Certainly individuals are penalised who ought not to be penalised. Last year Deputy Dillon did us a great service when he reminded us that death duties were brought in by Gladstone's Government in the 70's or 80's of the last century for a social and a moral purpose. He reminded us, on the one hand, of the drunken dukes and, on the other, of the dizzy dissolute whom Gladstone the moralist had in mind when he invented death duties as a means of preventing the inheritance of vast wealth, often times ill-gotten wealth. The purpose was a social one. Like a lot of duties introduced for social purposes, they have now become a significant part of our tax structure and Ministers find it hard to shed their prerogatives.
The impact of inflation on capital, the impact of inflation on the individual who wishes to provide for his wife and children, is very severe when one comes to consider death duties. There is a margin on one's estate up to £5,000 which is free of duty, and if one leaves more than £5,000, one's estate is subjected to death duties which become progressively more penal as the estate increases.
It is true, in the city of Dublin at any rate, that as a result of inflation, as a result of the property boom, a person of modest means, £1,500 or £2,000 a year say, a bank clerk or a civil servant, living in a modest house, on his death is likely to have that house assessed to death duties in the sum of £5,000 or £6,000. The Revenue Commissioners are most exacting and demanding in regard to the estates which they assess. The effect of all this is that the widow of the small man can be fleeced for death duties, as he, in his lifetime, has been fleeced for income tax.
Two years ago very severe and penal measures were brought in here to assess to estate duty superannuation benefits. The Minister, in announcing his surtax reliefs made the case that it was essential not to have surtax on managerial technologists, as he rather glibly put it, any higher in this country than in Britain. He made the case that these managerial types earning £3,000 to £4,000 a year were more heavily assessed to surtax here than in Britain. If that is so, it is very significant that estate duties press far more severely here than they do in Britain on the small man. Dependency benefits under pension schemes are totally exempt from estate duty in the United Kingdom, but we impose a penal duty on these dependency benefits, superannuation benefits in particular. Such a purpose was never contemplated as a sound social objective when estate duties were first devised. It is very necessary from time to time to examine our taxes as to their social value and as to their real purpose.
I am aware that Ministers for Finance have a problem, and that their dedicated advisers are expert in raising funds. That is their job, but it is our function here in this House to consider the full implications, and in particular, the social implications of the various taxes. I have no hesitation in saying that inequitable duties are assessed on the estate of the small person, the man who leaves an estate to cater for a family of five, six, seven or eight children, the man whose estate, taking into account pension superannuation benefits, the value of his house and whatever insurance he leaves, will be valued at, perhaps, up to £25,000 or £30,000. Even a two by-four house in the city of Dublin will be valued at at least £5,000.
The British precedent which we copy so frequently is totally unsuited to our situation in respect of death duties. We cherish our large families, and it is true that the average family in this country is five or six children—I am not quite sure what the Irish statistics are. In Britain, that is not the case. The average family in Britain is something like 1.3 children. Therefore, the British precedent is quite inappropriate and unjust in its application to death duties in this country. One hears all too frequently of one's friends and colleagues being cut off in their prime, men who were straining to bring up their children decently and provide them with the best education possible. With that in mind, they would insure themselves heavily and, by heavily, I mean for £5,000, £6,000, £7,000, £8,000 or £10,000. These are the estates treated so unjustly from the point of view of these duties. I do not go along with those who make the case that death duties ought to be abolished. I am aware of the sound social purpose they serve from the point of view of tremendous wealth, such as that envisaged by Gladstone's Government 70 years ago.
There is no effective appeal machinery in respect of estate duty. There is, it is true, the right of recourse in disputed cases to the courts, but there is no appeal machinery such as there is in respect of income tax, surtax and corporation profits tax, in relation to which there is a special commissioner. That, too, is a hardship since recourse to the courts is exorbitantly expensive.
I welcome the provisions in relation to educational investment. I said before that the Second Programme for Economic Expansion appeared to put the cart before the horse where educational investment was concerned, for it postulated that only as national wealth increased would more money be available for investment in education. That was putting the cart before the horse. National resources will not increase until we first improve educational facilities and expand educational opportunities. To the extent that the secondary school plan, in particular, appears to indicate rethinking by Fianna Fáil on this issue, again I rejoice at that development.
