Finance Bill, 1971 (Certified Money Bill): Second Stage.

Question proposed: "That the Bill be now read a Second Time."

In drawing up the Budget this year I recognise three interconnected problems confronting our economy. These are the steep upward movement of prices, the continuing large balance of payments deficit and the growth rate which falls appreciably short of that which could be achieved over the long term.

Prime emphasis was given in the Budget to the area most amenable to Government control, that is public expenditure. A determined effort was made to restrain the growth of the Current Budget in particular. Even though this involves a temporary slowing down in the rate of advance in social and infrastructural fields, it is unavoidable in our present economic situation if we are to check the upward trend in taxation as a percentage of GNP.

To ensure that the necessary control of expenditure succeeds in the prevailing inflationary trends evident in most western economies, the Government are making every endeavour to secure close adherence to the Budget estimates of expenditure. Also, as I indicated in my Financial Statement of April, in the longer term, increasing reliance will be placed on the systems of multi-annual and programme budgeting now being evolved.

Despite the difficult budgetary situation, however, it was found possible to share out over £9 million for improvements in agriculture, increases in social welfare payments and in pension rates as well as other eminently desirable schemes. As those and the methods of raising the necessary taxation to pay for them were widely discussed in the period since the Budget, I do not propose to dwell on them further at this point.

In order to close the gap created by these additional reliefs and improvements, it was necessary to raise some £9 million in extra taxation. The main taxation measure was the abolition of the reduced rate of income tax on the first £100 of taxable income. The additional burden placed on individual taxpayers by virtue of this measure— section 2 of the Bill refers—is by no means high; at most, it is less than £12 a year. However, it will be less in many cases where taxpayers have taxable incomes of under £100.

Furthermore, as I am providing in section 6 for an increase of £25 in the minimum earned income relief, with commensurate increases under sections 7 and 8 in the "age allowance" and "small income relief", many taxpayers on lower incomes will actually pay less tax than they did last year, while some 20,000 will be removed completely from the net. The net gain to the Exchequer is estimated at £5 million in the current year and £5.5 million in a full year. In addition, an extra £2 million will be raised this year from the increases provided under sections 27 and 28 in the duties on beer and spirits.

The action I am proposing in the tax field, taken in the special circumstances that currently exist, was made necessary by the urgent need to finance essential public services and to avoid exacerbating the problems of rising prices and slow economic growth.

In a special effort to improve our growth position, I am making provision in section 26, to extend free depreciation to the whole country, so that, if a taxpayer wishes, he may write off the full cost incurred on acquiring new plant and machinery that is brought into use between 1st April, 1971 and 31st March, 1973. If the asset is not brought into use between those dates, the enhanced initial allowance of 60 per cent will, by virtue of section 13, apply instead to capital expenditure incurred within that period. To preserve the comparative advantage of the designated areas, where free depreciation already applies, I am providing in sections 22 to 25 for a special 20 per cent investment allowance, so that up to 120 per cent of the cost incurred in acquiring new machinery and plant, for use in those areas, may be written off in the first year. As in the case of the 60 per cent initial allowance, the investment allowance will be operative for two years up to 31st March, 1973. These reliefs, which will cost about £3 million in 1972-73 and about £6 million in 1973-74, should prove to be most effective as an immediate inducement to further investment by our industries.

Industrialists will also benefit from the enhanced industrial buildings allowance of 20 per cent which is extended under section 14 for a further two years up to 31st March, 1973. Section 5 treats as a business expense the cost incurred in obtaining for the purposes of a trade, the registration, or the renewal of registration, of a trade mark; and, under section 45, the exemption from corporation profits tax of certain public utility companies, building societies and the Agricultural Credit Corporation is extended for another year.

Certain cases where hardship might be involved are also provided for in the Bill: section 9 extends the `housekeeper allowance" to an unmarried mother who is working full-time and undertakes the care of her child; section 10 increases the income limit of a dependent relative, for the purposes of the dependent relative allowance, to £243 which is the annual equivalent of the non-contributory old age pension; section 11 provides a new allowance of £100 for a blind person and of £200 where husband and wife are both blind; section 12 enables social welfare contributions in respect of the new death grants and retirement pensions to be deducted for income tax purposes; and section 15 ensures that the exemption from tax of a registered trade union's investment income which is applied solely for the purpose of provident benefits for its members will be preserved where the union pay an annuity up to £350 a year.

It is clearly very desirable that there should be broad acceptance in the community of the equity of the overall taxation structure and this will not exist if there is a general feeling that tax is being easily avoided or evaded. In this regard, I would remind the House that provision was made in section 6 of the Finance Act, 1968, requiring a person who is chargeable under Schedule D on the profits of a trade, profession or other activity to keep records to enable him to make a true return of income and to retain the records for a period of six years. The impact of this legislation was not felt until the Revenue Commissioners began making assessments of liability for the year 1970-71. In later years it is expected that this provision will become even more important as a means of preventing avoidance or evasion in this sector.

Some degree of avoidance and evasion of most forms of taxation is, probably, inevitable but it is our duty to ensure that it is kept to the lowest possible level. Senators are no doubt aware of the many provisions included in the Finance Act, 1970, to combat avoidance and evasion of income tax and death duties. Many of the provisions contained in this year's Bill that I now propose to review are also designed to counter other methods of avoidance and evasion that have come to light.

Section 3 ensures that, if on the cessation of a trade or profession in 1972-73 or a later year, the actual profits in the two years preceding the year of cessation are greater than the profits charged in those two years, the actual profits will be brought into charge instead. Foreign income of an Irish resident which is not actually remitted here but is applied abroad instead to repay a loan made on or after Budget day is brought into charge under section 4, and in the case of income settled by a parent on his child section 16 ends an avoidance device related to the year of birth.

Section 17 contains provisions designed to improve collection in 1971-72 to the extent of £2 million, making it unprofitable for taxpayers to leave tax unpaid for more than two months. If they do so, the rate of interest on unpaid tax will be 9 per cent per annum. Furthermore, a taxpayer will no longer be allowed an interest-free period up to the time an appeal he has made is finally determined, unless he has made an agreed payment, or a payment which, while not agreed, proves to be not less than 80 per cent of the tax involved, within two months from the due date and pays any balance owing within two months of the determination of the appeal. I should point out, however, that in either case, where too much tax has been paid, repayments of tax will, under section 18, carry interest at the rate applicable to overdue tax.

Section 19 requires tax due in accordance with a determination of the Appeal Commissioners to be paid pending the re-hearing of the appeal by the circuit court. If, as a result of the re-hearing, tax is found to have been overpaid, repayment under conditions similar to those in section 18 will, of course, be made.

Sections 17 to 19 will come into effect on the passing of the Act.

Where tax was undercharged because of fraud or neglect, section 20 enables interest to be charged at the rate of 9 per cent, from the date the tax ought to have been paid. The section will not, however, affect tax chargeable for any year of assessment prior to 1971-72.

Section 21 makes it clear that local authorities, housing associations, housing trusts or housing societies are obliged to operate the scheme of deduction of tax from payments made under construction contracts to sub-contractors since the scheme came into operation on 6th April, 1971. The section also imposes a 1 per cent rate of interest for each month during which tax deducted from subcontractors after the passing of the Act is not remitted to the Revenue. This is the same rate as applies to unremitted PAYE, turnover tax and wholesale tax.

Section 29 of the Bill contains a technical provision designed to facilitate speedy clearance of passengers through customs, and section 52 increases the excise duty payable by dealers in ammunition for "sporting" guns from £1 to £3 and, in the case of other firearms dealers, from £1 to £25. This latter provision is intended to facilitate the tightening up of the general control on firearms in the Firearms Act, 1971, which was recently before the House.

Part III of the Bill deals with death duties. Section 30 is a technical provision designed to remove doubt in relation to the expression "death duties".

Apart from death duties, there is virtually no tax at present in this country on the possession of assets. Death duties, therefore, serve an important social function of helping to accelerate the redistribution of wealth throughout the community. Their role in this field has not been particularly striking due in large measure, I believe, to avoidance and evasionary devices. Part III of the Bill contains a number of provisions to counter these devices.

In line with the rate proposed under section 17 in respect of unpaid income tax, section 32 provides, with effect from the expiration of four months from the passing of the Bill, for an increase to 9 per cent in the rate of interest on death duties due. This section also provides, for the first time, an interest-free period, namely, four months from the date of death, in respect of estate duty on personal property. Section 33 is to prevent loss of revenue by ensuring that, in addition to the executor, trustees, beneficiaries, surviving joint tenants and present owners will be accountable for estate duty in respect of property vested in them of which the deceased was competent to dispose.

Section 34 is designed to prevent avoidance of duty through the exemption for objects of national, scientific, historic or artistic interest. Section 35 tackles the device known as "grant and lease back" by bringing into charge to estate duty the entire property disposed of other than an interest in property determinable by reference to death. Private companies are a particularly useful vehicle for estate duty avoidance and section 36 contains further provisions aimed at making them less attractive for this purpose. Section 37 prevents avoidance of estate duty by devices involving the purchase of land outside the State and section 40 restricts artificial valuation of agricultural land to cases where the land is not sold within six years of the death or date of the gift. Section 38 abolishes the reduction in the value for duty of gifts made in the third, fourth and fifth years before death.

Section 41 restricts the existing exemption from estate duty of gifts made in consideration of marriage to the first £5,000 of such a gift made by a parent or remoter ancestor to a child or remoter descendant and by one party to a marriage to the other party; and the first £1,000 of a gift made by any other person in consideration of marriage will likewise be exempt from estate duty. As the bulk of gifts made in consideration of marriage—and these in three recent years have averaged 81 a year—do not exceed £5,000, I consider that the exemptions I have mentioned, together with the total exemption for all gifts made earlier than five years before the date of death, will relieve any possible cases of hardship.

Many people have expressed particular concern for the position of the farming community in relation to the proposed charge. The facts, however, are that, because of the generous reliefs available, especially in respect of agricultural land, the number of estates owned by farmers on which duty was payable in recent years was small; it was, on average, in three recent years less than 100 a year. These figures speak for themselves. The only farmers coming within the estate duty net are, in effect, the more affluent with large estates.

Section 31 increases the rates of estate duty on estates over £55,000 as announced in the Budget, so that our maximum rate will be 55 per cent. This is relatively low, however, by comparison with other countries and, with the increased abatements of £1,500 for a widow and £750 for each dependent child now proposed in section 39, the effective rates of duty on estates in any range passing to a widow, whether or not with dependent children, will be much lower than, for example, the corresponding effective rates prevailing in Britain.

This Bill aims at the preservation of equity within the taxation system and it is designed, as well, to promote economic progress. I commend the Bill to the House for a Second Reading.

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.

Unlike Senator FitzGerald, who has a great knowledge of estate duty and tax provisions, I shall be brief in my comments.

First of all, I should like to welcome some provisions of the Bill which are, I think, very good. One is the relief in the case of the blind. I would urge the Minister at some future date to consider including what one might regard as other helpless categories. I welcome the new provisions which are intended to prevent the avoidance of tax or tax evasion. I also welcome the Minister's reference in his opening speech to his aim to curtail as far as possible the upward movement of prices and to curb inflation.

On the question of estate duties, I should like to refer briefly to a couple of points. One is that tax interest chargeable against an estate is not allowable against income to that estate. It seems to me that at some stage the Minister might consider this because it is not always possible for executors to provide the money to cover the tax immediately if the person who has died has not made this provision. It can take quite a time to get an estate into a liquid situation.

Another point, which I think I raised previously in a different way, is that people who are not familiar with the principles of valuation of estates think that when estate duty is being assessed it is not chargeable on the first £5,000 if the estate exceeds £5,000. At some stage consideration should be given to the question of the tax on the first £5,000 where the estate goes to a not very high figure such as £10,000, £15,000 or £20,000. If an estate goes to say, £15,000, the 10 per cent on the first £5,000 is substantial. At some stage the Minister and his advisers might look at that question.

Another matter which makes people anxious is that of double deaths, that is, two deaths occurring in quick succession. This is not very important where the people concerned are pretty well off, but it can be important where small businesses or small family concerns are involved and double duty has to be paid because of two deaths. Last autumn I referred on the Appropriation Accounts to the rate of tax. I do not want to go too deeply into the matter of taxation; it is death duty in which I am interested. The present overall rate of tax is 58 per cent. From my experience, there is a disincentive effect in taxing over some figure, I do not know if anyone can say what the percentage figure is, but it is certainly above 50 per cent. The point I am putting is not in relation to people making money, what we call capitalism. It is in relation to the effect on the economy, to the effect on growth, to the effect on industry and the provision of work for people.

