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Dáil Éireann debate -
Thursday, 24 Jul 1975

Vol. 284 No. 3

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

Debate resumed on amendment No. 4:
In page 4, line 19, to delete "1975" and substitute "1976".

Cavan): I should explain to the Ceann Comhairle that the Minister for Finance is engaged at present with Commissioner Thomson, I understand, and will be along as soon as possible.

Just before we adjourned I was explaining that the object of this amendment, effectively, is to have the first valuation date for wealth tax occur on 5th April, 1976. I was drawing attention to the fact that that is what the Government indicated would happen in the White Paper. The White Paper at paragraph 93, read:

The wealth of the taxpayer would be valued on, say, the last day of the tax year, at present the 5th April

and there was a statement on page 60 of the White Paper which read:

Annual Wealth Tax: The date of commencement will be 6th April, 1975.

The only reasonable interpretation of the White Paper, and as I indicated earlier the way in which it was interpreted, was that the first valuation date would be 5th April, 1976. It is an annual wealth tax. For obvious, technical reasons it must be charged on the basis of the wealth on a particular day in the year and as indicated in the White paper, the likely valuation date would be 5th April, which is what the Bill provides. What the Bill does not provide though, and what was indicated in the White Paper, is that the commencement date for this annual wealth tax would be 6th April and, therefore, that the first valuation date would be 5th April, 1976. This Bill provides the first valuation date as the 5th April, 1975. Therefore, the wealth tax is being introduced a year earlier than was indicated in the White Paper. The consequences of that have included long sittings of the House, a guillotine motion, considerable strain on the staff of this House, problems for potential taxpayers who will, when the Bill is passed, be legally liable for wealth tax from 5th April last; with all that that entails in the preparation of valuations of their wealth for the purpose of the tax— and inevitable strain on the staff of the Revenue Commissioners in setting up the operation of the tax a year earlier than was indicated in the White Paper.

Why the wealth tax should have been introduced a year earlier than was indicated in the White Paper is something of a mystery. I have merely been indicating some of the consequences. When one considers the state of our economy at present, it becomes even more of a mystery. I doubt if anybody on the Government benches would contend that this is an auspicious time for the introduction of a wealth tax even if they believed in the whole principle of a wealth tax in our circumstances. That being so, the mystery of why the Government have brought forward the introduction of the wealth tax by one year deepens.

The purpose of this amendment is to operate the Bill in the way that was indicated by the Government that it would be operated. On earlier stages we sought to get the Government to agree to carry out what they said they would carry out. So far they have not agreed. There is every reason why this amendment should be accepted because, apart from the Government's statement and the impression that created in the mind of anyone who read the White Paper and apart from the economic difficulties, in view of the other difficulties which present themselves in the operation of a new tax such as this is, it would be reasonable to expect that there would be some interval allowed after the Bill had been enacted to enable people—not just taxpayers and their advisers but the Revenue Commissioners—to evaluate what was the content and effect of the Bill as enacted. No such interval is being allowed in the timetable the Government are now pursuing because the Bill will go through the House, according to the guillotine motion, on Wednesday next. It will then go to the Seanad where, no matter what points are raised or what discussion takes place, it must be passed within 21 days.

(Cavan): It did not take 21 days to pass the Capital Gains Tax Bill.

I know that. I am speaking about the maximum time. Maybe the Minister would like the Seanad simply to rubber stamp it and pass it in an hour. No doubt, if the Government are prepared to use the guillotine, that could happen.

(Cavan): The Opposition did not give much time to discussing the Capital Gains Tax Bill in the Seanad.

What point does the Minister make of that?

(Cavan): I am making the point that if the Seanad deal with the wealth tax as quickly as they dealt with the capital gains tax, they will not hold up the Bill too long.

Let us assume, for the purpose of the Minister's argument, that they pass it in one day. It will then become law some time early in August with a provision in it that people are legally liable for payment of wealth tax on 5th April last. Is the Minister aware of that fact? It is no answer to say that he has introduced an amendment to say you will not have to pay interest on tax outstanding if you pay it before 5th December. The idea of saying in a Bill enacted by both Houses of the Oireachtas that tax is legally due and payable months back is just nonsense. It would never have happened if the Government had adhered to what they said they were going to do in the White Paper.

This amendment is seeking to get the Government to do what they said they would do in the White Paper which, given that one is going to have a wealth tax, would have been a reasonable approach, an approach which would have allowed a reasonable opportunity to everybody concerned to study the enactment and to prepare for its operation. It would have allowed the Revenue Commissioners, who are already overburdened, to gear themselves up to the administration of the wealth tax. That is not being done in the Bill as it stands. The only way it can be done is by acceptance of this amendment.

We gave the Government an opportunity before this to mend their hand in this regard. They are now getting another opportunity to do so. If the Government fail to avail themselves of that opportunity, then the responsibility for what ensues will rest clearly on the shoulders of the Government and no one else. Furthermore, people can judge for themselves why the Government should have decided to rush this Bill through and implement it one year earlier than they said they would in the White Paper. It is up to the Government to choose which way they want this to eventuate, which decision they want the people to arrive at as to their motives. In this amendment I am giving an opportunity, probably the last opportunity, to the Government to mend their hand in this regard. As I indicated, if they do not avail themselves of it, the responsibility is clearly on the shoulders of the Government and nobody else.

As on the previous amendment, I do not wish to repeat Deputy Colley's arguments in a parrot-like way though I support them. I want to put them in a slightly different form. Deputy Colley has quite rightly based his case in the first instance on page 60 of the White Paper on Capital Taxation laid by the Minister for Finance before each House of the Oireachtas on 28th February, 1974. In that official document the question of capital taxation was analysed. There was a foreword by the Minister for Finance. Various parties were invited to make recommendations not later than the end of June, 1974. June, 1974, was about nine months before April, 1975. On that point, we all know how long it takes to deal with representations. We have had plenty of experience in this House of the delay involved and the time it takes to provide for legislation.

Having regard to the novelty, the scope and the likely volume of the subsequent legislation, that nine months—the minimum time to consider the legislation in question— seemed to anyone who knew about these things to be rather short, that is, always assuming the Minister was serious in inviting representations and was willing to consider fully and give due weight to representations, that he was not just bluffing people and telling them to send in their recommendations and then virtually putting them in the wastepaper basket when they came in.

The point I am making is that the indication in the foreword was that it would take some time to prepare that legislation after the date in June. As I have said, the proposals were novel and far-reaching. We then come to page 45 of the same Government document and it says in paragraph 93:

The wealth of the taxpayer would be valued on, say, the last day of the tax year, at present the 5th April. As a fixed annual date invites evasion, safeguards would be introduced to protect the tax base from artificial depreciation of the market value of assets.

That is a most material paragraph in respect of what Deputy Colley is urging. It says: "at present the 5th April" and there has never been any suggestion of an immediate change of that date. In fact, in changing the law not so very long ago in regard to the financial year the tax difficulties were such, if I understand the picture correctly, that the tax date could not be adjusted to the end of the calendar year as many other things were, including rates. It was this Government who made the adjustment in regard to rates.

Right through the debate it has been clear the 5th April stands and that being so nobody could be under the illusion that the tax date was to be changed from 5th April notwithstanding the use of the words "at present the 5th April". On page 45 of the Government's own White Paper there is the statement that the wealth tax would be valued on, say, the last day of the tax year, at present 5th April. It would be valued on 5th April as, indeed, the Minister proposes to do. This is a material consideration. Anybody reading that would say that the tax date was as it is, 5th April.

