I have pleasure in putting before this House the first Finance Bill of the century. It is in many ways a noteworthy event, particularly as there has been so much speculation in some quarters as to what the Bill may or may not contain.
The primary purpose of the Finance Bill is to give effect to the Government’s Budgetary proposals.
The Budget delivered the largest tax package in the history of the State conveying substantial direct tax reductions all round.
In regard to taxation, the Budget:
Gives over £1 billion in personal tax reductions - on top of over £1 billion in tax cuts delivered in the Government’s first two Budgets.
Removes over 70,000 from the tax net, including 10,000 over 65s
Takes 125,000 taxpayers off the top tax rate by substantially widening the standard rate tax band for single taxpayers and two-income married couples.
Cuts the standard and top rate of tax by 2% in each case.
Increases the basic personal allowances by £500 single and £1,000 married so that no PAYE earner enters the tax system until they earn £110 per week or more.
Takes the first step in putting in place a single standard rate tax band so that taxpayers will be taxed on what they earn as individuals rather than on their marital status as we have now.
Doubles a whole series of personal allowances for the aged, widowed, dependent relatives, blind, incapacitated children, converts them into tax credits at the standard rate of tax and makes them of equal value to all taxpayers.
Reforms mortgage interest relief to make it more simple and of greater value to nearly 300,000 taxpayers.
Increases rent relief by 50% for under 55s and, in the case of 55s and over, doubles the relief for those 80% of claimants on the standard rate of tax.
On Capital Acquisitions taxes, I took the major steps of :
Exempting the shared family home from CAT for all those sharing the home, irrespective of the circumstances of the family relationship.
Cutting the CAT rate to 20% and simplifying it from a three band structure of 20%, 30% and 40%.
Increasing the thresholds for payment of CAT by substantial amounts so that no tax will be payable on gifts or inheritances below £300,000, which are taken from a parent.
These substantial tax reductions will not be lost sight of by the electorate when the appropriate time comes.
When I announced the publication of the Bill on 10 February I summarised the main themes of this Bill as follows:
Against that background, I would now like to elaborate on the contents of the Bill in a number of specific areas. I do not propose to go into particular detail - the Committee Stage is the place to do that. I will of course be anxious to listen throughout to the contributions on the Bill from all sides of the House.
Sections 2 to 12 of the Bill set out the main personal tax changes announced at Budget time. The main provisions are the reduction in tax rates, the increase in the standard rate income tax band in section 3, the increase in the main personal allowances in sections 4 and 5, the doubling and standard rating of various personal allowances in sections 6 to 11, and the introduction of the £3,000 home carers tax allowance in section 12. The changes being made in these sections complete one major tax reform which the Government introduced last year - that is the move to tax credits by standard rating the basic personal allowances - and introduce a further
major reform - the move towards establishing a single standard rate band for each individual taxpayer.
Change and reform often invite controversy. This was certainly the case with the standard rate tax band proposal. Much has been said and written about this proposal both for and against. The Government is convinced that the reform of the tax bands is the way we must proceed to meet the changing conditions in our society both in terms of the new labour market situation and the reality of the position in many households where both spouses are earning income. The social partners have recently endorsed this policy in the Programme for Prosperity and Fairness.
The proposal, it seems, has opened up a wider debate on family issues, the role of earning and non-earning spouses, and the view one has of equitable treatment of different household types. From a technocratic point of view, there is no "correct" or "right" answer in debating such issues; it is a matter of society choosing the path it wishes to follow. Ultimately in a democratic society, this boils down to electoral choice.
Opinions it seems are divided but the recent opinion poll indicates a far greater support for the proposed changes than one might have deduced from the concerns expressed in the immediate post-Budget period. Time will tell but Budget 2000 will certainly be seen as a defining point in the evolution of tax policy in this State.
Section 12 gives effect to the £3,000 carers allowance announced by the Government on 8 December for spouses caring for children, the incapacitated and the aged. The section spells out how this allowance will apply. To ensure that the allowance works as smoothly as possible, it is proposed to allow for an income disregard where the caring spouse has a limited amount of income of their own for example through part-time work. It is also proposed that the allowance will be available where an aged or incapacitated relative resides in the caring spouse's home or is being cared for close by.
