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Dáil Éireann díospóireacht -
Tuesday, 21 Jun 1966

Vol. 223 No. 6

Finance Bill, 1966: Committee Stage (Resumed).

NEW SECTIONS.

I move amendment No. 8a:

Before section 10 to insert the following new section.

"10.—(1) In this section—

‘the Act of 1935' means the Finance Act, 1935;

‘the Act of 1965' means the Finance Act, 1965.

(2) (a) Subject to the next paragraph, the duty of customs imposed by section 1 of the Finance (Customs Duties) (No. 4) Act, 1931, shall, in respect of mineral hydrocarbon light oil chargeable with that duty, be charged, levied and paid as on and from the 10th day of March, 1966, at the rate of 3s 8d the gallon in lieu of the rate specified in section 14 (2) of the Act of 1965.

(b) The said duty shall, as on and from the 15th day of June, 1966, be charged, levied and paid at the rate of 3s 9 19/20d the gallon in lieu of the rate specified in the foregoing paragraph.

(3) (a) Subject to the next paragraph, the duty of excise imposed by section 1 of the Finance (Miscellaneous Provisions) Act, 1935, shall, in respect of mineral hydrocarbon light oil chargeable with that duty which is sent out, on or for sale or otherwise, from the premises of the manufacturer thereof on or after the 10th day of March, 1966, or is used by such manufacturer on or after that date for any purpose other than the manufacture or production of mineral hydrocarbon oil, be charged, levied and paid at the rate of 3s 7d the gallon in lieu of the rate specified in section 14 (3) of the Act of 1965.

(b) The said duty shall, in respect of mineral hydrocarbon light oil, chargeable with that duty, which is sent out, on or for sale or otherwise, from the premises of the manufacturer thereof on or after the 15th day of June, 1966, or is used by such manufacturer on or after that date for any purpose other than the manufacture or production of mineral hydrocarbon oil, be charged, levied and paid at the rate of 3s 8 19/02d the gallon in lieu of the rate specified in the foregoing paragraph.

(4) (a) Subject to the next paragraph, the duty of customs imposed by section 21 of the Act of 1935 shall, in respect of hydrocarbon oil chargeable with that duty, be charged, levied and paid as on and from the 10th day of March, 1966, at the rate of 3s 0¾d the gallon in lieu of the rate specified in section 14 (4) of the Act of 1965.

(b) The said duty shall, as on and from the 15th day of June, 1966, be charged, levied and paid at the rate of 3s 2 7/10d the gallon in lieu of the rate specified in the foregoing paragraph.

(5) (a) Subject to the next paragraph, as on and from the 10th day of March, 1966, the rate of any rebate allowed under section 21 (2) of the Act of 1935 shall—

(i) in respect of hydrocarbon oil on which such rebate is allowable and on which the duty of customs mentioned in subsection (4) of this section was paid at the rate of 3s 0¾d the gallon, be 3s 0¾d the gallon, and

(ii) in respect of hydrocarbon oil on which such rebate is allowable and on which the duty of customs mentioned in subsection (4) of this section was, by virtue of paragraph 6 of the Imposition of Duties (No. 84) (Hydrocarbon Oils) (Customs Duties) Order, 1959, paid at the rate of 2s 11¾d the gallon, be 2s 11¾d the gallon,

in lieu of the rate allowable immediately before the 10th day of March, 1966, by virtue of section 14 (5) of the Act of 1965.

(b) As on and from the 15th day of June, 1966, the rate of any rebate allowed under section 21 (2) of the Act of 1935 shall—

(i) in respect of hydrocarbon oil on which such rebate is allowable and on which the duty of customs mentioned in subsection (4) of this section was paid at the rate of 3s 2 7/10d the gallon, be 3s 2 7/10d the gallon, and

(ii) in respect of hydrocarbon oil on which such rebate is allowable and on which the duty of customs mentioned in subsection (4) of this section was, by virtue of paragraph 6 of the Imposition of Duties (No. 84) (Hydrocarbon Oils) (Customs Duties) Order, 1959, paid at the rate of 3s 1 7/10d the gallon, be 3s 1 7/10d the gallon.

in lieu of the rate allowable immediately before the 15th day of June, 1966, by virtue of the foregoing paragraph.

(6) (a) Subject to the next paragraph, the duty of excise imposed by section 21 of the Act of 1935 shall in respect of hydrocarbon oil chargeable with that duty which is sent out, on or for sale or otherwise, from the premises of the manufacturer thereof on or after the 10th day of March, 1966, or is used by such manufacturer on or after that date for any purpose other than the manufacturer or production of hydrocarbon oil, be charged, levied and paid at the rate of 2s 11¾d the gallon in lieu of the rate specified in section 14 (6) of the Act of 1965.

