I was explaining the great difficulties which would arise if the suggestion contained in the amendment were to be entertained and Deputy de Valera posed to me the specific question as to what problems of valuation would arise. As Deputy Colley acknowledges there are many aspects to the valuation of company shares. Valuation of underlying assets is a somewhat easier matter to determine if each asset can be valued in isolation but if, having made your valuation of the shares, you were to proceed to subtract the market value of a particular asset or try to make an apportionment you could well end up with a figure for the shares which would be quite artificial and quite different from the market price of those shares if the shares were to be sold on the open market.
Wealth Tax Bill, 1975: Report Stage (Resumed).
It should be different because the market value does not have regard to exemptions under section 7.
I would not say that it should be different but it would be a coincidence if it turned out to be the same. It would be very seldom that they would be exactly the same because, of course, share values can often not be even the equal of the underlying assets. There is frequently argument about whether or not shares are properly valued having regard to the value of underlying assets. Quite clearly all these problems would be multiplied if the suggestion were entertained. I would respectfully suggest that the amendment is not well founded and, therefore, there is no need to concern ourselves with the problems of valuation. I do not imagine it is necessary for me to go into any illustration of the points I have made. I think they are self-evident and from what Deputy Colley has said about the asset value and the share value not coinciding I think he understands the specific problems which would arise.
I understand the problems but I do not accept that they are insoluble as the Minister seems to suggest. The Minister said before the break that he felt it would be most unusual to have a company whose assets included the items exempted by section 7. I do not think this is so. For instance a trading company which is engaged in farming would certainly be likely to have a considerable amount of its assets consisting of livestock coming under the exemption in subsection (1) (c) of section 7. I already mentioned the possibility of a company having as a considerable portion of its assets bloodstock coming under paragraph (d). It is quite unrealistic to say that where such assets are held by a company no account should be taken of the various exemptions in section 7. In effect that is what the Minister is saying as I understand him. Quite apart from the difficulties which he has referred to he is saying it would be wrong anyway to give this relief. That does not seem to me to be correct but anyway if the Minister intends the exemption in section 7 to apply only where the assets are held by an individual then the section should say so. The Minister will note that the exemption in relation to a dwellinghouse is specifically confined to an individual. The exemption in respect of livestock is confined to a person—which, of course, includes a company—who is a farmer within the meaning of section 10. Bloodstock is exempt without any qualification at all but what the Minister is saying is that, in effect, none of these exemptions is to be available except where the property concerned is in the hands of an individual, that if it is in the hands of a company it is not to be available. If that is what the Minister's intention is I think the Bill should say so. It does not say it. For the reasons I have indicated I do not think it should say it but if that is what the intention is the Bill should say that. Where it specifically confines some exemptions to an individual and then, in other cases, does not mention any limitation the clear implication is that where no limitation is mentioned it is intended to be available to any taxpayer as defined in the Bill. In practice that is not so and the Minister has indicated that his intention is that it should not be so.
In those circumstances I would suggest that section 7 is defective to the extent that it does not make clear that that is what is intended. Indeed it may well be argued in due course that because of that difference in approach in section 7 the meaning of section 7, for instance in the case of bloodstock, is to apply the exemption to all possible taxpayers under this Bill. There may be some interesting court cases arising out of this. The acceptance of my amendment or alternatively the clear statement in section 7 that it is intended only to apply property in the hands of individuals would obviate such a risk but the Minister does not seem to be prepared to accept either. It may be that the Minister is becoming enamoured of ambiguous statements. He is certainly engaging in that in this section in refusing the amendment and refusing to spell out in the section what he has said in the House. Either way it is unfortunate but I do not wish to take up any more time on this matter when it is quite clear that the Minister does not intend to accept it or to amend the section to correspond with what he says is the intention.
Amendments Nos. 19 and 20 are related and may be discussed together.
I move amendment No. 19:
In page 12, line 42, after "each" to insert "such".
This amendment is concerned with subsection (1) of section 9 which deals with the valuation of shares in a private trading company held by an assessable person who controls such a company. In the course of the Committee Stage, it was pointed out that the subsection as drafted was ambiguous and, as the Deputy knows, I do not like ambiguity.
The Minister could have fooled me.
It was pointed out that the subsection was ambiguous in that it was capable of being read in reference to all the shares of the company and not, as was intended, to the shares in the hands of an assessable person who had control. The amendment removes the ambiguity and makes the position clear. The section applies only to shares in the hands of the assessable person who has control of the company. This is done by the interpolation of the word "such" with the result that the section refers to the market value of these "such" shares—that is the shares referred to in the immediately preceding lines, namely, those, and I quote:
included in the taxable wealth of an assessable person on a valuation date.
Deputy Colley's amendment No. 20 is designed to produce the same result but, with respect, I would suggest to him that the words he has added to the word "such" are not required in the circumstances and the insertion of the word "such" suffices to achieve clarification of the position.
As the Minister says, both his amendment and mine are designed to do the same thing. The only question which arises is do they, in fact, both do it and, if so, of course the Minister's amendment is the one that should be accepted. I must confess to having some doubts as to whether the Minister's amendment does what he wishes it to do and I think my amendment leaves it beyond any doubt. If the Minister looks at the subsection, it reads:
Where there are included in the taxable wealth of an assessable person on a valuation date shares in a private trading company which is a company controlled by that assessable person on that date, the market values of each such share——
Now it will read with the Minister's amendment in—
shall be ascertained, et cetera.
I think the Minister said that "each such share" would then be referring to the share in the taxable wealth of an assessable person. That is clearly the intention. I would suggest to the Minister that it could be read as meaning "each such share" as referring to the shares in a private trading company which is owned by that assessable person. This was the original cause of the ambiguity and the reason why we were trying to clarify it. I am suggesting to the Minister that, although the wording in my amendment is longer, it is clearer. It would read:
each such share included in the taxable wealth of that assessable person...
That leaves no room for doubt as to what is involved.
The significance of all this, of course, as the Minister appreciates, is that unless we make it quite clear what is intended the result would be that a minority shareholder would find his shares being valued for the purpose of wealth tax as though he controlled the company when in fact he does not. I am suggesting to the Minister that, even with his amendment, the references to "each such share" can be interpreted as "each such share in a private trading company controlled by the assessable person" whereas in my amendment "each such share included in the taxable wealth of that assessable person" leaves no room at all for doubt. For that reason, I would urge the Minister to accept my amendment No. 20 rather than his amendment No. 19.
