During the debate on amendment No. 18 last night the Minister stated that it imposed a charge. I have since confirmed that it does so. The amendment is accordingly out of order in accordance with precedent and cannot be proceeded with.
Capital Gains Tax Bill, 1974: Report Stage (Resumed).
Is the Ceann Comhairle aware of any precedent for a ruling out of order of an amendment after it has been partially discussed?
There are precedents, I understand. I am sorry this occurred. There simply was not the time to deal with it by reason of the lateness of the arrival of a batch of amendments.
I appreciate that, but may I also suggest that experience of the ruling of the Chair over the years suggests that the interpretation of what does or does not impose a charge on the people is somewhat wider than might appear on its face and that amendments are allowed, for instance, in regard to Finance Bills which on their face do impose charges?
I am afraid I have no alternative but to rule it out of order even though it was partially proceeded with.
I accept your ruling——
(Dublin Central): There was a different ruling given last night by the Leas-Cheann Comhairle. He said it was in order last night and it was half discussed sometime afterwards.
I am not aware that the Leas-Cheann Comhairle ruled in the matter.
(Dublin Central): It was ruled in order last night.
We must proceed in accordance with precedent. Amendment No. 19.
We are abandoning this amendment but may I say a word on it?
Not now.
(Dublin Central): But this amendment was discussed for half an hour last night and was ruled in order by the Leas-Cheann Comhairle.
I am fully aware of that.
(Dublin Central): At about 10 o'clock last night this amendment was introduced and it was discussed from 10 to 10.30. The Leas-Cheann Comhairle ruled that it was in order to discuss it.
I am well aware of that.
The amendment was discussed in an informal sense. It was with the mutual agreement of both sides of the House that it was discussed. There was no question of not accepting the ruling of the Chair. As I took part in that discussion I would like to make that clear.
I think that happened in relation to another one.
I am sorry then for being irrelevant.
(Dublin Central): I want to make it perfectly clear that I am right and that the Leas-Cheann Comhairle ruled last night that it was in order.
I am aware of that, but once it is clear that the amendment imposes a charge I have no alternative but to rule it out of order.
(Dublin Central): I accept your ruling now but I want to get my point, that last night it was ruled in order, clear.
I move amendment No. 19:
In page 20, after line 32, to insert a new subsection as follows:
"(5) Provide that where the person making the disposal referred to in subsection (2) is not the original beneficial owner but has acquired the policy of assurance, or contract for a deferred annuity solely for the benefit of the dependants of such original beneficial owner, no charged capital gains tax shall arise on such disposal."
I regret that the Minister was not given the opportunity of taking land bonds out, but that is the way it is. This amendment deals with a matter which was raised on the Committee Stage and in respect of which the Minister indicated that he was prepared to consider carefully the points raised. The Minister may recall that I drew his attention to a letter which had been received by a Deputy on this side of the House, and the Minister said that he had received a similar communication, which raised a point that required to be clarified. Perhaps the best thing I could do would be to refer to the Committee Stage debate on 21st May, 1975 as reported at column 296 when I quoted from the letter in question as follows:
As may be appreciated, when arranging life insurance on two partners who have families, it was normal up to now to arrange life policies on the individual partner's lives and then crossassign both policies. For example, Partner A might take out a £20,000 life policy on himself and assign his policy to Partner B, and vice versa. In the event of the death of Partner A, the experts deem that the funds are in the right hands, namely, in the hands of the surviving partner who can either buy out the deceased partner's widow or purchase an annuity for her.
My question is—am I correct in reading that the partner making the disposal is not the original beneficial owner in the above arrangement and that the proceeds of the policy would be subject to capital gains tax under this Bill, even though the proceeds might be entirely for the benefit of the widow and children.
In the case of policies taken out after this Bill becomes law there is no difficulty as matters can be rearranged until the law is given another twist. But in the case of existing arrangements, if I am reading the above section properly, this tax would be absolutely vicious.
I wonder if the Minister could throw some light on that?
Mr. R. Ryan: Something similar was received by the Minister and I have had the matter considered by the Revenue Commissioners, and I may say that generally speaking genuine arrangements such as that which is spoken of there are not intended to be caught. I certainly would very carefully consider the position because I would not consider it desirable that such an arrangement should be caught. However, at this stage I would not want to be specific as to whether it is exempted as it stands but I will certainly look at it between now and Report Stage.
The Minister did not in fact introduce an amendment dealing with this point so far as I can see and therefore I have put down an amendment which may not be perfect but which is designed to do something on the lines suggested by way of giving relief in the kind of circumstances outlined in the letter I quoted. My primary purpose in putting down the amendment was to give the Minister an opportunity of clarifying the position. I assumed from the fact that the Minister has no amendment down and from what he said on the Committee Stage that he did not intend that genuine cases would be caught. The Minister is now in a position to spell out clearly that such cases would not be caught under the section as it stands. If the Minister can give us any assurance that he does not think any problem arises I will be glad to hear it.
I am happy to be able to tell the Deputy that I can give him the assurance he seeks. His amendment meant something different to me from the situation he is endeavouring to cover. Where there is cross-assignment between partners under a joint policy it would invariably be done without consideration of money or money's worth. Accordingly the policy's proceeds would be exempt from capital gains tax by virtue of subsection (2) of section 20.
I accept that it is not done usually in consideration for money. It is done in consideration for money's worth having regard to the fact that two people are concerned. They are partners and each would have a specific interest in the policy on the life of the other. It would save the widow and children of the deceased partner considerable expense. Might it not be held that there was money's worth by way of consideration of assignment?
I do not think so. There would be no actual consideration of money's worth passing in order to acquire benefit. The right or interest would be acquired. That is the acid test—whether the person who obtains the benefit at the time of obtaining it pays a consideration for it or pays a consideration in order to obtain at some future date.
I presume I may take it from what the Minister has said that in any such case arising it is not the intention of the Revenue Commissioners to charge capital gains tax?
It is not.
Thank you.
Amendment, by leave, withdrawn.
I move amendment No. 20:
In page 22, after line 42, to add:
"(b) a dwelling-house or part of a dwelling-house which is, or has been provided fully at his own expense for the benefit of a dependent relative of his."
