Committee on Finance. - Finance Bill, 1964—Committee Stage (Resumed).

Debate resumed on the following amendment :
Before section 21 to insert a new section as follows :
"Section 1 (4) (d) of the Finance (Excise Duties) (Vehicles) Act, 1952, is hereby amended by the insertion of the words `including machinery used in a quarry or pit solely for the purpose of raising material for the construction or repair of roads'."— (Deputy Sweetman.)

Before the debate was adjourned I was dealing with this amendment, which seeks to exempt from road duty vehicles which are used in quarries or pit solely for the purpose of raising material for the construction of roads. I wish to make it quite clear that it is machinery and vehicles carrying that machinery used solely for the purpose of raising of material for road construction I have in mind. If, one day during the year, the vehicle carries machinery used for any other purpose than raising material for roads for that one day, then the exemption would cease to have application and the normal duty would be payable.

The present situation is that mobile tar tankers, tar sprayers, loaders, bulldozers, graders, excavators—all that type of travelling machinery—are exempt from this tax, but because a stone-crusher or a compressor may be mounted on a vehicle, the vehicle carrying that stone-crusher, and doing nothing else, and the stone-crusher, which does nothing else except raise road materials, are liable.

I understand further that if a compressor or a crusher were put on a low loader, the low loader carrying it would not be liable. Because it is put on a lorry chassis, it is liable, whether it is a lorry or an articulated vehicle. If it is carried by a low loader it would not be liable, but because it is on an ordinary lorry, it is liable. That is not fair. It seems to me contrary not merely to what was the intention of the section but also to commonsense. When I say it is contrary to the commonsense of the section, I am not indicating any argument on the interpretation of the original section. It seems to be a contradiction in terms that something used for the purpose of road construction in this way should be liable to road tax. The two things are not compatible. As the big tanker carrying the tar is exempt, so should the vehicle mentioned in my amendment.

I am afraid the Deputy is seeking to introduce a new principle by asking for the inclusion of this type of vehicle. As far as the motor taxation code goes, the use to which any vehicle may be put while off the public road is not relevant and is not a factor we can take into account in determining the liability or non-liability for duty of the vehicle. The fact that off-the-road operations are related to roadmaking materials cannot be accepted as relevant to the various exceptions made for motor taxation purposes. The lorry on which the machine is carried is a road vehicle which might possibly be used for other purposes.

It could not be. It has got a specially built-on body for those compressors and crushers.

The exceptions given do not relate to the materials produced in quarries and pits. They relate entirely to the construction and making of roads, not to the materials used. It could be held that the machines producing materials in the quarries are not used exclusively for roadmaking but for building and other purposes. Seeking to have this type of vehicle included in the list of exclusions would be departing from the list already in existence.

The Deputy mentioned some of those which are excluded. They include vehicles kept by a local authority exclusively for fire brigade operations, vehicles used for the transport of road construction machinery for no other purpose than the repair of roads. That is the one I am relying on in particular—the vehicle that might be used to transport a machine or to transport itself but which is used exclusively for the repair and construction of roads. In no part of the Bill relating to those things excluded is the manufacture of road materials mentioned. Therefore, the Deputy's proposal would widen the list of exclusions, perhaps inadvisedly and unnecessarily. The vehicle mentioned by the Deputy is subject to a favourable rate of tax—£1 per horse power.

It must be a very heavy vehicle to carry these machines. In one case, I know the rate of tax will be £75 per year, though the vehicle will make not more than 12 journeys during the year—it will spend a month in a quarry and then travel on. It seems wrong that a tax of £75 should be payable in respect of that vehicle since it is so constructed that it can be used only for that purpose. A bulldozer can be used for the purpose of making a road. If the Minister drives along the Naas road, he will see bulldozers at work there. A bulldozer can also be used for building, but the vehicle that carries the bulldozer, so long as the bulldozer is used only for the making of roads, is free.

