Dáil Éireann debate -
Tuesday, 29 Jul 1975

Vol. 284 No. 4

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

Debate resumed on amendment No. 14:

In page 11, between lines 19 and 20, to insert the following:—

"(g) the right to receive any benefit or any annuity or periodic payment which, when added to any such right, if any, under any of the schemes, provisions or arrangements referred to in any of the subparagraphs of paragraph (e), other than subparagraph (iii), would yield an entitlement equivalent to the superannuation entitlement of a Civil Servant having a similar income and contribution record.

(h) the property of any scheme or arrangement assuring or supporting the right to receive any benefit, annuity or periodic payment referred to in paragraph (g)".

—(Deputy Colley.)

Ruairí Brugha

Deputy Colley's amendment ensures that provision can be made for retirement by self-employed persons. I was startled to hear the Minister's strong attack on persons who had been writing to him, using the words "envy", "vindictiveness" and "ignorance" and ending by attacking persons not present in the House. The case put by the Opposition on Committee Stage and by Deputy Colley this evening has nothing whatever to do with the Minister's remarks.

I was shocked when I got the amendments and looked at section 7 to discover that the Minister did not propose to make any provisions to meet the case put forward by this side of the House on the Committee Stage. I can only presume that the Minister is not capable of taking an objective look at the case put by Deputy Colley. I am sure the Minister has had an opportunity to read our remarks made on Committee Stage.

One of the replies given by the Minister for Lands when dealing with this section on the Committee Stage was that the Opposition had not put down any amendment. I asked the Minister if people would be able to make provision for their own retirement and, although the record did not say so, the Minister nodded. I presumed there was something in the Minister's mind in connection with this but I assume now that he misheard the question. I submit that this amounts to a clear discrimination against self-employed persons who may be in a position and need to make provision for their retirement.

I am very concerned about the implications behind the reluctance to concede fair play to a self-employed person, which is allowed in the case of employees or even executives of firms who have made provision, through payments over a period of years for superannuation and which is also properly made in the case of all the areas of public service and the Oireachtas itself. To fail to make provision in this area is to discriminate against the solid, hard-working earner in an enterprise economy, that is the individual who sets up a small factory or runs a farm for his lifetime.

I will not repeat all the arguments I made on Committee Stage but I will give a summary of what I said then. Deputy Colley put a very substantial case in regard to the provisions which should be available by way of special exemption but he did not specify what this should be. On the Committee Stage the Minister for Lands said that any individual who sells a farm or business could buy gilt-edged securities and provide himself with a substantial retirement benefit, still falling within the area of the threshold.

The envies and jealousies the Minister has been referring to do not concern us. I am concerned about two aspects of the attitude being displayed by the Minister. One relates to ordinary fair play and social justice and the other to the vital importance, on this side of the Iron Curtain, of the individual who puts his efforts and energies as a self-employed individual in either the development of farmland or the establishment and creation of industry.

The position, as it stands under this Bill, is that many individuals are not fortunate enough during their working life to be able to provide the very substantial superannuation contributions which many large industrial firms provide for executives and workers. Because of the risks involved, and because capital is vital, they cannot extract from a farm, business or industry the necessary superannuation contributions to provide for their retirement. If and when they are able to make such an investment, unless they surrender entirely the capital they built up, it will be included under this Bill for assessable tax.

They are also up against another major disability which Members of the Houses of the Oireachtas or people in the public service, Garda, the Army and so on, and even the social welfare pensioner, are not up against, that is, the self-employed cannot make any significant provision against the inflationary effects on their investment. The Minister for Lands described them as gilt-edged securities which are now available at £80 for £100, showing approximately 13 or 14 per cent. Even if they succeed in providing a substantial return, taking a generous look at the inflationary situation, and allowing for a 15 per cent depreciation per annum, within five years their return will be reduced to half. The pension rate of a Member of the Oireachtas or anyone engaged in the public service will be made up by the taxpayer year by year.

We are discussing here a category of the community who are the real creators of employment and wealth, upon whom the public service— health, education, Army, Garda, civil service and so on—depend. I can only conclude from the Minister's remarks that he does not understand the situation. Not alone does he not understand the basic justice involved here, but the necessity for any Administration to encourage the enterprising and energetic, in the interests of the economy. How any Government can, in effect, discriminate against the people who are the real earners—farmers, small businesses or established factories—defeats me. I can only conclude that the Minister has closed his ears to any case, valid or otherwise, because it is put by the Opposition or, perhaps, because he got a few anonymous letters. The position seems to be that, so far as the person who is an employed worker and can retire on social welfare pension now at the age of 67 is concerned, he is in a far better position, while the energetic individual who creates wealth, in so far as this Bill is concerned, must extend his working life up to the age of 75 years or until he drops dead. It seems to me that the social approach here is that of people who want only wage earners.

If the State is not to take over all property, the question the Minister should ask himself is where is productive creativity and employment to come from if the approach of the Government is to discriminate against the real creators of wealth. The right principle in relation to this individual—I agree with Deputy Colley it is difficult to arrive at any assessment of how the State could provide for his natural right to the requirements of this Bill—would be to allow a person aged 55 or 60 or 65 who retires from work on his or her own means, who has been self-employed and cannot look forward to the benefits of superannuation, an exemption to an amount of £X for the purposes of retirement and that amount should be scaled upwards with the rise in inflation over the years.

The Minister, in speaking on this amendment, referred to the present rise and the future rise. That kind of talk is, to a considerable extent, academic. We covered a good deal of this area over the past five or six weeks and if he does not encourage energy, enterprise, risk, development which leads to an expansion of the economy, then he is not going to see wealth created and, in any community in which wealth is not created by the people who live in it, the inevitable result is a decline in economic development, a decline in employment and a reduction in the standard of living.

Mr. T.J. Fitzpatrick

(Dublin Central): This is another amendment put forward by Deputy Colley to try to bring some semblance of equality into this Bill. We tried on the Committee Stage to remedy the anomalies. We put forward amendments to try to get equality for every man and woman. The Minister rejected them all. We tried in the last amendment in regard to the private trading company to improve the substance of the Bill. Again, the Minister rejected it. In amendments put forward on the Capital Gains Tax Bill the Minister at least saw the wisdom of our suggestions and some of our amendments are now incorporated in the legislation on capital gains.

The Minister has not seen our point of view in regard to the Wealth Tax Bill. All the amendments we put forward are, in the opinion of the Minister, completely futile and serve no useful purpose. This Bill lends itself to bad legislation, and practical amendments can come from this side as well as from the Government side. All the wisdom is certainly not on one side of the House. Deputy Colley brought forward this amendment to try to bring some semblance of equality into the Bill in regard to pension rights for those in the private sector. I want to make it clear that, in so far as those in the public sector are concerned, they are quite entitled to the pensions they have built up over the years and this is put forward as an example of what we want in the private sector.