We can now happily all find common ground in the statement that there can be no more productive form of national investment than investment in education. It is not so very many years since Government policy was strongly influenced by the doctrine of deadweight debt, the idea that no investment, no matter how desirable socially, was justifiable, except to a very small extent, unless it yielded a cash profit and, so to speak, paid its way. Educational investment, like many other forms of social investment, such as housing and hospitals, will not yield a direct cash benefit over the short term, but that in no way detracts from its significance and value. Old doctrines die hard and I am sure there are still people who accept as their bible the famous report of the Banking Commission, published in 1938, so orthodox, conservative and stultifying in its approach to national economics.
With regard to the scheme for increased educational opportunities, it is, I am sure, manifest that Dublin city will not fare as well under the scheme as it should. It would appear that not many secondary schools in the Dublin area can find it in them, because of their financial structure, to accept the grant of £25 per pupil in lieu of their right to charge their existing fees in excess of that amount. This is a financial problem and it is one for the Minister for Finance rather than the Minister for Education. This situation arises because so many secondary schools are crippled with debt. If the Minister for Finance came along with £1 million to relieve that position, I believe more Dublin schools will accept the £25 grant per pupil. Once relieved of the burden of debt hanging over them, the £25 may be sufficient to keep them going on a yearly basis. That is why I say the problem is one for the Minister for Finance and I would urge him to succour the Minister for Education in this matter.
The Minister had a great deal to say about the contribution of industry to our economy. The basic aim of tax policy, from the point of view of industry in particular, ought to be to encourage savings and investment. The time has come when the Minister should seriously consider the need to introduce a special form of company taxation, which will have built into it a relief from the full rate of taxation on the undistributed profits of companies ploughed back into the development of business. I welcome the ten per cent increase granted in the initial allowance on machinery and plant and other forms of capital. I congratulate the Minister on his imagination in introducing a free rate of depreciation or wear and tear for industries in the West. This was a proposal made by the Income Tax Commission, so many of whose recommendations were not acted upon by the Minister's predecessors. I think the Revenue Commissioners opposed this free rate of depreciation before the Commission.
With regard to the increased initial allowance, the Minister is really giving away nothing in the long run because if he loses out on it this year or next near, there will be less to be taken by the taxpayer in subsequent years. No one can recover by way of tax relief more than the cost of his plant and, whether one recovers that cost over one, two or ten years, the cost to the revenue will still be the same. Let us not fool ourselves. The Minister in the long run will not lose one pennypiece.
I should like to see far more use being made of tax incentives for industry and for individuals. The export tax relief, first introduced by Deputy Sweetman, has shown the great value of such incentives. The cash grants made available by An Foras Tionscal and the Industrial Development Authority for the development of industry ought to be transferred or changed into tax incentives, for cash grants may and sometimes do encourage uneconomic expenditure, uneconomic developments. One test of the worth and the value of any investment in industry is its ability to earn profits and if when it earns those profits it has the incentive of being relieved in part from taxation, this may be of far greater value than cash grants doled out by An Foras Tionscal to people who, perhaps, may not have enough capital apart from the cash grant to keep their business going over a term of years.
In connection with the development of industry and its significance in our economy, I must say that I am personally a little frightened of what is likely to happen, if and when we get into the Common Market. Already the impact of tariff reductions on industry gives us cause for concern and there is no harm in being specific about this. What is in today's papers is common knowledge. There is a report published in this morning's paper of one of our leading companies, Dunlops of Cork, who have suffered in the past two months of 1966 from imports of foreign tyres. This is a rather frightening thing. Dunlops have always been a company second to none so far as efficiency and even wealth and sound management are concerned. When one sees such a company seriously affected by imports, it is rather worrying. This is a company that ought to be, and I am sure is, in a position to develop markets abroad. I think it is a straw in the wind.