The safeguards to protect the taxpayer from artificial depreciation of market values of assets is mentioned there, but, of course, that was done, amongst other things, by the warnings given. No argument can be made out of that warning because that warning synchronised with the date of the issue of the White Paper and nothing could be read into that warning. It was simply a warning that said: "Now you have got notice of what we are going to do, from the time of this notice the intention will operate." The warning gave no indication whatever of date. The fact that it was synchronised with the appearance of the White Paper deprived that fact of any significance as to when the tax was to come in. The Minister cannot invoke that point to qualify the argument I am basing on paragraph 93.

On page 60 the final paragraph reads:

The date of commencement will be 6th April, 1975. The new system of capital taxation will, therefore, be fully operative from the tax year 1975-76.

The Minister is jumping because he thinks he has the answer but he has not. The words used are: "from the tax year", and a year is a year. If the Minister wants it we can argue whether it is from the beginning of the year or from the end of the year. That argument can be answered by the argument we are making about 6th of April, the date of commencement.

The point is that anybody reading this paper would come to the conclusion that the tax assessable on 5th of April would be assessable at the end of the financial year in question. That is Deputy Colley's point. He holds that it should, therefore, be on the 5th of April, 1976 which would be the last day of the financial year 1975.

Firstly, we had the Minister's foreword. Secondly, the paragraph on page 45 "...would be valued on the last day of the tax year..." and that would be 5th April, 1976. Lastly, the 6th of April, 1975, would be the first day of the year in question. In other words taking the 6th April, 1975, that could only be 5th April, 1976, as the first day of the year, as would be the custom, and taking the last day as 5th April, that would correspond to what is in the White Paper.

That, in a nutshell, is the case Deputy Colley has made on the White Paper. It is a fair case that the capital taxation will be fully operated from the year 1975-76. I do not think that is a strange interpretation. This argument cannot be brushed aside by saying: "What is in a day?" It is not what is in a day; there is much more involved in it than that. It is what is in a year. Deputy Colley has given reasons about the time factors and the uncertainties.

Firstly, I want to get that argument clearly on the record to test the credibility of Governments for the future, and the present Government in particular. I do not want to use the word "credibility" in a pejorative sense; I want to use it in the simple meaning of the word. I do not want to use it in the sense of vulgar abuse. The Minister for Finance has more than once on Committee Stage claimed when we were making an argument that the people who would be concerned would be mainly people who knew what it was all about and who would have readily available expert advice. Let me take the Minister for Finance up on that. Deputy Esmonde may have a different opinion to mine, but would one fault an accountant or a barrister who might be more cautious and suspicious? Would you fault an accountant who read that White Paper and said to a client: "You had better get ready for this, certain things are fixed as of 28th February, the day the White Paper was issued but reading the Minister's foreword, people have up to the end of June to make representations." Could one be faulted for saying that page 45 says it will be the end of the tax year and the tax date, for all we know—there is no sign of it being changed—is 5th April, the last day of the financial year?

The custom is that tax is assessed at the end of a year. Would you fault an accountant, a solicitor or even a barrister—who, from training and wide experience normally is conditioned to being suspicious—would you blame any of these men, much less the knowledgeable client the Minister for Finance has so often postulated, for coming to the conclusion that the first time tax would be payable would be on the 5th April, 1976? Would that be an impossibly rash or mistaken view of the White Paper? We have given our interpretation here. But I submit to the Minister that it is not to be brushed aside with the facile answer "what is in a day?"

The sentence that the system of capital taxation will therefore be fully operative from the tax year 1975-76 cannot be used to refute the argument. I will read that sentence again. "The system of capital taxation will, therefore, be fully operative from the tax year 1975-76." There are two words to be noted in that—"from" and "fully". The tax year 1975-76 ends on the 5th April, 1976. Can you blame anyone for saying that taxation will be fully operative from the end of that year? What does the word "fully" mean? We have already had capital gains tax, which is operative in the year 1974-75. The capital acquisitions tax will be operative and would have been expected to be operative in the current year 1974-75. These Acts were going to be operative anyway from the 28th February, 1974. Under the notice given the Act was partly operative from the 27th February, 1974. The capital gains tax, of its nature, could be expected to be operative during the year 1974-75. The capital acquisitions tax could be expected to be operative in that year also, because nobody in their senses could expect a complete moratorium on death duties for a year.

In spite of the marginal note in the Finance Act that death duties are abolished; estate duty was suspended but, from the 5th April, 1975, legacy duty, or whatever one likes to call it, death duties in another form, continue. If there is any doubt about it I have that document which was circulated to solicitors bearing out what I mentioned this morning. I can quite understand the Minister saying to me: what are you at? I am at a very simple point, the meaning of the word "fully". If the new system of capital taxation was to be fully operative in the year 1974-75 why say it will therefore be fully operative in the year 1975-76 as is said in this White Paper? The whole system of capital taxation is already partially operative in the year 1974-75. It is partially operative in the current year 1975-76. It will be fully operative only from the tax year 1975-76. I have made the point that "from" means from the end of the year. If I say it is such and such a distance from a certain road I normally mean from the end of the road nearest me. In the same way, if I say from a period of time the normal meaning is that it is operative from the end of that period of time.

In fact what that sentence means is that this system of capital taxation will not be fully operative until the end of the current year, the year 1975-76. If all the provisions entailed in the capital acquisitions tax and capital gains tax are legally fully operative in the current year, and even if parts of them were not, certainly it is a fair assumption that this sentence indicates that it was visualised that some part of this legislation was not going to be fully operative in the current year. On the terms of the Wealth Tax Bill, and with the explicit statements on pages 45 and 60 of the White Paper, it was a very fair inference that the reference to the part that would not be fully operative was the wealth tax.

I am trying to present the case, the White Paper, on a factual basis. I want to present Deputy Colley's point in a logical and legal way. This White Paper goes to the credibility of the Administration in this matter.

In repetition and summary, the Minister's foreword signed "Richie Ryan", dated 28th February, 1974, on page III; the statement on page 45 I have quoted; the statement on page 60 to which Deputy Colley adverted more than once, and that I have now parsed in its context. I affirm and plead that that would have left any responsible adviser in the position of expecting that the date on which the burden would become operative or the wealth tax would become fully operative would be the 5th April next, not 5th April, 1975. That is not a trivial argument. The consequences are serious for all concerned. They are serious for the Revenue Commissioners administratively, no matter what one can say. One can lay the best plans in anticipation but we know, and I am sure the Revenue Commissioners and the other Departments of State have all had experience of this, it is very hard to get work under way and to reach finality until you know essentially what you are catering for.

There have been many amendments to these Bills. It would be asking too much of the Revenue Commissioners, even with their computers and with the relief that they are expecting in the estate duty office. That is slightly illusory; it will be simply transferring their activities. They do not yet know precisely, though I suppose they know perhaps 90 per cent, what they are up against, but that psychological factor is there among the staff, and when the flag comes down they will be up against all these problems familiar to those of us who have had to organise a project.

It is just like a political party when it comes to an election. There could be talk about a general election for months before with everybody preparing, but it is only when the Taoiseach comes out and says that the Dáil is dissolved that one goes into action. It is amazing the amount of work that perhaps could have been done beforehand that now has to be done.

From the point of view of the Revenue Commissioners, and the taxpayers this is a hurried measure and it will lead to errors and errors will lead to more trouble for the Revenue Commissioners. It will lead to disputes about interest, genuine mistakes, evasion, how to distinguish which is which and so on.

When I used the word "credibility" I did not do so in a pejorative way. What I am urging the Minister is to realise the necessity for good faith and, even at Report Stage it is not too late to make the necessary amendment when it is appreciated what is in this.