We must examine the situation where a businessman is concerned, be he big or small. If he is small, he is seriously victimised. Naturally, if he is in a very high bracket, say over £40,000, he can avail of the maximum concessions obtainable in regard to contributions to a pension fund and, as recognised by the Revenue Commissioners, up to a figure of £1,500 per annum. He can avail of that concession from a very early stage in his life and secure for himself pension rights and at the age of retirement of 65 years he will have his pension rights plus his capital asset, which will be subject to wealth tax only if it is over the threshold.

Let us take the situation of the businessman, starting on a small scale. We want to encourage him to expand. He is not in a position to avail of pension rights to the extent of, say, £1,500 a year. He would not be in a position to withdraw that amount of capital from his business, because if he did, it is quite obvious that the particular type of business in which he is engaged would never expand. He goes along developing his business, ploughing back the profits. By doing so he is benefiting the economy, creating more employment and paying his income tax and surtax. We should encourage him to continue in that way, even to the date of his retirement. He should be encouraged to expand his business in the interests of the economy. What can happen, and if he has any sense, it should happen, is that he should as far as possible provide himself with some means of superannuation or pension fund, especially if he is near the threshold of £100,000. If he takes the opposite view and ploughs back into his business the money he could possibly invest in a superannuation fund and his business reaches a value of £140,000, he is in the situation where, when he is capitalising that sum, not alone is he subject to wealth tax during the time he holds it, but he will be liable for capital gains tax when he disposes of it— that is, if he takes the line of not investing in a pension fund. I would prefer that he would take that line because that would be more beneficial for the country. It would be contributing to the economy. It would be creating more employment and, at the same time, he would be paying his income tax and probably his wealth tax.

One can, however, take a different view. If he has reached that level he should, if at all possible, try to get from the bank, or take out of his business, money to create a pension or superannuation scheme for himself, as approved by the Revenue Commissioners. By taking that line his business will naturally have to suffer. That kind of money is not in the business to be taken out for that purpose. Looking at it from that point of view, the Minister is unwise in not making provision for this particular type of person. Surely, the man who was in a position from early on in life to take out a scheme such as this, when he had a property of £100,000, is entitled to his pension of £3,000 or £4,000 a year, whatever the case may be. By virtue of the fact that he was in such a financial position at the time to undertake this kind of scheme, is it fair that the other man who was not in a position to create this type of fund for himself should not be entitled to the same concessions? I believe he should be. These are the kind of people we should encourage, the bedrock of our economic expansion. We must create the right climate for people, be they in agriculture, in industry or in the professions. They all play a very important role in our society. But this section does not lend itself to encouraging that type of person. To me it is ludicrous and I cannot understand the logic of it. One person can have an income from a pension fund. I am not now talking about the public sector. You can have this too in the private sector. If you have sufficient funds and assets to acquire it for yourself, you can build up an annuity for yourself and that will be exempt from wealth tax, but another person, who has genuinely re-invested all his finances and funds, will be penalised. I know they are all entitled to the same thresholds with regard to wealth tax but it is the income that counts, one's income when one reaches 55 or 65 years of age. It is unwise for the Minister to differentiate as between these two sectors of the community.

Deputy Colley's amendment provides that concessions will be given which will equate with pensions in the public sector. That is the only reason why the public sector is used in this particular amendment. I believe that this is a wise yardstick to use. If we overlook this particular sector we will find, as time goes on, especially in time of economic crisis, the price we will have to pay. If there is one section of the community that contributes a great deal in time of recession to bring the country's economy back into viability it is the private sector. Those in this sector are an independent people. They were never dependent on benefits of any description. Very seldom did they get free hospitalisation. I do not think they ever asked for any great contribution from the State. The Minister has an opportunity in this Bill of doing something positive for them now. What Deputy Colley is looking for is only common sense, treating everybody equally. There is nothing wrong with that. We have sought right through the Bill to get this incorporated in other sections but the Minister has refused our appeal. We are asking him now to give those in the private sector the same considerations as is accorded to those enjoying pensions in various other sections of the community. If this equality is not given there is bound to be a certain discontent. You can call it discrimination, if you wish. It is discrimination. We have had enough discrimination in the Bill without adding this.

In another section in this Bill we have nationals subject to wealth tax while foreigners are exempt. That is a bad enough distinction between foreigners and nationals but in this section we are actually trying to polarise, to divide our community as between different occupations in life— those enjoying pensions in other sectors against those in the private sector.

The Minister is unwise not to accept Deputy Colley's amendment. It would certainly be a step in the right direction. It would be recognising the difficulties the private sector encounter in making provision for retirement. There is no provision for a man, with four or five children, running a business or small factory. Nobody is concerned about him in his retirement. If he retires and is unfortunate enough to have to close down his factory or if he goes bankrupt there is no pension scheme. There will be no provision for him, his wife and his family. There are no provisions catering for that section of the community, unless a man has the finance available to undertake a scheme that will give him certain pension rights which are approved by the Revenue Commissioners. But he may not be in a position to do that. Other people are sheltered from the time they enter a profession, let them be 18 or 20 years of age, until the time they retire on pension. I approve of that policy. Unfortunately, successive Governments have never made provision for the protection of people in the private sector. Let them fall into ill health and not be in a position to carry on their business, they have to do the best they can with what remains of their assets after going bankrupt, or being forced to sell. This amendment of Deputy Colley's is a gesture in the right direction. We are showing we recognise their difficulties. It will not cost the Revenue Commissioners an enormous amount of money. The Minister could perhaps devise a closer and more tightly-knit amendment himself but it is a recognition that this section of the community that they have problems as regards their retirement and making provision for it.

The Minister has an opportunity now of recognising it. He knows perfectly well the difficulties the private sector are encountering at present. This is a Bill which is supposed to distribute wealth, which of course it does not, but at least if we are trying to distribute it, everybody should be treated equally under the Bill. We should not discriminate against one particular section. The Minister mentioned that it would create administrative problems. If you want to have perfection in any scheme you draw up of course there will be problems, and Ministers and Departments are there to iron out these difficulties.

I ask the Minister to look closely at this. It deserves serious consideration and it would give recognition to people in the private sector who also have problems as regards making provision for their retirement. That is exactly what Deputy Colley's amendment contains—provision to make a certain allowance that would be in line where those in the public sector are concerned.