My natural inclination to be humble would lead me to accept the Deputy's amendment if it had greater merit than my own, but I am satisfied that the one word I seek to insert achieves the goal we both have in mind. I would point out that the word "shares" in line 40 refers only to shares which are included in the taxable wealth of an assessable person on the valuation date. Therefore, the words which Deputy Colley seeks to insert after the word "such" are already in the subsection and the shares can relate only to——
Would the Minister look at that again? I am not quite sure that he is right.
Where they are included in the taxable wealth of an assessable person on a valuation date: what are we considering as being included? Shares of an assessable person on a valuation date—only shares in a private trading company which is a company controlled by that assessable person on that date.
That is right, but where part of the taxable wealth includes shares in a private trading company which is controlled by the assessable person, that is when the whole operation arises. Then when we refer to "each such share", cannot that reference to "each such share" be to shares in a private trading company controlled by the assessable person?
Only when they are included in the taxable wealth of an assessable person.
But, if they are included, then the reference can be to the shares—in other words, all the shares in a private trading company. The subsection only arises if some of the shares in a private trading company so controlled are in the taxable wealth of an assessable person; otherwise it does not arise at all. But, once it does arise, is there not the possibility that the reference to "each such share" could refer to shares in the private trading company with which we are concerned? However, I will not delay the House on this amendment. It is an effort at clarification. If the Minister is satisfied, well and good, but I take another view. I suppose eventually it will be sorted out in another place.
I do not think it will go that far. I am satisfied it is clear enough and not capable of any other interpretation.
I move amendment No. 21:
In page 13, line 25, to delete "having ceased to be" and to substitute "not being".
This is a textual amendment which was suggested on the Committee Stage as preferable to the original draft. The purpose of the subsection is to deem a company to be a controlled company (1) if it was controlled by an assessable person on a valuation date, or (2) if it was controlled at any time in the previous 12 months but was not so controlled on the valuation date, it again becomes so controlled at any time in the subsequent 12 months. The subsection deals, therefore, with two situations: First, where there is control on the valuation date or, secondly, where there is no control on the date but there is such control in the 12 months before and after that date. As drafted, it is arguable that the ceasing takes place on the valuation date which of course is not what is intended and would make the subsection practically meaningless. I think Deputy Colley mentioned this on the Committee Stage. The amendment clarifies the matter and improves the text as the contrasting situations are brought out more clearly. For instance, line 10 will read:
controlled by that person on that date
and line 13 will read:
not being so controlled by that person on that date.
As the Minister said, I suggested this on Committee Stage. The section, as drafted, was open to an interpretation which would have created an enormous loophole whereas, in fact, the subsection was intended to close loopholes. The amendment now as suggested and as, I think, I suggested on Committee Stage, closes that loophole and makes quite clear what was from the beginning intended to be achieved.
I wonder, sir, if you would allow me to say something which is not strictly related to any amendment? On section 10 subsection (3), I think, I made a mistake on the Committee Stage, when the Minister for Lands was acting for the Minister. I said things which it is necessary for me to withdraw now and for which I wish to apologise. I would like to extend that apology to the Minister's advisers. There might have been an implied reflection on them and I would like to extend this retraction and my apology to the Minister's advisers as well as to the Minister himself.
I accept the Deputy's apology and I appreciate it.
I move amendment No. 22:
In page 16 to delete lines 52 and 53, and lines 58 to 60, and in page 17 to delete lines 1 to 3, and substitute the following:—
"(b) in the case of an individual other than—
(i) an individual to whom paragraph (a) applies, or
(ii) a minor child to whom the proviso to this section applies,
a sum of £70,000".
It is a little difficult to deal with this. This is, in fact, the third of a set of amendments I put down, all of which were aimed at the same thing but, of necessity, they had to appear at different parts of the Bill. The object of the three amendments together was to create a framework in the Bill on the basis of which a married woman would be treated under this Bill as an individual in her own right and not merely as a chattel of her husband. The particular effect of this amendment would be to provide for individuals in the case of the thresholds being provided. Under the Bill, as it stands, individuals are divided into different categories, the first being a married man living with his wife and that includes the wife; she is automatically included in that category. The second is the widow or widower and the third is a minor child. This amendment seeks to provide that the individual would be only a minor child, a widow or a widower or any other individual thereby ensuring, as I say, that a married woman would be treated as an individual in her own right. The effect would be that the threshold would remain as in the Bill in the case of the widow or widower but, in the case of a married couple taken as individuals, each would have the same thresholds as either a single person or separated persons. If you take them together they would have the sum of the two single thresholds but, in fact, the effect of this would be that they would not be taken together but taken, as I said, as individuals.
There would be a number of cases, I presume, in which, as a result of this amendment, people would pay more wealth tax than they would under the Bill. That would arise in the case where the property or the bulk of the property in a family was held by the husband. Nevertheless it seems to me— and the Minister has used this argument frequently on this Bill—that people could re-arrange their affairs if they wanted to. It is more important in my view to establish the principle in this Bill, a new Bill dealing with the new tax, starting in 1975, that a married woman should be treated as an individual in her own right and we should avoid the kind of anomalies arising under the Bill whereby there is a bigger threshold in the case of a married couple who are separated or in the case of two single people than there is in the case of a married couple living together. Furthermore, it avoids, taking the other amendment with it and the framework it provides, the whole problem of a married woman's property being included in the wealth of her husband, whether she wishes it or not, making the husband liable to account to the Revenue Commissioners for that property and, therefore, entitled in order to fulfil his statutory obligations to know all about it and have all the details of it. It avoids the situation which arises under the Bill in which the husband not only has to account for his wife's property to the Revenue Commissioners but he has to pay the wealth tax on it. I indicated before the situation that arises where, if the wife is the one who has the property and the husband has little or none, nevertheless, under the terms of the Bill, the husband is the one who is accountable to the Revenue Commissioners for the valuation of the property and is also accountable for paying the tax on it.
I do not think this is an acceptable approach today and this amendment is part of a series of amendments I put down designed to remedy that situation and produce under the Bill an approach in which the married woman is treated as a separate individual and is treated equally with all other individuals except, on the one hand, widows or widowers or, on the other, minor children, who require separate treatment. But the real significance of it is that she is treated as an individual in her own right equal in all respects to her husband, to her single friends or neighbours, be they male or female, and to her separated friends or neighbours, be they male or female. That is the right approach to adopt today. I regret that the Minister so far has refused to agree with this approach. I have not any doubt it is the approach that should be incorporated in this Bill being passed in 1975.
