Dáil Éireann - Volume 283 - 17 July, 1975

Wealth Tax Bill, 1975: Committee Stage (Resumed).

SECTION 16.

Mr. Colley: I move amendment No. 26c:

In page 18, subsection (2), line 46, after “Commisisoners” to add “within two years from the date of delivery to them of the return on which the assessment is based or”.

If one considers 26 (c) and 26 (d) together one will see that the object of these amendments is to provide a time limit of two years from the date of a return being made to the Revenue Commissioners within which the Commissioners may review an assessment but that there would be no time limit in the event of fraud or material nondisclosure. Therefore in dealing with genuine cases the taxpayer would be entitled to some degree of certainty as to his liability. That is the object of these two amendments taken together. I would hope that the Minister would find it possible to agree.

Minister for Lands (Mr. T.J. Fitzpatrick, Cavan): Like the Deputy I propose to deal with the two amendments together. To deal with the first sentence of subsection (2) of section 16, with the addition of the two amendments the subsection will read as follows:

[2081] An assessment of tax may be reviewed by the Commissioners within two years from the delivery to them of the return on which the assessment is based or at any time in the event of fraud or material non-disclosure in the making of such return.

This compares with the section as drafted:

An assessment of tax may be reviewed by the Commissioners at any time.

In effect, therefore, the purpose of the amendment is to limit the Revenue Commissioners' right to review an assessment to a period within two years of a delivery of a return. I appreciate the Deputy's reasons for proposing this amendment and in normal circumstances I would go a long way to meet his wishes.

However the circumstances are not normal. We are dealing with a new tax and its introduction will present problems for practitioners and the Revenue alike. This fact has been kept in mind in the structuring of the tax which is designed to take a straightforward and uncomplicated approach to the various problems it presents. Illustrative of this approach are the following: (1) the intention as far as possible to make an assessment of tax on the basis of the returns as presented by the parties; (2) this necessarily involves that the taxpayer will require to know at some stage later whether his valuations are accepted. It may be remembered that under section 12 (2) he cannot have a determination of his valuations until after two years from the date of assessment. However, as I think I indicated on the debate on that subsection it is hoped to reduce this twoyear period later when the initial teething problems of administration have been sorted out; (3) as a corollary, therefore, the Commissioners would be unable to complete the review of all cases within two years of assessment.

While I understand and appreciate the purpose of the amendment I doubt whether it would be all that beneficial to a taxpayer at this stage of the tax. If the Commissioners were [2082] to be restricted in time in their review the practical result would be that the initial examination of returns would be more critical and protracted with little over-all saving in time in the long run. However, I think the question should be reviewed after some experience of the working of the tax to see whether something on the lines of the Deputy's amendment might be done. In the meantime I would ask the Deputy to withdraw his amendment so that administration is not tied to a time limit in the early and difficult years of the tax. In fact, the matter is academic for another two years even in the terms of the amendment.

Mr. Colley: I understand and appreciate the difficulties to which the Minister has referred in the early years of operation of the new tax, with difficulties for the Commissioners, the taxpayers and the practitioners involved. That is a very valid point. On the other hand, the Minister has indicated his agreement in principle with the idea of having some time limits or some degree of certainty. In the circumstances I wonder if, in order to have some degree of certainty, there ought not to be some period put in even if it seems a very lengthy period, but a period which would not place undue strain on the Revenue Commissioners in the manner indicated by the Minister which I accept but at the same time would impose some limitation. There is under the income tax code a limitation of ten years. It seems excessive to me but nevertheless I would prefer to see some limitation, however long, than as the section stands where there is no limitation and it says “at any time”. Would the Minister consider an approach of that kind?

Mr. T.J. Fitzpatrick (Cavan): The Deputy appreciates that it is absolutely academic for two years anyway even in the terms of the Deputy's amendment. If a person wants to know exactly how he stands in regard to his assessment and his liability he can resort to section 20 which provides for giving receipts and [2083] also a certificate of discharge from wealth tax—something similar to the old discharge from death duties.

Mr. Colley: I think that relates only to a particular kind of property. Is that not so?

Mr. T.J. Fitzpatrick (Cavan): No, it applies to the individual really and his property.

Mr. Colley: But does a certificate of discharge not apply only to real property?

Mr. T.J. Fitzpatrick (Cavan): It applies to any property that would be chargeable.

Mr. Esmonde: Subsection (3) of section 20.

Mr. T.J. Fitzpatrick (Cavan): Any property.

Mr. Colley: Yes.

Mr. T.J. Fitzpatrick (Cavan): I suggest to the Deputy that he leave it as it is for the time being. This is a Bill that will have to be looked at when the Finance Bill is being introduced each year for some years to come.

Mr. Colley: May I take from what the Minister has said that there is a definite intention to review this aspect of this Bill with a view, in due course, to inserting some time?

Mr. T.J. Fitzpatrick (Cavan): I have clearly said that. I accept the principle of the Deputy's amendment but I do not think that it should be written into the Bill at this stage.

Mr. Colley: In the circumstances I agree to withdraw it.

Major de Valera: Before the withdrawal of these two amendments I would like to put on the record that I am very happy to agree to that in the case of the Revenue Commissioners, but as a precedent for that type of thing where other Departments are concerned I would like to express a reservation.

Amendment, by leave, withdrawn.

Amendment 26 (d) not moved.

[2084] Mr. Colley: I move amendment 26 (e):

In page 18, subsection (2) (b), line 55, after “any” to insert “primarily”.

This amendment seeks to insert in paragraph (b) of subsection (1) of section 16 which reads as follows:

require any accountable person to deliver to them, within such time...

I am seeking to insert after “any” “ ‘primarily’ accountable person to deliver to them...”. The reason I put down this amendment is that the requirement of a return from a person who is not primarily liable can produce some pretty ridiculous situations. For instance an estate agent who collects a small rent for a millionaire can be, under the section, required to furnish a return of the total wealth of the millionaire and be subjected to a heavy penalty if he fails to do so. I know the Minister is likely to say to me that that may be so but that is not the intention, that is not what the Revenue Commissioners will do. Nevertheless, if it is not the intention, ought we not try to ensure that the legislation does not provide for it? That is the object of this amendment.

Mr. T.J. Fitzpatrick (Cavan): I consider the amendment unnecessary and I do not propose to accept it. Where, as a result of a review of an assessment which has been made, an amended assessment is necessary, the Revenue Commissoners may under section 16 (2) (b) apply to any accountable person to deliver an additional return, together with the required particulars to enable them to make an amended assessment. The amendment which seeks to limit the application to any primarily accountable person is not acceptable. To so limit the provision would mean that delivery of an account could not be enforced in certain circumstances if the person primarily accountable were outside the jurisdiction, ill or incapacitated.

Persons secondarily liable for payment of tax—trustees, agents, and [2085] so on—would not be liable to deliver additional returns, if the amendment were accepted. The situation would be incongrous. A person secondarily liable for the delivery of the first return would not be liable for the delivery of an additional return. The amendment would be ineffective because the Revenue Commissioners could make an amended assessment themselves on an additional return and apply to a person secondarily liable for payment of the tax. A position could arise where the original return was delivered not by the person primarily accountable but by a person secondarily liable. If the amendment were allowed, the additional returns could not be sought from the person who furnished the original return.

The Deputy will see, therefore, the difficulties which, if the amendment were accepted, would be produced. He speaks about the agent who is collecting a small rent from a millionaire. Of course, he would only be required by the Revenue Commissioners, in practice and in common sense, to furnish such information as he had in relation to the property with which he was dealing.

Mr. Colley: There are two observations I would like to make on that. First, the position is—and I think the Minister referred to this—that the Revenue Commissioners have power to make an estimated assessment, even with no return at all. Therefore, strictly speaking, they are not limited in the exercise of their powers and responsibilities if they are prevented from making somebody who is secondarily liable furnish a return of this kind. In practice, the Minister says, they have to confine that to a return of such information as was in possession of the person. I would expect that is how it would be operated in practice, but that is not what the Bill says. In view of that being the intention of the Revenue Commissioners, if this amendment is not accepted, ought not there to be a provision which would limit the return and the obligation in regard to a return from a person who is not primarily accountable to such [2086] information as is in his possession or power of procurement?

I know it would be difficult if such a person did not give information, which he did not have, to make him liable for the penalty that is provided at the end. It would be difficult but not impossible. We would not legislate for that kind of situation, as I said earlier, if we can avoid it. I am suggesting that it is not beyond the ingenuity of the Minister and his advisers to devise a method which will not impose that obligation on somebody who is not primarily accountable and will confine his obligation to such information as he has. If he must, for the reasons the Minister gives, be obliged to make a return in certain circumstances, should not his obligation be clearly delimited and not leave him in the position of being, at the very least, theoretically liable to a substantial penalty because he does not give the information which he does not have?

Mr. T.J. Fitzpatrick (Cavan): If the Deputy refers to section 14 (5) he will find that the person who is asked for this information is only required to give such information within his possession or power. It would be absurd to ask an agent here to give information about a principal for whom he was only transacting one item of business in respect of one item of property. I am sure the Deputy from his experience will know that the Revenue Commissioners have literally volumes of powers at their disposal which run right across the whole field of operations of people, and if they were to use those exhaustive powers against people for whom they were never intended it would be ludicrous. The Revenue Commissioners are indirectly responsible to this House through the Minister for Finance and the matter would be raised in this House. If we were to write into a Bill of this nature every protection that could be thought up, it would be so unwieldy as to be just not understandable. Deputy de Valera is satisfied, I think, generally speaking, that the Revenue Commissioners behave in a reasonable way. Their business is not to harass people: their [2087] business is to do a job, to collect tax and to get money. I do not think they harass people——

Mr. Colley: I accept that fully.

Mr. T.J. Fitzpatrick (Cavan): ——and the very limited number of appeals that came before the courts over half a century is ample evidence of this.

Mr. Colley: I accept that but, nevertheless, I am not at all happy about a situation in which we give powers which we do not intend to be used and that, in effect, is what the Minister is saying. It may be true that the Revenue Commissioners have many powers which they do not exercise because to exercise them would be ludicrous, but the suggestion that it is so is often used as a reason for giving additional powers and not going to the trouble of delimiting precisely what powers this House is giving. That is what is sought to be done here.

We are giving powers in this Bill which both sides of the House agree would be ridiculous to use and it would be contrary to the intention of the House if they were to be used. Yet we are giving the power, because no effort is really being made to delimit that power in the way it is intended to be used. I do not accept that it is not possible to delimit that power so as to spell out what is intended and what is not intended. In my view, it is a certain degree of laziness and sloppiness in doing the work that is leading to this situation. I am blaming everybody concerned on both sides of the House when I say that. We ought to make a greater effort to spell out precisely, if we are giving powers, what they are and not to say casually: “This gives a whole lot of other powers we do not want to give, that it is not intended to exercise, but it is too difficult to spell out.” That is a bad approach. We should not acquiesce in that kind of approach. That is what we are being asked to do in this section. I am not tying myself to the amendment but to the idea that we [2088] should delimit clearly what we intend to do.

Major de Valera: The Minister has correctly described my attitude to the matter. I wish to come back to something I was adumbrating during the debate for a specific reason: firstly, the question of discretion to the Revenue Commissioners which I am in favour of; secondly, possible constitutional issues. Because of our Constitution the Revenue Commissioners are more constrained in their discretion that their counterparts on the other side of the Irish Sea.

Mr. Esmonde: Yes, the Deputy is correct.

Major de Valera: We are constantly in the position of having to ask the question: Are we exercising judicial functions? From my own experience I have no hesitation in giving the Revenue Commissioners all the powers and discretion necessary. In legislating as we are, we may cause them to multiply their administrative machinery to the extent that the maintenance of the standards we are accustomed to may be difficult. That is a factor to be taken into account. This will not be the fault of the Revenue Commissioners or the staff heretofore. The more an organisation is multiplied— this legislation will do that—and made complex, the more difficult it is to retain standards. That is universal experience. Couple that with the constitutional position where one has to watch constantly whether a judicial function is being exercised or not. It is unwise in this legislation to confer what may amount to judicial discretion. That nets a lot of what has been said on this side of the House with reference to constitutional points. The Minister asked me last night to come down from the heights in dealing with one matter, but this is something more than the heights. There is a difficulty here for the Revenue Commissioners.

There has been very little acrimony and very few appeals to the court, beyond the normal reaction of people who do not want to pay any tax, about the administration of the taxation [2089] system by the Revenue Commissioners and their officers. That is an excellent record. It should not blind us to the fact that if we multiply legislation and administration, the Commissioners will not be able to maintain their standards. The only difference between Deputy Colley and myself is that while I would agree that the effect is sloppy I do not think that sloppiness is the result of lack of attention to the job or lack of diligence——

Mr. Colley: It is lack of diligence on our part.

Major de Valera: Yes, I could not agree more. That position may bring some very unforeseen results some day. I urge serious consideration of this amendment. It might induce the Minister to consider the limitation we have sought to bring in—not for niggling or nobbling purposes but in order genuinely to help.

Mr. T.J. Fitzpatrick (Cavan): As I see it, Deputy Colley's concern is to ensure that an agent is not asked to give information which he has not got, and to ensure that an agent is not penalised for not supplying information which is not within his control. That is already covered. We cannot read section 16 without also reading section 14.

Section 14 (5) reads:

An accountable person ... in possession of information relevant to the taxable wealth of an assessable person shall disclose to the Commissioners or such officers as the Commissioners may appoint such information within his possession or power as they may require in writing for the ascertainment of liability to, or the collection of, tax ...

