Amendments Nos. 1, 2 and 6 would seem to be related. I propose that they be debated together.
Wealth Tax Bill, 1975: Committee Stage.
SECTION 1.
I move amendment No. 1:
In page 2, subsection (1), after line 15, to insert—"child" includes—
(a) a stepchild;
(b) a child adopted—
(i) under the Adoption Acts, 1952 to 1974; or
(ii) under an adoption law, other than the Adoption Acts, 1952 to 1974, being an adoption that has, in the place where the law applies, substantially the same effect in relation to property rights (including the law of succession) as an adoption under the Adoption Acts, 1952 to 1974, has in the State in relation to such rights;
The words child, children and minor child are used throughout the Bill. The term minor child is at present defined to include stepchildren and children adopted under the laws of foreign countries. The absence of a definition of child could mean that reference to a child or to children would not include stepchildren or foreign adopted children. This could give rise to anomalies. For example in section 5 (2), which refers in the first instance to a child or children of a marriage and then refers to the position where a minor child, being one of those children, is living. It is, therefore, proposed to rationalise the situation by two amendments, Nos. 1 and 2. The first amendment introduces the definition of a child, under which the word child will include a stepchild, children adopted under Irish adoption law and a child adopted under the laws of another country where the adoption has by and large the same effect as adoption under Irish law. This places these categories of children, whether adult or minor children, on the same footing.
The second amendment, No. 2, which follows, then defines a minor child as a child who has not attained 21 and has not married. This amendment replaces the existing definition of minor child. The introduction of the new definition of child means that the bulk of the existing definition of minor child is unnecessary, that is, step-children and adopted children are included in the definition of child and, accordingly, do not have to be referred to again. All that is necessary for the definition, therefore, is a child who has not attained the age of 21 years on the relevant valuation date and who has not married on or before that date.
The previous definition merely said, "who has not married", and the amendment adds, "on or before that date", for the sake of clarity. Once a child marries he ceases to be regarded, for the purposes of the Bill, as a child of his parents; he forms his own unit. The age of 21 is chosen because it is the age of legal entitlement and the age invariably inserted for absolute entitlement in trusts and settlements.
The third amendment, No. 6, arises as a result of the introduction into section 1 of the definition of child. Under this new definition a child includes a step-child. There is, therefore, no need to make a separate reference to step-children in this subsection. The position remains as before, namely, that the spouse and children, including step-children, are of the same degree of consanguinity in the context of a discretionary trust when a number of principal objects of their consanguinity to the settlor has to be examined.
Amendment No. 2 (a) was withdrawn and amendment No. 2 substituted for it. Am I in order to move the substituting amendment now?
I understand that we take amendments Nos. 1, 2 and 6 together and later the Minister will move an amendment after which the Deputy can move his amendment.
My amendment is an amendment to amendment No. 2 which the Minister has moved.
Acting Chairman
They are all being discussed but only the first amendment is moved at present. The House can discuss all the amendments in conjunction with the Minister's now.
In regard to amendment No. 1 moved by the Minister, I am glad to note that the effect of it is to include in the definition of a child children adopted under our Adoption Acts from 1952 to 1974. I drew attention on Second Stage to the fact that the Bill, as drafted, appeared, inadvertently, to exclude such children. The same drafting occurs in another Bill and this clearly requires a similar amendment.
In regard to amendment No. 6 this follows automatically on amendment No. 1 but in regard to amendment No. 2 I should like to draw the Minister's attention to lines 18 to 20 of the original section:
then, for the purposes of this definition, the child shall be deemed to be the child of the adopter or adopters born to him or them in lawful wedlock and not to be the child of any other person;
Those words are used in the different Adoption Acts and they are used in a number of sections in those Acts. The way in which they were used suggests that in the drafting of those Acts it was considered necessary to insert them. The Minister's amendment No. 2 would delete them. From my perusal of the Adoption Acts I am not sure it would be correct to delete them. I should like the Minister to consider the effect of their deletion in the light of the manner in which they appear in a number of sections in the Adoption Acts.
I would not expect the Minister to be familiar, off-hand, with the use of these in the Adoption Acts but I should like to tell him that my perusal of these Acts shows that these lines occur in the sections not merely in a definition to be automatically carried through; they are used in a number of sections where they specify that for a particular purpose an adopted child is to be treated the same way as the legitimate child of normally married parents. These lines are used in each such section and that suggests to me that it is necessary to incorporate them. I ask the Minister to consider whether his amendment No. 2 is satisfactory in so far as it proposes to delete them from this Bill.
