Select Committee on Finance and General Affairs debate -
Thursday, 27 May 1993

SECTION 99.

Mr. Finucane

I move amendment No. 164:

In page 121, subsection (1), lines 6 to 14, to delete the definition of "dependent child" and substitute the following:

"‘dependent child' means a child of the deceased person;".

In talking about probate tax in the context of overall taxation one would have to bring in the capital acquisitions tax. I would describe the probate tax as a death tax but it may be that those words would be a stark reminder to the Members on the Government side. The probate tax, and the capital acquisitions tax, in many cases could lead to double taxation for many businesses and farmers. I would like to expand on the reasons I think that is the case.

In many businesses, particularly family type businesses, the father wants to transfer on his death the business to his son. The capital acquisitions tax, as presently administered will mean that in order to provide the liquid cash, or what is required by the Revenue, the son will probably have to sell some assets of the business which, in fact, could lead to destabilising the business. The capital acquisitions tax, and now the probate tax, will cause extra problems for many businesses and farmers. In many cases this could be the final straw to break the camels back. Taking the two together, it could mean that a farmer, depending on the size of the estate, may have to sell valuable assets which are important to his farm, such as equipment and so on in order to provide the finance. The Minister indicated that in certain hardship cases the situation would be looked at favourably. If there is a long delay in paying the death tax, the Minister will move in and charge interest.

It is very interesting to note that a recent survey on small businesses in general, especially on the passing of a business to another member of the family, that 70 per cent of those businesses do not survive to the second generation. Indeed, only 20 per cent of them will go to the third generation, and 13 per cent to the fourth generation. One might ask, what is happening to Irish business? Why is not that proud loyalty we had in the past of businesses passing from father to son, or even to the third generation or the fourth generation not being continued? This has to be looked at in relation not alone to the economic climate but also in relation to existing taxation measures. They act as a deterrent to the potential transfer of a business. It contradicts and negates the whole theory of what the Government are talking about — the creation and maintenance of jobs.

We should look at this probate tax and the capital acquisitions tax in tandem, because in many cases there can be two forms of taxation. The capital acquisitions tax was first introduced in 1976. The first change in relation to the threshold was only introduced in 1990 and that was based on the consumer price index. As a result if the consumer price index had been factored in since its introduction in 1976 rather than the £150,000 exemption, which is now being increased to £171,150, it should be £800,000. The fact is it suited successive Governments not to factor in the consumer price index on the basis that they would be deprived of revenue under the capital acquisitions tax.

I wish to highlight the extreme difficulties of businesses, both in relation to the capital acquisitions tax and the probate tax. That is what that 14-year gap in relation to capital acquisitions tax has caused.

It was a retrograde step to introduce this probate tax which is supposed to yield £12 million. The reason it is is that over the past few years the capital taxes to the Exchequer have increased dramatically. Last year they brought in approximately £100 million, which was £26 million more than the previous year. We are introducing another tax, a death tax, to take £12 million away from small businesses and farmers. This amounts to double taxation in some cases. Estates of less than £10,000 will be exempt from this horrendous tax. If the Minister thinks that was a major concession I am afraid he is being unrealistic. It may not seem much to some people but 2 per cent could be a great amount to a person who is emotionally upset following a bereavement. That person will be further traumatised by suddenly finding he or she is forced to face not alone the capital acquisitions tax but also this probate tax. I do not know who thought up this particular measure but I can certainly appreciate the resentment it has caused to people in business and, indeed, to farmers.

I am sure all Deputies have been approached by the farming organisations, such as the IFA, about this tax. Those organisations are extremely disturbed. As one travels through the country one sees many signs erected by the ICMSA with the slogan "No Probate Tax". When a farming organisation goes to that extreme it is because it is aware of the effects which a measure like this will have on the segment of the community it represents.

Certain measures in the Bill have been highlighted by Deputies. The provision that has been concentrated on and will be the subject of much attention today will be the probate tax. It is a death tax and that is what it should be called. I support the amendment that the estate of the surviving spouse should be exempt from this tax. In relation to the concessions that the surviving member would be entitled to the house and up to an acre, that would happen anyway in a transfer in a normal will. I will be looking for the abolition of this provision or, if this cannot be done, that the estate of the deceased should be free from this horrendous probate tax.

Mr. McGrath

This is one of the most repulsive measures in the Finance Bill. It is horrendous to think that death duties are being reimposed and we should resist the measure with all our might. The proposals for the probate tax mean that a spouse inheriting a partner's property will have to pay probate tax on a business or anything he or she has. In recent times we had moved towards a situation where the spouse inherited everything tax free. There is no stamp duty, no inheritance tax, and so on. Introducing probate tax on whatever business the spouse had is a retrograde step and should be changed. We should always allow a spouse to inherit all of his or her partner's property tax free.

What will this amount to? I know of a recent case where a farmer died and left seven or eight children and a substantial farm. There was not a lot of money but the farm would probably be conservatively valued somewhere in the region of £200,000. If that man had survived another couple of months his wife, as well as going through the trauma of his death and the responsibility of looking after a number of children, would be faced with a probate tax bill of £4,000 plus the value of stock and other assets on the farm. That is quite a substantial amount of money. Many people say they have the property and should have the money. What can they do? Will they have to sell part of the property to pay the probate tax? In farming, as the chairman knows, it is relatively easy to have a property valued at £200,000 and to be faced with this substantial probate tax as a consequence. What will happen to the spouse of a doctor who dies? The house will be free of tax but what about the business? Should a value be put on the practice of a doctor? In the past, one had to buy into a practice. I am not sure what the present situation is or whether the practice would be saleable. Will the Minister put a value on the practice? How will it be assessed and how will the spouse pay?

This morning we were discussing the retail trade and the clothes trade. We all agreed that the rag trade was going through a bad period. Many of those firms are at present running up bills and overdrafts. How will they be fixed if the spouse dies? Not only will they have debts accrued in the bank, they will be assessed on the value of the property. Perhaps they will have to come up with a probate tax figure to satisfy everybody. How will that work out? The position in relation to the spouse is certainly the worst aspect of the probate tax.

We must face the fact that if someone other than the spouse inherits the property a number of problems will arise. First, what happens if one of the dependent children lives in the house? Page 7 of the explanatory booklet states that where there is no surviving spouse portion of the dwelling house passing to a dependent child or dependent relative is exempt provided they are living in the house normally and that they have an income not exceeding £74 per week. I do not know the kind of circles in which the Minister moves, but there would be very few dependent relatives living in the house not earning in excess of £74. The gist of it is if the dependent relatives are living in the house they can inherit tax free that portion of the house which they use, as long as they earn less than £75 per week, if they earn £75 a week or more then they will have to pay the full probate tax in relation to that property. In essence, that means any child or dependent relative will have to pay the full probate tax. The income limit is ridiculous. It should be abolished or brought up to more reasonable proportions. The figure of £75 per week is absolutely crazy.

How does one cope with the situation where somebody dies intestate and the property is to be shared among five or six children? To share the property they must administer the estate and pay probate tax. According to the terms of this booklet, when one presents the documents for probate tax one must also pay the required amount of money. In a situation like that, those people will have no access to finance because the whole estate will be frozen until probate has been administered. From where will they get the money to pay this probate tax? If they do not have the money to pay it they cannot administer the property. It means they will have to go to the bank and secure a loan to pay the probate tax. If there are four, five or six children, which one of them will take out this loan and take responsibility for it? Will the friendly solicitor give them a loan so that it can be worked out in an agreeable fashion? That is something that should be looked at.

Probate tax will hit everybody at some stage, it will hit well off people and those who inherit from their parents. It will also hit the middle income people who are already grossly over-taxed and ordinary, poor people. Tenant purchasers of local authority houses will have to pay this probate tax when they inherit a house from their parents. Those who inherit a house valued at £20,000 will have to pay £400 in probate tax. People are only beginning to realise its implications.

With regard to the limit of £10,000, I am not sure what could be got for that sum of money in the Minister's area in Dublin, but I know in rural Ireland one would need another £10,000 to buy a site for a house. This property value limit of £10,000 is again out of the question. It is remarkably low. If a property value is being brought in, then it should be reasonable. The measure should exclude a reasonable proportion of the poorer people who will be faced with this probate tax.

Ms. Keogh

I agree this is a retrograde step. To many people it is unbelievable. At a time when another Minister may very well be considering a community of property within legislation this will become an even more complex quagmire of bureaucracy and disbelief. I was surprised that the yield quoted was £12 million because my fist estimate was about £6 million. I would wonder about the cost of collection here. There is going to be much bureaucratic wrangling over this.

Mr. B. Ahern

Collection is so simple that the cost is almost nothing.

Ms. Keogh

Maybe then it should be more complex. To me it is ineffably wrong to pursue a course like this. It is more than turning the clock back. It is now recognising the role that women play in our society today. The points that have already been made illustrate it all too well. One thing that struck me was this whole thing of the penalty clause. Take 1¼ per cent compounded, how much would that be? It seems an inordinate percentage penalty for anybody to have to pay. The point is made that this should be calculated from the time the person dies, if I am correct, rather than when the estate is settled. This would create all the difficulty of assets being frozen, trying to work it all out and having to pay the money upfront. The bureaucarts may find this very simple and straightforward; but for ordinary people it will be horrendously difficult and will cause a great deal of hardship to people not able to afford it.

