Finance Bill, 1978: Committee Stage (Resumed) .

Question again proposed: "That section 36 stand part of the Bill."

: Yesterday evening I was in the process of questioning some of the basic assumptions behind the Government's decision to cease making assessments on the wealth tax and, ultimately, as the Minister has assured us, to abolish it. It is important for us to remember precisely what is being done, in effect to abolish this piece of legislation. It is a tax which, although it was deliberately set at a low level by the then Minister for Finance in order to try to avoid any suggestion that it was a penal tax, was slowly beginning to make something of a contribution to the redistribution of wealth in Irish society. This year the estimated yield from it would have been about £8½ million. When we look at the Government's fiscal strategy we could have a fairly clear idea of a number of areas in which that money would have been very useful. We could have had free primary school books for every child in the country as well as a doubling of the present rate of higher education grants.

: Instead of that we could have doubled the capitation grants for national schools. I have no doubt that other spokesmen on these benches could equally think of other ways to spend that money. I have no doubt that our spokesman on the Environment, Deputy Quinn, could spend £8½ million very handily and that he would have produced a few jobs also. I have no doubt that our spokesman on Health and Social Welfare, Deputy O'Connell, would not have had much difficulty or taken much time in finding places and areas in which to spend that money. He would have provided jobs also. I have no doubt that on the Minister's side there are other Ministers who would have been delighted with £8½ million. The Minister for Health and Social Welfare would have needed only two-thirds of that £8½ million to give a 10 per cent increase in children's allowances in this year's budget. He did not get that and I am sure he is bitterly regretting that he did not.

: There are other reasons for that.

: There may be other reasons but I do not propose to go into them. This is hardly the place or the time to go into them but it is a peculiar series of coincidences that make for the matching of a regressive fiscal policy with the particular political currents inside the Cabinet. The Minister yesterday made considerable play of the exchanges that took place at the end of the Second Stage debate on the Bill in relation to whether or not capital outflow had taken place. I was present for those exchanges and I was interested to hear the Minister's defence of his statement on that occasion.

While the Minister made a defence of his statement he did not go so far as to claim, nor do I think he could go that far, that the evidence which he gave to us in the House was conclusive. He also ignored a number of factors which have to be taken into account if we are to make any definitive or conclusive statement about capital outflow. I would have thought that, for example, if we are to make any definitive statement about capital outflow we should look at movement in capital over a much longer period of time than the period the Minister adduced in his example. I would think also that we would have to correct and allow for factors such as the fluctuation and variation in interest rates available in different institutions here and outside. It cannot be forgotten that we share a common currency area with the United Kingdom and that this sharing of a common currency area is probably the greatest single contributory factor to capital movement in any direction at any given time, if we discount things like Government borrowing.

It could also be argued that part of the problem in relation to the creation of the wealth tax in 1974 was not solely our doing in that we were one part of a common currency area which introduced a wealth tax at a time when such a tax did not exist in the other part of that same currency area. I would not regard that as a strong argument against introducing a wealth tax in Ireland. It is certainly a fact that a modest amount of socialist co-operation between the then Government and the then British Government might have helped to obviate any capital outflow that might have taken place. When it is looked at in historical perspective one can see the action of the then Government in introducing a wealth tax at that time as an act of considerable political and moral courage, and it was not a socialist-controlled or dominated Government by any means.

I am prepared to accept that there is some evidence of capital outflow from Ireland, but it is very impressionistic and the Minister's description of it is open to the qualifications that I have mentioned. There is some other evidence which he did not refer to and he did not refer to it because it does not put this proposal in a very good light. That evidence is the vulgar self-advertisement of people who have announced in the public press that they are now back in Ireland because the wealth tax has gone. Some of them have had the good sense to hide their identities behind box numbers in the advertisements. We have all seen these advertisements: "Returned wealth-tax exile seeks large house in Dublin or Leinster area. Over £200,000 available.". This is the evidence that there was some capital outflow. It is also evidence of the kind of capital that flew out and the kind of latter-day flight of the Earls that accompanied it.

: Instead of the Wild Geese, the fat geese.

: These are the people who are now coming back to Ireland. These are the people the Minister hopes will be providing the jobs for the people who are unemployed in Ireland today. I wish I could be as sanguine as the Minister about the prospects of that happening. We are talking about people of extraordinary wealth who left this country at the first hint that even the tiniest bite might be taken at their wealth, wealth which was not necessarily amassed by their own unaided personal efforts, wealth that could have been inherited, wealth that could have been created by manipulation of financial institutions, wealth created by exploitation of workers. They are now expected, God help us, to come back and row the lifeboat that the Minister is providing for them in this Bill. If their initial action in leaving this country—and I accept that some of them did leave it—was anything, it was selfish. Can we honestly expect that their selfishness will be any less when they return?

There is some further evidence that not even the Government's decision to abolish the wealth tax has stopped any capital outflow from this country. I do not know if the Minister has seen a series of advertisements on the back page of one of our newspapers, inserted by a merchant bank, offering splendid investment opportunities in the USA for people with sums of £20,000 or over to invest. Has the Minister any way of preventing this?

: There is no outflow of money involved. I have a parliamentary question to which I will be replying. I am just telling the Deputy before he develops that point.

: I was not proposing to develop it in any great detail. It seems difficult to maintain at the best of times that, if somebody in Ireland invests Irish money in the USA, no capital outflow is involved. However, I look forward to hearing the Minister on this matter.

The final aspect of what he says about capital outflow was in relation to disincentives. We have consistently maintained that the real disincentive to investment and to hard work among the better-off and better-paid members of our community was not the wealth tax, which affected relatively few of them, but the high marginal rate of tax which was introduced by Deputy Colley's former Government, a rate of tax which reached 80 per cent at its maximum. The fuss and bother about the wealth tax almost evaporated as soon as the highest marginal rate of tax was reduced to 60 per cent. Of course, in any society any government needs to look at the question of incentives but it needs to look at the question of incentives with some kind of sensitivity.

It is interesting to note that one major commission which has studied the whole taxation problem and the question of incentives in Britain has published its report, known as the Meade Report, and has come to the conclusion that a particular equitable form of taxation would be an expenditure tax, not particularly of the VAT kind but one levied on total individual or family expenditure plus a wealth tax to prevent accumulations of wealth and adequately to tax existing accumulations of wealth.

The wealth tax was introduced as part of a package to replace a system of capital taxation which had existed in, broadly speaking, an unchanged form since 1894. It was introduced after a White Paper on capital taxation which was laid before each House of the Oireachtas on 28 February 1974. It was very clear what the inspiration for that White Paper was. In paragraph 50 the Government of the day said:

The promotion of social justice requires that the tax system should contribute to the achievement of a more equitable distribution of wealth and income in the community. A proportionate or even a progressive income tax will not achieve this objective since it will have no effect on the redistribution of existing accumulations of wealth. It can only to a very limited extent prevent the accumulation of new concentrations of wealth.

Paragraph 51 states in part:

There is no doubt that the distribution of capital in Ireland is far more unequal than the distribution of income.

Paragraph 54 states in part:

The absence of a comprehensive system of capital taxation is resented by the general body of taxpayers who feel that they are taxed excessively. If the development of a small, permanent, wealthy privileged class (whose position is assured by the absence of effective capital taxation) is not arrested, social inequalities will be perpetuated, which, in turn, will generate feelings of frustration and dissatisfaction within the community.

I believe that that was a reasonable assessment of the situation. I believe it was one which could be defended by reference to any kind of widely shared social and political norms. I believe that the taxation policy, which was based on that White Paper and on the political and philosophical ideas behind that White Paper, was modest indeed.

In relation to the actual distribution of wealth and income, there is unfortunately very little effective statistical information. One of the most recent pieces of statistical information to which we have had access was an address to the Statistical and Social Inquiry Society of Ireland on the personal distribution of income by Mr. Brian Nolan on 2 February 1978. The data advanced by Mr. Nolan, who based his findings on the 1973 household budget survey, the most complete thing that was available to the 1974-5 Government as well as to Mr. Nolan, suggests, and I am quoting from page 10 of this document:

... the bottom 6.75 per cent of households have less than 1 per cent of total income, and the bottom 20 per cent approximately have only 4 per cent of total income. The top 8.8 per cent have over 24 per cent of total income, and the top 13 per cent have over 32 per cent of total income. We thus have a picture of the structure of the distribution of gross income among households in Ireland.

The only other point I want to make from Mr. Nolan's survey is where he goes into considerable detail about the regional distribution of income across the country.

: The Deputy may not make a Second Reading speech on the section on Committee Stage.

: I do not propose to do so. There is a wealth of material here I would use if I were making a Second Reading speech. I am merely taking two quotations from it; that is all.

: I am not trying to curb the Deputy's scope, but there is a limit within which we must confine ourselves.

: I will bear in mind what the Chair says.

The only point Mr. Nolan makes in relation to the geographical distribution which is relevant is that:

... the percentage of rural households in each of the bottom six income ranges is higher than the percentage of urban households in these groups, and the percentage in the top six income range is lower.

We have always maintained that the wealth tax was part of a general policy of re-distributing wealth in Ireland. These figures are particularly interesting because they give the lie to the accusation that the former Government, in general, and this party in particular, were concerned only with re-distribution from the country to the town. If it is true, as these figures indicate, that the real poverty is, if anything, slightly more likely to exist in rural areas than in the towns, then in advocating this wealth tax, and now in campaigning against its abolition, we are campaigning in favour of a form of re-distribution which would benefit the poorer rural households in this State, and that fact should not be lost sight of.

On 25 March 1978, in relation to the 1976 assessments to wealth tax, Mr. Ken O'Brien in The Irish Times, quoting from the report of the Revenue Commissioners noted that the total net market value of the 1,713 individuals whose wealth was assessed was £337.7 million of which the two largest items were agricultural lands—£77.4 million, and stocks and shares—£76.1 million. The wealth of non-trading companies and trusts was put at £172.6 million. It is interesting to note what a great proportion of wealth is held in the form of land by people who were assessable to wealth tax. If this is the case it puts a further question mark against the Minister's contention about the flight of capital, because land is not capital that can fly—it stays there and is anchored there and its ownership largely will remain constant. I met at a meeting a farmer from one county who, in the last year of assessment of the wealth tax, paid more wealth tax in that year than I had total income for half of that year. He was not really grumbling. Obviously he would have preferred not to pay it if he did not have to, but he was not going to leave farming, to sell his farm to some Germans, Austrians or Belgians and get out; he simply was not going to do that.

There is an enormous contrast between the two ends of our social spectrum, between the 60 individuals who have ranges of taxable wealth of over £500,000 at one end of the scale and the 15 per cent or so of the 100,000 odd on the unemployment register who, on average, receive no payment at all during any particular week. And the wealth tax was introduced as part of an attempt to remedy that state of affairs, part of an attempt to create greater equity in Irish society.

The question of liability to wealth tax has been raised sometimes in such a way as to suggest that huge numbers of people were about to fall into it. But we must remember that the exemptions and allowances were extremely generous. For instance, for a married couple, we allowed a house, up to an acre of ground and £100,000 of net wealth on top of that before they were even touched. Just to give the House a single example of the kind of person who would not necessarily be touched by this legislation I only have to look to yesterday's Evening Herald in relation to a house in a suburb of Dublin which was bought for £200,000. In deference to the Chair I will not quote any of the names of the parties involved. But a relative of the seller was reported in the paper as saying:

My husband is pleased with the deal but it is not an exceptional price really when you consider the prices that fairly average houses on Killiney Hill are now fetching.

This £200,000 house and £100,000 of other property would have been totally untouched by wealth tax in relation to his family. I have no personal animus against this family at all; I would like to make that absolutely clear. What I am saying is that under the wealth tax regulations which the Minister is now repealing this particular set of family circumstances with a net wealth of over £250,000, might not have been touched.

I should like to ask the Minister a couple of questions which I feel he owes us answers to. First of all does he accept that there is substantial inequality in the distribution of wealth in Ireland? Does he believe that the present capital taxes—which produced a measly £3.3 million out of the £832.7 million Exchequer revenue receipts for the first five months of 1978—are adequate? There are reasons for believing that he believes these capital taxes to be excessive when one considers what he is now proposing to do to the capital gains tax. Does he believe that as well as the creation of wealth the re-distribution of wealth is a priority for any Government who have any pretence to social policy? Would he tell us if in the Fianna Fáil heaven towards which he is leading us all the price of progress will be continuing and perhaps worsening inequality? Will the poor always be with us? There are times when it is not enough to comfort the afflicted; we must also have the courage to afflict at least some of the comfortable. We have all too often in our society shown ourselves unwilling enough to provide even the basic safety net to look after the rejects and the casualities of society. The wealth tax, which was introduced by the previous Government, was an attempt to change society, to make it into a kind of society in which safety nets would have a much more limited and marginal effect than they have now. This is why we supported the wealth tax and why we oppose its abolition.

: It would be fair to say that Deputy Horgan certainly made the best of a bad job. I will pay him that tribute, but it is a bad job, and he knows it. In all he said about wealth tax he said little or nothing about the question of jobs and what effect the introduction of wealth tax had on jobs. Did he believe it had any effect? If so, what? That is what it is all about. The wealth tax is being abolished to ensure that the creation of jobs is not inhibited and, on the contrary, is encouraged. There is no use in expostulating at considerable length on theories of equality and ignoring the reality of jobs, because the basic social requirement of anybody claiming to have a social conscience is the provision of jobs for the unemployed. There is no use trying to run away from that truth; you either accept it or you do not. If it is accepted, then the question of the wealth tax, its introduction and abolition, has to be judged in that context. That is the most important context in which it can be judged. It was on that basis that we opposed it when it was introduced and on that basis that we are repealing it.