I am sorry that Deputy Colley is still tempted to roll along on the women's lib bandwagon particularly when acceptance of his amendment would do a very serious disservice to all families. In our capital legislation we have been very careful to protect the family. We have respected the normal Irish wealth producing situation which is in a family situation. There is not much tendency in Ireland to fragment holdings or capital between individual members of a family or between married couples. The tendency is to hold the property in a family situation. It may be in the name of one person for generations. It may be broken up at different times. But it is convenient to have it in one name. The consequence of accepting the amendments of Deputy Colley would be to confer benefit upon the wealthier families while doing a disservice to a family of more modest means. By having a family threshold——
Provided the family has a husband.
The family threshold of £100,000 and £2,500 for each child means that the family can enjoy the potential threshold of not less than £100,000. Four children would add £10,000, in a family situation. If Deputy Colley's amendment were accepted the result would be that the family wealth threshold would only be £70,000 plus whatever children there might be unless both spouses were fortunate enough to hold individual wealth of more than £70,000 each. It could then rise to £140,000. But that is not a normal situation. It occurs, and one does not speak with any hostility towards or envy those in that position but it is not a normal situation for separate holdings of wealth to exist in family situations of that kind. I would not consider that we would be justified in introducing an amendment to deal with an exceptional situation in Irish circumstances if as a result of doing that we were to harm the normal family situation. It is in the interests of the family I am speaking now and I consider that to be the most important aspect of this proposal. It would be against the family interest to accept it.
If we were to abandon the treatment of the family as a unit we would encourage fragmentation, and mitigation or avoidance of wealth tax would be all too easy by collusive action between members of a closely-knit family. Confirmation of the necessity to avoid that is available from all the wealth tax systems in Europe where the wealth of husband and wife are aggregated. That happens even in societies where broken marriages are more frequent than in Irish society. It happens in countries where individual wealth ownership of husband and wife is more frequent than is the norm in Ireland.
No other country even approaches the generous thresholds of exemption which we are providing for individuals, married couples or widows. No country identifies the widow as a person deserving a higher threshold than a single person except Ireland, with a threshold of £90,000 for a widow and £70,000 for a single person. The comparisons, are relevant so that it can be seen how fairly treated they are in this country. The threshold in Luxembourg is £1,100 and the home and its contents are not exempt. The next highest to us is Denmark with a threshold of £31,500 and no exemption for the home and its contents. These are the realities of the European situation. These are the realities of the comparisons, so it can be seen that both the individual and the family are being very gently treated in the context of the Irish wealth tax.
The proposal to grant a separate threshold to a husband and wife is not attractive for the following reasons. In the majority of households only one spouse is the person who holds the wealth, be it a farm, business or property. Such a person holds the property and works it in trust for the family. That is the normal practice. It does not have to be put in joint names in order to have property used for the benefit of the family. In all these cases the family would lose if the amendment were accepted. The wife would lose as much as the husband because the net money left in the family would be less. The family would lose because the threshold would be reduced from £100,000 to £70,000.
The amendment would discriminate against the husband or wife whose spouse had no taxable wealth. It would favour those families where both spouses had wealth. They occur, but they are not the norm.
The existence of separate thresholds would put undesirable pressure in many cases on farmers or businessmen to place their property in joint names for purely fiscal purposes. It might be desirable socially; it might be an actual response to natural love and affection; it might be the proper way to manage a family fortune to put it in joint names. These are all good reasons for doing it, but a bad reason for doing it would be for fiscal purposes. The effect of this amendment would be to force people to make decisions in relation to family fortunes for fiscal purposes only. Sometimes the circumstances of a family require that family wealth be held in one name until such time as an appropriate decision can be made regarding the disposal of the family fortune. As regards the family where the wife has as crucial a part to play as the husband and in which the children are as vital a part as either of the married parties I must reluctantly decline to accept the amendment.
This, like other parts of the Bill not only appears to be something like a long playing record but we are getting to the stage when it is like a tune that goes round and round in our heads and we cannot get rid of it. The Minister has repeated the same things and we are urging the same things and we do not seem to be making any progress.
There are two fundamental, related points here. I feel that the Minister is changing from one to the other when convenient for the purpose of his argument. The status and position of the married woman in regard to property ownership and the threshold are the points at issue here. One can be invoked against the other or with the other. In fact, the Minister has invoked the thresholds to support this argument in that he argues that a husband would be, under this amendment, worse off in a particular way where the threshold is concerned than under the Bill. I think Deputy Colley would agree with this. But this depends on what the thresholds are. As we have gone into this in very great detail in Committee it should be sufficient to try to recall the kernel which is composed of the two points I have mentioned, the position of the married woman in regard to property-owning and the question of thresholds.
The difficulty that the Minister has propounded can, I submit in one regard at least, be solved by a simple adjustment of the threshold. The Minister will come back on his own argument: I gave so much, why not give more? Here, it is the Minister himself who talked about certain fundamental principles. He has expanded at great length about the family and the necessity for keeping the family as a unit. I recall that on the Committee Stage he referred to what he was giving the family in such eulogistic terms that it evoked from this side of the House the comment: to the extent of docking them £40,000.
We have two things here and for clarity I will try to keep them separate. At the end, in resolving the dilemma we come back to the simple solution that if you treat the word individual in its natural sense and attach it to the threshold sum of £70,000 then you have practically overcome all your problems: it is a question of drafting after that.
Let me, therefore, deal with the position of married women where property is concerned. Deputies have accused us of jumping on the Women's Lib bandwagon. The Minister can put it whatever way he likes but it does not get away from the fact that we are living in an age when more and more equality of women generally, whether married or otherwise, is a matter of social importance and a feature of our social life, and to recognise it has come to the stage of being a necessity for social stability. Why should a married woman not be treated, where a property is concerned in any event— and I am strictly confining myself to that—like anybody else? She is competent to hold a property in her own right. She is utterly competent to dispose of it as far as property is concerned. She is very much sui juris. It is only under the accidents of the law, either by history in particular cases or by legislation such as under the Succession Act—which, incidentally, applies to both spouses—that the right to property disposition as well as property-ownership is restricted.