The Minister may recall that I drew his attention to the fact that when we were discussing this matter on the Committee Stage I understood that there was a provision in the British legislation on capital gains tax whereby when a residence is provided free by a taxpayer for a dependent relative it is added to the special relief in addition to the principal residence. I referred the Minister to that provision and suggested that this might commend itself to him. I quote from column 371 of Volume 281 of 21st May, 1975, where the Minister stated:
With regard to the dependent relative, I would be prepared to examine that point further. As Deputy Colley pointed out, the number of such cases would be quite few and the number of cases where capital gains would be made on the disposal of a residence for a dependent relative would be even fewer because in that case the disposal would be by the person who owned the asset. In most cases a person would not dispose of an asset made available for a dependent relative unless that relative moved into an institution——
There were a few other points, but when I asked the Minister to have a look at it the Minister agreed. There is no amendment from the Minister to deal with this point now. Consequently I put down amendment No. 20. I am aware of the fact that the exceptions of this amendment would probably involve some further drafting in the section but I did not feel it incumbent on me to make the necessary consequential redraft that would arise but merely put down the amendment dealing with the specific point at issue in order to ask the Minister why he has not put down an amendment of that kind himself having regard to the fact that he indicated on the Committee Stage that he would consider it further. I got the impression from what the Minister said that he would consider this point favourably.
As has been pointed out, the number of cases involved would be small but the principle involved would be consonant with the exemption in the section in respect of the principal private residence. It is sought here to provide a similar exemption in respect of a residence which was provided free of charge by the taxpayer for a dependent relative. There is a strong case for that. I believe that the case for it has been accepted in the British legislation. I would think therefore that the Minister ought to make provision for a case of this kind which would not contravene the principle of the section and which would acknowledge the special position arising where the taxpayer provides at his own expense a residence for a dependent relative. I would therefore urge the Minister to accept the amendment knowing that acceptance of it will require some consequential amendments.
I am sure the Deputy accepts that the usual practice in this country is for a dependent relative to live with the person on whom he or she may be dependent.
(Dublin Central): That is not the one that is encouraged.
That is the usual practice. I cannot see that there is anything wrong with it. It is regrettable that the trend in modern society here and indeed elsewhere may well be towards expelling dependent relatives either into institutional care or into other homes. It is a natural duty and in many cases a natural desire that families should live together. The reality in Ireland is that in most cases dependent relatives live with the people on whom they are dependent.
In England, which is a much more divisive society, the stresses and strains of the urban environment are quite different from here. Family units are handled differently. Of course, in England there is a very large number of dependent relatives of a class we have not got here. They are divorced women or separated women in respect of whom the original husband is required to provide a home. The English law specifically refers to such cases and "dependent relatives" include a person living apart from her husband or a person who is a single woman in consequence of dissolution or annulment of marriage. If we were to allow this exemption which would apply to comparatively few people in normal circumstances we would be opening the avenue to a very convenient way of avoidance.
Could the Minister elaborate a little on the avoidance?
I can see that it would be comparatively easy for people to establish a dependency for relations and to establish them in separate homes and thereby make a profit whenever the other home had been disposed of. If somebody decides out of the goodness of his or her heart to provide a home for a dependent relative and ultimately makes a gain there is no loss whatsoever to the person who provides the second home for the dependent relative, on the sale. There would be no erosion of the original capital.
(Dublin Central): He should be encouraged, not discouraged.
There would still be 74 per cent of any gain left as complete profit and there certainly is no discouragement in allowing people to make such a profit. The introduction of capital gains tax here, I am quite certain, will not dissuade people who have a natural sense of their own duty from providing alternative homes if they feel the circumstances warrant it, and it certainly will not discourage people who have a natural inclination to look after dependent relatives from doing so, merely because on the death of the relative followed by the sale of the house they may have to pay 26 per cent of the gain made during the ownership of the house.
It may not be realised that to make the alternative home an exempted property means that a loss on the exempted home will not be available. The gain will not be taxable but then any loss will not be available. ture of this country the exemptions in this Bill, which are very generous by international standards, are adequate and it is not necessary to provide for the comparatively rare cases which this amendment would seek to cater for.
The principle behind the amendment is a good principle. It is in line with the Christian outlook that there should be a sense of responsibility and compassion in certain circumstances. I do not think the circumstances are likely to arise very often.
The Minister seems to be obsessed with the idea that people will use an amendment of this kind in order to evade liability. If that tendency is so strong in our society the Minister ought to be able to make the provision that it would be at the discretion of the Commissioners.
I know of a case where some years ago an individual who was able to afford it provided a home free-of-charge and handed it over to the widow of a nephew who had died suddenly. The position of this lady was that because of her deceased husband's occupation she had to leave the home in which they had lived. In a case of that kind all sorts of complications would arise under the Minister's three tax Bills. The person would be caught under the gift tax provisions or, if he kept the house and did not give it to his nephew's widow he would come under wealth tax if he were wealthy enough, and he would come in under capital gains tax if the dependent eventually died and he sold the property.
I can see the Minister's point that people may study the Bill to discover how they can get around the regulations, but what Deputy Colley is talk
I am satisfied that in the social strucing about is fairly exceptional. It is not always practical to do as the Minister has suggested ought to be done in Irish society, that dependent relatives should be kept at home. It does not always work out. If there are circumstances, and they would be exceptional, where an individual is willing to provide a dower residence the Minister ought to make some provision for it even, as I suggested, if it is to be at the discretion of the Commissioners so as to avoid the problem the Minister is worried about that a provision like this would be used in order to escape capital gains tax.
(Dublin Central): The Committee Stage of the Bill would not have got as easy a passage if we had thought that the Report Stage would turn out like this. There were many occasions during Committee Stage where the Minister undertook to make a genuine effort to accept some of our amendments. It is quite obvious that he has no intention of doing anything about the promise given on that occasion. I doubt if the Minister has studied the Committee Stage debate in depth, or the promises he made. As Deputy Colley has pointed out—and has read an extract from the debate on Committee Stage to prove it—the Minister was sympathetic and indicated that he would have a look at some of the suggestions, not alone in regard to this matter but in regard to several amendments that Deputy Colley had put down.
The Minister said he would have a look at this and deal sympathetically with the matter. Actually he has completely overlooked the whole issue. We would have challenged him to a division on the Committee Stage were it not for the undertakings given by the Minister. He is now refusing to accept Deputy Colley's amendment. When the White Paper was published it was the Minister's intention to tax the private home and he would have done that were it not for the opposition put up by Deputy Colley to this punitive approach on the part of the Minister. The day the White Paper was issued Deputy Colley pointed out in no uncertain fashion the injustice of what the Minister was proposing and the Minister had to change his approach.
