I address myself to this Bill with great seriousness. I think I probably can say, as I have said before in relation to other measures, that I would make the same speech as I will make today if the Minister represented my party.
There was a great Minister for Finance in France called Colbert. He defined the art of taxation as the ability to extract the maximum amount of feathers from the goose with the minimum amount of squealing. We have had a fair amount of high and piercing squealing, and the flow of feathers is not too obvious, from the Exchequer figures published. The goose's condition is at least questionable.
As I wish to draw the Minister's attention to some serious observations I wish to make with regard to some provisions of this Bill which he may at this time be able to consider, as he was not able to consider last year because the Dáil had gone into recess, it would be at least good manners on my part to welcome some of the things that are in this Bill which indicate that if he has been receptive to recommendations from others, he may not be unwelcome to recommendations from Members of the Seanad. I think, for example, that whoever has made the recommendations—and it is to the Minister's credit that he has accepted them—that there is a provision for the blind should not go unnoticed and that the provisions should not pass unrecommended by the Opposition. This is very welcome.
When I come to the Committee Stage it may well be that I will ask: why stop at the blind? A friend of mine was once in a Paul Jones dance, a dance which we used to engage in many years ago, and she was greeted by the remark when her partner picked her up, "Why do I always get the blind, the halt or the weak?" She said, "You had better speak up, I am a bit deaf", which I thought was a very good reply. There are the deaf, there are the dumb and there are the handicapped. The Minister has made a good breakthrough here and that should be welcomed, as should the provision in regard to housekeepers or unmarried mothers. The adjustments of the minimum earned income relief, the small income relief, the age allowance, the initial allowance and the investment allowance and depreciation allowance are all welcome. I should like to know the basis on which these adjustments are made. I do not know and I think it is important.
The Bill has largely gone by on the basis that there is little change effected by it. In so far as the Minister apparently has set his face in favour of the cutting down of expenditure, my party would be wholly with him. Speaking personally, I would be. I do not know what degree of success is attending his efforts, whether there is not some evidence of the breaching of the dykes here and there.
But the Bill is not a Bill which effects little change. The Bill, if enacted, will effect considerable change. Despite my desire that the Minister would listen later to certain recommendations, I must honestly say that I think the Bill will have a bad effect. I said to the Minister last autumn that I did not think he would get the flow of taxation from companies that he thought 58 per cent would produce. He may now have some evidence coming in to his Department that what I said then was right.
We are talking about a free system. All right, let us abolish it and have another kind of system, but we have a free system and you have got to legislate on the basis that all Chinamen are Chinamen and all Irishmen are Irishmen. If you move the rate of taxation, particularly direct taxation, beyond a certain point, very often it is very difficult to judge what that point ought to be, but it becomes extremely interesting to avoid.
I will go further. The Minister, I hope, is fully aware of the distinction between the two operations combined in the words "avoidance" and "evasion". Both operations are operative. The honest man is concerned to avoid tax and to get sensible and very often highly expensive advice. The dishonest man does not give a damn. He packs it under his pillow or wherever else you may think of. The gnomes of Zurich perhaps are getting some of our money now. When you are engaging in direct taxation you have got to consider very carefully and seek a great deal of information from people other than the direct advisers of the Minister as to the consequences of the increase.
There is a constant battle going on between people who are engaged in advising people to avoid taxation and the Revenue Commissioners. It is a curious kind of tennis match in which the Revenue Commissioners are always serving and if you are on the other side you are lobbing back or slicing the ball or doing something that you know perfectly well they will discover in due course. Meanwhile you hope that your client will die, but unfortunately and inconveniently for us all he does not die quickly enough and the Revenue Commissioners would enjoy being informed about arrangements that are made before even anybody dies.
Do not tell me in which room, in which castle or in which office there are people directed to this operation but there is no doubt in my mind that they are there and they know an awful lot. I shall say things against the Revenue Commissioners so I had better start off by saying something in favour of them. They are doing their duty, which is to collect tax according to the laws of the State. If they find avoidance of measures the Legislature has enacted, directed to particular operations, they quite rightly think they should recommend amendments to these laws. They are also extremely clever, as anyone who has anything to do with them knows perfectly well, but the situation is rather like the one-eyed man in the Valley of the Blind. They know more about this subject from their special point of view than other people can because this is their entire specialty.
