As the Minister said, this is the Bill that gives legislative implementation to the Budget. The views we have expressed, and the views I have expressed on behalf of the Fine Gael Party, are already on record, but there are some points which it is necessary to repeat. Before doing that, however, there are a few details I want to mention, not so much for the purpose of getting an explanation from the Minister now, but because it might be of advantage to him to have notice of them before Committee Stage. As he said, this is a Committee Stage Bill as regards details.
Although I read the Bill several times, I do not understand the exact significance of the change in the allowances from unearned income which is brought in under section 2. A more elaborate explanation than is included in the paragraph dealing with it in the explanatory memorandum might be desirable. As I understand it, whether I understand it correctly or not, a person gets the combination of the two allowances up to £500 and if one allowance falls short of that amount he gets the other. He can make the first calculation on an allowance of £100 on one side and £400 on the other, or exactly as it works out. I should like it to be clear beyond question that the full amount of the £500 limit can be made up between different allowances.
I have never been quite clear as to what benefit was expected in relation to the centralisation of tax collection in the hands of one collector general. That is a matter on which we might get some information.
There is also in the Bill a section which deals with firearm certificates and firearm licences. I do not understand whether there is, in fact, any change from the existing law in that respect. I am a bit puzzled to know why, when we have the imposition of a firearms duty in the Finance Bill, there has not been a financial resolution on which to base the section. I understood that every charge made in a Finance Bill had to be based on a financial resolution. It would be interesting to know why that was not required in this Act, under the Standing Order.
In its detailed provisions the Bill also gives very wide powers of interrogation to Revenue under section 19. While I understand and appreciate the necessity for wide powers in relation to the investigation of smuggling offences, at the same time it seems to me that the powers given in this section are drastic, to say the least of it.
I want to pay tribute to the manner in which section 22 has been introduced, and the manner in which Revenue quickly appreciated the problem when it was brought to their notice under the Finance Act, 1951. I also appreciate the manner in which the Minister dealt with it so expeditiously. It is quite clear that the section is now brought in to legislate for what I believe was intended by successive Ministers for Finance when they were introducing national loans and saying that national loans would not be subject to any taxation if in the hands of non-Irish residents. Once the point was brought to attention that the 1951 Act had been framed in a way that was rather wider than was anticipated, it was dealt with very speedily. It is only right that that should be acknowledged.
There is very considerable unrest in the country because of the fact that in this Bill, and in his Budget statement, the Minister has not taken any account of the decreasing value of money so far as income tax allowances are concerned. People hoped and expected that the tax which would be collected out of the wage increases would be offset to some degree by an enlargement of the personal and marriage allowances. As I said during the Budget debate, there has been considerable dissatisfaction because the principle has not been accepted that it costs two people twice as much to live as one, and that the marriage allowance for tax purposes is not twice the single allowance. Even if the Minister was not in a position to go the whole way in increasing the marriage allowance this year, it would have been worthwhile making some move in that direction in acknowledgement of the principle involved.
There is also very great anxiety about the manner in which the scope of the tax net has been widened to bring the man who produces broiler chickens in under the Schedule D assessment instead of the Schedule B assessment. That has caused very considerable anxiety in many parts of the country and particularly, I understand, in the Monaghan-Cavan area. I am afraid it is perhaps only the thin end of the wedge and that there is the danger that it may pass on to people producing pigs in any intensive fashion. Certainly that was not the intention when the original Act was being framed.
It is particularly unfortunate in relation to the broiler chickens because in that industry you have a type of house that has a very short life and yet I understand that depreciation, with the charges under Schedule D, is limited to two per cent, that is to say, putting the life of the house at 50 years. Ten years would be a much more realistic figure, and perhaps a maximum figure, for the building used for chicken rearing. I am told that from eight to ten years is the basis upon which the ordinary person frames his estimates. It is wrong that they should be taxed under Schedule D at all but if they are it is absolutely monstrous that depreciation should be permitted only at a rate of two per cent, equivalent to, and appropriate perhaps, much more for the solid type of industrial building that is usually envisaged.
I understand that it is alleged that Revenue have no discretion at all in relation to that and that they are completely caught by the Act which provides that a two per cent building depreciation should be allowed. Frankly, I have never quite been able to discover the basis of reasoning under which market gardens were assessed in the same way, but that type of assessment has gone on for a long time. Because to some extent this is a new sector in agriculture, it is something that should be amended.
I also understand that there is a new outlook in relation to the road taxation of certain vehicles used for road construction. That is something which will require amendment. The position is that machines used on the road are not liable to pay tax to the Road Fund but the machine that takes the drill or the compressor into the quarry where the road material is raised is so liable although it is only used for going from one quarry to another. It seems to me that that is wrong and I hope on the Committee Stage to be able to persuade the Minister by means of an amendment to change it and go back to the practice we had.
I should like also an assurance from him at the same time that whatever the law may be at present in relation to the broiler chicken industry there will not be any question of going back retrospectively to earlier years because people genuinely did not believe they were liable for assessment under Schedule D under the existing law, if they are so liable, and it would thus seem to be wrong for the matter to be taken up retrospectively now.