In this amendment we are looking for something quite modest. The Minister says that it is desirable that fathers-in-law and mothers-in-law should live with their married sons or daughters. The Minister must know very little of what goes on if he thinks that is desirable. He must know very little about the problems that can exist between mothers-in-law and sons' wives. It is highly desirable to provide alternative living accommodation for parents. The situation can be quite impossible if the grandparents occupy the same dwelling as the sons or daughters and their children. The Minister will not convince me of the desirability of his suggestion. He will convince very few that his suggestion is a good one. The Minister has moved away from reality since he started discussing capital taxation. I do not think he is living in this world any longer. Ask anyone what he or she thinks about the Minister's suggestion and 99 per cent will tell him it is unworkable. The old people want their independence and they want separate accommodation. I have a recollection of a scheme whereby, when a farm was transferred to a son, a house was built on the farm for the parents. This was approved of by the NFA. The transfer of the farm and the provision of separate accommodation for the parents enabled the son to get married and settle down.
Deputy Colley's demand is a very modest one. I do not think there could possibly be any abuse. I can certainly see no tax avoidance in this. The Revenue Commissioners will be easily able to establish the purpose for which the house is provided. A very small section might try to capitalise on this kind of thing but, in closing any possible loophole, we will punish the average decent person. I am more concerned about him. A house and one acre of land will be exempt and surely it should be possible on that one acre to build a small dwelling for the parents. This would enable them to live in the family environment, visiting their sons or daughters and their grandchildren and having these visit them in return. That would be the ideal situation. Apparently the Minister does not think so. I do not take the same view as the Minister. I believe very few people take the Minister's view.
I am not worried about the man sitting down in an office devising ways and means of getting around this particular provision but I am worried about the genuine case. I agree that people should not be allowed to take advantage of a situation and the speculator must be prevented from speculating. I fully agree with Deputy Colley's amendment. I cannot see any possibility of tax avoidance in it. I appeal to the Minister to accept the amendment. Deputy Colley has pointed out that the number of cases involved would be very, very few.
I support the case made by Deputy Colley, Deputy Brugha and Deputy Fitzpatrick, and I challenge the Minister as to the desirability of having a mother-in-law or a father-in-law living under the same roof as a married son or daughter. In certain oriental countries for social and economic reasons peculiar to those countries it is the custom to have fathers-in-law and mothers-in-law living under the same roof as sonsin-law or daughters-in-law. One of the reasons for late marriages here has been the reluctance of the intended wife to live under the same roof as the mother-in-law. The solution to that problem—there is proof available—is the building of a small house proximate to the original home, thereby enabling each family to retain its independence. Because of that and other reasons, the incidence of late marriages and the number of bachelors in rural Ireland have diminished.
As Deputy Fitzpatrick put it to the Minister, he is a family man himself and perhaps he is different from the rest. Surely he is not making the case that his wife would be happier living with her mother- and father-in-law. If that is the only case he is offering for refusing to accept the amendment, then one must question his case, because, as I see it, it is no case at all. I am not concerned solely about the position in rural Ireland, because this can apply in cities as well. It can happen that the family house might not have sufficient space to build an additional small house for the parents. I can visualise other reasons why a small house should be built. Unfortunately there are occasions of ill-health when either parent might be better off living in separate quarters.
The Minister may say glibly that he thinks it is better socially for the two families to live together but, if so, he should substantiate his case. I would not want him to point a finger at this side of the House and say we are suggesting that the position of our senior citizens should be reduced by being evicted from the house in which they have lived all their lives. We are not doing that. Nor would I like him to suggest that we are relegating elderly people to an inferior position.
Those of us who are familiar with the manner in which elderly people operate, know that they are not happy living, not alone with a new wife, but later on with young children. They are very fearful of the accidents which may happen to these children. One may marvel at presents who, when they are young, probably reared eight or ten children with the natural material and paternal feelings, but they are fearful of even minor accidents which may befall their grandchildren.
My reason for contributing at this stage is in the hope that the Minister will give us some indication of the reasons for not accepting the amendment. What facts has he to prove that two families will live more happily under one roof?
I did not make that case.
(Dublin Central): But the Minister was trying to do that.
I agree with the two previous speakers. Many years ago our ex-President, Mr. Eamon de Valera, suggested, when there were so many late marriages that this would be the ideal set up. If the people could afford it, they could build a small house for either the newly weds or the parents. We all know, particularly in early marriages, that no young girl wants to share her livingroom or kitchen with another woman. Both women have different ways of doing things, and they will not agree. This problem is arising all over the country.
If the second house is built, both will be close enough for company and to help each other, while still maintaining their privacy. It has been proved that the lack of a second house was the cause of many late marriages. The mother ruled the roost and the son was afraid that if he brought his wife into the house, the two women would not agree. If he did move in with his parents, when a difference arose he had to make a decision where his loyalties lay. The son and his wife could move into the newly built house. Nobody is suggesting that the parents should be put out of the family home.
Would the Deputy not agree that in such cases the normal practice is for that house to remain in the family and, therefore, no concession for capital gains arises? It only arises in the eventual sale to a stranger.
I am talking about it being within the family.
Therefore, no occasion for taxation would arise.
(Dublin Central): There are occasions when the son may have to dispose of the property.
Every family home could be put in the name of the grand aunt to the nth degree. This would be the greatest dodge available for people to get their holiday home free of capital gains tax.
There is no doubt in my mind that the Minister has become totally obsessed with the most remote possibility of avoidance. In order to get over what he thinks is a possibility of avoidance, he does not care how many genuine cases he tramples on. He has demonstrated this time after time when dealing with our amendments. If he can think of one very ingenious method whereby the proposed amendment could be used for avoidance purposes—it does not matter how many genuine cases will suffer hardship—he will ignore that in order, as he thinks, to prevent that avoidance. Of course, that kind of an obsession produces a situation which is full of loopholes. That is what the Minister is doing here, as he will discover.
Would the Deputy describe what hardship he is alleging? What hardship can there be if a person has sufficient capital to buy two houses?
In the context in which I was speaking I spoke of a number of the amendments we put forward in which we demonstrated the hardship being caused and the Minister did not care because, he said, there could be some avoidance. I am speaking of his general attitude and obsession.
I want to go a little further. Deputy Fitzpatrick was perfectly right in what he said. Reluctantly I have been coming to the same conclusion as Deputy Fitzpatrick. I tried to avoid it but I cannot avoid it any longer. When we discussed the Committee Stage of this Bill we raised many valid points, many points of value. The Minister has acknowledged that in a number of his amendments. We also raised quite a number of points the Minister has not acknowledged in his amendments. We put down amendments ourselves to deal with these matters which were drawn to his attention on Committee Stage and in all cases he indicated if not considerable sympathy with the point at least a willingness to consider it. This amendment is no exception.