I am sure the Minister will be conscious of the fact that many section of this Bill do not come into operation or effect until it is signed by the President and that therefore in relation to any of these sections there is no reason at all for secrecy. An announcement could have been made 12 months ago of the intention to raise the rate of duty to a figure which is in excess of 40 per cent over £100,000 and which increases the figure of £55,000 and the reactions of people informed about this could have been discovered. I know that the Revenue Commissioners do not know things that accountants and solicitors know. I will just take one example and I hope the Minister will correct me if I am wrong because I did not read the entire debate in another place but I read him as saying, in relation to the section that appeared originally in the Bill as introduced: "Charge a tax on sums applied outside the State in repaying certain loans."
The Minister was asked what tax did he expect to get from this. I think he said £25,000. I could be wrong in this. My eye might have missed the figure but all I can tell him is, in relation to certain known cases of my own, he will either get £80,000 or the people will leave the country. I do not think that in relation to that particular section, which was originally section 4, that the Revenue Commissioners have any information. They simply do not know what is a nonremittable income of a non-domiciled person. An inquiry ought to have been made about that before this section was changed. I know that I can be told this section was changed years ago in Britain, but the British situation is very different from ours. We are much more an open economy and much more influenced in our whole flow of income, the degree to which life can be enjoyed here, by the availability of foreign capital.
This is where I am very concerned about the Bill. A large change has been made. It has been made in two particular ways. It has been made in relation to the remittances of foreign domiciled persons, their income tax payments.
May I say to the Minister, for the comfort of foreign domiciled persons, that I can see at least three ways in which that section can be overcome. I do not know if it is any comfort to him to know, but is seems to be in complete conflict with what has been the policy of the State, the policy of the Government, the policy of the Fianna Fáil Party since 1961. I do not like to use words like "breach of faith," because I have not considered what the late Dr. Ryan said when he introduced the Finance Bill, 1961. I have not had time to read it, but I can tell the Minister this: that any responsible professional man concerned to advise people who are thinking of settling here—and there are lots of other places where they could have settled—would tell them that 40 per cent was the maximum rate that would affect them.
I hold no brief—at least in the Seanad—for people who pay 40 per cent rate of death duty. I am not awfully sure that I would seek their company for an evening's entertainment. I am not sure that it is very good for them that they should be in the position to pay 40 per cent estate duty. I think this is one of the Minister's dilemmas. In relation to fiscal policy, financial policy generally, economic policy, you have got this difficult act of judgment to make between justice in the sense that it is being felt by the people—and here I share his view because I think this is very important— and efficiency. Included in efficiency here is the availability of capital.
I think the Minister expressed the view—if he did not express it I know that it is held by the Revenue Commissioners—that no particular benefit has flown from having a maximum rate of 40 per cent. The Minister ought to look at certain aggregates before he reaches a final conclusion on that. He ought to have a look at the flow of foreign investment income to this country. He has got to add to it some speculative figures based upon section 4, that is to say the extent to which there has been income enjoyed here which has not been treated as a remittance. If he looks at the rates of dividends paid on an average by, say, for example, United Kingdom companies, I think he will find that the increase in foreign investment income is quite striking and now represents a very significant proportion of our export industry.
It is most imprudent to make a change of this kind based upon a Revenue Commissioner's recommendation, which has probably flown from some discovery that somebody was earning, or had an income of, £25,000 and was remitting £1,000 of it and dealing with the balance by borrowing here and discharging the loans abroad. I was never required to take the Official Secrets Act oath, so I just do not know how budgets are made. I imagine they are made out of a composite of propositions, some of them coming from the Minister himself; some of them coming from recommendations within his Department; some of them coming from representations to him by outside bodies, which are sifted and found to be worthy and not too costly and which are granted accordingly; and some of them coming from the Revenue Commissioners, who are surprised to discover that somebody has got through the net.
