Before we adjourned yesterday evening the Minister, in reply to a question from me on the meaning of subsection (2) of section 3, said that no foreign company investing in an Irish industry would come under the provisions of the Bill. That is what I understood the Minister to say, and that I see in today's press is what he is published as saying, that subsection (2) of section 3 of the Bill does not apply to investment by any foreign company in an Irish industry.
Wealth Tax Bill, 1975: Committee Stage (Resumed).
Question again proposed: "That section 2 stand part of the Bill."
Cavan): I said a foreign trading company which owns the shares in an Irish trading company will not be subject to wealth tax and that presumably the shareholders in the foreign trading company would be residents of the country where that company operated and they would not be liable for tax.
They must be liable.
(Cavan): Only if they are resident here.
Section 3 (2) deals with people who are not.
(Cavan): It deals with shares owned by individuals.
May I ask who is in possession? Is Deputy Brugha giving way to the Minister?
Yes, for clarification of this point because it is misleading.
(Cavan): You have company A in the United States which establishes a company here and acquires all the shares in this company. The company here is not liable to wealth tax. The shares in this company are not liable to wealth tax because they are held by the American company A. The shareholders in the American company are shareholders in the American company, not in the Irish company. Therefore, the shareholders in the American company are not subject to wealth tax.
Does the Minister realise that what he is saying is not alone contrary to the explanatory memorandum but is also contrary to section 3 (2)?
(Cavan): No, it is not.
Yes. It provides that people who are non-resident are liable for wealth tax in respect of property of theirs situated in the State. Is the Minister saying that their shares do not consist of property situated within the State?
(Cavan): I am saying that American shareholders are not shareholders in the Irish company. The shareholder in an Irish company is the American Corporation and the shareholders of that corporation are not subject to wealth tax because they are not shareholders in the Irish company.
(Dublin Central): That means a complete takeover by foreign interests.
(Cavan): It is like the mouse in the pint; the Deputy is not satisfied whether it is in or out.
I dispute this with the Minister but I am not a lawyer and he is. If the Minister is correct then what is happening is that foreign investment here will not come under this Bill while Irish investment will.
(Cavan): No.
That is the Minister's interpretation. It means that Irish native industry will come under the Bill for the payment of wealth tax while foreign investment will not.
(Cavan): Individual shareholders here, provided they are liable for wealth tax, will be liable if they are domiciled here.
Shareholders from any part of the world must be liable.
(Cavan): Yes.
When I took the Minister up yesterday on what he had said about Deputy Colley, that Deputy Colley was guilty of economic sabotage, the Minister said that foreigners were not liable.
(Cavan): Foreign companies are not liable. Shareholders in foreign companies who own a company here are not liable.
If the Minister is correct then foreign investment here is not taxable while Irish investment is.
I should like to refer the Minister to subsection (1) and sub-section (2) of section 3 which deals with the taxable wealth of an individual.
Back to planting trees, Minister.
The Minister should get this clear in his mind. It is putting the Irish Government in a peculiar position if foreign investment is not taxable and Irish investment is. I spoke to a number of Irish businessmen recently, businessmen who are not necessarily supporters of Fianna Fáil, and they informed me that it was their opinion that a bunch of children had got hold of the economy and were running it into the ground. One businessman described the economic activities and performance of the present Government as being similar to a group of school boys who had got hold of a bus on a free day from school, succeeded in starting the engine but did not know how to put the bus into forward gear. It appears that the Government have succeeded in putting the country into reverse gear.
To date 127 industries have been closed down by inflation and by the failure of the Government to prevent the import of cheap foreign goods from outside the EEC. These goods are being imported mainly through Britain. Why this was allowed to happen I cannot understand. We find today that steps are being taken to deal with this matter but the Minister for industry and Commerce, in spite of our advice to him last December, could not make up his mind to stop the import of cheap goods as other members of the EEC had done. In December we urged the Minister to deal with this matter and we promised to support him in any difficulties that might arise. The important thing was that the jobs of Irish workers should be safeguarded. Action is about to be taken now when the Irish workers have no jobs and are on pay-related. It is too late.
In addition we know that 50 firms have notified the Labour Court that they will be unable to meet the national pay agreement increases. Those firms have had to make that decision because they do not have the money nor can they make the profit to enable them to pay their way. This brings me to the difference between the enterprise company and the State. The difference is that the State, and State bodies, can rest on the shoulders of the public, on the Irish taxpayers. The competitive enterprise company has to survive in a tough world where there are no taxpayers or exchequers to help them. This Government ought to learn one fact of life, particularly the Labour element in the Government, that the EEC will not allow subsidisation of industrial or agricultural goods coming into their markets but these are the markets we have to fight for.
The real lesson we and Britain must learn about the EEC is that there can be no featherbedding or cushioning. If we are willing to work we will get the results as many of our industries have proved in recent years. If we try any gimmicks we will be sat on by practical people who will not be fooled by promises. My main criticism of section 2 is against the tax package described by the Minister for Finance as a straight deal for the public. Deputy Barry Desmond yesterday described the Minister for Finance as the most radical Minister for Finance we have ever seen. The Minister for Lands who was sitting in for the Minister for Finance yesterday pointed out that this was an innocuous Bill. In as much as the ceiling or level is high and the rate of tax is relatively low it is innocuous. Deputy Desmond said he could not understand why Fianna Fáil were opposed to this. I realise that Fianna Fáil are taking a political risk because Deputy Desmond, and his Labour colleagues, will do in the coming months precisely as Deputy Desmond did yesterday—they will try to prove to the public that Fianna Fáil are on the side of the rich.
The reason for our opposition to this Bill and to the general tax atmosphere being created by the White Paper and these Bills is the major disincentive to energy and enterprise being created by this sort of taxation. It is being done at a time when Irish industry in many areas is virtually collapsing; at a time when we are having announcements almost daily of factories being closed down and at a time when in comparison to 12 months ago 45,000 additional people are out of work. The sad thing about this is that the Fine Gael Party earlier, guided by the late Deputy Sweetman, and the Fianna Fáil Party, guided by the late Deputy Seán Lemass, made a significant and, I hope, permanent contribution to ending the curse of emigration. Efforts were made, despite the cynics, to encourage Irish people to invest in Ireland and build up industry so that the picture we saw during the first half of the century of people having to emigrate to obtain employment would be ended in our time. Unfortunately, the combination of Fine Gael and Labour in the Government is recreating an old cycle. It is bringing about a situation where we will see nothing but dole and emigration if the Government do not pull themselves together.
I should like to deal a little bit further with Deputy Desmond's contribution yesterday. Deputy Desmond, as well as being a Member of this House, is a trade unionist. He said there could be no value to Fianna Fáil in opposing a wealth tax. Of course there is no value to Fianna Fáil in such opposition. Fianna Fáil's opposition to this tax has nothing to do with wealth. It has to do with the livelihoods of Irish people, and if Deputy Desmond and his colleagues are going to engage in the politics of envy described by Deputy Colley yesterday, then Fianna Fáil will perhaps have to suffer some minor consequences.
Fianna Fáil are taking a political risk, but Fianna Fáil believe in the provision of work for Irish people. Fianna Fáil do not believe in chasing after a handful of people who may have a lot of money simply in order to create the picture: "We are all on the side of the poor." We are opposing and criticising these measures. We specifically oppose the flat level of the capital gains tax, and I am sorry that members of the Labour Party are not in the House this morning. The proposal put forward by Deputy Colley was to start the level of capital gains tax at 50 per cent in the first year so as to catch the speculator, the person that Deputy Desmond talks about. Our proposal was directed deliberately towards energy and enterprise, and as with this Bill here, the present capital gains proposals from the Government have the major defect that whether you are a get-rich-quick merchant or whether you have spent your life working hard giving employment, the same level of tax will be charged in future, according to the capital tax measure, 26 per cent. Irrespective of whether you bought a parcel of land, sold it within six months at double its price, or whether you worked building up a farm or building up an industry or a small business for 25 or 30 years, you pay the same level of tax. That, I believe, is a disincentive, reversing the trend of economic leadership that was set in the thirties by the late Seán Lemass.