That is the case presented as I have presented it and there is no need to go back on what Deputy Colley said. The principle of making a tax legally due and payable months before the legislation is imposed is something that has to be done when notice is given in order to avoid evasion. I have no quarrel whatever with the restrictions that were put on when notice was given on 28th February. When you go beyond that it is a very undesirable development in taxation to introduce at the one time extensions of the liability to assess oneself, extensions of the penalties through interest bearing, and then to add to that an extension of the idea that you can create a tax liability retrospectively.

These things are bad in principle, and when they are bad in principle they will inevitably lead to various difficulties. Remember we are not living in the old days, we are living in an unstable world. To quote Deputy Colley, we are imposing a tax legally due and payable months back after the passing of this Bill. There is food for thought.

Deputy Colley said that there was a bit of a mystery about the rushing of this legislation. Here I am going to be frankly political, as I am entitled to be. Everything I have said on this amendment to date was meant to be helpful, constructive, objective, a fair, intelligent legal interpretation of the situation—the type of thing that if I were wearing a wig I would present to the court. That was my approach. Let me, so to speak, now take off my wig and put on another hat and become the politician. If I am the politician I can give a pretty simple answer to the mystery that Deputy Colley finds in this. The mystery is simple. Capital gains was a popular political name: people were worried about the nice little sums of money that speculators made. That Bill then could be called what it was called.

In the deliberately political misleading marginal note, to the first Finance Bill, we had a Minister and the Government adumbrating the phrase "abolition of death duties" when it was, in fact, a suspension of estate duties. I am giving full credit, as I said on that Bill, for the great improvements and I am in favour of a lot of that legislation. The Government did themselves a disservice in what they did there; instead of calling that Bill what it was, they called it by the grand name of Capital Acquisitions Tax Bill. Fair enough; it is just a little political gimmick. They wanted to pretend that they abolished death duties. They did not, and to my mind they did themselves a disservice because they gave fairly good reliefs. They are arguing a very good thing and for the life of me I cannot see why they did not bring in that Act.

Wealth tax sounds good. It is a great name, it is a catchword. They call this a wealth tax when it is really a property tax. I suspect that the rush is a political one. I see no mystery. It is a political point to pretend and say, "we are going to tax all the rich people. The money we collect will contribute to our economic and social welfare." The fact is there will not be very much money. The Minister has not told us if that is so, but my guess is that there will not be much money. There are not as many rich people in this country to be made the objects of this scapegoat exercise as some might think. It is being rushed in as something that looks well. Instead, it will cost a lot of money; it is at the wrong time; it is not achieving its purpose properly, and we, on this side of the House, are all for taxing non-productive wealth. The Minister would be shoving an open door. He has had our arguments about its repercussions on employment and productive wealth. As far as taxing the non-productive and luxurious wealth and so on, we are all with him. We want to know why he has to rush it in at this moment, when it is not going to do anybody any earthly good in the present financial year. Its administration will be complicated and costly. It will be responsible for individual injustice, errors and so on. With that political plea, I supplement the quasi-legal presentation of the points made earlier by Deputy Colley.

(Cavan): A wealth tax is an annual tax in the sense that it is paid once a year. It is not an annual tax in the sense that income tax is. The difference is that income tax covers a person's income or earnings for the entire tax year and therefore the entire year is relevant to the amount of tax payable. Wealth tax is different. It is payable and leviable in respect of wealth which is taxable and in the possession of the taxpayer on a given date. It is important to note that in so far as wealth tax is concerned, one day only in the year is all-important with, admittedly, certain devices for dealing with avoidance. One day and one day only is important in regard to the payment of wealth tax.

The White Paper said, on page 60— and it has been so quoted by the Opposition—that the date of commencement will be the 6th April, 1975. That is simple language. The date of commencement means the date on which a person will be taxable in respect of wealth tax. I repeat, a person is not taxable in respect of 12 months, but in respect of one day. Then, admittedly, one is not troubled again until that day 12 months. But if a person has £200,000 in his possession on the valuation day, 5th April, 1975, he is liable for wealth tax on that date.

This is in the year 1975-76.

(Cavan): Yes, he is liable for wealth tax if he has in his possession and owns £200,000 on the 5th April, 1975. Irrespective of what he does with himself or with his money between that date and the 5th April, 1976, he will be taxed on £200,000. If he is a gambling man, goes to the Derby in June, 1975, backs the favourite and gets himself £400,000 or £500,000, he will still only be taxed on the £200,000, subject to exemptions and thresholds, which he had on 5th April, 1975. Or, if he is not so lucky and disaster befalls him, and he again goes to the Derby and loses his £200,000, or the greater part of it, he will still be taxed on the £200,000 he had on 5th April, 1975. Therefore, there is no point referring to the tax year, and saying that because the tax year was to commence on the 6th April, 1975, that that is referable to the tax year 1975-76, and the whole year is to be taken into consideration. There is only one date here, and the date specified in the White Paper was the 6th April, 1975. Admittedly, there is one day sooner, the 5th instead of the 6th——

Is the Minister saying the paper is contradicting itself?

What is the reason for the difference? There must be a reason.

(Cavan): I did not interrupt Deputy de Valera.

The Minister interrupted me.

I beg the Minister's pardon for interrupting.

(Cavan): I am saying that this is an annual tax only in the sense that it is payable on one day in the year, and I have demonstrated that that is the date which counts, irrespective of what the position is a couple of months after that.

(Dublin Central): An annual tax all the same.

(Cavan): In the sense that it is payable once a year. In order to understand what is involved here and to see the reason why April, 1975, was selected, we must understand that, as the White Paper said, this was one of three taxes that was being introduced in substitution for death duties. About that there is no doubt. Sometimes it is said by the Opposition that the Capital Acquisition tax was the tax introduced to replace death duties. Death duties were a crippling tax.

I am not going to go over the whole thing again. The person concerned here with £100,000 would be liable to £41,000 taken in death duties. If he had £200,000 he would have over £100,000 taken in death duties. That was appreciated by this Government and that was appreciated when the White Paper was published and when the legislation was being introduced. It is stated in black and white the Government have decided that, if these objectives are to be achieved, the three existing death duties—namely estate duty, legacy duty and succession duty—must be abolished and replaced. —I invite the Opposition to note carefully, replaced—by a capital gains tax, an annual wealth tax and a capital acquisitions tax. There we have the proposal in the White Paper as clear as ABC to replace death duties by inter alia the wealth tax. Replacement does not mean in ordinary language that you do away with death duties this year and replace them with another tax in 12 months time. The ordinary man in the street understands by replacement that you do away with one thing and, at the same time, replace it with another. That is what was done here. That is as clear as anybody can put it and the White Paper said that clearly. The people were glad. Estate duty was abolished as from the 31st of March in respect of families as promised by the Government.

There is no use Deputy de Valera saying that it was not replaced, because it was replaced. Death duties is defined in legislation as meaning estate duty, legacy duty and succession duty. Those three types of duty were abolished as from the end of March of this year. The Government promised that, when it did that, it would replace those taxes by inter alia a wealth tax. That is the reason that the wealth tax came into operation early in April of this year. I do not believe that anybody was or has been deceived by the White Paper. I honestly believe that this whole argument is a political argument. First of all, there was a demand throughout the summer and autumn of last year, following the publication of the White Paper, that the Wealth Tax Bill be introduced immediately so that the people could see where they stood.

(Dublin Central): I certainly did not see that.

(Cavan): There was a general demand. There was pressure on the Government and there were representations to the Department to publish the Bill so that the people could see where they stood. If the White Paper meant and, was understood to mean, that it was not going to come into operation until 1976 what was the hurry? There was none. Furthermore, we know that private non-trading companies are taxable entities without thresholds. If the White Paper meant that wealth tax was not going to come into operation until April, 1976, what was the rush about dismantling and liquidating these private non-trading companies? There was a hurry and a rush and a great many of them were dismantled, liquidated—call it what you like—last year in anticipation of the introduction of the wealth tax in April of this year. That is why I say that this argument is a political argument. It is not alone a political argument, it is an afterthought.