We should all be wondering what the net is about when we are talking about the net of taxation. In 50 years time, if we still have a free system, there will be some fish clever enough to get through the net. What we have to think about is: what do we do to the net if we tighten it too closely? What evidence is there, for example, to justify the quite extraordinary change that is proposed with regard to the death duties in an amendment to the Finance Act of 1931? The Finance Act of 1931 provides "Exemption from death duties of objects of national, etc., interest." I do not know why the "etc." comes in but that is the subheading to the authoritative text. It is proposed that this be changed, and this is particularly the reason why I am here this afternoon when I might properly be doing other things. I really want the Minister to look at this proposal. I address him with great seriousness on this subject.
Somebody has obviously got through the net. May I briefly remind the House of what the section provided? It provided that if you had something which could be regarded properly as—the exact words are "pictures, prints, books, manuscripts, works of art, scientific collections or other things not yielding income as on a claim being made to the Minister for Finance under this section appear to him to be of national, scientific, historic or artistic interest." It is obvious that somebody has got through the net. Even with the 40 per cent rate, if you get one person out of a hundred who can be persuaded that he is dying—most people find it a disagreeable recommendation and do not like their attention to be drawn to it—then they can turn all their money made in trading of some kind into the purchase of art objects from Sotheby's and from some dealer in Bond Street on the basis that they will be resold to him. More power to him, I would say. If he is that kind of character he will have left children behind him who will benefit the nation. The number of them —and I say this with considerable experience—must be very small.
I have thought of this in relation to people in this situation. Setting aside the embarrassment, it just does not work in most cases when you have got a 40 per cent rate, because you have got to leave enough money behind so that the applicable rate will be 40 per cent anyhow. When they come to sell they will pay 40 per cent on what they sell. The section which is being amended was introduced into the Finance Act of 1931. I know—let us not get side-tracked on this point—that the Revenue Commissioners have, under a section of the 1894 Act, power to make a concession in relation to this matter. When they sell under this section, which imitated the British Act, there is a concession of 25 per cent of the proceeds when they come to tax it.
The overall cultural and moral effect of our making this change seems to be extraordinarily undesirable particularly in a situation in which the State lacks—here I should like the Minister to stiffen the law rather than relax it— the equivalent of the British legislation under which if one exports a work of art it is the same as selling it. The whole design of our legislation ought to be twofold. Firstly, it should encourage people to collect works of art and, secondly, it should encourage them to keep such works of art at home.
The American vacuum cleaner has been moving around this country for the last 20 years and has sucked up many works of art that should properly have been kept here. If that vacuum cleaner had been operating in Britain and if the person selling the work of art had been at gain to the exemption available under the existing law he would have had to pay duty, but such duty would be paid at the rate determined by the rest of the estate. That is a very sensible arrangement in the British situation where you go up to 80 per cent, and down now to 75 per cent. As the British duty goes down, our duty goes up; and this, in my view, is not a very sensible arrangement. However, a change of this kind ought to be preceded by very considerable examination of the economic significance and consequences of the fiscal change proposed. I see no evidence that such an examination has been conducted at all.
What do you think a shrewd guy does when he is in possession of a Canaletto in his kitchen or a Titian in the child's room? Do you think he looks for an exemption? Not at all. He gets the local estate agent to value them and he pays duty on them. The local estate agent will probably describe them as miscellaneous pictures valued at £25. I should like the Minister when he comes to this section and finds the State has to be rigid—and I trust he will not be—to tell us how many applications there have been for exemptions over the years. What were the values involved in such cases and what have been the duties lost? To whom have they been sold?
I understand, and sympathise greatly, although I am on the other side temporarily, in this field of tax avoidance, why the Minister wants to catch the tax avoider. However, many genuine people are being caught too and we are thereby discouraging the genuine collector. I know of people with small means who have devoted their lives to collecting objects of art such as prints, old manuscripts, paintings and so. They have managed out of their modest incomes to acquire worthwhile collections. Fortunately for their inheritors the lower rate of duty has been paid but they did not pay such duty to save death duty. Most of them did not know of the existence of this provision. I can think of one man who acquired such a collection and a rate of duty of 3 per cent or 4 per cent was applied based on what his other assets were and this rate of duty indicates that they were small. His family were forced to sell the articles involved.
