Amendment No. 1 arises out of Committee Stage proceedings.
Capital Acquisitions Tax Consolidation Bill 2002: Report and Final Stages.
I move amendment No. 1:
In page 14, line 20, to delete "in lawful wedlock" and substitute "as a child of the marriage of the adopters".
The purpose of this amendment is to draw attention to the archaic language which is used in the Bill and to substitute, as is the practice in many jurisdictions, modern language which would refer to the child as the child of the marriage of the adopters or indeed simply to refer to the parent or parents of the children. I raised this issue with the Minister and it is an important issue of principle that language should be changed to reflect current social circumstances.
The Deputy raised this issue with me earlier. Section 2(5) of the Bill deals with adopted children. Under that subsection a child who has been adopted in accordance with the Adoption Acts is treated for capital acquisitions tax purposes as if he or she was the natural child of the person or persons who adopted him or her. An adopted child is therefore entitled to the same tax-free threshold as a natural child.
The Attorney-General's office has advised that the proposed amendment could constitute a change of meaning. Accordingly, I do not propose to accept this amendment. If the Deputy is not satisfied, she can raise the matter on Committee Stage of the Finance Bill.
Amendment No. 2 arises out of Committee Stage proceedings.
I move amendment No. 2:
In page 44, line 19, to delete "section 33 of the Wills Act 1837, or".
It is our understanding that this reference to section 33 of the Wills Act 1837 was to be amended and I ask for the Minister of State's response.
The last time we discussed this we rejected this amendment and I think I offered the Deputy some extra information on the situation which I hope she has received. The amendment relates to section 42 of the Bill. That section deals with benefits arising under section 98 of the Succession Act 1965. Under section 98, a benefit by will of a testator's child or grandchild is, unless there is a contrary provision in the will, preserved from lapse where the beneficiary predeceases the testator. If that beneficiary leaves children or grandchildren who are alive at the time of the testator's death, the benefit takes place as if the beneficiary had died immediately after the testator and the property passes under the beneficiary's will to will or intestacy. The section prevents a double charge to tax in such cases. The person who ultimately takes the benefit is taxed as if he or she received the benefit from the testator.
This amendment proposes to delete the reference to the Wills Act 1837 from section 42(2)(b) of the Bill. Benefits taken under certain wills executed prior to the coming into effect of the Succession Act 1965 are still governed by the 1837 Act. Such benefits might come within the scope of the Consolidation Act. Accordingly, as there is a possibility that the provision of the 1837 Act might still apply in certain cases, the Attorney General's office has advised that the proposed amendment could constitute a change in the law which is not permissible in a Consolidation Bill. Accordingly, I am not accepting this amendment. I accept that in very rare and limited circumstances there is a case in point and the law has to cover such an eventuality. I can furnish the Deputy with details of that instance.
Amendments Nos. 3 and 4 are out of order as they represent a substantive amendment of statute law. The amendments propose to add the word "affirmation" to the Bill. The original legislation on which section 47 (2) and (5) is based refers to an "oath" only. These amendments would constitute a substantive amendment of the statute law and are therefore ruled out of order.
I appreciate the Ceann Comhairle's ruling. The purpose of this amendment was to provide for the circumstances where people do not wish to use an oath but would be happy to make an affirmation.
I appreciate that but in a consolidation Bill it is not possible to amend the statute law. There are other ways the issue could be raised, for example, in the Finance Bill, 2003.
I move amendment No. 5:
In page 88, lines 24 and 25, to delete ", made on or after 10 February 2000,".
I understood the Minister intended making a positive response to this amendment. I would like to hear his comment.
This amendment relates to section 88 of the Bill which deals with the exemption of certain transfers from capital acquisition tax following the dissolution of a marriage. Section 88 (2)(e) refers “to an order or other determination to like effect, made on or after 10 February 2000, which is analogous to an order referred to in paragraph (a), (b), (c) or (d)” of that subsection, that is orders made under the Family Law Act 1995 and the Family Law (Divorce) Act 1996 of a court under the law of another territory made under or in consequence of the dissolution of a marriage which is recognised as valid in this country. The relevant date is referred to in the original legislation. If the date was deleted, orders made before that relevant date would come within the scope of the exemption. The Attorney General's office has advised that this would constitute a change in the law which is not permissible in a consolidation Bill. Accordingly, I do not propose to accept the amendment.
