Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

Dáil Éireann díospóireacht -
Wednesday, 12 Mar 1975

Vol. 279 No. 3

Wealth Tax Bill, 1975: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

When I was beaten by the clock on the last occasion I was dealing with the overall principle of wealth tax and seeking to establish that the most objectionable aspect of it is in the main the fact that it is a new tax. It is just another new tax, no matter how anybody may try to justify it and an effort has been made to justify it on the grounds that other countries have it. This does not make it any the less another form of taxation. It may be a bit restricted in its application at the moment in the same way as every new tax is initially restricted in order to sell it. The vehicle for its collection has been established and that vehicle may be enlarged at any time in order to widen its scope.

Any new tax in a country that has not yet reached development but has, on the contrary, reached a stage at which its development has had a serious setback should not at this time contemplate imposing a new tax of any kind. There are those who talk about the social conscience and the redistribution of the national wealth. I have repeated here time and again that the most important thing in redistributing national wealth is ensuring first of all that there is national wealth. One must always keep a very watchful eye on the likelihood of anything happening which would injure the creation of wealth particularly its production and the concommitant development of the economy, which not only takes up the slack in unemployment but also takes up the growing population we hope to be able to maintain, and leaves more money actually available for redistribution. It is in that context one must view this wealth tax at this point of time as a tax brought in to milk the taxpayers of the last possible penny no matter how one may try to clothe it in the guise of something designed to help the weaker sections of our community.

If one looks at the domestic housekeeping generally one simply cannot agree with any member of the Government, least of all the Minister for Finance, that the economy or the domestic affairs of the country from the housekeeping point of view are being properly managed. There is a growing deficit in the balance of trade about which we are doing nothing. We tend to borrow more and more abroad against the advice of those who say we should not do it and in that borrowing we are further exacerbating what is already a serious problem. We are mortgaging the future to such an extent that there is every likelihood that people will suffer once more the same gloom and despair they suffered under the previous Coalition Government. A wealth tax introduced at a time when confidence is lacking, when there is great uncertainty, does nothing for that section which would be expected to invest in order to develop the economy and create wealth along the lines on which we were moving in the last 15 or 20 years. I see this wealth tax not as those who view it as if we had an inexhaustible pool of wealth on which we could continue drawing. I believe, like Abraham Lincoln, that one does not help the poor by destroying the rich. I do not believe this is the opportune time to bring in a tax of this kind.

I appeal to the Minister to withdraw the Bill and not to reintroduce it at least until such time as there is a greater degree of confidence in our economy. By then it might be possible to have the people accept it in the knowledge that it would not have a crippling effect. People are not being encouraged to invest in the economy and if company profits or the profits from any project or concern are not utilised for the expansion of that company or project the economy will sag.

The Bill is ill-advised. Perhaps it was brought in in desperation by a Government that are seeking to find money from any possible source. While there may be some effort to justify it on the grounds that other EEC countries operate such a tax system, I am very sceptical about it especially when I recall an examination that was carried out regarding VAT. We were in Government at the time and we had available to us information regarding the operation of VAT in every other country. Consequently, we were in a position to decide on what was the best line to take. My opinion was that we were somewhat premature with that tax, that people were not ready for it, but the advice at the time was that it was a new tax that would replace practically all other taxes, that it was the fairest type of tax because those who spent most paid most. However, I was suspicious that it would not result in the removal of any form of tax that existed then. My suspicions were proved right. Not only are there many other forms of taxation but if the Government can think tomorrow of another one, it will be introduced.

While we look to other countries that are more developed than ours and which experience full employment except at occasional periods of recession, we are not in a comparable state and are not ready for taxes such as this. Industry is not in a position to accept this tax. There are already sufficient means of getting the money we require for redistribution from that dwindling section who are producing wealth. We should begin to pay a little more attention to enabling them to continue to create the wealth which produces tax and which, also, enables them to expand. The section at which this Bill is aimed is small in number while the number of people on the receiving side is great.

The new national pay agreement will apply to about 500,000 people. There are another 100,000 in receipt of unemployment benefit and assistance. There are also the pensioners and those on other forms of State assistance. In order to be able to maintain these benefits we must pay attention at some stage to the source from which these moneys come. We must consider those who invest in the economy and we must encourage them in every way possible. We must have regard, too, to the inflow of capital from abroad. While present signs may not be too serious, they are pointing in the wrong direction. When I discuss the present state of the economy with people who are vital to the success of the country and with whom I had much contact in the past they recall that in 1957 everybody thought that this country had taken a nosedive from which it would never recover. However, it did recover and this is the example that these people use when expressing confidence for the future. They know that on that occasion there was a Fianna Fáil Government to take over and to manage the affairs of the State. They know now, too, that there will be a Fianna Fáil Government to put the country back on the road once again. Anyone interested in investing here or in any country would have to look hard at the Opposition as well as at the Government.

They would have to look twice as hard at the Opposition here.

It is this confidence that gives some hope for stability in the future.

Is the Parliamentary Secretary in favour of wealth tax?

Therefore, the people know that while they may suffer for a time in the present limbo, stability can be achieved in the future under Fianna Fáil. I know that the Parliamentary Secretary is not keen on this tax either but he finds himself in the unfortunate position of living with a section who are, whether genuinely or otherwise, paying lip service to another ideology and who must show signs of having got their little bit here and there as the bandwagon moves on. This Bill is a contribution to the opposing ideologies of the two parties to the Coalition. It is only by these means that the Coalition, comprised of opposing sections, can hang together. While they are able to give a bit here and there to the people and keep each other happy and so they can say to the people that they are getting on, that they can continue, but somebody suffers in the end.

My view on the wealth tax is that it is premature and that it is being brought in at a time when there is a complete lack of confidence in the economy which does not justify it being brought in at all. It is dangerous at any time. We have enough means to claw back from the people who create wealth. If it is not completely taken off the Statute Book this Bill should be withdrawn until the economic climate is more conducive to putting another tax on the people.

The debate on this Bill from the Opposition side has proceeded largely on the basis, described now by Deputy Brennan, that it represents a surrender by one side of the National Coalition to the other, that it represents the outcome of what are nationally damaging tensions within the Government and so forth. The history of this Bill has been a very interesting exercise in democratic Government and has had some lessons to teach about democratic opposition also. It is true that this Government, like any Government, contains a spectrum of opinion both in the Government strictly speaking and in the Government more loosely speaking consisting of the Deputies, Senators, county councillors and rank and file members who support the Government. In any Government the spectrum of opinion is condensed in our process into light of a constant strength.

The difference between a one-party Government and a Coalition Government is that in a one-party Government that process of condensation takes place—to use that idiotic expression—behind closed doors as though doors fulfilled any function unless they could be closed. In a Coalition Government the likelihood is that that process of condensation will take place more in public.

(Dublin Central): The difference between a one-party Government and a two-party Government is that the one-party Government can make decisions and follow them through; a two-party Government cannot.

Every day that passes disproves Deputy Fitzpatrick's contention. I would be willing to argue with him on a broader vein than just the wealth tax and at a more convenient moment.

It would not be relevant just now.

The Parliamentary Secretary is making a strong effort for someone who does not believe in the Bill.

I have been speaking for less than a minute and I have been interrupted about six times. I do not think I have mentioned the words "Fianna Fáil" yet let alone said anything rude about that party.

For the Parliamentary Secretary to say that he was interrupted six times is about 500 per cent exaggeration; typical Coalition policy.

