I understand that the Minister for Lands is deputising for the Minister for Finance.
Wealth Tax Bill, 1975: Committee Stage (Resumed).
Debate resumed on amendment No. 2b:
In page 3, line 46, to add "except in relation to the year 1975 when it means the 5th day of October".
—(Deputy Colley.)
, Cavan): In the absence, on official business, of the Minister for Finance I am taking the Committee Stage of the Bill.
I assume that the Minister for Lands is in the position that should he be convinced by arguments from this side, he would be empowered to accept amendments or suggestions.
(Cavan): The Deputy may take it that I am handling the Bill on behalf of the Minister and the Government and that I have all such authority as the Minister for Finance would have if he were here.
The amendment we are discussing is one which some people think does not go nearly far enough. Ignoring the economic aspects of this, I wish to put briefly to the Minister the proposition that in the absence of this amendment an indefensible position would arise, a position in which the valuation date, that is, the date on which wealth tax becomes due this year, would be April 5th. Furthermore, that three months thereafter, under the Bill, the wealth tax due this year would become payable legally.
It is clear to everybody that by that date the Bill will not have passed both Houses of the Oireachtas. The only gesture which the Minister for Finance has made in regard to this situation is that he has tabled an amendment, one which has not been reached yet, and the effect of which will be to provide that no interest would be payable on any wealth tax that was paid this year before some date in October. This is not a satisfactory position. It may be argued that it is meeting practical difficulties but it is not a defensible position that this House should enact legislation under which tax—whatever kind it may be—is due and payable and that the date for payment of it has passed at a time when the legislation has not been passed and when there is no certainty as to what the law is.
At least the amendment I have tabled is designed to try to overcome that position, a position which we should not allow to arise under any legislation. It is a situation that tends to bring the law into disrepute. I would have thought that the case for this amendment is self-evident, that it would not have been necessary to argue it but from what was said earlier it appears that it is necessary to argue it. I should hope that the Minister for Lands would agree that if this amendment or some other similar amendment is not enacted, the position would be indefensible.
During the debate last week I described Deputy Colley's amendment as being "a soft amendment". I did not consider it strong enough to meet our present situation. However, I would go further now and say that in our present economic situation in which I understand we are to have a minus growth rate, the introduction of a wealth tax is bordering on the irresponsible. Approaching the autumn of this year we will have a situation in which a large number of industries will be unable to pay their expenses. Many of them may not be able to meet the provisions of the national pay agreement. As I understand it, through their assets these companies may become liable to tax. Deputy Colley's amendment is a mild one. It is trying to help industries to maintain employment for the remainder of this year.
(Cavan): It has been said that the object of this amendment is to change the valuation date so far as this year is concerned from 5th April to 5th October. Every consideration has been given to the amendment but it is not acceptable and I propose to give the reasons.
First, there is no question of anyone having been taken by surprise. The White Paper on capital taxation was published in February, 1974 and the Bill we are now discussing was introduced and published in February 1975. It would be an understatement to say it has not been carefully studied and debated by all concerned.
Later in the debate I propose to introduce amendment No. 28. I wonder if Deputy Colley was aware of this amendment before he tabled his amendment? Under the amendment there would be no question whatever of any interest being charged on returns or on tax which has been paid before 5th October, 1975. That is giving taxpayers a period of seven months since the publication of the Bill to arrange for the making of returns and the payment of tax. In fact, I am sure many taxpayers have arranged or are arranging their affairs so that they will be able to make the returns.
Deputy Ruairí Brugha mentioned the ability of people to pay this year and the effect it would have on business generally. At this early stage of my entering this discussion I should like to put the record clear in this matter. Trading companies as such are not liable to wealth tax. It is incorrect for the Deputy to suggest that they will be liable to wealth tax through their assets.
(Dublin Central): They will be liable through their shareholders.
(Cavan): That is a very different matter. Deputy Ruairí Brugha was making the point that the money available to the companies for cash flow would be eaten up, or used to some extent, in payment of this tax and that the companies would be worse off. That is not so and I want the House clearly to understand it. The assets of trading companies are not liable to tax. Deputy Fitzpatrick said that the shares will be liable to wealth tax and that is so. The shares of trading companies are liable to wealth tax in the hands of holders who are liable to tax. They will have the benefit of a threshold which is the most generous in Europe and they will be able to avail of the concessions that exist.
For these reasons I would ask Deputy Colley to withdraw his amendment and to accept that amendment No. 28 which will be moved by me covers the difficulties he foresaw when he tabled his amendment.
(Dublin Central): I should like to support Deputy Colley's amendment for the reasons he put forward as well as for other reasons. I agree with Deputy Colley that this is a type of retrospective tax. When the Government were on the Opposition benches they always argued against such a tax. Deputy Colley said this Wealth Tax Bill may not become law until the end of the year. We may be discussing it for the next six months and, in any event, it will not become law until it is passed by both Houses of the Oireachtas.
As the Bill is framed, tax is due as from 5th April, 1975. The Minister for Lands stated that some companies have put their houses in order and taken this into consideration but I do not know any businessman in the city who has made provision for this tax. Whether we like it or not, this tax represents a costing of 1 per cent; there is no difference between it and the 25 per cent increase under the national wage agreement and other factors. The majority of businessmen have not made any provision for this although the Minister has said to the contrary. A very considerable number of taxation measures have gone through this House—the Capital Gains Tax Bill and the Capital Acquisitions Tax Bill as well as this measure. Business people have not time to study all the measures before the House.
Every day we read in the newspapers of the economic difficulties companies are facing. Daily we are lectured by the leading economists about what we should do with regard to industry and how to keep people in employment. We have been told what the workers should do and there have been rumours about the national wage agreement. This morning we were lectured by the social and economic council about what the Government should do with regard to reducing prices. If the Government are sincere in playing their part, I am convinced employees and employers will do likewise. However, it is up to the Government to give a lead with regard to reducing costs.
Above all other Bills, this Bill provides for a direct increase in unit costs. The Minister said that companies will not be liable to tax but companies are composed of shareholders and they will be taxed. Many of the shareholders may take a very poor view because they will want a return. This is the reality of the situation and it will affect the economy. We can develop this argument as we go through the Bill. I do not want to cloud the issue at this time and I will confine myself to what Deputy Colley stated. The Minister should consider seriously Deputy Colley's amendment and give companies a chance to put their houses in order. I realise that it would mean that tax would not be paid for an additional few months but it is only a deferred operation. The weath tax must be paid from 5th April but, as a gesture on this occasion, the Minister should give the concession sought by Deputy Colley. As I mentioned before, Deputy Colley has been very modest in seeking this extension.
I do not think the Opposition should press this amendment because, the more they press the amendment, the more they expose the flaws in their spurious opposition to this Bill. I use the word "spurious" because they have used arguments which can be based only on the conclusion that the Fianna Fáil Party have sold their souls, so to speak, to a very tiny minority who will be liable for wealth tax. It boggles the imagination that they still presume to call themselves a republican party.
What about the consequences on unemployment?
I shall come to the consequences.
(Dublin Central): Deputy Desmond is not at all interested in unemployment.
The Chair is anxious that we should deal with the amendment and the Chair would ask Deputies to avoid ranging too widely.
Deputy Brugha says firms will be unable to pay their taxes, if we do not accept this amendment: it may by now have dawned on Deputy Brugha that 95 to 98 per cent of firms will not be liable for wealth tax.
(Dublin Central): Then why bring in a Bill if it affects only 2 per cent?
Will Deputies please allow Deputy Desmond to continue without interruption?
As Deputy Brugha perfectly well knows, only discretionary trusts and private non-trading companies will be liable and I would hazard a guess that 0.015 of the labour force of the country has any remote connection with a discretionary trust or with a private non-trading company. To suggest, as both Deputy Colley and Deputy Brugha suggested, that employment or economic growth will be affected by this amendment is, on the basis of any rational analysis, so laughable that it brings me back almost to the kind of example given by Deputy Colley on the recent "Late Late Show" which has made him the laughing stock of every tax expert in the country: if someone had £100,000 and he had £50,000 of an overdraft he would be caught for wealth tax—that kind of thing lapped up by the particular commentator.
If the Deputy wants to quote the example, would he quote correctly and not just his version?
I would ask Deputy Colley to consult some of the officers of the Incorporated Law Society. He is a standing joke all over the country in relation to tax liability.
That example was not given.
Of course, it was not.
I do not want to raise the temperature——
The Deputy is going the right way about it now with that kind of evidence.
——but Deputy Colley has, I think, sold his soul for very narrow political gain to a few tax experts who are trying to get literally a couple of hundred people out of liability for wealth tax.
Fine Gael are not too happy for selling their souls to the Deputy.
It is very easy to come in here and say, as Deputy Fitzpatrick said, that companies will be liable. What companies?
(Dublin Central): Shareholders of companies.
Shareholders of companies and trading companies?
(Dublin Central): Yes.
That is an interesting revolution. It shows the Deputy has not read section 1. Let us take an example. We will deal with companies later. Let us take a farmer who has £500,000 in land. Let us be generous about it.
That is a hypothesis.
I have to take the hypothesis to show whether or not the man has to pay wealth tax. This State has done something unique; it has given a 50 per cent reduction so that man's liability is £250,000. This is a unique threshold exemption in the whole of Europe. In fact, the exemption is so generous I have had inquiries from people in Britain asking me if this is true. They are asking me, as a socialist, if this is true because they wish to come here and buy 800 or 900 acres of good land and settle here; they know Denis Healey would never give them that exemption in Britain.
(Dublin Central): Deputy Desmond should ring the Industrial Development Authority before he goes any further.
The IDA are not the least bit unhappy and because Fianna Fáil have a couple of friends around the country who are connected with the IDA and are being fed a bit of propaganda they are falling for this. I would urge both Deputy Colley and Deputy Brugha and other Fianna Fáil Deputies to be very careful who they listen to in relation to wealth tax. We know who is talking to them, and God knows, they are in strange company when one considers the representations they are making.
Let us take the man with £500,000 worth of land, liable for £250,000; his private residence would at a conservative estimate be worth, I suppose, about £25,000; that is exempted—no liability. Let us give him £30,000 worth of racehorses.
On a point of order, I do not wish to stop Deputy Desmond in his flight but, if he continues on this road, we will have a discussion on both sides of the House on what, I suggest, is much more appropriate to section 2. If that is all right with the Chair, it is all right with us, but we would like to know where we stand.