My own amendment is designed to reduce the age of a minor from 21 to 18. The time has come when we ought to recognise that the age of majority in the ordinary accepted sense is now 18 and not 21. It is some time since we gave people votes at 18 and it is my belief that for all purposes of taxation legislation we should fix the age of a minor child at 18. When I raised this on Second Stage the Minister said there might be a case for it but that it was not for this Bill. A start has to be made somewhere and I suggest we should make it in this Bill where we specifically define "minor child". I suggest it is an anachronism now to insist, as is being done in the Minister's amendment, that the age of a minor is up to 21.
One of the significant effects of providing that the age of a minor would be 18 and not 21 arises under this Bill in relation to a section of it which provides that any wealth which belongs to or accrues to the benefit of a minor is assessed against the father. The father has to pay wealth tax on that wealth if the amount is sufficiently large and it is added to his own wealth. I should like to give an example which I admit will not happen every day but is not uncommon. Where a minor aged 19 earns a large sum of money, as, for instance, a pop artist would, it is not unknown in such circumstances that the father of such a person may be in poor or at least ordinary circumstances. The effect of the provisions of the Bill and of the definition of a minor child as being up to the age of 21 unless married is that in such a case the wealth of the minor is attributed to the father who is legally liable to pay wealth tax on it. In the case I have outlined he would not be in a position to do so and should not be made liable in that way.
Of course, this is not the only reason for reducing the age to 18 but it illustrates one of the consequences of not doing so. I would have thought that the desirablity of reducing the age from 21 to 18 was self-evident now, and the only objection that was made to it when I mentioned this before was that it had wider connotations and this was not the place to start it. As I said, a start has to be made somewhere, and I do not see why it should not be made here in this Bill where it has considerable practical consequences as to whether one defines a minor as 21 or 18. I would therefore urge on the Minister and on the House acceptance of my amendment.
I dealt with this matter on Second Stage and I pointed out that the general law of this country, unlike the law of most European countries, regards 21 years of age as the age at which a person attains his majority. I personally am in favour of a change in the law, but a tax Bill is not the Bill under which to change so fundamentally the age at which a person attains his majority. It would create innumerable anomalies to provide a different age for the holding of capital than the age of majority which applies under the general law and applies under the income tax code as well. The income tax code provides that the income of a parent which is paid to a child who is under 21 years of age and is unmarried is treated as the income of the settlor. Therefore while not objecting to the philosophy which Deputy Colley has enunciated, I do not consider it is practicable or desirable to accept the amendment which he is offering, because I believe it would create a great deal more difficulty than benefits.
Another aspect of it which I think is worthy of consideration is that it is argued in respect of wealth tax that one of the consequences of it will be to encourage people to pass substantial property to their children as soon as they attain 21 years of age. It is argued —and I am not saying I accept the argument—that that is inappropriate, in that people of immature years will have control of substantial holdings of wealth and that it might be better for them and for society if they had not. If that argument has validity in relation to the age of 21, it has a great deal more validity in relation to the age of 18 years. The age of majority should not be looked upon as a complete blessing. One of the advantages which a minor enjoys is immunity to claims which may be made against people who have attained the age of majority.
While I have given very prolonged study to this matter by reason of the privilege which I had of being a rapporteur of a committee of the Council of Europe which was dealing with the matter for two years, I do not lightly adopt the idea of a total change in the law which would confer on anybody all the rights and responsibilities of seniority at the age of 18 years. Perhaps on some other occasion the House will have the opportunity to debate the merits or otherwise of a proposal to amend the general law to bring the age of majority down to 18 years.
On Deputy Colley's suggestion in relation to preserving the words at lines 18 to 20, I would observe that the effect now of the amendment which I am moving, which says that a child includes a child adopted under the Adoption Acts, 1952 to 1974, is to introduce for all purposes that particular description. The reason why those words have to be used in the earlier draft is that it was related not merely to children adopted under the Adoption Acts of this country but also to cases where the adoption was in a place where that law applies and has substantially the same effect in relation to property rights as the Adoption Acts of 1952 to 1974.