Mr. Ferris

All of us from time to time, particularly those of us in the Labour Party, have called for tax reform. One of the ways you can get tax reform is by broadening the tax net and relieving some of those unfortunates in the PAYE sector who have no hope of escaping the tax net. Having said that, it will come as a surprise to some of my colleagues across the way that we, as ordinary back-benchers, were unaware of either this or the income levy until it hit us. Backbench Members of any party, would not be privy to Cabinet decisions in these areas. I have to see how this applies to my constituency. I have viewed the system from an administrative point of view, not from a property owner's point of view. In the case of one estate I was associated with as an employee, I saw them, under the old death duty system, having to pay up £50,000, in death duties. Death duty was then abolished and replaced by an inheritance tax. The son who inherits paid the £50,000. Then he died intestate. The estate finished up paying £495,000 in inheritance tax, which meant that the place had paid altogether just over £0.5 million to the tax man. Most of it had to be sold to discharge the debts. The place has never employed the same number of people since then. In the good old days it employed 30 people and their families and housed a lot of them.

I have some first hand experience and knowledge of this. We agreed there would have to be tax reform and that we would broaden the net. What we must eliminate from any reform is this concept of double taxation. I am satisfied from some figures that have been made available to me that there could be double taxation as between this tax and the capital acquisition tax.

The Bill itself relates to probate tax, which we would charge at 2 per cent on the net value of the estate of the deceased. The existing provision will effectively result in the market value, particularly of agricultural property, being taken into account when you calculate the value of the net estate of the deceased. In section 19 of the Principal Act, which is the capital acquistion tax law, we find provisions for agricultural relief. This raised the question: should that agricultural relief be provided for in this probate tax to avoid the concept of double taxation? That would mean that property which was subject to capital acquisition and probate tax would be assessed on the same base line, which is the net value.

I always believed that if a farm, a shop or whatever transferred directly within the family, and the business continued, one would question the wisdom or morality of taxing in that case. Why should we tax a family for continuing in business? The corallary, of course, is that Social Welfare would immediately say that if it was just a change in the management of the farm or the property, then the elderly person transferring it would not automatically qualify for the non-contributory social welfare benefits which are worth over £5,000 a year to a husband and wife. Until we overcome the ten year period for PRSI contributions from the self-employed, that anomaly will remain. It is difficult to exempt transactions which would still allow the father and mother to live in the house and to be part of the family and part of the continuing business. Of course, if they are members of the family they are excluded from medical cards and other problems arise. I am concerned about the element of double taxation and I ask the Minister to respond.

The Bill has provisions that will result in some hardships when there is a tragedy in the family, such as a death or otherwise. The principal death inheritance tax may be taken from the surviving spouse at a time, as has been mentioned, when she may be least able to afford to meet it, of she may have to dispose of some assets to meet it. Is this what we want to do in the broadening of a tax net? Penalise people because somebody died. We have to question what this means. Are we killing the golden goose that might be laying this egg? The eggs are getting smaller. That is why we are talking about broadening the tax net. The geese are there, but the eggs are getting scarce. Let us look at how this can be related to the area of double taxation and how we can apply similar regimes that are in the capital acquisitions law. We have this whole question of extending double taxation. All of us, irrespective of what party we represent, would like to see a broadening of the tax net in different sector, but we would not like to see the introduction of the concept of double taxation. I know some Taoisigh in the past admitted they brought in legislation but altered it later when they discovered it contained double taxation. Dr. Garret FitzGerald is an example of one who did that, in case my colleagues in Fine Gael feel I do not remember some of the good things about that party. There are anomalies in this legislation. I would like the Minister's response to the amendments and to what I have said. I thank the officials for the excellent guide to the probate tax. It pointed out even more anomalies than I was aware of when I read the Bill first.

(Interruptions.)

Mr. Ferris

I welcome that kind of an interruption, because Deputy Connaughton would represent the same type of constituency as myself. Although I come from County Tipperary, it is not all in the Golden Vale. There are some mountainy disadvantaged areas there. Perhaps the Minister would look at that concept of double taxation and respond favourably to it.

Mr. Cox

I welcome the very constructive comments made by Deputy Ferris on this matter and I would like to go over some of those points. The layout and production of the provisional booklet is exemplary except for one thing. When I received it the other day it sent a chill down my spine to realise that no matter what we had to say on this everything was already with the printer. We had only to remove "Bill" and replace with "Act" and this lovely booklet would go winging on its way and frighten the living daylights out of people all over the country.

This tax is wrong and should not have been introduced. Certainly my party will be opposing each section and the whole idea behind it. This probate tax is death duties revisited. That was a 19th century legacy which involved an awful lot of operational difficulties. Thankfully, a Labour-Fine Gael Coalition brought out a White Paper on capital taxation in 1974. They had the good sense to abolish death duties and brought in a new system of capital acqusitions tax. Now, subject to parts of it being cleaned up, we are going back to revised death duties. On top of the system brought in to replace them.

Deputy Ferris is perfeclty correct. It is a double taxation system. The new tax is added on to precisely the set of taxes that were meant to replace it. It complicates the system. It will re-introduce all the trauma caused by a death in the family where death duities were involved. There were some minor exceptions.

As I see it, some of the Minister's officials and advisers went back to the 1974 White Paper and said, "What are the most vulgar parts of the 1974 critique of estate duties? We will seek to iron out the creases in those bits and we will stick in a new death duty on top of what replaced it." They did that elegantly. It is wrong for the Minister and the Government to go down this road. I will save my rhetoric for another place.

In respect of section 99, I want to deal briefly with the question of the relevant threshold. As I understand it, the threshold which will be subject to indexation — I know the Minister said that is not necessary but I am glad to see in this case he believes it is necessary as I do, in all cases — is £10,000. Proof positive that someone was back with his finger in the 1974 cookie jar is when we find that when death duty was abolished that is where the threshold stood. That was nearly two decades ago. We now come back with that subject to indexation. It is an appallingly low threshold.

I will oppose the tax in principle. I will oppose each section of it and the sum total of it. It will be one of those convenient riders to every speech I will make up an down the country for the next few years. I have an amendment tabled that suggests that the minimum threshold should be £100,000. If we had a very well clothed Finance Minister who had more than 25 anoraks, at their current market value, in his wardrobe the person in receipt of the estate would be liable to pay death duties on those anoraks. That is such a modest prospect by way of assets that it goes to show how the threshold could be reached. The threshold is ludicrous. Whatever else the Minister does if he is going to stick with this tax the threshold is totally unacceptable.

Section 101 (f) states: "Sections 19,21, 35 (1), 36 (4) and 40, subsections (1) to (3) of section 41, and section 43 of and the Second Schedule to the Principal Act shall not apply". As I have not studied all of these, I want the Minister to tell me about all these sections. I have put down an amendment to section 19. Deputy Ferris has spoken about it, as has Deputy Finucane. That is the question of agricultural relief. In a system where we have been foremost in encouraging the European Community to bring in a more purposeful farm retirement scheme and where we want to encourage more young qualified farmers to take up farming and we remove agricultural relief from this new death duty it is an absolute disgrace. The Minister simply cannot stand over it.

Section 118 of the Bill redefines upwards the value of agricultural relief. I am open to correction if I am wrong, but it seems to me that he is redefining it upwards for the purposes of capital acquisitions tax. I suppose then the Minister will tell me, "We will screw you on death duties for 100 per cent and we will only half screw you for the balance on CAT because we are putting up the allowances". I do not find that an acceptable mish-mash. The Minister should do with this what he did with the concrete blocks and simply drop one thing and give proper agricultural relief for the other. The Minister is pretending to give us a marshmallow solution in section 118 for what is a clear travesty in terms of section 101.

In respect of spouses, I would like the Minister to remind me when spouses were removed from tax liability under capital acquisitions tax and when spouses were removed from the imposition of stamp duty. I know for a fact that spouses have been removed from both. I recall the Minister saying in his budget speech that the idea of a death duty tax like this is to tax estates between generations. This is not between generations, this is the same generation. All parties who have been in Government and party to these Acts and to stamp duties, have removed the spouse from all tax liability. Before we introduce any of the new laws the Minister for Equality and Law Reform is talking about on common property etc., they have removed the spouse. It is an absolute regression, the worst kind of Victorian economics, to bring back taxing a spouse on the death of the other spouse. When the dog is down kick him in the teeth. It is absolutely appalling, in terms of any sense of caring about individuals in such circumstance.

One of the features that crops up in section 104, where someone tried to iron out the creases and vulgarities of the former death duty, has to do with quick succession. Where someone died you paid the death duty and then, unfortunately, if the legatee of the estate died quickly you paid it again. The Minister has made an allowance for quick succession with very limited consanguinity relationship between individuals, for one year and five years. I suggest, if this iniquitous tax is to be put in legislation, there should be a five year succession gap irrespective of who inherits the estate. I am referring here to section 104 and to amendment No. 173.

From reading this — I may be incorrectly interpreting it — it appears that gilts which had been kept out of this, largely to encourage people to hold them, slipped into this net. I am not sure if I am right or wrong. I want to know what is the position in respect of a non-resident who dies having held gilts in Ireland. Are those gilts subject to a probate tax here prior to the clearance in the non-resident's country of domicile? Furthermore, if an Irish domiciled person has an estate which includes in it gilts, equities or bonds held outside the State, are they subject to probate to do with the domicile here and to this tax or are the non-resident dimensions excluded? I find it wryly amusing that this Finance Minister, in a couple of weeks expects to bring in another travesty in tax terms, which has been described as a tax dodgers' charter and invite them to come back into a jurisdiction that will impose this type of tax regime on them when they get here having dodged tax successfully for much of their careers.