Deputy Desmond goes out of his way to deride and sneer at Fianna Fáil. Does Deputy Desmond not realise that if Seán Lemass had not the courage, the faith and the imagination 35 years ago to set about building an Irish industry, Deputy Desmond might now be in Camden Town or some part of the United States or Australia? Deputy Desmond, like myself, and the rest of us in this House is being maintained here by the Irish taxpayer, which includes the Irish worker, who has to pay his income tax. Unlike myself, who has to try to maintain and keep alive an Irish competitive enterprise, Deputy Desmond, before he became a Deputy, was maintained by the subscriptions of Irish workers whose jobs were founded and established by the policies of Seán Lemass. It ill-becomes any member of the Labour Party, particularly a trade unionist, to run down Fianna Fáil because Fianna Fáil are trying to defend the energy and enterprise which inspired Irishmen earlier on to try to get the economy on its feet and end the tide of emigration. As a Deputy reminds me, we get more trade union votes than Deputy Desmond or his colleagues. That is because the Irish worker is a lot more intelligent than the Deputies of the Labour Party.
I regret having to hit out so hard at members of the Labour Party, but a little frankness in this House is overdue. I should like to know if Deputy Desmond or any member of the Labour Party can give me one example of an industry set up by him or any of his colleagues giving gainful employment to any Irish worker. As far as I know, the only contribution —I am not talking about the trade union contribution, which is a significant one, but the employment contribution—given by Deputy Desmond and his colleagues is to employ some girl typists in trade union offices, and their wages are paid out of the earnings of workers.
One of the issues I wish to take up before I conclude is this description "wealth tax". It is a very nice, highsounding, popular word, "wealth" tax. It is tied up with the politics of envy, but basically the effect of this kind of tax is to discourage investment and the creation of wealth. The creation of wealth is the key to prosperity and employment. Wealth is the result of the imput of energy, self-reliance and drive by individuals into an economy such as ours plus, as Deputy Belton would say, a bit of capital if you can lay your hands on it. If our resources are not expanded through development opportunities and investment, leading to the creation of wealth, then there is only poverty and emigration facing us, because there will be no wealth to share. You cannot share what you have not created, and if you discourage it, it will not be created. It is wrong to discourage enterprise in a developing economy.
The concern of Fianna Fáil is not the individual wealth that may have been made by the efforts of a few individuals. A good tax code, including a more discriminatory capital gains tax and a proper inheritance tax should be able to look after overaccumulation of wealth without deterting enterprise and investment.
Personally, I think this exception could be made in regard to some of the examples cited by Deputy Desmond yesterday, that is, in relation to very large land holdings, particularly where the land usage could be questioned. But that has nothing to do with the principle which Fianna Fáil is trying to defend of encouraging investment and risk capital. We are sufficiently strong in our social attitude not to be afraid to say we encourage capital and the creation of wealth because when wealth is created the economy and the people gain.
Modern wealth is created by enterprise, energy and capital, and discouragement means that the community will suffer, not the wealthy few. Yesterday Deputy Desmond— and I think the Minister on one occasion—cited examples such as West Germany, Sweden and Belgium——
He avoided Belgium because Belgium does not have one. He went almost as far as Russia.
He would not be the first Minister to go to Russia.
One of your own went there last week when he should have been here doing something else.
There is no use in making comparisons between the Irish economy and any European economy. If a valid comparison could be made it would be with Italy, which has not this kind of tax. I suggest that Australia would be a pretty good comparison. You have a Labour Government there as in Britain but a Government that is strong enough to avoid this kind of tax package in the interests of the economy.
Last night Deputy Desmond boasted of what his friend, the Labour Chancellor in Britain, Denis Healey, will do with wealth tax. The Deputy may boast all he likes about his British Labour colleague: all I hope is that the Irish economy is not tied to the British economy when it sinks. We are not concerned with what goes on in other countries; our concern is Ireland and the effect of Government policy on incentives to industry. The principle of introducing taxes so as to appear nice and perhaps gain votes on the basis of envy is no contribution to life in Ireland. Whatever justification there might be for this type of tax if our economy had reached the European level—that is a long way off—it is not justified now. Irish conditions do not justify introducing taxes such as they have in Britain and in fully developed economies such as West Germany, one of the most sophisticated economies in the world. Our economy is virtually stagnant and the Government's performance is contributing to disincentive rather than incentive, the opposite to what the Government should do.
We need more investment and we need people in government who know how to manage and direct the economy with confidence and experience. This Government have proved they have not got these qualities. The whole atmosphere generated by the Government's tax package is a major disincentive to investment, the provision of jobs and the strengthening of industry. In conclusion, I would describe the Government as a government of ways and means to close down industry and possibly close down RTE.
Good boxers never hit their opponents when their opponents are down. In this case the Labour-Fine Gael Government are the heavyweights and their opponents the ordinary people. The real recipients of the blows from the Government involved in the introduction of this wealth tax are, in my opinion, the many thousands who have lost their jobs and the many who, apparently, will lose them. The Government must be punch drunk at present, reeling from internal problems and dissension. They do not know if they are coming or going and their one aim is to try to keep themselves financially afloat. Even the ordinary man in the street is now realising that the Government have bankrupt the country.
It is very difficult to understand, if what we heard from the Minister for Lands and Deputy Desmond is correct, that this innocuous measure as they described it, the Wealth Tax Bill, will yield only about £3 million, why they are prepared to run the risk of upsetting the whole economy for that sum. If that is so, it is bad for the country and for the Labour-Fine Gael Government because by their present actions they are doing irreparable damage to the country. I should like to take up some points made last evening by the Minister for Lands and Deputy Desmond. There were many inaccuracies in what they said and as the night wore on it seemed they were trying not only deliberately to mislead the House but the people also.
With the introduction of this Wealth Tax Bill many people outside are beginning to wonder what all the talk is about—what does it mean? Wealth means money or something akin to it— will it improve our situation? Will we be better off? People in the dole queues are saying: "This is great but will it give us employment? How will it affect our economy?" They are right to ask if it will create new jobs, if it will increase exports. I suppose everybody is asking if it will break the inflationary spiral, which is strangling the country much quicker than many realise.
At last the Labour-Fine Gael Government are beginning to wake up and to realise the irreparable damage which this inflationary spiral is causing. People are asking whether this legislation, legislation described by the Minister for Lands as innocuous and described by Deputy Desmond as fiddle-diddle legislation, will do anything to help those people who are in serious difficulty. Both the Minister for Lands and Deputy Desmond made cases last evening as to why we should have a wealth tax. However, despite continued urgings from Deputy Colley that the Coalition give sound economic reasons for introducing this tax at this time, bearing in mind the unfortunate state of our economy as a result of its mismanagement by the Government, no such reasons were forthcoming. We know the Minister for Lands to be a fair man but it was obvious last evening that he was very uncomfortable, that he was put to the pin of his collar to bluff his way out of the situation and that he wished that he and not the Minister for Finance were in Brussels. The Minister for Finance is endeavouring to have the Bill dealt with in his absence.
Many of our Ministers are uncomfortable in those days but the Minister for Lands was the most uncomfortable Minister last evening that I have ever seen. He knows that the introduction of this legislation is sheer lunacy, that instead of putting the country back on its economic feet it will worsen the situation, lengthen the dole queues and close many more of our factories. Lest anybody should think that I am being unfair in my criticism I would refer to the first question on today's Order Paper. Question No. 1 asks how many workers have been laid off in a factory in Killarney town. The factory in question must be the shoe factory. Another industry in the town, Pretty Polly, is in serious difficulty also. This concern employs more than 1,000 people but short-time working is in operation now and it looks as if the factory is going into a tailspin. Will the introduction of this tax do anything to help keep more than 2,000 people employed in those concerns? The second question on the Order Paper asks what are the prospects of an industry being established in Rathmullen, County Donegal. Will the introduction of this tax create an atmosphere that will be helpful in enticing investors to establish here? We know that it will have the opposite effect, that it will discourage anybody who may have been interested in coming here. The next question refers to further redundancies due to take place in a firm in County Offaly where 110 jobs are at stake. A Labour-Fine Gael Deputy asks what are the chances of having an advance factory at Ballymote, County Sligo. While I am not the Minister for Industry and Commerce I can tell the Deputy concerned that there is not a chance of any such industry for his town. Like many other advance factories throughout the country, it would be empty. As Deputy Brugha has pointed out, a big factory at Dunleer, County Louth, is closing today. All the glib phrases of Deputy Desmond and of others on the Government benches will not help one of these unfortunate people who are being thrown out of employment. Even before the beginning of the tailspin into which this Government have brought our economy, we were not ready for the introduction of a wealth tax. Our economy is still developing and this party hope to be able, when the time comes, to put it back once again on the road to economic development.
