Reading the section, one finds the differentiation between current expenditure on know-how and the purchase of know-how as part of a capital transaction, the one being allowed and the other not. Would the Minister explain the reason for the differentiation?
Finance Bill, 1968 (Certified Money Bill): Committee and Final Stages.
Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill".
There is not any differentiation. I am not clear what the Senator means.
It appears under subsection (4).
The whole purpose of this section is to remove any doubt about the capital nature of the purchase of know-how and to make it allowable.
Subsection (4) only applies to transactions between companies allied to one another?
Yes.
If a company were taking over another company, part of the purchase price was paying for know-how and this would be allowable?
No. That other company will itself have been allowed for the purchase of the know-how. When you buy over a company with know-how, that is part of the capital transaction.
This is the point I was trying to get at originally.
Question put and agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill".
This section deals with relief under Schedule E. I would again appeal to the Minister to look at this question of an allowance for fees for evening students. This is something which has been pleaded in the House year after year. I would like to express the hope that it is something on which we would be able to congratulate the Minister on the occasion of next year's Finance Bill.
We have had a number of reforms in education within recent years. For the future it is fairly well established that those who reach a certain standard will be able, due to the payment of maintenance allowances, to go to the university where they are well qualified to benefit from university studies. But we have got to consider those who have been left out, those for whom this came too late. Naturally, when the higher education grants legislation was going through, pleas were made in this House on behalf of these people. There were pleas that this legislation should have been retrospective. Quite rightly, the Minister for Education said to make this retrospective to any appreciable extent would have involved a great deal of expenditure. This is a reasonable attitude to take. The present Minister might well, through the medium of the income tax code, be able to make some allowance here.
While we recognise we must start from this year on in regard to full-time university training, we must also recognise that many of the people now taking degrees at evening classes are doing so because, due to financial circumstances, they were not able to attend the university full-time, although they had the academic ability to do so with profit. A recognition of this fact should be made in the near future by giving an allowance under Schedule E in respect of fees and other necessary expenses. When we are making provision for education in the future, we should not forget these people who have been passed by owing to the fact that the new legislation, the new departure, has to start at a certain point in time.
The Senator has very cleverly hung that suggestion on to section 3, which is really only concerned with exempting from income tax payments made in respect of a reduction of income because of a reorganisation of an industrial enterprise. This is a far cry from allowing for fees paid for university education. This is a case which has been argued many times, and it is a case not without attraction for many of us. However, it is not simple; it has precedent implications, and if one opened the door for these payments, it would be difficult to know when to close it. As the Senator says, it is perhaps something that could be looked at again in connection with next year's Finance Bill, because I think he himself would agree it is too late in the day to do anything about it in this Bill.
Question put and agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill".
I have raised on the Second Reading the whole question of wear and tear allowances and replacement costs. It is an old chestnut, but it is a question I should like to press on the Minister. We seem to be involved in all kinds of ways of getting around the problems created by inflation because we insist on telling ourselves that the value of money is unchanged, that we are dealing with a constant, with something which is not a constant. This means that any firm which does what, in fact, the Revenue Commissioners encourage them to do by the stringency of their regulations, to set aside out of their profits only such sum as will enable them to write off the historical cost of their assets, will in real terms be paying profits out of the real capital of the firm. Any branch of the tax code which encourages firms to adopt such an anti-economic approach, and which penalises them if they fail to do so, is something which surely any sensible Government must try to get rid of.
I am aware that there have been arguments against this, on the grounds of uncertainty, the difficulty of assessing what the replacement cost of assets would be. However, there exist price series for various types of equipment designed to enable firms to do this in their set of accounts in order to protect their capital, in order to ensure that they are not treating as profits what is money required to maintain their capital. This series is used by firms, but the firm that wants to adopt this practice has to get a second set of books for the Revenue Commissioners because of their requirement to operate these out-of-date historical cost prices. There are ways around that, investment allowances, for example, which enable the firm to write off the original sum by an arbitrary provision, but this is a devious way of handling it, and this simply represents a refusal to face up to the fact that the value of money is changing.
I would appeal to the Minister as an accountant, even though I know his profession has set its face so far against this—the less progressive elements in the profession—to do what I think he knows is the right thing to do economically and in an accountancy sense, and to encourage the adoption of this approach in the tax code. This would have a very beneficial effect, because many firms are very unconscious of this, and many accountants who are perfectly right to set aside a sum on an historical cost basis may or may not set aside an additional reserve to cover the change in the value of money and the increased cost of the replacement of assets; in most cases they do not bother to do so, but simply set aside enough to write off the historical cost of the assets. In doing so, they are acting in a manner contrary to the interests of their firm and of the economy.
The Minister should encourage firms to think again on this matter. Firms should be entitled under the tax code to recover a sum on the basis of the estimated replacement cost having given evidence of the replacement cost based on a relevant series established independently by some appropriate agency. If firms were enabled to do this, they could preserve the real capital of the firm and not just the capital of the firm in out-of-date pounds. I do not think there is any more effective way of making industry conscious of the reality that lies behind the superficial figures in their accounts. There is no more effective way of encouraging them to preserve assets and build up funds for replacements and also, one would hope, for the expansion of assets.
I think the case is a very strong one. The objections are well known but are, I think, of diminishing force in so far as they are strongly held to because of that innate conservatism which is to be found both in the ranks of accountants and Ministries of Finance and Revenue Commissioners. I think the Minister would want to adopt modern practices wherever possible and get away from traditions of this kind that are irrelevant and contrary to the economic interests of the country. I hope he will consider this suggestion, not, of course, in this Finance Bill because it does require thought and in any event there are other reasons why it might be difficult to amend the Bill at this time of the year, but in relation to the Finance Bill next year.
This is an argument that has been put forward on many occasions. I am not sure that the Senator is right in thinking that the arguments against it, which are well known, are diminishing. Perhaps, due to the complexity of modern technology development, there will be an increase in the element of uncertainty. It may become greater and may make it much more difficult to decide what is a replacement of a machine. In other words, machines, particularly in the industrial sphere, improve so much all the time that it is often difficult to relate the new machine in many ways to its predecessor. Another point in this connection is that now we are going over more and more towards the system of outright cash grants to help industry become more efficient and keep up to date with technological change. The Minister for Industry and Commerce has recently announced the introduction of a new system of adaptation grants which, I think, will act as a very real incentive to industrialists to change over, to re-equip and provide themselves with the most up-to-date machinery and plant.
One of the ways in which I think Senators could look at this matter is this: when the management of a firm sit down to consider the purchase of a new machine, one of the things that will influence them in deciding to buy or not is the rate at which costs can be written off against their future profits. That is a very relevant consideration. It is perhaps the right way to look at it rather than the somewhat more academic way that Senator FitzGerald is looking at it, that is to say, when one comes to replace a machine, the amount one has been allowed for wear and tear was probably completely inadequate. What matters is the factor influencing the management at the time of the decision to purchase or not, and surely the predominant factor in the mind of management at that point of time is whether they may be able to recoup the cost of this machine out of their future profits.