The Minister, I think, was explaining the difference between the two references, 5th of April and 6th April.

(Cavan): I am not going to get——

No, but we are waiting to hear the explanation.

(Cavan): ——mixed up on the date. When the Opposition put forward the argument that the White Paper means that the wealth tax was to be introduced in April of 1976, and when the Government say that the White Paper clearly meant that it was to be introduced in April, 1975, the reasonable thing to do is to look for independent corroboration. If independent corroboration is available on one side or the other it should bear considerable weight and should be accepted as tipping the scales one way or the other.

Would the Minister accept that independent corroboration?

(Cavan): I am putting forward my argument.

I will give it to him.

(Cavan): I have my independent corroboration here.

So have I.

(Cavan): I have the book of Sanford, Willis and Ironside, who went to the trouble of studying the White Paper, these three authors also went to the trouble of writing a book on capital taxation. They say in Chapter 3:

The Republic of Ireland is committed to a wealth tax planned to commence in 1975. The main outlines of the proposed tax are available in the Irish White Paper on capital taxation as modified by ministerial statements.

Then you have a footnote. It gives their authority for that: White Paper on Capital Taxation February, 1974, modified by a statement of Mr. Richie Ryan, Minister for Finance, on the 15th of May, 1974.

Could the Minister give the exact title?

(Cavan): An Annual Wealth Tax, Sandford, Willis and Ironside. I am quoting from chapter 3. That is the interpretation that this textbook——

That is the same as the White Paper. In 1975 they say it is going to commence. That is what the White Paper said. Do not be arguing about what the White Paper says.

(Cavan): Would Deputy Colley come off it? Deputy Colley says——

Quote that again now.

(Cavan):

The Republic of Ireland is committed to a wealth tax planned to commence in 1975. The main outlines of the proposed tax are available in the Irish White Paper on capital taxation as modified by ministerial statements.

That is what the White Paper says too.

(Cavan): That is what we are doing. If you turn to page 303 of the same book you will see that the tax is proposed to commence in 1975. Of course, that is commonsense.

(Cavan): It is, and that it what the Act says.

No, it is not.

(Cavan): It is.

What tax year? Is it not 1974-75? What tax year is it?

The Minister should be allowed to speak without interruption.

There is every point in it. The Minister is now trying to bluster his way through.

(Cavan): I know who is blustering. I am making a reasonable case by reference to a published authority. It is Deputy Colley who is blustering. Deputy Colley is interrupting and blustering across the House because he sees that he is caught and that his argument is shot down. There is no use in talking about a tax year in respect of a tax that is payable on a certain date.

The White Paper talks about it.

(Cavan): It does not. There is no sense in talking about a tax year when referring to a tax which is payable by reference to one day in a year, and one day only.

(Dublin Central): Is that in the White Paper?

(Cavan): Of course it is.

May I ask which capital taxation the Government are introducing is payable on an annual basis? They are all payable in relation to a particular date but it says: "the tax year 1975-76". Would the Minister make up his mind? Is he going on what is contained in the White Paper or is he making a new case?

(Cavan): This is not like Deputy Colley. He is usually a reasonable man and prepared to conduct a debate in a reasonable manner. His behaviour now suggests to me that he is rattled. I do not blame him for being rattled because he is caught out. The capital gains tax is payable by reference to the gains of a person in a particular year.

On a particular day?

(Cavan): No, over a particular year.

But if the gain arises on a particular day?

(Cavan): The tax is payable by reference to the gains over a particular year.

It is not paid annually. Would the Minister agree with that?

The Minister must be allowed to make his contribution without interruption.

(Cavan): There is no justification for harping on a tax year when there is only reference to a certain date. Even though I say so myself, the reference to the man with £200,000 on 5th April, 1975 and the fact that he either made or marred himself on Derby Day did not in the slightest affect his liability for wealth tax in that year, demonstrates that this is not a tax which is referred to in relation to a whole year. It is a tax referred to in connection with a person's wealth on a certain date.

The Opposition obstructed the passage of this Bill through the House——

(Dublin Central): If we had been given time we would not have obstructed it.

(Cavan): ——and wasted their own precious time, if the Bill is as serious as they thought. They wasted time on Committee Stage to the tune of 20 hours on section 2. They have wasted their own time and the time of the country because they, as an Opposition, are the watchdogs of the country. They are wasting time on this particular section, which is a broad section. They will leave themselves with no time for the remainder of Report Stage. If they have decided on that course of action I cannot help them. They must be judged by the country.

Because they did that I introduced an amendment, first of all, extending the interest-free period, which was originally three months from the valuation date. It was then extended to October. I extended it further up to 5th December to take account of the particular circumstances in this year. The position is as I have stated. First of all, 6th April, 1975 is mentioned and paragraph 45 is only a discussion paragraph. It says:

The wealth of the taxpayer would be valued on, say,

It goes on to say the last day of the tax year. That is only by way of example. There is nothing sacrosanct in that.

But that is what is done in the Bill?

(Cavan): No, it says: “Take for example in the White Paper.”

But that is what is done.

(Cavan): Yes, and we make that the date. Anyone would think to hear the Opposition talking that this was something hard and fast which was written into the White Paper. It is only by way of example and explaining to the people how wealth tax works. First of all, there is that and then the statement on page 60 that the tax will commence on 6th April, 1975. There was a great demand for the Bill in the summer of last year so that people could examine it and know where they stood. Then there was the dismantling of the unfavoured private non-trading companies so that they would not be caught for tax in April, 1975. This tax was introduced to replace death duties which the Government undertook to abolish and did abolish as from the end of March. Deputy de Valera made the point, which I accept, that the last date for representations in regard to this Bill and the other Bills was June of last year, so that progress would be made on the drafting. There are all those things coupled with the statement by Sandford, Willis and Ironside that the tax was commencing in April, 1975.

No, they said "commencing in 1975". That is what the Minister quoted.

(Cavan): They said: “will commence in 1975”. If Deputy Colley were correct that would not be so. It would read 1976.

(Cavan): It would of course. It is the valuation date that counts, not any other date. If what Deputy Colley is contending is right it should read 1976. All the indications received, the demand for the Bill, the dismantling of the private non-trading companies, the last date for representations, June, 1974, the statement in the White Paper that the tax commences on 6th April, 1975, and the statement in this published authority, all indicated clearly that the tax would operate as from a valuation date in April, 1975. Nothing could be clearer.

I know the Minister in his political experience and I would imagine also in his professional experience on occasions, has had to make the best he could of a poor case. I doubt if he has ever had as difficult a task as he has had just now. I pay him the tribute that he did it very well considering the poor quality of the case.

First, the Minister said that since we are arguing one thing and he is arguing the other, an independent view of the situation should tip the scales. He then proceeded to quote what he said was an independent view—I accept it as independent but what did it say? It said that the wealth tax would commence in 1975. That is exactly what the White Paper said. The date of commencement would be 6th April, 1975. The argument he quotes does not help him. I will refer him to an independent view of the situation.

I received and I think every Deputy in the House received representations in regard to the Wealth Tax Bill from the Irish Farmers' Association. If the Minister looks at that, he will find precisely made in that the very point about the reference in pages 45 and 60 to the 5th April and the commencement on the 6th April. There is no doubt as to how they read it or how very many people who are interested in wealth tax read the White Paper. They could not read it in any other way no matter how the Minister tries to gloss over its significance.