We are far behind our partners in the EEC in regard to economic development. I do not mind whether Deputy Desmond quotes his case from a red or from a green book but I can tell him that this is not the time for the introduction of further taxation. We are bankrupt as it is. How can anybody in fairness hope to compare our country with other European countries? Deputy Desmond tried deliberately to mislead the House. He continued to tell untruths until he was checked. Through this House he tried to tell the people that there was a wealth tax in every country in Europe. Although he was proved wrong on that he was not put off his track because it does not matter to him. It is only a game, hypocrisy on his part.
I like Deputy Desmond personally but unfortuantely for him he is not regarded as a heavyweight within his own Labour Party. If he were he would have been recognised and would have been given something at the time when things were being given to people in such a generous way for so many different reasons. Deputy Desmond last evening was doing a flak job, a cover-up on behalf of the Labour-Fine Gael Government in an effort to create a smokescreen and in order to undermine and to knock the serious contributions to the debate by members of my party. It would appear that he was deliberately sent for and told to talk. When he saw the way things were lining up here last night he got himself ready and made a contribution which, in all fairness, did not do him justice. Those who congratulated him must realise that in doing so they are partly responsible for the hypocritical approach of the Labour-Fine Gael Government to this legislation.
If we are being compared with other European countries there is an obligation on the Government and their spokesmen, in the interest of fair play, to compare like with like. This did not happen. The Government spokesmen, the Minister for Lands and Deputy Desmond, who is the Deputy Chief Whip of the Government, must be reprimanded for the unfair way they went about their task last evening. Even if they had not been so unfair, the question must be asked, will the introduction of a wealth tax help us to catch up with our EEC partners? It would be very easy to produce a litany of woes as far as the economy is concerned. The economic difficulties we are now in will be regarded as a monument to the mishandling by the Government, a Government of so-called bright sparks, a Government we are often told by themselves and those in the media who favour them for one reason or another who have a monopoly of the brains, that could run the country as it should be run. The brightness is dulled and the sparks are burnt out, barely glowing. One thing is certain: things are in a bad way, and no amount of flak work by Deputy Desmond or by the Minister for Lands, who is a fair merchant at it when he gets going if he thought he would get away with it, or by the Minister for Posts and Telegraphs who is trying to create confusion by the introduction of a second channel in the single-channel area, or by anybody within the Government or outside the Government working on their behalf, will smoke screen the stark realities from the people.
There are 103,000 or 104,000 unemployed and there are economists who are now saying that the unemployment figure will be 150,000 or 160,000 by the fall of the year. Will the wealth tax now being introduced help to create jobs? Will it create the climate which the Fianna Fáil party worked so strenuously to create, a climate of goodwill as far as foreign investment is concerned? Will it result in the opening of any of the 140 or 150 factories that have closed down in the last six or eight months? Will it help any of the factories that are tottering on the brink of closure? Will it bring workers on the three-day week back to normal working? It will not. The Bill will yield approximately £3 million pounds to the Exchequer and no more than that.
Despite the efforts of the Government to cause confusion on practically every front to hide the position that I am talking about, they have nothing to offer the people. All their efforts are an exercise to divert people's minds from the real issues. Things have changed rapidly for this Labour-Fine Gael Government over the last 18 or 20 months. We remember the fanfare of trumpets, the unlimited publicity which members of the Government got at all times. Thing are very different now. Despite the best efforts of the highly skilled and well-paid professional flak merchants they brought in and made civil servants of, there is a failure to convince the public that things are well when they are not well.
It is immaterial now what spiel comes from the Government Information Bureau or what script is issued on behalf of any Minister by the wizard in the Government Information Bureau. The people say speeches are all right, television programmes are all right, but what about the husband who is out of work and the youngsters finishing school—what are their chances? Let Mr. MacConghail fly from Farranfore to Dublin to write a script for the Minister for Labour to apologise for his failures on television, but what about jobs for the young people, for the people on the dole?
References to public officials must not be made.
I apologise. What about jobs for those on the dole?
What about jobs for graduates?
What about the factories that are closing down? What about the harsh fact of life that we are at the top of the league as far as inflation is concerned? There are 103,000 unemployed and the expectation is that there will be 150,000 to 160,000 unemployed by next September or October. With galloping inflation unchecked, the Government are doing nothing whatever about it. Despite urgings and pleading from this side of the House and from outside the House for the Government to take action in a responsible way, there are milk and water statements from the Taoiseach and members of his Cabinet, threatening us with dire actions, the consequences of which must be lived with.
There was a fair gallop but a stop was put to the gallop of the Taoiseach and the Fine Gael members at the recent annual conference of the unions in Wexford. The Taoiseach and his colleagues were told in no uncertain fashion: "Lay off this; do not interfere with us or we will bring down the Government". Perhaps this is the key to the introduction of the wealth tax at the present time. Is it being introduced as a sop for members of the Labour Party to ensure they will bolster up the Coalition? Is pressure being exerted on the Fine Gael members for the sake of the survival of the Labour/ Fine Gael junta? The only other reason is that the Government are so badly off for money that they need desperately the £3 million, and are being forced along irrespective of the consequences to the economy. It must be one of those reasons that has prompted the introduction of the wealth tax at this time.
This question has not been answered by the speakers I heard in the debate. Instead, we had a barrage of flak and personal abuse to members of my party which was uncalled for, and it was a pity it occurred. I did not expect it. The moment of truth for this Labour/Fine Gael Government is close at hand. When they took office, amidst a fanfare of trumpets, they were able to boast for some time of the growth in the economy, without acknowledging their reliance on Fianna Fáil's management of the economy. Subsequently, when things began to go wrong they blamed external factors entirely, but they can no longer escape responsibility. The recent speeches of the Taoiseach and some of his Ministers, including my Limerick colleague, the Minister for the Gaeltacht, suggest that at last the Government are willing to admit to some degree that something is seriously wrong with the economy. For the first time, they are beginning to admit there is some obligation on them to do something about the matter. So far they have not done anything, but we must be grateful that at last they are moving in the direction which Fianna Fáil have been urging on them since last summer.
At that time they were claiming they were not responsible and could do nothing about the disastrous fall in farm income and cattle prices. At the same time, Fianna Fáil were pressing strongly for the introduction of the green £ as a way in which they could help. After a delay of six months they were forced to acknowledge, with tongue in cheek, that we were right, and finally we got the green £.
Similarly, we have been trying to get the Government to accept that they had a duty to do something about the serious unemployment and inflation problems, instead of hiding behind the lame and untrue excuse that all these problems were caused by international events over which they had no control. For example, before the budget last January details of ways in which the right kind of government action would help were spelled out by Fianna Fáil. It was suggested that any government spending should be concentrated on reducing prices, by cutting VAT rates and by holding down the prices charged by the ESB, CIE, RTE and other State bodies. In this way our rate of inflation would have been dramatically reduced and the extra spending power obtained because money would go further would have meant that more jobs would be protected because of the increased demand for products.
At that time, similar to other occasions, our advice was rejected. The Labour/Fine Gael Government story was that they could do nothing about inflation. The budget was supposed to be concerned with saving jobs. We all know today how wrong the Government were. At last they are starting to admit we were right and that in order to protect employment we must cut down inflation. It is unfortunate that the long delay means that it will now be much more difficult and more expensive to cut down unemployment and inflation.
One must ask if this is the right time to introduce a wealth tax, when prices are 15 per cent higher than they were last November when we were first suggesting action to the Government in an effort to pull us out of this tailspin. After those months about 15,000 more people are unemployed.
Another reason—in many ways it may be the most important reason— why it is more expensive and difficult to take effective action is because the new national wage agreement must be based on the assumption that prices will rise this year by more than 20 per cent. Under the terms of the agreement the minimum rise in each three-monthly period is guaranteed at 4 per cent.