The allowance can also be retained for one year after the spouse returns to full time employment. This, and the tapered withdrawal of the allowance when the spouse's income exceeds the income disregard, is designed to ensure that the allowance is not suddenly lost when the family circumstances change. We can go into the operational aspects of the allowance in more detail on Committee Stage of the Bill.
Sections 13 and 17 set out the changes to standard-rated mortgage interest relief and rent relief announced in the Budget. Discussions will shortly commence between Revenue and the mortgage providers on the introduction of mortgage interest relief deducted at source from April 2001. Similar discussions will be held with the providers of medical insurance in relation to the deduction of tax relief at source from insurance premia.
Both these changes will deliver benefits to the taxpayer. They will also reduce the need for a considerable volume of individual contacts by taxpayers which takes place at present with Revenue offices. These arise from claiming, reviewing and adjusting relief and the issue of revised tax free allowances as appropriate.
The new system will streamline the position for all concerned.
I think it fair to point out that the major changes underway in the personal tax system, the exceptional growth in the numbers of persons in employment and the major initiatives being made by Revenue to upgrade computer systems and improve service to customers, have placed a considerable strain on resources. The new Programme for Prosperity and Fairness envisages examination of the role which refundable tax credits can play in the tax and welfare system, including the possibility of the payment of Family Income Supplement through the tax system.
All these factors oblige us to seek simpler and more effective ways to deliver tax relief, such as deduction at source. I am confident that such a system can be successfully put in place with the co-operation of the mortgage and medical insurance sectors.
Section 15 deals with BIK on preferential loans and the changes to the reference rate of interest for calculating BIK in respect of home loans. Section 16 continues the special exemption from taxation of the unemployment benefit paid to certain systematic short-time workers. This relief was first introduced in 1994 and, despite current labour market conditions, there are over 3,000 workers on short-time arrangements for whom the relief continues to be relevant.
Section 18 enhances the tax relief available for agreed pay restructuring, where such restructuring is necessary to safeguard the future of the firm. The relief, introduced in 1997 is being extended to 2003. Section 19 restores the application of the tax-relieved seed capital scheme to new traders on the financial futures exchange in the IFSC. Section 21 extends tax relief at the standard rate for post-graduate fees under certain conditions. The relief can be claimed by the person concerned or by his or her parents, guardians or spouse where they pay the fees.
This new relief, which will apply at the standard rate of tax, will be available to full-time and part-time postgraduate students and will include distance education courses offered by publicly funded colleges in other EU Member States.
Approved courses must be at least one year's duration and cannot exceed 4 years and they must lead to a postgraduate award based on either a thesis or an examination. Persons taking the courses must already have a primary degree or an equivalent qualification. Private colleges in the State and the postgraduate courses offered by them will be approved by the Minster for Education and Science and the level of postgraduate fees qualifying for tax relief will be determined by that Minister with the consent of the Minister for Finance.
Section 23 amends and extends a number of the important pension fund changes which I introduced with widespread support last year. This gave certain pensioners the option of investing in a continuing fund instead of being forced to convert to an annuity in all cases. This year, Section 23 of the Bill:-
Finally, in this income tax part of the Bill, Section 25 ensures that where, under joint assessment, the non-assessed spouse is proceeded against for non-payment of tax in respect of their income, this power can be exercised at a delegated level within Revenue or by the Criminal Assets Bureau, where relevant. The section will also make it clear that the power applies to cases where either spouse is the assessable person. The current provision, dating from 1958, refers to the husband only as the assessable spouse.
Sections 26 to 29, which form Chapter 3 of Part 1 of the Bill, deal with changes to the system of dividend withholding tax which was introduced with effect from 6th of April 1999.
Last year's Finance Act, applied the withholding tax at the standard rate of income tax on dividends paid by Irish companies to certain shareholders. Provision was made to exempt dividends paid to other Irish resident companies, pension funds, charities, collective investment funds and trustees of approved profit sharing schemes and ESOT's. Dividends were also exempt if they were paid to an individual tax resident in the EU or in a tax treaty country, or to a company controlled by such individuals.