I know the Minister will tell me that such articles could be sold to the National Library, National Gallery, National Museum of Science and Art or any other similar national institution, any university, county council or municipal corporation or the Friends of the National Collection in Ireland, but the provisions of these institutions are very inadequate. There has been a full debate on the position of the National Museum in this House. There is only word to describe the position of the National Museum and that is "scandalous". However, this matter cannot be regarded as the Minister's responsibility because it arose before he took his present office. Instead of a change in the law against the collector there should be a change in the provision for the collectors.
Look at the effect of this amendment. Collectors are forced to sell to the National Library. If I had a collection of old manuscripts I would be obliged to sell them to the National Library. What provision has the National Library to enable them to purchase such a collection? The present figure they receive is used up in the first two months of the year in buying books, not wonderful manuscripts. If I were a collector of manuscripts and wished to avoid paying duty, the National Library would be the sole purchaser. University College, Dublin, if it falls within the section, has not got the money to buy such manuscripts. The National University of Ireland is in a similar position. Dublin University may have the money to purchase such manuscripts but I am not sure of this. The National Gallery has received money through the good benefactors, Hugh Lane and George Bernard Shaw, and has made very significant purchases over the last six or seven years. If it had to depend on the money made available by the Government it would not now be in business. The Lane Bequest is strictly construed and strictly limited to the availability of funds.
This is a very significant matter. Unless the Minister has some reason which he intends to spell out in detail, I am afraid I must be placed on record as being in total opposition to this section of the Bill. I went last Saturday morning to the Library to read the debates in the House of Commons and House of Lords on the 1930 Act which introduced this enlightened piece of legislation—which is now being amended and about which I shall have much more to say—and the debates in the Dáil and Seanad. It is rather amusing to note that neither the Chancellor of the Exchequer in the House of Commons—I think it was Lord Palmer who dealt with it in the Lords—nor Mr. Blythe in the Dáil or Seanad made any reference whatever to the subject, so extensively interested was everybody in the innovation, which has been very encouraging. It is effective and right in striking a right cultural note on this.
In Italy, I understand, there would be no question of your being allowed to ell articles of national, artistic, scientific or historical importance nowadays. Alas, during the Civil War in Spain many beautiful things were thieved from churches by rogues and are now to be found in other churches that I have seen in Britain. Now the maximum rate applicable, if I am correctly informed, to the sale of articles of this kind in Spain is 30 per cent.
I would suggest—I think this provision exists in the legislation of other countries—that we could at least treat the people who dedicate their energies and their intelligence to this kind of work as well as the people who buy Exchequer Bonds three months before they die are treated. They should at least be given a reduction in the duty they would have to pay, if they hand them in in payment of duty, so that the Minister can give them over to the National Library, National Museum or National Gallery.
Through taking these spurious valuations from people who do not know a damn thing about what they are valuing—and here I charge the Revenue Commissioners very heavily—the Revenue Commissioners should require full information with regard to objects and freely grant these exemptions. This would have the effect of making museums aware of the existence in Ireland of these important objects. At the moment they are not so aware, nor is there any legislation under which they are required to be aware of such objects. The law should provide that they must be kept within the State or that people would pay a duty on exporting them, whether they are cousin or aunt. The embargoes on the export of these objects ought to be very heavy.
Perhaps the Minister will deal with this point when he comes to reply. I felt that it was my duty to check on books that advise on estate duty avoidance—I think I have most of them—and they do not recommend this as being very useful. The Minister talks about increasing the rates: he is increasing the flat rates now. Let us look at the position which would have existed in the case of an estate, say, of £10,000. I am not hired by anybody to come into the Seanad and argue in favour of lower rates of duty; I am directing myself to the public interest, because the creation and production of goods precedes their distribution. The Minister recognises that. It is awfully difficult to reconcile the provisions of this Bill with the Minister's excellent saving scheme of last summer. Why is one particular type of saving better than another? We all know the different types of saving that exist. One can buy savings certificates; one can invest in trustee savings banks; one can have life insurance policies; one can have pension schemes; one can re-invest the money in one's own farm; one can buy securities. That is agreed. But it is a real problem as to how we are to make the peoples' savings available for investment in Ireland. I shall welcome everything that can bridge that gap if it is taken in an overall view as being a sensible thing to do.
