: The debate on this section is, in our view, the most important debate so far on this Bill. The debate ranged over last week and today and would, I believe, range for quite some time yet but for the introduction of the guillotine motion. This section provides for the removal of a tax imposed in the 1975 Finance Act on the very rich in our society. Only two short years have passed since its introduction. Rarely, if ever, has the Labour Party opposition been greater or more sincerely held than on this issue.
The wealth tax was introduced in 1975 against the background of the abolition of death duties. A long campaign was waged against these death duties and the case was made that death duties, because of the way in which they operated, were a penal tax, coming as they did at a time of bereavement and deep distress. There was a great deal of what I would describe as hit and miss about these death duties, the misses being all too often on the side of the better equipped and the better advised sections of our community. For example, if wealth passed to the heirs five years before the death of the holder of that wealth, the heirs were free of tax. If not, then they were liable for death duties. Those whose enterprises were of a magnitude which involved frequent legal dealings were generally those most likely to make provision for their successors. Others not so happily placed had to face crippling death duties, often resulting in the sale of a home or a farm.
The wealth tax was introduced as a substitute for death duties. Its introduction was consistent with the programme of reform implemented by the then Government. Since there had to be a substitute—this is something the present Government are now discovering in regard to their election promises and the fulfilling of them—the wealth tax was the obvious course to follow. The Labour Party held firm views then—we still hold them—on the principle of wealth taxes and we offer no apology for holding the House up, if we can be accused of doing so, on this issue.
Our opposition to its abolition now is sincerely and keenly held. The wealth tax was indeed a relatively ineffective form of tax. It yielded only a marginal sum, but it was a definite step in the right direction and we are incensed that this tax should now be abolished by this Fianna Fáil Government. The capitalist shears of the Fianna Fáil Government is here in action. It is being wielded to cut out the liabilities of the rich and, not alone that, but to cut some of the services for the poor and the disadvantaged, if we are to judge by the proposals and options presented in the Green Paper.
This is not the time to discuss the Green Paper but, so far as the proposals in it are concerned, it is sinister taken in conjunction with the decision of the Government to abolish the wealth tax. A correspondent in The Cork Examiner, Liam O'Neill, who cannot be described as one given to lambasting the Government, had this to say in this morning's issue in regard to the proposals in the Green Paper, and his comments are applicable to the wealth tax as well:
"A BLUEPRINT to "hammer" the small man is one description I heard applied to the Government's Green Paper over the weekend. Not bad either, since it seems to be the small man—financially, that is— who is being asked to make all the sacrifices."
It is he who is being asked to accept less in children's allowances, to pay more for his housing, for his children's education, for his health services.
Not nearly so much is being asked of the better-off people in this document, and the rich are to be let off almost entirely.
A Government which only a few months ago decided to abolish the Wealth Tax—a tax sought only from those with a lot of property or money, or both—now comes along and proposes to tax children's allowances.
It is incredible, and it is to be hoped that their supporters will quickly let them know what Dr. Martin O'Donoghue must be told to do with that one.
That correspondent is not given to undue criticism of this Government.
The wealth tax introduced in 1975 was only a diluted form of what was proposed in the White Paper the previous year. The thresholds were doubled. The percentage was reduced and generous exemptions were provided. The then Minister very correctly said when introducing the measure that a means of tax evasion was about to be denied the better off sections and they were being required to make a modest instalment tax on the top slice of their fortunes. That expresses very well what the wealth tax is all about. There was a single rate of 1 per cent and the exemption thresholds of £100,000 in the case of married couples, £70,000 for single people and £90,000 for widowed persons. That was wealth beyond the wildest dreams and sometimes the imagination of many of the people who contribute 87 per cent of the income tax of this State under the effective PAYE system, an amount out of all proportion to their share of the gross national income, and beyond the comprehension of those unfortunate enough to have to rely on social welfare.
A lot more could be done for those people if this Government had collected and distributed the £10 million and more which would have accrued under the wealth tax. What is wrong with us as a people when we can tolerate such enormous differences in wealth, much less buttress the wealthy as this Government are doing under this measure? This is a tax on personal wealth of very great magnitude by my terms, if not by the Minister's. That is precisely the point I am complaining about—that there should be two standards of what constitutes the needs of a human being.
The Irish Independent of 9 June, carried a report by Colm Rapple which said that two bosses of a well-known company in this country took
"£14,000 a week from the company last year for services rendered. That is apart altogether from the dividends they got from substantial shareholdings in the company."
He went on to say they were entitled to £393,000 apiece. In the case of one of these bosses,
even assuming that he puts in a 60-hour week—which is possible—that works out at £136 an hour or over £8,000 a week.