The legislation set up a detailed administrative system to ensure deduction of the correct amount of tax and to ensure as far as possible that those exempt from the tax were entitled to exemption e.g. on the basis of non-residence.
The Revenue Commissioners have examined how the system has worked in its first year of operation. They have consulted market operators, Irish company registrars, stockbrokers and custodian banks, both here and overseas. As a result, this year's Finance Bill will modify the system to reduce administrative costs, simplify certification procedures, remove unnecessary requirements and extend the range of exemptions from withholding tax to companies resident in tax treaty countries but which are not controlled by Irish residents. The changes, I feel, will be welcomed by business.
There have been calls for a repeal of the tax. This is not on for two main reasons. Firstly, the application of a withholding tax is an effective collection mechanism - the yield from dividend withholding tax in 1999/2000 is expected to be £50 million. Secondly, from an international perspective, affording exemption only to those non-Irish residents who are resident in tax treaty countries is consistent with the logic underlying tax treaties and serves to reassure our international colleagues of the integrity of the Irish tax system.
Section 30 provides an exemption from a possible income tax charge on companies resident in another EU treaty country who receive interest from an Irish resident company. This exemption applies where the interest is paid in the course of such companies' trading operations.
Section 31 raises from £16,000 to £16,500 the capital value threshold used to determine the capital allowances and the deduction for running expenses for tax purposes for cars used in the course of a trade, profession or employment.
Section 32relates to the scheme of capital allowances for expenditure on private convalescent facilities and proposes to treat a convalescent home as if it were a nursing home within the meaning of the Health (Nursing Homes) Act, 1990. This will obviate the need for the special regulation of this area under the tax code.
Sections 33 to 40 deal with changes to the relief for urban renewal, rural renewal, the Custom House Docks, multi-storey and other car parks, regional airports and certain offshore islands. Section 33 brings forward the termination date for the signing of leases for double rent relief in the Temple Bar area from 5 April 2001 to 31 December 1999 to comply with EU rulings. Section 36 extends the capital allowance regime for regional airports to 31 December 2000 where 50% of the expenditure on the project had been incurred by the end of 1999. The section also extends capital allowances for multi-storey car parks outside of Dublin to end 2002.
Section 37 provides that a person can qualify for tax relief for construction and development on certain designated islands up to 31 December 1999 where 15% of the total cost of the project was incurred by 30 June, 1999, instead of 50% of the cost as currently required.
The House will be aware that the EU Commission decided on 22 December last to close the legal proceedings initiated by them in respect of the availability of the double rent and rates reliefs in the Custom House Docks Area. This decision means that these two reliefs, which are available for a ten year period, will continue to their original end-dates where, either the construction of the building was completed before 1 April, 1998, or the construction of the building commenced before 1 April 1998 and the tenant occupation of the completed building commenced before 9 February 1999. In all other cases, the two reliefs must terminate on 31 December 2003.
The detailed legal text of the Commission ruling is due shortly and the necessary legislative provisions to implement the EU decision in regard to the double rent relief will be put down at Committee Stage. Capital allowances for the buildings in the 27 acre and 12 acre sites in the Area were approved by the Commission in January 1999 and these allowances are unaffected by the Commission's decision on double rent and rates relief.
These proceedings bear testimony to the close attention which the Commission is paying under State Aids rules to new and existing schemes of tax reliefs under Irish tax law which are made available to business investors. We are now routinely notifying all such new schemes to the Commission. The Commission has shown itself active in pursuing complaints made to them about such reliefs. This may not be welcome news to us but it is a reality which we cannot ignore.
The Commission has set its face against double rent relief and rates relief which it regards as operating aid to business. The State aid rules do not affect tax relief in relation to residential schemes. However, we ourselves must continue to examine carefully whether all such reliefs are needed on a general basis at a time of an ongoing property boom.
Section 35 makes a number of changes in the general application of capital allowances including their application to the various tax relief schemes described earlier by me.