I am sure the Deputy will agree he is ranging fairly wide of section 2.
I must admit I was amazed at the way this debate had developed and with the latitude given to previous speakers. Not alone did we have a discussion on wealth tax and the proposals in the Bill but the debate ranged widely over capital gains tax, capital acquisitions tax, unemployment, dole queues, redundancies and so on. It was difficult to understand how such latitude could be given, but as it was I am basing my points on arguments put forward by members of the Government during their contributions. I shall certainly respect the Chair and do my best to confine myself to what went before.
The Chair is anxious to keep the debate within the confines of the section.
The Chair must also appreciate that I, too, have a difficulty in that it is my responsibility to deal with the arguments put forward by members of the Government which, to my mind, were deliberately put forward in an effort to mislead the House and the public at large.
The Chair appreciates that difficulty.
Under section 2, which proposes to charge wealth tax, we will do serious damage to our economy with inflation running at the rate it is. If inflation were reduced to zero for a three-month period salaries and wages would continue to rise and this would cause a new round of price increases and one would find it difficult to blame employers and trade unions for negotiating another pay agreement. They would be doing what the Government encouraged them to do in the White Paper, National Partnership, released last November. I should like to say publicly now here that employers and trade unions deserve the gratitude and support of the community in adopting the reasonable approach they have adopted. Trade unions were demonstrating they were willing to agree to no increase in real pay levels this year but were willing to settle for a rise which would only compensate for price increases. On the other hand, employers on their part were indicating they would continue to maintain employment and pay levels to the maximum extent possible. They understood the difficulties with the Government trying to introduce, as they describe it, an innocuous measure which will yield only £4 million. This is being done at a time when unemployment is well over 100,000 and looking as if it will increase by 50,000 or 60,000 more. We have a Government so badly off, so bankrupt and so desperate for an income of £4 million from this measure that they are willing and prepared to throw caution to the winds and travel the road they are going irrespective of the harm they are doing.
The Minister and the Government should know that many firms are out of business and many more are in dire straits. A previous speaker said that notice has been served by upwards of at least 50 other firms that they will be in difficulties in meeting their side of the national pay agreement. All this is happening at a time when the Minister for Finance has the bit between his teeth, a very common occurrence, and is running with the blinkers over his eyes, not knowing where he is going, also a very common occurrence. He is now trying to tell us this is the proper time for the introduction of a wealth tax. Even if he had wanted to, for whatever devious reason he might have, he could not have picked a worse time for the introduction of this tax. If his reluctant substitute here, Deputy Fitzpatrick, Minister for Lands, can tell us why this wealth tax is being introduced we might make some progress. What are the economic reasons for its introduction? Why is it necessary? What good will it do for the man out of work and the man on the three day week? Will it create more jobs? Will it cut down inflation? Will it help to increase our exports? I am convinced that this measure will do nothing whatsoever to help us with our unemployment problem and our inflation problem, which has run unchecked up to now, and nothing whatever to help us increase our exports.
The Government have been asked to give their reasons on an economic level as to why they are introducing this tax now. They have failed to give that reason. The Minister for Lands, a very shrewd parliamentarian, found himself with the unenviable task last night of trying to shuffle from one leg to the other to fill in the 15 or 20 minutes during which he spoke without answering the direct questions put to him by Opposition spokesmen. The Government have failed to tell us why they believe it necessary to introduce this tax. They have failed to tell us the economic reasons for its introduction and they have been by no means clear about the effects of its imposition.
The Chair's difficulty is that we now seem to have got back to Second Reading speeches which the Chair cannot allow.
I understand fully; not alone are we back to Second Reading speeches on this measure, which the Minister helped us into last night, but he also brought us back to Second Reading speeches on capital gains, capital acquisition and a general discussion on the economy and I have no option but to rebut the charges.
(Cavan): On a point of order, Deputy Collins said I spoke for about 20 minutes last night. I made a Committee Stage speech in which I dealt with this tax and other taxes. I did not roam over the economy. As a matter of fact, I was accused of not going over the economy. I did not think it was relevant in relation to a Committee Stage discussion on section 2 and I confined myself to taxes.
The Chair feels that, if we do not get down to Committee Stage, progress will be very, very poor in regard to the section.
I agree and it is unfortunate the debate was allowed to develop as it did. I am now in the awkward position of having to deal with charges made against my party and against individual members of my party because of the stance adopted. I have no intention of entering into conflict with the Minister for Lands as to what he did or did not say. He has his officials available. I have not got a copy of what was recorded here last night and, even if I had, it should not be used to say who said this and who said that. I sat here and I made notes of what Members said. I will confine myself mainly to an area that was well covered and I will do my best to deal with the arguments that refer to this particular section. I promise not to be as wide-ranging as the Minister's Labour Party colleague who spoke for over an hour yesterday evening and who brought us on guided tours to every European country, until we checked him, where he thought wealth tax is in operation. The only European country he forgot to bring us to was Russia.
The only argument put forward, particularly by Deputy Desmond, with regard to section 2, which proposes to charge wealth tax, is one of equity. The glib phrase used and not substantiated is that of redistribution of wealth. The Deputy made hay last night when talking of the redistribution of wealth but somebody on his own side of the House forgot to tell him that the Minister for Finance, when dealing with this Bill, is on the record as saying that this wealth tax will in no way redistribute wealth. He said the wealth tax would just cover up for the loss of death duties to the Exchequer.
Will the poor man be any better off as a result of the introduction of this tax? Will the poor man get any extra to feed himself, his wife and family when things are as bad as they are now and when he never needed money as much as he does at the present time? Will the poor man who is out of work and unable to manage, who possibly has a mortgage on his house and cannot meet the payments, be any better off with the introduction of this tax? I do not think so. The only distribution of wealth the Minister for Finance conceded would take place was a redistribution of wealth among the members of wealthy families. I am sure he knows many more of them than I do, but if this is the only redistribution of wealth that takes place I want to say to the members of the Labour Party that they are misled and it is apparent they do not know what this wealth tax is all about.
The argument of Deputy Desmond that the wealth tax will redistribute wealth is ludicrous. What arguments in favour of wealth tax and in favour of this imposition at the present time are left? It has been said by some Members that the case put forward last night could be regarded as a begrudger's case and the case of the envious man. I would not accuse Deputy Desmond of being a begrudger or a man who is motivated by envy, but he should sit back and examine his own contribution and he will agree with me that what he said last night could leave him open to the accusation that the case he made could be regarded as a begrudger's case and the case of an envious man. Deputy Desmond was the only member of his party in the House who offered or who has been in the House to offer on this particular section.
Full employment and the ideal of full employment is a sick joke at the present time. I believe it can only come about through the development of industry. I believe the introduction of this tax will screw the development of industry into the ground. I also believe that the initiative required in the development of industry will also be screwed into the ground by the introduction of this wealth tax. Any section which proposes to charge a tax of this nature, which will affect the economy, must be resisted as strongly as it can be. It is fair to say from what Deputy Desmond said last night that he and his colleagues do not understand the role of those who invest their capital and skill in industry for the purpose of providing employment.
When this Bill becomes law it will frighten off investors into the country. The IDA are being muzzled by the Government with regard to the information which they must have about the number of inquiries for the establishment of industry in this country. There is no new person setting up an industry to provide employment for the people. If the Government and the Minister for Finance are foolish enough to go ahead with this tax the creation of employment for our people will be a thing of the past and the IDA will have great difficulty in trying to continue the work they have been able to do because of the economic climate created by Fianna Fáil over the years. Somebody in the big brother of the Government, the Fine Gael Party, should, in the interests of the economy of the country, explain to Labour Party Deputies the function of those who invest capital and skill in industry in the country and provide employment. If this had been done a worthwhile job for the nation would have been carried out in getting these people to understand what it is all about. The question must be asked if this section is carried and if this proposal to charge a wealth tax is accepted: "How many jobs will be lost because of it"? We must also ask how many jobs have been lost already because of the talk about it.