I am still personally of the view that there is no need to make a reference to the Adoption Acts, 1952 to 1974, because those Acts make it clear beyond all argument that a child in Irish law includes a child adopted under the Adoption Acts. However, I could see merit in providing as much information as possible in this Bill to people who would be concerned about all aspects of wealth tax, including the people who might be liable or free from liability, and as there is no contradiction in introducing the reference to the Adoption Acts in this Bill, I am prepared to accept the suggestion which Deputy Colley made on Second Stage.
In regard to my amendment for reducing the age of minority from 21 to 18, the Minister says it is not really appropriate to do it in this Bill. Could I ask him in what Bill would it be appropriate and whose responsibility would it be, because unless it is pinned down to somebody it will never happen?
It will be a colossal job, whoever has it.
It will never be done unless somebody is pinned with responsibility.
I am not speaking ex cathedra, but I think it is primarily the responsibility of the Minister for Justice.
Let me refer the Minister again to his amendment No. 2 in regard to adopted children and tell him that what he has stated as being the position was my impression, too, until I looked at the Adoption Acts and found it was not so. I was under the impression, as the Minister appears to be, that once the Adoption Act was introduced the words in lines 18 to 20 were automatically imported, but that is not so. If you look at the Adoption Acts you will find these words are used in quite a number of sections. Neither is it true to say, as the Minister said and obviously believes, and as I believed until I looked at the Adoption Acts, that the effect of the Adoption Acts is to put an adopted child in exactly the same position as a legitimate child of a lawful marriage in this country, for all purposes. I believe that is what they should do, but it is not what they do. In fact, there are a number of sections which spell out that for purpose (a) a child adopted under these Acts "shall be". . . . Then it goes on to say: "For these purposes the child shall be deemed to be . . . ". Another section then deals with the adopted child for purpose (b) and spells it out, and these words are used again.
That is why I have raised this point, because it is not true to say that the reference to a child adopted under the Adoption Acts, 1952 to 1974 automatically brings these words in for all purposes of this Wealth Tax Bill. The Minister probably has not got these Acts available to him at the moment and I shall not press him on it, but what I am urging him to do is to have a look at them. If he does he will see the point I am urging on him and he will see the necessity, first of all, of bringing in the reference to the Adoption Acts.
Secondly, he will also see, I think, the necessity for retaining the words from lines 18 to 20 which his amendment proposes to delete. This is not a matter on which there is any contention. I think everybody wants to achieve the same thing. If the Minister has not the Adoption Act in front of him I will not press him but I would ask him to look at the situation and satisfy himself that the position is as he stated it and not as I have stated it.
One of the reasons for what might be considered to be some lack of precision in the Adoption Act, is that that Act when originally introduced and as it still applies applies not merely to current and future events but, in certain circumstances, to past events like old settlements, but in this legislation we are dealing with events as from 5th April, 1975 and everything else is in the future. I am certain that the definition we have now introduced in the amendment is the correct one, but the Deputy may be assured that we will examine the point he has raised.
Could the Minister clarify one point in relation to the reduction from 21 to 18? I understand that until the Department of Justice moves in this matter the Minister cannot introduce the 18 year age level?
I would not consider it appropriate to do so for wealth tax purposes until there is a change in the general law. It is a very fundamental question which is worthy of consideration but one would wish to look at all the consequences of it before asking the Dáil to deal with it in such a fundamental area as wealth taxation.
Amendment agreed to.
I move amendment No. 2:
In page 3, subsection (1), lines 8 to 20, to delete the definition of "minor child" and to substitute the following definition:
"‘minor child' means a child who has not attained the age of 21 years on the relevant valuation date and who has not married on or before that date;".
Deputy Colley has an amendment to amendment No. 2.
It seems pointless to push it in the light of what the Minister says.
Is amendment No. 2 agreed?
Agreed, on the basis that the Minister has undertaken to examine the point I raised.
Amendment agreed to.
Amendment to amendment No. 2 not moved.
I move amendment No. 2 (b):
In page 3, line 46, to add "except in relation to the year 1975 when it means the 5th day of October".
This amendment is in connection with the definition of "valuation date" and proposals to add to the existing definition in the Bill "except in relation to the year 1975 when it means the 5th day of October". The definition in the Bill is as follows:
"valuation date", in relation to any year, means the 5th day of April in that year.