Deputy Horgan appeared in what he said to be unaware of the consistent line that Fianna Fáil have taken in regard to the wealth tax, which is that it is totally inappropriate in our view to a country at our stage of economic development and can only hinder and not help that economic development. The question of when it would be appropriate is a luxury we can deal with at some time in the future, but the reality of the situation is that today and when it was introduced it was totally inappropriate.

: Lord, make me pure, but not yet.

: The Deputy does not give a damn about jobs. He is more interested in talking about alleged inequity, ignoring the real inequity of the people who could not get jobs under the Government which he supported. More and more young people were losing their jobs. What was the answer? The introduction of the wealth tax. What did that do for people as regards jobs? It is, I suggest, of some significance that the great majority of people who have favoured the wealth tax and criticised its abolition are people who themselves are in comfortable jobs.

: Are these jobs comfortable, Deputy Quinn's and mine?

: They are a great deal more comfortable than the position of many people who have no jobs.

: That is self-evident.

: The Minister to continue without interruption.

: Deputy Horgan painted a picture of people leaving the country and now returning. I have no personal knowledge of any such people going or coming. I am not interested in whether these people went or came back, but I am interested in their money and what happens to it and whether it is put to productive purposes which will create jobs. Deputy Horgan said: "These are the people on whom the Minister is depending to produce jobs". I suppose the Deputy can be forgiven a certain amount of exaggeration, but he must know that the vast majority of people who paid wealth tax remained in this country and are still here.

Much more significant in relation to the impact of the wealth tax is that shortly before the budget I had a meeting with a group of businessmen, none of whom was subject to the wealth tax. The purpose of their deputation to me was to urge me to abolish the wealth tax. The reason was that each of them was a successful businessman with, in national terms, a small or medium size business. Each of them was quite comfortably off and could retire and live comfortably for the rest of his life, though some of them, if not young, were not more than middle aged. Because of the kind of people they are—and they are the kind of people on whom I am depending to create jobs—they have an in-built urge to expand and grow in business and, of course, in the process to add to the employment they have already created. None of them was prepared to involve himself not only in the financial risk but the worry and the late hours and the hard work involved in expanding a business if, as a result of doing so, he was simply going to put himself into the wealth tax net. That was the message.

It may be that Deputy Horgan and his colleagues have no great meas on people of that kind. Perhaps they think that such people are not in the long run very worth while. If so, I disagree fundamentally. I believe that people such as these are most important in the creation of jobs. These particular people, none of whom was liable for wealth tax, made it perfectly clear that if the wealth tax were not abolished there was no way that any one of them would expand his business. They could all live comfortably without doing so. Since the announcement in the budget of the abolition of wealth tax, a number of them have already expanded their business and others have plans for expansion and all of this leads to further employment. That is the reality in talking about the wealth tax and it is the reality which Deputy Horgan has studiously avoided.

Deputy Horgan talked about the previous Government having the moral courage to introduce the wealth tax. Perhaps he would cast his mind back to when that happened. Is it not a fact that at that time and subsequently, virtually up to the general election, the accepted wisdom amongst political commentators and a number of Deputies was that Fianna Fáil in general and I in particular as the spokesman in Opposition had made an enormous mistake in opposing the wealth tax because it affected only a small number of people? It was thought that the great majority of people who were not affected and would never be affected by it could be motivated by the politics of envy to support the proposition that there should be a wealth tax and would, therefore, support the Coalition and consequently oppose Fianna Fáil who had opposed the wealth tax. Is it not a fact that that was the accepted political wisdom up to the election? If that is a fact, who was showing the moral courage in relation to the introduction of the wealth tax?

One of the major objections to the wealth tax, as I indicated last night, was the discrimination involved in it against Irish people. To give Deputy Horgan his due, he did not try to shirk this issue, but even he must acknowledge that his defence of that discrimination was less than convincing. It seemed to amount to this: if such discrimination exists, he presumes it exists in other countries, and, if it exists in other countries, they live with it and why should we not live with it?

I do not think that is good enough. Deputy Horgan lives in this country and he has to explain to the people of this country why a Government should introduce a tax of this nature specifically applying to Irish people and not to foreigners even though the Irish people concerned and the foreigners concerned may be trading in competition side by side in this country. I do not think Deputy Horgan has explained on his own behalf or on behalf of his party how one can justify that kind of discrimination against Irish entrepreneurs. Unless he can explain it in terms that are acceptable to the people of this country— not any other country—then, even on that ground alone, he cannot justify his support for the wealth tax.

In regard to what I said about capital flows I notice that he tried to dismiss it in the sense that he said there was no absolutely conclusive evidence, but he ended by saying that he acknowledged that there had been some exodus of money as a result of the introduction of the wealth tax.

It might be useful to remind the House briefly of what I said emerged as a result of the examination carried out in the Department of Finance in regard to capital flows. That was, first, that in the latter half of 1974 there were some indications that resident balances with the associated banks outside the State were increased; secondly, subsequent monitoring revealed a broadly similar pattern; and in early 1975 it was concluded by the Central Bank and the Department of Finance that it seemed a fair inference that financial outflows had been influenced by the taxation proposals here. These conclusions and the results of further studies were submitted to the then Secretary of the Department but there is no evidence on file to show whether in fact it was submitted to the then Minister. I might add that it would be a peculiar situation, I would have thought, if it had not been submitted to the then Minister.

Deputy Horgan said that I could not produce any definitive evidence on this matter. I think it is fairly persuasive. Originally, what I said went no further than saying that "There is some evidence of an outflow of money as a result of that being introduced." These are the exact words I used.

: It is the "as a result" that you cannot prove; coincidence in time but not causal relationship.

: May I remind the Deputy that there is a causal relationship and that I referred to it last night when I said that when one takes account of known inflows and outflows —for instance, Government foreign borrowing and changes in the banks net external position—there remains a residual item which is regarded as private capital and this item was positive in 1974 but has been strongly negative, suggesting outflows, in 1975 and later years and that this bears out the results of the monitoring carried out by the Department of Finance and the Central Bank since 1974.

Further, I drew the attention of the House to the fact that the Central Bank, in its annual report for 1977 on page 37, said that residual net capital outflows amounted to about £50 million. Again, the CSO statistics published in the Irish Statistical Bulletin also recorded net outflows of other private capital. One cannot ignore this. In the nature of things it is not possible to be absolutely precise about this —I said that from the beginning—but the indications are quite clear and it is simply quibbling to suggest that either there is no evidence or if there is, it is not sufficiently clear to warrant any attention being paid to it.

Remember this: Deputy Horgan says I did not give any definitive evidence of this, but we had definitive statements by members of the previous Government when in office and since they left office to the effect—I do not want to misquote: Deputy Barry referred to this on a few occasions and on the last occasion on which it came up Deputy Garret FitzGerald also referred to it. Deputy Barry said, as reported in the Official Report of 24 May 1978, column 1767, volume 306: "There was absolutely no evidence as the Minister suggests." Subsequently, Deputy Barry said: "If it is not conclusive, it is not evidence"—which would appear to be the line Deputy Horgan was taking. Deputy FitzGerald said: "There is contrary evidence. The balance of payments shows that capital outflow rose very sharply, many times over in 1974 after we announced the introduction of the wealth tax". Actually, the report says "capital outflow" but I am sure he said capital inflow"; I think it would not make sense otherwise.

I have already pointed out that that is of no relevance. We have had strong capital inflows, but when you analyse them and deal with the known items, such as Government borrowing and changes in the banks' net external position, then you have the residual item. The important thing is that it was positive—in other words, there was an inflow—in 1974; but it has been negative—in other words, an outflow—in 1975 and later years. Members of the previous Government when in office and subsequently, speaking with the authority of the knowledge they gained when in office, have consistently given the impression that there was no outflow and, in fact, as Deputy Garret FitzGerald said, there was evidence to the contrary, there was an inflow.

In those circumstances the question of definitive statements in this matter and the consequences of the introduction of the wealth tax began to fall into perspective, and I believe the truth to be that some members at least of the previous Government knew after the introduction of the wealth tax what the evidence was showing and they knew that it continued to show an outflow of private capital. Whether you regard that as bad, or good, or a serious matter or not, is irrelevant. The fact is that some of them at least must have known this evidence was there and yet they consistently said there was no such evidence or, if there was evidence, it was in the other direction and it showed an inflow. People are, I think, entitled to know why members of the previous Government felt it necessary to mislead the public, and still feel it necessary to mislead the public, as to the evidence available in regard to the capital outflows arising from the time of the introduction of the wealth tax. I think it is clear enough why they felt it necessary to mislead the public. It was because the public was not particularly enamoured anyway of the wealth tax, contrary to the expectations of the previous Government but, if there was evidence available to suggest it was causing an outflow of money, then clearly the public would have been less enamoured of it and so the evidence available was withheld from the public and it was represented that such evidence as was available gave a contrary impression. I would invite members of the previous Government to participate in this debate and explain now why this evidence was concealed and, in some cases, misrepresented.

To return to what I regard as the most important aspect of this section, the context in which the Fianna Fáil Party opposed the introduction of the wealth tax, the context in which they now propose to abolish the wealth tax, that aspect is the creation of jobs. This is basic to the whole argument about the wealth tax. This is the aspect of it that Deputy Horgan has been most anxious to avoid and yet this is the most basic aspect. I assume Deputy Horgan would agree with me that, if it could be shown clearly and beyond dispute that the wealth tax caused jobs to be lost and inhibited the creation of new jobs, then we should not have a wealth tax. He may argue that the evidence in that regard is not conclusive and, in the nature of things, it is difficult to produce conclusive evidence. But I mentioned, and Deputy Horgan did not attempt to controvert this, that I knew, and so did a great number of people, of specific jobs lost as a result of the introduction of the wealth tax. In addition I believe many more jobs were indirectly lost, which is difficult to prove, and it is also of course almost impossible to prove that certain jobs that would have been created had there been no wealth tax were not created.

The example I gave of the deputation I received shortly before the budget, a deputation consisting of a group of businessmen none of whom was liable to wealth tax, and their reaction to it, makes clear what the consequences of the wealth tax were, and one consequence was to inhibit the creation of jobs. As far as I am concerned—I have said this before and I say it again now—the most important economic and social objective we can have is the creation of jobs, jobs especially for our young people, and no amount of theorising about equity in taxation or the redistribution of wealth, or equity in its distribution, compares in the slightest degree with the importance of creating jobs for people. If they do not have jobs that is the greatest social inequity that can be inflicted on them, and it is in that context we opposed the introduction of the wealth tax and it is in that context we propose its abolition. I am quite happy to have this party judged in the context as to whether the wealth tax helped or hindered the creation of jobs. I would invite anybody who wants to make his judgement on the matter to advert to that most important aspect of it. As far as I am concerned, I am very happy to be judged in relation to the wealth tax in that context: Did it help or hinder the creation of jobs?

: Before calling on Deputy Quinn, the Chair feels obliged to point out that we would appear to be entering into a full-scale Second Stage debate on this Bill. That applies to both sides and it is not, of course, in order. We also have a great deal of repetition, which is clearly out of order.

: I believe the Minister to be sincere and very much committed to the objective of job creation. I do not think the debate is helped by any suggestion of acrimony with a personal tinge to it. What I am about to say is not directed personally, and I do not want it to be taken as directed personally, to people on the other side of the House. The Minister has asked us to indicate why we are opposed in principle to the abolition of the wealth tax and, more to the point, in practice. I want to try now to relate it back to his central concern, which is that of job creation. This section proposes to abolish the wealth tax. The law will remain on the Statute Book, presumably so that all outstanding taxes can be collected, but they will in fact be zero rated. From the point of view of semantics, we are not abolishing the wealth tax as we understand it.

Now we believe that a society which enables a small group to accumulate and retain vast wealth is fundamentally dangerous to the safety of a democracy. We believe small groups that accumulate vast wealth can convert that wealth into influence and, if they so wish, use that influence to direct the affairs of a democratic state to their own benefit. As democrats and as republicans we find that unacceptable. One could develop that point but I think it should be quite clear to all why our principal objection would be founded on that particular base.

This is, perhaps, the philosophical and theoretical argument and, coming directly to the area of concern the Minister has defined as the motivation upon which the Fianna Fáil party decided to abolish the wealth tax, namely, the creation of jobs, we do not see that the abolition of this tax is automatically and proportionately going to create jobs pro rata to the loss of revenue that will result from the abolition of the tax. I readily concede, and so do my party, that some jobs will be created. We would be ostriches of the most obscurantist kind not to see that.

We concede in principle that when the wealth tax was introduced it frightened some people. I would not argue with many of the points of view put forward by the Minister. Our view would be as follows: the demands for job creation in our society now are of such a scale and of such a level that we can no longer rely exclusively or simply on what I would describe as the haphazard tendency of private enterprise to develop jobs in different areas. On the contrary, we believe that the scale of the problem which the Minister has identified is such that the community at large and the Government in particular must take a more positive role in directing investment into various areas where jobs can be created and where, in turn, subsequent jobs can be supported.

In the arguments advanced to date by the Minister in this debate and elsewhere, principally in his contribution when the original Bill was introduced in 1975, we do not see a sufficiently strong correlation between the abolition of this tax and the direct creation of new jobs. I qualify that by saying that I concede there will be some jobs created because that kind of capital has to earn its keep and generate some kind of revenue in order to maintain its current value. That is not at issue. What is at issue is this: given the scale of the problem is it not essential to introduce some form of direction into investment in order to create additional jobs?

In his reply today to Deputy Horgan and in his comments yesterday, most of which I heard, the Minister spoke about the consistency of the Fianna Fáil opposition to this measure and about the moral courage of Fianna Fáil in going against the perceived conventional political wisdom in adopting this stand. I find it rather interesting that in a budget speech and in all the contributions he has made through this debate, he has ultimately gone back by way of justification to the Fianna Fáil manifesto and the mandate that manifesto got in the election last year.