In an effort to be fair to the Government we must ask: "How many jobs will the wealth tax create"? I do not believe it will create any jobs. If the Government can prove otherwise they have an obligation and a responsibility to tell us. It is now a recognised fact that there has been a big reduction in the number of new jobs that might otherwise have been created here. During Question Time yesterday the Minister for Industry and Commerce was in the most uncomfortable position he has ever been in trying to fob off questions with regard to job losses, job creation and job opportunity for the many thousands unemployed. If marks were being given for performance that Minister would have needed a calculator to get the pass mark. If this section is carried the mediumsized Irish firm, the family firm, will suffer most.
(Cavan): Rubbish.
This is a recognised fact. This charge was made to the Ministers for Finance and Labour and neither Minister, nor the Minister for Lands, was able to take up this charge and deal with it. The Minister for Lands had the opportunity of dealing with that charge but he did not avail of it. I hope the Minister will give the information available, if such exists, to rebut the charge. With the introduction of this tax the small family firm which is already in serious trouble will suffer most. What will happen then to these people and their employees? Is it just a pious wish of the Coalition Government that the dole queues will disappear overnight? Is it not also the pious wish of the Minister for Lands who said "rubbish" to my charge? These factories will close down, because the wealth tax will act as a catalyst to hasten their closing down. Is the Minister for Lands not in cuckooland when he made that statement?
Does the Minister for Lands know or care that this is what must happen? It must be apparent to the Government members that the unfortunate people who are on the dole queues for many months are beginning to see that the flak job being done by the Government Information Services in an effort to smokescreen the facts at great expense to the taxpayers is not a true indication of the position. There is no point in members of the Government, whether they write the speeches themselves or whether these are written for them by the wizards of the Government Information Services, believing that. What they say will not help the man on the dole queue. He wants to get off that queue, get back his job so that he can come home with his head in the air and his wage packet in his pocket once a week for his family. He does not want his children seeing him going down the road to sign on at the employment exchange. That man only wants a decent chance.
The Government, for a miserable £3 million and a piece of innocuous legislation, are ensuring that whatever chance that man had of holding his head up in the air he now has none. The Government are being pushed and goaded into the introduction of this tax. With this hasty and foolish legislation the small family firms will suffer. Nobody is going to take pride in the fact that there are 103,000 people unemployed or in the fact that that figure could be up to 150,000 in the autumn. We would all like to see full employment, irrespective of our political differences. If we achieve full employment the Minister can then return to the House with these taxation measures. It will be a new ball game then. I appeal to the Minister not to be pushed by the lefties in the Labour Party into destroying the country further; not to be pushed by the Labour Party to go further than he knows he should go. The Minister should not let the leftists in the Labour Party, with their shortsightedness and misunderstanding of the situation, as evidenced by the contribution of Deputy Barry Desmond, push him into doing something which he knows is stupid in the extreme.
The Minister knows the harm this will do to foreign goodwill built up over the years painstakingly by successive Ministers for Finance and the IDA. That goodwill was built up in an effort to attract foreign investment here to provide employment for our people. Would a Fine Gael Member explain to the Labour Party Deputies the role and functions of the IDA in the hope that they will understand what it is all about? Is it not a fact that few if any Members of the Labour Party provide employment for any person in their own private lives? I am not holding that against them. The Fine Gael Members should tell their Labour colleagues in Government how the efforts of the IDA are being seriously hindered by the wealth tax and the Government's attitude, as demonstrated in recent months.
Is it not a fact that inquiries for the setting up of new industries are practically non-existent? In Limerick city and county between 8,000 and 10,000 people are unemployed. Factories are closing down and nothing done about them. We were all waiting for a huge development at Ahanish Island on the Shannon but nothing ever happened. This £100 million project was to start months ago but it has been put back. Is the truth of the matter not the fact that they cannot raise the money on the international market? Is that not one of the reasons, plus the fact that the Government, instead of helping industries to get established in the way we helped them when they came first when we were in Government, are practically driving them out of the country? The imposition of this wealth tax and the acceptance of this section which proposes to charge the wealth tax will do so much harm to our country that we shall be reeling for many years to come. Indeed, the sick joke last night when we were leaving here was that, with unemployment as it is, with inflation unchecked as it is, the next spate of redundancies will probably take place within the IDA. There would be redundancies on a large scale outside their own sphere of responsibility. The Government, being pushed as they are by the "lefties", are throwing caution to the wind and can stand accused of national treachery in bringing in this "innocuous" legislation, as it was described by the Minister for Lands, not caring what harm it was doing in the meantime to the many thousands of people who are out of work or will be out of work as a result of it.
A wealth tax at this time is out and must be out. What we want at present is something that will build up our economy to where it was when we in Fianna Fáil left it and to take it from there to the situation where we can have full employment. It was interesting last night to note the remarks from the Government benches in regard to their own attitudes to investment from the United States. Maybe it is just as well, because the investors from that country were perhaps the first to see through this Labour-Fine Gael Government and its foolhardy promises of legislation which were forced on them at Ard Fheiseanna or party conferences.
Our good image which it took so much to build up is gone. The confidence of the foreigner in setting up industries in this country is gone since Labour and Fine Gael got the reins of Government. Americans shy away from this country. Is it any wonder that we are now referred to as a banana republic in certain international financial magazines? Might I say that what was deliberately read into the record here last evening by Deputy George Colley from a letter he received from a good friend of Ireland with regard to the image of Ireland abroad at present for the purpose of influencing and encouraging industry here, is a view that is held by many. It is surprising that the Minister and his colleagues have not heard this before now, because over the last six months many of them are travelling so far afield that one would have thought that some friend of the country would have told them what the score was.
We are not an industrial country, and irrespective of what buttonhole trade unionists in the Labour Party might say, we have a responsibility to encourage the setting up of industry to provide employment for our people. The introduction of this tax will knock that on the head. We have challenged the Government more than once to demonstrate even one argument in favour of this wealth tax. We have had nothing from the Minister who spoke last night other than remarks which I shall deal with later on when I come to them. We have had nothing from Deputy Desmond other than half paragraphs he read out of a little green or red book which unfortunately he did not seem to read too well and which I saw floating around this morning. Maybe we shall get more from it. If we are to have arguments for or against the introduction of legislation in our little Parliament given to us from gentlemen who write little books, whether they be red or pink, then God help the Labour Party and those who are allied to it.
The only kind of argument we are getting is that we shall have equity. As I have said already, Deputy Ryan, the Minister for Finance, admits that this alleged equity argument is not on and it does not arise. Let me say to those who are arguing on the alleged equity part of it, that personalities in regard to the members of this Parliament should not enter into it in any way whatever. I do not mind what the personal position of any Member of the House is. Good luck to them. They have worked for it and earned it. It is a sad day for a Government Minister bringing in legislation having an ally who was forced on him so as to form a Government and who starts picking at personalities in this House and saying that because of their own personal positions they were against the legislation.
I am vehemently against these measures, and never in my life will I be touched by this wealth tax, because no matter how low you bring the threshold you will not catch me, because there is nothing to catch. I am saying that to show people like Deputy Barry Desmond that personalities should be left out of it completely. Perhaps there are a couple of people who can talk for themselves over there if they want to, but I do not think it is necessary.
Deputy Desmond said last evening that this measure was long overdue and good for the country. If I were musically inclined—and thank God I am not at this stage—I could nearly put music to that phrase, "long overdue and very good for the country". We have heard it so often from people like Deputy Desmond, that it is again to be regarded as what it is, an empty phrase, unless he is prepared to substantiate it. If there are good economic and social arguments, let us hear them, but let us get away from these empty phrases.
If the Government want something to do other than trying to push this section through, let them set about reducing inflation, which is the highest in the EEC, something for which all the Deputies on that side of the House should hang their heads, because they have done nothing whatsoever about it. The Labour Party should know— I am not sure about Fine Gael members—that inflation is crippling the poor and the higher it goes the harder the poor are hit. I hope this will be recognised fairly soon by those who profess to represent the poor or say that they have something in common with those who represent the poor. The poor man is caught by this inflation. I suppose he is unorganised. The man with property should hold his own but the poor man, dependent on wages, has no chance. If the Government want to do something worthwhile for the country they should come here with some proposals to stop this crippling inflation. Those proposals are already nine months overdue and as time goes on the position becomes worse. The economy is being crippled and the question of a wealth tax is far less urgent than need to curb inflation.
