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STANDING JOINT COMMITTEE ON CONSOLIDATION BILLS díospóireacht -
Tuesday, 9 Nov 2010

Value-Added Tax Consolidation Bill 2010: Committee Stage

Question proposed: "That section 1 stand part of the Bill."

We move on to consideration of the Bill. I wish to advise Deputy Sherlock that amendments Nos. 1, 6 and 8, in his name, are ruled out of order as they are in the nature of substantive amendment of statute law.

Amendments Nos. 1, 6 and 8.

As members have been notified the Standing Joint Committee on Consolidation Bills meets today to consider the Value-Added Tax Consolidation Bill 2010. This Bill consolidates enactments relating to the value-added tax and has been so certified by the Attorney General. No new law has been included in the Bill nor is it permissible to introduce new law by way of amendment on Committee Stage. The joint committee has been empowered by orders of the Dáil and Seanad, passed on Wednesday and Thursday, 3 and 4 November 2010, to dispose of more than one section by any one question and if members are agreeable I propose to use this power so that the Bill can be processed as efficiently as possible. May I have agreement that where no amendments are tabled to individual sections that we can take them in groups so as to assist the efficient passage of the Bill? Is that agreed?

On what basis have they been grouped? Is there a thread running through the various groups?

If there are no amendments to a section, the section is grouped.

Perhaps I did not make myself clear. I see a grouping of sections 3 to 36, inclusive? Why is it sections 3 to 36, inclusive, as opposed to sections 3 to 24, inclusive, or sections 3 to 12, inclusive?

It is because there are no amendments to sections 3 to 36, inclusive. There is an amendment to section 37.

To satisfy my curiosity, why was amendment No. 1 ruled out of order when it is more of a semantic amendment than a substantive one?

Amendment No. 1 has been disallowed as being a substantive amendment of the law under Standing Order 145. The amendment seeks to replace the word "Department" with "Minister" in the definition of a public body. This is not merely to correct an ambiguity or inconsistency or to adapt to existing law in practice as is allowed under Standing Order 145. That is the reason I have been given.

May I go back to the point I was raising? I want to see this Bill dealt with properly and efficiently. I have no objection to groupings but it is proposed to group sections 3 to 36, inclusive, together which covers Parts 1 to 4 and one section in Part 5. Why should we dip into the first section of Part 5? Is there some coherence in this grouping? Section 36 which is added into that grouping deals with taxable amounts whereas the previous sections deal with different things.

I understand that the Bills Office made this proposal. The Bill to deal with the consolidation of the Social Welfare Acts had similar groupings and this precedent was followed on this occasion.

The reason that sections 3 to 36 were grouped together is that no amendments were tabled to these sections.

I am happy to speak to any specific section, for example, when dealing with sections 3 to 35, if there is a query about section 15, I well deal with it. I have no difficulty talking to any section.

That leads on to my next point. I do not want to be difficult, I just want to get the job done as we have been charged to get it done.

I do not like to hear a member prefacing his or her remarks with such a statement.

The Chairman referred to the Social Welfare Consolidation Bill. I recall the committee which dealt with the Social Welfare Consolidation Bill 1980, which I chaired. I recall the briefing material where each section was explained in detail for the information of members. I appreciate the Minister is willing to answer any questions.

The explanatory memorandum to the Bill is meant to elucidate in some detail each of the sections and that is available to members, notwithstanding that if a member wants to go into more detail on any section, all he has to do is signal that.

What is the format for dealing with Committee Stage? Does the Minister of State propose to comment on each section?

No. If members wish to ask the Minister of State to address a particular section, he is agreeable to discuss it.

I do not want to be difficult.

There is no problem.

If we are charged with teasing out the terms of the Bill, we should do it in a workmanlike fashion.

I do not think we were ever to discuss the legal implications of every section. We are discussing the technical changes that are allowed under a consolidation Bill. We are not making any changes to the law.

I fully understand that the main inhibition is that we do make substantive changes to the law.

