Dáil Éireann - Volume 280 - 30 April, 1975

Private Members' Business. - Finance Bill, 1975: Committee Stage (Resumed).

Question again proposed: “That section 45 stand part of the Bill.”

[879] Mr. Colley: I hope that the Minister and I, having been refreshed, ——

Mr. R. Ryan: The Deputy was luckier than I. I had to attend on most of the debate.

Mr. Colley: I trust the Minister's colleagues were sufficiently considerate of him to allow him to get a cup of tea.

Mr. R. Ryan: They were.

Mr. Colley: If so, perhaps he may be in a somewhat more flexible mood and will agree at least to consider the cases of, to quote himself, undoubted hardship in which duty has been paid and see if he cannot take action to give relief in those cases between now and the next Stage.

Mr. R. Ryan: I have already explained the difficulties. It has been suggested that all beneficiaries lose under the arrangement described by Deputy Colley but that is not so. The only person who would lose under such an arrangement would be the universal or residual legatee. I know that in many cases that could be the sole beneficiary but the reasons for variation in the market price between the date of sale and the date of death can vary. Sometimes executors can, at the request of the beneficiary, sometimes it is one and the same person, postpone sales in expectation of achieving a benefit for themselves. It does not always materialise. In many cases no loss is incurred even if the market is not behaving in a bull fashion for the reason that the duty may be paid by way of Government securities which can be surrendered at par and in such a situation if the market is low the beneficiary can get quite a significant gain.

In a number of cases the executors themselves can be responsible for a great part of the loss. If difficulties have arisen as they may have—I am not saying they have not—sometimes they have been attributable to the fact that banks have pressed executors—it has not been the State that has been pressing them for the recovery of their money.

[880] There are several cases that have been brought to my notice by people who have claimed serious loss who sold stock where there were other liquid assets available, where there was money available in the bank that could have been used. Quite clearly there is a multiplicity of different situations. It would be very difficult indeed to legislate for situations of that kind.

Again a further complex problem would be the difference between stocks and shares in public and private companies. The sale and transfer of shares in private companies is, of course, normally restricted by the articles of association and the question of the appropriate valuations on different dates would be a very complex matter to adjudicate upon. I do not think I could assist consideration of the problem at this stage if I were to go into all the various details. The Deputy may be assured that we have given earnest consideration to it. I will take another look at it but I cannot see that the problem is one which is capable of simple remedy. It is not. It is a complex problem and one cannot look at the minuses without also looking at the pluses that can occur in this situation.

Mr. Colley: Would the Minister accept that in cases where there is no loss as for instance, the case he mentioned where people surrender Government stock at par, no question of giving relief would apply if there has been no loss, that it is only in a case where there has been a loss that this would arise? Would he also accept that while clearly there are complications involved they have apparently been overcome in Britain? It would, therefore, seem to be possible for the Minister to overcome them if he wished to do so.

Mr. R. Ryan: I do not know that they have been overcome in Britain. However, I will look at what the British did and see if it could be usefully applied here without generating further difficulties and anomalies.

Mr. Colley: I am always greateful for small mercies.

Question put and agreed to.

[881] SECTION 46.

Acting Chairman (Mr. Pattison): Amendment No. 35 has been ruled out of order.

Question proposed: “That section 46 stand part of the Bill.”

Mr. R. Ryan: This section is concerned with the rate of stamp duty chargeable on conveyances and transfers, on the sale of any property other than stocks of marketable securities and on leases in the following ranges:

(i) For considerations between £20,000 and £50,000 the new rate will be £2 for every £50 or a fraction or part of £50 of the amount or value of the consideration.

(ii) For considerations exceeding £50,000 the new rate will be £3 for every £50 or fraction or part of £50 of the amount or value of the consideration.

The new rates came into operation on 1st March, 1975, and the period between that date and the date of the passing of the Act is covered by Order 217 under the Imposition of Duties Act, 1957, which is being revoked by section 47 of this Bill.

Major de Valera: How much revenue does the Minister expect to get out of that?

Mr. R. Ryan: £1.5 million in a full year. We lose two months in this year.

Major de Valera: The point is that it is additional taxation.

Mr. R. Ryan: It is additional necessary revenue for which there is an immense demand.

Mr. Colley: The Minister never imposes anything else.

Major de Valera: In fairness to the present incumbent, no Minister ever does.

Question put and agreed to.


Question proposed: “That section 47 stand part of the Bill.”

[882] Mr. R. Ryan: This is a revocation of the order which covered the duty up to date.

Question put and agreed to.


Question proposed: “That section 48 stand part of the Bill.”

Mr. R. Ryan: This section reenacts the terms of Resolution No. 8 which was passed by Dáil Éireann on 15th January, 1975, and which came into effect on the following day.

The section amends section 10 of the Value-Added Tax Act, 1972 by adding a new subsection, (2A) and by making supplementary and consequential amendments to subsections (3) and (9).

The purpose of the amendment is to counter a tax avoiding practice, involving sales between linked companies at artificially low prices, of Fourth Schedule goods liable to tax at the 36.75 per cent rate. The amendment will substitute the open market price for tax purposes in such cases. Goods specified in the Fourth Schedule to the VAT Act, 1972, comprise motor cars, motor cycles, television and radio sets, gramophones and gramophone records.

The 36.75 per cent rate operates on a two-tier basis, something that is often overlooked. It is 36.75 per cent at the manufacturing or import level and 6.75 per cent at wholesale or retail level. Of the 36.75 per cent rate applicable at the earlier level, 30 per cent is not subject to the normal VAT recoupment arrangements, but is trapped in the price passed on to the next stage of distribution. When, therefore, the manufacturer's price is fixed at an artificially low level the loss of tax is appreciable, even if, at the retail stage, the price is fixed at the normal market level.

It has come to the notice of the Revenue Commissioners that the practice is developing of manufacturers selling at such artificially low prices to their own subsidiary wholesaling companies as to avoid much of the tax. It is important, from the point of view of fair competition in trade as well as from the point of view of the [883] Exchequer that the practice should end as soon as possible. It is estimated that if the practice were to continue at its present level, there would be a loss of about £200,000 per annum and if the practice were to spread the loss would be correspondingly greater.

Mr. Colley: There seems to be a loophole here which should be closed and, therefore, we support the section.

Question put and agreed to.


Question proposed: “That section 49 stand part of the Bill.”

Mr. R. Ryan: This section amends section 11 of the Value-Added Tax Act, 1972, by substituting a new subsection for subsection (2) and a new subsection for subsection (4). The amendments came into effect as and from January 16th this year under Resoluton No. 9 passed by the Dáil on the previous day. Both of the amendments are designed to clarify certain doubts regarding the construction of the existing law and which have created the possibility of substantial tax avoidance.

The first doubt relates to whether, on the cessation of manufacturing or assembly operations of Fourth Schedule goods, stocks of finished goods, can be subjected to the higher, that is, the 36.75 per cent, applicable only to sale at the manufacturing level.

The second doubt relates to the provisions concerning the supply of materials. The existing section 11, subsection (4), was intended to ensure, in a case where materials are supplied for the manufacture of goods where the tax rate for the finished goods exceeds the rate chargeable for the materials, that the Exchequer will receive in total the amount appropriate to the finished goods. The doubt referred to is whether the provision can be applied in cases where the materials were acquired in circumstances not giving rise to tax.

Mr. Colley: Can the Minister give any indication of the estimated loss of revenue in this regard?

[884] Mr. R. Ryan: The estimated loss is £300,000.