Let the Government do the job they should have tackled long ago. They should stop talking, whining and moaning about it. They should get their priorities right and not worry whether the people in the single channel areas will go for BBC 1 or RTE 2. The people will make their choice when they get the full facts from the Government and the Minister for Posts and Telegraphs. Priority No. 1 is to curb inflation. The Government should stop trying to raise a hare when there is no hare to be coursed and no dogs to course the BBC 1 hare, which is not even a reality at present; we have no permission to do anything with it. We should deal with inflation and forget about introducing a wealth tax, which only makes matters worse.
If the Government are in agreement, and if their leader agrees with them and they are prepared to work together, they should have a chat during Question Time and decide to throw out the wealth tax and stop mucking about for the next two or three months, or however long it will take to get a measure through which they describe as innocuous and which can only yield £3 million. Instead, the Government should give work to those in the dole queues, curb inflation, do something, as they said they would, about prices and make it possible for people to live. They should not try to push this section through.
What will it cost to administer this Bill? How will we know? If we are to charge a wealth tax we should know if it is worthwhile, how much we will have out of it, when administrative costs are deducted. Because of the Government's present attitude the people's confidence in the Labour/ Fine Gael Government is at its lowest ebb. If the Government are serious, if they know or care what they are doing, do they know what this wealth will do to the country? In an effort to fireproof themselves against the just criticism levelled at them from many fronts are they trying to redherring the whole affair? I say to them: drop these proposals and get on with the job you should be doing: get down to the real problems and do something about them. Why is this House sitting in marathon session in unbelievably hot weather so physically demanding on members present in this Chamber that one would almost ask permission to take off one's coat? Is that possible?
I dare you
If the Chair allowed it, I would love to do so. Deputy Crowley told me the temperature is in the mid-seventies here. But one is not allowed to divest oneself of one's outer garment.
The Deputy really looks prostrate.
The Deputy should not worry. I never suffered from my looks.
Deputy Desmond is a victim of Victorian customs. Is it in order for Deputy Desmond to pass notes to the civil servants?
The Government should get away from this hypocrisy and abandon the charade they are carrying on. They should do what is their duty. Otherwise, they will not control the unions much longer judging by what we hear from a Member of the other House who is an important force in his union and who, seemingly, dictates to the Government what it should do. The Government had better do something quickly.
The real question here is whether this section will help the country, help the unemployed, help the tottering industries we see around us. We have lost 120 or 130 industries in the first three months of the year and another 50 or 60 are unable to meet their commitments under the national pay agreement.
That is some record.
Deputy Desmond said last night that we have spent 70 hours on another tax measure: it is a pity we did not spend seven hours or even seven minutes discussing inflation and unemployment, topics which more urgently demand our attention.
Socialism in the 'seventies.
Last evening charges were levelled against our spokesman on Finance, the former Minister, Deputy Colley, by the Minister for Lands. These were charges made in an effort to hit the headlines and throw up a smokescreen. There were charges of sabotage and of not understanding the Bill. If anyone does not understand the Bill before the House the Minister should not strain his neck too much looking over his shoulder. He need not have looked over any shoulder last night, because members of his own party who have been in the House without a break for longer than he has been were sickened by the contributions of the Minister and Deputy Desmond. Members of the House had to leave, and members of the other House who came in when they were leaving threw up their arms in disgust at the contributions made by Deputies opposite on section 2 because it was clear they did not understand it. If the Minister for Lands wants to throw stones he should realise that it is a very dangerous occupation.
Last night the Minister for Lands could make no attempt to answer the arguments put to him. He adopted the attitude that attack is the best form of defence. It upsets the Government to be told that they are mad in taking this action and this is what they have been told by people who are friends of this country, people who have endeavoured to provide employment for our people. If the charges made by the Minister for Lands are to be levelled against anybody, they should be levelled at himself and Deputy Desmond because the Minister collaborated with Deputy Desmond when he tried to mislead the House. Deputies on the Government benches made it clear by their gestures that they were disgusted with the Government's performance but because of their loyalty they said nothing.
In fairness to the Minister he admitted that the situation in the country is bad. He said we were experiencing a difficult time but why did he not tell us what the Government intended doing about such matters as inflation, unemployment and the cost of living?
The Minister for Lands endeavoured to take us back over the years from 1959 to 1973. He opened an area of debate on which he should not have embarked when he began a general discussion on our taxation system during that period. The record of the Government in this House during recent weeks is one that they should be ashamed of. They have voted against curbing the speculator. Let not the people opposite ever tell us that we were slow in bringing about improvements in the taxation system. Fine Gael who wait for the Labour Party to tell them, when politically, to go to sleep, ran away from taxation. I do not know how any member of Fine Gael, having listened to the debate here, can vote for this measure. The lust for power is a strong motivating force but let Fine Gael Deputies tell their Ministers that they must not worsen the situation for our economy.
Last night the Minister gave us much information regarding details of the Bill which was already known to us but he was asked what value the Government and, in particular, the Labour wing of the Government, put on employment. He was asked what value the Minister for Industry and Commerce places on the lengthening dole queues. At some stage I trust we will have an answer as to how this Bill benefits the economy.
We have the highest tax in Europe as was stated in one of our evening papers, that has not been contradicted by any member of the Government or by any of the highly paid talent that was imported into the Government Information Service. We are the least developed country in Europe but Deputy Desmond endeavoured to compare us with the wealthiest nations in Europe. Let us compare like with like. By his silence the Minister for Lands condoned what the Deputy said but let Deputy Desmond compare Ireland with southern Italy, an area with which we have much in common.
Not only are we the least developed country in Europe but we have also the highest rate of inflation and unemployment. I do not know what school of economics Deputy Desmond attended but he should at least know the dangers of introducing a wealth tax at this time. The Government are embarking on a course of lunacy. We do not know whether it is because they are bankrupt and need the £3 million or the £2½ million that will be got when administrative costs are covered—we are not told how much they will be—or whether it is a sop to Deputies of the Labour Party. Why are the Government throwing caution to the wind and making a bad situation worse? Why do they not do the things they should do? They should do everything humanly possible to attract industry to this country, everything humanly possible to create employment, to give people a chance to bring home a wage packet and to have a proper sense of pride in doing so. Let us get our priorities right and tackle the problems that need to be tackled and stop the hypocrisy.
There were 70 hours spent on the last tax Bill and there is a prospect of another 70 hours or 170 hours on this Bill. The Labour-Fine Gael Government have introduced these Bills for reasons they have not given, and they are not economic ones, because if they were they would have said so. The Government must be charged with irresponsibility in taking up the time of the House in dealing with what the Minister for Lands described as an innocuous measure, a measure which brings in very little to the Exchequer, instead of getting down to the business of running the nation and looking after the people.
Anyone in this House who says that it is not the duty of the Government to help to provide employment is not worthy to be in this House. It was said once before by a member of the Minister's party that it was not his responsibility to provide employment for people. Thank God, the Minister's party have seen the light since then.
Have they?
At least we thought they had but perhaps we should have second thoughts about it. The doubts which we have are justified when there are 104,000 unemployed and the thousands of school leavers have not a chance of a job even in the Civil Service. All the indications are that there will be 150,000 or 170,000 unemployed in the autumn. The Government are doing nothing about it. They are trying to get out of Dáil Éireann as fast as they can to go on their summer holidays. Why the mad rush out of here? Why is there all the talk in the corridors about finshing in the hot weather and getting out of here fast, that it is not human to be here? Of course, it is human to be here. We are paid to be here. There are many outside who would gladly take our places. If it is not human to be here as is suggested through the Government Whip's Office, it is much more inhuman that people outside should have no prospect of any sort beyond the dole and there is nothing for the young people leaving school, not even the price of a calculator to help them to keep up with the Joneses in the examinations.