The other issue which I would briefly raise with the Minister in respect of this relates to the question of compliance. You get a 1.25 per cent discount for each month in advance that you pay the tax prior to its due date. That is about the only provision I read in all the sections to do with this tax that I thought was good. I have an amendment on it. We did not get to it today but I note it. Discounting for compliance is a collection inducement which ought to be looked at more generally. It is the single and only feature of this appalling revisitation of Victorian economics that I welcome. The Minister should dump the rest of it, stick with the capital acquisition taxes and be more honest and less complicated about the matter. If he wants a bigger capital tax take he should stick with the system that was brought in in the mid-seventies and revise it accordingly. Why bring back in something that did not work in order to get a few pounds more? If there is a revenue-raising purpose it should be done through the new system. I am utterly convinced that what we will find in respect of this tax is that large estates, like the dodgers who will be bringing the money back in a couple of weeks' time, are good at getting away with everything. The guys who will be stuck with this are the Joe Bloggses up and down this country who plod along day in and day out, who have their corner shop, their auctioneering business, their farm, their pub or their own little business in some other area, who try to get on as best they can in compliance with the law and this comes around the corner. They have not been thinking about it at all. It is a disgraceful tax.

Mr. Yates

I agree with what has been said by everybody, Deputy Ferris included. I listened carefully to a number of lengthy contributions in relation to the broad thrust of the Bill. I welcome the sectioning up of the legislation because it allows us to deal with aspects that would never be debated. It is an introduction of a new tax. Nearly all the taxes we are dealing with are new layers, nuances of existing taxes. It is appropriate that where there is an entirely new tax — and this might be the only entirely new tax in this Bill — it should get more scrutiny than any other.

If we take a line by line approach, first of all, we will deal with amendment No. 164 in my name. I would like to read a letter to the Minister which deals with the definition of dependant child and could be from any solicitor about any client in relation to the probate tax. This will indicate the severe hardship it will impose. It states:

Dear Deputy, I thought I might bring to your notice the possibly very severe effects the probate tax may have. Over the past few weeks two almost identical cases came into me. In both cases the only asset of the deceased was their private residence. In both cases the only beneficiary was a daughter, there being no other children. In both cases the daughter was unemployed but had a small income. In both cases also the residence was the daughter's only residence. Both houses are worth in the region of £70,000. If the tax is implemented as announced each beneficiary would have to pay £1,400 in tax. In the two cases mentioned above the beneficiaries would just not be able to pay the tax because they have no assets at all, being unemployed. I believe there is a strong case to be made for exempting private residence entirely from the beneficiary.

Since then the Minister has moved in a couple of respects so that people who are unemployed and living in the house would not have to pay the tax. Unfortunately, under the definition of "dependant child" we have a number of problems. The first problem is if the child is not resident in the house but living in a flat with a boyfriend or living in a flat in town and say secondly that person had an income of £80 per week, from a low paid job, working in a shop, that person would have to pay this £1,400.

The purpose of my amendment No. 164 is that a dependent child means any child, an adopted child, a son or a daughter of the deceased. Where the family residence was involved it would be exempt for all family members; there would be no question of dividing up the value of the house pro rata or of saying whether they were resident or not. Where would you draw the line in regard to a daughter who became resident after the death but was not a resident before the death? That case is unclear.

Up and down the country people are very worried about this tax. People who require property for their livelihood, namely family businesses and farmers will be very harshly hit. Is the Minister aware that in West Germany, for example, they have a different tax treatment of paper assets such as land, property, where only one twelfth of the value of it applies as opposed to a liquid asset of money in a bank or a building society.

Young widows with children at school could be hit very harshly by this, particularly in the farming community. Any tax introduced at 2 per cent is subject to an increase in future years. The threshold of £10,000 is ridiculously low and, as has been mentioned earlier, it is the same threshold as was previously there in the early seventies for death duties. Property inflation or any type of inflation on a consumer price index between then and now will show that very modest families will have to pay this.

It was most instructive when the Minister was replying to the Second Stage debate that his script indicated — I do not think it was actually read out because the Minister did not complete his speech — that the average tax payment would be something of the order of £1,000. This means that the people who will be hit are people on modest incomes, it is not individual hauls of £30,000 and £40,000 in tax. The average payment will be £500 or £1,000.

The other difficulty which arises is that we all know, in taking out grants of porbate the delay of getting hold of the fruits of the assets as it were. They are tied up in red tape, tied up with solicitors and executors. This tax has to be paid up front, at the point of declaration when you are looking for the grant of administration.

I ask the Minister specifically to alter the defintion of "dependent child" to include all children, not just as Deputy McGrath said, people who have under £74 per week. Let us look at that £74 per week. It is below the level of the 48 per cent tax rate liability. We have a figure of general exemption of £60 or £70 a week and after that the first £7,600 of income is at the standard rate. People who are not supposed to be even at the top rate of tax will have to pay this tax. I ask the Minister to specifically accept amendment No. 164 in relation to a dependent child to mean any child, be it adopted or a natural child, of a deceased person.

Mr. Boylan

I want to make a number of comments on this because no other proposal has resulted in my receiving so many phone calls from people who are extremely concerned about this proposal. I am particularly concerned about the farming community, and I make no apology for that. I believe these proposals are urban based and far removed from rural Ireland. In farming circles they are talking about us being backward and lacking in forward thinking. If everything is so rosy in rural Ireland at this point why are there so many grants available and so many proposals to encourage young people to engage in faming?

There is a belief, in urban areas in particular, that anyone who inherits a parcel of land is very lucky. It is of little value to a young person or the wife of a deceased person to inherit a farm because, as Deputy McGrath rightly said, land, just as in the case of a doctor's practice, a legal practice or an accountancy practice, has to be worked. In the case of the sudden death of a husband, for instance, who, with his spouse, has been working a dairy farm with 30 or 40 cows to be milked, the wife could not be expected to be able to continue the business. Not only would she have suffered the loss of her husband, she would also have the anxiety of having to find this new death tax. That is simply what it is. There is no point in dressing it up and calling it a probate tax. It is not surprising that there has been so much confusion about this proposal. I compliment the ICMSA on the manner in which they set out to draw attention to it. People want to know what it means. To explain it you simply have to tell people it is a death tax, that when your partner dies the Government will say: "we are going after what he had at the moment of death and we will take 2 per cent of it." This is wrong and cannot be condoned if we are to encourage people to stay in rural Ireland and on the land.

The same applies to small businesses. We should not lose sight of the value in society of the family business and family ownership. It is deep rooted and should be encouraged. As I see it the Minister is dividing families and creating untold hardship for them. The provisions of this Bill are frightening. People are not fully aware of the consequences of what is proposed. On the death of a spouse, especially if it is the husband, decision may be made to leave the farm to the family member who stays home to look after it but that person has to have a decent level of income. In the past, quite often it was the case that a son who was not considered to be very good at school was the one kept at home on the farm but that day has long since gone. Those men were happy with an income that represented little more than pocket money, the occasional 10 shilling note sufficed. People engaged in farming now are edcuated and trained and must have adequate incomes. No one will be happy to stay on a farm for, say, £75 a week when his brother or his sister move into industry or are qualified in some area and earn a minimum of £160 a week. The Minister is getting back to the backward thinking of the slow child at home on the farm getting meagre pocket money. It frightens me to think that such thinking is present in the Department of Finance.

We must have regard, too, to the whole issue raised by Deputy Yates and Deputy McGrath in relation to ownership of the family home. If a daughter is resident in the house and there are five or six other members of the family who are entitled to their share, has the house to be valued and death tax paid on the four-fifths or five-sixths or whatever it is, depending on the number of children? I am not clear on that but certainly in the small print there is an aspect of this death duty that has not yet been fully teased out. However, I have no doubt that when the situation arises and when it comes to the bills being sent for this probate tax, or death duty, it will certainly become very clear to the people concerned. Deputy Ferris has often supported me in the past on such issues.

In social welfare the same nonsense exists, for instance, the myth of the hidden wealth in rural Ireland when it comes to old age pensions for a farmer or his wife on their handing over their farm. Where is the money supposed to be — under the mattress?

Chairman

Could we stay with the subject matter of the proposal before us, please?

Mr. Boylan

It all goes back to this thinking in Government circles. There is no point in us coming here and blaming officials in the Department of Finance or in another Department. The Minister is the person who makes the final decision.

Mr. B. Ahern

Will I talk about the blocks again?

Mr. Boylan

The Minister is causing untold turmoil for the IFA, the ICMSA and, I am sure, for officials in the Department of Agriculture who are encouraging the early hand over of farms, take-up of early retirement schemes and so on. What we have here is backward thinking and I appeal to the Minister, in the name of all that is good and decent in this country, to drop the proposal.

Mr. Yates

Deputy Rabbitte will be unlikely to shed many tears for the farming community.

Mr. Rabbitte

I did my best. I absented myself, at some cost it appears, for the first time since this Bill started. I understand the national broadcasting service decided to film the proceedings while I was away. I had no desire to come into any kind of conflict with the farmers' corner, a description that might be applicable to this afternoon's proceedings. Having listened to all those earnest speeches and having noted the fact that Deputy Ferris, for the first time since the debate started, has at least partially deserted his colleague, the Minister, I am being put in the position of giving the Minister a shoulder to lean on, and I am uncomfortable in that position.

(Interruptions.)

Chairman

We must allow Deputy Rabbitte proceed.

Mr. Rabbitte

I am encouraged by what the Minister is doing here so I will confine my remarks.

I was absent on behalf of a constituent of mine whose husband died in London in difficult circumstances. The remains have to be flown here and I was requested to intervene with the Irish Embassy to see if there was any system available to assist in bringing the remains to Ireland. The consitituent lives in Jobstown in Tallaght and I told that person that I had very limited time because I was taken up with discussing the probate tax on the Bill. I did not find that tax was a burning issue in Jobstown.

That note of reality ought to be brought into the debate. Unfortunately, people in all walks of life die, those who live in the city and those who live in rural Ireland. In many cases they have very little property to be concerned about. I do not see the probate tax as a massive imposition on people who have substantial property or less than substantial property. The Minister has built some reliefs into the system.

In any event it is an historical accident that great wealth in assets reposes in some sections of the community and not in others. When Michael Davitt started off the Land League he was in favour of peasant proprietorship but he was directed into giving the seal of approval to private ownership, by the political dynamics of the time.

