Skip to main content
Normal View

Dáil Éireann debate -
Wednesday, 2 Jul 1975

Vol. 283 No. 2

Capital Gains Tax Bill, 1974: Report Stage (Resumed).

Debate resumed on amendment No. 13:
In page 14, to delete lines 48 to 50 inclusive, and to substitute "for a consideration equal to their market value at the date of death; but".

I think I had concluded my remarks of substance and, having given further consideration to the matter during the break, I would not consider I would be justified in accepting the amendment.

In addition to what I have already argued, I would ask the House to remember that bequests in the form of assets, such as a private house, the wasting asset, moveable assets worth less than £2,000 and Government loans and securities may be made without any future liability to capital gains tax on disposal. When one considers these exemptions, together with the already high thresholds of exemption from capital acquisitions tax, it will be seen that there will be very few cases indeed where the kind of hardship to which Deputy Colley referred would arise.

I do not think it wrong that we should legislate now for the short term. I do not accept Deputy de Valera's view that whatever we do now will not be changed for 20, 50 or 70 years. Were I Minister for Finance at the turn of the century I would contemplate having a look at the matter again and, in the light of that, consider whether any changes should be made, as it might be thought that the man who introduced it might be more resistant to change than others. I am confident that future legislators will look at the situation to ensure that the kind of situation which Deputy Colley has rather graphically and in a rather exaggerated way set out would not arise.

In relation to the example I gave of the farmer and the nephew, might I ask the Minister is it not true to say that unless the nephew complies with fairly strict conditions of the capital acquisitions tax code with regard to living and working on the farm, the exemption limit for him would be something like £15,000 and not £150,000?

In circumstances like that does the Minister really think that is a capital gain he should be taxing?

First of all, the capital gain would not arise unless and until he disposed of it.

If he remains working the family assets, passed down from generation to generation—and that is the kind of situation we are endeavouring to protect, knowing the manner in which the Irish community operates in relation to family farms and businesses—no difficulty will arise; no occasion to capital gains tax will arise. If, ultimately, he or his children decided to get out of that activity, I do not think it unreasonable that they be asked to pay capital gains tax. They would still retain the net 74 per cent of the capital gain, plus the original value, which would be quite a considerable gift to have acquired.

(Dublin Central): What about inflation?

Did I understand the Minister to say he would be depending on a future Minister for Finance to remedy this matter in a number of years?

I am not saying it requires remedy. I have said I am sure that, if I am still around, or others, we will be looking at the situation.

The Minister is admitting that this Bill will create problems in years ahead.

I have not said that. I have said I am sure that legislators will be looking at it from time to time.

The Minister thinks there is something to be looked at by future Ministers. That will make farmers feel very uneasy because, if a farm is worked by a son who inherited it on the death of his father, and he continues to improve and develop it, thereby enhancing its value, the value is automatically increased. Must he then suffer in, say, ten to 15 years' time by having very heavy capital gains tax slapped on him if he decides to sell the farm, or if his wife, becoming a widow on his death, decides to dispose of it for a number of reasons? This is a ridiculous situation. It is ridiculous to have this in a comprehensive Bill and leave it to a future Minister to remedy that inequity say, ten years hence.

The Minister might examine the points made by Deputy Colley. In the case of inheritance tax, if it is a nephew involved in a farm or business the threshold is quite low. I think the Minister spoke about this himself and said not many cases would arise, but it is conceivable that both capital gains tax and inheritance tax could be applied. Certainly I agree with the Minister when he said that in the case of a direct descendant gift or inheritance tax would not apply because of the threshold. But the threshold covers direct descendants only. It does not cover what happens quite frequently here, particularly in rural areas, where there are so many bachelor farmers.

The other point occurring to me here, and which seems relevant in relation to the sort of example given by Deputy Colley, over a period of years, is the effect of inflation. If inflation is not to be taken into account it seems to me, with the automatic loss in the value of money, people in that category will become taxable anyway whether the value or quality of the farm or business improves. This, it seems to me, places the State somewhat in the position of having a vested interest in inflation and is an aspect to which I think the Minister should have some regard, because it seems rather unjust that simply by the devaluation of money a person will become liable to capital gains tax if he finds himself in the position of wanting to or having to sell an inheritance. This tax will come into operation simply because the value of money depreciated, as it has been doing very significantly over the last few years.

It seems to me from that point of view and also from the possibility of two taxes coming in that Deputy Colley's amendment is worth considering. The Minister should consider it on the basis of what Deputy Colley suggested, that market value at the date of death would at least help where a family business or a family farm is concerned to make the thing more equitable from a family point of view.

(Dublin Central): I would like to support Deputy Colley in this amendment. Throughout the country today there are many people confused with regard to the taxation package. The abolition of death duties was welcomed throughout the country but the majority of property holders have not grasped the full significance of the three Bills before the House. I refer particularly to the Capital Acquisitions Tax Bill and the Capital Gains Tax Bill. The majority of those people, when we talk about thresholds, are under the impression that this is an exemption which will last for all time, but this is not true. The thresholds exist only as long as you keep the property within the family. Once you dispose of it outside the family circle you become liable to the same level of taxation as any other individual.

Deputy Colley's amendment is one of the most important ones we have in the Schedule. It states that the market value is the price which should be taken into consideration. Deputy Colley quoted cases where property can pass from a father to a son who can pass it on to his son and a generation can pass. The Minister has said: "We will leave it to a future Minister for Finance to resolve this problem." I can see a problem in relation to this arising in five years' time. I believe if a person comes into property and in two years' time he disposes of it it should be at the market value on that date, not when he received the property. I am quite convinced that this amendment should be written into the Bill now. If a man passes his property on to his son or his nephew any day after April, 1974 and he feels like disposing of it in 1984 outside the family circle it should be valued at the market value at that date.

I believe that if a father passes a rundown business or a rundown farm, which he probably acquired at a very low value, to his son or his nephew it would be a very great disincentive to that young person to build up that business or farm if it is the market value at the time he originally received the property which is taken into account. It is a good thing for people to plough back profits into farms or business concerns as this creates more employment. We should try to encourage people to plough back profits into their business concerns, and not build something into this Bill which will discourage them. I believe the way this Bill is worded it is a disincentive to expansion. It is fundamentally wrong if you have to trace the value of the property back to 1974 and the property is passed to the man's son in 1980. We will have to go through the procedure of trying to find when the business or farm was purchased. There will be anomalies in this in 100 years' time. It is the market value at the time the property passes to the son, daughter, nephew, niece, son-in-law or daughter-in-law which should be taken into account.

As regards thresholds this is only a deferment if you want to dispose of your property. The Minister stated earlier today that this is designed particularly to keep family concerns together. There are occasions in business and in land, which has not been properly worked, where it would be preferable if that land was put on the market and sold to some enterprising young man. This can act in two ways. It can inhibit the transfer of property on to the public market, which is very desirable, and there is also a disincentive for people to plough back profits into a business or to work land to its fullest capacity. You will often find there is not full output from a factory due to bad management or the man-aging director may be in poor health and has not the drive or the ability to get the full potential out of that business. If the business is passed from the father to the son this section could discourage him from putting that property on the market. He could say that a considerable amount of money had been ploughed back into the business since he got it from his father.

May I just interrupt the Deputy and say that money spent on improvements would, of course, be set off against gains.

(Dublin Central): Yes, over a long period, over 20 years. Does the Minister think it would be possible for the Revenue Commissioners to do this? Does he really think it is possible in the case of a man working a business or a farm, who does not look at the clock at 5 o'clock in the evening to knock off work and quite often burns the midnight oil working in his business or making up his accounts?

Does the Minister think it would be possible to assess the work of a farmer who spends eight to ten hours a day building up an asset? Will the Revenue Commissioners be in a position to give an allowance for that type of work? I do not think they will because it is impossible to assess that. The Revenue Commissioners will be able to do it on a short term basis. They will be able to assess input two or three years before an asset is sold. It is possible that accounts would be available to be taken into consideration for capital gains tax.

In the type of situation Deputy Colley mentioned this would not be possible. It would not be possible to accumulate the accounts over a number of years to set them off against capital gains. A type of psychology will grow up in people's minds: "why should I expand my business?" Why should a nephew who received property from an uncle expand when he knows that with the disposal of that property outside the family circle the Revenue Commissioners will go back to the valuation date when it was first purchased? I cannot see that there would be any great evasion or that anyone would get away with any degree of capital gains tax if the market value on the date of sale was taken into consideration. If that is not done, the type of situation I have warned about will develop. People will cease to expand their business.