(b) The said duty shall, in respect of hydrocarbon oil chargeable with that duty which is sent out, on or for sale or otherwise, from the premises of the manufacturer on or after the 15th day of June, 1966, or is used by such manufacturer on or after that date for any purpose other than the manufacture or production of hydrocarbon oil, be charged, levied and paid at the rate of 3s 1 7/10d the gallon in lieu of the rate specified in the foregoing paragraph.

(7) (a) Subject to the next paragraph, as on and from the 10th day of March, 1966, the rate of any rebate allowed under section 21 (4) of the Act of 1935, in respect of hydrocarbon oil on which such rebate is allowable and on which the excise duty mentioned in subsection (6) of this section was paid at the rate of 2s 11¾d the gallon, shall be 2s 11¾d the gallon in lieu of the rate allowable immediately before the 10th day of March, 1966, by virtue of section 14 (7) of the Act of 1965.

(b) As on and from the 15th day of June, 1966, the rate of any rebate allowed under section 21 (4) of the Act of 1935, in respect of hydrocarbon oil on which such rebate is allowable and on which the excise duty mentioned in subsection (6) of this section was paid at the rate of 3s 1 7/10d the gallon, shall be 3s 1 7/10d the gallon in lieu of the rate allowable immediately before the 15th day of June, 1966, by virtue of the foregoing paragraph.

(8) (a) Subject to the next paragraph, as on and from the 10th day of March, 1966, the rate of any repayment allowed under section 10 (8) of the Finance Act, 1957, in respect of hydrocarbon oil on which such repayment is allowable and on which either—

(i) the excise duty mentioned in subsection (6) of this section was paid at the rate of 2s 11¾d the gallon, or

(ii) the customs duty mentioned in subsection (4) of this section was paid at the rate of 2s 11¾d the gallon or 3s 0¾d the gallon,

shall be 1s 4d the gallon in lieu of the rate allowable immediately before the 10th day of March, 1966.

(b) As and from the 15th day of June, 1966, the rate of any repayment allowed under section 10 (8) of the Finance Act, 1957, in respect of hydrocarbon oil on which such repayment is allowable and on which either—

(i) the excise duty mentioned in subsection (6) of this section was paid at the rate of 3s 1 7/10d the gallon, or

(ii) the customs duty mentioned in subsection (4) of this section was paid at the rate of 3s 1 7/10d the gallon or 3s 2 7/10d the gallon,

shall be 1s 6d the gallon in lieu of the rate allowable immediately before 15th day of June, 1966."

The purpose of this amendment is to take account of the subject matter of Resolution No. 1 passed by the House last week and reported this evening. It combines the increase on hydrocarbon oils both of the Budget of 9th March and of the Resolution passed in the House last week. Acceptance of the section in amended form will involve the deletion of section 10 as it stands in the Bill.

Amendment agreed to.
Section 10 deleted.

I move amendment No. 8b:

Before section 11 to insert the following new section:

"11. — (1) (a) Subject to the next paragraph, the duty of customs on tobacco imposed by section 20 of the Finance Act, 1932, shall, as on and from the 10th day of March, 1966, be charged, levied and paid at the several rates specified in Part I of the Third Schedule to this Act in lieu of the several rates specified in Part I of the Second Schedule to the Finance Act, 1965.

(b) The said duty shall, as on and from the 15th day of June, 1966, be charged, levied and paid at the several rates specified in Part II of the Third Schedule to this Act in lieu of the several rates specified in Part I of that Schedule.

(2) (a) This subsection applies to manufactured tobacco which was manufactured in, and consigned from, the United Kingdom and was manufactured therein from materials other than materials falling within Tariff Heading number 24.02 in the Schedule to the Imposition of Duties (No. 128) (Customs Duties and Form of Customs Tariff) Order, 1962.

(b) The customs duty on tobacco mentioned in subsection (1) of this section shall, as on and from the 1st day of July, 1966, be charged, levied and paid on manufactured tobacco to which this subsection applies at the several rates specified in Part III of the Third Schedule to this Act in lieu of the rates chargeable under subsection (1) of this section.

(c) The provisions of section 8 of the Finance Act, 1919, shall apply to the duties imposed by this subsection—

(i) with the substitution of ‘the area of application of the Acts of the Oireachtas' for ‘Great Britain and Ireland' and as though the expression ‘manufactured tobacco' in the first column of the Second Schedule to that Act did not include manufactured tobacco to which this subsection applies,

(ii) as though manufactured tobacco to which this subsection applies, together with the descriptions of such manufactured tobacco in Part III of the Third Schedule to this Act, were mentioned separately in the said first column and the appropriate preferential rates specified in Part III of the Third Schedule to this Act were mentioned in the second column of the said Second Schedule to the Finance Act, 1919, opposite the mention of those goods in the first column thereof, and

(iii) subject to the last paragraph (beginning with ‘Goods shall not be deemed') of subsection (1) of the said section 8 being disregarded.