I accept, of course, that there is rural proverty. But, earnest as Deputy Boylan's remarks were, for example, I do not accept the statement that there is no hidden wealth in rural Ireland. All this wealth that the Taoiseach and the Government want to bring back here had to come from somewhere.

Mr. Cox

Dublin 4?

Mr. Rabbitte

No, it does not all come from Dublin 4. Some of it comes from rural Ireland. I would prefer to see a revision of the capital taxes and I would prefer to be dealing now with that. Nonetheless, this is the way we do things and it seems that we must all sing for our supper. Nobody sings better than Deputies Cox and Yates, even if there are too many verses sometimes in their songs

This section should not, however, be left entirely in the remit of Deputies representing rural constituencies. I do not question their bona fides. I am sure this is in line with the representations they are getting, but I do not think it will make the difference between putting farmers of means out of business or prevent them leaving their relatives in business. I do not think it will be so severe on them. Perhaps, the threshold of £10,000 needs to be reconsidered but there are other reliefs, where the Minister anticipates some of the hard cases that might arise, as was adduced by other Deputies.

The Bill is strange from the point of view of procedure. Those of us who argue for limiting the burden of tax on one section of the community, are ruled out of order when we try to advance amendments that suggest where the additional money might come from. It is, therefore, very difficult to raise a debate on the structure of capital taxes now in Ireland, on the absence of a wealth tax, for example, which is considered so horrific that it dare not even raise its name here. Yet, we find that in the very same week, we are talking about £2 billion, apparently, expected to be repatriated. So madly anxious are we to do that that we will not impose retrospective taxes on the people concerned. They will merely be subject, for the first time in any amnesty, to a slice off the top. There must be a certain amount of wealth somewhere.

I presume that colleagues here would agree that I am as entitled to represent the point of view of my constituents as are the members who have been arguing for the farming community primarily. In any hierarchy of representations made to me, and there have been a great many about what is and is not in this Bill, the probate tax has been well down the list. I have to take that as a straw in the wind for the constituency I represent. I do not want to break the head of steam that was building up on it but up to the present I remain unmoved.

Mr. Connaughton

I am surprised at Deputy Rabbitte because his origins are not 100 miles from where I come from. The hidden wealth he talks about will not be found in the Galway/Mayo region. I can assure him.

This proposal of an exemption limit of only £10,000 on probate tax would only be sufficient to cover a beehive. Any property is worth far more than that, even the most humble abode. I listened attentively to Deputy Cox and I think we are going back to the 1974 legislation. Obviously, that threshold is extremely small by any standards.

Mr. B. Ahern

The family residence is actually exempt.

Mr. Connaughton

I know, but I am talking about the taxable income and the farmers.

Mr. B. Ahern

They would not then have to live in the beehive.

Mr. Connaughton

When the Minister talks about an exemption of £10,000 he is talking about property of very small value. That is the point. For example, take small businesses, the corner newspaper shop, what value will the Minister put on that? Can one get an auctioneer, anywhere in Ireland, to talk about a value of £10,000.

Let us call a spade a spade. This is a disgusting provision. The majority of people I meet from all walks of life are absolutely afraid of it. The ghost of this probate tax is stalking the land. People are afraid not of what is going to happen now but of what will happen in the future. The 2 per cent proposed now could be increased to 3 per cent next year, or 5 per cent the following year.

On a different note, why is there such inconsistency in the laws from the Department of Finance is a very short time? I stand to be corrected on this but in the budget of two years ago a small but important inclusion was made in one of the Acts. It was to the effect that an opportunity would be given to spouses to apply to be included on the title of property at no cost to themselves. For instance, where a farmer was the only registered owner of a farm an opportunity was given in that Bill to allow his spouse to become a joint owner at no cost. It might not be well known but, if I remember correctly, that was enacted at the time. I remember asking who thought of that most imaginative step. I find it remarkable, to say the least, that two years later we are actually ensuring that when a person dies, their spouse will be penalised. If that is not inconsistency I do not know what is. Young married couples nowadays will always ensure that their joint names are on the property, and quite rightly so, but, as the Minister knows, for many thousands of both business people and farmers generally that is not the case. This legislation constitutes a remarkable about turn in the Minister's Department.

What Deputy Boylan said coincides with my view that, particularly in the case of the self-employed, we should avoid placing impediments in the way of creating wealth. This is especially important at vulnerble times in people's lives, and there is no more vulnerable time than on the occasion of a death, as everybody will agree. If all this wealth which has been referred to exists, we have a section in the Revenue Commissioners with machinery to deal with that. If the existing machinery is not adequate it should be replaced.

Introducing probate tax is far too easy and is very discriminatory. It is a sitting duck situation and if the tax is not paid the penalties are extremely severe. We will deal with that later. What are people to do?

In the context of rural Ireland and the farming community, the Minister for Agriculture and indeed previous Ministers for Agriculture, have spent many hours and resources trying to ensure that we get a transfer system in operation in this country which will bring land into the hands of men and women who are at a stage in life when they can make optimum use of that proerty. By introducing this tax the Minister is making it most difficult, under certain circumstances, for that to happen. Take the case of a death in a family——

Mr. B. Ahern

Lifetime transfers are not affected.

Mr. Connaughton

It has to be transferred sometime.

Mr. B. Ahern

The IFA and ICMSA argument was that I should try to help in the Act——

Mr. Cox

Does the Minister think they are in favour of this?

Mr. B. Ahern

No, but they are in favour of all the things I did to make lifetime transfers easier.

Mr. Connaughton

The Minister first performed the surgery of the century, first on this and then he eased off a little bit. We are totally and absolutely opposed to the principle of it, as indeed are the ICMSA, the IFA and Macra na Feirme. They have said so publicly and very often. Leaving aside those organisations, every single farming family in the country is against this, and rightly so.

Deputy Rabbitte inferred that there is a lot of wealth in rural Ireland. I am not saying there are not people in rural Ireland who are well off, of course there are, but the vast majority of them are not. If all the wealth referred to is rolling around, why have so many thousands of people left the rural areas of Ireland? Why is it that when we talk about Structural Funds, we are trying to devise a system of positive discrimination that will get development and investment in areas of the country where, literally, nobody is willing to live? If that is the case, where is all the wealth then? We should not get carried away with this. There are huge areas of great poverty as we know it.

This probate tax is wrong in principle. It was ill thought out. It is a twin of death duties. It touches people when they are most vulnerable. The Minister for Agriculture, like many of his predecessors talks about all the aids available to farmers such as the installation aid funded by the EC, the farm retirement pension scheme, etc. But now, right in the middle of these, as an important part of the Finance Act, 1993, we find the probate tax. It was very ill-conceived. I do not know who is behind it but on this, above all aspects of this Finance Bill, I am very sorry we have not the required number of feet to go through he lobbies in Dáil Éireann and vote this measure down.

Mr. Rabbitte

We might have.

Mr. Connaughton

We might have fellow travellers. Perhaps my good friend, Deputy Ferris, will have a problem. At least Deputy Ferris is consistent on this matter. I have heard him speak on it many times before. Even at this late stage there will have to be a change of heart.

Mr. Nealon

The rural people I represent in Sligo-Leitrim — indeed the same people the Chairman represents — do not easily get excited or agitated about things. They are very reasonable people. That has probably been born of all the setbacks they have had to endure down the years. Above all, they are a reasonable people. But they have got excited about this probate tax in a manner I did not expect and they are determined to fight it. Whatever decision is made here — and it is very predictable what decision will be made; in fact, I could predict the actual number of votes — this will not be the end of the matter. This is something which will come up again and again and become part of election campaigns over the years. I am quite sure of that.

If anyone wants to see just how serious they are in the West of Ireland about this probate tax, all they have to do is look at the poster campaign visible at every crossroads. It is a poster campaign which would do justice even to the Fianna Fáil organisation, when it did have a viable organisation.

Mr. Cox

They still have one in Dublin Central. One sees a few posters.

Mr. Nealon

Indeed, on my way up to Dublin I passed a ball alley where the sign in whitewash of "Up Dev" had withstood the elements and the attempts of non-believers down the years since the fifties and the sixties. But now it is finally covered over with a whitewashed, almost three dimensional "No Probate" sign.

Mr. B. Ahern

On a point of order, Chairman, as a democratically elected politician who was brought to court for having a poster up late, I hope whoever put that up will also be brought to court.

Mr. Nealon

I think they will have to take the ball alley with them if they do that. If Mr. de Valera were here he would approve of the "No Probate" sign finally knocking out his name. At least the Mr. de Valera of the comely maidens, the pastures full of clover and the idyllic setting would approve of this, because this is striking a vital blow at the west of Ireland and the small farmer situation as we know it. It is doing so at a time when the Minister, instead of striking a blow, should be seeking ways and means of sustaining the population there. If he wants to know how the area is doing and if he wants proof that we are not just crying about non-existent imaginary difficulties, all he has to do is simply count the people there. Many of the rural areas are reaching the stage where the population is not able to re-create or sustain itself. The new Common Agricultural Policy reforms will do more damage. That is the reality on the ground.

In regard to the small farms which are hit by this, I am objecting, in particular, to the low level at which this tax is pitched. Small farmers get, not the farm, but the use of the farm to earn their livelihood. They pass it on, in the tradition that exists there, to the next generation, who have it again for thier lifetime. We are talking about small farms, those that reach the limit for this tax, with the dwelling house excluded. These farms would not be able to support people they need other means. I would like to ask the Minister to reconsider this, especially the exemption levels involved.

Mr. B. Ahern

I will go through some of the questions raised. Deputy Yates is correct in stating that this is the new tax of the budget. Practically all the speakers referred to it as a tax on agriculture. It has nothing to do with agriculture. A probate tax could relate to any area and one or two speakers mentioned that point.