Mr. Colley: Since, again, there appears to be a loophole here which needs to be closed, we support the section.

Question put and agreed to.


Question proposed: “That section 50 stand part of the Bill.”

Mr. R. Ryan: This section amends section 13 of the Value-Added Tax Act, 1972, by inserting a new subsection, (2A). The effect of the new subsection is to suspend in respect of live cattle, the tax recoupment of 1 per cent which registered purchasers, for example, meat factories, butchers and exporters, may claim from the Revenue Commissioners in respect of purchases from unregistered farmers. The purpose of the suspension, as I explained in the budget statement, is to provide a sum of £2.2 million required by the Exchequer to finance additional cattle feed vouchers.

The suspension will have effect retrospectively as from 1st March, 1975, which is the date of the commencement of a taxable period, and will cease on 30th June, 1976, at the latest.

Mr. Colley: How, administratively, is it possible to apply this retrospectively to 1st March? Will people not have claimed already and got the benefit?

Mr. R. Ryan: The people concerned were aware of this measure from the date of the budget and, also, they were notified directly. They have been operating the measure administratively since then.

Mr. Colley: Is the effect of this provision that for the period of the operation of the section a farmer would not be entitled to any credit for the VAT to which he was subjected and, if so, does this mean that the same would apply to livestock auctioneers and to marts?

[885] Mr. R. Ryan: If there is any effect it falls on the purchasers—on the meat factories—but not on the farmers unless the cost was reflected in a drop in cattle prices but this has not occurred.

Mr. Colley: That may be so in practice but I wonder if it is so in theory. Is it not the position that the farmer is entitled, having agreed a price, to be paid an additional 1 per cent? Is it intended to recompense him for the VAT he has suffered in respect of certain farm inputs? If VAT is being taken away is he not losing the benefits of the 1 per cent addition to his price?

Mr. R. Ryan: In respect of cattle there is no specific addition to the price paid. The farmer does not get £x plus 1 per cent. He gets whatever is the going price of the day but the meat factories, exporters and the like, have been entitled to apply to the Revenue Commissioners for a recoupment of the notional 1 per cent. As a result of this they will not be entitled to it. It is presumed that the 1 per cent which they received in the past was passed on to the farmer. The reality is more important than the theory. In effect, there has been no material reduction in price. Incidentally I think it is also fair to say that fortunately, thanks to the good Lord, the fears which existed at the time of the budget regarding the cattle fodder situation have not materialised.

Mr. Colley: What the Minister said is correct in certain areas but is it not true that in other areas, in marts, for instance, an additional 1 per cent is paid to the farmer who is selling and the mart then recovers that from the Revenue Commissioners?

Mr. R. Ryan: My information is that it is not paid in respect of cattle. It may be paid in certain circumstances in respect of milk and beet, and in respect of materials, but not in respect of live cattle.

Mr. Colley: In so far as it is paid, the effect of this will be to take it away from whoever was in receipt of it, be they farmers, or marts, or whatever.

[886] Mr. R. Ryan: If it was paid, yes.

Mr. Colley: Would the Minister explain in a little more detail how the taking away of this will benefit the small farmer which, I understand, is the whole object of the exercise?

Mr. R. Ryan: The Exchequer has issued cattle feed vouchers to small farmers. Most of the beneficiaries are people who are at the commencement of the line of production, people in the west who have not enjoyed the very substantial profits which materialised for the meat factories last year. By getting the feed vouchers direct from the Exchequer the small farmers and breeders of small cattle are receiving material benefit. The cost to the Exchequer has been met by that sector of the industry which has done comparatively well even when others were doing comparatively badly.

Mr. Colley: The Minister will be aware that there have been other schemes which were intended to benefit the producer and they have not, in fact, operated to benefit the producer. Is the Minister satisfied that any benefit accruing from this scheme will reach the producer, and particularly the small farmer?

Mr. R. Ryan: Having spent some time in Galway recently, like many other Deputies, I can confirm from personal experience that the benefit is being received where it is intended.

Mr. Colley: That makes a pleasant change.

Question put and agreed to.


Question proposed: “That section 51 stand part of the Bill.”

Mr. R. Ryan: This amendment is a consequence of the changes in the rates which took place on the occasion of the abolition of the tax on food as from 3rd September, 1973. The obsolete reference to 5.26 per cent contained in the Third Schedule to the Value-Added Tax Act, 1972, is [887] amended to conform with the current position.

Mr. T.J. Fitzpatrick (Dublin Central): Why does the Minister have to have this section when he has taken VAT completely off food? What is the significance?

Mr. R. Ryan: Because the keen eye of the experts did not fall upon the figure earlier. It has since been seen that it is now irrelevant and therefore it is being deleted.

Mr. Colley: Has VAT been charged at a wrong rate over the past year on any item?

Mr. R. Ryan: No. It is not now charged on food at all. That rate is no longer applicable.

Mr. T.J. Fitzpatrick (Dublin Central): Will the Minister agree that, although he reduced VAT on food it had no significance with regard to reducing the cost of living?

Mr. R. Ryan: Of course it had.

Mr. T.J. Fitzpatrick (Dublin Central)): It was a wasted exercise.

Mr. R. Ryan: The increase in the cost of food would be another 5.26 per cent if we had not made the change we made.

Question put and agreed to.


Mr. L. Belton: I move amendment No. 36:

In Part V, to insert the following section before section 52:

“Paragraph (i) of the Fourth Schedule to the Value-Added Tax Act, 1972, is hereby amended by the deletion of `motor cycles, motor scooters, mopeds and auto cycles'.”

The purpose of this amendment is to have motor cycles, motor scooters, mopeds and auto cycles removed from the higher rate of VAT. At the moment the rate is 30.26 per cent. We are all aware of the effect the use of petrol has had on the economy over the years. We know only too well [888] what happened last year when petrol supplies were cut drastically and, when we succeeded in getting petrol, it was at a greatly increased price. The Minister for Transport and Power is reminding us constantly to use energy carefully and that we cannot afford waste. We have all seen the television advertisements where the £ note is burned and people are advised how they should save energy.

The use of light vehicles such as auto cycles, motor cycles and mopeds would provide a great saving for workers going to work. In many cases, they have to take two buses and sometimes three buses. I know many workers from the Killester area, which Deputy Colley is very conversant with, who have to work in Finglas. They have to get a bus into town and a bus out of town. Even if they only go in the morning and come home in the evening, at a conservative estimate it costs them about £2.50 a week. If they could go directly from Killester or Raheny to Coolock they could do that for about 50p a week. As well as that, in many cases they could go home for lunch which they cannot do now. This would present a great saving to the ordinary workers. I urge the Minister to think carefully about this because it seems rather ludicrous that there is VAT at the rate of 30.26 per cent on these small vehicles and the rate on fur coats is only 5.26 per cent.

Mr. R. Ryan: I can understand why Deputy Belton moves this amendment and I am not unsympathetic to the argument which he advances in favour of people using motor cycles rather than motor cars. Nor am I unappreciative of the low cost of operating motor cycles having enjoyed operating a moped for many years myself.

There are a number of difficulties in relation to acceptance of the amendment. There are also a number of misunderstandings in relation to the operation of the existing system compared with what is suggested, which I should like to explain. Earlier I drew attention to the fact that the VAT rate of 36.75 per cent contains two separate elements. One is a rate of [889] 30 per cent which operates at the assembly or import level and from the point of view of price that is much lower than the retail level. There is also a rate of 6.75 per cent which operates at the retail level.