On page 6 of that manifesto dealing with tax cuts it states:

The most important tax cuts will be: Income tax allowances...; Increase in personal allowance...; Abolishing rates...; Reducing Social Welfare stamp ...; Abolishing annual road tax...

Nowhere in this manifesto is there any indication that Fianna Fáil were also going to abolish wealth tax. That is a factual observation.

I would be interested to hear why there was no commitment given in advance to the abolition of this tax if, as the Minister says correctly, he so consistently and energetically opposed this provision from the outset. This item was not in the manifesto and consequently does not have the same kind of moral mandate as many of the other provisions, and as democrats we cannot argue against them. Fianna Fáil promised to abolish road tax and they did it and got the votes for it in the ballot box. That is democracy. They did not promise in the manifesto to abolish wealth tax.

Are we to conclude that a group of businessmen who visit the Minister sometime before the budget are capable of exercising influence to the extent that he can subsequently and without any apparent popular mandate abolish the wealth tax? If that is the case does that not take us back to the principle I was enunciating at the outset, that people who collectively have this potentially vast amount of capital —bearing in mind his comments about this group none of whom would be personally liable for wealth tax—have the capacity to exercise enormous political influence without any popular mandate?

Most Governments in western democracies, be they Christian Democrats, right of centre or left of centre, have to deliver on jobs. If they do not they are subject to being turned out at the next election. Therefore the people who have the capacity to produce jobs have for those Governments potentially an enormous amount of influence.

Let me move on from those observations to the effects of the wealth tax as brought in by the last Government in principle. I am talking at all times in principle. Any arguments one might have had about the implementation of the wealth tax, about the methods, the administrative effects and the bonanza or nightmare, depending on your point of view, that it created for accountants, have effectively been made redundant because the Minister has seen fit to abolish it. Therefore comments about improving it and making it a better tax from a procedural point of view or from the point of view of the Revenue Commissioners do not concern us at this stage. Because this Government have seen fit to abolish it they have taken a principle decision, and we are concerned with that at this stage.

I find it very sad that a person who has as much political experience as the Minister—who has I believe a very sincere commitment to the people and the country—in a country that has an enormously high population growth relative to western Europe, after 40 or 50 years of independent government could accept as normal that a group of businessmen could say that they were comfortable and some of them were in middle age and could enjoy their retirement and live on their wealth for the rest of their lives, they were not really prepared to continue to extend their enterprises because of the possibility of a wealth tax.

It seems to me as a socialist that there is something radically wrong with the way we have all been brought up if someone who has been involved in an enterprise all those years could look on life and society in such an incredibly selfish, self-centred way. There is the assumption in that that if the managing director, or the primary shareholder or the owner, is weary of the whole business and has enough personal comfort achieved through his or her hard work throughout the years he or she does not have to try any more. The obligations with regard to creating new jobs are exclusively and totally the concern of that individual. What about all the other people who work in those enterprises and who have worked for them for years? Do they not have children and do they not have some stake in these organisations? This is where we do not see a correlation between the two. While in Opposition the Minister said, as reported at column 1505, volume 278 of the Official Report for 5 March 1975:

We are opposed in principle to a wealth tax in our economic circumstances.

Yesterday he said that on numerous occasions he has developed exactly what is the Fianna Fáil position regarding wealth tax. I have scanned some of the documentation available to me and I can find no more succinct or elaborate definition of the Fianna Fáil position than that they are opposed to a wealth tax in our economic circumstances. Deputy Horgan asked, rightly, when our economic circumstances are expected to change to such an extent that Fianna Fáil will not be opposed in principle to a wealth tax. As reported at column 1507, Deputy Colley went on to say:

I am looking for a practical, down-to-earth explanation that will make sense to our 103,000 unemployed people. I am not looking for a farrago of airy-fairy doctrinaire nonsense...

There the Minister was concentrating all his attention on the question of job creation and on the provision of jobs. I should hope that this House would be spared airy-fairy doctrinaire nonsense from whatever side, but with respect to the Minister, for him to rely to the extent that he has relied on the submissions of an anonymous group of businessmen plus other submissions obviously——

: I was illustrating a particular point.

: I accept that. We may have our disagreements, but I could not by any stretch of the imagination accuse the Minister of being remotely within that category.

: That is not what I meant. I was merely illustrating a specific point but not the basis on which the wealth tax is being abolished.

: To the extent that this tax is being abolished there is a reliance exclusively on what we would consider to be airy-fairy doctrinaire nonsense. The Minister has gone to much trouble to emphasise that, if one cannot show how the retention of the wealth tax could contribute to the creation of new jobs, one must be silent about its abolition. He is arguing that the wealth tax was a disincentive to people in the private sector who had the capacity to create jobs. Our argument to that is that, first, he is forfeiting £8.5 million approximately. That amount of capital could be utilised for investment and that investment could be directed by any one of the Minister's colleagues, either into what the Minister for Economic Planning and Development might prefer— the productive side—or into the non-job creation area. Either way that choice could be made by a Government with an economic strategy.

Our fundamental submission from an economic point of view is that that opportunity is lost by forfeiting the revenue involved and that we have no way of monitoring whether the benefits of that forfeiture will be used to create jobs. To that extent we consider the proposal to be unwarranted, having regard particularly to the nature of our society and to the demands on it. In essence that is our major argument. I should like the Minister to tell us whether the group of businessmen he met represented a particular organisation or whether they were an ad hoc group.

: They were an ad hoc group.

Deputy Horgan rose.

: At this stage the Chair considers that the section should be put. We have been having much repetition. Debate on the section has continued for almost three hours. That is not in order.

: I do not propose to be repetitive, but I propose to reply to some of the fundamental points which the Minister addressed to me in replying to what I said. The burden of his argument is that while we made play of the theory of inequality we were refusing to face up to the reality of unemployment. By way of an aside I would remark that inequality is just as much a reality as is unemployment. We do not measure inequality as accurately as we measure the other and perhaps we will be measuring it even less accurately in the future. Inequality is a reality because, although we study the poor with the sort of care and attention which is lavished by scientists on the lower species of animal and plant life, we rarely study the rich. The rich are noticed. They are conspicuous, but they are not studied in any scientific way.

In order for our exposition of the reality of inequality to be more complete we need more information than we have. The Minister, in a singularly ill-advised remark, suggested that only people in comfortable jobs were looking for the abolition of wealth tax.

: I think the Deputy means that the other way around.

: Yes. He was suggesting that only those people were opposed to the abolition of the wealth tax. When I asked him whether people like Deputy Quinn and I were in comfortable jobs he made the obvious remark that we were in a more comfortable position than people who were unemployed. The Minister ought to know that there are unemployed people who vote for and who work for this party but who are totally committed to the retention of the wealth tax and who are committed to opposing the Government on this issue. Even within the constraints of this House, and our salaries are governed by statute, there are degress of comfort and the less comfortable of us on this side of the House are the ones who are opposing the abolition of the wealth tax while the more comfortable people on the other side of the House are advocating the abolition of that tax.

: At least they are being consistent with the view they took when they were on the less comfortable side of the House.

: We are being consistent, too. Specifically on the question of jobs, the Minister cannot deny that when his Government were returned to office, despite the fact that the wealth tax was in operation, unemployment was decreasing and continued to decrease for a period during which, by no stretch of the imagination, could it have been said that the change of Government in itself had produced the improvement. Three days after the present Taoiseach was elected there were 500 people fewer on the unemployment register than there were four days before he was elected.

Not even the Minister would claim that those 500 jobs were created by Fianna Fáil. Not even the Minister would claim that Fianna Fáil's pledge to abolish the wealth tax was in some sense responsible for those new jobs. One can go on into the months after the change of Government when very little was happening, when unemployment continued to fall. In no way can one maintain either that the Government were directly responsible for that fall in unemployment or that unemployment would not have continued to fall had the economic policies adopted and pursued by the previous Government been pursued with vigour and force.

The Minister also said that he can actually identify actual jobs which were lost as a result of the imposition of the wealth tax. I was not in for all of Deputy Quinn's contribution but I imagine he may have asked him if he could identify actual jobs which had been lost, could he name the enterprises in which jobs have been lost. I do not believe the Minister will identify them, because if he were to point to such an enterprise and say that 45 jobs were lost in this firm he would actually be identifying not just enterprises but individuals who put the maintenance of their personal wealth before the maintenance of employment. It is not only tantamount to saying that he submitted to economic blackmail but that he took pleasure in it.

There are not a lot of people in the category mentioned earlier by the Minister. If we added up all their votes I suppose they would not come to enough to win more than a seat or two. I suspect that people like that came to the Minister after the election urging him to abolish the wealth tax on the ground that they would be actually prevented from expanding if it were not abolished. I suspect that the message that was going out to the work-force before the election was not in relation to a possible check on expansion but in relation to the possible security of the jobs in those enterprises. Blackmail can work in different directions. I doubt very much that the Minister will identify those enterprises, because he will be exposing them to the kind of accusation I have suggested.

: In the course of the Minister's contribution yesterday evening he did a most amazing piece of political cultivation. He finally finds himself with his back to the wall trying to support the main political premise which he has advanced in relation to the Government's decision to abolish the wealth tax. He has finally come down with some hard, definite evidence which he regards as conclusive. In the first instance, we have the statement by the Minister yesterday evening in his particular references to net capital outflow from the country. The Minister for Finance and the Minister for Economic Planning and Development have ridden this particular hobby horse around the country. This particular proposition of net capital outflow arising from the Coalition's decision has been ridden to death by them. At this stage the poor old nag has, according to them, been buried by virtue of the proof.

What proof have we got from the Minister? We have the reference yesterday evening to the data published by the CSO in the Irish Statistical Bulletin for December 1976 and 1977, which he maintains recorded net outgoings of other private capital in Table 6. I have been having a look at that table this morning. It is interesting to look to see if it can really be maintained by the Minister that this is private capital flying out of the country abroad. On page 234 of the Irish Statistical Bulletin for December 1977 we find on Table 6 “other private capital” item 9 (2). It is interesting to define what item 9 (2) is all about. It says:

Other private capital: Details are shown in Table 6. Included are foreign subscriptions to public share issues, premiums on life assurance paid by Irish residents to foreign established insurance companies, (less claims received in expenses.)

The foreign borrowing of State-sponsored companies is included in "other private capital". It also states:

Transactions by Irish residents through domestic stock brokers and banks in Irish non-Government and all foreign securities, transactions by residents in connection with British Post Office savings' schemes, changes in the net deposits of residents at external branches of Irish banks——

That is a very key point in relation to "other private capital". Perhaps the Minister has the information available to him through the Revenue Commissioners of changes in the net deposits at external branches of Irish banks.

—changes in the amount of Irish banks' acceptances discounted in London, loans and advances to Irish residents from foreign insurance companies, allowance for the capital gain/loss and revaluation of the foreign assets of the Central Bank and the associated banks and changes in non-residents' deposits with Irish building societies and any other private capital items not included elsewhere.

If one examines the particular table one will see under the heading of "other private capital" that there was a debit in 1972 of £25 million. There was not a whisper of a wealth tax then. Perhaps the Minister would care to comment why it happened there was a debit of £25 million in 1972. In 1973, when the Coalition's intentions relative to the wealth tax were announced, we had a credit of £61 million. Perhaps the Minister would care to comment on how he regards this as the sacred evidence of net capital outflow arising out of the wealth tax. It all comes back to the wealth tax apparently. In 1974, we had a credit item of £141 million. In 1975 we had a debit of £80.2 million and in 1976 the debit was approximately £68 million.

The Minister does not allude to such things as interest rates and so on where people who invest avail of interest rates abroad. He does not refer to the general changes in the investment portfolios of companies. This is the evidence we have been waiting for for three solid years. What is the other piece of evidence produced by the Minister? It is a one-line sentence from the Central Bank report on page 37. I will read the full paragraph because it must be put in its context. It says:

The official external reserves amounted to £956 million at end-December 1976, representing an increase of £280 million over 1976; however, some £106 million of this increase was attributable to revaluations leaving an underlying increase of £174 million in the reserves. With the current balance-of-payments deficit estimated at £175 million, total net capital inflows came to £349 million. External borrowing (net of capital repayments) by the Government and State-sponsored bodies amounted to £310 million, and there was also a substantial net capital inflow of £91 million through licensed banks. This indicates that residual net capital outflow amounted to about £50 million.

That is the sacred evidence that has been produced. We have the situation where the Central Bank does not even comment that it might be the outcome of taxation policy.

What other evidence is available? Is it the evidence of the private entrepreneurs who trotted around to a certain hotel in this city and paid money to the Fianna Fáil Party for their election funds, when they were told that if they supported the party the wealth tax would be abolished? Are they the individuals who fled the country? I do not know who they are, but there was the recent newspaper article in connection with the matter. I will not delay the House by referring to it now because I referred to it on Second Stage. There was one article in The Daily Telegraph, of all papers, talking about the wonderful new Minister for Finance, about Lord Harrington and all the others who were flooding back into the country with their racehorses, yachts and so on. Frances O'Rourke of The Sunday Press wrote about Lord Harrington, the Marquis of Conyngham.

: The Deputy was told on a previous occasion that he should not name people outside the House.

: I am naming people——

: The Deputy should remember that if Members of this House attack people outside they have no way of coming back.

: I am not attacking anybody.

: The Deputy is getting way from the section completely. He is being irrelevant. He should not mention the names of people outside the House. That ruling by the Chair has been given on numerous occasions.

: I accept the ruling of the Chair that I should not attack anyone outside the House. I have not done so.