Major de Valera

On the Committee Stage we argued this point strongly. It was the Minister's colleague who was sitting opposite at the time. Referring back to the Official Report I would point out that the example I took on that occasion was, on purpose, selected from the area of public companies. I do not mean semi-State companies but public companies in the sense of the Companies Act. There were authorised pension schemes approved of by the Revenue Commissioners under the relevant Act. I took that as the norm. The case I based on that was that if you were making a provision for all the exemptions that are covered particularly in paragraph (e), you must realise there is one omission. In making these exemptions the Minister is perfectly right in the attitude he has taken there so far but there was one omission. It was this. In certain cases there would be provision for an annuity. If a provision was not put in this section, the annuity which would really be a pension, would not get this relief. I was quite prepared to leave it at the discretion of the Revenue Commissioner to test bona fides. I would remind the Minister when he brought in the amendment from the Seanad today that the phrase “or such longer period as the Revenue Commissioners may by notice in writing allow” appeared in it. I would be prepared to abide by the judgment of the Revenue Commissioners here. The essential point was this. This section does not cover the case of a doctor, professional man, self-employed business man of a type that was fairly common, a man who has a business house of his own whether in the licensed trade or drapery trade even in these days of agglomerated business——

Ruairí Brugha

They will be less common in future.

Major de Valera

They will, but while they are with us I would suggest there should be equality of treatment. The formula which I tried to suggest on that occasion and which Deputy Colley is proposing here is that in so far as you had a bona fide provision for a pension that the annuity by way of pension should be treated at the pensionable stage as these other pensions are treated.

We had a long discussion in regard to capitalisation and capitalisation values. I think it is on the record. I had not time to read the record since. I think the Minister deputising for the Minister and his advisers got the point. I would like to refer to that argument again and like the Minister to consider it as repeated.

I am not altogether happy with the wording of this amendment: Deputy Colley will not mind my saying so. I do not like the narrowing of it by the words "civil servant". I know Deputy Colley put them there in order to be definite and get the spirit of it. I was not here at the time, unfortunately, but I think he has pointed out that this was meant to be a framework which we could discuss at the last minute hoping the Minister would accept the spirit of this amendment. These words seem to connote a certain equality in level of payment which is not quite the same thing as equality in provision and equality in rights against taxation. For that reason I am worried about defining a particular class. On the other hand, "public service" might be too broad. I would like the taxation relief to be equal for all no matter in what sector and in its application the specifics will determine precise levels of payment and will depend on relative scales of remuneration and so on. I would like to make a distinction between parity in payment and parity in benefit with parity in treatment in regard to taxation. It is a difficult point to put over in this way, but I mean as to equality and parity before the law in regard to the incidence of taxation.

It could be suggested that instead of using the word "civil servant" in the amendment the word "public sector" or "public service" should be used. I would certainly like to think about that.

We have to consider the importance of parity in provision and equality before the law, because if you allow disparity to cause large diversions then ultimately there would have to be a closing of gaps with embarrassment and difficulty to the parties concerned. On the Committee Stage I took one example of this. It so happens that today we are discussing this amendment when we have reason to understand that the lead will come in the public sector. We have reason to understand, as indeed the Government understand—perhaps too late—that that lead can easily set the pattern and it is very hard to avoid equality with the public sector for all when such matters arise. Such thoughts make one urge the Minister to consider the principle of this amendment though I am demurring from its actual wording and particularly from its specification here.

If the economy survives at all pension schemes will be more and more part of the scene. Industrial pension schemes will be more part of the scene in industry at large. Parity in those schemes will ultimately be demanded whether within the industry itself or within the community. Demands will be made for parity before the law and parity in treatment and more and more will the impact of the mass of the people concerned be on those who are in the more favourable position, whether in the public service or elsewhere.

The Minister has been very vocal on this question of levelling wealth, of equality, and of socialisation of the community. The Minister should reflect that this is happening whether he advocated it or not. His own experience, even of this day, may give him cause for reflection, but there is one thing that is certain, that this levelling process is going on and it would be well to have regard to it and that the greatest contribution to stability that the Minister can make at the moment is to provide in legal terms for this equality and parity of what I may call opportunity rather than regard it as a question of pay levels or anything like that.

I have mentioned industrial pension schemes. These can very easily be— and indeed in the case of public companies are—under the schemes here approved under the relevant Acts of Parliament. Limits and levels and how much provision can be allowed for inflation in all these things are decided upon and there is discretion given under those Acts. All I will say is that these levels should also be applied with judicial impartiality and that no group or element should be favoured more than another.

That brings me to Deputy Fitzpatrick's arguments. With regard to the industrial workers the mass influence will correct itself and there is a trend now whereby it is clear that the Minister and his Government are relatively unimportant and therefore I do not need to plead the case of those who have the power. I would plead the case of equality if it were necessary. With regard to Deputy Fitzpatrick's arguments, I would like to say that there is an unfortunate confusion in the use of the word "public". We know quite clearly what we mean and probably this is why Deputy Colley used the words "civil servant" to which I have demurred. What was meant to be conveyed there is the State service proper in its restricted and traditional sense. The public sector in the ordinary connotation of the word has expanded in our time, particularly the Department of Local Government to fringe bodies. It is taken to include such arms of the public service as the Garda Síochána and the teachers and so on, who would not be within the class described as civil servants but who are nevertheless public servants and are in the public sector.

This area has been further expanded through the development of the semi-State body which is really a State activity, because they are very largely devices for public activity and public utility. The Electricity Supply Board was one of the earliest. There are many others and CIE is now in that category. According to the context these bodies might or might not be implied in the phrase "public sector". If it is taken that the public sector embraces the civil service, the Garda Síochána, the Army, teachers and semi-State bodies then I should say, let there be parity there in provisions. Again, I am insisting on parity in provision where taxation is concerned: I am not advocating necessarily parity of levels or anything like that. Everybody has his own job and there is the appropriate levelling of them. I merely want to find out the importance of parity and procedure or, if you like, the avoidance of particular privilege anywhere. Then there is this word "public" used in the Companies Act to mean a public company. Here we have the confusion. If one refers to a public company one is often thought to be referring to a semi-State body. Under the Companies Act a public company is a definite corporate entity with a number of shareholders and subject to provisions under company law. Many of them are still of great economic importance; we are not yet a completely socialised State in the conventional sense of the term and we have some important public companies which are private enterprise.

It is important, when one is talking about private enterprise, to realise that public companies of this nature are private enterprise. They are often more beneficial to the community than the other. If anyone wants to have experience let them cross the water and look at the history of British Steel or any of these things and judge the merits of private enterprise or otherwise. But they are public enterprises, public companies and they are the major part of private enterprise. They have a large employment and creative employment content.

If we consider we have already granted parity in the public sector in the first sense in which I described it then, if the schemes are suitably framed and administered, there is no reason why that considerable part of the private sector should not be treated the same. That is generally provided for in this section. All it requires is that the schemes devised for that part of the private sector, the public company which will have its schemes, should be on the parity that should exist internally within the public sector, defined in the sense of the public service, including the semi-State bodies.

If that analysis is right, if the principle of parity, of opportunity, procedure and parity before the law in regard to these schemes, and judicial impartiality in the administration of these schemes, is right, then so far the section is right, and to be commended. However, one finds highlighted the element which Deputy Fitzpatrick emphasised. Who are they anyway? What is not provided? The Minister has provided for the public service in general, for all those who are, so to speak, paid directly or indirectly by the State, and for the public element in private enterprise—the public company, the normal public company of size and with employment content as provided for in the Companies Act and our own latest Act of 1963. But in startling contrast one finds that not only does the Minister not provide for an element of the community but by not providing for them they are, so to speak, in a penalised, or to be more modern, a seriously disadvantageous position.