It is exactly the same principle I am asking the Minister to accept in this amendment. I am not indicating how the taxation authorities will satisfy themselves that a vehicle that carries a bulldozer is carrying such a bulldozer only for the building of roads. They do exempt vehicles carrying bulldozers when it is for road construction and therefore it should not be beyond the wit of the draftsman to cover exactly the same principle in this.

The person concerned, the owner of the vehicle, must satisfy the taxation authority that it is used solely in relation to road construction by raising materials in this way. Without materials raised in this way, roads will be made only from individual very large quarries. All the type of machinery I have in Kildare is not suitable perhaps in parts of the West. The pattern of road construction, particularly in the West, is to endeavour as far as possible to raise economically a variety of quarries round a particular county. So long as the Minister has this provision here, which is now being enforced in a particular way, it will not be possible to have that type of construction any more. The effect of it will be that the smaller quarries will have to close and there will be pockets of unemployment in consequence of which the Minister will have to pay far more than the amount that is involved here in the duty.

I could understand the case made against me if a bulldozer could be used only for the purpose of making roads but obviously it can be used for many other purposes: the Minister understands that. Yet so long as the machine that carries that bulldozer is used for roads it is free. If that is so, there is an easy method of dealing with this same analogy.

The legislation and regulations dealing with this matter appear to make a very clear distinction between road-making and road materials. That is the point.

It is a mistake. That is one of the reasons why I have put down the amendment. I shall withdraw it now and retable it for the Report Stage in the hope that the Minister will see light between this and then.

Amendment, by leave, withdrawn.
Section 21 agreed to.
Question proposed : "That section 22 stand part of the Bill".

I have already paid tribute, in relation to this section, as to the speed with which the argument I put forward was acknowledged and met.

Question put and agreed to.

I move amendment No. 7:

Before section 23 in Part III to insert a new section as follows:—

"In respect of Estate Duty there shall be deducted from the net value of the property passing on the death of a father to his widow or to his children the sum of £2,000 in respect of each child of his under the age of 16 years before calculating the principal value of the estate liable to estate duty."

The purpose of the amendment is to alter the present scale of estate duty, the system of taxation levied on capital at death. The scale of estate duty, originally in the Finance Act, 1894, has been altered from time to time in respect of rate but, basically, as far as its fundamental structure is concerned and the principles upon which it is based, the system has remained unaltered since drafted by the Chancellor of the Exchequer.

I have tabled this amendment in order to draw the attention of the Minister to the position in this country as it applies to the family man. We are a nation who cherish, our large families. Our country accords a special place to the family in our Constitution as the basic unit of society. It seems to me that it is very right and proper that we should keep that fact very much to the forefront in matters of taxation as in other matters.

The average family in Britain is something like 1.3 children. The average father who dies there leaves a small family of 1.3 children and a widow. In this country, the average family is five or six children. In the past three months, I have heard of no fewer than three friends and acquaintances of mine who were cut off in their prime, leaving large families of young children. They were men who wisely had covered themselves by insurance and there is, thank God, a certain capital sum available to the widow in these cases. In one case, there is a sum of about £20,000 available to bring up no fewer than seven children under nine years of age. But the State is having its crack at that capital sum.

We have death duties which yield £3 million of which estate duty yields about £2 million. To the extent that that tax is levied on the capital fund left by fathers for the upbringing and education of their family of young children, it seems to me that such estates are improper subjects for taxation.

Deputy Sweetman pointed out last week that in many countries of continental Europe a system of family relief is granted in respect of estate duties. I never tire here of making the case that British laws can be very unsuited to our circumstances. I suggest to the Minister that in no respect is that more manifest than in this matter of death duties which taxes the estate of a father with a family of small children in the same way as it taxes the single person.