The reasons for this amendment are first, that very many people understood from the Government's White Paper on Capital Taxation that it was the Government's intention to commence collection of wealth tax in 1976 whereas under the Bill before us it is proposed to commence collection of the tax in 1975. The position is even more difficult for many people in that the production of the package of legislation—and it is not possible to view the wealth tax in isolation: it has to be viewed in the context both of the capital gains tax and the capital acquisitions tax—in its original form for submission to Dáil Éireann was delayed, so that we had in fact discussed two of the Bills here on Second Stage before the third Bill, the Capital Acquistions Tax Bill, was produced. Even now none of the Bills has been enacted in law and clearly it will be quite some time before they are all enacted through both Houses of the Oireachtas. Until they have been enacted it is not possible for people to know what their liability is in regard to capital taxation because changes may be made in the Bill as produced and it is clear, in regard to the Capital Gains Tax Bill of which the Committee Stage has just been completed that not only have there been changes during the Committee Stage but that there will be further changes on the Report Stage, quite apart from anything that might happen in the other House.
The same thing applies to the Wealth Tax Bill to which quite a number of amendments have already been tabled, and we have not yet come to the Committee Stage of the Capital Acquisitions Bill but it is almost inevitable that the same thing will happen there. That being so, it is quite impossible for taxpayers—and it will be for quite some time—to know what the law is with which they have to comply and how they can arrange their affairs in accordance with that law.
The Government's White Paper on Capital Taxation specifically provided that an interval would be allowed for taxpayers who had arranged their affairs in accordance with existing death duty legislation to enable them to evaluate the implications of the changeover to the new capital taxation and to make any alterations that were necessary in their wills or arrangements they had proposed regarding their property. That was the intention expressed by the Government but, as things worked out, that intention is not being complied with or honoured. I do not say that this amendment would enable that intention to be complied with or honoured fully, but at least it would recognise the difficulties which are arising and give some opportunity to taxpayers to see—hopefully—all of the legislation in a final form and make arrangements accordingly and thereby become liable to taxation as proposed in these three Bills in a way that conforms not only with the law but with whatever area of discretion is left to them in the arrangement and disposition of their property.
As things stand at present, the valuation date under this wealth Tax Bill is 5th April, 1975 and payment of tax is due during the three months following that. There should be liability for interest on unpaid tax after three months at the rate of 18 per cent per annum but the Minister has informed us that he proposes to move an amendment which would have the effect of absolving people from interest on wealth tax which was paid before October next. But that is still leaving the valuation date at 5th April last and is leaving people liable legally, once this Bill is enacted, for the payment of wealth tax within three months of the 5th April. That is an indefensible position, a position in which people are liable legally to pay tax although the law under which they are being assessed and rendered liable is not passed and while nobody, not even the Minister, can say at this stage what will be the final form of the Bill.
Therefore, in an effort to meet this situation and to give some degree of legality to it, I am proposing that for this year the valuation date should be 5th October next. That does not remedy the position but it goes some of the way towards doing so. The effect of that would be that wealth tax for this year would not be due until 5th October and there would be three months allowed after that date in which to pay it and before liability for interest would commence. I urge strongly on the Minister to accept this amendment or something similar to it and that he should recognise that a position which renders people liable legally for tax at a time when the law under which they are liable has not been enacted is indefensible.
We have reached a new stage in legislation where we are talking of enactments that are not yet law but which are applicable legally. We are now reaching the end of the first week in June and wealth tax which eventually will come into force as a result of this Bill will be payable from April last.
Deputy Colley's amendment is reasonable and is intended to enable those people who will be assessable under this Bill to at least prepare to deal with the situation. I do not know what people are doing so far in this regard but it is unusual that returns are due from 5th April last under a Bill which has not yet been passed. Although the Minister has expressed his intention of extending the period, the tax would be due legally in July. The Deputy's amendment would enable those fortunate enough to be assessable for wealth tax to make preparations for it.
Since February, 1974 people have been aware of the Government's intention to introduce a wealth tax with effect from 5th April, 1975. As a consequence of that throughout 1974 there was considerable public clamour for the production of the necessary legislation. I met innumerable deputations to discuss the wealth tax proposals, the date on which it would become operative and so on. At no time was there a suggestion from anybody that the White Paper did not forecast that the wealth tax would be operative as and from April, 1975. It could not have been so said because it says on page 6 of the White Paper that the date of the commencement of the wealth tax would be 5th April, 1975 and that the new system would be operative fully for the year 1975-76. It was only in March/April of 1975 there came forth the ingenious suggestion that the Government were bringing forward the date of the introduction of wealth tax.