Fine Gael is happy to see this Bill passed which draws together pieces of the capital acquisitions tax code which have been scattered through various Finance Bills. We have some reservations. Recently the Revenue Commissioners indicated that they believed a root and branch review of this particular capital acquisitions tax code is necessary. It seems strange therefore that we are making such an effort to consolidate a piece of legislation which the Revenue Commissioners regard as in need of overhaul and reform. Notwithstanding that, this consolidation Bill will be of value to practitioners and is worthy of being passed.
I congratulate the Minister of State on getting the Bill through. The Labour Party has a fundamental problem with the way the tax code operates at the moment. It is difficult for Members and other people to get detailed information on how taxes impact on particular classes of taxpayers, the sums of money involved, and the incomes, profits and capital assets involved. As well as moving to consolidate tax law here it is necessary to provide for transparency. It is only with clear indication of who pays what taxes and why that we will move to a situation where the general body of taxpayers, particularly PAYE taxpayers, will have confidence in the fair administration of the tax system.
The Green Party also supports and welcomes the consolidation Bill. We accept the need for consolidation legislation to be put in place. We repeat our reservation that there is a need to go beyond housekeeping legislation in regard to the administration of the tax system. We need to introduce more imaginative Bills in terms of reforming the tax system and we look forward to debates on a wider scale on the issue. We would like to see the Government enter into debate about the effectiveness, efficiency and equity of capital acquisitions tax in the context of the tax system. As already mentioned, we have a tax code that is deficient in measures of success. The next legislation on taxation will be an opportunity to address many of the inequities that continue to exist in our system.
I welcome the Capital Acquisitions Tax Consolidation Bill 2002. It removes much of the difficulty of wading through the raft of legislation that existed previously and simplifies the situation in regard to capital gains tax and people's understanding of its application. I hope the Minister of State will indicate in his concluding remarks that the Government will undertake a full and comprehensive review of the taxation system. That is essential.
Consolidation Bills are only a minor step towards what is required in the area of taxation in this jurisdiction. On Second Stage I put two questions in regard to capital acquisitions which have not been substantively addressed. These regard the specific anomalies in sections 70 and 71 of this Bill. Section 70 states "Notwithstanding any other provisions of this Act, a gift taken by a donee, who is at the date of the gift the spouse of the disponer," and section 71 states " Notwithstanding any other provisions of this Act, an inheritance taken by a successor, who is at the date of the inheritance the spouse of the disponer,". In each case exemptions from tax are involved where the value is not taken into account in computing tax. Both of these point to the acute anomaly in this legislation which draws a differential between what is regarded as a "spouse" and the reality of cohabiting couples in our society. It is imperative that the necessary amending legislation is introduced to give equal recognition to the rights of cohabiting couples as is already the case applying to those regarded as spouses or those involved in formal marriage situations. That is essential.
The Minister of State's senior colleague in the Department of Finance has not responded to a question I put to him. Where does this legislation sit in regard to European law? There is no doubt that there is a major difficulty with this Consolidation Bill where it continues and maintains discriminatory practice in regard to spouses as against cohabiting couples. It is in conflict with European legislation.
Will the Minister of State please refer to that point in his concluding remarks? I am hopeful that he will take on board the points raised by me and other colleagues and that he will signal the Government's early intent to come forward with the necessary amending legislation. I am sure the Minister of State will be an enthusiastic proponent of that.
I thank all the Deputies for their contributions on this Bill. It is, indeed, an administrative review of all the previous legislation. It is a good Bill and consolidates the law relating to capital acquisitions tax contained in the principle Act of 1976 and the many provisions of sub sequent Finance Acts that amended and extended that Act.
There will be an opportunity on Committee Stage of the Finance Bill to address some of the issues that were raised but cannot be addressed here, such as that raised by Deputy Ó Caoláin. The matter he raised relates to general law, and tax law must follow general law. I commend the Bill to the House.