To reduce the rate from 36.75 per cent to 19.5 per cent at retail level would not give any significant reduction in the price to the purchaser and accordingly would be unlikely to confer any significant benefit on the motor cycle industry. The 19.5 per cent rate would be charged on the retail price which would include the distributor's margin, whereas the other rate of 30 per cent operates only at the assembly or import level and contains only 6.75 per cent of the retail profit margin. The actual added value in the motor cycle assembly business is very small compared with the import value of the components. I am sure the House will appreciate that the employment content is correspondingly quite small. Apart altogether from the tax element, there has been a fairly steady decline in the demand for new motor cycles reflecting, no doubt, the anxiety possibly which some people have in respect of motor cycling and also reflecting an increased preference for motor cars.

In 1971, the number of new motor cycle registrations was 9,264; in 1972 the figure was 7,685 and, in 1973, which was substantially unaffected by the oil crisis, the figure was 6,607. The number of new motor cycles has been decreasing for reasons which are not, I think, connected with taxation. There are, of course, other taxes on motor cycles besides value-added tax. There are customs duties. These are protective duties designed to protect employment in the motor cycle assembly industry. These will be phased out in the case of imports from EEC countries and they will have to be aligned with the full non-external tariff in the case of imports from outside the EEC. Apart from these tax items there is undoubtedly still a very significant benefit for any person who decides to travel by motor cycle. If he does his sums he will see that a light motor cycle gives him a substantial [890] cash advantage at the end of every week compared with either a motor car or public transport. While on paper an argument can be made in favour of this amendment—an argument can be made very effectively really by a competent Deputy like Deputy Luke Belton—it will, I think, be seen from the explanations I have given that the situation is not quite as serious as it may appear to be and the decline which has occurred appears to be attributable to causes other than value-added tax.

Mr. L. Belton: The Minister gave the figures for the decline in the number of motor cycles from 1971 to 1973 and he said that this decline was probably due to the fact that more people were using motor cars. Would he not agree there has been a decline in the sale of motor cars due to the increased cost of petrol and would he not also agree that this should in turn lead to an increase in motor cycles, mopeds and autocycles?

Mr. R. Ryan: Quite possibly. I have not seen the figures for 1975. There was not as big a drop between 1973-1974 as occurred in the previous three years. Perhaps this was a reflection of people's concern with the price of petrol. I think the probable reason for the reduction in the demand for motor cars—this has occurred in other countries as well as here—is attributable not so much to the cost of petrol as to the widespread recession which has reduced incomes because of unemployment, lack of overtime, short time, a general anxiety and also, of course, the increase in the cost of motor cars themselves, an increase which has been quite substantial apart from the cost of the energy consuming content.

Amendment, by leave, withdrawn.

Mr. Colley: I move amendment No. 37:

In Part V to insert the following section before section 52:

“52.—Notwithstanding anything to the contrary contained in the Value-Added Tax Act, 1972, value-added tax shall not be payable in respect of the supply of electricity or gas consumed on or after the [891] 16th January, 1975 to individuals aged 70 years or upwards living alone.”

The amendment is self-explanatory really. The date, 16th January, is, of course, the day following the introduction of the budget. That is why it was picked. I have tabled this amendment in an effort to give some relief to the people mentioned. It would not be a major relief in terms of cost but it would be a major relief to the people concerned. Listening to people, particularly Ministers, I have a feeling that very few people realise what an enormous problem has been created for old people, particularly those living alone on very small incomes, who were subject to the effects of the increases in the price of electricity and gas over the past two years. The increase has been enormous and quite out of proportion to the increase in the cost of living. These people have to pay value-added tax which is going up all the time as the price increases. This is adding a burden on them which may prove for some the last straw.

The Minister will tell me there would be considerable administrative difficulties in implementing this amendment. The difficulties are by no means insuperable in my opinion. I do not claim that the wording of the amendment is precisely what it should be to achieve exactly what we want and to ensure we do not open loopholes, but would the Minister accept the principle of it? The problem is there and it is a major one for old people living alone. It could mean the difference between life and death for them and I urge the Minister to accept at least the principle involved.

Mr. R. Ryan: The exemption suggested by Deputy Colley would not be of significant benefit to those concerned having regard to the free electricity allowance to which they are already entitled. Old age pensioners and social welfare recipients aged 67 years or over —the Deputy suggests 70 years in his amendment—living alone or with dependants receive free of charge up to 300 units per two month period. They do not pay any meter rent. The cost is borne entirely by the State, as the [892] Deputy is aware. The State also covers value-added tax and the fuel variation charge appropriate to the allowances. The value of the allowance for a two-month period is estimated at between £4.50 and £5, or something in the region of £30 a year. We are informed by the ESB that there are very few, if any, pensioners who exceed the free allowance. The benefit suggested by the Deputy is, therefore, not required since it is already in existence. The only case where it could be of benefit would be in respect of consumers of gas but, because of the free electricity, a number of pensioners have switched from gas to electricity. The effect of granting the aid, even to those using it, is estimated to be something less than 1 per cent. The statistic I have been given is that it is of the order of .07 per cent. Now, having regard to the fact that there are various gas companies and that they are not as well geared in handling accounts as is the Electricity Supply Board, there would be some very real problems for them in the administration of an allowance such as this if it were to be granted.

I am sure the Deputy will accept that the lion's share of expenditure by such people is already covered by the State scheme and that, accordingly, his amendment, while, no doubt, well-intentioned, would not confer any significant benefit.

Mr. Colley: I must confess I am rather astonished to hear the Minister saying that few, if any, pensioners exceed the free allowance. The reason this surprises me is that, first of all, I have personal knowledge from my constituency of pensioners who certainly exceed the allowance. Secondly, when I was Minister for Finance I was responsible for, as far as I can recollect, doubling the existing allowance of units and even then was aware of the fact that this did not go nearly far enough, particularly in the winter in providing any real relief in regard to heating.

I recall I had consultations in this regard, particularly with the Society of St. Vincent de Paul, who gave me some very clear examples of cases of considerable hardship which were arising. I have a distinct recollection at [893] that time of being quite dissatisfied with what I was able to do, although I was doubling the existing allowance, because I was aware there were quite a number of pensioners who would still have difficulties. That was at a time before the enormous increases in both gas and electricity, arising directly or indirectly out of the oil crisis, were imposed. The position now, in respect of anything they have to pay over and above the free allowance, must be much more difficult than it was then.

I realise there are some administrative difficulties but I do not think they are by any means insuperable. I appreciate the fact that there are a number of gas companies around the country but I believe, provided the people concerned are identified— they would have to be by applying— the matter could be relatively easily dealt with by allowing the gas company concerned to claim in respect of its own liability for VAT what was foregone in respect of each of the identified people. I do not think the Minister was saying that the administrative difficulties were such that it would not be possible to do this. The substance of what he was saying was that it would benefit few if any pensioners. If that is true, of course, it is a very valid argument for the Minister to make but I repeat I am astonished if that is the position because it was not the position a few years ago and the allowance of electricity units has not been increased since then.

Mr. R. Ryan: The weather has been mild for the last two winters and this may have something to do with it. I am also informed that when excesses occur they are quite marginal. They are in the region of 25p or thereabouts so that the amount of VAT involved in the excess is insignificant.