The debate on this Bill has to some extent taken place in public and the public have been able to see the opinions presented to the Government because various interests on one side or the other, favourable to a tough wealth tax, unfavourable to any kind of wealth tax, have publicly brought their point of view to bear. The existence of that pressure in one direction or another has been no secret. It would be pointless and of no advantage, even if it were true, for me to pretend that the Minister and the Government in the history of the process which has led up to this debate have not been listening to and been influenced by the opinions of the people who elected them. I will not pretend that because it is not true. I do not agree and I do not see that the Government could sustain any harm through that admission.

It seems to me that a public process like this is beneficial to the people at large, that the spectrum of opinion which exists within a Government if intensified by the addition to it of elements from any side is likely to result in legislation which is generally acceptable and generally right. It is more likely to result in that than if the process which culminates in a Bill goes on inside a Government or inside a single Department and in which there is little consideration with outside interests. When the White Paper was published a year ago I gave some instances, conspicuous instances which have now faded into history though I have not forgotten them, where Fianna Fáil when in Government produced proposals in Bill form which they either had to abandon completely because their own grassroots revolted as in the case of the Criminal Justice Bill or had to proceed with on a heavily modified basis because the revolt from the entire people was so strong, namely, in the case of the Succession Bill, 1965. It is true that the wealth tax proposals now before the Dáil are nothing like as severe as the wealth tax proposals contained in the White Paper a year ago.

I noticed that a Labour Party Senator said the other day that the Wealth Tax Bill had been devitalised because of what he called pressure from big businessmen, affluent Fine Gael TDs and so on. I would say to that Senator in a comradely spirit that he is wrong in thinking that the pressure came from affluent Fine Gael TDs or big businessmen. I know he is wrong because I had the experience last year of attending constituency conventions and annual meetings of my own party at which not a single person could be described as an affluent or big businessman. There were meetings in country constituencies which were largely attended by farmers, probably the bigger type of farmer but they were men who would not recognise themselves under the description implicitly given them by Senator Mullen.

It was in part the opinion and the feelings of this section of the people —which is not a contemptible section and which I refuse to agree is in any way deserving of less consideration than anybody else—which led the Minister and the Government to do what they impliedly promised to do, to look again at the proposals in the light of representations which they received by the end of June last. It was expressly stated in the White Paper that anybody who wished to comment on the proposals had three or four months to do so. In the end the proposals were modified.

These were not the only type of pressures we had to deal with or the only kind of comments made on the proposals. When the White Paper was issued Deputy Haughey, who was then roosting on the back benches of the Opposition but who was generally regarded as being the final court of appeal in all matters financial and fiscal, was reported in the papers early in March of last year as saying that the wealth tax proposals amounted to the abolition of private property. Everyone is inclined to discount political criticism when it is of an exaggerated kind. I may be over solemn in saying that everybody took Deputy Haughey's words at their face value but there would have been a section in the community—again, by no means a contemptible section—which would have come to associate Deputy Haughey with experience in business and would have been very alarmed by that kind of language.

I admit I have heard no more of that kind of language since the revised proposals were put forward and Deputy Colley abstained from using any such language in his Second Stage speech last week.

What Deputy Haughey said was true.

He abstained from using expressions of that kind. That was the kind of deliberately alarmist atmosphere in which the Government were obliged to consider the proposals before announcing their modifications. At any rate they were modified and the Bill now before the House represents the result of the consideration the Government gave to the numerous representations made to them.

This Wealth Tax Bill, line for line, is not something the Coalition parties undertook to produce before the last election, but this fact is lost sight of even though the Minister for Finance relentlessly reminds people of it. In the nature of things a programme put forward at an election cannot spell out, line for line, all the points and the parties have not the time to work out, line for line, details of a proposal of this kind. The 14-point programme which Fine Gael and Labour put before the people in February, 1973, undertook to do away with estate duties and to replace them with a different form of taxation. What the 14-point programme actually said was: "With a view to relieving the heavy and unjust burden on ordinary house purchasers and farmers, the National Coalition Government will abolish estate duties on property passing on death to windows and their children and replace them with taxation confined to the really wealthy."

It was set out in simple language and if ever a Government had a mandate for doing this this Government had such a mandate. I remember clearly that programme being put together, and I remember the unanimity with which Fine Gael Deputies, some of them from the constituencies where there was so much disquiet when the White Paper first emerged, attached terrific importance to this proposal. They said the then Government had delayed far too long in the abolition of estate duties or death duties and had allowed fearful hardship and injustice to develop, particularly after the rise in the value of agricultural land which was associated with our accession to the EEC. Although our joining the Community made a difference to the prospective value of agricultural products, it had a much more pronounced difference in the capital value of land for which the widow of a farmer suddenly found herself liable to pay estate duty. I recall the unanimity with which that proposal was greeted by Fine Gael Deputies and the Government are perfectly entitled to say that they are only doing what they said they would do.

On the other hand, I heard Deputy Dockrell say here last week that he was not sent here by the people to do something over and above that. This is an important point and those who think this Bill is not going far enough might be reminded of it, in a comradely spirit. I notice that Senator Mullen in the speech I mentioned a short time ago which was delivered in Mitchelstown and reported on 8th March——

I am sorry to interrupt the Parliamentary Secretary but it is a convention of the House that we do not reflect on Members of the Upper House. Reference to Senators, either by way of praise or blame, should not be made.

I apologise for having referred specifically to the Senator but his words fairly represent a point of view that exists in some circles of the Labour Party. We have been hearing from the Opposition that the Bill will be a disaster because it will destroy something or other, but there is the other opinion that the Bill will be a disaster because it does not go far enough. This latter point of view, which I was about to cite because it had been put in a nutshell was to the effect that the Government now have an opportunity to break up the vast accumulations of wealth this country is supposed to contain——

(Dublin Central): I do not see any such wealth.

Certain people have taken the view that the Government were not availing of the opportunity. My reply, uttered in a friendly spirit, to criticism of that kind——

The Parliamentary Secretary on two occasions has referred to a comradely spirit—that is certainly more apt.

My reply to such criticism from an ally in Government is that this Government did not go to the country on the platform of destroying private property or of breaking up accumulations of wealth. The Government went to the country on the platform of replacing a particular form of taxation by another form of taxation——

Not replacing.

It might be possible to convince the people that the right thing to do was to break up capital and redistribute it all. That is a perfectly respectable, indeed an old-fashioned, political proposition. It is within the law of the country to advance that proposition and to invite people to vote for it but that did not happen in February, 1973. The people were not invited to vote for such a radical measure and to imply, merely because the last Government were replaced by the present Government, there is now an opportunity to put through a measure of this kind, while well-intentioned, takes no account of the political reality on which this Government is founded.

If it is any comfort to those who think the Bill is a threat to the productive and beneficial accumulation of capital, I do not mind being on record as saying that whatever may be the theoretical virtues of the idea that wealth should be constantly redistributed and should never be accumulated in large quantities, this Government have no such mandate for that operation. The Government never pretended to have such a mandate and this Bill does not present that operation. In spite of what Deputy Haughey may have said originally about the White Paper, it does not aim at the abolition of private property. If it did so it would mean the Government were doing something extremely radical, even revolutionary in its economic and social implications, for which they had not asked the people's permission.

That is what the Government were doing.

That is a point on which the Opposition and the Government disagree. I do not read the Bill in that light.

Not the present Bill.

Naturally, it is open to the Opposition to represent it in that light. I must say in fairness to Deputy Colley that he did not go that far in his Second Stage speech. I know it has been said by supposedly responsible people on the other side that the Government, in obedience to the dictation of the Labour Party, are doing something for which they were not given permission by the people. That is not true.