The great danger of a high level of taxation in a competitive economy like ours is that carelessness will creep in with regard to expenses. The attitude develops fairly quickly and people will say "Why bother about a couple of hundred extra, after all, there is only £42 on it in a year". I am not referring only to expense accounts but to the whole profit situation in an industry or business in which one has to take decisions at the end of the year. Any businessman will say: "Why make all this effort if there is only £40 less to the shareholders or to the company or to the industry out of each £100"? What is left over is very significant in relation to expansion.

I should like to welcome in particular the provisions under section 29 which refer to easier facilities for people coming through customs. This is a practice which has developed in other countries and it is one from which we could benefit here. I know that customs officials try to be as courteous as possible to tourists and one does not like to complain about them. Nevertheless, in one of the voluntary capacities in which I operate I get complaints from time to time. This provision means that if you have nothing to declare you go one way; if you have something to declare you go another way. It will certainly avoid harm to the tourist industry here.

Finally, I should like to ask the Minister if he has any further information on the provision of duty-free goods on ships and aircraft between here and Britain? In our present tourist situation the provision of such a concession could be very useful. We are competing in the tourist industry with lower-cost countries such as Spain and with countries such as France who are, from the point of view of travel costs, nearer to Great Britain. Those countries provide duty-free goods for British people travelling to any European port. I am interested to know if any progress has been made in securing an agreement to provide similar facilities between Ireland and Britain. This facility also extends to Irish people travelling from Ireland to European countries.

Like Senator Brugha, I hope to be reasonably brief. I should like to welcome the reliefs outlined in the Finance Bill. Reliefs are always welcome in any Finance Bill and for this reason this year's Finance Bill is welcome. The Minister, at the conclusion of his remarks, summed up the aims of the Finance Bill. He said it was aimed at the preservation of equity in the taxation system and was intended to promote economic progress. Those are both very desirable objectives. We must admit that the Minister has gone some way towards preserving equity in the taxation system although there are a number of sections in the Bill which will call for more critical analysis on the Committee Stage. I do not propose to deal with them in detail at this stage.

Any Minister for Finance must come up against a number of difficulties. Obviously, he has to cut his cloth according to the national measure. He is under a number of pressures from various sources prior to the Budget and during the course of the Budget debates in the Dáil and Seanad. He has to resist these pressures to the best of his ability when he feels they are unsound or that the country's resources will not allow for their introduction. Furthermore, he has, in the natural order of justice, to provide something each year for the less-privileged sections of our society. This is a provision with which, I am sure, every Member of the House will agree.

If we have any criticism in this regard it is that the less-favoured of our people are not adequately provided for. Every mite they get in the Budget seems to be eroded in the ensuing 12 months by continuing inflation. By the time it comes round to the same Minister, or possibly another Minister, to provide a measure of justice to the lowest 10 per cent, he finds that the pittance he is in a position to hand out barely covers the inflation that has occurred in the preceding 12 months and almost certainly will not cover the inflation to come.

Notwithstanding the remarks, admonitions and advice of various Ministers for Finance and many other figures in the financial and economic sphere, inflation is here to stay. I am not an economist and I hope I am proved wrong in this, but I do not see any hope whatever, on present indications, of containing inflation to any appreciable degree. During the last three years inflation has averaged around 8 per cent to 10 per cent annually. If the Minister this year, succeeds in arresting inflation he will have achieved a very remarkable victory indeed. I call it a victory because I do not see how he can possibly do so.

In framing his Budget this year the Minister had to take account of other considerations besides those of equity and the necessity to promote economic growth. He was very concerned that his Budget would not, in any way, rock the boat of the National Wage Agreement concluded by employers and employees. This, naturally, restricted his freedom of action. It is obvious from the content of his Budget and from the content of the Finance Bill that the Minister has kept this factor very much in the forefront. He realised that anything that might increase prices would tend to wreck the National Wage Agreement on which, quite rightly in the Minister's view, the future stability of the economy and hopes of growth largely rested. By curtailing direct taxation to a very limited range of spirits the Minister has largely achieved his objective in this regard.

With regard to the Minister's aims to promote growth, I regret to say that I cannot share the enthusiasm or hopes of the Minister as outlined in his remarks. The private sector is still and will continue to be, the sector which provides the greatest economic growth. I do not think we can hope for economic growth in any degree while we have the present level of company taxation. It is very encouraging that the Minister has given an extra £3 million or £4 million to the Industrial Development Authority. Provided this money is spent on viable projects it should assist economic growth through industrial development. However, in the final analysis growth must be financed from capital retained by industry and companies in general. Under our present level of taxation it is futile to think that companies can retain sufficient funds to provide for their capital requirements.

Looking through some of the publications issued by the Confederation of Irish Industries from time to time, the first six months of this year would seem to indicate that companies are retaining less and less of their profits due to the high level of taxation. It might be asked: "Why do they not cut dividends to shareholders? I suppose this would be an obvious thing to do, to cut the dividends of the shareholders and give more taxation to the Government. However, everybody would agree that that would be a very negative and shortsighted policy. If we do not reward shareholders in this country as they are rewarded by companies outside the country, capital, which is quite free to flow out of this country, will flow into industrial and other developments outside our shores. This would be a most unwelcome development. If we are to encourage investment in Irish industry, we must offer the Irish investing public a reasonable rate of return, at least a rate of return comparable to what they would get in Great Britain, which is the nearest country in which Irish people invest.

This year there was a very serious obligation on the Minister for Finance to do something practical and concrete about reducing company taxation. He has done nothing about it. At present nearly 60 per cent of the profits of a company must be paid over to the Government in taxation. That is far too high a rate for a developing country such as ours that needs to invest every possible pound that can be saved, after having made reasonable provision for maintenance of the factory or business and giving a fair return to its shareholders. The Minister made a disastrous decision last October. It was one that I had hoped he might have put right in his Budget, but he has not done so. All we, in the Seanad, can do is to criticise it. Irrespective of our party affiliations, we all respect the fact that you cannot make a profit unless you plough back a substantial proportion of the earned profits into the company or industry.

I should like to pay the Minister a tribute in regard to one welcome section in the Bill which extends the free depreciation allowance to the entire country. Of course, it gives an extra 20 per cent to industries located in designated areas. Nevertheless, it is a welcome development. My only regret is that the Minister has not seen fit to bring it into effect in the current financial year. It will not come into effect until 1st April, 1972. If it had come in this year it would have given considerable benefit to companies suffering severe liquidity problems. There are a number of such companies in the country at present. The Minister has paid for more than half the £9 million that he requires for the benefits in his Budget by the abolition of the relief in respect of the first £100 of taxable income. That will not hit the wealthy as much as the wage-earners, who are least able to pay it. The Minister estimates that in the current year he will get £5 million from the abolition of this relief, and in a full year £5½ million. The Minister might have found some other source from which to get the substantial portion of the money that he requires.

There are some sections of the Bill at which I hope, as Senator FitzGerald has said, the Minister will have another look. These strike me as being unfair for the reason that it is now possible for the Revenue Commissioners to issue to a company or companies, on 1st January each year, an estimate of their profits in the preceding tax year, and to demand, at the end of two months, 80 per cent of the payment which the Revenue Commissioners estimate are grossly understaffed at present and are unable to deal with claims. Therefore, it appears to be most unfair that an individual or a company can be liable to taxation, through no fault of their own, but because the necessary machinery to deal with claims is not available in the offices of the Revenue Commissioners. This is a matter that should be looked into. Before this tightening up of the net is implemented, making it easier to collect tax, the staffs in the the Revenue Commissioners offices throughout the State should be put in a position that they can deal expeditiously with taxation claims. The same criticism can be applied to the Estate Duty Office. I understand that they are grossly understaffed, are short of expert help and are not in a position to deal with schedules for estates which are presented to them.

All these factors should have been examined by the Minister before any revision of taxation was brought about to expedite the payment of tax. Nobody can cavil at the Minister wanting to get legitimate taxation in quickly, and he has certainly done everything he can to assure that. At the same time, there is a measure of justice due to the taxpayers. If the necessary staffs are not available, either in the Revenue Commissioners' offices or in the Estate Duty office, it is a matter that should be looked into first, before the introduction of these more speedy methods of collecting tax.

After the failure of the other House to influence the Minister in regard to company taxation, I suppose that this House cannot have any view. From time to time we have evolved a system of mini-Budgets in between the normal Budgets. Every Budget has been introduced for the purpose of increasing either personal taxation or company taxation. I should like to suggest to the Minister that the time has come to introduce a mini-Budget that, instead of increasing taxation, would reduce taxation. A start could be made on the next mini-Budget by reducing company taxation to an equable level. We in this country cannot hope to compete with Great Britain or other countries in the era of free trade, which is rapidly approaching, unless our industry is equipped to compete in the very competitive field of industrial exports. We cannot hope to do it, unless we keep our industry in trim and keep our machinery up to scratch and replace it. Anybody with a practical knowledge of industry will know that nowadays machinery depreciates and becomes obsolescent at a far greater rate than even a few years ago. There is, therefore, a greater need now to have capital available to purchase new machinery in order to remain in the rat race which exists in industry. I should like the Minister to consider it very strongly and I should like him, in his reply, to tell this House how he hopes the Budget which he produced and the Finance Bill which is before us now will promote growth while at the same time asking industry to carry the present high level of company taxation? I should like to reserve any further remarks I have on this for the Committee Stage of this Bill.

As the old style preachers used to say, I should like to take as my text a remark made by Joseph Charleton in an article which he wrote in the Irish Press of 7th June, 1971, when he reviewed this Finance Bill. He said:

It cannot be too strongly or too often emphasised that tax legislation deserves the widest possible coverage and examination while it is being enacted, and that for a number of reasons our system of democracy fails the public badly on this score.

I very much sympathise with that point of view. I should like to say a little about what I think the reasons for this may be. First of all, I think some of the reasons lie in the complexity of the legislation. I sympathise with much of what Senator Alexis FitzGerald had to say. The time has long passed when our tax legislation should really be simplified, if at all possible, and made more intelligent. The more difficult and complex taxation becomes, in many ways it becomes easier for people to find loopholes and methods of evasion.

It is a valid point to make that it is undesirable that because of its technicality and complexity it should be so difficult for Parliament to exercise proper and adequate scrutiny of the legislation with the time, the facilities and expertise available to parliamentarians. This point should be borne in mind by the committee looking at the procedures of the Dáil because there may be something to be said for having a committee or some special procedure to deal with tax legislation of the kind before us so that it may receive adequate scrutiny.

One of the reasons for lack of interest in discussing and considering legislation of this kind is that it looks so dull. It is unfortunate in this regard that when the legislation is introduced by the Ministers it sounds so dull. After all, if the Budget and our taxation legislation means anything at all it should be the absolute core of government. It is the machinery whereby we change society by bringing about social reform. To the politician nothing should be of greater interest and importance.

In his opening speech on this debate the Minister referred to some points of philosophy in his thinking in this legislation. He made the point that it is clearly very desirable that there should be broad acceptance in the community of the equity of the overall taxation structure and that there should not be a feeling that tax is being easily evaded. He made another philosophical point in regard to death duties which, in his view, served an important social function of helping to accelerate the redistribution of wealth throughout the community.

The Minister by making those points, recognised the importance of taxation legislation in the reshaping of society. I should like to stress the point of redistribution of income and to say that at a time when so many socialists are disagreeing about what socialism means and so many republicans are disagreeing about republicanism, at great cost to our community, they both should take a hard look at the idea of egalitarianism. This is an idea which might be grasped more clearly by both socialists and republicans and also it is an idea which one can use as an objective in many areas of legislation. Most people have a clear and practical idea about what equality of opportunity should mean in a society.

I feel that egalitarianism cannot be achieved or approached by piecemeal reform and adjustment. If one is regarding taxation legislation as a means of advancing towards an egalitarian society the type of piecemeal adjustment which we see in this piece of legislation will not bring us very far along the line. I do not think that one can make much progress towards egalitarianism simply by listening to hard cases. It is extremely difficult to distinguish the genuine hard case from the bogus hard case. Whilst I welcome, as other Senators have welcomed, the special provisions made in this legislation for the blind people and unmarried mothers, I should have welcomed it all the more if I had had a real feeling that efforts had been made to assess the relative merits of dealing with the particular needs of these undoubtedly hard cases in relation to the many other hard cases in our society.

