Wednesday, 5 July 1972
Dáil Eireann Debate
Minister for Finance (Mr. Colley): This section corresponds to Financial Resolution No. 1 which was passed by the House on Budget day. It is the charging section providing for the imposition of income tax and surtax on a permanent basis for 1972-73 and subsequent years. The rate of income tax remains unchanged at 35 per cent and the rates of surtax also remain unchanged. Of course, the making of these taxes into permanent taxes does not in any way preclude any future adjustments in the rates of income tax or surtax.
Mr. Bruton: The making of this tax into a permanent one is only a matter of being realistic. It was odd that the rate of tax had to be re-enacted each year in the Finance Act. The change is desirable. However, it is important that on the discussion of the Finance Bill each year it should be open to Deputies to discuss the burden of existing rates of tax even if no changes are proposed. I hope that this change will not mean that discussion of existing rates of tax will be ruled out in the House.
Mr. Colley: This section introduces  the increased married allowance and single and widowed personal allowances which were announced in the budget. It also preserves the differential of £100 between the normal married allowance and the special married allowance granted in the year of marriage.
The drafting in this subsection gives rise to some problems. The amendment was tabled in order to overcome difficulties arising from the question of accident cover arranged by companies in respect of their employees. This kind of cover is 24 hour and when it is arranged for one year's remuneration, the cash benefit under the Occupations and Pensions Scheme has to be cut back to three years' remuneration. If the employee dies from natural causes his widow would be at a disadvantage to the extent of one year's remuneration by comparison with those who are not covered by accident benefit. In the UK Finance Act of 1970 provision is made for this. This is the reason why benefits arising by reason of death or disability resulting from an accident occurring during the services of the deceased are excluded in that Act. Clearly we do not wish to do this. Indeed, a provision of this kind could have been seriously detrimental to the widows of a number of people who were killed in the recent air disaster. None of us would want, unintentionally, to do anything that would have that effect. The amendment is necessary to achieve this result. Unless I misunderstand the position it is necessary to make a change of this kind in order to prevent the difficulty which I have mentioned arising.
Mr. Colley: The problem to which  Deputy FitzGerald refers here can be solved readily by employers and their advisers if they arrange to have the accident insurance cover for their employees restricted to death or disability arising out of or in the course of their employment which, of course, is the prime purpose of the insurance in question. If they do this the problem referred to by the Deputy does not arise. If, however, the cover extends beyond that and if we were to accept this amendment we would be importing an illogical aspect into the whole structure that is involved here. Indeed, to some extent it could be said that we were giving either an unfair advantage to one class of member of a superannuation scheme or, alternatively, that we are being unfair to those who cannot benefit in this way. The real issue here is if there is insurance cover for employees provided by their employers, that cover should relate, strictly speaking, to an accident arising out of or in the course of employment. In so far as it is so restricted, there is no problem but if it goes beyond that it is taken outside the code with which we are dealing.
Dr. FitzGerald: Surely the Minister must accept that it would be wrong to put an employee's widow at a disadvantage because the company which employed her late husband either inadvertently or out of goodwill arranged accident cover more extensive than that defined narrowly by the Minister. No widow should be put at a disadvantage on that account. It is all very well for the Minister to say that the firm ought to express the extent of the cover as being limited in this way but they may not do so. Not every firm, and there are thousands, will read this debate. By not making this change the Minister is putting at risk a large number of widows whose position will be affected disadvantageously by reason of the failure of the employers of their late husbands to narrow down the insurance cover either inadvertently or out of goodwill. It cannot be the intention of the Minister that a widow should be penalisd because the employer made a mistake. The UK Finance Act makes provision  for dealing with this problem. Why should we have a bias against widows?
Mr. Tully: Is there any particular reason why the amendment cannot be accepted or why the Minister cannot undertake to introduce an amendment which would achieve the same results? What Deputy FitzGerald says seems reasonable, or is there something in it that I fail to detect? It appears that this is an unnecessary penal clause against widows. I am sure this was not the intention of the Minister. Would the Minister not consider introducing an amendment of his own if he is not satisfied with the wording of the suggested amendment, for, as it seems, two reasons, one, that somebody has not included what he could have included or, alternatively, that he is attempting to assist the widow in the event of the death of the worker?
Mr. Colley: It is certainly not intended to introduce some penal restriction against widows. The effect of doing what is proposed in this amendment would, in fact, be to discriminate, if I may use that word, as between on the one hand widows whose husbands die by natural causes, or widows whose husbands are insured against accident arising out of or in the course of their employment and, on the other hand, widows of husbands who were insured against accident whether arising out of or in the course of their employment or not. What we are endeavouring to do is to treat widows in such circumstances on the same basis.
Dr. FitzGerald: May I ask the Minister, because I find it difficult to interpret, is it the situation that under the Bill as drafted, if an employee dies by natural causes, not as a result of an accident, his widow will be at a disadvantage to the extent of one  year's remuneration simply because the employer covered her husband against accident even though an accident never happened?
Mr. Colley: Perhaps I could assist the Deputy on this. The four years apply in any event but if, in addition, there is an insurance policy which is restricted to “an accident arising out of or in the course of employment”, that can be added and does not affect the four year situation. It is exempt. The only problem arises where the policy covers an accident arising other than in the course of employment.
Dr. FitzGerald: I am not sure that I understand that. If the man does not die from an accident and he happens to be insured against accident, is his widow's position affected, as I have been authoritatively informed is the case?
Dr. FitzGerald: Perhaps I am not making it clear because I am not very clear myself. If the policy is specified to be wider than covering an accident in the course of employment but the man does not die of an accident, is his widow at a disadvantage as to one year if no accident has been involved?
Dr. FitzGerald: I shall come back to the main point in a minute. I am trying to clear the way. I am not giving in on the main issue. I can assure the Deputy of that, but I have been so authoritatively informed of this that I am puzzled by the Minister's rejection of it. I do not understand myself how this could arise.
Mr. Colley: If the four year limitation applies in all circumstances but you could have a situation in which a superannuation scheme might provide that in the event of death by accident of the employee the amount of benefit payable under the superannuation scheme would be for three years and one year coming under the accident policy. To that extent you could get a situation where the benefit is cut back to three years but as far as the recipient is concerned it is still, in fact, four years because she either gets four years under the scheme or three years under the scheme and one year under the accident policy.
Dr. FitzGerald: It was suggested to me that a situation could arise where you would be cut back to three years by virtue of the existence of the accident policy; but the death might be such as not to come within the accident policy and you would not get the money from the accident policy but would be cut back by virtue of the existence of such policy to three years. I do not read the wording that way but I am informed that is, in fact, the effect.
Mr. Colley: In the case the Deputy has in mind what would happen is that the superannuation scheme itself would provide that in the event of death the benefit would be three years. If the scheme so provides there is nothing we can do in income tax  law to change that. This may be what the Deputy has in mind, that a scheme might so provide, but it is not the Finance Act which would solve that problem.
Dr. FitzGerald: What was put to me was that most companies arrange accident cover on a 24-hour basis but the cover may be arranged for one year's remuneration and in that case I am told the death cash benefit under the occupational pension scheme, if it is to be approved, must be cut back to three year's remuneration.
Mr. Colley: This gets back to what I was saying that in any event, no matter what happens, the limitation is four years so that in the case envisaged by the Deputy the scheme might provide specifically that only three years would be paid in the case of a death by accident in the course of employment. But as far as the recipient is concerned she is, in fact, getting four years, three years under the scheme and one year under the insurance policy.
Dr. FitzGerald: My understanding is if the scheme is to be approved by the Revenue Commissioners it must cut back the occupational pension scheme to three years' remuneration. That having been done, if a person dies by natural causes the widow gets only three years. Only if he has an accident does she get four years? In order to deal with this accident case the Minister is forcing firms to cut back the benefit to three years; otherwise the scheme will not be approved. That is what I have been told.
Mr. Colley: The position, as I understand what the Deputy has in mind, is that where an employer insures the employee say for one year's remuneration, that would then restrict the benefits under the superannuation scheme to three years, making four years in all. This is largely a question for decision really in relation to each particular scheme but if they restrict the insurance policy as I have indicated to death or disability arising out of or in the course of the employment then this problem does not arise. If they do not restrict it in that way I agree that a  problem can arise. It is largely a question for decision in relation to each particular scheme and it is one which does not have to arise by virtue of the provisions of this section.
Dr. FitzGerald: We are making a little headway. We are discovering there is a little more to this than met the eye at the beginning. My suggestion that I was a little wrong in this was not sound. If a firm have the practice of arranging accident cover for their employees covering a year's remuneration and if that accident cover is designed to catch cases which may be marginal from the point of view of the accident occurring in the course of his employment, and for no other reason, if the firm feels an obligation to do that, then the scheme they put forward will only be approved if they cut back the benefit under the ordinary arrangement for three years. Many firms feel it necessary to insure their employees against accidents on a fairly wide basis because the interpretation of whether the accident occurred arising out of or in the course of their employment is a very complex legal point.
There is a variety of decisions on this and there are cases where many of us would feel in commonsense that the person would not have met with this accident had he not been an employee of his company and yet the accident did not occur strictly and legally, within the narrow definition of the law, in the course of his office or employment. Any decent firm will want to ensure that their employees do not suffer because of this. They want to make sure that no legal quibble by an insurance company will exclude an employee from benefit for an accident which might occur when he was somewhere he would not have been had he not been an employee of that firm but when he was not actually in the course of his employment. What the Minister is doing is to say that any decent firm which tries to insure against the legal quibble adversely affecting an employee in the event of an accident will be forced by the Revenue Commissioners to cut back his normal occupational pension  scheme to three years. The point I made originally is therefore valid. If I had not persisted and been reluctant to accept the assurances which the Minister gave me quite innocently, not intending to mislead, this thing might have passed. Now that I have a fuller understanding of the point, and that he has, I should like to press the Minister to look at this again.
Quite apart from the basic issue as to whether this is desirable at all or not, and quite apart from the risk that firms may inadvertently get themselves into difficulty by not knowing how narrowly they must define an accident policy in order to have their pension scheme approved and valid, the point I have now made is a very important one. It is quite clear to the Minister now I think, as it is to me, that the English Act of 1970 had very good reason for widening this definition to accidents occurring during service so as not inadvertently to detach such cases, so as not to force pension schemes to be cut back in their benefit. Firms should not be put in the position of having to choose between either risking their employees losing the accident benefit because of a strict legal interpretation or, alternatively, cutting back the pension scheme provision. It is not the function of Parliament, the Minister or the Revenue Commissioners, to try to force firms to choose between two ways of disadvantaging their employees. Our job should be the other way around, to try to get firms to look after their employees properly. I would ask the Minister to have a look at this again.
Mr. Colley: I think Deputy FitzGerald is mistaken in a few matters. I believe he is mistaken in reading such a great deal into the British provisions. I cannot elaborate on that but I believe he is. Secondly, the fact is that provided the insurance policy is restricted in the way I have indicated this problem does not arise at all and there is no necessity to cut back from four to three years. Deputy FitzGerald suggests that employers may do this indavertently. This is not so because in order  to have their scheme approved by the Revenue Commissioners they have to submit the scheme, together with any details of this kind of insurance that they would have, and immediately this matter would come to light. It would not occur inadvertently. It would occur only because the employer decided that this kind of insurance should be operated despite the provisions here. Therefore, it is mistaken to imagine that this could happen inadvertently. The practical operation of these arrangements results in the employer having his attention drawn to this situation. Having had his attention drawn to it he has a remedy and on the general principle involved in this it seems to me that what we are doing is trying to treat all widows in the same way.
Mr. Colley: No. I do not think that is true at all. So far as existing arrangements are concerned, and what is proposed here generally in relation to superannuation, there is very considerable liberalisation involved. If an accident occurs to somebody outside the course of his employment it does not seem to me to be something which is relevant in any way to any form of superannuation which relates to his employment and this is the kernel of what is involved in this amendment.
As regards the possibility of hardship being created. I have demonstrated that this is not so. If hardship occurs it will not have occurred by inadvertence, it will have occurred because there was a deliberate decision made to take a particular course.
Dr. O'Donovan: May I try to take this thing apart? The only words Deputy FitzGerald really wants to substitute are “occuring during his service” for “arising out of or in course of his office or employment”. I did not have a great deal to do at any time with the Workmen's Compensation Act but the words the Minister has put into the Bill have been sanctioned by long usage. I am sorry to disagree with my colleague on the left.
Dr. O'Donovan: “Arising out of or in course of his employment”. What is the difference between that and “occurring during his service”? I cannot see the difference. It may be that I am stupid about this matter.
Dr. O'Donovan: I am no lawyer but at least I try to construe words in their true meaning. Does Deputy FitzGerald really want to cover a man for every accident that can occur to him while he is in a particular employment?
Dr. FitzGerald: May I explain? The Deputy is not a lawyer. The Minister and I have had various associations with the law going back some distance. The Minister has practised but I never did. We are not, perhaps, the best people to try to explain the law to Deputy O'Donovan but, since we are the only people available in the House  at the moment, he will have to make the best of us.
The position as I understand it from the vague recollections I have of my law, is that the question of what is in the course of employment can be very narrowly defined by the courts or more widely defined. There are conflicting decisions on this point. Suppose an employee is sent over to Brussels or somewhere like that and, while he is there on business, he walks down the street to buy a paper or something which is not required by virtue of his office or employment, but which he would not be doing were it not for his office or employment, if he has an accident he should not lose out on a legal quibble if the insurance company say: “We will not pay.”
Every decent employer seeking to avoid that uses the words in the policy “during his years of service” rather than “in the course of employment” because there have been so many cases where employees lost out. What the Minister is doing in effect is saying to a firm: “If you want to continue to ensure that your employees are protected when they are away and that they cannot lose out on a legal quibble, you must cut your pension scheme back for three years.” That is precisely the effect of it. I do not believe that is desirable and I do not really believe that the Minister feels it is desirable.