(d) In this subsection "the United Kingdom' means Great Britain, Northern Ireland, the Isle of Man and the Channel Islands.

(3) (a) Subject to the next paragraph, the duty of excise on tobacco imposed by section 19 of the Finance Act, 1934, shall, as on and from the 10th day of March, 1966, be charged, levied and paid at the several rates specified in Part IV of the Third Schedule to this Act in lieu of the several rates specified in Part II of the Second Schedule to the Finance Act, 1965.

(b) The said duty shall, as on and from the 15th day of June, 1966, be charged, levied and paid at the several rates specified in Part V of the Third Schedule to this Act in lieu of the several rates specified in Part IV of that Schedule.

(4) The expression ‘hard pressed tobacco' mentioned in Part III of the Third Schedule to this Act and the next subsection of this section has the same meaning as it has in section 17 of the Finance Act, 1940.

(5) The expression ‘other pipe tobacco' mentioned in Part III of the Third Schedule to this Act means manufactured tobacco of kinds normally intended to be used in pipes, not being hard pressed tobacco."

My remarks in relation to section 10, as amended by amendment No. 8a, are relevant to this amendment. The increase in the tobacco tax imposed by the Budget of 9th March is added to the increase imposed by Resolution No. 3 passed last week and the increase are then combined in this amended section and acceptance of the amended section will involve the deletion of section 11.

Question put and agreed to.
Section 11 deleted.
SECTION 12.
Question proposed: "That section 12 stand part of the Bill."

This is to an extent a consequential amendment on the previous amendment in so far as the extra duty applies to stocks of tobacco in manufacturers' hands— no, I am wrong in informing the House that it is on the same lines as the previous amendment. It is the section imposing duty on stocks of tobacco held on Budget Day. It does not relate to the Resolution to the same effect which we passed last week.

This relates back to 9th March?

Question put and agreed to.
NEW SECTION.

I move amendment No. 8c:

Before section 13 to insert the following new section:

"13.—(1) Subject to the provisions of subsection (2) of this section, there shall be charged, levied and paid on all stocks of tobacco of every description which at five o'clock in the afternoon of the 14th day of June, 1966, are in the ownership or possession of a licensed manufacturer of tobacco and in any place in the State other than a bonded warehouse, a duty of excise, payable by the manufacturer, at the following rate, that is to say:

(a) so far as the stocks consist of unmanufactured tobacco, three shillings and five pence for every pound weight of the stocks, and

(b) so far as the stocks consist of tobacco (including snuff) other than unmanufactured tobacco, three shillings and five pence for every pound weight of unmanufactured tobacco from which, in the opinion of the Revenue Commissioners, the stocks were derived.

(2) The duty imposed by subsection (1) of this section shall not be chargeable on any manufactured tobacco (including cigarettes, cigars and snuff other than offal snuff) as to which it is shown to the satisfaction of the Revenue Commissioners that it was at five o'clock in the afternoon on the 14th day of June, 1966, fully prepared for sale by retail and that either—

(i) it was not the product of any operation carried out by any manufacturer in whose ownership or possession it was at that time; or

(ii) it was at that time held as retail stock in premises used for selling tobacco by retail; or

(iii) it was at that time in transit from seller to buyer under a contract of sale:

Provided that no tobacco shall be deemed for the purposes of this subsection to have been fully prepared for sale by retail if, according to the ordinary course of business of the person in whose ownership or possession it was or to whom it was in transit, it had still to be subjected to some further process (other than packing) before being sold by him.

(3) Every licensed manufacturer of tobacco shall not later than the 21st day of June, 1966, make a return to the Revenue Commissioners in a form approved by them giving such information as they may thereby require and, in particular, showing the quantities by weight of tobacco of every description in his ownership or possession at five O'clock in the afternoon of the 14th day of June, 1966, in any place in the State other than a bonded warehouse.

(4) Every licensed manufacturer of tobacco shall—

(a) produce, if so required, to any officer of Customs and Excise the trade books and all accounts and documents belonging to or in the possession of such manufacturer which are necessary for verifying the return made in pursuance of subsection (3) of this section, and

(b) render all reasonable assistance to such officer in the taking of an account of the tobacco which was in the ownership or possession of such manufacturer at five o'clock in the afternoon of the 14th day of June, 1966.