This is another example of all take and no give by some people who are not inclined to favour the taxation of substantial wealth. I have never heard complaints from these people regarding the abolition of death duties with effect from April, 1975.
It is a question of delaying legislation.
Since February, 1973 it has been made perfectly clear that estate duties would be eliminated and wealth tax introduced at one and the same time. The argument being put forward may be a good debating point. It might merit a mark or two at a child's debating society but it has no validity beyond that. The White Paper was explicit as to the date of the commencement of wealth tax. It was clear that the valuation date would be 5th April each year and that this date carried with it a liability to pay the tax which became due as and from that date.
Because of the special circumstances of this year I undertook during the Second Stage to introduce an amendment to extend the interest-free period from three to six months. I am doing this in amendment No. 18 which achieves substantially what is contained in Deputy Colley's amendment. His amendment would create considerable difficulty for many taxpayers. If it were to be adopted its effect would be that a new valuation date would be struck but already many prudent taxpayers have had property valuations assessed as and from 5th April, 1975 and these would now have to have new valuations carried out.
(Dublin Central): That is a weak excuse.
Some of these people might not thank Dáil Éireann for making this change if the new valuations were to be at a higher level than the April, 1975 ones. There is this further difficulty that valuation returns being made as at 5th October and possibly later would lead to a situation in which taxpayers would be called on to pay two loads of wealth tax, the first one, perhaps, in January and the next three months later, in April. I consider it preferable to have the dates as far removed as possible from each other and to adhere to 5th April as the appropriate date for carrying out valuations and to meet the point about the special difficulties of this year by extending the interest-free period.
Never has the introduction of taxation been announced so long in advance of the date on which it takes place. It was forecast first in the White Paper of 28th February, 1974 and since then persons who are in the area of liability have had ample opportunity to make arrangements for valuations to be carried out. There are some areas of uncertainty but the main bones have been there. The liability has been known. Fortunate are those who may have been relieved by changes in the threshold but by and large nobody has been taken by surprise by any of the amendments brought in.
Nobody has been disadvantaged by amendments made subsequent to the publication of the White Paper, only by any amendments tabled since the publication of this Bill, in February, 1975, again two months before the date of operation of the new tax, so that when one considers the fair and ample warning given of the introduction of the tax, how specific we were about the date of first valuations and of liability and that we are now extending the interest-free period for a further six months it will be seen that we have coped with the special problems created by the introduction of the new tax in a very fair way, indeed, and nobody can claim that he is at a disadvantage.
(Dublin Central): I support the amendment and want to say that I completely disagree with the way in which the Capital Taxation Bill was brought before the House. The cart was put before the horse in regard to the introduction of the Bills. The Minister has spoken about abolishing death duties. We have welcomed that measure since it was first mentioned and I have always advocated that these duties were unpopular, but if we were being practical in our approach to legislation, we would not have the Capital Taxation Bill last week or the Wealth Tax Bill today. If we had taken them in the proper order, when death duties were abolished the first Bill that should have come in is the Capital Acquisitions Bill. This has not been done.
We have heard a lot from the Minister about how this wealth tax is necessary, how the capital gains tax is necessary and how the capital acquisitions tax is necessary to replace death duties. We have gone over this only too often in relation to what was coming in from death duties and we know what death duties were bringing in over the past two years, roughly £13 million, and Deputy Colley is, indeed, very reasonable in his proposition for if I were writing that amendment, I would not alone postpone it to 5th October next but to 5th October, 1985 when the economy was in some way able to carry it. A postponement for six months is very reasonable. If the Minister were practical in his approach to the economy today, and the unsettled state of the economy, he would take the opportunity to go even later than that date for the implementation of the Bill. He knows perfectly well that he has had representations from all groups of industry over the past three weeks, the FUE, the IFA, the ICMSA. These have already submitted memoranda to the Minister setting out their views on the wealth tax, and if the Minister were sincere in his contribution—and he has asked these people to help and show how the economy can be helped—what he would do would be to defer this tax at this time because it will have a detrimental effect on the economy.
He knows that in this amendment he has an opportunity to go some small way towards helping the economy by deferring the Bill to an even much later date than is asked for. Deputy Colley is being very modest in his demand, because I would defer the introduction of the Bill for five years until the economy got back on its feet. I thought we would be moving ahead with the Capital Acquisitions Bill, in which we can see many good sections which we welcome, as we said about the Capital Gains Tax Bill. We did not fully oppose that Bill but tried to amend it and the Committee Stage served a very useful purpose. The same attitude has been taken with regard to the Capital Acquisitions Bill, but this Bill which is going to undermine the economic confidence of the country is a different kettle of fish.