One sometimes hears the case made that estate duties in this country are not as heavy as in Britain. That is partly true. In estates ranging between £8,000 and £20,000 the duties here are exactly the same as they are in Britain. In days of rapid inflation, a capital sum of £20,000 left to the widow of a family will provide an annual income of less than £1,000 and every £ taken out of that capital fund is making it more difficult for the unfortunate widow to meet the trials and tribulations of her state in life. The duty levied on an estate of £20,000 here is £2,400. No relief whatever is given for the family circumstances of the deceased person. I appreciate that my amendment, as drafted, is technically imperfect but it gives the opportunity of drawing this matter to the Minister's attention. Very probably he may not be fully aware of it and therefore I ask him to address himself to this case.

Mr. Ryan

Deputy Byrne's amendment illustrates his concern and the concern of the Fine Gael Party for the standard of families. The object of the amendment is to preserve for the children of a deceased father the standard of comfort and opportunity which would have been theirs if the father had lived. It is next to impossible for us to replace, no matter what State aid we may give, the position of father but the least we can do is to see that the State does not step in to take away from a family some provision which the father in his lifetime had put aside so that if he were taken away while the family were young, there would be some fund there to provide them with something like the same opportunity as would have been theirs if he had been alive and earning an income for them.

The only criticism of this amendment that is valid is that it does not go far enough but Deputy Byrne, like the other members of the Fine Gael Party, is well aware of the many pressures on State funds by reason of the great improvements sought. We do not want to ask for the impossible but we ask that where there are children of tender years up to 16, £2,000 be left as a sum untouchable by the State in respect of each. When one considers the cost of maintaining a child and the cost of school and university fees, the sum we ask to be taken into account is small compared with the many demands which could be made upon it. The income which could be derived from £2,000 would be insufficient to meet the annual outgoings on those children and therefore I would ask the Minister to meet us on this.

We should like the Minister to indicate, if possible, what he considers the cost of meeting this case would be. I suspect the cost would be negligible. The number of families that could benefit by this provision would not be very great but the degree to which they could benefit would be very great to them. On that account we think it is worthy of the Minister's sympathetic consideration.

I was asked about this some time ago and I was not able to get any fair idea of the cost of such a proposal. What Deputy Ryan said in concluding is hardly a logical statement, when he said that the concession would be a big benefit to those who would receive it and would cost the State very little. It is hard to see how that could be true. However, I think I know what he means.

Returning to the question of children, where a man dies and leaves a widow and children, the children and the widow are fairly well treated under the present law. First the estate duty comes out of the residue. If there is no residuary legatee, I suppose it is taken from the estate before it is divided between the widow and children. Having gone so far, the succession duty or the other duty which is also chargeable in some cases, is very low for a widow and children. If the estate is under £15,000, there is no succession duty at all. Even a minor child who inherits less than £2,000 is free of succession duty.

This amendment relates to estate duty.

I am just talking of succession duty.

Let us talk about the estate duty to which the amendment relates.

I am putting this in my own way and I am saying that widows and children are not too badly treated at present. On an estate of up to £15,000—it may be more, with £2,000 for each of the children, it might be £25,000—there is comparatively little duty charged because they are not charged succession duty at all. Even if they were above that amount, they would be charged only one per cent. Deputies will be aware that the duty is only one per cent where you have a wife and children or a father or mother. If it is a brother or sister or descendants of a brother or sister, the charge is five per cent and for others ten per cent. There is good treatment under the present law for widows and children.

I do not know if I can say much more at the moment. I was asked some time ago by, I think, Deputy Byrne and I was unable to make any estimate of what this might cost. I suppose if we got some time, we might be able to make an estimate. It is not altogether the cost but it is so much out of line with the general theory underlying estate duty and succession duty that it would be an entirely new principle which we are not sure should be introduced as it is difficult to see where it might lead us. Therefore, I must oppose the amendment.