Last week I heard Deputy Crinion say in this House that the Labour tail was wagging the Fine Gael dog. That is not so. The easiest way of proving him wrong is to confront him with the statements of the kind I tried to introduce here from people in the Labour Party—I think they are in a small minority—who believe the Government are not going far enough. On the one hand the few gentlemen I have in mind—they might be regarded as being on the left—are saying the Labour Party have been submerged and, on the other hand, Deputy Crinion is saying that Fine Gael are being submerged. There could be no better proof that the Government's measure represents a fair and honest attempt to do what the Government were elected to do— no more and no less. To that extent, I suppose it could be described as a "middle-of-the-road" measure. Such a measure always means that people on the outskirts, on either side of the spectrum, will be dissatisfied but that is unavoidable. What gives me confidence that the Government are doing the right thing is when I observe the mutually, quite incompatible and contradictory criticisms the Government are encountering from various sides for doing what they are now trying to do.

The death duties which the Government are in process of replacing with the wealth tax were and are a severe, erratic and unjust burden. Although I have heard a good deal about the effect this Bill will have on the productive employment of capital, it is not without interest that I had a letter not long ago from a man I have not seen for a long time but whom I knew when I was a schoolboy, whose family own a business which naturally I will not identify in the House. It is a very well-known business in one part of the country. Perhaps it would be going too far to say that it is a household word; it is not that; but it is a well-known and very long established Irish business. This man's father died some years ago and he and the rest of his family are faced with a crippling bill in death duties which they simply have not got the money to pay. They have a business which employs a lot of people but they cannot raise the money to pay this sum in death duties. This man, who is an industrialist, who is an employer, who is the kind of person on whose behalf tears have been wept from the Opposition benches since this debate began, said in the course of his letter to me, in referring to the condition in which his own family found itself through the incidence of death duties, that "it is ironic that this injustice appears about to be put right next April". That is an industrialist. He is not running out of the country because the wealth tax is on its way but he was damn nearly driven out of it on account of the way that death duties operated on himself and his family and even now his situation is a critical one.

Death duties and estate duties, in fact, whether we like it or not, are a form of wealth tax or property tax. They are a property tax which is collected only once in a generation and they are a property tax the incidence of which is erratic and unjust, for this reason, that careful accounting, careful planning, enabled one with perfect legality to avoid paying death duties at all or to avoid paying the better part of them. I emphasise "perfect legality" because I do not want to be taken as throwing any scorn on people who have availed of the law, as was their 100 per cent right to do, to avoid the payment of death duty by making this, that or the other disposition which the law regarded as perfectly legitimate. I do not criticise them at all but I do say that the thing was erratic and unjust because a family in which there were no unexpected or premature deaths and in which there was the level of foresight, prudence and education—it has got something to do with education— which in turn, in the past, has had something to do, I suppose, with relative privilege, was able to make and had the knowledge and the incentive to make provision for the perfectly lawful avoidance of this particular tax. A family where perhaps youth and the neglect of the certainty of death, which is a characteristic of youth, prevented or inhibited such arrangements from being made, and which was subsequently deprived of the father who, I suppose, in most cases is the man who owns the property, might find itself literally on the street or on the road. That was unjust and erratic. There is no other word for it. It was condemned often enough in this House from both sides. Deputy Crowley knows that perfectly well. It was a property tax but it was a property tax of a hit-and-miss kind and this Government in replacing it, as they undertook to do before they were elected, by a tax which will have an impact only on the very wealthy are abolishing something which was erratic, which was an object of universal detestation, and are replacing it with something that is rational.

We are, of course, under criticism from people who feel that a lot more should be done, that we have retreated in the face of pressure from the so-called affluent Fine Gael TDs, and the like, and that we should be doing something a good deal more drastic. As I say, that is a respectable political proposition. It is a very old-fashioned one and is perfectly open for debate but I think every country is a separate case. While I know that anyone arguing along the lines that I am going to argue must expect people to say that he is arguing the case of his own class or caste, or section, be that economic section, or whatever it is—I do not mind that—and while I realise that danger is there, I have to say that most of the people in this country who are well-off or rich—there is a distinction between the two—are not rich or well-off in consequence of wealth inherited through the operation of a closed caste system based on deliberate exclusion of one kind of person from the opportunities which life offered and the heaping of those opportunities on another kind of person. They are not well-off for that reason; they are well-off for quite a different reason and it is a reason which does not have to be apologised for. I would be sorry if the day should come that one did have to apologise for it.

If anyone in this House cast his eyes around the range of people in this country who by Irish standards would be well-off, professional people, business people, the bigger farmers and so on, he will see that the parents or at most the grandparents of these people in nearly all cases were people of very simple, not to say humble origin and the thing which has made a difference over the space of one or two generations—not more, because we were all poor 100 years ago, or nearly all of us—has been a combination of certainly inherited "what it takes" and, I suppose, a measure of aggressiveness——

And thrift.

I was going to come to that. I quite agree. These are God-given attributes and carry with them the duty to help people who are not so gifted—I believe that as well— a combination of that with the very thing that Deputy Crowley mentioned, thrift, and hard work.

In our parents' and grandparents' time hard work and thrift were held up to children from the moment they were able to understand such words as desirable approaches to life and a desirable way to live one's life. One was taught to be hard working and thrifty. There are many, many thousands of people in this country today who live in comfortable circumstances who in their turn for the most part are also hard working and thrifty but who got something of a start in life, not because they were Anglo-Irish, not because they were Protestants in a nation where the Catholics never got a chance and not for the reasons which may have operated in the eighteenth century. They are where they are because their parents or grandparents worked, or both generations worked, and saved instead of idling and spending.

That may be a displeasing point of view to push to the people who are anxious to break up accumulations of wealth but it is true, I believe. I have seen too many examples of it in my personal vicinity among my own friends and acquaintances and every Deputy knows examples of this kind.

It is wrong for the critics of this Government on the left, if I may put it that way, to leave that out of account because to use language about accumulations of wealth and about big business and so forth, is as much as to say that we ought to apologise for the fact that parents or grandparents exercised qualities which were held up to them as virtues and which I still believe are virtues.

Hear, hear.

I cannot see that we owe any apology to anybody or that the generations that have gone before us owe an apology for having saved money instead of spending it prodigally or in forms of momentary enjoyment when it might have been kept, as it was kept in a lot of cases, to make life easier for their children.

You cannot eradicate this desire of parents. Deputy Dockrell spoke last week about the squirrel instinct. I would like to mention another instinct which is too often left out of account by the theorists. You cannot destroy the wish of parents to make things better for their children than they had them themselves. Nothing will destroy that.

I read with the greatest interest a couple of years ago of a trial taking place in Moscow of professors in the Moscow Polytechnic. They were being tried on a charge of taking bribes to pass students in the entrance examination to that polytechnic. The significance of the bribes in the entrance examination is that the Moscow Polytechnic, for a wide range of people, is a certain route to a white-collar job. Success or failure in that entrance examination meant the difference for the children of these parents between a white-collar as distinct from a blue-collar job. It was alleged that the professors had a going rate of 100 roubles per subject—there were four subjects for the entrance examination and a student who failed all four of them could still get in via one of these corrupt professors if his parents could produce 400 roubles. I do not know how the trial ended; that is not important. What is important is that despite two generations of revolution and indoctrination, despite two generations of official persuasion of something which in fact I believe to be true, that a man doing a blue-collar job is in no way inferior to a man doing a white-collar job—I believe that is true and I would never lend myself to any system or pretence that it was otherwise —in spite of that official line, which is driven home with the greatest severity and consistency in a communist country, the idea was still ineradicable with these Moscow parents 55 years later, who perhaps had to work in dirty manual jobs, that they would do their best, even if it meant bribing a professor, to make sure that their children would have a better deal than they had.

