Dáil Éireann debate -
Tuesday, 10 Jun 1975

Vol. 281 No. 12

Wealth Tax Bill, 1975: Committee Stage (Resumed).

Question again proposed: "That section 1, as amended, stand part of the Bill."

Major de Valera

As I pointed out before progress was reported, the very fact that the discussion was of the nature into which it developed was in itself a plea for consistency and simplicity in regard to these three Bills. We are defining the very same words and phrases in these Bills, which follow the one White Paper and which are related to capital and the taxation of capital. They are going through the House at the same time and I do not think it is too much to ask why there are differences and to suggest that in the interests of simplicity the matter should be reexamined.

I should like to make a point now on subsection (3) which is essentially the same point I made on the preceding two subsections. First of all, the word "indicated" is used. It is used in all three Bills to relate them to other enactments but in this Wealth Tax Bill it is in a somewhat different form from the other two measures. In the Capital Gains Tax Bill the reference is section 2 (6): "References in this Act to any enactment shall, unless the context otherwise requires, be construed as references to that enactment as amended or extended by any subsequent enactment.". It is precisely the same in the Capital Acquisitions Tax Bill but in this Bill it is: "A reference to any other enactment shall, except so far as the context otherwise requires, be construed as a reference to that enactment as amended by or under any other enactment, including this Act". There is a difference of meaning. Is there any particular reason why this variation should be there? I have been quoting subsection (3) paragraph (c). There is a similar but yet somewhat different provision in the other two Bills dealing with the same matter. This is confusing.

What is the import of the word "indicated"? It occurs in the interpretation section of the Capital Gains Tax Bill, subsection (7), and in the Capital Acquisitions Bill, section 2 (6) and, in this Bill, it occurs in section 1 (3), paragraphs (a) and (b). What is the meaning of "indicated" here? Deputy Esmonde might be able to help me here. Is it to be taken in the general meaning or is it now to be taken in the technical term? I have not attempted to follow up the word "property" and some of the other words today. I do not want to pursue the purely legalistic line. It states here that a reference to a section is to a section of this Act unless it is indicated that a reference to some other enactment is intended. That is the phrase at (a). What precisely is the force and effect of the word "indicated" in a statute? That should be looked at in relation to this Bill and also as far as the other two Bills are concerned. I do not know if this is simply a general word to be taken in its general meaning or if it has been used in the statutes before and has become a technical term or has even been interpreted as such.

Mr. Esmonde

It is used in conveyancing when you get those large trusts and you have to deal with various aspects and cross references.

Major de Valera

It is a material word in this definition section. I am unhappy about the system of definitions in this section. I am unhappy about the system of definitions throughout the whole Bill. I feel it may give rise to uncertainties both for the administrators and for the taxpayers under the Acts. It could possibly be conducive to litigation, which is always costly to the parties involved.

Mr. Esmonde

The word indicated is used in the Income Tax Act, 1967. Section 1 (3) of this Act states:

In this Act, a reference to a Part, section or schedule is to a Part or section of, or schedule to, this Act, unless it is indicated that reference to some other enactment is intended.

Minister for Lands (Mr. T.J. Fitzpatrick

, Cavan): Before we adjourned I was trying to bring home to the House that we are dealing here with definitions for the purpose of this Bill only. We are now dealing with the Committee Stage of the Wealth Tax Bill, 1975. Deputy de Valera insists on going forward to the Capital Acquisitions Tax Bill, which has only had a Second Reading, and compares what is in this Bill with what is in that Bill. Unless he can convince me that what is in this Bill is inadequate for the purposes of it I do not think he is being reasonable. He thinks it desirable to synchronise the definitions in both Bills. I do not think he can do that because they are two different Bills dealing with different matters. Unless he is convinced that what is in this Bill is not sufficient or is inadequate he should pass from this Bill and put forward the amendments to the Capital Acquisitions Tax Bill, when it comes to Committee Stage.

There is no point in comparing definitions in this Bill with those in another Bill, which may or may not be amended at a later stage. It is valid to say that we are not concerned with definitions, drafting or terminology of other Bills, some of which have not yet been passed. If we do that where will it all end? Why not go back to the Income Tax Acts, the Death Duty Acts? In the field of property and succession we could spend a very interesting week dealing with the Succession Act, 1965 and it would be every bit as relevant as the one Deputy de Valera is dealing with now. I want to be reasonable, and I do not want to give the impression that I am not prepared to listen or that I am not prepared to talk. If it is any way helpful, having taken the stand I have taken and which I intend to continue to take, because I believe it is reasonable in regard to a comparison of the two Bills, and if it throws any light on the problems which Deputy de Valera has, I will give him some comparisons and some reasons which I hope will demonstrate to him why there is a difference in terminology between the two Bills.

In regard to "discretionary trust" the first seven lines are identical with the definition in the Capital Acquisitions Tax Bill except that the word "disposition" is used instead of "trust" in the first line. Disposition is then defined in three lines in this Bill. Disposition in the Capital Acquisitions Tax Bill involves up to 40 lines instead of the three lines in this Bill. That is because the Capital Acquisitions Tax Bill is concerned with property passing on death or inter vivos. The word “disposition” is intended to embrace all possible means by which property can pass. A full and detailed definition of the word “disposition” was therefore a sine qua non in the Capital Acquisitions Tax Bill, hence the necessity to spell out every conceivable manner by which property might pass.

I said that this morning in different language. I said that in this Bill we are dealing with ownership on a specific date, the 5th April in any year and that in the Capital Acquisitions Tax Bill we are dealing with a change of ownership. That is why the emphasis in the Capital Acquisitions Tax Bill must be on the change of ownership whereas in this Bill the emphasis must be on the ownership in possession on a given date. No such necessity arises in the Wealth Tax Bill. A detailed definition of "disposition" is unnecessary and would be superfluous. It is not advisable to insert in any statute superfluous language or superfluous matter.

That is the point Deputy de Valera has been making all morning, that we should simplify things and cut out a lot of unnecessary verbiage. In "entitled in possession" there is no substantial difference between the definitions except that in the wealth tax "interest in expectancy" is made part of the definition. The major difference between the two definitions arises in the addition of subparagraph (2) in the wealth tax. This is for the purpose of anti-avoidance in the wealth tax and is not relevant in the capital acquisitions tax.

A minor difference is that in capital acquisitions tax interest in expectancy is stated to include every other future interest, whether vested or contingent. This is not considered necessary in the wealth tax. Capital acquisitions tax is concerned with all interest whether in possession or future interest because dealings with either could give rise to a charge for tax. No doubt that was one of the reasons why separate treatment was given to the interest in expectancy. On the other hand wealth tax is only concerned with the present right to the enjoyment of the property. I have spelt that out in detail but I have been expressing repeatedly this morning the same view. I ask the Deputy to accept that while it is reasonable to associate these three Bills with each other because they were introduced at the same time there is a different principle involved in each Bill and a different emphasis. Different machinery is necessary in order to attain the object of each Bill. I cannot put it clearer than that.