The Minister should realise what Deputy Colley has in mind. I know the Minister has the administrative point of view in mind. The Wealth Tax Bill has not gone through the House and God only knows when this Bill will get through, but people are liable from 5th April to the wealth tax. This will be an imposition on industry and we know the tight margins on which business people are trying to operate today. We know the factories that have closed down. I asked a question of the Minister for Industry and Commerce a fortnight ago about this matter and he informed me that 56 factories had closed down in the past 12 months. I presume they will have to pay wealth tax. I do not think they are exempt by virtue of the fact that they are not being operated. There are many serious implications in the Bill which in my view is the most important to go through the House since I came here 11 years ago.
The Minister seems quite adamant in his decision to put it through but I ask him to consider very seriously the consequences of it. He is only too well aware, far better than I am, of what the business community consider the implications of the Bill. He has admitted that the amount of revenue to be collected from it will not be of great significance, but we must remember that three Bills are only to replace death duties, which amounted roughly during the past year, if properly assessed, to £15 million. If we break that down, capital gains taking about 4 per cent, capital acquisition about 3 per cent, we arrive at a figure for wealth tax, if we take the Minister's figures, of £5 million or £6 million. This is what we are gambling with in the Bill. Most of the damage is being done for the sake of this small figure. If a Bill like this could bring in £100 million and really help the economy, we would be legislating in a positive way because we could channel funds back into industry and social welfare but it is not in the Bill.
That particular type of wealth will not come in from it in view of the thresholds in the Bill. Once we take the 50 per cent valuation of agricultural land, you are going to find that they are all thresholds. Taking agricultural land valued at 50 per cent, you can see the amount of land throughout the country that will be exempt. All small businesses will be exempt, but we are directing this at people who are generating employment, a very small section of people but a section who generate employment, and this is the important factor and what we have to think about. Whether the Minister likes it or not, before this Bill goes through he will be reminded of it on many occasions.
I regard the amendment as very modest. It would at least give business people time to assess their situation financially. At the moment it is quite obvious that with unit costs climbing all the time, with inflation rampant, with bank charges high, this is 1 per cent of value of property. This will have to be taken into consideration when costings are calculated. This year wages increased by 25 per cent and the pay-related benefits accounted for 2 per cent, making a total of 27 per cent. We are trying to export to European countries who have brought their inflation rate down to 7 or 8 per cent. Italy has succeeded in reducing its inflation rate by an even greater precentage and they have no wealth tax even though they have much more minerals than Ireland. There are several other European countries who have real wealth. This country has had only 20 years since we started our industrial development and the industries concerned should have been given a chance. The amendment by Deputy Colley is not demanding; it seeks to defer implementation of this measure to 5th October. If I were the Minister for Finance I would defer it for five or ten years as my contribution to the economy.
Deputy Fitzpatrick has talked about the realities of the situation in so far as he referred to the economic consequences of this Bill and what little might be achieved by postponing its operation. I did not dwell on that aspect because I will do so at some length later on. Nevertheless it is a most important and relevant aspect. So far as I am concerned, this Bill is a disaster for the economy, particularly at this time.
At the moment I am confining myself to the legal and administrative situation as we find it. When one analyses the case made by the Minister against the amendment one finds that the real point he made was that the people who will be affected by the wealth tax have been given notice of its introduction. Although changes have been made since the White Paper, nevertheless those who will be affected have been given notice. In so far as the Minister is relying on people having been given notice, I would point out to him he is treading on dangerous ground. Notice was given in writing by the Taoiseach, Deputy Cosgrave, on 24th February, 1973, to people that there would be no wealth tax. In so far as people are to be held to rely on notice given, they were entitled to rely on notice in writing given by the Taoiseach. I do not think it is good enough for the Minister to talk about the notice given in the White Paper. He avoided the real issue I put to him, namely, that he proposes to have people made legally liable for wealth tax, legally liable to assess their wealth and to pay tax on it. He proposes that it will be assessed as on 5th April last, tax to be paid within three months of that date——
Six months.
It is three months. The only amendment the Minister is proposing is that they will not pay interest. Does the Minister agree that is so?