Take the case of the individual businessman. He may be a private trading company, or the owner of a licensed premises—as Deputy Brugha said, they are getting fewer and far between because the bigger element is taking over—it could also be a family firm.

I made the argument on Committee Stage about retiral and I do not want to repeat all that again, but it can definitely be a professional man, a doctor, an accountant or a lawyer. It may not be a large proportion of the population but for their numbers they are giving good service to the community and only too willing during their lives to support themselves and not be a burden on their descendents or the State. Are not these people at a disadvantage if we do not provide for them? A professional man who saves a sum of money to provide himself with an annuity for the time he retires or when he can no longer practice, or a businessman who has built up his own business and has either passed it on to his family or has sold it when he can no longer work, at that stage can realise the capital and has the sum of money there for it. Whether that is covered or not elsewhere I am leaving aside for the moment because some such provision should be in this section.

Is it not a little hard that some provision, some recognition of that group, who would not be as wealthy as many in the other group at that stage, might perhaps have smaller annuities, might be in more modest circumstances, is not included? Is it not a serious omission on our part not to provide something in this section to cater for such cases? This is the general case I make to the Minister demurring at the actual wording of the amendment, but then after all Opposition amendments very often have to be of this nature. It takes the Minister's resources, and the professional advice, to perfect an idea. The Minister has listened and has amended his BIlls, after listening to discourse of this nature here and, notwithstanding the strains and the difficulties of the moment, I am sure he would still wish to take the same attitude now.

We have heard a lot about the philosophy of envy one way or the other and that is a terrible thing no matter how it is applied and it must, therefore, be eradicated. We must not be shy to support the victims of that philosophy or of a campaign of that nature wherever they lie, in the public sector or anywhere else. I pointed out on Committee Stage that in the public sector many people in onerous positions by comparison with what will be found in private enterprise, in what I call the public sector of private enterprise, were poorly remunerated for their labours. The dangers are becoming more obvious every day. Where disparities develop problems are bound to arise. Where problems arise nowadays they are apt to spread and local solutions are apt to be applied generally and if they are not applicable generally something has to give somewhere. All that so far as taxation is concerned can be avoided by a little trouble to get scrupulous fairness in approach. On that general ground I support Deputy Fitzpatrick's plea. May I point out to the Minister that what we are seeking is not to modify what is here which is excellent; it is to add that little bit that will provide for that one area which to a large extent is excepted, and try to get this uniformity of approach that would make everybody feel that taxation law was, like Caesar's wife, absolutely above reproach.

Mr. Colley

The Minister when speaking on this amendment used some rather intemperate language in relation to representations made to him from outside this House on this matter. When I was proposing the amendment I said I was aware of some of the representations made to the Minister, and to the Taoiseach. I said some of them were in fairly strong language. It could be said that the Minister's language was equally strong. While it is interesting to note the Minister's reaction to those representations it was particularly interesting to note his reference to such representations being motivated by envy, amongst other things. It was interesting in the context of the Bill and the methods used by the Minister to try to sell the whole idea of this Bill. It seemed that the Minister was getting a small taste of the same methods being used against what he was proposing, and he did not like it. I would agree with him; I do not think much of the politics of envy either whichever way they are used.

However, the reality of this amendment and the merits of it are another matter. I was aware, more so than anybody else, of certain snags arising out of the drafting of these amendments. I know a number of the difficulties that are not covered. I do not consider it to be my duty to usurp the functions of the Parliamentary Draftsman but rather to indicate in the amendments the basis on which this difficult problem could be approached. I was not happy about the use of the phrase "civil servant" in the amendment but, as Deputy de Valera surmised, there was a reason for that use. I have no doubt that the Parliamentary Draftsman would have a better way of putting this but I was not anxious to use the phrase "public servant" because there have been disagreements on what is precisely meant by "public service".

The Minister will recall that when he was introducing a Bill to establish the Department of the Public Service he referred to the difficulties which arise in this regard. He may recall that in the Devlin Review Group's Report reference was made to this and, for the purposes of that report, the public service was assumed to cover the civil service, the semi-State bodies and the local authorities. That is the only reason I used the word "civil servant" in this amendment.

The substance of the amendment is to try to ensure that as far as possible the same treatment is afforded for the purpose of this Bill to a person who is employed in and entitled to the benefit of the pension scheme that applies in the civil service and in the Houses of the Oireachtas to those who are not so entitled as regards pension rights. The Minister said that the Bill exempts the right to receive a pension or an annuity, but it exempts the property of a superannuation scheme or fund so that there is more involved than merely the exemption of the right to receive. The Minister talked about "the present value" of say, a pension or an annuity. That is true as far as it goes but we should remember that it applies to the present value, not merely the present value on retirement. Under these public service schemes there is an entitlement which exists for many civil servants now, even though they may not be retiring for ten years and that entitlement has a present value, a capital value.

The Minister made the valid point that there is a difference between a person being entitled to a pension which has a capitalised value of £X,000 on the one hand and a person who actually has £X,000 on the other. I agree there is a difference in value, but would the Minister accept also that there is a difference between a person who has a right to receive a pension, the present value of which is £X,000, and a person who has nothing? I do not know how the difference can be measured between the £X,000 and a pension right which is worth in present value £X,000 but if there is a formula by which the difference can be measured I would have no objection whatever to the application of the formula to a taxpayer who had wealth worth £X,000 and if one applied the formula to it to reduce that value for the purpose of exemption under this section, I would have no objection at all to that if such a formula is available and can be devised. But to pretend that a self-employed person who has no superannuation rights at all can with justice have whatever capital he owns subjected to wealth tax, while somebody who has pension rights which have at present value in capitalised terms the same worth as the capital of the self-employed person should be exempt, and to suggest that this is equal treatment, is I would suggest, merely to engage in semantics.

The Minister may make all the distinctions he wishes, the academic distinctions he was trying to make when he was dealing with this amendment between the entitlement of a person under the civil service pension scheme—I am using that as a shorthand—on the one hand, and the person in the private sector who has his business or capital or whatever, on the other, does not alter the fact that for the man who is retiring without benefit of the civil service pension scheme there is an enormous difference. To tell him that he is being treated equally under this Bill is something that you will not convince him of, and rightly in my opinion, because there is a difference in approach and there is a difference in treatment involved in this.

As I said when proposing the amendment, there is a stark difference between the self-employed man who has no pension scheme and who is dependent on selling his business or the goodwill of his practice, or whatever, when he retires to provide for his own retirement, and the person entitled under the civil service pension scheme on the other. That is the stark contrast: clearly there is not equality of treatment.