Let us get down to basics. Let us kick out this wealth tax and let us look after the people who sent us here. Deputies who have towns or urban areas in their constituencies have been approached by constituents who are on a three-day week or who are redundant and cannot meet the mortgages on their homes and asked what will happen to them. Does anybody on the Government side of the House care? Will anything be done about it? The Government have a terrible responsibility. Anything will do when things are going well and when the media are working with the stuff that is fed to them at high expense to the ratepayer and taxpayer through the well-paid gentleman brought into the Government Information Bureau. A party can stay in government when things are going nicely for them. Now things are not well. The Government know it and have admitted it. They must face up to their job and stand on their own feet irrespective of the differences that there are between Fine Gael and the Labour Party. The Government must do what they have to do. They must help the unemployed.
Deputy Desmond says that we spent 70 hours on the last tax Bill, as if it should have been passed in five minutes. They were not men enough to vote for the one clause that had any teeth in it, that would have been good for the country. They voted against the clause that would catch the speculator. Now they are trying to get another bit of legislation through —part of a package. They should throw the package overboard because it is too heavy for the little boat they are in and there is a fierce storm around the headland. Do the Government care? Are they running true to tradition? Are they doing what they did in 1951 and 1957? Are they going to make such a mess of things and create such havoc that eventually, whether dictated to by Senator Mullen or anybody else, they will throw in the towel and run to the country? I hope they will not run true to tradition. If they do they will have thrown all their responsibilities overboard; they will have neglected their obligations and will have sold the Irish people down the river for the third time in a short number of years,
We have had discussions on unemployment that were forced on the Government. The Minister for Local Government told us untruth after untruth in connection with the employment position in the building industry, and members of the Government who had the information in their hands did nothing about it. We had the suggestion last night from Deputy Desmond that the building societies should do more. The Government should have been making demands on the building societies some months ago when the queue of applications for loans was a mile long. If building was going on, unemployment would be down.
The Government forget the fact that 127 firms went into liquidation in the first three months of this year. They are not interested. For a reason that I cannot understand and which is not an economic reason this wealth tax is introduced at a time when there are 127 firms in liquidation and 50 others in serious trouble.
People outside do not want to invest their capital in this country. They are no longer interested in investing here. Unfortunately for us, the term banana republic is being given more meaning by the way the Government are behaving. I shall not talk about the individual behaviour of the Minister for Finance last week in reference to Deputy O'Malley or about the Ceann Comhairle and the way he mishandled the whole affair. I am worried about the image of our country abroad and the effect that the image will have on foreign investors and the fact that they are not coming in, and about the dole queues and the prospect of their doubling or trebling in the near future and about the unchecked inflation and the prices that have gone mad. Nobody seems to care.
Would somebody who is good on publicity, who has the ear of some newspaper reporter or editor, get the message out to the people that the Government are engaging in diversionary tactics in order to cushion themselves from the criticism which must be levelled at them for having the country the way it is? We are the laughing stock of Europe and the United States, as any banana republic is. It galls me when I see the fantastic effort that was put into the building up of the economy over the years being nullified within such a short time. Private enterprise is shunned whether Fine Gael Deputies want to believe it or not. Private initiative is being choked and strangled but nobody over there shouts stop. The truth of the matter is that nobody wants to come to this country any more. The wealth tax at this time will cripple our industries and it will destroy many of our small Irish-based family industries. What we want is investment in industry and the creation of jobs.
There was a lot to be said for the comment of the Minister for Defence on the White Paper on wealth tax some months ago when he said, "Forget about that; it is only Civil Service talk". How silent is the present Minister now when it comes to the wealth tax? Has he got his priorities right? Does he know that one of the biggest and most successful industries in the country, which is located in his constituency, has closed down? What has he done to help these people? We will know as time goes on.
I hope something worth while will come from this discussion, that the Government will have second thoughts and that they will withdraw the Bill. We will not sneer at them if they do that. They should not make an unbelievably bad mess worse than it is. They should have sympathy for the people out of work, do something for them and give them a chance to live. The Government should do what they can to ensure that more industries will not have to close. They can do this and save face in the knowledge that they are doing a worthwhile job. Government is not always easy. When things are bad a sign of good government is to do the right thing and do it quickly. This Government stand accused of grave neglect of their responsibilities on many fronts which have led us into this economic morass.
Deputy Barry Desmond last night said that only a few people would be caught. He told us there are only a few millionaires and he threw his hands around—he could do that because some of his colleagues were not in the House then. He tried to do sums and told us that very few people would be caught. If this is so, it is all the more reason why the Bill should be withdrawn because of its consequences. The Deputy said that the most a millionaire could be caught for would be £6,000; if this is so, let the Government withdraw the Bill immediately. They have done enough harm already. We are told that only £3 million or £4 million will be obtained from this legislation. If the Government are so bankrupt that they are forced to go after this money irrespective of the consequences I suppose we may be facing a very early election.
I do not know if a phrase used by Deputy Desmond last night is on the record; it was, "God knows, it is so harmless. We are only charging 1 per cent for the time being". That was said in the presence of a Minister who has been designated to steer this Bill through the House in the absence of the Minister for Finance——
(Cavan): I have no recollection of it being said, and further I do not believe it was said. I do not believe the Official Record will bear out what the Deputy has said.
I should like to put on record that Deputy Desmond made that statement not alone last night but on Radio Éireann also where he said, "Once the principle has been accepted it is an easy matter to adjust the rate".
That is not a point of order.
It is a point of information for the House. I have here my own note which I took last night and which I am prepared to stand over, making all allowances for human nature. If I am wronging the Deputy I apologise, but my honest recollection of what was said by Deputy Desmond was, "God knows, we are only charging 1 per cent for the time being". We have here a notice saying that Deputy Desmond stated on Radio Éireann that "once the principle has been accepted it is an easy matter to adjust the rate".
Even if an assurance is given here today, will it be accepted? How many times have the Government reneged on their promises and broken their word? How many times have they been accused of dithering like the Minister for Industry and Commerce, fiddling away without a string to his bow while Rome is burning? Yet, Deputy Desmond tells us that they are only charging 1 per cent for the moment; the legislation is dismissed with a wave of the hand as unimportant, where only a few hundred people will be caught. The Deputy asked us "Who are they, anyway?" while looking over his shoulder and seeing that his colleagues, who might be affected, were absent from the House. He told us that all the Government wanted to do was to widen the tax net.
Deputy Desmond spoke about the redistribution of wealth, despite the fact that the Minister for Finance told him indirectly he was talking through his hat, that he did not know what it was all about. In an effort to help the Minister for Lands last night, Deputy Desmond made a definite pronouncement to the effect that there was a plentiful supply of money coming into the country for investment purposes and for the purchase of land. The Minister will recollect that. The Deputy told us that he knew positively that money was available. This morning I checked with a number of leading auctioneers in Dublin on the extent of inquiries from Britain regarding land. I checked with Deputies here who are in the auctioneering profession about the extent of inquiries they knew about. I might have known I should not have bothered because Deputy Desmond deliberately told untruths last night in giving the general impression that there was large-scale investment into this country from England for the purpose of buying up land. That statement was condoned by the Minister for Lands who sat silently and did not even tell Deputy Desmond he was on the wrong tack. If the Government persist with this measure it is our belief they will multiply the dole queues and have many more questions on the Order Paper about the closing down of factories and the plans for industries to fill the empty IDA advance factories. It is of this we are afraid and, if they persist with this section, they will deliberately clobber those who believe in free enterprise.
That is a dirty word.
They are clobbering those with initiative and goodwill who would be prepared to come in here and provide employment. I believe this action by the Government will introduce a new breed of people into this country. Even if the Bill is withdrawn now so much damage has already been done it will take several years to repair it. Enact this measure and the country is in for a long and troubled period.
It is no good Deputy Desmond coming in with a textbook printed and published in England, written by an English author, trying to read from it arguments as to why a wealth tax should be introduced here. Deputy Desmond, as I say, deliberately tried to mislead the House by saying all European countries have a wealth tax, and he said Britain would have it soon. He mentioned the name of the responsible British Minister; we were lucky we did not have him over here because we would be much worse off. Is that the case for introducing this legislation which will harm the country?
We asked for the economic arguments and all we got was page 91 out of whatever book it was. Is that good enough? Deputy Desmond embarked on personal abuse and gibed at some members of our party. He did not do himself justice. He has the ability, like everyone else, to put a fair case. He did unbelievable injury to himself last night in carrying on the way he did. His contribution was worthy of a light programme on RTE. He and the Minister accused us of not knowing what the Bill is about. That sort of thing rankles.