If a property was passed on to me by my father who had purchased it ten years previously, I would be hesitant about ploughing any capital into that business. If I endeavoured to capitalise my assets, the value would not be taken as that which applied on the day I acquired it but on the date my father acquired it. I cannot see any logic in that. Of course, this will not apply to speculators because they do not keep property for any length of time. They buy the property, develop it and within two or three years they capitalise their assets again. We never had any intention of trying to encourage speculators and on Committee Stage we tabled an amendment which clearly indicated what we would do with speculators. On the other hand, we gave an indication of the leniency we would show to people who had made a fair endeavour to build up the economy over a number of years. We gave every encouragement to people to plough their money back. It was the intention of that amendment to have the charge on a sliding scale after ten or 14 years.

By encouraging people to plough their money back we felt we would be creating more employment. That is the philosophy the Government should be following. We should be encouraging people instead of taxing them. The philosophy in this Bill is to tax people. Nobody can tell me that it is not a good thing to encourage people to build up their property or business. The Minister's proposals will have a detrimental effect on industry. Many people do not realise the significance of certain sections of this Bill. Many, when they see the thresholds in the Capital Acquisition Tax Bill and Capital Gains Tax Bill, are under the impression that they are exempt for all time. They are not so exempt. They will only be exempt when this remains within the family circle.

There is no reason why the Minister should not accept Deputy Colley's amendment. If he did, he would be contributing in a small way to the economy. The Minister should turn back from this policy because it will have a detrimental effect on the economic expansion of our country. We should be pursuing the opposite approach and encouraging people at home and abroad to invest their assets here. We should go all out to attract foreign assets, irrespective of where they are. This Bill is discouraging the inflow of foreign capital and encouraging the outflow of capital. The Minister will regret introducing his capital taxation package. Surely he can see the depressed state of our economy and that there is no hope of generating the capital which is necessary.

We have been pleading with the Minister since Christmas to do something about these Capital taxation measures but he refused to listen to our plea. Deputy Colley's amendment will not alter the structure of the Bill but it will ensure that people will be dealt with fairly. It is not fair to tell the people that death duties have been abolished. The Government were given credit for abolishing death duties but they should tell the people that they have replaced death duties by three taxation measures. The Minister for Lands told this House that the wealth tax was replacing death duties without referring to the other Bills before the House.

It is the three-card trick.

(Dublin Central): The Minister for Lands should be fair and tell the people that while the Government have abolished death duties they have introduced three other capital taxation measures to replace them. It should also be explained that the thresholds will only obtain when the property remains within the family circle. It should be explained to people with property that when a person is disposing of a farm or business it will go back to the time his father purchased the property, not to the time when his father died and he acquired it. If the Government want to be fair to people they should tell them exactly what is in the Bill. Bills of this nature are complicated and many people do not understand them. The Minister should spell out exactly what is replacing death duties. I doubt very much if we will be any beter off with the total package than we were before.

I would ask the Minister to reconsider his decision. One can imagine the disappointment of many people who will be disposing of their property outside of the family circle in ten or 15 years' time. They will have to go back and find out the value of the property when it was purchased by their father. The Minister said one can charge against capital input as an expense. The Minister knows well that that would be rather difficult if one were to take time alone into consideration. The average person would never take into consideration time spent in work and endeavour put into a property of his own. On a farm a husband and wife may work until 10 o'clock at night. That is the type of endeavour that cannot be measured in money. That is the type of endeavour for which the Revenue Commissioners cannot give compensation. The same applies to a business. A businessman does not look at the clock and finish work at 5 o'clock. He may often finish at 12 o'clock at night. That has built up his assets and expanded his business and more than likely has created more jobs within that business. That is the type of person who should be encouraged. Now such a person will say to himself: "Why should I plough it back? I might as well go out and play a game of golf at the weekend. I do not see any reason why I should make a great endeavour when if I want to dispose of my property in 15 years' time 26 per cent of it will be taken from me".

If we are to get anywhere as regards our economic expansion we should encourage work and endeavour. If we do not do that by compensating people for expanding and developing, our economy will contract still further and we will have more unemployment. At present we need expertise in every field. We need people who have courage to get out and expand business. It will never be done by excessive taxation unless we want to become a completely socialistic country. If we do, let us say so. If the Minister wants a socialist society he should tell us exactly what he has in mind. To cloak it in this type of Bill is unfair. I would ask the Minister to seriously reconsider Deputy Colley's amendment.

I will give the Minister credit that probably what Deputy de Valera said is true and that the Minister, because of the various pressures on him and on his time in recent weeks, has not had an adequate opportunity to examine fully the arguments that were put forward in regard to a number of points on this Bill and specifically the points involved in this amendment as put forward at the Committee Stage. I am giving the Minister that credit because I think he indicated on the Committee Stage that he could see considerable validity in the points we were making. In fact at column 1676 of the Official Report of 13th May, 1975, the Minister said:

I have not closed my mind to the suggestion contained in Deputy Colley's amendment. I would be prepared to have a look at it between now and Report Stage. However, it would be undesirable to allow the principle involved to be applied extensively. This could lead to a situation in which there would be holders of substantial wealth who would never be called on to pay tax.

It seems to me reasonable to conclude from those remarks of the Minister that what he contemplated was that it would be possible to deal with the worst of the situation arising under the section as outlined from this side of the House but that he would contemplate putting certain limitations on the relief that would be given. In fact, he has no amendment in to do any such thing. We therefore have to treat the matter as we find it, but I am prefacing my concluding remarks by saying that I am giving the Minister the benefit of the doubt that in fact he did not get an adequate opportunity to examine this fully. That is very unfortunate.

I did. I want to assure the House.

All right. I am afraid I will have to take it then that he considered it and rejected it.

On the merits.

If that is so the Minister is in a worse position than I thought he was because we have got the very grave anomalies and injustices that are arising under this provision whereby if people obtain property under a will when they dispose of it in due course they are going to be assessed to capital gains tax on the alleged gain arising not from the time they acquired it but from the time the deceased person acquired it. This is so demonstrably unreasonable that if the Minister supports it, having considered the whole position, his position is, to put it mildly, untenable. The fact is that this kind of proposition is totally wrong, and it is aggravated by the fact that the Minister has refused point blank to provide in this Bill for provision against inflation. Therefore, the whole accumulation of alleged gain over many years is of course going to be an artificial gain related to inflation and yet the Minister proposes to tax that gain at 26 per cent and to apply that, not to people who are engaged in speculation, but to people who are engaged in farming and business which by nature of the section must be the kind of situation in which they have engaged over many years. It is the kind of person who, in my view, should not be affected at all by capital gains tax who is really going to be hit by this section as it stands.

There is a rather ominous mentality revealed in this section and in the Minister's attempted justification of it. The Minister has on a number of occasions boasted in this House and outside it that he was abolishing death duties and he has quoted quite substantial exemption limits and thresholds but what he actually is saying to justify his action is: "If I accept your amendment, then people will be enabled to inherit property below the threshold limit for the capital acquisition tax and pay nothing." What he is saying is: "I am going to impose a form of death duty in a case like this." That is, in effect, what he is saying. He has actually used the argument—he used it today but used it on the last occasion too—in case there is any doubt I will quote him. At column 1676 of the Official Report for 13th May, 1975, the Minister said:

If a legatee were to be treated as acquiring the asset for capital gains tax purposes at its market value, he could dispose of it immediately or very soon after acquisition and escape capital gains tax while, at the same time, because of the very high exemption thresholds which are afforded in the capital acquisition tax he might not be charged to any capital acquisition tax. This is particularly relevant in the case of transfers on death by parents to their children where the threshold of exemption in respect of each child is £150,000. The possibility of a charge to capital gains tax on a disposal is intended to ensure that tax is payable at the time of liquidity.

If we take first of all the case the Minister mentions, the passing by will of property by a parent to a child, the Minister has said that nobody will be affected by this except the very wealthy; there is an exemption of £150,000 in respect of each child. That is what he said in connection with capital acquisition tax but what he is saying is: "I am not going to let them away with that. They are going to pay capital gains tax and going to pay it at a value assessed away back, not to when they acquired it but to when the parent acquired it."

This is, in my view, a situation, as called for by Deputy Fitzpatrick, where the public should be told clearly by the Minister just what he is doing. When he talks about applying these exemption limits—generous, he says, and they would be generous, particularly if he were allowing for inflation, which he is not—why does he not tell people at the same time that he is applying another form of death duty to those who are exempt as well as to those who are not by calculating capital gains tax at 26 per cent on an artificial gain calculated from a date not when the person acquired the property but when their parents acquired the property?