The Minister said he would deal with a particular point which he did not deal with. I reminded him of it and again he did not deal with it. It is significant that he did not. That is the fact that page 45 refers to the valuation date as being likely to be the 5th April and that page 60 says the commencement date will be the 6th April. The Minister said that the commencement date being the 6th April meant that would be the valuation date. If that is true, then there is a contradiction between page 45 and page 60 of the White Paper. I invited the Minister to comment on that and explain his view of it. He did not. He avoided it very carefully and for a very good reason.

He knows as well as I do that the White Paper can mean only one thing. It said the valuation date was likely to be the 5th April as, indeed, it has turned out to be in the Bill. It said that the commencement of the wealth tax which it describes as "annual wealth tax" will be 6th April, 1975. It did not say the 5th April, the 26th April, or 4th April. It did not say April. The Minister tried to suggest on another occasion that there was no difference between one date and another date in April. There is a difference between the 5th and 6th April of one year. That is the difference. It is the difference in the tax year, and no amount of glossing over this by the Minister will get over the fact that the White Paper clearly said the annual wealth tax would be commencing on 6th April, 1975, and that the valuation date was likely to be 5th April in each year.

If the annual wealth tax commences on 6th April, 1975, and if the valuation date is 5th April, which 5th April can it be referring to? The one before the commencement date? Is not that impossible? The Minister knows that quite well. Furthermore, the Minister said there is no point in referring to tax years when you are talking about a tax that commences on a particular date, not in a year. I want to draw the Minister's attention to the statement in the White Paper:

...the new system of capital taxation will therefore be fully operative from the tax year 1975-76.

Each of the systems of capital taxation proposed relates to a particular date, not to a year, except the wealth tax which is described as an annual wealth tax. None of the others—capital gains tax, gift tax, inheritance tax —refers to anything other than something arising on a particular date. Yet the White Paper refers to the tax year 1975-76. There is a good reason why it refers to that. I am quoting from pages 59 and 60 of the White Paper on Capital Taxation under the heading Introduction of New Taxes:

Capital Gains Tax: The charge would commence from 6 April 1974...

Then it goes on to refer to measures to counter avoidance before that.

Capital Acquisitions Tax:

Gifts: To prevent avoidance, gifts made on or after the date of this Paper, viz. 28 February 1974 would be liable...

Inheritances: ...the inheritance tax element of the proposed capital acquisitions tax will not come into effect until 1 April, 1975.

Each of those dates is prior to 5th April, 1975. They are all in the tax year 1974-75. Then it goes on:

Annual wealth tax: The date of commencement will be 6 April, 1975.

The new system of capital taxation will, therefore, be fully operative from the tax year 1975-76.

(Cavan): That is so.

If it were intended that the wealth tax first valuation date would be 5th April, 1975, that sentence should read: "The new system of capital taxation will, therefore, be fully operative from the tax year 1974-75". Each of those dates would be in that tax year. But it says 1975-76 because the wealth tax was not to commence until the tax year 1975-76. The wealth tax is commencing on 5th April of this year which is in the tax year 1974-75.

This, I believe, is just as plain to the Minister as it is to me and to everybody else but he has to maintain this facade. The fact of the matter is that the Government have introduced the wealth tax a year ahead of the time they said they would.

(Dublin Central): Disgraceful.

All of the trouble which has arisen in this House, and for everybody else, is because of that decision. The Minister has a nerve, to say the least, to talk about the Opposition wasting precious time which is limited by the Government under a guillotine to force this tax through a year earlier than they said they would.

(Cavan): Nonsense.

Any attempt by the Government to force it through is something they are doing, and if we are spending time on these matters— it is the duty and responsibility of the Opposition to do it—and in so far as the time available to do it is limited, that time being limited arises from two facts both of which are the responsibility of the Government, one, the decision to bring in the wealth tax a year earlier than stated in black and white in the White Paper and, two, the introduction and passing of a guillotine by the Members of the Coalition parties in this House. They are the reasons the discussion on this Bill is being restricted and no other.

The consequences for the Revenue Commissioners and for the taxpayers and their advisers, which will be serious, are all arising directly out of the Government's decision to bring in the wealth tax a year earlier than stated in the White Paper.

I referred to the mystery of why this decision was made. Deputy de Valera said there was no mystery as far as he was concerned. He understood it and explained what he understood. I am aware of what he was talking about, but there are other possible explanations, perhaps even more sinister. That is why I prefer to cover the whole thing with the blanket term of "mystery". I do not want to waste time speculating on this. People can do that for themselves. You do not have to speculate about the facts of the situation. The facts are clear. They are in the White Paper and they are spelled out on the record of this House. Having said the whole system of capital taxation would be fully operative from the tax year 1975-76, if the Minister is now correct in what he is saying, the Government should have said the year 1974-75. They did not say that and the reason is in the line above it. The commencement was to be the 6th April, 1975.

The position is quite clear. The Government are insisting on rushing through the wealth tax a year ahead of schedule with all the consequences for everybody concerned, including this House. We have done our best to point out the damage being done. We have demonstrated in regard to the capital gains tax beyond any doubt the value of the kind of opposition we are giving on matters of this kind, the vast improvements that have been made in the Capital Gains Tax Bill directly as a consequence of the manner in which we were able to study and discuss it in this House. That is being denied to us in regard to the wealth tax. The reasons are ones that the Government may explain to the country if they wish. The facts are clear; the Government have gone back on what they said in the White Paper and are directly responsible for all the consequences, including the long hours in this House and the application of the guillotine. So be it, we have done our part. This amendment is designed, as far as possible, to remedy that situation but if the Government wish to refuse to do it so be it, the consequences are on their heads.

Question put: "That the figures proposed to be deleted stand."
The Dáil divided: Tá, 72; Níl, 65.

  • Barry, Peter.
  • Barry, Richard.
  • Begley, Michael.
  • Belton, Luke.
  • Belton, Paddy.
  • Bermingham, Joseph.
  • Bruton, John.
  • Burke, Dick.
  • Burke, Joan T.
  • Cosgrave, Liam.
  • Costello, Declan.
  • Coughlan, Stephen.
  • Creed, Donal.
  • Crotty, Kieran.
  • Cruise-O'Brien, Conor.
  • Desmond, Barry.
  • Desmond, Eileen.
  • Dockrell, Henry P.
  • 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.
  • Governey, Desmond.
  • Griffin, Brendan.
  • Harte, Patrick D.
  • Hegarty, Patrick.
  • Hogan O'Higgins, Brigid.
  • Jones, Denis F.
  • Kavanagh, Liam.
  • Burke, Liam.
  • Bvrne, Hugh.
  • Clinton, Mark A.
  • Cluskey, Frank.
  • Collins, Edward.
  • Conlan, John F.
  • Coogan, Fintan.
  • Cooney, Patrick M.
  • Corish, Brendan.
  • Keating, Justin.
  • Kelly, John.
  • Kenny, Henry.
  • Kyne, Thomas A.
  • L'Estrange, Gerald.
  • Lynch, Gerard.
  • McDonald, Charles B.
  • 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.
  • Thornley, David.
  • Timmins, Godfrey.
  • Toal, Brendan.
  • Tully, James.
  • White, James.

Níl.