That may be very blameworthy in the eyes of the ideologist; it is all very sad and no doubt is a grave weakness and a grave departure from ideological rectitude on the part of these parents that they could not see that a tough manual job is just as good for their children as one in which they use their minds more than their hands. This is very blameworthy, but it is part of human nature and nothing can more clearly demonstrate how ineradicable it is than its survival in this acute form in a communist country 55 years after their revolution. I will not judge whether or not we ought to be re-educating people along the lines of not caring what kind of job their children have. It would be an insane thing to do. It has demonstrably failed, as the example I have just given shows, in Russia and it cannot succeed here either.

That leads me to think that so far from being a defect in the human being that should be apologised for and eradicated if possible it is a sign of something which is basic in a human being, namely affection for his children and a desire to do his best for them. If that best is measured in terms of trying to give them a launching pad in life, without implying any exploitation of others, or any wish to exploit others, I cannot blame it. I believe the majority of the wealth of this country—admittedly not all of it —is in the hands of people who, without any intention to exploit others, and without doing so—except on an interpretation of the economic process which I do not subscribe to—have built up over a couple of generations a situation where their offspring or descendants are in a more comfortable and secure condition than they themselves. For a Government to overturn that way of doing things, that approach to life, if it can be overturned, which I do not believe, would be as much as any Government possibly could undertake to do. In other words, there is no measure more far-reaching that I can think of except possibly the prohibition of religion or something of that kind, that any Government could possibly undertake than the destruction of, firstly, the instinct of people to save and be thrifty and secondly, the instinct to pass the benefits of that to their children.

I do not think that can be done, but if a Government were to attempt to do it, they would be attempting a measure as wide-ranging and as revolutionary as it is possible to conceive. A Government cannot do that kind of thing unless they have a clear popular mandate to do so. Certainly if they do not have to rely on the people's votes they can do it. A Government which relies merely on force can attempt anything, but a Government that know they have to go back to the people in a matter of months or years cannot and ought not undertake that kind of thing. This Government, despite what has been said about them, are not undertaking that kind of thing.

Not now and I believe this Government—I cannot foresee into the future—never will undertake it.

The original Bill has that kind of intent.

Perhaps I should add as an appendix to that that the reverse process holds true. The Irish seanfhocal "trí ghlúin ó rí go ránn"—three generations downwards from a king to a shovel, expresses in a few words the truth that of course wealth can be dissipated over a couple of generations as easily as it can be accumulated. We know of examples of that too. The best that any Government who depend on the votes of people can do is to deal fairly and justly with the people under their control, to take money from them in taxation, however that taxation may be contrived or constructed, in order to help people who, because of the fact that God has not given them the same gifts as their neighbours, have not got what it takes to survive in the race of life or who, because of handicap, age, disability or misfortune, are unable to provide for themselves properly. That duty is inescapable. I accept it. Not only do I accept it but I stand 100 per cent behind the compassionate end of any Government who say: "Look, you have more than you need and we will take the surplus from you in order to look after the people that life has dealt with more harshly than with you".

I want to express another instinctive feeling of mine about the Irish people. I believe they will go a very long way if led—not driven—and persuaded. There is no limit to the distance they will go in the relief of hardship, in the making up to a person for a handicap which God has laid on him, so far as money or care can make it up. There is almost literally no limit to what you will persuade or lead Irish people to do in the line of what some people may dismiss as cold charity but which is in fact in recognition of simple justice.

I believe this Bill and the whole complex of measures which the Government are promoting to do what was very much overdue, to recast our tax legislation, represent an attempt to lead the people in the direction I am talking about. To the extent that it has caused annoyed reaction, it may be that the persuasion part of the operation has not been as smooth as it might have been. I am sure this total package of legislation will have rough corners or sharp edges on it which will have, with the maximum speed and compassion, to be filed down and smoothed away. I have no doubt whatever that this Government will do this. I will do the Opposition the credit of saying that if they found themselves with legislation of this kind on their hands, as I suppose they may do one day if they return to this side, they would also do their best to smooth away rough corners or sharp edges. When any major legislative revolution is going on there is the danger that some hazard is insufficiently appreciated by the Government, that it is not as well appreciated by a Government as by some of the people who will be affected by it. Of course, that danger exists but this Bill still has a long way to go in this House and in the other House. Even when it is law it is not the end of the world. If there are things in it which are detrimental, which are unfair, unworkable or any of the other things that have been said about it, this Government does not consist of ideologues, madly intent only on the achievement of a political proposition and to hell with the reality of human beings, business, agriculture and so forth. It does not consist of people like that, and it will certainly do whatever it considers necessary to remedy any difficulties which the Bill, when law, may contain for anybody. The acid test of any measure, legislative or otherwise, in a democratic State when you are dealing with a democratic Opposition is whether you would repeal or reverse this, that or the other measure if you were in power tomorrow, next week or next month. That test is unavoidable. You cannot get out of it, you cannot insure against it, you cannot duck it. You have to face that question. I have put that question across the floor of the House and elsewhere indirectly to the Opposition time and again in regard to various measures which were called impossible, such as the removal of VAT from food. There is a long list of such measures with which I will not bore the House. I have repeatedly said to the Opposition: "You have done enough talking about how bad, unworkable and nationally damaging this, that and the other is—making farmers over a certain limit liable to income tax in the same way as everybody else, taking the compulsory Irish out of the Civil Service and out of the schools system. You are full of criticism of these measures but will you give a firm undertaking to reverse them if you are back in power tomorrow?" I am still waiting for the answer "yes" to a single one of those questions.

It is true that the Opposition attitude to this Wealth Tax Bill has not been that the Bill is bad from top to bottom. As far as I can understand it, the line taken by Deputy Colley and Deputy Brennan is more to the effect that it is inopportune at this time so, perhaps, to ask the Opposition this question is a little unfair. Having admitted that, I will have to ask them if this Bill goes through and if they find themselves in Government again next week or next month, will they give the people a firm undertaking before they present themselves for election to repeal this Wealth Tax Bill and go back to the old system of death duties. Since the parliamentary opposition to the Bill has been a somewhat more qualified one I recognise that the answer might not be a straight "yes" or "no" but it is a question which anybody considering this debate must regard as essentially one which the Opposition must answer. If an election comes up next week or next month when the Opposition review the measures which this Government have applied, will they reverse the ones they have criticised? I would particularly like to know whether, assuming this Bill becomes law, the Opposition are going to commit themselves, if not to repealing it outright at least to introducing an amending Bill which would suspend its operation for a year, two years or three years, and will they reintroduce and continue as from 1st April the death duties in the old form. Until we get a satisfactory answer to that I think we are entitled to write off what we have heard from the other benches as opposition for opposition's sake.

I have expressed here this morning points of view about wealth, about the capitalist society, about the kind of people I believe the Irish people are, which I suppose are conventional enough. Deputy Crowley took it upon himself to say, before I stood up, that I did not support the wealth tax. He is wrong. I do support it. I am not a financial or industrial expert and I will not offer a judgment, therefore, on the criticisms which have come from the Confederation of Irish Industry or other sources although I recognise that they must be taken seriously and I have no doubt that the Minister will take them seriously. I see in the Bill nothing like the monster which the Opposition have conjured up and which individuals outside the House have conjured up. I see it as being an attempt to discharge a duty which the people implicitly laid on us at election time. If the Bill goes too far, if it is damaging, if its bad effects are more numerous than its good ones, I have absolutely no doubt that it will in time, perhaps rapidly enough, be amended or adapted, but a Government cannot be blown about by every wind of criticism. It has to take its stand and do what it thinks right. It cannot be chopping and changing every day of the week. We have already had a fairly substantial modification of the original proposals and the Bill now before the House represents a considered attempt to reconcile the points of view, the valid points of view, which the Government have received from all sides. For that reason I support the Bill, not merely as a matter of party discipline, but with conviction; and I commend it to the House.