I regard this as just sleight of hand and misleading the public to be pretending to abolish death duties in a case like that and then using the very argument that these people are being exempt from capital acquisition tax to say: "We are going to apply capital gains tax."

The fact is that in the Government's While Paper it was said that this would not be done. This is another instance where the Minister went back on what the White Paper said was going to be done. The White Paper said: "We will not apply capital gains tax and capital acquisition tax to the one transaction" but it is being done here and it is being done because the Minister says that otherwise people would avoid liability. But, is that not the whole case the Minister has been making, that they are avoiding liability, that they are so much better off than they were under death duties, according to the Minister? But, when you look at the small print, how much better off are they? It is almost certainly true in many cases that people will be far worse off by reason of the small print the Minister is introducing in this way and unlike death duties calculated on the market value on the date of death, in this case it will be calculated on alleged gain accrued back over many years.

That is the case where you apply the high exemption limit the Minister was talking about but, of course, the Minister knows, as we do, that there are very many other cases where there is no such exemption limit at all. I referred to one of them, the case of the nephew or niece who has not been living on the farm, if we are dealing with a farm situation. The limit there is £15,000. So that in such a case the Minister would take this artificial value, alleged gain, going back over many years, make no allowance for inflation, apply capital gains tax to this alleged gain and then if the market value at the date of death is over £15,000 will also apply capital acquisition tax.

I do not know how the Minister thinks he can justify this kind of approach and, in particular, how he thinks he can justify it where he is clearly dealing, not with speculators, but with people who have built up a farm or business over many years, the very people who should not be subjected to capital gains tax. They are the ones who are really being hit here and they are being hit because the Minister will not listen to the case being put forward. We put it forward on Committee Stage and the Minister indicated that he could see considerable force in it. He saw snags in dealing with it. It seemed to me that if he were anxious to deal with the problem he could certainly have done so. He did not do it. We tried to give him the benefit of the doubt as to why he did not do it but he insists on telling us he did consider it fully and arrived at this decision. If he did, shame on him to be guilty of such an imposition on people who have worked hard over the years to build up a business or farm and then to be subjected, not alone to a capital acquisition tax but to this underhand form of death duty which the Minister is introducing on a much worse scale than we ever had before. It is unforgivable of the Minister to do this and even more unforgivable of him to do it in this way when most people do not know that he is applying a form of death duties in this way.

I would ask the Minister, in the interests of accuracy, honesty and truth, from now on to stop telling us in relation to any particular one of these capital Bills to look at the position under them as compared with death duties. Would he tell us in all honesty to compare the total position?

This whole operation that the Minister and his colleagues have been engaged in is a confidence trick on the people, pretending that they are abolishing death duties when in fact, they are imposing a number of other taxes and, apart from what they have announced as in this case, a number of underhand forms of replacement of death duties, as the Minister is doing here.

I want to tell the Minister that we on this side of the House will have no part in that kind of underhand transaction he is trying to put through here. He cannot say it happened inadvertently. His attention has been fully drawn to it on Committee Stage and now on Report Stage and he is persisting in doing it. He is doing it. We are not.

I have spoken but would the Minister consent to my giving an example I have come across? If he does not, I have not the right to speak, Madam Chairman.

If the Deputy will communicate with me, I will look at it.

All right. Do not worry. On Fifth Stage the Minister will get the lot.

Question put: "That the words proposed to be deleted stand."
The Dáil divided: Tá, 65; Níl, 56.

  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Dick.
  • Burke, Joan T.
  • Burke, Liam.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Costello, Declan.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Crotty, Kieran.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Dockrell, Maurice.
  • Donegan, Patrick S.
  • Pattison, Seamus.
  • Reynolds, Patrick J.
  • Ryan, John J.
  • Ryan, Richie.
  • Spring, Dan.
  • Staunton, Myles.
  • Donnellan, John.
  • Dunne, Thomas.
  • Enright, Thomas.
  • Esmonde, John G.
  • Finn, Martin.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Griffin, Brendan.
  • 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.
  • Taylor, Frank.
  • Timmins, Godfrey.
  • Toal, Brendan.
  • Tully, James.
  • White, James.

Níl

  • Allen, Lorcan.
  • Andrews, David.
  • Barrett, Sylvester.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Breslin, Cormac.
  • Brosnan, Seán.
  • Browne, Seán.
  • Brugha, Ruairí.
  • Burke, Raphael P.
  • Callanan, John.
  • Calleary, Seán.
  • Carter, Frank.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard.
  • Cunningham, Liam.
  • Davern, Noel.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Fahey, Jackie.
  • Farrell, Joseph.
  • Fitzgerald, Gene.
  • Fitzpatrick, Tom (Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, Denis.
  • Geoghegan-Quinn, Máire.
  • Gibbons, Hugh.
  • Gibbons, James.
  • Gogan, Richard P.
  • Healy, Augustine A.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael P.
  • Lalor, Patrick J.
  • Leonard, James.
  • Loughnane, William.
  • Lynch, Celia.
  • Lynch, Jack.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Moore, Seán.
  • Nolan, Thomas.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • Power, Patrick.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Tunney, Jim.
  • Walsh, Seán.
  • Wilson, John P.
  • Wyse, Pearse.
Tellers:— Tá: Deputies Kelly and B. Desmond; Níl: Deputies Lalor and Browne.
Question declared carried.

Amendment No. 14 has been ruled out of order.

This was a drafting amendment. I was notified today by the Ceann Comhairle's Office that this was out of order as it involves a potential charge upon the people. I notified the Ceann Comhairle informally earlier today that when this amendment was called I would request some elucidation as to why it involves a charge upon the people. Would the Acting Chairman be in a position to give me that information?

Acting Chairman

This amendment could have the effect of removing assets from the category to which section 14 applies.

I wonder if that is correct. It all depends really on what the Minister means by the section, which is what we discussed on Committee Stage. It would appear that the Chair is in a position to know what the section means. I do not know and I do not think the Minister knew quite clearly when we discussed it on Committee Stage. I am in some difficulty here, as the Chair will appreciate. Could some further information be given to elaborate on the statement you have made as to how assets which would otherwise be within the section would be taken out by virtue of this amendment?

Acting Chairman

It appears that the effect of this amendment would be, prima facie, to bring foreign assets into the scope of the Bill.

With due deference, I do not think that is correct. That may appear to be the position on the basis that my amendment would omit the words in the section "assuming that all the assets were situated in the State ..." I presume that is the basis for the reasoning. That is the whole point of the amendment and the discussion we had on Committee Stage. What did that phrase mean? Did it mean that we were to assume that this applied only to assets situated in the State, or did it mean competent to dispose of assets and if they were situated in the State? This is a very technical point, I admit, but the whole purpose of the amendment was to try to elucidate the point which had been raised on Committee Stage. I submit that a person can be competent to dispose of assets which are situate in and outside the State and the effect of my amendment relates to assets of which he could have disposed by his will, does not, in fact, bring in or exclude assets which were not brought in or excluded by the section as it stands.

I am in some procedural difficulty in that under the Chair's ruling, we have not an amendment before us and, therefore, it is not in order to speak. I am only too happy to assist in so far as I may be permitted to do so.

If the Minister could assist, it might help everybody.

The provision is designed to secure that if the deceased had assets in another country, they would be assumed to be in the State for the purpose of deciding on competency to dispose. It could happen that foreign assets would be outside his competency to dispose because of the laws of succession in the country where the assets are situated.

Under the amendment which has been ruled out of order, if I understand it right, those assets could not be deemed to be disposable under the will and the protection of section 14 would not extend to them. There would be a charge, accordingly, to capital gains tax on their transmission on death. The amendment, therefore, if it were allowed, would be more unfavourable in relation to any foreign assets, which are subject to special succession laws, than the provision in the Bill. The provision in the Bill thus ensures that while such foreign assets cannot be disposed of by the deceased by his will, by assuming they are in the State they are, for the purposes of section 14, taken away from any restriction of foreign law and will reach the heir at law or other legal successor as if he were the legatee under the will of the deceased.

I thank the Minister for that. What he has said has, in fact, clarified the point and has done what I sought to achieve by putting down the amendment. I was concerned solely with the use of the word "assuming" and the ambiguity which arose from it. What the Minister has said makes it quite clear what is intended to be achieved by the use of the word "assuming".