It is a long time since I first had to deal with the Revenue Commissioners and with the officials who advise Ministers. The gap between them and people outside is very much less than it was then, but that gap should be greatly narrowed. There is a great deal of information available to people in the State service, information which should be available to people outside, but which is not available simply because they are in the State service. I think it was Adam Smith who said that one of the attributes of a good taxation system was that it should be simple. I ask the Minister—highly intelligent as he is, who must have gone into this thing with a sieve, or a comb, or with a pan if you are looking for gold—to have a look at section 20 of the Finance Act, 1965, as amended by the 1967 Act and the present Act. Would the Minister tell me if that is simple taxation? Men with wet towels around their heads cannot make out, not merely what is intended but what is likely in consequence, because what is intended is very often what the courts will hold was intended.
Although perhaps I speak much against the interests of many people, I should much prefer to pierce the veil of incorporation than go through this stuff, where one does not really know who is in control and who is not. I hope that everybody in the Revenue Commissioners office will understand what I am about to say; I hope that nobody will misunderstand it, because there is nothing personal in my remarks. I am embarrassed to state it, but I feel in duty bound to make this statement. It is an interesting fact that, as legislation with regard to taxation matters increases in complexity, so increases in value the Revenue Commissioners and all the members of the Revenue Commission. If you take a ten-year view you will find an interesting outflow from the Revenue of personnel to people who are literally bewildered by the effects of legislation. This is now becoming what law should never be. It is a sort of a secret science with men from temples and sepulchres and other semi-religious places with an awareness of what is intended which even the sections will not tell. Somebody said that to have knowledge of the common law one would have to have been born during the reign of Henry II and be still living. This is probably an exaggeration of our situation but it is certain that one must have inside knowledge of the income tax legislation to know the full implications of the amendments to it.
The Minister should give very careful consideration to this before he makes further amendments. There is an amendment which the Minister referred to in his Second Reading speech with regard to the operations which are carried out prior to cessations which I will deal with when we come to Committee Stage. I should like the Minister to have a look at the full section he is amending to know of the circumstances that leads to cessation—death.
I have heard of people arranging for their daughters to be married so as to avoid estate duty. So far I have never heard of anyone who has gone into the River Liffey to avoid death duties or to avoid income tax. If the Minister is making this amendment it ought not to apply, nor should the original section have applied to the case of cessation arising through death. Avoidance does not arise where death is the circumstance in relation to income tax.
I referred to the position of an estate in 1931, and I think the rates remained unchanged for a considerable period of time. The rates at that time were £10,000 with a 4 per cent rate. That £10,000—I am open to correction here —would now be valued at £46,000. Four per cent of £10,000 would have been paid in duty where now 27 per cent would be paid in duty. What sort of a coon would sit there and not do something about that?
I grant the Minister and his predecessor all the credit that is due to them in relation to the exemption in favour of dependent children, but when does a family cease to exist? Does my daughter cease to be my daughter because she is over 21 years of age? Why not, if we want to have a definition of a child, take the definition that the High Court is placing on a child under the Succession Bill? This would make sense.
In regard to farmers, the Minister must not tell us what he has told us about the number of people who are paying and what percentage they are paying in death duty without having regard to the whole farming situation here, and the situation we are moving into, and without having information for the House as to the degree of study that has been made in regard to the cash flow of farmers and small traders.
The Revenue Commissioners already know more than I do, but in Britain the situation exists where a man with less than £100,000 will pay much more duty on his death if he is domiciled in Ireland than he would have to pay in Britain—unless he is in the miserable position that the Minister has properly provided for by having dependent children and a widow. This should get first priority and I completely agree with it.
There are other situations, such as where there are children who are dependent for the whole of their lives. These circumstances are not taken into account. There are small farms, small industries and private companies that are not big enough to be floated. In England about 45 per cent would be taken off to establish how the value for duty purposes could be reduced and therefore a very much lower rate is attributed.
