Before Questions I had been drawing the attention of the House to the situation in which the wealth tax was imposed. I had reminded the House that this tax was imposed as part of a package whereby the Government of the day removed death duties. Now that wealth tax is being removed we are to have the situation, for the first time since 1894, in which wealth, no matter how enormous, will be subject to no direct impost either during the lifetime or after the death of the owner; and I expressed astonishment at the idea of the Minister for Economic Planning and Development that the wealth tax had no economic value. I tried to make the point that even though, and it may be so, the trouble in collecting it was excessive and even though, and it may be true, though I doubt it, it had a disincentive effect on this or on that, the very existence of the wealth tax was a signal of social justice and to remove that is reactionary and lunatic for any Government. I object very strongly and I want to promise the Government that when they come to repeal this tax with the Finance Bill of this year, I will give them a boring time in this House.
We sweated in 1975 to put that Bill through. We did it in the face of an opposition which I will not ever forget. It broke all limits of parliamentary common sense. There was no device that Fianna Fáil did not descend to in order to wear us down physically, because at that time we had a paper thin majority. I will not easily forget that opposition. I will not easily forget the kind of arguments we were met with. That wealth tax was not thought up out of the air, and was by no means a child of the Labour Party wished on the Coalition. As a matter of fact, I first heard the matter mooted in the Fine Gael Party. By no means was the arm of this party twisted, what-ever a couple of individuals may have felt about the wisdom of it. That was a solemn undertaking to the people before the 1973 election, which we carried out along with the other half of the promise in regard to death duties. I want to promise the Government personally, even if there may be the odd Deputy on these benches who does not think much of the wealth tax, a boring few days when the section of the Finance Bill arrives in which that tax is proposed to be repealed.
It is a unique situation that we now find ourselves in that capital wealth, no matter how enormous, is subject to no impost. This situation, unique in Europe, could have been avoided while at the same time respecting all the objectives the Ministers of the Government are interested in or say they are interested in, and I believe they are interested in, like maximising investment and trying to get the economy into a pattern of growth which cannot again be arrested. It would have been possible, and I would not have objected to this, to review the wealth tax, to say the threshold is unreasonably low. We, in any case, were due this year, because of our commitment in 1975, to review the thresholds upwards because of the intervening inflation. That would only have been justice.
I am quite open to the idea, and would not quarrel with figures, that the threshold was too low anyway and that maybe it ought to have been doubled or trebled. I am equally open to the idea that the percentage on which the tax was levied was too heavy. It does not seem to a man of little or no property that 1 per cent on something over £100,000 can be very punishing, but there are people whose wealth has an investment potential for the country who might find that a serious problem if they have cash flow difficulties and liquidity difficulties, and so forth. I am perfectly open to that. I would have been equally open to an amendment of the wealth tax on the lines the Minister for Economic Planning and Development implicitly suggested we might consider, when he said that one of the main faults he could find with the wealth tax was that it exempted things that should not have been exempted. He said ten days ago that the idea whereby exemption existed for one's principal dwelling invited people to live in ostentatious, unnecessarily big houses and, as he put it, stuff these houses with valuables.
I remember this very point being canvassed here in 1975. It was made clear, and it is quite clear in the statute law, that exemption of the contents of the house is not to be taken as being a licence to turn the house into a museum. I am quite certain that this paragon of parliamentary honesty, Deputy Professor O'Donoghue, does not believe that there are six people in the country who have turned their houses into museums in order to avoid wealth tax. I do not believe there are and I am quite certain that he knows there are not.
Nonetheless, it was an ostensible or potential source of abuse and I would have been perfectly open to the suggestion that that form of exemption should have been amended in some way. I think it is reasonable to exempt somebody's dwelling, the roof over his head. That would be necessary; otherwise, the threshold would have to be very much higher, even for people who by no means could be considered wealthy in the ordinary understanding of the term.
But, instead of making amendments, instead of pushing up the thresholds, changing the percentage at which the incidence of the tax arises, instead of changing the exemptions in regard to private dwellings and so forth, instead of doing all of these things, with many of which I might have agreed, perhaps even would have supported them in the privacy of my own party, they abolished the principle of the thing. That is what I object to. I would have gone a long way with any amount of re-form of the wealth tax for the purpose of removing any disincentive it may have contained, although I do not belive there was any serious disincentive, but I could not go along, and virtually all the Members of my party could not go along, nor could the Labour Party go along with the abolition in principle of the wealth tax, and I am quite certain there are queasy stomachs in Fianna Fáil about it too and they have every right to be queasy, because the people will not forgive them for it.
The economy since the beginning of 1976 has been on an upturn and people are in a mood of euphoria. I freely concede that a mood of that sort can be triggered off by a change of Government, not just in one direction, but may be triggered off just as easily in another. I freely concede that any sort of change in the conditions of life, of which a change of Government is a conspicuous example, can contribute to a mood of euphoria. I am told there is that mood and I cannot see an awful lot to contradict it. But, that curve will reach its apex sooner or later and it will start to descend. When it does, these chickens will come home to roost, and this will be the most important one. Minor hooflings like the ground rents swindle are relatively unimportant. We made fun of that here yesterday and will do so again. That kind of thing is relatively unimportant. Important is this distinction of a major signal of social justice which all sides in this State, I thought, had accepted. It is being swept from the scene. And, while I am by no means an ideological socialist, still less a communist or a man who is fanatical about redistributing wealth, I think that is a grave and fatal mistake. It is a national mistake. It is a mistake, the penalty for which, I console myself with this reflection, will be paid in the first instance by the Fianna Fáil Party.