I have already intimated to the House that the Chair is anxious speakers would confine their remarks to the amendment. The Chair is tempted to give some latitude.
This man has £500,000 in land, £25,000 in a private residence and £50,000 worth of racehorses. Let us throw in another exemption category, £60,000 worth of livestock, which is not an unusual sum. Let us assume he has taken particular care of his pension rights and has capitalised something in the region of £40,000 and let us be quite frank about his deep freeze full of nice lamb and a few salmon, and so on, and a good bit of household effects worth about £5,000. He has a total asset value of £670,000, a small bit of rope in these days.
What is the capital value of his pension?
Anything up to £40,000. I am quite generous: 40 years of age with £40,000 at 6 per cent—the Deputy can work it out. I come to the point: here is an individual worth £670,000. For good measure, we will give him two children with £2,500 each. His liability out of that £670,000 will be £240,000 —1 per cent on that. A munificent contribution of £2,450 in the national interest out of £670,000—£2,450 a year wealth tax. And the country is on the downward slope to rack and ruin——
It sure is.
——to economic chaos, massive unemployment, to the devil knows what, because Deputy Colley has discovered that a man with £670,000 is liable for £2,400 only in wealth tax. On the half year it is £1,200. The net effect of this amendment is that Deputy Colley proposes to say to him £1,200 and, furthermore, Deputy Colley knows we are not even in the magnificent generosity of the Marxist socialist extremism of wealth tax; we are not charging interest on the amount due. These are the people Fianna Fáil are defending. I met many people around the country with a fair amount of money who said: "We are not liable for this tax." The propaganda is out, that what you have you hold. If a person has a couple of million you make representations to Deputy Colley because you know you have a soft touch to put up some ultra-special pleading in relation to this Bill in this House. Deputy Colley should not make a party political plea. I have met rank and file Fianna Fáil members around the country who say: "What is happening to our party? They are screaming their heads off in Dáil Éireann about the wealth tax."
Did the Deputy meet any of his own people?
We are ranging wide of this amendment.
I have met them.
(Dublin Central): If the Deputy keeps up like this we will not finish here until Christmas.
It is simply a holding operation by the Whip of the Labour Party.
Order.
The company the Deputy is keeping in relation to amendment 2b is the strangest I have ever found for a person who professes to be a member of a republican party. It is a very peculiar twist to constructive opposition here. If the Deputy is worried about expeditious proceedings through the House in relation to this Bill the answer is that we could have sent it to a select committee. As we know Deputy Colley and Deputy de Valera spent 70 hours in the House on the Capital Gains Tax Bill with the Minister for Finance. Three Deputies spent 70 hours on that Bill. The Deputy got as much change out of it as he thought he might.
We showed the Government how to do an Opposition job on a Bill.
Back to the amendment.
I suggest that for a party who have sold their souls on the wealth tax they should seriously think it is a bit early in the morning to continue the process. I know I have raised the temperature somewhat but I found the hypocrisy of the Fianna Fáil Party in relation to the Wealth Tax Bill very nauseating in a situation where we are introducing wealth tax in this country. The threshholds are so unique in Europe that the belted earls of Britain are seriously thinking of coming over here to settle down and save themselves the impact of the British levy.
It is after 11 o'clock and the Deputy can sit down.
Deputy Colley brought in employment into the debate. He said that this was undesirable in the current economic climate. This is the great threat they have been using in the Dáil and on television during the past few months. The productive assets reliefs in this Bill are unique. I challenge Fianna Fáil to analyse any part of the wealth tax legislation and they will find that the situation is one they cannot defend. Just because they have got a few wealthy constituents breathing down their necks the pleading is so special that it boggles my imagination that they still call themselves a republican party.
I would like to deal with the point the Minister made that the tax is not paid by companies but by shareholders. I did not intend to convey the impression that it was otherwise. I will leave the politics to Deputy Desmond, who does not really understand what the Opposition are talking about in relation to the importance of employment. I would like the Minister to consider the point I made. I am not interested in the category who are over the threshold.
If you have a large number of shareholders throughout the country holding shares in various industries who find that not only are they not getting a reasonable return from their shares, as compared with what one would get in any gilt-edged security on the market at the present time, but if they fall within the category of those who have a fairly large shareholding they will now find themselves carrying shares which are not paying dividends and will now be subject to tax, it is the effect of that which I think should be considered by the Minister in relation to this wealth tax. If a significant number of people are holding shares in private industry who find themselves in that situation they will ask what is the use of their carrying this thing and they will try to persuade the directors to wind up so that they can get their money back. That is the employment factor I was trying to make to the Minister despite what Deputy Desmond may say.
I am rather surprised at Deputy Desmond's special pleading. He made a case about an individual who has great assets. I do not agree with practically a word the Deputy said. He cited an individual worth £600,000 odd. The point about opposition to certain aspects of this wealth tax is that, irrespective of whether or not the assets are wealth producing, certain people will be stuck for paying tax on it. That will bring great changes here. The Deputy also referred to 5 per cent, 2 per cent and .01 per cent. I always understood that justice should be done to everybody and that it should not necessarily be a case of saying: "Of course, we do it to 95 per cent of the people and 5 per cent are too small to count."
The logical extension of that is that nobody should pay.
Not necessarily. The logical extension of that is something we saw very much of in fascist doctrine and thought, that there were people who were not worthy to be considered as citizens. I know Deputy Desmond does not mean anything like that.
I was also interested at the Deputy's reference to broadcasting. In answer to the charge that the projected tax had been reduced to 1 per cent since the introduction of the White Paper I heard him saying: "Of course, the principle will be established and the amount could change". I commend that to the attention of the House.
To get the irrelevancies out of the way I should like to point out that the level of Deputy Desmond's contribution was highlighted by his totally inaccurate, careless and wrong reference to an example I gave on the radio. That, I believe, was the key note of his whole approach.
I challenge Deputy Colley to repeat the example; he is the laughing stock of the Incorporated Law Society.
Since Deputy Desmond could not even get it remotely right——
Gay Byrne could not even get it right, and that is saying something.
It is not in order to refer to persons outside the House.
That shows how inaccurate Deputy Desmond has been. The Deputy's reference to the Bill was equally inaccurate. Deputy Desmond thinks that shareholders are some kind of incorporeal beings or that when money comes from shareholders they do not count. The Deputy spoke of the number of shareholders who would be involved in discretionary trusts or private non-trading companies.
I mentioned the number of workers affected by the activities of them——
I am coming to that. The Deputy does not know what he is talking about. Every trading company employing workers is ultimately dependent on capital advanced by shareholders, it may be directly or indirectly through other companies. Ultimately, it comes back to individuals and the money they are prepared to save and to put into investment. If Deputy Desmond does not understand that the jobs of thousands of industrial workers are dependent on people putting money into Irish industries he should not be wasting the time of the House.
I am fully aware of it.
If the Deputy is aware of it how can he come in with that kind of nonsense and suggest that no worker is endangered by what is being done here? If there is any basis of truth in what the Deputy is saying then it must follow that no shareholder in any trading company is going to be liable to wealth tax on his shares. Surely the Deputy is not going to contend that that is true. If it is not true of course the return that is got—in many cases where no return has been got up to now from the company income tax has to be paid on top of it— that money has to be paid out of the profits of the company. Of course, it will affect employment at a time when Deputy Desmond should be concerned, more than anything else, with the chronic unemployment position we have here. However, we have had the glib nonsense from him as though it does not affect anybody.
Deputy Desmond is only concerned with the Press Gallery.
Deputy Desmond, as Deputy Dockrell mentioned, spoke on the radio about this Bill on the day it was published. He got in his blow fast. Substantially what he had to say was: "It is not going to affect me; I am all right, Jack, and you can squeeze the rich. To hell with the consequences for employment or anything else." That is not the attitude of the Fianna Fáil party and it never will be.
Of course it is.
The politics of envy and of "I am all right Jack" are all right for Deputy Desmond but they are not all right for Fianna Fáil. Fianna Fáil are not going to be misrepresented by Deputy Desmond.
On a point of order, since when did the rich of this country become the exclusive employers in productive industry?
That is not a point of order.
That is what the Deputy said.
To suggest that the wealth tax will not affect employment is either crass ignorance or deliberate misrepresentation of the position. Deputy Desmond can take his choice as to which is the explanation in his case.
The Minister indicated the level of exemption and the rate of tax in this Bill. He referred to it as being very high; I am not sure if he said it was the highest in Europe but he indicated that it was extremely high. The fact is that if one is to make a real comparison with the other countries in Europe which have a wealth tax one must have regard to the level of income tax and the thresholds of income tax at the marginal rates. What one discovers is that the effective rate of wealth tax proposed here is the highest in Europe. I propose to demonstrate that at a later stage.
I was aware that an amendment on the lines of Amendment No. 28 would be submitted by the Minister because he indicated when we raised the difficulty on the Second Stage about the 5th April and the consequences that would flow from it that he would put in an amendment. While the effect of that is to say that people will not have to pay interest on unpaid tax up to 5th October, nevertheless, is it not true to say that if that is not the only amendment made in connection with this point we will have a situation in which 5th April, 1975, will be the valuation date legally. Three months thereafter, under the Bill, the wealth tax on the 1975 valuation will be legally payable. The only concession being made is that there is no interest on that but legally it will be payable.
The Minister may say that in practice this will not make any real difference, but I believe it could depending on how long the passage of this Bill takes through both Houses. Leaving that aside, surely the Minister cannot accept that it is a satisfactory position to be providing in that way for the legal valuation date at 5th April—the date on which the payment is legally due being 5th July —when the Bill has not been passed and when the ultimate content of the Bill is not known to anybody, including the Minister. That is the point of the amendment I have put down.
(Cavan): I respectfully agree that there will be other opportunities later for a wider discussion on the effects of wealth tax. We have had an adequate Second Reading debate already and throughout the committee stage we should concentrate on the details of the Bill. This amendment proposes to change for the year 1975 the valuation date from 5th April to 5th October. It has been suggested by the Opposition that if that is not done trading companies in some way or another will be confused; that they will not have time to make provision for this tax, presumably in their accounts, and that it will be to their disadvantage if this date is not postponed. Anybody who understands the working of the proposed tax must realise that it does not concern the internal workings of trading companies in so far as the preparation of accounts is concerned or the payment of tax. They are not assessable; they are not accountable; they do not come into it.