Firstly, Section 35 provides a legal basis for the option to set excess allowances arising in charging rental income against non-rental income. This option has been operated administratively by Revenue up to now. Secondly, it allows a person on joint assessment to set excess capital allowances against the income of a spouse where the individuals own income is insufficient. Thirdly, the section ensures that capital allowances for expenditure on fixtures and fittings in rented residential accommodation and for expenditure on registered holiday cottages can only be set off against rental income and not against other non-rental income.
Sections 38 and 39 extends the qualifying periods for the Urban and Rural Renewal schemes until 31 December 2002 and increase the capital allowances in respect of qualifying commercial buildings to 100%. The year one allowance of 50% will apply to both owner occupiers and lessors of qualifying industrial and commercial buildings with the remaining 50% written off at 4% per annum. The legislative provisions for the business tax incentives available under both schemes are being amended with effect from 1 July 1999 in order to comply with the EU Commission's approval of both schemes. Double rent and rates relief will not apply to such schemes as a result of the EU Commission ruling.
Section 41 continues tax relief for film investments for a further five years to 2005. Section 42 requires that in order to qualify for tax relief on expenditure on significant buildings and gardens in the future, the property must be open to the public on at least 10 weekend days out of the 40 opening days required during the high season. Section 125 later on makes a corresponding change in the rules for CAT relief on a stately house or garden.
Section 43 makes a number of changes in relation to relief for gifts to third level institutions. The current legislation allows tax relief at the marginal rate of income tax on donations of at least £1,000 made to certain third level educational institutions in respect of specific projects approved by the Minister for Education and Science in the areas of research, the acquisition of capital equipment, infrastructural development and the provision of facilities in certain areas of skills shortages.
Section 43 allows instead for each third level institution to set up an approved development fund to which the donations can be made in respect of the areas specified above. The objectives and operations of the fund will have to be approved in accordance with guidelines to be laid down by the Minister for Education and Science with the approval of the Minister for Finance. In addition, the range of projects covered by the section may be widened with the approval of both Ministers. Section 43 provides for a reduction in the minimum level of contribution from £1,000 to £250 per annum and the carry forward of unused tax relief by donors in any one year for a period of three years in total.
There is also a requirement for the value of tax relief to be recouped from the third level body if any money in the approved fund has not been used for designated investments. The section provides further for delegation by the Minister for Education and Science of his functions under the section to the Higher Education Authority.
I expect to see private donations play a much greater role in the funding of education in the future and I was glad to be able to respond positively to the proposals put forward by the Universities which are reflected in this section.
Section 44 makes a number of limited changes to the tax relieved save as you earn share options schemes I introduced last year. I will be bringing forward on Committee Stage a number of proposed changes to ESOT legislation and to certain aspects of the taxation of share options. Section 45applies the tax rate of 20% announced in the Budget to profits from the sale of residential land.
Sections 46 to 49 as well as sections 51 and 59 give effect to the new arrangements announced in the Budget in respect of the taxation of life assurance and collective investment funds. The purpose of this is to align the domestic market and IFSC tax treatment of these products and to enable the industry to retain its competitive advantage in the provision of such products within the EU. Effectively we are breaking from the traditional UK method of taxing these funds and moving to the system prevalent in the other member States.
The changes, which have been discussed with the industry, mean that the proceeds of these investment media will no longer be taxed on an annual basis but will be subject to an exit tax on encashment or maturity. The exit tax will be the standard rate of income tax plus 3%. This method of taxation is referred to as "gross roll-up" as the investment returns are allowed roll up gross each year and are taxed on withdrawal except in the case of non-residents. This is the tax regime which currently applies in the IFSC.
The new gross roll-up arrangements will come into effect from 1 April 2000 for new domestic funds and from 1 January 2001 for new domestic life assurance business. The current taxation arrangements of taxation in the fund on an annual basis will continue for existing business at the request of the industry. Existing business will eventually run-off leaving in time only the new system applying to life assurance and collective funds.
Section 50 of the Bill increases the tax relief on capital allowances for farm pollution control. This relief will be amended on Committee Stage arising from the farm taxation undertakings in the Programme for Prosperity and Fairness concluded earlier this month.