There is a great need for research in the whole field of advancing towards egalitarianism in society and in this particular case of research into how taxation legislation can help or hinder the advance towards egalitarianism. Just as Senator FitzGerald was, by implication, calling on the Revenue Commissioners and other advisers of the Minister, when framing legislation, to listen to what people in the legal field and in the field of tax consultancy might have to say, I should hope that the people advising the Minister regarding taxation would also have a major interest in social research.

There is a great need for research into the prevalence of poverty in our community and where exactly it may lie. I often feel that the real poverty may be in some of the classes that are hit most hard by taxation legislation of the type we are dealing with at the moment, namely, what are loosely called the middle class who are working hard trying to save and provide for their families, legitimately aspiring to leave behind them some property. When we are looking at a particular clause in a Bill such as we have before us now, it is difficult to know what are the social implications of that particular section for people of the kind to which I refer.

I should like the Minister and his Department and advisers to present much more information in this field. We need to know if we are looking at the economy as a whole and our social pattern as a whole. We accept that there is a housing problem. It is important to know how any taxation on legacies may affect the provision of housing for the young people in that family. It may well be that a small taxation return would have nothing like the benefit of the family retaining income which they were able to pass on to help in the housing of a new generation, housing which might otherwise have to be provided by the State and would be a drain on the economy.

When we wish to bring about a social change and want to deal with underprivileged cases, we tend to think it is simply a matter of redistributing income, or getting tax revenue from somewhere and applying it for these necessitous cases. I would feel hat i research of the kind we have been talking about was carried out, one might find—I am putting this forward as a hypothesis—that there might be a big gain to the economy if the average family size in Ireland was smaller than at present.

I understand we have an unusual population structure in our society. There are large numbers of very young people and very old people and not a very large salaried group. This might be one of the ways in which we could gain a much fairer redistribution of income in our economy and a much better balance—if we could achieve in our community a better distribution of family size.

This might be a more acceptable method of dealing with some of the ills in our society than saying we must tax Peter to help Paul. I would urge on the Minister and the Government, particularly at a time of financial stringency, that some of the resources should go into much more research into the social structure of our society, so that when money becomes available it will help to give a better distribution of resources in our society so that ad hoc decisions will not be made. The decisions should be made on a proper understanding of our society and how its resources may best be used.

Critics often tend to sneer at Governments who produce White Papers or Green Papers and say that is an excuse for inaction. That sort of criticism should be ignored; the investment in research, in the long run, must make a major contribution to our society and, even by promoting discussion, may well have a value in its own right at a time when it is not possible to implement proposals which may emerge. Next year I do not expect to hear the Minister for Finance giving a philosophical analysis of the structure of our society when introducing his Budget or the Finance Bill, because I realise that this type of work takes time. I am stressing its importance and I hope the day will come when we will have a major radical re-examination of our taxation system, of equality in our society.

The associated banks send round useful comments to Members of the Oireachtas. In their issue of Money Matters No. 3, May, 1971, they made a point about the political context in which the Government must operate. I quote:

The sharp political exchange over the decision to remove unemployment benefits for certain classes of single men during the summer months demonstrates only too clearly the constraints under which the Government must operate in attempting to moderate its own expenditure and so reduce inflationary pressures.

I am fully aware of these pressures on the Government and I applaud the efforts which they have made to control their expenditure and inflation and back the National Wage Agreement. These are the priorities of this time. Pressures will continue to be made vocal whenever there is a cut-back, and there is a constant tendency in a developing society for people to ask for more. In my view one of the things which may help the Minister to keep the Government within their constraints is, if, in some areas which are directly under their control, the Government might display some of this impetuosity which I am criticising in the community—for example, in the area of price control and investigations into restrictive practices etc.

We have had a great deal of evidence that proposals are forthcoming in this field. I think I am right in saying that in the community there is still the feeling that review of our price control machinery is not properly under way, that decisions are not being made quickly enough and that certain areas of income earning in the community— the professions, for example—where investigations and assessments have been promised, still have not got under way. I would urge on the Minister that it might help the public to understand what the Government are trying to achieve and to appreciate that their interests in the inflationary spiral were being looked after if there was a definite sign of action in this field of price control and investigation of restrictive practices. It may be a lack of public relations. There may be important work taking place in these fields which has not been communicated to the public. Again, if that is the case, I would urge an improvement in the public relations concerned.

I spoke earlier about the need for social research and particularly investigation into the area of poverty. If one looks at the Third Programme for Economic and Social Development, it is often depressing to see the number of reports and investigations which seem to be left pending. In the type of area I was speaking about, in the Minister's absence, there are a number of investigations which seem to be on hand in the Department of Social Welfare. These investigations will probably lead to a White Paper on the whole area of assistance. That is a field, too, where the publication of the facts, a sign of new ideas, would help to build up the type of climate in our society which I am anxious to see: a climate which the community appreciates the general objectives of the Government's budgetary taxation policy, a policy which should be aimed towards egalitarianiam in our society.

I am not an expert in the specific fields of taxation legislation but, as I began with a text from the Irish Press columnist Joseph Charleton, I should like to end with another one, which again seems to me to speak plenty of good sense, that was when he wrote in the Irish Press on 19th April, 1971, asking the question “What would wealth tax replace”? His answer to that question is in that article. I do not know if the Revenue Commissioners are readers of the Irish Press but I would urge that they would have a look at the suggestions which Joseph Charleton makes in that particular article.

As soon as one talks about an area such as wealth tax one is often accused of being in some way anti-entrepreneurial, that in some way one is calling for taxation which will just sap the energy of our creative industrialists. That is not my intention. My interest and belief in egalitarianism is not based on hatred or jealousy. It is based on a simple sense of justice. I believe that entrepreneurs recognise the importance of justice in society; and if they appreciate what is being done, if at times the taxation on them may be severe, provided they are clear about the direction in which society is going, I believe they, as much as any one else, are prepared to contribute their bit towards the creation of a better community.

I have read the case the Minister made in the Dáil concerning the provisions in regard to marriage gifts of land and I feel that the Minister, as a city-based person, has failed to appreciate the difficulties facing the young farmers of today. The Minister said today that over the past three years the average of estates paying death duties was nearly 100. I should like to ask the Minister if he would not agree that land prices have appreciated considerably over the last three years. In the quite recent past I have seen in the public Press where a farm of 150 acres was sold at somewhere in the region of £170,000. This immediately puts farming out of the grasp of many people. With present day agricultural profit margins I wonder why people waste capital of those proportions. Are they doing the right thing by investing it in land?

The Minister for Finance is the appropriate person to take action. At present Irish agriculture is starved for capital and finance. If we expect to see the agricultural community prosper and flourish, it is very necessary that a big injection of capital, of the proportion of at least £100 million, should be made available to the agricultural sector. This can be done very easily through the aegis of the ACC. At present it is not possible for a farmer or a farmer's son, no matter how well equipped he is to handle a farm, to raise a loan in order to purchase an adjoining farm or any farm for that matter. We have the extraordinary situation now where farmers with perhaps a few thousand pounds to their credit and perhaps with many more thousand pounds worth of assets are not able to raise, on the strength of all that, the sum required to buy an additional piece of land in order to make their holdings more viable, or, indeed, in order to set up one of their sons in the same profession.

The Minister in this Budget is discouraging farmers to hand over land to their sons. When you realise that so many of our farmers are in the higher age group, it is a pity that younger men, the heirs apparent, are not encouraged to develop their holdings. This is a very difficult situation. They have not got a full say. This "age gap" on the land is very noticeable in some parts of the country, where you see people making no effort to specialise in any line of farming.

We are told that agriculture is the major industry in this country, but the Government are making no effort to encourage the farming community to equip themselves and to think in terms of competition under EEC. conditions. The Government must, as a matter of urgency, do something to help the farming community. A point of major importance is the changing of some of the functions of the Land Commission. It is quite common nowadays to hear people advocating the abolition of this body, which I think has done a reasonable amount of work over the years since it was established in the 1920s. The eve of our entry into the EEC would be the wrong time to disband this body.

We need to look at the various legislation which govern the Land Acts. With the high prices that land is commanding and the prospect that these prices will go still higher, the time has come when, if we are to ensure that the number of viable holdings in the country will increase, the Government might very well look at the position in regard to leasing land. One of the more attractive sections of the Land Act, 1963, was the section whereby it was proposed to offer pensions to elderly or incapacitated farmers in order to encourage them to hand over their holdings to the Land Commission, perhaps for distribution to neighbours. This idea has flopped completely. The Land Commission have had, in all, only ten or 12 applications in the entire 26 Counties. The idea here was a wonderful one and the Government should try something similar again. I would like to see the Government bringing in an amendment to the Land Acts whereby it would be possible for elderly or incapacitated land holders to lease their land for a five, ten or fifteen year period. The advantages this would have over the ordinary 11-month conacre letting would be this: the conacre 11-months system tends to run down a holding, because the man who will pay £30 or £40 an acre will endeavour to get the maximum profits he can out of it for the least possible expenditure and will not be so terribly interested in keeping the quality and the fertility of the soil very high. Therefore, if we had amending legislation on the lines I suggest, we could maintain the optimum output from our land and, at the same time, attain the objective of the section of the Land Act, 1963, to which I referred.

By this method of leasing we could even control the type of person to whom it would be possible to lease land. In this way we could very well take care of people other than farmers who would be endeavouring to speculate in land deals. The Government have an onus on them to ensure that the Land Commission are properly equipped. The price of agricultural land here is far less than the EEC price and when we go into the EEC this situation would attract to our shores people intent on buying up large tracts of Irish agricultural land. Unless the Government want to see another land war—indeed there are sporadic incidents throughout the Republic where people are getting quite determined in specific holdings—the Minister has an obligation to ensure that this does not happen. I cannot claim to be an expert on finance, nor do I wish to tell the Minister how to run his Department, but one way of dealing with this which would give our young farmers an opportunity to compete a little more fairly with outsiders would be for the Minister to make available to the ACC sufficient funds to enable them to advance to suitable farming applicants —I would also include in this category farmers and farm workers who had served their apprenticeship under the agricultural apprenticeship scheme— long-term loans for the purchase of land. Any viable holding, that is a holding of over 60 acres, is fetching from £60,000 to £100,000, especially in the midlands. This amount of money is not very easily had. It is a pity that if a farmer wants to extend or buy a holding, he has to employ so much of his capital instead of utilising more of it for the day to day running and stocking of his holding.

An Leas-Chathaoirleach

The Senator is talking about the control of land purchase and land use by methods other than those which would be appropriate to a Finance Bill.

I was just trying to make the point as we will not have another opportunity this year. The Minister for Agriculture has only been in the House once in the past 12 months.

An Leas-Chathaoirleach

This is a plea of guilty, I take it?

I merely wish to make the plea that the ACC might come to the rescue of Irish farmers. In section 41 of this Bill the Minister proposes to make farms liable to death duties. I know it is popular to say you are taxing people who would appear to be very wealthy, but I have seen in my own country farms of between 300 and 400 acres being hit for estate duties, not only once but twice in three or four years. This drives these old traditional families to the wall. Contrary to popular belief, all these large farmholders are not aliens. They have long and historical roots in the country. Reading through the Dáil debates I was disappointed that the Minister had taken such a hard line on this particular item. As this section has got a large amount of publicity throughout the country over the past few weeks, I hope the Minister will have second thoughts and perhaps will accept some amendments in this House.

The figures inserted in section 41 do not represent a tremendous concession because, as I have said, a very modest holding now fetches £20,000. I remember that in 1958 the Government had a survey of Irish agriculture carried out by a man called Gilmore from the United States. Even though these figures are now outdated, the proportions are still true. I hope that a similar survey, taking into account present prices, might be carried out in the near future, so that we could have a fresh appraisal of the value of the assets the landowning community hold and, at the same time, have an assessment of the amount of ready cash this large and much maligned section of the community have at their disposal in these pressing and rather difficult years.