(5) Every licensed manufacturer of tobacco shall, immediately upon making the return required by subsection (3) of this section or on the 21st day of June, 1966, whichever is the earlier, pay to the Revenue Commissioners the full amount of the duty mentioned in this section on any tobacco which was in his ownership or possession at five o'clock in the afternoon of the 14th day of June, 1966, and was chargeable with the said duty, and the Revenue Commissioners may, if they think fit, defer the payment of the duty to a date not later than the 31st day of December, 1966, upon the manufacturer giving security by bond or otherwise to their satisfaction that such duty will be paid.

(6) Every manufacturer required by subsection (3) of this section to make such return as is mentioned in that subsection who either fails to make such return or makes a return which is incomplete, false or misleading in any material respect or fails or refuses to do anything which he is required by subsection (4) of this section to do shall be guilty of an offence under the status relating to duties of excise and shall for every such offence incur an excise penalty of fifty pounds, and all tobacco in relation to which such offence was committed shall be forfeited.

(7) Where drawback is payable in respect of tobacco on which the excise duty imposed by subsection (1) of this section has been paid, such drawback shall, to the extent of the duty paid in pursuance of the said subsection (1) as determined by the Revenue Commissioners, be a drawback of excise."

This is the section that will impose the duty on stocks of tobacco held by manufacturers on 14th June as of 5 p.m. on that date.

The amendment is opposed.

Question put and declared carried.
SECTION 13.
Question proposed: "That section 13 stand part of the Bill."

This is the section that imposed the increased duty on table waters as in the Budget of 9th March without any change since then.

Question put and agreed to.
SECTION 14.
Question proposed: "That section 14 stand part of the Bill."

This is the section imposing the duty on Irish wine. There is no duty at present on wine made here. It is made from what is called imported "must". That is the raw material for this type of wine. There is duty on imported wine even if it is imported from the United Kingdom and in order to conform to the terms of the Trade Agreement, we either have to eliminate the duty on imported wine or impose a duty on Irish wine. Rather than forgo the duty on imported wine, we propose to impose a duty on wine made here and it will be done in accordance with the Trade Agreement and as agreed by the manufacturers of wine in this country in ten equal annual instalments. The imposition will be trifling and makes no real difference to the manufacture and sale of wine from home sources.

Would the Minister bear with me for a moment? I got confused, in the submission to this. I am afraid I did not observe what was happening to section 8. What did we do on section 8—beer?

It was confirming the Budget increases as passed in the original Budget.

I did not observe the stage at which we were discussing it. Did section 8 come after Deputy Dunne's amendment?

Deputy Dunne's amendment was the last amendment on section 8.

I had intended to say something on the section. I did not wish to agree to the section.

Section 8 was taken as a section immediately after Deputy Dunne's amendment.

It has been discussed and the House has agreed to it. I cannot allow any discussion on it at this stage.

It is in the hands of the Chair.

Do it on the Fifth Stage.

Unless we recommit it.

There is no question of recommitting it. We are on section 15. It is rather unfair to ask the Chair to go back to section 8. I am sorry but I cannot allow any discussion on section 8 now. Perhaps the Deputy will get an opportunity.

Will the Chair remind me?

What is the finished product of "must"?

What is it called?

I do not like to mention brand names in the House. You have seen types of Irish sherry on sale.

Question put and agreed to.
SECTION 15.
Question proposed: "That section 15 stand part of the Bill."

The firearms certificates——

Section 15 in the Bill which becomes section 16 because of the introduction earlier of a new section.

If we continue to refer to it by what we have in front of us, I think it would be easier.

There is no reason why we should not.

Section 15, as it stands, refers to the increase in the excise duty on firearms certificates.

Question put and agreed to.
SECTION 16.
Question proposed: "That section 16 stand part of the Bill".

This is the section that increases the road tax by 25 per cent on mechanically-propelled vehicles.

Would the Chair put the section?

Question put and declared carried.
NEW SECTIONS.

I move amendment No. 9:

Before section 17, but in Part III, to insert the following section:—

"The various enactments relating to death duties are hereby repealed."

Death duties or estate duty as a whole are one of the things we have inherited from British legislation to which we appear to be slavishly adhering, to the detriment of our financial position. Anybody will appreciate that the present Minister for Finance finds himself in considerable difficulties in that there is a gross shortage of capital at the moment. We are one of the few countries in the world that has surtax and estate duty tax as well, neither of which is an encouragement to capital to come into this country.

It was away back at the end of the last century or at the beginning of this century—I am not sure which—that estate duty was first introduced for the purpose of getting at the big estate-owners in England who paid little or no tax. Whoever the genius was who thought of this tax, I presume it was thought that when a person was dead, he would not be worried about what tax he had to pay. Actually, it is the reverse in this case: it is the people who live on who have to pay the tax. It is gradually widening its net. It is causing untold hardship to all sections of the community.