I have a few questions I would like to address to the Government in regard to the consequences of this abolition. I should like to know how the effects of the abolition will be, to use a favourite word of Departments, monitored, how they will be kept track of. Suppose the abolition of wealth tax does not have any visible effect on the inflow of funds to this country, suppose it does not have any visible effect in the creation of employment, suppose even the very small number of millionaires that we have compared with the kind of wealth that exists in other countries in the EEC do not turn around and start putting their money into schemes which will be productive in the employment sense, what will be done about capital taxation then?
There is something I would welcome it if it was said—it might be useful if the Minister for Finance were to say it in closing the debate; I should like it to be said—that the extreme wealth in this country is being given a chance now but if it does not take this chance, this whole matter will have to be looked at again. A sensible Government would not have taken this step to begin with, but if any titter of sense is coming into their minds at this late moment, even at the last moment of this debate, even at the last moment of the Finance Bill debate, they should say that. This relaxation is unique in western Europe. I am not certain about Switzerland, but I believe that there is not another country in Europe in which there is no taxation in life or in death on accumulations of wealth—a unique situation in Europe. I would like that at least at a late hour the Government might say that this is intended to be a chance for a really heavy investment and that if those millions which they are now not going to tax in life or in death are visibly put to work in this country to make Irish jobs, they will leave the situation as it is but if there is no sign of that, if they are being put to work merely on a calculation of what will produce the most profit for the people who own them, then the Government will have to look at the situation again and may go back to what the National Coalition did. I should like to hear the Government side on that point.
In regard to the criticism of the Leader of the Opposition by the Minister for Economic Planning and Development, I should like to know what he expects the Leader of the Opposition to say in a budget debate when he forms an opinion such as the one which Deputy FitzGerald expressed two weeks ago and which I am expressing now. Deputy FitzGerald said that the abolition of the wealth tax would have a very unhelpful effect on the negotiation of a national wage agreement. I said the same thing on radio. I do not take part in these negotiations, nor does the Minister opposite. I do not know what goes on in the minds of the people on the trade union side in the negotiations; but I am certain that if I were one of them I would stiffen my determination not to give in too easily. Is not the Leader of the Opposition entitled to warn the Government that their proposed measure would do exactly that? Is he to sit tight and hold his tongue about this piece of lunacy? That is a babyish conception of Opposition. A Minister who holds such an office and has that conception of Opposition is likely to have a very dim appreciation of what Government is all about. I have the same respect for the Minister for Economic Planning and Development as most other Members have, and I am saying this about him only because of his speech last week.
A few years ago I remember the present Minister for Finance, Deputy Colley, boasting in regard to a couple of people on the Labour benches that Fianna Fáil "did not take anyone in off the street and make him a major-general". I think this was intended to refer to Deputy Thornley; I am not quite sure. That expression was proudly used. That is precisely the situation in which the Minister for Economic Planning and Development now finds himself and I wish him the best of luck, covered in the decorations of the rearguard of the political army of which he is a member, getting to the front in one jump. I would have done the same thing myself if I could, and so would the rest of us. But when I find that the Minister has such little understanding of what an Opposition is all about, I have to ask myself if he has much grasp of the functions of a Government. I will be watching that Minister with double attention from now on because of the idiotic speech he made 10 days ago.
I make allowances for saying things in the heat of the moment which one does not really mean, but the Minister read a lecture to Deputy FitzGerald on academic probity, on presenting the full picture and not being selective. If I had been exiled in Mars or had been in orbit for the past five years, and had returned to earth and been given no information about the economic situation in the meantime except what was contained in the Minister's speech, I would not have known that there had been an oil crisis and I would barely know that there had been a recession. The recession was mentioned quite marginally at two places. He was very free in heaping blame on what he regarded as the insane policies of the Coalition in regard to foreign borrowing. This borrowing has been far outstripped by his own figure. The speech does not contain one word of understanding of the whirlwind through which the Coalition had to pass within 12 months of taking office.
Academics are flesh and blood and are as frail morally and every other way as the rest of mankind, and I can say that from first-hand experience. I can assure the House that anyone setting out an academic argument will not enjoy the respect even of his most junior colleagues unless he takes account of what has been said on the other side. He may mention it only in order to dismiss it, but he will take account of it. When I read this speech I find that the oil crisis is never mentioned and the recession is referred to only marginally in what is supposed to be a devastating review of the mess into which the Minister alleged the previous Government had brought the country. There is no mention of the orthodoxy which I understood was axiomatic, according to which one is supposed to borrow and spend oneself out of a recession and that the most dangerous thing to do is to deflate the economy. There is no mention of the cruel burdens— quite gratuitous burdens—coming from Northern Ireland which the last Government carried, with little enough help from the other side of the House.
I say this without offence. If it were the Minister opposite who had made that speech I would not take it as a point of criticism, but when I find these things are done in a speech which is topped off by a lecture on academic probity to Deputy FitzGerald, I must call attention to it.