(Dublin Central): Inflation or no inflation, there is only £5,000 that he can plough back into the business. That is no encouragement. If the figure were £10,000, £20,000 or £30,000, something positive, the person concerned could make up his mind to work the property on the basis that he could make a capital gain of a certain figure and on reaching the age of 55 that gain would be exempt because this was provided in the Bill. But according to the Minister that would present administrative problems and that is the important thing with all these Bills; it makes no difference what happens the taxpayers. To me what happens the taxpayer does matter, and I believe this Bill has the effect of damping down expansion—not just this section but various other sections which have the same philosophy.
In drafting a Bill such as this you should put yourself in the place of the person for whom you are drafting it. I do not say you should please him but at least you will get your thinking right. Recently, I was discussing the design of property with a man who was doing some building and I disputed the proposed layout. I said, as I am saying now, that he should consider the frame of mind of the person he was designing it for—it was required for a certain purpose. I believe the Minister had something in mind here but as it appears in this Bill it will not work for the type of person about whom I am speaking, the man who is in the last ten years of his working life and wants to retire with his wife and, perhaps, buy a small house by the sea and who only got the opportunity of going into business at 45 years of age because he was not financially able to do so earlier. Because of present inflation what business can be bought for under £45,000? There is no concession in section 26 for that type of person. When we take inflation running at 25 per cent into consideration we see that it would be easy for such a person, if he never ploughed back anything, to get £60,000 or £70,000 when he sold the business. It would have to make that much. As far as the Minister is concerned, inflation does not exist. There is no account taken of it in these Bills. The Minister should accept Deputy Colley's amendment. We are talking about gains. The Minister has brought in the word "consideration" because it suits him to bring it in. It reads well in the Bill.
A man who wants to retire at 55 may be under the impression that there are substantial exemptions for him in the Bill. There are exemptions for a certain category only. There are precious few for the type of person I am talking about. If he wants to retire at 55 and goes to his solicitor I can imagine what will happen. He will be told: "You bought the property for £45,000 and you are selling it now for £60,000." The man will say "I thought there was a concession for people retiring at 55 years of age." The solicitor will tell him: "Unfortunately under section 26 (1) you are only allowed up to £50,000." There will be many people very disappointed when they find out about this section as the years go by.
The more one goes through this Bill the more one sees the confusion that exists. If it is confusing for us here it is certainly confusing for people outside the House. It is quite obvious that the public will not understand the Bill or the other Bills, particularly the Wealth Tax Bill, in regard to the thresholds and the anomalies concerning two single people as against a married couple. The Minister refuses to accept that there are those anomalies. We are told about administrative difficulties. That is the important thing. The Minister does not mind about the taxpayer. He will not understand it anyway. He will think there is something good in the Bill. I believe people should be told exactly what those Bills contain and their implications. If the public knew what was in those Bills I do not think the Minister would have received the bouquets which he did receive when death duties were abolished. I thought it was a great thing until I studied the other Bills.
The Minister has failed to grasp the significance of Deputy Colley's amendment. A man retiring at 55 should be getting special reliefs in regard to capital gains but there are no special reliefs here. What happens if a person buys a business at £50,000 and there is no increase in value? I know of a business in this town that was offered for sale last week. It had been purchased for £175,000 and the owner was offered £120,000 for it. There is a consideration for you.
I have been speaking about farms. The same applies to businesses. A man going into business at 45 with the intention of retiring at 55 would be hoping to build up a little nest egg in the ten years. If he looks at section 26 (1) of this Bill it will not encourage him to expand to any extent. A person in business may work until ten or 12 o'clock at night. How does one measure that type of work in money? It is very difficult for the Revenue Commissioners to assess it. Many business people have to work 15 and 16 hours a day. The smaller the business the longer the hours because in a small business it is not profitable to employ a large number of people.
If the section were worded properly and if it were specific we could say to that person that he could plough back his profits into the business and that he would be rewarded in the long run for the time he has spent in it. The section is not specific. He will be told that once he sells his property and its value exceeds £50,000 he will be charged capital gains tax. In those circumstances the person will reconsider his philosophy. If I met him in the morning I would tell him exactly what his situation will be if he puts his time, energy and money into the business and intends to retire at 55 years of age. There is no provision in the Bill for inflation. It is important in the context of any Bill to tell the people the truth as to what it entails. I would tell the person who purchased property for £45,000 and is now 45 years of age and intends to retire at 65 years of age what his position will be under this Bill.
The time spent by a man in his business is of great importance. We know how much has to be paid per hour to an employee. Very few business people put a sufficient value on their time. They draw a weekly salary from the business, enough to keep them going, and the rest goes back into the business. If the average businessman were to draw his salary according to the hours he spends in the business the business would not survive, he would be closed down by the bank manager within a very short time.
If I were drafting a Bill I would encourage businessmen, at least in the last ten years of their working life, to expand. It is only by encouraging expansion that the economy can be uplifted. There is discouragement inherent in this Bill and in the other capital taxation Bills. The businessman should be told that if he expands and ploughs back money into the business he will be rewarded. If I were Minister for Finance I would encourage expansion on the basis that it would build up the economy and create more wealth and ultimately produce revenue and provide employment. That is what we must try to do. That is the direction in which we must proceed Instead, there is a negative approach, a socialistic approach, as if it will work. It will not work, and that is becoming more obvious every day.
I appeal again to the Minister to make at least this small gesture. It is very small but at least it will show people where they stand. The man whom I have specifically referred to, at the figure I have mentioned, £45,000, will know that there is something in it for him, some encouragement to work and to plough back his reserves.
As a result of this Bill people will not reinvest money. I can visualise business people taking the easy way out. They will take weekends off and play golf. The people who spend their time building up industry are the people who will uplift the economy. It will be a bad day when we all work from nine to five, take full salaries and wages out of businesses and spend it.
The Minister is bent on a socialistic policy which is alien to our way of life, which is undermining confidence throughout the business community. Ask the IDA what they think about confidence being undermined and the effects on the inflow of capital. Ask any businessman what he thinks about wealth tax. He will tell in no uncertain fashion his opinion of the wealth tax and the detrimental effect it will have on economic expansion. These are the people one should talk to when drafting Bills.
I am not against the speculator being taxed, but the Minister has the highest regard for the speculator as against the genuine working person. The section comes down in favour of the speculator. If he acquires property and acquires four acres of land and holds it for ten years without working it or fertilising it, providing he comes within the specified period of ten years he will be able to make a profit of £40,000 if he sell it for a consideration of £50,000 having paid £10,000 for it. The Minister is giving the speculator the very same concessions.
We put forward amendments in the early stages of the Bill which would give concessions to a man who had spent a considerable length of time building up his assets. We wanted to give relief on a sliding scale according to which the stage would be reached where he would be exempt after 13 years. The Minister said "No". He is treating the shortterm speculator, the fly-by-night man, with the same leniency that he would apply in the case of the genuine Irishman. He is treating them both equally.
