I move amendment No. 8:—
In sub-section (1), lines 35 and 36, to delete "issued after the passing of this Act".
The purpose of this section is to give relief from estate duties by assessing at two-thirds of their value shares of Irish companies issued after the passing of the Act, subject to the limitations imposed in Section 7 of the Finance Act, 1932. While the main purpose of that section has our approval as being in accord with the general policy of our Party to induce, by tax measures, interest in Irish, as against external investments, it seems to us that the Minister has gone a long way towards defeating the purpose—if that is his purpose—by limiting the concessions to future share issues.
I doubt if the enactment of this section will influence very much the success of future share issues by Irish manufacturing concerns, but there is advantage to be secured by inducing greater stock market activity in the shares of Irish concerns generally. If that can be done by measures of this kind, or any other measures, then new issues are likely to have a much better chance of succeeding than otherwise.
The difficulty, I think, at the present time is that stock market news relates more frequently to British stocks than Irish stocks. There is not a great deal of movement in Irish stocks but there is always some development of interest on the British stock market. The result is that the attention of prospective investors is more frequently directed to British market news than to Irish news. That is detrimental to our industrial development. Anything which tends to create greater interest in the issues of Irish companies and greater activity in regard to them can be very beneficial.
I think it would help to secure that position if this very limited concession—which will not involve a very great deal of money—was extended to all issues of stock. There seems to be something anomalous and wrong in giving a concession of this kind which can only be realised upon the death of the owner of the stocks, to persons who in future may decide to invest in issues of Irish companies and to withhold it from those who so invested in the past.
I do not know if the Minister or his advisers have fully considered all the complications which these proposals may involve for companies whose shares are quoted on the stock market and for the management of the stock market itself. A financial writer in one of the morning papers commented on the provisions of the Finance Bill— both the section dealing with the extension of Section 7 of the 1932 Act and this section. He said in relation to the earlier section we have already discussed dealing with Section 7 of the 1932 Act and having given an illustration of the effect of that section in relation to a particular company—this is from the Irish Independent of Monday:—
"It was therefore essential to distinguish between the old and the new capital."
The writer was referring to the effects of the limitations in the Act of 1932:—
"The only way around the matter was to create a second equity and as preference shares were also similarly issued, it was necessary to create a new line of preference shares."
Further down, he said:—
"There are quite a number of Irish companies whose capital is spread over several different issues in a similar way and for the same reason. The new amendment of the Finance Act of 1932 will clear the way for a welcome consolidation of these issues, providing as it does for the formerly ineligible capital to become eligible for the abatement of income-tax."
The Minister is reintroducing these complications all over again. The writer did not appreciate apparently that this section is limited to shares issued after the passing of the Act.
I think that the very limited scope of this section has not been appreciated by those interested in these matters. There are many Irish companies with authorised capital in excess of their issued capital. No doubt at some stage they intend, if business expands, to issue shares to the authorised limit. Is it contemplated that these additional shares issued will have a different standing to those already issued? They are, according to the Bill, to be described and designated so that they can be clearly distinguished from the earlier issues. Is it contemplated that these two classes of shares will have different quotations on the stock market? This section only applies to shares issued to the public in respect of which there is a stock market quotation. What is the position regarding shares of which only a part of the nominal value was subscribed and on which there is a call liability? Are these shares deemed to have been issued before the passing of the Act and therefore not eligible or will they qualify under this Act because part—perhaps the major part —of the total amount to be subscribed will be paid after the qualifying date?
I attemped to make a calculation as to what the cost might be if this section was extended but I could not. There is always considerable doubt as to what the yield of estate duty will be in any one year. The Minister announced in the financial statement that he got a "wind-fall" yield from death duties last year. That can arise any year, but, so far as it is possible to estimate, it does not appear to me that the cost to the Exchequer over any length of time can be very considerable. This concession is limited to shares of companies which have been issued for public subscription.
We know from the report of the Industrial Taxation Committee that the amount of capital put into Irish industry by public subscription for issued shares is much less than half the total investment in Irish industry. The great majority of companies engaged in industry here are private companies, the shares of which have not got a public quotation and which do not qualify either for this concession or for relief under Section 7 of the Act of 1932. Having regard to the nature of our industrial organisation, to the experience of the past of the manner in which industrial capital is raised, there does not appear to me to be any reason why this concession should be restricted to shares to which Section 7 of the 1932 Act applies.
I think it is inevitable that, whatever form our future industrial development may take, a large part of it will result from the activities of private companies. I should imagine that is not an unusual position in smaller countries where industrial units are smaller in size also and where there is a natural desire to hold the control of these smaller units within the family group of the person who initially started them. I do not know if the Minister has considered this point. If he is not prepared to do so, I do not suppose any arguments here will persuade him to change his mind, but it seems to me that if he has in this section the idea which I expressed——