In the Budget, or subsequently, the Minister gave an increase to many farmers of one old penny per gallon. I should like to ask the Minister if the Government are so completely bankrupt that it is not possible to pay even an old penny per gallon for milk delivered to creameries all in one piece. One would need to be in the area of higher education to know exactly what the price of milk is now. To make out the price would require at least a page of foolscap. What amazes me about this latest price increase—for which we are all grateful because half a loaf is better than no bread—is why on earth the Minister must pay one old penny in instalments. The proposal is that four-tenths of a penny should be paid now and six-tenths paid in a lump sum before Christmas. It could be that the Minister anticipates a general election in or about that time and thinks that it is a good idea to give these farmers a lump sum at that time. Perhaps he would be kind enough to enlighten me as to why it is necessary to make it so extraordinarily difficult for the ordinary farmer to understand the price of milk.

Business suspended at 6 p.m. and resumed at 7.30 p.m.

This Finance Bill is paranoic in its obsession with tax evasion. While the Minister could, perhaps, make a case for the 50 per cent increase in the interest rate on unpaid taxes in section 17 of the Bill, that might be all right. I would not feel that the odd person who might leave his money invested would be able to collect a higher rate of interest than the one charged by the Minister. I do not think that we should worry about this section.

In section 32 there is a completely different case and the Minister and his advisers have by this section imposed a penal clause. The rate of interest on unpaid taxes and unpaid estate and death duties is increased to nine per cent and this is most unfair. Surely the Minister is aware that, where assets are frozen pending probate and where any cumulative interest is earned, the interest itself is subject to estate duty or death duty. Those unfortunate people will then be asked to pay an additional nine per cent interest on their estate duty. I should like the Minister to clarify the position.

We had in the country last year a prolonged bank dispute which may have delayed some of these probate cases to some extent. Surely in situations like this, where people through no fault of their own may find they are unable to pay estate duty or death duty right away, it is unfair to penalise them still further. The Minister may be kind enough to clarify this section for me, but, as it stands, I think it is an injustice which is imposed on the community. I regret that the explanatory memorandum only came to hand in today's post which does not give Members a lot of time to study the contents. I should like to ask about sections 38 to 41. For years we accepted the concept of a family farm unit, a family farm holding, family farm labour and family farm income. If we take statistics at face value we find that family farm income over the years has been around £6 per week.

On this question of gifts, are the Government introducing a new concept here? A farmer's son may be considered young at 40 or 45. When he comes to get married the Social Welfare Acts encourage elderly farmers to sign over their farms to sons and there are special concessions if they sign them over on the son's marriage. Then the parents will qualify for old age pensions and other social welfare benefits.

Do the Government now consider that a man who has worked for 40 years on his father's farm for nothing except the price of a smoke or a drink at the end of the week will be subject to these high estate duties? Any place that is not worth £5,000 at the present time, complete with stock and goods and chattels and a house of some sort, is hardly worth considering at all. In my county an ordinary labourer's cottage is now costing in the region of £3,000, even after the Minister for Local Government has asked the local authorities to consider low cost housing. What type of livelihood can one expect to get from a holding valued at only £5,000? Practically all farms in the country will be subject to this estate duty and it is yet another imposition on the farming community. Having regard to the family farm income of last year and the fact that farm prices have not increased in any instance this year, I think the Government are not treating the farming community very fairly in this respect.

In section 40 we have the artificial basis for calculating the value of agricultural property. The Minister should increase that figure significantly. The present method of calculating the artificial value is 25 times the poor law valuation plus the stock, goods and chattels. People with a holding which would not yield a figure in excess of £2,500 would qualify for the dole and would not constitute a problem. I think the Minister is going to adversely affect people who are at present on the breadline.

We have great difficulty in rural Ireland at present where young people, because of the unavailability of adequate credit, are not able to increase their numbers of stock. With this in mind, I would urge the Minister to look at these sections again. I know the Minister is endeavouring to capture people whom he considers are evading taxes on estate duty. We should all pay our fair share of taxation but, nevertheless, it would be a pity if, in order to pay estate duty, we found found ourselves with an abundance of medium-sized and small-sized farms which were uneconomic. If such farms are to suffer under penalties of this kind they will be rendered even more uneconomic.

We hear from people who have studied this matter in depth that there is great need at present for increased investment in agriculture. There is also great need for increased capital and more readily available loans to boost our agricultural output. Surely the Minister should look at the figures here in the light of present day values. With land selling at around £400 an acre at present in the Leinster and Munster regions and with stock selling at the highest prices ever recorded, these figures are totally unrealistic. By this time next year, if this Bill is passed, you will find that people who traditionally paid their way will be forced to the wall.

This is a time when we should all be endeavouring to strengthen the agricultural sector of our community in order to encourage more people to stay on the land. It is a shame to see, on the death of a farmer—or indeed a businessman—that the farm has to be sold in order to meet debts and estate duties. I believe the Minister is going too far in these sections. The value placed on agricultural property is grossly out of tune with reality.

On the question of general taxation, the tourist trade is suffering severely. Hotel prices have gone completely out of the reach of the vast majority of our people. Added to the bottom of each hotel bill we have the 15 per cent Government tax. This is something the Government should take a serious look at. If the tourist industry is worth £100 million per year it should be encouraged by every means possible. I have been told by cross-Channel visitors and visitors from the Continent that our prices for both drink and tobacco are greatly in excess of what those people pay for them in their own countries. The Government should assist the tourist industry, and those people who are actively engaged in it in order to keep hotel and restaurant prices in line with other countries. We are confident of our future entry into Europe, but by boosting our prices as we have done in the past couple of years we will make Ireland an exclusive holiday country. If this happens we will do great harm to our future tourist potential. Instead, we should bring our prices back to within reach of the ordinary tourist.

Government taxes have not helped in this regard. It is demoralising for tourists to find that a Government tax of 10 per cent or 15 per cent has been added to their bills. It is a very high figure and certainly puts tourists off the idea of a return visit to Ireland. On travelling to a few of our tourist resorts this year I found that most of the hotels appeared to be underbooked. There is no point in blaming the state of affairs in the North of Ireland for the slackness in the tourist trade. People are finding the Republic of Ireland far too expensive for their holidays. If we had a more realistic approach to the problem, with proper tax concessions—such as supplying tourists with petrol and drinks at the same price they would pay for those commodities in their own countries— it would help to attract greater numbers of tourists.

The Revenue Commissioners propose to charge interest for non-payment of income tax even in cases where the person has appealed and has questioned the assessment. Here the Minister is giving the Revenue Commissioners a big stick with which to beat the taxpayers. We all recognise that the people who are paid for and entrusted with the task of gathering the taxes perform a very necessary function, but I do not think they should have this supreme power or dictatorial deterrent. It is unfair if a person, in these rather difficult financial times, considers he has any cause or need to question his tax assessment, to burden him with an extra 9 per cent in the intervening weeks.

The Minister should have got over this difficulty by instructing the income tax commissioners to deal more expeditiously with appeals and applications. This would be a more civilised approach to a problem. I cannot see that the commissioners have that awful number of appeals and inquiries with which to deal. If the Minister were to give the commissioners adequate staff, so that these appeals and inquiries could be dealt with a little more expeditiously, there would be no need to add this extra imposition on the taxpayer.

We must be the most overtaxed community in Europe, with turnover tax and special taxes for every day of the week and for every walk of life. We are down to the last straw when the Government are charging interest on the actual tax itself. This is emphasised by the example of the Government when one compares their efficiency in paying out various grants. This year there were extreme delays in every Department of State, in particular the Department of Social Welfare, which take up to seven months to pay a widow's pension. If the Government were to give the public a definite lead in this regard, there would be no need to increase the rate of interest on the unfortunate taxpayer, as they are doing in this Bill.

I do not intend to get involved in this complex problem, but reading through the Minister's speech, I was attracted to one statement which says:

Sections 17 to 19 will come into effect on the passing of the Act.

Where tax was undercharged because of fraud or neglect, section 20 enables interest to be charged at the rate of 9 per cent from the date the tax ought to have been paid. The section will not, however, affect tax chargeable for any year of assessment prior to 1971-72.

The year 1971-72 is reasonable enough. However, I do not understand how you can connect fraud and neglect. People who submit their cases do not do it themselves: they employ an accountant or a solicitor to do it for them. If a member of the legal profession or an accountant neglects to do this I do not see why their neglect should be visited on the person who employed him to do it.

It is unreasonable to say to a person: "Because you did not do this thing on a certain date, fraud and neglect are coupled". Fraud is very different from neglect, and you would have to decide where the neglect lay, but it should not be visited on the person who was amenable to the Revenue code. Perhaps it happened that these two words fitted in and were explanatory of the Revenue code, and probably when one examines the Bill these terms will not apply to the sections that are involved. Most people employ a solicitor or an accountant to process their cases, where these various taxes are involved. However, there is a very wide discrepancy between fraud and neglect and I do not think they should be bracketed together. A person may request a solicitor or an accountant to submit his case for him. If one of these people is guilty of neglect, it should not be visited on the person who engages him to carry out a particular piece of business. Perhaps during the course of the debate on Committee Stage this will be sorted out.

However, as it has been mentioned in the Minister's speech, I wish to say that I consider there is a very wide discrepancy in the Revenue code between fraud and neglect. I should like the Minister to comment on this when he is replying to the Second Stage. I know of numerous cases where there has been neglect by solicitors and accountants in the processing of a case for assessing duty on estates. It would be very unjust to bracket a person with neglect when he had given the business to another person, and through no fault of his own, might find himself eventually accused of neglect and would be subject to this 9 per cent duty. There is a very wide discrepancy between fraud and neglect because, having delegated the authority to somebody else, the neglect side would be coupled with fraud and would be visited on the person who required the work to be done.

My contribution to this debate will be a very brief one and I will not make any points that have already been made either in the Dáil or in the Seanad.

My main point has been made by speakers from Labour benches and from commentators generally down through the years, as well as during the current year and if a point is made repeatedly and by a great number of people it only tends to prove that it has validity for much of the population.

I must avail of this opportunity to register our opposition to a system of taxation designed to take money from people who have not sufficient money to provide the necessities of life for themselves and their families. There are people whom this Finance Bill embraces in the taxation net who have not, by any stretch of the imagination, wages of a sufficient amount to meet present costs. I shall go so far as to say that people should not be asked to work for these wages, much less pay tax on them.

We all agree that taxation is necessary and that the money must come from some source. About a fortnight ago we were discussing the Social Welfare Bill in this House and there was general agreement that the concessions and improvements made in that Bill, for which we must find the money in this Finance Bill, were inadequate. It would be desirable to provide greater improvements and a greater amount of money by way of taxation to meet the needs of the section of the community our social welfare code is designed to cover. We are agreed that direct taxation is the most equitable way of providing that money.

In the Minister's speech today he stated that he intends to provide £5½ million this year by abolishing section 2 of the 1970 Act. We disagree with this. Surely it should be possible to find some other method within this taxation system other than abolishing section 2 of the 1970 Act. This section gave some concessions to all taxpayers and it was greatly appreciated by those people who came just within the tax net, people who, by our values, should not be paying tax. The two-third rate on the first £100 was appreciated more by people receiving an income which was barely taxable than by people with far greater incomes.

The total yield last year from direct taxation came to £116,000,641, which represented an increase of 20 per cent on the previous years' figure. We were further informed that it is expected direct taxation should yield approximately £140 million in 1972. The turnover tax was doubled in the last financial year. Surely it should be possible, when we are talking in such huge terms, to find £5 million from some other source than by hitting at people who should not be in the tax net. The Minister could have looked to the people in the higher income bracket. Down through the years Deputy Corish has repeatedly called on Finance Bills and in his Budget speeches for a capital gains tax. This was derided by people who opposed what he stood for.

Quite a lot of money is being made by people who buy shares and then sell them at increased prices and who buy land and sell it at a greatly enhanced price. I cannot assess the profits being made from those sources. The Minister and his Department are in a position to look into this method and possibly provide the £5 million from that source. It would be a more equitable system of taxation and one which would distribute wealth more equitably than the one which he is utilising in this Finance Bill.

While we welcome any tax concession it must be agreed that to tax a man at £7 and a woman, I cannot understand why, at £6.75 per week, is grossly unjust. There are not many people working at that rate today, but there are many women whom we are well aware of working for wages of £9 and £10 per week. One hopes the commission will bring out their findings on equal pay in the near future. It might not be relevant to the Finance Bill but it is something which we cannot overlook, having regard to women workers paying income tax on £7, £8 and £9 per week.