It is true that shares of these companies in the hands of people who are not exempt will be liable to wealth tax in the ordinary way. However, if, as Deputy Fitzpatrick has said, there are many shareholders in trading companies, the greater the number of shareholders the less the likelihood that they be affected by this wealth tax, because they will have the exemption from the fact that the more people the shares are spread across the greater will be the threshold available to them.
The Government proposal is to introduce wealth tax as from 5th April of this year. Everybody has known about that proposal for some time. Deputy Colley complained that in this Bill we are asking them to pay retrospectively, as he puts it, and making them liable at a time when they did not know what the law was. Without going into detail, I think there are ample precedents for that in taxation. The budget is frequently introduced in May——
Yes, but the Minister will agree that it is not quite the same thing. There are specific increases in certain taxes——
(Cavan): Indeed, sometimes there are new taxes introduced in the budget, and income tax is altered frequently and made payable from the previous 5th April.
The rules are known in advance. It is only a change in the rate.
(Cavan): Therefore, I say this is nothing new. If we are to accept Deputy Colley's amendment, it is almost certain that accounts will not be put in until 1st October or even after that, and the effect of that will not facilitate the Revenue Commissioners, as has been suggested, by giving them an opportunity of preparing for it. Not alone will it make the tax more difficult to operate this year but it will probably overflow into next year and it will take longer to get the tax working smoothly.
Admittedly there will be teething problems with this tax. There are teething troubles with any new system of taxation or with an innovation of any description. Our entry into the EEC had its teething troubles despite the fact that every precaution was taken to negotiate the best terms possible. The Minister for Finance has met the real point that Deputy Colley is worried about, that people were going to have to pay interest on tax because they had not an opportunity of putting in a return. By providing that no interest would be payable on tax paid before 5th October next, I think I have gone, on the Minister's behalf, sufficiently far to remove any hardship.
In regard to many other points that have been introduced into the discussion on this amendment, I agree that there will be an opportunity, even perhaps on the very next section, for dealing with this sort of thing, and again I suggest to Deputy Colley that he might withdraw the amendment.
The Minister seems to speak about companies as if they were inanimate things. Companies are made up of shareholders. Shareholders are motivated, as we all are, by economic and other norms. He said earlier on that the Department had an intimation already that these companies were gearing themselves for the payment of this wealth tax. My only interest here is the reaction this may have on the rather hopeless and chaotic economic conditions which unfortunately prevail in our country today.
As a member of the Public Accounts Committee I received from the Department of Finance a statement indicating in respect of companies and their liability for PAYE, VAT and pay-related benefits that the amounts that will be paid this year by them will be considerably less than has been paid heretofore, and there is also not a request but an intimation to the members of that committee that if these companies are not in a position to pay it, we shall have to go the easy way about extracting it. There is a change in the whole pattern. They are not bringing these companies to court now. They are sending officers around trying to coax payments out of them.
I want to ascertain from the Minister whether what he says is correct, that, notwithstanding all they are liable for to date, they are looking forward to paying an additional tax, or whether the statement we have received from the Revenue Commissioners intimating that these companies are going to find it most difficult to pay the liabilities that reside with them at the moment, is correct. We must have that clarified. Either the statement we got from the Department is incorrect or the information the Minister is giving is incorrect.
(Cavan): I do not want to intervene at any length here, but I want to make it abundantly clear that this Bill, when it is passed, will not impose any further tax on trading companies as such. Deputy Tunney spoke about companies saying that they were unable to pay PAYE. I would ask Deputy Tunney to be really serious in discussing this. All these companies that transmit amounts for PAYE income tax to the Revenue Commissioners have already collected it from their employees and it is no burden on them.
(Dublin Central): They have it spent.
They are not able to pay it to you. That is the difficulty.
This is part of their employees' wages.
The State-sponsored companies are now paying wealth tax. That is a new one. It shows the erudite approach of Fianna Fáil.
(Cavan): I want to keep on this amendment, and in reply to Deputy Tunney I am just making two points: first, that wealth tax will not impose any further burden on trading companies as such. It will on the shareholders as such.
The company is the shareholders.
(Cavan): The company is owned by the shareholders.
It is their money.
(Cavan): Deputy Tunney should think again about the example he gave about the burden of PAYE. It is a serious offence for companies to collect income tax from their employees' wages and not transmit it to the Revenue Commissioners at the end of the month. That is their obligation. It is not coming out of their pockets but out of the pockets of their employees who have had it deducted from their wages.
Deputy Tunney seems to believe that State-sponsored bodies are having difficulty in paying——
I have not said that at all.
Then may I enquire through the Chair, since when does the Public Accounts Committee deal with public companies, manufacturing companies?
Did the Deputy listen to what Deputy Tunney said?
He said he had become aware from information available to him from the Committee of Public Accounts that companies were having difficulty in relation to PAYE payments, social welfare and so on.
A statement to that effect was given to the committee by the Department of Finance. That is what the Deputy said.
I am simply saying to the Deputy, whose knowledge in relation to particular companies is, of course, confined to the operation of State companies——
It is not. Do not be an idiot. The Revenue Commissioners——
The Revenue Commissioners make noble statements about the revenue returns generally and in relation to company difficulties but not in reference to particular companies.
Amendment No. 2b.
I suggest to Deputy Tunney that it would be interesting to examine the record in relation to statements he has just made particularly bearing in mind the period of time dealt with by the Committee of Public Accounts.
We are getting away from the amendment.
The analogy he has drawn here is, to say the least of it, quite ridiculous.
Is the Deputy saying that there was no such statement or that there was such a statement?
I suggest that the attempt by Deputy Tunney to draw a red herring across this amendment is quite ridiculous.
If the Deputy does not understand it, he should not talk about it.
That is no trouble to the Deputy.
In regard to the amendment itself, again I want to point out—we have to do this ad nauseum—that there is no obligation on anybody virtually unless he wants to act in a particularly public spirited manner to pay the amount due. His liability to payment of the amount due, in effect, does not arise until 5th October, 1975 because, as Deputy Colley knows, interest does not arise. Naturally, those with even very modest wealth know that if we are not liable to pay interest we will sit on our cash and the amendment proposed by Deputy Colley is irrelevant in terms of amendment No. 28. His argument is a non-argument. In replying to Deputy Brugha, I would say that there still seems to be embedded in Fianna Fáil the idea that every shareholder——
We are getting away from the amendment.
(Dublin Central): Are we having a Second Reading debate or a discussion on an amendment?
Amendment No. 2b.
Deputy Colley made global statements at the beginning of his opposition in relation to the rejection of amendment No. 2b. I think he has to be exposed——
And the Deputy is the man to do it.
——and if I rather indulge myself in doing so I must confess that, after 70 hours listening to Deputy Colley on the capital gains tax it should not be too difficult to do so.
That is not relevant.
Very little listening was done by Deputy Desmond. He did not appear for the Capital Gains Tax Bill.
I am putting the question: That amendment No. 2b in the name of Deputy Colley, be made.
Amendment put.
The Committee divided: Tá, 35; Níl, 51.
Tá
- Brady, Philip A.
- Brennan, Joseph.
- Briscoe, Ben.
- Browne, Seán.
- Brugha, Ruairí.
- Carter, Frank.
- Colley, George.
- Collins, Gerard.
- Cronin, Jerry.
- Cunningham, Liam.
- Daly, Brendan.
- de Valera, Vivion.
- Dowling, Joe.
- Farrell, Joseph.
- Faulkner, Pádraig.
- Fitzgerald, Gene.
- Fitzpatrick, Tom. (Dublin Central).
- Gallagher, Denis.
- Gogan, Richard P.
- Haughey, Charles.
- Healy, Augustine A.
- Lalor, Patrick J.
- Leonard, James.
- Lynch, Jack.
- MacSharry, Ray.
- Moore, Seán.
- Murphy, Ciarán.
- Noonan, Michael.
- O'Malley, Desmond.
- Power, Patrick.
- Smith, Patrick.
- Tunney, Jim.
- Walsh, Seán.
- Wilson, John P.
- Wyse, Pearse.
Níl
- Barry, Peter.
- Barry, Richard.
- Begley, Michael.
- Belton, Luke.
- Belton, Paddy.
- Bermingham, Joseph.
- Bruton, John.
- Burke, Joan T.
- Burke, Liam.
- Cluskey, Frank.
- Conlan, John F.
- Cooney, Patrick M.
- Cosgrave, Liam.
- Costello, Declan.
- Creed, Donal.
- Crotty, Kieran.
- Cruise-O'Brien, Conor.
- Desmond, Barry.
- Desmond, Eileen.
- Dockrell, Henry P.
- Dockrell, Maurice.
- Donnellan, John.
- Enright, Thomas.
- Esmonde, John G.
- Finn, Martin.
- Fitzpatrick, Tom. (Cavan).
- Governey, Desmond.
- Griffin, Brendan.
- Hegarty, Patrick.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Keating, Justin.
- Kelly, John.
- Kenny, Henry.
- Kyne, Thomas A.
- Lynch, Gerard.
- McLaughlin, Joseph.
- McMahon, Larry.
- Malone, Patrick.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Donnell, Tom.
- O'Leary, Michael.
- O'Sullivan, John L.
- Pattison, Seamus.
- Ryan, John J.
- Staunton, Myles.
- Taylor, Frank.
- Timmins, Godfrey.
- Toal, Brendan.
- Tully, James.
Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.
Amendment declared lost.
Question proposed: "That section 1, as amended, stand part of the Bill."
There are a number of points I want to raise on this. The first I would put to the Minister in relation to the definition of "discretionary trust" in subsection (1). The Minister has received representations to the effect of what I am about to say, but I should like to get his comments on it now. It appears that the definition of a discretionary trust may include something which is not discretionary. For example, it has been suggested to me that the definition could include a trust in which a widow is paid the income during her lifetime from property left to her by her husband. It appears the effect of the Bill would be to charge a fixed trust to wealth tax without any threshold. If that is so, the definition should be amended so as to exclude fixed trusts of that kind.
(Cavan): I will take the point raised by Deputy Colley now. A widow entitled to a life interest in the income from her husband's property would not be regarded as being involved in a discretionary trust. The widow would be deemed to have a limited interest in the husband's property, and we will be dealing with this under another section. That would have implications for the widow but not because it would be considered to be a discretionary trust.
