in a company in order to get this relief.

If that is what the Minister fears, I wonder has he examined how the British operate their provision. It is true that they do not have precisely the kind of relief being offered here regarding abortive expenditure but the principle of policing this is one that arises in Britain in slightly different circumstances; the principle is the same. They can manage it; I do not see why we could not. It is unfortunate that the Minister's approach should be conditioned as it is and so far removed from what is actually happening on the ground and that he should think of it as buying up a share in a hole in the ground instead of thinking of it in terms of expenditure on exploration to find mineral wealth. If he thinks of it in that way I suppose there is nothing I can do to disabuse him but it is regrettable that he does not find it possible to accept this very reasonable and very limited amendment.

He did not refer to something I mentioned and I want to urge him again to consider it: it could be very important in the future. It is that if there should be State participation in exploration activities, that amount of the equity should be totally excluded for the purpose of this section. There will be a built-in inducement against the joint venture with the State unless that is done in this section.

May I interrupt to say that I shall take a look at that?

Thank you. I am glad the Minister has said that. It is a point that could be of some importance. I am glad the Minister will look at it. If he will not accept the very reasonable arguments I have been putting forward I cannot help it. I have done my best.

I accepted the Deputy when he was reasonable but I am unable to accept him when he is unreasonable.

Amendment put and declared lost.

Amendment No. 7 has been ruled out of order. Amendment No. 9 is cognate to amendment No. 8 and amendment No. 10 is consequential and so these amendments may be discussed together.

I move amendment No. 8.

In page 10, line 30, to delete "1973-74" and substitute "1974-75".

The Minister will recall that on the Committee Stage I introduced an amendment and in the course of the discussion on it I asked the Minister some questions on it and told him I thought we were not ad idem but that I would look at the matter further. I had not very much opportunity to see it then; I think it came in somewhat late. When I looked at the matter further I found as I suspected that we were not ad idem. It boils down to this: I have been informed by a number of people that they attended a meeting with the Minister on, I think, 11th January last and that the matter which, in effect, is the subject matter of this amendment was discussed: the question of when the application of tax under this Bill would operate. I am told that at that meeting the Minister was asked three times about this and three times gave the same answer. That answer, as understood by his hearers, was that the tax would not be applied to profits earned prior to 6th April this year. What the Minister is doing is applying tax from 6th April this year but he is in practice applying it to the profits earned in the year prior to that. Whatever the effect of the amendment he brought in may be, that is the practical result. Consequently, the amendment I have put down is designed to put the operation of this tax on to the subsequent year's profits. I did it that way because any other approach seems to be extremely complicated in dealing with this section. Whatever one may argue — some people might allege retrospection and the Minister would certainly argue that there was no retrospection in this and I am not sure that I would disagree with him if he said that—I am concerned that if a number of people believe that the Minister conveyed one thing to them, some different provision should be made in the Bill.

Perhaps the Minister would say that is not what he told these people and was not what he intended to convey. If he says so I would certainly accept it but I would ask him to accept from me that, inadvertently or otherwise, that is what he did convey to them. At least, that is what they understood from what he said and I suppose it is accurate to say that is what he did convey to them in those circumstance. If that is so, I would ask the Minister very seriously to consider the implications of that and if he is satisfied that the people to whom he was talking bona fide understood this, to accept that he has an obligation, both personal and arising out of his office, to see that such persons are not left in the position that under this Bill what was conveyed to them by the Minister is not honoured. I know the Minister would not wish to create that situation but I would ask him to consider seriously the implications of a situation where the people concerned believe he conveyed to them something different from what is in this Bill.

Apart from that, there is a consequential effect of what I am proposing here and I touched on this on Committee Stage. The Minister's amendment on Committee Stage provided for a right of election and I drew his attention to the fact that there was considerable difficulty there because that right was to operate before 1st August. When this Bill goes through both Houses of the Oireachtas and is published and when it is in the hands of the people concerned, we will not be far away from 1st August. I suggest that he should consider putting back the date until 1st October, thus giving people some chance to know what is in the Bill and to operate their right of election. The substantial point I would urge on him is that profits earned from existing mines prior to 6th April, 1974, should not be subject to tax because he gave the impression to the people with whom he was dealing that that was what he intended to bring about in this Bill. That is not what is in the Bill.