I want to deal with the question of how one could offset this tax. The amount concerned on all taxes relating to estate duty, according to figures I got in reply to a Parliamentary Question on 30th March of this year, is £4.441 million. It is just under £4½ million. The overall revenue of this country is running, in the average, at £250 million a year. In effect, my amendment suggests that the Minister forgo a sum of £4½ million. I am not frightfully optimistic, having listened to the rejection of amendments this afternoon where the Minister was asked to forgo only a few pounds to enable people to travel free on buses to their work. I have no doubt that the economic and financial advice the Minister gets is that it is not feasible. Unless somebody infuses a new idea on fiscal policy in this country, we are heading gradually for gross financial difficulties. We are doing so already. We are static in our economic progress. We have been listening to descriptions of the great advance in economic progress supposed to be going on in this country over the past four or five years. That has suddenly been halted. I do not propose to deal now with the pros and cons of our economic progress. Assuming that it was progress and that there has now been a halt, then it is halted for the want of money. I do not think anybody can deny that.

There are several economies far weaker than our own with a far smaller population and fewer resources and reserves than we have. They have had the intelligence to do away with duties such as this to enable them to get capital into their country and to keep going by the process of the inflow of capital. I shall mention just three of them. The Channel Islands have very little resources, really. Malta has practically no resources whatsoever. At one time, it was entirely dependent on the British Mediterranean Fleet which is now practically non-existent. They had no source of revenue but they had the sense not to impose taxes such as this and they have had a steady inflow of capital to enable them to carry on comfortably. The same applies to the Isle of Man and to Cyprus. Cyprus is a place torn with dissension, a place in which bombs fly. They depend for their existence on lesser taxation.

Sooner or later somebody will have to take a new look at the situation in Ireland. I know the Minister's reply will be that we cannot afford to do it. I do not expect he will even go so far as to agree that what I am saying is a useful thing to do. He will probably say that we have reciprocal arrangements with the United Kingdom in relation to tax and therefore it is impossible for us to do it without breaking the sweet harmony that exists at present between the British Prime Minister and the Taoiseach, which culminated in that Agreement the other day. We are not unmindful of the fact, however, that we have been twice kicked in the face. First, they restricted the flow of capital here, which added to our difficulties; secondly, they had no hesitation in imposing the 15 per cent. I do not suggest we break away from sterling or do anything drastic like that; but I suggest we at least continue in our financial policy on the lines most suited to this country as a whole. If the Minister would go so far as to say he was accepting the principle of my amendment if he could find £4½ million, we would be travelling in some direction along the road.

In many countries of the world today, people are trying to avoid taxation. In fact, the world has reached such a stage that practically everybody who has an investment or real estate of any sort is trying to evade taxation as best he can by legal and other methods. I know the Revenue Commissioners in their activity on the turnover tax are well able to look after their end of the story. I regard estate duty as a predatory tax. It is harmful to a community as a whole. Take the firm with an overall paid-up capital of £50 million, of which not many exist in this country. It is subject to death duty. The rate on £50 million is something like 30 per cent at present. In the event of some principal in that firm travelling the road we all must travel some time, it means 30 per cent of that capital is going to be scooped out of that firm and it leads to unemployment. If it is on a capital of £100,000, the rate is 40 per cent. No Minister for Finance and no adviser sitting beside him can convince me that is neither injurious to the economy or conducive to unemployment. It may even go so far as closing down factories and business concerns. Apart from that, the duty itself is responsible for causing untold harm and disruption even in the family life of the country. In the past this duty covered only bigger concerns. With the rise in the value of money, it takes very little to bring people within the ambit of this duty.

I want to pose the ordinary case. The case where perhaps most harm is done is among the not very wealthy middle classes. It does not take very much these days to run an estate up to £15,000. The Minister probably knows the value of money better than I do because he is the custodian of the national purse, the one that pinches from time to time. Say a person dies in the prime of life, leaving a couple of children at the most expensive stage. The deceased owned his own house. It does not take much in that walk of life to bring the value of the house up to £8,500. Knowing I was going to move this amendment, I made a few researches into the prices of house property. I see some quite moderately-sized houses now completed in the suburbs of Dublin are listed at £8,850. Say there is an insurance policy. I think that is put into the estate. If there is an annuity as well, that is capitalised and put into the estate. If the breadwinner prior to his decease had been told by a doctor he may not have more than a few years to live and has made over the property within three years or outside the period of three years, he is now pared back to five years.

Suppose a man has saved his money, worked hard, bought his house and provided an annuity for his widow and also an insurance policy. What happens is this. Trying to educate and bring up these children, if the widow is lucky enough to have an insurance policy as well as an annuity, she may just be able to cover and pay the predatory demands of the tax gatherers and keep a roof over her head and maybe retain some of her annuity to struggle to bring up her children. I do not think that is suitable justice. I do not think it is applicable or suitable to this country. Sooner or later —quite obviously, successive Ministers for Finance have been thinking on those lines only they have not courage enough to take the plunge— somebody is going to come along and say this tax must go.