Is the Minister satisfied that the definition as provided in the subsection clearly provides that there must be a discretion? In other words, cannot the definition include what I have described as a fixed trust where, in practice, there is not a discretion?
(Cavan):“Discretionary trust” is a definition of what is normally understood by the term. It is defined as a disposition which results in property being held on such trusts that the income of capital, or part of the income of capital, may be applied for the benefit of one or more of a number or class of persons at the discretion of the trustees or any other person. A trust is a discretionary trust notwithstanding that there may be power to withhold payments and to accumulate all or any part of the income. A trust may arise under a disposition which is a deed, a will, any covenant, agreement or arrangement and may be established with or without an instrument in writing. There is nothing in the definition which does not accord with the usual concept of a discretionary trust. The very essence of a discretionary trust is that the trustee, or some other person, must have a discretion as to what is to be done with the subject matter of the trust.
I would agree that that is the essence of a discretionary trust. The matter is somewhat technical, but——
(Cavan): Highly technical.
I may return later to what appears to be the difficulty about the definition, as to whether it does make it clear that there must be a discretion. In the meantime, I should like to refer the Minister to the definition of "entitled in possession" which follows the definition of "discretionary trust". First of all, the general definition of "entitled in possession" goes on to provide that, without prejudice to the generality of that definition, a person shall also, for the purposes of the Act, be deemed to be entitled in possession to, and the first part is "property comprised in an instrument which he may revoke". In regard to that part of it I should like to know is the person who is entitled until revocation, also deemed to be "entitled in possession"?
(Cavan): Like myself, I am sure the Deputy will have had many experiences of transfers—perhaps more common in the country—of property subject to a power of revocation. A person who parts with property subject to a power of revocation does not, in reality, part with control of it because he can take it back at any time. Were this provision not in the Bill, there would be nothing to prevent a wouldbe taxpayer executing an instrument at the end of, say, March, transferring property valued at £50,000 to somebody who had no other property, revoking that instrument in the middle of April and thus avoiding tax altogether. Therefore, it is provided in the Bill that the person who has the power to revoke is “entitled in possession” and that the person who holds, subject to the power to revoke, does not hold in possession.
Does not?
(Cavan): Does not. I am clear and have been advised that there is no doubt about that.
Therefore, the person entitled, subject to revocation, is not deemed to be "entitled in possession"?
(Cavan): That is correct.
I am sure the Deputy is aware that that has always been reflected in stamp duty.
Yes, up to a point, but there are implications in this. Of course, I understand why the provision is there but the Minister's illustrations of it was in relation to somebody who parts with a property just before the valuation day. One can visualise a situation where somebody parts for, say, 20 years subject to revocation, that it might continue for 20 years. Yet the Minister says in such circumstances the person who is enjoying the property is deemed not to be "entitled in possession".
(Cavan): That is so for the purposes of this Bill.
I have not worked out the implications of this but it seems they might create an anomaly.
(Cavan): I should be glad to hear about it.
I see a glint in the Deputy's eye when he is thinking about the implications.
There should be a glint in the Deputy's.
In regard to paragraph (b) of subsection (1), also deemed to be "entitled in possession" are "an interest or share in a partnership, joint tenancy or estate of a deceased person, in which he is a partner, joint tenant or beneficiary as the case may be...". The first question I want to pose on this is why is this paragraph necessary?
(Cavan): It is really necessary to put the matter beyond doubt. Probably the effect would be the same were the paragraph not there. But we thought there might be arguments that a person entitled to a share in a deceased person's estate was not in possession of it, in that he had the right to claim it only; that it might be argued that joint tenants have not exclusive possession of any part of the property they own and that, if one were to acquire possession of it, one would have to have a petition suit or something like that. It was to forestall arguments such as that that this provision was inserted.
In the case of a beneficiary in the estate of a deceased person, prior to the winding up of the administration and, therefore, before the beneficiary has, in fact, received the property, is he deemed under this provision to be "entitled in possession"?
(Cavan): Yes, he would have the right to it. I could visualise a situation arising where one might not be able to say precisely, within a few pounds what was in fact coming to one. Before we did away with death duties, there used to be such things as corrective affidavits or corrective accounts. I am sure that could be tidied up afterwards.
Some interesting possibilities may arise on that also which, again, may be considered later. Another question to be posed in regard to this paragraph is that, included in the definition of "entitled to possession" is an interest or share in a partnership. I should like to know what are the rules for determining the interest of a partner in a partnership where under this provision a partner is deemed to be "entitled in possession".
That would be a factual situation in every case.
Not necessarily.
(Cavan): There are not special rules in this Bill on definition for ascertaining the precise share the taxpayer would have in a partnership but, presumably, the partnership agreement or arrangement would spell that out. Otherwise, it would be a very loose form of partnership indeed.
It is not quite as simple as that. It is true to say that this Bill does not contain any rules for the valuation of assets, not merely partnership assets, but any assets unlike, say, the Capital Gains Tax Bill which has very detailed rules for assessing the valuation of property. In the case of partnerships, it is not quite as simple, I think, as the Minister indicated—the partnership deed may not necessarily make it clear what is the share because one could approach it on the basis of the share of the profits, or one could approach it on the basis of the share of the subscribed capital at the commencement of the partnership. There may be other ways of approaching it but, anyway, those are just two. It is important that there be no uncertainty about this. Not only in relation to partnership and the points I raised but, generally, in relation to the valuation of assets for the purposes of this Bill, there should be detailed rules for those valuations. As I have indicated, there are precedents which would go a long way in meeting this in the Capital Gains Tax Bill and I am not quite clear why such rules should not exist in the Wealth Tax Bill.
I agree with Deputy Colley. Deputy de Valera was ready to give the Revenue Commissioners a certain amount of leeway and to allow them to make up their minds about valuation of different things in the Capital Gains Tax Bill. I agree with Deputy Colley that, from a business point of view, we must put a value on a person's home. To go further, we must also put a proper valuation on an estate. We must also be told how the Revenue Commissioners will arrive at that value. We may be told that the Revenue Commissioners will be fair. I agree that in the past they have been fair but the day will come when a person might over-value his assets and will be able to prove by law that his estate is worth X amount of money. In my opinion, a proper valuation should be put on everything. No businessman will tolerate a valuation that is wrong. One must plan ahead in business. One must plan for five, six or even ten years ahead. There is no way that one can look for a price until one knows at what price the assets are valued. One cannot be depending on the whim of some man who has never been in business.
(Cavan): Deputy Colley asked how a person's share in a partnership will be ascertained. I cannot conceive a partnership without some provision for at least winding it up. If there is such a provision, that would suggest who would be entitled to the assets.
As the Minister knows, there are many partnerships in which there is no written agreement.
(Cavan): Yes, indeed. We can only apply common sense to this. If there is a partnership for which there is no written agreement, it would be very hard to devise rules for ascertaining the ownership of the assets of that partnership.
It could be related to shares and profits.
(Cavan): I agree that if there was no other basis for deciding who owned the property, then the profits were equally divided, presumably the assets would be equally divided. I noted when studying the Second Reading debate that some people complained that there were not rules for doing this, that and the other, and that the absence of rules would lead to a great deal of litigation. Candidly, and speaking as a rural solicitor, I believe the more rules and the more one tries to define things definitely, the more litigation one creates. I understand that since 1910 there has not been one appeal to the courts against the valuation of land for estate duty purposes. I also understand that since Deputy Colley, as Minister for Finance, introduced machinery for appeals against the value of shares, that there has not been one case. It is the job of the Opposition to say that such and such might happen. We must deal with the realities and the practicalities of the situation. The simple, everyday lanquage used in this Bill will be more likely to lead to the smooth working of the legislation.
I can only anticipate what the Revenue Commissioners will do. I cannot speak on their behalf nor can I give any assurance of what they will do but I am sure they will not try to value something to within pounds. The rate of tax here is fairly low, so if there is an error of a few hundred pounds one way or the other, nobody will be robbed.
Let us deal with a partnership. Will the Revenue Commissioners value it on the saleable value of the property, or on a year's profits or on five or ten years' profits? Let the Minister tell us how the Revenue Commissioners will value an estate or a partnership. A businessman must know that or he cannot run his business.
(Cavan): We are dealing with a partnership as distinct from a company.
The same thing.
(Cavan): It is not, because if it is a trading company there is machnery for valuing shares, and if it is a public company the value will be taken from the Stock Exchange. So far as the partnership is concerned, it is the market value of the assets——
(Dublin Central): That is the point.
(Cavan): Market value has worked very well in regard to shares under Deputy Colley's proposals. It has also worked very well in regard to land since 1910. Death duties are on their way out. I do not believe that since 1910 the Revenue Commissioners ever extracted the last pound of flesh for estate duty purposes. The contrary might have been the case.
The Minister will appreciate that I am not trying to widen the debate, but it is rather difficult to refer to the question of rules for valuation of a partnership without relating to the absence of rules generally for the valuation of assets. It is an open secret that this Wealth Tax Bill is very largely modelled on the Indian Wealth Tax Bill. Under that legislation there are detailed rules for valuation of assets. Since the Indian legislation was followed fairly closely in this Bill, why was this aspect of it not followed?
(Cavan): I make the Deputy a present of the fact that I have not studied the Indian system. Without casting any disparagement on the Indians, I can assure the Deputy that we are not legislating for Indians but——
No, but we are emulating their legislation.
(Cavan):——for ordinary Irish people. Such experience as we had in the past of the things I have been talking about —when it was necessary to value land or shares—has worked well. We believe it will continue to work on that basis. This is a new tax. If as the years go on, amendments are required, they will be brought in.
(Dublin Central): I agree with Deputy Colley and Deputy Belton. Valuations will be of vital importance in this Bill. The Minister pointed out that valuations for death duties have worked reasonably well through the years. I believe this to be so. Death duty valuations will probably occur once in every 20 or 30 years, but we are dealing here with a different ball game. We are broadening the scope of valuations. From the Revenue point of view, valuations will become much more difficult, especially when we take inflation into consideration. The fluctuations in inflation will undoubtedly affect valuations. It will present an enormous problem for the Revenue Commissioners to get fair valuations from year to year. Property bought at a very high price 12 months ago would have a different valuation today. It could be 25 or 30 per cent lower. This is the type of complicated situation in which the Revenue Commissioners will find themselves with regard to this wealth tax. As the Minister said, it was much simpler in relation to death duties. There should be certain guidelines to show exactly what the valuation is. The Revenue Commissioners have power to appoint people. I am not sure that I will agree with that section when we come to it. We can discuss it then. Valuations will have an important bearing as we go through the Bill. I doubt that any Revenue Commissioner would be competent to value property accurately throughout Dublin City. I would find it very difficult to imagine that there is such a man.
