The Gazette 1972

Budget Statement, April 1972

In the course of his Budget Statement on 19th April,

1972, Mr. Colley, Minister for Finance, referred to the

following matters: —

Implementation of EEC Directives on agricultural

reform

The EEC Council of Ministers recently adopted a

directive on measures to assist agricultural reform by

providing incentives for developing farms and financial

assistance to those who wish to retire from farming.

Although a significant proportion of the cost of im-

plementing these directives will be recouped from the

European Agricultural Fund a large part will have to be

met from the Exchequer. We can meet a considerable

part of this cost by adapting many of our present aid

schemes for agriculture. As the EEC directives provide

for a wider range of aids than generally exist here at

present, such as pensions for retiring farmers and re-

duced interest rates on a wide range of investment, I

expect that additional funds will be required.

Public service pensions

It has not been possible up to now because of the

substantial cost involved, to implement fully the prin-

ciple of parity for public service pensioners which was

accepted by the Government in 1969. Nevertheless,

since then three pensions increases have been granted

to public service pensioners at an annual cost of £3.9

million bringing their pensions up to a level based on

June, 1969, pay rates.

This year, it gives me particular pleasure to announce

that I am granting parity to public service pensioners

by bringing their pensions up to levels related to pay

as on 1st January, 1972, the date of the most recent

general revision of public sector pay. The increased

pensions will be payable from 1st October next. The

cost of the increase will be £1.9 million in the current

year and £4.2 million in the following year. It will bene-

fit retired civil servants, gardai, teachers, members of

the Defence Forces, local authority staffs and the widows

of these groups. There will be a corresponding increase

in military service pensions and other army pensions

including special allowances. The percentage increase in

individual groups will, of course, vary but the overall

average will be around 28 per cent.

Imposition of income tax and sur-tax as

permanent taxes

When income tax was introduced in this country more

than a century ago, it was described as a temporary

tax. This polite fiction has been observed ever since,

and each Finance Act provides for the renewal of the

tax for a further year, with or without a change in the

rate of tax. I think that it is now time to give statutory

recognition to the accepted fact that income tax and the

comparative newcomer, sur-tax, which was introduced

some 60 years ago, are as much permanent features of

our taxation system as are the other taxes and duties

administered by the Revenue Commissioners. As in the

case of the other permanent taxes, the change will not

in any way preclude modifications of the income tax

and sur-tax to meet changing conditions.

Corporation profits tax

A permanent statutory exemption from corporation

profits tax applies to two classes of bodies one being

companies established for the advancement of religion

or education .which are specially registered under the

Companies Acts and are precluded from distributing

profits to members, and the other being bodies corpor-

ate precluded by their constitution from distributing

profits. The relief for the latter class was intended to

cover certain bodies set up under statute and, as well,

companies registered under the Companies Acts which

were established for charitable, social and philanthropic

purposes and not for the enrichment of private in-

dividuals.

Recently, a group of trading companies have sought

to take advantage of this exemption by inserting a pro-

vision in their articles of association prohibiting the dis-

tribution of profits to members and claiming that they

were no longer chargeable to corporation profits tax.

If this claim were to succeed, the effect would be that

the charge to corporation tax on the profits of the com-

panies concerned would be avoided so long as the pro-

hibition on distribution of profits was maintained. I

propose to tighten the exempting provisions so that

they will apply only in the circumstances for which they

were intended. The proposal will be effective as from

today.

A separate exemption from corporation profits tax

which is provided on a temporary basis for certain

public utility companies and other cencerns, including

building societies, expired on 31st December, 1971.

Pending completion and consideration of the report of

the inter-departmental working group which is examin-

ing the position of building societies. I propose to con-

tinue the exemption for a further year.

Amendments of death duties legislation

There is an anomaly in the existing death duties

legislation which I propose to remove. The estate duty

code provides for appeals to the Circuit Court from

decisions of the Revenue Commissioners on the value

of property, other than land or houses, if the value of

the property in dispute does not exceed £50,000. If.

however, the value in dispute relates to land or house

property, the appeal must be taken, in the first instance,

to the property arbitrator appointed under the Property

Values (Arbitrations and Appeals) Act, 1960 . There is

a right to appeal to the Circuit Court from a decision

of the property arbitrator provided the value of the

property in dispute does not exceed £500. Otherwise, the

appeal has to go before the High Court. I propose that

this limit of £500 be raised to £50,000 to bring such

appeals into line with appeals to the Circuit Court on

the value of other types of property.

Also, I have had under consideration the hardship

which arise under the death duties code when illegiti-

mate children, who have not been legitimised, inherit

property from their mother, and when children adopted

under the adoption laws of foreign countries inherit

property from their adoptive parents who are domiciled

in this country. Such children bear legacy and suc-

cession duties at the maximum rate of 10 per cent and

the abatements of estate duty provided in respect of

legitimate children do not apply. I propose to remedy

this situation by providing that, for death duty purposes,

illegitimate children will be treated as if they were, in

fact, legitimate, and that, where foreign adoption orders

have substantially the same effect as orders made under

our Adoption Act, the adopted children will be treated

140