If that is so, if she is fully competent to hold property, fully competent to dispose of that property, fully the proprietor of that property in every sense, I fail to see why she should not be fully competent where taxation is concerned and why she should not have whatever benefits are going where taxation is concerned. It has been an old complaint, and I do not want to go into the Income Tax Acts, that a married woman who is earning and living with her husband is at a disadvantage already for income tax purposes. This case has been made and I think there is some substance to it. That is not directly germane to what we are talking about now. But there has been a great deal of talk about this. There have been representations, I believe, to Ministers and Governments in this matter before now. So, why, in a Bill of this nature, do we perpetuate that kind of thinking? Why do we still, even with the very laudable—from a traditional and even constitutional point of view —sentiments of the Minister in regard to the institution of marriage and the family degrade women? It seems to me that the principle should be accepted that if she is accountable for her property, competent in every way to own and dispose of it, she should be held responsible physically for it as well and therefore fully entitled to taxation reliefs as well as any other individual married or unmarried, married and living with her husband or separated.
These cases have been provided for in this Bill. We have pointed out on Committee Stage that because of this mistaken approach—very understandable for traditional reasons, and perhaps supported by the sentiments expressed by the Minister when it is not examined more deeply—we have had to bring in some extraordinary anomalies like the position which we referred to in the Committee Stage of people who are separated. Why does all this arise? It arises in theory, it would appear, because of the Minister's approach as adumbrated here today and before this by himself and the Minister for Lands on his behalf.
I wonder whether this approach that has been so emphasised by the Minister has not been an ex post facto justification of something that just happened because of, shall I say, the normal or traditional or conventional approach to this problem in taxation law. That is no reflection whatever on the people who drafted or inspired this legislation in the first instance. It is one of the reasons why it is reviewed by both Houses of Parliament. It is a very necessary practical ingredient in the making of law.
With all that the Minister adverted to from the theoretical point of view, I am just wondering if this was in mind when the Bill was drafted. I am rather inclined to think that the approach in this Bill was the conventional, traditional, one and that limits were fixed. There were three categories, married, widowed, single. When the married category was considered again there had to be provision for spouses living together or separated. The logic of including the widower in the scheme has not been touched on and there is no point in going into that now. In the case of the single person, that was the case of the individual simpliciter, and no doubt that was the baseline taken. From this all the rest of the consequences flow.
So much for the theoretical approach. From the practical point of view, I do not think the Minister would be putting up all the obstacles if in the actual approach the figures had been worked on the basis of so much for the individual with a double allowance for married people. If that had been done many of the difficulties we have been discussing would disappear and the Minister might be more amenable to the current pleas in regard to the status of women. He gets into difficulties because he will not increase the allowance to £140,000 for a married couple.
It is going a little bit outside the terms of the amendment to argue that the limit for a married couple should be £140,000 and not £100,000. It is not going to mean an awful lot to the Exchequer but it would mean a great deal in simplification of the approach in principle that the Minister has talked about. At the moment this threshold might not be of very great consequence but I am always hopeful of a brighter future. The difficulty the Minister and Deputy Colley saw, that in certain circumstances a married pair might be worse off under the provisions of the Bill, would disappear. The temptation to fractionate would disappear and many of the Minister's arguments would be answered.
I simply cannot understand the Minister's strong objection to this particular adjustment of a threshold although I have often understood his difficulties when it has been sought to extend thresholds. Such a procedure would immediately obviate incidentally all administration worries about whether people were single or married. The difficulty about whether they were living together or were separated would disappear and it would be left to the husband and wife to arrange between them as to whether the £140,000 should be divided into two sums of £70,000 or whether it should be left as one unit of £140,000. The provision for a minor child could remain exactly as in the Bill.
As Deputy Colley said, in this treatment of thresholds the status of women does not become an issue. I support Deputy Colley in this amendment on the basis of the recognition of the reality of the position where women are actually concerned in our social life both in regard to employment and to how they live—whether they are single or married—and on the question of the parity of the sexes which is so much in the news and which is causing the Government some difficulty with regard to parity in pay. I have not been given what I regard as a sufficient reason for not dealing with the threshold in this case. This is not just a question of thinking of a number. If it was a question of just fixing a level, I would not press the Minister, with the qualification that I have mentioned in regard to inflation.
There is no provision for future inflation in the Bill and this is a cause of some anxiety. Taking the facts as they were in the first half of 1975 when this Bill was introduced, the Minister, with justice, can make certain claims but here we must consider what is the sensible, realistic thing to do where one threshold figure is concerned. Even if the Exchequer did lose the 1 per cent on the excess between £100,000 and £140,000 completely, having regard to the simplification in administration by not having to inquire into the status of an individual, much less inquire into the question of cohabitation, that loss would be so small as to be in that negligible category that was referred to in the last Bill where the Minister was very wise in writing off small sums more or less or the basis of de minimis non curat lex—that the law does not take account of trifles.
It all depends on the raising of the threshold in one particular case. I fear the Minister has not given me a sufficient reason for that. It is not for the money value or as a taxation relief that I am pleading for it; it is to resolve the type of problem that has given rise to this amendment and to resolve the problem that arises when we approach this amendment on the basis of the property rights and liabilities of a married woman. I do not want to put the Minister to the trouble of telling me all over again about the levels, comparing with other legislations and all that. That is conceded. If it is a pat on the back the Minister wants for the good things he has done, we have not spared the bats so he is welcome to the bouquets too. I would not mind presenting them and if he met us in this case, I would be prepared to walk across the floor and present one personally. I wonder if some of the married women Deputies in his party could persuade him?
(Dublin Central): He has gone beyond persuading now.
They might be listened to more than I will be. This is one amendment, more than any other, which can be simply solved in such a simple way. I commend the spirit in which this amendment is offered. It could become a very automatic and simple thing and, quite frankly, if it was not for the threshold the Minister would have been there before us in propounding many of the points of view we have propounded.
We are coming to the end of this debate and the House is going to adjourn. Before the end of this year we will hear more about parity, the rights of women and so on. Let us on the last day of this session legislate a genuine token of sincerity in the professions that we have been making in this area. I was going to say the noises we have been making in this area because I am afraid there has been a lot said—outside this House particularly—that has been more noise than useful pleading in the whole area of women's rights.