The Minister will agree that the pattern of death duties here is built more according to the pattern of the British death duties than to the pattern of other continental countries of which I spoke the other day, but let us be clear where the divergence occurs. It occurs in that the very duties of which the Minister has been speaking and on which he relies have been abolished in Britain where there is no legacy and no succession duty. It seems hardly logical to rely on that part of the pattern when it has gone over there. We must make up our minds in the time ahead—on this subject, I do not want to be wrong in my facts—first, whether we are to keep death duties as a means of capital adjustment in their existing forms or if we are to keep them on the British pattern. Then I think we should go the whole way on the British pattern and abolish legacy and succession duties. We must make up our minds whether we are going over to the continental pattern of which I spoke the other day where emphasis is not so much on the amount of property a person leaves but on whether the person leaves the property to his immediate family or outside it.

The emphasis in the Common Market countries particularly—I admit that outside those I know little about the European pattern—is to a small degree on the total estate a man leaves but to a very high degree on whether he leaves it to his immediate family or to those further away from him by relationship. There is, of course, no distinction on the continent between estate duty, on the one hand, and succession and legacy duty, on the other. There is one amalgamated death duty in the countries of which I spoke the other day, entirely based on one rate for those within a certain degree of relationship, the widow or the widower and the children and grandchildren on the one hand and those to a greater degree outside on the other hand. Frankly, if one is going to keep death duties at all—I see objections to their complete and total remission—I would prefer the continental system so long as I could find a method of tying that in with our double taxation and relief arrangements with Great Britain.

We have a combination of estate duty on the whole property and a varied duty according to the relationship of the person to whom the estate is left. The variation is from 1 to 10 per cent, which is a very big variation. We could, I suppose, consider, as Deputy Sweetman says, going over this one to ten per cent—making that a bit higher, and dropping estate duty or, like the British, drop the succession and legacy duty and increase the estate duty to make up for their loss. We have on the one side the British, entirely estate duty, and the continental system, which is like our succession or legacy duty, but we have both. I think the system we have is not too bad from that point of view.

I must confess that I find the Minister's line somewhat exasperating. We should not concern ourselves with either the British system or the continental system. I believe the continental system is far more favourable to the large family than is the British one. The Minister has quoted rates of legacy and succession duty of up to 10 per cent. This amendment deals with estate duty. If a family man in this country dies and leaves an estate valued for probate purposes at £18,000 the rate of duty applied to that is 12 per cent. I know of an estate of about £20,000 which includes the value in a substantial amount of the deceased's private residence in which his family have to reside. The estate is about £20,000 and there is £2,400 estate duty. That is money taken from small children and an unfortunate widow who will be hard pressed to bring up those children in the manner in which her late husband hoped she would be able to do by reason of his prudence in covering himself for a very substantial sum of insurance.

Let us have regard to the fact that this is a Catholic country, that we pride ourselves on our large families, that the large family has a special place in our Constitution. If we do that, we will act accordingly.

Amendment put and declared lost.
Question proposed: "That section 23 stand part of the Bill".

What duty was a scrip certificate liable to up to this? The first ones—the "A" certificates are 6d each?

The "B" certificates?

They are charged with a stamp duty of 2d. Prior to 1961, it was chargeable the same as a receipt.

The scrip certificate of a share certificate?

Yes, entitling the holder to become a shareholder in respect of the shares mentioned and exchanged for an actual share certificate. It is where a scrip certificate is issued. It was a 2d. stamp—an impressed stamp. I suppose that made it more difficult.

The Minister must be talking about something other than what I think is involved because I have seen, and the Minister has seen, many share certificates but did he ever see one with a stamp on it?

I do not think I did.

I never did.

It is a temporary receipt entitling the holder to become a shareholder in respect of the shares mentioned.

That is not what is usually called a scrip certificate in ordinary business parlance. It may be a stamp duty one all right. I would not know about that.

I suppose in the law it is.

It probably is.

Question put and agreed to.
Question proposed: "That section 24 stand part of the Bill".

Do I understand that the practical effect of section 24 is to acknowledge that the 1963 section was not operative or is it because the Companies Act has been passed in the meantime?

