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The Finance Act 2000 has been processed through the Oireachtas in the same fashion as its numerous predecessors. New tax proposals are unveiled when there are only three days available to digest them, and where necessary, amend them. This is a silly system and does not lead to good law.
There are four well defined stages in the production of a Finance Act. On budget day the Minister announces certain proposals for changes in tax. This usually occurs on the first Wednesday in December. A few are implemented immediately by Financial Resolutions of Dáil Eireann. Towards the end of January following, the Minister issues a press release detailing further measures he is contemplating in the tax area. In early February the first draft of a Finance Bill is published. It will usually contain proposals which have not been previously publicised. Towards the end of February or in early March a Committee of the Dáil meets for three consecutive days to discuss the Finance Bill line by line.

Usually on the morning of the first meeting of the Committee to review the Finance Bill, much additional material for inclusion in the Finance Bill is published. These are the 'Committee Stage amendments'. Traditionally these contain significant new legislation.

Minister closeted

On the three days during which the Committee is sitting, the Minister and his senior advisers will be closeted in a room in Kildare Street from 10 am to 6 pm. There is therefore little opportunity for outside bodies, even if they had been able to thoroughly analyse the Committee Stage amendments in such a short time, to have discussions with the Minister or his advisers regarding them.

If the Minister does not indicate his intention to make further changes before the conclusion of the Committee Stage, then the Minister cannot introduce further significant amendments in the final stage of the Bill, called the Report Stage. If any changes are to be made to Committee Stage amendments before they are enacted, those changes have to be signalled in the three days following their publication.

Can you speed read?

This year the Committee Stage amendments included the changes to employee share option taxation (commented on elsewhere in the Tax Monitor), significant changes to urban renewal legislation excluding certain types of occupiers from allowances (see elsewhere in the Tax Monitor), capital allowances for expenditure on the purchase of milk quotas and on communications capacity rights, an important change in the manner in which banks are taxed on interest income which is prepaid, a restriction on the basis of relief for interest payments by a company, an important change to the manner in which financial institutions calculate their input recoveries for VAT purposes, and restrictions on the right of part time partners to relief for losses, interest payments and capital allowances.

Remember, from the time these amendments were published until they were no longer capable of being amended, the window of opportunity for analysis, comment, and change was at most less than 60 hours. For the bulk of that, the Minister was incommunicado in the Committee, and for a large part of it most of us were in our beds.

Some of these Committee Stage amendments were misconceived. It was possible to achieve improvement in some of these measures, thanks to the assistance of hard-pressed civil servants. But you don't have to be a genius to see that a system such as that described is not likely to produce good tax law. It is not likely to produce law which achieves what the Minister wants to achieve, nor is it likely to produce tax law that will be fair to the taxpayer. It is a recipe for confusion and error and regularly produces that result.

This has been commented on in Tax Monitor in several previous years. It has also been commented on elsewhere. Why do successive Ministers fail to change a system which is so obviously bad?

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