We continually talk about broadening the taxation base, trying to find new ways of spreading the tax load to new areas. This is a very good example of where we identified a new area, put on a small tax which will hit nobody too hard and spread it across a very wide area. As soon as one tries to bring in any tax people immediately see all kinds of difficulties.

Based on the records of very detailed analysis of both urban and rural areas, it is estimated that 25 per cent of estates will not pay any probate tax. A further 25 per cent will pay less than £500 and a further 25 per cent will pay between £500 and £1,000. Therefore, in all, 75 per cent will pay below £1,000. As well as that assets which do not pass under the deceased will or intestacy are excluded from the tax. For example, joint property which passes to the surviving joint owners is not included although some people appeared to think it was. Gifts made in the lifetime of the deceased are excluded as are the proceeds of insurance policies which pass directly to the beneficiaries. Nowadays the reason the take from capital acquisitions tax is going down dramatically is that people are using their section 60 insurance policies. That is their right. Nobody can complain about that. Accrued and pension entitlements which transfer to the dependants under the terms of the pension scheme are excluded as is property held in trust which transferred under the terms of the trust. There are also specific exemptions such as net estates valued at less than £10,000. A number of people have said that would mean nothing. However, it excludes over 25 per cent of estates, based on the analysis of the probate registers of 1992.

Mr. Connaughton

Unbelievable.

Mr. B. Ahern

Twenty five per cent is the figure. I have already stated that point. Family homes are nowadays, by and large, jointly owned. The family residence is excluded from the ambit of this tax regardless of its value; pensions are excluded also as are charitable bequests and heritage property; quick succession relief is available.

Even though probate tax was debated in the Seanad, it was raised on the Adjournment of the Dáil, came up on two Question Times and on programmes on radio and television. In terms of letters from rural or urban areas, poor or rich, this would not rank in the first 25 items in the Finance Bill about which people were concerned. Most complaints were about the 1 per cent levy. I admitted that the other morning. The prolate tax was hardy mentioned. The letters sent in by the farming organisations——

(Interruptions.)

Chairman

The Minister, without interruptions, please.

Mr. B. Ahern

I know when one gives answers to these questions not everyone wants to hear them, but I will endeavour to give them.

The farming organisations and the Law Society made submissions and asked for meetings which were granted in so far as we could manage it. By and large, most of the amendments were at the behest of the ICMSA, IFA and the Law Society, who were in touch with us about properties of all kinds. All the hardship provisions in the capital acquisition taxes will apply to the probate tax, as will the liquidity provisions and phased-in payments. Deputy Yates gave an example of the person with two daughters. Such cases are covered.

Mr. Yates

If they earn under £75 per week?

Mr. B. Ahern

Even if they do not, they can use the capital acquisition provisions and the liability can carry over until the second daughter dies. As happens under capital acquisition tax, you can defer the liability on the person who makes the hardship case until that individual dies. Again, there is no difficulty.

My party published a northside magazine in which all the good news in the Finance Bill filled most of the pages. It appeared to be the most attractive issue in a long time. I also included information on the probate tax. I got letters inquiring what kind of a Minister for Finance I was, saying that the last time this was introduced death duties were 55 per cent and that I was bringing in this abysmal 2 per cent.

Mr. Cox

That must have been from someone to whom Deputy Rabbitte was talking.

Mr. B. Ahern

The tax is very small compared to what applied over the years. I have been agreeing with Deputy Boylan all week. I am lucky to be invited to rural Ireland by my colleagues most weekends. When I am in the Chairman's constituency, they are very nice to me. Tomorrow I will be in the most northern part of the north east. I have been around the country practically every weekend, except Easter weekend, in recent weeks, and I know that there are difficulties for farmers.

I accept the fact that farmers pay very little income tax because they are not making much money. They pay about 1.5 per cent of the income tax take. They pay 10 per cent of the capital acquisition tax take but almost nothing in residential property tax and capital gains tax take. This is because they have no money. These are the facts.

They asked me to look this year at the lifetime transfers and how I could help. In three areas I increased the agriculture relief for gifts, from 55 per cent subject to £200,000 and up to 75 per cent for £250,000. I brought further money into the early retirement scheme and dealt with other smaller areas with which the IFA and ICMSA were extremely pleased.

The exemption figure on an estate worth £500,000 given CAT and agricultural relief is £380,000. Capital acquisitions tax would be paid on £120,000. Probate tax can be set off as a liability against CAT. If anyone left me an estate worth £100,000, I would have to pay £2,000. I would be delighted to pay that; in fact it would make my weekend. The procedure for the deferral of probate tax is extremely easy. Let us be honest. Are we seriously saying that if somebody is left a property worth £100,000 — if it is from a father to son there is an exemption of £171,500 per child or the agricultural relief for gifts of 75 per cent — the tax payable on it is a hardship?

Mr. Cox

Why not amend the capital acquisitions tax?

Mr. B. Ahern

Quite frankly, it is not.

The yield from the capital acquisitions tax has fallen every year and it will probably fall more this year because of the generous reliefs I introduced. I have listened attentively to views of the ICMSA and Macra. Even though I was born in the heart of the city, my father was farm manager of one of the most productive farms in the area for 54 years. My sister is a farmer in Kildare and other family members married into the agricultural business. When we meet we discuss two subjects, GAA and farming so I am not unaware of the issues. I know this is not an issue.

Mr. Cox

Wait for the by-election.

Mr. B. Ahern

Which one?

Mr. Cox

Whenever the Government come off the fence and let us take them on——

Mr. B. Ahern

Does the Deputy think it will have a major influence in Mayo or in Dublin?

Mr. Cox

Both.

Mr. B. Ahern

I agree there are difficulties with the 1 per cent levy.

Mr. Cox

The Minister will bring back the hot money to get him off that one; another quick fix solution.

Chairman

The Minister without interruption, please.

Mr. Cox

Will the Minister move the writ?

Mr. B. Ahern

Wait until after the Report Stage of this Bill. I want to be able to join the campaign.

If we moved to a threshold of £100,000 it would cost £8 million. The total yield from this is £11 million. Regarding doctors, it depends on the value of the practice. In effect there is little value in it, because when the person who has built up the practice dies, the value does not carry forward.

The figure of £3,877 is the same dependent relative figure as is contained in the income tax law. That is on the basis of consistency. If a person is over that limit — I accept it is not a lot of money — they must pay £1,400. If they cannot pay the £1,400 that will be added as a liability to their estate for the next 25 years until they are deceased. That is fair. They are not penalised for not paying because they can use the hardship provisions under CAT.

I dealt with early retirement pensions and increased ceilings. In regard to Deputy Yates's question about an adopted child, such a child would be regarded as a dependant and would be eligible. With regard to spouses, all joint property is outside the probate tax.

The penalty is only one-fifth of that for non-payment of CAT. The examption for gilts is the same as that for CAT, so if one is domiciled in the State one must pay and if one is non-resident one does not pay. Under CAT, if one is domiciled in the State one's worldwide assets are taxable.

Mr. Cox

If an Irish-domiciled person died here but had considerable assets abroad, I would have thought that taking out probate in such an estate would be relatively complicated. The way this scheme operates that type of estate would be subject to the same penalty process as the most simple kind of estate in probate administration terms.

Mr. B. Ahern

There is a procedure whereby a payment can be made on account until the full probate is worked out. If one can prove subsequently that they should not have paid anything, then one is entitled to claim that back with interest.

Regarding business assets, it is difficult to sustain the argument that the charge can have anything but the most minimal impact. Mention was made of the fact that many family businesses would not survive passing on to second and third generation and it was suggested that the tax is a contributing factor to this process. There is no evidence to suggest that.

The percentage yield from CAT for farmers is estimated to have fallen from 19 per cent in 1981 to 10 per cent last year. In 1981 the total yield was £92 million and farmers contributed just under £2 million and last year when it waa £33 million, farmers contributed £3 million. I do not need to say any more.

Mr. Finucane

The total yield is almost £200 million.

Mr. B. Ahern

No, £33 million.

Mr. Finucane

Is the Minister including capital gains tax in that?

Mr. B. Ahern

No. The capital acquisitions tax yield is £33 million. That is the position. In ten years the farming contribution has only increased by £1 million.

Mr. Connaughton

There are good reasons for that.

Mr. B. Ahern

I accept Deputy Boylan's argument but let us not pretend that there are huge increases. While the overall figure increased from £10 million to £33 million the farming contribution went from £2 millon to £3 million.

Mr. Connaughton

This year probate tax on farms will yield £4 million.

Mr. B. Ahern

At the end of the day some other areas might prove to be far more beneficial. The probate tax will apply a small charge to the majority of estates. It would be inconsistent with this approach to exempt whole categories of assets. The exemption of farms from the probate tax along the line suggested would reduce the yield by £2 million in a full year. Deputy Keogh asked about the full spouse exemption. It might be argued that the property passing to a spouse should be exempt from the probate tax. In devising the scheme, we took into account that particular regard had to be had in relation to the position of spouses. Where a spouse buys the dwelling house they are entirely exempt from the probate tax irrespective of what share the spouse actually receives in the transfer of the property. The tax is applicable only to property passing under a will. All joint property, including joint life assurance policies, will fall outside the ambit of the probate tax. I have already covered that point.

I would like to refer to taxation of assets passing on inheritance. While it is in the nature of the tax that payment will be required in many cases before assets have been realised this is recognised by the application of a deferral of payment for nine months. I am sure this will be welcomed. This will have the effect of counterbalancing any interest charge arising from the payment. No interest charge accruing is required for up to nine months.

On the basis of data supplied by the Revenue Commissioners it is estimated that the total value of assets coming within the tax charge will be £550 million per annum. Those assets excluded by virtue of reliefs are estimated to be about £150 million per annum. The base broadening aspect of the new tax is illustrated by the fact that the present capital acquisitions tax charge is estimated to embrace assets to the value of £100 million per annum.