Here is a simple case of recognising the full property-owning rights of a woman if she is tied in matrimony. To take the Minister's point of view one has to say tied in matrimony; if the Minister carries on in this way that is what he is doing because he is putting her in an inferior position and he is putting the institution of marriage in an inferior position. We have all given a great deal of attention to these points and the Minister has made his case here. He has one very simple solution. It will cost him very little. It will resolve all the problems, namely, to restore the recognition that marriage is the union of two individuals. If the Minister does that one simple thing and makes an adjustment in the wording, there is no further problem.
The Deputy will recall that the Lord has commanded us not to put asunder those he has joined together.
We are not in Committee now but that is just the case I made, that the Minister was instigating artificial separation. Let him look at the Official Record. That is just one of the points I made, that the Minister was instigating people with property to have phoney separations to avoid tax.
When a significant number of Irish families have property in excess of £100,000 I will be prepared to reconsider the matter.
Would the Minister be prepared to encourage sin for the few?
There are far greater advantages in staying together than separating in order to get fiscal benefits.
The Minister's chauvinism——
I want to protect the family unit.
The Minister's concern for the family unit is most edifying and laudable. However, when one finds that what he says is one thing and what he does is another one has to look again. What he does in this Bill is to provide that in the case of this family unit with which he is so concerned he gives them a threshold less, by the sum of £40,000 and a dwelling-house and contents, than he gives to two single people or a separated married couple. That is the measure of the Minister's concern for the family unit, whatever his mellifluous words and phrases in regard to the family unit. We can judge the Minister's concern by what he does in this Bill rather than what he says.
This amendment has sought to give to a married couple living together the same treatment as to a married couple who are separated or to two single people, but it has also sought— and I think this is much more important—to recognise the role of a married woman as an individual in her own right. This Bill does not just ignore the role of the married woman in her own right but goes out of its way to downgrade her. It says that no matter what property she has, her husband is the one who is to account to the Revenue and to pay the tax on it. I do not believe that any married woman, whether she is directly or indirectly affected by the wealth tax or not, could with any degree of equanimity accept the approach set out in this Bill to a married woman.
I was listening to the Minister talking about the family and the pattern of Irish family life and the blow that it would be to it to approach the matter in the way suggested in this amendment by treating the married woman as an individual. I was thinking, while listening to the Minister, that no doubt similar sentiments were being expressed when the Married Women's Property Act was being discussed in 1890 or so. I am sure that at that time many expressed the view, and believed it, that the idea of allowing a married woman to have control over her own property and that the property she brought into the marriage should not thereby be placed totally at the disposal of the husband who knew far better, of course, than she did of how to handle it, that this concept was going to ruin married life and the family as a unit. Here is the Minister, in 1975, expressing virtually similar concepts. Whatever the Minister says about the level of the thresholds—and I have indicated what he is doing in that regard—this Bill, as drafted, specifically provides that the married woman, whatever her property, is to be treated as a chattel of the husband. She has no role under this Bill. If she has property and her husband has or has not property, in either case he is the one who has to account to the Revenue for it and pay the tax.
Does the Deputy accept that the married woman already has a threshold? Since the day her groom carries her over it.
Thank you very much. It is a bit late in the day for that.
It is the last day of term.
I am sorry that is the best the Minister can do in regard to this amendment, although it is not bad.
If the Deputy wants to achieve what he says he is out to achieve, to discourage sin, he might like to consider putting down an amendment to reduce the threshold of a single person to £50,000.
Why?
If the argument is that what is wrong with the Bill is that the married allowance is not as high as the single the Deputy can achieve that by reducing the single one.
Why?
Because the Deputies believe we should not have an encouragement to sin.
Why reduce the single one? I do not follow the Minister's logic.
There is a parameter within which the Minister is working, obviously, and he cannot see anything outside it. There are many things wrong with the Bill but two things are wrong with this aspect. One is that it penalises a married couple living together. One can measure the amount of the penalty involved vis-à-vis two single persons or a separated married couple. That measure is £40,000, plus a house and contents.
The other serious defect is the fact that the married woman is being treated as a chattel, not as an individual in her own right. Whether or not she has property, she is entitled to be treated as an individual, but the Minister is refusing to do that. It is unfortunate but not, perhaps, too surprising.
If the husband pays her tax surely that will be a benefit to the wife.
That is a great help to the married woman who has property and whose husband has not. She is being compelled by this Bill to disclose every detail of it to him. He has to account to the Revenue Commissioners for it. I do not think the Minister understands the full implications of what he has in this Bill because he has adopted them from the statutes going back to the last century.
Wisdom of the word.
Which has not descended on the Minister.
With regard to the wisdom of the word in relation to this matter in the last century, and the early years of this century, I hope that by 1975 we have progressed a little and learned a little about the rights of women and, in particular, the rights of married women which are being persistently denied and again being denied in a renewed way in this Bill.
We have tried, not as the Minister suggests because we are trying to get on any women's lib band wagon; that is an insult not only to us but to Women's Lib. It is self-evident to us, in 1975, that a married woman is entitled to be treated as an individual, like any other individual. It is unfortunate that it is not the Minister's belief. That being so, we cannot hold up the Bill indefinitely trying to convince the Minister when he is obviously an incorrigible MCP.
I left out the P but I used a qualifying adjective.
It is clear that no matter what we say the Minister is not prepared to accept the fact that a married woman is entitled to be treated as an individual. The present Minister will not be Minister for Finance for ever and the married women here can look forward to the fact that in future at some time there will be some recognition given to this proposition. It is self-evident that a married woman is entitled to be treated as an individual in her own right equal to all individuals.
I am the Minister who introduced equal pay. I am also the Minister who removed the marriage ban on women in the public service.
When did the Minister introduce equal pay?
Introduction is one thing; implementing is another.
The Minister was committed to it by his predecessor.
No, not at all.
I move amendment No. 23:
In page 17, between lines 7 and 8, but in section 13, to insert the following:—
"(2) Each of the sums mentioned in paragraphs (a), (b) and (c) and in the proviso to subsection (1) shall be appropriately increased on the 5th day of April, 1976 and on every subsequent valuation date in accordance with the increase, if any, in the Consumer Price Index during the period of one year commencing on the next preceding valuation date and such increased sums, if any, shall be deemed to be inserted in place of the corresponding sums in subsection (1) on the appropriate valuation date".