An agent is only required to furnish information within his possession or power. If you look at section 16 (1) (b) it can be seen that the draftsman had in mind the provisions of section 14 (5). Section 16 (1) (b) reads:

require any accountable person to deliver to them, within such time, not being less than 30 days, as may [2090] be specified in the requirement, an additional return on form provided by the Revenue Commissioners of all the property (or any part thereof) comprised in the taxable wealth of the assessable person...

Those two sections taken together make it clear that the accountable person will be required only to deal with the wealth of the assessable person about which he has information. That is clear enough.

Mr. Colley: I would suggest in reference to subsection (5) of section 14 that it may not be as helpful as the Minister thinks. This amendment deals with the demanding of a further return, not the original return, as is required under section 14. If that is so and the Minister made that point, I do not think it is open to him to bring section 14 into this.

Mr. T.J. Fitzpatrick (Cavan): It is because section 14 requires him to give such information within a limit specified by the Revenue Commissioners.

Mr. Esmonde: It is a follow-on from the first one.

Mr. Colley: If it is a follow-on, why was the Minister making the point that this amendment will operate only in relation to an additional return required by the Revenue Commissioners?

Mr. Esmonde: The section says it is an additional return.

Mr. Colley: That is what I am saying. I think the Minister was right when he said that.

Mr. T.J. Fitzpatrick (Cavan): It is written into the section.

Mr. Colley: If it is so, the Minister cannot bring in section 14 when it suits him and exclude it when it does not suit him, which is what it seems the Minister is trying to do now. The provisions of section 16 are standing on their own. The only indication of what the Minister has in mind is the words in brackets “or any part thereof”. That could be stretched to mean that that is all the Revenue [2091] Commissioners will seek. In other words, if they seek information in regard to part of the property that is all one is obliged to furnish.

Mr. T.J. Fitzpatrick (Cavan): I go further than that. If a person under section 16 (1) (b) is required to give information about which he knows nothing, he simply goes back to section 14 (5) and says that protects him.

Mr. Esmonde: If he has no knowledge, how can he give information?

Mr. Colley: That is one thing. It is another thing to say section 14 (5) now protects him and, therefore, he cannot be asked for that.

Mr. T.J. Fitzpatrick (Cavan): Is Deputy Colley seriously saying that any court would enforce this if the Revenue Commissioners were foolish enough to think that they had powers under this section, which Deputy Colley says they have but which I say they have not? If they were foolish enough to think they had such powers and went to court to enforce penalties the case would not last too long. If the defendant could say——

Mr. Colley: I hope that would be so. What we are doing if we are saying that is that we are depending on the courts to protect a person of that kind when it is our job to do it in the legislation.

Mr. T.J. Fitzpatrick (Cavan): I am saying we have done it between section 14 and section 16. I am only putting in the other arguments to show the absurdity of the Deputy's fears.

Mr. Colley: I am sorry but I cannot accept that that is so. I accept that the Minister believes it is so but, as the Minister knows, this is only one example of the kind of problem that arises on this Bill and on many other Bills. I think that we ought to make it crystal clear. I do not want to go back over what we did but we had a fairly detailed discussion last night on another aspect where I contended that it was not clear and the [2092] Minister is to look into the situation. These are not isolated instances. There is too much of a tendency for us to accept that because it would be unreasonable that powers should be exercised they will not be exercised in a particular way.

Mr. T.J. Fitzpatrick (Cavan): I do not think the powers are here. If people other than experts in the field of draftsmanship are to take on themselves to draft Bills and put unnecessary protective provisions into one section it will lead to all sorts of difficulties in interpreting the Act as a whole if it comes to court. The court would be forced to say “they said that there, why did they not say it here?” Unnecessary verbiage in sections is dangerous.

Mr. Colley: There may be that risk. I acknowledge it but there is a much greater risk if we accept that philosophy. What guarantee have we got that the brief of the parliamentary draftsman—by that phrase I mean a number of people over a number of years, I am not referring to a particular man—includes the protection of the rights of individual? Is it not a fact that his brief is to translate into legal terms the heads of a Bill as approved by the Government? If we are to approach it on the basis of “leave it to the expert” we are simply abdicating our responsibilities in this House. I do not accept that we should approach it in that way. I am not going to continue to discuss this matter ad nauseam. We are working under a time limit and I have made my position clear on this. I just want to reiterate that the attitude I am taking in this is not one that I am adopting only in Opposition. I took exactly the same view on the other side of the House, though it is more difficult to do on the other side of the House. Nevertheless it is a basic philosophy to which I subscribe and I am not at this stage going to abjure that philosophy.

Mr. T.J. Fitzpatrick (Cavan): I am satisfied beyond doubt that there is no danger here for a person who is not primarily accountable. I am satisfied that he can only be called upon [2093] to furnish a return of such information about another person as is within his own knowledge. I am also satisfied that if the word “primarily” was included as suggested in the amendment [2094] it would lead to all sorts of incongruous situations that I outlined when opposing the amendment in the first instance.

Amendment put.

The Committee divided: Tá, 60; Níl, 69.

Allen, Lorcan.

Andrews, David.

Brady, Philip A.

Brennan, Joseph.

Breslin, Cormac.

Briscoe, Ben.

Brosnan, Seán.

Browne, Seán.

Brugha, Ruairí.

Burke, Raphael P.

Callanan, John.

Calleary, Seán.

Colley, George.

Collins, Gerard.

Connolly, Gerard.

Crinion, Brendan.

Cronin, Jerry.

Crowley, Flor.

Cunningham, Liam.

Daly, Brendan.

Davern, Noel.

de Valera, Vivion.

Dowling, Joe.

Farrell, Joseph.

Faulkner, Pádraig.

Fitzgerald, Gene.

Fitzpatrick, Tom (Dublin Central).

Flanagan, Seán.

French, Seán.

Gallagher, Denis.

Geoghegan-Quinn, Máire.

Gibbons, Hugh.

Gibbons, James.

Gogan, Richard P.

Haughey, Charles.

Herbert, Michael.

Hussey, Thomas.

Kenneally, William.

Lalor, Patrick J.

Leonard, James.

Lynch, Celia.

Lynch, Jack.

McEllistrim, Thomas.

MacSharry, Ray.

Meaney, Tom.

Molloy, Robert.

Moore, Seán.

Murphy, Ciarán.

Nolan, Thomas.

Noonan, Michael.

O'Connor, Timothy.

O'Leary, John.

O'Malley, Desmond.

Power, Patrick.

Smith, Patrick.

Timmons, Eugene.

Tunney, Jim.

Walsh, Seán.

Wilson, John P.

Wyse, Pearse.

Níl

Barry, Peter.

Barry, Richard.

Begley, Michael.

Belton, Luke.

Belton, Paddy.

Bermingham, Joseph.

Bruton, John.

Burke, Dick.

Burke, Joan T.

Burke, Liam.

Byrne, Hugh.

Clinton, Mark A.

Cluskey, Frank.

Collins, Edward.

Conlan, John F.

Coogan, Fintan.

Cooney, Patrick M.

Corish, Brendan.

Costello, Declan.

Coughlan, Stephen.

Creed, Donal.

Crotty, Kieran.

Cruise-O'Brien, Conor.

Desmond, Barry.

Desmond, Eileen.

Dockrell, Henry P.

Dockrell, Maurice.

Donegan, Patrick S.

Donnellan, John.

[2095]Pattison, Seamus.

Reynolds, Patrick J.

Ryan, John J.

Spring, Dan.

Staunton, Myles.

Taylor, Frank.

Dunne, Thomas.

Enright, Thomas.

Esmonde, John G.

Finn, Martin.

Fitzpatrick, Tom (Cavan).

Flanagan. Oliver J.

Gilhawley, Eugene.

Governey, Desmond.

Griffin, Brendan.

Harte, Patrick D.

Hegarty, Patrick.

Hogan O'Higgins, Brigid.

Jones, Denis F.

Kavanagh, Liam.

Keating, Justin.

Kelly, John.

Kenny, Henry.

Kyne, Thomas A.

L'Estrange, Gerald.

Lynch, Gerard.

McDonald, Charles B.

McLaughlin, Joseph.

McMahon, Larry.

Malone, Patrick.

Murphy, Michael P.

O'Brien, Fergus.

O'Donnell, Tom.

O'Leary, Michael.

O'Sullivan, John L.

[2096]Thornley, David.

Timmins, Godfrey.

Toal, Brendan.

Tully, James.

White, James.

Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.

Amendment declared lost.

Mr. T.J. Fitzpatrick (Cavan): I move amendment No. 27:

In page 19, subsection (6), lines 46 and 47, to delete “section 14, 15 or 16” and to substitute “section 14 or 15 or in this section”.

This amendment is to improve presentation from a drafting point of view. A reference in a section to the section itself is usually done by use of the words “this section”. As originally drafted, subsection (6) of section 16 refers only to section 16. “Section 16” in this context is now being changed to “in this section”. The meaning of the subsection remains unchanged.

Amendment agreed to.

Question proposed: “That section 16, as amended, stand part of the Bill.”

Mr. Colley: There is just one question I wanted to raise with the Minister on the section. In the proviso to subsection (3) it is provided that the Commissioners may withdraw an assessment made under the subsection in certain circumstances. Why is that provision there that they may “withdraw” the assessment instead of “amending” the assessment?

Mr. Esmonde: It might be on a completely wrong basis. This has happened in income tax cases, in fact.

Mr. Colley: Does the wording oblige the Commissioners, if they want to make a change to withdraw it or have they still got power to amend in these circumstances under this section?

Mr. Esmonde: “May withdraw.”

Mr. Colley: The Deputy knows very well that that could mean more than it appears to mean.

Mr. Esmonde: It may be interpreted as “shall”. I think it is just dealing with the practical day to day matters that can arise.

Mr. Colley: No. I want to know the thinking behind it because I understand that in similar circumstances under the income tax code the provision is for amendment.

Mr. T.J. Fitzpatrick (Cavan): This is a reasonable approach to it. If the taxpayer does not put in a return the Commissioners can raise an assessment on him and in that way encourage him to put in a return himself.

Mr. Colley: That is a very nice phrase.

Major de Valera: Not an unusual thing in the case of dilatory taxpayers.

Mr. T.J. Fitzpatrick (Cavan): If the response is reasonable, the Commissioners say “Good enough. We withdraw ours and accept yours.”

Major de Valera: Could you not say withdraw or amend?

Mr. T.J. Fitzpatrick (Cavan): I think it is a neater job to withdraw the assessment raised without any information and to raise an assessment on the basis of information supplied.

Major de Valera: If “may” is permissive there, as Deputy Esmonde contends, is there anything wrong in meeting Deputy Colley's point by putting in the words “or amend” there as well?

Mr. Colley: Perhaps I could put another point to the Minister. I have seen this phrase interpreted in a way [2097] that I think is stretching much too far although the interpretation does seem to favour the goodwill of the Revenue Commissioners. I think it is stretching it and it is this, in a later section there is a provision that you cannot appeal without paying 75 per cent of the assessment and the interpretation I saw on this was that the purpose of saying “withdraw” here was to enable the Revenue Commissioners in certain circumstances to withdraw the assessment and thereby enable a person to appeal without having to pay 75 per cent. I think that is interpreting it in a very extreme way.

Mr. T.J. Fitzpatrick (Cavan): It could have worked that way.

Major de Valera: I cannot see them doing that.

Mr. Colley: I am merely mentioning it to the Minister to indicate that that is one interpretation I have seen of it and one of the reasons that I have asked the question is that—I may be misinformed—I understand that in similar circumstances under the income tax code the provision is for amendment and not withdrawal.

Mr. T.J. Fitzpatrick (Cavan): There is nothing involved here. The Commissioners may withdraw the assessment and raise another one. They are obliged to do it but I think it is in the interests of promoting the best relationships possible between the taxpayer or his advisers and the Revenue Commissioners. People do not like to have ad hoc assessments raised without any return being made and if a man gets such an assessment he runs to his adviser with it and the adviser says “That is all right. I will get in touch with them” and he is able to tell him then that that assessment will be withdrawn and that he will put in a return for him if he gives him the necessary information and it runs along more smoothly.

Major de Valera: Would having the words “or withdraw” in any way prejudice it?

Mr. Colley: Or “amend”

[2098] Major de Valera: “Withdraw or amend.” That gives much more power to the Revenue Commissioners.

Mr. Colley: They have that power already, in fact.

Major de Valera: They may have the power already but if there is any doubt simply put in on Report Stage “withdraw or amend an assessment”.

Mr. Colley: Have the Revenue Commissioners power at the moment in the Minister's view if they choose to amend rather than withdraw to do that?

Major de Valera: They may not have power to amend if you do not put it in. They might simply have to withdraw.

Mr. T.J. Fitzpatrick (Cavan): I do not think they would have power to amend their own assessment made not on the basis of a return but if a return comes in they can discuss the return and either accept it or query it.

Mr. Colley: I do not think it is a major point. I was more interested in finding if there was any special thinking behind it than anything else.

Question put and agreed to.

Section 17 agreed to.

SECTION 18.

Mr. T.J. Fitzpatrick (Cavan): I move amendment No. 28:

In page 20, to delete subsection (3) and to substitute the following subsection:

“(3) Notwithstanding the foregoing, interest shall not be payable upon tax which is paid within three months of the valuation date upon which it becomes due and payable and, where tax and interest thereon (if any) are paid within 30 days of the date of the assessment thereof, interest shall not run for the period from the date of the assessment to the date of payment:

Provided that interest shall not be payable upon tax which is paid before the 5th day of October, 1975.”