  • Allen, Lorcan.
  • Andrews, David.
  • Barrett, Sylvester.
  • Brady, Philip A.
  • Brennan, Joseph.
  • Breslin, Cormac.
  • Briscoe, Ben.
  • Brosnan, Seán.
  • Browne, Seán.
  • Brugha, Ruairí.
  • Burke, Raphael P.
  • Callanan, John.
  • Calleary, Seán.
  • Carter, Frank.
  • Colley, George.
  • Collins, Gerard.
  • Connolly, Gerard.
  • Crinion, Brendan.
  • Cronin, Jerry.
  • Crowley, Flor.
  • Cunningham, Liam.
  • Daly, Brendan.
  • Davern, Noel.
  • de Valera, Vivion.
  • Dowling, Joe.
  • Farrell, Joseph
  • Faulkner, Pádraig.
  • Fitzgerald, Gene.
  • Fitzpatrick, Tom. (Dublin Central).
  • Flanagan, Seán.
  • French, Seán.
  • Gallagher, Denis.
  • Geoghegan-Quinn, Máire.
  • Gibbons, Hugh.
  • Gibbons, James.
  • Gogan, Richard P.
  • Haughey, Charles.
  • Healy, Augustine A.
  • Herbert, Michael.
  • 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.
  • Noonan, Michael.
  • O'Kennedy, Michael.
  • O'Leary, John.
  • O'Malley, Desmond.
  • 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 declared lost.

I move amendment No. 5:

In page 4, lines 26 and 27, after "wheresoever situate" to insert "other than property in the State, which is agricultural property or is used directly in the provision of employment in the State and stock and shares of a trading company trading in the State,"

In the course of discussion on this Bill on previous Stages, the Minister for Finance, and on other occasions the Minister for Lands sitting in for him, repeatedly referred to the fact that trading companies are not liable to wealth tax as though the imposition of wealth tax on shareholders in a trading company would have no effect on the operations of a trading company. This amendment relates not to companies but to an individual. It seeks to exempt from wealth tax productive assets in the hands of an individual. Therefore, I suggest it does not leave any room for clouding of the issue as to what is involved here because what is involved is whether it makes sense, economically, to impose wealth tax on productive assets in the hands of individuals and, in particular, in the hands of individuals who are shareholders in trading companies which, as I said earlier, are themselves not liable to wealth tax.

We have been told in the past about other EEC countries having wealth tax. The Minister has been rather coy about mentioning some of the EEC countries which do not have a wealth tax—of course all of them are far more wealthy than we are—nor has he been terribly explicit about the countries which have wealth taxes as to how precisely such taxes operate. In general, it is true to say that those of the EEC countries which do have a wealth tax operate different systems. None of them operates a system similar to ours either as regards scope, methods of valuation or, I think, rates. But to pick out a portion of a wealth tax in one country, for instance the rates being charged, and compare that with the rate being charged in other countries is quite meaningless unless one is also comparing the scope of the tax, that is, the kind of assets to which it is applied and the methods of valuing those assets. Even if one could demonstrate that there were other EEC countries which operate a wealth tax similar in all respects to the system proposed in this Bill the question still arises as to whether it makes sense, in our circumstances, to apply such a wealth tax to productive assets here.

It is so obvious that we are in a major recession having regard to the level of unemployment, the level of inflation, the downturn in our economy, the contractions rather than even holding our own, and all the other indicators with which we have been dealing recently that we are in a grave recession and that nobody would attempt to argue that it would be helpful to our recovery to apply a wealth tax at the moment to productive assets.

The main argument made in the past by the Government is that the impact of this wealth tax will be so small as to make very little difference. That argument is totally mistaken. It is mistaken in that a wealth tax applied to productive assets creates a climate of opinion. Confidence or lack of confidence is a vital element in the welfare of any economy. It is not something that can be measured. It is not something to which a wealth tax can be applied nor can it be exempt from wealth tax. It is a vital element in an economy and never was it more vital than at present. In my view we ought to be using every possible device open to us to get our economy moving again, to get as many as possible of the 103,000 unemployed back to work, to get growth in our economy again. We should be using every possible method open to us to get this done.

Has anybody got the nerve to suggest that the imposition of wealth tax on productive assets will do that? He could not seriously make such a contention. People fall back on the argument that it will not make much difference. It will make a difference first because of the climate it creates, but also in practical terms. No matter how much or how little is collected by the Exchequer in the way of the wealth tax on productive assets, whatever amount is collected will be a charge on productive assets. It will add to the overheads of business which is providing employment. It will add to the overheads of business which is not alone providing employment but which is our only hope for getting growth in our economy.

The recognition of how serious this matter is and how important it is to try to get employment lies in the Government's own measure, belated though it is, in respect of which there is a Bill before this House, to pay an employment premium of £12 per week in respect of each person taken off the unemployment register and put into employment. With the one hand the Government are doing that but with the other they are imposing a wealth tax on the very sector of the economy to whom they are offering £12 a week in respect of each job created. Does that make sense to anybody?

There is the difference between a blank cheque and something that is chosen especially.

Is the Deputy referring to a wealth tax exemption on productive assets from outside as a blank cheque? Is that what he means?

The Deputy is advocating no tax whatever—we can find the money from the raindrops.

The wealth tax is for the purpose of finding the money? Is that what the Deputy means?

(Dublin Central): We thought it was to replace death duties only.

Order. Deputy Esmonde will have his opportunity to speak later.

Perhaps Deputy Colley will tell us——

I have asked that Deputy Colley be allowed to speak without interruption. The Chair should be obeyed.

I do not know if the Deputy was here when I commenced to speak. I referred to the fact that there were repeated statements from the other side of the House to the effect that since wealth tax was not being imposed on trading companies it had no effect as far as productive assets were concerned and that this amendment, which relates only to the individual, obviates wasting time on that ridiculous argument and gets to the root of the matter. If Deputy Esmonde or any other Deputy on those benches wants to say that it makes sense to tax productive assets in our circumstances, let him say so openly and clearly and defend that concept. To my knowledge nobody on that side of the House has said so. They are trying to blur the issue.

The issue is quite clear. This country is in dire economic straits. The Government's duty is to get the economy moving, to get people back to work. What they are doing is imposing a wealth tax on productive assets on which jobs and growth depend. If anybody wants to deny the truth of that statement I would like to hear from him.

The allegation that it does not make any real difference does not stand up because no matter how large or small the revenue from the wealth tax on productive assets it will be a charge on productive assets. It will be a charge on business, on assets which are employed in the creation of employment, in the creation of growth in our economy. To the extent that it is adding to the overheads it will restrict the use to which the productive assets can be put with, in some cases, a loss of jobs, in other cases, slower or no growth, and in other cases increases in prices.

Because much of business is carried on in the form of trading companies it may be argued that it will not affect prices or employment. Is it not the truth of the matter that very much of business in this country is conducted by private trading companies? The impact of the wealth tax on private trading companies can be quite serious. Deputy Esmonde knows what I say is true but some Deputies on the other side—Deputy Barry Desmond may be one who apparently does not know—may not know that there are private trading companies operating in this country in which no dividends or direct receipts have been drawn for years since the companies were founded. All profits have been ploughed back into expanding those companies, with a consequent increase in employment created by those companies and by the use of those productive assets. In any such case where the shareholders are individually liable to wealth tax, can it be seriously suggested that a man who has invested a considerable amount of his wealth in a trading company, from which he has received no return whatever for a number of years, when asked to pay an annual tax, will not insist on getting that tax at least out of the company? I would not expect him to do anything else. If he does——

Would that not be ultra vires?

How could it?

Paying another person's tax.

The Deputy cannot be serious. Surely he knows it will be done in the form of a dividend or a director's fee.

Or a loan?

Hardly a loan. Certainly if I were one of them, I would not take it in the form of a loan, having put my money in for so long.

Deputy Brugha is saying——

I read it in a paper yesterday.

The Deputy in possession must be allowed to speak without interruption.

The point at issue here, of course, is that in whatever form it is done, it is going to come out of the company. The impact in such circumstances will be considerably greater than in the case of the actual amount of wealth tax being paid because income tax will have to be paid on it. What it amounts to is—if anybody is in doubt about this I will give them the calculations, but I do not want to waste time on that if I do not have to —that for £1,000 wealth tax each year, there would have to be paid out of the company £2,167. The net effect of that is that less money will be ploughed back into the business, jobs will be lost, there will be less growth in that business, and therefore, in the economy.