The Deputy can ask any question on a section, if he so wishes, and the Minister indicated he will respond to any query.

That is all right.

Would it be in order for me to make some general comments?

The Value-Added Tax Consolidation Bill 2010 consolidates almost 40 years of VAT legislation as part of the ongoing modernisation of tax legislation. The Bill which follows earlier tax consolidation exercises will make Irish VAT law more accessible and user friendly to Members of the Oireachtas, businesses, tax practitioners and students of taxation. As I stated last week on the Second Stage debate in the Dáil, the Value-Added Tax Consolidation Bill 2010 has been restructured and remodelled as far as possible along the lines of the EU VAT directive, with which Irish VAT law must comply. The most notable effect of this remodelling is that there are a far greater number of sections in the Bill. While the Value-Added Tax Act 1972 contained 44 sections with a number of additional sections inserted through the Act, by means of successive finance Acts, the new Value-Added Tax Consolidation Bill contains 125 sections, primarily due to expansive sections in the Acts being replaced and clarified by a number of separate sections in the Bill.

I thank members of the committee for their input to date into this process, including the amendments brought forward today. As members will be aware, consolidation Bills may not make any substantive changes to existing law and the Bill has been certified by the Attorney General as being a consolidation measure containing no legislative changes.

While changes in existing legislation are not allowed in a consolidation Bill, some suggestions being made could be considered in the context of future finance Bills.

Question put and agreed to.
SECTION 2

Amendment No. 1 in the name of Deputy Sherlock is deemed out of order.

Amendment No. 1 not moved.

I move amendment No. 2:

In page 18, subsection (1), to delete line 28 and substitute the following:

" "repealed enactment" means the Value Added Tax Act 1972 repealed by section 122;”

This is a drafting amendment. As it stands the definition of "repealed enactment" refers to section 121, which defines it for the purposes of Part 14, however, the expression "repealed enactment" is used outside Part 14 for example, in section 15(5) (a). It seems to us more appropriate to delete section 121 and simply define “repealed enactment” in Part 1.

This amendment relates to a drafting practice used in the Bill. Section 2 defines the term "repealed enactment" in a way that refers to section 121 which in turn refers to section 122. The amendments propose that section 121 is deleted and that section 2, as amended, refer directly to section 122. The proposed revised structure involves consequential cross reference changes and does not materially improve the Bill.

I do not therefore accept these amendments.

I will withdraw the amendment on that basis.

Amendment, by leave, withdrawn.
Question proposed: "That section 2 stand part of the Bill."

Definitions are usually important, and there are eight pages of definitions in this Bill. Are the definitions taken directly from the existing legislation? Have any of them been reworded? Have any of the existing definitions, which are now being incorporated in the consolidation Bill, been subject to interpretation by the courts or the appeal commissioners? I would like to hear the provenance of the definitions.

I see some interesting definitions, for example, the definition of "footwear" led to its prominence at one stage. The Minister of State will understand my concern about definitions.

The definitions are drawn from existing legislation. Should the Deputy want me to go through every single definition, I can do so.

If the Deputy would like to pick out a sample or a definition that he would like to have clarification on, I can do that as well.

Are they transposed word for word from the definitions in existing legislation? Are there any definitions to which the Minister of State or his advisers believe attention should be drawn which could give rise to either a new definition or interpretation?

No, I am not aware of any cases of pushing out the boat in terms of definitions. There is a document from which the definitions are drawn and there is a long list.

Yes. The situation is fully set forth in the explanatory memorandum and most of the definitions are mentioned there. However, there are references to the schedule as well.

I assure the Deputy that there are no new definitions here. These are drawn from existing legislation, as is the whole Bill.

Were they proofed by the Attorney General and his staff?

Question put and agreed to.
SECTION 3
Question proposed: "That section 3 stand part of the Bill."

Are there any queries?

Is there any point to which the Minister of State and his officials believe they should draw our attention? Are these transpositions of the existing legislation?