Probate tax will be allowed as an expense in assessing liability to inheritance tax. That means it will be deducted from the net taxable value of the inheritance before calculating liability to inheritance tax. It was suggested today that the probate tax should be allowed as a full credit. However, this would make the tax regressive because it would mean that wealthier individuals with relatively large inheritance tax liabilities would effectively enjoy the full relief from probate tax and that would fall entirely on those with little or no liability to inheritance tax.

Mr. Cox

It is very small already.

Mr. B. Ahern

And spread in a very small way across a huge number of people.

Mr. Cox

So those at the top pay £3 millon of the £11 million?

Mr. B. Ahern

They would pay the other 25 per cent.

Deputy Yates spoke about the child threshold. He is talking about the £171,750 — on an estate valued at over £500,000, divided between three children, the figure would be approximately £370,000 relief.

Mr. Yates

There are two items that sparked my attention in the last few minutes. As regards amendment No. 170, in the name of Deputy Noel Ahern, I take it the Minister is accepting that or is it like the 1 per cent levy — he sympathises with them but he does not agree with them?

Mr. B. Ahern

Since the Deputy criticised me on the 1 per cent levy I am not going to give him anything.

Mr. Yates

Is the Minister rejecting amendment No. 170? The Minister, in responding to the criticism that farmers should have to pay the tax, said it really will not be farmers at all when one looks at the insurance policies and who owns them. My understanding of the Minister's Second Stage speech was that insurance policies were exempt from this. I thought that was the wording. Now it seems that it is only if there is a named beneficiary on the insurance policy that there is an exemption. In other words, we now have the small print revealed in a throw-away remark by the Minister which is that, if I take out a life insurance policy and am a single person or if I do not specify it is for my wife and leave it as part of my estate, it will be caught in the 2 per cent tax. The only way I can avoid that is to ensure that it is stipulated that my wife or that a given inheritor must be the beneficary. Is that true?

Mr. B. Ahern

We looked at the position regarding life assurance. Not all policies are exempt but most of them will be exempt. They are exempt where the proceeds of the insurance policies pass directly to the beneficiary.

Mr. Yates

Where are they not exempt?

Mr. B. Ahern

When they are not passed to named beneficiaries.

Mr. Yates

That is my point. They will be caught. I hope insurance companies take note of that.

Mr. B. Ahern

They will amend their procedure to take account of it. They have been in on this from the start.

Mr. Yates

I moved by what Deputy Rabbitte and the Minister had to say about the urban versus the rural community, implying that hardship does not extend beyond Jobstown and the impact of this tax is really, in so far as it affects the farming community, among noncompliant, non-tax paying people who can afford to pay this modest increase. That was the general tenor of what was said.

I would like to give an example to bring home exactly what the effect of this tax will be. For example, let us take a dairy farmer with 80 acres of land — which is not uncommon in County Tipperary, Deputy Ferris will agree — and 45 cows. The farmer dies and his assets are breeding stock worth £21,000, which is not unreasonable; trading assets, £17,000; machinery, £14,000; land and buildings £147,000. Say they have loans and debts, trade credit, etc. to the amount of £16,000. We have gross assets of £200,713 on this example, less loans and liabilities of £16,047. The net assets are £184,666. That is what one reads in the Sunday Press when one sees where a farmer dies in County Tipperary leaving £184,000. There is then a young widow with three young children probably all in primary school. What happens? The probate tax comes in at 2 per cent of net assets.

Mr. B. Ahern

That is if he has not used the lifetime transfers already.

Mr. Yates

This is on the assumption that he does not have a life insurance policy with no named beneficiary. Before the solicitor can take out a grant of probate she will have to pay £3,693. Dairy farmers are better off than dry stock farmers and tillage farmers. Their income would be £13,700. That is a fair sized farming income. Their probate tax, in a year of acute tragedy, would be 27 per cent of their income. If the widow is not able to pay and is not able to administer the estate and carries on with the farm, that tax will double every six years because of the interest penalties. That is very severe.

Mr. B. Ahern

There are two points. There is the liquidity provision and the person in that case would be advised by you, as a good Deputy——

Mr. Yates

The person is dead.

Mr. B. Ahern

Deputy Ferris in Tipperary would point out the liquidity provision and the fact that there is a ceiling on the amount.

Mr. Yates

We are dealing with Joe Bloggs who died and not someone working for Price Waterhouse who knows the ins and outs of this. All property transferring between spouses should be exempt. For the purposes of the tax code, spouses are considered as one. This is an entirely new precedent in the tax code that says only the family home is exempt. That is unfair. Where people's livelihood is dependent on a capital intensive asset they are liable for tax. There should be an exemption there. In rural Ireland there has been a massive campaign by the Incorporated Law Society to get people to make a will, not to speak of being aware of the probate tax. We know the mess people get into. I know the Minister may have family farming connections, but the farm organisations are very concerned about this. I was intrigued by what the Minister said about letter writing. I hope that goes unreported because I have no doubt but that the IFA and the ICMSA could organise a deluge of post next week.

Mr. B. Ahern

The Deputy knows what I meant by that. We know the difference between a spontaneous reaction from the public and an orchestrated one.

Mr. Yates

Perhaps the Minister could tell us what it would cost to exempt spouses.

Mr. B. Ahern

Three million pounds.

Mr. Yates

In other words, the Minister will deliberately take £3 million from spouses. This is not something that was unforeseen. It is a direct attempt to tax spouses. That is very harsh.

I do not understand one point the Minister made. He said if we gave a credit against inheritance tax they would be better off. The thresholds are very low, and the Minister and the Labour Party promised during the last election compaign to increase them. I was the Agriculture spokesperson at the time and the Minister, Deputy Joe Walsh, Deputy Ferris and Paddy Lane were on a programme together. I was pleasantly surprised at how supportive Deputy Ferris was in relation to the issue of inheritance tax. It is true to say that Barry Desmond, as Labour director of elections, was the author of a document, which stipulated that the Labour Party's view if in Government — I do not know if he meant a partnership Government — was that family farms would be exempt from inheritance tax.

Mrs. Doyle

That was before the Labour Party took the shilling. They changed their tune. Deputy Spring's view on 5 November was that Deputy Reynolds was unfit to govern.

Chairman

Please keep to amendment No. 164. We have 20 other amendments to deal with.

Mr. Yates

The difficulty is that the threshold has not been increased sufficiently since the CAT Act was originally introduced in the mid-seventies. It was acknowledged that it was not enough to index the threshold. There was no change in the threshold in this year's budget and instead anything over £10,000 is now being covered whereas previously the threshold was £171,500. Will the Minister outline how this policy is consistent with their election promise?

Mrs. Doyle

I compliment the Revenue Commissioners or whoever was responsible for this user friendly document. It is almost idiot proof and helps those of us without an in-depth knowledge of financial legalese to come to terms with what the Minister prescribes.

I am shocked at the reintroduction of death duties. It will be forever held against the Minister. He will be known as the Minister who reintroduced death duties. Many of us remember when they were abolished in the mid seventies. I am thinking of one case — maybe my colleague Deputy Yates will be aware of this — in County Wexford which underlines the horror at the prospect of death duties when a member of the family died. Four or five miles from Gorey, a husband died five days before the abolition of death duties. They had a dry stock farm and did not have any children. Because of the implications of the abolition of death duties to the treatment of that estate, his wife put him in the deep freeze and only called the doctor and the Garda on April 6 or 7, whichever was the relevant day.

Mr. Cox

Did she put him in the microwave?

Mrs. Doyle

You could not retrace your steps if you used a microwave. She lifted him out of the freezer and put him back on the sofa and called the Garda the day after death duties were enacted. It meant that much in terms of the treatment of her estate.

Chairman

I hope Deputy Doyle realises that she could now be questioned with regard to this item.

Mrs. Doyle

It is well known. They were colourful characters. What is going through my mind, as I listen to this debate on the reintroduction of death duties, is I hope that some poor man or woman will not have the plug pulled before the enactment of this legislation. Anyone who dies from the date of enactment of this legislation will be caught by this penal death duty. That is the extent of the concern in Ireland about death duties generally and that is the reason the campaign against probate tax is being conducted.

Mr. B. Ahern

I think the next time the Deputy comes across extreme constituents like that who do not want to pay tax he should say: "Join the rest of us. Be like PAYE people and pay the £3.5 billion". It is far less dramatic.

Mrs. Doyle

The farming and rural community pay their income tax today. Let us be quite clear. This is death duties on top of capital acquisition tax, on top of income tax.

Mr. B. Ahern

I agree. I quoted the figure earlier on. They pay 1.5 per cent of the total.

Mr. Cox

Would the Minister agree to reduce VAT rates on large deep freezers after the introduction of this tax?

Mr. B. Ahern

It just shows that in 1974 they had deep freezers. I know people who still have not got them.

Mrs. Doyle

If we are stuck with this iniquitous tax, and the voting strength indicates that we will be, could I ask the Minister to ensure that all property transfers between spouses are exempt? The Minister gave a figure of £3 million. I would urge him to yield on that and put a human face on the death duties he is reintroducing. He might find a slightly easier acceptance by one and all of what he is now doing.

I would like the Minister to explain slightly more clearly the treatment of a surviving spouse and the dwelling house in cases where the husband and wife are no longer living together. They may have a divorce Irish style but in many cases there are two family homes. He is living in a separate house and she is living in what was the family house but it is in his name. I am not sure which is the family house in that case or whether both houses would be exempt. With the complicated civil position I would like to know how the dwelling house exemption would actually be treated.

Mr. B. Ahern

The house would be exempt regardless of whether the spouse was in Hong Kong or in the house.

