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Dáil Éireann - Volume 262 - 12 July, 1972 Committee on Finance. - Value-Added Tax Bill, 1971: Report Stage (Resumed). Debate resumed on amendment No. 14: In page 13, line 7, after “transaction” to insert “and not including hire purchase charges”. —(Deputy FitzGerald.) Mr. Tully Mr. Tully Mr. Tully: Are we discussing amendment No. 15 also? An Ceann Comhairle Cormac Breslin 1373 An Ceann Comhairle: Amendment No. 15 appears to be related and I [1373] understood that the House was discussing amendments Nos. 14 and 15 together. The Minister reported progress. Dr. FitzGerald Dr. FitzGerald Dr. FitzGerald: I thought the Minister had concluded. Mr. Colley Mr. Colley Mr. Colley: My recollection is that I was not on my feet at the time. I think there was a question being addressed to me at the time. I cannot quite remember what it was. Dr. FitzGerald Dr. FitzGerald Dr. FitzGerald: I do not think we can either. The basic issue here is the lack of neutrality, to use the Minister's words, between hire purchase and interest. The Minister suggested in some obscure way that if you exempt hire purchase charges, as you exempt bank interest charges, in some way you will be disturbing the neutrality between a purchase that is on hire purchase and a purchase that is not. That is not the issue. The goods in all cases pay the tax. The question at issue is whether the interest charges, which are exempt from value-added tax if it is a bank loan, should or should not be payable when it is a hire purchase arrangement. The Minister has given no reason, other than an assertion that this will affect the neutrality as between goods purchased on hire purchase and goods purchased by cash, for wanting to depart from the principle of neutrality in this respect. While one could make a case on the grounds of the different kinds of people who use these different facilities for departing from neutrality in favour of hire purchase charges, on the grounds that people who use hire purchase are generally less well off than those who use bank loans, you certainly cannot make a case the other way round. To suggest that bank loans must for some reason be exempt, that the interest charges on bank loans must be exempt, but not hire purchase charges, is a movement in the wrong direction, against the poorer person. The Minister has given no reason for this. Mr. Colley Mr. Colley Mr. Colley: I did, in special committee. Dr. FitzGerald Dr. FitzGerald 1374 Dr. FitzGerald: I see. The Minister [1374] was being very careful not to repeat himself. Mr. Colley Mr. Colley Mr. Colley: I am endeavouring to avoid that as far as possible. Dr. FitzGerald Dr. FitzGerald Dr. FitzGerald: I do not recall the Minister giving us a reason at the special committee. Perhaps there might be a difference of opinion as to whether it was a reason or not. I may be wrong. Mr. Tully Mr. Tully Mr. Tully: I think the Minister gave the same reason as he gave before the adjournment, that it would differentiate in favour of hire purchase as against hiring, which I would not be prepared to accept as valid. Mr. Colley Mr. Colley Mr. Colley: Deputy FitzGerald is talking about another point. Mr. Tully Mr. Tully Mr. Tully: No, we are talking about the interest that has to be paid on the money given for hire purchase and the only way it would be valid would be if we were talking about expensive machinery. Dr. O'Donovan Dr. O'Donovan Dr. O'Donovan: I think the Minister was interested that it might upset trade as between hire purchase and hiring. Mr. Tully Mr. Tully Mr. Tully: That is right. Dr. O'Donovan Dr. O'Donovan Dr. O'Donovan: That was his case. Mr. Colley Mr. Colley Mr. Colley: Deputy FitzGerald's question was in relation to why bank loans were being exempted. Mr. Tully Mr. Tully Mr. Tully: The Minister will agree that people do not lease bedroom furniture or things like that, that they are taken on hire purchase, which is what we were talking about. Dr. FitzGerald Dr. FitzGerald Dr. FitzGerald: Perhaps the Minister is referring to the fact that it would affect neutrality between hire purchase and leasing or hiring. Mr. Tully Mr. Tully Mr. Tully: That is the argument he made. Mr. Colley Mr. Colley Mr. Colley: I thought Deputy FitzGerald was asking a question why bank loans were not. Dr. FitzGerald Dr. FitzGerald Dr. FitzGerald: No. Mr. Colley Mr. Colley 1375 [1375] Mr. Colley: I am sorry. I misunderstood him. Dr. FitzGerald Dr. FitzGerald Dr. FitzGerald: The Minister has not developed that point where I said there are complications about taxing bank loans. Given that that is the situation, there are three ways of buying goods. You can borrow from the bank, you hire purchase or you pay cash. Hiring and leasing has nothing to do with it. That is a different transaction altogether. You could not achieve neutrality between activities so different in kind as leasing something and buying something. In so far as the Minister made that point, it is irrelevant to the discussion. 1376 We are concerned with people who are buying something. The man who has not got cash has to get a loan, normally [1376] through a bank, or he hire purchases. If he is well-off he will tend to go to the bank for the money or increase his overdraft. If he is not, he will tend to hire purchase. No doubt there are people who cross the borderline. There is a broad distinction between hire purchase and a bank loan. The neutrality we seek is as between people buying goods. As between those people, bank loans are exempt; hire purchase is not; and there is, therefore, lack of neutrality which the Minister has not justified. I have not heard any reason. I have heard a reason on a different point which does not arise on this issue. As he has not given a reason, we have no alternative to pressing the amendment. Amendment put. The Dáil divided: Tá, 54; Níl, 63. Tá
Níl
Tellers: Tá, Deputies Cluskey and G. Timmins; Níl, Deputies Andrews and Meaney. Amendment declared lost. Dáil Éireann 262 Committee on Finance. Value-Added Tax Bill, 1971: Report Stage (Resumed). General Debate 19720712
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