I am not suggesting that there was an obligation on the Minister in every such case to bring in an amendment. That would be unreasonable. I am suggesting that, when one finds time after time that these points which the Minister indicated on Committee Stage would receive serious and sympathetic consideration are now being thrown out, it is difficult, if not impossible, to avoid the impression that the Minister, in order to get Committee Stage through, indicated that he was prepared to give serious consideration to these points and, on his performance since, he was not prepared to give serious consideration to them and did not do so. He is now trotting out the same arguments he used before and followed by saying he was prepared to give them serious consideration. Clearly he has given no consideration to them if he is still relying on the same arguments at the conclusion of which on Committee Stage he said he was prepared to give consideration.
I can tell the Minister now that, on behalf of this party, I agreed to a programme for the completion by this House of the Report and other Stages of the Capital Gains Tax Bill without having available to me the Minister's amendments, and in the belief that the Minister would be acting bona fide on this matter. I now have the gravest doubts as to whether the Minister is acting bona fide. If I had known, and if Deputies on this side of the House had known, that the Minister would adopt the attitude he is now adopting, we would not have agreed to that programme of completion. We acted in good faith, and I do not think our good faith is being matched on the other side of the House.
In relation to this amendment the Minister agreed on Committee Stage that the number of cases involved would be small. Now he says he cannot consider it because every grandaunt in the country would find herself being given a house which was the second house of a taxpayer, in order to avoid capital gains tax. Is the Minister really serious? Has he considered the reality of the situation? In the amendment the relative has to be dependent and the house has to be provided totally at the expense of the taxpayer concerned. Of course it is kept in the family while the dependent relative is alive. All of us have to die some time.
If a house is provided for one of the surviving parents who is totally dependent on the taxpayer, at the expense of the taxpayer, and eventually the parent dies, what does the Minister say should be done? Is he saying he should not sell the house and that that is an indication that he is trying to get in as a quick speculator and get a capital gain? Will the Minister come down to earth instead of trying out these silly arguments on us all the time? Let us relate this discussion to reality and not to some abstruse schemes which the Minister thinks somebody might produce to avoid liability for capital gains tax.
It has been found possible under capital gains tax legislation in Britain to give this relief. On Committee Stage the Minister indicated that he would consider it favourably and that there were only a small number of cases in which it could arise. He comes in here today and insults our intelligence with the kind of argument he puts forward against it, an argument which he could not possibly sustain, and a suggestion that by refusing to accept the amendment he is standing up for Christian virtues. Has he any awareness of the requirements of the community in the cities or in the rural areas as Deputy Tunney said?
Is he aware of the very considerable sociological and economic advantages which are seen to be attached in rural areas to the provision of a small dower house for the parents of young married farmers? Do I have to spell all that out for him? Is he totally unaware of it? Is he suggesting that where such is provided and the parents eventually die, the house should be left to rot until the son and his wife eventually become old enough to transfer to it and their children take over the farm? What has the Minister in mind in the argument he puts forward on this?
There is virtually nothing involved in this for the Exchequer. There is a good case for the amendment in equity and from a sociological point of view. Its rejection in the way it was rejected by the Minister for the reasons given can only suggest to us that the Minister's approach in this whole matter is not bona fide but one of simply trying to get the Bill through and not really giving a damn what kind of a Bill it is. He must admit— and on the record it is clear—that in so far as this Bill is in any way tolerable it is because of the work done on this side of the House to improve it. It could be improved a great deal more if the Minister would act in a reasonable, rational way.
I am not suggesting he should accept every single amendment we put forward. I am suggesting that his attitude to this and other amendments suggests, whatever he may say, that he has not done his homework because he did not have a chance to do it. I am not blaming him for that. I am saying he did not have a chance to do it. He is simply following the brief he was given and not listening to the arguments put forward. This is a totally unsatisfactory position so far as we are concerned. We would not have agreed to the programme for completing this Bill if we had thought the Minister would act in this way. However, we have agreed to it and we will abide by our agreement.
I want to make it quite clear to the Minister that, in the short term, he may think he is gaining by getting this Bill through as a result of this kind of approach, and that there is some advantage to him in doing so, but there is not. If he produces a Bill full of anomalies which were drawn to his attention and which he refused to remedy, then the longer term consequences will rest on the shoulders of the Minister, not on those of us on this side of the House who did their best to make this a better Bill. The rejection by the Minister of this small, simple amendment, for which there is a very good case, is symptomatic of the approach he has adopted which, to say the least, is regrettable.
Question put: "That the amendment be made."
The Dáil divided: Tá, 44; Níl, 51.
Tá
- Allen, Lorcan.
- Andrews, David.
- Barrett, Sylvester.
- Brady, Philip A.
- Brennan, Joseph.
- Breslin, Cormac.
- Browne, Seán.
- Brugha, Ruairí.
- Burke, Raphael P.
- Callanan, John.
- Calleary, Seán.
- Carter, Frank.
- Colley, George.
- Collins, Gerard.
- Connolly, Gerard.
- Cunningham, Liam.
- de Valera, Vivion.
- Fahey, Jackie.
- Fitzgerald, Gene.
- Fitzpatrick, Tom (Dublin Central).
- Flanagan, Seán.
- French, Seán.
- Gallagher, Denis.
- Gibbons, Hugh.
- Gogan, Richard P.
- Haughey, Charles.
- Healy, Augustine A.
- Kenneally, William.
- Lalor, Patrick J.
- Leonard, James.
- Loughnane, William.
- Lynch, Celia.
- Lynch, Jack.
- McEllistrim, Thomas.
- Meaney, Tom.
- Molloy, Robert.
- Moore, Seán.
- Nolan, Thomas.
- O'Leary, John.
- Smith, Patrick.
- Tunney, Jim.
- Walsh, Seán.
- Wilson, John P.
- Wyse, Pearse.
Níl
- Barry, Peter.
- Barry, Richard.
- Begley, Michael.
- Belton, Paddy.
- Bermingham, Joseph.
- Bruton, John.
- Burke, Dick.
- Burke, Joan T.
- 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.
- Desmond, Barry.
- Desmond, Eileen.
- Donnellan, John.
- Dunne, Thomas.
- Enright, Thomas.
- Fitzpatrick, Tom (Cavan).
- Flanagan, Oliver J.
- Gilhawley, Eugene.
- Griffin, Brendan.
- Harte, Patrick D.
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Keating, Justin.
- Kelly, John.
- Kenny, Henry.
- Kyne, Thomas A.
- L'Estrange, Gerald.
- Lynch, Gerard.
- Malone, Patrick.
- Murphy, Michael P.
- O'Brien, Fergus.
- O'Donnell, Tom.
- O'Leary, Michael.
- Pattison, Seamus.
- Reynolds, Patrick J.
- Ryan, John J.