Mrs. Doyle

There are two houses. I am not saying anyone is in Hong Kong. One lived in Gorey and the other in Wexford and both houses were in his name. He moved out of the family house which traditionally in Ireland was in the husband's name. He moved off to another property.

Mr. B. Ahern

The house that is part of the estate would be subject to the probate tax.

Mrs. Doyle

Both houses would be part of the estate in that case. The wife and children would be living in one and he would be living in the other, maybe with another woman. There would be two houses in his name, part of the estate.

Mr. B. Ahern

In this case is he dead?

(Interruptions.)

Mrs. Doyle

There are many cases where that situation exists.

With death duties when there was no money in the estate to pay them, they attached to the property and eventually whoever bought the land ended up owing the death duties. In the case of illiquidity, will the liability for payment of the outstanding tax attach to the property or will it attach to the person who benefits from the estate? Is it any different from death duties? To get this extra £12 million, why introduce a new tax? Why not amend capital acquisitions tax regulations and thresholds?

The Minister indicated that where the taxable value of the estate exceeds £10,000 the entire estate is liable to tax. Would the Minister not exempt the first £10,000? He gives marginal relief for estates valued at £10,400 and £10,200 but in any estate the first £10,000 should be exempt. Maybe the Minister could put a figure on what that would cost. It would put a more human face on this tax as well as exempting more transfers to spouses.

Apart from funeral expenses, no other liabilities or expenses incurred after the date of death are deductible in arriving at the net estate for purposes of probate tax. I put it to the Minister that you could have protracted legal problems in sorting out some mistakes and huge legal fees could be incurred after the date of death. In the care of large estates there could be very large accountancy fees, particularly if the estate was spread between Ireland and abroad, in sorting out the compliance forms in relation to this and other taxes. Legal fees and accountants' fees incurred after the date of death in the matter of resolving the problem of the estate should be fully allowable as an expense, as well as the funeral expenses. I would appreciate the Minister's response.

Mr. Ferris

People yesterday were prepared to cut off their arms to get certain benefits and now they are going into deepfreezers to escape death duties. I said I welcome tax reform and that the spreading of the tax net to other sections was in a way tax reform but I did object to the principles of double taxation and I identified a couple of areas. The Minister in replying has said that this tax when it is applied will be counted as an expense for inheritance tax purposes. That was one of the anomalies I saw in it. I asked him if the exclusion given in the Finance Act, 1976, in the case of capital acquisition tax could not also be given here. He said my suggestion would be regressive. I have to accept what the Minister said on that. These are two areas in which the Minister has satisfied me in that there is not double taxation.

Deputy Yates asked me a question and he deserves an answers. He was absent when I made this contribution originally. I always found it unpleasant, unfair, immortal, to tax transfer of property, particularly if the farm or business continued to operate within the family. In following that argument to its conclusion I discovered that the social welfare code would then penalise the father and or mother in the family because they would not qualify for non-contributory old age pension. As of now they will transfer it, divest themselves legally of their property and qualify automatically for non-contributory pension which is worth just under £5,000 a year. If we had no capital acquisition tax, then the father and mother would be still in the family farm but would have lost the management control of it. They would be excluded. I had to look at what the cost factor would be. In the area of social welfare more people qualify for non-contributory old age pensions than for contributory pensions. That is a fact. It is a significant benefit for people legally to divest themselves. I genuinely felt, during the election, that transfers within a family should be exempt.

Mr. Yates

Were you aware of the letter that Barry Desmond sent to the IFA?

Mr. Ferris

He did so at my request, on the basis that a transfer within the family should be exempt. But if it is within the family then you exclude the parents, who transfered the farm, from their benefits under the Social Welfare Acts. There is a down side to everything. I want to be honest with people. We all contested elections in the belief that all of us would have majority shares in Government. I do not think Fine Gael have come to grips with the fact that they are not in it at all. But the reality is that all things change. I must say, in fairness to my colleague, the Minister for Finance, that in partnership with Fianna Fáil we have got much more in many of these areas than we would ever get from Fine Gael. That is a fact.

Mr. McGrath

I was not quite listening but I presume Deputy Ferris is doing an about turn again. The Minister did not answer the question in relation to paying the money up front, that in an estate that has to be divided out, the probate money has to be lodged with the papers. All bank accounts and everything are frozen at that stage and will not be opened until probate has been completed. You are asking somebody who wants to administer the property, or if it is a case of a share-out to borrow from the bank to pay their probate tax so that everything can be released and opened up. What is the situation there?

The Minister said if he inherited £100,000 this weekend it would cost him only £2,000 and he would be delighted. What would be the stamp duty accruing on a property worth £100,000? It is not just a straight £2,000 on £100,000. There are other complications involved and it is only fair to outline what those are too.

The income limit of £74 for dependants is a very low limit. I would like you to look at it because I think it is far too low. It is not a reasonable figure at all and you should come up with something that is reasonable.

Like my colleague, Deputy Doyle, in regard to the transfer of property between spouses — we are talking about a total of £3 million according to the Minister's own figures — to find that £3 million elsewhere and make the transfer of property between spouses tax free. We reached that situation a number of years ago and this is a major retrogade step.

The Minister indicated that the total transfer of property through inheritance in this country per annum is £700 million which seems to me a remarkably low figure. Is that all it runs to on probate?

Mr. B. Ahern

That is excluding property in joint ownership.

Mr. McGrath

No, he mentioned £550 million of which he is going to get two per cent, which is £11 million. He also said there was £150 million in exemptions. That brings it to a total of £700 million. That seems a remarkably small amount of money per annum for inherited property in this country.

Mr. Connaughton

On the question of the transfer of property between spouses and the £3 million that could be saved in that instance, the Minister did not answer the question I asked at the beginning about joint ownership and stamp duty. I was talking about inconsistency. That, of course, ties up with what many Deputies are saying today about the transfer of property between spouses. The Minister mentioned that £3 million was involved there. I think that is the kernel of the matter and it is very important. I wonder if the Minister could give me some indication of what the extra cost would be if the exemption limit was raised from £10,000 to £50,000? That is in one of our amendments.

Mr. B. Ahern

The cost could be £4 million extra.

Mr. Connaughton

The Minister has a very plausible answer to most of the queries we have raised today but the reality is entirely different. My colleague, Deputy Yates, instanced a farm of 80 or 90 acres. I was at a public auction last Monday in east Galway at which a 50 acre farm of only reasonable quality land was sold for £125,000, around £2,500 an acre. I make the case to the Minister that if that farm was involved in the probate tax and we were talking about a tax on just £125,000, how much probate tax would that sum incur? I would be very grateful if the Minister could answer that question. That is a very small west of Ireland farm and if that is not penal, by any standards, on that size of farm I do not know what is.

Mr. Cox

Deputy Keogh asked a question earlier and I would like to return to it to clarify it in my own mind. My understanding is that the Programme for Government — is to try to see by the end of next year a divorce jurisdiction of some sort in the State and that as preparatory legislation for that Minister Taylor proposes to bring in some kind of community property legislation as between spouses. Would it not follow that the introduction of such legislation would, on the balance of probabilities, write off the £3 million in respect of spouses? If the Government is already anticipating legislation in that area is it not something of financial "Tautology" to bring in something that for other reasons you intend to knock out in the course of the same year by way of legislation?

Ms. Keogh

I made that point earlier. In fact, in the debate on marital breakdown earlier in this session this factor was alluded to. I know it has not gone right down the road but my understanding is that community property goes beyond the shared ownership of the family home. It is the home and chattels, etc. You can see the difficulty that would arise in that case.

Mr. Boylan

The Minister said that if he inherited a property worth £100,000 he would be glad to pay £2,000 probate tax on it. I am sure he would. Indeed it would be great for any one of us around this table to get 40 acres of land in Meath, Cavan or Mayo. It is not our bread and butter. But when it is your bread and butter and you have a wife and a small family it is a totally different scene. A farm has to be worked. It is not a toy. It is not something you go to at the weekend. It is something you have to work at every day to provide for your family. There is a demand for land. It is not because there is much profit to be made from it but because more people, like the Minister, are coming into the marketplace looking for something for the weekend, land to put a few cattle on and make a hobby of it. For the real farmers — the people I represent — whose bread and butter it is, this is an imposition. I make this last appeal to the Minister to withdraw the death duty.

Mr. Finucane

The one thing that strikes me in relation to these taxes in general is that, if you are a progressive farmer or business person, reinvest your profits and pump in borrowings, because of these taxes you can be financially exposed. It could lead to a divesting of assets in order to pay them. What does the Minister define as hardship cases? I would be interested to hear from him of typical hardship cases the Department would encounter.

Mr. Cox

I wonder when we will get around to taking amendment No. 186.

Mr. B. Ahern

Can we agree amendment No. 186? It would save me a great deal of trouble. I could not help thinking, when Deputy Boylan was talking about the 40 acres in Meath, that it could be far handier than this discussion has been for all of us over the last three days.

I am considering Report Stage amendments to provide limited tax relief for certain donations in support of enterprises in disadvantaged areas. I am referring to the enterprise trusts. An amendment is required to cover cases where individuals would be giving donations to assist communities for job creation purposes. There is one there in relation to enterprise trusts but I think an amendment in needed, as there is a difficulty with it.

In addition to Report Stage amendments I have mentioned over the last few days, I wish to inform the committee that I will be bringing forward three Report Stage amendments to the new section inserted by Committee Stage amendments Nos. 63 and 72 to correct minor drafting amendments.

I would like to refer to a point made by Deputy McGrath. We were talking about the 2 per cent probate tax on £550 million of assets. The exemptions will be £150 million. I might have said the joint properties would be £150 million. It is £550 million that the 2 per cent will be paid on; £150 million would be the exemptions, so that is £700 million. That excludes the joint ownership. You have to draw a line somewhere in relation to post-death expenses. I accept what Deputy Doyle said, that you could have a legal position that would go on for some time after.