Major de Valera

I am grateful to the Minister for that statement, and I thank him for his courtesy and the trouble he has taken. I regret I have put the Minister and his officials to that trouble. I do not intend to pursue this matter further; my argument is on the record. Some points I made may be worth nothing and may call for a rethink in some way or another. I should like to assure the Minister that we have no intention of trying to make a red herring of the other two Bills but one has to refer to the state of legislation in certain cases. I do not accept the view of the Minister that we should not go outside the terms of this Bill in reference. To push that to its logical conclusion would mean that we could not refer to any other Act.

I shall try to co-operate as much as I can in this regard. My intention was to indicate the dangers and the complexity of this section. It may be a material matter in such common things as market value. The definition sections of these Bills left the situation rather confused. The same phrases were used with different meanings.

Mr. T.J. Fitzpatrick

(Cavan): I can assure the Deputy that every word he uttered this morning will be carefully considered.

Mr. Colley

I should like to refer the Minister to the last line of subparagraph (i):

A remainder expectant on the determination of a lease.

Is that the equivalent of a reversion? That word is used later but is it to draw a distinction between the two or is the meaning the same?

Mr. T.J. Fitzpatrick

(Cavan): It means what is left after the lease expires.

Mr. Colley

Is it what the Minister and I would normally refer to as a reversion?

Mr. T.J. Fitzpatrick

(Cavan): Exactly.

Mr. Colley

I should like to refer the Minister to subparagraph (ii) which states:

a reversion expectant on the determination of a limited interest created by the person;

In the context in which it appears the effect is to say that such a reversion is deemed to be an interest in possession, a person having this is deemed to be entitled in possession. It would appear, having regard to that provision and to the provision of section 3 (3) that in such a case both the person who is in possession in the ordinary sense and the reversioner are deemed to be in possession of taxable wealth. If so, which of them would be liable for wealth tax on the interest?

Mr. T.J. Fitzpatrick

(Cavan): I hasten to assure Deputy Colley that, as I think he appreciates, both interests, the limited interest and the remainder on the reversion, are interests in possession. The Revenue will elect as to which interest will pay the tax.

Mr. Colley

On what basis will they elect? Having regard to this provision and section 3 (3) does the Minister agree that both the interest in possession and the reversionary interest are deemed to be taxable wealth which may be subject to wealth tax?

Mr. T.J. Fitzpatrick

(Cavan): I agree that the limited interest is, by virtue of section 3, an interest in possession which is liable to tax. I also agree that the provisions referred to by Deputy Colley make that type of remainder or reversion property in possession. Therefore, both are, on the face of it, liable to tax, but it is provided that only one person can be taxed at the same time for the same property. In this regard I should like to refer the Deputy to section 21 (2) which states:

Tax shall not be paid more than once on the same property on the relevant valuation date and the same property shall not be included more than once in taxable wealth on that date.

Mr. Colley

Is it not possible to argue that it is not the same property since one is an interest in possession and the other the reversion on it; that they are two separate properties? Therefore, they would not be saved by section 21 (2)?

Mr. T.J. Fitzpatrick

(Cavan): Section 3 (4) deals with that point. That subsection reads:

(4) For the purposes of this Act, where the property to which an individual is beneficially entitled in possession includes a reversion expectant on the determination of a limited interest, the individual shall himself be deemed to be entitled in possession to that limited interest and the provisions of this section shall apply accordingly.

Mr. Colley

I do not think that solves the problem.

Mr. T.J. Fitzpatrick

(Cavan): I understand it does.

Mr. Colley

It seems that the effect of that subsection is to confirm that where a person's property includes a reversion expectant on the determination of a limited interest the owner of that reversion is deemed to be entitled in possession, and therefore liable to wealth tax on that interest.

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

But we have already established that is so. The problem is that at the same time the owner of the interest in possession in the ordinary sense as distinct from what is deemed to be an interest in possession here is also liable to wealth tax on his interest.

Mr. T.J. Fitzpatrick

(Cavan): Yes, but subsection (2) of section 21 comes in in aid of the property.

Mr. Colley

Does it? I wonder does the Minister take my point about the meaning of the word property in this. Perhaps it might be simpler if we took an example of somebody who is in possession, a tenant on foot of a 21-year lease. Under this he is liable to wealth tax on that, other things being equal, and his lessor or his landlord who is entitled to the reversion is also liable to wealth tax on his interest in the reversion. Is it not possible to argue that under section 21 (2) the word "property" as used there in the case of the lessee means one thing and in the case of the lessor, another thing, that there are two separate properties involved, and if that is so, section 21 (2) does not save the position.

Mr. T.J. Fitzpatrick

(Cavan): I do not think so because section 3 (3) defines that where a limited interest is concerned, it is the underlying property, that is, the whole property, the entire property, that becomes chargeable and in each of the cases the Deputy has mentioned, the whole property, the actual tangible property, is chargeable. The fee simple is chargeable and therefore it is obviously the same property.

Mr. Colley

Accepting that for the moment, and I have some slight reservations about it, I think the Minister said earlier that in a case of this kind the Revenue would elect.

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

On what basis would they elect?

Mr. T.J. Fitzpatrick

(Cavan): I will put it to the Deputy this way: section 21 (2) says in the clearest possible language that tax shall not be paid more than once on the same property on the relevant valuation date and the same property shall not be included more than once in taxable wealth on that date. If one person pays, the Revenue cannot follow the other. If neither pays and the Revenue has to enforce its right by virtue of the section, it must decide against which person it will go, and having gone against one, it cannot go against another.

Mr. Colley

How will the Revenue decide? Supposing neither has paid——

Mr. T.J. Fitzpatrick

(Cavan): I suppose they will go for the best mark or the one easiest to recover from.

Mr. Colley

That is hardly a satisfactory position, as I think the Minister would agree.

Mr. T.J. Fitzpatrick

(Cavan): Nothing is entirely satisfactory in life, but it is a reasonable enough proposition.

Mr. Colley

It seems to me to lead to considerable uncertainty.

Mr. T.J. Fitzpatrick

(Cavan): I understand that there are precedents for it under the Stamp Duty Acts and other Acts, but there does not seem to be anything very wrong with it. The outrageous thing would be if there was any danger of the same property being taxed twice in respect of the same date and it is absolutely clear that that cannot happen. The best way I have of illustrating this is that if there are these two people, A and B, and A pays, the Revenue cannot follow B and if B pays, the Revenue cannot follow A, and if neither pays, the Revenue can follow one but cannot follow the other.