Section 52 provides for accelerated capital allowances for expenditure on the construction, refurbishment or extension of childcare premises that meet the required standards as set out in the Childcare Act. This accelerated allowance is available to both owners of the childcare facilities and also to investors who wish to invest by way of leasing arrangements. I am convinced that the availability of these allowances is an attractive incentive. It will assist in increasing the supply of childcare places to help ease the current shortage.
The remaining sections in Chapter 4 of Part 1 of the Bill are largely technical. Section 56, however, implements a number of substantive changes to the DIRT audit regime. This provides for Revenue to be able to appoint, at their discretion, specially qualified persons to conduct or to assist with DIRT audits; and to report to the PAC on the results of the DIRT "look-back" audit currently underway and to publish the results of this audit.
The section also augments the powers of the Revenue to obtain information in the course of a DIRT audit and applies the audit powers to returns made by life assurers and collective funds under the new gross roll-up tax regime just described. Certain features of this gross roll-up regime involve distinguishing between the tax treatment of investors on the basis of residence or non-residence in the State. Hence the need for these powers in such cases.
Sections 60 to 67 in Chapter 5 of Part 1 of the Bill cover corporation tax changes. These largely deal with the application of the 12½% rate of tax to trading income which does not exceed £50,000 and technical changes to consortium loss relief and to IRNR provisions. Section 66, together with section 30, is designed to facilitate the growth in securitisation of assets business both within the IFSC and in the Irish financial sector in general. Section 67 makes a number of changes to the grant and revocation of taxation certificates to IFSC or Shannon companies and the repeal of provisions allowing the application of special tax rates to particular IFSC or Shannon trading operations.
Sections 68 to 71 deal with capital gains tax, enhancing certain aspects of CGT "retirement" relief for over 55s; applying the 20% CGT rate to gains on the disposal of non-residential development land; providing for a more efficient and streamlined tax clearance procedure on sales of newly-constructed houses; and removing certain tax obstacles impacting on the disposition of property following a foreign divorce or legal separation which is recognised in the State.
Section 72, which forms a Chapter of the Finance Bill on its own, sets out the provisions in relation to the income and corporation tax reliefs for the renewal and improvement of certain towns throughout the State whose population is between 500 and 6,000.
As the House will know, the relevant selection process to designate these towns in each county is still underway. This process involves County Councils recommending areas where tax incentives are to be applied to an expert advisory panel which in turn will make recommendations to the Minister for the Environment and Local Government. I will then designate those areas for tax relief which are recommended to me by the Minister for the Environment and Local Government.
This Town Renewal scheme involves a similar range of reliefs being available as in the case of the current Urban Renewal Scheme. The scheme will operate from 1 April 2000 to 31 March 2003 subject to EU approval of the business elements of the reliefs. The residential reliefs will however apply from 1 April next.
The scheme is intended to assist in restoring or improving the built fabric of Irish towns, to promote sensitive local development and to revitalise the centres of small towns. I remember last year on the Finance Bill that we had a very good debate and analysis by the Opposition spokesperson on the plight of rural areas and the implications of changing life styles and technology for the future of small towns and villages. I share these concerns and look forward to some thoughtful interchanges on this issue in the course of the debates.
Parts 2 and 3 of the Bill deal with indirect taxation. Sections 75 to 87 relate to excise duties and sections 88 to 105 to Value Added Tax. The excise duty changes:
The VAT changes are largely technical, apart from Sections 92 and 94 which confirm the increase in the farmer's flat rate of VAT from 4% to 4.2%, as announced in the Budget. The various other VAT provisions close a loophole in the reclaiming of VAT on rented holiday accommodation; ensure that VAT estimates and assessments can be raised where annual VAT returns are not made or an underpayment is revealed by a VAT audit; implement certain requirements of the EU directive on VAT on investment gold; confirm in substantive form the new duty-free VAT rules consequent on the elimination of duty-free on intra-community travel from 1 July last and clarify the application of certain VAT definitions, exemptions and zero-rating in the case of particular goods and services.
Part 4 of the Bill sets out a number of Stamp Duty changes. These are mainly technical except for section 107 which continues the relief from stamp duty of transfers of assets to young trained farmers for a further 3 years. The relief, which is a two-thirds abatement of the relevant duty, will be increased to a full relief on Committee Stage arising from the recent national programme discussions.