(Cavan): Deputy Fitzpatrick hit the nail on the head when he said we can discuss this later. It arose indirectly. It was a hare raised by Deputy Colley on partnership. I do not think he intended to raise the question of valuation but rather the question of ascertainment of shares in partnership, which is different.
Deputy Fitzpatrick said we are in a different ball game. We are dealing with something which occurs every three years, whereas death duties were different. When we were valuing for death duties we were talking about a handover of 55 per cent of the assets to the Revenue Commissioners, whereas we are dealing here with less than 1 per cent effectively. I suggest that section 8 (2) will afford us an opportunity for discussion on this matter.
I want to approach this Bill in the same spirit as the Minister and I am grateful to him for creating an atmosphere which enables us to do so. Would he permit me to make one general observation on the section which requires a technical approach? Having regard to the nature of these Bills, there are three points of view. There is the businessman's point of view which was so aptly and ably expressed by Deputy Belton on the Government side and Deputy Fitzpatrick on our side. There is the administration point of view, the point of view of the public service, what is commonly called the bureaucratic point of view. The third is the lawyer's point of view. The lawyer is, perhaps, the bridge. As we are making law, the lawyer's point of view is relevant and so are the other two points of view.
There was some substance in Deputy Belton's submission that the administrative point of view does not always take account of the problems and the practical situation when it comes to commerce. Perhaps the lawyer's point of view is a little closer to it although, with the State having its finger in practically every pie nowadays, I would not go so far as to suggest that the administration are not aware of what is going on. No one point of view should be allowed to override the others unfairly. I hope the Minister does not mind my making these general statements because I want to put what I have to say into perspective.
I welcome a Minister like the Minister who is deputising for the Minister for Finance and who obviously knows what he is talking about when he says there is merit in simple language. I think I heard him express the opinion: the more rules, the more litigation. That is a very common-sense point of view which is applicable to the three points I mentioned. I have been trying to advocate that on all these Bills. I am probably in a minority in the view I have taken about the discretion which should be given to the Revenue Commissioners, from what I hear in the House, but I still feel that in our set up to give that discretion is the clearer and the more practical course.
I want to come now to the definition section. I should like to invite assistance from Deputy Esmonde. He knows much more about this than I do. I do not pretend that I have kept up to date in these matters. Is not this Bill in pari materia, as the lawyers say, with the Capital Acquisition Bill and the Capital Gains Bill which are before the House? Is this not a code of law of the same nature, or dealing with the same subject matter, as the lawyers say, in pari materia? I am not so sure that could not be extended to relate to the income tax code. Just for the moment I want to raise that point. I am very glad Deputy Esmonde is here because there is nobody more competent in the House to express an opinion on some of the matters I may raise.
If this Bill is in pari materia with the other Bills in certain circumstances they can be mutually relied upon for interpretation. If they are mutually to be relied on for interpretation, the comparison of the definitions in the three Bills is of vital importance. I was intimidated when I opened the Bill and saw the task which faced us. It will be a very difficult task in Committee. I do not want to delay the House with details. I shall try to be as general as I can. Certain questions arise. I think the point I am raising has substance. The principles on which, therefore, we have to approach this section are that this is a fiscal charging and taxing statute and that although it received the same interpretation as any other statute it is to be strictly construed.
As I have said, it is of the same nature as two other statutes that we are passing simultaneously. Incidentally, the fact of the homogeneity of the Bills and presumably the close dating of when they become law will go towards substantiating the point I am making.
As I understand it, the rules are that where there are different statutes in pari materia though made at different times or even expired or repealed and not referring to each other and though using different language they shall be taken and interpreted together as one system and as explanatory of each other. Whatever has been determined in the interpretation of one of several statutes in pari materia is a sound rule of interpretation for the others. For Deputy Esmonde's information I am referring to Beale's Cardinal Rules of Legal Interpretation, Third Edition.
(Cavan): I do not want to interrupt the Deputy but could he give us a definition of “in pari materia”?
This is one of the difficulties I am asking Deputy Esmonde and the Minister about. The Minister will allow me to make my submission.
(Cavan): Certainly.
If I have to be set off on that we will be here all day. “In pari materia” simply means of the same nature. I will try to satisfy the Minister with a case.
That is good enough for practical purposes.
Deputy Esmonde knows what I mean, does he not?
Yes—of the same nature, governed by the same rules.
Yes. The general statement I have made is qualified. Frankly, I would not be prepared to offer an opinion as to what the precise position is at the moment but there has been a great deal of case law on this and I suggest that the three Bills going through the House are in that sense in pari materia. If they are, those rules of interpretation can be complex when it comes to the practical case and difficult in application. There are a multitude of decisions relating to them. It is that fact that I want to emphasise here. I do not want to indulge in the exercise of giving a legal opinion. I do want to point out that these three statutes are as far as I can see so related that they may be used and in principle should be used for mutual interpretation when the necessity would arise, that the rules governing their relationship are complex and you would need particular cases to apply them and that, therefore, there are possible grounds for legal points in court. I do not say that they would in themselves bring about extensive litigation but I do relate it to the Minister's point.
What is the relevance of what I am saying to the section? The Chair has been very tolerant in not asking that question. The relevance is: in these three Bills the same words are defined and the definitions vary. I do not say they are contradictory. I make that clear so as to avoid our going off at tangents. They vary. I have not found a blatant contradiction between the definitions but one may evolve in the course of the debate. I have found more than once in making the comparison the suspicion at least of an enlargement of meaning or a qualification in one Bill or the other in the use of the same words. This is a legal problem.
Before I embark on each individual definition, perhaps I should give the Minister an opportunity to comment. I greatly appreciate the fact that it is the Minister for Lands who is deputising for the Minister for Finance on this occasion. I am not criticising the Minister for Finance but it is useful to know that what one is saying will be understood in its full implications. If the Minister likes, I will give him an opportunity to comment on what I have said.
(Cavan): I will comment very briefly. First of all, Deputy de Valera has embarked —and he is quite entitled to do it— or highly technical legal argument and has put forward the case that statutes which are in pari materia to each other should have common construction, so to speak. I was not being funny or obstructive when I asked for a definition of “in pari materia”. There are absolutely different principles involved in each of these three Bills. The measure we are dealing with now imposes an annual tax and if it would be in pari materia to anything it may be in pari materia to the rating system. The Capital Acquisition Tax Bill imposes a tax once and once only when a gift passes or an inheritance occurs. Capital acquisition tax is really a different code altogether and bears no resemblance to what we are dealing with here.
I do not know what Deputy de Valera was quoting from but I understand—and I want to make it clear that I cannot quote the authority for this—it is laid down and accepted that a taxing statute must be construed within the four walls of the statute. Some people say the law is an ass but the law quite frequently follows common sense and that is elementary. What I have said there is that a taxing statute must be construed within the four walls of the statute because if that were not the case, dear only knows what the taxing statute would mean. For want of a better expression, it is a penal statute; it is a statute which is extracting tax from people. You cannot wander over statutes which have no relation to it to see how it affects the taxpayer.
I may be able to produce authority for that statement later. It appears to be full of common sense. I repeat that the language in this statute is simple. If we are to wander now from the capital acquisitions tax definitions to the definitions here and then to the income tax code and to the capital gains tax code we shall find ourselves in chaos. Anybody questioning his position in relation to the Wealth Tax Bill will rely on the definition in that Bill and not any other in determining his rights. I suggest, respectfully, that we accept that and deal with the Bill on that basis.
I should like to accede to the Minister's point of view but this is a capital code. The Income Tax Acts are a code in themselves. I submit that the three Bills relating to wealth are dealing with the same subject matter—namely, capital—and are part of a whole code of legislation dealing with that subject. For that reason I submit that they are in pari materia. However, it is not my intention to use this point as a type of filibuster.
Deputy de Valera is correct in raising this point at this stage because we are dealing with the definition clause in the Bill. Normally, when Bills are being drafted, the definitions are at the end although in relation to finance business they are usually at the beginning. Consequently, when people find definitions at the beginning of a Bill they wonder whether they should allow the definition to be enacted without making any comment at the preliminary stage.
Deputy de Valera has raised the question of in pari materia. I cannot see any grounds for in pari materia in respect of the three Bills. As the Deputy says, all three Bills are related to capital but there is nothing to corelate them. They must be taken as separate entities. The approach to the tax base is different in each of them. To take a simple example, capital acquisitions tax is a tax on capital but one tax is an annual one and the other is, so to speak, a once and for all tax. That, alone, is sufficient to put them in different categories. Deputy de Valera pointed out that there are differences in the interpretation sections of the Bill as to the meanings of words used. That bears out the fact that they are not in pari materia. While I cannot say what is the definition of “real property” in the other Bills, I have always understood it, in lawyers' terminology, to mean freehold property. However, in this Bill we find that included in the definition of real property are leaseholds, so that here we have a special definition in a special Bill, included for special purposes. Therefore, it is a package on its own.
Obviously, lawyers will read the debate on the Bill because they will be interested in knowing what was the view of the House. Without going into the wider interpretations of law, there is ample evidence in the Bill to show that it is a package on its own. It is usual, when one takes a Bill like this, to endeavour to find analogous sections in some other Act but one must be very careful in this regard. Usually a section that is analogous to a section of another Act is invoked by lawyers as a precautionary measure but that other section does not necessarily govern their judgement. It is helpful to a lawyer to look at the ways in which words have been used.
Deputy Esmonde is right up to a point. I submit that what we are dealing with in these three Bills is in pari materia and to that extent I disagree with the Deputy. Should a quotation be needed in regard to the definition of in pari materia I would refer the House to Hardcastle on the rules which govern the construction and effect of statutory law, second edition. He tells us that it may be profitable to refer to one Act for the construction of another and says that when the statutes are in pari materia, that is dealing with the same subject matter or in other words constitute a part of a whole of the code of legislation on a particular subject, and so on. There is a case quoted in this context. It is Rex v. Tonbridge Overseers, 1883, 11, Queen's Bench Division, 134. The work is well known to lawyers.