Mr. Colley

I have some slight reservations with regard to section 21 (2) but we will come to that in due course. I suggest for the Minister's consideration that in a case like this where there are alternatives for the Revenue to go for and nothing is laid down to indicate which they should go for in order to achieve some degree of certainty, it would be better to provide that either A or B is the one the Revenue will go for and if they cannot or do not recover from A, they can go for B. I am unhappy about the situation in which they can go for either and neither knows which will be liable.

Mr. T.J. Fitzpatrick

(Cavan): I can see that if I were to do that and to say that the man entitled to the reversion would be subject instead of the person entitled to the limited ownership or vice versa—I cannot see how this would arise at the moment but I am certain it would—and there would be some avoidance, machinery would be very quickly introduced. It would obviously lend itself to some avoidance mechanism. I do not think any hardship is being imposed.

Mr. Colley

The situation about which I am somewhat unhappy is where two taxpayers find themselves in the position that one or other of them is going to be liable for tax but there is no way of telling under the law which is going to be liable and they have to wait and see which will the Revenue go for. It is all very well for the Minister to say that if one pays, that is it, but if they are not connected persons—for instance, Deputy Belton and myself—why should either of us choose to pay the tax when I know that the minute I pay, Deputy Belton is released of all liability and vice versa, so I think the likely position is that neither of us will pay, leaving it to the Revenue Commissioners, and have a fifty-fifty chance that we will not be charged. That does not seem a satisfactory provision.

Mr. T.J. Fitzpatrick

(Cavan): I think that the Revenue Commissioners—I know that to the Opposition, to any Opposition, this will not sound right—can be relied on to act in a reasonable manner.

Mr. Colley

We will accept that without reservation.

Mr. T.J. Fitzpatrick

(Cavan): We have gone a good distance then because they will look at each transaction and ask if this is a genuine transaction or is it an avoidance device. If they have a case of a man here who executed a lease in favour of somebody resident in Liverpool or the United States, the effect of that would be, if this bit of mechanism were not written into the Act, that the man out of the jurisdiction could not be followed while at the same time the wealth of the native would be substantially reduced. In that particular case, the Revenue Commissioners would obviously follow the man at home who divested himself of the property in favour of the absentee.

Mr. Colley

I would accept that, but I would think it would be worth the while of the Minister and his advisers to give a little more consideration to this. It may be possible to have a method whereby you could value the whole interest, whatever the valuation of it may be, including the interest of the lessor and the lessee, or the A and B we have been talking about, and to provide that in the event of one of the persons concerned being resident outside the State, the person resident in the State is liable. There are refinements possible in this, but I have the feeling that the Minister agrees with me that the position as it stands at least requires a good deal of explanation, and I should imagine that he would hardly be happy if the situation were that two genuine taxpayers, not talking of an avoidance situation, are liable and there is no way to determine which one should pay. I am sure that it is possible to devise machinery which would give a degree of certainty in that case which I think is desirable.

Mr. Esmonde

This business of apportionment between people who are liable where two are liable has often arisen in reference to death duties——

Mr. Colley

Yes.

Mr. Esmonde

——and while that often gives trouble to the lawyer who is advising the estate because he has to arrange for the apportionment— the liabilities, one, to keep down the interest, the other, to pay the capital levy—it has worked out in practice on a reasonable basis. It does not sound as if it could, but this has been a common occurrence.

Mr. Colley

I agree with the Deputy, but in that case there is a degree of certainty. As far as I can see, under the provisions of this Bill, in the case we are envisaging, there will be no right of apportionment; in other words if one of the parties either paid or was assessed by the Revenue Commissioners, I do not think the other party would be entitled to demand an apportionment.

Mr. Esmonde

Perhaps he would have a right over——

Mr. Colley

I wonder would he.

Mr. Esmonde

The charge would be on both of them. It is basically the same thing, like quasi-contract.

Mr. Colley

On what basis does the Deputy say the charge would be on both of them? It does not seem from the Bill that that is so; it is on one or the other.

Mr. Esmonde

Take the provision in clause (ii). That is obviously directed at people who might work out a contrivance to avoid paying tax, because it uses the word "created". A man could have a property and would create a limited interest for the purpose of bringing himself within the threshold or outside it. A false situation would arise. The basis of that section is to leave them within the charge. I think that is fair enough, and I am sure the Deputy can see that could be an avoidance device that would have to be closed.

Mr. Colley

Yes, but in the case where it is created genuinely and not for avoidance purposes, one ends up with the situation where one of two people can be liable and there is no way of determining in advance which one of them is.

Mr. Esmonde

They might be different properties.

Mr. Colley

If they are different properties, then we do not get the protection of 24 (2) or whatever the Minister was referring to, which was the point I was making earlier. If they are different properties then they are both liable.

Mr. Esmonde

Yes, but only if they are within the wealth tax bracket themselves individually.

Mr. Colley

One must assume for the purpose of this that they are.

Mr. Esmonde

One interest would be subtracted from the other, because there would be two properties in the one. If there is a life interest worth so much and the remainder interest worth so much, the two could only make 100 per cent, so it is virtually an apportionment already created by the deed or the instrument which has created the different interests.

Mr. Colley

I would have thought that would be the way the matter would be approached, but that is not what is being done. What seems to be done here is to treat both as an interest in possession to allow the Revenue Commissioners the option of deciding which one they will go for. When they go for it they will value only the property of the person they go for, not the two interests together as one interest as an apportionment. There is no provision for that. The provision is to value the interest of the taxpayer who is sought to be charged rather than the two interests together as one.

Mr. T.J. Fitzpatrick

(Cavan): I am sure the Deputy does not want to make the Bill utterly unworkable.

Mr. Colley

No, I do not.

Mr. T.J. Fitzpatrick

(Cavan): I believe that unless we have dual possession here with the right of the Revenue Commissioners to elect, avoidance is utterly impossible to prevent. Take a block of property valued at £150,000 owned by a married man. The deciding factor as to wealth tax will be, is he in possession of all that on the 5th April in any year? If we did not do what we are doing here, this man who owns the £150,000 could make a short lease of £60,000 worth of property to somebody in the United States at a rent which the man in the United States might never pay, but then the wealth of the person here in this country would be only £90,000, and he walks out of the net. In that case the Revenue Commissioners would clearly elect to recover from the lessor; that is the case where he is out of the country. Deputy Colley may say: why not make provision that if the lessee is a non-resident, you follow the lessor, but in every other case you do not? Then the tax payer properly advised would lease his £60,000 worth of property to some poor relative, to a brother of his or somebody else in the country, and you get the same thing over again.