Mr. Colley: Deputy O'Donovan put a specific question to Deputy FitzGerald. As I understood him he asked: “Does this mean that Deputy FitzGerald wants to have covered any accident that might occur to a person while he is in a particular employment?” Since the Deputy has given an example, could I give an example of the kind of thing I think Deputy O'Donovan has in mind and ask Deputy FitzGerald if he agrees that this is so?
In the normal course of his employment a man comes home from work some evening, has a meal, and goes out with his friends to a pub. On his way home for one reason or another he is involved in an accident and killed. In those circumstances would  not Deputy FitzGerald's amendment apply and mean that he would be covered for that as against somebody who died from natural causes without any accident at all?
Dr. FitzGerald: Yes. The answer is that an inevitable by-product of trying to ensure that you cannot be done out of your money through a legal quibble is that you have to over-protect. If we drew up some other form of words which did not say “in the course of his service” or “in the course of his occupation or employment” and we did not go as far as “during the years of his service” and used some other phrase that lay between them, the courts would again start making decisions and we would find cases where the man in the view of the firm was engaged in something he would not have been engaged in but for his employment with them and should have got the money but the insurance company would not pay.
If we are to ensure that the insurance company will pay up in any relevant case we have to define it more widely. I can see no great harm in doing so. If somebody benefits by an accident which has nothing whatever to do with his employment, what harm is that?
Dr. FitzGerald: The difficulty is that in defining these things the decisions of the courts can appear to the layman arbitrary and, indeed, self-contradictory and conflicting at times. I do not think we should start inventing new phraseology here. There are two forms of phraseology established by law as  far as I know. One is “in the course of his office or employment” and the other is designed to ensure that no case can go wrong and that, where any accident occurs, the person will get the benefit and cannot be done out of it by the insurance company taking a strict legal view.
If we attempt to come up with some new definition not now known to law, we will start a whole new body of law on this point and still some people will be ruled out. What for? Why should we go to such trouble to help the lawyers when, in fact, by putting in the words I have suggested, the words in the UK Act, we can cover the case? Why should we be so anxious to prevent people from getting benefit that we should insist that this must be so narrowly defined that employers will be forced to chose between adequately insuring their employees under the law as it stands, or cutting back their pension scheme rights? I do not see any argument for this.
All this talk about some widow somewhere else not doing as well shows a bureaucratic attitude of mind which should not inform our legislation. Given that we have to err on one side or the other in order to make the position legally clear, let us err on the generous side. What harm if some people insured by their employers, if they have an accident, get an extra year's benefit? Why should we begrudge it to them? I do not see why our practice in this matter should be so much narrower and more stringent than the practice in Britain. I press this point on the Minister and hope that he will agree to reconsider it.
Dr. O'Donovan: Do I understand that the Deputy is arguing something I would be in favour of, that is, that insurance companies generally are doing extremely well in the present inflationary age and could afford this kind of thing whereas an unfortunate widow could not afford to be done out of her compensation through a legal technicality?
Dr. FitzGerald: Indeed, that is what I am saying although I assure  the Deputy that when I say the insurance companies can afford it I mean that they will get the money from somebody else to pay for it.
Dr. FitzGerald: I did not deal with that. It would not occur by inadvertence in the sense that every employer would be brought in and told: “Show us your accident insurance policy. How do you insure a man going on a business trip to London? Do not do it that way again.” This appears to be what is proposed and it seems to be an extraordinary performance. The fact remains that in any large firm it could very well happen that, at some subsequent time years after the pensions scheme was cleared, an official in the relevant department dealing with accident insurance might get on to the insurance company and say the wrong words on the telephone, and the terrible crime would be committed that we must at all costs guard against; the man might be insured against an accident occurring in the course of his service and as a result the whole system would be prejudiced. This can occur by inadvertence.
You cannot assume that because something is clear to the Revenue Commissioners, for the rest of the history of that firm every employee dealing with insurance will be aware of these legal quibbles and the strictness that has to be employed in the form of words where accident insurance is concerned.
Mr. Colley: Deputy FitzGerald has now been put to the limit of his very considerable ingenuity to produce an example of inadvertence. The fact of the matter is that, as I have said, when a scheme like this comes to be approved the question arises and is brought to the attention of the employer as to what the law will be. He is given a choice as to what kind of insurance scheme he will operate  for the benefit of his employees. If he operates an insurance policy which is restricted to death or disability arising out of or in the course of his employment then there is no problem.
The phrase “arising out of or in the course of the employment” is well settled and there are many decisions on it arising out of the workmen's compensation code and now the occupational injuries code. Speaking from recollection, I believe that the vast bulk of the decisions on the interpretation of this phrase is very much to the effect of widening its meaning in layman's terms. I have seen some decisions on the interpretation of this which certainly to any layman would not be possible. In circumstances in which any layman would say that it was not arising out of or in the course of the employment, the courts have held otherwise on a strict legal interpretation of the phrase.
I do not accept the argument that this is a very restrictive feature. In fact, I believe that this very wide-ranging interpretation of this phrase is the law at present as administered by the courts. I repeat that it is open to the employer to make the decision as to which kind of policy will be entered into. I do not think it is good enough to say that this is simply a bureaucratic approach. One can say that but what one is really describing is an effort to achieve equity between taxpayers.
Mr. Colley: Deputy FitzGerald may put it that way, but in effect what he is saying really is “If there is any doubt about this, forget about any restrictions; open it up” and of course the next thing is that you have to open it up all round. I do not think there is any hardship being done to anybody, because the principle involved here—and this is what is at stake—is: should there be a special benefit for people whose employers effect a policy of insurance which covers them in respect of something which has nothing to do with their employment as against those who are  either restricted under the terms of the policy on the lines I have indicated, or for whom no policy is taken out? That in effect is what Deputy FitzGerald is urging.
Mr. Colley: This is not a question of being generous. What we are dealing with here is the question of a superannuation scheme and its liability to or exemption from tax, and the Deputy is well aware that restrictions are necessary in order to ensure that there is not wide-scale avoidance of tax. Without restrictions, this would be so. What is being done here is, to my mind, something which is right in principle and also acceptable in practice, and I do not think that  anything Deputy FitzGerald has said has really got around either of those two fundamental points. He has had to try to think of the most extreme kind of case to justify the case he is making. One can do this in relation to any provision virtually of any Act of Parliament. One can think of a most extreme case and show that arising out of this case there will be what would apparently be an injustice done to somebody. One has to look at the other side of the coin and see whether it is justice or injustice consciously to set out to treat people differently under this code. I do not think it is justice.
Brady, Philip A.
Connolly, Gerard C.
de Valera, Vivion.
Gogan, Richard P.
Healy, Augustine A.
Hillery, Patrick J.
Kitt, Micheal F.
Lalor, Patrick J.
Lemass, Noel T.
Loughnane, William A.
Bruton, John. Collins, Edward.
Dockrell, Henry P.
Donegan, Patrick S.
Enright, Thomas W.
Esmonde, Sir Anthony C.
Fitzpatrick, Tom (Cavan).
Flanagan, Oliver J.
Clinton, Mark A. Harte, Patrick D.
Jones, Denis F.
O'Sullivan, John L.
Tellers: Tá, Deputies Andrews and Meaney; Níl, Deputies L'Estrange and Desmond.
Question declared carried.
Amendment declared lost.
Question proposed: “That section 13 stand part of the Bill”.
Mr. Bruton: Could the Minister explain this section?
Mr. Colley: This section is concerned with the interpretation of the terms used in Chapter II. It also gives effect to the First Schedule which contains administrative, transitional and consequential provisions and which also widens the tax exemption in favour of life insurance companies in respect of approved pensions scheme business.
Dr. FitzGerald: There is one point I should like to raise on interpretation. At the bottom of page 7 “final remuneration” is defined as annual average remuneration of the last three years of service. This can give rise to a number of difficult issues. You get cases in which people get ill towards the end of their working life. The humane practice in the United Kingdom is to make provision for these by varying the strict legal interpretation of the words here. I could have put down amendments to seek to do this but it seems to me preferable to seek clarification on Committee Stage and an assurance from the Minister that there would be a degree of flexibility applied here, as there is applied in Britain, in the application of this definition. I am, accordingly, asking the Minister to consider whether, in fact, it will be the practice here to deal with problems arising towards the end of a man's career in one of a number of different ways.
In Britain, I understand “final remuneration” is defined as the highest average remuneration of any three consecutive years of the last ten years of service, which is more generous and wider than what is here, to begin with; in fact, not alone is the definition wider and more generous, but the practice allows for an even wider interpretation. For example, where an employee's health deteriorates in the last few years, with a consequent reduction in remuneration in the final year of employment, the United Kingdom practice makes provision for the employee either working on the basis of the remuneration for any one of the five years preceding the normal retiring date, remuneration meaning basic pay, plus fluctuating pay averaged over a period of five years or, alternatively, the average of the total emoluments for any three, or more, consecutive years ending not less than ten years before normal retirement date and, in order to determine the cash sum payable, that is, four times the “final remuneration”, the practice adopted in the United Kingdom is to take the annual rate of remuneration at death rather than to enter into the delays of the occasion by seeking certificates for  the previous three years. Now I should like to ask the Minister whether these various interpretations, including the basic interpretation which is spelled out in the British Act—that is, any three consecutive years in the last ten years—will in fact be the practice here? Will it be the practice to interpret the definition in lines 45 and 46 on page 7 in that way and to give them the other wider interpretations where illness arises in the closing years of a man's working life?
Mr. Colley: Under section 15 (4) the Revenue Commissioners will have discretion in the approval of schemes and it will be possible to permit schemes to adopt other bases than that set out here as the definition of final remuneration where the circumstances so warrant. When Deputy FitzGerald said that he could have put down amendments, but did not do so, he was, I think, getting at a point which comes up again here in that one cannot provide for every possible circumstances in the Bill because, if one does, one then excludes other circumstances which one might not have thought of. It seems to me the provisions of section 15 (4) are the only practical way to approach this problem. On foot of that provision the Revenue Commissioners will, as I said, have discretion to adopt or permit to be adopted, a basis of final remuneration other than that specified in that section where the circumstances so warrant.
Dr. FitzGerald: Subsection (4) of section 15 specifies that the commissioners may in particular approve, by virtue of the subsection, a scheme which does one of four things. My recollection is that when you get a section or subsection in that form, followed by a phrase like “the Revenue Commissioners may in particular do any of the following four things” that particularisation can in fact confine the operation of the section to the things that fall within those four headings. Bearing in mind the risk of that legal interpretation which can arise—I do not know if it will here; it is a technical point with which I am not sufficiently familiar—it seems to me none of these  four seems to cover the case I mentioned because the Minister will see that, No. 1, It deals with the matter of a scheme which exceeds the limits imposed by the prescribed conditions as respects benefits for less than 40 years service, or which allows benefits to be payable on retirement within ten years of the specified age, or which provides for the return in certain contingencies of employees' contributions and payment of interest (if any) on the contributions, or which relates to a trade or undertaking carried on only partly in the State and by a person not resident in the State. None of these relates to the matter with which we are dealing and may it not be the case that the particularisation under these four headings of the power of discretion of the Revenue Commissioners might narrow down that power of discretion and prevent it being used in relation to the matter under discussion?
If the answer to that were positive and the Minister could give me an explicit assurance that this is not the case and that the legal interpretation of this subsection will not be as narrow and restrictive as I have suggested it will be, could the Minister indicate the intention of the Revenue Commissioners, under his guidance, in this particular matter? He has said in his view they will be able to vary the definition of “final remuneration” but what I want to know is whether the practice will be the kind of practice I have indicated and that, in fact, any three consecutive years in the last ten years will be accepted, first of all and that where there is a question of deteriorating health and falling remuneration the remuneration for any one of the preceding five years preceding the normal retirement date can be taken, or an average of the total emoluments for three or more consecutive years ending not less than ten years before the normal retiring date. Is it the intention to operate in practice along these lines? We should have an assurance on this before we proceed any further.
Mr. Colley: I trust the Chair will not rule me out of order now, but I am obliged to refer to this in the context of section 15 (4). The phrase “The  Commissioners may in particular approve” is a phrase which does not exclude anything other than the matters mentioned in particular. I am advised that the Revenue Commissioners will have the discretion I have described. I am also advised that the practical operation of that section will cover the various possibilities raised by Deputy FitzGerald and, of course, some other matters as well.
Dr. FitzGerald: As I understand the Minister, the practical operation of his discretion will cover the case I raised.
Mr. Colley: That is right.
Dr. FitzGerald: But will it involve the operation of the kind of practice I have mentioned?
Mr. Colley: That is what I meant to convey.
Dr. FitzGerald: You can cover the case of a man who gets ill, but you may cover it by methods other than the ones I have mentioned.
Mr. Colley: No. I mean to convey that the practice which Deputy FitzGerald suggests the Revenue Commissioners should follow is a practice which they will, in fact, follow.
Dr. FitzGerald: I am content with that assurance but perhaps on section 15 we could particularise it.
Question put and agreed to.
Section 14 agreed to.
Dr. FitzGerald: I move amendment No. 2:
In subsection (3) (a), page 9, lines 49 and 50, to delete “or on earlier retirement through incapacity”.
This amendment relates to the introduction into paragraph (a) of subsection (3) of section 15 of the words “or on earlier retirement through incapacity”. An employee who has the misfortune to be incapacitated, and thereby prevented from serving the full term to normal retiring age, should be given  a pension based on his potential service to normal retirement age. This is the position which operates in the UK in their new code. It is a question of how one deals with this. There are various ways of ensuring that this is the practice. My amendment is for the purpose of securing this result but before pressing it I would like to hear from the Minister as to whether it is necessary or whether, although these words are here inserted, it will be possible to operate the same practice as that operated in the UK in this matter.
Mr. Colley: What I wish to say on this amendment applies also to the other amendments tabled by Deputy FitzGerald so that, if I am allowed to say this, we may shortcircuit the business to some extent.
An Leas-Cheann Comhairle: Is it the intention to discuss amendments Nos. 3, 4, 5, 6 and 7 together?
Dr. FitzGerald: Nos. 3 and 4 could be taken together.
An Leas-Cheann Comhairle: Amendment No. 2 (a) intervenes.