Mr. Colley: I do not wish to be harrowing about this. Does the Minister not recall, within the last 18 months, an old man was burned alive in a corporation chalet and there was good reason to believe that his death was brought about because he was [894] unable to pay his ESB bill, although he was in receipt of free electricity? I do not know if the Minister recalls the case but I do and it is by no means an isolated one. I strongly urge the Minister to look again at the information he has been given to see if it is not something that maybe has been averaged out. I am sure he is familiar with the old story of the man who wandered across the river and asked how deep it was. He was told it was an average of 3 feet deep and he was 5 feet tall but he got drowned because at one point it was 6 feet. I suspect something like this may be happening in the information given to the Minister about the usefulness of the free electricity allowance. I believe, from what he said, that if he were satisfied there were cases where this could be of some assistance he would be disposed to try to do something about it. I accept that is so and, therefore, I ask him to recheck the information he has been given to see if there are not cases where it could be of some value in very difficult circumstances.

Mr. R. Ryan: I think the Deputy will accept, to use his analogy of the river, his amendment would only just vary the average depth of the river by an inch or so but it would not overcome the problem of the greater depth which might exist in part of the stretch. One would want to look at the situation to see if the amount of units should be increased in certain circumstances where particular difficulties arise such as, for instance, in one of the prefabs where possibly the insulation is not as good as it is elewhere. I will certainly be well-disposed to consider the matter and I will examine it further.

Amendment, by leave, withdrawn.

Question proposed: “That section 52 stand part of the Bill.”

Mr. R. Ryan: This deals with the capital services redemption account. A system operated through the capital services redemption account is designed to amortise the expenditure on voted capital services, which is charged to the capital budget, by means of annuities [895] charged on the Central Fund and against the current budget over a 30 year period. Each year a new 30-year annuity is set up, based on estimated expenditure on voted capital expenditure in that year. In the following year, when actual expenditure is known, the annuity is adjusted for the remaining 29 years. Portion of each annuity is earmarked as the interest element and a sum not exceeding the total of these interest elements may be paid from the account towards meeting interest on Exchequer borrowings. The balance of the annuities is used towards helping to finance the capital budget.

Question put and agreed to.


Question proposed: “That section 53 stand part of the Bill.”

Mr. R. Ryan: This section is consequential on the amendment to the Dáil Standing Orders of last year.

Question put and agreed to.


Question proposed: “That section 54 stand part of the Bill.”

Mr. R. Ryan: This is the customary provision for care and management of the Revenue Commissioners.

Question put and agreed to.

Section 55 agreed to.


Mr. R. Ryan: I move amendment No. 38:

In page 30, after Part I, to insert the following part:


Amendments consequential on definition of capital allowance.

“1. Sections 69 (1), 218 and 317 (1) of the Income Tax Act, 1967, section 20 (5) (a) of the Finance Act, 1970, section 39 (7) of the Finance Act, 1973, and section 27 (1) of the Finance Act, 1974, are [896] hereby amended by the deletion of the definition of `capital allowance' or `capital allowances', as the case may be.

2. Section 236 (3) of the Income Tax Act, 1967, is hereby amended by the substitution of `a capital allowance within the meaning of section 33 of the Finance Act, 1975', for all the words from `any allowance' to `XVI'.

3. Section 314 of the Income Tax Act, 1967, is hereby amended by the deletion of subsection (2).

4. Section 22 of the Finance Act, 1971, is hereby amended by the deletion of subsection (5).

5. Section 39 (1) (b) of the Finance Act, 1973, is hereby amended by the insertion after `1967' of `or section 24 (3) of the Finance Act, 1971, section 6 (1) or 7 (4) of the Finance (Taxation of Profits of Certain Mines) Act, 1974, or section 22 (6) of the Finance Act, 1974'.”

Amendment agreed to.

First Schedule, as amended, agreed to.


Question proposed: “That the Second Schedule be the Second Schedule to the Bill.”

Mr. R. Ryan: This Schedule is supplementary to sections 19 and 22 of the Bill which apply new rules in relation to the charging of tax on premiums and rents under leases.

Mr. Colley: Would the Minister explain the end of paragraph 2 which states:

... shall be deemed to have had effect as from the passing of the Finance Act, 1963, and as respects leases granted at any time.

That portion of paragraph 2 and paragraph 3 (b) appear, on the face of them, to be introducing retrospection. Would the Minister reassure us that they are not?

[897] Mr. R. Ryan: There is, in fact, no retrospection. What we are providing against is the carrying forward of any losses from that period. There is no retrospective tax charge.

Mr. Colley: Are these losses which would otherwise be capable of being carried forward if we had not enacted sections 19 to 22?

Mr. R. Ryan: Yes, possibly. The Deputy will recall that we had no information of the operation of any scheme against which we are now taking these protective measures. We have no evidence that any such scheme has been operated but we are providing that if such has been operating it will not be open to any operators to carry forward any loss which would be an artificial one.

Mr. Colley: In the light of what the Minister has said, that no such cases are known, the Minister cannot be accused of deliberately operating retrospective clauses but could the Minister indicate, in relation to Part II and Part III, what is involved?

Mr. R. Ryan: The addition to column 2 of Schedule 15 of the Income Tax Act, 1967 of sections 19 to 21 in Part II of the Schedule invokes the penalty provisions of the Act for the purposes of those two sections.

Mr. Colley: Did the Minister say sections 19 to 21?

Mr. R. Ryan: Sections 19 to 21 of this Bill.

Mr. Colley: It says sections 19 to 22 in the third column.

Mr. R. Ryan: Section 22 in this Bill is the section which gives effect to the Schedule. Subsection (1) of that section states that Part I of the Second Schedule shall have effect for the purpose of supplementing sections 19 to 21 and this section. It is the provisions of sections 19 to 21 which we have to add to Schedule 15 of the Income Tax Act, 1967.

In relation to Part III, paragraph III of the proviso to section 81 (3) of the Income Tax Act, 1967, is to ensure that a premium chargeable under [898] section 83 will be charged for one year only. The paragraph as it stands refers to premiums in respect of which the recipient has opted to be charged on instalments thereof as they arise. As the option to be charged on instalments is being withdrawn, by the effective repeal of section 83 (6) by section 20 (a) of this Bill, the words in quotes in the first subparagraph of column 3 of Part III of the Second Schedule are no longer relevant and are now being repealed. For the same reason the second and third subparagraphs of column 3 of Part III of the Schedule repeal references to section 83 (6), sections 91 (1) (b) and 92 (2) of the Income Tax Act, 1967.

Mr. Colley: I take it that the with-drawal of the right of election relates only to future cases? If somebody has opted to have the case dealt with by instalment and the instalment is in the middle of the instalment scale this Schedule will not prevent the operation of the rest of that scale on an instalment basis? Does it only apply to people who are about to elect?

Mr. R. Ryan: Again, we do not know of any of these cases yet being in existence so the eventuality which the Deputy is thinking of is unlikely to have occurred. It would apply to all cases.

Mr. Colley: Does this not extend further than the cases envisaged in sections 19 to 21? Has it not a wider significance than that?

Mr. R. Ryan: To the extent that there may be other cases where there was special treatment of a premium these provisions would apply.

Mr. Colley: I take it it would not apply in such a way as to take away the benefit of an election already made by a taxpayer.

Mr. R. Ryan: Paragraph 6 has a provision whereby if the Revenue Commissioners are satisfied that there would be undue hardship the tax may be paid by such instalments as the Commissioners may allow and that option would apply in all cases where hardship to the satisfaction of the Revenue Commissioners might occur.

[899] Mr. Colley: The Minister will appreciate that the House dealt with this matter, particularly with relation to sections 19 to 22 on the basis of the kind of case he outlined which all sides agreed should be dealt with but if other kinds of cases not envisaged in those sections are affected by this, would the Minister agree that there should not incidentally be an interference with the rights of those persons? Would the Minister agree and place on the record of the House, that in such cases the Revenue Commissioners will allow the right of election even if there was not a question of suffering undue hardship if it were denied? I do not think we should incidentally take away rights because we are trying to close one loophole.