If the Revenue Commissioners are left to their own devices, they will recover from the lessor, but if this was a genuine case of a lease to somebody, say to a prosperous solicitor who was paying a rent, the Revenue Commissioners would say: "This is a genuine transaction. The reasonable thing to do here is to ask the solicitor to pay." I think that is the way it will work and that we should wait until we see some glaring abuses. If we do not do this I am advised—and I accept—that it is so wide open to avoidance as to be valueless.

Mr. Colley

There is something arising out of what the Minister has said that raises a doubt in my mind, and perhaps he could clarify this point. Take a property that is, as the Minister says, worth £150,000 freehold. If there is a genuine lease of £60,000 worth, am I right in thinking that when the Revenue Commissioners elect between the lessor and the lessee as to which they go for, if they go for the lessee they will assess him only on the £60,000, and if they go for the lessor they will assess him on only £90,000?

Mr. T.J. Fitzpatrick

(Cavan): No, £150,000. They will assess the lessor on £150,000 anyway, but they would collect from the lessee on the £60,000.

Mr. Esmonde

There is a difficulty about the example the Deputy gave there. He put £60,000 on the lease.

Mr. Colley

I was just quoting the figures the Minister had given.

Mr. Esmonde

On a lease. What about a limited interest? Take a life estate. Are we not straight into the same provision, clause (ii) in page 3:

a reversion expectant on the determination of a limited interest created by the person;

The Deputy, by his example, has given the exact situation that this clause is directed to deal with, because the person who was granted the limited interest has put himself outside the value by creating a transaction himself. It is not created for him; he has deliberately created a transaction.

Mr. Colley

I was quoting the case given by the Minister which was given to show this avoidance measure, but what I was trying to understand was this: I understood that the valuation of the lessor's interest in a case like that would be calculated on the basis of what the reversion was worth, and in the case of the lessee, calculated on the basis of what the lease was worth. However, I gather from what the Minister said, that that is not so, and I am trying to get this clear.

Mr. T.J. Fitzpatrick

(Cavan): I think we have drifted a bit. We are dealing here with a limited interest. Deputy Colley really dealt specifically with (ii)——

Mr. Colley

It might mislead the Minister if he concentrates on that because really the provisions of (iii) come into this also. Let us take a limited interest, however created.

Mr. T.J. Fitzpatrick

(Cavan): If it is a genuine, limited interest the tax is payable by the person in possession of that interest, but this provision is designed to catch the person who parts with profit for the lifetime of another or for a short time with the reversion to himself. That transaction will be utterly ignored. In a genuine transaction the limited interest would come into play and neither would be liable for tax in the case the Deputy and I were discussing where the £150,000 is divided as to £60,000 here and £90,000 there. If that were a genuine transaction and that were all the wealth either party had, neither would be liable.

Mr. Colley

But supposing each had other wealth which when added to the interest would bring them over the threshold?

Mr. T.J. Fitzpatrick

(Cavan): Then, each would be liable in a genuine transaction but not in respect of the same property. One would be liable in respect of his £60,000 plus whatever he had before that, and the other would be liable in respect of the £90,000 plus whatever he had before that.

Mr. Colley

That is what I expected the position would be, but it is not clear to me that that is what the Bill actually achieves.

Mr. T.J. Fitzpatrick

(Cavan): I am advised that it is.

Mr. T.J. Fitzpatrick

(Dublin Central): Is this not double taxation on one property? I am not altogether clear about it. Would the Minister clarify it?

Mr. T.J. Fitzpatrick

(Cavan): No, there is no question of tax being collected twice from the same property. That is absolutely clear, getting back to section 21 (2). If the Deputy looks at that section he will find that cannot happen.

Mr. T.J. Fitzpatrick

(Dublin Central): But I thought the example the Minister has just given of taxing the lease and taxing the property owner also——

Mr. T.J. Fitzpatrick

(Cavan): No. You are taxing the man with £150,000 worth of property. He retains £90,000 worth and leases £60,000 worth. If neither the lessee nor the lessor had any other property and if it is a genuine transaction neither would be taxable. But if both had other property which brought both of them over the threshold whether it was £70,000, £90,000 or £100,000, both would be liable. The Bill will not work unless we have this in it.

Mr. Colley

In the case of a non-genuine transaction the provisions of the Bill are to the effect that both parties are deemed to have an interest in possession. Do I take it that the intention is that the value of the interest in possession in the example mentioned, if it were not a genuine transaction, would be £150,000 whichever would be taxed, whether the lessee or the lessor?

Mr. T.J. Fitzpatrick

(Cavan): In the non-genuine case the Revenue Commissioners would ignore the transaction and follow the lessor for the lot and not the reversioner.

Mr. Colley

I wonder how that is achieved. The provision is that in such a case the reversioner is deemed to have an interest in possession. But how do you ignore the other transaction? If you deem him to have an interest in possession you have to value that interest, and, on the face of it, the value of that interest is the value of the reversion.

Mr. T.J. Fitzpatrick

(Cavan): If the Deputy refers to section 3 (4) I think it will solve his last mentioned problem. It says:

For the purposes of this Act, where the property to which an individual is beneficially entitled in possession includes a reversion expectant on the determination of a limited interest, the individual shall himself be deemed to be entitled in possession to that limited interest and the provisions of this section shall apply accordingly.

Mr. Colley

I agree that answers my question in relation to the non-genuine case. Apply that to the genuine case and you are saying that the lessor, even in the genuine case, is being valued at £150,000 according to subsection (4).

Mr. T.J. Fitzpatrick

(Cavan): No. I said that in the case of the genuine lease the lessee would be in possession and enjoyment of the £60,000 and would be treated as being in ownership of that on 5th April and the lessor would be left with £90,000.

Mr. Colley

That may be the intention, but if the Minister looks at section 3 (4) in the light of a genuine transaction with the figures we have taken of £150,000 and £60,000 as the value of the lease, "for the purposes of this Act", it is stated "where the property to which an individual is beneficially entitled in possession includes a reversion expectant on the determination of a limited interest, the individual shall himself"—the lessor—"be deemed to be entitled in possession to that limited interest and the provisions of this section shall apply accordingly". That seems to me to mean that the lessor is deemed to be in possession of the lessee's interest and that makes him liable on £150,000.

Mr. T.J. Fitzpatrick

(Cavan): I understand that in a genuine transaction each person would be deemed and taken to have an interest in possession in the £90,000 and the £60,000.

Mr. Colley

I can see that would be the intention, but what I am suggesting is that that is not what section 3 (4) provides, that it compels the Revenue Commissioners even in a genuine case to regard the lessor, in the case we are talking about, as being in possession of the lessee's limited interest and that would mean that he would be assessed on £150,000.