Such a result could be justified in certain circumstances. One of the circumstances would be that the state of the economy was such that it could stand this. That clearly is not so in this case. Another condition I suggest should be that, as a result of the imposition of this tax in circumstances where the economy could bear it, the result would be to achieve greater equity and a greater redistribution of wealth. That will not be achieved by this Bill. That was originally suggested but it is not being pretended any longer because the estimated yield is relatively so small that it can make no difference and contrary to something said earlier by the Minister for Lands, it will not make one penny difference to people paying PAYE.

The redistribution that will be brought about, not just by this but by the whole package, is redistribution within wealthy families, not amongst the people of this country in general. None of the conditions which would justify a wealth tax apply. Yet it is proposed to apply a wealth tax to productive assets, not only in the hands of discretionary trusts and private non-trading companies, but even in the hands of individuals, such as individual shareholders in trading companies I have been describing.

Was not death duties a multiplied wealth tax?

No, it was not, and the Deputy should know better than to say that.

Maybe the Deputy is out of private practice, but I have seen it apply.

We would welcome a reasoned contribution from Deputy Esmonde on this, or any other amendment. I hope that if the spirit moves Deputy Esmonde to contribute on this amendment he will deal with the crucial question involved here. Is it right or wrong to apply a wealth tax in our circumstances to productive assets on which jobs and homes depend? It is a simple question, and that is what is at issue in this amendment. One can confound the issue in various ways, but we come back to that question. This amendment seeks to ensure that it is not done in the case of productive assets in the hands of individuals.

We believe it is very important to the future of our economy that this proposition should be accepted, and that could not have been more important at any time in the past than it is today, in 1975, having regard to the state of our economy and the urgent need for any method open to us to get the economy moving again. If the Government persist in imposing a wealth tax on productive assets in these circumstances, it can only be assumed—and I suggest reasonably assumed—that they do not care about their major responsibility, which is the management of our economy, and are interested solely in what they think is party political advantage based on the politics of envy.

Whatever chance of success that might have had, in my view has gone out the window because of the state of our economy, and because everybody now knows what the duty of the Government is. Not alone the imposition of wealth tax on productive assets at this time, but the amount of time and effort which the Government are spending on this whole measure when it should be concentrating on the management of our economy, is very very revealing, and people are getting the message of where the priorities of this Government lie.

The message the people of Ireland are receiving is that the Fianna Fáil Party are against wealth tax. They are also receiving the message that the Fianna Fáil Party are, in 1975, delivering speeches reminiscent of the 19th century, the same kind of speeches as the rearguard of Blue Toryism were delivering in other successful countries such as Germany, the Netherlands and the Scandinavian countries, half a century ago when wealth taxes were introduced.

I doubt whether this amendment is in order. Dáil Éireann have voted in favour of the principle of the wealth tax, on amendments tabled by Deputy Colley on the Committee Stage which are virtually on all fours with this amendment, and Dáil Éireann rejected them because it saw that the purpose of the amendments was to exempt——

The majority of Dáil Éireann——

——to exempt all property in the State from wealth tax, to have a wealth tax with so many exemptions that nothing would be affected. There is no other country in Europe which gives any exemption whatsoever to productive assets, except Ireland.

What about the countries that have no wealth tax?

We are the only country that gives an exemption. There are countries without a wealth tax where the combined tax on capital is greater than countries with a wealth tax. The combined taxes on capital in Belgium far exceed the wealth taxes of Germany or the Netherlands. If Deputy Colley wants to get smart about comparisons being difficult, I could keep this House going for a long time, or I will speak elsewhere——

Compare us with France.

——to give figures which would quickly deflate the arguments being advanced. It is time the Fianna Fáil Party realised that the Wealth Tax Bill is going through. The Dáil have already said they favour wealth tax and——

We know it is going through.

——the sooner that this prevarication and mischief-making stops, the better.

Would the Minister like us to lie down?

No, but when you have been standing up and shouting for a long time and the public are getting very bored with the effort——

And we will keep on doing it.

——particularly when they see that it is not directed at the merits of the legislation, but directed on a long tedious succession of partisan comments which have nothing whatever to do with the state of the economy or the steps necessary to make the world recover from the worst recession which it has experienced for 45 years.

How ironic that comment is.

If Deputy Colley would restrain his wit, as I have the manners to do when he is talking, then, perhaps, we might get through. If he does not, then I will have further evidence of Fianna Fáil's readiness to——

Perhaps I had better bring in a backbencher to speak to the Minister in the way I was spoken to.

The amendment is completely unacceptable because, having regard to the other exemptions in our wealth tax proposals, which exemptions exempt the principle private residence and its contents and many other assets, there is virtually no property left to tax and Deputy Colley knows that. If we had the generosity of mind and the wisdom to give a lower rate of tax to productive assets, it probably would not have crossed Fianna Fáil's mind at all or anybody else's mind at all that there was a case for giving a special exemption to productive assets. As I say, we are the only country in Europe, the only country anywhere that I know of, and I have studied the European situation closely, that gives special treatment to productive assets. There 20 per cent of the tax liability is removed because of our anxiety to distinguish between assets which people put to productive purposes, which give employment in Ireland, and assets which are not capable of producing employment.

Deputy Esmonde was quite right when he raised the question of the abolition of death duties. Death duties applied to all productive assets. The full rigours of death duties applied to all productive assets. There is many an employment unit here that was destroyed because death duties up to 55 per cent had to be paid and the only way they could be paid was by selling off the productive units. That will not happen under wealth tax. The amendment takes no account, as I say, of the exceedingly high thresholds and it clearly is designed for two purposes—one, to allow the Fianna Fáil Party for the umpteenth time to make the same irrelevant partisan speeches and, if that is not the purpose, then it is to make a laugh of the wealth tax, to prevent this country having a wealth tax, to prevent this country getting some degree of social justice, which is very necessary at any time but particularly at a time of economic strain when, unfortunately, some of the greatest burdens have to be borne by people least able to carry them, by the people of small means, the people whose only means are their labour which they have to sell at a price. People with property and people with wealth can survive economic stresses and strains because they can eat, as it were, into the fat, but these days are more difficult for people who only have incomes and cannot do that, particularly if they become unemployed and if their labour is not in demand.

This talk about this not being the time is the worst of all arguments. There never was a better time for the introduction of taxation which will help to give social stability and, if this is not acceptable because it comes from members of this Government, the Fianna Fáil Party might during the coming recess spend some time reading the many textbooks on taxation which are available, the many text books on economics which are available, all of which point to the value of having a tax on capital. We have gone to great trouble to trim the capital taxation measures here to Irish circumstances and to build in incentives that no other countries have. If wealth is employed for productive purposes, then I think it will be seen that the criticism of the Opposition here is puerile and facile and not related to the circumstances or the requirements of today. May I ask the proposer of this amendment, what would be left to tax if his amendment were to be carried? That is a fair question.

I presume the Minister can answer that better than I can.

Having regard to the thresholds and exemptions, are the Fianna Fáil Party saying that the exemptions which we have given are wrong? They were hounding us to give them. They complained that we did not give enough. They complained that we should have given more.

The Minister asked me a question and I am saying that I do not know what proportion would be involved but, suppose 90 per cent were exempted because they were productive assets—I have no idea what the percentage would be—there is a message in that for the Minister if he will only think about it.

Let us leave aside for a moment the percentages. What items of wealth or property would be left to be taxed here if this amendment were to be carried? The Deputy knows that there would be nothing of any significance left.