[2099] The main purpose of this amendment is to extend the interest-free period for this year in view of the fact that this is the introductory year of the tax. This is done by the addition of a proviso to the original subsection (3). The subsection itself is being slightly amended to make the position more clear where tax is paid within 30 days of the date of assessment. As the House knows, the valuation date in this year is 5th April, 1975, but due to difficulty in processing this legislation through the House, this amendment is brought in to provide that the interest will not be payable on tax which is paid on or before 5th October, 1975, and we availed of the introduction of the amendment to make it clear that interest will not be payable for the period beginning on the date of the assessment and ending 30 days after that.

In the House last night when dealing with another amendment on another section which was in some way related to this topic, it was suggested that an extension of the interest-free period in this year should be extended beyond 5 October, 1975. The suggestion was made that it should be extended for a period of three months but Deputy de Valera did say—I think I could paraphrase him in this way—that if there were difficulties in extending the period to three months, some extension should be considered and given. I have considered the matter since then and I feel that if I were to extend this interest-free period for three months beyond 5th October, 1975, I would be coming very close to the valuation date for 1976 and would be likely to create chaos in the Revenue Commissioners' office.

However, as I said, this Bill will be through the Oireachtas shortly and I understand that most of the people, if not all of them, who will be concerned with the Bill are people who are likely to be represented by professional consultants and that most of these professional people are already preparing to make returns. It will be open to anybody to make returns as soon as the Bill becomes law and, of [2100] course, they can make a payment on account if they like. Having said all that, I am prepared to extend the interest-free period beyond 5th October, 1975, and I am prepared to go as far as 5th December, 1975. That is a genuine effort to meet the wishes of the House and of the people. The amendment would then read as it stands with “5th December” being inserted in the last line for “5th October”.

Mr. Colley: We certainly would agree with that amendment of the amendment. It is a distinct improvement on the position that was being presented under the amendment as tabled. For that we would like to express our appreciation. Nevertheless, the whole position arising here is totally unsatisfactory and that there is a patching-up effort having to go on in order to get some degree of reasonableness, and I say only some degree, into the situation. As the amendment was tabled it was designed to deal with the situation as it arises but the position is that this Bill is likely to be passed by both Houses of the Oireachtas about 20th August and if one took the date in the amendment as tabled, 5th October, that would have left about one and a half months in which to peruse the final form of the Bill, to assess oneself correctly and to pay tax. Otherwise, one would have been liable to interest and that interest would be at 18 per cent per annum from 5 April to the 5th of the month following payment. I would regard that as a most iniquitous and penal provision. What the Minister has announced is a considerable improvement.

We must not lose sight of the fact that all of this tinkering with the dates for 1975 arises, not because, as is sought to be suggested from the Government benches, of filibustering or unreasonable opposition on this side of the House. I would venture to suggest that the Opposition's performance on this and on the other capital taxation measures will be shown from the record to have been detailed and conscientious effort on the part of the Opposition to deal [2101] with what are very difficult and complex Bills. The real problem arises because of two things: one, that the Government were very dilatory in bringing forward the Bills. They should have been produced much earlier than they were. I do not think that the Minister can contest that statement.

If some kind of charge analagous to the 18 per cent interest rate were to be imposed on Members of the Government in respect of their dilatoriness in this matter, they might take a different view of the situation and their approach would be more equitable than it was in the amendment as tabled.

The other matter that causes the difficulty is one to which I referred last night, that is the fact that the White Paper said that the commencement date for the wealth tax would be 6th April, 1975. It also said that the wealth tax would be charged on one particular day in each year, probably, it said, 5th April, which is the last day of the tax year. It did not commit the Government to 5th April as the valuation date but it said it was likely. But it did say specifically that the commencement date for the wealth tax was 6th April. The clear implication of that was that what the Government intended to do was to charge an annual wealth tax but, for technical reasons which were spelled out in the White Paper, it would have to be based on wealth on a particular day, that the valuation date likely to be chosen for that was 5th April in each year and that consequently what was intended was that wealth tax considered as an annual tax would commence on 6th April, 1975 and that the first valuation date would be 5th April, 1976.

If that had been adhered to we would not have the kind of problems we are faced with in this amendment and now the amendment to the amendment given by the Minister, because there would have been adequate time to process this Bill through both Houses of the Oireachtas, to give taxpayers and their advisers a reasonable opportunity to consider the implications, to make preparations, to get valuations where they were necessary, [2102] and to operate the wealth tax in an orderly way.

I believe the plans as outlined in the White Paper would have ensured that but, for some reason—one can speculate on the reason; I have a fairly good theory as to why this was changed but that is irrelevant—the Government changed their minds and departed from what was said in the White Paper and, instead of doing what was proposed in the White Paper, which was to have the wealth tax commence on 6th April, 1975, and to have the first valuation date 5th of April, 1976, they departed from that and tried to rush it through a year earlier. This led to all of the difficulties we have been faced with, long sittings, amendments and amendments to amendments. All of this gets back to the departure from what was clearly set out in the White Paper. As I say one can speculate on the reasons, but that may not be relevant here.

The fact is that all of these difficulties have arisen and they have arisen not, I repeat, because of unreasonable Opposition in this House, but because of two things, both attributable to the Government. One, the failure to bring forward the legislation, to publish the legislation in reasonable time and, two, the departure from what the White Paper said was going to be the programme for implementation of the wealth tax. All of that has led to all the difficulties we have had with this Bill: the long sittings and the amendments which have had to be put in and now the Minister has had to amend the amendment again. It is unfortunate that it should be so, but if it is so let it be clear why it is so. I do not think that it is open to the Minister to contend, as he tried to contend last night, that the Government did not say in the White Paper, and make it quite clear, that what they intended was to have as the first valuation date for wealth tax purposes 5th April, 1976, although the Bill now says 5th April, 1975. Just to refresh the Minister's memory on this, let me remind him that paragraph 93 of the White Paper said:

[2103] The wealth of the taxpayer would be valued on, say, the last day of the tax year, at present the 5th April.

On page 60 of the White Paper it is stated:

Annual wealth tax: The date of commencement will be 6 April, 1975.

There is, I suggest, a significance in the fact that it says 6th April and not 5th April. Any reasonable reading of this White Paper—and I can confirm that this is how it was read by numerous people—shows that the commencement date would be 6th April and the first valuation date would be 5th April. If that reading is not correct, the only other possible explanation is that the Government are charging wealth tax in advance. If it is to commence on 6th April and the first payment date is 5th April then it is being charged in advance. The Minister denied strenuously last night that it was being charged in advance.

If it is not, the only other possible reading of the White Paper is the one I have put forward and the one that I am quite sure is what the Government intended, which was to have as the first valuation date 5th April, 1976, and that would have allowed for a reasonable processing of the Bill and implementation of all the necessary measures both on the part of the Revenue Commissioners and on the part of taxpayers to operate this measure smoothly. Instead of that, for whatever reason, we have had the very unsatisfactory manner in which this Bill has had to be dealt with in this House. Now we are operating under a guillotine because of the failure of the Government, on the one hand, to bring forward the Bill in adequate time and, on the other hand, the failure of the Government to adhere to what they stated in the White Paper as the programme for implementation.

Mr. T.J. Fitzpatrick (Cavan): The Government published their White Paper on Capital Taxation in February, 1974. This Bill was presented to this House on 13th of [2104] February of this year. It got a Second Reading on 12th March, 1975. One could have understood a good rousing political debate on the Second Reading. We had it, but the House accepted the principle of the Bill. Deputy Colley made the point, last night and again today, that there is some going back on the White Paper about the date of introduction of the tax. One thing which is clear in the White Paper is that wealth tax was to commence in April, 1975. The Bill implements that.

Since this Bill was published the Minister for Finance and his officials met many professional bodies and discussed the Bill with them. The point raised by Deputy Colley in regard to the commencement of it in relation to the White Paper never was raised. It never was raised until Deputy Tom Fitzpatrick, my namesake, raised it here in this House. He was perfectly entitled to do that and I am not complaining.

Mr. Colley: Is the Minister quite sure of that?

Mr. T.J. Fitzpatrick (Cavan): I am sure.

Mr. Colley: I am virtually certain that I have seen a copy of representations to the Minister for Finance in which this point was raised.

Mr. T.J. Fitzpatrick (Cavan): Maybe it was subsequent to Deputy Tom Fitzpatrick raising it here.

Mr. Colley: No.

Mr. T.J. Fitzpatrick (Cavan): This amendment has been brought in because of the difficulty in getting this Bill through the House. It was introduced on 13th February and got a Second Reading on 12th March. It has been obstructed here in a most unreasonable way since. The amendment I am introducing now first of all proposed to extend the time to 5th October but, in the course of discussions that we had here in a reasonable way, I thought the reasonable thing was to go as far as 5th December. I have gone that far.

Deputy Colley blames the Government for not processing the Bill [2105] earlier, for not having it through the House, and for now introducing the guillotine. I am afraid that the Opposition used the Committee Stage of the Bill not to improve it, not to do Committee Stage work, but to try and exploit it for political purposes. For example we had, approximately, a 20-hour debate on section 2 of this Bill to which there was no amendment and which was a complete and utter waste of time. It may be said: why did not we put on the guillotine?

Mr. Colley: You did.

Mr. T.J. Fitzpatrick (Cavan): I did, after many hours. If I had put on the guillotine earlier I would have been accused of obstructing. I would have been accused of depriving the Opposition of their rights. I do not want to take up what time is left but, in view of the fact that Deputy Colley said the Opposition were conscientiously and scrupulously going through this Bill on Committee Stage, I want to say to the Opposition that they are behaving in a disgraceful manner even at this stage. It is now mid-day and the debate must conclude on Committee Stage at 2.15 p.m. We have yet to deal with the charging of tax on property, receipts and discharges, appeals and penalties. The Opposition are using their time in such a way that it will not be possible to do that.

I want to put the blame for the failure to deal with this Bill, section by section, fairly and squarely on the shoulders of the Opposition, even since the guillotine went down. Yesterday evening we had Deputy Colley bringing into this House, and encouraging, Members of the Opposition to contribute. He was perfectly entitled to do it, but I respectfully say they had very little to contribute to the Committee Stage of this Bill. If Deputy Colley wanted——

An Leas-Cheann Comhairle: Deputy Colley made some general remarks and I am sure the Minister is replying to them. The Chair would hope that we could get back to the discussion on the amendment.

[2106] Mr. T.J. Fitzpatrick (Cavan): This Bill has now been 16 days and 88 hours in this House. Surely that is more than ample time to process it and to go through it line by line if the Opposition had not deliberately wasted time. I recommend this amendment to the House. I know it is being accepted. I do not expect thanks from the Opposition for it, but I say it is a reasonable effort to meet the situation in a reasonable way.

Mr. Colley: I do not want to waste time unduly on this matter but it is important that we get the facts right. What was the Minister's answer to the major fact with which he was faced, which is the departure from the provisions of the White Paper, as a result of which wealth tax is being introduced one year earlier than was said in the White Paper? The White Paper said the wealth tax was to commence in April, 1975. That was his answer. A nice glossed over answer. The White Paper said the wealth tax was to commence on 6th April, 1975, not 5th April.

There is a significance in that date because it had previously referred to the valuation date being 5th April, the last day of the tax year. No amount of glossing over this and saying one day does not make a difference, or mentioning the month of April, will overcome the fact that the White Paper said specifically the date of commencement was 6th April. Any amount of attempted abuse of the Opposition by the Minister does not explain away the reason for the Government departing from this, and introducing the wealth tax a year earlier than they said they would, and thereby imposing enormous difficulties and strain on this House, on the other House, and on everybody who will be concerned with this.

As for the conduct of the Opposition on Committee Stage, I want to say in regard to section 2, which is the charging section, Deputies spoke within the rules of order from this side of the House on that charging section, and expressed on behalf of this party the grave concern of this party at the economic consequences of introducing the wealth tax, something they were [2107] not only entitled to do, but obliged to do. The Government imposed a guillotine on section 2. If the Minister is attempting to say that the conduct of this side of the House in regard to the remaining sections was, I think he used the word, “disgraceful” then I can only say that the Minister will have to be judged by his use of that word in the light of the record of this House.

Mr. T.J. Fitzpatrick (Cavan): Irresponsible is probably a better word.

Mr. Colley: Whether the Minister wants to say irresponsible or disgraceful the fact is his use of that word, and the mentality it discloses, will be judged in the light of the record of this House, specifically in regard to last night when the Minister stated I encouraged Deputies on this side to speak when they had virtually nothing to say. I think I am paraphrasing the Minister fairly when I say that. Let me say, No. 1, I did not encourage anybody to speak and, No. 2, those who did speak had things to say of considerable importance. In particular, one Deputy dealt with a very practical difficulty, a difficulty about which Deputies behind the Minister were very concerned too, in case he does not know it, and the Minister gave no satisfaction in response. However, it is not just the right of Deputies—of course the Minister concedes the right of Deputies to speak in this House on Committee Stage or otherwise—but it is the duty of the Opposition to do the kind of work on a Bill of this type that we have been doing. The difficulty for the Minister and the Government is that they were years in Opposition and they never did this kind of work. They did not do their job in Opposition.

Mr. T.J. Fitzpatrick (Cavan): We did.

Mr. Colley: When they see it being done now, they regard it as obstruction and they apply a guillotine. The question the Minister must answer, and not just inside this House but outside it, is why did the Government depart from the provision in the [2108] White Paper? Let them explain that to the people and explain this guillotine in the light of introducing the wealth tax a year earlier than they said they would, with all the consequences that flow from it.

Mr. T.J. Fitzpatrick (Cavan): We will.

Major de Valera: Further in regard to last night, only three Deputies spoke and one Deputy's suggestion has been accepted by the Minister— we are grateful for it—namely, the extension to December. I think the Minister got carried away.

Mr. T.J. Fitzpatrick (Cavan): There are still 13 sections to be dealt with.

