We oppose this section. It is typical of what I regard as the overall characteristic of this Finance Bill and fiscal legislation this year. It is obsessional. It is obsessed with the fact that there are small holes in the net and, in trying to close every possible loophole and ensure that nobody escapes, injustice is unwittingly, perhaps, being done to certain people. One cannot complain of any effort to close loopholes and thereby diminish tax avoidance. Everybody must agree with that policy but when the method used to close such loopholes inflicts injustice on small people it is time to cry halt. We must balance the two positions.
Section 39 can do an injustice, At the moment, if an estate consists partly of agricultural land and partly of other personal property, the agricultural land is valued on an artificial basis at 25 times the poor law valuation and from that figure is deducted the redemption value of the Land Commission annuity. If the resultant figure when added to the net personal property does not exceed £2,000 the estate may be valued on that artificial basis. My experience is that that artificial basis invariably lies only in the case of small farms. Here, we have a provision that if, within the following six years, that farm is sold the actual market value as realised will then be the value and presumably the assessment will have to be re-opened. If the exemptions allowed by section 7 (5) of the 1894 Act and section 61 (1) of the 1910 Act were being abused, or were capable of abuse, I could see some justification for the section, but I cannot see how they can be abused. Invariably they deal only with small estates.
The Minister made the point that the net personalty, because of a very large debt, might be a nil figure or there might even be a deficit. When that would be taken from the artificial value that should clearly come within the £2,000 limit but, as I say, in practice this is just not possible. Take a farm of £50 valuation, which is a common enough type of valuation. There are bigger farms and there are smaller farms but, in my experience it is the maximum valuation to which these provisions could apply. I cannot see that such a farm would not have livestock on it and, if it has livestock on it, the personalty can only then be taken down if there is a bank overdraft. The reality of the situation is that a bank overdraft would not be permitted of such a size that it would equate to or exceed the personalty of the estate. This is the reality of life in rural Ireland. I cannot visualise a situation in which this could be used as a means of avoidance. All this section will do is impose hardship on people who, for some domestic and bona fide reason, have to sell their farm within six years of the assessment being made. It will not close any loophole because I do not think there is anybody escaping through that loophole at the moment. The original intention presumably in the 1894 Act and in the 1910 Act and all the other Acts which increased the original figure from £500 to £2,000 was to benefit agricultural land and not to prejudice people on small farms with heavy estate duty burdens and to encourage presumably the rectification of title and the passing on of property within the family. This was highly commendable. It is still commendable and it is altogether unjust to say that, if these people can have the benefit of this value today, and if they sell the farm within six years, the full value comes into play; six years is altogether an unrealistic period of time.
I am against any change in the law but if there has to be some provision and if the Minister feels strongly enough about it and can make a case to justify the change I cannot see how he is going to be able to justify a period of six years. So much can happen on a family farm within six years. The circumstances could be completely different from those pertaining at the time of death. This could lead to a very serious injustice in a small or medium size farm.
The proviso of subsection (2) seeks to give relief to what I suppose the Minister will tell me would be a bona fide transaction where presumably on intestacy, there has to be a sale in order to distribute the assets among the next-of-kin and one of the family retains the property, and the section shall not apply. Again this is unrealistic; it is not conversant with the realities of life in rural Ireland and this is my chief objection to this section. It does not take into account what happens on the average farm when there is an intestacy or even a death testate. To suggest that this section has been used for tax avoidance or estate duty avoidance is quite ridiculous.