I am not certain.
I can tell him that is the position. He is proposing they will not be liable for interest before 1st October but the provisions in the Bill are that the valuation be made on 5th April and that payment of tax be made within three months thereafter. The Minister is not proposing to amend that. The point is that when the Bill is enacted that will be the real position in respect of people who do not know the law. I have been primarily concerned to avoid a situation in which people are being legally bound by legislation that does not exist. This is not a case of notice being given of an increase in the rate of tax on some item from a certain date and its subsequent enactment. This is a whole new code of taxation with a number of very complex provisions.
Any complex legislation, particularly if it involves taxation, which is being applied to people long before it is enacted so that the taxpayers concerned do not know what is the law at the time they are being subjected to the law, when they are obliged to have their property valued and when they are legally obliged to pay the tax is, in my view, indefensible. I should like to hear the Minister's views on this. He did not attempt to defend that position but unless he accepts my amendment we will have that position. Even if he accepts the amendment there is no guarantee that it will not happen at some time in the future because we do not know when this Bill will be enacted.
I made the amendment as reasonable and as modest as possible by referring to October. Failure to accept the amendment means that the Minister and those behind him are saying they will enact legislation that will bind taxpayers from 5th April last, that will legally oblige them to pay tax three months afterwards. The Minister and others are saying they do not care when the legislation is enacted, that they do not care that people do not know what the law was on 5th April or three months afterwards, that the only concession they will make to the facts of the situation, to what has happened to the legislation in relation to the Government's proposals in the White Paper, is to say that if people pay their tax before 1st October no interest will be charged on it. Not just in relation to the wealth tax but as a general proposition, it is quite indefensible to make people liable in this way, under a complex piece of legislation and without their knowing what is the law. It is a fundamental breach of the rights of citizens of any democracy to apply that kind of principle. One can argue that in this case they will not be very adversely affected, although we do not know that. But, if we accept the principle that you can do this, where is that going to end? Does it mean that in future you can say, as from tomorrow everybody in a particular category will be subjected to a certain tax and, two years later, you can produce the legislation which spells out precisely what the category is and what the tax is and you make them liable from two years previously, and then extend that on and on. There is a principle involved here and we should stand on it. I would not have though it would be necessary from this side of the House to spell it out to Deputies on the other side; it should be quite clear.
This amendment does not mean a loss of revenue. It does not mean the Minister is being asked to concede any principle except the principle that taxpayers should not be subjected to and held legally liable for taxation under legislation which does not exist so that they do not know what the law is under which they are being made liable. The necessity for maintaining these stances is so self-evident that I am surprised it has been necessary to put down this amendment at all. I want to point out that the Minister, in replying to what I said when moving the amendment, did not deal at all with this point, which is the major argument in favour of the amendment if one ignores the economic realities referred to by Deputy Fitzpatrick. The Minister did not deal with that. All he said was that, if taxpayers were given notice that there was going to be a wealth tax in operation, as he says, in 1975, that is sufficient, ignoring what has happened and what has failed to happen since the first announcement was made and ignoring the fact that, if people are to be bound by notice of that kind, they are entitled to rely on the notice given by the Taoiseach on 24th February, 1973, when he said that a wealth tax was not part of the Coalition then going before the people.
I would invite the Minister to comment now on the real case that has been made for this amendment and not on an imaginary one; I would invite him to comment on the position arising where he proposes to make people legally liable for having their property valued and for paying tax under legislation which does not exist and which they cannot know.
I should like to say something about this amendment and the Minister's explanation of the three months being added. I would like to add my voice to the voices of those who have spoken urging the Minister to legalise the position almost certain to arise on 5th July.
I cannot really see how this Bill can become law, going through all stages here and through the Seanad, and finally becoming law, in any reasonable time before 5th April. I do not know whether to say I would or would not be pleased to see it being passed before 5th April because, if it is passed much in advance of 5th April, it will mean of necessity that parts of the Bill may not have had the time for discussion we would all like them to have, especially legislation like this which is of a very fundamental character. I would urge the Minister either to accept Deputy Colley's amendment or to bring in himself a somewhat similar amendment.