- Ryan, Richie.
- Spring, Dan.
- Staunton, Myles.
- Taylor, Frank.
- Timmins, Godfrey.
- Tully, James.
Tellers: Tá, Deputies Lalor and Browne: Níl, Deputies Kelly and B. Desmond.
Question declared lost.
I move amendment No. 21:
In page 24, lines 46 and 50, to delete "partly" and to substitute "mainly".
As further evidence of my willingness to accept all reasonable points raised by the Opposition I have prepared this amendment. Deputy O'Malley was concerned that the words "or partly" would negative the exemption in section 25 because most people contemplated the possibility of making a gain at some time or other on the disposal of the property and thus the purchase could be said to be partly for the purpose of realising a gain. The amendment specifies that the acquisition of a private residence or the incurring of expenditure thereon would have to be made wholly or mainly for the purpose of realising a gain before subsection (10) could operate to exclude the house from relief.
This amendment follows on the fact that we drew the Minister's attention to the fact that the Bill as drafted could take away the exemption in respect of the principal private dwellinghouse in many cases. That case was unanswerable, and I do not think the Minister had much alternative but to introduce this amendment. To the extent that he has introduced it we welcome it, but that is not the end of the matter. The subsection which the Minister is proposing to amend has two parts. The first part provides that the exemption in respect of the principal private dwellinghouse will be forfeited if the house was purchased wholly or partly for the purpose of realising a gain from the disposal of it. The Minister proposes to amend that so that it will be wholly or mainly for the purpose of realising a gain.
The second part of the subsection says that the benefit of the exemption in respect of a private residence shall not apply in relation to a gain so far as the gain is attributable to any expenditure which was incurred after the beginning of the period of ownership and was incurred wholly or partly for the purpose of realising a gain from the disposal. The position is that many people, including those in small houses, have added on a back kitchen or a bedroom because their family was growing. The second part of this subsection provides that if they do that then in so far as they make any gain eventually when they dispose of the house attributable to that improvement or extension—of course portion of the gain would be attributable to that improvement or that extension—they will be taxed on that gain.
There was considerable discussion on this point on Committee Stage, and the fact that the Minister has introduced this amendment is an acknowledgment by him that the use of the word "partly" means precisely what I have said, that expenditure on the improvement of the house which results in a gain on the disposal will be subject to capital gains tax. If the first portion of the subsection should be amended by the substitution of "mainly" for "partly", as indeed it should be, the second portion should be amended and the word "partly" in line 50 should also be changed to "mainly".
Does the Deputy think that line 50 is not amended?
Yes.
There may have been some omission in the original copy, but in the printed sheet line 50 is amended also.
My notes on the Minister's amendments were based on the list of amendments I got from the General Office. I see that the second list is different. I accept that the final version does include line 50 and, therefore, the point I was making is met. The effect of the amendment would be to provide that the exemption in respect of a private dwellinghouse would now apply unless either the premises were acquired or improvements were made to the premises wholly or mainly for the purpose of realising a gain. That is as it should be. For that reason we do not oppose this amendment.
This amendment makes the Minister's intention clear. There was a danger in the use of the word "partly" because, no matter how small the part, it could be sufficient to include the rest. We have had plenty of experience in this city of the situation where a person acquires a house and does some things to it with a view to disposal at a gain. There are a number of cognate situations which are covered by the Minister in the Bill. I would like to be clear that line 50, as well as line 46, is being amended.
Yes.
(Dublin Central): In a case where a normal family spends a considerable amount of money on their private house, perhaps £15,000 or £20,000, and then because of circumstances outside their control have to sell the house, may I take it that that will not be regarded as a sale for the purpose of making a gain?
The Revenue Commissioners would have to look at the facts of each case. You obviously cannot specify in legislation all the variety of situations that can arise. In the kind of situation the Deputy has described I think he can be assured the Revenue Commissioners would consider such a case as a development or improvement of the family home, but the Revenue Commissioners would have to look at each case. If a person were dissatisfied with the decision of the Revenue Commissioners he could appeal but I would not anticipate difficulties arising.
Amendment agreed to.
Amendments Nos. 22, 23, 27 and 28 are cognate and, if the House wishes, may be discussed together.
I have a slight difficulty in this matter in that we did discuss a similar type of amendment on the Committee Stage. It arose first I think in connection with section 17 and then these other matters were taken with it. Arguments were advanced by the Minister in relation to section 17 which do not apply to the other sections but the whole discussion was taken at the one time. I would suggest that we might take the ones which relate to one section together— that would be Nos. 22 and 23.
Acting Chairman
Yes.
I move amendment No. 22:
In page 25, lines 4 and 5, to delete "consideration for the disposal" and substitute "gain".
The exemption proposal in this section relates to the disposal of a business or farm on retirement and subject to the conditions in the section the exemption is that where the consideration does not exceed £50,000 there will be no capital gains tax chargeable on the gain accruing. That is what the section provides. The amendment is designed to have the exemption related not to the consideration but to the actual gain made. I made this point clear on the Committee Stage but I want to make it clear again lest there should be any misunderstanding or misdirection of effort in arguing about what I consider to be irrelevant.
I am aware of the fact that acceptance of this amendment would entail the alteration of the amount of the exemption. In other words it would entail the alteration of the figure of £50,000. I am not proposing that the exemptions in this case should relate to a gain of £50,000 but, as I have indicated before, the fixing of thresholds depends on information being available which is not available to this side of the House and is probably available only to the Revenue Commissioners to enable them to fix the correct amount that would be involved. I want to make that perfectly clear.
What I am concerned with here is the principle involved of giving the exemption in relation to the gain at a particular threshold which the Minister, advised by the Revenue Commissioners, would fix. Subject to that, the position as I see it is this: relating the exemption to consideration rather than gain first produces various anomalies and secondly leaves the amount of exemption totally outside the control of the Minister or the legislature. If you fix the exemption in relation to the gain then you are controlling the kind of exemption you give.
An example which I gave before and will now give again will perhaps illustrate the problems which arise if one does not accept an amendment on these lines. As the Bill stands a person could buy a farm for £10,000 and sell it for £45,000. The gain he would make would be £35,000 but under the Bill he would pay no capital gains tax. On the other hand a person could buy a farm for £45,000 and sell it for £55,000 making a gain of £10,000 but he would have to pay capital gains tax on £10,000. There is a situation in one case where a gain of £35,000 would be free of capital gains tax while £10,000 in the other situation would be subject to that tax. That anomaly should be sufficient to illustrate the wrong approach to the way the exemption is given under this section. It is related to the consideration. There is a necessary connection between the consideration in a transaction and the gain made. There is no reason why a high consideration or a low consideration should yield a high or a low gain. It all depends on the circumstances of the transaction. It is supposed to be a capital gains tax—a tax on gains. If it is, the exemptions that are proposed should be related to the gains and not to the consideration which is irrelevant to the gain.