Mr. Colley: That amendment is not before us yet and in relation to it I shall have a word or two to say on the section. Perhaps if the Chair would bear with me for a moment I could explain what I have in mind. This amendment and the other amendments which Deputy FitzGerald has tabled all relate to the types of cases which, under the discretionary powers given to the Revenue Commissioners under subsection (4), can and will be covered. All of the amendments proposed by Deputy FitzGerald would in practice be approved under the discretionary powers of the Revenue Commissioners. But as I said earlier, if we begin trying to spell out every possible contingency, not only will we finish up with extremely complex legislation but we may well preclude some possible case that we have not thought of and which is not specified. Under the discretionary powers provided for in subsection (4) these cases can be covered and, specifically, all the cases which the Deputy has in mind in  each of these amendments would be approved.
Dr. FitzGerald: I am not sure which amendments the Minister is talking of.
Mr. Colley: All the Deputy's amendments that relate to section 15.
Dr. FitzGerald: The Minister may like to explain what would be the practice in each of these cases but he would need to go very slowly because I would have to try and assimilate each one.
Mr. Colley: I thought that my suggestion might shortcircuit business but if not I am happy to proceed in the normal way.
Dr. O'Donovan: Nos. 2, 3 and 4 could be taken together.
Dr. FitzGerald: I would be willing to take them all together if the Minister will promise to give me a chance to assimilate what he says on each one.
An Leas-Cheann Comhairle: So far as the Chair is concerned, Nos. 2, 3 and 4 can be discussed together with separate decisions being taken on each one but No. 2a must come in its place after No. 2.
Dr. FitzGerald: It seems to concern a different matter altogether.
Mr. Colley: Nos. 2a and 3a are not before the House at the moment. I did propose to ask the House on the section if it would agree to take them today. Subject to that, they would be before the House but at the moment they are not before us.
Dr. FitzGerald: I am willing to take the amendments together so long as the Minister pauses long enough between each one for me to grasp what has been said.
An Leas-Cheann Comhairle: In that case we will proceed as if these were not before the House at all, to take the amendments as they are and then, on the section, we can take the others by leave of the House.
Dr. FitzGerald: Does that mean that the Minister will now deal with amendments Nos. 2 and 4 and then Nos. 3, 5, 6 and 7 in that order?
An Leas-Cheann Comhairle: The Chair must make it clear at this stage that he must put No. 2a after No. 2.
Mr. Colley: Therefore, could we deal with No. 2 and then allow me to make my request to the house?
An Leas-Cheann Comhairle: They can be discussed together but decisions will have to be taken separately. Nos. 2, 3, 4, 5, 6 and 7 can, therefore, be discussed together.
Mr. Colley: The preliminary remark I wish to make about all of these amendments is that they involve the setting out specifically in the Bill of certain procedures which Deputy FitzGerald would wish to see the Revenue Commissioners adopt in particular cases. In each of the cases envisaged in the amendments the procedure indicated in the respective amendments would be adopted by the Revenue Commissioners on foot of their discretionary powers under subsection (4). On that basis I suggest to the House that the amendments are not necessary because the power is there already for the Revenue Commissioners to deal with such cases in this way. I am telling the House that the Revenue Commissioners would deal with them in the way indicated in the amendments. As I have said, to spell out in the Bill every possible contingency could have the unfortunate effect of tying the Revenue Commissioners rigidly and thereby taking away their discretionary powers. This might have the result of creating a difficulty as a case might arise which had not been thought of, and so be incapable of being dealt with in a reasonable way. On the specific terms of amendments Nos. 2 and 4, the amendments are directed to the same point and they seek to alter in a minor respect the conditions for approval of a retirement benefits scheme. One of the conditions laid down in section 15, subsection (3) (a) is that the benefit for an employee should be a pension on retirement at a specified  age, the pension not to exceed one sixtieth of the employee's final remuneration for each year of service up to a maximum of 40 years.
These amendments seem to me to be intended to secure that approval may be given to a scheme which includes a provision to the effect that in the case of an employee who retires because of ill-health before the normal retirement age, his pension should be based on his potential service, not determined by reference to his actual years of service. In his case the pension would be two-thirds, that is forty-sixtieths of his remuneration at the date of actual cessation of work and not say, one-third, or twenty-sixtieths if he retired after 20 years service on the grounds of ill health.
If Deputy FitzGerald will accept that the conditions laid down in section 15 (3) (a) are not rigid and unalterable he will see that this amendment is not necessary. The provisions for discretion by the Revenue Commissioners are contained in subsection (4) and enable the Revenue Commissioners to approve a scheme notwithstanding that it does not satisfy one or more of the prescribed conditions. That discretionary power would enable the commissioners to approve a scheme having the kind of provisions that are envisaged by Deputy FitzGerald in these two amendments. In practice a scheme including such provisions and complying with the other conditions laid down would be approved and in these circumstances I submit that these two amendments are not necessary to achieve the desired result.
Mr. J. Lenehan: I shall be very brief on this. I agree with the Minister that the commissioners have the power. They have too much power but it is not the power they have but how they use it that worries me. They are in the same position as the Land Commissioners who, as far as I can see, can do whatever they want and nobody has any way of dealing with them. Their decisions are always loaded against the taxpayer and it seems we have no power at present to alter that position. They have too much power and I do not agree with Deputy FitzGerald about giving them more power.
 There is no use in giving power to those who will make life worse for us. The more power we give them the harder it will be for us to live or to pay tax.
Dr. FitzGerald: It is not I; I am proposing to give them extra discretion; it is the Minister. I have not even spoken on this yet.
Mr. J. Lenehan: I should prefer to give the discretion to the Minister rather than leave it to these gentlemen whom I have never seen. I suppose no other Deputy has seen any of them either, unless he may have dreamt about them——
An Leas-Cheann Comhairle: The Deputy should keep to the amendments.
Dr. O'Donovan: We do not often see them in this House.
Mr. J. Lenehan: I never saw one even in the pictures or even on television and most of the “queers” come on TV
An Leas-Cheann Comhairle: We are dealing with amendments Nos. 2 to 7.
Mr. J. Lenehan: I am on the side of the unfortunate taxpayer and he is unfortunate when he comes within the grasp of these “geniuses” who do whatever they like however, whenever and wherever they like. What opportunity has the taxpayer of defending himself against them? I see none. I know what I have gone through and I have suffered over the years and I believe so has every Deputy who is here for any reasonable time. I can see no reason, whatever Deputy FitzGerald may say, to give them any more power. I hope he will do his best—and I shall support him—to take whatever power they have from them.
Dr. FitzGerald: That leaves me in a position of virtue which I am sure I shall quickly overcome and find something to say on the amendment. I wonder if we should not distinguish between cases where amendments have to be devised with great difficulty in order to achieve a particular result  leaving the situation still woolly and unsatisfactory, or perhaps tightened up too much unintentionally, and where an exercise of discretion may be the most appropriate approach and cases where, to my mind, an amendment can do no harm and must help the position. To give an example, I take the second of my two amendments, No. 4, which says:
In subsection (4) (b), page 10, line 33, after “age,” to insert “on earlier incapacity”.
The wording at present is that the commissioners may, in particular, approve a scheme which allows benefits to be payable on retirement within ten years of the specified age. I put in there, “on earlier incapacity”.
Dr. O'Donovan: May I interrupt? I think that is a misprint because I think the amendment should come in after the word “or”—“or on earlier retirement or incapacity”. Otherwise, the Deputy's amendment would have no meaning: the word “or” must come in.
Dr. FitzGerald: I agree. I thought it was in, that I remembered correcting it. Perhaps I am wrong and the Deputy is quite right. The word “or” is required there. But the existing “or” must remain as well for reasons of linkage. The amendment should read:
or on earlier incapacity
That amendment specifically authorises the exercise of the discretion in question. I do not follow the reasoning of the Minister when on the one hand he goes right down through (a), (b), (c) and (d) of section 15 (4), particularising ways in which discretion can be used, although the Minister says it is not desirable to particularise because of the dangers, and then when I propose an amendment to one of these, which I think is entirely appropriate to the purpose and helps to make clear how the discretion should be used, the Minister says: “Do not let us particularise.” If the Minister did not have paragraphs (a), (b), (c) and (d) in the subsection I could take his point. If a general discretion were given in the  subsection and if I were insisting on listing the things it could do I could understand him saying: “Do not particularise; let us leave the discretion open”. But when he has particularised and I merely seek to extend that to the specific problem of earlier incapacity and when no argument is put up against my suggested wording I do not understand the Minister's objection.
Mr. Colley: It is not necessary.
Dr. FitzGerald: Are (a), (b), (c) and (d) necessary?
Mr. Colley: I believe they are because they lay down some basic principles that are involved but, as I pointed out earlier, the use of the words “in particular” on longstanding interpretation does not limit. Sometimes it is worded: “In particular and without prejudice to the generality of the foregoing...” That is not here but I understand it is not necessary and that the same effect is achieved by the present wording.
Mr. J. Lenehan: How did it take 50 years to discover these principles?
Mr. Colley: Because we are introducing a new and more liberal code in favour of employees who are benefiting from superannuation.
Mr. J. Lenehan: I shall believe it when I see it.
Dr. FitzGerald: The Deputy is sceptical, an attitude quite widely shared. The Minister has given a non-answer. He says these four paragraphs provide basic principles or something like that. But if it is not necessary to particularise and if particularising does not affect the generality of the foregoing I still do not see why they should be there. If (a), (b), (c) and (d) are necessary and if in particular (b) is necessary, I cannot see how (b) could be necessary in order to permit a discretion in relation to benefits being payable on retirement within ten years and how it could not be necessary to make similar provision in respect of earlier incapacity. The Minister cannot really answer the case. Once he puts in (b) and says it is necessary  then the words. I have suggested are also necessary. In telling me that my words are not necessary he is saying that (b) is unnecessary. I should like him to get himself off the horns of that dilemma before we go any further.
Mr. J. Lenehan: Do these changes act in favour of the Revenue Commissioners or in favour of the taxpayer.
Mr. Colley: The taxpayer.
Mr. J. Lenehan: If that is true the Minister is the first Minister who ever brought in anything of that kind. I will not deny it until I see it working.
Dr. O'Donovan: Why does Deputy FitzGerald propose that “or on earlier retirement through incapacity” be taken out of subsection (3) (a) and at the same time propose that they be put in, I think correctly, in subsection 4 (b)? I cannot reconcile this. It may be my stupidity but perhaps Deputy FitzGerald will explain why he proposes this.
Dr. FitzGerald: I do not think I can explain it very adequately but the position as I understand it is that by including the words there it in some way inhibits giving an employee who is incapacitated a pension based on his potential service to the normal retiring age. It is necessary therefore to take the words out there and to put them into the discretionary clause in section 15 (4). That is my understanding. If the Deputy asked me to spell that out in logic I am afraid I could not do so but I am advised that it is necessary to do this.
Dr. O'Donovan: Not being a lawyer I do not understand this kind of thing. I cannot understand why they should come out. I agree that they should be put in in the other subsection. I cannot see why they should be taken out here because as it is it is quite clear to me what it means. This is the service a person has.
Dr. FitzGerald: The Minister could probably explain.
Mr. Colley: I will not attempt to explain Deputy FitzGerald's amendments. I have my own troubles.
Dr. FitzGerald: Subsection (3) (a) says:
or on earlier retirement through incapacity, which does not exceed one-sixtieth of the employee's final remuneration for each year of service up to a maximum of 40.
That means that if he retires after ten years he can only get it in respect of ten years' service whereas it might be fair to give him the pension he would have got had he remained on longer. The Deputy will be familiar with the practice in UCD, in relation to people who retire early——
Dr. O'Donovan: And in the Civil Service.
Dr. FitzGerald: I am sure that is where it came from—or come in late and have not got the full years of service, of adding years of service. As worded, subsection (3) (a) would preclude the adding of years of service in the case of early retirements through incapacity and therefore it is necessary to delete the words in order to remove that limitation.
Dr. O'Donovan: In view of the fact that “at a specified age” is in, if the words “or on earlier retirement through incapacity” are taken out it leaves the thing bare. If you take out these words you leave it at a specified age not earlier than 60, bare, naked.
Mr. Colley: I would have thought so. I do not follow the explanation given by Deputy FitzGerald about the adding of years. I believe Deputy FitzGerald can be taken off the horns of this dilemma very easily on the basis that each of the amendments that he has put down suggests that in certain circumstances certain provisions ought to be applied by the Revenue Commissioners in considering the particular case. I have put it on the record of the House that (a) the Revenue Commissioners are advised that under the provisions of section 15 (4) they are entitled to exercise the discretion that would enable them to do this and (b) in practice this is what they would do in such cases. That being so I suggest that none of these amendments is necessary. If we were to  put these in but omit many others— and I could produce a list of others that would be in the same type of category, that is making some minor changes in the provisions of the Bill— we could end up in very serious difficulty. I would suggest that the practical approach is the one I suggest—to rely on the discretion being given to the Revenue Commissioners having regard to the fact that in regard to each of the types of case to which Deputy FitzGerald has drawn attention in his amendments I have given an assurance to the House that in practice the Revenue Commissioners would operate their discretion on the lines suggested in these amendments.
Dr. O'Donovan: I am aware that when a Minister for Finance gives this kind of assurance in the House it is always operated for long years afterwards no matter, what change of Government occurs.
Dr. FitzGerald: I would accept what Deputy O'Donovan says. May I come back to explain my point before withdrawing the first of these two amendments? Subsection (3) (a) refers to where a person retires between 60 and 70 and limits that to one-sixtieth of the employee's final remuneration for each year of service up to a maximum of 40. I accept what the Minister says but I still think that when you particularise in subsection (4) and omit it in the other section there is a danger that you could be taken as precluding matters covered by that paragraph.
Mr. Colley: I am advised that is not so.
Dr. FitzGerald: Would the Minister accept my other amendment? Would he not think it would be sensible, given that he is particularising on this issue already?
Dr. O'Donovan: I do not think it would do any harm. It may not be necessary but I do not see what harm it would do.