I do not want to go into the technicalities of law. However, we are dealing with three Bills where the subject-matter, namely, capital is the same. We are dealing with three Bills that propose to tax capital, and which are going through the House at practically the same time. The same words are defined in at least two of the Bills and I am suggesting this may give rise to complications. I do not wish to go into a legal exercise regarding the legal position but we should have consistency and we should avoid making traps or causing grounds for further litigation. That is why I went into the question of in pari materia because I wanted to establish the relevance of the definitions in these Bills. I think I have done so prima facie.
The Minister spoke about market value, and this is a matter that must be considered. However, I think it better if I consider the points made as we proceed in this debate. It is an involved process and I do not intend to parse every word but I wish to ask a few questions. For instance, why is the definition of a word in this Bill not the same as in another Bill?
Because they are not in pari materia.
I say they are in pari materia and I want to point out the relationship. I am entitled to make my case. I am sure the Deputy will agree with me that the judgment will be given when we walk into the division lobby, but up to that point each of us is entitled to make his case.
I hope we are not going to divide on a legal definition point, because the important point will be the divisions on the specific items.
I meant that I hope the Deputy would allow me to operate on the basis that I am saying they are in pari materia.
We get the point the Deputy is making.
I take it the Deputy does not object to my making a comparison between them provided I do so within reason. Incidentally, the word "property" which the Deputy mentioned might be a good one to consider.
I said "real property".
The word "property" is defined in the two Bills. Why it should vary slightly seems to suggest that the draftsman nodded. In the Bill we are discussing "property" includes interests and rights of any description, and in the Capital Acquisitions Tax Bill it includes rights and interests of any description. Could we not go to the trouble of keeping the same definition? In one case it is "interest and rights" and in another case it is "rights and interests". That may seem a trivial point, and I realise that there is no difference in the meaning, but it serves to bring out the point I wish to make in regard to the other sections. Incidentally, the word "property" is to be taken in its general sense—at least that was the case originally. Since then it has been defined by statutes in various ways, and nowadays the word probably means anything one owns.
Or has a claim to.
Originally it was a common English word but now it has become a technical term. For the purposes of this Bill and of the Capital Acquisitions Tax Bill it means everything a person owns, has a claim to or has an interest in. Deputy Colley and the Minister both referred to the definition of "discretionary trust". In this Bill and in the Capital Acquisitions Tax Bill the definition is the same essentially but——
(Cavan): I do not wish to interrupt the Deputy but, on a point of order, it is obvious that there can never be an end to the debate on Committee Stage if we are going to deal with the three Bills together. I respectfully suggest that they are three different and distinct Bills. Section 1 (1) of the Wealth Tax Bill, 1975, says:
In this Act save where the context otherwise requires—
I respectfully submit that we are bound to deal in Committee with the Bill before us and that it would not be in order to deal with the meaning of words in other Bills.
I submit I am dealing with the meaning of the definitions in this Bill. In dealing with the definitions in any Bill I am entitled to refer to any source for the meaning, whether or not it is in another Bill. I made the case in pari materia to relate them, but if the Minister takes that attitude I submit I am perfectly entitled to point out that the meaning attributed in this Bill is at variance with another meaning elsewhere, whether technical or common. We are going to legislate the definition of words and if there is any restriction put on me regarding the interpretation that can be put on them we will nullify the work of the House. I am afraid I may have confused this slightly by referring to the points in pari materia——
(Cavan): We are defining words for the purpose of this Bill and for no other purpose.
I question the Minister's point. The definitions we are making in this Bill are for the purpose of this Bill, but they will be also for the purpose of the code.
(Cavan): No.
I am perfectly entitled to ask, and I do ask, and shall go on asking as to why the Minister does not subtract or why he does not add certain words. I have referred to the other Bills. If the Minister puts me to it I shall go into detail, and that will delay the House. I was going to try to deal with this without going into detail but, if the Minister wishes to force me into detail, he will have the detail.
(Cavan): I know the Deputy will be reasonable. I would not expect him to be anything else.
I have made my point about in pari materia. I have pointed out that the definitions in this and the other Bills are at variance with one another. I do not say they are contradictory. I was very careful at the beginning and I did not say contradictory, but they are at variance. They are not quite the same. I do not want to make any further legal point, but I am entitled to ask the Minister why certain words are there and why certain words are not there. Even if I am excluded from dealing with the other Bill I now want to put it on the record that, if I am driven to it, I will do it in relation to the other Bill. The Minister cannot stop me asking him why he did not add the whole string that includes disposition. Let us be reasonable and do it in a reasonable and less technical way.
This is one of the devices suggested to the Minister, and I will not be stopped from discussing freely the contents of a Bill we are passing no matter how inconvenient that may be to anybody, and I will not be stopped from relating the three Bills. The definitions are at variance. In the case of property they could not even put the words in the same order; it is rights and interests in one and interests and rights in the other. That does not matter one whit but it is an indication of the difficulties. The Minister has provoked me into saying those things, things I regret, and the real reason why I want to do what I want to do is because I want to try to see if we can get consistent definitions. The definitions could be consistent. I do not see why there are these variations.
I do not want to delay the House, but discretionary trusts is defined in line 17 onwards of section 1 (1) and it is also defined in exactly the same words in relation to "accumulate any part of the income" but then, in this Bill, disposition includes any disposition whether by deed or will and any covenant agreement or arrangement whether effected with or without right. Those are the words in this Bill. In the other Bill disposition includes a whole list of things running from "a" to "n" in the definition and not in both cases the words "include his house". Why the difference? There is probably a reason why what is defined in this Bill is more relevant. I accept all that but, if one takes definitions like that, it is easy to see the list can only be jarring on a lawyer finding the same words in the same code defined in a different way. That is all I am saying on that.
There is no need for me to parse the words, something to which I would have been driven had the Minister persisted in his earlier approach. The next words are "entitled in possession". The phrase is defined in essentially the same way in the other two Bills but in the Bill before us there is a difference. The property and the interest and the share of a partnership are set out separately and in the other Bills there is a reference to "joint tenants and beneficiaries". The wording, as I say, is precisely the same. If this Bill is passed in this form I will leave the courts to deal with what is meant, but this is an indication of the technical difficulties that are beginning to arise on this whole code. "Interest in expectancy" is varied in the definition in the Bill before us. It gets a separate definition in the Capital Acquisitions Tax Bill. In this Bill it includes an estate in remainder or reversion but does not include a number of other things. It seems to say the same thing but it is set out differently. There is certainly a formal variation.
I do not want to delay the House with these comparisons. Anybody who reads the Bills will discover them for himself: although they appear to be essentially the same they are set out differently and presented differently. There is some variation. Lawyers would ask: Why? The courts would ask: Why? I do not want the Minister to send me looking to authorities. I can give them. I am quite capable of giving them. If this were as simple as the Minister says it is, that would be all right, but it is not. But even if it were not a statute in pari materia, when difficulties of interpretation arise one can refer, as Deputy Esmonde said, to decided cases or any relevant legal material for the interpretation.
I do not know why, if one definition in one of these Bills is all inclusive, it cannot be repeated or adapted in the other Bill and why, in the case of words or phrases like "discretionary trust", "entitled to possession" or "interest in the expectancy" a suitable general definition cannot be taken and be the same in all three. It would give certainty, avoid dangers that may be here, and it would obviate the possibility of one qualifying the other. After our experience with the last Schedule of the Capital Gains Tax Bill, Deputies might be excused if they were somewhat suspicious about variations in wording as to what was being imported.
In the three definitions I have mentioned, I do not see that any of these three materially expand the meaning in the other Act but it seems to me that the widest interpretation, taking all three together, where they are consistent, will be the interpretation put on these words. It is the widest possible meaning over the three Acts that will be taken, not necessarily the narrow meaning within the Act itself. If the Minister wants me to justify that statement I can do so but I would prefer to make the statement here as a Deputy rather than to have us running into technical law.
In the same spirit I want to take the words "market value". Market value in relation to property means the market value thereof, ascertained in accordance with section 8 or 9, as the case may be. I am glad Deputy Esmonde has got his ammunition and will join with me but I also want to say that while he was collecting it, I said that I wanted to try to avoid going into the finer details. I want to say to him, on the question of in pari materia or otherwise, that in the last analysis that will be decided by the courts and not by us. I am entitled to take the possibility into account in making my submission.
The Wealth Tax Bill defines market value as:
The market value in relation to property means the market value thereof ascertained in accordance with section 8 or 9, as the case may be.
As the Minister said, the details of that are best argued on these sections. It is relevant and important for me to point out, at this stage, that section 8 has four subsections of some substance and section 9 has three subsections. Under the Capital Gains Tax Bill we had a big debate on market value. Section 49 of that Bill defines "market value" in some detail. I shall not go into a detailed comparison of the details of market value here. It seems from the discussions we had on that lengthy subject that it is important, from the point of view of the business man as a person practically engaged in commerce, to give particular attention to the definition here. I, therefore, suggest that when we come to sections 8 and 9 we give it rather particular and detailed scrutiny, particularly in the light of section 49 of the Capital Gains Tax Bill and indeed the provisions in it.
It is difficult to draw the line that the Minister—and I sympathise with him—would like to draw on where the discussion on this should occur. If we have an important practical matter of this nature am I asking too much to suggest that it should be treated in the same way in the three Bills and that instead of having the definition, as we have it in this Bill, because of the practical difficulties, that the definition already in the Capital Gains Tax Bill, which the Minister has seisin of still as it has to come back for Report Stage, and the definition of market value in this Bill should be taken together, reconsidered, if necessary adjusted, so as to cast them in precisely the same form in the two Bills? Here is something on which my colleague. Deputy Tom Fitzpatrick, and Deputy Belton have expressed views on. It will be a matter of major practical importance and even day to day importance where this Bill and the other Bills are concerned. Valuations will be required. The Revenue Commissioners will have to make many more assessments. Under the Bill the taxpayer will have to make assessments. Therefore, it is unfair to the citizen complicating the issue for the administration to have, in the one code, dealing with the taxation of capital, varying definitions even though an involved legal argument at the end will show that there is not a very great substantial difference between them. The fact that there is even a verbal difference can be important in law.