The only plausible reason that the Minister can advance in favour of the approach of using consideration is an administrative reason. However, I should point out that the Minister in section 16 (1) accepted the principle I am putting forward. That section reads:
An individual shall not be chargeable to capital gains tax for a year of assessment if the amount on which he is chargeable to capital gains tax under section 5 (1) for that year does not exceed £500.
In other words the exemption in that case is related to the amount on which he is chargeable, that is, the gain. In section 16 the gain is accepted as the criterion. In section 26 the gain is not accepted but the consideration is accepted.
The arguments in relation to difficulties of administration, whatever validity they may have—and I do not think they have much—in relation to section 17 do not apply in relation to this section. First of all, we are dealing here with the disposal of a business or farm on retirement. Of necessity, if there were no capital gains tax legislation, there has to be an official record of such a transaction. In the case of a farm there is the record in the Land Registry or the Registry of Deeds as the case may be—and normally it is the Land Registry—and within the process of stamping and registering that deed particulars are delivered to the Revenue Commissioners of the transaction. This is normal practice for years past. It will continue. It is not a question of the Revenue Commissioners having to get details of a transaction which normally they could ignore nor is it a case of the taxpayer having to provide details in respect of transactions which normally he would not have to give details about at all.
The Minister has argued that if the consideration in a case of this kind does not exceed £50,000 the Revenue Commissioners can ignore the case and not involve themselves in the details of what the original acquisition price was or what the gain was. I want to suggest that that simply is not so, and that if one operates on the basis of the section what would normally happen would be that the Revenue Commissioners on seeing in relation to the transaction that the consideration did not exceed £50,000 if they had no reason to be suspicious would not examine the matter further. That is true. If they had any reason to be suspicious they would have to examine the matter further. They would have to ensure that there was no defrauding of the Revenue and they would have to engage in spot checks in cases of this kind.
Let us assume that instead of consideration we would have a figure in for gain, what would the Revenue Commissioners do? I suggest that they would do precisely the same thing. Where the returns show that the gain was below the threshold unless they had reason for suspicion they would not normally pursue it further, but they would have to engage in spot checks just as they would in other cases.
I would suggest that the amount of administration involved whether the figure in this section is in respect of gain or consideration is virtually the same. There is one other aspect of the administration that the Minister was inclined to argue would present difficulties and additional work. Presumably he meant the additional would be very substantial if the logic of what we are proposing here is so strong. I presume the Minister would not resist it unless he thought there was a great deal of work involved for the Revenue Commissioners in doing it. That refers to the area of administration which the Minister sees as follows: if you want to find out what the gain is you must know the consideration and the original acquisition price. One substracts one figure from the other to find out the gain. In any case in which the Revenue Commissioners would have to check up whether it is gain or consideration they would have to get precisely that information. They have to know the original cost and the cost of disposal. If there is any additional work involved for them it is subtracting one figure from the other. I do not think the Minister can seriously suggest that the obligation on the Revenue Commissioners to subtract one figure from the other is such that it would impose an enormous and unsustainable volume of work on the Revenue Commissioners. In other words, from the point of view of administration I am suggesting that the amount of work involved for the Revenue Commissioners is virtually the same whether the exemption threshold relates to gain or relates to consideration.
But, leaving that aside and looking at the merits of the proposal I do not think that it can seriously be suggested that consideration can be compared with gain as a measure of what should be done here in exemptions. After all, if one is trying to give an exemption, is one giving an exemption because in particular circumstances it is something that should be done socially? If that is the reason then should we not be concerned since this is a capital gains tax to ensure that the exemption is given in relation to a certain volume of gain?
As I have indicated earlier, consideration means nothing. You can have a relatively low consideration and a very high gain. You can have a relatively high consideration and a relatively low gain, but there is no social reason for saying that at a particular consideration you should give exemption at another. There is a very good social reason for saying that in certain categories if the gain does not exceed a certain amount that should be exempt but if it exceeds that it is getting into the big league and should pay capital gains tax. But, to say one should exempt in relation to consideration is approaching the matter purely from the point of view of the convenience of administration and without any regard whatever to the sociological implications of what one is doing.
I am therefore urging that for these reasons and so that one can control the amount of exemptions one is giving then the threshold should relate to gain and not to consideration. As I have said, since there may be an enormous variation in the amount of gain, quite irrespective of the amount of consideration, to give an exemption related to consideration means that you have no control at all; you do not know what amount of gain you are exempting.
The figure here for consideration is £50,000. It is quite conceivable that under that you could be giving exemptions in respect of a gain of £45,000. On the other hand, you could very easily in the case of a consideration exceeding £50,000 be applying capital gains tax to a gain which is only, say, £1,000. To me this does not make sense at all and it is abdicating the responsibility of achieving the real purpose of the exemption proposed in the section.
The arguments which were advanced by the Minister in relation to section 17 do not apply in this case. To suggest that from the point of view of the taxpayer it is simpler if he knows what the consideration is, he knows he is in or out, is too simplistic a view altogether, because he has got to know what the gain is; and if the Minister says he does not really have to know, if the Revenue Commissioners happen to pick on him as one of the spot check cases then he has to find out and, in any case, most people will know pretty accurately what gain they are getting in a transaction.
I would suggest that all the arguments are overwhelmingly in favour of operating this section on the basis of gain rather than consideration, that the administrative difficulties which could arise from doing so are minimal and therefore that the amendment should be accepted in relation to this section.
I repeat what I said at the beginning, because I do not want any red herrings raised in this regard: I made it clear on the Committee Stage and I am making it clear again on this that what I am doing in this amendment is trying to establish the principle that the exemption should be related to the gain, not to the consideration. I am not endeavouring to prescribe the level of exemption in relation to gain. The only person who can do that is the Minister with the information available to him. I do not want to have it suggested that I am trying to achieve an exemption in relation to £50,000 gain under section 26. I am not endeavouring to achieve that.
As Deputy Colley has said, this has been discussed on the Committee Stage and one would have hoped for a little more clarification. The Minister did not enlighten me before I got up to speak. In the absence of further illumination I must try to probe the matter myself.
As Deputy Colley says, there is no question of wanting to measure the gain and, as Deputy Colley also said, in order to come to a complete and reliable judgment in a matter of this nature one would require to have the information which is available only to the Revenue Commissioners and the Minister. Therefore, since I am not in the position of having that information I must be tentative. Nevertheless from the point of view of the Bill as a whole there does seem to be prima facie something here that needs reconciliation with the general principle of the Bill.