: The practice of the House, and this has been ruled on on umpteen occasions, is that people outside the House are not named.

: What about outside the country?

: As a new Deputy, I wish to know whether we can quote comments from people outside the House. May I quote a comment made by the economic correspondent of The Irish Times?

: The Deputy may quote such comments. What has been ruled on numerous occasions is that Members do not name people outside the House. Numerous precedents are there. People may not be named in the fashion that they are being named now.

: On a point of clarification——

: The Chair must be obeyed in this matter, as has been the custom throughout the years.

: We want to obey the Chair and we will do it readily if we can get some clarification. I am quoting what the Chair said a few minutes ago, "naming people outside the House". Perhaps the Chair would elaborate on naming people outside the House? Does the Chair mean attacking people who are not in a position to defend themselves?

: That has been stated several times. We do not attack people outside the House, and when people are named in the fashion Deputy Desmond named them they are being attacked so far as the Chair is concerned. I would ask Deputy Desmond to stay on the section. I said previously this morning that we are having nothing but repetition. Debate on this section has gone on for the best part of three hours but we are having nothing but repetition.

: We are entitled to debate——

: The Chair is responsible to see that the matter is debated in a proper fashion.

: Is it in order to praise people outside the House?

: Yes, and it has been done on many occasions. This is not a laughing matter for anybody. It is not in order to attack people outside the House because they have no way of defending themselves.

: I should like to make two comments on what the Chair has said in reference to the wealth tax. First, I have not attacked anybody. Secondly, I am entitled to quote a newspaper report and, under the Rules of the House, I am entitled to give names. However, I am not entitled to attack anybody and I accept the ruling of the Chair. I would point out that I did not attack anybody.

: The ruling was given on 25 occasions. It was that Members should not comment on, criticise or make charges against a person outside the House.

: The Leas-Cheann Comhairle's constituency colleague has said that the Chair has not even heard what I have said about these people. Therefore, how could it be assumed that I was attacking them?

: The Deputy is being naïve. He should not be helped by my colleague from Wexford in being naïve. Deputy Desmond should stay on the section.

: I referred to the evidence produced here yesterday evening by the Minister for Finance——

: The returning earls.

: In some western European democracies they would not be let back and if they were let back the only thing they would see at the port of entry would be the back of a police van. These are the great patriots the Minister bled for during the past three of four years, people who at the first whiff of having to pay a few shillings in tax ran out of the country like scalded cats. They went around Europe in their yachts——

: We dealt with this matter at considerable length in the Deputy's absence.

: I listened into the debate on the intercom. It was painful enough listening without being present.

: Obviously the Deputy switched off as it was so difficult to listen to. We dealt with this matter in his absence. Obviously he did not know that because presumably he would not be making this silly point again.

: We are having nothing but repetition. Deputy Desmond on the section.

: I come to the two observations made. They are the only ones I can allude to because they are the only two firm pieces of evidence that the Minister brought to the attention of the House. Yesterday he referred to the December 1976 and December 1977Irish Statistical Bulletin, Table No. 6. This is where the Minister said there was a clearly recorded net outflow of private capital from this country arising out of the wealth tax.

: Would the Deputy like to quote?

: I can quote what the Minister said without any difficulty.

: The Deputy knows I did not say that. I have asked him to give us the quotation. We can solve the problem then and see whether he is right or wrong.

: I shall quote from the unrevised Official Report. The following is the quotation:

... it is based on data supplied in the Irish Statistical Bulletin for December 1977. The figures show that there has been a significant net capital inflow in every year. However, when normal inflows and outflows are identified, for example Government foreign borrowing, changes in the banks net external position, there remains a residual item which is regarded as private capital. This item was positive in 1974 but has been strongly negative, suggesting outflows in 1975 and later years.

This bears out the result of the Departmental and Central Bank monitoring since 1974. I may add that the Central Bank in its annual report, 1977 at page 37 stated: with reference to the balance of payments and official external reserves the figures indicated "that residual net capital outflows amounted to about £50 million". The bank's annual report is laid before both Houses and a copy is supplied to every Deputy and Senator. The Central Statistics Office statistics published in the Irish Statistical Bulletin for December 1976 and 1977 also recorded net outgoes of other private capital in Table 6.

: We are still waiting for any evidence of what the Deputy said I said.

: There is no problem.

: He has not come to it yet.

: I will come to it. The unrevised Official Report adds:

Subsequent monitoring revealed a broadly similar pattern and in early 1975 it was concluded that while it was impossible to isolate the magnitude involved it seemed a fair inference that financial flows had been influenced both inward and outward by taxation proposals here and in the UK.

: By the way, the Deputy is going backwards in my speech.

: That is a clear reference by the Minister. The unrevised Official Report continues:

The Departmental files show that the question of capital flow in the context of capital taxation was first looked at on 2 April 1974 just before some of the capital taxation measures were due to come into operation. The analyses show that it was not possible at that stage to identify particular outflows and it was concluded that there was no evidence to show that such outflows had resulted from the proposals about the taxation of capital.

I wish to quote from another portion of the unrevised Official Report which states:

... indicates that there were outflows of private capital from 1974 with the introduction of the wealth tax.

: Is that what the Deputy now says he said about five minutes ago before he started quoting? Has the Deputy any regard for accuracy in these matters?

: I will quote the relevant part again:

I want to emphasise two points arising out of this. First, there can be no doubt that the evidence available, such as it is and with the inherent defects that I referred to, indicates that there were outflows of private capital from 1974 with the introduction of the wealth tax.

The Minister was quite definite. That is why I said to the Minister that he had this absolute assurance that there were outflows of private capital from the introduction of the wealth tax in 1974. I am saying to him that the evidence of Table 6 in The Irish Statistical Bulletin and the evidence in the Central Bank Report does not necessarily support that illusion by the Minister. There is the other famous evidence presented by the Minister— he even trotted in when in Opposition with a couple of submissions he had received from rather dubious sources— that employment was being dramatically affected. We have challenged the Minister to give us one factory, one entrepreneur, one industry affected as a result of the managing director flying out of the country on the money ship which is alleged to have left Dublin port and gone to the Isle of Man every week. We heard great talk in financial circles here that billions of pounds were suddenly taken out by the famous money ship in 1976 and 1977, all of which the Minister is aware of but which the Revenue Commissioners know nothing about. We have been told of managing directors wearing financial lifebelts lining up outside Dún Laoghaire harbour, getting on to the old yachts and chasing off to the Isle of Man where they flogged the money into external bank accounts in the associated banks. We are told that all this money went and that employment was dramatically affected.

I do not believe for one moment that there was such a dramatic effect on employment. One interesting thing has come out of this debate. We have heard one solitary line from the 1977 report of the Central Bank, but have we any evidence from the Revenue Commissioners? They are silent partners in the whole operation. Have the Revenue Commissioners given any information to the Minister? Indeed, they have not opened their mouths, because I am certain not one memorandum was issued. I must necessarily speculate here but I do not believe one memorandum was issued by a Revenue Commissioner or one principal officer in the Revenue Commissioners' Office to the Minister to the effect that it was not worth the candle or that they were wrong in bringing in the wealth tax. Of course, we all know that for the first time in about 30 years here the Revenue Commissioners got some idea who was salting away tens of thousands of pounds and not paying one penny in ordinary income tax, not to mention wealth tax.

For the first time in decades, as the Minister knows, and as his predecessor knew, once the finger was put on the situation we had the parameters of wealth exposed here. Those who would not pay one shilling in any kind of tax if they could avoid it, VAT, income tax, capital payments on estate duties or any kind of tax payments, were involved. They were advised by some of the sharpest financial legal accounting brains here on tax avoidance. The Minister knows that we now have a situation with his manifesto in shreds, not a shilling in the bulging coffers, that he cannot subsidise a half pound of butter or a loaf of bread.

: That has nothing to do with the section.

: It is highly relevant.

: It has nothing to do with section 36 which deals with wealth tax and nothing else. Deputy Desmond will have to stay on this section. We have had repetition time and again in the last three hours.

: I will have to send for my friend, Deputy Brennan, because I might get a better deal.

: One can understand the Deputy's concern at the way the debate has been going and his efforts to divert——

: The Chair is very concerned at the repetition we are having on this section. The debate has been in progress on this section for three hours and we have had at least two hours of repetition.

: Every Deputy has the right to express his or her views on this matter.

: Deputy Corish should not argue with the Chair. He will get an opportunity of expressing his views.

: On a point of order, am I correct in assuming that the Leas-Cheann Comhairle has said that if a case is being made that the abolition of the wealth tax is not the way to run the country——

: That is not a point of order. The Leas-Cheann Comhairle does not comment on anything. He is not entitled to comment. The Leas-Cheann Comhairle, like the Ceann Comhairle, is here to keep order and see that debates are conducted within the Rules of the House. This debate, as far as the Chair is concerned, is not being conducted within the Rules of the House. We are having repetition after repetition. Deputy Desmond is in possession.

: The Leas-Cheann Comhairle has now given a ruling that he is not entitled to comment on what is happening and has been commenting for a long time while I was listening.

: Deputy Tully knows well that the Chair has not commented on anything. He has tried to keep Deputies within the Rules of the House. The Deputy did not raise a point of order.

: I propose to take part in the debate at a later stage and I should be obliged if the Chair would let me know, so that I can keep within the rules of order, if he is saying that a Deputy cannot comment on the way in which money could be spent if the wealth tax had not been done away with. I would like a reply to that.

: Deputy Desmond on the section.

: One of the more interesting, conclusive and positive indicators of the lack of impact on the economic situation of the wealth tax, leaving aside the tax reform aspect of it, was given by Deputy Peter Barry. Last evening he said that in three years before we came into office—he was referring to 1970, 1971 and 1972—the proportion of GNP which was devoted to fixed investment was 21.6 per cent in 1970, 22.7 per cent in 1971 and had been declining to 21.5 per cent in 1972 when we took office. That reference by Deputy Barry is far more appropriate, relevant and necessary in the context of the allegations made by the Minister right through 1973 to 1977. Deputy Barry said that in 1973-74 the amount of investment increased and in 1975, at the height of the depression, it decreased again. But it decreased to 23.7 per cent and this was when the wealth tax, according to its opponents, was supposed to be biting hardest.

That is the acid test of the effect of the wealth tax. In my view what happened, in so far as there may have been some capital outflow from the country——

: I thought the Deputy was suggesting there was no evidence whatsoever of that.

: I have no doubt that there were individuals who took some money out of the country. Let us examine the kind of money that went out. Was it money that was invested in fixed productive Irish assets?

: Is the Deputy suggesting that whatever went out did not show in the statistics?

: The Minister said that millions of pounds left the country. He went "bananas" in this House when he was in opposition.

: Perhaps the Deputy could give us a more accurate assessment.

: I do not want to burden the conscience of the Minister by giving specific references. At every business meeting which he held, whether it was in the Shelbourne or out in P. V. Doyle's with Senator Hanafin, himself and Deputy Jack Lynch looking for a few bob to pay for their bonanza in the general election, the entrepreneurs were assured that submissions were received that millions of pounds of necessary productive capital was running helter-skelter out of the country because of the wealth tax.

I concede that some individuals had ready cash salted away and had no intention of investing it in anything. They would not even use the money to buy a farm or a pub and invest it in that relatively more respectable way. I met individuals who assaulted me over the idea of having to pay wealth tax. Having worked out their net asset value they were each worth about £800,000. Those who are referred to as being on top of the pile by the esteemed columnist, Mr. Arnold, the unfortunate individuals with productive assets such as pubs, shops, interest in hotels, a few hundred acres of land, a stud farm here and there, were being called on to pay in lieu of estate and death duties £1,000 per year or £500 per year. They became so excited that they rushed to Deputy George Colley and said: "For God's sake, put the Coalition out; we are going to be ruined and will have to flee the country". The Minister, Deputy Colley, bleeds for these unfortunate earls who took flight in 1973-76. Now we have a situation where the loss of this revenue makes a big difference. That £10 million is the price of 800 new local authority houses each year. That money would have gone into productive capital formation. We could have built 800 new local authority houses every year for families in Deputy Colley's constituency who have not a roof over their heads. That money would have paid for increases in social welfare last October. By using that money we could have reduced the retirement age to 65.

Deputy Colley is creating another two-nations theory in this country because we now have the Fianna Fáil two-nations system of taxation. I admired Deputy Tom Fitzpatrick's contribution to the debate on the wealth tax. He was outstanding, calm, rational and coherent. He stood up to the spurious nonsense which we heard during the Opposition rampage of Deputy Colley. The Minister is now 12 months in office and all he can dig out in support of his decision to abolish the wealth tax is one line of a Central Bank report and a table from the statistical bulletin. Deputies Tom Fitzpatrick and Richie Ryan, who were Ministers at that time, rightly pointed out that the system was unjust, that substantial reform was needed in relation to estate duty and that there were genuine grievances in relation to the capital taxation structure. We set out to do something about that and introduced a wealth tax system. Deputy Michael O'Leary rightly pointed out that the system could have been amended, but Deputy George Colley waxed eloquent about the charge on Irish productive assets. There would have been no difficulty in amending the wealth tax in that regard.

: Why was it not done?

: The Minister knows that any system of taxation has to be given a year or two to run before a fresh look is taken at it.

: Come off it, Deputy.

: The Minister did it many times. I know there is no difficulty in bringing in reasonable amendments. The Minister got caught in the trap of the manifesto. During the election campaign the Minister, Deputy Martin O'Donoghue, was driven around Dún Laoghaire in private cars by some of the commercial bankers. On the anniversary of his portfolio they cannot even afford £¼ million to subsidise the increases in the price of bread and butter.