Having listened to the Parliamentary Secretary to the Taoiseach speak for the past three quarters of an hour, I am reinforced in my belief that the Parliamentary Secretary is a very honest, upright and, indeed, rational man and I only wish that instead of being Parliamentary Secretary to the Taoiseach he were Minister for Finance. If he were the Minister for Finance I certainly would not have the fears I have now of that type of Bill. I found myself in agreement with practically his entire speech. Everything he said was, in my opinion, absolutely authentic, especially where he referred to the Irish paternal attitude in wanting to hand down to their children something that, perhaps, they did not have without a lot of thrift and hard work and wanting to do the best they can for their children. I agreed with Deputy Haughey's original statement when the White Paper on the Wealth Tax was first published that this was the end of free enterprise in the country. I think the Parliamentary Secretary acknowledged that on such a fundamental change as the abolition of the free enterprise system the Government had not a mandate to carry out that kind of economic upheaval in the country. I think people were right to speak out and those outside the House who spoke out against it deserve to be congratulated. They highlighted the drastic consequences which could result if the White Paper were implemented as a Bill in this House.

We all recognise that the Parliamentary Secretary with his legal training uses words very carefully. He used the phrase "the replacement of death duties" as one of the 14 points in the Coalition's manifesto before they went to the country in the last general election. If I remember rightly, they promised—and they promised it verbally because I heard them with my own two ears—the abolition of death duties. They never talked about the replacement of death duties. We all realise that, if you abolish a certain source of revenue to the Exchequer, you have to look around for alternative sources of revenue. In fairness to the people at that time, that should have been put clearly before them. Farmers in my own area voted for the Coalition on that issue alone. They are now very disillusioned with the whole charade being conducted by the Coalition.

The greatest danger I can see in the introduction of wealth taxes or, indeed, any type of what I can only describe as ideological taxes, is that they do not just affect the wealthy person, because the wealthy person can liquidate his assets and take them out of the country and the country loses forever the benefit of that capital. The first person to suffer is the humblest worker because unemployment is created immediately. Unemployment starts at the bottom and works its way up.

We are right on this side of the House in saying that, while the present Bill is not all that Draconian and bears no relationship to the original White Paper, this is not the time for the introduction of such a Bill. The Parliamentary Secretary may well ask what is the right time for the introduction of any form of taxation. You need never fear the introduction of new taxation where you have an economic boom, where you have progress and prosperity, and where you have more or less full employment. It is absolutely vital that we should have an inflow of foreign capital continuously to make available, through the banks or through some of the financial institutions, capital by way of loans or, in some cases, grants to various enterprises who badly need capital.

The Parliamentary Secretary is also perfectly right in saying that the communist system has failed and that we must preserve the private enterprise system. Taking Russia as an example, various Russians have little plots of land, little gardens, which make up something like ½ per cent of the total acreage of Russia and, yet, on that ½ per cent of land one-third of the vegetables in Russia are grown. This is a phenomenal statistic. To me it is the greatest possible condemnation of the whole socialistic or communistic attitude to property and to wealth.

Listening to the Parliamentary Secretary this morning, I felt very reassured that at least we have one man with access to the Government who is not involved in what I can only describe as the political twilight in the Cabinet. We all know the clichés which are thrown out especially by the Labour members of the Coalition: "We will tax the speculators. We will get at the wealthy man. We will give to the poor." Nobody disagrees fundamentally with having a more just society and with redistribution of wealth but I would be very seriously worried about the system involved in the redistribution of wealth.

I do not think the Irish people will ever opt for a system where we have not a free choice under a free enterprise system. I do not think that will ever change, although one cannot predict the future. One can only make judgments on one's own background and one's own beliefs. If we are to take into account the slogans coming from the Labour Party, to fulfil their aims would require a redistribution and an economic upheaval at least every 12 months. As the Parliamentary Secretary so rightly said, all people are born different. Some are given more talents than others. Some are given the gift of enterprise more than others; and others, with the best will in the world, have not got the talent or the ability to make it on their own. Therefore, they need help from the State. Everybody encourages that. It is only right that the less well off members of the community should be looked after to the best of the State's ability to pay.

My greatest fear would be that, in in the pursuit of this type of ideology, we would cause economic chaos with the result that everybody would be affected. It is important that we, as the Opposition, should at all times highlight the inadequacies of the Government as we see them, and criticise legislation as strongly as we can if we see flaws in it. The Parliamentary Secretary asked if we were in Government would we change this Bill. That is a very hypothetical question and, as he said himself, you cannot gives a "yes" or a "no" answer. I do not think we would be against the principle. I know we would not be against the principle of the redistribution of wealth under controlled circumstances.

I do not want to speak for very long. Deputy Fitzpatrick very kindly let me in before him and I promised not to delay the House for very long.

It was just as well the Deputy spoke. There was nobody else on those benches.

Deputy Fitzpatrick knew I would be speaking. I might draw the attention of the Parliamentary Secretary to his own benches.

I did not mean it offensively.

The Parliamentary Secretary has put himself in a very embarrassing position. There is not one Government Deputy in the House except the Parliamentary Secretary. That is very significant. The tug of war which the Parliamentary Secretary was gracious enough to admit goes on in relation to the introduction of this Bill is obviously having its effect on the Government benches— otherwise what is there to keep them out of the House? It is the Government's business to keep a quorum. They are not doing so. It is noticeable, too, that the Labour Deputies are not showing very much interest.

I do not want to see a situation occurring here where we will have to start from the ground to rebuild our economy, our industries and our social welfare system because we have a few political twilighters in the Cabinet. However, I am heartened that we have a man of the pragmatism of the Parliamentary Secretary who can behave as Fianna Fáil would behave.

That is a curious compliment.

(Dublin Central): As Deputy Crowley said, there does not seem to be much of interest by Government Deputies, particularly those of the Labour Party, in this Bill. One thing I am happy about as regards the various tax proposals before the House is that the Bills to implement them will not have to be put through before Easter. At one stage we were left with the impression that the Wealth Tax, Capital Gains Tax and Finance Bills would have to be through the House before the Easter holidays. We have been told now that that is not so. I am glad of that because they are complicated measures which will have to be studied properly in Committee. That can be a time-consuming occupation and it is heartening to learn that they will not be put through in a hurry because ordinary Deputies will find it very difficult to digest their implications.

It is all very well for financial experts and lawyers to try to understand these complicated measures. We know how complicated the Capital Gains Tax Bill is and the one now before us is also very complicated. I often wonder whether the expert advice available to the Government could not be made available to this side so that we would know exactly what Bills of this type contain.

As I was saying, I am glad these Bills are not to be rushed through the House. There is no possibility of the Capital Gains Tax Bill being finalised before Easter and neither could the Bill we are now discussing be rushed through. The Second Stage of the Finance Bill has been completed and after Easter we can sit down and study it section by section.

The Wealth Tax Bill is part of the package contained in the White Paper issued on 28th February, 1974. We know what it is supposed to replace: death duties are to be abolished in April. That is another welcome feature. Since I came into the House I have been saying publicly that that was an unjust tax which always struck at a time when families were at their weakest, when widows were confronted with the task of trying to find this tax. We have seen businesses getting into terrible trouble because of it. Once I was executor of a will and I saw a widow having to find £6,000 to pay this tax. Any measure aimed at abolishing it is to be welcomed.

The amount of tax collected in death duties was £12 million to £14 million. I agree that that amount had to be compensated for in the budget but I do not agree with the method being employed here. Fianna Fáil put forward proposals for the collection of this £14 million. We proposed that proper capital gains and capital acquisition legislation would be sufficient, but if such legislation fell short by any fraction, it would be infinitesmal in a budget of this year's size, £1,200 million.