I cannot say what naive or expert people took out of what I said. I am satisfied in my own mind that I made it clear to any group I met that the Government's decision to end tax exemption with effect from 6th April, 1974, stood and that the tax charge would come into effect as and from that date, not before it.

I am sure Deputy Colley will appreciate — as I am sure the advisers to any of the people I met understood—that in calculating profits one uses as the basis of the measure of those profits the accounts of the previous year. It was in order to remove any grounds for alleging or suspecting that there was any element of retrospection that I brought in the amendment on Committee Stage—it is now section 16—to give to companies the right of election, to choose instead of the previous year's profit as a measure the actual profits for the current year.

That concession is being given, not in order that people may decide their liability to tax or whether their taxes should be higher or lower depending on whether they are making more or less profit this year than last year, but rather that they would have an opportunity to elect to pay on the amount of the profits of 1974-1975. This would obviate the necessity to comply with what some people call accountancy practice, of writing into the accounts for the previous year the succeeding year's tax liability. It was for that purpose that the concession was given. There is no element of retrospection, good, bad or indifferent in the Bill and I am satisfied that what I intended to convey to the people in question is being honoured in the Bill.

Deputy Colley's amendment goes a great deal further. He seeks to have a continuation of the tax-free holiday for yet another year so that liability would not arise until April, 1975. I do not think that is justified. It would be contrary to the clearly indicated decision of the Government, announced last autumn, which the mining industry has accepted as the operative date and is an argument against uncertainty in taxation. There is an argument in favour of having finality. If we were to postpone this matter for another year, we would only encourage people to argue for further change and relaxation; we would also have people protesting that the mines were not being charged early enough. There has been enough public frustration over the tax holiday. There has been some public disappointment that the allowances now being given will not bring in any income from the mines for a few years yet, but clearly there would be a great deal of public indignation if the holiday were extended for a further year so that we would have to wait longer to obtain any contribution towards the revenue of this country from mines being worked here, and from the wealth of this island which is being exported.

I could not entertain any further delay in the commencement of this tax liability. I am quite sincere when I say I am satisfied that, irrespective of whatever understanding people may say they took from what I said, there could not be any justification for this extension. Certainly there could not be any justification on the part of those who understand tax laws, who understand that using the profits of a year as a measure for calculating the profits for assessment of the succeeding year is not in any way exposing the base year to a liability for tax. Of course, people may continue to argue that as a debating point but there is no reason why Parliament should be asked to make a concession of a year's tax exemption to an industry that, on all the evidence available and on the admission of both sides of this House, is well in a position to pay the liability we are asking them to undertake. On that account I am sorry I cannot accept the amendment.

If the position were that the Minister had told these people he was not going to apply tax prior to 6th April, 1974, and that because they were unfamiliar with our taxation system they misunderstood him, then I would agree entirely with him that there would be no case for this House putting back the imposition of tax for one year. However, that does not appear to me to be the case. In fact, it was the first thing that occurred to me when I heard the arguments being made about this provision, namely, that there were involved in some meetings with the Minister people from outside this country who would not be familiar with our taxation system and could well make the mistake to which the Minister and I have referred. It occurred to me immediately that that was the explanation for what had happened. I inquired further and I found there were Irish people present who are expert in our tax laws and that they knew precisely what was involved in a statement made by the Minister. I was further informed, as I indicated earlier, that at the meeting of the 11th January the Minister was asked three times, and confirmed three times, that profits earned prior to April this year would not be subject to tax. It is for that reason that I urged the Minister to accept this because I am a very firm believer in the idea that if a Minister, and in particular a Minister for Finance, makes a commitment or conveys he is making a commitment to people who bona fide misunderstand him or if he bona fide makes a mistake himself in what he says to them, it is in the long term in the interests of the Exchequer that what he has conveyed should be honoured. There is nothing more damaging to the economic prospects of this country than the suggestion getting abroad that a deal made with an Irish Government or any member of an Irish Government cannot be relied on.