Mr. Colley: The Minister for Justice will be introducing a Bill we never heard of before and he wants it discussed next Tuesday because there is time to discuss it. But he will not process it through. He is not going to finish with it. There is time to discuss it but there is not time for the wealth tax.

Amendment as amended agreed to.

Mr. T.J. Fitzpatrick (Cavan): I move amendment No. 28a:

In page 20, lines 35 to 37, to delete subsection (4) and to substitute the following subsection:

“(4) A payment on account of tax shall be applied—

(a) if there is interest due on tax at the date of the payment, to the discharge, so far as may be, of the interest so due; and

(b) if there is any balance of that payment remaining, to the discharge of so much tax as is equal to that balance.”.

This amendment is being made to improve the original drafting.

Under section 18 of the Bill the tax becomes due on the valuation date. Interest on tax is payable from that date unless the tax is paid within three months of that date. A payment may be made at any time after a valuation date on account of tax due on that date. This provides the taxpayer [2109] with the means of stopping interest running in a case where he is not in a position to furnish a return within three months of the valuation date.

Subsection (4) provides that, when a payment is made on account of tax, the payment must be set off, in the first instance, against any interest which has accrued and the balance must then be applied in discharge of the tax itself. The subsection as drafted in the Bill states:

A payment on account of tax shall, in the first instance, be applied in discharge of interest, if any, outstanding on tax and thereafter, in discharge of tax.

It might be argued that through the use of a word “discharge” a small payment on account would result in the satisfaction of a larger amount of interest or tax. For example, a payment of £100 on account would, on a technicality, discharge the liability of £800. That might be argued. The amendment is intended to spell out more clearly the application of a payment on account. Under the subsection as redrafted the payment on account must be applied, firstly, in discharge of interest so far as may be and if there is a balance of payment on account after the satisfaction of the interest, towards the discharge of tax to the extent of such balance. Taking subsection (4) in conjunction with subsection (5) the overall position must be that a payment on account must, in the first instance, exhaust interest on tax and the balance of the payment on account must be applied pro tanto in satisfaction of tax due.

Mr. Colley: I take it that apart from the difference of interpretation there is no substantial difference?

Mr. T.J. Fitzpatrick (Cavan): No. The purpose of the amendment is to improve the drafting and clarify the position.

Amendment agreed to.

Question proposed: “That section 18, as amended, stand part of the Bill.”

[2110] Major de Valera: I have a certain uneasiness about this section. The charging of interest is understandable, necessary, and even desirable subject to the rate. I say that subject to the two reservations we have had through the debate, the rate and the fact that interest is one-sided; that interest will be taken by the Revenue Commissioners but will not be granted in corresponding cases in reverse. As in the income tax code the payment of interest is understandable and justifiable but under the provisions of the Bill a person is required to assess himself in a new situation. There is the continuing difficulty that that assessment may be innocently erroneous. Because of such a situation there may be an accumulation of interest which the person liable did not expect. In the innocent case I am contemplating the person had no reason to expect this.

I do not see anything in this section which gives a discretion to the Revenue Commissioners to deal with a case like that. It becomes due and payable yes, but whether a discretion is involved or not I cannot say. This difficulty is not likely to arise with income tax because assessment to income tax is a well established procedure. It is an annual matter of a different nature and it does not extend to property the way capital tax does. There is inherent in this the possibility of serious injustice, analogous to the type of injustice that occurred under the estate duty code. The generous thresholds applied go a long way to adjust the situation.

The Minister will probably say that anybody will get professional advice and that, in theory, may be all right and that is what I characterise generally as administrative or staff thinking. In practice it may not work out that way and there may be reasons why not. I do not know what the answer is, but it is an uneasiness I have about the section.

Paragraph 6 states:

All sums due under the provisions of this Act shall be paid to the Accountant-General, Revenue Commissioners, Dublin 2.

[2111] Very often cheques are paid to the “Revenue Commissioners.” The statute says to the “Accountant-General, Revenue Commissioners. Dublin 2.” Would there be a technical defect in a cheque addressd to the “Revenue Commissioners”? Could a point be made of that? It is a ridiculously small point, but this is a statute. Would it not be better to have it paid to the Revenue Commissioners than to specify the officer of the Revenue Commissioners? The Commissioners could then accept it through any officer. To give an example of what may happen: Somebody could be dilatory and it could get into the hands of the solicitor for the Revenue Commissioners. It could be a case of somebody not catching up on their job. They get a letter from the Revenue Commissioner's solicitor requesting payment and the requisite charge of interest. The recipient of the letter realises that not only was all the fairness on the side of the Revenue Commissioners but that the Revenue Commissioners' solicitor had gone to the trouble of writing most courteously about it and a cheque is sent by return. It could be made payable to the solicitor but that would be a technical noncompliance with the provisions of the Act. Why not say, “Revenue Commissioners”?

Mr. T.J. Fitzpatrick (Cavan): It is accepted that it must be charged because otherwise there would be an encouragement not to make returns and to avail of the money. I cannot see any other way of doing it. The sums due are directed to be paid to the Accountant-General, as distinct from the Collector General. The Collector General deals with income tax and VAT. This is a capital tax and it is therefore directed to be paid to the Accountant General to distinguish it from the other and to get it into the proper Vote. I do not think Deputy de Valera need have any trouble about the case he cites—the cheque being sent to the solicitor. Surely, if the solicitor is doing his business he will direct it to the right channel.

[2112] Major de Valera: I see the point now, that the Minister wanted it to go to the right office.

Mr. Colley: Like Deputy de Valera, I consider the interest rate of 18 per cent per annum charged here far too high. The only reason we have not got an amendment down to reduce this figure is because we have sought by amendment to reduce this figure in a number of pieces of legislation brought forward by the Minister for Finance and on each occasion it has been voted down. The figure is ridiculously high, and that is highlighted when we come to the question of re-payments. One finds that the Minister for Finance is very reluctant to provide anywhere that the Revenue Commissioners will pay interest on repayments. It is done in a few limited cases but where it clearly should be done he refuses to do it for a good reason; it would be open to a taxpayer deliberately to overpay substantially and earn himself 18 per cent interest on the money. That, of course, is not a desirable thing, but it highlights the degree to which the rate of interest being charged is too high.

I also want to question why this section should provide that interest is payable from the valuation date as distinct from a reasonable period following the date of an assessment. In theory the citizen is supposed to assess himself on 5th April and therefore if he does not pay on that day, he is liable for interest.

Mr. T.J. Fitzpatrick (Cavan): That is not so. If it is paid within three months the interest is not chargeable from the valuation date.

Mr. Colley: There is an interest free period of 30 days being provided. A person is given 30 days' interest free from the date of assessment if the payment is made within that 30 days but, at the same time, interest appears to be charged for the previous period from 5th April of that year to the date of assessment if that is later than 5th July. Is that right?

Mr. T.J. Fitzpatrick (Cavan): That is correct.

[2113] Mr. Colley: I am right in what I am saying?

Mr. T.J. Fitzpatrick (Cavan): The Deputy is right now but he did not appear to be at one stage.

Mr. Colley: I had not finished when the Minister interrupted me. I will say it again for him. There is a 30day interest-free period from the date of assessment if the payment is made within that 30 days, but at the same time interest is charged for the previous period from 5th April to the date of assessment if that is later than 5th July. What is the logic behind this approach? It seems a new and unjustifiable principle to charge interest on tax that is not yet assessed, and that is what is being done here.

I am also concerned about the point raised by Deputy de Valera on reassessment. An area where this could easily occur is where there is a valuation of shares in a private company, an area which is fraught with difficulty. It could easily happen that a taxpayer, acting absolutely bona fide, could submit a return in connection with such shares, placing particular value on them and, years later, the Revenue Commissioners could say they did not agree with that and charge interest over a period of years on the amount extra they found to be due. As we saw on an earlier section, there is no limitation whatever, at the moment, on the number of years they can go back. This raises a serious problem and there does not seem to be any provision in this section to give any degree of reasonable protection to a taxpayer in such circumstances.

The primary question I want the Minister to answer is, what is the logic behind what appears to be a new and unjustifiable principle whereby a taxpayer is liable to interest on tax which has not yet been assessed?

Mr. T.J. Fitzpatrick (Cavan): It is necessary, in regard to the amount or rate of interest, to have the rate of interest at least as high as that chargeable elsewhere. As a matter of fact, it is necessary to go a little further and introduce a penal element into it in order to encourage, or pressurise, people [2114] into paying their wealth tax in time. Otherwise it would be good economics for them to delay the payment of wealth tax and use the money for other purposes. They could invest it and drag on and on at a low rate of interest. Deputy Colley as Minister for Finance a few years ago recognised this. For years, the rate of interest payable on death duties was something like 4 per cent and he increased it to 9 per cent, which was above the going rate at that time.

Mr. Colley: It was fairly close to it.

Mr. T.J. Fitzpatrick (Cavan): It was above the going rate and that was the philosophy behind it.

Mr. Colley: May I interrupt the Minister for a moment on that point? I was at the same time anxious to establish the principle that on overpayments there should be a repayment at the same rate. The level of interest being charged here makes it difficult for the Minister for Finance to agree to these.

Mr. T.J. Fitzpatrick (Cavan): I am agreeing and we will deal with that, if the Deputy lets us get to it. The proposal here is that the valuation date be 5th April and if wealth tax is paid within three months of that date there is no interest payable. Admittedly, if it is not paid for six months there is interest then payable from 5th April but there is a pause for the assessment date for 30 days. If a person is not assessed for six months or does not pay there is interest payable for six months but he has then a further month in which there will be no interest payable. For years under the estate duty code the position was the same. There is provision in the Bill for payment on account.

Mr. Colley: Is the Minister right in saying that was the position under the estate duty code?

Mr. T.J. Fitzpatrick (Cavan): It was, for years, but it may have been changed.

Mr. Colley: Was there not a 12 months, in effect, executive year?

[2115] Mr. T.J. Fitzpatrick (Cavan): That was for real estate.

Mr. Colley: At least it applied there and I think there was a saving period also, even on personalty.

Mr. Esmonde: Not for years.

Mr. T.J. Fitzpatrick (Cavan): At any rate, that is the position. If interest was not charged, wealth tax might not be paid. Interest must be charged at a rate that makes it worth people's while to pay the tax as it falls due. Deputy Colley introduced that philosophy into the code as Minister for Finance.

Mr. Colley: I do not think the Minister has answered my question. The problem arises because the interest is chargeable from the valuation date. One of the questions I asked him was: Why not commence the interest liability from a reasonable period after the assessment date? What is proposed here is 30 days. Why not provide that if the payment is not made within 30 days of assessment interest would then commence to run, but what is provided is that during that 30 days there will be no interest but that for the previous period of possibly six months there will be interest.

Mr. T.J. Fitzpatrick (Cavan): If it were as I said paid within three months, there would be none.

Mr. Colley: The Minister understands that it is a provision that you pay within three months of a valuation date on which you have no assessment other than your own. Why not operate it in relation to the date of assessment?

Mr. Esmonde: Would that not be throwing an undue burden on the Revenue in that they would have to make a positive move to assess you, whereas the spirit of the section is that the taxpayer makes his own assessment?

Mr. Colley: I question that whole approach. It is an attempt to save effort on the part of the Revenue Commissioners. I understand why, but the way it works out is very unsatisfactory.

[2116] Mr. T.J. Fitzpatrick (Cavan): It is extraordinary how sympathetic for the taxpayer a period in Opposition encourages Deputy Colley to become. I understand that legacy and succession duty in certain cases is subject to interest from the date of death although it could not possibly be paid for months after, even with the best will in the world. Interest is related back to the date of death in most cases. You have here a period of three months from the valuation date.

Mr. Colley: This is an annual tax.

Mr. T.J. Fitzpatrick (Cavan): Anybody who is interest conscious can——

Mr. Colley: At 18 per cent anybody would be interest conscious.

Mr. T.J. Fitzpatrick (Cavan): The point of it is to encourage them to be interest conscious. They can make payment on account. Most people concerned are people who are advised by professional people and they can estimate to very near the correct amount. They can lodge that within three months. If they pay too much they get it back with interest.

Mr. Colley: I do not regard it as satisfactory. What about the point that was mentioned by Deputy de Valera and of which I mentioned an example? Does the Minister appreciate that shares in a private company can present difficulties in valuation and arguments as to what their real value is. Let us assume that a taxpayer has, in his taxable wealth, shares in a private company and he makes a genuine effort to value them and he pays tax on that basis. Years later, as the Bill stands without limitation on the number of years, the Revenue Commissioners could decide that that valuation was not correct and that it should be increased.

It would appear under this section that if they do that the taxpayer would be liable for interest for the length of period whatever it was— eight years, ten years or whatever— [2117] that the Revenue Commissioners decided to review it and change the figure. Would the Minister not agree that in circumstances of that kind it is unfair to charge the taxpayer interest at 18 per cent on whatever would be the extra sum for a period of ten or more years? Should not some provision be made to ease the imposition of the interest in circumstances of that kind?

Mr. T.J. Fitzpatrick (Cavan): If we were to do that it would encourage the taxpayer to under-estimate the value of the shares in the knowledge that he could do so without becoming liable for interest. The Deputy knows that there is provision in the Bill for agreeing values for a three-year period. Once the Revenue Commissioners and the taxpayer agree on a figure, that figure is valid, apart from certain exceptions, for a further two years. I am convinced that if we were to say that in the case of a person who genuinely makes an effort to value his shares or his property, that if it turns out afterwards that he was grossly under-valued, he would not be liable to tax, that would only be inviting people to avail of that amendment—to say afterwards that there was an innocent misrepresentation or an innocent error but that they did their best.

Mr. Colley: I can only regard this type of section as being very unsatisfactory.