Lower paid male workers—agricultural labourers and county council road workers—earn around £16 per week. When calculating the rate of pay that these people, who are at the very minimum of the scale, receive, account is taken only for the bare cost of living. There is no account taken for luxuries or status or any other additional expenses: it is calculated on what is necessary to provide the minimum living standard. Those people, under our taxation code, if they are single pay almost £3 per week in tax. If they are married they pay approximately £1 in tax. If their wives work, and work they must if they have to keep a home on wages like that, the allowance given to them is scandalous even though it has been improved.

The cost of living has soared beyond all recognition in recent years. This year the pinch is being felt more than ever before. The depreciation in the value of money is accepted everywhere except within the income tax code. In many cases wages have not increased adequately to keep up with the soaring cost of living but the tax-free allowance has remained the same, with only minor adjustments, as it was ten and 15 years ago. That is the main point I want to make on this Finance Bill.

I want to appeal for travelling allowances for workers. This is something that should be conceded. We are all well aware of men and women who are on very low wages living maybe ten to 20 miles from their places of employment. The trend towards rationalisation and the siting of industry in centres and the building up of dormer towns mean a great deal of travelling for those workers. Travelling costs have increased like everything else. It is nothing unusual to find a worker paying up to £2 for a weekly bus ticket to get him or her to work yet there is no allowance under our income tax code for this. Travelling allowances and allowances for other expenditure are given to other people in society and they should be extended to the ordinary worker whose weekly wage, minimal though it is, is the only source of wealth he has, many of whom should not be within the income tax code at all.

Many of those people know very little about income tax. I have met several people who I have felt should not be paying income tax. In talking to them I discovered that they were not aware of their rights. They had dependants for whom they were not claiming and had they known something about income tax they would have discovered that there are various allowances for which they could claim. The people who are the least equipped to pay income tax are the people who know the least about it. There should be some simple guide to income tax which would enable those people to claim such benefits as are available to them. Income tax is a complex matter, but there must be some way of enabling the people I have mentioned to avail of such rights, and there are not very many, to which they are entitled under the income tax code. They need that guidance and if we could have a booklet relating to income tax such as The Guide to Social Services, it would be a great help. People with very low incomes do not consult experts. They may not even be aware that there are experts who might help them in the field of income tax. Like other speakers I welcome the concessions which are provided in this Bill. I welcome the increased concessions for dependent relatives, the new allowances for blind persons, housekeeping allowance for unmarried mothers. These are all very welcome, though small.

This point has already been raised, but I should like to add my voice to pleas for the widows of civil servants, that is the pre-23rd July, 1968, widows. They are making an all-out effort to obtain parity with those who became widows after that date, and they have a just case. It has been stated against them that their husbands were not contributors towards the scheme but I believe it has been proved that five per cent was retained from their husbands' wages, as civil servants, for superannuation. They have not benefited from this. They have been granted half benefit in recent years and now they want to get full parity. This half pension in many cases, is a deterrent in so far as it deprives the recipient of a social welfare pension and their last state is as bad, if not worse, than the former. I think their request is a small one and the Minister might reasonably be asked to meet it at the earliest possible date.

The income gaps are enormous. The amount one man or woman has to spend in a week is considered by others as only adequate for one night's entertainment. Where that sort of society exists, drastic action is necessary. This Finance Bill certainly is not providing that drastic action. Somebody should grapple with the situation soon. I know it needs courage. During this present financial year we may expect the value added tax. This is a new era of taxation and I sincerely hope that a new approach will also be heralded, an approach which will be more redistributative than any we have had so far and will take cognisance of the fact that there are many people paying tax who are not equipped, not alone to pay tax, but to provide for themselves the minimal standard of living.

When one gets a Finance Bill which is mostly about income tax, it is difficult to welcome many of the sections contained therein. In so far as there are allowances made for the blind and allowances for housekeepers, it is welcome. It is good to see that industry is getting some encouragement in allowances for plant and machinery and I am happy that the Minister had the forethought to keep the difference which existed before this Act in the designated areas. It is difficult enough to keep an industry in the West of Ireland for many reasons and any advantages which can be given should be given.

In reading this speech of the Minister and listening to him speaking I was surprised to see the enormous powers being given to the Revenue Commissioners. The poor taxpayer does not get much protection from the Revenue Commissioners. In my opinion, what is sauce for the goose is sauce for the gander. It appears that one cannot leave tax unpaid after two months. It must be paid or else interest must be paid on it.

The repayment of the overcharge of tax will now carry interest as well. I wonder if there is any clause that says that the Revenue Commissioners must repay the tax within a specified time? There is nothing about this in the Bill. The taxpayer has no redress if the Revenue Commissioners agree to refund tax. There is no time limit set wherein they must repay that tax. I know a case where a taxpayer had to pay last year in excess £2,000 income tax. It is now agreed that that tax should be refunded but I cannot see that tax being repaid. It will be held until next year when there is an assessment and by some means the assessment will be for £2,000 and the money will be held. This has happened with a smaller sum before. I should be interested to hear in the Minister's reply what steps are being taken to make the Revenue Commissioners pay their bills. The Minister is making sure that the taxpayers pay theirs.

I am rather puzzled about having to keep accounts for six years under the 1968 Act which is now going to come into force. Surely, if an account has been furnished to the Revenue Commissioners and they have accepted this and tax has been paid on it, they should not be empowered to go back six years and re-examine those accounts? Does it mean that a new inspector coming to an area could suddenly decide to examine the accounts of all the businesses and professional people in that area for the last six years? Is the inspector empowered under this Act to do so? Even if there is already tax paid, can he then decide at this stage that enough tax has not been paid and more must be paid and interest on that tax also? I should like clarification on this point when the Minister is replying.

I should also like to speak about the travelling allowance which Senator Desmond referred to. In rural areas or anywhere there are industries, people must travel. With a salary of £9 per week, £8 10s. is the tax-free allowance for a woman. After that she pays tax and even her Social Welfare stamp of 72p is not exempt—in many cases she is paying £1.50 for her travelling. It means that her wages at the end of the week are very small. There is no use making an allowance for travelling because they are going to be taxed on it.

In rural areas and certainly in the West of Ireland in many of the designated areas, where there is a concerted effort being made to build up industry and to encourage workers to stay in that area, I think that some form of travel allowance should be made to these people. I do not think that it would break the Exchequer and it would be an encouragement to people to stay in their own areas and work there.

I do not know whether customs in this country has been mentioned or not. We are very far behind in our treatment of visitors to our shores as far as customs are concerned. I will not speak about the treatment nationals can get from time to time coming back. To say that it is discourteous would be to put it mildly. At times it can be downright rude. When you see visitors sometimes being subjected to this you feel humiliated. In most places there is a green area where you walk through under a sign "Nothing to Declare." I cannot understand why in this day and age, when we are trying to encourage tourists to come to our country, when we now have Jumbo jets coming through, when we expect a large influx of visitors—and we need them—we have not this green area where at least our visitors could walk through, whatever about our nationals. Maybe we were smugglers and maybe there is always a little touch of thinking that you can smuggle something through, but I know myself I would not bring as much as a handkerchief through the customs because I would be too terrified. I have seen what has happened to other people. The ease with which visitors can go through customs in other countries compared with the hold-up there is in customs here is something that should be looked into and something should be done about it.

I could say a lot about income tax; I am not going to. The Minister has to get his money somewhere. He squeezes the people very hard to get the tax to give to other people, and we can only hope that our rate of growth will be such that we will be able to continue to pay the tax. Of course, if everybody paid their taxes as they should, the tax burden would be lighter on us all. Tax we must have and tax gatherers we must have. I would ask the Minister to look into my point that the Revenue Commissioners would give back the money just as quickly as they collected it.

In approaching the Finance Bill we can sympathise with the Minister in the situation in which he has found himself, a highly inflationary situation. In what everyone recognised was an inflationary situation, the Budget of April, 1970, went completely against the advice of the economists and did not take the necessary steps to get the economy in balance. We had the disastrous effects, of course, of that. It has meant that our getting a hold on inflation and recovering from it have been delayed very considerably by the failure to take action at the proper time. Indeed, it should have been taken at least in 1969. However, the present Budget from the Minister has on the whole been accepted by orthodox economists as broadly displaying an approach relatively acceptable to them, although, I believe, a highly unimaginative one.

I should now like to discuss some of the aspects of this. One of the first essentials was the getting of Government expenditure under control. This, the Minister claims, has been done and the Book of Estimates shows that it has been done. But I question if it has been done with equal justice to all. I need only produce a few figures to show that is not the case. The nearer you were to the Department of Finance the better treatment you got in this. I might cite, for instance, the school capitation grant of £25 per pupil in secondary schools which has not been changed since it was first introduced by the late Deputy Donogh O'Malley four years ago. Surely that is an injustice. An amount that was considered fair and proper four years ago, can it today be fair and proper? Indeed, the £ in that period had lost in value by, I should say, at least 30 per cent and consequently there should be some comparable adjustment in the figures.

The Senator will appreciate that, while general expenditure is in order, details of expenditure and administration are not.

I am just giving a few figures to illustrate my main thesis that I am not satisfied that justice has been done in the expenditure that was given. I quote one figure. I give another figure which is exactly the same—a student grant figure which has stood for three years. Again, that cannot possibly be justice. Another grave source of dissatisfaction in this is that the bodies concerned had in most cases no opportunity of——

The Senator is going into details of administration and expenditure which do not arise under this Bill.

I am not giving details; I am dealing with this on the broadest possible canvas, just merely establishing the fact that to my way of looking at it—and I hope the Minister can offer some defence—the reductions have not been applied with justice to all. I take it that the usual procedure is for State Departments to have the right to argue, to show where their priorities were and to make a case why a reduction below a certain level would completely hamper their activities—in fact almost bring them to a standstill. That opportunity is afforded only to Civil Service Departments, whereas I cite the case of the universities, as given in the public press, where without the slightest consultation they have been put by the Budget in a position the only solution of which is bankruptcy, unless the fees are raised in a way that will put an extreme burden on students whose grants have not been increased. While I approve wholeheartedly of keeping public expenditure under control, it must be seen to be done with justice and fairness. We must be able to get away from the position that the closer you are to the Department of Finance the more you will have an opportunity of arguing for your estimate and the better the treatment you are likely to get.

Moving on to another point in the Minister's statement, he mentions about increasing reliance being placed on systems of multi-annual and programme budgeting. Here I want to raise a cautionary voice. In theory this programme budgeting is very nice. You seem to have absolute control on everything that is happening—that is if you were operating it in Heaven but not operating in an imperfect world such we have got. The Americans, who were the originators of this, have found that the idea is only a minor aid and not a panacea for everything. I am afraid that the way the words "programme budgeting" have been bandied around in circles as a sure cure-all is reminiscent of the euphoria of three or four years ago for manpower forecasting, where the whole programme was a cradle to the grave business of planning. Again it was something that could not be done—now we realise it cannot be done. I want to caution the Minister on this and I want to ask the Minister if he is aware of the latest case studies that have come from the United States which show the limitations of this.

While the Budget is in most regards a standstill Budget, it surely fails to tackle the situation of luxuries in this country. We all know that times are hard, very hard for many sections of our community. Equally well we know that the lounge bars have never had longer queues of cars than they have today. Surely there is something very wrong in this situation? The Government should be there to exact far more tax from this. I do not think that the penny which has been put on beer or the twopence on spirits is anything like the measure of what this traffic is able to bear. I do not begrudge anyone taking a drink—I take a social drink myself as well as anyone else—but we must treat it as a luxury and it is capable of making a much greater contribution to the Exchequer than it is making, especially in the spirits and the other ranges. If you examine some of the countries in Europe you will find that is the case: that they are getting more from their spirits than we are getting. I know the Government did increase the tax last November and it has put on another penny now, but my contention is that there is far more available. Also our concern with tobacco smoking and so on is not matched by a similar concern for the evergrowing consumption of alcohol in the country—and there is a very large number of confirmed alcoholics in our population. Again that is a situation where judicious use of taxation can, coupled with other measures, effect a national reform which is required.

