Last night I mentioned that the promise to abolish death duties was welcomed by farmers in particular. When a man died at an early age and left a wife and young family the widow was obliged to borrow the money to pay the death duties or to sell a certain amount of the property to raise the money. Wealthy people were able to avail of expert advice regarding the setting up of trust funds, thereby avoiding the payment of tax. The replacement of the death duties by gift and acquisition taxes, which set out a liberal allowance of £150,000 per person, as well as the capital gains tax were well received by businessmen and industrialists and even by Fianna Fáil. It was agreed that the "quick sell", the person who bought a property, developed it and sold it quickly, should be taxed.
Very few people will object to capital taxation on shares. In most cases the business of buying shares was regarded as a "nixer"—the term in the building trade for work carried out after hours. Prior to this Bill the speculator and the person who dealt in shares as a semi-permanent job did not pay any tax on the transactions even though it was part of their income. In some cases they developed their dealings to such an extent that it became their main business. One might have some sympathy for these people if they had tremendous knowledge of shares and their dealings but in the main it did not require much business acumen.
As I pointed out last night the person concerned might wish to back a shell company or a professional person might have knowledge of a take-over of a company. There have been cases where some of the shares in the case of a shell company could be bought at 1 per cent and, in fact, I have seen them as low as .5 per cent. The person who bought such shares did so for capital gains on which he was not obliged to pay tax. This practice must be stopped. This legislation will ensure that there is a more correct situation, that a person will buy shares and give a return on them. Because of the collapse of stock exchanges throughout the world some of the shares that were 1 per cent now have a return of 22 per cent.
Prior to this Bill the person who did not take any risk was not liable to tax. If any preferential treatment is given it should go to the businessman or the industrialist who takes a risk. The man in the retail or manufacturing industry is entitled to a better return with a lower tax liability than the man who lies in bed, reads The Financial Times and then gives instructions regarding the purchase of shares.
Most of the points raised on this Bill will be better discussed on Committee Stage. The objections raised by Fianna Fáil were, first, that there should be a 50 per cent capital gains tax, reducing each year until it is nil at the end of a 15-year period. I agree with Deputy Colley who said that in killing speculators there is a danger that we may kill enterprise in business. Fianna Fáil speakers mentioned that ill-health might force a person to sell and he would be caught for this tax. Another point raised by Fianna Fáil was that compulsory purchase should not be liable to capital gains and they also said that where income tax is paid capital gains tax should not be levied.
I do not agree with the figure of 50 per cent capital gains tax. The Minister was fair in his proposals, he was even liberal but we must have a lower capital gains tax than England to encourage money to come in and be invested here. England have many very wealthy financial houses and we have only one or two so we must encourage them to come in here. I believe the Minister is correct in including the CPO. The corporation put a CPO order on a building and the interested parties try to fix the matter up through negotiations. If they do not it means a loss of money and also it takes time to put the CPO into effect. The price may be fixed at slightly above its value but if the person gets a fair bargain and reinvests his money he will not be caught very heavily. If the CPO were to be left free of capital gains tax nobody would agree to anything. People would make sure that a CPO was put on and that would mean they would get more money.