I do not believe the measure now before us will collect that amount. However, that is not my objection to it. I am looking at how it will affect the business outlook. Business people must be assured that they will be rewarded for their endeavours and it will be a bad day if business people have to say: "Why should I make an endeavour? Why should I not finish work at 5 o'clock and go out to play golf?" Numerous people can afford to do that, but much of the endeavour and the thinking that goes into business expansion are done far beyond ordinary working hours—there is no 9 to 5 in a businessman's life. In framing our fiscal policies we must think along these lines.

We have no objection to the distribution of wealth, but logically wealth must be created before it can be distributed. You cannot expand a social policy without first expanding the social economy. You must put people to work. It is only in that way that you can expand the social arm and uplift the old age pensioner, the widow and orphan and the disabled.

There is no man unemployed in Dublin today who would not prefer to be back in a decent job. The ambition of a wage-earner is to get a decent job with security and what is lacking today is that wage-earners are afraid in their jobs—is there guaranteed continuity for them, or is confidence being undermined? Will they be unemployed next week? This is what the worker is afraid of.

We must in no way deter or discourage the expansion of our industrial arm because if we do we will run into deep trouble and obviously we will not be able to meet our social commitments. If our economic arm contracts and industries close down, naturally there will be less money in circulation from the consumption point of view where indirect taxation is concerned. There will be less money also from direct taxation in so far as income tax is concerned. Naturally also that will have an adverse effect on the amount of money available for distribution to the social welfare sector of the community and that is what we are trying to achieve in the distribution of wealth.

I do not believe this wealth tax will distribute equitably the wealth of the country. If we consider how it will operate in regard to distribution of wealth, we will find that the thresholds are quite large. We must remember that factor. I agree that the thresholds are quite generous. For example, there is a threshold of £100,000, and we have agricultural land valued at only 50 per cent. Therefore, I am convinced that will exempt a considerable number of farmers. So also will it exempt a considerable number of smallholders and shopkeepers. If we exempt such people, the self-employed and those employing very small numbers, at whom then are we directing the wealth tax? We will be directing the wealth tax at people who are expanding industry and creating jobs. It cannot be directed at any other section of the community. Is it more important that such people be left with a sufficient amount of capital with which to expand their businesses and create employment than to take it from them when there will be a contraction of industry and more unemployment? That is a balance we must strike. We must try to decide whether or not it will be worth what we will get. If I thought this would produce £100 million, then I might consider it and say: "Yes, without affecting industry or the employment situation". But I believe it can have a psychological effect which would far outweigh any gain in revenue.

We should be endeavouring to encourage people to expand, making it worth their while to do so and if at all possible to create new employment. That is what the whole exercise of a good economy is about. We must try to generate confidence abroad. It is quite obvious there is not sufficient wealth in the country with which to expand industry. That is one thing about which we must make up our minds. As much as I should like to see the greater part of Irish industry in Irish hands, I cannot see that happening. Therefore, our aim must be to attract new wealth to the country. I wonder if we are going about it in the proper way. We will have to establish what will be the pattern here if we are not to have massive unemployment. We would need to look at the position obtaining in other EEC countries and observe the number of people engaged in industry as against agriculture there. For the past 20 years here there has been a decline in the number of people engaged in agriculture and if that does the past 20 years here there has been a decline in the number of people engaged in agriculture and if that does not continue we will not be able to bring up our standard of living in line with that of other EEC countries. We will have to get industry going, whether it be ancillary to agriculture or some other type. On average the percentage of people employed in agriculture in other EEC countries is 10 per cent. That is a figure taken in 1971 and which demonstrates the pattern at that time. The remainder were employed either in industry or the services. In 1973 it was estimated that 25 per cent of our people were engaged in agriculture It is quite obvious from the figures I have given that there will be a further shift to industry, businesses and services.

We shall have to direct our attention along those lines in creating new jobs if there is not to be further emigration. Indeed, it was forecast recently, with regard to our future population, that we will require between 20,000 and 25,000 jobs per annum up to, I think, 1990. I doubt very much if there is any hope of meeting that figure or of creating sufficient employment for the people who will be leaving agriculture. If there is not that shift from the agricultural sector we will continue to be the most backward country of the EEC. Their standards of living will be improving progressively while ours remain static. Therefore, we must consider the policies of creating new industries and getting more people employed in the services. A lot of thought will need to be given as to how best we should achieve that aim. Fiscal policies and these types of Bills will have an important bearing on it. They will decide eventually whether or not we are progressing along the right lines.

Were this Bill introduced when we had practically full employment, when we were highly industrialised, then I would welcome it. Had we the concentration of capital over the past 100 years of some other EEC countries, then again I would welcome its introduction. Were we in that position, then I would say: "By all means let us introduce a Bill such as this", when it would produce revenue. But on the basis of present wealth in this country, with the thresholds contained in the White Paper it is debatable whether or not the amount of money accumulated for the Exchequer will work to the advantage of the economy in the long run.

We are well aware of the advice given to the Government before Christmas. Various industrialists and economists have pointed out in no uncertain fashion the state of industry today. The Confederation of Irish Industry have made several submissions to the Minister for Finance as regards their position prior to the last budget. We are aware of the position in which they find themselves in regard to cash flow and liquidity. We have only to look at many of their balance sheets to see the downward trend in profits. It is not that the shareholders are getting less but rather the adverse effect it is having on the economy and the creation of more unemployment.

Indeed, it is not very fashionable to talk about a Bill such as this one at all. There are very few votes to be got out of speaking against a Wealth Tax Bill. It might be all right for the super-socialists who can talk about distributing wealth. It is very popular to be uttering these socialist clichés. Provided you can project the right image as a socialist you can live as a capitalist. Anyone speaking against this Bill is doing it because he is genuinely concerned that in the long-term it may not be beneficial to the country. In the short-term, say, over the next three or four months, this will not show any adverse effects for the man in the street, but in the long-term I believe it will have an effect on our economic development.

The Minister was advised before Christmas in relation to the budget and the problems firms would face in regard to cash flow and so on if something positive were not done. I thought something positive would be done in the budget. I do not intend to go into the budget now, but it is slightly relevant to this Bill. What did these firms get? They got deferred taxation of £12 million, which every businessman knew was of no significance. The real dishonesty of the situation is that six weeks later they are told an increased contribution to the stamp will cost £28 million extra. That is not what you would call helping industry in 1975.

On top of that, industry will have to contend with this Bill, and three months after April they will be called upon to pay this tax. I know many companies that are struggling at the moment to make ends meet. They are on the tightest possible margin and hoping to keep their employees at work. Some of these companies can have a very high valuation as regards property and plant, but what is the return? If a company is making big profits I believe it should pay, but there is a mechanism to make it pay—company taxation.

Wealth is accumulated in three ways and should be taxed in three ways. When wealth is inherited there should be a capital acquisition tax, and it is intended to have such legislation later on. When capital is disposed of there is a capital gains tax. We did not object to the Capital Gains Tax Bill, although we objected to certain provisions in it and put forward other provisions which we thought would be more suitable to this economy. When capital is held it is worked, and a person is taxed through income tax or surtax, as the case may be. If you go along those lines you will tax capital in all aspects.

However, when you tax wealth on top of that, that is where the disincentive comes in. When a person holds wealth within the State it should be the Government's duty to encourage the full expansion of that wealth by its utilisation, thus building up a sound economy. Taking wealth away, slice by slice, has a depressing effect. Of course I do not believe this is a wealth tax at all; this is a property tax, whatever name you call it. It is a tax on assets that are generating employment. I doubt very much that the policies being pursued by this Government over the past two years have been conducive to economic expansion.