Mr. R. Ryan: If the action taken had not the intention of avoiding tax, then I am sure the Revenue Commissioners would consider using the powers conferred on them by paragraph 6 but if the plan was deliberately created for the purpose of engaging in avoidance it would be difficult to justify in those circumstances giving the relief.

Mr. Colley: I agree.

Mr. R. Ryan: Otherwise, there could be an accidental case of somebody who had entered into such an arrangement. Well and good, the Revenue Commissioners would look at that not unsympathetically. The hardship has not got to be the loaf of bread line in order to qualify.

Mr. Colley: I would like it to be clear that the House agrees to the sections on a particular basis and that it would not be the intention, I am sure, on either side of the House that incidentally people should be penalised and the Revenue Commissioners would bear that in mind in any such case that would come to light.

Mr. R. Ryan: If any such case of difficulty is brought to light we would consider taking appropriate action in some future Bill and making it retrospective if the circumstances of the case justified it.

Question put and agreed to.


An Ceann Comhairle: Amendments 39 and 40 are related.

Mr. R. Ryan: I move amendment No. 39.

In page 34, paragraph 3 (1), to delete clause (d) and to substitute the following clause:

“(d) the business of the transferee company consists wholly or mainly of the sale of goods manufactured by the transferor company; and”.

This amendment to the Third Schedule is to make two technical changes in paragraph 3 (1) (d). The word “business” is substituted for “trade” and the words “wholly or mainly” are substituted for “wholly”.

Mr. Colley: I am sorry to interrupt the Minister. I see the second part of the amendment but the first part has disappeared from my ken. I was going to ask what happened to it.

Mr. R. Ryan: What is the Deputy's difficulty?

Mr. Colley: I think the Minister said the first object of the amendment was to substitute “business” for “trade”.

Mr. R. Ryan: That is right.

Mr. Colley: There was an amendment to that effect circulated but I do not think it is on our sheet.

Mr. R. Ryan: It is all incorporated in the new amendment. Both changes are incorporated in the substituted clause.

Mr. Colley: The Minister did circulate an amendment which was specifically to substitute the word “business” for the word “trade” but he withdrew that and substituted this one.

Mr. R. Ryan: The Deputy's memory is correct.

Mr. Colley: I would like to know what happened.

Mr. R. Ryan: The amendment was circulated separately. It is now being [901] withdrawn and incorporated in this one. We are ad idem now?

Mr. Colley: Yes.

Mr. R. Ryan: We are now proceeding on the basis of substituting this omnibus clause. The trade carried on by the transferee company referred to in paragraph 3 (1) (b) is not a trade as defined in section 31 (1). Therefore, it is necessary to substitute another word for “trade” in paragraph 3 (1) (b) and the word “business” is being inserted.

Representations have been received to the effect that the condition that the business of a transferee company must consist wholly of the sale of goods manufactured by the transferor company is too restrictive. Accordingly, to provide for the case where the selling company's trade is not confined to selling goods produced by an associated manufacturing company the words “wholly or mainly” are being inserted in paragraph 3 (1) (b) in lieu of the word “wholly”.

Mr. Colley: The representations to which the Minister refers were also referred to me. I think they are reasonable and I think the Minister's amendment meets the case made in regard to those specific points. There are, however, other matters which on the face of it the Minister does not appear to have dealt with but we can raise that later on the Schedule when we have dealt with the amendments.

Amendment agreed to.

Mr. R. Ryan: I move amendment No. 40:

In page 34, paragraph 3, to delete subparagraph (5) and to substitute the following subparagraph:

“(5) The provisions of this paragraph shall apply only where one of the two companies referred to in subparagraph (1) (a) holds throughout the relevant accounting period or reference period either in its own name or in that of a nominee all of the ordinary shares in the other company referred to in the said subparagraph or where some other company holds throughout the relevant accounting period or reference period either in its [902] own name or in that of a nominee all of the ordinary shares in each of the two companies referred to in the said subparagraph.”.

The primary purpose of this amendment is to relax the conditions under which a selling company associated with a manufacturing company may qualify for a measure of relief on a group basis where it would not otherwise qualify in its own right. Under paragraph 3 (5) of the Third Schedule it is a condition precedent to the granting of relief that the manufacturing company should hold either in its own name or in that of a nominee all of the ordinary shares in the selling company. The amendment has the effect of widening the scope of paragraph 3 (5) to include the converse case where the selling company holds all of the ordinary shares in the manufacturing company and the case where all of the ordinary shares in both the manufacturing and the selling companies are held by a third company. The amendment also secures that relationship between the parent company and subsidiary company or the relationship between the common parent and its subsidiaries, as the case may require, must subsist throughout the relevant accounting period or reference period. Again, the amendment is made in response to representations from apparently the same source as Deputy Colley and I received them.

Mr. Colley: On the face of it it seems to me that the amendment does meet the case made in this regard where it is suggested that three conditions alternatively might be met to get the benefits intended to be conferred. Is the Minister satisfied that the amendment does cover the three suggested conditions put to him?

Mr. R. Ryan: Yes. If it did not, I would have heard about it before now.

Amendment agreed to.

Mr. R. Ryan: I move amendment No. 41:

In page 34, after paragraph 3 (5), to insert the following subparagraph:

[903] “(6) For the purposes of computing the aggregate amount of the deductions to which the transferor company and the transferee company treated as one by virtue of subparagraph (2) are entitled under section 31 pursuant to this paragraph and the apportionment of that amount between them, the transferee company shall be regarded as carrying on a trade.”.

As I have already indicated when I was talking on section 31, a transferee company cannot be carrying on a trade as defined if it is to qualify for relief pursuant to paragraph 3 of the Third Schedule. It is, however, necessary, for technical reasons to secure that for the purposes of computing the deductions to which the transferee company is entitled under section 31 by virtue of paragraph 3 it will be regarded as carrying on the trade as defined. It is with this end in view that the proposed new subparagraph (6) is being added to paragraph 3 by means of this amendment.

Amendment agreed to.

Question proposed: “That the Third Schedule, as amended, be the Third Schedule to the Bill.”

Mr. Colley: The Minister has referred to some representations he received. I think he will find that one of the points put to him in those representations was a suggested interpretation of paragraph 3 (1) (a) and that interpretation was that the paragraph as drafted makes it a condition for the relief that all goods manufactured by the manufacturing company should be sold to the selling company. I think that is based on the use of the words “those” at the end of paragraph (a) “acquires those goods as trading stock”. Does the Minister agree with that interpretation?

Mr. R. Ryan: No. We received representations on the lines of what the Deputy has just argued but I am advised that the paragraph, as drafted, does not and could not bear the construction which has just been suggested. May I say, with some modesty, [904] that is my own view of the matter as well?

Mr. Colley: Might I ask the Minister, if he suggests that it should not be interpreted that way, what way should it be interpreted? What does “those goods” mean?

Mr. R. Ryan: It is a question of whether or not it is all the goods, or some of the goods. I do not think it involves all the goods.