Mr. Colley: We are talking now about amendment No. 4?
Dr. FitzGerald: Yes.
Mr. Colley: Relating to subsection (4) (b). I am advised that it is not necessary but I am also advised that it does not make any difference. Therefore, on that basis, I am prepared to accept amendment No. 4.
Dr. FitzGerald: It will make a great difference to my summer holidays to feel that I have actually got an amendment to the Finance Bill.
Dr. O'Donovan: When the Deputy is here a little longer he will not be worried about his summer holidays.
Dr. FitzGerald: The Minister might like to continue.
Acting Chairman (Mr. Healy): Is amendment No. 2 to section 15 withdrawn? Amendment No. 2a now.
Dr. FitzGerald: We are engaged in a rather unusual procedure and I am not too sure how it works. The idea was that before I put my amendments, which I have not yet done, the Minister would explain in respect of amendments Nos. 2 to 7 why they are not necessary. The hope was that he would shut me up for the afternoon. He has been doing this with limited success on amendments Nos. 2 and 4 and the idea was that he would continue with these explanations and that I might accept his viewpoint on any, all or most of them, and that the amendments would be withdrawn and we would go back to amendment No. 2a. Perhaps the Minister could be permitted to continue with the explanations. It might speed things up, which we are all anxious to do.
Acting Chairman: The Chair was instructed that we would take amendments Nos. 2, 3, 4, 5, 6 and 7 and discuss them and then take them as being withdrawn, defeated or accepted and that after amendment No. 2 the Minister would move amendment No. 2a before we discussed the others.
Dr. FitzGerald: I understood that he was to discuss all of them and that we were not to take a decision on them.
Acting Chairman: I thought the discussion had ended. We will continue the discussion.
Dr. FitzGerald: We can postpone the decisions on amendments Nos. 2 and 4. We know what they will be.
Acting Chairman: After the discussion is over we will take the Minister's amendment No. 2a.
Mr. Colley: On the remaining amendments in Deputy FitzGerald's name I am afraid I have not anything else to add. Precisely what I said before applies to them.
Dr. FitzGerald: After all the trouble I went to, to give the Minister a chance! Would the Chair permit me to read through them and see whether I am in a position to accept what the Minister says? I will have to check each of them separately. Perhaps I could take a couple of them together not to keep the House too long. Amendment No. 3 is designed to deal with a problem where a widow of a pensioner may be limited to receiving an inadequate pension where her husband had commuted part of his pension under paragraph (e). Do I take it that the Minister accepted the point in the amendment in the statement that discretion will be exercised? Will it extend to this kind of case? The Minister has assured us that the Revenue Commissioners will exercise discretion to meet the points I am making. As I have not yet made the points——
Mr. Colley: They are made in the amendments.
Dr. FitzGerald: They are not explicit in the amendments which merely open up a possibility of discretion but do not indicate the way in which I feel it should be used. It is necessary for me to put the point to the Minister as to whether in this instance, in particular, this would cover the case where a husband had commuted part of his pension, and that discretion would be exercised to ensure that the widow was not limited to receiving an inadequate pension on account of that. Is that right?
Mr. Colley: That is correct.
Dr. FitzGerald: Coming to amendment No. 5 my understanding was that the provisions there were excluded by  section 15 (3) (f) which states very firmly, if I may say so to the Minister, that no other benefits are payable under the scheme. It has been put to me that, if we do not make some exclusion there for pensions for children or dependants of the employee, paragraph (f) will prevent discretion being exercised because it is so explicit. Is that not the case? Despite paragraph (f) it will be possible to provide benefit in the form of pensions for children or the dependants of the employee?
Mr. Colley: I am advised that it would not exclude this discretion but the amendment which I propose to ask the House to accept may have some bearing on this.
Dr. O'Donovan: Could I ask the Minister a question? The position at present in the civil service is that a widow gets half the pension plus the children's allowances to which she was entitled. Amendment No. 3a says, “shall not exceed, in the aggregate...” Is this to be understood as excluding the widow? Otherwise there is a reduction in the benefit which civil servants get at present. I admit that this is a cross current.
Mr. Colley: I do not follow the Deputy.
Dr. O'Donovan: As I understand it, at present the widow gets half of the pension that the civil servant was in receipt of when he retired, and she also gets children's allowances if he was in receipt of children's allowances. Unless I am misinterpreting this amendment it cuts this down because it says “shall not exceed, in the aggregate, one-half of the pension specified...”
Mr. Colley: Which amendment is Deputy O'Donovan talking about?
Dr. O'Donovan: Amendment No. 3a.
Mr. Colley: We have not come to that yet.
Dr. FitzGerald: I accept what the Minister has said. On my amendment No. 6. the practice at the moment, I  understand, is that where there is a guaranteed pension to an employee for five years, even if he dies, that continues and overlaps with the widow's pension. The intention is that this discretion will continue to be exercised in that way. That is the point?
Mr. Colley: That is correct.
Dr. FitzGerald: On my amendment No. 7, most occupational pension schemes make provision for such a surrender of option on conditions which are currently approved by the Revenue Commissioners. It is important to retain this right of surrender in the case of an employee who was a member of an occupational pension scheme which does not otherwise provide for his dependants on his death after his retirement. The intention is that the discretion would be exercised to cover that point also.
Mr. Colley: It is so exercised at the moment and will continue to be.
Dr. FitzGerald: I think that covers all the points I have to make on my amendments.
Mr. Colley: Perhaps before decisions are taken on these matters I might be permitted to ask the House to consider accepting, without notice, the amendments which have been circulated, amendments Nos. 2a and 3a.
Acting Chairman: Will the Minister deal with both of them together?
Mr. Colley: I can speak on them together. The same principle applies.
Amendment, by leave, withdrawn.
Mr. Colley: I move amendment No. 2a.
In page 10, subsection (3), to delete paragraph (c) and to substitute the following paragraph:
“(c) that any lump sum provided for any widow, children, dependants or personal representatives of an employee who dies before retirement shall not exceed, in the aggregate, four times the employee's final remuneration,”
There appears to have been an oversight  in the drafting of section 15 subsection (3) and, as a result, the limits on superannuation benefits specified in subsection (3) apply to benefits taken by an employee or his widow only. If we did not amend subsection (3) on the lines suggested in these amendments, no, limit would apply to the benefits payable under a superannuation scheme to children, dependants and personal representatives.
The aim of limits of this kind is to prevent the avoidance of tax which would otherwise be lost in terms of the reliefs given in section 16. At the same time, we are trying to strike a reasonable balance in the interests of the members of superannuation schemes. In these circumstances it is essential that limits which are commensurate with those applicable to an employee or his widow should also apply to children and other dependants for the purposes of this chapter of the Bill.
For that reason I am moving these amendments, to make it clear that the limits would apply not only in the case of the member himself or his widow but also in the case of children, dependants or personal representatives. As I have said, the limitations, one in respect of lump sum and the other in respect of pension, are in line with the limits which are proposed in relation to benefits which would be going to the member of the scheme himself or his widow.
Dr. O'Donovan: I am afraid I have two dissonant remarks to make. The first of these amendments—I can only speak historically—appears to me to be unduly generous and the second to be unduly restrictive. The lump sum shall be four times the employee's final remuneration. Things have changed a lot, of course, but my recollection is that it was one year's salary. I appreciate that with the changed circumstances, in which a widow can get half, there must be a different approach, but it does seem to me that four times the final remuneration is very generous in the case of a man who dies while in the service.
As regards the other, I make the  point which I made earlier, that the total shall not in the aggregate exceed one-half of the pension and at present, as I understand it, the widow gets one-half and still draws the children's allowances, if she is a person whose husband in the service was entitled to children's allowances. I would like to hear the Minister on this four times the final remuneration. In the age in which we live, one cannot look after pensioners too well, or it is very difficult to look after them too well or well enough, but one of these amendments faces one way and the other the other way and perhaps the Minister would clear it up for me.
Mr. Colley: First of all, in regard to the lump sum provision, as the Deputy says, the limitation proposed is four times the employee's final remuneration, his annual remuneration in the last year. Lump sum provisions in superannuation schemes could provide for payments to the children, dependants or personal representatives of the employee as well as provision for a lump sum to the employee, so that the effect of what we are proposing here is that the aggregation of these lump sums together will not exceed four times the final remuneration.
Dr. O'Donovan: What is the present position in the Civil Service? That is a fair question in relation to this matter.
Mr. Colley: In the Civil Service the provision at the moment is a lump sum of one and a half year's final remuneration.
Dr. O'Donovan: That is my understanding too.
Mr. Colley: But the Deputy will appreciate that we have to cover more than the Civil Service scheme here. We have to cover various kinds of schemes of private firms.
Dr. O'Donovan: This is, in fact, a provision for a limit?
Mr. Colley: That is right.
Dr. O'Donovan: It is not intended to be of general application at all, except as a limit?
Mr. Colley: Only as a limit.
Dr. O'Donovan: All I can say is that it is pretty generous. There is an element of the golden handshake about it.
Mr. Colley: It is, in the sense that we have to provide for the situation in which a scheme might be providing for lump sum payments to children and dependants as well as the employee himself and to aggregate them together. If we made it any smaller, we might create considerable difficulty in certain circumstances.
Dr. O'Donovan: I am satisfied, once it is a limit.
Mr. Colley: In the same way, the other is a limit also.
Dr. O'Donovan: A lower limit?
Mr. Colley: I do not think so.
Dr. O'Donovan: “Shall not exceed” are the key words. This is an upper limit also?
Mr. Colley: That is so.
Dr. O'Donovan: It does seem to me that the second is extremely restrictive and the first extremely generous. Am I wrong in thinking that?
Mr. Colley: I think the Deputy is, but if he will bear with me for a moment, I will try to sort it out for him.
Dr. O'Donovan: May I suggest that this is not, in fact, as generous as what is at present given in the Civil Service because the widow can get half the pension and the children's allowances as well?
Mr. Colley: The limit proposed here is two-thirds in respect of the widow's pension and one-third in respect of dependants. That makes a total limit of three-thirds—in other words, the full pension. I understand that this should not present any problem in the case the Deputy has in mind in the Civil Service.
Dr. O'Donovan: Because it really does not apply to the Civil Service by  reason of the fact that it is not this kind of retirement pension scheme. These schemes do not apply to the Civil Service, in fact.
Mr. Colley: This is so but as regards the point the Deputy has in mind which is on the basis that the Civil Service scheme works, this limit would not be exceeded. If a widow had a pension which was equivalent to half of the pension of her husband, it would then require the portion of the pension in respect of children, to be the equivalent of half of the civil servant's pension in order to reach the limit imposed here, because the limit proposed is the full amount, three-thirds—two-thirds as to the widow and one-third to the dependants.
Dr. O'Donovan: I take the Minister's word for it.
Amendment agreed to.
Amendment No. 3 not moved.
Mr. Colley: I move amendment No. 3a:
In page 10, subsection (3), after paragraph (d) to insert the following paragraph:
“(e) that any pensions for the children or dependants of an employee who dies before retirement or on his death after retirement shall not exceed, in the aggregate, one-half of the pension specified in paragraph (b) or (d) as the case may be,”
Amendment agreed to.
Dr. FitzGerald: I move amendment No. 4:
In subsection (4) (b), page 10, line 33, after “age,” to insert “on earlier incapacity”.
Amendment agreed to.
Amendments Nos. 5, 6 and 7, inclusive, not moved.
Question proposed: “That section 15, as amended, stand part of the Bill.”
Dr. FitzGerald: I am glad the Minister brought in amendment No. 2a because this was a point which I had  raised on Second Stage—the deficiency here. I had suggested the need to insert the words “children, dependants or personal representatives”. I am glad the Minister has done that. I did not put down an amendment as I wanted to discuss it first to see what the position was.
Question put and agreed to.
Sections 16 to 25, inclusive, agreed to.
Question proposed: “That section 26 stand part of the Bill.”
Mr. Bruton: This section slightly improves the schedule of rates of estate duty. However, with the inflation in the market value of property which has taken place it probably is the case that it has not kept pace. I know that in the case of agricultural land relatively small farms are coming within the death duty net now as a result of the operation of the existing schedule. While the schedule introduced in section 26 is an improvement, it will not go the whole way to meet the problem. It has been found in Sweden that the operation of estate duty combined with the capital levy has resulted in the extinction, practically, of small family businesses. We should endeavour to ensure that this does not occur here.
A way could be found around this problem. A problem which arises most commonly in rural areas in relation to farms and, probably, also, to a degree, in relation to other businesses, is that the estate duty leviable is so high relative to the earning capacity of the estate on an annual basis that portion of the estate has to be sold. A way has been found around this in Britain where they have formed an estate duty corporation. I have a very rough notion of what this is but I understand that it can take an interest in an estate or, in fact, take over the part of the property which would normally be sold and completely alienated, and lease it back to the original owner and, over a period of years, can collect the death duty which would have been paid, thereby preserving the existence of the business in its original form.
 It is desirable, particularly in rural Ireland, that we should preserve farms and not have them fragmented, which is the danger arising from the existing estate duty code. A body in the nature of an estate duty corporation could be set up which could purchase or take over the segment of the property which it would be necessary to sell and lease it back to the farmer and collect the death duty over a period in the form of rent. Such a device might be a way of getting around the problem. I cannot say that I am an expert on the matter but it is common case throughout rural Ireland that estate duty is falling heavily on relatively small farms and is causing considerable distress and is leading to the position that farms have to be fragmented in order to pay estate duty. I would ask the Minister to consider this question carefully.
Dr. O'Donovan: Might I just add that it is quite true, as Deputy Bruton says, that the real difficulty is to get cash to pay the estate duty? This has occurred long since in relation to private companies. Indeed, I heard a man who in this House would have been regarded as a very wealthy man moaning, to the amusement of some of his colleagues, about his son getting married. He was worried sick that he might pass away and about the load the son would have to pay.