From that point of view, we are taking a very considerable step forward here. We are rationalising the whole situation, reducing the number of rates to three. The new rates will be ten per cent, 12½ per cent and 25 per cent, so that I think we are making real progress in this section by this piece of rationalisation of the rates. I suggest that perhaps the more appropriate way of looking at it is that the particular management would be influenced in their decision by the writing off provisions available to them during the lifetime of the machine rather than some speculative look ahead to know whether the wear and tear allowance will enable them to put so much aside that they will be able to replace that machine at the end of its life with some much more advanced one.
I do not think we are being altogether antiquated or out of date in our approach to this matter, particularly when one bears in mind the fact that this problem of adaptation and reorganisation of industry is being approached from another direction also, that is, the system of outright cash grants which are being made available on an ever-increasing scale.
I hesitate to intervene in a discussion on replacement to which there have been contributions by an economist and an accountant, and I hope both of them will be merciful if I show ignorance in regard to this particular matter. The Minister has said that there is a great deal of difficulty in regard to making decisions, particularly decisions regarding the future in matters of this sort. That, of course, is true because we are no longer dealing with physical wear and tear but also dealing with a technological and process obsolescence. This becomes very difficult to predict.
A point of view that I should like to put forward is whether there is not a case to be made for leaving industry completely free regarding the writing off provisions. The Minister now allows three rates of writing off. Is there not a case for leaving this decision about writing off to the industry?
We have done that in the west of Ireland.
Is there not a case that this should now be part of the income tax code completely and that we allow the industry to make its decisions year by year as regards the proper rate of write off? As the Minister has said, this may well vary during the life of a machine. Some technical advance may indicate that if the costs and accounts are to be realistic, a certain machine which is perfectly healthy from a mechanical point of view is no longer competitive and needs to be written off as quickly as possible. There is now a pretty fair case to be made that there should be no prescribed rates of writing off such as are laid down in this Finance Bill, provided that there is no evasion or avoidance and that the industry be allowed to make its decision in accordance with certain general overall rules and that this would then be allowed by the Revenue Commissioners.
What the Senator is talking about is known as free depreciation and last year we did, in fact, introduce free depreciation for the western region. Any industrial establishment there now has the right to write off its capital expenditure on plant and equipment at its discretion. Perhaps the only reason we did not extend it to the country as a whole is the consideration of cost. It would be quite expensive in the initial year. Even then, we are still going a fair distance because the initial allowance is now 60 per cent, and if a piece of equipment attracts one of these new rates of, say, 25 per cent, you can write off 85 per cent of the cost in the first year. That is getting as near free depreciation as does not make any great difference.
I do not think the Minister quite took my point because while free depreciation or what Senator Dooge has referred to and which is effectively free depreciation, will get over the difficulty that firms are in fact being taxed on capital, in a sense, but it does not meet the point I made. My suggestion is that if, in fact, firms were able to get tax relief on the basis of replacement costs, they should have some objective criteria as to what would be a fair figure. This would encourage every firm in the country to be conscious of replacement costs and the reality of its capital structure. If there is free depreciation, that means that any inequity in the present system is removed—not removed; that is too strong a word—alleviated to some degree, but you do not draw the attention of firms to this issue. Some Irish firms need to be educated in this matter.
There are the adaptation grants.
It is true that the Government make a contribution.
Surely that focuses their attention?
On the contrary, because it makes it easier for them. The Government present them with certain additional capital but I want to direct the attention of these firms to this issue. I had experience myself many years ago with a State body, Aer Lingus. I raised this issue and this industry with a high degree of sophistication were not thinking about it with a sufficient degree of realism.
Income tax is not a major factor in the thinking of Aer Lingus.
I am saying that the thinking of a firm with the sophistication of Aer Lingus was not as accurate on this issue as it might have been, and therefore firms with less sophistication are not likely to appreciate the relevance of the problem. Such experience as I have had in the private and public sector suggests that that is the case. My suggestion still has merit even if the Minister is meeting the tax inequity in a different way.
Question put and agreed to.
Section 5 agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill".
Could the Minister give us an idea very briefly of what would constitute satisfactory records?
In another context I suggested a little black book with income written on the right-hand page, and expenses on the left-hand page.
Quite a small book would be adequate.
In many cases it would suffice. Sometimes what is stated in regard to profit and loss it not a true record of what actually happens.
We are dealing here with professional people who do not earn profits in the strict sense. They have income and expenditure.
That is why I suggested a little black book.
Is it necessary to go to the extreme of having a little black book?
It does not have to be black: it could be red.
If a man has a record of his lodgments and has the cheque stubs and the returned cheques, his expenditure is identifiable, and is it really necessary that he should have a little book?
The inspector of taxes might be satisfied with a cash account basis but the income of a professional man, such as a doctor, is not only what he receives in cash. He may have a lot of bills for which he has not got cash and which have to be taken into account in computing his income.
I think I am right in pressing this. If a professional person can produce his actual cash accounts, I do not think he should be pressed to keep accounts in which every receipt is identifiable. We are concerned to ensure that people pay their full tax on their full revenue, having deducted expenses legitimately incurred.
The inspector of taxes might say: "We will deal with you on a cash basis, knowing that taking one year with another, it will even itself out." On the other hand, he may insist on having it on the narrow income basis. Strictly speaking, the inspector will be entitled to have a record of what was receivable. He can say: "I know that, one year with another, it will balance out", and accept a cash basis.
I had the experience of giving professional advice some years ago to a county council and I have not yet received the amount of money which is due.
That is a matter for the Minister for Local Government.
I would have great difficulty in remembering the particular year in which this service was given to this county council. I am still hoping that the fee will be paid and I will then return it as part of my income for that year. I should hate to think that I was breaking the law by doing so.
If the Minister would give enough money to the Minister for Local Government, Senator Dooge might be paid. I too had an experience with a public body who welshed on their obligation, to the embarrassment of their adviser with whom I dealt on the matter. I still think there is a valid point here. My concern is to ensure that this legislation does not require people to go to more trouble than is necessary for the purposes of this Bill, and keep records which they do not need because of what I must regard as a finicky accountancy approach. I am worried lest this phraseology will be interpreted in an onerous manner. On the question of income tax and surtax I am forced back on the Income Tax Acts. I have not got them with me as they are rather heavy to carry around.
They are in loose leaf form now.
Am I right in thinking that true returns for income tax purposes mean tax on income rather than on receipts? I think I am. Therefore, we are now requiring people, under this, to keep records of their income, with all the complications that entails. I regard this as unnecessary. If you are getting from a man the actual amount of cash he receives year after year, this should be sufficient. You can fiddle an income account but you cannot fiddle a cash account.