The Minister has said that this is a way of catching up on the farmers who have not been paying tax over the years. There is a lot to be said in favour of that view. I could muster up some arguments in favour of it. But the overall taxation position must be looked at and incidence of local taxation on farms must be looked at before any well judged assessment can be made of this position. There is much to be said for something like the wealth tax applied on a quinquennial basis or a ten-year basis. Why pick the most miserable moment in the life of a family when the owner of the farm or plant and machinery dies? Why create situations which may not be capable of solution other than through a realisation, which is the position? I am interested to see that this Bill contains a provision for taxation if, say, within six years a farm has got the benefit of the artificial valuation. It has taken an Irish Parliament to take away from Ireland the privilege which is given only to Ireland.
I hope the Minister will regard as significant an increase in the rate of taxation by seven times in the case of an estate valued at £10,000 in 1931. An increase without any increase in the rates takes place annually because of inflation, which it should be the Minister's first duty to combat. In so far as the Minister's policy is directed at saving and public expenditure this is the best he can be expected to do in our situation. A sum of £10,000 in 1931 is now equal to £46,000. If I take another figure, such as £1,000 with a rate of 4 per cent I will be told that it is free from duty.
I am very concerned with this Bill. I think insufficient thought has gone into it, though a great deal of thought did go into it. It is the insufficient consideration of the economic consequences of this that worries me most of all. I do not know how a Budget is made, and I wonder could the Minister tell us that in his reply. I know requests come in from various Departments. I am sure there are global estimates made of the flow of taxation, but has the Minister been specifically advised of the effect on our international credit of his raising the 40 per cent rate? Has the Minister considered—and I direct this question with particular emphasis— the position of an executor, or has he considered at all the position of the members of his own profession, or the profession he once practised with distinction? I will spend a good deal of my time trying to return him to his profession, without too much hope of success. I am sure he would return to it with a lighter heart than he has at the moment. Has the Minister considered the position whether it will be all that easy to get people to take up the job of executors?
If I understand the section correctly, the executor of an executor will be liable to a penalty. I am delighted to see that one horrid provision in the original Bill "the burden of proof with regard to fraud" has disappeared. I should like to say that it was pleasant to have observed in the records of the debates in Dáil Éireann that the scene ended in a series of mutual congratulations. Good and hard work was done by everyone concerned. Benefit was effected by the hard work, but not enough.
We will have a penal rate of 9 per cent. If my arithmetic is correct, and this often happens, this 9 per cent penal rate of estate duty in the case of an estate liable to surtax amounts to something in the order of 89 per cent taxation. It is non-allowable for income tax. I should like the Minister to make it clear to me whether it can be grossed up for allowance against surtax. If it is non-allowable in that way against surtax, it is a 79 per cent or an 89 per cent rate in regard to the effect of the interest on the income of the estate. We are dealing with human beings, to wit, executors; and other human beings, to wit, solicitors; and still more human beings, Revenue Commissioners; and we are dealing with the delays incumbent on collecting information.
This penal rate starts applying four months after a person's death. It would be better to die yourself than be faced with that situation. How could you go on holidays or make any plans if this appalling rate is to apply against an estate with beneficiaries quite capable of exacting their rights from you?
If you have a private company in an estate you cannot get probate out or pay your estate duty within four months. There may be some obscure provision of the Finance Act, 1894, or some amendment thereof which entitles you to pay a sum on account. If you are acting for an executor your duty is to get the lowest possible valuation on the share in question. Therefore, you do not pay a large sum because you are at once conceding the Revenue view as to what the value is.
If you have a private company, the situation has changed in the last two years, I think, where the administration of this aspect of the estate affairs has become deplorable and you are treated by people whose behaviour you can only describe as usurious. The request for information is unfair; the attitude entirely hostile. It is assumed, because you are administering a wealthy estate that you are a fair target for anything. These are the estates of people who have been saving in response to the Government's proper request that they should save. Four months is not nearly adequate.
Suppose I am a minority shareholder in a company and I or my executor is asked what is the value of my shares. I have to write to the secretary. He has to write to his auditors. I have got to get three years' accounts. They are not all dancing to my tune. I am absolutely dependent on them, but I am subject to a 9 per cent non-deductible interest rate. I know there is an interest rate at the present, but it is not 9 per cent.