Amendment No. 14 not moved.

I move amendment No. 15:

In page 15, line 55, to delete "is" and to substitute "shall be".

This amendment arises from a point raised by Deputy Colley on Committee Stage. He feared that the use of the word "is" made the provision absolute with possible implications, as I understood, outside the capital gains tax sphere. We are, therefore, using the words "shall be" for "is".

I thank the Minister for putting down this amendment which, as he says, is on the lines of what I was seeking on Committee Stage. While not wishing to look a gift horse in the mouth, could I put it to the Minister that it would be even better if instead of "shall be" he provided "shall be deemed to be"?

I was afraid the Deputy might take exception to that and want it to be "shall be assumed to be".

It is in a different context.

For the purposes of this Bill it is "shall be a disposal of the entire property".

It is not a major matter and I will not push it. It would be better if it were "shall be deemed to be" but certainly "shall be" is better than "is".

Amendment agreed to.

I move amendment No. 16:

In page 17, line 46, to delete "Without prejudice to" and to substitute "Notwithstanding".

This is a matter of drafting and trying to get clarity rather than a point of major substance. On 13th May in the discussion in this House on Committee Stage I pointed out to the Minister the ambiguity that could arise by the use of the words "Without prejudice to". As reported at column 1729 of the Official Report I said:

It is confusing and in substance what it is saying is that you have two contradictory provisions. I believe it does not convey, in circumstances where the contradictions arise, that subsection (6) (b) will prevail. That could be said quite clearly or more clearly. I urge the Minister to have it looked at again to see if what is intended as described by him cannot be more clearly conveyed in the wording.

The Minister said:

I would agree to do that but my feeling at the moment is that the correct wording has been used. It provides that subsection (6) (b) will not be overruled by this provision in section 12.

I freely admit that this phrase "Without prejudice to" is used in some other section and I did not put down amendments to deal with it. I did not feel it incumbent on me to go through the whole Bill and do that. I felt that if the Minister accepted the idea he and the draftsmen would look after these matters.

The point at issue here is that two contradictory things are involved. The Minister means to convey that, where such a contradiction arises in particular circumstances, subsection (6) (b) will prevail. The use of the words "Without prejudice to" seems to me to be neutral in its effect and, therefore, not to ensure, as the Minister wishes to ensure, that in the particular circumstances subsection (6) (b) would prevail. I have suggested that instead of that phrase we might use the word "Notwithstanding" which I suggest is somewhat less neutral. I think the Minister will agree that he does not want the phrase used to be so neutral as not to make it clear that subsection (6) (b) would prevail in the appropriate circumstances. My fear is that the phrase used in the Bill is so neutral as not to make that clear. The slightly different nuance in the use of the word "Notwithstanding" being slightly less neutral would convey what the Minister is trying to convey.

I take the opposite view. I think the words "Without prejudice to" are better. The danger of using the word "Notwithstanding" is that it may suggest some element of exclusion of subsection (6) (b). The word "Notwithstanding" suggests a conflict between subsection 12 (b) and subsection (6) (b), whereas no conflict is intended.

The treatment of income in subsection (6) (b) and the annuity in subsection 12 (b) is the same. Each is treated as a separate settlement. Subsection (12) (b) extends the treatment in subsection (6) (b) to an annuity which is a charge on particular assets and, therefore, is, in substance, treated as a life interest in income of a separate settlement. There is really no conflict and the words "Without prejudice to" in circumstances of no conflict seem to be the right ones to use.

Perhaps I should give an illustration. There could be a fund in which A has a life interest in income but the fund is charged to provide an annuity to B. Subsection (12) (b) would cover the annuity and subsection (6) (b) would continue to cover the balance of the fund even though part of the fund has been appropriated to the annuity.

I thank the Minister for his illustration but I do not quite see how it proves his point.

There is a nice little point of wording here. I should not like to say how a court would interpret between the two words. The Minister seems to say that "Without prejudice to" would mean that paragraph (b) would operate in its entirety. Although the Minister says there is no logical contradiction as to part, in the sense that there is a specific matter to be covered by subsection (12) (b). If that is also to some extent captured by subsection (6) (b), then subsection (6) (b) might prevail over subsection (12) (b) in all circumstances. It is open to that interpretation. Deputy Colley's word "Notwithstanding" means that the narrow provision of subsection (12) (b) will rule in face of subsection (6) (b) and the residue will be caught by subsection (6) (b). It is a nice point of argument. Taking the words alone, without going into the actual case, it seems to me that subsection 6 (b) covers a general situation. Subsection 12 (b) is designed to cover the one and only—if you like, call it technically an "exception", or an "addition" outside of subsection 6 (b). Would the Minister agree if I go that far?

Subsection 12 (b) deals with the annuity.

Which is, so to speak, additional; is not that correct?

Yes, I think I understand what the Deputy means.

There is a generality in subsection 6 (b) to which there is, technically, an exception—but we will call it an addition—in subsection 12 (b). What the Minister wants to do is safeguard the generality of subsection 6 (b) but to provide also, specifically and independently, for the addition in subsection 12 (b), but saving subsection 6 (b) for every other contingency. I think Deputy Colley and the Minister are agreed so far.

Now let us consider the two forms of words. The word "notwithstanding" in subsection 12 (b) goes only so far as what is specifically said in subsection 12 (b) because the wording of subsection 6 (b) says—without qualification, for the purposes of subsection (5). Therefore, whether one uses the words "without prejudice to" or "notwithstanding" the intention and possibly the effect—because we are walking on a knife edge here and Deputy Colley will not disagree with me when I say there is merit in the Minister's point of view also—in both cases is that subsection 12 (b) will operate only in the specific circumstances set out in that subsection and that every other case is ruled by subsection 6 (b).

So far for common case. Let us now take the two forms of wording in that context. "Without prejudice to" could be interpreted as meaning that subsection 6 (b) overruled subsection 12 (b). This is the type of submission I would make in court, if I had to, that subsection 12 (b)—if the words "without prejudice to" are used, as Deputy Colley said—is more than neutral. I might argue that the words "without prejudice to" are unqualifyingly putting subsection 6 (b) in the ruling position and, being in the ruling position, would overrule subsection 12 (b). I am not saying that argument is as strong as I make it at present but I want to ensure that we understand what we are doing. If that interpretation were to be in aid of the taxpayer—and this is a taxing statute—the court would seize on that interpretation, if it is available. I am trying to say to the Minister that it is available and that the use of the words "without prejudice to"—if a taxpayer were in the position of involving subsection 6 (b) in his aid to overrule the disadvantage contained in the application of subsection 12 (b) to his case, the court might very well take the view and might even say, in a judgment: the words used are "without prejudice to"; it would be different were the word "notwithstanding" used.

Therefore, I put it to the Minister that there is merit in what Deputy Colley says because the word "notwithstanding" means that subsection 6 (b) rules. But, if one reads the two together in a legal sense, the provisions of subsection 12 (b) will apply in the appropriate case, as provided in the section. There is no doubt about that. There is the technical danger— particularly when one is dealing with a taxing statute—in the case I have tried to suggest, though frankly, I cannot cite a probable case; I am speaking on the principle more than anything else—that if, perchance, a taxpayer wished to invoke that argument, then applying the canons of construction applicable to taxing statutes, the way out would be found in the words "without prejudice to".

While fully appreciating what the Minister says, freely admitting that we are a little near hair-splitting, and I think Deputy Colley would not press it any further than it should be; approaching it from a judicial point of view and with that, admittedly, possible danger, the Minister has been so haunted with ghosts of evasion and so on on other occasions, perhaps a little haunting on this side of the House might not be any harm. On balance, I would suggest that probably Deputy Colley has a point in his amendment.

If the Chair and my colleagues will permit, I should like to pose this problem which I think may help to explain the use of the words "without prejudice to". I am sure it will be agreed that the two interests do not necessarily coincide in point of time. The interest in subsection 6 (b) might terminate before that in subsection 12 (b). Even though there would be no cessation of the interest in subsection 12 (b) there would be no cessation under subsection 6 (b) and, therefore, it should prevail. The use of the words "without prejudice to" mean that it would prevail. However, if we used the word "notwithstanding" it would be subsection 12 (b) and not subsection 6 (b) that would prevail in those circumstances.

The Minister says that the use of the words "without prejudice to" would make subsection 6 (b) prevail?

It could, but that is the whole point of Deputy Colley's amendment.

"Notwithstanding" subsection 6 (b)—if one uses that phrase—then subsection 12 (b) prevails although the interest in that subsection would not have ceased.