You can: it works both ways. It might happen, if you work entirely on a cash basis, that a man might get an exceptional payment in one year and that that might throw him into a much higher income tax bracket range. The purely cash basis has a lot of danger from his point of view and also from the point of view of the income tax inspector. If the man is prepared to spend enough of his money, then the cash basis need not convey at all the full range of his income.
There are other complications. For instance, if the man ceases to practise a profession, the cash basis might not make any allowance for a whole lot of liabilities for expenses which are due. I think this is a matter that must be left to the discretion — if you like, to negotiation between the taxpayer and the inspector of taxes in each case. Normally, the inspector of taxes is entitled to insist on the income tax for any year being assessed on the basis of the full income for that year and not just on the cash received in respect of the year. It can happen — and very often it has happened — that the inspector of taxes, for convenience all round, in many cases will settle for returns made on a cash basis. This section is concerned that adequate records must be kept to enable one or the other basis to be adopted by the inspector.
I should not like to give the impression that, in the past, there has been any difficulty in these matters. The concern is that this section when enacted might create difficulties that are not there already. Normally, the inspector of taxes has always been most reasonable in this regard. There is the difficulty of fees not being paid for a very long length of time and also of retainers not being paid in regard to services not yet rendered. The present practice—which has been satisfactory as far as the experience of anyone who has spoken to me on the matter is concerned and as far as my experience goes—has been quite satisfactory and there is every hope that that will continue.
I am not quite satisfied. The Minister spoke of the discretion of the tax authorities. If the individual could operate a cash account and, in some year, get an enormous——
You cannot have it both ways.
If, at some time, he finds the system is operating against him, he will be entitled to switch to the income system?
I would not go along with that.
Would it be possible for him to change over at some point? Take, for instance, a man who has a lump sum problem. Take a doctor. He will have not just to record his bills when he gets them in: he will have to record, for each bill, when each consultation occurs. A doctor does not send out his bills regularly after three months. Sometimes a general practitioner may send them out after six months.
That will be the operative date—the date the bill was sent out.
Regardless of when the service was rendered? Is that the law?
That is the practice.
We are concerned with the law.
The income would become receivable as and from the date the bill was sent out. He might never send out a bill. The date of sending out the bill would be the operative date—and my opinion is worth a great deal in this respect.
I am fascinated by what the Minister just said. Does he think his opinion is worth a great deal as Minister for Finance or as an accountant?
In both respects.
I cannot make any comment on the Minister's opinion from the point of view of the accountancy profession. I am sure it is worth a great deal. I had the impression that, in this respect here, the Minister's opinion was influenced by the Revenue Commissioners, who had considerable independence——
The only discretion I would visualise the Revenue Commissioners exercising here is one of concession—in other words, the right and proper thing is the income concept. If a man's income in any year is the totality of the income receivable, and the other basis, the cash basis, is not the proper basis, the Revenue Commissioners would probably exercise a concessionary discretion to accept a cash basis where it is more convenient.
Question put and agreed to.
Sections 7 and 8 agreed to.
SECTION 9.
Question proposed: "That section 9 stand part of the Bill."
This is not dealing with the Senator's favourite point about interest chargeable on arrears of income tax. It is, instead, charged on arrears of PAYE by an employer.
I appreciate that. I do not accept that it is my favourite point.
Question put and agreed to.
Sections 10 and 11 agreed to.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."
This is the provision in relation to marriage which is designed—if I understand it correctly—to give some benefit to people in the year in which they are married. I must make my favourite point at this stage. Provisions of this kind, while very welcome in the tax code—and we thank the Minister for it—should not be unaccompanied by provisions for people who are not well-off enough to pay income tax and who cannot get a similar benefit when they get married. We have to draw a line at some point to the practice of continuing to extend benefit to payers of income tax in this country—which, in itself, is desirable —unaccompanied by similar benefits to people who are not in a position to pay income tax at such a rate as to receive full benefit.
I think we should ask that the Minister, in this case and in other future cases, should parallel any increases in benefits with similar increases by way of direct grant to people not paying income tax. It would be better to build the whole of this mechanism into the social welfare code, which may take time. It is desirable that social benefits, including the benefits to people getting married—at that point —should be extended to all members of the community and this can best and most effectively and simply be done through the social welfare code. When it is done under the income tax code, it is discriminating in favour of the better-off members of the community and is but an addition to a whole series of discriminations in relation to children's allowances and interest on house mortgages. This is a welcome concession but it goes only halfway: I suggest the Minister has started at the wrong half.
I hope the Minister will continue to provide assistance to people when they are getting married. I consider he ought to start with those who are less well-off. If he has enough money, he should extend the concession to the less well-off. I look on this provision as an earnest of his intention to provide this concession to the whole community. It is being operated through the income tax code at this point. I trust the Minister will extend it on a non-discriminatory basis to all our citizens.
I am always making the point that the way of the reformer is hard. As soon as you bring in some desirable improvement, invariably somebody else says you are not going far enough and that you should do this or do that. This is something well worthwhile doing on this occasion, when I had not a great deal of money to spare to give in concessions in regard to income tax.
I want to make the point that Senator FitzGerald's colleagues in the other House spoke at great length on how iniquitous income tax was at the moment and they waxed eloquent on the fact that nowadays everybody is paying income tax. Senator FitzGerald's colleagues must not be right in all their speeches because they were talking exactly the opposite on this very Bill in the other House. It is a bit unreal to suggest that this is a concession to the wealthy. There is a great deal of validity in what was said in the other House, that a great many people come within the income tax net but the man starting off and who is getting married is very rarely in the wealthier section of the community. If this were something which we had given to the income tax payers at the other end of the scale, there might be some justification in the Senator's point.
The vast majority of taxpayers at the marrying stage cannot very legitimately be described as the wealthier section of the community. This seemed to me to be a small concession which was well worth doing at this point of time: at least it was an indication of our sympathy with the problems which confront young people who are getting married today, an earnest of our wish to give some small assistance to them. I think it will be welcomed in very many cases. The vast bulk of our working population today pays income tax. I did mention in the Budget speech and elsewhere that I looked at this problem very long and earnestly on this occasion. I should have liked to do something about children's allowances because this is a mechanism which could be used to give assistance to families where it is really needed but, unfortunately, the machine as it is administered today does not make it possible to do that. It is more or less an across-the-board system at the moment and we will have to introduce some measure of selectivity into it to enable us to direct assistance to the families who really need assistance most. Pending that, this small concession is something that is worth doing on this occasion.
If I used the word "wealthy" in the sense of relatively wealthy, I misled the House. The concession as applied excludes many people who are less well-off and it extends to the wealthy, the reasonably well-off and the not terribly well-off who are liable for income tax. I should like to know how many income tax payers there are in the country. I have not looked up the figures lately but it used to be in the region of 200,000 to 300,000.