I know this is radical. I have mentioned it before and I will probably be told it has never been discussed at international conferences of estate duty officials. I hope that the Minister, who is an honest man personally, will not simply give us when replying comparative rates for dependent children, if he deals with this aspect. Let the Minister remember that apart from the case of the child and the widow we still have legacy and succession duty here of from 5 per cent to 10 per cent. That has gone in Britain. I do not know what limitations there are on our ability to change our whole death duty system. I understand that there are difficulties arising because of our arrangements with the United Kingdom. We should find out what is the cost of all this and see who is benefiting from it. I would not be the second in this House to rush out to support a change if that was the position: I would be among the first.
This is a point that I think is worth making and people who are not burdened with the duties of my profession may not be at all aware of it. One of the reasons for delays in the administration of estates here is the survival of this legacy duty because you are faced with the obligation of producing this appalling thing, the residuary account, in which you have got to give an account of the whole performance to the Revenue. This is a very heavy task in modern offices where they are not equipped to do it and it does give rise to delays which are absolutely needless. I wonder how much money is coming in now from the 10 per cent and the 5 per cent. I would certainly recommend the Minister to consider that.
In relation to this whole affair, the provisions of the 1894 Act with regard to the valuation of estates was bad before this Bill was proposed. It now becomes terribly serious. Somebody dies leaving investments. I have got to repeat what I said at the beginning. I am not concerned particularly with people with money. The Minister is rightly encouraging people to save. If you save you cannot help having money. It is as simple as that. Then you are in the range of estate duty. Then I get interested, and I get interested because I think savings at all levels should be encouraged. You can have a volatile stock market, and I have known cases in which when the estate was valued at the time of the death the stock market was at its peak, and the realisations were effected by a damn fool when it was at its lowest and the beneficiaries got nothing.
Serious consideration should be given to an amendment of that. I see great difficulties but there should be some option to choose the most beneficial period, say, within six months prior to the death or something of that kind. There is already this consideration, that if you die at the week-end they can pick the Saturday, Sunday or Monday, whatever it is, but there should be some extended option here to protect an estate against disaster. If there is a 9 per cent rate this becomes gravely serious. There is no real defence to an executor if he lets an insolvent situation develop, is there? Maybe there is. I should like to be told about it.
I am sorry if I am holding up the time of the House rather longer than I had intended, but I feel I have got to say various things. I find it almost incomprehensible that the marriage exemption is effectively being abolished. I could not trace back this exemption to my own satisfaction. I do not find very coherent policy, looking at the legislation of the past 20 years or so, because some provisions seem to contradict other provisions in policy, but this exemption seemed to have been introduced as an amendment to section 2 of the Finance Act, 1894, by section 27 of the Finance Act, 1938. There was an amendment subsequent to that which was an understandable one and by which only beneficiaries or the persons within the marriage could benefit. You could not transfer a fund to your daughter with a view to passing it on to her sister. That seems sensible and fair enough.
I do know—and the Minister should consider this, and I should like him to note the year, because it is not a point in favour of my party—that in 1951 a man whose income was £10 million a year decided to come to live in Ireland. We raised the rates of death duties in the Finance Act, 1951. He decided not to come. Could you think of 40 per cent of an estate bringing in £10 million a year? I should think of the surtax and the income tax, but think of the benefactions which would have resulted from his choice and which did, in fact, result from the choice he finally made.
I know there is this question of the sense of justice throughout society and it is a difficult decision, but although it is possible for somebody to remind the Minister of something I said here in another debate—that I considered that the same amount could be got from a variation in the rates of duty—the 40 per cent rate should have stood fast. Allowances should have been increased and allowances should include more than those who are in fact allowed.