Mr. Colley: Let us briefly look at what the paragraph says:

3. (1) The provisions of this paragraph shall have effect for the purposes of section 31 and the preceding provisions of this Schedule in any case where—

(a) there are two companies one of which is enaged in a trade consisting wholly or mainly of the manufacture of goods (in this paragraph referred to as the transferor company) and the other of which (in this paragraph referred to as the transferee company) acquires those goods as trading stock;

Since the Minister does not interpret that as meaning “acquires all those goods”, he must interpret it as meaning part. What part, the main part of it, any part of it? The Minister will appreciate that if the interpretation which is suggested could be placed on this is correct, then certain other consequences follow, whereas if the interpretation which he says has been advised should be placed on it is correct, then those consequences do not follow. It is of some importance to understand what is precisely the kind of advice proffered to the Minister on this point.

Mr. R. Ryan: If it were to mean only “all the goods”, then it would seem to me there would be a necessity to determine what would be the period during which one would measure the goods which had actually been manufactured in that period and acquired by the other body during that period. Of course, we know that goods are manufactured in an on-going process. Again, acquisition by another [905] company is an on-going process. But one cannot say at any particular moment that the purchaser has acquired all the goods manufactured by a particular entity. One could not say that unless the purchaser was to be at the end of the assembly line, at the end of the manufacturing process and receiving them as they were manufactured. There will always be a residue of goods in a manufactured unit which has not been transferred elsewhere. I should not say always but that is the normal practice. To try to interpret this section in such a way as to suggest that all the goods must be taken at any given time is to stretch this in a way which is contrary to ordinary business practice.

Mr. Colley: May we take it, then, that the Revenue Commissioners will not now, or at any time in the future, argue that that paragraph means “all the goods”?

Mr. R. Ryan: I think the Deputy may so take it. Of course, I cannot govern what the Revenue Commissioners may or may not do.

Mr. Colley: The Minister can place on the record of the House what is the intention and that would be of some value.

Mr. R. Ryan: Well, that is the intention.

Mr. Colley: With regard to paragraph 3 (2), page 34, it has been suggested—I think the Minister will have received this suggestion—that that paragraph be amended to enable the manufacturing and selling companies to make a joint election to apportion the relief by reference to their trading profits rather than their stockholding. Reasons have been advanced in favour of this. Would the Minister like to comment on that suggestion?

Mr. R. Ryan: It should deal with trading profits?

Mr. Colley: They should have the right to make a joint election to apportion the relief by reference to their trading profits rather than their stockholding. If the Minister wishes, [906] I will outline briefly the arguments put forward in favour of that.

Mr. R. Ryan: I should be grateful if the Deputy would do so.

Mr. Colley: It is suggested that conditions operating in groups—and this is what we are dealing with here, groups of companies—which use selling companies vary considerably from group to group. The extent of stockholding by group selling companies varies considerably; so does the mark-up allowed to such companies. The people who made these representations claim that they are aware of cases where the stocks held in the selling company are low relative to its profits, whereas the converse is the case in the associated manufacturing company. Therefore, in some cases, the method of apportionment prescribed in this Schedule would not give the same measure of stock relief as if the manufacturing group did not use a selling company.

Consequently, it is suggested that paragraph 3 (2) be amended to enable the manufacturing and selling companies to make a joint election to apportion the relief by reference to trading profits rather than their stockholding.

Mr. R. Ryan: As the Deputy is aware, I have received representations on this matter also, no doubt from the same body as has been in touch with him.

As regards the proposal that relief should be apportioned by reference to profits as well as stocks, I feel this could have the effect of circumventing the provisions of section 31 which prevent the creation of a loss in the case of an individual company. On that account, it would not be appropriate to accede to the proposal.

Mr. Colley: The Minister thinks it would create a loophole for the artificial creation of a loss?

Mr. R. Ryan: Yes.

Mr. Colley: Is there no way of closing that and still giving relief in the genuine case?

[907] Mr. R. Ryan: I have great admiration for the ingenuity of people who generate artificial losses. I cannot see that one could provide against it.

Mr. Colley: At this stage I am not in a position to produce the magic formula for the Minister. Perhaps it may be produced before he has finally dealt with the Bill.

Question put and agreed to.


Mr. O'Malley: I move amendment No. 42:

In Part II, page 39, paragraph (3) (h), to delete the Table and substitute the following:

If the term does not exceed 35 years or is indefinite

If the term exceeds 35 years, but does not exceed 100 years

If the term exceeds 100 years

Exceeding £100, for every full sum of £50, and also for any fractional part of £50 hereof





This amendment is on the lines of one I put down in 1973 and again last year. It was dealt with in 1973. It was never reached last year at the time when the Finance Bill was guillotined through. The amendment is put down in the light of the exemption of stamp duty on a fine up to £1,000. I found it very difficult to see what is the justification for charging stamp duty on small amounts of rent, whether they are in a long lease or in a tenancy agreement. When I moved a similar amendment in 1973, the Minister did not disagree with the principle I put forward but told me he could not do everything in one year and it was hoped this would be done in the succeeding year. It was not done last year and, so far, it has not been done this year.

There is the incongruous situation that on the part of the consideration that represents the fine there is no [908] stamp duty up to £1,000 but even a tiny rent, whether by ground rent or in a tenancy agreement, is subject to duty. Of course, the duty is not very high at the lower figures. Where the term does not exceed 35 years or is indefinite, the duty on a rent of £100 per year is £1 so there would be no question of a substantial loss to the revenue. In fact, there would be very little loss but it would make the matter more sensible in the light of the abolition in the last two years of duty on small capital considerations.

In 1973 the Minister accepted the principle of what I am saying and this is the first opportunity we have had to bring it back again. If it was valid then it is even more valid now with inflation running at a rate of 20 per cent per annum since then. If the Minister is consistent with what was done in relation to capital payments or fines, I hope he will accept this amendment.

Mr. R. Ryan: The Deputy knows I am not unsympathetic to the proposal he has made. There has not been an adequate system of collecting information about rented property. It is possible the much-discussed new capital taxes may provide a better system of recording information about property. A great deal of property is now held by people who convert single dwellings into multiple dwellings and collect rents from them. I would anticipate in the not-too-distant future that some amendment would be made of the kind suggested by Deputy O'Malley but I think we have achieved quite an amount in this year's Finance Bill without adding to the number of new problems to be dealt with. Even an easement can create problems somewhere along the line.

There is another element which is not unimportant. Deputy O'Malley might make little of it but, on reflection, perhaps he would not. Many letting agreements are prepared in a situation that gives the tenant very little protection because often he is the weaker party. The very obligation to stamp a letting agreement in its [909] own way has provided some protection for the tenant and not infrequently a landlord has found himself in a position of embarrassment where he failed to stamp an agreement. Frequently because of failure to have a letting agreement stamped when it was entered into, the landlord has not dared to produce the agreement later on and this has operated to the advantage of the tenant. It has been a protection for him——

Mr. Colley: That is nonsense.

Mr. R. Ryan: I am not suggesting the system is perfect but if there was not the surveillance that arises where letting agreements are entered into and stamped, it is probable that the operations in the rental market might lean somewhat against the tenant. There are enough disadvantages already operating against tenants without putting in an easement that would jeopardise their interests.

The amount of the stamp duty is very small and the revenue will be quite small. Certainly it is not an imposition on the parties to a letting agreement to have it stamped. It is only a tiny fraction of the total outgoings involved in the preparation and execution of a lease and of the payments and benefits that arise afterwards. It cannot be said it is an imposition on the parties. At most it is an inconvenience but until we have more knowledge about the operation of the whole system of landlord and tenant operations with regard to flat dwellings I consider it desirable to retain this system.

