There is another very attractive proposal here which, I think, would appeal to most of us and that is the proposal regarding tax exemptions. Any time I see the phrase " tax exemption " my heart is gladened but you usually find, on closer examination, it does not mean a thing. I want to make an obiter here. You may have read that the Commission are going to take action to ensure that tax evasion is counteracted throughout the Community. Measures will be initiated to ensure that any member state will not be used as a basis for tax evasion by residents of another member state. The thing that intrigues me about that particular proposal is that it is going to be undertaken by the Commission and the staff of the Commission who pay no tax themselves.

I though they were subject to European tax?

At a much lower level.

If they pay any tax it is minimal.

But they do pay tax. That is the criterion.

The ordinary citizen in this country objects very strenuously to being harrassed by his own Revenue Commissioners but at least he has the comforting knowledge that those Revenue Commissioners themselves pay full tax. One is entitled to have some reasonable objection to being harrassed by persons who, as far as one can ascertain, pay no or minimal tax to anyone.

Does this not refer to personal property?

It does, yes. It permits us to avail of the opportunity to make an obiter.

From July, 1977, we will have free access. Anybody moving from one state to another will have to pay no excise duty, except as far as we are concerned, Protocol 7 of the Treaty of Accession as far as motor cars are concerned will be in conflict with the Directive.

Maybe that exemption, which will come in July, 1977, will apply only to customs and VAT and excise duties will still remain.

How about motor cars?

They are governed by special exemption.

It will mean that we will not, as a nation, comply with this Directive after July, 1977.

That is dealt with on page 4, the second paragraph:

The position in regard to motor vehicles, which the proposal envisages being imported, in a case of a permanent change of residence only, without payment of Irish taxes is somewhat different. Protocol 7 of the Treaty of Accession made special provisions to protect the Irish motor car assembly industry and in recognition of those provisions the proposed directive should not, as far as Ireland is concerned, extend the facilities which exist at present in the case of motor cars. Any restrictions which the Revenue Commissioners and the Minister for Industry and Commerce are entitled to impose under their present statutory powers should be continued.

That refers to licences to import foreign cars but these particular cars would not be included in those quotas requiring importing licences, would they?

This is one of the difficulties actually.

It covers cars imported for personal use.

Is it not the position that these Directives would, in fact, allow people to bring in cars without a change of residence and it may be necessary to quote Protocol 7 at them in regard to change of residence to provide for our particular situation? In the absence of some request from our side, I take it that our cars would come under these Directives just the same as everything else.

We are asking that the position regarding cars be left unchanged.

It would mean changing the Directive in our favour.

If it is necessary to change the Directive to retain this requirement, then we are asking for that.

There is one matter I think for which we made provision and I want to highlight just some wording here. In paragraph No. 2 of the first page of the report it says : " The property must be used property ". In other words, I take it that it is property already used elsewhere brought in. I think there should be some provision made for physically handicapped people. These people especially should be allowed an exemption. That does not seem to be opposed to any plans. Very often it is a new machine that is brought in.

If you follow on to the top of the next page, page 2, it does not qualify. It says : " Local taxes must have been paid on the property in the member state where it was purchased and it must not have been acquired for export ". I think that covers the situation quite well.

The only difficulty is the sentence: " The property must be used property ". I think we give an exemption for that. It is a very difficult one to get but is done by repayment of the tax. You pay the taxes, first of all, and then you get the repayment of the tax. That happened in a case of disseminated sclerosis.

Presumably these Directives are a minimum requirement that every member state must bring in. There is nothing to prevent us giving further concessions.

Yes. In one instance, we give 12 months in the case of motor cars, whereas the Directive says six. We will be invited to maintain our trends.

Yes, that is correct.

When they say six do we not have to cut down to six? If, on the other hand, they say six and we were prepared to make it two or three, that will not do. We can give more generous concessions.

And that is overdoing it.

We can improve. We will be obliged to maintain our 12. If they say six, we cannot say 12 in the absence of some kind of change of Directive.

Our 12 is a concession. They want to insist on six but we already give 12, which is a greater concession, and we may continue to give 12.

That is right.

The other condition is that you must have lived at least two years abroad.

I want to refer to the second paragraph:

The draft Directive would also allow the tax-free importation of new goods by an individual intending on marriage to establish his or her principal place of residence in the State. In the case of any article of more than 125 units of account the importer would be required to show that it had been fully tax-paid in a member state.

That only means that if it is under 125 units of account you do not have to.

If it is over that?

Then you have to do that anyway. That is applicable across the board. Local tax must have been paid on the property in the member state where it was purchased. It cannot have been acquired for export.

It is to prevent you furnishing your house with duty-free goods.

I am talking about the handicapped people. Cars are going up in price. What is their position?

There again, there is nothing to stop our Government giving additional concessions.

Yes, but if it has been taxed in another state, why should it be taxed when we have given an exemption to date?

We are entitled, if we want to, to say we are bringing in cars for handicapped people, with no duty paid anywhere, either in the state where it was bought or here. We are entitled to do that if we want to.

That is all right. But if it is taxed already, surely there should be an exemption.

Yes.

Who is going to refund the tax?

If it is more than 125 units of account you must pay the taxes in the state where it was purchased but you do not have to pay anything here.

You have not to pay the VAT twice anyway.

What is the value of 125 units in sterling?

It is roughly half.

This is on marriage now.

I know this is the exemption given on marriage.

These are the concessions we must give here to somebody coming in from a member state into Ireland. We could let them in for nothing. We must let them in at the minima. There is only one little point that we might quibble about and that is that at the moment, as far as a motor car is concerned, the proof of your residence is pretty informal but when these new provisions come in they will stipulate what proofs you have to give of residential status. I think that is only fair.

Could I ask if arrangements are being made for people who would fall into a category of dual residence?

This provision is really in easement of people with double residence which means that you can move from one country to another and bring a certain amount of personal property with you without any formalities or duties. It is really for people who are doubly resident that these provisions are intended.

I see in some European countries as far as cars are concerned, you can have two cars on one plate. Insurance and tax are attached to the plate. If you are going for the weekend into Switzerland you just bring the plates with you.

Switzerland is not in the Common Market.

I know people who go to other countries for a weekend skiing and carry plates with them and I think that they are able to have tax and insurance on two cars for the price of one. It is part of the tax system there. It seems to be a common practice with quite a number of foreigners.

I do not know. The purpose of this Directive is to facilitate the movement of Community citizens intra community.

You are moving the cars while under Deputy McDonald's suggested scheme we are moving the owner of the car rather than the car. The car stays put and the owner has to move which is a different situation.

The tax systems in Europe are certainly more liberal than here.

You might be giving us ideas, Deputy.

Paragraphs 1 to 7, inclusive, agreed to.

Draft Report agreed to.

Ordered : To report accordingly.