Suppose I were to embark on a word by word comparison of these defininitions and Deputy Esmonde and I were to go into a technical argument on this, we would be here for a long time. The Minister would be valid if he complained that we were discussing the matter in a way more appropriate to another place, namely, the courts. Deputy Esmonde could reinforce him by saying that one can never discuss anything in a court without a specific case. Both points would be perfectly valid and I accept them. However, my point is that we are making the law in the interests of the citizen, and of the administration, in the interest of the Deputies who have to take the responsibility for passing this. Deputies should be given a chance of using their heads instead of their boots to put the Act into effect because the feet will march up to the lobby when the division bell sounds, but it is not asking too much to give Deputies a chance of using their heads on this matter. I complain that it is, indeed, confusing to have a common thing like "market value" defined in the complex way it is and, differently, in two related statutes we are putting through the House at the same time.
They may not be different in content but that is part of my trouble. I have to read through a lot of apparently different material because it is differently set out and presented to see whether there is any variation or qualification in meaning at all. We have the warning of the parenthesis in paragraph 3 of the last Schedule of the Capital Gains Tax Bill to warn us what can be buried, inadvertently often, in this kind of legislation.
In order to avoid that I am making, as strongly as I can, the point that in the case of a phrase like "market value" can we not get a common definition, a clear definition? All the qualifications necessary should be put in one Bill and "market value" defined in a section. In the Bill before the House the word appears as a definition in the interpretation section but that definition is meant to refer to two further sections in the Bill. That seems to be deliberate confusion. The charge has been made before now that certain types of statutes have been drafted in a way that can be confusing.
I urge the Minister, in connection with "market value" to put the definition into one section at least, either in this section or in another; to have it consonant with the definition contained in section 49 of the Capital Gains Tax Bill. It should be done in a clear way so that the people in commerce will not have to go to a lawyer. The general rule governing would be that words will be used in the general meaning. Here I have great sympathy with what the Minister said at the outset. It would, perhaps, have been better not to define the words "market value" at all, to let it be dealt with as common words as "property" was in the beginning. However, that may not be feasible in a Bill of that nature. That is freely conceded. If it is defined, it should be in a clear way so that the person reading it, whether he be a lawyer or a layman, will have some certainty in the answer to his particular problem as to what is the market value of the item of property he is interested in at the moment.
That is the practical test. Market value will not become a live issue until there is something to be valued, until there is some property there whose market value is to be determined and when one knows the property it should be clear what is the meaning of the phrase "market value" and what are the rules by which one decides what the market value of that piece of property is.
There is a definition by reference to two sections but it seems to be unnecessary to include them in this. It is a bit of a puzzle, for instance, why when it is virtually defined in section 8 and 9 and it is also defined in section 49 of the Capital Gains Tax Bill, a definition by reference has to appear in the Wealth Tax Bill but no such thing appears in the corresponding section of the other Bill. I do not think there is any sinister reason for this but I have pointed out the fact that courts will usually try, wherever possible, to come to the conclusion that Parliament meant what it was doing. If the question of in pari materia ever arose, if the Bills were related, and if the subject came up, it might well be that the question as to why it was put in this way in this Bill and different in the other could arise.
These are all questions of legal interpretation, but this is the morass we are getting into with this Bill. I am a little puzzled as to what the outcome will be. Property is defined essentially the same but there is no reason why the words should be inverted in one to the other. It is an indication of what will happen.
We have net market value as a new definition in this Bill. However, taking subsection (1) of this section, I want to make the general point that we should in defining the same words in these three Bills as far as possible have the definitions exactly corresponding, and where they do not correspond a good and sufficient reason should be given to the House for the lack of correspondence. To go into the matter in greater detail than that would be trespassing, at this Stage, beyond what is properly our business.
There are some further points I want to make on the section, but on this first point I have made the Minister should be satisfied of the consistency of these definitions. Secondly, on the words "discretionary trust". "entitled in possession", "interest in expectancy", "the market value", all of which I have discussed, will the Minister at this Stage say whether those definitions in the Acts are in pari materia or not, whether the definitions given in this Bill now before us are the same as the definitions given in the other two Acts and, if they are different, would he please indicate to us the points where there is a difference?
(Cavan): I cannot accept the proposition that this is a code of tax or that these three measures are in pari materia. Deputy de Valera urges that the three measures are dealing with capital or wealth and that they are dealing with the taxation of capital or wealth. He goes on to say that because that is so, all the words used in the three Bills should have the same definition. The Planning and Development Act of 1963 deals with land and with the use of land. The Land Acts deal with land, and indeed to a very large extent with the use of land, but it would be going very far to say that our definitions in regard to land in both those different codes should have the same definition. I think that is what Deputy de Valera is trying to do here. I concede that these three Bills—and it is coincidental that they happen to be here at the same time——
They were in the same White Paper.
(Cavan): Yes, I am not going to become controversial but even the opposite side of the House agree that the Capital Gains Tax is years overdue. The other Bills are to replace death duties. It just happens that when this Government came into office they decided that a revision was long overdue.
I respectfully put it to the House that we have three entirely different approaches to the taxation of capital and wealth here and that these words that are worrying Deputy de Valera must be looked at in the context of the measure in which they appear. The Bill we are dealing with now is the only Bill we are concerned with. It deals with wealth in the possession of the taxpayer or which is deemed to be in the possession of the taxpayer on 5th April in any year. Therefore, the emphasis here must be on clarifying what possession on 5th April means. That is the important thing here, to ascertain as clearly as possible what we mean by possession of property or wealth on 5th April. I put it to the House that the expressions that are used in this Bill bear that in mind and are adequate to make it clear to anybody or any court what exactly is meant by them. That is the important thing.
It is also important to ensure that certain devices which might divest or might appear to divest a person of property or wealth temporarily will not be accepted. That is what is at stake here. When we come to deal with the Capital Acquisitions Tax Bill the emphasis shifts, and what we are dealing with there is the passing of property—not the stationery existence of property—from one person to another by way of gift or inheritance, and the emphasis there must be to provide words and phrases and meanings which will make the situation clear to all concerned when property passes by way of gift or when property passes by way of inheritance, as indeed when we come to the Capital Gains Tax Bill we have another principle involved and another situation arises.
There we are concerned with the appreciation in value of property between one date and another in the hands of the same person. That is the issue involved there. I sympathise with Major de Valera. He has read these three Bills in or about the same time and must naturally be inclined to think they all deal with the same thing. They are dealing with the same thing in a very different way and under a very different set of circumstances. I have no intention of trying to indulge in a learned argument about the meaning of in pari materia in this House, because if politicians had to be qualified to do their business in that sort of way it could never be done. I have certain experience as a lawyer going back over a number of years since 1940. I hope that I always approach things in a common-sense sort of way, and I feel that in doing that, I keep myself and, indeed, my clients out of trouble.
That, I think, answers clearly the general points raised by Deputy de Valera. He mentions that "market value" is defined in section 1 by reference to two other sections. But when we have the whole thing threshed out we will find that market value means the ordinary market price that a thing will fetch in the open market on a given day with a couple of exceptions mainly in ease of the taxpayer. I will not give details now: one of them would not be an ease of the taxpayer but it is necessary in order to ascertain the real value of things. Shares which confer control of a company are valued on that basis. The fact that they do give control is taken into account.
Agricultural land, if it is within a mile of a town, will not be valued under this Bill at its development price, at the price that a speculator might pay for it, or even at the price that a genuine building contractor would pay for it. At the option of the taxpayer, it will be valued at agricultural value, farm value plus 25 per cent. That is all the mystery there is about that. It is a sensible approach that a farmer who is using his farm for agricultural purposes should not have it valued at five or six times the agricultural value because he happens to be within a mile of a town or because a town decided to extend near him.
I would, therefore, suggest that when we get down to talking about these definitions as most of them arise in the various sections, we will see that for the purposes of this Bill they are a practical common-sense approach and that they are couched in language which will not be difficult for either the taxpayer or the Revenue Commissioners to understand. I understand that in the death duty code which could be regarded much more as a code than the passage that we are dealing with now, various words have different meanings for the purpose of estate duty, legacy duty and succession duty. There are three branches of a code that were much more related than what we are dealing with. I am advised that estate duty stood on its own, as did succession duty and legacy duty, and that that has been the position for a long time.
As I said in my general remarks, in the capital acquisitions tax disposition is the all important thing. No tax arises until there is a disposition, change of ownership by way of gift or inheritance. The important thing is the ownership as on the 5th of April in any year. I have already dealt with the extended definition of property in possession including property over which some person has a power of allocation and interest in partnerships and that sort of thing. I respectfully suggest that we can deal with any definition that is annoying anybody or indeed with any definition that is giving anybody any trouble. I will do my best to clarify the position and take part in a realistic debate on it.
I am grateful to the Minister for his approach, which I can only characterise as a common-sense one, which is the best compliment I can pay him in this regard. I do not wish to go into detailed technicalities on this but I want to make two points which are material in approaching this section. One is in regard to the meaning that is in the section. For that reason one can ask a number of questions. My view is reinforced by the point I made about in pari materia with which the Minister does not agree.
When he suggest that it is accidental that they came in at the same time I respectfully reply that it is not accidental, because the whole thing was forecast in the same White Paper: it is manifestly part of a code of capital taxation. These Bills were all preceded by this one White Paper. This is an argument that we do not wish to pursue. I do not want to pursue it any more than the Minister except to say that it is a point that should not be lost sight of in our drafting of definitions.
I want to ask a couple of questions here which I have asked already in general terms, and I do not intend to parse the two—lawyers will do it— and anyone who is interested now has the reference to read those definitions to see if they can get anything further than I have got out of them. The point is this: we will take the definitions, "discretionary trust", "entitled in possession", "disposition" and "interest in expectancy". We will take these first. They are all contained in subsection (1). I repeat "discretionary trust", "disposition", "entitled in possession", "interest and expectancy". These also appear defined in the Capital Acquisitions Tax Bill. The question I wish to ask is: are the definitions in this Bill narrowed or the same in content, or do they embrace anything wider than the definitions in the Capital Acquisitions Tax Bill? I take the Minister's point that the purposes of the particular Bills, in the sense that they are dealing with different aspects of capital, are different and that there are certain parts of these definitions that require different emphasis in each of the three Bills. That, I accept, of course. I also accept that these being taxing statutes, the danger of the definitions in this Bill being enlarged by reference to the other Bills is minimal because the court would tend to construe strictly in favour of the taxpayer as far as possible. Therefore, if this Bill is narrower than what is in the other Bills for the purposes of this Bill, it is not so important. Nevertheless, I would like to know whether we have a wider definition here or how far these definitions are on all fours, one with the other, notwithstanding the point which the Minister made that you are dealing with different aspects of capital taxation in the three Bills.