No. If the Deputy looks at section 45 of the 1963 Act, he will see it dealt with a local authority and this is "body corporate". It is the same drafting practically except that it is "body corporate" in this case.

This section applies to "other than a company". Why "other than a company"?

Statutory bodies.

What we commonly call a board as apart from a company —is that the idea?

State Board, yes.

Commonly but incorrectly called a board.

Question put and agreed to.
Section 25 agreed to.
Question proposed: "That section 26 stand part of the Bill."

This contains a small element of retrospection, I think?

Back to 1st January only.

The Minister has made up his mind that 1st January is his date for CPT. I do not think we will shift him off it.

Question put and agreed to.
Sections 27 to 29, inclusive, agreed to.

I move amendment No. 8:

To add to the section the following subsections:

"(2) Where, whether before or after the passing of this Act—

(a) by virtue of an order under section 57 of the Dairy Produce Marketing Act, 1961, a company which manufactures a milk product within the meaning of that Act other than butter—

(i) is totally prohibited from exporting the product, or

(ii) is prohibited from exporting the product to any specified country or countries,

(b) the product is sold by the company to An Bord Bainne (hereafter in this subsection referred to as the Board), and

(c) in a case which subparagraph (i) of paragraph (a) of this subsection applies, the product is exported by the Board or, in a case in which subparagraph (ii) of that paragraph applies, the product is exported by the Board to the specified country or any of the specified countries,

Part III of the Finance (Miscellaneous Provisions) Act, 1956, shall apply as if the product had been exported out of the State by the company, and any amount receivable by the company from the sale of the product to the Board shall be deemed for the purposes of that Part of that Act to be an amount receivable from the sale of goods so exported.

(3) For the purposes of subsection (2) of this section, exportation shall be deemed not to be prohibited unless the Minister for Agriculture certifies that he is not prepared to license it."

In the Bill I had inserted a section dealing with bacon factories where bacon factories are compelled to do their exports through the Bacon Board. It is provided there that they will continue to enjoy whatever relief they would have got from exports if they had exported them directly rather than through the Board. I omitted to include in that certain dairy produce companies that may be in the same position in case the Milk Board might take over the central exportation of certain commodities, as they, I think, intend to do, in the future. It is only fair, if a company is compelled to export through a certain medium, that they should have whatever benefits they had up to that with regard to relief from taxation on profits.

Amendment agreed to.
Question proposed: "That section 30, as amended, stand part of the Bill."

When does export tax relief end under the present system?

In 1974-75.

Is there a tapering provision after that?

Five years' tapering.

That is the beginning of the tapering or the end?

The beginning.

Question put and agreed to.
Section 31 agreed to.
Question proposed: "That section 32 stand part of the Bill."

The effect of this section brings these securities in for death duty purposes as well as income tax and sur-tax purposes?

Question put and agreed to.
Section 33 to 35, inclusive, agreed to.
Question proposed: "That the First Schedule be the First Schedule to the Bill."

The Minister will note he issued no explanation in the White Paper of the First Schedule, although I appreciate part of the explanation arises in the comment on section 9. I would have liked to have had a little more explanation in the Explanatory Memorandum of what is an extremely complicated schedule.

I thought myself that sections 8 and 9 were very complicated. I came to the conclusion that the Schedule was more or less the same as section 9. When I got the explanation of the lot, I came to the conclusion it was better to go back to the Explanatory Memorandum, because it is terse and uncomplicated.

I suppose the Minister's brief probably ran to many pages?

Several pages.

Question put and agreed to.
Second, Third and Fourth Schedules agreed to.
Question proposed: "That the Fifth Schedule be the Fifth Schedule to the Bill."

Would the Minister tell me what section 4 of 1951 is?

That is the old provision for age allowances.

And section 17 of 1940?

A penalty for the rebate on hard-pressed tobacco.

Question put and agreed to.
Title agreed to.
Bill reported with amendments.
Report Stage ordered for Tuesday, 9th June, 1964.