Well, subsection 12 (b) should prevail in the appropriate case.

We draw attention to what I considered to be an ambiguity on Committee Stage. The amendment I have put down is by no means the best I could do in the circumstances. Indeed, when one gets involved in the semantics, it is possible to say one could argue either way—in favour of what is in the section or what is in the amendment. The real point I had in putting down the amendment was to draw the attention of the Minister to the fact that that possible ambiguity existed. In fact, I shall tell him I had a form of amendment almost prepared which was very much on the lines of what Deputy de Valera was saying and spelling out precisely what would happen. Frankly, I came to the conclusion that the thing was getting so complex merely to remove the ambiguity involved in this matter I was not going to concern myself unduly with it, not being the parliamentary draftsman. I put down the amendment merely to draw the attention of the Minister to it. I have done that and, if the Minister is satisfied with the wording "without prejudice to", as he has it, and if he thinks there is no ambiguity involved, I have done my duty and shall not press it any further. All I want to say is that it is certainly possible to amend the subsection in a way that will leave no ambiguity whatever.

Amendment, by leave, withdrawn.

I move amendment No. 17:

In page 17, line 60, after "£500" to add—"provided that where, by virtue of section 13 (1), gains accruing to a married woman during a year of assessment, or part of a year of assessment, are assessed on her husband he will not be chargeable to Capital Gains Tax if the amount on which he is chargeable for that year of assessment does not exceed £1,000, and provided further that, where, by virtue of section 13 (2) a husband and wife are separately assessed for capital gains tax in any year of assessment, the husband shall not be charged to capital gains tax if the amount on which he is chargeable for that year does not exceed £500 and the wife shall not be chargeable to capital gains tax if the amount on which she is so chargeable for that year does not exceed £500".

You will be very glad to hear that the purpose of this amendment is, within the terms of this Bill, to give due recognition to the role of married women. We referred to this matter on the Committee Stage. I think the Minister will find that all the amendments we have down on Report Stage relate to matters which were referred to on Committee Stage and in respect of which the Minister indicated either agreement or willingness to consider the point further. In regard to this point at column 1674 of the Official Report of 13th May, 1975 I am reported as saying:

Would the Minister consider again the point we made to him in regard to the allowance for the husband and wife in the light of the separate treatment of husband and wife in subsection (5)?

The Minister said:

I will.

There is no amendment in from the Minister and, therefore, there is an amendment in from us. The basic concept in the Capital Gains Tax Bill is that the husband and the wife are one person and that there is no regard to their being separate persons in so far as transactions between them are concerned.

However, when we come to a very important matter dealt with in subsection (5), we find that that concept disappears, that is where the transaction involves trading assets. When that happens the concept goes out the window and the husband and wife are regarded as separate persons. The practical consequences of them being regarded as one person is that whereas a single individual has an exemption from capital gains tax of up to £500 in any one year a married couple have an allowance of only £500.

I want to put it to the Minister that this treatment of the married woman in this case is unfair to her and to her husband and is a continuation of the mentality revealed, I am afraid, in all of these capital taxation Bills of regarding the married woman as merely an appendage to her husband, having no separate existence whatever, unless something arises like trading assets. That is important as it is a business and, therefore, you take a different approach there but otherwise a married woman, in effect, does not count in this legislation.

If she is making money he pays.

Yes. I know the Minister will say that this is because where trading assets are concerned that brings in an income tax consideration. I suggest to him that so far as there is an income tax consideration that should be left aside. He argued very strongly on an earlier amendment that any allowances arising under the income tax code have to be kept totally out of the capital gains tax code. I ask him to follow out that precept, forget the whole income tax code, look at the situation under this Bill, in relation to capital gains tax, and see the situation in which the single person has an allowance of £500 but the married couple have an allowance of only £500.

In the past this has been the general approach under all our statutes, but this is 1975 and we have come a considerable distance since the legislation dealing with income tax and other matters, which automatically placed the married woman in the category of non-existence for the purposes of the law. I believe we have now reached the stage where we can, without any great risk to anybody, including the Exchequer, extend to a married couple an allowance which is the equivalent of that given to two single people. There is no great risk involved in this for the Exchequer. There is an argument involved in it of the separate and independent status of the married woman, a recognition to which, I suggest, she is entitled at this late stage. The Minister should not perpetuate in this legislation an attitude which has its roots in legislation going back a very long time.

This is not justifiable in 1975 and, in particular, for a Government which, hollow though it may sound now, held themselves to be progressive and advanced in their social thinking. However hollow that may sound I imagine the Minister would like to try, if he could, to hold on to what little shred of that aura may remain attached to the Government. There is no chance that he can do so if he persists in enacting legislation, which is modelled on and carries forward into 1975, attitudes to married women which should now be long behind us and which may have been generally acceptable many years ago when the legislation involved was being introduced but which is not acceptable today.

I, therefore, urge the Minister very strongly to accept this amendment or if he does not like it, to substitute one of his own, but to achieve a situation in which a husband and a wife will have available to them an allowance which is the equivalent of that available to two single people. I will not at this stage go into the details of the amendment which goes a little further than that. It deals with a situation where they are being assessed together or assessed separately. That is the purpose of the amendment and I hope the Minister will not now refuse to accept that purpose and will not now refuse to accept the principle involved in this amendment.

I am sorry I must defend married women against the attack Deputy Colley wants to make on them. I have provided in this legislation that a husband and a wife are to be given very favourable treatment in so far as transfers between them are not chargeable and the losses of one may be set off against the gains of the other. That is very favourable treatment. The acceptance of Deputy Colley's amendment would do away with that.

The Minister is treating them as one person.

They would have to be treated as separate persons if they are to get separate allowances. In that case the husband who transferred the property to his wife would have to pay capital gains tax on the disposal and vice versa and the losses of one would not be set off against the gain.

That does not follow from the amendment.

It does, logically and inevitably and it is the only way in which the matter could be treated taxwise. Nobody knows that better than a man who held the office of Minister for Finance. Whatever may be the views of some lobbies today the normal practice is for husbands and wives to live together and to share their earthly goods as well as the blessings of this world in preparation for the next.

And pay more tax.

No. They will be paying less tax as a result of the generous and progressive outlook we have. The Opposition would want us to treat them as separate persons, to consider that they were not joined together in holy and happy wedlock to share the advantages which we want to give them under which gifts from one to the other would not be chargeable and the losses of one could be set off against the gains of the other. Is that a desirable thing or not? If the Opposition think it is desirable they should not be pressing to introduce some amendments which would sever that particular unity which they have and which allows them these advantages which would not be available to single persons.

The position of unmarried persons is not analogous. They have the £500 allowance but transfers between unmarried persons are chargeable and there cannot be any interchange of losses against gains. They cannot pool their incomes and capital gains for the purpose of the alternative charge as can be done in the case of husband and wife. I cannot accept that there is anything illogical in what we are doing in the exception to joint treatment made in the proviso to subsection (5) of section 13. That is a relieving provision to prevent double charge to income tax and capital gains tax. It does not involve any departure from the principle of joint treatment which works to the advantage of each partner in marriage. The gain under that treatment is much greater than the occasional gain that might be enjoyed by such married couples as constituted partners with separate capital of their own. Such persons do not represent the majority of married persons, and I cannot relish the prospect of severing the benefit which husband and wife can enjoy under the Bill as drafted in order to get for the occasional capitalist married woman the advantage that Deputy Colley's amendment would seek to confer on the exception and in so doing imperil the majority.

The Minister breaks my heart when he says he has provided favourable treatment for man and wife. He has created a situation where, as Deputy Colley said, the woman does not exist once she gets married. We had this out with the Minister's colleague on the wealth tax. The Minister for Lands referred to the fact that some European countries had unfair treatment which does not apply in the modern European community. The countries applying unequal treatment introduced their legislation many years ago. The Minister is introducing his legislation this year following our joining the European Community. It is presumed that we subscribe to the general principles of that Community.

It seems that the Minister must not have benefited from his journeys to Europe as the Minister for Labour has because the latter Minister is strong on equal pay. Let us assume that a wife has money. We can have a situation where a married couple can have grown-up descendants over the age of 21 and each of them could qualify for a capital gains threshold of £500 but the wife would not qualify for anything except splitting it with her husband. If the Minister was introducing this legislation 20 or 30 years ago or prior to our joining the EEC there might be some justification for being conservative and backward-looking. However, the legislation is being introduced in 1975 and we are presumed to be aspiring to the general principles of the European Community and of equality. I do not see any justification for the Minister sticking to this backward principle that when two people get married the wife ceases to exist.