Part 5of the Bill refers to Residential Property Tax. While RPT was abolished from 5 April 1997, arrears of tax continue to be collected, some £1.5 million or more each year. Section 113 of the Bill provides for an increase in the market value exemption limit to £300,000 from £200,000 in respect of properties which must be tax cleared when they are sold if they exceed this limit. Section 114 absolves any property from tax clearance which the vendor purchased after 5 April 1996, the last valuation date on which RPT was payable. These changes will reduce the administrative burden of tax clearance while still collecting significant arrears of tax from those who should have paid when RPT was in force.
Sections 115 to 131 give effect to a number of major changes in the CAT code as announced by me in the Budget. In addition, there are some further changes which I am making to the operation of business and agricultural relief. The result of these changes overall will be to reduce the severe impact of CAT on family inheritances in particular, make business and agricultural relief more available and move the basis of gift and inheritance tax from domicile to residence, which is the more general basis of liability in the tax system both here and abroad. These are among the most radical and extensive changes to CAT since its introduction.
Sections 116, 117 and 118 propose to change the basis on which gift tax and inheritance tax is charged on assets situated outside the State from domicile to residence. Under existing tax rules a liability to gift or inheritance tax can arise where either the disponer is domiciled in the State or the property comprised in a gift or inheritance is situated in the State - regardless of the domicile or residence of the disponer. There is no change in this latter property rule.
However, the Bill changes the general domicile rule to a residence basis so that a liability to gift or inheritance tax can arise on foreign property where either the disponer or beneficiary is resident or ordinarily resident in the State. A person will not be treated as resident or ordinarily resident in the State for this purpose unless they have been resident in the State for the 5 consecutive tax years before the gift or inheritance. This five year period starts to run from 1 December 1999 so that a foreign domiciled person in the State will not be affected by this change until 2004.
The changes apply to gifts or inheritances taken on or after 1 December 1999, except in the case of a gift or inheritance taken under a trust or settlement existing on that date where the present rules will continue to apply. Gifts or inheritances taken prior to 1 December 1999 are unaffected by these changes.
Section 119 closes off a loophole in the qualification rules for agricultural relief while Section 127 allows a person to qualify for CAT business relief in respect of a farming business which does not qualify for agricultural relief in the case of inheritances taken on or after 10 February 2000 - the day the Bill was published. The effect will be to allow a beneficiary who fails to qualify under the 80% assets test for farming (for example because they own a domestic property whose value has increased considerably in recent years) to seek business relief where they come within the terms of that relief. The farming groups sought changes along these lines before the Budget.
Section 124 provides for the increases in CAT thresholds in the Budget and the introduction of the uniform 20% rate of tax for both gifts and inheritances. It also provides for the aggregation of prior gifts and inheritances only within classes of relationship instead of across classes as at the moment. The current aggregation rules, apart from being very difficult to understand, can lead to unforeseen tax consequences depending on the sequence in which gifts or inheritances occur.
Section 126increases the threshold for exemption from probate tax to £40,000 as announced in the Budget. Sections 127 and 129 remove certain obstacles in the CAT and probate tax code to the recognition of foreign divorce orders. This mirrors the changes made in the Bill in respect of CGT and stamp duty in such cases.
Section 130 provides for the new relief of CAT on the family home as promised in the Budget. This relief I know will be supported by the House and responds to a growing concern on the part of many home sharers over the tax consequences of the death of a partner or family member. I have received a large volume of representation on this issue in the last year alone as, I am sure, have the Deputies opposite.
The final part of the Bill contains a number of miscellaneous, but nonetheless important, tax measures. Section 135 provides for further payments in 2000 of monies from the Exchequer into the Temporary Holding Fund for Superannuation Liabilities.
Deputies will be aware of the Government’s decision to partially pre-fund social welfare and public service pension liabilities with annual provisions of 1% of GNP and an allocation from the Telecom sale proceeds. Interim legislation was passed before Christmas setting up a Temporary Holding Fund for pension allocations and a sum of £3,015 million was paid into the Fund before the year end.