Over 500,000.
A significant number of those must be women.
Half the working population: about 1,100,000.
There are probably about 400,000 then, out of 750,000 men employed one way or another so that, in fact, this concession could only benefit half and the full benefit could only be secured by people to whom the £494 would be relevant. This proves that the better-off half of the population——
There is a fallacy in that; a vast number of people are not paying income tax because they are men who are married and have families.
That is balanced by the fact that a lot of people who are——
Do not be looking a gift horse in the mouth.
We could argue around and around whether one-half, one-third or one-quarter were affected but this is designed to benefit the better-off people and it is a wrong approach. I am glad to hear confirmation of what was said before, that our whole social welfare code is being looked into from the point of view of its construction. Therefore, this is a step in the right direction, using the means which the Minister has available to him, pending the time when he will be able to ensure that this goes to the poor as well as the better-off.
Question put and agreed to.
Section 13 agreed to.
SECTION 14.
Question proposed: "That section 14 stand part of the Bill".
This provision which extends the allowance for scientific research to sponsored research in the universities and other bodies, which is not directly related to the actual productivity process of an industry, is to be heartily welcomed. The position is that from observation of what is occurring in other countries one finds that the firms which are freest in the direction of their research, whether it is carried out within the organisation or outside, are also those which ultimately prove the most profitable both from the private and the public point of view. In this country where industry is not organised in large units as it is in other countries it is particularly welcome that there should be every encouragement for the sponsoring of research.
The original provisions in this regard which were very welcome at the time have not, perhaps, had the effect one might have hoped from them. I do not know if the Minister is in a position to give us any idea of the extent to which advantage is being taken of these particular provisions but my understanding is that it has not been as wide as it might have been and that, indeed, we are still lagging very much behind in regard to sponsored research and contract research. Even if the Minister cannot give any indication about this, I wonder if he would bring the matter to the attention of the newly-formed Council on National Scientific Policy who might perhaps take it on themselves to make industry aware of this particular provision and might perhaps do some publicity in regard to the benefits both to industry and the general economy of such sponsored research. I should be glad if the Minister could give us any information about the extent to which this has been availed of.
I am afraid it has been very little availed of in the direction for which it was intended. It has been reasonably widely availed of in a completely wider and different direction as the Senator no doubt is aware. I accept gladly the suggestion that this is something of which the National Scientific Council should take note.
I know that they are already advised on this matter and I will make sure that any proposals they put forward in this vital area will be favourably and sympathetically considered. I do regard it as a vital area. This question of science and scientific research and the application of the results of the research to industry and manufacturing industry generally are really of great importance to our development.
I am grateful that the Minister and the Council both aim that more should be done in this direction and, therefore, I am hopeful that more will be done.
There is just one matter of detail here. I took the trouble of looking back to the original section, seeking to discover the scope of the term "scientific research", and I found it is there referred to as being any activity in the fields of natural or applied science. For my own benefit, and the benefit of my particular specialty, does applied science in this regard include engineering in all its discipline?
Yes.
Question put and agreed to.
SECTION 15.
Question proposed: "That section 15 stand part of the Bill".
On this section, the explanatory memorandum indicates this was intended for the benefit of the taxpayer in order to make sure that he was not prevented from making an appeal in certain conditions, but it was a little difficult to reconcile what is said in the memorandum with the section as it stands. I know this is due to my own inability to read and construe it properly.
This is to clear up a technicality. Some doubt arose as to whether or not people could go to the courts following an appeal to the Special Commissioners. If an appeal to the Special Commissioners went by default it was suggested, I think by a learned judge, that the Appeal Commissioners had not then determined the appeal and, therefore, no appeal lay to the courts. It is to put that matter beyond doubt and make sure that the taxpayer can still go to the courts, even where his appeal——
It is treated as an adverse decision rather than a lapsed case?
Quite.
Question put and agreed to.
Section 16 and 17 agreed to.
SECTION 18.
Question proposed: "That section 18 stand part of the Bill".
On section 18, there is a class of taxpayer in this community who helps the Minister for Finance to a considerable extent. I should like to think this class of taxpayer is also a patriotic section of our community and likes to drink home-produced beer, the drinking of which helps to provide employment for Irish workers in Irish factories. But, as I said here on a few occasions in the past, many of the supervisors, who are members of ade unions, in these particular hostelries in which this beautiful drink can be got, do not seem to think it is any business of theirs to encourage the drinking of Irish-made beer.
I want the Minister to enlighten me now—I speak for quite a number of people who are as puzzled as I am about this—how and why it is that foreign beers, in spite of their drawbacks, in spite of tax and in spite of everything, are being sold in our public houses and hotels as cheaply as the beer made on the Liffey and in Dundalk. Why is it that beer can be brought from Scandinavia, Holland and Germany and put on the market here as cheaply as Harp Lager, which comes by rail from Dundalk, and the beer produced beside the River Liffey here in Dublin? Is there scope for tax dodging? Is there scope for excess profit? I think our brewers are certainly doing their share, as far as that is possible, to enable the publicans to get a fair profit out of the article they are selling, but there seems to be some bottleneck somewhere——
So long as it is not a broken bottle!
——as a result of which beers can be brought from all parts of Europe and sold as cheaply here as Irish beers. Perhaps I should put it the other way round: why is it Irish beer is as dear as foreign beer? Can the Minister throw any light on that? Is there any way in which that situation can be remedied, either by Government action or a voluntary campaign, in order to deal with those who make undue profits out of it, jeopardising the Irish industry in the process?
In this connection I have no ministerial or personal expertise. I am just an ordinary beer drinker like Senator Ó Maoláin and it seems to me this question should be directed to the Minister for Industry and Commerce. It is not really a taxation matter at all. I have, however, heard it said that the reason this happens is that the Irish publican is anxious to maintain the status of the home-produced article and therefore charges the same price for it as he does for the imported article.
Mr. J. Fitzpatrick
He is a great patriot.
It is purely an excess of patriotism on his part. He would not wish for a moment that the customer would hold Irish-produced beer in lesser esteem than the imported article by charging a lesser price for home-produced. I am not sure really if that is the explanation, but I have heard that said on the odd occasion on which I have visited a hostelry myself. For further information, I can only refer the Leader of the House to my colleague, the Minister for Industry and Commerce, within whose expert province the matter would appear to me to lie.
I should like to ask the Minister what proportion of the beer drunk is, in fact, a patriotic effort in so far as it is a contribution to the Exchequer? Would the Minister give us some indication, very approximately, as to what proportion of the price of beer goes to the Exchequer.
In 1967, standard barrels, home-made beer, £987,000 or nearly £1 million, whereas imported was only £35,000.