But I should like to make it clear that there are far more people concerned with this than simply the self-employed who have no provision for their own retirement. Everybody who is not entitled to a pension on the lines of the civil service scheme is involved. That includes people employed in semi-State bodies, people in the private sector, all of whom may have pension schemes which are in effect exempt under this section, but none of whom has pension schemes which will give comparable benefits to the civil service scheme. Therefore, to the extent that there is a difference in the capitalised value, they are not being treated in the same way as the civil service and they are not being allowed to accumulate a sufficient amount of capital to equalise their position with that of a comparable person under the civil service scheme without being subject to wealth tax. That is what this amendment is all about.

I do not suggest, nor have I suggested, that this is a matter easy of solution. The Minister touched on one of the difficulties involved, of which I am conscious, in measuring the income of people, say, who are self-employed, but presumably one would operate on the basis of their income tax returns. Some people might suggest that they were not accurate. That would be too bad for them in my view, but it is a measure that is available to the Revenue Commissioners.

The real point at issue here is that if the will is there to try to achieve reasonable equality, an effort can be made on the lines of this amendment, but the Minister unfortunately has made it clear the will is not there as far as he is concerned. He either has convinced himself or has allowed himself to be convinced that there is no problem here and that there is no difference in the method of treatment being dealt out under section 7. I want to tell him firstly that there is a problem here and many people are conscious of it.

Secondly, there is an enormous disparity in treatment under this section. It simply is not good enough to say we are exempting all approved pension schemes, whether in the public or private sector. That is simply glossing over the realities of what is involved. If a man is retiring today it makes an enormous difference to him whether he is to receive a pension of £X a year or half £X a year. If he is to receive only half £X a year and that is not to be allowed to accumulate sufficiently to make up the other half £X without being subjected to wealth tax while certain people are allowed to have £X a year pension without being subjected to wealth tax, how can you convince him that he is being treated equally with other people? There is no way you can do it because he is not being treated equally.

That being so, the Minister in refusing to accept this amendment or even the principle of this amendment is guilty in my view of engaging in unfair treatment of people who, as was pointed out earlier, particularly by Deputy Brugha, are people who are vitally important to the economy of this country on which most people, a relatively small category, are depending for their living and occupations. To refuse to give such people equal treatment is in my view both inequitable and very misguided in the long-term interests of all of us. Yet that is what the Minister is doing.

As we had to say in regard to other amendments, if the Minister is doing so he is doing it fully conscious of the consequences. If he was not conscious of them before he is now because we have drawn his attention to these consequences. We have gone so far as to indicate in these amendments the way in which the problem might be tackled, but the Minister either is not interested or does not think it is worthwhile. We think it is worthwhile and very important and the failure of the Minister to do this is a consequence accruing on his head and not on ours. We have done our best.

Amendment put.

The Dáil divided: Tá, 62; Níl, 69.

Tá

• 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.
• Fahey, Jackie.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzpatrick, Tom. (Dublin Central).
• French, Seán.
• Gallagher, Denis.
• Geoghegan-Quinn, Máire.
• Gibbons, James.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Herbert, Michael.
• Hussey, Thomas.
• Kitt, Michael P.
• Lalor, Patrick J.
• Lemass, Noel T.
• Leonard, James.
• Lynch, Celia.
• Lynch, Jack.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Murphy, Ciarán.
• Nolan, Thomas.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Power, Patrick.
• Timmons, Eugene.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Níl

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Bermingham, Joseph.
• Clinton, Mark A.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Corish, Brendan.
• 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.
• Fitzpatrick, Tom. (Cavan).
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Patrick.
• Hogan O'Higgins, Brigid.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Byrne, Hugh.
• Jones, Denis F.
• Kavanagh, Liam.
• 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.

Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.

Amendment declared lost.

Amendment No. 15 not moved.

Mr. Colley

I move amendment No. 16:

In page 11, line 56, before "gardens", to insert "houses or".

The Minister introduced an amendment to exempt from liability for wealth tax certain gardens, subject to various conditions, rightly in my view. This amendment seeks to apply the same exemption, subject to the same conditions, to certain houses. I mentioned in the discussion on the Committee Stage as a possible example Castletown House. I do not like mentioning specific places. I do not know the situation there, whether it is the principal residence of the owner. I rather think not. I am mentioning this as an example of the kind of place I have in mind. There are some such cases around the country, not very many, where the property concerned has a high capital value with little or no income value. It seems to me that we ought, subject to the conditions which are laid down by the Minister in regard to certain special gardens, apply the same exemption to houses of this kind which have a particular interest historic, artistic or otherwise as defined in the section.

It was suggested from the Minister's side of the House on the Committee Stage that we could see how this operated and then, if necessary, the Bill could be amended. I want to suggest to the Minister that that is the wrong approach because by the time it is discovered that the amendment should be made some of these places may well be demolished and nothing can be done then. I would suggest that the correct approach is to accept this amendment and then if it is found subsequently that it is not necessary or that it is open to any form of abuse, although I cannot see how it could be, then to amend the legislation by deleting this. To operate on the other basis is leaving the matter to chance and with the impact of wealth tax on properties of the kind I am mentioning which have little or no income almost certainly it will lead to demolition of houses of particular interest which should be retained.

There cannot be any real significance as far as the Minister is concerned from the point of view of revenue in accepting this amendment. It would be very unenlightened of this House to pass this legislation without a provision of this kind. I would therefore strongly urge the Minister to accept the Amendment with the possibility always open that if it turns out in due course to be unnecessary or to need modification that can be done. Not to do it now may mean it will be too late if any change is made in due course.

Ruairí Brugha

When a similar amendment was being discussed on Committee Stage the Minister for Lands standing in for the Minister for Finance said that it was not really that important because if houses of this kind were there they could not be of very much value and therefore would not rate in the assessment of a person who owns such a house. That may be true up to a point; it depends on the method of valuation. The principle which the Minister has included running through this section 7, in regard to pictures, prints, books, manuscripts and so on, things of a national, scientific, historic or artistic interest and gardens situate in the State which appear to be of national, scientific, historic or artistic interest must also apply in the case of houses of a similar kind. As Deputy Colley has already said, the amount would not be very great. At least it is marginally worthwhile retaining such houses rather than that the owner would feel that it was being added in against his estate for wealth tax and therefore would dispose of it. The basic idea behind the amendment is desirable and ought to be considered by the Minister.

Mr. R. Ryan

On the Committee Stage I exempted gardens which were of national, scientific, historic or artistic interest, provided reasonable facilities for viewing were available to the public. As has happened with virtually every step of capital taxation legislation, every time I have given an inch people have demanded a mile. Were it not for the fact that I am of a generous disposition. I might long since have resisted even moving an inch because of the advantage people took when I moved at all.