There are some provisions which are absent from this Bill and which I obviously cannot propose. I think we can propose recommendations. Is that not what we are allowed to do on the Finance Bill? However, I do not even intend to propose this as a recommendation but to make it. The Minister will find that there was a provision in the Finance Act, 1894, which was deleted by a subsequent amendment in favour of people who were described in the language of the time as common seamen and soldiers. There should be a complete exemption from death duties given to members of the Garda Síochána and the Army who die on active service. I would go further and say that we should have a negative death duty in their favour so that, if they leave a widow and four children, they will be given by the State a sum equivalent to what would have been exempt from duty if they died. I throw that to the Minister as a thought. He took one of my thoughts last year, which I hope he remembers. I was delighted to see the people with a domicile of origin different from the Irish domicile getting different treatment in certain circumstances. Perhaps I will postpone any other words I had on that until we get to the section.
Am I correct in thinking that the elimination of the tapering provisions means that in the fifth year the donor is worse here now than in Britain? If so, I would suggest that ought to be amended. We should not have any detail in which our taxation system is more severe than that in Britain. I would like the Minister to look at a section which in the original Bill deals with the marriage exemption and includes provision in favour of children. I do not think the language would take in step-children, adopted children or grandchildren. They could exist.
I also want to direct the Minister's attention to something which I have endeavoured to deal with in a Bill which I will probably be withdrawing, the Succession Bill, and that is a proposed amendment to the Finance Bill which gave certain people some worry as to whether it was appropriate to include it in the Succession Bill. This to me is very important. May I remind everybody that under the existing law of this country the only survivor of the original provisions with regard to exemptions on successive deaths was the provision in favour of the death of the surviving spouse with a limited interest. If a man dies and leaves a life interest to his wife duty did not have to be paid on her death. Effectively that is gone and gone accidentally. It is clearly not intended by the draftsman of the Succession Bill, 1965, but the Revenue Commissioners are holding, and I think are correct in their view as to the law, that she is now competent to dispose of what is her right to claim under the Succession Bill and if she dies, even though she may not have exercised her right to claim her share, having been given a life interest, duty is claimed by the Revenue Commissioners on her death.
I do not think that the draftsmen of the Succession Bill intended that at all. The Revenue Commissioners are probably right in their contention. It is a defect which has arisen accidentally and which the Minister could cure in this Bill. I drafted what I am sure is a very incompetent section on the matter which is to be found in the Succession Bill. If the Minister would be good enough to have a look at that he would remove a real misery because two deaths can occur very shortly after each other. These cases have arisen; this is not just academic talk. I have known one case where the surviving spouse died shortly after the death of her husband. On his death, although he had given her only a limited interest, there was duty claimed on her right to claim what she was entitled to under the Succession Bill. That was not intended. That makes our position much worse than the United Kingdom position. This is damaging to the family as a unit and it is the agreed policy of every party in this House to maintain that unit.
Taxation which is felt to be, whether or not it is, excessive leads on the one hand to extravagance, expense-account living, avoidance which is beneficial to some people but a complete waste of the energies of the people concerned, a complete distraction from what they ought to be doing. They ought to be assisting the State rather than devoting their minds and time to trying to save their clients taxation. It also leads and is leading, I am afraid, to a most corrupt and demoralising practice of evasion.
In relation to company taxation the point of diminishing returns has been reached. I would like the Minister to give us the figures of the flow of death duties in real terms, not in monetary terms, over the last ten years. He would be surprised at what he would discover has been the flow. I know that an increasing number of people are treating the affidavits of inland revenue as unnecessary oaths. For solicitors with any kind of conscience it is not just an embarrassment, you simply do not act if you know any facts that make you aware that these affidavits are incorrect. It is becoming increasingly difficult to convince people that they are not entitled to treat this as an unnecessary oath and not a binding one.
I would be in favour of attaching very severe penalties indeed to anybody who engaged in fraud or misrepresentation of any kind to the Revenue Commissioners. There is serious ground, in regard to the Christian traditions of our country and the importance that we ought to attach to calling God to witness that what we say is true, for asking the Government and the Revenue Commissioners to consider whether the whole system of affidavits ought not to be abolished? It is a frightful thing to think of people making false oaths as to their father's, or mother's or sister's estates. I can tell the Minister it is happening.
I earnestly ask the Minister to try and apply a policy, with our open society, to ensure that our rates of direct taxation are not higher here than in Great Britain.