The Bill, although it does not mention the tax in so many words, is, of course, a general taxation Bill and, therefore, it would be appropriate to say a word on the turnover tax in relation to it. Everybody is finding that the administration of the tax is costing more than was anticipated. It may be costing the Minister very little, from his own revenue point of view, to administer the tax but that is because he has passed off the job on to the business community. There should be some system of discount to offset the additional charge which the business community have to provide. Only the other day I came across certain information regarding turnover taxes on the Continent in the European Economic Community. I want to mention this for the purpose of showing that what we said at that time was right and the information that was given by the Minister was wrong. He contradicted us flatly when we said then that on the Continent turnover taxes for the most part exempted basic foods.
The position in relation to Belgium, for example, where they have a multistage cumulative tax on all transactions up to but not beyond the retail level, is that basic foods and most services are exempted, The position in France, where they have the added value tax, is that basic food products are exempted. In Germany where they have a multistage cumulative tax, basic necessities are either exempted or are charged at a lower rate. In Italy they have a multi-stage cumulative tax with many modifications and few exemptions. I do not know the position in relation to Luxembourg but in the Netherlands there are many exemptions.
Therefore, it would have been quite in accord with the European pattern for the Minister to have done what he was asked to do in relation to that tax, to exempt the essential foodstuffs. It is also unfortunate that the House was misled, if you like, in relation to the practice on the Continent and that there was not some authoritative document available at that time, but there is, of course, the great difficulty in dealing with Continental taxation that one is not only dealing with a system foreign to our way of taxation but, in addition to that, books on it in English are not very readily available.
I also found it interesting to discover that the taxes on capital, in so far as death duties are concerned, in the Community are very much lower than here. With the exception of Great Britain, no country appears to have the type of death duty taxation we have. I appreciate that ours is changed from the British model and that we have a top rate of 40 per cent compared with the British 80 per cent, but, even so, the difference between our rates and the rates of the Continent is very striking. In Belgium, where the beneficiary is a child, the rate rises from 1¼ per cent at the bottom to a maximum of 14 per cent. That is where the beneficiary is a child and that is the type of case we would naturally like to have here.
There is a much higher rate where property is given to someone who is not a relative. In France, between 1956 and 1960, the tax levied on the total value of the estate of a deceased person was at a maximum of five per cent. I think that has been varied since 1960 and now the position is that relatives get a different rate. It runs ultimately up to 15 per cent on both bequests andinter vivos gifts.
In Germany, again where a child is concerned, the rate rises from two per cent up to 15 per cent. In Italy, it is more like our pattern, rising to 35 per cent in the highest cases. I am not quite clear what the position is in relation to Luxembourg. It probably follows the pattern of the other Benelux countries but I am unable to say. In the Netherlands, again in the case of a child beneficiary, the rate rises from three per cent up to a maximum of 17 per cent.
Those figures show that the pattern we have here in relation to death duties is more penal than those of the six members of the European Economic Community. I appreciate that because of special circumstances here, we must give consideration to the position in Britain under the double taxation agreement, that a person coming in here must not merely become resident or domiciled here but must in addition transfer into Irish securities of some sort if duty is to be avoided or imposed at the lower rate.
One of the indications is that it would be worth while as a means of attracting additional capital if we follow the pattern on the Continent rather than that of Great Britain. The Minister has in section 15 of this Bill abrogated the idea that used to be held strongly that it was not possible to make a differentiated tax in that respect. If it can be done in relation to Scotch whisky, it can equally be done in relation to death duties and should be done for the purpose of attracting more capital.
The Bill itself implements the Budget. It is the legislative enactment which puts up the price of beer. It is the legislative enactment responsible for the increase in customs duty on whisky. Apart from any other aspect, I may say in that respect that it is not at all certain, and is not considered at all certain in the trade, that that is likely to be of benefit in the long run. I agree it may be of short term benefit to the trade and, of course, to the revenue. However, it is utterly impossible to reconcile the increase in the customs duty over the excise duty here with our application to GATT or with our anxiety to level out for adherence to the EEC in 1970 or, indeed, with the dismantling of tariffs which is being dealt with already in two instalments.
The Bill also is the legislation that imposes the additional tax on petrol and on diesel oil. Somebody said here in the Budget debate that the duty on petrol had been increased during the time we were in office. Of course it was, but at that time Governmental policy was to try to push as much traffic as possible on to the railways and it was in keeping with that policy.
This increase comes on top of that, so that it is entirely irrelevant to refer to it in this respect. The cost of distribution will be felt everywhere and such a tax is bound to have its effect in increasing the cost of living. Virtually all heavy goods are now carried in diesel lorries.
If the Minister had wanted to deal with the matter from a pleasure point of view he could easily have exempted heavy hydrocarbon oil. If he had done so, it would not have had the effect of adding to the cost of distribution and, therefore, to the cost of living. Apart from that, this increase will put a very distinct brake on productivity and will mean that business people, manufacturers, will find it hard to keep their costs down and to compete in the export market. The Bill follows a bad Budget, and because it is an implementation of a bad Budget, it follows also that it is a bad Finance Bill.