That brings me to what is perhaps the most important part of what I am trying to convince the House. It is, of course, said from the Fianna Fáil benches that if you remove any taxes at all, you are doing the old age pensioner out of his due. I am more convinced than ever, having listened to this debate and listened to the rejection of the humble pleas made by Deputy Byrne and by Deputy Dunne, that the Minister is not likely to give anything but I am going to try to convince him and the House that it would be possible to get this money. I am convinced that if to-night the Minister accepted this, the auctioneers would be pestered with inquiries from people living in the United Kingdom, probably people of fairly advanced years, who would see an opportunity of coming and settling here and of being part and parcel of the economy.

It might be argued that that would be encouraging people to buy what we do not want to sell, our land, but it would not. The type of person who would come would be retired pensioners of whom there are thousands in the United Kingdom. They would come here and they would want to get houses. Possibly one of the advantages of a Fianna Fáil Government is that so many people are without a roof over their heads and the first thing these people would have to do is to build houses and it is likely that they would build. They would probably buy plots of land in the vicinity of our big cities. Most of the people I have in mind would be enjoying lucrative pensions and would pay income tax.

I would ask the Minister to consider all the income tax he would get. Apart from the income tax, their coming would create a different situation from the existing situation in which there is a lack of credit, a failure to pay the heifer grants, and so on. All of these would fade away. When these people came in, they could not live indefinitely in hotels. They would have no chance of getting any houses because there are no houses here, thanks to the policy of the Fianna Fáil Government. If this were made effective, they would build houses and the building of houses would mean more tax under PAYE from those engaged in the building trade. I may be wrong, but I think that it would not be a question of 50 or 100 people, but of thousands coming in. After all, it is a good country to live in, despite our weather, the Government and a few other things like that. As I say, the Minister would have the advantage of PAYE and the industrial life would benefit because the building industry is one in which we supply all the raw materials ourselves. This would be a step away from the old policy of accepting everything that is British and particularly of accepting any worn out legislation that is bad for the country as a whole.

We should have a fiscal policy of our own and we should think on those lines. I feel certain that if the Minister is prepared to take this risk, it will pay him. At the moment we are paying out large sums of money to foreign industrialists, to attract them to come here and having spoken to foreigners—as I suppose all Deputies have, in an effort to get as many industries as possible to their own constituencies, and some of us have not been as lucky as others—I know that quite a lot of them have refrained from coming here because of the estate duty they would have to pay on the investment of their money in this country. Literally millions of pounds have been paid out by the Industrial Credit Company. I have not got the actual figures but I am sure that over the years we paid out more than the amount we take in in estate duty. The removal of estate duty would be an inducement to people to come in and would result in an industrial expansion and revival.

I hope the Minister will consider what I have said, but as I also said, I have not much hope of anything from this side of the House being accepted. This Government have lost their nerve. They are struggling to exist from day to day, afraid to lose a shilling and afraid to take any risks. I suppose if you have made many mistakes in your lifetime, you become cautious as you get older. I am not talking about the personnel who, I understand, are seething young dynamos. This Government has been a long time in power, except for short broken periods when we had inter-Party Governments, and to a large extent they have stopped thinking.

It is a curious thing for a Conservative Deputy like myself to say, and I am not ashamed to admit that I am conservative, that they are thinking conservatively and they are doing and accepting nothing new. I am sure the Minister knew that this amendment had been tabled and I am sure he has had very sound conservative advice from his advisers—"do nothing and you will not get into danger". I am asking the Minister to take this step. If he does, he may undo the great harm of the financial legislation we have had over a number of years.

The two broken periods which interrupted the regime in office of Fianna Fáil permitted inter-Party Ministers for Finance to introduce no less than six Budgets but there was no evidence of seething dynamism as far as the abolition of death duties was concerned.

You cannot do everything in six years.

If people felt so strongly about the abolition of these duties, it must mean that six Budgets gave them a reasonable opportunity to make some attempt in that direction but nothing was done.

(Interruptions.)

Deputy Esmonde has made a good case for the point of view he seeks to present but unfortunately the extent of the Utopia he thinks we are going to get is not realistic. In the first place, a person to bring in his assets so that they will be liable for death duties in Ireland, must be presumed to have transferred his domicile. Domicile is not a thing like nationality that you can establish by a written document. Domicile is something that must be proved by reference to a number of factors and these factors involve literally moving one's residence and moving one's usual habitat and habits from a former place of residence to a new country of residence. Even then the country from which he moves may not accept that he has changed his domicile and may look to his assets for death duty purposes when he dies. The stroke of a pen or the buying of a ticket on a boat or on an airline does not necessarily involve the person who has assets bringing them under one jurisdiction rather than another. Even if it did the person Deputy Esmonde has in mind would have then to transfer all his investments from the country from which he moved into the new country.