It means that the Minister, when reflecting on this principle during his journeys in the past few weeks, must have been thinking of the tax revenue and not of the principle involved. He has more information available to him than any Member as to what the difference would be in tax revenue but, nevertheless, in starting off on the wrong foot with fresh legislation the Minister is making a mistake. There is no need to repeat what we said on the Wealth Tax Bill because it tends to be picked up by journalists. It is ridiculous to have £500 for an individual and £500 for a man and wife. The best the Minister can do is to provide the very favourable treatment that they can have a plus and minus situation between them. It is as well that the Minister went that far because he would be hearing a lot about it if he did not.

In introducing this legislation the Minister is overlooking the economic principle that exchange and sale is good for business and, therefore, good for the community. The Minister is wrong in the application of this flat rate of tax to all irrespective of whether they have put years of work into earning the capital or whether it is the easy speculator money which ought to be caught. The Minister should be applying the principle of equality to people whether they are married or single. He should be giving the benefit to the family which the Minister, like this side of the House, believes I am sure should have prior position in life here.

(Dublin Central): I join with Deputy Colley and Deputy Brugha in supporting the amendment. Right through the capital taxation Bills there is the same anomaly. Last week we discussed with the Minister for Lands the anomaly that a married man and woman are entitled to £100,000, whereas two single people living together would be entitled to a threshold of £140,000. We find the same anomaly in this section. Two single persons over 21 years of age would be entitled to £500 each. If two people are fortunate enough to be married, for that happiness they are penalised; they can get the benefit of only £500. Basically, that is wrong.

There should be a new concept in regard to allowances where a man and wife are concerned. We have reached the stage where the status of women is very important. We have heard a great deal about it over the past few years. Women have been gaining their independence and are looking for equality, and rightly so. This is Women's Year in which women have special pride of place. The Minister had an opportunity in new legislation of introducing a new concept in regard to allowances. I see no reason why the Minister cannot accept Deputy Colley's amendment. It is disheartening for a married woman that her friends can get exemption of £500 each whereas she is not so entitled. A woman could leave a farm where her two sisters are living and they would be entitled individually to an exemption of £500. When she leaves that farm and joins her husband on another farm, together they are entitled to only £500. Fundamentally, this is wrong.

The Minister, to prove his case, dragged in some red herrings. At no time did we expect that the Minister would disallow the other privileges which are conferred on a married man and woman. Naturally, we expect those to stand. We are asking here for something additional. This would involve a very minor charge on the Exchequer but it would be a gesture in the right direction, a new type of legislation, new thinking. Instead, we get the same restrictive measures throughout these capital taxation Bills. The Minister has gone out of his way on several occasions to ensure that every loophole is closed. Rightly so. That is what we are here for, to ensure that there are no loopholes whereby the legislation can be abused. The Minister has an obligation and a duty to recognise that married people are entitled to exemption in their own right. We have argued this in relation to the wealth tax. It has been debated on this Bill. We debated it on Second Stage and on Committee Stage. We firmly believe that what Deputy Colley is seeking here is fully justified.

The amendment is not put down for the sake of putting down an amendment. We are quite sincere in regard to it. We believe it is right and proper that a man and woman living together would each be entitled to the £500 allowance. Are there exemptions in other parts of the Bill in the case where a husband and wife are legally separated? Could they claim the exemption? It is probably in some section. I can visualise a situation where a husband and wife are separated although not legally so. Is there any provision in the Bill for exemption in that type of situation?

Section 13.

(Dublin Central): I thank the Minister for that information. That does not divert me from seeking the £500 each for a man and wife living together.

If the Minister accepts the amendment he will be bringing modern thinking into legislation. That is what the legislation is about, to keep up with the times. We must move with European legislation. As Deputy Brugha has said, the Minister's colleague, the Minister for Labour, Deputy O'Leary is moving with European legislation in regard to equal pay and other matters. There is no reason why we should not lead the way, rather than follow others. The Bills that have come into the House over the past two or three years are mere photo-copies of the legislation in other European countries.

I would ask the Minister to consider the amendment. To do so would be a step in the right direction and enlightened policy. The women of this country would appreciate this type of amendment. It would restore to them the dignity to which they are entitled and would be a recognition that they have equal rights with their husbands and are entitled to the same benefits. I would ask the Minister to accept the amendment.

I noted, with a little bit of understanding—I realise that the Minister is taking a good deal of punishment this weather—a little bit of petulance in the Minister's reaction to the amendment.

Defending married women was not petulant.

The Minister may be very sympathetic to married women but I detect the legacies of the harem mentality here in this. There are a couple of specific points in what the Minister said to be answered. The question is in what order you have them.

First, I want to make a general observation. In his reaction the Minister let drop the phrase "capitalistic married women". I told the Minister this morning that the horses were running away with him. There may be very few capitalistic married women. We may be moving very rapidly into an organised form of socialism where everybody will be brought to order, where everybody will contribute, where the standard of living will be lower, where there will be discipline. The Minister's doctrinaire socialist approach has been bringing the wagon of State along that road, and I warned him this morning the horses may be running away with him. That phrase of his was a revealing phrase, and I would advise the Minister to think over what he says and question what the consequences may be, because there are very many sincere people who may wish for a freer and more prosperous economy than can ever be achieved under this Government and not the chaotic disaster that is going to follow from this Coalition. It is a long time since there was a Blum coalition in France; it is a long time since there was the German set-up known as the Weimar Republic. Today we have a third disastrous coalition here and the Minister should be very careful about phrases like "capitalist married women". He may think they are emotive and politically attractive, but the situation is so serious now that people are cogitating seriously on such phrases and wondering seriously where the economy is going. I suggest to the Minister that he should either be a little more forthright or else a little less facile of tongue.

We are talking here about sums in the region of £500. What is £500 in our present inflationary situation? We spoke yesterday about the inflationary situation and I understand the Minister himself in another place talked about local inflation. What is £500 from the point of view of wages and from the point of view of what is happening to the £ sterling or the Irish punt, however we measure it at the moment? Thirty years ago £500 was a comfortable enough salary for someone pretty well placed in the public service. To give an example, an Army commandant's pay was then £500. Today £500 is one-third or a quarter at best of the annual salary of the lowest paid clerical worker in the State service. When we talk about concessions and sums like £500 let us get our measures right. The same £500 will be worth a great deal less in a short space of time. Let the Minister do his sums. He thinks he will achieve a great deal in this budget by reducing the rate of increase from 25 per cent to 20 per cent. Now £500 reduced by 20 per cent is £400 and that is the value it will be by the time this Bill becomes law.

In the light of what the Minister said a moment ago let us look at this amendment. The Minister makes a gesture designed to oppose the sanctity of marriage and he has made certain provisions for interchange between husband and wife. Full credit to him for that, but he then states that this amendment would be contrary to principle. In section 13 (1) we have the principle the Minister is talking about in regard to the unity of husband and wife, but that is breached immediately in subsection (2) which provides for an alternative. There is nothing rigid then about the principle because it is contradicted, and rightly so. There is no quarrel with the Minister in that, but it is a spurious argument to suggest that acceptance of Deputy Colley's amendment would be a breach of principle and throw the two people concerned into separateness. The Minister has done that already in subsection (2) and so his argument does not hold water. Section 13 (1) provides:

Subject to the provisions of this section, the amount of capital gains tax on chargeable gains accruing to a married woman in a year of assessment, or part of a year of assessment, during which she is a married woman living with her husband shall be assessed and charged on the husband and not otherwise, but this subsection shall not affect the amount of capital gains tax chargeable on the husband apart from this subsection nor result in the additional amount of capital gains tax charged on the husband by virtue of this subsection being different from the amount which would otherwise have remained chargeable on the married woman.

Section 13 (2) provides:

Subsection (1) shall not apply in relation to a husband and wife in any year of assessment if, before the 6th day of July in the year next following that year of assessment, an application is made by either the husband or wife that subsection (1) shall not apply, and such an application duly made shall have effect not only as respects the year of assessment for which it is made but also for any subsequent year of assessment:

Provided that if the applicant gives, for any subsequent year of assessment, a notice withdrawing that application, the application shall not have effect with respect to the year for which the notice is given or any subsequent year but such notice of withdrawal shall not be valid unless it is given before the 6th day of July in the year next following the year of assessment for which the notice is given.

