Before the debate was adjourned I was trying to express certain views on the implications of the Bill with particular regard to the main aim of the Bill which is to tax land which is subject to rating. One could summarise the Bill by saying that it provides that the first collection of wealth tax will be due in April next for 1974-75. When the Minister spoke some time ago in terms of a wealth tax he did not state clearly that the effects of the Bill would begin so early. He did not indicate then that he would begin to collect this year. Therefore, this tax proposal will take many people by surprise.
There are many sides to it, one of them being that the Bill discriminates to some extent in favour of farmers and against Irish companies. It is a fantastic situation to find in the Bill that the companies doing least well are liable to be put out of business. There are old established Irish companies who this year, because of cash flow, or liquidity, to put a nice word on it, were in some difficulties in regard to raw materials. The Bill will create a position in which these companies will suffer heavily. We must bear in mind that while profits might be diminishing the assets will still be taxed.
One could understand this sort of tax arrangement in a buoyant economy but it is difficult to understand it in a no-go situation—perhaps it is unfair to describe it in that way. However, our economy is seriously affected this year in many ways and the Minister is especially penalising old established family companies who have been in business for many years and who have stood the test in good times and bad. Such companies in the future will find it much more difficult to manage, particularly against the background of EEC membership when we are reducing tariffs progressively, when competition will be more aggressive, when goods from abroad will be sold here, some of them at fancy prices and some of them at dump prices.
We have a position at the moment in which trade unions are threatening to black goods at the docks at the Custom House and is it not fantastic that we should lean on the companies who are finding it hardest to make headway?
This tax will apply above certain thresholds. When one talks in terms of £80,000, £90,000 or £100,000 it seems to mean a lot of money but we must relate that sort of money to what it takes to bring even a small business unit into being. Such investment would enable the employment of fewer than 100 people and it would not go far to provide even a small unit at prevailing costs. Therefore, one must look beyond the Minister's explanations in regard to the effects of the Bill and try to visualise the difficult position the companies I have been speaking about will find themselves in, particularly in the background of competition in and from Europe and the dumping of goods from Third World countries against which we have no effective remedy.
The NESC report refers to the fact that from 1976 to 1980 we would need to generate 25,000 new jobs per year. Indeed, in the next breath, the same report said it might even go so far as to say we should generate 36,000 news jobs. Be that as it may, I cannot see the light at the end of the tunnel because at present we are slow enough in generating jobs. Even with our best efforts over the years the number of jobs generated were not much in excess of the numbers leaving rural areas. Therefore, I do not see any light at the end of the tunnel as to what approach we should be making in generating those jobs. Certainly, we are not going to make this approach more attractive to investors at home or abroad by taxing productive assets. That is the really aggressive part of this Wealth Tax Bill.
It is all very well for the Minister and his chief apologists to say it is an individual matter. We know that. Of course individuals pay tax but, collectively, they make up the community. It is easy enough to say we are rifling the pockets of individuals separately. It is our contention at present, and in the light of the difficulties encountered in the economy during the past year, that the timing of this Bill is wrong. Certainly, it will have the effect of discouraging, if not paralysing, the efforts of our industrialists in investing at home and will not encourage the investor from abroad. In fact, there is one provision in the Bill under which an investor from abroad could find himself not merely paying tax here but to the British Exchequer as well. Therefore, if you like, it is a double-barrelled gun held to the head of the most productive members of our community and this at a time when we never needed more the aid of the most enterprising amongst us and the techniques and mechanics of investment.
It is all right to say that a few family companies could go bankrupt. Indeed they could, and will, with the enactment of this legislation. There is no doubt about that because it will bear heavily on family-promoted industry. There has been a lot of criticism of such family-promoted industry, that they did not re-jig the fabric of their companies or orientate them to the new set-up in Europe and so on. Nonetheless, through those industries we were able to maintain employment here, and not merely maintain it but reach out from there and attract investors from abroad. I am merely wondering what way investors from abroad will view this legislation considering that its provisions are to be applied to global wealth.
During the last two or three years it has become almost a crime to be engaged in private enterprise, when private enterprise, is, as Mr. Edward Heath said, the unacceptable face of capitalism. One does not have to be a capitalist here to indulge in private enterprise. One does not have to be a capitalist to promote small industry here. In the past those were the people we tried to foster, from whom to branch out and, in so branching out, to gather in the experience, the cash and the updated techniques of those in Europe and elsewhere.
This tax applies above certain thresholds; it taxes discretionary trusts and private, non-trading companies. One could speak for some time on the implications of that aim and condemn that aspect of the Bill. I fear it will have the effect that before any industrialist, promoter of industry, or anyone with money will invest here, he will look twice at the economic situation and examine it very thoroughly. He will examine our prospects on the labour market, what skills and techniques there are here. As in the past, he will not merely take our word for it, seeing that we have here a weapon to use on him when he comes in. Similarly it will apply to the investor at home, the man who has carried the can down through the years. Admittedly we protected him but he was in need of it at the beginning. As I said earlier, we started at a very low level. But, moving away from the trappings of protection, we should take care that this is not used as a mallet to discourage industry and other investment here.
There is also the further aim of this Bill, which is to "clobber" the individual who owns a piece of land near an urban area. His land is supposed to be enhanced because he may own a few acres on the edge of a town. I suppose it could be said that such land could be used for many purposes, such as for industrial development, the building of houses and so on. Mind you, it will not cheapen the end product in regard to houses. When one begins to "clobber" the man providing sites for houses—and this is very plain from this Bill—it will not cheapen the provision of sites for industry either. As the Yanks say at present, it is fantastic the way costs are escalating and, at the same time, prices increasing.
With regard to the numbers unemployed, at least in the bad old days —and they were bad—when there was high unemployment prices usually fell. Now, due to the ramifications of governments here and abroad, we have a distorted scene in business, and prices are likely to continue to rise rather than fall. In the end I am afraid we will not generate job opportunities, even at a much lower target than was indicated by the NESC. If we were not able to do it in the past when taxation was relatively lower than it is now, when we had more or less price stability, and when we had much more favourable opportunities, when we were not able to generate many more jobs than what left agriculture yearly, then I do not see the prospects that rosy. I regret this because one does not like being cast in the role of a prophet of doom. One would like to see reasonable prospects for both industry and agriculture, but this is not possible.
This Bill has implications which in the long run will lead to undesirable results. It will discourage employment, will discourage the potential employer and will, in general, discourage investment from abroad. It must be borne in mind that our economy is still based on private enterprise. We are practising one thing and preaching another. We cannot have it both ways. If we start tampering in the area of fancy doctrinaire socialism, we are bound to injure the people who want to work and who would work here if they were left their money. When it is going to be taken from them in this way there is no incentive either to invest here or for the future. As I said earlier, I think the Minister should withdraw the Bill and have it considered by a Committee of the House.