Let us face some of the practical problems that would arise if we were to accept the amendment. Who would determine what is a house of historic interest? Would it be historic merely because somebody was born there or somebody lived there? We have had near riots in this city in recent times because houses were about to be pulled down which had no historic association other than that some people lived there for a while. Are such houses to be exempt even if they are used for business offices? I can think of some such within 500 yards of where we are meeting tonight. Or, would you provide that if they were used for business purposes and were of an historic value that would exclude the right? Or, supposing you had a house which was of historic interest because somebody was born there—I can think of a number of such houses in this city with plaques on the outside commemorating the fact that writers of plays or books or artists have been born there, quite clearly there would be a serious administrative problem if the amendment were to be accepted.

Unlike Deputy Colley who says give a generous exemption and hope for the best that it is not abused and then come in and tighten it if it is, I would prefer to have the Bill providing reasonable exemptions which can be effectively managed and administered and if particular difficulties come to light then to legislate, if need be, retrospectively, to provide the relief. In most cases if a house is habitable it will be occupied. If it is not occupied it may well be that the owners of it are abroad and have decided not to live in it. That is their decision. If they lose exemption as a consequence of that it might be an encouragement to them to return to live here in order to get the exemption.

I do not believe that there are many houses which would be of the type described by Deputy Colley. The strange thing is that none that I know of has been brought to our notice in the course of the representations that have been made. Prior to the publication of the Bill and following the publication of the White Paper there were quite a number of representations made about houses and gardens and other places like that being provided with exemptions where they were reasonably accessible to the public. I cannot recollect that we received any representations since the publication of the Bill, which leads me to believe that people must be reasonably happy that the provisions of the Bill cover the genuine cases.

The best thing to do is to pass the Bill as it stands. It would be inadvisable at this early stage to make any further amendment in it. We will watch the situation and in the light of experience and full knowledge of the realities of the situation rather than the suppositions, we can consider whether or not amendments of the law are required in the future.

Ruairí Brugha

If there were not any it would not matter.

Mr. R. Ryan

I suppose not.

Mr. Colley

First of all let me say, to the best of my recollection, on the Second Reading of this Bill I urged the Minister to provide this exemption in respect of both houses and gardens of historic interest. The Minister brought in an amendment to cover gardens, not houses. Then we have this extraordinary approach by the Minister in which he says "I am generous and then people are pushing me. When they get an inch they want a mile." I do not know if the Minister realises just how much he is revealing when he says this. Of course, the Minister's approach to this ought to be, "Is this worthwhile? Is it a good thing or is it not?" It has nothing to do with the Minister's generosity or lack of generosity. It is a question of what is right or what is wrong in his judgment and in our judgment. I find it a little disturbing, to say the least, to hear a Minister talk in these terms. The present Minister for Finance is not the first Minister to talk in these terms, nor is he indeed the first Minister for Finance to do so, but he ought to cop himself on. No matter which of his predecessors spoke in that way before it is a wrong approach to the position of the Minister for Finance. It is an introduction of a personal approach when it should be, as far as the Minister can do it, an objective approach. The fact is that the Minister said in effect that it was not possible to distinguish what would be an historic house and what was not. Did somebody live there, was somebody born there and so on. How is he going to distinguish a garden of historic interest, which is precisely what he is providing in the Bill? Does it depend on whether Master McGrath is buried there or what? What is the use in telling us about these difficulties when the Minister already has them in the Bill and contemplates them?

The fact of the matter is that a house which is a principal residence is already exempt and of the remaining houses very few could qualify for the conditions which are laid down, those conditions being "which on a claim being made to the Commissioners appear to them to be of national scientific, historic or artistic interest and in respect of which reasonable facilities for viewing are allowed to members of the public or to recognised bodies or to associations of persons." Given that you can exclude all houses in the country which are principal private residences, and given that you can exclude in addition all other houses which do not comply with those terms which are in the discretion of the Commissioners substantially, you are left with a very small number of houses involved.

To talk about an office block possibly qualifying under this seems to me to be ridiculous. The Minister must know it is ridiculous to suggest that. The real point at issue here is that if there is one such house as is envisaged here and if it is not exempted and as a result of the failure to exempt it it is demolished, the Minister can himself go down in history—he may go down in history for other reasons—as a vandal because there is good reason why this exemption could not be given and monitored to use a favourite phrase of one of the Minister's colleagues. If it is necessary, in due course, to amend the provision, this can be done. What use is there in the Minister coming along subsequently and saying that it had been demonstrated to him by reason of the demolition of A, B and C that it is necessary to have this provision, and, therefore, they will amend it? That is no good. The Minister cannot seriously contend that there is any realistic danger of avoidance or evasion under a provision of this kind which is, as I say, in the discretion of the Revenue Commissioners and which is being applied in the case of gardens. My sole concern in this matter is to try to ensure that the operation of the wealth tax will not, amongst the other items of damage it does, cause the demolition of the few houses in this country which are not the principal residence of anybody, and which are of national historical, scientific or artistic interest and which are available to reasonable viewing by members of the public or groups of members of the public.

I would have thought that the Minister would have no difficulty in accepting a proposal of this kind. It is very disappointing that he finds himself unable to accept it. That being so, I can only say we have done our best, and if any of these buildings are demolished let the Minister remember who was the vandal responsible for what happened.

Mr. R. Ryan

If I go down in history for the reasons suggested by Deputy Colley presumably the house where I was born would have historic value.

Mr. Colley

It would hardly be one to which members of the public would be seeking access, I would suggest.

Amendment put and declared lost.

Mr. Colley

I move amendment No. 17:

In page 12, between lines 8 and 9, to insert the following: "(m) productive property situate in the State."

This amendment seeks to exclude from the operation of wealth tax productive properties situate in the State. It goes very close to the kernel of what most of this debate has been about. I do not propose to repeat all the arguments which have been advanced in the past in relation to the taxation of productive assets. I propose to give the Minister what, in effect, will be a final opportunity to avoid the worst effects on our economy of the wealth tax as proposed by him.

Our economy at the time the Minister took over as Minister for Finance was, relative to today, absolutely booming. Even if the economy were in that position today, in my view it would be ridiculous to apply a wealth tax to productive assets. I say that because relative to our competitors, and in particular to our EEC partners, we are substantially an underdeveloped economy. Anything the Minister wants to say about the manner in which wealth tax is applied in other countries has to be borne in mind. It is of some significance that some of the richest countries in the EEC have no wealth tax. Even if they all had a wealth tax, it would still not justify the imposition of a wealth tax on productive assets in our situation. When one looks at the situation in which we are today, it absolutely escapes me how anybody can attempt to justify the imposition of a wealth tax on productive assets given the unemployment situation, the inflationary situation, the contraction in our economy and the paramount need to get people back into jobs and to get our economy growing. Given that paramount need —and I do not think anybody would dispute that that is our paramount need—how can one justify the application of a wealth tax to productive assets? To the extent that it operates, be the yield large or small, it will be an additional charge whether on agriculture, industry, distribution or whatever productive sector of the economy one looks at. Where will that money come from? Is it not clear that the great bulk of it will come from increased prices? Is that not what always happens with the imposition of additional overheads, whether in the form of tax, interest or any other form? It goes on to the cost of living.