I know that in the past the Estate Duty Office were very reasonable in the kind of value they put on small farms. There were certain limitations. I do not know whether that applies any longer. If the valuation of the farm was £25 or under, they multiplied it a number of times and assessed accordingly. If that does not apply any longer it would be a very small farm today that would be worth £20,000 and that would pay 12 per cent, which is approximately £2,400.
It has been remarked to me that there are two parts of this country: there is the city of Dublin where there is one kind of income, and there is rural Ireland, where there is a different kind of income. I am talking about income. I am not talking about the wealth question that we had recently. The difficulty in relation to estate duty  is to get hold of the cash. It is well known that the return on agricultural land in the past was about 2 per cent. This was an accepted figure. If you take any figure of this sort—I am not talking about exceptionally good farmers like the Brutons, able farmers; I am talking about the ordinary farmer —what kind of return can he get on the capital which his farm would make if it could be sold? Of course, it cannot be sold: it is a family farm that has been in the family, perhaps, for 200 years.
I should like to hear the Minister on this problem. Assuming that estate duty is now levied on the basis of what the farm would make if it were sold, it is a great difficulty for any family or any person inheriting the farm, who has to live by the farm, to lay his hands on that amount of cash. He will have a millstone around his neck for many years.
Deputy Bruton suggested the setting up of a corporation through which estate duty could be paid. Again, my recollection of estate duty is that once it is owed for more than a year it is subject to 5 per cent interest.
Mr. Bruton: Nine per cent.
Mr. Colley: We raised it last year.
Dr. O'Donovan: That makes it worse, increases the load. A person can be very wealthy—and I use that word deliberately—very rich, and can be very poor in relation to income.
Mr. Tunney: It is a nice way to be poor.
Dr. O'Donovan: I have too much sympathy with people who are poor, I am not against the Deputy's point of view at all. There is a serious administrative problem for anybody who inherits a farm. How will he manage it? Will he go to the bank and get a loan and pay the estate duty, assuming that there is that much cash around? Perhaps the Minister would tell us what he thinks about this.
Mr. Colley: First of all, what we call the artificial valuation of farms for death duty purposes still applies.
Dr. O'Donovan: That leaves out the small farms, does it not?
Mr. Colley: It does. Now, to keep this in perspective, I have to repeat something I said here before; approximately 4 per cent of all the cases in which estate duty is paid are farm cases. There is some significance in that. It may be argued that, with the increasing value of land, that percentage will change.
Mr. Bruton: When was that figure arrived at?
Mr. Colley: Last year.
Mr. Bruton: In respect of just one year?
Mr. Colley: Yes, but the pattern over previous years was the same, or worse, or better, depending on one's point of view. There is no evidence over previous years that the farm percentage is high and this figure of 4 per cent is just a freak. On the contrary, this pattern of such a small percentage of cases being farm cases is the regular pattern year after year. As I said, it may be argued that, with the increase in the value of farms, that pattern will change. I do not dispute that this is possible, but one must wait and see if it is true before one accepts that it is the evolution.
There are factors that operate here, such as the artificial valuation, to produce this kind of result. Also, and I think this is of some relevance, when the rate of interest on outstanding death duty was 4 per cent only one in eight of the farm cases elected to pay death duty by instalments. This is another benefit available in respect of farm property; the duty can be paid by instalments. Only one in eight elected to pay by instalments when the interest rate was 4 per cent so this would seem to indicate that, certainly up to now, duty has not been a major problem for the farming community. Although one hears people talking about farms having to be sold, or some portion of them, in order to pay estate duty, the Revenue Commissioners are not aware—they were certainly not aware up to a short time  ago anyway, and I put this qualification in, because it is some time since they told me this—of any cases in which a farm had to be sold in order to pay duty. There are cases in which a whole lot of debts have piled up and death duties constitute the last straw; but that is not the kind of case most people are concerned with; we are concerned with the ordinary case in which the debts are of reasonable proportions. We know of no case in which it was necessary to sell a farm in order to pay death duties.
I should remind the House, too, that last year we increased the exemptions in respect of property passing to widows or to widows with dependent children. We are proposing now in this section to increase the exemption limit, which was £5,000 in 1960, to £7,500. This involves reduced rates on estates between £7,500 and £11,000. Again, I must remind the House that, in assessing this in relation to farm land, one has to take account of this artificial valuation, which does not apply in all cases, but applies in very many cases and, as Deputy O'Donovan said, has the effect of including all small farms. On the figures I have given it clearly excluded more than small farms from liability to duty.
Mr. Bruton: Has the Minister any figures on the size of the farm which in normal practice is excluded and the size which is included?
Mr. Colley: I said 4 per cent of all the cases and it is quite clear from that that small and medium sized farms are excluded because, if they were included, the percentage would have to be higher than 4 per cent. Under the changes made last year and by the provisions in this Bill relating to property—it does not relate to farms only, but it includes farms of course—where a widow is the only beneficiary an estate is exempted from duty if its value does not exceed £17,750. Where there are two dependent children the limit will be £25,500. Where there are five dependent children the limit will be £35,700 and where there are six dependent children the limit will be £38,095. It is clear, therefore, that what we have been doing is of considerable importance to the most vulnerable  person in a situation like this, the widow or the widow with dependent children.
The whole question of liability in respect of farms seems to me to be one that tends to be clouded with a certain kind of misty thinking because, on the one hand, we find it argued that farming is a business and that the farm is the capital and, to some extent, the equipment available to the farmer to run his business and should be treated as such and, on the other hand, in the case of businesses other than farming this problem arises, as Deputy O'Donovan said, just as acutely and the normal method of dealing with this kind of liability is to take out an insurance policy in respect of the liability.
Dr. O'Donovan: Certainly, if it is going to be very sizeable, it is the sensible thing to do.
Mr. Colley: This is open to farmers or anybody else worried about possible liability to duty. Deputy Bruton mentioned the arrangement in Britain. I understand it is called the estate duty in investment trust. It is a consortium of insurance companies and it is confined to taking up shares in private companies, without taking directorships, to provide money to pay duty. That is one way of approaching it. The point is it is a group of insurance companies who are doing it and it bears out my point: the approach to this problem of liability for duty, if the contingency is substantial, is to ensure against the contingency. In the case of substantial farms, where the liability could be substantial, this is the right approach. It is the businesslike approach and the one we are entitled, I think, to expect from large farmers. They are engaged in business on a large scale. It is quite clear from the statistics and the results that the incidence of death duties on the farming population in general has been far less than the incidence on any other section of the community. Statistics bear this out. Due to the size of farm and the increasing value of farm land, substantial liability for duty may now be facing some farmers  and to that extent their approach should be that of people engaged in other businesses, that is, to take out an insurance policy in respect of this liability.
Question put and agreed to.
Question proposed: “That section 27 stand part of the Bill.”
Mr. Bruton: What is the significance of subsection (3)? Is this provision in a previous Act?
Mr. Colley: Yes. There is such provision in existence but this is a consequential change because of raising the figure from £5,000 to £7,500.
Question put and agreed to.
Question proposed: “That section 28 stand part of the Bill.”
Dr. FitzGerald: This gives me an opportunity to protest again against the way aggregation works. It involves considerable hardship and resentment and most people will regard it as iniquitous that the value of death benefits should be doubly taxed on the recipients, first, by their aggregation and liability to duty on the capital value and, secondly, by the fact that it is mandatory for the major portion of the death benefits to be converted into an annuity for the dependants which is also taxable. To tax the same amount of money twice is something that we are trying to avoid under VAT. It is a pity that we cannot apply the same principle here in regard to estate duties. There is a principle here which we should stand by. I protest also against any arrangement under which property passing to a widow is liable for estate duty. When I raised this on Second Stage the Minister denied that the rationale was to prevent capital accumulating from generation to generation. I do not think, however, that he developed the thought as to what was the rationale other than raising money for the Government. Given the undesirability in general terms of taxing capital the only justification for taxing  capital is to prevent wealth accumulating. If the Minister has reasons for trying to reduce the amount of capital by taxing it out of existence other than for the purpose of preventing the accumulating of wealth, I should like to hear them. Capital must not accumulate in too few hands and, rightly, civilised governments tax capital in various ways designed to prevent that accumulation. In our system that is done, not by taxing capital annually for which there is a lot to be said although there would be many problems attached to that practice, but by taxing capital as it moves from one generation to the next. The taxation of widows is an anomaly in our system. There is no case for it. It is not that it is desirable to tax capital per se. It would be undesirable to do so. It is not that it is undesirable to prevent it accumulating from one generation to the next because the widow is, prima facie, the same generation as her husband and it is only when capital passes to the next generation that it would be legitimate to tax it in that interest. It is not because widows are particular accumulators of capital that their class must be tackled by special penal legislation to prevent capital accumulating among them. They are not a particularly well known class of exploiters in the community, so why pick on them for special tax? As there are no grounds, therefore, for taxing capital in general, there are no grounds for taxing it as it passes to someone in the same generation as the deceased. There is no case whatever for taxing money that goes to widows so, perhaps, the Minister would give us his reason for this tax. In practice, money passes to the next generation except in cases where it goes to the widow. The Minister's defence of this tax was extremely weak on Second Stage.
Mr. Colley: This provides an interesting exposition of Deputy FitzGerald's general approach to various questions whereby he postulates something and then thinks that the onus is on the Minister concerned to demonstrate that he is not correct and that if  he does not demonstrate that he is not correct, in Deputy FitzGerald's view, the postulation stands.
Dr. FitzGerald: It could be that the Minister is not competent to dispute my point.
Mr. Colley: There is also another possibility which apparently never enters the Deputy's mind. The Deputy postulated before and again today that the rationale behind death duties was to ensure that capital would not be accumulated from generation to generation. If his version of the rationale were correct, there would be no duty levied on property passing to a widow but similarly there are to be no duties levied on property passing to a brother or a cousin or anybody of a similar generation.
Dr. FitzGerald: I think the case can be made that the relationship between man and wife is rather stronger.
Mr. Colley: The Deputy is now changing feet. That is not the case he made. He poured forth on the basic rationale behind estate duty in this country which, he said, was to ensure the non-accumulation of capital in too few hands but also the passing on of wealth from one generation to another. His argument does not stand up but when I point that out to him now he talks about the special relationship between man and wife. I confess that I am making a debating point because I think that is what the Deputy was trying to do. There are difficulties, especially in our circumstances with the substantial importance of agriculture, in a proposition that property passing to a widow should not be liable to duty because in most cases farms would pass to widows who in many cases would be fairly old. I doubt if Deputy FitzGerald would contend that this would be in the general social or economic interests of the country. I am dealing with that merely as one of the many aspects of the matter that arise. On this section we are proposing to do something that is in favour of the taxpayer.
Dr. FitzGerald: At last I have extracted some argument from the Minister  on this particular point. That is a useful contribution to the sum total of knowledge.
Mr. Colley: It is a useful contribution to another debating point.
Question put and agreed to.
Section 29 agreed to.
Question proposed: “That section 30 stand part of the Bill.”
Dr. O'Donovan: In anticipation of Deputy FitzGerald's question, what is the meaning of this section?
Mr. Colley: Is the Deputy asking what it means or what is its purpose?
Dr. O'Donovan: If the Minister tells us what is its purpose we will have the meaning.
Dr. FitzGerald: Not necessarily.
Mr. Colley: This is purely a technical section but it has very important practical applications particularly in relation to double taxation relief. It provides that, as from the date of the passing of this Bill, foreign debts shall, for the purpose of estate duty, be deductible from all foreign assets. That is the whole foreign estate, both real and personal, and not from foreign personal estate only as is the present law.
A practical example of what can happen would illustrate what we are getting at. If a person dies domiciled in England leaving personal estate here and if by reason of certain debts he had in Britain his English personal estate is deficient but his real estate in England is quite substantial, what happens is that the deficiency in the English personalty must be allowed against the Irish personalty even though there are sufficient assets in the form of real property in England to meet it. I do not know if that is clear but I can tell Deputy O'Donovan that because of this state of the law certain smart people have arranged or attempted to arrange their affairs so as to bring about a situation like this and thereby save very considerable  sums in estate duty. What we are saying in this section is that where a person has property abroad which is liable to duty, all of that property should be subject to his debts abroad and, not just personalty abroad. In other words—does the Deputy wish me to go further? There is a danger that the further I go the more complex it will become.
Dr. O'Donovan: Does it mean a liberalising provision in certain cases and a restrictive one in other cases?
Mr. Colley: No, it is a duty avoidance provision.
Mr. Bruton: I do not quite understand that because the explanatory memorandum refers to debts being deductible and this section appears to extend the scope of deductibility of debts. Would I be correct in believing that it would be in the interests of the successors to the estate to extend the scope of the deductibility of debts so that in a case where, for instance, the debts on the personal estate might exceed the actual assets of the personal estate, while up to now they could not be used to subtract from the real estate they could, as a result of this proposal be so used?
Mr. Colley: I do not think that is quite right. I shall try to give another example. Assume a person dies domiciled in this State possessed of Irish personal estate worth £400,000 net and English personal estate worth £90,000 gross and English real estate worth £250,000. If the debts in England, say, amount to £300,000, for instance, an unsecured bank overdraft, the British Revenue would then get estate duty on £40,000 made up of the £90,000 gross personalty in England plus the £250,000 realty, minus the £300,000 debts, and that, calculated at the appropriate rate of 24 per cent would amount to £9,600. Duty is payable here on £190,000 made up of the net Irish personal estate of £400,000 less the deficiency on the English personal estate, which amounts in this case to £210,000. In that case no claim for duty arises here in respect of the real property situated  in England because of section 37 (2) of the 1971 Finance Act. This £210,000 which was deducted both in England and in Ireland escapes duty here although there was sufficient English real property to meet it.
This is a very highly artificial situation which arises from the present provisions. In the case mentioned, £210,000 was allowed as a deduction in effect here although there were sufficient assets available in England to meet it. By deleting the word “personal” from the relevant provision of the 1894 Act we get to the situation where we say that the property in England was sufficient to pay these debts. We should say that unless the property in England or abroad was insufficient, then these debts should not be deducted against the Irish personalty.
Dr. O'Donovan: Are we to understand that this was, in fact, an indication of the attitude of mind of the Victorian age in Britain for the protection of real property?