I believe the Minister for Finance and the Government as a whole must exert pressure on the Minister for Industry and Commerce to bring anti-dumping legislation in at the earliest possible moment. Again, in respect of anti-dumping, I am afraid I am a little despondent as to the efficacy of legislation in restricting it. If one thing is sure, it is that dumping is very difficult to detect. You do not know about it until after it has taken place. In the old days, one could be sure that everything imported from Japan or Hong Kong was dumped and one could put an embargo on the goods of these countries that exploited cheap labour. However, in current conditions, the dumping is likely to be effected by prosperous countries, some of whose industries will engage in skilful financial manipulation. These devices are very difficult to recognise until after the damage is done.
We must candidly admit that part of the growth of Irish industrial exports is to an extent the result of a mild form of dumping by Irish industries in foreign markets. I would issue a word of warning to the Government on that. An industry which has a protected home market and perhaps keeps its machinery and its factory working for four days a week can very easily work on the fifth day of the week and export its products without recovering the full cost of production and still do well out of it, cut their losses, so to speak. I am afraid that some of our Irish industrial exports are based on this protective position in the home market and that is not going to continue.
One thing which I would take the Government very much to task for in this connection is their failure to announce effective and comprehensive plans for the compensation and retraining of workers who, through no fault of their own, are likely to suffer from the development I speak of. Indeed, in the constituency which both the Minister and I have the honour to represent, that of North-East Dublin, we have one industry, the motor assembly industry, the future of which must cause us grave concern. I do not believe the Government are on top of the job in looking to these problems. I believe that there is a lot of vague and woolly wishful thinking in respect of the Common Market which it is alleged will solve all our problems.
Finally, I want to express a note of disappointment with one small part of the Minister's Budget statement. I refer to Part VII of the Finance Act of 1965, the iniquitous proposals brought in by the present Taoiseach two years ago taxing over severely, using a sledge hammer to crack a nut, certain gains on the sale of one's house or factory. The former Minister for Finance, Deputy Lynch, soon realised his mistake and last year, 1966, announced to us that he was engaging in some rethinking in respect of Part VII and that he would bring in retrospective or retroactive amendments in 1967. The Minister has deferred these until autumn and he has undertaken to bring in a Finance (Miscellaneous Provisions) Bill.
I am aware that a number of taxpayers and industries in particular are living in a state of acute suspense. A Sword of Damocles hangs over them so far as this tax is concerned. I appeal to the Minister to put them out of their agony and give us prior notice in this House when he is replying to the debate outlining what it is likely that he will do in the Bill which we are promised in the autumn. There are certain cases which the Minister must deal with, for instance, the case of the industry which wants to sell its factory in one place to move to another place to re-erect a bigger factory. The present position is thwarting development and progress. I know that to be a fact. It is hindering economic development. It is hindering employment of increased workers in at least one place that I have personal knowledge of. I would ask the Minister to the fullest extent which he can to anticipate in formula his autumnal proposals and put us now as fully as he can in the picture.
I welcome the Minister's decision to repeal section 490 of the new Income Tax Consolidation Act. I have not studied this in detail. However, I think it may go at least part of the way to meet some of the objections to the harsh powers at present possessed by the Revenue Commissioners in respect of seizure of property—something very much in the air these days—of private individuals. I would ask the Minister if he has yet considered the joint representation made to him some time ago of the Incorporated Law Society and the Institute of Chartered Accountants regarding the time limit for making assessments and the power at present possessed by the Revenue Commissioners actually to go back 44 years, to the foundation of the State, in re-opening assessments in all cases, not only in cases where fraud is suspected but in all cases. In Britain, from which we copy so much of our legislation, this power is confined to six years. In common justice and in common sense, the Minister must repeal this arbitrary and harsh power which exists. I shall have a lot more to say on these matters in the Finance Bill. I am confident the Minister will give me a fair hearing.
I have said before, and I say again, that much of the British tax legislation in this country is completely unsuited to our requirements. Let us not fool ourselves. The recent consolidation measure does not make one title of difference. Largely, we have consolidated British law, the bones of which are the British Act of 1918 and that goes back to 1853 and even earlier. We shall now spend £10,000 or £20,000 on the solemn farce of translating that into Irish, as if it would make it any more suited to our requirements. I shall have more to say on that issue on the Finance Bill.
At the outset, I undertook to be brief. I am afraid I have already exhausted the time limit I set myself.