If it is to go on to the cost of living in relation to what might be termed as luxury or semi-luxury goods, one might live with it. Leaving aside the problem with which the Minister is extremely familiar of the impact in that regard on the consumer price index—I am ignoring that aspect of it at the moment; I am simply talking about the impact of this on prices of what are in effect basic and essential commodities—there is no use saying that this will not happen, because that is precisely what is going to happen. This is where the money will come from. Is that sensible? Is that something which will in any way help us to get our economy moving and get people into employment? Is it not obvious that the very best that could be hoped for would be that it would be neutral? In fact, it will not be neutral, it will be quite negative in its approach and in its effect.

There is no doubt that the Government have, belatedly perhaps, recognised the need to do something to get people back to work. They have recognised that, in concrete terms, by introducing a measure to provide an employment premium of £12 a week in respect of each person taken into a job, in effect off the dole. I said, when that was announced, that while there might be some difficulties of administration it was an imaginative measure. What kind of imagination is needed to encompass the giving of an employment premium with one hand and the taking back with the other of an additional tax on the very people to whom we are giving the employment premium? Certainly, the Minister may be imaginative and, maybe his imagination can encompass this, but mine cannot. It does not make any sense. I feel that it is so self-evident that wealth tax should not be imposed on productive assets, that it hardly needs to be argued. But apparently with the Minister it does need to be argued.

The Minister for Finance said that if we exempted productive assets what would be left? I told him at the time that I did not know what percentage of potential assets which might be subjected to wealth tax would be involved in productive assets, but I guess a very high percentage. The higher the percentage involved the stronger the case for saying that we should not apply wealth tax to productive assets. If we are left then with a very small base for the wealth tax, that is a problem the Minister should consider—whether it is justifiable to apply a wealth tax to such a small base. Of one thing I am absolutely certain, and that is that it makes no sense in our circumstances to apply a wealth tax to productive assets.

On productive assets, on the willingness of people to use their assets productively, depends the hope of this country. On that depends the hope not alone of getting a number of the 101,000 on the unemployment register at the moment back to work, but on preventing the numbers on the regiter going through the 130,000 or more mark. On the use of productive assets and the willingness of people to use their assets productively, depends our hope of getting our economy moving again, of getting growth in our economy, of enabling us to pay our way, to advance in the social, educational and other fields not, to quote the Taoiseach, with the goodwill of the creditors and living on borrowed time, but on our own efforts on wealth produced here by people willing to invest their assets productively. That is what we are depending on. In my view, nobody in his sane senses could suggest that the application of wealth tax on productive assets, particularly in our present circumstances, can do anything but cause further damage to an economy which is already reeling.

When one considers that not alone does this Bill propose to apply wealth tax to productive assets, but it proposes at the same time in certain circumstances to exempt from wealth tax investment by foreigners but to apply wealth tax to assets productively invested by Irish people, one finds it unbelievable that the Minister would seriously put such a proposal before this House and get Deputies to come in and vote for it. There are two reasons why he is getting Deputies to vote for it, one, most of them do not know what the Minister is doing, and the other is that the Whip is being applied very strongly. But even with the Whip being applied very strongly, I do not believe that every Deputy on the Fine Gael and Labour benches, if he knew what the Minister was doing, would support this. To make any such proposal and to support it in the division lobby can only mean that people do not care what happens to our economy, no matter how bad it gets. They are still anxious to plough on with this irrelevant, to say the least of it, but in my view very damaging proposal of the application of wealth tax to productive assets. If this Bill goes through in its present form, not alone will damage be applied at a most crucial moment in our history when our economy can least afford it, but we will find factories, hotels, supermarkets, and other businesses will be taken over by foreigners, who will not have to pay wealth tax, as against Irish people who do.

As I said, this amendment is designed to offer the Minister a last chance to step back from the abyss into which he is trying to rush headlong, bringing the country with him. If he were rushing along on his own, it would be his own business. I would be sorry for his own sake to see him do it, but it would be his business. But he is not just going on his own; he is bringing the rest of us with him.

Mr. T.J. Fitzpatrick

(Dublin Central): That is the tragedy.

Mr. Colley

The damage that has already been done to our economy by this Minister and his colleagues is such that it should make even the present Minister for Finance pause for a moment to think what he is doing and see if it makes any sense. It is no good talking, as the Minister possibly will and as he has done before, about death duties. The Minister is imposing here an annual tax. Death duties were a tax arising on a once for all situation. It was possible in most cases to cope with it, with difficulty sometimes, but to cope with it, without putting a farm or a business out altogether. When I was Minister for Finance I was advised by the Revenue Commissioners that they had no evidence of any farm or business at that time having to be disposed of because of the incidence of death duties. It was true that some places were disposed of and death duties were paid out of them but that was because of the incidence of other deaths and other circumstances in conjunction with death duties. I am saying that because the Minister may be tempted to tell us that death duties were payable in respect of productive assets. If they were, they were on a once for all basis and could be handled in quite a different way from an annual tax, which the wealth tax is.

Furthermore, it is quite unfair and misleading to suggest that one can compare simply death duties with wealth tax on productive assets. The Minister is well aware that he is bringing in, and has brought in, other legislation which can affect these assets too, capital gains tax and inheritance tax. All these are at one point or another in their passage through the Houses of the Oireachtas. If one wants to make any comparison, one has to compare the whole lot. Even in regard to those other taxes, capital gains, gift and inheritance, they also are once-for-all taxes arising on one situation. They are not an annual tax.

Apart from the economic impact of an annual tax, there is a psychological impact involved which the Minister should not underestimate. To apply that tax in all circumstances to productive assets is something that no Minister for Finance should be guilty of and, in particular, no Minister for Finance whose primary concern should be how to get this economy moving again and how to get people back to work. How can the Minister reconcile that duty with what he is doing here, imposing wealth tax, in conjunction with the other taxes, on productive assets? I cannot understand how the Minister can justify this. I want to make it quite clear that we have no doubt at all about the enormous potential damage involved in all this and the purpose of this amendment is to give the Minister one last chance of pulling back from this abyss into which he is rushing headlong and dragging the rest of us with him.

Mr. R. Ryan

I had hoped we had heard the end of Ard-Fheis speeches or, at least, Second Stage speeches. Apparently not. We still have to listen to them. I must bring Deputy Colley's record over to the next meeting of the Finance Ministers in Europe, the next meeting of the OECD, so that they will all know that the world economic slump arose out of the publication here of the White Paper on Capital Taxation in February, 1974.

Mr. Colley

Did I say that?