The realities of the situation have been mentioned. The reality is that the Minister has given 90 days of what one might call "grace" but, in dealing with a wealth tax, we are dealing with individuals, with estates and various things like that, with business people and not with people who have made fly-by-night quick change moneys here or there. We are dealing with stakes people have had for quite a while and these people are not the kind of people who like to exist in an illegal position. In fact, owing to their vulnerability they cannot place themselves in the position of owing money for the non-payment of which they could be heavily fined. The Minister should alter that date. I know that will mean consequential changes, perhaps even consequential difficulties, but I do not think they will amount to anything when set against the difficulties that will arise for people and for corporations who find themselves in the position of owing money illegally, being allowed by way of grace perhaps another three months for payment, and that is little enough time in which to assess the position.
The Minister has said that this was brought in in 1973 and that the people knew that this was coming. I would like to remind the Minister that already the figure which was mentioned at the earliest date has changed radically and when a figure has changed so radically down to one per cent, as it is now, other radical changes can ensue and people could be pardoned for thinking changes would arise of necessity during the remaining stages of the Bill because the Minister would yield to the protestations and importunities of various bodies, some of which have been mentioned, who have been wearing a track to his door to get some of these anomalies corrected.
It is wrong to place people under a legal disability which they cannot get out from under except by an alteration of the law or by, as I say, a certain number of days of grace. But that is a wrong principle and I hope the Minister will find some way of altering it. Changing it from three months to six months is a real effort to make it less onerous on the people concerned but that is not the only factor to be taken into consideration. We will be legislating something which in the normal way is taken to be bad law, that is forcing people to break the law or leave themselves liable to a fine when there is no way they can get themselves out from under this. When this Bill is passed we will need to give those people time to find out what they owe in the light of what the Bill will say is their liability. Some people hope that a great deal of this will be done away with before the Bill leaves the House.
It is important to give those people time to make the necessary financial arrangements. In times of changing financial conditions, like those we are going through at the moment, one realises the value of property and of shares can change. It is unfair to put a person in the position of having to sell out at the wrong time in order to find money to pay taxation, when he does not clearly know what the amount will be. I hope that when the Minister replies he will be able to go into some of the points more clearly.
Amendment No. 28 meets the point raised by Deputy Dockrell where we are extending until 5th October next the interest-free period.
I hope we will be able to carry on with this Bill in the same spirit as we did on the previous Bill. Deputy Colley, Deputy Dockrell and Deputy T.J. Fitzpatrick put what I might call the human merits side of the case for what is proposed here. I would like to put the matter somewhat differently to the Minister.
We have to have regard to section 2, which imposes the tax as an annual tax with effect from 5th April, 1975. Originally, if the Bill were passed by the 5th April, 1975 the tax would have become payable and similarly on every subsequent 5th April. The legislation is not only not perfected but it has not reached any stage of finality so in contemplation of law at this moment and a fortiori at 5th April, 1975 there was no certainty whatsoever what the liability of the taxpayer was. Until there is certainty it is impossible to make an assessment in a legal sense.
We must have regard to what has happened on the previous Bill and what is likely to happen on this one. We must now come to the construction of this. I want to put the case of somebody who comes into court after the Bill has been passed and challenges the validity of the assessment for this year. I am sure both the Minister and his opponent would be very pleased if the case I will outline has substance, to brief colleagues of theirs to argue a case in court.
It might be cheaper to pay the tax.
It might cost more than the tax to the State. There is no certainty of liability and no possibility of ascertaining the legal position and making an assessment as on the date in the Bill until the Bill is passed.
I want to put a novel case, which I have hinted at on the other Bill. Even in contemplation of English law, where Parliament was supreme until today, the courts were completely bound by statute but even there they leant very strongly both against retrospection and in favour of the strictest construction of taxing statutes. There is a general principle of jurisprudence of certain people before the law. We have a different set-up. Under our Constitution the Supreme Court are in a position analogous to the American judiciary and they have the duty to administer justice. There are general clauses, like the provisions of Articles 40 and 43 in the Constitution, which deal with the rights of people and property. It is perhaps tempting providence to tax a person at a date in respect of a liability that was completely unascertainable at that date. Would the Minister not be wiser, in his own interest, not only to extend the period of interest but also to extend the date of liability to the date of the passing of the Bill?
That is virtually what he has done.
Not quite. I am arguing in the Minister's favour now. I suggest he might even lose a year's revenue on this if he leaves it as it is. I agree with Deputy Esmonde that, effectively, from the point of view of anyone who pays the tax, it would come to this, but we are now getting into very sticky ground and we will get into it further with this.
Progress reported; Committee to sit again.