Section 135 of the Bill will enable me to make further payments of up to £1,850 million into the Fund this year. This is slightly above the estimate included in the recent Budget, due in part to higher than expected additional receipts from the Telecom sale. The payments into the Temporary Fund, which is being managed by the National Treasury Management Agency, are being made pending the introduction of an appropriate statutory framework for the financing, management and investment of State pension funds on a long-term basis.
My Department is currently working on the detailed legislation for this and I hope to be able to introduce this legislation within the next few months. The legislation will also provide for the transfer of the moneys in the Temporary Fund to the new pension funds once these are established.
Section 137 deals with donations of heritage items. This provision was introduced in 1995 and allows for the value of certain donations of heritage items to a national heritage institution to be written off against certain tax liabilities of the donor. Each donation must be worth at least £75,000 and be approved by a special selection committee. There is a limit since 1996 of £750,000 on the total amount of gifts which can be tax relieved each year in this way. In response to requests from the Minister for Arts, Culture, Heritage and the Islands, the Bill increases this limit to £3 million. This relief has been used quite actively since it was brought in and has served a useful purpose.
Section 138 provides for certain changes to the legal requirements for the publication of certain details of tax defaulters. Since 1983, the Revenue Commissioners have been required to compile and publish a list of persons on whom either a fine or other penalty has been imposed by the courts or, in whose case the Commissioners have accepted a settlement offer in lieu of initiating legal proceedings. Publication is prohibited in certain cases - where the settlement is the result of a voluntary disclosure, where the 1993 tax amnesty applies, or where the settlement amount does not exceed £10,000.
The list of names of tax defaulters is published on a quarterly basis and gives details of the name, address and occupation of the person concerned and the fine or penalty imposed by the Courts or the amount of the tax settlement involved. Section 138 contains a number of changes to tighten up these requirements to ensure that details of settlements are published by Revenue irrespective of whether a fine or penalty has been imposed by a Court and irrespective of whether any such fine has already been published by the Revenue Commissioners. The existing law has been interpreted as allowing publication of either the outcome of the Court action or the settlement, but not both.
The section also makes it clear that in future settlements, details will be published even if the relevant tax penalties have been paid in full. This closes a gap in the existing law under which settlements are not published if the full penalty is paid. Furthermore, the published list will now give a brief description of the circumstances relating to the default or evasion, for example whether a case may have arisen out of a specific inquiry or investigation.
All these changes take effect for settlements agreed or court fines imposed after the passing of the Act.
Section 140 incorporates a number of provisions to facilitate the introduction of consolidated billing by Revenue - the issue of a statement showing a taxpayer's payment or repayment position across a number of tax heads. The section provides that claims for repayment can be set off against outstanding tax liabilities. The Revenue Commissioners are empowered to make regulations specifying the order or sequence in which repayments may be set against tax liabilities. A similar enabling provision will allow for appropriation of a tax payment in a particular order where no specific instructions have been given to Revenue.
The Programme for Prosperity and Fairness highlights the fact that the taxpayer must have confidence in the fairness of the tax system and that this must be maintained by determined action to combat tax evasion and fraud. I acted swiftly last year to arm the Revenue with a wide range of modern powers to combat tax evasion. I also made it clear that in the case of the DIRT issue, the Revenue would pursue the tax, interest and penalties due to the State under the law. I made the point when publishing the Bill that the amounts of money involved in this could be very substantial. I also pointed out that there were constitutional limits on what could be done in respect of a number of the PAC tax recommendations.
There is no lack of will on this side of the House in seeing that tax liabilities are properly pursued and in building on the efficiency gains in tax collection which the Revenue Commissioners have achieved over the past fifteen years. I have complimented the Revenue on more than one occasion on their achievements in transforming the tax collection system and in upgrading their standard of service all round. I know that it is the Commissioners' firm intention to continue the process of improvement.
I hope that the House has benefited from the extensive outline I gave of the provisions in the Bill. The Bill is a substantial piece of legislation both in terms of content and in size. I look forward to the debate on its passage and I commend the Bill to the House.
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