Mr. T.J. Fitzpatrick

(Cavan): My information is that section 21 (2) would come in there again and that the Revenue Commissioners would regard this as a genuine case and that they could not recover tax twice, that if the £90,000 man was liable they would recover from him for his £90,000 plus and would recover from the £60,000 man from his £60,000 plus.

Mr. Colley

Suppose the £60,000 man were not liable?

Mr. T.J. Fitzpatrick

(Cavan): Then it is OK. He would be scot free. They would not collect from him.

Mr. Colley

The other man would seem, according to this, to be assessed on £150,000.

Mr. T.J. Fitzpatrick

(Cavan): No.

Mr. Colley

Is that not what subsection (4) of section 3 says? He is deemed to be in possession of the lessee's interest under subsection (4)— deemed to be entitled in possession to that limited interest.

Mr. T.J. Fitzpatrick

(Cavan): As a result of that subsection there are two life tenants and the Revenue can only recover from one. That subsection does not say that the owner of the limited interest has no interest in the property. It only says that the lessor or the settlor is also the owner in possession and that creates two separate limited interests and back into play comes section 21 (2). I agree, it is difficult to follow.

Mr. Colley

I think I follow the reasoning but I am not entirely satisfied that it is achieved. Furthermore, it raises this question: in the event of the lessee, in the case we have quoted, not being liable for wealth tax, what is to prevent the Revenue Commissioners operating subsection (4) of section 3 in order to assess the lessor on the basis that he owns both the lessor's interest and the lessee's interest and therefore is liable on £150,000 in the example given? Is there anything in the subsection or in any other subsection which would prevent that?

Mr. T.J. Fitzpatrick

(Cavan): I am told that the short, simple answer to that is that there is nothing to prevent them but that there is nothing to prevent them from acting similarly under income tax and death duties but they do not do it. They are not highway robbers. It is necessary in order to hold on to the right fellow that we have this machinery. I am told that similar provisions exist in the stamp duty, estate duty and income tax codes.

Mr. Esmonde

There is also a little body of case law that is referred to frequently that has to be watched, on what is a geuine transaction and what is not. There are some cases which have even broken the company veil. The Deputy may have heard of one or two. There is the genuine and the non-genuine case.

Mr. T.J. Fitzpatrick

(Cavan): For the Deputy's fears to be justified, section 3 (4) as well as catching the settlor would want to exonerate the limited owner. It does not exonerate the limited owner. It creates dual ownership. It does not exonerate the person in possession but it captures the settlor.

Mr. Colley

Would the Minister have available to him at the moment references to the similar provisions under say, the death duty or income tax code?

Mr. Esmonde

One of the 1950 Acts is it not?

Mr. Colley

With all due deference to the Minister and Deputy Esmonde, I have the suspicion that the provisions to which they are referring are not on all fours with this. I think this goes a bit farther. On the face of it, this Bill is doing something which the Minister says is not intended to be done and where it is a genuine case the Revenue Commissioners will act in one way and where it is a non-genuine case they will act in another way. If that is the way it is intended to operate, I would be happier to see something spelled out.

Mr. T.J. Fitzpatrick

(Cavan): I am absolutely certain that it does not compel the Revenue Commissioners to do what the Deputy is afraid they will do. It does not oblige them to do that.

Mr. Colley

I will have a further examination made of this matter and I would ask the Minister to have it further examined. I am not satisfied that there is not a better way of doing what the Minister wants to do—with which I concur.

Mr. T.J. Fitzpatrick

(Cavan): I am told that there are several heads of charge in stamp duty. Several overlap. The commissioners can take whichever head of charge they prefer. I will be able to pass on to the Deputy a reference to that. I have not got it now.

Mr. Colley

Would the Minister know whether in such cases it is possible, theoretically even, for the Revenue Commissioners in a genuine case to charge one party on the basis of the value of the whole transaction whereas their intention is in a genuine transaction not to do that? That is what is being done here.

Mr. T.J. Fitzpatrick

(Cavan): I understand that the total duty payable would be different under different heads.

Mr. Colley

That I can appreciate.

Mr. T.J. Fitzpatrick

(Cavan): In other words, that electing under one head they would get more duty than they would under the other.

Mr. Colley

I appreciate that but it is not quite the same thing as is provided here. In this case not alone have they a right of election but they have a right to charge tax on, in the case we have mentioned, £150,000 even though they do not intend, according to the Minister, to do that in a genuine case. I wonder whether the other cases to which the Minister refers give them that kind of option as distinct from electing between one charge and another where one would be higher than another.

Mr. T.J. Fitzpatrick

(Cavan): I can tell the Deputy that well before the next Stage I will find the references to that and make them available.

Mr. Colley

I thank the Minister. The Minister appreciates what my concern is?

Mr. T.J. Fitzpatrick

(Cavan): I do.

Mr. Colley

The next matter to which I wish to refer on this section will present a little more difficulty. It is the definition of "ordinarily resident". The Minister will see it on line 24, page 3. The definition is:

"Ordinarily resident" has the same meaning as in the Income Tax Acts,

and so on. The Minister may be aware that there is no definition of "ordinarily resident" in the Income Tax Acts, contrary to what one would think from reading that line. Exactly similar wording was used in the Capital Gains Tax Bill. I raised this with the Minister for Finance and we had some discussion on the matter. I then referred to it again. I want to quote this. It is reported in the Official Report for Wednesday, 5th March—column 1519. I was at that time speaking on the Second Stage of the Wealth Tax Bill and I said:

I note also that, as in the Capital Gains Tax Bill, in this Bill the term "ordinarily resident" is not defined. I should like to remind the Minister that, in connection with this phrase in the Capital Gains Tax Bill, as a result of certain exchanges which took place between the Minister and myself, he undertook to let me have, not in the House but privately, details on which he based the claim that this phrase had been adequately defined, and that I have not yet heard from him. I am not faulting him for that. I am just reminding him that that is so. I would appreciate getting that information as soon as possible in relation both to this Bill and the Capital Gains Tax Bill.

That was on 5th March last when I was reminding the Minister of his undertaking earlier to give me privately—he gave reasons why he did not wish to do so publicly—the basis on which he argued that the words "ordinarily resident" have been adequately defined. I have not received the information and we are now dealing with the Committee Stage of the Wealth Tax Bill.

Mr. T.J. Fitzpatrick

(Cavan): I am aware that the Deputy was promised the information he is seeking but I understand that this is being assembled.