Mr. R. Ryan

The Deputy inferred it. It is so childish we do not have to bother dealing with it. It is time all this was dropped because it carries no conviction. All that it does is illustrate the paucity of opinion the Opposition have on economic matters. It also, perhaps, illustrates their vindictiveness so far as wealth tax proposals are concerned. Ireland is the only country in the world which recognises the concept of productive assets in a wealth tax.

Ruairí Brugha

What about countries which have not got wealth tax?

Mr. R. Ryan

Some of them, like Belgium, have a much higher cumulative taxation of capital.

Ruairí Brugha

What about Australia and France?

Mr. R. Ryan

Names mean absolutely nothing.

Ruairí Brugha

The Minister said every country in the world.

(Interruptions.)

Mr. R. Ryan

It is the cumulation of tax that matters. I do not know of any country that has a cumulative tax rate as easy as ours.

Mr. Colley

The Minister is rattled now.

Mr. R. Ryan

Far from being rattled, I am tickled pink. I did not think that after so many months I would find any light relief in this debate, but I do at this late hour when I hear people suggesting that all our economic ills would be cured if the Government were to withdraw the Wealth Tax Bill.

Mr. Colley

The Minister did not hear that tonight.

Mr. R. Ryan

Get people back to work, get the economy moving.

Mr. Colley

And that is what the Minister should be doing.

Mr. R. Ryan

This is a last chance to revolutionise ourselves. That is what Deputy Colley said. He said we would get the people back to work by abolishing the wealth tax. The Opposition are, of course, now trying to jump on the National Coalition band-wagon——

Mr. Colley

God forbid!

Major de Valera

The Minister is on some wagon now. It is only a two-wheeled one.

Mr. Dowling

It is an old crock.

Mr. R. Ryan

Hold your whist. The Opposition realise that the Government are doing the right thing by giving special treatment to productive assets. Deputy Colley spoke about our approach to wealth tax. We are the only country in the world to show imagination on this front. I used the words "productive assets" as far back as the 15th May, 1974, and people seized on to the idea. Let us look at the track record of Fianna Fáil and see what they did with productive assets.

Mr. Colley

Let us look at what the economy did under Fianna Fáil.

Mr. R. Ryan

Did they exempt productive assets from income tax? No, they did not. Did they exempt productive assets from death duties? No. They never thought about giving different treatment to productive assets.

Major de Valera

I suggest the Minister looks at the economic programme for expansion.

Mr. R. Ryan

Did they exempt them from corporations profits tax? No, they did not. Did they exempt productive assets from death duties? No. They never thought of giving any special treatment to productive assets until this imaginative and enlightened Government drew attention to the desirability of giving more favourable treatment to people with productive assets.

Deputy Colley suggests that the effect of this will discourage people from putting their money into productive assets. I find that difficult to understand. If a lower rate of tax is charged on productive assets than on non-productive assets, surely the encouragement is to transfer the assets from the non-productive into the productive so as to enjoy a lesser rate of tax. Of course, if you want to pretend that productive assets are being penalised, then you suggest the reverse. Those who gave no exemption from corporation profits tax, no exemption from income tax and no exemption from death duties on productive assets are hardly in a position to chastise this Government which is giving more favourable treatment tax-wise, to productive assets than assets which are in any other form.

The failure of the Opposition when in Government to show any imagination in respect of productive assets is a measure of their insincerity in the amendment they now propose. Very generous provision is made in varying degrees in section 10 for all forms of productive property. The relief goes so far as to extend to shares in trading companies, a fact which has been praised by at least one foreign commentator, The New Law Journal of July 3rd, 1975, page 650 states—and I commend this to the capitalist Fianna Fáil Party——

Mr. Colley

To which party is the Minister referring? The Socialist Fine Gael Party? Let us be clear.

Mr. R. Ryan

I quote:

Capitalists can thus take heart that the Irish Government has equated the ownership of shares with the direct provision of employment.

There is an objective, impartial, dispassionate international commentator, a man not strained by the efforts to gain a miserable passing political advantage in Ireland. It is an international recognition that, quite contrary to what the Fianna Fáil Party here are suggesting, the Government of Ireland respect, not merely by their view but by the concessions which they give, the great contribution which capitalism has to make in the direct provision of employment.

This Bill breaks entirely new ground both at home and abroad and it may well be that other countries may yet seek to follow our example because they will appreciate that this is an imaginative and positive contribution to the encouragement of using wealth for productive rather than non-productive purposes. We have argued in our White Paper and on several occasions since that a wealth tax by itself will of its nature encourage people to put their assets to productive purpose. It certainly will encourage people to invest in a form which will yield an adequate income to cover not merely current income but also sufficient to pay the tax and even if we have not got an easier rate of interest for productive assets, wealth tax will have that beneficial effect. People will shift their assets from non-income earning negative forms of assets into productive ones which, by being productive, will provide employment. Remember, our definition of productive assets is assets which provide employment in Ireland. It is not an abstract definition unrelated to employment promotion. It is specifically in relation to the provision of employment a very positive encouragement. It is certainly not deserving of the derisory comments, or worse, from Deputy Colley or any of his colleagues. We are providing positive encouragement by a lower rate of tax on productive assets. We are providing the encouragement to put assets into productive forms to provide employment because, by so doing, people will obtain for themselves an income greater than they would if they left the assets in some sterile non-productive form. It is a reasonable assumption from the record of the Opposition when they were in Government and from what they have contributed to this Bill that, were it not for the fact that we have given such special treatment to productive assets, they would not have considered the issue at all. At best, this amendment is an effort by the Fianna Fáil Party to suggest that the wealth tax system can be used in some way to promote productive use of wealth, but that is already in the Bill itself. It is a concept we preached from the beginning which Fianna Fáil were unwilling to accept. They are still unwilling to accept it takes the form——

Ruairí Brugha

To demote, not promote.

Mr. R. Ryan

I am sorry, I have lost the context in which I used the word. The wealth tax scheme and the specific measures of this will have the effect of promoting employment. This country is saturated with many forms of wealth which produce no employment whatsoever——

Major de Valera

It will produce plenty of administrative employment.

Mr. R. Ryan

——not earning income, but the new package of taxation will ensure that people will take steps to earn themselves an income, and what better way to do it than by applying the assets in such a way as to promote employment and thereby have a rate of tax which will only be .8 of 1 per cent, the lowest rate of capital taxation in Europe? When you take the very generous thresholds in addition to the rates and the total exemptions for some property in the Bill, it is fair to ask, as I asked on a previous occasion but did not get a satisfactory answer from Deputy Colley, the question: if you give this total exemption what is left to be taxed?

Mr. T.J. Fitzpatrick

(Dublin Central): The non-productive assets the Minister has been speaking about.

Mr. R. Ryan

It has been argued that it is wrong to impose any tax on productive assets and, therefore, the private home should be taxed and its contents should be taxed and not the productive assets. Is that the argument of the Opposition? Are they going to argue that?

Mr. Colley

We are the ones who told the Minister to take the private home out of it. He was not proposing to do so.

Debate adjourned.