Yes, certainly.

It is not so easy because some of these investments might be in lucrative equities. They might be in some type of family companies from which he might not like to withdraw his investment. Even if he did succeed in getting his money out, he might not find sources of investment here to satisfy his requirements from the point of view of a return on his money.

However, to return now to fundamentals, we have here, unlike most other countries, no capital gains tax. The only type of capital gains tax we have is that imposed on the estates of deceased persons. Under the Constitution we are required to ensure that the ownership and control of the material resources of the community are so distributed as best to subserve the common good. The main purpose of estate duty is to ensure against the accumulation of wealth in the hands of a few people and to ensure, so far as estate duty is concerned, that such wealth will be fairly distributed amongst the people generally.

There is another consideration then to which I should advert. Some years ago, my predecessor, Dr. Ryan, amended estate duty legislation by limiting the amount of duty on big estates of £100,000, and over, to 40 per cent, his purpose being to test this contention that a reduced rate of duty would attract wealth. I do not know to what extent it has done that, but there has been no very striking evidence of any great shift of capital from other countries.

Now estate duty here at 40 per cent goes right through from estates of £100,000 and over, whereas in Britain the 40 per cent increases gradually to 80 per cent. On estates of £1 million and over, the Irish tax is 40 per cent as against 80 per cent in Britain. That is a fairly good inducement to wealthy people but it has not apparently been successful because we have very few estates of £1 million and over, whereas it is quite commonplace in Britain for the Exchequer to extract 80 per cent from estates of that size.

There is one other point. Deputy Esmonde referred to it. It is the question of the £4½ million. It is not something to be treated lightly. I am not at all satisfied that the abolition of estate duty would attract sources of revenue of that value into the country. With regard to the suggestion that by doing nothing one will not make any mistake, the first advice I got from the Taoiseach when I took up ministerial office was to do something, that, by doing something, I might make a mistake but I might do a helluva lot of good too. I have tried to follow that advice. I do not see a great deal of good being done by adopting Deputy Esmonde's suggestion.

The Minister said that there were difficulties in moving capital into this country, difficulties in transferring assets, that other countries might object to assets being transferred. Am I not right in thinking that, if a person is domiciled in a country, it is in that country he pays tax? My argument is that these people would come and live here, transferring their assets here. They would then be subject to the fiscal laws here.

Not necessarily. If the other country established that domicile had not been changed, they could, for estate duty purposes, chase the assets into this country.

Surely if I go and live in Jersey, I will be domiciled there, and I will have no tax to pay. Even if I am an Irish national, the tax gatherer cannot come over and make me pay tax. I do not follow the Minister's line of argument.

We had the Jersey mortgage last year under which we ensured that transfer of assets in certain circumstances would not involve escaping estate duty in this country.

Do I understand the Minister to say that, no matter where a person is domiciled, he must pay estate duty and income tax to the country to which he really belongs, although he has no property? If a worker goes to England and earns £20 a week, is it the Minister's contention that he should come under Pay-As-You-Earn here?

He sends most of the £20 home.

I did not refer to income tax; we are speaking of estate duty which is based on residence, not domicile.

My argument is that people with money would come to live here and pay their taxes here. The Minister argues that, even if they did come here, they would not be allowed to pay their income tax here.

I said estate duty. Payment of income tax is dependent on residence rather than domicile. Estate duty is related to domicile and not simply residence.

Yes, but in the early part of the Minister's reply to my argument about people coming into this, as he said, suggested Utopia, he said that, even if they did come in, he would not be able to collect taxes from them. I maintain he would. My argument is based on the supposition that, if we abolish estate duty, people with money will come and live here and pay taxes here and that will compensate for the loss of this £4½ million revenue. I understand the Minister to say these could not be domiciled here without the consent of the country they leave. The only consent a person needs is the consent of the country into which he comes.

I never used the word "consent".

We would not be so foolish as to keep anybody with money out of the country, particularly in the condition in which we are at the moment. I do not follow the Minister's argument at all.

I never used the word "consent". Domicile has to be established and the country the person left may not accept that he has, in fact, changed his domicile and might chase his assets in here for estate duty purposes. Generally it is a row between countries in relation to liability to estate duty by people who transfer their residence and who might be presumed to have transferred their domicile. Transfer of domicile is a different matter from transfer of residence and the country from which an individual has come may claim, and establish, that he has not, in fact, transferred his domicile and claim estate duty, therefore, on his assets when he dies.