Mr. Colley

I am sure the Minister will appreciate my difficulty. This question arose on the Committee Stage of the Capital Gains Tax Bill. On the Second Stage of this Bill I reminded the Minister of my request for the information but now that we are at the relevant part of the Wealth Tax Bill, my hands are tied in the absence of this information. Therefore, I must continue the argument I was making. All the information I can get from people who are very well qualified in this field is to the effect that the phrase "ordinarily resident" is not defined, that certainly, it is not defined with any degree of precision although it has a very considerable importance in the operation of the Wealth Tax Bill. We are told here that the words "ordinarily resident" have the same meaning as in the Income Tax Act but there is nothing in the income tax code to define the phrase.

Mr. T.J. Fitzpatrick

(Cavan): I know that.

Mr. Colley

Therefore, presumably what is intended to be conveyed is that the phrase has the same meaning as in the decided cases on the Income Tax Acts. Even then my information is that decided cases in this regard do not define "ordinarily resident" with any degree of precision. Since we do not know what the phrase means, the matter is in the air.

Mr. T.J. Fitzpatrick

(Cavan): I appreciate the Deputy's point. There is no definition of “ordinarily resident” in the income tax code but it is equally true that it has been a relevant consideration in the income tax code since about 1910 and that that term is being used, operated and worked on in the income tax code year after year. What we are saying in the Bill is that anybody who is ordinarily resident here for the purposes of the income tax code will be ordinarily resident here for the purposes of this Act.

We are told that "ordinarily resident" has the same meaning here as in the Income Tax Acts. The term is not defined specifically in the income tax code but from decided cases and working rules a meaning has evolved in that code. Where a person is treated as ordinarily resident here for income tax purposes he will be so treated for the purposes of wealth tax. "Ordinarily resident" is defined in section 1 generally as having the same meaning as in the income tax code. The term is not defined in relation to income tax but as in the case of "domiciled", guidance as to the meaning has been given in decisions of the court. The expression "ordinarily resident" is used in its everyday sense and has no special or technical meaning. It is broadly equivalent to being habitually resident.

In any case, where wealth tax arises in relation to an individual the question of his residence would have to be considered for income tax purposes. Whatever decision is reached as to a person's ordinary residence for that purpose for a given income tax year ending on evaluation date will be applied also for wealth tax. Therefore, tying ordinary residence with an income tax situation will reduce the problem. The term, as it was operated in relation to the income tax code, involves a very high percentage of the population, whereas the measure we are dealing with would involve only a very low percentage of the population. The term in question has been used in the income tax code and has stood the test of time. It can be relied on but it is not as important as it was because, as the Deputy knows, I will be moving an amendment to section 3. This is amendment No. 3 which proposes:

In page 5, subsection (5) (a), lines 9 to 14, to delete subparagraph (i) and to substitute the following subparagraph:

"(i) an individual who is not domiciled in the State on a valuation date and who has resided in the State for not less than—

(I) 183 days in the year ending on that date, and

(II) 183 days in each of six or more of the nine years immediately prior to that year,

shall be deemed to be domiciled and ordinarily resident in the State on that valuation date;".

I understand that is broadly the test that has been operated down through the years with regard to the income tax code. It puts the matter beyond any reasonable objection.

Mr. Colley

The Minister has thrown a good deal more light on this matter than we have had before.

Mr. T.J. Fitzpatrick

(Cavan): That is what I am here for.

Mr. Colley

The most important point he has made is in regard to the amendment because, in effect, what is being said is that "resident" in those circumstances set out in the amendment means "ordinarily resident". At least, therefore, we have something to go on. Another part of the Minister's argument was based on the assumption that "ordinarily resident" has been used, interpreted and relied on in the income tax code since 1910. This is where I part company with the Minister because the information available to me is that that is not so, that while it applies to domiciled and to resident it does not apply to "ordinarily resident". This is why I was pushing the Minister for Finance to produce the evidence on which he based his statement that the term is defined clearly in the income tax code and on foot of case law and otherwise. He has not done so yet.

To the extent that the Minister relied on the assumption that this phrase has been defined clearly down through the years, I take issue with him. I concede that the effect of the amendment he proposes to move takes away from the difficulties I was facing. Despite that, I would still appreciate if the information I sought earlier were given.

Mr. T.J. Fitzpatrick

(Cavan): I understand it is being assembled.

Mr. Colley

When the information becomes available to me, I may have to come back to this point in some other way but for the moment I shall rest on the amendment the Minister proposes to move. "Ordinarily resident" is defined as having

the same meaning as in the Income Tax Acts and an individual who has been ordinarily resident in the State for a year ending on a valuation date shall be deemed to be ordinarily resident in the State on that valuation date.

Can the Minister see any conflict between that and section 3 (5), even as he proposes to amend it? That refers to a year ending on a valuation date. The amendment seeks to provide that if a person is not domiciled in the State on the valuation date but he has resided in the State for the period set out he shall be deemed to be domiciled and ordinarily resident in the State on that valuation date. Which valuation date is referred to? I am trying to reconcile the proposed amendment with the definition of "ordinarily resident". Perhaps I am making an unnecessary difficulty but I think there is a slight conflict here.

Mr. T.J. Fitzpatrick

(Cavan):“Ordinarily resident” has the same meaning as in the Income Tax Acts and an individual who has been ordinarily resident in the State for a year ending on a valuation date shall be deemed to be ordinarily resident in the State on that valuation date. I think that is quite clear. The person concerned has been resident in the State for a full year, up to and including the valuation date.

Mr. Colley

That is clear enough if we can ignore the amendment for the moment and provided we are agreed on what "ordinarily resident" means. The Minister referred me to the amendment and it is helpful in defining what "ordinarily resident" means. Here we are dealing with a case where the person is resident on a valuation date and for a year ending on a valuation date. We are dealing with someone other than one to whom the amendment applies. That brings us back to the meaning of "ordinarily resident".

Mr. T.J. Fitzpatrick

(Cavan): I am told that the words “ordinarily resident” have been and are being used in the income tax code, contrary to what the Deputy has said. The Deputy seemed to think the word “resident” was used but that the words “ordinarily resident” were not used, but my information is that these words are used.

Mr. Colley

Perhaps the Minister will forgive me if I make the following point. What he has said was also said by the Minister for Finance when I raised this matter previously. I was going on the basis of advice given to me by people who are quite skilled in this area. Since I raised the matter originally, the Minister undertook to give me certain information and I reminded him of that on 5th March. I still have not received that information and, quite frankly, it makes me suspicious that perhaps the information I received was right and the Minister's information was wrong.