This tax is levied at 1 per cent right across the board. There is different profitability among companies. Some companies have a high concentration of labour and give a very low return on capital. Other highly mechanised companies can have a low concentration of labour, and thus have high profitability. This tax is levied irrespective of the profits achieved by a company or a person. We have often spoken in the past of the injustice of the rates system, that people were obliged to pay regardless of their ability to pay. There is a certain element of that here too. This does not take into consideration one's ability to pay. It is automatically levied on property.

Denmark has a wealth tax but they take into consideration a person's ability to pay. The full impact of the wealth tax there will not be implemented unless profits are over 6 per cent. There is merit in that type of proposal. But to tax a person on a property which is not returning a very high profit is not a good idea.

Many export companies here today may find it difficult to maintain employment because of the increased social welfare contributions being introduced on 1st April. They will have to look at their costings to see if they can continue to be viable. All these factors must be taken into account. An employer told me last night that he is not in a position to pay the 10 per cent increase which came into operation on 1st March. He told the unions also of this unfortunate situation. He further stated that with the increase in the stamp and wealth tax he will have to let four or five men go. He can see no way out. Most employers are in this unfortunate position. There are 104,000 people unemployed. It is all very well to boast about our great social welfare system, the amounts of money being paid to the unemployed and to those who become redundant and so forth, but they are no substitute for a good job.

The duty of any government is to provide work for the people. If any government fail to do that, or are not capable of doing it, they should give the job to another party who can. Every government, are elected to generate prosperity, to create and guarantee employment. This Government have failed to generate confidence in the business community over the past two years. If anything, they have eroded confidence by pursuing certain policies— doctrinaire socialism, as it is called. This is doing a very great deal of damage. It is undermining confidence at home and, I am sure, abroad.

I was amused to read in the newspapers last week that the Minister for Industry and Commerce was in America telling industrialists how we had doubled our exports to EEC countries over the past two years. The Minister should go down to the Dáil library and read some of the statements made during the EEC debate. At that time we in Fianna Fáil were telling the people it was good for this country to join. Now we have the Minister, Deputy Keating, telling the American industrialists what we gained from the EEC. That is what I call double thinking. We would not be in the EEC if the Minister for Industry and Commerce had had his way. We would still be fighting for markets which we would not be able to find.

It would be interesting to look at the highly industrialised EEC countries who have not a wealth tax. Belgium is half the size of Ireland and has twice our population. The headquarters of the EEC are situated there. Every country in the world has offices there. The cost of office blocks and property in Brussels is astronomical. That country is booming. Yet, they have not got a wealth tax. France does not have a wealth tax either. Because of their mineral wealth over the years they are in a far better position to carry a wealth tax than we are. Italy does not have a wealth tax.

The United Kingdom have forgotten more about industrial development than we will learn for a long time yet. There has been capital inflow into industry in England for the past 200 years. They have been talking about introducing a wealth tax but they have not done it yet. How will Irish companies fare against British companies or where will the transfer be after a number of years? It might not be too difficult to avoid a wealth tax then if our nearest neighbour has not got one.

Belgium has coal mines, iron, steel, brewing, and textiles. France also has textiles and huge technological investments from America. These countries have vast wealth. Italy has iron, zinc, marble, natural gases and cotton. These countries also have a large tourist trade. Wealth is flowing into these countries. I agree that the south of Italy is poor but there is real wealth in the north because of industrial development. As I said, these countries do not have a wealth tax.

Our super-socialists must jump first, even before our nearest neighbour. If I were introducing a wealth tax I would wait until England had introduced hers first. This Government might regret the day this tax was introduced. The European countries already mentioned have regard for the distribution of wealth and a high standard of living. Their social welfare systems are far better than ours.

There are two ways of distributing wealth as there are two ways of making money and two ways of getting money to boost Exchequer funds. There is the way the Government take, namely, taxation—tax everything. That is the negative approach. The positive approach is to create wealth and thereby create more jobs. Workers will spend money and that money will come back to the Exchequer in both direct and indirect taxation. That is how a country is built up. The philosophy one should instil into people is that it is worth while working. The Government have opted for the lazy way, for taxation. If we continue like this eventually there will be nothing left to tax. That could happen. People can get tired of paying taxes especially if they have not got the ability to pay. This is an important factor. If we were a highly developed country industrially the people who will be affected by this legislation could carry the burden but they cannot carry it in our present state of economic development. Our economy is at its weakest point. We have a frightening unemployment problem with 104,000 people out of work. This legislation will make no improvement in that situation. The Minister for Finance and the Minister for Industry and Commerce should get together and devise a policy aimed at expanding the economy. A combined effort might result in something positive. At the moment there is no positive approach. This Bill will not create one new job. It will not bring down the cost of living: if anything, it will increase the cost of living.

A look into the minds of the directors of some of the big retail outlets in Dublin might be very interesting. It is quite possible some firms will be valued at £8,000 or £9,000. It does not take a great deal of arithmetic to figure out what the valuation will be with a threshold of £100,000. Roughly it would be about £70,000 or £80,000. Does the Minister think that will be absorbed or will it be passed on to the consumer? Let him consider that aspect to see what the effect will be on the cost of living. Take any of the big firms, such as Jacobs, Mackintoshes and Seafield Fabrics, which is struggling——

The Chair would prefer that these enterprises would not be mentioned.

(Dublin Central): I agree, but they are mentioned in the newspapers every day. Some are in dire straits.

That is a different matter.

I trust the Deputy realises these firms will not be involved.

(Dublin Central): They are public companies and their shareholders will be involved.

How will it affect the companies?

(Dublin Central): Of course, it will affect the companies. Does the Minister not think the shareholders will stand up and tell the boards they want more profits? Has the Minister any knowledge of business?

Mr. Ryan

They do not go along to the companies with guns in their hands and demand a slice of the assets because they have to meet death duties.

(Dublin Central): If they are dead they cannot go along to the boards. The position is different when they are in the grave.

The Deputy wants to have it both ways.

(Dublin Central): I do not want to have it both ways. I am telling the Minister what the consequences will be. Prices will be affected. Prices will increase. There will be an effect on increasing production because otherwise people will take their money out completely; it will not be worth their while to leave it in. I am speaking about firms on a tight margin. The big firms will look at their costings and they will have their accountants. The effect is bound to be adverse.

I cannot understand section 3. Subsection (1) provides:

Subject to the provisions of this Act, the taxable wealth of an individual who is domiciled and ordinarily resident in the State on the valuation date shall comprise all the property, wheresoever situate, to which he is beneficially entitled in possession on that date.

I presume that is if the individual concerned has property in Japan, America, Britain and France. Subsection (5) provides:

... an individual who is not domiciled in the State on a valuation date and who has been ordinarily resident in the State for not less than seven out of the ten years immediately prior to that date shall be deemed to be domiciled and ordinarily resident in the State on that valuation date;

A great many of our companies were founded by foreigners who have companies in other countries as well as here. Will their foreign assets be subject to wealth tax here? Some years ago a Bill was introduced giving certain concessions, like tax holidays, to foreign industrialists who founded industries here. On my reading of this Bill, it looks as if these foreign industrialists will be subject to this wealth tax. In clause (ii) it is stated:

an individual who was domiciled and ordinarily resident in the State on a valuation date shall, notwithstanding that he ceased to be ordinarily resident in the State after that date, be deemed to be domiciled and ordinarily resident in the State on the three valuation dates next following that valuation date:

If a businessman leaves the State, does that mean his property abroad will be taxed on the three valuation dates next following that valuation date? I do not expect that is what it means but it appears that way.