Ruairí Brugha: There are bound to be differences in valuations and changes because we are going into a totally new business here so far as the Revenue Commissioners and taxpayers are concerned. If there are revaluations for one reason or another there will have to be reassessments. Is there any likelihood that the Commissioners would be charging interest on the additional amount due which had not been paid because property had not then been so valued in the previous year?

Mr. T.J. Fitzpatrick (Cavan): That is the point that Deputy Colley has been dealing with. It would arise.

[2118] Ruairí Brugha: I am not saying it should not if the Commissioners were satisfied that somebody put in a valuation that was not a true valuation.

Mr. T.J. Fitzpatrick (Cavan): Unless they were satisfied that the taxpayer had put in a valuation which was an under-estimate, that valuation would not be increased.

Mr. Esmonde: There would have to be a material alteration under section 12 before the Revenue Commissioners would move in.

Ruairí Brugha: This is a whole new business for many people. I do not know how many will come under it but it is quite conceivable that you will have valuations put in which could be quite significantly below the real value. It is not easy to determine the real value of a lot of things at the moment. I know things that were worth £200,000 some years ago but which cannot be sold today. Valuation at present is not easy to assess. Would it be reasonable if a person or accountants put in a valuation and that if it emerges a couple of years later that that valuation was significantly greater, is it reasonable to charge interest? After all, the Commissioners have the provision of getting the valuation done themselves if they are not reasonably satisfied.

Mr. T.J. Fitzpatrick (Cavan): My answer to that is that if we were to agree not to charge interest we would encourage people to put in very low valuations because they could do so in the knowledge that they might get away with it, and also that if the valuations were increased later, the difference in tax would be interest free. This would be inviting people to take a chance and would increase the work in the Revenue Commissioners' offices. It simply would not work.

Ruairí Brugha: I appreciate that. The point I am making is that it is one thing to enable the Commissioners to charge interest on revaluation but it is another to compel them.

Mr. T.J. Fitzpatrick (Cavan): Where are we to draw the line? That [2119] would be an intolerable discretion to expect them to bear.

Mr. Colley: If the Minister and his advisers were to put their minds to this they could devise a reasonable workable way of distinguishing between the genuine case and the effort to get away with it. The Minister would agree that in the genuine case it is a very serious imposition. While I agree that it would be wide open to leave it with no limitation to abuse, it should be possible to devise some method of distinguishing between the genuine and the nongenuine.

Mr. T.J. Fitzpatrick (Cavan): We are dealing here with people of [2120] considerable property all of whom will have advisers of one sort or another.

Mr. Colley: You can have all the advisers you wish and, as Deputy Brugha says, still be wrong.

Ruairí Brugha: I can give the Minister an example of a property valued at approximately £200,000 but for which there is no buyer.

Mr. T.J. Fitzpatrick (Cavan): There is provision in the Bill for agreed valuations. Once the valuations are agreed, unless there is fraud or a change in circumstances, they are binding for three years.

Mr. Colley: As I indicated, this is a very unsatisfactory section.

Question put.

The Committee divided: Tá, 69; Níl, 65.

Barry, Peter.

Barry, Richard.

Begley, Michael.

Belton, Luke.

Belton, Paddy.

Bermingham, Joseph.

Bruton, John.

Burke, Dick.

Burke, Joan T.

Burke, Liam.

Byrne, Hugh.

Clinton, Mark A.

Cluskey, Frank.

Collins, Edward.

Conlan, John F.

Coogan, Fintan.

Cooney, Patrick M.

Corish, Brendan.

Costello, Declan.

Coughlan, Stephen.

Creed, Donal.

Crotty, Kieran.

Cruise-O'Brien, Conor.

Desmond, Barry.

Desmond, Eileen.

Dockrell, Henry P.

Dockrell, Maurice.

Donegan, Patrick S.

Donnellan, John.

Dunne, Thomas.

Enright, Thomas.

Esmonde, John G.

Finn, Martin.

Fitzpatrick, Tom (Cavan).

Flanagan, Oliver J.

Gilhawley, Eugene.

Governey, Desmond.

Griffin, Brendan.

Harte, Patrick D.

Hegarty, Patrick.

Hogan O'Higgins, Brigid.

Jones, Denis F.

Kavanagh, Liam.

Keating, Justin.

Kelly, John.

Kenny, Henry.

Kyne, Thomas A.

L'Estrange, Gerald.

Lynch, Gerard.

McDonald, Charles B.

McLaughlin, Joseph.

McMahon, Larry.

Malone, Patrick.

Murphy, Michael P.

O'Brien, Fergus.

O'Donnell, Tom.

O'Leary, Michael.

O'Sullivan, John L.

Pattison, Seamus.

Reynolds, Patrick J.

Rvan, John J.

Spring, Dan.

Staunton, Myles.

Taylor, Frank.

Thornley, David.

Timmins, Godfrey.

Toal, Brendan.

Tully, James.

White, James.

Níl

Allen, Lorcan.

Andrews, David.

Barrett, Svlvester.

Brady, Philip A.

Brennan, Joseph.

Breslin, Cormac.

[2121]Calleary, Seán.

Carter, Frank.

Colley, George.

Collins, Gerard.

Connolly, Gerard.

Crinion, Brendan.

Cronin, Jerry.

Crowley, Flor.

Cunningham, Liam.

Daly, Brendan.

Davern, Noel.

de Valera, Vivion.

Dowling, Joe.

Fahey, Jackie.

Farrell, Joseph.

Faulkner, Pádraig.

Fitzgerald, Gene.

Fitzpatrick, Tom (Dublin Central).

Flanagan, Seán.

French, Seán.

Gallagher, Denis.

Geoghegan-Quinn, Máire.

Gibbons, Hugh.

Gibbons, James.

Gogan, Richard P.

Haughey, Charles.

Herbert, Michael.

Briscoe, Ben.

Brosnan, Seán.

Browne, Seán.

Brugha, Ruairí.

Burke, Raphael P.

Callanan, John.

[2122]Hussey, Thomas.

Kenneally, William.

Kitt, Michael P.

Lalor, Patrick J.

Leonard, James.

Loughnane, William.

Lynch, Celia.

Lynch, Jack.

McEllistrim, Thomas.

MacSharry, Ray.

Meaney, Tom.

Molloy, Robert.

Moore, Seán.

Murphy, Ciarán.

Nolan, Thomas.

Noonan, Michael.

O'Connor, Timothy.

O'Leary, John.

O'Malley, Desmond.

Power, Patrick.

Smith, Patrick.

Timmons, Eugene.

Tunney, Jim.

Walsh, Seán.

Wilson, John P.

Wyse, Pearse.

Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.

Question declared carried.

SECTION 19.

Question proposed: “That section 19 stand part of the Bill.”

Mr. Colley: On the section, in view of the definition of “real property” under section 1, one can take it that the reference to real property in subsection (2) of this section includes leaseholds and land vested by the Land Commission and registered in the Land Registry. Therefore, it seems to me that very grave difficulties may occur under this section in many ordinary transactions. It should be remembered that we are dealing here with an annual tax, not like death duties where there was a somewhat similar provision for a certificate of discharge from death duties. Under this, one will need a certificate in respect of each valuation date for 12 years, not just the one certificate as was necessary in the case of death duties.

I would suggest that there is no good case for making property subject to a charge for wealth tax in the hands of a bona fide purchaser for value whatever the consideration. This section proposes to make it subject to a charge even in the hands of a bona fide purchaser for value if the consideration exceeds £50,000. I would also suggest that subsection (3) may well be unworkable in many cases because it is possible that in a number of cases a purchaser will find it impossible to ascertain with certainty whether his vendor had other previous transactions within the previous two years with his vendor, in other words, the vendor in the transaction with which we are concerned. The purchaser has to ascertain this with certainty or he can be in considerable difficulty. That is why subsection (3) may turn out to be unworkable in a number of cases. In the light of these objections, unless the Minister can throw some light on them that does not appear from reading the section, I am afraid the provisions of this section, although I understand why they are there, are going to present considerable difficulties, as I said at the outset, in many ordinary transactions.

Mr. T.J. Fitzpatrick (Cavan): This is a charging section. Section 19 (1) charges all real property comprising taxable wealth of a person and also charges all personal property, but [2123] in regard to personal property there is only a charge on it as long as it is in the possession and ownership of the assessable person. Subsection (2) deals with real property, and it provides that real property comprising taxable wealth of an assessable person shall not, as against a bona fide purchaser for full consideration, remain charged after 12 years. There is a precedent for that in the present death duty code. Subsection (3) releases what I will call small transactions, and indeed according to any standards they are not small. Real property which changes hands for less than £50,000 is discharged from wealth tax in the hands of the purchaser unless there are other transactions between the purchaser and the same vendor. I do not think it goes back any further between the purchaser with whom we are dealing and the same vendor within two years.

I have been thinking about subsection (2) which discharges real property in the hands of a bona fide purchaser for value after 12 years. We obviously took 12 years from the estate duty code. I think we could reduce that a bit. With the permission of the House I propose to reduce “12 years” in the second last line of subsection (2) to six years.

Mr. Colley: That is a step in the right direction.

Mr. T.J. Fitzpatrick (Cavan): I think it is a move in the right direction and it is sufficient for the purposes of the section. With the permission of the House we will delete 12 in line 4 of page 21 and insert six.

Mr. Enright: Will there be any method by which a solicitor acting for a purchaser will be able to check with the Revenue Commissioners and obtain a certificate?

Mr. T.J. Fitzpatrick (Cavan): Yes, there is provision for that.

Mr. Colley: But is it not true to say that even allowing for the Minister's amendment now from 12 to six it will be necessary to get a certificate [2124] in respect of each of the valuation dates in those six years.

Mr. T.J. Fitzpatrick (Cavan): My understanding of it would be that the solicitor or other person concerned would apply to the Revenue Commissioners for a certificate to the effect that the property comprised in the application is not subject to a charge for wealth tax and when he has got that certificate that would clear all years up to that date.

Major de Valera: The real question arises on the next section.

Mr. Colley: On that point I am not sure if the Minister is giving sufficient weight to the fact that we are dealing here with an annual tax whereas the death duty situation was a once-and-for-all. Therefore the procedure of a certificate of discharge which was appropriate to that is much less appropriate, I would suggest, to an annual tax.

Acting Chairman (Mr. Moore): Is the Minister moving an amendment now?

Mr. T.J. Fitzpatrick (Cavan): Yes. I move:

To delete “12” in line 4, page 21, and substitute “six”.

Amendment agreed to.

Acting Chairman: Is the section, as amended, agreed?

Major de Valera: No. The Minister was interrupted when he was answering something important.

Mr. T.J. Fitzpatrick (Cavan): What was I saying?

Major de Valera: That is exactly what these unwarranted interruptions mean.

Acting Chairman: I wanted to ensure that the House understood what was being proposed.

Major de Valera: I will take that up another time.

Mr. T.J. Fitzpatrick (Cavan): Deputy Colley asked me whether I was giving sufficient weight to the fact that this was an annual tax as distinct from a now-and-again tax. [2125] I feel that I am. First of all in so far as personal property is concerned there is no problem once it leaves the hands of the taxpayer. All real property stands discharged after six years in the hands of the purchaser. Property which changes hands for £50,000 or less stands discharged immediately unless there were other transactions between the purchaser of that property and the same vendor. There is provision, in reply to Deputy Enright's query, for a certificate of discharge from wealth tax and that certificate of discharge will take much the same form as a certificate of discharge on death duties. In other words, it will certify that up to the date specified in the certificate there is no charge for wealth tax against the property concerned. Of course on exempted property, like a private residence, if there is a certificate, the question of wealth tax will not arise. I do not think there is anything to worry about. It would be unreasonable not to charge real property to the extent that it is charged in the section.

Major de Valera: There is an assessment for each of six years instead of one assessment. This is what the Minister was replying to. There is obviously an administrative difficulty here. It is six times the job for the Revenue Commissioners to prepare the certificate. I do not want to anticipate the argument on section 20. What I would be concerned about here is the physical capacity of the Revenue Commissioners to clear the mechanics of this charging section in time and the consequences of it not being done in time may lead to the difficulties that Deputy Colley mentioned and may further lead to considerable commercial embarrassment. When I say commercial embarrassment I mean embarrassment that will not be good for the community in the effecting of certain transactions. There are really six assessments involved. This is not a simple operation for the Revenue Commissioners and they cannot be expected to give a certificate in the same time. In the case of death duties there was a provisional [2126] assessment. Obviously that procedure is not applicable here.

Mr. T.J. Fitzpatrick (Cavan): In the case of a provisional assessment the Revenue Commissioners would not give a certificate of discharge without having another look at it.

Mr. Colley: But the bona fide purchaser is free.

Mr. T.J. Fitzpatrick (Cavan): After 6 years.

Mr. Colley: No.

Mr. T.J. Fitzpatrick (Cavan): Yes.

Mr. Colley: Yes, if he does not get the certificate of discharge. Could I interrupt the Minister for a moment and add to what Deputy de Valera said? From the point of view of the Revenue Commissioners it is not just six assessments. They have got to look, not just at the property, but at different persons. The property could have been in the ownership of different persons and the job involved is going to be pretty substantial.

Mr. T.J. Fitzpatrick (Cavan): These will be transactions of over £50,000. If the vendor is a wealth tax payer the Revenue Commissioners will have a file on him from the introduction of the tax or from the day he came into the net. There is no problem there at all. If he is not a wealth tax payer it will be necessary to make some enquiries just as at the present time if a property is changing hands and the estate duty has not been finally settled, it is necessary to make enquiries and if necessary furnish a corrective affidavit. We are dealing here with transactions over £50,000. If the person is already paying wealth tax there is no problem. If he is not it will be necessary to make some enquiries.