Mr. T.J. Fitzpatrick

(Cavan): I am quoting now from the booklet issued by the Board of Inland Revenue of the United Kingdom entitled Residents and Non-residents Liability to Tax in the United Kingdom. I.R. 20, 1973. It states:

The terms "resident" and "ordinarily resident" are not defined in the United Kingdom Income Tax Acts but guidance as to the meaning of these words has been given in decisions by the Court. These show that both expressions are used in their everyday sense and do not have any special or technical meaning. The term "domicile", on the other hand, is always used in its strictly legal sense.

My amendment deals more with deeming domicile than ordinary resident. It is only fair I should tell that to the Deputy. It may be a guideline to "ordinarily resident". The real effect is to deem domicile and capture global assets. In that section it gets rid of the need for using the words "ordinarily resident" but it uses the yardstick we have been using during the years.

Mr. Colley

I can see the Minister is not in a position to push this any further at the moment——

Mr. T.J. Fitzpatrick

(Cavan): That is correct.

Mr. Colley

Having regard to the short history of this matter which I have outlined, I am sure he will appreciate I must reserve my position regarding this when I receive the information from the Minister.

Mr. T.J. Fitzpatrick

(Cavan): I want to be quite clear about this matter and I should like to inform the Deputy that during the briefing session yesterday I was told Deputy Colley had been promised something—I was told what it was but I do not recollect —and that it was being assembled and on its way to him. Presumably that is what the Deputy was talking about.

Mr. Colley

I think it might have been. I appreciate the present Minister cannot push this any further but I am reserving my position until I receive that information. I may wish in some other way to come back to the definition of "ordinarily resident".

Mr. T.J. Fitzpatrick

(Cavan): That is understandable.

Mr. Colley

The definition of "real property" reads:

"real property" means real and chattel real property and includes real and chattel real property that is impressed with a trust for sale and to which an individual or other assessable person whose property situate outside the State is not liable to tax is beneficially entitled in possession;

Could the Minister give an example of what is envisaged in the latter part of the definition?

Mr. T.J. Fitzpatrick

(Cavan): I shall read my note on it for the benefit of the Deputy. All immovable property held either in fee simple or under lease comes within the term. The definition is expanded to provide that such property will remain immovable property here even if it is impressed with a trust for sale when in the beneficial ownership of a foreign individual, a foreign discretionary trust or foreign private trading company. This is done to counter possible avoidance. A foreigner owning land in the State could impress the property with a trust for sale and investment of the proceeds. He need not have the slightest intention of selling the land. However, the land would cease to be land in his hands and would be notionally converted into foreign personal property and, as foreign property in the ownership of a foreign person, it would be outside the scope of the tax. It is the old case that once a contract is signed land ceases to be land and becomes money. I imagine if it is impressed with a trust for sale here it is the same thing.

Mr. Colley

I thank the Minister for the information.

Subsection (2) reads:

For the purposes of this Act, a husband and wife shall be treated as living with each other, on a valuation date, unless on that date—

(a) they are separated under an order of a court of competent jurisdiction or by deed of separation, or

(b) they are in fact separated in such circumstances that the separation is likely to be permanent.

In a case where a husband and wife are separated by order of a court of competent jurisdiction, is each of the parties entitled to an exemption limit of £70,000 or are they still confined to the married allowance?

Mr. T.J. Fitzpatrick

(Cavan): They are each entitled to £70,000.

Ruairí Brugha

That means that everyone with more than £100,000 will get a separation?

Mr. Colley

Is each entitled to an exemption on one dwellinghouse?

Mr. T.J. Fitzpatrick

(Cavan): I do not know whether to say I am afraid or to say I am glad, but such is the case anyway; each is entitled to £70,000 exemption.

Mr. Colley

The Minister may or may not be aware that I had been asking on the Second Stage——

Mr. T.J. Fitzpatrick

(Cavan): I have read the Second Stage debate.

Mr. Colley

The Minister will recall then that I was arguing that the exemption or threshold limits were encouraging people to live in sin but this definition is, I think, far more encouraging.

Mr. Esmonde

Or an encouragement to celibacy.

Mr. Colley

There is an argument that that is a higher status, but that is in a different context.

Mr. T.J. Fitzpatrick

(Cavan): I am told, if it is any consolation, that the same situation arises under the Income Tax Acts and we must follow the law of the land. I know the argument that it is cheaper to live in sin than it is to live morally or respectably, but here is section 196 of the Income Tax, 1967:

A married woman shall be treated for income tax purposes as living with her husband unless either—

(a) they are separated under an order of a court of competent jurisdiction or by deed of separation, or

(b) they are in fact separated in such circumstances that the separation is likely to be permanent.

I used to think it was extremely difficult to draft Acts of Parliament until I suddenly discovered one could get a great many sections elsewhere.

Where a married woman is living with her husband and either—

(a) one of them is, and one of them is not, resident in the State for a year of assessment, or

(b) both of them are resident in the State for a year of assessment but one of them is, and one of them is not, absent from the State throughout that year,

the same consequences shall follow for income tax (including surtax) purposes as would have followed if, throughout that year of assessment, they had been in fact separated in such circumstances that the separation was likely to be permanent.

Mr. Colley

I am not objecting to the provisions of subsection (2) at all. What I am urging on the Minister is that, if the position is as he says it is under subsection (2), a married couple who are separated are entitled in fact to be treated as two single persons— that is what it amounts to—for the purpose of threshold, dwelling house and so on exemption. If that is so, why are the married couple, who are not separated, not entitled to this? In the case of income tax long, long ago the decision was made differently and over the years an effort was made to close the gap, but the case I have been putting to the Minister for Finance and the case I now want to put to the Minister for Lands, who is doing duty for him, is that this is a new tax; we are starting now ab initio and why do we not start on the right foot and have regard to the fact that a wife is entitled to be treated as an individual and that a husband and wife, who are not separated, should not for the purposes of this Bill be penalised as against the husband and wife who are separated, or as against two single people? If the Minister would accept the proposition that one regards a husband and wife as two individuals and treats them accordingly he would solve a great many problems and at the same time start off on the right foot with this new tax uninhibited, as you are under the income tax code, with what has gone before and with the cost of changing it. I do not think it will make any enormous difference to make this change and I strongly urge the Minister to accept that proposition.

Mr. T.J. Fitzpatrick

(Cavan): I am glad to see the Deputy is settling down well into opposition because that is really the classical Opposition approach to this and I can appreciate it.

Mr. Colley

It is a new tax.

Mr. T.J. Fitzpatrick

(Cavan): I have told the Deputy that if two people find it impossible to live together as man and wife and the marriage breaks up and they are living apart in circumstances which look as if the break will be permanent, then they are two single people and they are treated as such, both for the purpose of the threshold and for the purpose of the separate house, and I do not think we should assume they are living anywhere else, or in sin. Deputy Colley asked why I do not go on and say that, even if they are married, they should be treated as two separate and distinct people. My answer to that is they would not acquire two houses.