How much is the tax element in the price of a glass of beer?
1s a pint.
Question put and agreed to.
Sections 19 and 20, inclusive, agreed to.
SECTION 21.
Question proposed: "That section 21 stand part of the Bill."
There is no doubt that everybody appreciates the view in medical circles that there is a connection between cigarette smoking and the incidence of lung cancer. I am wondering if the Government have ever given much consideration to the desirability of fixing the tax on tobacco with a view to the impact on the health of the population. I know quite well, of course, that if the tax is increased, that increase will be highly unpopular, but it seems to me that it is highly irresponsible for us as a community, if all the evidence points in one direction —and all the evidence seems to point in the direction of a direct connection between cigarette smoking and cancer —that we continue to make it easy and feasible for people to continue to smoke cigarettes. It seems to me to be absurd—and future ages may judge us as lunatics in our time—that we continue to permit people to smoke cigarettes and at the same time, we devise different kinds of health services in order to remedy the damage which people are doing.
There is a way of controlling it and the way of controlling it is, of course, by making tobacco and cigarettes so dear that fewer people will smoke. There is no doubt that every time there has been the steeper increases than we have had of late in the price of cigarettes, some people said that they were finished smoking and they were. That may be only a small number of people who have ceased to smoke but one knows and meets people who, because of a very steep increase in the price of cigarettes, say that they are finished smoking and that they will be damned if they will pay the Minister for Finance that price.
Likeable though he may be.
Yes. It does happen. Of course, some people will say that this is an absurd idea but it seems to me that if the Government were satisfied or if the Minister for Health were satisfied that there is a direct connection between cancer and cigarette smoking, it is quite absurd to say that we do nothing actively to discourage it.
I am not suggesting that the manufacturer should be encouraged to increase the price but it is quite obvious that the present taxation on cigarettes has not effectively discouraged cigarette smoking. I do not know whether the Government have ever studied this problem or not but if the Government were satisfied that there was this direct connection, it seems to me that, notwithstanding temporary unpopularity, the Government certainly — and we should encourage them — should so increase taxation on cigarettes as substantially to discourage the incidence of cigarette smoking in this country. This Government, we are often told, never fear to face unpopular decisions.
I do not know whether the Minister has any indication as to whether the volume of tobacco used in cigarettes or pipe smoking has increased or decreased. It is quite clear that large numbers of the population appear to be affluent by reasons of the fact that they smoke cheroots and things that look like cigars. There is no doubt that the public have this feeling that cigarettes are not the thing but I would be encouraged to hear, at least, that the volume of tobacco used in cigarette smoking was being reduced. In this connection I should like to see a shift in emphasis in the taxation system, to have relatively higher increases for cigarette tobacco and cigarettes and, in fact, to encourage people to go over to cheroots and cigars.
I rather think, on the basis of present knowledge in connection with the detrimental effect of cigarette smoking, that is the kind of system we should aim at—progressively higher taxation on cigarettes and a less high taxation on cigars.
I must confess, I do not quite know how to answer the Senator on this one. There are many and varied points of view about it and many different aspects, indeed. I can only say, in a very broad way, that our taxation policy in regard to tobacco is not such as would encourage its increased consumption.
So far, there is still no element in the Government's taxation policy of endeavouring to move the people away from the consumption of tobacco; it is purely based on revenue, is it not?
No; we always favour the pipe tobacco a little bit because successive Ministers for Finance down the years have smoked pipes themselves.
Perhaps I should have put my question like this: Is the effect of the Minister's statement that the Government have not altered their policy in regard to the taxation on tobacco or types of tobacco in the light of recent medical evidence in regard to lung cancer?
There is no differentiation on this occasion but consistently over the years the cigarette has been more heavily taxed than other forms of tobacco.
But the Government have no intention of moving further in that direction?
Yes, I would say, probably. This is a matter that is kept under constant review. As the Senator may realise, the Minister for Health from time to time makes different proposals, some of which have found favour with the Government and been put into practice with regard to advertising and, indeed, as I say, the desirability of preventing an increase in cigarette smoking is always something that we keep in mind in fixing the level of duty as a factor.
We can only encourage the Government to keep moving in the same direction.
Question put and agreed to.
Section 22 agreed to.
SECTION 23.
Question proposed: "That section 23 stand part of the Bill".
Again, there is the usual plaint of the manner in which the taxation on wine has been placed under this Finance Bill. It has been said from time to time in connection with the recent levies on wine that these are bearing unduly on the lower-priced wines. Until recent years, we in this country were not at all a wine-drinking people but a number of years ago, perhaps due to more continental travel, our people began the practice recommended by St. Paul of taking a little wine for their stomachs' sake. This was a good thing and, indeed, in this case, the Minister for Health might well be on the side of increased consumption in contrast to his stand in regard to cigarette tobacco.
We have had the position under this and under previous Finance Bills that rather than have an ad valorem duty on wines, we have a certain tax, I think it is on the bottle. This means, of course, that this bears far more heavily on the cheaper wines and far lighter on the more expensive wines, the expensive blends and the vintage wines, so much so, indeed, that the really good wine in this country is remarkably cheap by international standards for a non-wine-producing country. This is a tendency which I personally deplore. It may be that we should ultimately encourage our people to drink the best of wine but before we do that, we have to encourage them to drink wine at all.
It is regrettable that, once again, we have had this taxation in this particular form rather than as an ad valorem tax, which I know it would be more difficult to frame, and perhaps more difficult to administer, but it is a pity and I would hate to think that at any time in the future the Government or the Minister would go still further in this direction.
I am one of those simple people who have watched the increasing number of camp followers of St. Paul, of whom Senator Dooge spoke, imbibing this wine from the continent and I am deriving some considerable amusement from attempts to pose as experts in the choice of the said wines. Being a peasant myself and not knowing very much about this type of stuff, I have to rely on people who are supposed to know better. I was quite happy to do that until quite recently when I read some of the scandalous revelations which have created so much consternation on the continent in regard to the production of wine by some famous firms in continental countries in which everything from pyjamas to bicycle springs went into the wines which were exported.
What interests me in view of that and in view of the lack of knowledge of the people of this country as to what is a good wine and what is not is whether there is any standard by which wines are judged at the point of import, whether there is any test made by excise or customs people or whoever handles this thing, to ensure that this wine is good wine. If so, have they got wine experts on the job and where did they get them? I have no objection at all to wine. I think it is very nice.
As I said, I am no judge of it myself but I would like to think, if we are, as Senator Dooge says, becoming a wine-drinking people and the best wines are comparatively cheap here that we know what these best wines are and what steps are being taken to ensure that this camouflaged bicycle grease is not imported here from some of the great centres of wine production on the continent.