In less than four-and-a-half hours that man could make what a person on unemployment assistance gets in a year or what a single woman's allowance would be in a full year. How can there be such mind-boggling disparities between the values society places on human beings when one person has 650 times more to live on than the other, and that is unearned wealth. We could talk about earned wealth. The lucky few who earn £80 a week for a 40-hour week still get only one sixty-eighth of the amount earned by the man I mentioned.
There is no question of cherishing all the children of the nation equally. How can it be reasonable that the boss I have mentioned should be given tax relief while no reliefs are given to taxpayers in respect of dependent children or to mothers in the form of increased children's allowances? It is scandalous to suggest that the wealth tax be abolished. According to a survey carried out by Brian Nolan of the Central Bank one quarter of the total income of the country is taken by the top 10 per cent and only 1.5 per cent is retained by the bottom 10 per cent. It is the top 10 per cent who were defended by this Government when in opposition and to whose aid they have leapt the moment they were returned to power.
In the apportionment of the £70 million tax reliefs in this Bill only £70 a year could be afforded for a widow, no matter how many children she had. The individual worker still pays tax as soon as he earns more than £16 a week. Retired workers are still taxed on their pensions. The just call of the people who must use their cars to commute for tax reliefs has once again been ignored. The abolition of car tax was no substitute. The bigger your car the more you gained. The worker who must use his car going to work has a very good case for tax relief. There have been suggestions of savings in social welfare, cuts in expenditure on health and education while our friend getting £136 an hour is given more into his bulging pockets. This is incomprehensible.
Workers are constantly reminded of their duty to the unemployed. There have been calls for income restraint by workers but apparently the contribution of the very wealthy is only available at a price, their price, at whatever price they command, regardless of the consequences that might have on the weaker sections of the community. That is a terrible indictment of capitalism. It appears to us to be the law of the jungle.
The Minister argues that this is the time to create jobs, that the people with a disproportionate share of the wealth of the State will not give of their talents, of their ability, of their brains, unless they are allowed to make unlimited profits. They have been given exemption on what must be assumed to be substantial houses. They have been given exemption, too, in respect of their livestock, their bloodstock, their pensions and so on, but yet they are unhappy. At least those who have the ear of the Minister for Finance have not expressed themselves as being happy with the situation. As a result of an amendment in last year's Finance Bill private non-trading companies that have control of trading companies were exempted so that genuine commercial arrangements would be exempted from wealth tax. The outright opposition of the privileged people in our society to the principle of a wealth tax has prevailed.
In defending his action, action that is diametrically opposed to everything we on these benches stand for, the Minister makes the case that a wealth tax is disastrous economically. He argues as if wealth taxes did not apply in any other country whereas approximately half the countries in the EEC have a wealth tax of some kind. How do these countries survive? There is opposition to the whole principle of wealth tax at any stage of economic development but in Denmark, for instance, there is a wealth tax and the threshold is only one-fifth of what it has been here. Various arguments have been put forward in seeking to justify the abolition of wealth tax but what has emerged is a total reliance on people who are the holders of wealth of the magnitude necessary in order to be liable for wealth tax. These are people, who, even according to what was said by Fianna Fáil in opposition, have not done their duty so far as the country is concerned, especially during the time of the recession. Despite this there is a frightening reliance by the Government on private enterprise to solve the unemployment problem.
As we have said so often before, the purpose of private enterprise is not the creation of jobs but the creation of profit. Jobs will be created in the private sector only in so far as they are needed to create profit. Private enterprise is answerable in the first instance to shareholders. There is evidence that the leaders of the private sector are not totally happy with the over-reliance being put on them by the Government to create jobs. A CII survey published in February last showed that 22 per cent of private firms did not envisage providing additional jobs even if they should increase output by as much as 30 per cent during the next two years. In other words, their aim will be to increase output as cheaply as possible with employment being a feature only in so far as it cannot be avoided. Therefore, there would not appear to be any case to be made for the abolition of wealth tax. Neither is there a guarantee that the abolition of this marginal tax will help in any way to solve the unemployment problem.
The Government's proposal constitutes an injury and an insult to the poor and the deprived, that 10 per cent who enjoy only 1.5 per cent of the wealth of the State. This proposal is an affront to those parents of the 100,000 children who are dependent on social welfare. It is a gross insult, too, to the widow with two children who is being asked to survive on £24.40 per week, a far cry from the £136 per hour I mentioned a few moments ago. These are the people who should be considered in relation to any attempt to redistribute wealth. The Government's proposal is an affront also to those paying tax under the PAYE system, tax which is out of proportion to their share of the wealth of the State. It is a proposal which portrays an extraordinary sense of priority for any party, even for Fianna Fáil. It is astounding that the Government intend going ahead with this measure. After only a year in office there is a frightening shift to the right on the part of the Government. That is a trend that we denounce and will continue to denounce as strongly as possible.