I am not suggesting for a moment that the Minister misled those people or that he is going back on his word. What I am suggesting is that he very clearly conveyed to those people that tax would not be applied to profits earned prior to 6th April of this year and that that being so, whether he intended to do it or not, it is a commitment which should be honoured. I believe, on this side of the House, that whatever might be involved in it, taking the long-term view there is nothing more important to the economy of this country than the reputation of this country, the reputation of any Irish Government or any member of an Irish Government, that if he makes a commitment then it is honoured.

I do not know whether the Minister heard what I said a moment ago but I will repeat it in case he did not. I am not suggesting for one moment that the Minister misled those people or intends to do so. What I am saying is that for whatever reason the impression conveyed to them was the one I have indicated. Whether it was a mistake on their part or on the Minister's part it seems unfortunate to me, when this is bona fide the belief of the people who dealt with the Minister, that what was conveyed to them should not be embodied in legislation brought in by the Minister.

The Minister should be able to accept that in putting this case I am not in any way trying to impugn his integrity and that he could accept the argument without impugning his own integrity and that really whether people would be indignant, as he put it, at the extension of the tax free holiday for another year is really irrelevant taking the long-term view of this country's interests if, in fact, the Minister conveyed to those people, as he puts it now, that the tax holiday would be continued for another year.

The Minister said that, in fact, some people are indignant at the fact that various allowances and so on are being provided in this Bill and that we will not be taking enough from the mines. I think he is right. I think many people do not realise just what is happening. The Minister on the last occasion estimated the tax yield at £125 million, total, over 20 years. He conveyed it as being the estimate for what was coming from existing mines. It now transpires, of course, that that was not what he meant, that he was including Tara in it. If that is so, from the information I have been able to glean as to the amount of tax that the Minister can expect under these provisions from existing mines then the tax he is expecting from Tara is far too small. I am saying that because the Minister brought in the question of people's indignation or otherwise at the amount of tax being collected.

I think people would be justified in feeling indignant at the relative smallness of tax to be obtained from Tara. Even if the acceptance of this amendment were to mean a reduction in receipts by the Exchequer, the point I am making to the Minister is that even if it were to mean that it is more important in the long term for the Exchequer that it should be known, particularly abroad, that if a commitment is given by an Irish Government or a member of it it will be honoured no matter what the consequences. If people bona fide believe that such a commitment was given it is virtually the same position.

I am sorry the Minister cannot see his way, as apparently he cannot, to accept these amendments. I think it is important, if he did convey this, that it should be honoured and I, on this side of the House, would not want to tax him with a loss to the Exchequer for the reason I have indicated, that I think that whatever the reason for misunderstanding, the long-term interests of this country require that any undertaking or any understanding of an undertaking given by a member of an Irish Government should be honoured without question. The Minister, unfortunately, does not seem to see it that way. If he does not, I hope that in the course of time he will see how important this kind of stance and this kind of argument is. It touches on matters that we dealt with earlier about the taking away of the statutory relief from existing companies. I do not think he has grasped the importance of the good name of this country to put it in simple terms. I am putting it in simple terms but it means much more than that. He, unfortunately, has not grasped it and that is illustrated by his unwillingness to accept the amendment.

Section 16 meets the point if there is any validity in it.

The Minister knows it does not. There is a year's tax involved.

Question: "That the words proposed to be deleted stand" put and declared carried.
Amendment declared lost.
Amendment No. 9 not moved.

Amendment No. 10 is consequential and falls.

Amendment No. 10 not moved.
Bill reported with amendments.
Question proposed: "That the Bill, as amended, be received for final consideration."

I take it the Minister will remember that he undertook earlier to have a look at a matter about State equity and that he proposes to do this in the other House?

I most certainly will.

In the other House?

Question put and agreed to.
Question: "That the Bill do now pass" put and agreed to.

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