The one corroding piece of stupidity on the part of the Government is the creation of strata of unfairness in the minds of every ordinary income tax payer. There is no justice in the proposition that the ordinary worker— white collar, blue collar, farm worker, the ordinary shorthand typist in an office—must pay income tax and taxation relative to persons who have got massive relief from the Minister, relief in many cases which was not just a couple of thousand a year but anything up to £10,000 or £12,000 personally to such persons.

It is a most disturbing feature that we should have had this kind of what can only be called funny-money politics of the Fianna Fáil Party in relation to the wealth tax. The Government have a clear responsibility to hold the ring between different sectional interests in the community in respect of their ability to contribute to the National Exchequer. All that the Minister has done is given total exemption to those who are in the strongest position to pay a small annual sum of taxation. He has got his pay-off in political terms with their support in the last general election. Now that the honeymoon is over in the Fianna Fáil Party, now that their funny-money promises have come to an end, I predict that in future elections, when the workers will be waiting and languishing for any further relief of income taxation, they will turn around, look the Minister in the eye and say: if you had not abolished the wealth tax we would not be in the predicament in which we now find ourselves as a country. I say that not in any desire to create mischief between different sections of the community. Any person on a limited fixed income, looking at what the Government have done in relation to the wealth tax, can only regard it with dismay, as being totally unfair and unrealistic on the part of the Government.

I would challenge the Minister on three scores. Perhaps he would elaborate to the House on the net capital outflow evidence which he has; provide more definite evidence, if such exists; if he would, above all, elaborate to the House on the extent to which employment has been dramatically affected by the introduction of the wealth tax by the Coalition Government. Perhaps he would comment also on the legal situation arising from the removal of money from this country and on the non-declaration of assets which the Revenue Commissioners should rightly be prosecuting persons for if money was removed in such a manner. That the Minister should line up his party with the new belted, financial patriots—when the country was in dire need of some additional State revenue, when they should have been paying some contribution to taxation—in such an odious manner as happened in 1975, 1976 and early 1977, is not going to redound to the credit of his party in the years ahead. As a politician that record is something with which I would not wish to be associated in any way.

: It is clear that Deputy B. Desmond—as I suspect also a number of his colleagues—learned nothing at all from the last general election. I must confess that, from a party political point of view, I rejoice at this knowledge. I do not think they will present much of a problem to us at the next election either. Certainly, on the basis of Deputy Desmond's performance we can be quite sure of that. In Government they fiddled and fiddled, unemployment figures grew and what did they do about it? They brought in a wealth tax——

: What has that got to do with unemployment?

: We told them at the time that they were making a shocking mistake. They did not listen because they believed, their calculation was: it only affects a small number of people, the rest of the people will be delighted, they will go for the politics of envy. But they did not and they will not next time out either. They know what they need and that their first priority is their job. They know that Fianna Fáil are trying to do something about it and that the abolition of wealth tax is an important element in creating jobs for people. They know that, they knew it before and they will know it when it comes to the next election.

Deputy Desmond commented on the anniversary of Fianna Fáil's accession to office and that they could not afford to subsidise foodstuffs. I am glad to tell the Deputy that on this very day about which he was speaking the latest figures have been issued in respect of the consumer price index which show that in the three months to mid-May the increase was 1.8 per cent and in the 12 months to mid-May 6.2 per cent. The Deputy should take that in. It is another step on the road being taken by a Government who know what it is all about, unlike the previous Government, defended by Deputy Desmond then and again today, who were concerned, allegedly, with equity but who in fact ignored the real equity of trying to get jobs for our people. The reality was that they were not concerned with equity but with envy and the belief that that would win them the election. The people gave an answer. Apparently that answer has not been heeded by Deputy Desmond.

The most interesting thing I found about Deputy Desmond's contribution was that he came in here, having done all his research, to try to demolish what I have said about the evidence in relation to outflow of money in connection with the introduction of the wealth tax. It is important to keep this in perspective. Members of the previous Government, in office and out of office, have maintained there was no such evidence. Deputy Desmond comes in and what does he do? In dealing with what I said he spent most of his time trying to demolish a reference I made, the very last reference, to the CSO statistics published in the Irish Statistical Bulletin for December 1976 and 1977 where I said that they also recorded net outflows of other private capital. He dealt with this at great length as though this was the basis of my argument. Of course, he ignored the fact that I went on to say immediately afterwards: “however, a much higher degree of estimation than is normal is associated with this figure”.

The identification of capital flows presents many difficulties and involves a good deal of estimation. Even published figures should be treated with a good deal of caution. Did Deputy Desmond quote any of that? He did not because that would not have suited his case. He tried to make out that my reference to the statistical bulletins was the basis of my case. Then he dealt with one other point, the reference I made just before that to what is stated in the Central Bank Report, the one line, as he said: "residual net capital outflows amounted to about £50 million," and he alleged that that was the basis for what I said. Why did Deputy Desmond, when he came in to demolish, as he thought, what I said ignore the substance of what I said? This is just the trimming at the end. Why did he ignore the substance? There is some reason for that.

: What substance?

: He did not even notice it. In frantically looking for a quotation and reading the report he had of my speech backwards, he actually started dealing with this but he was so frantically looking for the quotation he did not notice.

: I had it in front of me—no problem.

: Obviously he had not intended to refer to it. Let me draw his attention to it again. Perhaps Deputy Desmond would even deign to honour us with some comment on that, unlike the length of time he spent commenting on the relatively minor references to the Central Bank Report and The Irish Statistical Bulletin. First of all I said—and remember that this is in the context of positive statements of the Coalition Government when in office and some subsequently—that there was not evidence of capital outflows arising out of the introduction of the wealth tax, that the monitoring which was carried out by the Central Bank and the Department of Finance indicated in the latter half of 1974 that residents' balances with the associated banks outside the State were increasing. Did Deputy Desmond comment on that? Did he try to refute it? No, he did not.

I said that subsequent monitoring by the Central Bank and the Department of Finance revealed a broadly similar pattern and in early 1975 it was concluded by the Central Bank and the Department of Finance that it seemed a fair inference that financial outflows had been influenced by the taxation proposals here. These conclusions and the results of further studies were submitted to the then Secretary of the Department. Did Deputy Barry Desmond comment on this or attempt to refute it? He did not. I wonder why. Did he comment on the fact that I have mentioned that the Central Bank intimated to the Department of Finance in 1974——

: These conclusions and the result of further studies were submitted to the then Secretary of the Department of Finance, but the files do not indicate that they were shown to the then Minister for Finance. Information of such great importance was not even passed to the Minister.

: The Deputy claimed that he was listening on the monitor to what I said this morning. If so, he would have heard that I said I believed it would have been the strangest possible thing if that information were not furnished to the Minister.

: The files do not indicate it.

: The files do not indicate it. I am letting the former Minister and his colleagues off the hook because I am saying that while the files do not indicate it I regard it as totally improbable that such information would not have been furnished to the Minister. I think Deputy Desmond would agree with me.

Returning to the statement I made, I said that in 1974 officers of the Central Bank intimated to the Department of Finance that they had heard reports in banking circles of funds being transferred abroad. Did Deputy Barry Desmond comment on that or attempt to refute it?

: What reports? What information? Has the Minister any information?

: Is the Deputy now questioning the statements I am making in this regard?

: The Minister said that officers of the Central Bank had heard reports in banking circles that funds were being transferred abroad. I am challenging the Minister to give some information about these reports.

: Is the Deputy accepting when I make that statement that it is taken from the records of the Department of Finance?

: I am accepting the Minister's statement.

: Is he suggesting that the Department of Finance concocted this? If he is not suggesting that, is he suggesting that the officials of the Central Bank concocted it? Why is he trying to get off the hook? He came in here alleging that he was demolishing the argument made. He did not comment on a single one of these points in his lengthy speech. The Deputy had his chance and failed to do so.

: There is a long time to go.

: The significance of his failure to do so is obvious. He came in here purporting to deal with this argument and did not do so.

: I am challenging the Minister to give the information to the House.

: The Deputy knows that he and, in particular, his former colleagues in Government were challenged many times on this and all they would say was that there was no evidence. I am now telling the Deputy about the evidence that was available.

: What evidence?

: The Deputy had his opportunity to comment and he did not do so. He chose to comment on matters of relatively minor importance. He did not choose to comment on the matters I have mentioned.

: They had heard reports——

: Is the Deputy suggesting that no such reports existed? Yes or no? Why is he trying to cover up the cover-up for his colleagues? What the hell is he at?

: Where are the details?

: Deputy Desmond knows that his colleagues in Government repeatedly said there was no evidence. Now he is trying to suggest either the officials of the Department of Finance told lies or that the officers of the Central Bank concocted suggestions that there were such reports. Why is the Deputy disputing this?

: Where did these reports originate? The Minister said that officers of the Central Bank intimated that they had heard reports in banking circles of funds being transferred abroad. I am challenging the Minister to give the sources and the details about these hearsay reports from unnamed banking circles.

: To get the information.

: Why is the Deputy challenging me to give this information?

: Because I want to know.

: Does he not accept it?

: I do not accept——

: Deputy Desmond is now saying that he does not accept it because the story was concocted either by the Department of Finance or by the Central Bank, one or the other. The Deputy has had his chance and he now says that he does not accept it. If he does not accept it, he does not accept what is on the official files in the Department of Finance, either because they made it up or the Central Bank made it up. He cannot have it both ways. He has now made it clear which way he stands on that and people can judge what he has in mind.

: Where are the details?

: Let me go on to other matters which the Deputy omitted to comment on when he came in with his big flourish to deal with this matter.

: This is the great evidence of Deputy George Colley—he heard reports. The Tánaiste heard reports.

: The Tánaiste heard no such reports, as the Deputy can see if he reads the papers in front of him. No such reports were heard by me as are referred to here. Of course I heard the reports, as Deputy Desmond did if he had his ears open, and everybody else in the country knew what was going on.

: Where is the information?

: The Deputy knows that it was there. The Central Bank got the report. What did they do? They monitored it, as did the Department of Finance. What did they find? This is where the Deputy very obviously failed to advert to what I said. The monitoring revealed that residents' balances with the associated banks outside the State were increasing, and subsequent monitoring revealed a broadly similar pattern. Then I said—and there was no comment from Deputy Desmond on this either—that the table published in the Irish Statistical Bulletin showed that there had been a significant net capital inflow in every year but when known inflows and outflows are identified and taken out, for example, Government foreign borrowing, changes in the Banks' net external position, there is a residual item regarded as private capital. This item was positive in 1974 but has been strongly negative in 1975 and later years. Deputy Barry Desmond did not mention that or comment on it. He came in here to demolish this whole thing and never found it necessary to mention that significant evidence. Why?

: In 1974——

: There is a reason why the Deputy did not. He knows very well that, irrespective of the arguments, economic, social or otherwise, for or against the wealth tax, one matter which goes to the credibility of people on that side of the House and people on this side of the House relates to whether or not there is any evidence, and whether it is conclusive or not, of an outflow of funds after the introduction of the wealth tax. What is clearly revealed is that statements that there was no such evidence or statements that in fact the evidence showed the contrary made by some Members of the former Government were untrue and designed to mislead the people, understandably perhaps if one accepts that kind of thing because, as I said before, if the people knew that this was happening they would know the significance of it. I have listened for a very long time to people on these benches trying to do what Deputy Desmond was doing a short time ago to discredit any suggestion from Fianna Fáil that there was any outflow or any evidence of an outflow——

: Where is the evidence?

: ——trying to discredit it. The evidence is there now, evidence that was available to the former Government if they wanted it. That evidence was available and it is now on the records of this House. So far as that issue is concerned, the issue of credibility in this matter quite apart from the merits or otherwise of the wealth tax—but I think it has a relevance—I am content to let the record speak, and Deputy Desmond or anybody else may try to obscure the issues but they are now on record for anybody who wants to see them.

: I want the Minister to explain in relation to Table 6, "other private capital"——

: Would the Deputy explain why he did not comment on the important evidence that was put before the House?

: I shall comment in my own time. I will take it at the point when I wish to raise it. I wish to draw the attention of the House to the very important aspect of this famous evidence alluded to by the Minister. In 1974, under "other private capital" we had a credit of £140.7 million. The Minister does not dispute that figure on page 234 of The Statistical Bulletin, Table 6. We had a debit in 1975 of £80.2 million and we had a debit in 1976 of £67.9 million. It is interesting that the Government's proposals on capital taxation were published in February 1974 and the evidence was there of the Government's intentions to go ahead with the wealth tax. It is interesting that if one adds the £80.2 and the £67.9 million they just about cancel the £140.7 million. This is the evidence, the very firm statement by the Minister relating to “other private capital”. I have challenged him in regard to his use of these figures to indicate how the capital outflow of 1975-76 can be attributed or inferred to be attributed to the wealth tax as such. He has made no effort to come back on that and comment on the make-up and composition of the item, “other private capital”. As he knows it is an aggregate of a whole range of transactions. That particular table relates to foreign subscriptions to public share issues, premiums and life assurance, semi-State company transactions, other transactions and then we have the inclusion of other private capital. I wonder how we had a debit of £25 million in 1972. To what extent were interest rates influencing factors? What was the influence of the wealth tax as such?

I suggest the Minister is grasping at a rather insubstantial and inconclusive straw. He has belaboured this House——

: Was the Department of Finance in 1974 grasping at a straw?

: I shall come back to that in a few seconds. I am talking about the evidence produced by the Minister. He has said that Table 6 is conclusive evidence——

: Quote that.

: ——in so far as one can—if the Minister would bear with me.

: The Deputy heard the statement. I shall have to say it again for him. Talking about being conclusive, I said "a much higher degree of estimation than is normally associated with this figure". If the Deputy purports to quote me will he quote me exactly?

: The Minister has been challenged to produce any evidence——

: The evidence should have been produced by you——

: ——in relation to capital outflow.