Mr. O'Malley: What we have heard from the Minister has been most interesting. It was worth putting down the amendment just to hear some of the admissions we got from the Minister but there has not been a reply to the argument I put forward now, any more than there was in 1973. However, we now know the Revenue Commissioners are making a surreptitious copy of tenancy agreements sent to them for stamping and that they are using this for income tax purposes. We have the word of the Minister for Finance in the Dáil to [910] that effect. The only argument the Minister made against my proposal was not an argument of principle but simply that it suited the Revenue Commissioners to keep in touch with the letting of land and property, particularly in relation to people who are turning houses into multiple dwellings.

The Particulars Delivered Stamp under the 1909-10 Finance Act does not apply to tenancy agreements and, in the normal way, the Revenue would not get a copy or an abstract of a deed or a lease. It is interesting to know the Revenue Commissioners are using this very small stamp duty as a way of checking up on people as to whether they have let property and, if so, at what rate. The fact that the small amount of duty may be lost would not matter but the substantial amount they might get in income tax from the parties to the letting would matter. I do not think the surreptitious activities of the Revenue Commissioners in making use of the information they get as a result of the stamping of documents should be an excuse to retain a duty that is otherwise not acceptable in principle when sales for £1,000 or less are free of duty.

The remark of the Minister that this was a protection for the tenant by forcing the landlord to stamp the agreement is of doubtful validity because the tenant is liable for stamp duty under any normal agreement. Prior to 1967 he was liable for the costs also. If for some reason the agreement is not signed at the time it is executed, there is nothing to stop the landlord stamping it five or ten years later under a penalty. I understand the interest does not exceed the amount of the original duty. Therefore, a duty of £2 will only cost £4 even if several years have elapsed. There is no embarrassment caused to landlords although it may well be caused to tenants because they may not feel like paying the duty but they are liable for it, not the landlord.

I am a little disturbed to hear from the Minister that those agreements are used for the purpose for which he mentioned. One would have hoped [911] that the Revenue Commissioners would not be bothered checking up on people to the extent that they read agreements for small lettings and presumably take copies of them. That appears to be the situation.

The Minister's third reason for not accepting the amendment was that there were enough good things in the Finance Bill for this year and that he did not want to create another problem. That is almost exactly what he said two years ago, that this amendment would be a grand thing but that they would do it some other year. In other words, there is no reason why it should not be done except for the fact that the Revenue Commissioners are using this as a means of getting information they would not otherwise get and the few shillings or pounds do not matter.

That is the wrong approach on the part of the Minister. If the Revenue Commissioners want information about lettings let him put a section in the Finance Bill. Let him do it openly and say that whether it is liable for stamp duty or not a copy of every letting agreement shall be sent to the Revenue Commissioners. That is the honest way to do it. I do not like this method. Because they have the excuse of collecting the few shillings on the tenancy agreement they retain it even though it is anachronistic and does not fit in with the abolition of duty on capital fines of £1,000 or less. They still retain duties as small as 5p under this arrangement.

The three reasons given by the Minister do not invalidate what I have put forward. He should accept the amendment and, if he wants to, let him put a section into this Bill on Report Stage but take away this silly, troublesome little obligation to stamp agreements which are frequently so small that it must cost the Revenue Commissioners more to collect this duty than they get out of it. Some of the duties payable are as low as 5p and the time alone of the official in calculating the duty and in impressing the stamp must come to 50p even if he only takes a short time to do it. It has to be posted to the Revenue Commissioners [912] and posted back. The stamp to send it back must cost more than the amount of duty in some cases. Those foolish little duties should be forgotten about. I thought most of them were abolished some years ago. There were duties on receipts, cheques, bills of exchange and promissory notes which were so small that they were done away with. At least when one was stamping cheques one could stamp thousands of them together but with this each one must be done individually. Each one has to be examined and a duty calculated. It is just not worthwhile. If it is of use to the Revenue Commissioners for other purposes they should put in a section asking for copies of agreements and not do it in this back-door way.

Mr. R. Ryan: There might be a charge of a breach of confidentiality between solicitor and client if solicitors were under the obligation to furnish copies of their clients' transactions to the Revenue Commissioners by putting the whole document on record.

Mr. O'Malley: Did the Minister not bring in sections under which they have to disclose everything to the Revenue Commissioners?

Mr. R. Ryan: No, I did not.

Mr. O'Malley: What did we spend three hours on last week?

Mr. R. Ryan: I wondered why the Deputy was talking about it for so long. I hope he knows by now it is only names and addresses that are required. Any person who has an income from lettings should disclose the information to the Revenue Commissioners for income tax purposes. Unfortunately they do not. The law does not require the lessee to pay the stamp duty. In practice a landlord may require, as a condition of the tenancy, that the lessee pays but that is a matter for negotiation in each case. There is no obligation under the law imposed upon the lessee to pay the stamp duty. Anyway it is only buttons compared with the fee that would be payable to the professional advisers in the case.

[913] Mr. Colley: Would the Minister throw away his brief for a moment and stand back and look at this from a practical point of view?

Mr. R. Ryan: That is what I have done.

Mr. Colley: No. Do it for once.

Mr. R. Ryan: I expressed the point of view, which is not in the brief, that the amount of stamp duty is negligible compared with the legal costs involved. I am talking in the presence of three solicitors.

Mr. O'Malley: In 1973 the reason why the Minister, quite rightly in my opinion, abolished duty on a capital fine up to £1,000 payable in a transaction was that the amount involved was so small that it was not worth the trouble of collecting it. At that time the duty on £1,000, as far as I can remember, was £5 or a little less. That was regarded as so small that it was not worth collecting. I would like to read out the list of duties that are payable under this. The sum of £5 was too small in 1973 to be collected but now the Minister says that the economy will break down if he does not get 5p, 10p, 15p, 20p, 25p, 50p, and 75p. Then you come to the big time—£1. We suggest it is not worth the time of the Revenue Commissioners to collect those sums. I can say without fear of contradiction that they cost more to collect than they provide. This is a joke.

At least the second time the Minister spoke only about the duty to tell the Revenue Commissioners about one's income from lettings. He did not try the one about there being too many “goodies” in the package. It has now been narrowed down to the fact that it is not to collect those amounts, it is to get information surreptitiously that the Revenue Commissioners want those things retained. How could the Minister say in 1973 that it was not worth collecting £5 and in 1975, the Coalition's inflation having ravaged the country in the meantime, that it is worth collecting 5p? Can the Minister answer that?

Mr. R. Ryan: In the case of an outside transfer of property particulars [914] have to be delivered to the Revenue Commissioners so that there is information about the sale and the purchase. Furthermore, the deal would have to be transferred or registered either in the Registry of Deeds or in the Land Registry. Therefore, information becomes available even if a stamp is not imposed on the deed. However, in regard to a letting, there will be no record of a transaction by way of PD from or by registration. I have told the Deputy I anticipate that in the foreseeable future there may be some movement in this field. For the reasons he advanced and for other reasons, that date will be sooner rather than later.

Mr. O'Malley: We must pause here and reflect for a while because this is ominous. The Revenue Commissioners and their able assistant, the Minister for Finance, have something up their sleeve and we are only beginning to see this raise its ugly head. The Minister tells us that something else is coming which will enable the Revenue Commissioners to get information about transactions.

Mr. R. Ryan: I did not say that. I said to “Mr. Mischief” that something on the lines of his suggested amendment would occur.

Mr. Colley: The Minister said more than that.

Mr. O'Malley: The Minister said this had something to do with the capital taxation provisions.

Mr. R. Ryan: We did fine while the Deputy was out but now that he has returned mischief has spread all over the place.

Mr. Colley: The Minister is backpedalling.