Mr. Colley

If they do not they will not get the benefit.

Mr. T.J. Fitzpatrick

(Cavan): If they are living together one house is sufficient. The old saying is that two can live cheaper than one and I suppose that is the answer to it.

Mr. Colley

I do not think the Minister really believes that. In fact I think he has personal experience which would prove to him that it is not true. I would seriously urge the Minister to consider this. We are talking about a couple who are separated.

Mr. T.J. Fitzpatrick

(Cavan): I do not want to interrupt the Deputy, but what we are talking about will be negatived in section 4 because there we aggregate the wealth of the husband, the wife and the children.

Mr. Colley

This is what I am at. The effect of this is that, if they are separated they will be treated separately and section 4 will not apply.

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

It is precisely because section 4 aggregates them that I am putting the case to the Minister. If the Minister is saying I should really make this argument on section 4 I will accept that.

Mr. T.J. Fitzpatrick

(Cavan): I am not saying that.

Mr. Colley

Where couples are separated by order of the court or by deed of separation, in many cases, as the Minister knows, alimony is being paid and the wife is being maintained by the husband. Nevertheless, here we are saying such people are to be treated as two single individuals with the consequence that each has an exemption limit of £70,000 and each may have an exemption in respect of a dwellinghouse as against the position of the married couple who are not separated where the limit imposed is £100,000 and one dwellinghouse. I would understand, if the wealth tax were in operation, and this was an amendment of that legislation, the difficulties the Minister would face, but I want to urge him very strongly that, because this is a new tax, it is open to him now to treat husband and wife as individuals. He must admit that there is involved in this subsection, as compared with section 4, a distinct discrimination against married couples who are living together. I do not think there is any justification for that and I think the Minister does not think there is any justification for it. I would urge him very strongly in all cases of married couples, whether separated or not, under whatever circumstances, that they be treated as two individuals. That would be in conformity with equity and justice and with the recognition we are obliged to give to married women.

Mr. T.J. Fitzpatrick

(Cavan): Deputy Colley wants me to separate couples who are not separated.

Mr. T.J. Fitzpatrick

(Dublin Central): Oh, no.

Mr. T.J. Fitzpatrick

(Cavan): Treat them in the same way.

Mr. Colley

Treat them as well as those who are separated.

Mr. T.J. Fitzpatrick

(Cavan): Treat them at least as well as if they were separated. The principle of this Bill is that the wealth of the husband and wife—I will not go any further at the moment—is aggregated. If that were not so you would have in 99 cases where tax might become payable the wealth divided whether the wife owned it or did not.

Mr. Colley

I accept that.

Mr. T.J. Fitzpatrick

(Cavan): As Deputy Colley knows it is done all over the country quite frequently in allied legislation. I am not prepared to do that. I want to be perfectly clear about that. We are treating a married couple as one and we are treating the property of both of them as the property of one. We are not meagre in this country. We are much more generous in our approach to this than they are in most countries. In our proposal a single person has an allowance of £70,000. The threshold for a single person is £70,000 and for a husband and wife £100,000. In Denmark the threshold for a single person is £31,500 and for a husband and wife exactly the same. No added allowance is given for a couple in Denmark. In Sweden the threshold for a single person is £19,000 and for a married couple it is £19,000. In the Netherlands the threshold is £6,800 for a single person and £9,200 for a married couple. In Norway the threshold for a single person is £5,700 and £7,700 for a married couple. In Finland the threshold for a single person is £3,000 and for a married couple £3,500. In Luxembourg the threshold is £1,100 for a single and also £1,100 for a married couple. In each of those countries the wealth of both is aggregated and treated as one. I believe we are reasonable here. We have given a very generous threshold and we have exempted the family home and its contents. I am not open to conviction or persuasion on this particular point.

Mr. T.J. Fitzpatrick

(Dublin Central): I would like to support Deputy Colley in regard to this. The Minister called out some figures in regard to other countries and I hope this is not the thin edge of the wedge, that those are not the figures he has in mind for future years. I believe, having given the concession of £70,000 each to the husband and wife who are separated, the same thing should apply to married people. This is women's year and it is important to ensure that we do not discriminate against women when we have new legislation like this. We are discriminating against average, decent married couples. In section 13 two people can have £140,000 of a threshold and it is quite obvious in this particular section that an exemption will be given to people who live separately. We should give equality of status to men and women. In section 13 an allowance of £2,500 is given for each child. Who will claim this money in the case of a separation?

Mr. T.J. Fitzpatrick

(Cavan): Whoever has custody of the child.

Mr. Esmonde

I hope the Deputy is not suggesting that we bring separated couples down to £50,000.

Mr. Colley

We are suggesting that the same treatment is given to married couples who stay together as is given to those who do not.

Mr. T.J. Fitzpatrick

(Cavan): The married couples are the people who get the benefit of the dwellinghouse exemption. Most single people would not have that exemption.

Mr. T.J. Fitzpatrick

(Dublin Central): We are dealing here with married couples who are separated and who are getting separate allowances. A lot of this is taking place today. We do not want to encourage this in relation to the wealth tax. We are bringing in new legislation and we should give equality of allowances to men and women, irrespective of whether they are married or separated.

Question put.

The Committee divided: Tá, 56; Níl, 53.

Tá

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Joan T.
• Burke, Liam.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Cosgrave, Liam.
• 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).
• Flanagan, Oliver J.
• Governey, Desmond.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Patrick.
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Keating, Justin.
• Kelly, John.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• 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.
• Spring, Dan.
• Staunton, Myles.
• Taylor, Frank.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.

Níl

• Allen, Lorcan.
• Andrews, David.
• Barrett, Sylvester.
• Brady, Philip A.
• Brennan, Joseph.
• Briscoe, Ben.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• O'Leary, John.
• O'Malley, Desmond.
• Power, Patrick.
• Smith, Patrick.
• Timmons, Eugene.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzpatrick, Tom (Dublin Central).
• French, Seán.
• Gallagher, Denis.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael P.
• Lalor, Patrick J.
• Leonard, James.
• Lynch, Celia.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Moore, Seán.
• Murphy, Ciarán.
• Nolan, Thomas.
• Noonan, Michael.
• O'Connor, Timothy.
• Tunney, Jim.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.

Question declared carried.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Mr. Colley

This is the charging section, the section that proposes to charge wealth tax. There are a number of relevant matters to be considered on this section. In my view the most important thing to be considered is: is the imposition and charging of wealth tax good or bad for our economy, because if it is good, this section should be supported and if it is bad, it should not be supported.

Progress reported; Committee to sit again.