Pursuant to the Treaty signed the 6th day of December 1921 a process started by which the Irish Free State was to be established, ultimately a year later. A Provisional Government was established.
The Government of Ireland Act 1920 had been passed in the United Kingdom and become law in Northern Ireland. It had contemplated an equivalent devolved government in the 26 counties to be known as Southern Ireland. This existed only in a fleeting sense under UK legislation.
The United Kingdom passed the Irish Free State (Agreement) Act 1922 providing power by Order in Council to transfer governmental functions to the Provisional Government. By Order made 1st April 1922 functions were transferred to the Provisional Government. The Ministry of Finance of the Provisional Government succeeded to the functions performed by the Treasury the UK Commissioners of Inland Revenue, the Special Commissioners of Income Tax the Commissioners of Customs and Excise and others.
The Provisional Government made a number of decrees in relation to taxes for the year 1922. In May 1922 it was agreed that the budget proposals of the UK for the years 1922/ 23 would be applicable in the Free State and tax levied would be paid to the Irish Exchequer.
Revenue Commissioners Established
On 6 December 1922 the Irish Free State was established, and its government assumed direct control of Customs and Excise. For a period, HM Commissioners cooperated with the newly established Irish Revenue Commissioners in relation to administration.
The Irish Free State government established a Board of Revenue Commissioners based on the United Kingdom Commissioners of Customs and Excise and the Commissioners of Inland Revenue. This continued the practice whereby the Commissioners were independent in the practice of their functions.
The Exchequer and Audit Department Act 1921 in the United Kingdom provided by the Department of Customs and Excise and of Inland Revenue. Under the Adaptation of Enactments Act 1922 where any Board of Commissioners exercised any function of government or discharged any public duties in relation to public administration, the e Executive Council might by order establish a Board of Commissioners to exercise such functions in the Irish Free State.
The Executive Council made the Revenue Commissioners Order 1923 establishing the new Revenue Commissioners, to take over the powers exercisable by the Commissioners of Inland Revenue and Commissioners of Customs and Excise. There were to be three commissioners appointed by the President of the Executive Council and removable only by him.
The order also adapted existing UK statutes in relation to Inland Revenue and Customs and Excise. References to the Treasury or the Commissioners of the Treasury was to refer to the Minister for Finance.
Finance Act 1923
The Finance Act 1923 charged income tax at the rate of five shillings in the pounds (25%) and also charged the supertax. The tax remained a temporary tax in the technical sense (as it had been since 1799).
The Act carried over the listed taxes and duties in the schedule in particular those of Customs and Excise, stamp duty corporation duty corporation profits tax mineral rights duty and motor vehicles duty.
Where an employee had omitted to pay income tax, Revenue Commissioners might by notice requires his employer to deduct the same from remuneration. This could lead to a deduction of a considerable sum.
Tax was deemed a sum due to the Minister for Finance for the benefit of the Central Fund and payable to the Revenue Commissioners. It might be recovered at the suit of the Attorney General as well as by other modes of recovery.
Challenges were made to the ability of the Free State to collect arrears of taxes and assessments made prior to 1922. This was exacerbated by the fact that Sinn Fein prior to 1920 had urged non-payment of taxes to the UK authorities. In 1926 the Supreme Court decided that assessments could lawfully be made and that the Irish Free State had succeeded to the liabilities for pre-independence periods.
Provision was made for relief from double taxation for persons were assessable in the United Kingdom and in the Irish Free State.
Revenue receipts in 1923 /24 comprised the following
- Customs £8,107,523
- excise £9,351,753
- income tax £4,894,706
- supertax £504,385
- estate duty £1,049,906
- Stamp duty £493,707
- corporation profits tax £363,000
- excess profits duty £92,199
- land value duties/mineral rights duty £245
Other Revenue Functions
The customs continued to administer a wide range of legislation outside of taxation legislation. Revenue acted as agent of other bodies and Departments. This included control of dangerous drugs,
- obscene literature,
- arms, ammunition
- lottery advertisements
- importation of gold and silver coin,
- importation of cattle horses hey straw,
- importation of salmon,
- enforcement of public health regulations,
- passenger returns on vessels,
- restricted imports
- registration of shipping,
- certain merchant shipping,
- merchandise marks and
- copyright infringement (1927)
The Stamping branch dealt with savings certificates for the Department of Post and Telegraph, postage stamps, national health insurance stamps, unemployment insurance stamps as well as others. A dog duty was enacted in 1925 at five shillings per dog annually collected through the Post Office.
The old-age pension officers under the Old-age pensions Act 1908 were to be officers of excise. Where an estate was less than £300 in value a person may apply for probate or letters of administration to officers of Inland Revenue pursuant to 1881 statute. This figure was increased to £500 in 1894.
In 1929 the Revenue Commissioners appointed a Departmental committee for the purpose of simplification of the Income Tax act. This proved difficult and the recommendations proposed a bill which was significantly longer and more complex than anticipated. Ultimately the project was abandoned.
The Tariff Commission was appointed in 1926. It was empowered to report to the Minister of Finance and proposals for the position imposition abolition or renewal of customs duty and the importation of goods into the Irish Free State.