Above all, this luxury spending applies to the young married sections of the community. They never had it so good. They never had so much money to spend. Yet the Government consistently over the years has failed to take any equitable portion of tax contribution from this section. That should be done. There is the plea that the poor tourist is going to have to pay more for his drink. I do not think we go quite as far as Greece where the Orthodox Church has composed a special prayer against tourists, but we should not allow tourism to be used as an excuse for everything. If it is necessary to give any special concessions to tourists by way of drink or such items, surely this can be done through the hotels; in other words, legitimate consumption of drink by tourists up to a certain percentage of their hotel bill can be treated at a certain rate. There are ways and means of doing this. Other countries have found ways of dangling a bait before tourists, a bait of some reductions, some concessions, whether on petrol or otherwise. That can be done, but it should not be done at the expense of tying the Minister's hands in respect of getting proper and adequate tax yields especially from the more expensive drinks. That is the pattern which you see today. No longer is it the working man's pint which is all the go; it is the much more expensive drink. There is money to be got there and plenty of it. Indeed, when we see that 2p a glass on spirits as put on, brings a yield of £4 million in the full year, we get some idea of the capacity of this to provide additional tax yield.

The other feature of Government financial policy or lack of policy in the last year is the frightening increase in foreign borrowing. Not alone is the Government itself borrowing but we have many of our larger public companies going abroad for funds. These must be paid for sometime and 10 per cent interest rate on foreign borrowing is equivalent to about 17 per cent rate on home borrowing because the home borrower has to pay income tax on full rates without any remissions on earned income or otherwise. He has to pay a full rate on what he gets from interest. I should have thought that the time had come for some type of imaginative programme or approach to try to increase our savings, primarily for the sectors who have money to spend. In this we do not seem to have had a real idea in savings since the prize bonds were introduced about 15 years ago. Since then there has been no gimmick or no real incentive that has in any way helped in the savings drive.

I have in mind here especially the case of newly weds who are faced with tremendous bills for housing and so on. In many cases these people have not saved a great deal when they were in a position to save during the years before marriage. The Minister could serve both a social purpose and a national financial purpose by giving very real and spectacular concessions to savings made by unmarried people who are given to the Government, the bonus yield to be paid when these savings are drawn out on the occasion of marriage. I do not think that a bonus of almost double the interest rate would even be too high a rate—certainly a bonus which would make savings in this quarter no more costly than savings from foreign borrowing—that is, a 17 per cent yield or a 7 per cent bonus increase on cashing the savings on marriage. That would be a tremendous incentive to young people to save. Indeed it would provide, in a few years, very substantial down payments on a house or furniture or other requirements of newly weds.

Therefore, I would ask the Minister to try to do something as quickly as possible in this area. There is money to be got there and there is a national need to encourage savings from that sector. If savings can be got from other sectors, from overtime payments and so on, that is something that should be helped. There is a great deal of dissatisfaction at the amount of overtime payments taken in income tax. I do not think the dissatisfaction is altogether justified and these payments have to bear their proper share of taxation. On the other hand with a view to encouraging legitimate overtime and also to encouraging savings, the Minister might well develop some new initiative aimed especially at that group also, whether it is by giving more scope to group savings or some other schemes which have been tried with success in other countries.

Above all, I am very worried about foreign borrowing where the World Bank is concerned because the borrowings have all sorts of strings attached. We are greatly disturbed by the fact that we could not afford to erect a few schools without involving the World Bank in them. We did this work before the World Bank was ever heard of. Indeed, we ran our secondary schools system before the State started to subsidise the building of them. It would be a poor lookout for the Ireland of the seventies if the State is not able to preserve the same independence of outside dictation on what our policy should be. I am voicing the discontent of many at the recent disclosures in connection with the World Bank's involvement in this.

We also have to look at the Budget from the point of view of what it does to gear this country for entry to the Common Market. There we find the type if dichotomy that has plagued our thinking over the last 20 or 30 years; we do something for industry but completely neglect agriculture. The measures for industry here seem to be worthwhile and to be capable of spurring industry on to adaptation and expansion in view of the Common Market. I refer to the extension of the free depreciation to the whole country and also to the fact that the industrial buildings allowance of 20 per cent has been extended. These are worthwhile measures and I understand that in a few years they will cost about £6 million for the reliefs which they provide by the year 1973-74.

These, coupled with the very generous adaptation grants and other measures that have been used in the past four or five years in a frantic effort to have our industry equipped for the Common Market, are positive and I commend the Government for them. We look in vain for any such measures in agriculture. All we see is just a continuation of the same policy; not just a continuation but a reaffirmation of the about turn that was made in the agricultural policy of this country in October, 1969. Then the Minister for Agriculture, Deputy Blaney, and the Department of Agriculture panicked at the condition of the dairy market at that time, even though advisers in dairying could have seen at that time that things had reached their lowest ebb and were on the upswing.

An Leas-Chathaoirleach

The Chair must point out to the Senator that agricultural policy is not in order except in so far as it is affected by budgetary provisions.

I agree completely with that. The endorsement of the old policy that is contained in the Budget is something that we cannot pass over. It is costing £9 million for this endorsement; .2 of a penny here and .1 of a penny there and so on. What was needed was to bring agriculture into line by means of budgetary control and other means with what is required in the Common Market—in other words, efficiency. Efficiency is being promoted in industry and there is no price for efficiency being asked in the £9 million that is being handed out to agriculture. At a time when every emphasis should be on quality and on improvement of the basic structure, on training and everything else, we look in vain for them. I would ask the Minister to try to make it of special and urgent concern. The case for agriculture was certainly fully argued by the National Farmers' Association who in their thinking are light years ahead of the Department of Agriculture in this matter.

It is amazing to find that the surest way to make money in agriculture is to go directly against the advice given by the official policy. When they say "Get out of dairying" that is the time to get into it. When they say "Get into beef" you had better be wary. The Minister claims that the Budget is geared to try to redress the balance of payments. We are very thankful for the very fortuitous contribution that agriculture has made in the past year to this, because the income from agriculture and agricultural exports will be up by at least £50 million in the current year. That in itself is a tremendous contribution to our balance of payments. Without that we would be in "Queer Street" today. I would ask the Minister to use what has been provided there to enable him to make a proper effort in the autumn to get agriculture equipped for the Common Market.

There is also the question of the credit line involved. I am afraid this has been applied rather rigidly and unimaginatively by the banks concerned. I would ask the Minister to use all the power at his disposal to see that as much as possible of what limited credit there is available will be made available to agriculture for productive projects. That is the only way in which we can make proper use of the short time we have left.

I should like to touch briefly on the question of gifts. This shows a lack of imagination and of appreciation of the role of the farming industry. The limit set is £5,000, when to buy and equip a 40-acre farm today would cost at least £20,000. Is the Minister suggesting that a farmer who has built up and equipped a 40-acre farm—which is below the minimum size advocated by Dr. Mansholt—and then gives the farm over to his son should be subject to taxation? The Minister made the point that this type of inheritance tax is the only taxation on assets of the farming community.

There have been pleas down through the years for a properly administered capital gains tax. I would like to add my voice to the voices of the Senators who have already spoken in advocating that. It is very disturbing to all wage-earners, who work hard for their living, to read and hear of the "killings" made on the stock exchange. That mighty country the United States, which could not be called a Socialist country, has a capital gains tax. It is administered fairly. In other words, if the asset is held over three years, then the amount of the gain is scaled down. If it is held from six to eight years—I think that is the scale—then it is legitimate trading and there is no gain involved.

When we read of the takeovers that are plaguing our industrial life at present and the substantial gains made on such takeovers it is only proper that the Minister should take his share of such gains on behalf of the community. I cannot see why the Government are dragging their feet on this while at the same time they are rushing to levy an inheritance tax which is totally unjust. A small business or a small farm, when being handed over, cannot afford to be burdened by the State insisting on their share of the assets which have been built up over the years. Those assets usually consist of nothing more than a very meagre livelihood for the shopkeeper or small farmer who has worked long hours to keep his family going. The Minister was very ill advised in coming in here like Shylock exacting his pound of flesh where there is no flesh to be exacted.

I must commend the Minister on bringing the death duty allowances for widows and dependent children into line. In effect, what he has done is to restore the value of the allowance to what it was when introduced four years ago. The allowance was then £1,000 and is now £1,500. That adjustment is to be commended but I believe this type of automatic adjustment to keep allowances in line should be carried out at very frequent intervals. In fact such allowances should be brought into line every time there is a depreciation of more than 10 per cent in the value of money. I commend the Minister for for what he has done in this regard.

I would like to add my support to Senator Desmond's plea for a travel allowance for workers who have to travel long distances to their place of employment. This is a very necessary allowance taking into consideration the pattern of developing industry today. It is socially desirable to grant such an allowance to enable people to stay in our smaller towns and villages rather than move to the larger centres where such industries may be located There is a strong case for giving a reasonable travel allowance on income tax assessment to such people. Such an allowance could quite easily be restricted to people below a certain level of income. It should not be very difficult to administer and it should be easy enough to prevent any abuses of it.

Senator Desmond also made a plea for income tax advice for people who may not be conversant with the income tax codes. I should have thought the proper place to provide such advice would be the industries concerned. The larger industries already have such an advisory service for the upper and middle managerial groups and they may also have it available to their workers. If industries do not supply such advice already they should be encouraged to do so. It should be a part of the ordinary industrial relations within any firm to ensure that workers are satisfied they are getting whatever allowances are due to them. This is something that should be brought to the notice of the industries. The Minister, when he is replying, might encourage firms, if they have not already done so, to make such an income tax advisory service available to their workers.

In summing up, I feel this is a Budget that will please orthodox economists but is not the type of imaginative Budget we need at this stage. I think the Minister will have to bring in a supplementary Budget in the autumn because some of the cuts made by his Department on expenditure by related bodies are totally unrealistic. Those bodies just cannot discharge their functions without further assistance. I do not claim any great gift of prophecy but I foresee a mini-Budget in the autumn this year. If we have a mini-Budget its primary purpose should be to raise funds to assist the agricultural and industrial sectors in their preparations for our impending entry to the Common Market.

My real purpose in contributing to this debate is to suggest certain what I would consider possible further social benefits that could be given in the Finance Bill. I ask the Minister to consider them. First, I should like to speak on behalf of the person who falls seriously ill, or whose wife or child meets with a very serious illness involving vast expenditure in the one year, or perhaps over a period of two or three years. I have been interested in this subject for some time, and I have taken the trouble to make inquiries. I find that a large number of people have to pay medical expenses ranging from, perhaps, £800 to £2,000 over one, two or three years. There is provision in an earlier Finance Act that, if a person incurs medical expenses in the course of a year, anything over £50 is treated as if it were a business expense and he is exempt from tax on it, provided that it does not exceed £500.

To me, this is completely illogical. I cannot understand why the maximum is fixed at £500. Surely the person who is deserving of most help in those cases is the man who has to pay £1,000 or £1,500 in the course of a year, because he or his wife or one of his children has suffered a severe illness? It is the gravest hardship on such a person that he is left, for all practical purposes, with only two-thirds of his income to pay anything in excess of that £500. In other words, if his medical expenses are £2,000, the first £450 is treated as if it were an expense; now there is the remaining £1,500. That unfortunate man would have to earn £2,250 to meet that £1,500. Most of those people are not very well off; there are very few people in this country with incomes sufficient to meet expenses of that nature, after having provided for themselves, their wives and families. If that man were using his motor car for business purposes only, and if he crashed that car through his own fault and had to pay £1,000 for a new car, he is allowed that as an expense free of tax. However, if he falls ill, has a serious operation, has to pay 25 guineas or 30 guineas a week in a nursing-home, plus surgeon's fee, plus chemist's bills, plus nursing fees, he gets no allowance whatsoever in excess of £500. If his wife falls ill, he gets no allowance whatever.

Since I started to make these inquiries I have found that there are families that have been brought practically to the edge of financial ruin. Some of them have told me that they have stuck it out for the last year or two, but if they have to try to stick it out for another year or two, they will have to let things go, that they cannot possibly afford it further. Even if it is just a member of a family who is ill, it destroys a man's interest in his life's work; it destroys his enthusiasm; it almost destroys his will to live. I ask the Minister to see his way to provide that medical expenses for a man, or for any member of his family, in excess of £50, be allowed as if they were ordinary expenses of his business, so that he can claim relief. If he does so, he will have done a very great deal for many people who are sad and unable to attend to their work. I do not know if it would be reasonable to ask the Minister to take this Bill back to the Dáil, but I assure him that there is so much genuine hardship throughout this country by reason of that, that he will have done something for which many Irish people will remember him with gratitude.