Mr. Colley: I am assured it is.
Question put and agreed to.
Question proposed: “That section 31 stand part of the Bill.”
Mr. Bruton: Does the Minister believe this will lead to a great increase in the work of the Circuit Court? Could he tell me by whom these matters have been dealt with in relation to these cases up to now?
Mr. Colley: I understand there has been only one case here since 1909, and that was in 1917, in which there was an appeal from the Property Arbitrator. What is provided here is directly consequent on section 26 of the 1968 Finance Act where the limit was raised from £10,000 to £50,000 in the case of property appeals. I have no reason to believe that this will clog up the work of the Circuit Court having regard to the fact that there was only one case of this kind since 1909.
Question put and agreed to.
 SECTION 32.
Question proposed: “That section 32 stand part of the Bill.”
Dr. FitzGerald: The need for this section has become evident and in principle it is acceptable. That does not mean it is comprehensible. People more learned than I in these matters have described it as incomprehensible. In so far as one's limited understanding goes it appears to do something useful but there are some difficulties about it. It appears that something similar was done in last year's Finance Act in respect of companies and that in it the words “income or benefit” were used and here the word is “payment”. It has been put to me that it is puzzling that where you are dealing with it from one point of view you use “income or benefit” and from another point of view you use “payment”. The Minister might explain this to me.
More important is the fact that what it does is to repeal a section of the 1965 Act which, like so many parts of that Act, has turned out to be unworkable. It must be the worst piece of legislation in the financial field this country has seen possibly in the lifetime of this State. The fact that we have to keep on amending it year after year reflects no credit on it. It was not one of the happier features of the Ministerial career of the present Taoiseach when he spent a brief period in Finance and left as his memorial this constantly changing edifice which has been chipped away at year by year.
There is a problem which I raised on the Second Stage—I always believe it is useful to mention matters on Second Stage so as to alert the Minister and his officials to them—the fact that section 20 (4) (b) (i) of the 1965 Finance Act depends for its workability on section 21 (5) of that Act. We are now getting rid of section 21 of the 1965 Finance Act and in so doing we are getting rid of the subsection upon which the operation of section 20 depends, section 20 being a continuing part of our legislation since it is not being amended or repealed. Having got rid of it we are substituting something and it can be argued that subsection (6) of the section we are dealing  with in this Bill takes the place of subsection (5) of section 21 of the 1965 Act. I do not know what principle of legislation there is that permits one to assimilate a somewhat differently worded and not specially identified subsection of a new Bill for a subsection of another Bill which is required for the interpretation of another part of that Bill. It does not seem to me that legislation can be left that loose. Secondly, the wording of this subsection does not seem to me to lend itself to the purpose of propping up section 24 (b) (i) because in line 5 of page 20 there is a reference to payment of income at an annual rate of six divided by the number of objects of the trust of full age including the deceased. That is something which cannot be used outside the sphere of persons. The idea of a company of full age is a novel one from the point of view of legislation. It does not seem to me that one can use the new subsection (6) of this section to prop up section 24 (b) (i) of the original Act. I should like the Minister to explain whether he suggests it can be so propped up or is there not a need for an amendment to section 20 as well? Maybe there is a missing link I have not detected but I think there is a defect here that needs to be looked at.
Mr. Colley: The Parliamentary draftsman advises that there is no necessity for an amendment of the kind envisaged by Deputy FitzGerald because the point at issue is covered by section 20 (1) of the Interpretation Act, 1937.
Dr. FitzGerald: Would the Minister develop that a little? How does that Interpretation Act help one when the new subsection here is different not only in wording but different in kind, in a sense?
Mr. Colley: I think Deputy FitzGerald is going a little bit too far when he says that.
Dr. FitzGerald: Where does the idea of a person of full age come into the earlier one?
Mr. Colley: The Interpretation Act refers to any provision which is repealed  and re-enacted with or without modification which is what is happening here. It is a repeal of subsection (5) of section 21 of the 1965 Act but with two changes so it comes within the definition “with or without modification”.
Dr. FitzGerald: When you introduce the concept of full age you introduce a concept which is so irrelevant to a company that I do not see how you can use something in it to deal with matters which concern companies. I can see that if a new subsection (6) were similar in kind and did not change its character we might be able to use it but I do not understand how you can calculate what is due to a company in terms of whether the company is of full age. I am afraid the change has been so radical as to defeat the workings of the Interpretation Act.
Mr. Colley: It is because companies do not die that they are in the section but the reference to age I think refers to the deceased.
Dr. FitzGerald: Suppose the objects are companies. Section 20 is all about companies. How do you decide which companies are of full age and which are not? It is a very interesting concept but a novel one to me. I am glad that the Minister is puzzled.
Mr. Colley: No, I am puzzled about something else.
Dr. FitzGerald: The Minister should not be puzzled about anything except this at the moment.
Mr. Colley: I am puzzled about whether a company could be in occupation of a house or a chattel. I think it could not. It could own a house or a chattel but it could not be in occupation of it.
Dr. FitzGerald: Is that necessary?
Mr. Colley: Yes.
Dr. FitzGerald: I am getting even more lost at this stage. We are dealing with how to interpret a section which is headed, “Dispositions in favour of certain companies”—section 20 of the 1965 Act.
Mr. Colley: What section is the Deputy on?
Dr. FitzGerald: Section 20 of the 1965 Act.
Mr. Colley: I am sorry. I thought when the Deputy was quoting the heading he was talking about some section other than section 32.
Dr. FitzGerald: Paragraph (b) provides:
...shall be deemed to be an annuity equivalent to the average annual amount received or enjoyed by way of income or benefits in the relevant period, that is to say, the period of five years immediately preceding the death of the deceased and in relation to the said interest——
—which could be interest by a company, I understand——
——the following provisions shall apply:
(i) where the benefits enjoyed consist of or include the occupation or possession of lands or chattels, the value of the occupation or possession shall be determined in the same manner as the value of similar benefits is determined under the provisions of subsection (5) of section 21 of this Act.
It is not just occupation. The Minister was misled if he was relying on that being the only phrase because it is “occupation or possession”. We are talking of a case of the possession by a company of some property and we are asked to determine that by reference to a section which, as now amended, refers to the question of whether the objects of the trust are of full age. If one of the objects of the trust happens to be a company I do not see how it can be of full age.
Mr. Colley: The object of the trust has to be deceased for this to operate.
Dr. FitzGerald: Does it?
Mr. Colley: A company cannot die.
Dr. FitzGerald: It says:
For each year or part of a year which a number of objects of the trust including the deceased was in occupation or possession...
Only one object of the trust has to be deceased. The others do not and they could be companies and they could be companies in possession, not in occupation. That is what it says here. If the Minister can explain how this could apply to a company, fair enough. If not, an amendment is required to section 20 of the 1965 Act. Would the Minister like to look at it between now and Report Stage, letting him off the hook?
Mr. Colley: I do not wish to get off this hook, if the Deputy does not mind.
Dr. FitzGerald: Always trying to help.
Mr. Colley: I am not quite sure that I appreciate what difficulty the Deputy anticipates. He has referred to section 20 of the 1965 Act. I am not quite clear, despite what he said, what difficulty he sees in applying section 32 of this Bill.
Dr. FitzGerald: The Minister admits he is not clear and I will admit that I am not entirely clear either. I am trying to get it clear. That is why I raised the matter. I am quite open to being told I misunderstood it. Subsection (4) of section 20 of the 1965 Act provides:
(i) the deceased had at any time, whether before or after the passing of this Act, made a disposition of property in favour of a company controlled by the deceased, and
(ii) he was at any time within five years of his death in receipt or enjoyment of income or benefits from the company other than dividends or interest...
he shall be deemed to have had an interest ceasing on his death in the net assets of the company within the meaning of paragraph (b)...
 An interest in a company. Paragraph (b) provides:
The interest to which paragraph (a) of this subsection refers shall be deemed to be an annuity equivalent to the average annual amount received or enjoyed by way of income or benefits in the relevant period, that is to say, the period of five years immediately preceding the death of the deceased and in relation to the said interests the following provisions shall apply:
(i) where the benefits enjoyed consist of or include the occupation or possession of lands or chattels, the value...is determined under the provisions of subsection (5) of section 21 of this Act.
These are benefits enjoyed by companies, I understand at this stage, and yet they have to be determined by reference to the question of the number of objects of the trust of full age. These objects of the trust could be companies.
Mr. Colley: Which part of the section is the Deputy now on?
Dr. FitzGerald: I am now coming to the end of subsection (6) of the current Bill. That is where the full age comes in. In section 20 of the 1965 Act we are referred to a subsection of section 21 which is now substituted by this subsection. It does not seem to me that we can use this subsection for that purpose where companies are concerned. I am not claiming to understand it fully, and I may have missed a point somewhere, but it all seems to me to be about companies, or potentially about companies, and they cannot be of full age. I do not want to hold up the House. Perhaps the Minister would look at it between now and Report Stage and he may be able to offer clarification and reassurance or, perhaps an amendment if I have a point.
Mr. Colley: I should like the House to bear with me for a moment. I think I was tending to deal with other points. May I take it that the point being made by Deputy FitzGerald is in relation to the phrase at the end of subsection (6)?
 The words in brackets are “divided by the number of objects of the trust of full age including the deceased”. He is saying that one of the objects of the trust could be a company and, that being so, how would you determine the meaning of the words in brackets because you cannot determine whether a company is of full age, and, therefore, it is not applicable at all. Is this the point he is making?
Dr. FitzGerald: Yes.
Mr. Colley: Is that the net point?
Dr. FitzGerald: It is the net point because it relates back to the problem of operating section 20 of the 1965 Act. If the Minister can say that none of the objects of the trust could be a company, OK.
Mr. Colley: What I would say is that clearly, as Deputy FitzGerald says, the question of being of full age is meaningless in relation to a company.
Dr. FitzGerald: That is why I say the subsection is entirely inappropriate to be used to work section 20 of the 1965 Act. That is my point.
Mr. Colley: Surely the reasonable commonsense approach to this should be that, since you cannot determine whether or not a company is of full age, you relate the question of full age to persons, and if one of the objects of the trust is a company the question of whether it is of full age does not arise.
Dr. FitzGerald: Would the Minister not agree that it is very queer drafting?
Mr. Colley: Before the Deputy says anything further, would he answer the point I made? What is wrong with that approach?
Dr. FitzGerald: I do not know what a court would do—whether it would rule that it is so meaningless as to be inapplicable or that an object of a trust of full age can mean a company and that the question of the age of the company is irrelevant. I cannot say what the court would say but our object should be to legislate with sufficient  precision, clarity and commonsense that the legislation is usable and meaningful to the people using it. It seems to me much simpler to avoid the dangers inherent in this, where I might have one view if I were sitting in the High Court and the Minister another view, with it all depending on what the third judge decided, on which way he went, by simply putting into the Bill the appropriate amendment to deal with the problem in respect of section 29 of the 1965 Act. The Minister could look at it between now and Report Stage.
We should not waste too much time on a technical point but there is sufficient ambiguity involved and the whole link is so tenuous—the fact that you have to apply the Interpretation Act and see whether there is a subsection sufficiently similar in form to that in the original 1965 Act as to be usable for purposes of the Interpretation Act, and then examine it and if necessary assume that if the words “full age” are not there, it is inapplicable—that it should be looked at. Why do it in that roundabout way, this devious way, instead of by means of a simple amendment to give effect to section 29 of the 1965 Act?
Mr. Colley: The Deputy will find with some more bitter experience of the Finance Bill that, especially in relation to estate duty, to talk about making quite a simple amendment is far from what seems to be possible. Perhaps I should tell the Deputy that my difficulty here is that I had hoped I might get all Stages today.
Dr. FitzGerald: I am afraid that would not be possible. Although there are not many points to be discussed, it is important that they be discussed to see whether there are any amendments to come. The Report Stage will be very brief and can be given next week but it would be quite wrong to put the Bill through without having time to consider the points made. I never contemplated that possibility, although we will facilitate the Minister.
Mr. Colley: Perhaps on the conclusion of this Stage it would be possible  to take all Stages and I would undertake to look at the point the Deputy has been making in the other House. If that is not so and the next Stage is not being taken today, I would undertake to look at it before we come back here.
Dr. FitzGerald: I appreciate the Minister's offer but we could be in a difficulty if this House had adjourned. Suppose there were an amendment in the other House, what happens the Finance Bill?
Mr. Colley: I had overlooked that.
Dr. FitzGerald: The Minister cannot really offer that. I want to consult people about points raised in the debate. The Minister will accept that we will facilitate him next week and take very little time.
Parliamentary Secretary to the Taoiseach (Mr. Andrews): That would destroy the undertaking arrived at between the Whips that the Minister would get all Stages.
Dr. FitzGerald: I have not heard the slightest mention of it.
Mr. Andrews: Deputy L'Estrange, whose word is his bond, would confirm what I say if he were here. Can the Deputy not make his point now?
Dr. FitzGerald: I have not heard of any such agreement and I would not dream of accepting such an agreement on a Finance Bill. We will facilitate the Minister next week and get it through quickly.
Mr. Colley: If we were to proceed with the remaining sections, would it be possible for me to deal in more detail with the points raised by Deputy FitzGerald? Would I have permission to go back when we come to the end?
Mr. Tully: It does appear that the issue is not a matter of principle but simply whether or not the words mean what the Minister claims they mean and what Deputy FitzGerald claims they do not mean. It is a question of fact and surely it would be foolish to hold up the Bill on that point, that the  Minister is attempting to do something and Deputy FitzGerald claims he is not doing it the right way to copper-fasten it and suggests another way. Surely the proper thing to do is to have the matter looked at and, if necessary, corrected? I am sure that Deputy FitzGerald, who is very reasonable, will agree that it is not an issue on which we should have any long debate.
Dr. FitzGerald: If the Minister comes back with an amendment, it will go through in a minute and if he says it is not necessary, it will go through in half a minute.
