asked the Minister for Finance whether he was correctly reported in the Press as stating that the estimated amount of revenue which will accure from the proposed new systems of capital taxation outlined in the recent White Paper will be approximately the same as that derived from the present system of capital taxation; and, if so, the statistical basis for this estimate.
Ceisteanna—Questions. Oral Answers. - Capital Taxation.
8.
The proposed new system of capital taxation, when in full operation, is designed to yield not less than the same amount as the present death duties. This estimate is based on existing death duties statistics and information obtained in the administration of such duties, suitably modified to take into account the differences in scope, incidence and rates of the proposed system.
A number of factors make it difficult at this stage to estimate precisely the yield from the new system. For example, the new taxes may after the existing pattern of gift-making and inheritances, and may afect the realisation of gains made on capital assets. Additional revenue, which it is difficult to quantify at this stage, may accure because large amounts of capital on which tax is at present avoided should be liable to tax in future. The yield in the initial years may not be a good indicator of the potential yield since there may be initial starting up problems, and the yield from the capital gains tax will be comparatively low in the early years of operation.
While accepting the qualifications which the Minister has outlined to any estimate that may be made, nevertheless, the question asks the statistical basis for the estimate. The Minister has, I think, outlined the general approach to the estimate but he has not given the statistical basis. Would he be prepared to make that available?
The statistical basis would be those statistics which are contained in the annual reports of the Revenue Commissioners.
Surely the Minister appreciates that that is an indication of the present yield of death duties but it is not any indication whatever of the yield or the manner of estimating the yield from the proposed forms of capital taxation and that is what the question sought.
It is also an indication of the known size of estates but that relates only to those estates which at the moment are subject to estate duties. It is no indication of property accumulations which, by being distributed more than five years before death, do not come within the existing estate duty net, a point which Deputy Colley as a solicitor will appreciate.
Is it a fair assumption from what the Minister has just said that no estimate, in fact, has been made?
No, the estimate which has been made is based upon existing knowledge and, as I have again and again indicated, one of my greatest disappointments on becoming Minister for Finance was to discover that my immediate predecessor and his predecessors had done little or nothing to collect information which would be a guide as to where wealth lay in this country. The only information we had was in relation to property which passed on death and not to property which was held and distributed during their lifetimes by the extremely wealthy.
Question No. 9.
May I pursue this a little further? I asked the Minister for the statistical basis of his estimate. He has said an estimate was made. Could I ask him again, as I have asked him in the question, for the statistical basis of this estimate? Would he make it available to the public and to the House?
If the Deputy will read my reply he will see what the answer is.
I have seen that the Minister is unable to furnish any estimate whatever.
We cannot resolve this matter now.
9.
asked the Minister for Finance whether, in connection with the preparation of the White Paper on Capital Taxation, any estimate was made of the effect of the proposals on grant-aided industries at present enjoying export tax relief; and, if so, the result of such estimate.
It is expected that the effects on grant-aided industries at present enjoying export tax relief from the proposals contained in the Government's White Paper on Capital Taxation will be nil or minimal. The relief given to export profits is, of course, an income or profits relief.
Did the Minister say it is estimated that the proposals in the White Paper, if implemented, would have no effect?
It is expected, because the present concessions relate to incomes.
The Minister is presumably aware that the White Paper issued in his name proposes to apply some forms of capital taxation to industries set up here with the aid of grants and availing themselves of export tax relief. If that is so, how does the Minister say that the effect will be nil? Does he not intend to apply the proposed forms of capital taxation to those industries in the way indicated in the White Paper?
Because the relief at present relates to export profits which are income.
I think we are at cross-purposes. I am well aware of the fact that the relief is applied to income but the question asks the Minister whether any estimate was made of the effect of the proposals on those grant-aided industries. Some of the proposals are to apply to those industries and the Minister says the effect will be nil. Could he explain that, please?
The answer is exactly that. I am not sure whether Deputy Colley wants to encourage those companies, which have come over here for a variety of reasons, one of them being the relief given in respect of income—to sell out and make a capital gain. If they were to do that they would, in future, be caught but if we did not do this they could sell out and, having made profit here, being exempt from income tax, they could then get off scot free. We are certainly closing that.
Is the Minister under the impression that the proposed wealth tax will not affect those industries in any way? Is that his impression?
As companies it will not affect them.
But of course it will affect the shareholders. This is an extremely important matter and the Minister does not appear to understand the proposals issued in the White Paper. Would he answer the question that was put to him on the Order Paper?
That is what I have done.
Question No. 10.
May we take it that this is a further example of the white flag being raised on the White Paper as indicated by the Parliamentary Secretary to the Taoiseach?