Last night when we were discussing another matter the Minister appealed to the principle in support of his arguments and stood on an alleged principle in regard to section 13 and it was necessary for me to point out that the principle that he sought to rely on was already modified by the qualifying subsection (2) of section 13. What is involved is gain and here, instead of fixing the thresholds or reliefs with respect to the gain, the fixing is done with respect to the consideration. As Deputy Colley pointed out, consideration and gain are totally different matters. I could carry out a commercial transaction such as is visualised in this Bill, a transaction the Bill is basically designed to cover, and I could make a small gain.
This Bill, if the Minister's philosophy is to be understood in any coherent sense, is primarily aimed at capturing big commercial transactions where gains are made and taking a percentage of those gains to the Revenue. It is very relevant then to understand that a transaction, the consideration for which was £1 million, may result in a large gain, a small gain, no gain or a loss. A transaction in terms of £1 million could result, for instance, in a gain of merely £5,000 and that is all that would be taxable. I make this point not with specific reference to the circumstances visualised in the section but to get at the basic point that consideration and gain are two totally different things, and that the gain is attached to the consideration to some extent in an accidental way and to take consideration as a measure does not bring any logical measure of gain with it. As Deputy Colley pointed out, a very clear example was given by him early on the Committee Stage. Speaking at column 1761 of Volume 280 of the unrevised Official Report on 10th May last, Deputy Colley said:
As an example, under the Bill as it stands, a person might buy a farm for, say £10,000 and might sell it for £45,000. The amount of the capital gains tax he would pay on the £35,000 gain under the Bill is nil. But, on the other hand, a person might buy a farm for £45,000 and sell it for £55,000 and be liable to capital gains tax on the £10,000 gain. This arises because the amount of the consideration is the criterion used in the Bill for assessing the basis of the capital gains tax.
That drives home in a very clear way not only the general point that the measure of consideration is not a measure of gain and, furthermore, within the specific contemplation of the type of thing here in the section, and directly relevant to the amendment we are discussing, clearly consideration is not a proper measure. That is the first point. I make it separately as there are flowing from that other considerations in this approach by Deputy Colley. Before coming to them I must repeat that it is realised that a certain amount of what I might call readjustment will be necessary if this point is taken. Again, I feel it is quite possible pressures have been on the Minister—and there is no doubt about it nobody will fault the Minister for his personal energy in dealing with this and other matters—but it would be a pity if rushing legislation of this nature through should result in blemishes in the legislation in question. Again, therefore, before going on to the corollaries that arise in relation to this, I would urge that we keep before us here in this Bill all the time what the purpose of it is. What is the principle both in regard to taxation measures and to the reliefs? If we do not do that we will be heading for the type of embarrassment I have discussed on previous occasions when considering the possible legal consequences, and consequences in court, of this legislation.
The question is why was this approach adopted. I am not altogether completely satisfied reading the Committee Stage debate—I do not intend to delay the House by reading all the relevant portions from the unrevised report and I would like to recall to the Minister that I did agree with him that, in order to assess the gain, you must know your consideration. My agreement with the Minister that far is on record. But that very point makes it difficult for me to believe there are administrative reasons for taking this approach. I do not want to repeat the long argument that took place on the other occasion as to the administrative difficulties in getting the information and what information is to be got. It is sufficient to say that the consideration is relevant because the gain cannot be assessed unless you know the two considerations. In order to do what the Minister wants to do you need the consideration also, and so I am at a loss to understand why for administration reasons one would prefer to measure the reliefs by the consideration rather than the gain. In fact, as in practically every other provision in this Bill, one has to ask oneself three questions. First, what is the motivating purpose behind this provision? Last night in another situation I asked the Minister whether his purpose was sociological or was it revenue gathering? Was it taxation? The Minister answered that it was both, and I accept that a consideration has three aspects to it—taxation, social policy and administration. These are the three. We must therefore, look at Deputy Colley's amendment in the light of taxation, social policy and administration.
As I was saying, every provision in this Bill has to be looked at bearing three considerations in mind: taxation, social policy and administration. Let us look at what is involved here in measuring these reliefs by consideration, instead of taking the norm and the purpose of the Bill as the measure as in other parts of the Bill, that is, taking gains as the measure, as is suggested in these amendments.
From the point of view of taxation, I do not know, and only the Revenue Commissioners can say, how much is expected to be caught. But if one has regard to all the provisions in this Bill, one can get some idea of the amounts of money the Minister wishes to capture. I would not be far out by saying he aims at capturing gains roughly of the order of £1,000 and upwards, which he considers worth while. I base that estimate on the fact that the measure of certain reliefs—and we mentioned this last night—was of the order of £500 and that there was resistance to an amendment which sought to exempt the £1,000 level. Perhaps I am not far off the mark if I suggest the Revenue Commissioners and the Minister are aiming to capture gains of £1,000 and upwards. I know, of course, that that is a very approximate estimate, and I am sure it has not been formulated anywhere but remembering what happened to the £500 last night, that seems to be a fair figure.
On taxation, taxation returns and exemption, and taking it that it is desirable to capture a gain of £1,000, let us take Deputy Colley's example. As the provision stands, the purchase price of a house might have been £10,000, the disposal price £45,000 and the gain £35,000. Here, Revenue are throwing away a substantial tax of roughly onequarter, approximately £8,000, a nice little sum. The Revenue Commissioners do not throw away large sums of money. I and other Deputies have commended them for their fairness but they have never been censured for foolishness. If they were given discretion in this respect, eyebrows would be raised, internally and externally. But that is precisely what the Minister would be doing in such a case, unless I am completely off-bean, in which case I can only offer the excuse as Deputy Colley did, that we are not in the Minister's confidence.
From the taxation point of view, for the man who bought at £45,000 and sold at £55,000—which would be a normal and probable price—there will be a gain of £10,000, of which £300 will be captured, which is below the exemption level. There appears to be a lack of logic here. Why? What underlying compelling motive inspires the Minister to choose consideration as the measure here rather than gains when, from the taxation point of view, on a very simple and probable example, we find the inescapable result in the case of two transactions, that the Revenue will automatically lose £8,000 and in the other case the whole machinery will be put into gear to collect £300, which is less than the general exemption limits and considerably less than the figure we wanted of roughly £1,000. From a taxation point of view what on earth is the reason for this? It can result in a peculiar type of anomaly.