Surely the Minister has hardly a debating point in the light of those two subsections when he tries to claim that Deputy Colley's amendment is a breach of principle, because he asks if there is a gain not exceeding £1,000 that £500 can be apportioned between the husband and the wife. On that argument, point one is that there is no breach of principle. Point two has been made by Deputy Fitzpatrick and Deputy Brugha. This is an additional provision, without any prejudice to what the Minister has done already. It will not prejudice in any way what the Minister is doing for husband and wife. It is a little bit more, something that enables the husband and wife, living together as a unit, to get more benefit. That is what it all boils down to.

The Minister talked about capitalistic married women, but there will not be many left. This will not be a problem nor will it affect the revenue but it might affect the windfalls which could come to the so-called lower middle classes—the people who have been working hard to get their houses, to establish stability, who are living in a certain modicum of comfort which they have worked hard to get; people in jobs in the city, lower grade executives and many people in the public service; people who are good citizens and are interested in making their families good citizens. Surely they are not begrudged a little windfall. On that basis, I strongly urge support for Deputy Colley's amendment.

At the rate money is depreciating £1,000 is not worth a very great deal. All we are asking is that the Minister allow £500 for each, which they would get if they were single. Somebody said that under another Act if they were two single people they would get more relief, £140 as against £100. There is no contradiction in principle here. It is being offered as an addition. Do not say we cannot afford it. This is not for the capitalistic married woman. As I said, I am interested in the occasional windfall which may come to the husband and wife in the lower middle income group who have reared their families. This windfall need not exceed £1,000. To our capitalistic friends £1,000 will not mean very much, especially at the rate money is depreciating.

I would ask the Minister to extend his generosity—and I refrain from appealing to him on any other grounds—on the basis of his protestations of interest in the married couple living, to use his words, "in holy wedlock".

But there is more, as the Minister seemed to recognise, in section 13. What about all this talk about equality for women? What about all this talk about equal pay and equal rights? Here is an opportunity for the Minister to demonstrate his sincerity. In this case generosity, like honesty, might be the best policy.

Before I conclude does the Minister want to answer any questions?

I could not do a disservice to married women by accepting this amendment which would mean that I would have to subject to tax gifts which they receive from their husbands.

The point made by the Minister earlier and by him again now, is that if he were to accept this amendment it would take away the benefits applying to husbands and wives in the Bill. Of course, it would not do any such thing. The Minister is saying that if he accepted that, he would take away the benefits in the Bill. This amendment would be in addition to the other provisions of the Bill. There is only one way the benefits could be taken away and that is if the Minister were to do so. This amendment does not take them away. We are not proposing to take them away. The Minister is threatening to take them away if this amendment is accepted.

I do not want to get into a broader field but the Minister's attitude to this is somewhat reminiscent of something he said in his budget speech of taking things away if certain things did not happen. Let us be clear about who will take away these rights. Not us. We are not proposing that in this amendment. We are saying that the Bill provides (a) a transfer of assets between husband and wife and is not subject to capital gains tax. That is correct. It also provides that losses incurred by a husband or wife may be set off against the gains of the other. We agree. We are not suggesting that should be taken away, nor does the amendment so provide.

What we are saying is that in addition to that there ought to be a provision such as we have in the amendment, to ensure that where the husband and wife are assessed together the amount of exemption they will get in any one year will be £1,000, the equivalent of that given to two single people. Alternatively if they are assessed separately each of them should get the exemption of £500 given to single people. We on this side of the House do not think such treatment would be too generous for married couples or for married women. Apparently the Minister thinks it would be too generous because he says if he were to do this he would have to take away the other benefits. I do not see why he would have to take them away. I do not think it is too generous treatment for a married couple. The Minister does.

As I indicated earlier when proposing the amendment, the whole thinking in this Bill, and in the other measures on capital taxation, is so redolent of the attitude embodied in legislation passed in the earlier part of the century and, indeed, in the last century, as to be almost unbelievable. One could say this emerged because of the way the Bill was drafted, and that the parliamentary draftsman was following precedent in existing legislation, and that is how it crept in, but we heard what the Minister had to say on this amendment. Lo and behold, out he came with his phrase about capitalistic married women. The cat was out of the bag. Whatever his protestations the Minister is as great a—if I may use the phrase; it is part of the vernacular now—male chauvin-istic pig as there is available in this country.

Do not call the Minister that.

I am calling him that in the sense of the vernacular. I am sure he understands that.

I am defending married women against an erosion of their rights and privileges which are in this Bill and which Deputies opposite want to take away from them.

The only person in this House who wants to take away any of the rights of married women or married couples is the Minister. Nobody on this side of the House has said or has proposed in an amendment that that should be done. The only person who proposes this is the Minister. What we want to do is, in addition to the provisions of the Bill, to give this treatment I have outlined which would treat a married couple in the same way as single people.

As I was saying, the Minister's general attitude in this matter came out in what he had to say. The draftsman cannot be blamed because he was following precedent. It is the Minister's thinking that we have in this Bill. It is the Minister's thinking that we have in the Wealth Tax Bill where the same thing applies. I wonder how many married women know just how far back sociologically speaking this Government are. It is not a question of what the Minister says. Nor is it a question of what the Minister for Labour says, and frequently he does make noises about the rights of women. The real test is: what are the actions of the Government? What have they in their legislation in 1975, International Women's Year?

What they have in their legislation is precisely the same attitude as was contained in, for instance, the original Income Tax Acts or in earlier legislation from other countries which the Minister for Lands quoted here in connection with the Wealth Tax Bill in the same general area of the rights of married women. Those attitudes may have been acceptable then. They are simply not acceptable now. There is no use in the Minister trying to bluff his way out by saying he is trying to save the rights of married women. Nobody is trying to take them away except the Minister. Why we should not give this additional small benefit to married couples in general, and married women in particular, is beyond me.

It is of some significance that the Minister did not contend that this would create a problem for the Exchequer. We do not know whether it would, although a number of speakers on this side of the House surmised that it would not create a problem. The fact that the Minister did not make that point can reasonably be taken to mean that it would not, in fact, create a problem for the Exchequer. As Deputy de Valera pointed out, because there is no provision in this Bill for inflation, the allowance we are talking about of £500 for the married woman or £1,000 for the married couple is really quite a small allowance and getting smaller by the week and by the day.

As Deputy de Valera also pointed out, the people we want to see, and the general public want to see, paying capital gains tax are not people to whom an allowance of £500 or £1,000 in a year would mean anything. What is involved here is the ordinary person who, as Deputy de Valera said, gets a windfall. The Minister does not want him to get it. I do not know why, considering that a financial problem does not seem to be involved. The Minister is either activated by his Victorian approach to married women and their rights or, alternatively, he is so obsessed with the purely theoretical capital gains tax that he cannot let go of the idea that it should be applied to all alleged gains as he indicated in the White Paper when, for instance, he wanted to apply capital gains tax to alleged gains on the sale of a private residence. He dropped that afterwards, but it was against the principle of the Bill that he should drop it. Apparently he feels this principle would be breached by giving this slight additional benefit to married couples and, in particular, by recognising the independent separate position of married women.

Whether or not they are, in the Minister's words, capitalistic married women, they should in my view, as a matter of right, as individuals, as citizens, be entitled to equal treatment. The Minister refuses to give that. He chooses to do this, not we. We want to give it to them. The Minister refuses. He threatens that if this were to be given, he would take away such benefits as they get in the Bill. We do not threaten that. We do not want that. We do not propose it. Our amendment does not propose it. Only the Minister threatens to take them away.

It all adds up to the fact that members of this Government may talk at great length about their concern with the rights of women. They may talk at even greater length about their progressive attitude but, when it comes to the crunch, as it does in this Bill, and in this amendment, we see what kind of Government they really are. They are way back. They have not even learned that in 1975, women, and in particular married women, have their rights of themselves, as individuals, as citizens. This Government do not propose to give them those rights. We have tried to give them to them but the Minister, and the troops he has behind him, will ensure that, as long as this Government are in office, women will not get those rights.

Does the Deputy wish his amendment put?

Yes, Sir.

Question put.
The Dáil divided: Tá, 57; Níl, 63.

