Michael Ahern
Ceist:7 Mr. M. Ahern asked the Minister for Finance if the Finance Bill, 1997 will include appropriate provisions to deal with the taxation of cross-Border workers; and if he will make a statement on the matter. [4001/97]
Ceisteanna—Questions. Oral Answers. - Taxation of Cross-Border Workers.
I do not propose to include any provisions in this year's Finance Bill relating to the taxation of cross-Border workers. As I have explained on numerous occasions in the House, the issues involved in the taxation of cross-Border workers were thoroughly investigated by an interdepartmental committee I established in 1995. This committee found that the treatment of cross-Border workers for the purposes of income tax is fair and reasonable vis-á-vis other Irish taxpayers. Consequently, the committee felt there is no justification for any special income tax treatment of these workers as compared to any other category of Irish resident taxpayers.
The committee however, made other recommendations, most notably to exempt cross-Border workers from the health and employment and training levies. As the Deputy is aware, I announced such an exemption in last year's budget and this was introduced in last year's Social Welfare Act.
The committee also recommended that cross-Border workers should avail of the direct debit system as a means of paying their Irish tax liability and this now applies for the preliminary tax payment which was due on 1 November 1996 and which will fall due on 1 November of subsequent years. Full details of this system, including an explanatory leaflet, are available from the Revenue Commissioners.
A further recommendation of the committee was that there should be consultation between the Irish and UK revenue authorities on the scope of Article 18, which is concerned with the taxation of governmental employees. Discussions between the two authorities on the scope of Article 18 and whether it should be amended to make it clearer what categories of employment are covered have been in progress for some time and, it is hoped, will be satisfactorily concluded shortly. This possible amendment would, however, cover only a small class of Government employees and the position of cross-Border workers generally will not be affected by the outcome of the negotiations. It is important to add that the 1976 Irish-UK Double Taxation Agreement is a bilateral one and any changes must be agreed to by the UK Government.
Will the Minister address the anomaly whereby those who work across the Border pay tax in the jurisdiction where the highest rate applies and that the State benefits irrespective of whether one lives in the North and works in the South or vice versa? Has this issue been addressed at European Union level to ascertain if equity prevails in the treatment of people who cross frontiers of EU member states to work?
I am not sure if that issue has been addressed at European Union level, but I will find out for the Deputy.
I am disappointed the Minister does not appear to accept there is a problem in this regard. Does he accept wage levels are lower in Northern Ireland? Does he agree with the concept of equal pay for equal work and, if so, does he believe a solution to this problem can be found through taxation or other means to ensure that people from Donegal, where there is a high level of unemployment, who travel across the Border to secure work are not discouraged because of lower wage levels? What does the Minister propose to do for such people in the event of Britain not joining economic and monetary union? People living along the Border in Donegal are already dealing in two currencies. What exemptions will apply to Government employees? In April or May last year the Minister spoke about inviting interested people to form a committee to discuss this matter, but I heard nothing more about that.
The Deputy raised three questions. I agree with the principle of equal pay for equal work, but that is difficult to effect when two jurisdictions are involved. A policy of low wages and low direct income tax has prevailed in the conservatively-run United Kingdom.
That will continue under a Labour Government, if it is to be believed.
We will wait and see. We cannot do anything about that.
The changes in the structure and formalities of employment in the United Kingdom, and consequently in Northern Ireland, adversely affected primarily teachers and health care workers. Those categories of workers are currently the subject of discussion under article 18. If possible I will forward a more detailed reply to the Deputy at a later stage. She is correct in suggesting that I indicated it would be useful to organise a meeting of interested parties to consider our position and the progress made on this issue since we last spoke about it. On foot of her representations today, I will be happy to convene such a meeting on a consultative basis to update all concerned. Changes in respect of article 18 are subject to agreement by both Governments. Unfortunately, we cannot unilaterally make those changes on this side of the Border.
Is there provision in the bilateral agreement on double taxation between Ireland and the UK for a periodic review, particularly having regard to the variable terms of the sterling-punt exchange rate? The level of remuneration received by a teacher living in County Louth and teaching in Crossmaglen or Newry may vary from time to time. Does the bilateral agreement provide for a review to take account of those matters?
I do not know the answer to the Deputy's question. I presume any such agreement would contain a review clause, but I will get that information for the Deputy. The best way forward would be to convene a meeting of all the Deputies and Senators directly concerned. Discussions will take place on 26 and 27 February on Article 18 and related matters, following which we may have further information. We should be able to brief Members on the up to date position in mid-March, subject to the normal courtesies and availabilities.
I hope I am not considered impertinent in posing this question. As Deputy Ahern's question refers to the Finance Bill, 1997, when will it be published?
We are aiming for Wednesday of Holy Week, 26 March. In accordance with last year's practice I intend to publish fairly soon a list of the Bill's contents giving a title description of each section of substance. Deputies will be contacted about the preconsolidation measures. Subject to advice from the Attorney General we hope to publish a White Paper outlining the consolidation measures, which will be published in quasi legislative rather than draft legislative form at an early stage to facilitate consultation with all sides. The Revenue Commissioners will hold an information seminar on this matter in the near future. It is hoped to publish the White Paper in mid-April and when the Finance Bill, which will give effect to the budget, is enacted, we will incorporate those measures into the draft consolidation legislation. That will require the setting up of a joint committee of both Houses.
On a previous Finance Bill, a sub-committee of the Fianna Fáil parliamentary party went to great lengths to prepare a draft amendment to address the question of cross-Border workers, but because the Bill was guillotined we did not have time to deal with the amendment. Will the Minister give his view on that or an alternative amendment to the committee he sets up?
I have no desire to unnecessarily penalise cross-Border workers. The intensity of feeling in Donegal was obvious from the by-election Deputy Keaveney contested. Senator Maloney and other Deputies, particularly from the Dundalk region, have raised this matter with me on a number of occasions. Those two posts tend to be the most acute points of transfer and cross-Border activity. I have no desire to be restrictive or mean in regard to this issue. It is a question of finding a formula that does not offend other categories of Irish taxpayers. At the committee I convene I will listen to proposals from all sides of the House to ascertain how we can address these intensely felt injustices.