Mr. Tully: If the Minister wants to achieve something, it is the Minister's job to ensure that it is achieved. Deputy FitzGerald pointed out, and rightly so, that he thought this was wrong and should be corrected in a certain way. I agree with the Government Whip that an agreement has been made—that is the information I got from our Whip—that it should be completed, and perhaps it can be. It is not an issue in principle at all.
Dr. FitzGerald: We are dealing with an important Bill——
Mr. Colley: Perhaps the suggestion I made, if accepted, might get over our difficulty.
An Leas-Cheann Comhairle: The position so far as the Chair is concerned is that Standing Orders would not permit what has been suggested. Once we enter a section, we cannot go back. Standing Order No. 93 deals with that point.
Dr. FitzGerald: Let us not get bogged down in this. The position is that this is an important Bill. I had a number of amendments down and I have heard the Minister's views and have withdrawn them for further consideration in some cases. There are other matters on which in the limited time available since the Bill was published, it was impossible to get sufficient advice and in respect of which I would have put down amendments on Committee Stage but had not time to get that advice. I have now put down amendments on Report Stage and there is no question of pushing  the Bill through without adequate debate. I was never consulted in the matter. We will get it through as quickly as we can next week.
An Leas-Cheann Comhairle: What the Chair is saying in regard to what the Minister suggested as to the section itself is that Standing Orders prevent coming back to it at a later stage, once the section is entered on.
Dr. FitzGerald: The point I am making is that in any event there must be a Report Stage and there are other amendments to come—or there may well be—which have not been raised yet.
An Leas-Cheann Comhairle: Section 32 agreed?
Dr. FitzGerald: The Minister has not dealt with the point raised at the beginning as to the use of “payment” when previously the words “income benefits” were used.
Mr. Colley: Income benefits in section 20 of the Finance Act of 1925 deal with benefits derived from a private company and could include a wide range of advantages such as dividends, salary, directors' fees, use of a car or occupancy of a house. In this case we are dealing with payments by a trustee to a discretionary beneficiary as distinct from section 20 of the 1965 Act which dealt with benefits derived from private companies and a very wide range of things.
Dr. FitzGerald: That makes sense.
Mr. Colley: Could I, on a point of order, refer you, Sir, to Standing Order No. 93? I do not wish to hold up the House but it sets out that in Committee a Bill must be considered section by section and that “it shall be in order before the consideration of a section or sections is entered upon to move the postponement of the section or sections——
Mr. Tully: “Entered upon”.
Mr. Colley: I withdraw my point.
Mr. Bruton: Could I ask the Minister to state the types of evasions  which it is designed to counter by means of this section?
Mr. Colley: Could the Deputy be a little more specific as to the types of evasion he has in mind?
Mr. Bruton: This section replaces section 21 of the 1965 Act. Presumably, section 21 has proved to be inadequate for the purposes for which it was designed. I should like to know in what respect it has proved to be inadequate.
Mr. Colley: I am glad Deputy Bruton raised this question because he reminded me of a point I wanted to make in reply to a point made by Deputy FitzGerald earlier and which I omitted to make in the rush of dealing with other points. In fact, the amendment of this section became necessary because of a decision of the High Court in a particular case. I do not know if it will mean anything to the House but in the hope that it will let me say that the net effect of the judgment is that property could be settled on trust for A contingently on his attaining a certain age and, on his failure to attain that age, for B, contingently on his attaining a certain age and, on his failure to attain that age, for C and D, contingently on their attaining the age of 21 years, with power to the trustee to apply the income at his discretion for the benefit of “any person immediately contingently entitled to the capital”; and no claim for estate duty would arise on the death of A before the specified age although he might have been in receipt of the entire income. But, if the certain age were fixed high enough, duty could be avoided indefinitely; it is because of this High Court decision —on an interpretation of subsection (2) of section 21.
Mr. Tully: Would that not be a very unlikely eventuality?
Mr. Colley: No. It is wide open if we do not close this loophole. That is the basis of the kind of avoidance that could be involved and that is what Deputy Bruton asked. I did say that he reminded me of a point I wanted  to make. Deputy FitzGerald, in the course of talking about this section and making a number of rather more technical points, made a blatantly political point which I omitted to deal with and that was when he tried to make out that the Taoiseach was responsible, as Minister for Finance, for —I cannot remember his exact words but certainly the implication was—the worst piece of financial legislation we had in this country.
Dr. FitzGerald: I have heard it so described by reputable professional people.
Mr. Colley: No doubt they had a certain political bias.
Dr. FitzGerald: No, they were speaking professionally. I do not know what their politics are.
Mr. Colley: The point I want to make is, and it is very important that it should be realised by Deputy FitzGerald and others, what really happens in relation to the tax avoidance measures in practice is that in Britain certain loopholes are discovered; legislation is brought in to close the loopholes; that draws the attention of certain professional people here to these loopholes and they start operating them. When they do, we have to close the loopholes. That is the pattern that goes on time after time after time. This explains why people think that we are simply following British legislation in this matter. The fact is that it is people who are trying to avoid liability for duty, income tax and so on, who are following the British and we have to follow it to close the loophole.
Dr. FitzGerald: Slave-minded tax avoiders.
Mr. Colley: That is the trouble and they present us with this problem. Because of this it is inevitable that various Finance Bills, but particularly those which are designed to close loopholes on any large scale, will be the subject of numerous amendments time after time as further loopholes are discovered. That is what happened in relation to the 1965 Act. It certainly  is no reflection on the then Minister for Finance and it is a rather low point for Deputy FitzGerald to try to bring in in relation to the present Taoiseach. It does not stand up to examination.
Mr. J. Lenehan: I should like to ask the Minister a few questions which it is possible he could answer and, on the other hand, it is possible that he may not be able to answer. A great many people who make a good deal of money in Great Britain return here, buy property, set themselves up and they are blackguarded in every possible way by the Department of Finance.
An Leas-Cheann Comhairle: This does not arise on this section. The Deputy must keep to the section before the House.
Mr. J. Lenehan: I am dealing with cases where income tax is being taken from people.
An Leas-Cheann Comhairle: The section deals with discretionary trusts.
Mr. J. Lenehan: It may not come within the section but if money is being taken from them——
An Leas-Cheann Comhairle: The section deals with discretionary trusts. We cannot depart from the section.
Mr. J. Lenehan: We have in this House a great number of theoretical geniuses, financial experts, financial advisers——
An Leas-Cheann Comhairle: That has no application to the section.
Mr. J. Lenehan: We have theoretical advisers——
An Leas-Cheann Comhairle: The Deputy may not proceed on that basis. His remarks must be relevant to the section we are dealing with.
Mr. J. Lenehan: I have been for a long time a Member of the House. A man who comes up with nothing but a few bits of theoretical nonsense can speak all day and I cannot be allowed to say anything.
Mr. Bruton: I am not satisfied with the Minister's explanation about loopholes that it is designed to close. I do not think that could be seen as explaining all the additions to section 21 of the Finance Act of 1965 but, then, I cannot query the Minister too deeply on this matter because of lack of knowledge. It seems to me that problems may arise. It seems that the word “deceased” used here and in the definition in subsection (1), is defined by reference to subsection (2) but, as far as I can see, the word “deceased” is not used in subsection (2) other than within brackets and is not really defined at all. I wonder if that is a proper definition section. Again, the words “market value” are defined by reference to subsection (6). The words are used once in subsection (6) but do not seem to be explained to any great degree in subsection (6).
I wonder, therefore, if this is the most desirable way of defining these terms and if a better way could not be found. Could they not be defined in a self-contained definition section rather than by reference to another subsection in which the definition is not very clear? Could they not be defined in the same way as the words “relevant period” for instance?
Mr. Colley: The two definitions are, I think, quite satisfactory. It is true, as the Deputy says, that the word “deceased” in subsection (2) appears in brackets, but it is the words outside the brackets which constitute the definition.
Mr. Bruton: I do not follow that.
Mr. Colley: The Deputy appeared to think that because the word deceased appeared only once, and inside brackets, this was a very unsatisfactory approach to the definition of the word.
Mr. Bruton: Why not define it in a definition section?
Mr. Colley: It is defined. The definition consists of the words outside the brackets.
Mr. Bruton: The definition then is any person dying who at any time during the relevant period received a  payment either directly or indirectly out of the property or out of the income of the property.
Mr. Colley: Yes, though there may be a question of “after the passing of this Act”, but substantially, yes, the Deputy is right.
Mr. Bruton: Would it not be easier to put that in in the first place?
Mr. Colley: It is fairly clear. I do not think we should waste too much time on trying to improve on the draftsman's work. We could all make a great many suggestions, but I do not think they would get us very far.
Mr. Bruton: I can foresee a certain amount of confusion, particulary in regard to the words “market value”. I wonder if the definition of trustee is not, perhaps, too wide:
“trustee” includes any person who, whether the property the subject of the trust is vested in him or not, exercises or has a discretion to exercise a power or make a decision in relation to the nature or extent of, or any matter affecting, a payment under a trust of the kind referred to in subsection (2) of this section.
Is it necessary to put in “or any matter affecting”? Does this not make it very wide? Some very simple matter in relation to the mechanics of a payment, by cash or by cheque, could only be determined by someone else and he could become a trustee within the meaning of the section. Is that of any significance?
Mr. Tully: I do not know whether or not I am becoming a little bit puzzled about all this, but normally an intricate Bill like this will have certain amendments proposed to it; these are debated and either accepted or rejected and general comment is made on the various sections of the Bill as they come up. This is the first time on which, when a Bill has been fully debated and the amendments to it fully discussed, matters such as what “market value” means, what “deceased” means and what “trustee” means, which are all defined specifically in the Bill——
Mr. Bruton: That is the matter in dispute.
Mr. Tully: They are there and we either accept them or we do not. If we are not prepared to accept them, then we should put down an amendment designed to do something else. Fine Gael will deal with this in their own way and the Government will deal with it in their own way. The fact is that the Whips have got an agreement. There are a number of matters which must come before the House. I suggest that we are now digging in our heels purely for the purpose of making comment and having a rather confused discussion on a number of matters which have already been fully discussed and the House has been unduly held up for no apparent reason. I was not here all evening—I was at a committee—but it is obvious we are not making any effort to get the business of the House done.
Dr. FitzGerald: Quite. I was coming to that.
Mr. Tully: I do not agree with Deputy J. Lenehan on a number of things but he did refer to the fact that one has heard again and again and again the same point raised by the one Deputy and it does sound a little as if that person is attempting to prove that no one in Dáil Éireann knows anything about anything except himself.
Dr. FitzGerald: I have not said much in the last ten minutes. I have not raised any question on definitions and how Fine Gael run their affairs is their own business.
Mr. Bruton: It is conceded that this is an extremely complex section and it is our job to ensure that it is the best possible section going into the Bill. It is also conceded that estate duty law has had to be amended and re-amended over and over again.
Mr. Colley: And it will continue to be so.
Mr. Bruton: That is evidence of the fact that all this is extremely complex and amendments have been and will continue to be made. These amendments  arise from minor drafting points but these are exactly the things which can be used by lawyers and others to circumvent the purposes of the Legislature. If one is to ensure that financial legislation is effective, then one must go into the small print and we will go into the small print even if that means we are inconveniencing Deputies who want to get away.
Mr. Tully: If Deputy Bruton is referring to me, I was here in this House long before he ever came in here and I spend more time in this House than any Deputy in Fine Gael or any other party.
Mr. Colley: I took it Deputy Tully was referring, not to whether or not people wanted to get away, but to what he understood to be an agreement between the Whips.
Dr. FitzGerald: I was quite unaware of any agreement. There was a misunderstanding and the misunderstanding was entirely on our side. Deputy Andrews, Parliamentary Secretary to the Taoiseach, was correct in saying that there was an agreement. I just did not hear about it. I am sorry about this confusion. I think agreement is being sought which will facilitate the passage of legislation and meet all needs. I do not think that is in issue at this stage.
Mr. J. Lenehan: I was not born. I was invented and we who come into the world in that way probably have a different attitude towards life. Some of the boys here got in by the back door. I did not come in by the back door. I came in by the main door. I am rather amazed it has taken 50 years, and more, to produce these types of amendments. I wonder why, in 50 years, neither Ministers nor their advisers discovered that there was anything wrong with previous Acts. They now want to change all the financial Acts as well as changing everything else in the country.
An Leas-Cheann Comhairle: That matter is not before the House. We are concerned only with what is contained in the section.
Mr. J. Lenehan: Will the changes be to the benefit of the Revenue Commissioners or the taxpayer?
An Leas-Cheann Comhairle: The section before the House deals only with discretionary trusts.
Mr. J. Lenehan: We can be sure the changes will operate against the taxpayer.
Dr. FitzGerald: They will operate against the speculative taxpayer.
Mr. Colley: They will operate against the very wealthy taxpayers who are not employing this device of discretionary trusts.
Mr. J. Lenehan: Fifty years is a long time to find that out.
An Leas-Cheann Comhairle: This has nothing to do with the section.
Mr. J. Lenehan: As the law stands, it seems to me that no matter what changes are made it is the family who lose the head of the household who will be penalised.
An Leas-Cheann Comhairle: That is not at issue in this section.
Mr. J. Lenehan: I am in no way partial to the Revenue Commissioners. They have been fooling me for many years.
An Leas-Cheann Comhairle: That is not being dealt with in section 32.
Mr. J. Lenehan: I am not saying it is but we are entitled to ascertain what are our rights. I always maintain that any amendment to any Act or Bill dealing with finance is automatically loaded against the taxpayers.
An Leas-Cheann Comhairle: There is no amendment before the House at the moment.
Mr. J. Lenehan: I know that. The whole Act should be scrapped. Has any measure that was ever introduced here been of any advantage to the taxpayer?
An Leas-Cheann Comhairle: The Chair will not permit the Deputy to proceed on those lines. We are on section 32 and if the Deputy wishes to contribute to this section he may do so.
Mr. J. Lenehan: Of course, I could be put out.
An Leas-Cheann Comhairle: That could happen, too.
Mr. J. Lenehan: I will not let that happen since I have not been put out before now.