: ——and I have produced it.

: The Minister has been able to grasp at information available which I readily concede is imperfect, is difficult in aggregate to separate, most difficult to attribute precisely to particular taxation proposals —I concede all that but what do we get? The Minister comes back and with all its imperfections, he uses this data. He would be for better off not particularly referring to it because as reasonably definitive evidence, bearing in mind all the difficulties of aggregation, it is by no means as waterproof and watertight as he is trying to maintain. That is the first clear statement of reaction I want to give him. Secondly, he makes great play about the monitoring reports of the Central Bank and he refers to my lack of reference to the hearsay reports of the Central Bank and their transference to the Department of Finance for the information of the Minister. The Minister said that subsequently officers of the Central Bank intimated that they had heard reports in banking circles of pounds being transferred abroad, and that perhaps they were not the only people who heard these reports, that although the Central Bank was unable to substantiate this or to produce any further information, monitoring began in the Central Bank to detect possible flows of funds and by the latter half of 1974 there were some indications that resident balances with the associated banks outside the State were increasing.

: Comment please. The Deputy omitted to comment on it the last time and he promised to do it now.

: I shall comment. I do not in any way personally impugn the integrity of the Central Bank staff. I know some of them personally and hold them in the highest regard. I do not impugn the integrity of the staff of the Department of Finance. It is true that one can walk around the city and hear that this pension company is sending money out or thinking of doing this or that. One can hardly walk into some of the pubs in this city for a gin and tonic without getting some inside information about what is going on in banking circles.

: That is not what I was asking the Deputy to comment on. I asked him to comment on the monitoring.

: I will deal with that. I have challenged the Minister on two counts. First, to what extent was there any hard evidence in banking circles? The Minister has gone through the files in the Department of Finance and all he could dig out at the heel of the hunt are the reports.

: The reports are nothing. It is the monitoring that went on. That is what is important, and the Deputy knows it, not the pub talk.

: I will come to that. Be patient. I regret I had no legal training. I am an ordinary Corkman.

: There is no such thing.

: The Minister dredged out these reports in the Department of Finance and all he could find was this so-called evidence. Now I will go on to the other aspect. I challenge the Minister, the Central Bank could not substantiate anything. We go on now to the famous monitoring exercise by the Central Bank. The Central Bank —I quote the Minister—increased inflows under other heads, but there appeared to be no net loss of funds as far as the bank were concerned. Although the Central Bank were unable to substantiate this or to produce any further information, monitoring began in the Central Bank and by the latter half of 1974 there was some indication that resident balances with the associated banks were increasing, increasing under the other heads and subsequently there was monitoring of these on a broadly similar pattern and in early 1975 it was concluded——

: The Deputy is skipping again.

: I am quoting the Minister.

: I asked him twice to comment on the finding of the monitoring.

: I am coming to the finding. Be patient.

: The Deputy passed up that bit. He has skipped it for the third time, and that is significant, and I am commenting on that significance.

: I will take it patiently again. Subsequently monitoring revealed a broadly similar pattern.

: The Deputy is skipping again. Go back a little.

: I will. Although the Central Bank were unable to substantiate this or produce any further information—is that early enough in terms of going back?

: ——however monitoring began in the Central Bank as to the possible source of funds and in the latter half of 1974 there were some indications that resident balances of the associated banks outside the State were increasing. The next sentence is——

: Do not mind the next sentence until the Deputy deals with that one.

: I will deal with it. There were some indications that resident balances of associated banks outside the State were increasing. I challenge the Minister to tell us where is the evidence available either in The Irish Statistical Bulletin or in the Central Bank statistical supplement of the actual resident balances——

: May we take it the Deputy will dispute the finding in the absence of the evidence?

: I am always very careful about the words the Minister uses. There were some indications— that is the Central Bank obviously——

: It says some indications that resident balances——

: Remember, this information was available to the Government the Deputy supported, the members of which said no evidence was available.

: I am not disputing that. Again, I would urge caution and patience. There were some indications that resident balances with the associated banks outside the State were increasing. All I am saying is that, if the Minister uses that particular indication to come to his inconclusive conclusion that all this was attributable to the wealth tax, which is the genesis of his argument, then the Minister owes it to the House to give us a little more firm information than that the Coalition had it. It did not come down on the side that this represented a massive transfer of funds from resident balances to associated banks outside the State. We did not have massive evidence of that. The Central Bank report gave some indication of changes in resident balances and those changes can be attributable just as much to changes and fluctuations in interest rates, or even to some supermarket chiefs deciding that it was time they transferred to some bank outside——

: The Deputy is trying hard.

: I can assure the Minister I have seen some supermarkets transferring not because of the wealth tax but because of some hot money somewhere else. This is the evidence which, according to the Minister for Finance, who was then outside and was being fed a great deal of selective gen——

: The information there is information within the Department of Finance. It was available to the Coalition Government. Do not mind the pub talk. Stick to what is available.

: The information is available for the first time in all this debate on the wealth tax in so far as the Minister has brought in here his evidence——

: Not my evidence. The evidence available to the Deputy and to his colleagues. That is what I brought in.

: What is this evidence? It is the official evidence of The Irish Statistical Bulletin of the changes in other private capital in Table 6, evidence which, with due respect, as the Minister said, must be treated with great caution. It is not conclusive evidence. It is an inconclusive indication of monitoring by the Central Bank. Where is this famous evidence of the country being bled to death?

: That is not the point. The point is the Deputy said there was no evidence whatever of capital outflow. It is now clear from the evidence available to the Deputy and to his colleagues that there was such evidence. That is the real evidence however much he may try to obscure it.

: There is little point——

: I agree.

: The Minister has interrupted so strenuously that it is quite obvious, even to a poor unfortunate B. Comm. like myself, that we can put even greater weight on the reaction we have had. The Minister has interrupted assiduously.

: I am anxious to make the Deputy face the facts.

: If that is the evidence available to the Coalition in 1975, 1976 and 1977 that should have led us to come down in favour of attempting to mend the error of our ways——

: That is not the argument made and the Deputy knows it is not. The argument is that the Deputy and his colleagues said there was no evidence. The evidence was available. That is the issue.

: I say to the Minister, and I stand over every word I say, that what has been called evidence by the Minister from the reports available to the National Coalition and to the Department of Finance and former Finance Minister, Deputy Richie Ryan, is not evidence and I take my hat off to Minister Ryan because he took the right decision, in my opinion, at that time on the information and indications then available. All this really exposes the spurious assumptions of the Fianna Fáil Party in 1976 and 1977, the spurious assumptions that the country was being bled to death, that the people were running out with £10 notes wrapped in the elastic of their stockings, anxious to get to hell out of the country as quickly as possible, and the country had not even a few bob to pay the workers' wages on a Friday evening. There is no conclusive evidence at all of that and, by and large, I think we can dispose of the allegation made by the Minister.

My colleague, Deputy Ryan, wishes to speak. He has been very patient with us. I do not think it is worth pursuing the points made by the Minister on the so-called evidence of the so-called outflow of capital in the magnitiude he has implied repeatedly. I concede readily that a certain amount of money went out of the country but to what extent I do not suppose anybody will ever really know. That kind of money could be done without. I was not sorry to see the back of it. A man with that kind of money who did not declare it would have taken it out of the safety deposit box or from under his bed and out of the country. That is the kind of money Fianna Fáil got back to power on.

: I thought it was votes.

: It was money translated into votes.

: It seemed that the votes gave us 20 extra seats.

: That is the kind of money which I do not think any——

: If that is all that was involved the Deputy and his colleagues would be in for ever.

: That is the kind of patriotic money I would not like to see my party soil their hands with at a general election. As Fianna Fáil got the votes as a result of this money there is no harm in the Minister geting stick here this morning when he is trying to justify an outrageous financial decision which, even with a budget of £2,400 million, the £10 million of that sum that we could stand over——

: If we did not give a damn about jobs, I agree.

: We cared as much about jobs——

: The Coalition showed how much they cared and the people showed what they thought of that.

: This is ideological guff. What did the people who allegedly care about jobs do? They took their money out of this country instead of investing it in creating jobs. It is a shame that the likes of the Minister should sit there. The former secretary of the Department of Finance, Senator Whitaker spoke time and again about the failure of our people to put their money into productive capital formation. He said they should not be putting it into dirty money schemes, such as exporting their capital.

Why did that money leave the country. The Minister said these people were afraid to create jobs here. His arguments and the attempts to attribute the abolition of the wealth tax to job creation is so fanciful and spurious that he deserves the stick he is getting here this morning.

: What stick am I getting this morning? I hope it was not what Deputy Desmond was saying.

(Cavan-Monaghan): I propose to make a short intervention to deal with a few matters.

: That is very welcome.

(Cavan-Monaghan): In the early seventies a number of people were alarmed about the consequences of death duties on family businesses and family farms.

: We are on section 36.

(Cavan-Monaghan): Yes. At that time the rate of death duty affecting the passing of assets from father to son, from mother to child, stood as high as 51 per cent. In other words, if a man died leaving assets of £200,000——

: This has nothing to do with section 36.

(Cavan-Monaghan): I am coming directly to it.

: I am waiting.

(Cavan-Monaghan): You will not have to wait very long. If a man died leaving assets of £200,000 and those assets passed to his son, the Revenue Commissioners took £100,000. It was part of the National Coalition's programme in the 1973 election that death duties within families would be abolished and that the system of death duties would be replaced by a small annual payment by wealthy people. That was the basis on which the wealth tax was introduced.

: That is not quite right. There were other taxes.

(Cavan-Monaghan): I will deal with that later. Many wealthy people and the not so wealthy sighed their relief when they realised that their family assets were not going to be gobbled up by the Revenue Commissioners on the death of the father or the mother.

As far as I can interpret this Finance Bill, what Fianna Fáil propose to do is to have a right about turn on that. They are now abolishing wealth tax and are phasing in death duties within the family. The Minister refuses to increase the threshold for gift tax which his predecessor undertook in 1974 or 1975 to increase this year.

(Cavan-Monaghan): Yes. The Minister's predecessor undertook to increase the threshold for gift tax as well as other thresholds. The Minister has refused in this Bill to increase the threshold above £150,000. That is the beginning of the reintroduction of death duties by the Fianna Fáil Government. In order to keep a political promise in connection with wealth tax they are abolishing it and effectively reintroducing death duties within the families. I want to deplore that in the strongest possible terms.

The Committee Stage of the Wealth Tax Bill, 1975, was taken on 5, 10, 11, 12, 17, 18, 19 June and on 9, 10, 15, 16, and 17 July, 1975. I do not propose to detain the House by quoting at length from that debate. The record is there for all to see. I want to put it on the record of the House that Fianna Fáil in Opposition recklessly used the introduction of wealth tax for political purpose. Recklessly they misled American investors.

The Minister must take responsibility for that because at the time he was spokesman on Finance for his party. He allowed a council of American industrialists to mislead themselves about the effect of wealth tax. It was known then that wealth tax did not affect trading companies in this country, that the assets of trading companies were not being made subject to wealth tax. Despite this the Minister read into the record on 5 June 1975 a letter from a Mr. Frank O'Reilly, the representative of an American industrial council, to the effect that that council were alarmed at the proposal to impose wealth tax on trading corporations set up here by American corporations. That is a fair summary of the letter, but with the letter in his possession the Minister did nothing to correct the erroneous impression that these people had got. Instead he gloated that Mr. O'Reilly had misled himself and that as a result he would warn his associates in the US that they would be liable to wealth tax if American corporations established industry here, industry that would provide employment.

If the Minister understood the Bill he should have known that there was no such proposal, that there was no such intention. The industries which Mr. O'Reilly was talking of establishing here were trading companies, the shares in which would be held by the parent corporations in America, the latter being also trading corporations, being held by citizens of America resident in that country and who could not possibly be liable for wealth tax here. That was a shabby performance, debate on which continued for several days, but when Deputy Colley was beaten on the argument he shifted feet and said that if what the then Minister said was true, we were discriminating against Irish people. We had been discriminating against Irish people for the previous 20 years by allowing exports to Americans free of tax while imposing a tax on people resident here.

: What is the Deputy talking about? What does he mean when he says that for 20 years we had been discriminating against Irish residents?

(Cavan-Monaghan): We had been allowing exports free of tax.

: That was the case regardless of whether the exporter was Irish or foreign.

(Cavan-Monaghan): The point I rose to make, and which I shall not be prevented from making, is that the Minister, as spokesman for Finance for his party, misled the American investing public into thinking that American corporations who invested here would be liable to wealth tax when the Bill did not propose anything of the kind. I was indignant about that performance at the time. I regarded it as national sabotage, as anti-national propaganda for political purposes, and having re-read the debate this morning I have no reason to change my mind.

: I had hoped for some contribution from Fine Gael on this section. I know they find it rather awkward, but if what we have heard is the level of their contribution we can write them off as being irrelevant in this instance. I do not propose going back over the ground covered by Deputy Fitzpatrick except to say that I refute completely the allegations he has made. He has made these allegations liberally and freely just like the one he made a few moments ago and which he made no attempt to withdraw when I pointed out to him that he was wrong. It is untrue to say that for 20 years we discriminated against Irish people in favour of foreigners by way of export tax relief. The rest of the Deputy's contribution was on the same level.

(Cavan-Monaghan): The Minister is ashamed, as he should be ashamed, to deal with the points I have made.

: People would like to hear what Fine Gael have to say on this section but they will be disappointed.

(Cavan-Monaghan): What is involved here in effect is a reintroduction of death duties.