Major de Valera: In the case of realty there have been cases in or about 1973 where the value of land in the suburbs of Dublin so escalated that people who would not have been chargeable to tax suddenly, within the period of one year, found themselves [2127] heavily chargeable to tax. It is situations like this that complicate this charging section.

Mr. T.J. Fitzpatrick (Cavan): We have taken care of that.

Major de Valera: You cannot expect the Revenue Commissioners to be inspired.

Mr. Esmonde: We are dealing with a vendor-purchaser situation, as I understand it. Deputies will recollect the old section 6 certificate and that very often goes back over the years. Up to 1st April this year we have had this business of where there have not been what I call full commercial transactions, where there has been a voluntary element in transactions— quite a common thing in dealing with property and development—and you had a future liability for succession duties arising where you had to have it commuted. All that was done by the Revenue Commissioners without too much cost or delay.

Mr. Colley: Yes but they started off with “on the death of” and then their files showed where the property came from to that person. This has always been the situation here.

Mr. Esmonde: No, the succession duty situation is far more complex than that. You are dealing with actuarial calculations and the creation of a——

Mr. Colley: At least they knew the party and had a line to go on to trace him. It could be like looking for a needle in a haystack looking for one of these. I wanted to come back again to the point I raised with regard to the purchaser and the obligation imposed on him. I do not think the Minister quite got the point I was putting. If we assume for a moment that I was purchasing property from the Minister for a consideration less than £50,000 and that the Minister had acquired that property, say, from Deputy Esmonde, I would have to establish that during the two years prior to the sale there had been no other transaction between the Minister and Deputy Esmonde, because if [2128] there had been, it could produce the question was the property charged. At least that is how I read the section. If it is so, this could present in practice impossible difficulties to ascertain with certainty what the position was.

Mr. T.J. Fitzpatrick (Cavan): I do not take that meaning out of it.

Mr. Colley: Am I misreading the section?

Mr. T.J. Fitzpatrick (Cavan): I believe so. I take the view that if the Deputy buys from me he will be concerned only with transactions which take place between the two of us, and even if the title shows that I purchased from Deputy Esmonde, there is no obligation on the Deputy to go back and see what transactions Deputy Esmonde was involved in.

Mr. Colley: Is the Minister sure? That could be very important if what the Minister is saying is correct.

Mr. T.J. Fitzpatrick (Cavan): “...unless the amount of the consideration or mortgage exceeds £50,000 or the amount of the consideration or the mortgage debt, together with the amount of the consideration or the mortgage debt for any other such sale or mortgage effected between the same parties...” I say that the same parties there must mean the vendor and purchaser. It does not go back beyond the vendor.

Mr. Esmonde: Subsection (3) starts with the words “notwithstanding subsection (1)”, which creates the charge. This gives exemption and ties it down to the particular transaction. You are only concerned with the particular transaction and this subsection gives you the exemption, and if you are within the wording of the section you are not concerned.

Major de Valera: There is an aggregation all the same in the section.

Mr. Esmonde: Yes, but only as between the two immediate parties doing a contract.

Mr. Colley: That is the question. Supposing that there had been a few [2129] transactions in the two years, say, between the Minister and Deputy Esmonde and the result was that aggregating it, it came to over £50,000. If I am a purchaser from the Minister, am I not in the position that I am purchasing property which because there had been these transactions within the two years, is subject to a charge for wealth tax?

Mr. Enright: I think I know what Deputy Colley is getting at. If a person has quite a substantial number of holdings the problem arises of consolidating or separating them. It can reach the situation in which, take two holdings of say, £45,000 each: if Deputy Colley is selling and I buy one portion and I put the other portion in my wife's name, are we both exempt? There is one vendor but two separate parties purchasing who, for taxation purposes, may be considered as one person. Is that sufficient to escape the net? I can see a situation arising where a person who wants to avoid wealth tax in disposing of property can do so if he is lucky enough to find two or three separate purchasers.

Major de Valera: That may be exposing a loophole all right.

Mr. T.J. Fitzpatrick (Cavan): Putting into his wife's name would not alter the position but to get back to the point made: Deputy Colley purchases from me for less than £50,000. Deputy Colley is concerned only with transactions between himself and myself within two years. If I bought from Deputy Esmonde, it is a matter between myself and Deputy Esmonde. I might still be liable for wealth tax on this property, but it is not charged on the property, in my opinion. This section discharges it in the hands of a purchaser for less than £50,000 unless there were other transactions as set out in the section between that purchaser and me.

Mr. Colley: If that interpretation is correct it certainly eases a number of the problems I hear. Could I ask the Minister between now and Report Stage to go into that even further, because it is very important that that [2130] should be so. Could I ask him further if, in fact, it turns out not to be so, would he reconsider the whole concept of charging real property with liability for wealth tax, because it seems to be if that is one of the consequences and if you take into account what Deputy Enright was talking about and the possibilities of evasion which he outlined, the only way you can close that in the lines of this section is to interpret it the way I am interpreting it; in other words if in fact there has been this kind of attempted evasion that he outlined, the effect of subsection (3) should be to aggregate these things and therefore charge the property with the wealth tax. If that happens, then the purchaser for value is affected, and if there is any danger of this complication setting in, it would be better to drop the whole idea of charging real property in these circumstances.

Mr. T.J. Fitzpatrick (Cavan): I am not prepared to go that far, and I am not prepared to discharge real property from the charge for wealth tax. I am satisfied that what I say is correct, but in case it is not correct I am prepared to have a look at it and if what Deputy Colley is saying is correct I will investigate the possibility, which I think should not present any difficulty, of spelling out clearly my interpretation of it.

Major de Valera: May I ask one final question of the Minister on the section? It seems to me on interpretation of the section that real property is chargeable but that personal property is not chargeable.

Mr. T.J. Fitzpatrick (Cavan): It is only chargeable in the hands of the——

Major de Valera: All property is chargeable but real property is charged in the hands of a bona fide purchaser for value, whereas you do not pursue personal property. The question I want to ask the Minister is this: is the simple reason for that not that you can get your hands fairly surely on the real property and you cannot on the other?

[2131] Mr. T.J. Fitzpatrick (Cavan): Exactly.

Major de Valera: Is that a sufficient reason for charging real property in this case? It is different to other cases, and I will tell you why. I think the question has more relevance here than in the case of other property. In the case of the big transaction that the Minister is considering, where considerable sums in wealth tax may attach, it is likely that the property concerned may be more in the nature of personal property than realty. It can be in the form of shares, for instance. I am not going to delay the House with giving specific examples. I think it will be enough to give the hint for the Minister's consideration. It is quite conceivable that the transactions that would be significant for wealth tax purposes as distinct from the traditional situation in regard to estate duty where, coming from the days of the landed estate, the important thing was real property—in the case of wealth tax it is quite possible, if not even proper, that the bulk of the taxable property will not be realty as such. Therefore the only reason it is being charged is that the Revenue can get their hands on it and they can get a security that they cannot get in the other case.

Therefore I would reinforce what Deputy Colley has said on an examination of the subject, that if difficulties of that nature and others accumulate, it might be more prudent, realistic and certainly administratively more convenient for the Revenue Commissioners, having regard to section 20, to forego what is really what one might call a security for payment provision in this case. I do not expect an answer to that, because I simply say it as something for the Minister to consider.

Mr. T.J. Fitzpatrick (Cavan): I would like to put this on the record. There is more in the section than appears to Deputy de Valera. In order for any tax to be fair and just and equitable it must be collected from all people who are liable to it. This is not always 100 per cent possible, but [2132] certainly in order that a tax may be equitable and just the Revenue Commissioners should take reasonable steps to collect it from those liable to it.

Experience has shown that the certificate of discharge is one of the methods or part of the machinery through which a lot of taxable property comes to light. This certificate of discharge in these big cases may very well have the effect of bringing people who are liable to wealth tax into the net who otherwise would succeed in staying out.

Major de Valera: This is on the next section.

Mr. T.J. Fitzpatrick (Cavan): Yes, but there would be no necessity for a big portion of the next section if we did not have the section we are dealing with now, because there would be no charge. If we did, in any circumstances, what Deputy Colley suggests——

Major de Valera: I admit that may neutralise my administrative argument, but not all the argument.

Question put and agreed to.

SECTION 20.

Question proposed: “That section 20 stand part of the Bill.”

Major de Valera: Most of what has to be said on section 20 has already been said on section 19. I would simply confine myself to saying that it is going to be more difficult for the Revenue Commissioners to process certificates of discharge and to give them with the expedition required in the cases under this Act than it has been in the case of estate duty.

On the Second Reading debate on the Capital Acquisitions Tax Bill a number of us pointed out that the Estate Duty Office had got into a very serious jam, and that it was very hard to get even provisional assessments, much less certificates of discharge. These are facts. I was challenged on that and I mentioned—I think it is on the record—that I made a number of individual inquiries at certain solicitors' offices and even got [2133] authority to disclose the cases, if necessary. In every case, however, it was genuinely qualified by the statement that nothing but the most helpful co-operation had been given as far as possible by what was described as the harassed officers of the sections concerned. It was even said in one case that people were being driven to the point of almost nervous breakdown by the burden of work in these Departments. It is with that in mind and the discussion on the previous section, without repeating what I said, I wonder whether this section is not in the initial stages going to result in some serious log jams. I am conceding the Minister's point—and he does not need to repeat it—about the value for collective purposes of issuing certificates, and as far as he went with that it is a valid argument and of great assistance to the administration of the code. On the other hand there is the physical problem of dealing with the work involved. I have no idea what volume is going to be concerned but even though there may not be many people concerned, there will be initially a considerable amount of exploratory work to be done as well as routine work. In these circumstances, I would simply ask the Minister to consider the short-term consequences of this section and whether he should not have some transitory provisions in that regard.

Mr. Esmonde: Could I say following on what Deputy de Valera has said in relation to this matter of getting certificates from the Estate Duty Office that he is quite correct that there has been difficulty——

Major de Valera: And it is not the fault of the office?

Mr. Esmonde: No, it is not the fault of the office, but what it is the fault of is the frightfully complex nature of estate duty over the years with piecemeal legislation and amendments, and this has given rise to quite a considerable amount of trouble. Very often the valuation and assessment of estate duty was many years removed from the valuation of the property that was the subject of the [2134] transaction, say, for the sale. I am only approaching it from the point of view of a sale. We are talking about certificates. I do not perceive the same trouble arising under this Act because you are dealing with the sale. It gives you the value. You are also not going to be dealing with the complex rules you had under estate duty. It will be a far simpler Act.

Mr. Colley: The Deputy is an optimist.

Mr. Esmonde: I have always been slightly pessimistic about this sort of thing, but I think I have got grounds for optimism here. I much prefer dealing with this Bill than dealing not alone with all the Finance Acts from 1894 down to date but with the Succession Duty Acts back to 1881 and some of the Legacy Duty Acts which incorporated sections where difficulties arose. It is a terrible morass at times to go through, and if anybody wants to prove how disturbed a lawyer's mind can be in the estate duty world all he has to do is look at some of my work from the point of view of vendor and purchaser on the estate duty section. It is a wonder the estate duty office are able to produce certificates.

Major de Valera: I understand the Deputy's point. This is new and it appears simple. Let us not forget that it is not in a watertight compartment. I am not going back in pari materia but legacy duty, stamp duty and succession, may attach to this real property. All this will be in the purview of the Revenue Commissioners. A capital gain may be anything but simple. While I agree up to a point, the Deputy may be too optimistic.

Mr. Esmonde: I am taking this legislation as it stands.

Major de Valera: Only the Revenue Commissioners can judge that and I leave it to them.

Mr. Esmonde: I am limiting my remarks to this section and the particular certificates operating under the chargeable section.

Major de Valera: I told the Deputy that my remarks are meant to be helpful in this regard. Only the Revenue [2135] Commissioners can judge this for themselves. We are commending it to them for their consideration.

Mr. T.J. Fitzpatrick (Cavan): I do not think Deputy de Valera need be worried about the office of the Revenue Commissioners becoming clogged up if there are the same number of applications as under the estate duty code. Under the estate duty code there were applications for personal property and for practically every sale. A sale might be part of a person's property. Without sales at all executors apply for certificates of discharge from death duties in respect of the entire assets before distributing. In the estate duty code there is aggregation. Estate duty might be paid at 5 or 6 per cent. There was not any guarantee that that was the end of it. Here once wealth tax is paid at 1 per cent that is the end of it.

There is provision in this section in order to facilitate people that a certificate discharging property may in certain cases be issued even when the tax is not being paid. If the Revenue Commissioners are satisfied that the tax will be paid, supposing that a reputable executor or a bank executor or the Land Commission are involved, or if there is some way of being reasonably sure, they may issue a certificate.

Major de Valera: There will be requisitions raised on section 19. That may complicate it. I would imagine that the Revenue Commissioners may be relying on the new computers to help to solve a lot of their problems.

Mr. T.J. Fitzpatrick (Cavan): There will be requisitions raised in regard to the property which is exempt.

Major de Valera: We know what requisitions can do.

Mr. T.J. Fitzpatrick (Cavan): Perhaps some bright genius would eliminate some of the totally unnecessary requisitions that are asked. Not long ago I came across one asking whether there were any railway lines running through the property although there is no railway station within 30 miles of the property.

[2136] Mr. Esmonde: Under estate duty if a person was borrowing money from a building society, the building society had not power under the Building Societies Act to advance the money until the estate duty liability was discharged. This subsection (3) automatically provides for the discharge of the property from the wealth tax even though it may not be paid. This is a tremendous improvement.

Mr. Colley: If the certificate is given.

Mr. Esmonde: It is a tremendous improvement. Sales have been held up interminably because of this. This caused great hardship to young married couples who have not been able to close their sales and who have been hanging on to bridging finance. It costs them a small fortune. They have been unable to take up the building society mortgage money.