In reply to Senator Dooge, first of all, I should like to point out that alcoholic beverages have traditionally been charged duty by reference to their strength and in fact this is the socially desirable thing to do because it does develop a tendency towards a reduction in the alcoholic strength of drinks. In fact, to switch from a flat to an ad valorem duty, would have the opposite effect, so that although it may seem more equitable to have an ad valorem duty, I think it would not work towards socially desirable aims in the long run. In fact, the present duty does tend to make the dearer wines dearer and the cheaper wines cheaper because there is a higher rate of duty applicable to wine imported in bottle as compared with wine imported in casks.
In answer to Senator Ó Maoláin, in so far as we are concerned in Finance and in the Revenue Commissioners, we are only concerned with the alcoholic content. We charge duty by reference to the strength. I am afraid I cannot help Senator Ó Maoláin. The only thing I can suggest is that when he goes out to dine, he bring some reasonably sophisticated member of the community with him to select the wines and, if at all possible, to pay the bill as well.
Question put and agreed to.
Section 24 agreed to.
SECTION 25.
Question proposed: "That section 25 stand part of the Bill".
The reliefs being granted in this section are highly desirable and I think it right and proper that due credit should be given to the former Minister for Finance who is now a Member of this House, Senator Dr. Ryan, who first initiated this particular form of relief way back in the early years of his term of office as Minister for Finance. One can only wish that it could be extended in some direction. I have no doubt that there are cases apart from widows and children where there are persons who are equally deserving of the kind of relief provided in this particular section—people with an ailing brother or sister or persons of that kind who should be entitled equally to benefit. However, I have no doubt that this will be a progressive concession which Ministers for Finance will provide in future Budgets.
I often wonder whether much consideration has been given to the abolition of death duties as a means of raising tax. Of course, the question that always arises is: "What do you substitute for it?" Ultimately it is a question of balancing one good against the other. It does seem to me at the present time there are the beginnings of a movement of people into this country from America and England. It has been going on for some time. These are elderly, retired people, settling down here, people who are afraid of changes in their own countries and want to invest some money in this country. Indeed, one finds now by reason of disturbances both in South Africa and in the United States, more people from those countries wanting to buy up properties here and to acquire an Irish domicile. They want this because of the racial tensions in the US and in South Africa. It may well be, of course, that the attitude of the Minister for Finance and of the Revenue Commissioners would be that it would be a very good thing for the Exchequer if they acquired an Irish domicile, difficult though that is to do in law.
The other question arises of the number of people who are discouraged from taking up permanent residence here simply because of the uncertainty which exists in regard to death duties and in relation to the rate payable in Britain which is considerably less. This is a subject on which I should like to hear the Minister for Finance—as to whether even preliminary investigations have been made into the question of abolishing death duty for the people who come in here with permanent incomes, build houses, perhaps get interested in industry and provide in many parts of rural Ireland, where many of those people prefer to take up residence, as fine an income and employment for many people as perhaps the smaller type of industry which is the only possible kind in the case of many counties.
I know the Minister for Finance will say: "What do you substitute for death duties?" There are other sources of revenue. The added value tax might or might not be used in partial substitution for death duties, if they were abolished. No doubt the added value tax would be used to replace other forms of existing taxation. It seems to me to be something that is well worth thinking about at this stage in the light of what I understand from both auctioneers and solicitors in rural Ireland to be this increased tempo of people from other disturbed parts of the world coming in to live here. It might be seriously considered by the Government, perhaps over a period of years, so as to lay the groundwork at any rate for taking a decision.
We can welcome the concessions made here and I think we can feel that Seanad Éireann over the past four years played a considerable part in advancing the case for the improvements we now have in this Bill. I think it shows that even though our work at the time did not bear fruit, it seems to have borne fruit subsequently and, indeed, quite speedily. For that we are all very thankful. The only point that remains is the question of annuities, since, in calculating death duties, annuities are reckoned at their present worth. As I pointed out several times, and I think we might return to it now, it is the last improvement that requires to be made in this section. That is one of the major improvements still outstanding. Under it an elderly widow, say, aged 70 who is left an annuity, in her case it could be reckoned that her expectation of life at that age is six to seven years. Therefore, the present worth of the annuity would be only seven times the amount, where as if she were an unfortunate widow left at the age of 40 with many young children, at that stage it would be reckoned that her expectation of life was somewhere around 28 to 30 years and, therefore, the full present worth of the annuity would be reckoned, at present rate of interest, at possibly 16 years purchase.
It is obviously unfair to the more deserving case and I think the only tidy solution to the whole thing is that such annuities should be exempted from death duties altogether. If the Government are anxious to get something corresponding to what they get in this Bill why not take it on a yearly basis as it comes payable.
I admit a very large section of widows have been relieved from this fear because the Bill provides that they will be paying little or no death duties and it is only in the somewhat higher capital range that it comes in. Nevertheless I would ask that we should have any desired tax paid on a yearly basis, as the annuity falls due.
I should like to support Senator O'Quigley's recommendation that perhaps through the medium of death duties something might be done to attract retired people to live the latter part of their lives here. I think it was first advocated by the late Father Coyne who was a very distinguished president of the IAOS in his time. He had a pet scheme which he advocated many times that certain regions of our coasts, the more holiday-type regions in west Cork, Kerry or portions of Connemara, might be declared as regions that carried very special exemptions from death duties, or light rates of death duties, so as to attract retired people to retire to these areas. The areas mentioned are ones that enjoy quite a considerable summer holiday tourist trade, and which are in need of some boost during the off period, and perhaps a boost could be achieved by availing of this. The climate in these regions is quite good and we could avail of the death duty differential to attract retired people there. It would be something along the lines of the concessions already made to try to attract industries to Shannon. Death duties could be similarly reckoned in attracting retired people to certain regions where, worthwhile winter boosting is required.
The question, of course, of abolishing estate duty with a view to attracting capital is one that has been commented on many times. The first question arising in regard to any such proposition or proposal is the one that has been mentioned, that is, where would we get, or from what alternative source would we raise, the same amount of revenue. Estate duty brings in £6 million a year at present. That is a fairly substantial sum. A justification for estate duty is that it is a tax which falls on nobody in particular. You tax on the estate when it is in a state of suspension, as it were. The person who is dead has not an estate and the person who inherits has not yet got it and, therefore, theoretically, the tax falls lightly because it does not fall on anybody in particular. I do not know whether that is philosophically sustainable or not. I would be inclined to deal with the matter in more practical and realistic terms.
The first question is, from what source would we get the money? The other question is whether the abolition of the duty to attract capital in here is really necessary. In recent years we have been attracting a substantial capital inflow. There have been a couple of minor interruptions but there has been a satisfactory and steady inflow. It is the sort of capital we want. It is productive capital, the capital which comes in and is put to practical work. I am not sure there is a great advantage in having old retired people coming in here even though they may be wealthy, if they are not prepared to put their money to work in this country. It is a broad question and I think at the moment at any rate we are doing as much as we need, that is, we are maintaining this tax and trying to make sure that it does not cause hardship to widows and children.