: It has not been sustained satisfactorily that the withdrawal of this tax improved business confidence to the extent claimed by the Minister while on the other side the case is far from proven that the imposition of this tax meant a loss of jobs by reason of the tax being a disincentive to industrialists to continue to expand. We know of countries in which a wealth tax operates without damage to the economic fabric of the states concerned. Yesterday I pointed out that some members of the business community who, after a superficial examination of this tax decided to oppose it, may live to regret its abolition, and that far from the Minister's critics being motivated by envy, the forces of envy will be given greater impetus by this measure. We believe that the Minister has adopted a mistaken course and in opposing the section we ask him to consider once more what he is doing. Equity must be seen to operate in the taxation system. The Minister has not done himself a service by the exaggerated claims he has made this morning.

: I rise to elaborate on one point in our analyses regarding the benefit that is being conferred on people who would have been paying wealth tax but for the decision to cease assessment from the beginning of this financial year.

First, it could be argued that the tax was set at such a low level that it might be described almost as a tax on income rather than on capital. Anybody whose capital was employed productively at reasonable rates of return could perhaps have paid this tax out of current income without having to realise any of the capital concerned. It could be argued, then, that the wealth tax was an incentive to people with capital to move that capital from a less productive into a more productive form of investment and, one would hope, create further jobs by so doing.

The other point relates to the benefit accruing to the people now being released from the obligation to pay wealth tax. On this side of the House and from these benches in particular we have contrasted the average £20 per week benefit which is being bestowed on those people who were liable to wealth tax with the £2 per week benefit approximately to social welfare recipients.

There is a distinction between those two which I do not think has been made strongly enough, that is that the increase for social welfare recipients is both a gross and a net increase. In other words, their purchasing power has been increased by only that small amount of money. With regard to people who pay wealth tax the real gross value to them of that £20 a week on average is related to the marginal tax rates they are paying. If they are paying 50 per cent or 60 per cent—if there is any justice in the world they will be paying 60 per cent—that actual figure of £20 is worth considerably more. The real relief in terms of what they would have to earn to bring home the money they would have to pay out in wealth tax is inflated even beyond the terms of this simple comparison. I do not see how the Minister and the Government can stand over that.

: Some time the Deputy can do his sums again and allow for the fact that the payers of wealth tax have families like other people, and also that there were investment trusts involved. He can calculate how he arrives at the sums per head.

: I am aware that there are different categories of wealth tax payers and I am aware that not all of them would have been individuals only, receiving so much per head. The same might be said of social welfare recipients, because they also have families.

: Then there would be different calculations.

: Perhaps the Minister may at this stage be disposed to give the information about one of the things we have been asking about. It has been suggested that there were approximately 5,000 assessment forms and that approximately 8,000 people were involved, as the Minister has rightly pointed out, with investment trusts and family trusts. How many families were actually concerned in the payment of the particular tax concerned? As the Minister knows a particular family can set up a fairly elaborate financial system of general investment control. The information which we feel should be made available would be quite illuminating in regard to the total payment by the total number of families. I believe the information is available to the Revenue Commissioners. It has been given to the House in such general terms that one feels that it should be more specific when we would have a greater indication of the precise position.

: There is no way, because it involves trusts and companies, that we could say the number of families involved.

: Except in the submission of returns by a trust and by a company it is possible for the Revenue Commissioners to have a reasonable idea in terms of the individual's name and so of the beneficiaries thereof.

: I am afraid not. In many cases there would be potential beneficiaries who might not benefit at all. The Revenue Commissioners do not have that information.

: I am accepting that limitation on it but it is a fair assumption—I believe the Minister will agree with me here—that a number of families may have two or three trust operations. There may then be the individual assessment of two or three members of the family. I wonder to what extent one can close this figure and say that the total number of people in terms of families is——

: One cannot. I am sure the Deputy will realise that some trusts could relate to quite a number of families as well as he is postulating, which is possibly true, that one family might have another trust.

: It is a fair postulation that if one talks about 5,000 liabilities in effect one would be talking in the region of 3,500 families. That is a fair assumption.

: I would not think that assumption is correct. We do not have the figures.

: It would be less than 5,000.

: The debate has been most interesting. It is right, because of the complicated matter involved, that it should be debated at great length here. It is of great interest to the people in this House but it is also of great interest to those who in years to come will be looking at State finances and the ways in which taxation can be increased. I have a great respect for the Minister for Finance and his ability to make the best political decisions from time to time. I was appalled when I heard the announcement that the wealth tax was being taken away, but I was more appalled at the fact that the members of his party clapped the abolition of the wealth tax.

: They also clapped the borrowing.

: I am sure the Deputy knows they were clapping the possibility of more jobs.

: I will come to that in a moment. The clapping was by people who did not understand what was at stake. There were honourable exceptions. There were decent hard headed members of the Fianna Fáil Party who neither clapped nor applauded in any other way because they realised that this was something which the Fianna Fáil Government will live to rue. The Minister for Finance has again and again talked about the number of jobs involved, the amount of money which left the country and the number of people who left the country with their money.

I met a number of groups who were interested in wealth tax before the decision was finally taken by the Coalition Government to impose the wealth tax. Some of them were very wealthy people who represented the horse breeding industry and came from all over the country. After we had a quite detailed discussion on it they informed me that they had no option but to leave the country if the wealth tax was imposed. I asked them where they proposed to go but they were not quite sure. I have been checking since but they have not left the country. They had no intention of leaving it. Anybody who thinks that there was a big outflow of those with a big capital investment in this country, because of the wealth tax, are either pretending or are deliberately attempting to confuse.

: I agree with the Deputy on that.

: The Minister is one of the people who has again and again said that there was a big outflow of capital from the country as a result of the wealth tax. Is he admitting that he has confused himself?

: I have said that there was a substantial outflow, but that was not the real problem. That was only an incidental thing. The real problem did not relate to the outflow.

: I will sit down if the Minister thinks he has got another explanation. I have been listening to the debate right through and I have read and re-read what was said, particularly what the Minister said. He has again and again attempted to prove that the imposition of the wealth tax forced people with money to take it out of the country. He now says that those who say that are trying to confuse people.

: The point of what I was saying in relation to the capital outflow was not the level of the outflow or that this was the major result of introducing the wealth tax, but that it had been contended by members of the previous Government when in Government that there was no evidence whatever of any outflow. I was saying that we have been accused, when saying there was an outflow, of scaremongering. I produced in the House the evidence available to the previous Government of what happened. That was the only point being made. It is only of marginal importance in relation to the wealth tax.

: We can now take it that the Minister said there was no outflow of capital as a result of the imposition of the wealth tax.

: No, I did not say that. The question of the outflow of capital and what I have been saying about it relates to the credibility of some members of the previous Government and some members of the present Government.

: Deputy Tully should make his point without this questioning across the floor of the House.

: We are on Committee Stage. The proper way to debate a Bill is to clear up every point as we go along. In this way Bills can be improved.

: I agree, but it must be done in an orderly way.

: We are very orderly. As a matter of fact, the Leas-Cheann Comhairle is the person who is interrupting at the moment. When Fianna Fáil were in Opposition they claimed very strongly that people were being driven out of the country because of the wealth tax. They did this repeatedly, and if the Minister wants me to give quotations I shall produce statements made here by himself and others to the effect that a large amount of capital was being chased out of the country because of the imposition of the wealth tax. If I understand the Minister correctly now, he is saying that was not said but that people might get the impression——

: No. I do not want to interrupt the Deputy but I am sure he is trying to get at the truth. The Deputy's version of what was said when we were in Opposition in regard to substantial sums of money going out of the country is quite correct. In regard to allegations of a large number of people going out of the country, I wish to point out that I never heard that allegation. With regard to this debate, my reference to the outflow was not to it as a major element in relation to the wealth tax, because I do not think it was a major element although the argument was made——

: The Minister is changing his tune.

: No. The real point about the wealth tax was the inhibition on the money in the country, the money that stayed here, and its non-use for productive purposes such as the creation of jobs. In so far as this debate is concerned, my reference to the outflow was not so much with regard to the amount but to the credibility of those who said there was no evidence of the outflow and those who said that it was happening.

: It appears that Deputy Colley as a Deputy and Deputy Colley as a Minister for Finance are two different people. The evidence is available and we will produce it next week to show what the Minister said about the matter when he was in Opposition. He was recorded as stating categorically that (a) a lot of money was leaving the country and (b) that a lot of moneyed people were leaving the country. If my memory serves me correctly, on one occasion there was a reference made to the type of people who would be leaving. As Deputy Desmond said, a few people did go but I do not think the country lost a lot when people left because there was a question of making them pay some of the tax they should have been paying during the years but for the fact that the then Government had not the moral courage to impose the necessary taxation.

There is another aspect, and it is a serious one. The suggestion was made by Fianna Fáil when in Opposition—it is being covered up now— that because of the imposition of the wealth tax many people would be affected. I shall never forget an incident at a bye-election when a supporter of the then Opposition—I admit he was coming out of a pub and perhaps he had a few drinks too many— put it strongly to me about the amount of wealth tax being collected and how wrong it was to collect the tax. When I pointed out to him that I did not think he would have to pay any money he protested that the farmers' dole was not big enough. That was propaganda that was sold to those people and in my opinion it had a major effect on people who voted in the last general election. However, we are not debating the result of what happened this day last year.

As has been pointed out by previous speakers, a certain type of moneyed people were being affected by the wealth tax and in order to protect those very wealthy people the Government are now changing the taxation system. The Government have no hesitation in admitting that they have given financial concessions to this limited number of people, concessions that they did not need because they were not in need but, at the same time, they cannot find the money to do what is needed urgently. A suggestion has been made—particularly by the Minister today—that in some way the wealth tax prevented people from investing their money. The Minister spoke about the effect it had on employment. He is suggesting that the wealth tax prevented people from investing their money——

: I said it inhibited them.

: Would the Minister not agree that there is very little difference between statements that it inhibited them from investing their money or that it prevented them from investing their money? It is a distinction without a difference.

: If I had said it prevented them from investing Deputy Desmond would have claimed that there was no investment, which was not the case. It was necessary for me to use the word "inhibited" and hope that Deputy Desmond would quote that word.

: We are not debating what Deputy Desmond said. We should stick to the facts.

: I am all for that.

: Is the Minister saying that he did not say they would not invest all their money in case they might be caught by the wealth tax but that they would invest only a certain amount and hide the remainder? Is that what the Minister is saying now?

: I am saying now, as I said then, that the introduction of the wealth tax was inhibiting investment in productive enterprises that would produce jobs.

: In fact, the Minister is saying that these people did not invest money in enterprises in order to create or to protect jobs. Have I got that correctly in plain English?

: Certainly they would not invest to the extent that they would do without the wealth tax.

: That is a presumption.

: I dealt with this at some length earlier on when I spoke about a deputation I met before the budget. I explained that none of them was liable for the tax but they did not propose to develop their businesses. I am sorry to interrupt the Deputy, but I do not want to be quoted as saying something that I did not say.

: I should not like the time of the House to be spent on discussing deputations who saw the Minister before the budget in order to ensure that their corner was protected. The Minister is saying now that one reason the wealth tax was removed is that people who came to him and said they had money to invest were afraid that if they did so it would create so much money that they might be liable for wealth tax. If that is the argument that is being put forward it is wearing a little thin. I thought there might be some reason for abolishing the wealth tax that had not been put forward. My reason for coming here today was to convince myself that I had not the wrong end of the stick. It appears from what the Minister has said that the excuse for doing away with the wealth tax is getting flimsier and flimsier as we go along. Far from reassuring me the Minister is now saying that something might happen if these people invest their money. If that is so the argument is getting very weak.

When we are discussing the wealth tax we will also have to consider some of the reasons why the wealth tax was introduced. Does the Minister consider that the old type death duties were better? He should remember that people with little money were put to a lot of trouble and expense in relation to death duties. I am sure the Minister can recall the representations I made to him when he was Minister for Finance before on behalf of people who felt they were being harshly treated when property was left to them. They were tied between whether they should hold on to the property or get permission from the Land Commission to sell a portion of it in order to pay the death duties. That was all wiped out by the last Government who introduced a system of taking money from the richest people in the country. Does the Minister consider that the system we introduced should be done away with completely, resulting in our eventually having to revert to the old system? Under that old system the poor, as well as the rich, will have to pay.

I am sure the Minister will agree that money is needed to do anything and that money must be produced from somewhere. If the wealth tax was producing a certain amount of money and it is now to be abolished the money must be paid by somebody else. Does the Minister agree that ordinary taxpayers, particularly the workers who pay most of it under PAYE, will have to pay the £11 million which the wealth tax would have brought in next year? Should it be paid by the PAYE taxpayers rather than the very wealthy or does he consider that the hundreds of unemployed and sick people who are being knocked off benefit because the money is getting scarce should give up their meagre income to substitute for what the wealthy were paying? Those matters must be considered.

I do not know the thinking of the Minister or the Government on these things and it is possible that that is a good thing. I know that for years we had a system of taxation which leaned heavily on those earning a weekly or monthly wage or salary. We introduced a system which changed that, a system which through wealth tax would bring in a relatively small sum, when one considers the national finances, but a sum which would help to reduce the burden on those not able to pay tax. Now the Government, with one stroke, are handing over a sum of £11 million to the very rich and saying: "we know you supported us in the last election; you will do the same for us in the next election and we will give you this concession now. You do not have to pay wealth tax anymore and the suckers who paid before will pay it again". That is wrong. The whole system is wrong.

Before the debate concludes the Minister should tell us how he proposes to find the money which will not be collected in wealth tax. If he does that we will then know what the Government have in their minds. All we have been told so far is that the Government expect some of their supporters in this House to support them and clap them for doing away with wealth tax. When one sees a person who has fairly sufficient to live on clapping the handing back of an average of £20 per week to those who already have a lot more than they need then there is something wrong with a Government who run the country in that fashion.

