This section provides for technical amendment of section 36 of the Finance Act 1977 which is concerned with the construction of references to "child" including a son or daughter in the Tax Acts and the Capital Gains Tax Acts. At present section 36 provides that any reference to a child in those Acts, includes a child adopted under a law that has, in the place where it applies, substantially the same effect as adoption under our own adoption Acts. This section now amends section 36 to replace the existing reference which I have just described with a reference to a foreign adoption effected in accordance with the Adoption Act 1991 thereby bringing the section into line with recent developments. This will ensure that, for the purpose of the Tax Acts and the Capital Gains Tax Acts, adoptions effected abroad will be recognised on the same basis as they are for the purpose of general law under the Adoption Act 1991.
SECTION 16.
Does it apply to all foreign adoptions in any country or jurisdiction?
Yes, in any jurisdiction.
I was going to ask the Minister, if my amendment has been ruled in order, what kind of a reply he would have made. It used to be almost fashionable some time ago to talk about wealth tax but it seems to be no longer so.
That's because the Deputy is a hardchaw socialist.
A wealth tax is as relevant today as it was ten or 15 years ago. I find it extraordinary to read the outcry in Sunday papers and to hear of people jumping all over the Minister, threatening doomsday if he proceeds with some of the measures envisaged in the Bill. I find it difficult to be moved by these warnings. In any society that professes to be egalitarian a moderate wealth tax is appropriate. I wonder if the Minister would like to comment on the section?
We are not into the area of policy changes. I believe your amendment which I read the other day proposes a whole new section on the wealth tax which we do not propose to include. There have been hysterical remarks about the prospect of a wealth tax. We are trying to achieve fairness. We will deal with it later rather than now. The concept of wealth taxes is a policy area that does not require examination now. One step at a time.
What we try to do as we go into the area of base broadening is another matter. Wealth taxes, in the form in which they were known in this country, were found not to acceptable because they were believed to be unjust and unfair. Later on I may comment on other more appropriate measures.
I accept that but where great personal wealth exists, as it unquestionably does, we ought to devise some system which would oblige such people to make a contribution to the costs of State services. The Minister in his reply on Second Stage gently chided my na�veté in remarks I made about the special savings accounts. He implied that if I thought these accounts would persuade the filthy rich to bring their money back from offshore tax havens that I was na�ve. He was right; they are not designed to persuade wealthy persons to repatriate money. The lesson of last year is that many who made enormous killings on the sale of property and so on managed not to pay a penny to the Exchequer. We do not seem to be able to oblige such people to make a contribution to the Exchequer and it is that kind of person I have in mind with this amendment. It is a social crime that they should evade taxation. In the United States few weeks ago a 71 year old billionairess was fined £20 million for arrears of income tax. After years of arguing she said she would pay up but she also went to jail for eight years. That situation would be unheard of here. We are omitting to learn from the lessons of last year.
We can deal with this matter on other sections but in case my silence might be construed as disagreement I declare that I fully agree. Some people in our society do extremely well and pay very little tax. I have to be careful not to say whether legally or illegally. We devised this Finance Bill so that even the best brains in the land — there is no implication there that my colleagues around me from Revenue are not among the best brains in the land — will not find legal ways around it. The may be other illegal ways but we are closing down as many as we can.
Where it is possible to stimulate enterprise incentives must be offered and it is not always possible to foresee how they might be abused. Someone made a comment relevant to this on Second Stage and recently, in my dealings with the Financial Services Centre, I met a number of Japanese, American and German business people who told me the policies we are adopting now were adopted in their countries in the last few years. They are closing off tax shelters for the same reasons we are, having found that they were subject to widespread abuse. A straight wealth tax is not always the best way of dealing with it. I will try to achieve base broadening as far as I can as I believe strongly in that concept. It is wrong that one person should pay 48p when she or he goes over a certain threshold on what is not a sizeable salary while another can make a few hundred thousand and pay no tax by investing or reinvesting that money. That will no longer be possible. People should have some room for manoeuvre but until now too much room was available.
Some, who are not spokespersons for their parties, have said that these arrangements are tremendous for creating jobs but I pointed out at the end of Second Stage that ingenious tax planners and accountants took three or four of these measures and interrelated them. That is how they were used. I would rather close them off and look at new ideas rather than talk about a blunt wealth tax which did not work well when it was tried before.
We have had a free run for 15 minutes on an item the Chairman ruled out of order. We must accept the rulings or it will be open season on every section whether ruled out of order or not.
Chairman
We will get through the sections if we get co-operation.