Question put and agreed to.

SECTION 21.

Mr. Colley: I move amendment No. 29.

In page 21, subsection (1), to delete lines 47 to 50 inclusive.

Subsection (1) of this section provides broadly that if the taxpayer can show that the combination of wealth tax and income tax in one year exceeds 80 per cent of his income the Commissioners shall repay to him the amount by which the combined total exceeds that 80 per cent. It goes on to say that despite that he is to pay at least 50 per cent of the wealth tax. The consequence of that is that in some cases, admittedly not very many cases and cases in which there is likely to be a good deal of money involved, there can be a liability for more than 100 per cent of income. I suggest that in any such case with this proviso operating what will happen amounts to confiscation. The taxpayer concerned, if obliged to pay more than the total amount of his income, has got to sell off some of the property in order to pay the wealth tax. If it were a temporary situation he could borrow. If he has to pay more than 100 per cent of his [2137] income for any length of time, the only way he can do it is to sell off some of his property compulsorily in order to pay the tax. If that happens I would suggest it is getting very close to confiscation. This section with that proviso is of doubtful constitutional validity.

Mr. T.J. Fitzpatrick (Cavan): I do not accept the Deputy's argument. I do not propose to accept the amendment. The Deputy has admitted that the situation which he worries about will arise in extremely exceptional circumstances. I would go further and say that the situation could not arise in normal circumstances and would only arise in manipulated circumstances.

Subsection (1) of section 21 provides a ceiling for the wealth tax payable in the case of the individual. It provides that the combined total of income and wealth tax is not to exceed 80 per cent of the income of the individual. The proviso to this subsection provides that 50 per cent of the wealth tax as assessed must be paid in any event. The amendment proposes that this floor of 50 per cent be abolished. The result would be that no wealth tax would be payable in the case where the owner of property had no income and would be greatly reduced where the income was small relative to the value of the taxable wealth. Thus if a married individual had taxable wealth of £1 million and no income no wealth tax would be payable. If he had wealth of £1 million and £1,000 income, £748 wealth tax would be payable.

Mr. Colley: The Minister is talking of even more unusual situations.

Mr. T.J. Fitzpatrick (Cavan): On wealth amounting to £1 million and £5,000 income £2,670 wealth tax will be payable. The wealth tax on taxable wealth of £1 million at 1 per cent is £10,000. It will be seen, therefore, that a man with £1 million if his income was so arranged could really defeat the charge for wealth tax. As the section stands £5,000 wealth tax would be payable in any of the above cases. The examples [2138] chosen are extreme. However, they pinpoint the problem and underline the principles which are valid for wealth tax payers at all levels. It is clear that tax can be avoided or mitigated by keeping income at a minimum. This can be done by minimising income as such.

I repeat that it is clear that tax can be avoided or mitigated by keeping income at a minimum. This can be done by minimising income as such. It can also be done by investing in property which provides little or no return. It is, therefore, necessary to prevent the avoidance of tax. The wealthier a taxpayer the more scope he has for avoiding tax in the absence of a floor. His opportunities and his means of living off his capital are greater and for reasons of equity, a floor is essential. Again an extreme but much quoted example makes the point; the millionaire in the first example because of lack of income pays no wealth tax; neither does a beggar, yet nobody would claim their capital situations are similar. It is illogical that income alone should determine the amount of an individual's wealth tax. In examples 2 and 3, the wealth tax payable increases from £748 to £2,670 merely because one individual has a higher income although their capital position is similar. The absence of a floor would encourage wealth tax payers not to put their wealth to the greatest use and discourage investment as such. For all these reasons the proposal to abolish the floor is unacceptable.

Finally there can be no question of hardship. The 0.5 per cent floor has reference only to taxable wealth. When regard is had to the high thresholds and the generous exemptions in the Bill, the effective rate of the floor vis-á-vis the taxpayer's entire wealth will, in the vast majority of cases where the floor will operate, be well below that figure.

Mr. P. Belton: I am not talking about the total income and the total tax. I think it is wrong that a man has to pay 22 shillings on every £ he earns. I think this is wrong. If a man earns a huge amount of money, he [2139] may be a big industrialist, and it is wrong that he should have to pay 22 shillings on every £ he earns. I agree with Deputy Colley. I think it is against the Constitution. I do not think he will have to pay it.

Major de Valera: Will the Deputy vote with us?

Mr. P. Belton: No, I will not.

Major de Valera: Then cut the cackle.

Mr. P. Belton: The Deputy voted for things he did not believe in.

Mr. T.J. Fitzpatrick (Cavan): In reply to Deputy Belton his argument would have a lot more validity if this were income tax. It is not income tax.

Mr. P. Belton: It is both.

Mr. T.J. Fitzpatrick (Cavan): No. It is a tax on wealth as distinct from income tax. Of course, if it were solely income tax it would be irrational to expect a man to pay more in income tax than his income. That is not proposed here. This is a separate or distinct tax. In the days of death duties the widow was not asked what income she had, she was not asked what income her husband had. She was politely asked to hand over to the Revenue Commissioners 55 per cent in certain cases of her husband's wealth without any reference, good, bad or indifferent to the income that her husband had or to the income that she had, or without any reference as to whether the husband had provided liquid cash to pay the estate duty or as to whether she would have to sell the estate to pay the duty. That was a much more brutal and ruthless attack on the wealth of an individual. In the vast majority of cases where the floor will apply it will have arisen in cases where the position is not real but manipulated. I think the comparison I have given in regard to the death duty situation, together with the example I have given from my brief, justify retention of the floor.

[2140] Mr. Colley: However you look at it this can result in what amounts to confiscation, and if it is ultimately held that this section is unconstitutional we can only say that we warned the Government.

Mr. T.J. Fitzpatrick (Cavan): It is a great thing we have a Constitution. How could this be unconstitutional when death duty confiscation was never challenged?

Major de Valera: It is a fair point. It is a question of when something is challenged. How did it get through in 1948 without the point raised in the Haughey case?

Mr. Colley: Not alone that, but in the death duty case if you pay 41 per cent on your property you have the remainder. Here we are talking about an annual tax. If you cannot pay it out of your income you are paying it out of your property.

Mr. T.J. Fitzpatrick (Cavan): On the famous section 2 I gave an example where it would take 139 years at this rate to pay as much as the widow is asked to pay in one sum.

Mr. Colley: We will see.

Amendment, by leave, withdrawn.

Question proposed: “That section 21 stand part of the Bill.”

Mr. Colley: The relief that is given in subsection (1) is of very little value to a number of classes of persons. If you take a farmer whose herd is affected by brucellosis or any other major disease, or indeed if there is a bad cycle of weather, or alternatively a businessman who finds he is trading at a loss, in either case they may have no income for a period of two or three years. Being in that position they are not likely to be able to raise a loan. They certainly could not do it very easily. Yet there are no provisions here which will ease their liability for wealth tax. It seems to be one of the major drawbacks in the proposals in the Bill. To have no provision for any easing or exemption in a case where a person finds he is operating at a loss and, therefore, has no income with which to pay it is not very satisfactory. There should be [2141] provision to give exemption for, say, farmers, who are affected by disease in their herds, or businessmen going through a bad patch and trading at a loss.

Furthermore, I note that the relief that is being given is confined to the individual. It is not, apparently, proposed to apply it to the private nontrading company or the discretionary trust. Again, it is not clear to me why that should be so but because not even the relief in the section is being given, there is graver danger of what amounts to confiscation in those cases.

Should not the relief, such as it is, be available to a person who is ordinarily resident here, even if not domiciled here? He could be here for very many years and still not be domiciled here. I am not quite clear why it should be refused to somebody who is ordinarily resident here.

In regard to subsection (2) which provides that tax shall not be paid more than once in respect of the same property on the relevant valuation date and the same property shall not be included more than once in taxable wealth on that date, there ought to be an addition to that subsection to provide that wealth tax and death duties would not be payable on the same property after 5th April, 1975. When speaking about death duties I am not including death duties which arose before 5th April and were not paid. I mentioned on an earlier section the sections under which they arise, but we ought to make certain in that subsection that liability for wealth tax and death duties should not arise on the same property after 5th April, 1975.

Mr. T.J. Fitzpatrick (Cavan): Deputy Colley makes the point that a person may have a bad year and may have no income and that in such case he should be completely exempt from wealth tax. Wealth tax comes into play only in the case of persons of considerable wealth. There are other forms of tax in this country—I will not go back to death duty again —and they did apply to people who had no income and, indeed, to people [2142] who might have owed money on the security of the property which was being taxed.

Then there are rates that are in operation here for years. These are levied on wealthy people and poor people. In neither case do they take into consideration the ability of the person to pay. Under the wealth tax a married farmer can have 240 acres of land and other property worth a total of £250,000 and be completely exempt from tax. He can have property worth £326,000 and the rate of tax is only .09 per cent.

Mr. Colley: Is it intended that wealth tax would be paid out of income or out of capital? That is really what it amounts to.

Mr. T.J. Fitzpatrick (Cavan): It is meant that it would be paid. There is no direction given in the Bill as to where it would be paid but this subsection provides that in normal cases where property is worked in the normal way it would be paid out of income. It is necessary to have the section drafted in such a way that wealth could not be manipulated so as to avoid both payment of income tax and payment of wealth tax. That is the situation that the Deputy's amendment would lead to.

Deputy Colley raised the question of death duties and wealth tax on the same property. I do not know exactly what the Deputy means by that. It cannot arise in so far as death duties are abolished.

Mr. Colley: I indicated on an earlier section the possibility of death duty liability arising in the future. One example was growing timber and the other related to heirlooms. I am speaking from recollection.

Mr. T.J. Fitzpatrick (Cavan): I do not want to have a discussion on heirlooms. I am more familiar with the position in regard to timber. I am glad to be able to assure the Deputy that it is exempt from wealth tax. I introduced an amendment which exempts growing timber in the ownership of the same person as the land from wealth tax.

[2143] Mr. Colley: When it ceases to grow, what happens then? Does it become liable to wealth tax?

Mr. T.J. Fitzpatrick (Cavan): I suppose so.

Mr. Colley: But it becomes liable to wealth tax.

Mr. T.J. Fitzpatrick (Cavan): Whether it is growing or whether it is standing.

Mr. Colley: It is only the principle I am concerned with. If there is a danger of this arising does the Minister accept that it should not arise?

Mr. T.J. Fitzpatrick (Cavan): I do not know.

Mr. Colley: The Minister will check that?

Mr. T.J. Fitzpatrick (Cavan): Everything will be checked. There is nothing unreasonable in this section. If the floor was not there the position would arise where people could enjoy what to most people is extremely valuable property and it might not be liable for either income tax or wealth tax.

Mr. Colley: Would the Minister care to comment on the exclusion of the discretionary trust and private non-trading company from this relief? It is confined to the individual.

Mr. T.J. Fitzpatrick (Cavan): There is no floor and there is no ceiling and they are often able to avoid income tax.

Mr. Colley: In practice, they are not getting the relief.

Mr. T.J. Fitzpatrick (Cavan): It does not apply to them because there is no floor for them, admittedly, but there is no ceiling. They are taxed at a flat rate where they are taxed. The discretionary trust has certain exemptions and certain reliefs.

Mr. Colley: Are they treated as individuals?

Mr. T.J. Fitzpatrick (Cavan): They are not treated as individuals. There are no exemptions and there [2144] are no thresholds and they are taxed at a flat rate of 1 per cent.

Question put and agreed to.

SECTION 22.

Mr. Colley: I move amendment No. 30:

In page 22, subsection (2), lines 17 and 18, to delete “or from a date which is three months after the relevant valuation date, whichever is the later”.

Under this section the position seems to be that interest which is payable by the taxpayer on outstanding tax can run from 5th April but interest payable by the Revenue Commissioners on overpaid tax can only run from 5th July, other than in 1975. If the taxpayer is entitled to interest and this is recognised in the Bill, why should not the payment of interest by the Revenue Commissioners date from the date of overpayment when they actually received the excess amount of tax?

Mr. T.J. Fitzpatrick (Cavan): We do not want to create a situation where we would regard it as an investment. There is an element of penal interest in the 18 per cent. That is admitted. If there was not a penal element there would be no pressure on people to pay within the time. If the rate of interest they were charged by the Revenue Commissioners was lesser than the rate of interest that was charged by the bank they, of course, would give preference to the bank.

Mr. Colley: The Minister does not really want them to pay much before July 5th—is that it?

Mr. T.J. Fitzpatrick (Cavan): I do not want them to pay too much before July 5th. The purpose of subsection (2) of this section is to pay interest on overpaid wealth tax which under subsection (1) falls to be repaid or retained on foot of outstanding tax. The interest on the overpaid tax is to be calculated from the later of two dates, the date of payment of the excess tax or the date three [2145] months after the valuation date at the rate of 1.5 per cent per month or 18 per cent per annum. The significance of the three months lies in the fact of the interest-free period which is extended to 5th December of this year. The amendment proposed by Deputy Colley seeks to delete the reference to three months with the result that interest on the excess tax will be calculated from the date of payment of the tax irrespective of when it was paid. The amendment is not acceptable for the following reason, to accept it would involve paying interest on tax in respect of a period during which interest is not charged.

Mr. Colley: Only in certain circumstances. It is charged over that period in certain circumstances.

Mr. T.J. Fitzpatrick (Cavan): It must be paid in this case.

Mr. Colley: Yes, but the Minister is having it both ways now. He is charging the taxpayer interest and he is not paying interest himself on overpayments.