  • Allen, Lorcan.
  • Andrews, David.
  • Barrett, Sylvester.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Breslin, Cormac.
  • Brosnan, Seán.
  • Browne, Seán.
  • Brugha, Ruairí.
  • Burke, Raphael P.
  • Callanan, John.
  • Calleary, Seán.
  • Carter, Frank.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard.
  • Cunningham, Liam.
  • Davern, Noel.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Fahey, Jackie.
  • Farrell, Joseph.
  • Fitzgerald, Gene.
  • Fitzpatrick, Tom (Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, Denis.
  • Geoghegan-Quinn, Máire.
  • Gibbons, Hugh.
  • Gibbons, James.
  • Gogan, Richard P.
  • Healy, Augustine A.
  • Hussey, Thomas.
  • Kenneally, William.
  • Kitt, Michael P.
  • Lalor, Patrick J.
  • Leonard, James.
  • Loughnane, William.
  • Lynch, Celia.
  • Lynch, Jack.
  • McEllistrim, Thomas.
  • MacSharry, Ray.
  • Meaney, Tom.
  • Molloy, Robert.
  • Moore, Seán.
  • Murphy, Ciarán.
  • Nolan, Thomas.
  • O'Connor, Timothy.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • Power, Patrick.
  • Smith, Patrick.
  • Timmons, Eugene.
  • Tunney, Jim.
  • Walsh, Seán.
  • Wilson, John P.
  • Wyse, Pearse.

Níl

  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Joan T.
  • Burke, Liam.
  • Byrne, Hugh.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Costello, Declan.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Crotty, Kieran.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Dockrell, Maurice.
  • Donegan, Patrick S.
  • Donnellan, John.
  • Dunne, Thomas.
  • Enright, Thomas.
  • Esmonde, John G.
  • Finn, Martin.
  • FitzGerald, Garret.
  • Fitzpatrick, Tom (Cavan).
  • Flanagan, Oliver J.
  • Gilhawley, Eugene.
  • Griffin, Brendan.
  • 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.
  • Reynolds, Patrick J.
  • Ryan, John J.
  • Ryan, Richie.
  • Spring, Dan.
  • Staunton, Myles.
  • Taylor, Frank.
  • Timmins, Godfrey.
  • Toal, Brendan.
  • Tully, James.
  • White, James.
Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.
Question declared lost.

I move amendment No. 18:

In page 20, to delete line 8.

As in the case of a previous amendment in our name, this matter was also referred to during the Committee Stage discussion. We are seeking here to delete from the list of items on which gains are not chargeable and losses are not allowable, land bonds. As I said, this matter was referred to on Committee Stage and the case for excluding land bonds was put with, I believe, considerable cogency by a number of Deputies. At the end of the discussion, as reported at column 367 of the Official Report on 21st May last I said:

The Minister is undertaking to have a look at the situation, is that correct?

The Minister replied:

Yes.

Since, again, there is no amendment from the Minister on this matter we can only assume that he looked at the situation and decided not to do it. The section that is involved here is section 19 and it lists a number of items, including Government loans, stock issued by local authorities or harbour boards, stocks or debentures issued by various State bodies and it says, in respect of all of these, that they shall not be chargeable. The list includes land bonds issued under the Land Purchase Acts. The purpose of this amendment is to delete from the section the reference to "land bonds under the Land Purchase Acts".

On the face of it this might seem to be a peculiar omission, but the reality of the situation is that when land bonds are issued to people in payment of land taken from them by the Land Commission they are, as Deputy O'Malley pointed out on the Committee Stage, that very day considerably devalued. As time passes thereafter they are devalued still further unless the holders happen to be fortunate enough to be involved in the draw which takes place at certain intervals in respect of which land bonds are redeemed. If people are not fortunate enough in that way they are given security which, as I said, on the day it is issued is considerably devalued and thereafter tends to be devalued still more. That being the reality, there is no question of the great majority of holders of land bonds making any capital gains whatever in respect of them but there is the question, in respect of the holders of most of the land bonds, that they will sustain capital losses and because the land bonds are included in this section the holders of those land bonds will not be entitled to claim those losses against any capital gains they may make in respect of any other assets they may have.

On the face of it, as I said, it might seem a rather odd proposition to exclude land bonds from this list, but I do not think it can be said of any other securities included in this section that the great majority of the holders of those securities can, with certainty, state now that at any time in the foreseeable future they will suffer capital losses and have no hope of a capital gain. Where that is the reality it is perpetrating an injustice on the holders of land bonds. To include them in this section knowing that the direct consequence of doing that is that one is depriving the holders of land bonds of the right to claim the losses they sustain on those land bonds as against any capital gains they may have from other assets is an injustice.

The situation of land bonds is different from the other securities also in that they are not voluntarily acquired from the Land Commission as in the case of all the other securities mentioned in the section where there is a voluntary decision by the holder to purchase them at issue. In the case of land bonds the holder of them is forced to take them very unwillingly, knowing that they are devalued immediately they are given to him in exchange for property which has a certain market value. The moment a person is given these land bonds their value will be in the main. 10 to 15 per cent less on the day they are issued than the value of the land. Thereafter they go down in value.

That is not the most recent experience.

What date would the Minister be referring to as the most recent experience?

Land bonds issued at 16 per cent have been sold since at a premium.

When was this?

Issued in the last year and sold recently.

Land bonds issued recently—by that I mean in the last two months—were, on the day of issue worth considerably less than their par value. Given a choice the people to whom the Land Commission issue the land bonds would not take them; they would take cash or some of the other securities mentioned in this section. That is another fundamental difference between land bonds and the other securities listed in the section. Therefore, there is a strong case in equity why land bonds should be excluded from this section so as to enable the holders to claim in respect of the losses they are going to incur.

There are two major reasons why land bonds differ from the other securities listed in the section. What might on the face of it appear to be a somewhat strange proposal is not as strange as it seems. The distinguishing marks between land bonds and the other securities listed in the section are the virtual certainty of loss and the fact that they are not taken voluntarily and for those reasons one is entitled to regard them differently from the other securities listed in the section. That being so I suggest to the Minister that equity requires that he accept this amendment. Acceptance of this amendment would not be a breach of any principle he might consider was involved in relation to the listing of what might be called, in general terms, State and semi-State and local authority securities. The Minister need not have any worries on that score for the reasons I mentioned, the distinguishing features of land bonds as distinct from the other securities.

We have every cause for worrying if because of this section as drafted the Minister were to force people not only to take land bonds but to accept the capital losses involved without any hope of being able to set them off against any capital gains. I am concerned at the fact that, this case having been made and the Minister having indicated on Committee Stage that he was prepared to give consideration to it, he has not produced an amendment to do what my amendment seeks to do. Despite that concern I am not without hope that the Minister will find it possible to accept the amendment because the reasons for its acceptance are compelling. Any reasons advanced against it to say the least, cannot be as compelling. I hope the Minister will find it possible to accept this amendment.

I respectfully suggest that the amendment is out of order because the effect of it would be to impose a charge in certain circumstances. As I pointed out to the Deputy the experience in recent times has been contrary to what I know has been the usual experience in relation to land bonds. Clearly they are Government securities and there is no justification for treating them in any different way from other Government paper. The other point I made is one which is worthy of consideration.

The Chair had adjudged the amendment to be in order.

I say, with respect, that possibly the point I made was not previously considered.

(Dublin Central): There is not any fear of that.

The Minister should know and the Chair does know that the ruling on matters of this kind is somewhat wider than the Minister is suggesting. The Chair has ruled that the amendment is in order and we need not concern ourselves further with that.

If it is not in order the Deputy's case fails.

So the Minister says, but not the Chair, and the Chair, thank God, is still the Chair in this House and not the Minister.

If the Chair is right I bow to the Chair's ruling, but the amendment is ineffective.

How does it fall?

The Minister does not understand the considerations involved in an amendment of this kind.

It is advisable at this stage that Deputy Brugha proceed with his own argument.

On Report Stage no new section or other amendment may be proposed which creates a charge on the public revenue or upon the people, is what Standing Orders state.

On a point of order, is the Minister questioning the ruling of the Chair in this matter? We would like to know where we stand.

I am answering Deputy Brugha who asked me for information.

Deputy Brugha should continue with his own argument in regard to the amendment.

Land bonds certainly fall into a different category than any other type of public issue in the sense that they are not being bought by people initially. This matter was discussed in the House and the Opposition did not agree with the principle of the type of land bond involved because the recipients of land bonds are in most cases in a position where the land is being taken from them compulsorily. It is not a choice of purchase or selection as far as they are concerned. Land Bonds have tended to fall in value once they have been issued and this is a measure of injustice. If there was a benefit to be gained by the holders of these bonds this benefit ought to be considered by the Minister. He should bear in mind that they tend to fall on issue.

Debate adjourned.
Top
Share