Mrs. Doyle

Could I ask the Minister to look at it between now and Report Stage. There is very little involved.

Mr. B. Ahern

At the same time, you are not taxing any post-death income anyway. Does that not cover it? If you take what happens post-death there is no further taxation.

Mrs. Doyle

It is a charge on the estate which has been incurred after the death. It should be an allowable expense.

Mr. B. Ahern

It is a charge on the estate, not on the property. The attachment order is on to the property and not on the individual. If you were to exempt the first £10,000 the cost of that would be between £2 million and £3 million. It is normal enough that people pay up front. What happens is that executors borrow on the strength of the assets of the estate. The cost of the borrowing in that case is balanced by the discount that is allowable. Also in cases of difficulty there are the illiquidity provisions. In relation to the point raised by Deputy Doyle where one house is exempt, this would be the original family home presumably. In general the second house will be in the joint names of the separated husband and his partner and if not, only one house can be exempt.

Mrs. Doyle

Only one house?

Mr. B. Ahern

The question for decision is which house is exempt. It depends on the circumstances.

Mr. Doyle

If he leaves a will and leaves some of the property to his official wife and family and leaves another to the common law wife what happens?

Mr. B. Ahern

The Revenue attitude on that is that they would take a reasonable view.

Mrs. Doyle

Would they? As reasonable as thier treatment of all other taxpayers.

Mr. B. Ahern

They would be decent about it.

Mrs. Doyle

As reasonable as they treat them in relation to income tax at present, I suppose.

Mr. B. Ahern

They could not preempt the decision. In a case like that where it is not clear you would have to look at each individual case. All kinds of combinations arise.

Mrs. Doyle

It is a litigants charter if the Minister does not clarify by Report Stage exactly what it means. You could be talking about £200,000 houses if you are looking at the upper end of the market. It is worth sorting out.

Mr. B. Ahern

It depends what name the second house is in. If the second house is in joint names——

Mrs. Doyle

If it is not.

Mr. B. Ahern

Then it will be part of the estate and only the first house will be covered. On Deputy Finucane's question on the illiquidity provisions, deferment of tax will apply where there are insufficient liquid assets in the estate to meet the tax liability. Hardship provisions will apply where payment of the tax would cause hardship; these provisions could involve indefinite postponement.

Mr. Cox

Deputy Taylor's legislation, will that not contradict the £3 million from spouses? I have not heard the answer.

Mr. B. Ahern

It will not.

Mr. Cox

So what is the meaning?

Mr. B. Ahern

I do not know what is in it yet.

Mr. Cox

You know that it is to deal with community of property and that it is designed to have those assets shared among spouses in terms of ownership.

Ms. Keogh

The Minister had better tell the Minister for Equality about this.

Mr. B. Ahern

The fact is the houses are already exempt so you are talking about other property.

Mr. Cox

Will it not affect the Minister's £3 million estimate in terms of income he is going to get from spouses if the property is to be community property? Is the Minister not bringing in something in the Finance Bill which is flying in the face of the logic of something in social legislation?

Mr. B. Ahern

No, I do not think we are.

Mr. Cox

Will the Minister check that before the Report Stage? I would be interested to hear an answer on that.

Mr. B. Ahern

I do not think we are contradicting it.

Mr. Cox

It is a great compliment to those concerned with agricultural relief that Deputy Yates's colleagues put pressure on the Minister for such a prolonged period.

(Interruptions.)

A Deputy

At the commencement of this committee a case was made that the Minister for State, Deputy Eithne Fitzgerald, be requested to attend in relation to Structural Funds. Have we received a reply from the Minister?

Chairman

It is not relevant to the Bill. We have not yet received a reply.

A Deputy

Has she indicated if she is coming?

Chairman

For the information of Members, it is proposed that the committee will meet again on Friday, 11 June to consider the Estimates for the Department of the Environment. I will ask that brief material for Members be circulated as soon as possible. Is it agreeable to Members that we meet at 10 a.m. on 11 June?

Mrs. Doyle

In the Seanad Chamber?

Chairman

More than likely it will be in the Seanad Chamber. Is it agreed that we meet at 10 a.m. on Friday, 11 June, concluding at 1 p.m. or 1.30 p.m.?

Mr. B. Ahern

There is the second year we have taken the Finance Bill in Committee. I thank you, chairman, the committee and the staff of the Houses. It was not easy switching to two venues but I appreciate the efforts. I also appreciate the efforts of my officials from the Revenue Commissioners and the Department of Finance. Last year, the Finance Committee, on a proposal by Opposition parties put forward a suggestion to do it this way. Having brought many Bills through the House, from a time factor, we covered about four and a half days' Dáil time. It proved the benefit of the committee system. I thank the chairman, the Opposition spokesmen and the Deputies on my own side, particularly Deputy Ferris, who has been here all week.

Mr. Yates

I endorse what the Minister said. I thank you, chairman, for the pleasant and affable way you stretched a point at various times to facilitate the debate. I think the Bills Office who were invaluable to Opposition spokesmen, who do not have the resources available to the Government. There are more advisers to the Minister than committee Members. I suppose that is what keeps the ship of State going. I thank the Minister for the courteous way he dealt with all the queries. I also thank his officials.

Chairman

As chairman, I would like to thank the Minister and his back-up staff, also the Members of the House and members of the committee for the courtesy they showed to me for the past three days, from which we all benefited. This committee has shown, during its first real working seession, that it has a contribution to make with regard to legislation, both in this Bill and in the future.

Mrs. Doyle

I agree with everything that has been said. On a different point, many Members on all sides have registered their dissatisfaction with this venue, particularly for such an important issue. If that could be noted, most Bills, particularly a Bill of the importance of the Finance Bill, should be taken in the Dáil or Seanad Chambers. We should not be on this merry-go-round, running backwards and forwards, without all the facilities, pleasant as this building is. That should be noted to try to change it for the future.

Chairman

With regard to that, we made a suggestion that we sit on a Monday. It was not convenient although it would have meant we would have had the Seanad Chamber available for two days and have benefit of television. I hope, if we must come back here in future that there will be television facilities. It is hoped to have them installed in this room in early June to facilitate the holding of committee meetings. It would have been of enormous benefit to the public of some of the contributions of the Members had been available to them on the Official Report tonight and last night.

Mr. Rabbitte

Most politicians wish that. It would be helpful to them too as well as to the public. In that sense we should thank the press who have stayed with us from the beginning. However, we should note that not all of them stayed with us. If the experiment on Dáil reform is to be successful the media, especially those elements of it who have written so much about Dáil reform in recent years, must play their part. If that means the media managers and so on making arrangements in terms of the provision of staffing that covers the different committees and the Dáil when all are sitting together, it should be done. That is a very imporant dimension. I do not think that Deputies will generally attend to the work of committees over what will be at least a four day Dáil schedule unless the media pays attention to it. This Bill which is the most important fiscal, taxation and, indeed, broader economic measure of the year — has got little coverage in the print media. That is something on which we should comment. In saying that, I know that some colleagues from the media who attended here did a lot of work that has not necessarily appeared in print. Generally speaking, it is an aspect that must be looked at.

Mr. Cox

I would like to express my thanks to you, chairman, and to the staff of the Bills Office and elsewhere, the Minister and his staff. I found the past few days intensive but very rewarding. This is a good example of a Legislature in action at what its business is primarily meant to be. I endorse what Deputy Rabbitte said for those who are loud in calling for legislators to legislate. There has been a curious vacuum in terms of observing that process which has been their priority for so long.

Mr. Ferris

As one of the Whips who spent months trying to put this procedure into operation, this is the first real test from a legislation point of view, apart from the Estimates of the committee system. I thank the Whips of all parties for their consultation with Members. I am glad that it worked out. I think it has been satisfactory. We did not get all we wanted, but we have a better knowledge of what the Finance Bill is about. I thank the Minister and his advisers.

Chairman

I am required to put the following question in accordance with an Order of the Dáil of 20 May:

That the amendment set down by the Minister for Finance to Parts VI and VII of the Bill and not disposed of is hereby made to the Bill, and in respect of each of the sections undisposed of in the said Parts that the section or, as appropriate, the section as amended, is hereby agreed to, that the First, Second, Third, Fourth and Fifth Schedules of the Bill are hereby agreed.

As there are fewer than 31 Members present, Standing Orders require that the division cannot be taken until eight minutes have elapsed or as soon as all Members of the committee are present. The Vote will take place eight minutes from now.

If Deputy Rabbitte wants a separate vote an amendment No. 196, I am sure he can put down an amendment on Report Stage.

Mr. Yates

Deputy Rabbitte and every Member of the committee will have an adequate opportunity to debate its contents. I look forward to that debate.

Question put.

The Select Committee divided: Tá, 19; Níl, 11.

Tá
Ahern, Bertie.	Killeen, Tony.
Ahern, Michael.	Ó Cuív, Eamon.
Ahern, Noel.	O'Leary, John.
Briscoe, Ben.	Power, Seán.
Broughan, Tommy.	Ryan, Eoin.
Ellis, John.	Ryan, John.
Ferris, Michael.	Smith, Brendan.
Fitzgerald, Brian.	Wallace, Dan.
Kenneally, Brendan.	Walsh, Eamonn.

Níl
Boylan, Andrew. Connaughton, Paul. Cox, Pat. Currie, Austin. Deenihan, Jimmy.	Doyle, Avril. Finucane, Michael. Keogh, Helen. McGrath, Paul. Rabbitte, Pat. Yates, Ivan.

Question declared carried.

Bill, as amended, reported to the Dáil.

The Select Committee adjourned at 6.10 p.m. until 10 a.m. on Friday, 11 June 1993.