Mr. T.J. Fitzpatrick (Cavan): Secondly, the interest-free period would be availed of to deposit sums with the Revenue Commissioners to earn interest at the rate of 18 per cent per annum. As drafted, the subsection will ensure that payment on account made within three months of the valution date will be based on a realistic estimation of the taxpayer's liability to wealth tax.

Mr. Esmonde: We do not want to have to issue to the Revenue Commissioners a banker's licence or something like that, under the provisions of the Central Bank Act.

Mr. Colley: You see the difficulty when you put the interest rate too high. If the Minister had followed my example he would not have this problem.

Amendment, by leave, withdrawn.

Mr. T.J. Fitzpatrick (Cavan): I move amendment No. 30a:

In page 22, subsection (2), after line 19, to insert the following proviso:

[2146] “Provided that the reference in this subsection to a date which is three months after the relevant valuation date, shall, in relation to the valuation date in the year 1975, be construed as a reference to the 5th day of October, 1975.”

Mr. Colley: I was wondering about that.

Mr. T.J. Fitzpatrick (Cavan): Subject to checking, that should read “5th December, 1975.” The subsection provides that interest shall be calculated on overpaid tax from the later of two dates—the date of payment of the excess tax, or the date three months after the valuation date. The date three months after the valuation date corresponds to the last day of the interest-free period of three months in section 18 (3). In my amendment, No. 28, this three-month period has been extended to 5th December, 1975, so as to allow the period for delivery of returns under section 15 (1). This amendment is therefore consequential on those amendments. In the debate on the previous amendment No. 30, in the name of Deputy Colley, the necessity for the substitution was explained. I ask leave to make the amendment with the substitution of “5th December, 1975” for “5th October, 1975”.

Amendment to amendment agreed to.

Amendment, as amended, agreed to.

Mr. Colley: I move amendment No. 31:

In page 22, to delete subsection (3).

The purpose of this is to delete subsection (3). Subsection (3) says that where there is a repayment of tax due to the taxpayer by the Revenue Commissioners under section 21, no interest will be paid on it. I do not know why there should not be interest on repayments under section 21. It is wrong in principle and also in practice. It is going to include cases where people have no income because of losses suffered, as I have outlined [2147] earlier. Therefore, in practice, there is even a greater case for interest in this case than in the limited number of cases where it is contemplated that interest would be paid by the Revenue Commissioners on repayments. It is wrong in practice and in principle in some of the cases that will arise.

Mr. T.J. Fitzpatrick (Cavan): We are not allowing interest here because the refund is being made because the floor in section 1 applies. The floor comes into operation because the taxpayer must be using his property or misusing it in such a way that he is getting no return on it. In such a case we think that it would be unreasonable to give him 18 per cent.

Mr. Colley: Would the Minister say a farmer is misusing it if he has been hit by disease? That is hardly misusing it.

Mr. T.J. Fitzpatrick (Cavan): The reason behind the rejection of the amendment is as follows: section 22 of the Bill deals with cases where there has been an overpayment of tax and allows interest on an overpayment at the rate of 1.5 per cent per month from the date of payment to the date of repayment of the tax. The subsection which it is sought to delete provides, however, that an overpayment under section 21 should not carry interest. The repayment under this latter section arises only where the total of the wealth tax and income tax exceeds 80 per cent of the income. The effect of the amendment would be that a repayment under this ceiling provision would carry interest. The amendment is not acceptable. As the rate of wealth tax is only 1 per cent and the effective rate is generally somewhat lower, the ceiling provision will arise only where the total income of the taxpayer is abnormally low in relation to the value of the property he possesses. In the case of an individual, if it is abnormally low income it would obviously be in his interest to postpone as long as possible the settlement of his tax affairs or his application for a refund in the sure knowledge that he would be in receipt [2148] of interest at the rate of 1.5 per cent per month from the overpayment, a return far in excess of what he was earning on his own capital.

Furthermore, an individual who has his affairs so arranged that his income is abnormally low has little or no equity in seeking a good rate of interest in an overpayment at the expense of the State, particularly so if his low income policy is designed to reduce income tax liability and wealth tax liability. An overpayment in the ordinary course may be set off against any other outstanding liability on the date on which the repayment falls to be made. The overpayment in the ceiling case is not subject to such set off as the Bill stands, though it provides little or no income. The floor is therefore necessary to prevent the avoidance of tax. The wealthier the taxpayer is the more scope he has for avoiding tax in the absence of a floor. His opportunity and his means of living off his capital are greater. For reasons of equity a floor is essential. Again an extreme but much quoted example makes the point. The millionaire in the first example because of his lack of income pays no wealth tax. Neither does the beggar, as I have said before. Yet nobody would claim that their capital situations are similar. It is also illogical that income alone should determine the amount of an individual's wealth tax.

Mr. Colley: I have got the Minister's point all right.

Mr. T.J. Fitzpatrick (Cavan): The point is absolutely clear. The case made by Deputy Colley in which he suggested that just because of a bad season or because the hay was not saved this man's income would be as low as it is is a very far-fetched example when one gets into the wealth tax class. When Deputy Colley was talking about disease he was probably talking about cattle. You are getting into the £¼ million category, at least, before wealth tax would apply in that case.

Mr. Colley: In many cases the innocent will suffer for the guilty.

[2149] Mr. Esmonde: That situation arises under Income Tax Schedule D.

Amendment, by leave, withdrawn.

Section 22, as amended, agreed.

Section 23 agreed.

SECTION 24.

Mr. Colley: I move amendment No. 32:

In pages 22 and 23, to delete subsection (4).

Subsection (4) provides:

An appeal under this section against an assessment shall not be proceeded with or entertained by the Appeal Commissioners unless an amount equal to 75 per cent. of the amount of the assessment is paid to the Commissioners by or on behalf of the appellant.

There is a proviso that this subsection shall not apply where the appellant is aggrieved on the ground that he is not an accountable person, in other words that they are charging the wrong man. Otherwise on the amount, and so on, he cannot bring an appeal unless he lodges 75 per cent of what he has been assessed on.

I have the gravest doubts about this provision. There could be a gross over-assessment. The possibility is acknowledged in the proviso where there could be an assessment on the wrong person. Similarly there could be, by mistake, a gross over-assessment. It would be unjust to force a taxpayer to pay 75 per cent of the tax assessed on this gross over-payment, merely in order to exercise his right of appeal. I would not mind a provision which made the taxpayer liable from the date of the original assessment on the amount that he was found under appeal to be liable for until the date of payment, assuming he paid no tax prior to the appeal. I would have no objection to that kind of provision. I suggest that this subsection is going much too far.

Again I wonder about the constitutional validity of such a provision. In the ordinary case maybe it would not impose an undue obligation but in the kind of case I have outlined where, by [2150] mistake or otherwise, presumably by mistake, there is a gross over-assessment, to impose on the taxpayer the obligation before he can even exercise his right of appeal, to pay 75 per cent of that assessment, I suggest, is going much too far. I wonder why is it that under section 23, where there is a reference to an appeal in regard to the value of real property, no such provision is imposed. It seems to me that this subsection ought to be deleted and I am urging the Minister to do that.

Major de Valera: This situation is likely to arise only when both parties are in a dispute position and when both parties, the Revenue Commissioners and the other party, are driven to making extremes of that case and the probability of an over-assessment is very great. The Revenue Commissioners will be put in the position of a party in court who naturally have to make the best and the safest case they can make.

Mr. T.J. Fitzpatrick (Cavan): The amendment seeks the deletion of subsection (4) of section 24 which provides that 75 per cent of the wealth tax assessed must be paid before there can be an appeal against the assessment. The necessity for this provision can be seen in the context of the tax as a whole and the circumstances generally. The effective rate of tax is low and the taxpayers are wealthy. The taxpayers because of their wealth have expert advice available. The appeals procedure is simple and inexpensive. On the other hand, the administration will be in its weakest condition in the earlier years of the tax. In such circumstances a taxpayer has nothing to lose by appealing. In any matter of doubt he would be foolish not to have a go. If this were done on any substantial scale it would have two effects. It would postpone the payment of tax and clog up the administration of the tax and the field machinery.

Mr. Colley: Would he be liable to interest all this time?

Mr. T.J. Fitzpatrick (Cavan): I am coming to that. Especially in the [2151] case of a new tax there would be speculative appeals, the more so as the appellant would have nothing to lose. It is essential, therefore, that there would be a substantial payment on account to discourage the appeals. The amendment is unacceptable. I wish to emphasise, however, that there can be no question of hardship in this provision since, in the event of an appeal being successful, interest at 18 per cent per annum will be payable on the tax which is being refunded.

Mr. Colley: Thanks very much.

Mr. T.J. Fitzpatrick (Cavan): I would also like to tell the House that, under the estate duty code which Deputy Colley lived happily with for quite a few years, before a person can appeal to the courts against the assessment of estate duty he must pay the entire duty, and then he can appeal. That did not disturb Deputy Colley over the years.

[2152] Mr. Colley: I did not introduce any such provision and the Minister knows this. In fact I introduced provisions under another code whereby you could make an appeal without any lodgement of that kind, but you were liable for interest from the date of original assessment on the amount to be due. I think that is a reasonable approach. The approach in subsection (4) is quite unreasonable and will be oppressive on a number of taxpayers in preventing them from exercising their rights. It is no answer to say that they will get interest on the money over-paid. Thanks very much if you can find the money.

An Leas-Cheann Comhairle: According to the Order of the House of the 9th July the Chair must now put the question.

Question put: “That the Bill, as amended, is hereby agreed to and as amended is reported to the House.”

The Committee divi ded: Tá, 69; Níl, 67.

Barry, Peter.

Barry, Richard.

Begley, Michael.

Belton, Luke.

Belton, Paddy.

Bermingham, Joseph.

Bruton, John.

Burke, Dick.

Burke, Joan T.

Burke, Liam.

Byrne, Hugh.

Clinton, Mark A.

Cluskey, Frank.

Collins, Edward.

Conlan, John F.

Coogan, Fintan.

Cooney, Patrick M.

Corish, Brendan.

Costello, Declan.

Coughlan, Stephen.

Creed, Donal.

Crotty, Kieran.

Cruise-O'Brien, Conor.

Desmond, Barry.

Desmond, Eileen.

Dockrell, Henry P.

Dockrell, Maurice.

Donegan, Patrick S.

Donnellan, John.

Dunne, Thomas.

Enright, Thomas.

Esmonde, John G.

Finn, Martin.

Fitzpatrick, Tom (Cavan).

Flanagan, Oliver J.

Gilhawley, Eugene.

Governey, Desmond.

Griffin, Brendan.

Harte, Patrick D.

Hegarty, Patrick.

Hogan O'Higgins, Brigid.

Jones, Denis F.

Kavanagh, Liam.

Keating, Justin.

Kelly, John.

Kenny, Henry.

Kyne, Thomas A.

L'Estrange, Gerald.

Lynch, Gerard.

McDonald, Charles B.

McLaughlin, Joseph.

McMahon, Larry.

Malone, Patrick.

Murphy, Michael P.

O'Brien, Fergus.

O'Connell, John.

O'Donnell, Tom.

O'Leary, Michael.

O'Sullivan, John L.

Pattison, Seamus.

Reynolds, Patrick J.

Ryan, John J.

Spring, Dan.

Staunton, Myles.

Taylor, Frank.

Thornley, David.

Timmins, Godfrey.

Toal, Brendan.

White, James.

Níl

[2153]Allen, Lorcan.

Andrews, David.

Barrett, Sylvester.

Blaney, Neil T.

Brady, Philip A.

Brennan, Joseph.

Breslin, Cormac.

Briscoe, Ben.

Brosnan, Seán.

Browne, Seán.

Brugha, Ruairí.

Burke, Raphael P.

Callanan, John.

Calleary, Seán.

Carter, Frank.

Colley, George.

Collins, Gerard.

Connolly, Gerard.

Crinion, Brendan.

Cronin, Jerry.

Crowley, Flor.

Cunningham, Liam.

Daly, Brendan.

Davern, Noel.

de Valera, Vivion.

Dowling, Joe.

Fahey, Jackie.

Farrell, Joseph.

Faulkner, Pádraig.

Fitzgerald, Gene.

Fitzpatrick, Tom (Dublin Central).

Flanagan, Seán.

French, Seán.

Gallagher, Denis.

[2154]Geoghegan-Quinn, Máire.

Gibbons, Hugh.

Gibbons, James.

Gogan, Richard P.

Haughey, Charles.

Herbert, Michael.

Hussey, Thomas.

Kenneally, William.

Kitt, Michael P.

Lalor, Patrick J.

Lemass, Noel T.

Leonard, James.

Loughnane, William.

Lynch, Celia.

Lynch, Jack.

McEllistrim, Thomas.

MacSharry, Ray.

Meaney, Tom.

Molloy, Robert.

Moore, Seán.

Murphy, Ciarán.

Nolan, Thomas.

Noonan, Michael.

O'Connor, Timothy.

O'Leary, John.

O'Malley, Desmond.

Power, Patrick.

Smith, Patrick.

Timmons, Eugene.

Tunney, Jim.

Walsh, Seán.

Wilson, John P.

Wyse, Pearse.

Tellers: Tá: Deputies Kelly and B. Desmond; Níl: Deputies Lalor and Browne.

Question declared carried.

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

Mr. T.J. Fitzpatrick (Cavan): Next Thursday.

Mr. O'Malley: I think there is something else ordered on Tuesday. Is this definite now or will the Parliamentary Secretary to the Taoiseach change his mind again?

Mr. T.J. Fitzpatrick (Cavan): We got on well all morning until the Deputy came in.

Mr. Kelly: I might.

Mr. O'Malley: Is the Parliamentary Secretary lecturing the sailors now?

(Interruptions.)

Report Stage ordered for Thursday, 24th July, 1975.