I hope that even at this late hour, with the country practically bankrupt, with the highest unemployment for many years and with inflation rampant, the Government will wake up. We have the highest taxation in Europe, the highest unemployment and the highest inflation. I appeal to the Government to have sense and withdraw this Bill. Let them get down to the serious task of doing something worth while for those who have nothing other than the dole. Let them help the housewives who are hard pressed trying to make £5 do the work of £4. The Government should be doing something positive not introducing, as the Minister for Lands described it, an innocuous measure like this. The Government should be giving some hope to those who are in the depths of despair. I have painted a fair picture. I have removed some of the unnecessary varnish. I have dealt with the kernel of the problem. Is it not sheer lunacy for a Labour-Fine Gael Government to introduce a measure like this? The second last time out Labour tried to go it alone, and Fine Gael tried that also. Knowing what the consequences of this measure will be, is it not sheer lunacy to insist on its passage? The Minister is a fair man. I respect him. I know he is doing this job for the Minister for Finance. I am glad he is because I think he has a better sense of fair play than his colleague and surely he realises the damage this Bill will do. Surely he realises it is foolhardy to insist on its passage, a Bill designed to bring in approximately £3 million a year.
The last speaker said this Bill would prevent foreign investment in this country. I approve of a wealth tax but I do not approve of an Irish citizen who is a director of a company paying wealth tax while foreign companies which invest money here will not have to pay it.
(Dublin Central): Is that true? We are confused about that.
(Cavan): Deputies obviously are.
Of course, it is true. If money is invested here and the shareholders live outside the country the money is not taxed here. I am more worried about that than I am about what Deputy Collins was speaking about.
(Dublin Central): Effectively they are taxed outside the country.
I am talking about wealth tax or any tax the Deputy likes. If a company is from outside the country they do not pay wealth tax.
If an American company own shares in an Irish company or an American individual owns shares in an Irish company the Revenue Commissioners would not be able to collect the wealth tax from them?
No, because they pay it in America. Fianna Fáil, as well as nearly everybody in this House, object to some sections of this Bill. Have Fianna Fáil come out yet and said if they will vote against the Bill in toto or in bits and pieces? I believe there is a group in Fianna Fáil who will split with them if they do not vote for it. The speech made by the last speaker would do for anything because there was very little about the Bill in it. I have great admiration for Deputy Colley but he has been criticising the effect this Bill will have on business. When he was Minister for Finance he increased the corporation profits tax on companies and that caused large-scale unemployment. When he brought in that tax he was told by the Opposition that it was very dangerous.
I am for this wealth tax although perhaps I am not for the amount. This is the time to bring in a wealth tax when there is a world recession and there is unemployment in all the European countries, some of which have never seen it for over 50 years. This is the time when a Government want money. They need to help those who may be out of employment for a short time. I believe that a person who does not want to work is entitled to get something to keep him alive. Those who lose their jobs, through no fault of their own, should be paid a sum of money as near as possible to what their original salary was until such time as they get further employment.
I would like to point out to Deputy Collins that I am not a Leftist. I agree with this tax and I employ people. In the explanatory memorandum we are told that there are three assessable persons, namely, the individual, the discretionary trust and the private non-trading company. The case of the individual is easy to understand. There are no thresholds for the discretionary trust. That is all right if the person who created the discretionary trust is alive. What is the position if he is dead? Is there a threshold then? What happens if there is a trust for four people whose grandfather left it but the parents have no threshold to use? The parents in that case may not have sufficient income to be able to use a threshold. Is a threshold allowed for that trust?
Will the individual, in the case of a discretionary trust, be forced by the valuation of the Revenue Commissioners to pay out so much money out of his company so that the company are left short of liquid cash? Business people want to know how they will be fixed as a result of this. That is why I stated on the first section that a businessman likes to know whether five years' purchase or ten years' purchase is taken into account in relation to the assets value. The assets value might be a certain figure this year but they might be worth practically nothing next year and might increase again the following year. Will there be a rule of thumb in the case of an individual? Let us say six years ago the valuation was ten years' purchase. Will the Revenue Commissioners take that? Today it could be down to four years' purchase.
I do not believe anybody in the world knows how to stop inflation quickly. It can only be done gradually. If price control is used to reduce inflation how will the Revenue Commissioners value a property that has a price control on it and has practically nothing to show for profits? Will there be four years' purchase on that? Four years' purchase can mean nothing but VAT still has to be paid out of it. I would like to see those things spelt out a little more.
I asked on the Second Stage the amount of money in toto a person has to pay out of every £ he earns. The Minister has given some information on this, but we could still reach a stage where a person could earn £1 and pay £1.10 or £1.20. I can give examples of countries where this does not happen. I know that Britain is worse, but who will look at Britain as an example today? The businessman likes to know where he is going and to be able to plan ahead. I know this is very difficult for any Government or individual to do. There was a time when it was possible to do this, but that day has gone with the rate of inflation throughout the world. The Government of some years ago, who introduced at least two budgets annually, did not plan ahead.
We have a budget a week now.
A person must pay two taxes whether he makes money or not, VAT and wealth tax. If he is a minus quantity he pays VAT and if he makes no money in his business but his assets are worth a certain amount he is followed for wealth tax. How can the Revenue Commissioners assess the amount he is liable for? He could finish up paying wealth tax on something he has not made any money on. I do not believe that tax here should be lower than other countries, but it should not be much greater. At present it could be slightly greater because we are not basically an industrial country; we are not as industrialised as other European countries.
A certain amount of tax must come from those who make profit to bolster up industry. Some years ago the Fianna Fáil Government imposed restrictions on the import of certain goods with the result that people had to pay ten times the price for it to bolster up industry. It is not too bad to tax our people a little above other countries provided it does not leave us in an uneconomic position. I would be obliged if the Minister would give us a list of all taxes paid by the people in other European countries, direct and indirect taxes. If given these figures we would have a better idea of what is happening.
It is hard to compare one wealth tax with another because other countries may have certain local taxes or better children's allowances. If these figures were made available we would know how tough it will be to be in competition within the EEC. It is important for us that our taxes are at rates which are not excessively greater than those in other European countries. I include in that personal allowances.
I should like to give an example for consideration by the Minister. If we take 1974 and assume that the married person—I am excluding children's allowances—has an income from employment of £6,000 per annum and that the balance of his income is from investment. Assume that the top rate of tax here will be 80 per cent that person would start paying tax on an annual income of £9,150. The corresponding figures in other countries are:
Luxembourg, £14,320, 57 per cent rate.
Denmark, £6,670, 61 per cent rate.
Germany, £38,900, 59 per cent rate.
Netherlands, £22,620, 71 per cent rate.
United Kingdom, £20,865, 98 per cent rate.
Belgium, £44,710, 70 per cent rate.
I agree with a tax that is used to bolster up certain commitments a Government may have and will have because of European or world conditions. I reckon that 80 per cent should be the maximum with all taxes. I want to get across that if a person earns £1 he should not have to pay 22/-. Fianna Fáil always got the man in the street who was getting £3 a week to pay treble the price for shoes and other commodities when they were cheaper outside.
In the case of the actual rate of tax we are paying, assuming again that the married person I referred to earlier does not get any children's allowance or other exemptions, the rate for tax in Denmark is .9 per cent above the threshold. This rate is reduced if taxable income is less than 6 per cent of the taxable net wealth. In Luxembourg the rate is .5 per cent above the threshold and Netherlands .8. In the event of a control on prices being introduced and a trader being forced to pull down his price what compensation will such a person get against wealth tax? In Europe the marked up price at any retail outlet is greater than here, and we are greater than Britain.
It is extraordinary to think that Deputy Belton is in favour of this Bill with all the objections he has to it.
They are not objections; I asked the questions for information purposes.
I find it difficult to understand the mentality behind these tax proposals. There is evidence to show that the Government regard ownership, if not as something reprehensible, at least as something to be taxed. Deputy Collins was talking about 104,000 who are unemployed, about the men who have to queue up weekly and lose a lot of their dignity in order to obtain a Government handout.
Debate adjourned.