The principal reason why I rose to speak on this Bill was to draw the Minister's attention to the extreme hardship involved. There is one other social matter to which I should like to draw his attention. If he does not see his way to accept it, I am quite satisfied. I note that the Minister, in his opening speech has stated that over the past three years there has been an average of 81 marriage settlements. I hope that I have not misread it. With the very greatest respect to the Minister's Department, I query that figure. As a solicitor in a rural town, I, myself, know——

I think I can explain the discrepancy that the Senator has in mind. The 81 refers to marriage settlement which came to the notice of the Revenue Commissioners, in other words, marriage settlements in which the donor died within the statutory period.

I was reading the speech literally. As regards cases where the donor died, there are relatively few of them that come to the notice of the Revenue Commissioners. The average practising solicitor knows that in the country a son gets married, be the father a shopkeeper or a farmer. What follows is that there is a deed drawn up in consideration of marriage. That takes a 50p stamp. Everything else is transferred by what we call manual delivery. Perhaps three years later that man dies and has no assets; he makes over everything to the son, so it could not come to the notice of the Revenue Commissioners.

Time and time again I have persuaded the elderly father or mother to make over a place to a son who has told me that he is about to get married. The manner in which I have persuaded the father or the mother to do so was by saying: "You have got to die some day. If you die within the next few years there will be death duties on this. If you make it over to your son now and let him have it on marriage, there will be no death duties." I have succeeded in that many times. It may sound an irrational sort of argument, but it is so. Anything that encourages marriage provided that it is not an excessive loss to the State, is something that should be approved by everyone. A former Taoiseach, who is now the President, suggested that, with a view to encouraging those marriages, there should be a dower house provided for the young couple. I ask the Minister to continue that social policy. If he cannot do so, I accept it; but I think that it is something that is worthy of consideration.

I also entreat the Minister to consider with the utmost gravity the granting of medical allowances to those unfortunate people of whom I spoke at the commencement.

Before replying to the specific points raised by Senators on this Finance Bill I should like to give some review of progress on the general economic scene in the light of the main objectives of the Budget.

Those main economic objectives were to control inflation and to ensure that the National Pay Agreement would not be jeopardised. In the matter of restraining inflation the main lever within the Government's control was in relation to public expenditure. As I mentioned in my Budget speech, a marked increase in public expenditure this year would worsen the balance of payments position. While it might give us some short-term prosperity the price would be too high and the benefits would be merely transitory. Accordingly, I decided, and the Government agreed, to moderate the rise in Government spending. On that basis the original capital and current expenditure proposals for this financial year were reduced by £76 million from £797 million to £721 million. This is not to say that there was a cut-back in expenditure but rather a cut-back in the rate of growth of expenditure.

This very substantial contribution to the moderation of the growth in public expenditure required many difficult decisions. It may fairly be said to be the main and most important aspect of budgetary policy for this year.

As I mentioned, one of the main objectives of budgetary policy was to arrest the accelerating rate of price increases which we witnessed during 1970. Anti-inflationary policies take time to work through the economic system. However, the first post-Budget indicator for movements in consumer prices is encouraging. The consumer price index for mid-May, 1971, was 8 ½ per cent higher than in May, 1970.

Although this is far from satisfactory, it shows that the peak of the inflationary cycle has now passed. Increases of 10 per cent were recorded for the years ended mid-November, 1970 and mid-February, 1971.

The rate of increase of 8½ per cent is high by past standards but the downward trend is a vindication of the budgetary and other policies adopted by the Government to moderate the rate of inflation. I have indicated before that we expect the main effects in price levels from the National Pay Agreement to occur next year. It is encouraging, and it does deserve to be recorded, that in this year there is already—although the housewife probably has not noticed it yet—an indication of the downward swing in the growth of prices. While there are grounds for guarded optimism on the prices front I want to assure the Seanad that there is no complacency in the Government in regard to this situation.

The importance of ensuring a continued slowing down of the rate of inflation and the need for ensuring the maintenance of the National Pay Agreement and for controlling monetary and credit policy still exists and will continue to exist for quite some time. All of this is necessary if we are to minimise the inflationary pressures which have been affecting our economy.

In my financial statement I spoke at some length about the National Pay Agreement. I tried to hammer home the need for giving its very hard-won terms a chance of succeeding. In framing the Budget itself I sought to avoid any action which might endanger the agreement. I tried at the same time to encourage all concerned to see that its terms were fully observed. If I return briefly to that theme again tonight it is, first of all, because the success of that agreement is vital to moderating inflation in the period ahead; secondly, because I see the agreement as a crucially important step, although no more than a step, towards solving some of our basic problems in the fields of incomes and industrial relations, problems which, if left unsolved, can hold back the growth of our economy and diminish the hopes of providing the number and the kind of jobs and the rising standard of living that we all wish to provide for our people in their own country.

On the first point, nobody is suggesting that the agreement will stop prices from rising. It is, as the Government pointed out at the time, itself inflationary. Furthermore, apart from higher import prices various instalments of 12th round increases are still affecting prices and they are likely to continue doing so for most of this year. That is the reason that I said earlier that we do not expect to see the real results of the National Pay Agreement reflected on the prices front until next year. The agreement holds out hope of reducing the rate of inflation and of reducing industrial strife if its terms are wholeheartedly observed. Wholehearted observance of the agreement is the nub of the matter.

Since the agreement already provides for increases significantly above the likely extra national output, any attempt to build on those increases provided for in the agreement or to make excessive use of clauses which are designed to deal only with very exceptional cases can only put the whole agreement at risk.

There have recently been some encouraging signs that more people than before are beginning to realise what is at stake in maintaining the National Pay Agreement. Much credit for this must be given to the efforts of the Irish Congress of Trade Unions and the Employer-Labour Conference. We would delude ourselves if we did not realise that a strong and continuous effort will be needed from all of the parties concerned to protect the agreement from being destroyed by the stress and the strains which not alone have come but will undoubtedly come its way in the future.

Furthermore, although the agreement is vital it is only a temporary measure. Everybody concerned must use the time which it gives us to tackle the long-term problems of incomes bargaining and industrial relations, and to build up procedures which will help to avoid a return to the troubles of last year.

So far as prices are concerned, the Government have introduced, by long and short titles, in the other House, legislation already announced in connection with prices and allied matters. The Government have virtually completed the examination of the Irish Congress of Trade Unions' proposals for improving the price control system. On completion of that examination, the legislation will be circulated.

Before leaving the domestic scene I should like to dwell briefly on the monetary and credit area. In current economic circumstances, continuation of monetary restraints is necessary, more particularly because of the excess liquidity which was generated during the credit holiday which accompanied the bank closure last year. The figures now available show that the increase in bank lending in the past year was far greater than that provided for in the Central Bank guidelines. All of the excess accrued to the private sector. Part of this exceptional increase in credit may not have worked its way through the economy as yet and could add to inflationary pressures in this current year. While credit policy in the coming year must aim at helping to curb inflationary pressures, we also must take care to ensure that credit is not restricted to an extent that would adversely affect business liquidity.

The Central Bank have considered credit policy in the light of the aims of economic policy for 1971-72 and they have recently issued guidelines to the banks. These guidelines envisage an increase in total lending of not more than £115 million or about 11.5 per cent and no net inflow of capital from abroad through the banks. Priority will continue to be given to credit for the needs of productive investment. There is to be no net additional lending for consumer expenditure. Because of the uncertainties arising from the possibility I have already referred to of delayed-action effects from the bank closure, the Central Bank intend to reconsider the state of monetary policy at intervals during the year in the light of the economic trends which emerge.

In the course of the debate reference was made to borrowing abroad and perhaps some comment on the National Debt might be appropriate. The service of the National Debt accounts for over 20 per cent of the expenditure side of the Budget. At the 31st March, 1971, the National Debt was £1,106 million including £90 million—or 8 per cent of the total—external liabilities. A year earlier the debt was £1,009 million including £70 million external, and at 31st March, 1969, it was £914 million including £55 million external debt. The cost of servicing the debt in 1970-71 was £101 million compared with £89 million in 1969-70 and £76 million in 1968-69.

Thus, while the National Debt has risen by 10 per cent in each of the last two years, the service charges have risen by 17 per cent and 13 per cent, respectively. These increases reflect the higher interest rates generally applying to new borrowings. The service charge on the National Debt is met from current taxation and as 92 per cent of the debt is held internally, the charges are mainly internal transfer payments. Therefore, the internal part of the National Debt does not constitute a debt on the community as a whole. The National Debt has declined as a percentage of our GNP over the last three years from 69 per cent in 1969 to 68 per cent in 1970 and to 67 per cent in 1971.

There are one or two points regarding borrowing by the Government I should like to mention. During the year 1970-71 an amount of £41 million became due for redemption. Of this sum, £25 million was converted into new stock. At the same time three new stocks were issued for public subscription and these attracted investment of over £21 million. The Government, therefore, borrowed £46 million in a single operation. This was the largest undertaking of this nature which ever took place in the history of the State and I am very pleased to say that it was successful and, despite our economic difficulties, indicates the underlying strength of our economy and the confidence of investors in that underlying strength.

Reference has been made during the debate to the necessity for improving our methods of borrowing, especially from the small borrower. A great deal has been done in this regard recently and with considerable success. The proposed improvements which have been announced in the attractiveness of the Post Office savings scheme and the continued success of the national instalment savings scheme, together with a very much improved prize bond scheme and savings certificate schemes recently launched, should increase the intake from small savings in general. This does not mean that further efforts cannot and will not be made, but I would not like it to be thought that no efforts have been made, as has been suggested in the course of the debate, since the introduction of prize bonds. That would not be correct.

There are a few matters on the external scene I should comment on at this stage. First, with regard to our exports in 1970, the position has been that, despite the problems with which we were faced in that year, our export performance is not at all bad. It is showing signs of improving in the present year. The excessive increase in income levels last year that I have referred to could not but have had an adverse effect on the growth of our export trade because of the damage done to our competitiveness on the basis of price. The two major industrial disputes we had in the cement industry and in banking were also unfavourable factors. Nevertheless, despite these difficulties, merchandise exports rose by 16 per cent last year, which was appreciably better than the 1969 increase of 11¾ per cent—and a not unsatisfactory performance having regard to all the circumstances I have mentioned; and particularly welcome was the fact that our industrial exports rose by 20 per cent. Now that the effect of those two industrial disputes has worn off and that there is some hope of improved competitiveness, in the main thanks to the National Pay Agreement, it would be reasonable to expect that 1971 should be a better year for exports than last year. In this regard the figures for June are quite encouraging.

Our balance of payments position, while it may on the face of it not appear to be as good as we should like, is, in fact, showing a trend in the right direction. The balance of trade for the first half of this year showed a deficit of over £136 million or about £28 million worse than in the corresponding period in 1970. While exports were up by about £38 million or 17 per cent, imports rose by £66 million or 20 per cent. Much of the increase in imports is attributable to the build-up of stocks of raw materials for further production and to the purchase of two Boeing aircraft which cost £20 million but which will not have an immediate impact on the balance of payments. While it is too soon to make a firm estimate of the likely balance of payments outcome for the current year, I consider that, including ships and aircraft, the deficit should not be appreciably greater than £60 million.

With regard to our two main trading agreements or prospective agreements —the Anglo-Irish Free Trade Area Agreement and the EEC—there is a great deal I could tell the House but it might not be of any great assistance to Senators, particularly in relation to the EEC. Most of the information is already available and the Minister for Foreign Affairs intends very shortly to circulate to Members of the Oireachtas a document giving the latest report on our negotiating position. I do want to say briefly in regard to the Free Trade Area Agreement that there have been suggestions that a number of factory closures have been due to the operation of this agreement. I cannot say that no factory closure has been due to that, but I can say that a number of the closures which were said to be due to the operation of the Free Trade Area Agreement were not due to that agreement. Some of them were in the field of textiles which is suffering a major recession all around the world. Of the textile factories which have closed down, virtually all of them were directed to the export market and were set up for that purpose and by definition, could not have been affected by the Free Trade Area agreement.

Apart from those, there have been difficulties in the footwear industry, but there had been a number of closures in this industry before the removal of a quota protecting the industry under the Free Trade Area Agreement. Therefore, a number of the closures blamed on the Agreement were not due to it.

I would like to remind Senators that we have now just passed the half-way stage in the reduction of protection on Irish industry under that agreement and, on balance, over the period of operation of the agreement we have gained very substantially. Our trade shows this. The British have gained, too, and this was what was envisaged in the signing of the agreement. It would be well to remember that under the Free Trade Area Agreement there is provision for a review of the operation of the agreement at the mid-stage. We are entitled to take temporary safeguarding action where the position of particular industries is threatened by increased imports attributable to the operation of the agreement and we have used this in certain cases.

