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

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

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