There is a real message in that, if that is true.

If people hold their property in productive assets, they are getting better treatment than if they hold it in non-productive assets. That will be an incentive to people to put their money in productive assets if they are interested in getting the 20 per cent concession applicable to productive assets.

I will conclude, as I opened, by asking the Fianna Fáil Party to accept what Dáil Éireann has recorded again and again, namely, its support for the wealth tax. That principle has long since been debated in this House and the concluding days of the discussion on the wealth tax is not a time to reopen that matter of principle which was decided in this House months ago.

I will be very brief. I take the view that this approach by the Opposition on this amendment is somewhat of a smokescreen to cover what I would regard as the gross political and economic negligence in the past.

In the last general election I was deeply concerned to see that death duties would be abolished. I know well, and I think that anybody who has bothered to study the figures knows well, that the present proposal will exempt 90 per cent of the people who were previously liable to death duties. We should bear that in mind.

From all forms of——

Under this proposal 90 per cent of the people originally within the tax net for estate duty and death duty purposes will be exempt.

Wrong. That is nonsense.

Right. Deputy Colley can have his view and I can have mine. If the Fianna Fáil Party did not regard estate duty, succession duty and legacy duty as capital taxes of a very swinging nature, then I cannot understand either their political or economic thinking. They have had disastrous results on the economy. Death duties were multiplied capital taxes and I would describe them in the language in which other people have described them, namely death penalties with which the family was saddled when the breadwinner died. Very often the breadwinner died at the age of 55 or so with a young and growing family and left that millstone around the family's neck. If anybody wants to investigate this all they have to do is go and examine Land Registry folios and see the number of ACC owned mortgages and charges that are on the folios of Irish farms which were created principally for the purpose of paying off death duties because people had not got the money to pay the death duties and they had to put their families and their property in pawn.

We have to be realistic when we are looking at the matter of wealth tax in this House and not lose sight of these facts and not lose sight of the damages those taxes did and the damages they continue to do to our economy. Yet when the proposal was put publicly to the leading members of the present Opposition Party before the last polling day, when the question of the abolition of death duties was mooted, the answer was quite clearly—no we cannot do it and will not do it.

And you have done it? What is inheritance tax?

We have done it. You who previously had to pay 40 per cent are now being asked to pay 1 per cent when your assets are well over the £100,000 and so far as the incidence of wealth tax is concerned it will not affect, on average, people unless they have £150,000 worth of net assets, when you take exemptions and the general picture across the board.

For the second time today the Minister for Finance has opened up, I think somewhat petulantly, against the Opposition. Ten minutes ago he said that the message to the people of Ireland is that the Fianna Fáil Party are against wealth tax and that the Opposition are blue Tories of 50 years ago. He followed that up by saying that the capital tax situation in Belgium is well in excess of here. I would like the Minister to give us a little bit of information about Belgium, because his own White Paper says that there is no wealth tax in Belgium.

Not in name, but there are capital taxes which operate more severely.

Give us some details of them, because I gave a detail in relation to Belgium yesterday which to me is very significant. The level of income tax in Belgium percentagewise is quite high, almost as high as here—it is 70 per cent against the Minister's 77 per cent— but in Belgium that level is not reached until you have a very high earning capacity, far beyond the vast majority in this country. In Belgium you do not reach the top level of taxation until your income is over £44,000. Here you reach it at £12,000. I am not complaining about that. I expect most of us here in Dáil Éireann have not any complaints to make about that. We are not that worried about wealth tax. We are concerned, as Deputy Colley has set out in this amendment, about the effect of this kind of taxation on the economy. We have told the Minister that times without number. The impression I am getting from the Minister is that he does not think the Opposition should talk at all. That is the impression the Minister is giving. The purpose of the amendment is to illustrate the effect that taxation of this kind can have on this economy and on employment. The idea of applying this type of tax to shares held in Irish industry by Irish people when the same tax does not apply to shares held in Irish industry by foreign companies is simply ridiculous. I do not know how the Minister can stand over it. Talk about blue Tories of 50 years ago. The idea of taxing productive assets in a small undeveloped country of this kind is something similar to the penal taxes of a century ago. It is only five years ago that the balance of emigration changed and the population began to increase for the first time since, I think, 1845. That is where the effort has been put in over the past 50 years—to try to reach a situation where we would be relatively self-sufficient and where people would not be driven out of the country to look for jobs. If the Government must have what the Minister described as social stability or if they have some ideological inclination in this regard, there would be some merit in putting this Bill through and then suspending it until better economic times. That is what the Australians did. In fact they withdrew it because of the state of their economy.

My information is that the levels of wealth tax in the EEC countries are considerably below the level the Minister is putting through here although I grant, as I have said before, that the thresholds here are reasonable. Nevertheless the information available to me is that the level of wealth tax in Denmark starts at .9 and drops to .18. In Luxembourg it is a half a per cent. In Holland it is .8 per cent. France, Belgium and Italy do not have wealth tax. Neither do the USA nor Japan. That is the information available to me and I believe it to be true.

Deputy Esmonde has been trying to equate death duties with this tax on property and productive assets. He is trying, to some extent, to mislead, not only us, but himself. I agree with Deputy Esmonde that the estate duty and death duties were not a good thing. They were applicable right across the board on estates of any kind whether they were productive or not. In fact, they were an undesirable thing in our economy because it meant that companies, in the event of a death, would be up against a fairly high level of duty and it might cause the winding up of a company. That is the sort of thing that is undesirable in any economy. If companies or industries being run by families come up suddenly against a fairly high level of death duty and the money is not there to pay it, and you have perhaps five, six or seven shareholders, minority shareholders tend to step in and say: "Why not sell it because you have a high death duty coming in?" That was one of the undesirable sides of death duties. But Deputy Esmonde's argument just does not apply in this area because what is being done here, and I think the Opposition have not totally disapproved of it—I certainly have not— is that an Inheritance Tax Bill is still before the House and that Inheritance Tax Bill gives the safety area of a threshold where a parent can transfer at a stage to a descendant at a fairly high level without suffering a high tax. That gives one the stability that one needs in relation to the continuity of business and the continuity of jobs.

I do not want to spend a long time talking on this subject. We talked about it before. I believe that the principle of taxing productive assets which are providing employment and, at the same time, introducing a £12 a week premium in order to try to get people back into jobs are simply contradictory. Are the Government going in one direction or the other? The Minister for Labour is heading in one direction trying to get people back to work and the Minister for Finance is apparently trying to put people out of work. The principle of this tax as applied to working productive assets is a bad principle. It is not responsible and it is bad for our economy and it certainly is disastrous for any prospects of expanding employment.

We have wandered a bit on this amendment. There is one point I want to make on it. This amendment seeks to exempt agricultural property. The Minister complains that this is a repeat. I wonder was the Minister listening today to what the Minister for Agriculture and Fisheries said about the green £ situation when he talked about the increased burden the farmer would have to bear. Even today there is a deterioration. Even today there is a new case.

That is a lot of news.

I listened today to the 1.30 p.m. news.

They got an extra £13 million.

I heard the report of what was said by the farmers and what was said by the Minister about the extra burden that will be placed on the agricultural community and if it is right——

It is quite wrong.

The Agricultural expert is now speaking.

The people who made the news know what the answer to that is. I am pointing out that the interview after the 1.30 news is a further reason for this amendment.

(Interruptions.)

I will come back to that.

Farmers are already exempt.

I am giving the Minister a new answer to his case. He said we were repeating.

We must hear the Labour Party's agricultural expert.

The Minister for Agriculture and Fisheries made a very definite statement to an interviewer today and it was reported on the 1.30 news.

Debate adjourned.
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