There are many other considerations applying. I have not said at all that the person who comes in here, for example, draws a pension, say from the British Government or the American Government would not be liable to income tax on that pension. If it were high enough, indeed he would. There is no question whatever about that. However, I was saying that I doubt if the number of people attracted by the abolition of estate duty would be sufficient to make up by way of income tax the £4½ million we would lose in revenue from estate duty and death duties. Deputy Esmonde made another point a while ago, that the abolition of estate duty would encourage industrial development. Of course, companies, being corporations, are not liable to estate duty at all so it does not matter to a company where it has its assets from the estate duty point of view.

May I quote the Minister's reply to a Parliamentary Question I have here:

The net receipts of estate duty (including probate and account duty) in the year ended 31st March, 1965, was £3,848,830. The net receipt of legacy and succession duties and of corporation duty, if added, would bring the total to £4,441,826.

I think that where the Minister and I are at cross-purposes is this: the Minister assumes these people are going to come over here and die at once and there is going to be a dispute over the estate duty. My hope is that these people will come here, will have many years to live here in which they will spend their money and that the Minister will be able to get income tax from them which will represent a full replacement of what he would have got in estate duty. Of course if they come over here and died immediately, there would be a dispute as to who should get the estate duty and it would be very hard for the Minister to prove it was his lawful right to have it. That is not the issue between us.

Where I join issue with the Minister is on the Minister's statement that no one can transfer here without the consent of the country concerned. If the person died within a reasonable period, there might be some dispute as to who should get the estate duty, but the issue is whether or not the people coming in here with money are going to provide revenue. I absolutely fail to see why they should not, provided enough of them come in. Anyway, the Minister knows no more about them from that point of view than I do, because he has never tried it. Obviously the capital development situation of the country at the moment needs a new look. I am suggesting to the Minister that this proposal is the avenue for it. As I said at the outset, I was not very hopeful because there is very little new in the offing lately.

Amendment put and declared lost.

If the House wishes, amendment No. 11, in the name of Deputy Sweetman, may be taken with amendment No. 10.

Yes, they are analogous. It is quite immaterial on which the decision is taken. It is entirely a matter for the Chair to rule on.

Amendment No. 10, the first one.

If amendment No. 11 is taken, it means that one must, to be consistent, reject section 17 as well.

I think we might dispose of section 17, as the two amendments which follow come before section 18.

As you wish, Sir, but if you were to pass amendment No. 11, we might also want to reject section 17. It is immaterial whether I argue on the rejection of section 17 or on amendment No. 10 or No. 11. I am in your hands, Sir. I shall do it whichever way you wish.

If the House agrees to section 17, we can then discuss amendment No. 10.

Then, of course, if I can persuade the Minister he is wrong. I can deal with section 17 by deletion on Report.

That is quite true.

Section 17 agreed to.

I move amendment No. 10:

Before section 18 to insert a new section as follows:—

"Notwithstanding anything contained in any other enactment insurance policies shall not be aggregated with the rest of an estate for death duty purposes."

This amendment provides that there shall not be the aggregation of policies provided by section 25 of the Finance Act, 1965, because, though amendment No. 10 does not mention that section, it is that section which is the operative one. Prior to the passing of section 25 of the Act of 1965, the provision was that policies that were taken out by a man for the purpose of providing for his widow after his death were not aggregated and, in consequence, did not operate for the purpose of increasing the estate passing on the death and, therefore, for the purpose of increasing the rate of estate duty payable. The section concerned dealt with the aggregation of the policies in question, but the effect of the section itself is aggravated by the provisions of section 26 of the Act of last year and by the provisions of section 17 of the Act of this year.

The combined effect of all these sections now is that, even though a person may have taken out a policy bona fide for the purpose of providing for his widow in the event of his untimely death, substantial duties will have to be paid. It also has the most extraordinary effect that the earlier the age at which a person dies, the greater will be the duty payable. We can all visualise the case of a person who dies in his very late 20s and has a very young family, compared with a person who dies in his late 50s, and whose family are reared and fending for themselves. In the enactment of any taxation legislation, it is quite clear that we should bend over backwards to provide that the person with the young family will come out in a better situation than the person whose family has been set up.

Because of the manner in which the computation for a policy is taken and related to the number of years over which the premiums have been paid within the previous five years as against the total number of premiums payable, the younger person is hit much more seriously than the older one and is hit also because of this aggregation provision. This is a matter that was discussed fairly fully last year. I think time has shown in the year that has gone that everything we said then was true and that the criticisms that were levelled by us at most of Part III of the Finance Act of 1965 were justifiable criticisms. Indeed the Minister has admitted that to some extent by the provisions of section 18.

Progress reported; Committee to sit again.
The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 22nd June, 1966.
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