Nothing has been flagged to me to which I should draw the attention of the committee. If there is any particular section the Deputy wishes to home in on I would be pleased to deal with it.

Question put and agreed to.
Sections 4 to 36, inclusive, agreed to.
SECTION 37

Amendments Nos. 3, 5, 10, 11 and 12 are cognate will be discussed together.

I move amendment No. 3:

In page 53, subsection (4)(a), lines 16 and 17, to delete all words from and including “Central” in line 16 down to and including “Ireland” in line 17 and substitute “Central Bank of Ireland”.

These amendments update the references to the Central Bank which appear in five places in the Consolidation Bill. In accordance with the Central Bank Reform Act 2010, the title of the Central Bank and Financial Services Authority of Ireland was changed to the Central Bank of Ireland on 1 October 2010. The amendments reflect that change and I commend them to the joint committee.

Do I take it the only effect of the amendment is to change the name from "Central Bank" to "Central Bank of Ireland"?

That is all. Presumably when the Bill was originally drafted, it was still the "Central Bank and Financial Services Authority of Ireland". The change took place on 1 October.

Amendment agreed to.
Section 37, as amended, agreed to.
Sections 38 to 45, inclusive, agreed to.
SECTION 46

I move amendment No. 4:

In page 59, subsection (1), lines 9 to 23, to delete paragraphs (a) to (d) and substitute the following:

"(a) zero per cent of the amount on which tax is chargeable in relation to goods in the circumstances specified in paragraphs 1(1) to (3), 3(1) and (3) and 7(1) to (4) and (6) of Schedule 2 or of goods or services of a kind specified in the other paragraphs of that Schedule;

(b) 4.8 per cent of the amount on which tax is chargeable in relation to the supply of livestock and live greyhounds and to the hire of horses;

(c) 13.5 per cent of the amount on which tax is chargeable in relation to goods or services of a kind specified in Schedule 3;

(d) 21 per cent of the amount on which tax is chargeable other than in relation to goods or services on which tax is chargeable at any of the rates specified in paragraphs (a), (b) and (c).”.

This is a drafting amendment. We are setting out a more logical listing in numerical order. A logical listing of the rates should be in order of amount from 0% to 21%. This is basically the reasoning.

It makes sense to go from 0% to 21% rather than from 21% to 0%, back up to 13.5% and then down again to 4.8%. A tax practitioner or an unfortunate payer of tax must find his or her way through this maze and we wish to ensure it is as readable as possible. The point raised by Deputy Sherlock is worthy of support.

This undoubtedly plausible amendment relates to section 46. It concerns the paragraph order in which the different rates of VAT are presented. The text in the Bill reflects section 11 of the Value-Added Tax Act as currently worded. It shows the 21% rate first, which is the standard or default rate and always referred to as the standard rate. This is followed by the 0% rate, the 13.5% reduced rate and, finally, the livestock rate of 4.8%. The proposed amendment re-orders the text to show the rate in numerical order. This is a presentational issue and there is no difference in substance between the Bill as it stands now and what the amendment would do. However, the proposed change would entail cross-reference amendments to several other sections. More important, there is a logic, albeit a different one, in the way the rates are presented in the Bill with the standard rate appearing first before the exceptions to that rate. For these reasons I do not accept the amendment.

The longer I spend in this institution the more I am beginning to realise that parallel logical positions are often taken. I accept what the Minister is saying and I will withdraw the amendment on that basis.

Amendment, by leave, withdrawn.
Section 46 agreed to.
Sections 47 to 57, inclusive, agreed to.
SECTION 58

I move amendment No. 5:

In page 70, subsection (2)(v)(I), lines 45 and 46, to delete all words from and including "Central" in line 45 down to and including "Ireland" in line 46 and substitute "Central Bank of Ireland".

Amendment agreed to.
Section 58, as amended, agreed to.
Sections 59 to 71, inclusive, agreed to.
SECTION 72

Amendment No. 6 in the name of Deputy Sherlock is deemed to be out of order.