Two proposals in this Bill will to a large extent ensure that. In fact, from now on, from 1st April this year, if you take a widow with three children, the estate will not become liable until it exceeds £20,100, a widow with four children, when it exceeds £21,428 and a widow with five children £25,000. We are taking care of hardship with these proposals. Then it is a matter for great economic and philosophic debate whether or not estate duty is a good form of tax. I must say I have never been satisfied that in our circumstances it worked in any significant way against economic development. Figures seem to bear that out and they show that we have been getting a substantial inflow of capital.
We have the best product to offer. We should not underestimate that.
I am coming to that point. The Senator made the point that people left other countries because of unsafe conditions, racial tensions and so on. I think a far more important factor in our case is that people may be attracted because of our way of life, the political stability and the prevailing conditions. They will be attracted to come and live here more for those reasons than for any other. I myself have a predilection towards getting our own people back here. We have to try to facilitate that in a number of ways. As Senators know, we provided that certain types of pension will be free of income tax if a person comes back to reside here. In that case we are thinking primarily of our own people, people who emigrate and spend their lifetime working abroad and who might perhaps like to come back and live here during their declining years.
I do not say the last word has been said on all this question of estate duty. Indeed, if we are examining the whole structure of our taxation system in connection with the possible introduction of added value tax, then estate duty is something which would have to be looked at in that overall context. This is the only fundamental way in which it could be considered because at the present time estate duty is a very important budgetary consideration. I was nearly going to use the phrase "at this point in time" but the Leader of the House objects to that as a cliché.
You are being very sensitive after the Irish Times article.
Now that you mention that, I would like to take this opportunity of pointing out that that particular leader was written about a situation in which the Press were not present. The writer of the leading article very clearly implied that he was describing what actually occurred. The thing was totally and factually incorrect.
I have given you the opening.
As I say, at the moment we will have to leave aside the broad question of estate duty in all its aspects and deal here with the immediate problem of alleviating hardship in the case of medium-sized estates going to widows and children.
As a husband and father of five children, I am greatly relieved to know that up to £25,000 of my assets will not be liable to tax, if I die. It is subject to complete relief on the first £25,000? That is what I understood the position to be.
Yes.
That is certainly encouraging. The Taoiseach, when he was Minister for Finance, took the great sting and the real objection there was to estate duty and to succession duty out of the code. It is quite true to say, after that, that death duty as a system of taxation is a very fairly worked out system in which people are giving to the State portion of what they were never entitled to but for the disposition made by some other person. I have always thought it a very fair code.
While the Minister says at the present time there is not any lack of capital inflow into the country, there is more to the abolition of death duty than the mere inflow of capital. I think in addition to the inflow of capital— this is important in any estate—we would have people spending their incomes here whereas what happens at the present time in relation to the capital which comes in, I rather think, is that the profits or dividends on it leave the country and you would have much more advantage from the inflow of capital from the abolition of death duty.
You would have capital coming in here in any event and a much higher proportion of income being spent in this country and in places where no factories will ever be established because people who want to leave cities like Chicago and the suburbs of Boston prefer to live in out of the way places in this country. It is remarkable even in the last year that in certain places people are coming over to this country and they are prepared to pay two prices for properties, mainly in towns, because they are enabled to acquire agricultural land without the consent of the Land Commission by virtue of the Land Act, 1965.
Another thing, which is something on which the Minister for Finance should do some research and perhaps some propaganda, is the benefits for people who come over, live here for the rest of their lives and die here. Those people may have property situated abroad as well as other property, but it is still advantageous to them from the point of view of death duty to come here. However, some of those people feel they would pay double death duty, notwithstanding all the double taxation agreements we have with a number of countries. The provisions of those double taxation agreements are not fully understood even by those whose duty it would be to advise persons who ask them about what their benefits are in regard to death duty. There is not readily available any handbook for any prospective returned Irishman working in America or in England which he can get hold of to find out what the position is.
I rather think the system of taxation in this country is so complex nowadays that there are very few people who are not consulted daily in relation to the kind of taxation that has to be paid by foreigners, either in relation to income tax or in relation to death duty. People find it so complex that they are not able to give the kind of on the spot assurance which they should be able to give to those people to enable them to make up their minds immediately. The Revenue Commissioners, the Minister for Finance or some such agency, should do something about clarifying the position of foreigners who want to come here and settle down.
I should say, in that context, the foreigners I have in mind, and know of, are people who have gone from this country or whose parents went from this country and have done fairly well in America or Canada. While it is desirable to bring back as many of our own people as possible, and as I said here in relation to another matter the other day, there are still small farmers who come back and settle down, invest large sums of money in small holdings, we ought not to forget the better off and more well to do of our kith and kin who emigrated 30 or 40 years ago and who might retire, come back and live out their last days in this country. We should do everything possible to attract those people to settle down in increasing numbers in rural Ireland.
I wonder would the Minister say something on the position about the aggregation of annuities? Is there any way that can be modified?
It would lead to abuse. This is a very difficult matter.
Is there any hope of exploring the possibility of having it paid year by year or some such relief given?
Senator Garret FitzGerald advocated something of that nature when speaking on the Second Reading. I would be very much against that. That would be what the French call a wealth tax. The idea is, you find out the net worth of the capital for each year or over two years or three years, and then you pay a percentage of that as a tax. I can see a variety of arguments against it, not the least being administrative difficulty and great temptation to evasion. The fact is that it would almost certainly act as a disincentive to enterprise. Many such arguments can be adduced against anything in the nature of a wealth tax. I am not sure that the present system, if we have to have some tax of this nature, is not the best one, that is, giving those reliefs which we are now introducing. The trouble about what the Senator suggests is that any such relief immediately opens the door to all sorts of devices which enable people to effectively avoid paying duty at all.
If we take an estate, say, a moderate one of £15,000 and if the owner left an annuity to his wife of £2,500 a year, the wife with young children, when that £2,500 was aggregated, the young widow would get about £15,000.
That is not what I mean by aggregation. It means putting all the assets of the estate together.
Does the widow's pension not come in?
What the Senator is talking about is capitalisation.
Yes.
That is precisely the problem we are trying to deal with here, that is, the fact that annuities left to widows and children are capitalised and brought into the estate at that capital value. The widow and children receive reliefs here. In fact, as I mentioned, if there is a widow and two children, there would need to be a very large annuity to cause any trouble. The typical case is a widow left with a house, which is very often the family house, and an annuity or a pension. The annuity is capitalised and added to the value of the house. I think we are catering here for the average case.