Mr. Bruton: Could the Minister explain the purpose of subsections (8) and (10)?
Mr. Colley: Subsection (8) is designed to align discretionary trusts with non-discretionary trusts. Section 24 of the Finance Act of 1940 was designed to prevent an avoidance of duty through the creation of foreign trusts by persons who were domiciled here. It applies to settled movable property. There is a doubt as to whether property in some discretionary trusts is settled within the definition of the Finance Act of 1894 and the object of subsection (8) here is to put discretionary trusts in line with non-discretionary trusts so far as these definitions are concerned.
Regarding subsection (10), since section 32 will operate to give claims for duty if a discretionary trust is wound up within five years preceding the death of the deceased as defined in the section, it is reasonable that a trustee be given the same protection as is given to the trustee of mandatory trusts which are wound up within five years preceding the death of a life tenant. Section 11 of the Finance Act, 1955, provides that if property ceases to be comprised in a settlement the trustee may obtain from the Revenue Commissioners a certificate of the prospective amount of duty. His liability as a trustee will not exceed the amount so certified by the Revenue Commissioners. Of course, if the amount so certified turns out to be under-estimated the excess over the amount certified may be claimed from the beneficiaries. The liability of a trustee is  limited to the amount certified by the Revenue Commissioners.
Subsection (10) proposes to apply the same kind of procedure to a trustee of a discretionary trust as is applied at the moment under section 11 of the 1955 Finance Act in the case of a trustee of a mandatory trust.
Mr. Bruton: Up to now was a trustee of a discretionary trust accountable for estate duty?
Mr. Colley: Yes.
Mr. Bruton: Therefore, this change is based on that?
Mr. Colley: This is providing that in the circumstances described, that is, the winding up of a discretionary trust within five years preceding the death, the trustee may get a certificate from the Revenue Commissioners which will limit his liability as a trustee. The change is in protection of the trustee.
Mr. J. Lenehan: Is the Minister correct when he says that this is in accordance with an Act passed in 1894? Had we an Irish Government then? I do not think so. The Minister should be ashamed to make such a remark in this House.
Dr. O'Donovan: The Deputy is a little too late.
Mr. J. Lenehan: Was Deputy O'Donovan here before me? A Minister who says that we are operating under an Act of 1894 should see to it that an election is called immediately.
Dr. FitzGerald: Some of our Acts go back to the 1370s.
Question put and agreed to.
Question proposed: “That section 33 stand part of the Bill.”
Mr. Bruton: What is the purpose of this change?
Mr. Colley: This section is designed to meet a demand that there should be a form of appeal tribunal in estate duty matters which would correspond to the appeals commissioners in income  tax. The appeal will be to the appeals commissioners in relation to the valuation for estate duty purposes of non-quoted shares. I received representations in this regard on a number of occasions. While there is a right of appeal to the court, there is a feeling that this involves expense and difficulty and that there is a tendency to let the matter go at the valuation fixed by the Revenue Commissioners rather than go to court. I do not know whether that is true, but, in case it might be, I am proposing here this form of appeal to the appeals commissioners from whom also, of course, there would be an appeal to the Circuit Court.
Dr. FitzGerald: Would the Minister not consider extending this to other matters?
Mr. Colley: Before the Deputy develops that point I wonder whether he noticed that in my reply to the Second Stage of the debate I dealt with this point which he made then.
Dr. FitzGerald: As I do not recall the reply, perhaps the Minister would remind me briefly of it.
Mr. Colley: The fact is that appeals in respect of other property have been available for a long time. This is simply making them available, in respect of non-quoted shares, a special kind of appeal.
Dr. FitzGerald: Is the item relating to market value covered by appeal already?
Mr. Colley: Relating to the type of property, what has the Deputy in mind? This section is dealing with non-quoted shares.
Dr. FitzGerald: There is a definition in section 33 concerning market value, the price which, in the opinion of the Revenue Commissioners, the property would fetch if sold on the open market. I am just asking whether that market value is covered by an appeal already?
Mr. Colley: It is covered in respect of any property at the moment. That has been available for a very long time.
Dr. FitzGerald: I see. So that the addition of this appeal means that all property is now subject to appeal as to its value without exception?
Mr. Colley: Yes, that is correct.
Question put and agreed to.
Sections 34 to 37 inclusive agreed to.
Question proposed: “That section 38 stand part of the Bill.”
Dr. FitzGerald: Am I right in thinking that this is to check up on charities and check this type of abuse? I think that is the position and if I am right it is a very welcome move.
Mr. Colley: The Deputy and I may be on the same wavelength.
Dr. FitzGerald: But the Minister's brief is different?
Mr. Colley: The section is designed to counteract a device adopted by trading companies to avoid the charge to corporation profits tax on their profits. The device takes the form of introducing into the memorandum or articles of association of a company preclusion of the distribution of the profits to members. Prior to Budget Day this preclusion entitled the company to exemption from corporation profits tax. Subsequently, the preclusion could be removed and the profits which had escaped the tax could then be distributed. This is closing the loophole but in the next section, section 39, we are preserving the position of the genuine companies which should be entitled to this exemption.
Question put and agreed to.
Sections 39 and 40 agreed to.
Question proposed: “That section 41 stand part of the Bill.”
Dr. FitzGerald: I think a winding up of the fund at this stage is reasonable.
Question put and agreed to.
 SECTION 42.
Mr. Colley: I move amendment No. 8:
In page 26, between lines 39 and 40, to insert the following subsection:
“( ) Section 246 of the Income Tax Act, 1967, is hereby amended by the insertion in subsection (1) after `Part XV' of `other than an initial allowance made by virtue of section 251 (4) (d) of this Act'.”
The purpose of this amendment is to ensure that the giving of the concession of free depreciation in the case of a new ship on which capital expenditure has been incurred before the 1st April, 1973, which ship cannot be brought into use before that date, will not result in the consequential loss of investment allowance in respect of that ship. There is no problem where the ship has been brought into use before the date specified. There is a corresponding benefit for other items of investment but this one relates specifically to the investment in a ship where the investment has been made or capital expenditure incurred before the 1st April, 1973, but which has not been brought into use before that date.
Amendment put and agreed to.
Section, as amended, agreed to.
Mr. Colley: I move amendment No. 9:
In page 26, line 41, to delete “1936” and to substitute “1971”.
This is simply a drafting amendment dealing with the collective citation of the Industrial and Provident Societies Act under which credit unions are registered. In fact the Industrial and Provident Societies (Amendment) Act, 1971, provides that the various Acts relating to industrial and provident societies were to be cited together as the Industrial and Provident Societies Acts, 1893 to 1971. This drafting amendment is designed to bring the citation in this Bill into conformity with that requirement.
Amendment put and agreed to.
Section, as amended, agreed to.
 SECTION 44.
Question proposed: “That section 44 stand part of the Bill.”
Dr. FitzGerald: This is very much welcomed, if I may say so in advance, so is section 45.
Question put and agreed to.
Question proposed: “That section 45 stand part of the Bill.”
Dr. FitzGerald: I did raise a point here and I suppose it applies also to section 44 in regard to the retrospective element. This arises, I think, from a particular case that has arisen. It is rather unfortunate where a case arises which shows a defect in the law and the Dáil amends the law so as to put it right, the person concerned does not get the benefit of the anomaly being remedied unless there is retrospection. Could the discretion of the Revenue Commissioners be used in this case, or to deal with cases of this kind, especially the case which may have given rise to this amendment being brought in? I have had representations made to me in respect of this particular case and I should like to press this point.
Mr. Colley: One of the difficulties in matters such as this is that retrospection of a benefit can lead to various complications which are difficult to unscramble having regard to the fact that many cases will have been completed and arrangements made perhaps as between the different beneficiaries under a will. While it is theoretically possible to unscramble it, it can present a great deal of practical difficulties and, while I have a good deal of sympathy with the idea, I think in practice it would not be very feasible. It is unfortunate, I agree, but all we can say about it is that it is much better that it should be done now rather than not done at all even though it does mean that some people who might have benefited in the past do not benefit.
Dr. FitzGerald: Is this something that arises frequently? I thought it was pretty rare?
Mr. Colley: I understand it is relatively frequent.
Dr. FitzGerald: Is it something that comes up every year or would there be so many cases per year?
Mr. Colley: There would almost certainly be a case a year.
Dr. FitzGerald: I should have thought that at least we could deal with the case that has been raised, that at least we should go back a year or so and deal with cases that have not been completed and attempt to use some discretion in the matter.
Mr. Colley: I omitted to mention that I am afraid the Revenue Commissioners' discretion would not extend to this on the Bill as drafted.
Dr. FitzGerald: We would need to put in some amendment?
Mr. Colley: And it would involve a Money Resolution, too, I think, which has to be moved before Committee Stage I am told.
Dr. FitzGerald: Does the Minister mean he is not in a position to amend the Bill at this Stage in this respect?
Mr. Colley: It depends on what kind of amendment it involves. An amendment which would involve a refund of duty would oblige us to move a Money Resolution.
Dr. FitzGerald: So the Dáil is not able, even if the Minister agrees, to accept an amendment? Even if the Minister puts it forward, it cannot be done if it involves any refund of duty payable, not just paid, at this stage?
Mr. Colley: I am talking about duty paid.
Dr. FitzGerald: I am talking about duty payable, in cases that have not been settled.
Mr. Colley: That would not be fair. If somebody is delaying a case deliberately he should not get the benefit over the person who pays up.
Dr. FitzGerald: Given that there are so few cases, I am sure if the Revenue Commissioners looked at the cases they  could draw a reasonable line. It should be quite easy to pick a line.
Mr. Colley: It would be easy to pick a line but does the Deputy think it would end there?
Dr. FitzGerald: It would end there if this House decided it would end there and if it were the case, for example, that cases which came up this year and last year have not been settled and previous ones have and that you draw a line which does not reopen any past cases but deals only with ones that have not been settled. That kind of line could usefully be drawn. Does that mean a Money Resolution? If the money has not been paid it does not, is that the case?
Mr. Colley: The principle of doing it only in cases where the money has not been paid is one of——
Dr. FitzGerald: It is a bad principle.
Mr. Colley: Very bad principle.
Dr. FitzGerald: But in the particular instance here a line could be drawn in respect of recent cases, not people who dragged their heels for years. If a line could be drawn at some months or a year ago, perhaps.
Mr. Tully: Would it be possible to introduce such an amendment now? I assume it could be introduced in the Seanad and come back to the Dáil.
Dr. FitzGerald: It could be introduced on Report Stage.
Mr. Tully: I do not think so. It would be a new matter.
Dr. FitzGerald: No, I am raising it now.
Mr. Colley: I have just been informed that in order to cover the kind of case the Deputy has in mind we would have to go back eight years. There is one case which has been going on for eight years and where the duty has not yet been paid.
Dr. FitzGerald: If the Minister can find any way of dealing with this between now and Report Stage we will not stand in the way of an amendment.
 Question put and agreed to.
Sections 46 to 48, inclusive, agreed to.
First and Second Schedules agreed to.
Question proposed: “That the Third Schedule be the Third Schedule to the Bill.”
Dr. FitzGerald: Why are we amending the Taxes and Duties (Special Circumstances) Act, 1942, which gave the Taoiseach power to act when the Dáil could not meet in an emergency? Why does this come up at this Stage?
Mr. Colley: This Act will no longer be necessary because when income tax and surtax become permanent taxes a Resolution coming within the ambit of section 3 (1) would be concerned not with imposing income tax and surtax but with varying the rate of income tax or the rate of surtax. This is the reason for the proposed amendment of section 3 (1).
Dr. FitzGerald: This Act, then, is still in force?
Mr. Colley: Yes.
Dr. FitzGerald: The war is over. Do we still have to have it?
Mr. Colley: We are removing the parts that are not necessary consequent on the enactment of this legislation.
Dr. FitzGerald: We are not removing much judging by what is before us. How are these amendments accepted? Is there some section of the Bill dealing with them or are they just being entered in here in some way? Are we then to pass legislation just in the Schedule or do we have to do it somewhere in the Bill? I do not recall coming across these in the Bill.
Mr. Colley: I think we did.
Dr. FitzGerald: We went too quickly, obviously.
Mr. Colley: They are in section 12.
Question put and agreed to.
Dr. FitzGerald: The point I raised in amendment No. 10 is covered in a devious way, which I had not detected.
Amendment No. 10 not moved.
Question—“That the Fourth Schedule be the Fourth Schedule to the Bill”—put and agreed.
Title agreed to.
Bill reported with amendments.
An Leas-Cheann Comhairle: Next Stage?
Mr. Colley: As I indicated earlier, I understood we would have it now. Is there some change in the situation?
Mr. Tully: No.
Dr. FitzGerald: I was quite unaware of this agreement. It is our fault. The Minister will be taking the Report Stage of the Value-Added Tax Bill next Wednesday, as far as I know.
Mr. Colley: The Deputy knows more than I do at the moment.
Dr. FitzGerald: I think there is a proposal to this effect. When we are taking it perhaps we could deal with Report Stage of this at the same time. It may well be that there may not be further amendments but I think it is wrong that we should not have time to reflect. There were other points I had hoped to raise if I had been able to get more information and I would like a chance to consider some of the things that were said today. It will certainly be got through very quickly if any issues at all arise on it.
Mr. Desmond: It was agreed at the Whips' meeting that we would conclude the Finance Bill tonight.
Dr. FitzGerald: Unfortunately, through an error, I never heard about this. If I had heard of it I would not have agreed.
Mr. Desmond: The Deputy was busy chasing the £100,000 today.
Mr. Colley: All right. I agree, if it is agreed on all sides.
Dr. FitzGerald: I thank the Minister very much for his courtesy.
Dr. O'Donovan: I do not see why we should not finish it tonight. I can see nothing in it but, however, let it go.
Mr. Colley: No doubt Deputy FitzGerald will remember it to me and on some other Bill he will be very co-operative.
Dr. FitzGerald: Of course.
Mr. Colley: There is no fear of that.
Mr. Andrews: The Deputy may not be sitting where he is.
Report Stage ordered for Tuesday, 11th July, 1972.
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