: I am not an economic expert or a person with a legalistic mind. I am an ordinary Deputy from Tipperary and I should like to concentrate on one aspect of the Minister's contribution on this section, the main thrust of his argument for the abolition of the wealth tax. He has refunded £10 million to approximately 5,000 people. His reason for the abolition is a genuine one which I support: he felt it would be an incentive to the wealthy to reinvest these moneys and other moneys in the creation of employment to assist the Government and all sides of the House in defeating the terrible curse of unemployment. One would think that this curse of unemployment only occured between 1973 and 1976. At times, when I listened to the Minister, I thought I was outside a church gate at an after-Mass meeting. I thought the Minister was a little above the church gate orator. I listened to those arguments during the election campaign and I noticed that speakers made certain not to advert to the impact of EEC membership, the trade agreement or the world recession. They blamed the Coalition for everything.

: That was not the point. The point was that the wealth tax was introduced when unemployment was high.

: I had a high regard for the Minister but I did not think I would hear him talking as if he was outside a church gate. The Minister said job creation was our main concern and I support him in that. I had hoped that some of the 5 per cent who own 87 per cent of our national wealth would put their money back into the economy. Many of them during our four years in office decided to emigrate and enjoy the sunshine of the Riviera and the other millionaire playgrounds. They have now returned and, in the Minister's estimation, will be superpatriots who will put their money back into the economy to create the jobs that are badly needed so that we can get on with the job of cutting down the unemployment figures.

: When did I say that?

: I did not interrupt the Minister.

: I do not like being misrepresented.

: The Chair must enter into this. A short time ago the Chair tried to get this debate into an orderly fashion when Deputy Tully was speaking. The Chair asked the Deputy to make his statement and the Minister could reply afterwards. Deputy Tully did not agree under any circumstances with that but that is what the Chair wants. When Deputy Ryan has made his statement the Minister will have an opportunity of replying.

: I was delighted to hear the Minister say that these well-heeled people were so concerned about the country that they would put their money into industry. Another member of the Government, the Minister for Labour, indicated on 17 January that among the many Government incentives to industry the employment incentive scheme was of particular interest to him. He believed that the employment incentive scheme could be significant in ensuring that the recovery in demand was translated quickly into more employment. The Minister for Labour could see that there was hope that the jobs we needed so badly would come and he was prepared to support the efforts. However on 17 May the Minister for Economic Planning and Development, Deputy O'Donoghue, at a meeting in Trinity College, clearly indicated that as far as the employment incentive scheme was concerned in the private sector, and despite the fact that there has been remarkable growth in our industrial output since the plan was introduced, it was a complete failure and the Government would have to look further afield in an effort to solve the unemployment problem. That must surely indicate that the gamble taken by the Minister in abolishing wealth tax was a failure.

Following the warning of the Minister, Deputy O'Donoghue, to the private sector, the Minister repeated that statement and said he was concerned with the efforts being made by the private sector and feared that other steps would be necessary to reduce the unemployment level. This was a direct warning to the private sector and I believe it was accepted. Within a week of that statement a new all-stars team was announced, a team of 15 with a number of subs and a captain, organised by big business in an effort to counteract the employment situation and to offset interference with private industry. Their objectives were primarily to reduce unemployment, which is what the Government set out to do. This is an indication to the public that the private sector has failed the Government and we all know that the private sector mainly supports the Government. It can be accepted that the abolition of the wealth tax failed to create employment. Having listened to what his colleague said on the incentive scheme and having seen the reaction of the private sector, the Minister must also accept failure.

The people involved in the private sector have no interest in the great number of unemployed. They are self-centred, conscious of their own needs and sufficiently selfish to leave the country when they were most needed because they were not prepared to meet their tax commitment. The Minister also said that those who spoke most loudly about the abolition of the wealth tax were those who were best off. He used the words "the politics of envy" in a decrying manner. The politics of envy are accepted by many people. With the abolition of the wealth tax the sermon on the mount has been rewritten before our astonished eyes. The poor in spirit may indeed possess the Kingdom of Heaven but the kingdom of earth is reserved for those who have two houses, two cars and used to pay wealth tax. They are now the heirs to the Kingdom of Fianna Fáil.

There must be envy among the 900,000 social welfare recipients who received so little in the budget. The people who are waiting for local authority houses and those who were promised the £1,000 housing grant must surely be envious. If envy is a sin it is rampant in Ireland today.

Deputy Barry Desmond made a relevant point in relation to the wealth tax and his words should be etched on to the record. I can well remember the promises in the manifesto and the definite omission of any mention of the abolition of wealth tax. One wonders why it was not included in the manifesto. Many things were promised and many things were given. Car tax and rates were abolished and income tax allowances increased. All these things were for the good of the public but there was no mention of the abolition of wealth tax. The revenue gathered from wealth tax may be only £10 million but it would surely reduce the cutback in local authority spending. It is unjust that a few privileged people should enjoy a substantial refund of tax this year when farm labourers and industrial workers will have to pay tax and social welfare contributions. The Minister gambled on the patriotism of the elitist section of our society. He lost the gamble and will be sorry for what he has done. I hope he will reconsider the situation in the next few years.

: I am not a financial expert but I must make my position clear in regard to this matter. The removal of the wealth tax is a disgraceful act in our present circumstances. It was said that the yield from wealth tax was not high but it is agreed that it was £8.5 million. I know what could be done with that amount of money in the most needy areas.

It was said by a Fine Gael speaker that the wealth tax was introduced in replacement of the death duties which had harassed many people for many years. I agree that that was the original basis for its introduction. However, it was 1 per cent only on people who had property valued at £100,000 or, if it was land, £200,000. The full revenue from people liable to that tax in one year was £8.5 million. It would be fair to assume that that would have increased this year—with increased valuations—to at least £10 million. Those £10 million could have been expended on things that should have been done in this budget in other areas but which have not been done. The Government and the Minister for Finance are neglecting their social duty to people in the social welfare class.

A precedent had been set for the reduction of the old age pension eligibility age, which was reduced by one year in the four-year term of office of the previous Government. It was the duty of the present Government to continue that trend, reducing it this year to the level obtaining in most countries nowadays of 65. That could have been achieved quite easily with a lesser amount than the £10 million that might have been yielded from wealth tax in this year. I merely cite that as one thing that could have been done. Everybody who is a public representative, be it on a country council, health board or whatever, must realise the very many areas in which this amount of money—even spread over the whole of the country—would have provided certain services for the poor and less well-off in our society.

The field of social welfare is one in which I have a particular interest because it deals with the poorer people. How any Government or Minister could justify giving 5,000 people £10 million—because I contend that would probably have been the yield from the wealth tax this year—very rich people already, people in the top bracket of property and assets, is beyond me. Yet they turn around and give a deserted wife with a couple of children £14 or £15 a week.

That is why I stand here to make clear to the public and to the people I represent that this is one of the most disgraceful acts I have ever known on the part of any Government. I believe that a form of wealth tax continues under this Government on farmers in the £20 to £60 valuation bracket. I believe it has been left there deliberately as a wealth tax on the smaller family-type farmer who is finding it hard to survive, who has no hope of increasing his holding because of present land prices.

: Does the Deputy think they should not pay rates, or that they should not pay income tax, or which?

: I am saying that there is a deliberate wealth tax continuing to be levied on them. If they have an income that warrants the payment of income tax, then I contend they should pay it. I say here without fear of contradiction that anybody who has an income warranting the payment of income tax should pay it. I never made any bones about that. I made that point clearly on the section under which farmers were debated—I think it was section 13—when I said there should be no special category of farmer or anybody else.

The Minister cannot deny that a certain type of farmer is now allowed rates in lieu of income tax while a wealth tax is left on the poorer section of farmers—those who are regarded by the Minister as not being liable to income tax and should not be so charged. I do not know whether or not they are and it is not my business to know. But if the Minister is saying that they are liable to income tax and should be paying it but that instead he is charging it as a wealth tax in rates, I say that is wrong and the system is unjust. I know I have diverted somewhat from the section but I was challenged by the Minister——

: The Chair knows that too but he has given the Deputy a fair amount of latitude.

: I was challenged by the Minister to say where I stood on that issue. I hope I have made it clear to him.

: I am afraid the Deputy has not, but that is another question.

: I shall elucidate on it if the Minister is not clear on where I stand. I am contending that a wealth tax is being continued to be levied on those people. I contend that £8.5 million is being given to a small group of very wealthy people; it is being handed back to them because they will not now be charged under the system of taxation on the statute book, which remains on the statute book, but which will not now be charged because of an Order being made under this section. I say it is neither just nor right nor can it be justified particularly in view of the miserable allowances being given in other sections of this Bill. It is a criminal injustice to allow one section of the community—who possess the kind of property valued from £100,000 to £200,000 and over— go without paying wealth tax on it. The Minister hopes that, by allowing that situation to obtain, it will produce the kind of employment vital to our economy. I doubt very much if it will have any effect in that area.

I am no financial expert but I must make it clear to everybody, and to my constituents in particular, where I stand on this issue. I see no justification whatsoever in allowing these type of people to take £10 million away from the finances of the State this year and at the same time say to certain other people that they can have only so much. I think it was agreed during the budget debate on all sides of the House that it was unfortunate that certain areas of social welfare could not be dealt with, for example, that there could be no increase in children's allowances.

: I have already given the Deputy a lot of latitude. Surely he is not going to discuss social welfare on this section.

: I am entitled to point out what could have been done with this £8.5 million which is not now being collected. I am making a few very brief points. Certain things could have been done in other areas with that money and I have made my position clear.

: I am very proud of the fact that I was a member of a Government which introduced the wealth tax. The introduction of such a tax has always been the stated policy of the Labour Party and because we were members of a Coalition with our colleagues in Fine Gael we agreed that such a tax was justified on moral and economic grounds.

It might appear to the Chair and possibly to the Minister to be rather peculiar that most of us in the Labour Party have spoken on this section. We could, of course, have remained silent and merely registered our votes when the division bells rang. However, we feel so strongly that we believe that the members of our party should go on record in our opposition to the attitude of the Government with regard to the implementation of a wealth tax. As has been pointed out, wealth tax has not been abolished but it will not be put into operation. The virtual abolition of the wealth tax means the loss of revenue to the Exchequer of some £8.5 million.

We all know of the opposition of the present Minister for Finance to this tax when it was introduced by the then Minister, Deputy Richie Ryan. I must say that the present Minister's opposition was consistent and he still retains this attitude now that he has responsibility for the financial affairs of the country. He said he opposed it because it was not in the best interest of the country. I cannot honestly believe that. He also said he opposed it because it was a disincentive to investment. During the course of the debate yesterday and again this morning, there was no evidence from the Minister that such a tax would be a disincentive to investment. The best thing to say as far as the Minister is concerned is that it is a belief and not a fact that the wealth tax is a disincentive to investment.

The decision not to collect wealth tax to the tune of £8.5 million per year is a fact. As Deputy Barry Desmond said, this may appear to be a relatively small amount of money in the context of the overall bill for the running of the financial affairs of the country; it is relatively small in the context of that £2,400 million bill. As a former Minister for Social Welfare. I would have been very happy to have had £8.5 million to disburse amongst those who are most deserving in the community. That sum of money, which is not now being collected, would provide an increase of 4 per cent in social welfare payments and would continue the practice introduced by the previous Government of having second increases in social welfare and social assistance benefits in the autumn, usually in October.

: That was because of the high inflation.

: The Minister must recognise that it was an extra bonus.

: It was cheaper on the Exchequer.

: Why was it not introduced by the Minister in the budget?

: Because inflation is going down. The latest figure is 6.2 per cent.

: The payments and increases that were made as far as social welfare was concerned were over and above the increase in the cost of living at any given period when these payments were put into operation. It would have given 2,000 jobs in the health service, the much needed jobs which the Minister for Health says he wants in the health service. It would provide 700 local authority houses per annum. I am sure the Minister has heard that figure before from other speakers from this part of the House. There is no evidence whatsoever as to what jobs will be created as a result of the present Government's not introducing the wealth tax. It is not a trivial amount of money and I do not believe that it will mean one extra job. No evidence has been put forward by the Minister to show how extra jobs would be created by the abolition of the tax. I must confess that I have not been in the House all the time but I heard the argument this morning between the Minister and Deputy Desmond. Never at any stage was there an indication as to how many jobs, if any, would be created by the abolition of the wealth tax.

I believe that the introduction of this tax was good on economic ground but more important is the moral justification for such a tax. I believe and my party believe that people who have amassed enormous amounts of money have an obligation to contribute to the rest of society. It may be said that they are subject to the same income tax restraints and concessions as anybody else, but we must question the methods by which these fortunes were amassed. How did people manage to collect such an enormous amount of money in such a short time? The Leas-Cheann Comhairle said that we should not mention names but we saw a report the other day, though it was not an in-depth description, of two gentlemen who through their financial manipulations —I do not say that in any derogatory way—managed to get themselves so many thousand pounds per week. How did they get that? Legally? If they got it legally the law should be changed. If they got it illegally or by any method, I believe that the Government have an obligation to remind these people of their obligations towards the rest of society.

In my view the primary interest of these people is not the creation of employment or in building up the economy but merely personal gain. If that is so, I believe there is a moral justification for the introduction of a wealth tax in order to make these people contribute to the relief of unemployment, about which the Government say they are so concerned at present. I do not think they are being asked for very much. One could not regard 1 per cent of their wealth after very generous tax concessions as a very high tax. It is extraordinary that there was such clamour about this tax, not only from the Minister when he was spokesman on finance during the term of the Coalition Government but also by these very few people. They managed to convince the Fianna Fáil Party and the present Minister for Finance that such a tax should not be operated.

Progress reported; Committee to sit again.