This amendment is designed to introduce into the Bill a provision to provide for inflation. I suggest that not to provide for inflation really amounts to sharp practice. The Minister for Finance gave an undertaking in another context in resisting an amendment of this kind that the Government would review the matter there concerned, which was income tax allowances. He said it was not necessary to have such an amendment because he was giving a firm commitment to review the income tax allowance thresholds in the light of inflation. The clear implication of what the Minister was saying was that such allowances would be adjusted in the light of inflation, but they were not. When inflation was running at 25 per cent per annum they were adjusted at the rate of 15 per cent.
The Minister resisted a similar amendment in regard to the capital gains tax and resisted an amendment which was somewhat similar in intent, though not in precise detail, in regard to the wealth tax on an earlier stage. I regard this persistent refusal by the Minister to build in provision for inflation as ominous especially in regard to a Bill of this kind where the major portion of the Minister's effort to sell the idea behind the Bill has been based on the statements that it will apply only to a handful of people and they are all very wealthy people. Whatever the merits or demerits, the morality or immorality of that case, unless there is provision for inflation in this Bill there will be a lot of people in a short time who will be directly affected by it. At present they think it can never affect them.
We have had all sorts of red herrings advanced in regard to this matter in the past by the Minister and, indeed, by Deputy Esmonde who spoke on this on the last occasion. The Minister in the past has suggested that there is not any agreed way of measuring inflation. He has said that the consumer price index, the method suggested here, is not an accurate measure of inflation. Deputy Esmonde said it would be most unfair to provide something on these lines, say if it were related to the consumer price index to somebody who owned, say, land if land was to increase in value at a faster rate than the consumer price index.
I regard these arguments as plain dishonest in the absence of a proposal from the Minister which would deal with it. The real choice being faced is that we either have some provision for inflation, say, based on the consumer price index if this amendment is accepted, or none at all as the Bill is drafted. In the absence of a proposal from the Minister which would be designed to adjust the thresholds for inflation the choice is to have nothing at all or the adjustment based on the consumer price index.
I venture to suggest that while there may be arguments between academics as to the manner in which inflation can most accurately be measured, as far as the great majority of people are concerned, and certainly as far as those who are going to be directly affected by the wealth tax are concerned, they would opt any time for a provision for inflation such as is built-in in this amendment based on the consumer price index as against no provision or any other provision that would not be as easily measurable as the consumer price index. Such arguments are pure red herrings. The basic issue is, should the Bill contain a built-in provision for inflation or should it not. That is the net issue. I have no doubt that it should contain such a provision. The Minister, apparently, on the basis of what he has said up to now, does not accept that. I take issue with him on that. I have no doubt that this should contain provision to adjust for inflation.
It should also be recalled that this is not just a matter of whether people's private property in the ordinarily understood sense is going to increase in value or not. We must not forget that wealth tax is being applied right across the board to productive assets as well as what might be described as non-productive assets and that its effect on business can be substantial. There is a provision in the Bill whereby the valuation of property can be agreed for a three-year period, that the agreement would stand for a three-year period as between the taxpayer and the Revenue Commissioners with some loopholes in that, but basically that is so. If one takes the stock-in-trade of a business valued at £100,000 and if inflation is running at 25 per cent per annum as we have at the moment, in the first year it will be worth £100,000; in the second year, £125,000 and in the third year, £156,000, without any increase in real value at all. I hope the Minister will see the potential for damage to a business where assets are productively employed if there is not a built-in provision for adjustment in line with inflation in this Bill, either in the threshold or in the method of valuing the property. This amendment seeks to make the adjustment in the threshold. It is not the complete answer to the problem but at least it goes some of the way. As the Bill stands there is no provision at all for adjustment either in valuation of property or in thresholds in line with inflation.
With regard to stock-in-trade I want to draw the Minister's attention to the fact that in the case I have mentioned in the three year period involved that goes up to £156,000. The Minister may say that if the people have agreed with the Revenue Commissioners on the valuation of property that will hold for three years. That will not hold in regard to stock-in-trade because that will be turning over in those three years and it will be a different property that will be involved. From the point of view of the taxpayer concerned the stock which is worth £100,000 in the first year, the exact same quantity of stock if the price of it only goes up in line with the consumer price index, would be worth £156,000 in the third year without any increase in the stock at all. It is turning over all right but the same quantity of stock would be worth £156,000. Of course, wealth tax is being applied to that apparent increase in value; it is only an apparent increase.
At this late stage I hope the Minister would see the necessity, if this wealth tax is not to do even more damage to business than it is otherwise likely to do, of providing for an adjustment in line with inflation. If the Minister refuses to accept this amendment and, at the same time, refuses to put in an amendment himself which would adjust in line with inflation there is only one conclusion we can be left with, that the Minister intends to ensure by reason of the process of inflation to bring in to the wealth tax net many people who are being led to believe at the moment by the Minister and his colleagues that they will never be subjected to wealth tax. But if that is so, I think it ought as far as possible to be clearly spelled out now so that the people will know exactly what is involved in this. The Minister's bona fides are in question in this regard. He can, I suggest, remove any doubts in that regard either by accepting this amendment or by amending the Bill himself on the basis of adjustment for inflation, but if he does not do either, then there are, I would suggest, very good grounds for doubting the bona fides of the Minister in regard to this aspect of the matter.
The Deputy knows well that this amendment is irrelevant to the Wealth Tax Bill because valuations made in April, 1975 are to stand for three years. If it has relevance, what Deputy Colley is asking is to have these valuations revised every year. We are supposing that 1975 valuation will remain for three years. That will be a very significant benefit to holders of capital in these highly inflationary days——
That does not apply to all properties.
It will not apply to all properties but it will apply to those properties which have to be specially valued for the purpose of the tax. Other properties will be reflecting changes in valuation while other properties will reflect inflation in various forms. But considering that a very large proportion of the kind of property which will bear wealth tax will remain at 1975 valuations, there is a built-in safeguard. We would have to remove that safeguard, that protection, if the Deputy's amendment was to be pressed. I do not think anybody would thank him.
Which safeguard is the Minister referring to?
I am referring to the advantage which would flow to the taxpayer where certain property values at 1975 are taken for the two succeeding valuation dates. It is probable that such a scheme would be to the advantage of the taxpayer. It is not stronger than that. Even if we were to halve or even quarter the current rate of inflation, it would still be a probable built-in advantage, a probability amounting almost to a certainty.