If you take the £2,500 and aggregate that, it would give you about £37,500 for a young widow with a house. The ordinary house will not add on too much to that. Say it is £10,000. This would bring the figure up to £47,500. The tax on that would probably work out at 3/- on £20,000 or, in other words, £3,000 to £4,000, which is not a healthy bill for a widow to get at such a distressing time. Perhaps if there were a means of spreading the payment over a year or so, this would relieve hardship. I admit the Bill has gone a very long way towards relieving those deserving cases but there are still those above that, if it were spread over a year or more, who would get some relief.
I accept that. It is a matter of how far we can go. The additional relief will cost us £200,000 in a full year.
I appreciate the relaxation given. I was not suggesting any more than that from the estate at the present time but if it could be spread over a number of years, it would probably meet the hardship caused.
So far as the annuity is concerned, it is capitalised and duty is payable in four annual instalments. Four years may not be much but it is something.
That is something.
I am not sure if this is appropriate on this section. I remember raising this point before on the Succession Bill and it is as a result of that that this might arise. Before the Succession Bill, quite a lot of estates were left partly to the wife. Possibly after the Succession Act and possibly by reason of the fact that the spouse did not feel like renouncing the estate that came from the other spouse, you would find cases where the husband and wife, normally being about the one age, when the estate came to the husband or wife, as the case might be, in a very short time he or she would also pass away. The result is in the space of a very few years perhaps duty would be taken twice off an estate which normally would not have happened because there would not have been an estate for the other spouse. I wonder perhaps, in some future Finance Bill, if the Minister would not give consideration to this.
There is a measure of quick succession relief in at the moment.
As between spouses, there would be relief.
It occurred to me at the time of the Succession Bill that an estate could becomes liable to duty twice in a short space of time by reason of that Bill alone.
I am advised that if a widow dies with a life estate only no estate duty is payable.
She may not have renounced the widow's right under the Succession Bill.
I see what the Senator means.
Question put and agreed to.
Sections 26 to 30, inclusive, agreed to.
SECTION 31.
Question proposed: "That section 31 stand part of the Bill."
This section deals with turnover tax. Turnover tax in its time has been blamed for many things. It seems to me that is has been blamed for things for which it could not possibly be the cause. There are lot of prices which shopkeepers at one time attributed to the turnover tax which have risen very steeply. I merely give an instance. The threepenny bar of chocolate shot up to fourpence in recent times. Whereas some increase was to be expected when the turnover tax came in originally, this increase in 1968 can hardly be attributable to it. The Minister will say that this is not a matter for him but for the Minister for Industry and Commerce.
It is a terribly miserable threepenny bar of chocolate as well. It is not what it used to be.
I am speaking on behalf of the young, the defenceless taxpayers.
They have all the money.
I am afraid that what is happening at present is that whoever is responsible for these price increases thinks that the Government are somewhat sensitive, having increased the salaries of Ministers, judges, Deputies, Senators and so on, and that they will not take action in relation to increases of that kind which were formerly put down to turnover tax. I do not know whether the turnover tax is at this time having some kind of delayed action effect?
An Leas-Chathaoirleach
Does the Chair understand that these matters are not strictly attributable to the turnover tax, which I think would make them not relevant?
I said I can see the Minister saying that this is a matter for the Minister Industry and Commerce. I do not want to pursue the matter in a disorderly fashion, now that I have got the hint, but I think by virtue of the doctrine of collective responsibility, the Minister for Finance is concerned with maintaining the value of the pound and he might have something to say about these increases.
As the head of a household which is a large consumer of chocolate bars of one sort or another, I have a very strong interest in this matter and I will certainly bring it to the attention of the Minister for Industry and Commerce.
Cheers from the children of the nation.
Question put and agreed to.
Sections 32 and 33 agreed to.
SECTION 34.
Question proposed: "That section 34 stand part of the Bill".
All good things come to those who wait. It is some time now since, on some other measure I cannot now recollect, I advocated the granting of a relief similar to the relief in this section. I understood at the time there were engineering firms in this country who could draw up plans and do the groundwork for new buildings and schemes being undertaken in the developing countries of Africa. In this section we are providing certain reliefs for engineering services. It seems to me that engineering services are defined in a somewhat unduly restrictive way. I do not know the reason for it. The definition is:
In this section "engineering services" means design and planning services the work on the rendering of which is carried out in the State in connection with chemical, civil, electrical or mechanical engineering works executed outside the State.
Would that include architectural design?
Yes, design and planning. Surely that includes architectural? We certainly intended it to. I hereby go on record in this House as saying that it does.
Let the Revenue Commissioners and the inspector of taxes take note. First of all, in what you describe as "engineering services", you deal with chemical, civil, electrical or mechanical engineering works. They are all in the connotation of the engineering side of things, whereas architects and quantity surveyors——
What it means is chemical works, civil works, electrical works or mechanical engineering works executed outside the State.
That may well be. I am glad the Minister has gone on record as saying that it does.
If any trouble arises, I will not hesitate to amend it.
That is one of those courageous decisions the present Government are never afraid to take.
Question put and agreed to.
Sections 35 to 45, inclusive, agreed to.
SECTION 46.
Question proposed: "That section 46 stand part of the Bill".
I understand quite clearly what the section says, but is this one of those orders that come before us under the Imposition of Duties Act and that normally require a resolution to be passed by each House of the Oireachtas affirming it?
This gives permanent effect to an order called the Imposition of Duties (No. 170) (Excise Duties) (Vehicles) Order, 1968.
Made under what Act?
Made under the Imposition of Duties Act, 1957. The order had two purposes: one was to settle the taxation of school buses and the other was the removal of differential rates of motor tax as required under the Free Trade Area Agreement.
It is a rather absurd way of making permanent provision.
Question put and agreed to.
Sections 47 and 48 agreed to.
First Schedule agreed to.
Second Schedule agreed to.
THIRD SCHEDULE
Question proposed: "That the Third Schedule be the Third Schedule to the Bill."
For the edification, instruction and better wining and dining of the Leader of the House, I would be glad if the Minister would throw some light on the provisions of the Third Schedule.
This is to put 1s per bottle on imported wine.
I cannot quite follow. It says: Still wine not exceeding 25º of proof spirit, "not in bottle" and "in bottle". What is the difference between "not in bottle" and "in bottle"?
One comes in a cask.
The other comes in a château bottle?
Yes.
That is at a somewhat higher rate?
Yes, it is a better wine.
This is what I cannot quite follow. I thought it was by reference to so much per gallon being levied?
There always has been extra duty on bottled wine, a "bottle" tax.
At any rate the Leader of the House now knows château bottled wine is pricier.
I am glad to see we have a couple of experts on wine here.
I intend to place my entire expertise at the disposal of the Leader of the House on this matter in the future.
Question put and agreed to.
Fourth Schedule agreed to.
Title agreed to.
Bill reported without recommendation, received for final consideration and ordered to be returned to the Dáil.