Is there scope for me to come at this again at the next Stage? I accept at one level that the Chairman maintains there are substantive amendments and he has ruled some of them out of order. Is it possible for the Opposition to reserve the right to take a view on this in the intervening period and then come back on Report Stage?

As I understand it, the amendment cannot be moved on Report Stage. If the Deputy wishes to speak on it, that is fine.

While I accept the Chairman's ruling that it is to be disallowed, I will take the opportunity to comment.

That will be possible when we come to discuss the section.

Amendment No. 6 not moved.

I move amendment No. 7:

In page 99, lines 12 to 16, to delete subsection (2) and substitute the following:

"(2) An invoice shall be stored within the State unless—

(a) it is stored by electronic means in a manner which conforms with requirements laid down by the Revenue Commissioners in that respect,

or

(b) the storing of the invoice is otherwise in accordance with the agreement of the Commissioners and is subject to any conditions set by them.”.

This is a drafting amendment. At the moment the subsection could be deemed to be contradictory because it states "any invoice...shall be stored within the State" but the phrase "may be stored outside the State" is used afterwards. We propose a re-draft which makes the exceptions to storing within the State clearer and which makes more sense grammatically as well. It is more of a semantic amendment.

This amendment relates to section 72(2) of the Bill; it deals with the rephrasing of text. The text in the Bill reflects section 17(15) of the VAT Act as currently worded. It provides that an invoice not stored by electronic means shall be stored in the State, but may be stored outside the State under certain circumstances.

This amendment re-orders the text so that the provision does not start in a negative way. In general this drafting style is welcome as it makes the text easier to read but in this particular case, there is a possibility that the revised wording may result in a difference in substance in the law. As this is not permissible in a consolidation Bill, I cannot therefore accept the amendment. The Minister will, however, look at the issue in the context of the Finance Act 2011.

Amendment, by leave, withdrawn.
Question proposed: "That section 72 stand part of the Bill."

Amendment No. 6, which was disallowed, referred to the storage of invoices. The existing text in section 72(1) of the Bill states that invoices should be stored. The amendment proposed that the words "for a period specified in regulations" be inserted to qualify this. The text in the consolidation Bill reflects section 17(15) of the VAT Act as currently worded, and if accepted the proposed amendment could amount to a substantive change in the law, which is not permissible in a consolidation Bill. I would not, therefore, have been able to accept the amendment but as stated on amendment No. 7, the Minister will look at the issue in the context of the Finance Bill.

I appreciate that. The logic of the amendment is based on the recent Data Retention Act which, although it was designed for specific counter-terrorism purposes and to assist Garda investigations, the issue here is still the retention of data and if it should be stored for a specified time.

The issue is not the merit of the amendments, it is if it can be done in a consolidation Bill.

Question put and agreed to.
Sections 73 to 83, inclusive, agreed to.
Amendment No. 8 not moved.
Section 84 agreed to.
Sections 85 to 105, inclusive, agreed to.
SECTION 106

I move amendment No. 9:

In page 164, line 29, to delete "Tax" and substitute "Value-added tax chargeable by virtue of this Act".

This is also a drafting amendment. It is not strictly necessary having regard to the definition of tax but section 106 as it stands does not read well in our view.

This amendment relates to section 106 of the Bill, which deals with the care and management of VAT. The section currently provides that tax is placed under the control and management of the Revenue Commissioners. Section 2 of the Bill defines the term "tax" as meaning value-added tax chargeable by virtue of the Act. The term "tax" is used extensively throughout the Bill.

The amendment proposes that the term "tax" be replaced by the term "value-added tax chargeable by virtue of this Act" in section 106. I do not consider that the proposed change would materially improve the Bill. It may, in fact, lead to some confusion, as the term "tax" is defined in section 2 for the purposes of the whole Act and is widely used throughout the Bill. I cannot, therefore, accept this amendment.

