Chartered Accountants Ireland have issued important clarification of the status of Budget Night resolutions in the event of a General Election prior to the passing of the Finance Bill: Following this morning’s announcement by one of the Government coalition partners, it is now almost inevitable that there will be a General Election between Budget Day, 7 December, and the customary date for the passing of its corresponding Finance Act in March 2011.  Accordingly the status of Budget Night resolutions will be determined by an item of legislation almost a century old, and which grants additional breathing space to an incoming government.

Under the Provisional Collection of Taxes Act 1927, “Financial Resolutions” can be passed on Budget night.  Usually these apply to bring a taxation measure into immediate effect, for instance duty increases on tobacco, alcohol and petrol.  In recent years they have been also used to confirm more pressing matters, for example changes to the Income Levy.

A Financial Resolution can remain in force for up to four months from its introduction on Budget Night, but can only take permanent effect in a Finance Act.  This is why the President will normally sign a Finance Bill into law within four months of Budget Night.  Where a Financial Resolution is not brought fully into law in time, any taxes which it raised must be repaid.

However, where the Dáil is dissolved in the meantime, the Provisional Collection of Taxes Acts disregards the period of dissolution when reckoning the four month interval.  Accordingly, any of the following scenarios could come into play:

  • A 7 December Budget, with its corresponding Finance Bill in May of next year
  • A 7 December Budget, with a very short Finance Bill to confirm the essential elements (rates, credits etc) enacted within days of the Budget
  • A 7 December Budget, with two Finance Bills associated with it; a short Bill as described earlier this year and a second Bill next year constructed entirely by a new Government which addresses more general issues – anti avoidance, anti evasion etc

Any financial measures have a new urgency given the prospects of a Four Year plan and any further conditions applied externally.

It will therefore be important to have clarity on the preferred approach as early as is practicable given the momentous changes and events we are currently experiencing as a nation.

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