(Dublin Central): What about downward trends in values, like companies that have been reflecting it over the past week? How will they be fixed?
A taxpayer may apply to have an agreed valuation made but if there is a downward trend in values then the inflation argument falls.
We will not be paying wealth tax.
The Opposition have clearly out of their mouths shown the country they want it both ways and every way, but they do not want to pay wealth tax. That we know. They want every possible device built into the Bill so that unlike other taxpayers in the community the wealth holders will have such a range of options available to them that they can play around and choose whichever option means that they will not pay tax.
It will be a wonder ful country.
It will be a wonderful country if they can do that and if the country could keep running when people engage in that type of game, until such time as we have some source of revenue which as yet remains untapped which allows income tax and capital taxes to be abolished. That type of paradise is not likely to be available to us.
In the meantime, try growth in the economy.
In the meantime, bring in a system of taxation which will make people more content and which will make people realise that nobody is getting away with it, that nobody who is in a position to pay tax is being permitted to evade and avoid tax—bring in a system of taxation which, by building up community contentment, gets people ready to make more effort and to bear their share of the burden because it will be seen that other people are being obliged to accept their share of the burden as well.
Ever since we started debating this tax system in the early days of 1974 this has been one of the principal points of debate. I cannot see that a useful purpose can be served by reopening it at any great length at this the 11th hour of the debate on the Wealth Tax Bill in the Dáil, or I should say at the 125th hour of debate of the Wealth Tax Bill in the Dáil. The problem of dealing with inflation and taxation is a very big one. Inflation touches all forms of taxation. There has been no agreed formula in any Constitution to deal with it.
Where consideration has been given to that and when there has been an acceptance of the multitude of problems about which there has been a grievance, when there is acceptance that the best way of meeting the problems generated by inflation is to go for a low rate of tax and generous thresholds, we have done that. If we were to have a Bill with a very sensitive inflation index, then the argument in favour of more generous thresholds would fall and lower thresholds would be appropriate. But we have generous thresholds which will exclude the overwhelming mass of our people for many years to come, even if inflation was to continue at its present appalling and insufferable rate.
That is one of the realities. The principal form in which many people hold capital is their private residences and their contents. They are going to be exempt altogether because those elements will not be touched at all no matter what the inflation rate might be. We have given assurances in the White Paper and on many occasions since in the name of the Government that the thresholds for the new capital taxes will be reviewed to take account of inflation. There is a firm commitment to review the thresholds for wealth tax by 1978 when the three-year review of valuations will occur.
Naturally, when the thresholds come to be reviewed in 1978 the change in the value of money between now and then will be one of the factors to be taken into account, but it is only one of the factors. There are other aspects in practice which determine the amount of wealth tax to be paid. They include the rates, the thresholds, the exemptions, the reliefs, the ceilings and so forth. I have pointed out in relation to suggestions that indexation be built in for all taxations, that it is a simple thing to give but if the consequences of giving indexation in tax levels is to necessitate an increase in the rates in order to produce the same revenue as heretofore there is little point in engaging in the exercise. If we are to have indexation of taxation levels—in principle it is difficult to argue against it—I would accept it. But we would have to consider its introduction for all taxes, not just for one. Why should it be available for only one and not for others? The Opposition may well argue "All right, bring it in for everything."
We tried in regard to the other taxes, too, including income tax.
"Yes, we will bring it in for everything." Will the Opposition accept the consequences? Will the country accept the consequences if it is to reduce revenue? Will taxation operate then so that expenditure will be reduced, according to Deputy Brugha? That is the logic of it. If the principle is good in one respect it is good for all. There is a great clamour for indexation in relation to the interest paid to savers, to depositors.
(Dublin Central): Quite right.
Deputy Fitzpatrick says "quite right". The Deputy will no doubt follow the logic of his argument and say: "Yes, and then there should be strict indexation for the borrowers as well—and they should pay sufficient on the money they borrow to compensate the savers for inflation and pay the saver in addition."
(Dublin Central): They often do.
If Deputy Fitzpatrick carried that through all the way it would mean that today persons borrowing to purchase homes would be paying an interest rate of 15 per cent. Indexation is fine to the receiver of the benefit, but nobody wants to pay the cost of it. Who will do it? Is the State to do it, with people contributing less revenue to the State because they insist on getting indexation? Where will that get us? Into a bigger and bigger economic plight, and the Deputies know that well.
Maybe the State is taking too much.
Perhaps the people are demanding the State to spend too much. Perhaps the State is being forced to expend too much because the private sector will not spend enough. There are a multitude of considerations here which if we discussed them all would take us outside the immediate ambit of this amendment. But do not let us have a proposal which says: "Let us have indexation because it is nice and we will benefit by it." That is to be the end of the logic. "We will have indexation when we can make on it but we will let somebody else carry the consequential burden." If one person gets benefit through a lower rate of tax the Revenue is required by the State to make up the loss somewhere else. I am saying this by way of obiter dicta and not by way of opposing the suggestion that the rates of thresholds and exemptions to the wealth tax are just to reflect inflationary trends. I believe that is as far as it goes without committing oneself to doing it, but I insist now, as I have on numerous occasions in the last year, that when people call for indexation they be honest with themselves and with the country.
Indexation to a rate of inflation which is too bad ensures one thing; that is, that we continue to be propelled down the slippery slope towards ruin. It is like scutting on the back of a lorry which is out of control and expecting that you can travel safely to your destination. You could be thrown off or involved in a very serious collision. Indexation is one of the panaceas being offered in recent times by a number of commentators, who see it only as conferring benefits without looking at the association between indexation and inflation.
(Dublin Central): The Minister will not get anybody saving if indexation is not introduced.
They will. One of the most encouraging features of the present economic malaise affecting the world is the growth in precautionary saving even when the rate of interest paid is less than the rate of local inflation. There is an inclination to be prudent. It tends to come to the surface only in times of difficulty and to be practised in times of difficulty. A man can be improvident when times are easy——
Particularly when you are Minister for Finance.
If all countries followed the advice of their Ministers of Finance there would be very few economic crises anywhere. Countries for various reasons, tend not to listen.
It is practice rather than preaching that makes people listen.