It is a rather odd way of expressing the whole business of tax. We never really thought of the Revenue Commissioners as being people who have care and management of tax. One would have thought that the collection of tax was under their care and management, not tax generally.

I accept it is a lapidary formulation.

I suppose it is sanctified by time by this stage.

Amendment, by leave, withdrawn.
Section 106 agreed to.
Sections 107 to 120, inclusive, agreed to.
SECTION 121
Question proposed: "That section 121 stand part of the Bill."

We have withdrawn our opposition to this section of the Bill.

Question put and agreed to.
Sections 122 to 125, inclusive, agreed to.
SCHEDULE 1

I move amendment No. 10:

In page 196, lines 3 and 4, to delete all words from and including "Central" in line 3 down to and including "Ireland" in line 4 and substitute "Central Bank of Ireland".

Amendment agreed to.
Schedule 1, as amended, agreed to.
SCHEDULE 2

I move amendment No. 11:

In page 199, lines 41 and 42, to delete all words from and including "Central" in line 41 down to and including "Ireland" in line 42 and substitute "Central Bank of Ireland".

Amendment agreed to.

I move amendment No. 12:

In page 200, lines 21 and 22, to delete all words from and including "Central" in line 21 down to and including "Ireland" in line 22 and substitute "Central Bank of Ireland".

Amendment agreed to.
Schedule 2, as amended, agreed to.
Schedules 3 to 6, inclusive, agreed to.
SCHEDULE 7

I move amendment No. 13:

In page 225, column 1, line 46, to delete "regulation 2" and substitute "article 2".

This is a minor technical amendment to correct a drafting error. The text currently refers to "regulation 2" in the definition of VAT and the amendment substitutes the word "article" for "regulation" because that is the correct terminology.

Amendment agreed to.
Schedule 7, as amended, agreed to.
SCHEDULE 8

I move amendment No. 14:

In page 226, column 3, lines 20 and 21, to delete ", in so far as it is unrepealed".

This is a technical amendment and I thank Deputy Sherlock for bringing it to our notice. Schedule 8 repeals the Value-Added Tax (Amendment) Act 1978. The current provision related to repeal includes the phrase "in so far as it is unrepealed".

None of the 1978 Act has been repealed to date. This phrase, therefore, is superfluous and the amendment proposes its deletion. I commend this amendment to the standing joint committee and thank the Deputy.

Our logic is the same. The words "in so far as it is unrepealed" are redundant when the whole Act is being repealed.

Amendment agreed to.
Schedule 8, as amended, agreed to.
TITLE
Question proposed: "That the Title be the Title to the Bill."

I assume the original draft, as amended, as it went through the early process has been discussed with the Institute of Taxation, the Law Society and other relevant bodies.

That was stated in my Second Stage speech.

Are there outstanding issues of any consequence arising from those discussions? Certainly nobody has been in touch with me about them.

Do I take it that it is largely an agreed document arising from these various discussions with the professionals in the field?

Broadly speaking this had the agreement and support of the relevant bodies. There are a few drafting issues, we have been through one or two of them already this morning. One cannot change existing language in a consolidation Bill but there may be one or two issues of a strictly drafting nature that may be for consideration in the finance Bill context that would have arisen out of consultation.

In regard to those issues, do we have an assurance on the basis that they cannot be included here because of the danger that they might change the existing law, that they will be examined and looked at carefully in the context of the next finance Bill?

The Minister and the Department have given assurances that they will be examined in relation to the Finance Bill. We are constantly trying to improve drafting in the Finance Bill with a view to greater clarity in finance legislation. Some particular issues would have been drawn to attention and the Finance Bill is the appropriate place to deal with them.

I thank the members of the committee, the Minister of State and his staff, the clerk of the committee and staff of the Houses for dealing with the Bill expeditiously and efficiently through the system.

I thank members of the committee for their co-operation and the spirit in which they have dealt with the Bill on Committee Stage.

Question put and agreed to.
Bill reported with amendments.
Barr
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