Fianna Fail was elected to power in 1932 initially with the support of the Labour Party and then in its own right. Protectionism was a significant part of its policy. The Finance Act 1932 authorised the Executive Council to impose vary and remove by Order customs duties excise duties and stamp duties. An Emergency Imposition of Duties Order was to have statutory effect on its making. It was to last for eight months unless it was confirmed by an act of the Oireachtas in this period.
The President of the Executive Council, Eamon de Valera declared that he would withhold Exchequer land annuities of €5 million a year (an enormous sum at the time)to the UK government. The United Kingdom government retaliated and charged impose 40% duty on Irish cattle and 30% on other agricultural products. Quotas also applied.
The Irish Free State in turn-imposed duties on a wide range of British goods. This led to the economic war which persisted until the Anglo Irish Trade Agreement of 1938. The high rates of tariffs and the existence of s quotas led to significant smuggling across the land border with Northern Ireland. It is estimated over 100,000 cattle were smuggled into Northern Ireland in 1934/1935. Equally a significant amount of smuggling of consumer goods from Northern Ireland to the Irish Free State.
By 1933/34 total tax taken was £22,955, 446.
- This was made up as follows
- custom £9,684,000
- excise £5,305,843
- income tax including supertax £5,213,251
- estate duty £1,065,000
- stamps £1,063,000
- corporation profits tax and excess profits duty £623,700
Revenue comprised 2,200 staff, 226 in the secretariat, 203 in the accountant general 22 in the solicitor’s office, 31 estate duty office and 50 in the stamping branch. There were 1,200 in the Customs and Excise branch including 505 officers implemented the legislation on the ground, Under the chief inspector of taxes there were 422 officers including 7 senior inspectors 14 inspectors and 51 lower-grade inspectors and assistant inspectors.
The Oireachtas passed the Emergency Powers Act 1939 on 3 September 1939, the day when Britain declared war on Germany. The legislation allowed the government to make emergency orders or emergency power orders. The Constitution had commenced in 1938 and there was a 3 year period in which amendments could be made by the Oireachtas.
The first amendment of the Constitution provided at a time of war included a time when the state was not a participant in an armed conflict but when arising out of such an armed conflict a national emergency existed affecting the vital interests of the State. Resolutions were passed that a national emergency existed.
Accordingly, the provisions of Article 28 3 applied. It provides that nothing in the Constitution could be invoked to invalidate a law enacted by the Oireachtas expressly for the purpose of securing public safety and preservation of the State in time of war.
Provision was made for prospective invasion. It allowed the functions of government to continue in so far as possible during an actual or prolonged invasion and occupation. The State was to be divided into eight regions administered by a Regional Commissioner with very wide powers. It included requisitioning commodities and taking measures necessary to ensure an equitable distribution of supplies.
Intensive Economic Control
The Emergency Powers Act allowed the government by order to authorise control and regulate prohibit the import and export of any specified class of goods. Numerous orders were passed limiting the import, export and supply of goods.
The first Emergency Powers Order of 3 September 1939 prohibited the import, export of informative article (news information) other than by post. An authorised officer was empowered to search and examined the import by post of and informative article.
Controls were placed on agricultural imports and exports. Famously the distribution of tea and sugar was subject to restrictions,
The Customs and Excise branch of Revenue were intimately involved in the rationing provisions. Importation of products was subject to licensing in many cases.
Revenue was given an enhanced powers. Members of the Defence Force are authorised to act with the powers of officers of Customs and Excise. Enhanced searching and investigative powers were provided for to enforce the legislation.
The Imposition of Duties Act 1957 replaced the Imposition of Duties Act 1932. This allowed for imposition of duties by government order for a temporary period pending confirmation by the Oireachtas.
Many import duties were suspended during the war and reintroduced afterwards.
Finance Act 1941 raised excess corporation profits tax to 50%. It introduced an individual’s excess income profit tax. This is partly inspired by alleged excess profiteering since the commencement of War.
There were Emergency Powers Orders restricted wages in industry as well as a standstill in public service remuneration. There were restrictions on dividends and directors’ fees.
Excess profits tax for companies applied above profits of £2500. The excess surtax on individual trading profits was 7 shillings 6p in the pound.
A Reference Tribunal was established. A company subject to the order was not permitted without prior approval to pay fees or other remuneration to directors unless approved by the Tribunal. No company was permitted to pay a dividend without the approval of the Tribunal.
Supplies & Rationing Post-War
The Emergency Powers Act was continued annually up to 2 September 1946.
A Department of Supplies was established pursuant to the Ministers and Secretaries (Amendment) Act 1939. The Supplies and Services (Temporary Provisions) Act 1946 continued many emergency powers in light of the continuing shortages of commodities and necessity to preserve and restrict foreign exchange dealing. It facilitated continued retention of emergency provisions for a further period.
Under the 1946 Act the government might by order authorise and provide for the regulation and control of any supplies and services that are in the government’s opinion essential to life of the community. The Act was continued annually until the end of 1957 when it was continued by further legislation providing for potential continuation from time to time.