I remember when Deputy Colley held my office and preached words of wisdom he was not always listened to. He had his difficulties just as every Minister for Finance has difficulties. One tries to persuade people that certain things are in their own interests but they do not always see it that way, any more than a child sees that it is in its own interests to be corrected by an adult. The adult could be dead before the child appreciates the wisdom of the disciplines imposed on it.
(Dublin Central): That is far removed from the hot realities of the Wealth Tax Bill.
It is all directly related to wealth tax and to economic difficulties. One of the responsibilities of good parenthood and of good Ministerial responsibility is to get people to accept their responsibilities and also to distribute whatever is available fairly, and to collect from those who have it in order that those who have not got it may have less sense of grievance. And now to return to the amendment——
It might not be any harm.
I have been led along these roads by the example I got from the Opposition on so many occasions throughout the debate. I have avoided on most occasions chasing——
We all succumb at some stage.
There are those who think I am inhuman, and I should like in the 120 and odd hours of this debate to show how very human I am and how concerned I am——
No doubt it is the function of a Minister to preach.
And others to listen.
In the case of a Ministerial office the Minister's preaching rather than his actions may go down in history. Of course some of the things he did might well be remembered as well.
In a new tax such as the wealth tax there will obviously be additional work in the early years for both the taxpayer and his advisers and for the Revenue Commissioners in becoming familiar with the tax. These problems are increased when adjustments to valuations have to be made. Until such time as people become familiar with the working of the system, the time taken to reach agreement will probably be greater than it would otherwise be. But having agreed to this first year's valuation and assessment in the light of the provisions of the Bill, I feel sure that the work involved in complying with the administration in the immediately succeeding years will be much lighter.
With a view to further easing the burden, the Bill provides in section 12 for the maintenance of the valuation for the next two valuation dates. Naturally if the valuation is frozen, except in the circumstances indicated in the section, it is logical that the thresholds should also be frozen for the same period. That is why the Government are committed to the thresholds and refer to a three-year period. The proper thing to do is to look at both the valuation and the thresholds in 1978. As it is the taxpayer and not the Revenue that is exempted by that arrangement I would suggest that the amendment should be withdrawn. The work would be eased and a service would be done to the people the Opposition believe they are benefiting by offering this amendment.
The Minister excelled himself in his pleading and entertained us as well. Before I deal with the main point which the Minister was making may I say that he let slip the significant phrase "produce the same revenue". Now the cat is out of the bag. This Bill has been sold to us all the way through for its social merits, for its equity and so on, but briseann an fhirinne and there it is. Like every other taxation measure, no matter how well the package is dressed up, the whole object of the exercise is to get the money in. This is what taxation is all about, but I am glad we recognise it and we have put a lot of things into perspective.
The Minister's case as I understand it is that if you try to adjust thresholds on the basis of CPI or on any other basis then because of the three-year provision for valuation you would have to let either one or the other go unless for revenue-producing purposes. That is where the phrase slipped in. If that is what it is all about my only comment is that if you are going to produce revenue you will have to cast the net wide enough. That justifies our fears and suspicions that this net, no matter how wide-meshed and narrow in circumference it is will quickly expand and the net will quickly contract with the flow of time and in that case a lot of what has been said in this debate can appear to posterity only as a rather good selling job. That is no credit to anybody in the House.
Apart from that, the Minister made the point about thresholds and valuations. The fact is that the valuations are for three years. As I understand this Bill, and it is complex enough, there are certain discretions for review in regard to valuations. In regard to certain properties and shares a valuation will be accepted for three years. It is not as definite a statutory limitation as the thresholds. There are areas which are not covered by that. So the absolute limit of the thresholds on the one hand is not compensated for by what the Minister tried to tell us here, that everything is fixed for three years. That is only a partial statement of the situation. That argument is open to the further objection that in the case of anyone above the thresholds all the inflation works to suit them, notwithstanding that the thresholds in relative values as well as the real values that Deputy Colley spoke about, are decreasing in the social and financial circumstances that are developing in the case of rapid inflation of the order of 20 per cent onwards.
If one considers the partial nature of the review, subject to revision in certain cases where it applies—there are certain cases where it would not apply at all, if that makes it partial; when you take inequity and the iniquity, of penalising a class of the people above the thresholds, then I find it hard to accept the Minister's arguments and I am left with the anxiety as to what the content of this legislation will mean for a lot of people in, say, four or five years' time.
I have a shrewd suspicion that the preparation of this legislation did not envisage the calamitous impact of inflation in this year. The work that went into the preparation of this code is only too apparent and the thinking that went behind it did not happen in a night. I suspect that the Minister may have rushed it, thinking he was on a good political wicket and mistimed it. I should imagine that when the founding concepts were laid there was not present to mind the level of inflation that has been reached and the rate of increase in inflation that has been experienced was not perceived.
The Minister's argument is, at best, only a partial reply to us. His argument that you would have to reduce the thresholds does not stand up and is simply to be interpreted with the phrase which he let slip, "produce the same revenue", which is probably the key.
I can, of course, understand the Minister's sensitivity to indexes at the moment and I sympathise with the Minister in regard to the operation of mechanical calculators like CPIs. These arithmetical and mechanical operations have led to embarrassment, and it was quite apparent the last time the Taoiseach was talking about these matters in the House that he was more concerned with the cost-of-living index and holding that and thinking in terms of an index rather than in terms of the realities of production, the matters I was talking about this morning, the realities of the economy. He was thinking more in terms of index and accountancy control than about economic activity and productivity and getting the economy underway and getting a drive to secure employment and all these other things. I was surprised at the time but I must confess that I felt it was a question again of staff thinking. In the light of subsequent events I can understand the Taoiseach's concern about the CPI, and the Minister must be very worried about it also.
For his consolation, Deputy Colley or I or any member of our party would be quite prepared to accept any alternative proposals that would effectively, perhaps in a broader way, perhaps in a more discretionary way, provide for inflation. What we fear is that when these inflationary limits are tied statutorily they will be allowed to remain, that the fiscal factors that are working at the moment to depress money values will continue and that the level of these thresholds will fall in real worth and the tax net will be widely extended in scope and the mesh will become so narrow that many people will be caught who are happy about their situation at present. They will be caught in an alarmingly short space of time if the experience of the past two years is to be any guide. The Minister's argument is only a partial reply. It is a good pleading reply. One has to make one's case. I can understand his index-phobia but the substance remains. These thresholds should be geared to inflation.