In addition, under article 1 (s) of the agreement there is provision, following a general review of industry and after discussion with the UK authorities, to relieve some goods from the further operation of the agreement. This general review of industry has now been completed and discussions have been proceeding with the British Government regarding the products which appear to us to need special consideration under the terms of that article. These discussions will continue over the next few months. Pending their completion, interim arrangements were agreed with the UK authorities for certain items. These consist of a standstill of the rates of duty in some cases and in others a smaller tariff reduction than was required on 1st July, 1971, when the sixth reduction was made in tariff protection against UK goods in accordance with the agreement. These interim arrangements were agreed without prejudice to the outcome of further discussions which are to take place concerning the tariff rates to apply subsequently to these and other products under discussion. The items to which a standstill will apply for the present comprise certain iron and steel products, certain kinds of agricultural machinery, certain domestic electrical appliances, aluminium, holloware, blankets, mobile homes and joinery. The UK Government were unable to accept the proposals put to them in the case of footwear but they agreed that the tariff reduction which was due to be made on the 1st July should be held in suspense, pending further consideration in the light of the survey of this industry which is being carried out at present. This survey is expected to be complete within the next few months. The items for which there were modified reductions on the 1st July were furniture, ropes and cordage, and brushes and brooms.

I will now turn to a number of the points raised in detail in the debate on the Bill. There were queries raised by Senator Alexis FitzGerald about the artistic objects clause. Perhaps it would be more fitting to deal with this in detail on the Committee Stage. I am not quite certain if I understood precisely what he had in mind. But in general I would like to make it clear that, in my view, even if there was only one case which came to light showing the use of this existing exemption for the purpose of avoiding liability for death duties, I, and every Member of the Oireachtas, have an obligation to close, as far as possible, the loophole involved. This is a matter which comes up in general over a number of aspects of this Bill. I would like to make it quite clear how I stand on it at any rate. In my view, although certain items may not yield a very great deal of revenue if in fact we close our eyes to them and allow a small number of people to avail of loopholes, we are not doing our duty. We are, in fact, building up a sense of frustration among taxpayers who pay their taxes in full and fairly promptly. By allowing these small items to accumulate we can cause a complete breakdown in the system because of a sense of injustice and frustration.

Therefore, I feel that we have an obligation, as Members of the Oireachtas, to ensure, as far as is reasonably possible, that equity will be done as between one taxpayer and another. I do not pretend that we will achieve this situation. Certainly we will never achieve 100 per cent equity as between one taxpayer and another, but we have an obligation to ensure that, as far as we can, that situation is achieved. That is the thinking which is behind a number of the provisions in this Bill.

Reference was made by Senator FitzGerald, to the rates of estate duty here and in the United Kingdom Senator FitzGerald said that the rates of estate duty here were considerably higher than in England. This is true of the scale of rates on estates up to £15,000 only. But—and this is very important—the scale cannot be looked at without regard to the abatement for widows and dependent children. If the deceased leaves his estate to his widow, the effective rate here is considerably below the effective British rate at all points in the scale.

Senator FitzGerald also suggested that the executor of an executor could become liable for penalties under section 42. This cannot happen. In the first place the chain of executorship or chain or representation, as it is known as, was abolished by the Succession Act, 1965, which came into operation on 1st January, 1967. Secondly, the section imposes penalties only on persons who fail to comply with the existing estate duty provisions. There is not any basis for suggesting that the personal representative of an individual has any vicarious liability for the wrong-doing of that individual.

Senator FitzGerald also referred to what he called "accidental withdrawal of the surviving spouse exemption". There has been no interference in any Finance Act with this exemption. The Succession Act, 1965, vested a valuable right in a surviving spouse. There is no valid reason why this item of property should not be treated in the same way, including liability to estate duty, as any other property. I would remind Senator FitzGerald that there is no new imposition here. Prior to the Succession Act, if the deceased spouse had died intestate, the share of his estate vesting in the surviving spouse was of course subject to estate duty in the estate of the sorrowing spouse. If in present circumstances the surviving spouse takes a life interest under the will and elects to take that interest the exemption continues to apply.

Reference has been made to the 9 per cent rate of interest which appears in a number of sections in this Bill. I want to make it clear that there are two basic reasons for this. The first principle involved is that the object of this is to ensure payment of income tax or death duties to the Exchequer promptly because failure to pay promptly costs the taxpayer money. It is reasonable, in the interests of the taxpayer, that I as Minister for Finance, should try to save the taxpayer money. Secondly, the rate of 9 per cent was arrived at because it is possible at present to invest money at 8 per cent and upwards and there is a built-in inducement in this situation to taxpayers not to pay promptly and still not to lose money, perhaps to gain money by not doing so.

When one has regard to the number of taxpayers who pay their taxes promptly, whether by deduction by PAYE or in the ordinary way, one sees that there is no reason why a special privilege should be given to other taxpayers. That is why this rate of interest is being raised, in the Bill, to 9 per cent. In any case of overpayment, I am also providing that repayment is made with interest at 9 per cent. I would like to assure Senator Mrs. Farrell that it is the intention in any such case that repayment would be made without any delay. Indeed, if there is delay and the State has to pay interest on the money that is not repaid, I will want to know why.

I can quote specific cases.

This Bill contains some new provisions about paying back money with interest which were not in previous legislation.

Surely, they should pay that money promptly when they are demanding it promptly?

I agree, but I can tell the Senator this, through the Chair, that I frankly expect to gain a lot more for the Exchequer than I expect to lose, by charging interest and by paying interest. I make no secret of that.

Reference was made to the level of company tax at 58 per cent. I do not want to go back over all this ground again but I should say this much. The companies which became liable for this level of tax under the supplementary Budget last autumn gained two substantial things from what happened in that supplementary Budget and, subsequently, from the economic policy which the Government is pursuing. Firstly, their unit costs are far less than they would otherwise be if the Government's policies had not been pursued and the taxation imposed on companies at that time was an integral part of that policy. Secondly, the workers employed by these companies are restrained by the National Pay Agreement. I would like to know why the companies themselves should not be restrained. There is only one possible argument why they should not be and that is an argument which was advanced very strongly last autumn to the effect that this would prevent growth in the companies, and, therefore, in the economy in general. It is a valid enough argument, I concede, but I would direct Senators' attention to the provisions in this Bill under which free depreciation has been provided for industry generally and, in the designated areas where we already have free depreciation, an additional investment allowance of 20 per cent.

The estimated cost to the Exchequer of these arrangements is £3 million next year and £6 million the following year. That £6 million corresponds to the yield in a full year from the additional company taxation. In effect, what we are doing is directing the relief which is involved in this Bill to companies which invest. In this way, I would suggest that we are meeting very fully any valid criticism which could have been made of the increased level of company taxation. It would be quite unfair, to say the least, to criticise the level of taxation on companies without having regard to the context in which it is imposed, to the fact that the National Pay Agreement evolved from what happened at the time, and to the fact that the National Pay Agreement is being adhered to and, as a consequence, to the substantial reduction in the demands being made on companies and, therefore, in their unit costs.

Senator Mrs. Farrell referred to the green area of customs control. I should like to remind her that there is provision in this Bill to provide the legal framework by which we can apply this. It is intended to apply this form of dual control as quickly as possible. This provides the legal framework and there is a certain physical work to be done at Customs entry points which will be carried out shortly. We cannot apply it for this year's tourist season but it will be applied as soon as possible.

One other major matter which I should like to mention is the question of the provisions of section 41 in relation to gifts in consideration of marriage. No doubt we shall go into this in more detail on Committee Stage. In general I want to say this: first, all gifts whether they are in consideration or not, are free of death duties if the person making the gift survives for five years after the making of it. Consequently, the kind of gift affected by this is gifts made in consideration of marriage in which the donor dies in less than five years after the date of the gift. We are therefore, talking about quite a small number of cases; that is the first thing we have to understand. The second thing is that it applies not only to agricultural property but to other property—to businesses, as some Senator mentioned. It refers to any kind of gift: money, property, a shop or farm.

In the non-agricultural cases a provision of £5,000 for a gift by a parent to his child on marriage does not seem to be ungenerous. It also seems to me that somebody who can afford to make gifts substantially in excess of that to his children on marriage is not somebody for whom we should have a great deal of sympathy if in the rare case that it happens that he makes the gift and does not survive for five years after making the gift in consideration of marriage. Having regard to the normal standards of people in the non-agricultural community this level is not unreasonable—£5,000 in respect of a gift to one's child.

If that is just a farm——

I said in the non-agricultural side; I am coming to the agricultural side now.

On the agricultural side the position is that if a farm is transferred in consideration of marriage and the donor lives for five years, there is no duty. If he dies within five years, the provision whereby artificial valuation can be applied to agricultural land comes into play. Under this provision, if twenty-five times the poor law valuation of the land less the redemption value of the Land Commission annuity and less any deficit on the personalty—as a result of overdraft from the bank or something like that—brings the estate under £2,000 the estate will be free of duty. Due mainly to this provision about 90 per cent of agricultural cases do not pay any death duties.

It seems to me that what is being provided for here is an effort to maintain the exemption for what we might call the normal bona fides, whether it is agricultural or non-agricultural, but at the same time closing a loophole which exists whereby people can take, and very wealthy people have taken, advantage of the occasion of the marriage of one of their children to dispose of what by any normal standards is a very substantial sum of money by way of gift and thereby ensured that, provided they lived until the following day, no death duties would arise. We are closing the loophole against the very wealthy people but we are maintaining the position as it is for the ordinary normal kind of case, whether it is agricultural or non-agricultural. I am sure we can deal with this in more detail on Committee Stage but I felt it as well to give the general picture of what we are trying to do.

One other point I should like to deal with was made by Senator Nash and related to medical expenses—the limit of up to £500. The reason for this is to avoid abuse. It is wide open to abuse, as the Senator will realise if he thinks about it. Furthermore, I think we will find that most people, whatever their bills are for medical expenses, could not afford to pay more than £500 in any one year and therefore most people are covered by this. However, I shall undertake to have a look at this limit, but I could not undertake that I could do anything about it in this Bill. I appreciate the point the Senator has made and in fact I have come across some such cases myself. When I pressed it, I found that although the people concerned could not get the allowance, they also said they could not pay the whole bill in one year anyway. It seemed, then, that they were not being affected by it.

I think that in general I have dealt with the main points that were raised; others will appear on Committee Stage. I should like to deal briefly with a couple of points made by Senator Quinlan. Firstly, I should like to say that there has been no dictation whatever by the World Bank to us in regard to educational policy, and we do not want repetition of that inaccurate statement because there has been no such dictation. Secondly, in regard to programme budgeting it is true that United States' experience has not been very happy. We know about this; we think from what they told us that the reason is that that they applied it too fast across the board without adequate preparation and we are trying to avoid that pitfall.

Thirdly, Senator Quinlan referred to this unimaginative Budget. He used this word "unimaginative" a few times in connection with other things. In one place he equated it with gimmickry. I do not want to be, and I have no intention of being, a gimmicky Minister for Finance. I have a job to do which is difficult enough. I think I am doing that job fairly well and I intend to do it without gimmicks.

Senators

Hear, hear.

In connection with the depreciation allowance the Minister mentioned, which is 100 per cent and 120 per cent in designated areas in regard to new machinery, what happens if that machinery is resold?

An Leas-Chathaoirleach

I do not like to interrupt the Senator but it seems to me that it would be more appropriate to raise this question on Committee Stage. The Chair will usually allow some questions arising out of the reply to the Second Stage debate, such as questions which may affect the Senator's decision in regard to whether he supports the Second Stage or not, rather than detailed points more appropriate for the Committee Stage.

There are provisions in the Bill in relation to that point which we could discuss in more detail on the Committee Stage.

Did I hear the Minister correctly in implying that such a thing as, for instance, the Prize Bonds is a gimmick that the Minister would not consider right?

The Senator used the phrase "unimaginative and gimmicky" in relation to savings as equivalents. As I understand the use of the word "unimaginative" and when he referred to an unimaginative Budget I took it that he was saying that it was a gimmicky Budget.

Question put and agreed to.
Committee Stage ordered for Thursday, 22nd July, 1971.
The Seanad adjourned at 10 p.m. until 10.30 a.m. on Wednesday, 21st. July, 1971.