Mr. R. Ryan: I am not.

Mr. O'Malley: There are a lot of people who would regard as mischief the introduction of this kind of capital taxation and all the information that is required and so on but I do not think they would regard as mischievous my probing for information.

[915] Mr. R. Ryan: If the worker's pay is disclosed fully why should there not be full disclosure made from other activities?

Mr. Colley: Why does the Minister not disclose fully what he is talking about?

Mr. R. Ryan: We are dealing with the Deputy's amendment.

Mr. O'Malley: In effect the Minister is telling me that he agrees with my argument and that there will be some new system shortly for ascertaining information but that in the meantime this backdoor method of finding out facts by way of charging 5p or 10p on duty on little agreements will have to stay and that once the new and more elaborate system of ascertaining information comes into existence, my arguments are valid. If the arguments are valid now—and the Minister has accepted them as such—would it not be logical and responsible to sweep away all this nonsense? If he wishes to bring in another system he should do so openly. So far as we are concerned he is free to table an amendment for Report Stage when we could recommit this part of the Bill, if necessary. I am not saying that we would accept any such amendment but we would be free either to accept it or vote against it. Then, the country will know where it stands. It is ridiculous that the Revenue Commissioners, for this surreptitious purpose, are expected to spend £1, £2 or £3 in order to collect 5p, 10p or 15p.

Unless the Minister can answer my question as to why, since it was considered uneconomic to collect £5 in 1973, it is to be economic to collect 5p in 1975, he should accept the amendment and stop this waffling. If he is to bring in some new investigatory procedures that is fair enough but we would like to know what they are so that we might decide whether to accept them. What we have heard from the Minister will only raise suspicions in the minds of any normal persons. I wonder what horrors are in store for us all under the Minister's further proposals, those about which we do not know yet.

[916] Mr. R. Ryan: It is desirable in the interest of tenants that the provision be retained. Documents cannot be produced in court unless and until the law is complied with.

Mr. O'Malley: Is the Minister not aware that the normal time—in practice, I would say the invariable time —that a tenancy agreement is produced in court is on eviction proceedings by a landlord? In 99 cases out of 100 this is the only reason for the production of such a document and this would be the only case in which it would need to be stamped. I do not see a lot of protection for the tenant in that.

Mr. Esmonde: Would it not be better than a scrubby rentbook?

Mr. O'Malley: Am I not to receive any answer from the Minister?

Mr. R. Ryan: The Deputy has received an excellent answer from Deputy Esmonde.

Mr. Colley: I do not think Deputy Esmonde was aware of what the discussion was all about.

Question: “That the words and figures proposed to be deleted stand”, put and agreed to.

Amendment declared lost.

Question proposed: “That the Fourth Schedule, as amended, be the Fourth Schedule to the Bill.”

Mr. O'Malley: On the Schedule, the reason that it is set out here is because in the budget the Minister increased stamp duty on transactions between £20,000 and £50,000 from 3 per cent to 4 per cent and he increased the duty on transactions in excess of £50,000 from 5 per cent to 6 per cent. At the time these provisions got little or no publicity because many people do not know what stamp duty is and are not concerned with it unless they have to pay it. These increases have a definite bearing on the cost in respect of a number of people whose importance in our economic life is considerable. For example, a builder buying land for building houses would rarely be able to buy any worthwhile quantity for [917] less than £20,000 and the extra £10 on £1,000 or £100 on £10,000 in addition to the duty for which he would be liable already, would make some contribution to increasing the cost of houses. Inflation, generally, is putting up house prices anyway so that increasing numbers of properties are coming within the £20,000 and upwards category. Presumably the Minister tries to justify this increase on the ground that only people with large amounts of money can pay £20,000 for any kind of property. I would point out to the Minister that, over the past two years, scarcely any farm would fetch less than £20,000. Quite a modest farm in many parts of the country will make £20,000. Quite a moderately sized farm in most parts of the country will cost more than £50,000. Not everybody realises that, if they buy a medium sized farm for slightly over £50,000, they are paying 6 per cent duty on that since 1st March.

Mr. R. Ryan: On a point of order, the House has already agreed to section 46 which is the charging section of this Bill. I would respectfully suggest that in those circumstances the remarks now being made are irrelevant.

Mr. Colley: If that contention is correct, what are we supposed to discuss on this schedule?

Mr. R. Ryan: The text of the schedule.

Mr. O'Malley: I am talking about the text of the schedule. It is putting up duty.

Mr. R. Ryan: The Deputy is talking about the philosophy behind it which was determined when the decision was taken on section 46.

Mr. O'Malley: The Chair was conducting the business of this House in a perfectly admirable fashion until the Minister sought to dictate to him as to what he should or should not allow.

Mr. R. Ryan: I raised a point of order and the Chair can rule on it.

[918] An Ceann Comhairle: We are on the Fourth Schedule.

Mr. O'Malley: The Fourth Schedule implements the budget resolutions, or decisions, or whatever they are. I am talking about them. In spite of the Minister's wish that I should not talk about them I will continue to talk about them with your indulgence, Sir. As a result of this budget decision or resolution which this schedule now seeks to put into permanent effect, anyone buying a moderately sized farm, by no means a big farm, will pay 6 per cent duty to the State. On a little over £50,000 that is duty of a little over £3,000. Many people do not realise that they are liable for tax until they have to fork it out all of a sudden. In addition they have to pay land registry fees and solicitors' fees. These expenses can often be considerable. Younger people wishing to start off in life by buying a farm will find themselves hit with all kinds of unexpected expenses.

It is wrong that there should be a considerable increase in duty at this time, and not at a very high end of the scale for luxury properties, but for properties purchased for £20,000 and upwards. A small business could make that now. A fairly big house could make that now. Any sort of a farm will make that now. Any sort of building land if it is more than a few acres will make that now. The consequential difficulties which are created are not insignificant. At this time when so much advice is given about trying to keep down costs it seems extraordinary that the Government should deliberately put up the cost of housing and the cost of farming and various associated matters. If this increase were in respect of property worth over £100,000 it might be understandable but at a time of rampant inflation, to increase the duties on properties worth £20,000 and over seems to me to be foolish and unjustified.

The exemption was brought in in 1973 for sales up to £1,000. Since then the value of money has gone down by about 40 per cent. It is not [919] unreasonable to ask that that exemption limit of £1,000 should be increased by at least 40 per cent. Because of inflation I do not think it is justified to put up stamp duty at all, because the take of the State increases in exactly the same proportion as the increase in inflation.

Major de Valera: A simple case in point is that a house costing £7,000 would not be a very big house in the city of Dublin. We are all talking about the difficulties of housing and the effects of inflation on people who are transferring under this schedule. The stamp duty on £7,000 would be £110. As I read this schedule it would be more than one-seventh. That should be sufficient comment from the city point of view to reinforce what Deputy O'Malley has said from the general point of view and the agricultural point of view.

Question put and agreed to.

Title agreed to.

Bill reported with amendments.

An Ceann Comhairle: When is it proposed to take Report Stage?

Mr. R. Ryan: I would suggest next Thursday. The Bill must be passed into law by the 15th. I would like to take it earlier but perhaps Deputies opposite would like to take it later.

Mr. Colley: We would be willing to take it earlier but I understand the Minister may have some difficulty. We would be willing to take it on Tuesday.

Mr. R. Ryan: At present it is expected that I will be in the United States on Tuesday and coming back on Wednesday. There is a possibility that there might be a variation in that date. If the House is agreeable we could order it for next Thursday.

Report Stage ordered for Thursday 8th May, 1975.