In asking the Minister that question I am really asking him whether he could not, from a common-sense point of view, from the point of view I have mentioned already, get common definitions in all the Bills which would make it so much easier for the layman, the businessman and the lawyer to read. That is really what I am asking him: Is this definition narrower or wider than, or the same as, that in the other Bill?
(Cavan): “Discretionary trust,”“entitled in possession”—and what were the others?
They are: "discretionary trust", "disposition", "entitled in possession" and "interest in expectancy."
(Cavan): I do not want to be unhelpful or appear to be ungrateful but I would rather conduct this debate on the basis that Deputies would find fault with the language used in the Bill or with the definitions used there and suggest that they should be amended if they find fault with them rather than to ask me, or anybody, to compare one Bill with another. It may be an interesting exercise, but the object of this Bill is to define words so as to include the entire wealth of an individual and bring him into the net.
I imagine in the Capital Acquisition Tax Bill, which has not come to Committee yet and which will be dealt with later on, the emphasis will be to see when property is changing, when an ownership is changing. If the House thinks about it seriously it is not realistic to do that now. If Deputy de Valera says we are going too far in this. I say we are not going too far because the intention is to go as far as we can to embrace all of the wealth. But if he says that the language is defective we will have a discussion about it and I will try to see how it can be improved. I do not think it serves any useful purpose to ask why is this Bill different from the others. They are two different Bills with two entirely different objects.
I have some other questions to raise but I want to say a brief word in regard to the general point raised by Deputy de Valera. To suggest that similar words or phrases in these three different Bills ought to have precisely the same definition would, of course, be going much too far. Deputy de Valera never suggested that. He made it clear on a number of occasions that because of necessary differences in the purposes of the three Bills it could be necessary to have different terms used in some of the definitions. The general proposition he was putting was that in so far as they could be similar they should be similar. On the other hand, to suggest, as the Minister has, that these three Bills are totally unrelated and are purely fortuitously coming before the House in or around the same time is also, I would suggest, going too far.
As Deputy de Valera said, the three Bills are part of a code of capital taxation. Furthermore, in regard to the Capital Gains Tax Bill, it is very necessary to define in that what is the wealth in the terms of what is taxable on a particular day, the day of acquisition or the day of disposal, so that the same purpose is required as in this Bill. A similar argument could be made in regard to the Capital Acquisitions Tax Bill.
I would suggest to the Minister that the proposition put by Deputy de Valera, which is, as I understand it, that in so far as is possible the definitions of the same words and phrases should be the same, is a reasonable proposition. To take the simplest and most minor one which Deputy de Valera put forward, in one case there is reference to "rights and interest" and in the other there is reference to "interest and rights". Is there any good reason why they should not be the same?
As the Minister well knows, mere difference raises a suspicion in lawyers' minds that there is a difference in meaning and they can spend a long time trying to find out whether there is or not, whereas the whole thing could be made very simple by making them the same without any loss to the purpose of any of the Bills. That is just an illustration of what is the general proposition we are urging on the Minister—that is, in so far as it can be done, and recognising that it cannot be done 100 per cent, the definitions should conform and thereby make life simpler for the citizens who have to live under these Bills when enacted apart from any question of lawyers. Some lawyers might like them to be complex. I, as a lawyer of sorts, would prefer if they were simpler and more straightforward.
Take "market value" and ask the question, in the context of what the Deputies have been saying, why it could not be in the interpretation? Each Act has its own meaning. Basically, an Act is given its ordinary everyday meaning. I see the point that has been made about the definition of words and I do not think there is anything——
There is no substance in that point.
The basic point is that interpretation sections are used to clarify the meaning of words used in a particular Act. Sometimes it has appeared in many statutes that have been discussed that definitions were put in which were not basically required at all. Ex abundanti cautela is the Latin phrase used in that sense. They were put in to make it quite apparent, and it turned out on Committee Stage on other Bills where a point was raised that the Minister said: “I do not think it is necessary but if you like I will put it in. There might be another pertinent view, it might be different.”
We are dealing with definitions here now. It all goes back to the theory on which Deputy de Valera and I disagree, what is in pari materia and what is not. There is no need for alteration of the other Acts. When a new, in layman's language, package comes in, Deputy de Valera, who is a prominent member of the Opposition, and I support him, would naturally compare it, which is the natural thing for a lawyer to do, but that does not make the one code. I want to quote a well-known legal authority in reference to interpretation clauses which says all that needs to be said. It is from the 1913 edition of Halsbury's Laws of England, Vol. 27, paragraph 234:
Most modern statutes contain an interpretation clause wherein is declared the meaning which certain words or expressions are to or may bear for the purposes of the statute in question. As a rule it should be used for interpreting words which are ambiguous or equivocal only and not so as to disturb the meaning of such as are plain. Interpretation clauses are often inserted ex abundanti cautela and are not necessarily to be construed as positive enactments.
That covers everything we have been discussing here in ordinary, plain, simple language. Halsbury had a gift of putting what might appear to be complex points into simple language, and any judge, lawyer or layman looking at the sections of an Act which is to stand on its own, and not part of a code, would take that view, whether he was a lawyer or not. The sooner we get down to the sections where these definitions become relevant the better. We could go on and on for ever.
I still think that, when passing legislation, we should have regard to simplicity. Incidentally, that interesting passage from Halsbury does. Indeed I could invoke it to support the point of view I was urging here. The question is this: why, in two similar Bills we are passing at the same time—leaving out the law altogether; leaving out in pari materia or anything else; forget the law; just think of two Bills going through the House simultaneously; after all it is the ordinary citizen who is involved in this—should we use exactly the same phrases, in quotes, purported to define and have manifest differences in the definition when it appears to me to be unnecessary? Some of it may be ex maiori cautulae, if you like, in which case, it is unnecessary though I agree with Deputy Colley that much of it is necessary. What I am complaining about is that some of it is so very nearly the same, why is it not exactly the same? To come back to that quotation from Halsbury, would it hurt to add the additions that are, say, in the Capital Acquisitions Tax Bill to some of the definitions here, even though they were not directly relevant, for the sake of completion? I would be completely justified in doing that on that quotation.
If and when that arises, going through the Act, that would be the time——
I am talking about the interpretation section from which the Deputy quoted. Here we find this peculiar situation. We are dealing in every case in the interpretation subsections in these Bills with words or phrases in inverted commas and we are purporting to fix their meaning by Act of Parliament. But, when I look at these Bills before us at present, I find these very same words or phrases are being defined in this code which I have submitted as in pari materia and that they are either precisely the same, as in the case of definition of “personal representative”—that is all to the good—they are practically the same, as far as I can see, but with variations, both in form and, in one case, two of them telescoped into the one paragraph— which happened twice—the wording is practically the same. I can find no very tangible difference in meaning. But, on first blush, looking at the two, they are completely different.
I do not want to hold up the House by reading those long provisions and putting them on the record. But anyone who takes up the Bill and compares the way it is set out will naturally enquire: why the difference when there does not seem to be any reason therefor? In the case of "disposition", for instance, one may well say: Well, it is more complete in one Bill than the other because it is required to be more complete. But, relying on the quotation of Deputy Esmonde about interpretation clauses, I would go so far as to say that perhaps it would be safer, in this case the way we are putting it through, to insert the longer definition even though parts of it were not directly relevant to this Bill. It would not go any further to defeat the Minister's argument, if it is valid, that it is not in pari materia because, as I pointed out earlier, the courts would lean to strict construction of the particular Act itself as it is a taxing Act. All this being so, I am puzzled why some are exactly the same, some appear to be the same, even the same words, but are juggled around differently, presented differently. Then, as I will say later, there is possibly substantive differences but I shall reserve them for the sections concerned.
Why must we put "market value" into an interpretation section in one Bill and not in the other? All these, to my mind, create a certain confusion. I would be willing to bet that those of us who have been trained as lawyers and those practising lawyers in the House were we to get down to the details of this, would find themselves with a lengthy and time-consuming task. Should that be relevant or necessary for this debate, it would be a very long and tedious job to tease out the whole thing. If that situation is there— apparent confusion as far as the layman is concerned, a patent involved technicality; a matter that has given rise to both Deputy Esmonde and myself, in the spirit of what the Minister has asked, repressing ourselves from getting into a legal argument—but there has not been a phrase opened on either side that does not tempt one to run for the books and the cases—if that is the factual situation on a definition section of an Act, cannot we get more simplicity? That is what I am asking.
Taking the Minister's very reasonable opening I think—and I am back to it—that sometimes, with general words, the less rules, the less litigation. I could not agree more. My point is being made by the very fact that here are Deputy Colley and the Minister, Deputy Esmonde and myself, all of us agreeing on simplicity. But the complications of this have launched us into a position where we are having a legal argument and we are trying not to have a legal argument; where we are having, if one likes, a political debate on it, that is, a debate appropriate to the House, where we should have a debate but where we cannot have such without adverting to technicalities and complications in the very way the Bill is presented. Surely that makes my case, apart from anything else, that these Bills are unnecessarily complicated in their presentation.
I have made that point generally in certain other ways. I am concerned about it not only from the simplistic point of view but also with the experiences we had on the last Schedule of the Capital Gains Tax Bill. I am afraid that this complication could lead to unforeseen and unexpected interpretations. If the Minister thinks I am exaggerating, the Minister for Finance, when he was on paragraph (3) of the last Schedule of the last Act, immediately took more than one point. We had strong argument on them; there were differences of agreement but he said, at the end, he would re-examine it, and we expect there will be a drafting change in that Schedule coming from the Minister on Report Stage. All that arose out of the type of situation about which I am talking on the definitions section.
It is not unreasonable to ask for the maximum of simplicity here. If you must define it, then try to have the definition on all fours. As I said, I would invoke that passage which Deputy Esmonde quoted from Halsbury, if we are going to take that approach, to say that no harm is done in putting the wider definition into all the Acts. If there is a specific reason for narrowing the definition in the Act, then there is a well-known way of drafting it. As it is before us, I feel that we were embarking on a course of big complications and it is not going to help the administration, the taxpayer, or the people who have to deal with the matter in everyday commerce. It may give plenty of material for lawyers to pour over but that is not the object of the exercise.
Progress reported: Committee to sit again.