So far I have dealt only with taxation. I still have to consider the matter from the point of view of social policy and the point of view of administration. From the point of view of taxation alone, one can follow up the line I am opening up now and ask oneself what are the possibilities for manoeuvre and evasion. Big gains can be made on sums under £50,000 and small gains can be made on sums over that figure. Perhaps the Revenue Commissioners see it in a different way. Naturally they are much better informed than I am and I am prepared to grant that they are wiser than I am, but there seems to be plenty of room for the cat to play among the pigeons. On the other hand, if you go for the gain, if you set your exemptions on the gain, you avoid all this.
I am still talking purely on taxation. Take Deputy Colley's example. If you go on the gain, a man may buy for £10,000 and sell for £45,000 —and this would not happen unless there were some elements that would normally be liable to tax—that will be captured, and £8,000 will be caught where the £35,000 was earned and £300 will be got on £10,000 instead of taxing the £10,000 for £300 and letting off the £35,000 scot free as it stands. From the taxation point of view, the Minister has something to look at here quite apart from the equity of the matter.
I also fear that a little imagination and ingenuity may enable devices to be employed which will achieve the type of result Deputy Colley pointed out in the most unexpected cases. This is the trouble with reliefs. I have the greatest sympathy and understanding for the Minister. I do not want to discourage him from giving reliefs in these matters. I do not want him to take what I am saying in any spirit but a desire to help him. I should like him to accept that. At the same time it is our job to tease this out. An Opposition can be of very little help to the Government if they do not do that. The Minister will have the superior information and resources to quote to us and we will rest satisfied if we feel we have done our job.
Looking at it as a taxation measure in its own right, there is a problem particularly with the principles applying to taxation law which I will not repeat as I have mentioned sections I many times on previous sections I should like to be given some very good reasons why consideration is adopted as the measure and not gain. I feel that anomaly may lead to abuse.
From the social point of view I anticipate—and in my anticipation I not only sympathise with the Minister but I laud him on his approach —that the Minister will tell us the purpose is to give relief to a familytype business on disposal to somebody to encourage the proper succession, to pass on productive wealth, and to enable a person to retire and not hang on for too long. For social and economic reasons the Minister can make a very good case for the principle of what he is doing and the reliefs he wishes to give. Not only is that understood and accepted but the Minister is entitled to credit and praise for this very proper approach.
Which we advocated originally.
In this case, and I hope in other cases, I am perfectly prepared to be as generous as I should be to say the least of it. I want the Minister to feel that I want to help him and I give him absolutely full marks for this. He will permit my analysis in that spirit. I wonder whether to some extent, again taking consideration as the measure instead of gain, a difficulty does not arise. It is clear what the Minister has in mind in this exemption. The term "qualifying assets" is defined in a later part of the section and I shall not delay the House by an analysis of that.
By taking a limit of £50,000 the Minister has in mind a small business. I am sure it was a consideration in his mind that it would probably be a disposal to somebody who would carry on the same type of business, or possibly a disposal to a relative. We need not analyse what the disposal is to be. The point is that it is to provide for the small business and to assess the tax on the large business. Tying it to the consideration has nothing to do with the gain. For this reason the Minister may find that he is actually encouraging persons to make disposals of a certain sort which might not altogether be desirable. For instance, when a person reaches 55 years of age there may be other social considerations which could be controlled by charging on gain, but where a real temptation arises if there are large gifts. I am worried that, over a period of years, situations can be engineered where, in the process of maturing, the assets can be distributed in such a way—when it comes to the age of maturity at 55—some interesting transactions could take place at considerable gain or adjustment. That might be spelled out if one undertakes a detailed analysis of this and a couple of other sections of the Bill. We have already dealt with it on Committee Stage; we are now restricted and I want to observe the Rules of Order.
If there are circumstances for the disposal of assets in certain places— local varying circumstances where consideration changes—then I wonder is one achieving one's social purpose? Again, one must take into consideration a number of provisions in the Bill. Here we get into interminable argument, with the Minister saying: "Ah, but this section will do that", and I come back and say: "This section will do the other thing." We cannot engage in such today. Therefore, I must make a general statement, being perfectly aware of the riposte that can come, knowing I shall not have a chance to reciprocate the riposte and, even if I did, there would be a further argument because we are now dealing with the Bill as a whole.
Perhaps I may put one idea as being relevant to this question. One's qualifying assets can be affected very much by one's environment, and the circumstances of the physical and commercial environment may operate in such a way that consideration is not the appropriate measure at all but that gains are. If that is so—just as in the case of taxation—so too, in the case of social policy, there may well be traps. I know what the Minister wants to do. Like Deputy Colley, I am in some difficulty here because I realise that a more radical adjustment than merely the amendment is involved.
I can understand the Minister saying: ‘Look, this amendment, by itself, will not be sufficient and I just cannot do it now." If that is his answer, it is a pity but I can understand it. Both from the point of view of taxation and social policy it would be preferable if the tax and the reliefs were fixed on gains. If the Minister wishes to exempt the very small man, then it would be simple to word it in such a way that where the gain accrued, in certain circumstances, a total exemption could be allowed. Though arguing vehemently for Deputy Colley's amendment, I find myself more than ready to understand the Minister's difficulty when this amendment is put to him. Nevertheless, we are highlighting what may be a serious blemish on the Bill.
I shall leave the question of the social purpose with the remark that the good social intentions may be capable of perversion just as is the taxation intention. I am sorry that one of my colleagues, who has a very intimate knowledge of small businesses in this city and their circumstances, is not present because I am sure he would be able to express, in a more concrete way, some of the things to which I have been referring in principle.
Lastly, there is the question of administration on which I touched at the beginning. If anomalies exist from the point of view of taxation, if there is any ground for my fears that the Minister's social approach could have unforeseen and undesirable consequences notwithstanding his proper attitude and intentions, it is a question of administrative convenience or necessity for the Revenue Commissioners? By the way, I see that Deputy Fitzpatrick has now returned to the Chamber and I am sure he will be able to elaborate on the question of small businesses in this city; what can happen; how capital gains can be made——
(Dublin Central): And losses over the past two years.
——with small businesses. I was making the point about the possible social abuse, in the temptation to use below the consideration threshold in a certain type of operation that would be socially undesirable and still result in capital gains.
To revert to my point on administration, surely the Revenue Commissioners—if I am correct in my limit of £1,000—if they have to have the information as they will, about consideration to operate this section, will have to have continuing information; information about the two considerations, the difference between which gives one the gain. I do not think any great problem is involved. I would be obliged if the Minister—I do not expect he will have an opportunity now but he will have one before he goes to the Seanad with this Bill—would consider all the points we have put to him. We are only helping the Minister to make this Bill a better one in this regard.
Debate adjourned.