I cannot see how the Revenue Commissioners can value assets held abroad. We have heard in the past of plans to provide aeroplanes for Ministers to travel to the various parts of the world but it will be the Revenue Commissioners who will need aeroplanes if they are to assess the value of assets held abroad. If my understanding of the Bill is correct, it cannot be a workable piece of legislation. However I should like to hear the Minister's reply to this point. A person domiciled here could have a factory in Chicago or New York or he could have a brewery in Nigeria. Would it not be very difficult to assess the valuations of any such assets? It would be interesting to hear how it is intended to extract a wealth tax in respect of such persons.

This Bill is in no way designed to attract people from outside to invest here. It is a means of penalising people, especially those who have been living here for the past seven or eight years. There are many aspects of this Bill which could be discussed more suitably on Committee Stage.

I do not agree with the proposal to tax both private and public companies in the same way. A public company pay their dividends and the money is spent by the shareholders, whereas a private company operate in an entirely different way. Mostly they use the minimum amount of money and plough back the remainder into expansion. I know of one private company which, seven years ago, had a share capital of £120,000. In their early stages they employed about 15 people and this figure has been increased in the meantime to its present strength of 45. There are three or four shareholders. The people who invested in that company, with the exception of the manager, have not drawn any money from it during that time but have ploughed all the profits into expansion, the purchase of new plant and the expansion of an export market. If this Bill goes through, a company such as that would not be wise in the future to act in this way. If the Minister wishes I can let him know the company to which I am referring. By foregoing profits these people were helping to build up the nation. Because of these Wealth Tax Bills the attitude will be to enjoy oneself, play golf and take holidays abroad. This is the difference between the policy of Fianna Fáil and that of Fine Gael. We have always encouraged people to work, to build up the State and to create more jobs.

There will now be the danger that the average businessman will ensure that he remains below the threshold of £100,000 so as not to become involved in these wealth taxes. Many companies and businesses who remain below that threshold will have greater net profits than those whose assets exceed the threshold. Of course much would depend on the type of business concerned.

I understood from the White Paper that this tax would not become payable until 1976-77 but it appears now that payment will have to be made from April, that is, the 1 per cent on assets assessed at April 1st will have to be paid within three months. This will mean the submitting of thousands of accounts in that time, many of which will not be subject to wealth tax. The Revenue Commissioners have to contend with a huge volume of taxation, but I wonder how they are expected to deal with these new taxes. Have staff been recruited for this extra work? There will be a massive amount of work to be done in the field of valuations and all cases will have to be examined to ascertain whether they are liable for the tax. Can all this work be carried out within a few months?

A big problem will be that of accurate valuations. I doubt if anyone could give an accurate evaluation of his property today. If, say, a business were to be put on the public market and withdrawn at a certain figure but sold later at a higher or a lower figure, which figure would the Revenue Commissioners take for the purposes of assessment? It is not a simple matter to value property in a depressed market. If a property valued in April is sold 18 months later at a much higher figure, will the Revenue Commissioners seek back-tax, or in a reverse situation would they refund the extra amount that had been paid? These are some of the problems I see in relation to this Bill. It is all right to say that payment must be made within three months of the valuation date, but does this mean that payment will be made in advance? Ordinary income tax in respect of businesses is usually paid within 12 months of the assessment date. This is the way that business accounts are dealt with; but to pay three months after the day of assessment would mean paying nine months in advance. The business community today cannot meet their current demands in cash flow not to mention paying in advance.

Perhaps I am wrong. If the Minister does not clarify it in his reply we can have it clarified when we come to Committee Stage. It will be interesting to see how many new officers the Revenue Commissioners recruit to try to cover the most cumbersome taxes which have been introduced in the past few months. They are not all through the House yet but they will be on the Statute Book within the next few months. It is then we will know if the Revenue Commissioners are in a position to handle them. This party are in favour of the distribution of wealth but we believe the timing of this Bill is wrong. If we had it in the middle of the 1960s, when we had economic progress, there would be some justification for it.

There is no justification for bringing in a Bill like this when the economic situation is as bad as it is. When the Minister for Finance introduced income tax for farmers he stated that the best time was probably when you had the lowest profitability in land because no income tax would have to be paid. You would then pay according to your profits. There is a certain argument in that. I should like to hear the Minister putting forward the same argument now. If it is right to put in a tax that must be paid without taking profits into consideration—profits are at their lowest ebb—this is the right time to bring it in. He would be laughed out of the House if he said that.

We could consider the introduction of a wealth tax if business and industry were booming. We have never been against the distribution of wealth in order to contribute to the weaker sections of the community. Fianna Fáil do not need any lecturing with regard to helping those people. They piloted that course during their term of office. This is not the preserve of the Coalition Government by any means.

There is no section in the Bill to deal with inflation. Inflation is not taken into account at all. The Minister just said he would review it. We do not know what yardstick he will use in relation to what inflation has taken place within three years. The Minister knows as well as I do that if some measure is not taken in relation to inflation we will have a chaotic situation. This Bill will encourage the transfer of the wealth of the country to foreign countries. Although foreign shareholders over the threshold of £100,000 are technically caught in the Bill, the Minister knows as well as I do that these people will arrange their business so that they will not go over the threshold of £100,000. It will be an encouragement for foreign investors to take over companies probably at a lower rate because the Irish shareholders will be caught.

Many of the supermarkets in this country are foreign owned but one of the leading Irish supermarket owners has stated that any supermarket owned by an Irish private company— we know the rates they are operating on—will be vulnerable to foreign takeover when this Wealth Tax Bill takes over. Their counterparts, owned by foreign concerns, will be able to avoid it. These things need to be looked at. The Minister has put a flat tax of 1 per cent on all business as if they all produced the same profits. He has readily conceded that agriculture does not produce the same profits. He has given agriculture a 50 per cent reduction. The same should apply to certain industries. The Minister did not give any concession in relation to a company which operates on very high profits and one which operates on very low profits.

Investment in the country is running at around 10 per cent at the moment. This is not very high when you take interest rates into account. This Bill will take 1 per cent off that figure. That is not very encouraging. I believe, irrespective of what tax you bring in, whether it is wealth tax or capital gains tax, it should be designed to improve the standard of living of the people. I am sure no tax is brought in with the intention of destroying the economy but there can be misguided ideas.

We should try to uplift the sagging economy. We should encourage businesses to expand their holdings and create more work. If we do not do this, we have no hope of keeping up with European countries. Our immediate concern should be to provide employment for the 104,000 people out of work. The Government's major concern should be to direct their attention to a major expansion in the economic front with a large injection of capital. There is no effort being made to get this capital to expand industry. We are just drifting along helplessly. The Minister in his budget speech, in relation to planning for the future, stated that he would consider it a futile exercise at the present time to provide a medium or a long-term plan.

I hope the semi-State bodies do not take the advice of the Minister. I hope that CIE do not say: "We are losing £17 million but when inflation is rampant we do not see any sense in having a plan. We will drift along and things might right themselves". What would the Minister feel if many business firms, who find themselves with problems on all sides, decided that there was no good in planning, that things were too irregular, that prices were jumping so often and inflation was fluctuating that they would wait until they could get out of the situation they were in at the moment?

How could any business survive if that attitude were adopted? I do not think any businessman would make such a statement to his staff. It would be very depressing for the staff of a firm to be told by the manager that there was no plan in operation and that the firm were merely drifting along. We need a positive lead from the Government if we are to boost the economy. If the Government do not give good example, they cannot expect any section of the community to take positive action.

We did not get good example in the last budget. Then the Minister deferred taxation of £12 million on a temporary basis and subsequently the Minister for Social Welfare took £28 million from industry when the social welfare stamp was increased. This kind of action is not encouraging. Positive action is needed if we are to protect employment.

We have been told there will be an upturn in the economy towards the end of the year and I hope this will happen. However, we should not put too much hope in this. There is overproduction in America and in European countries; they are selling their goods at ridiculously low margins on the European markets in order to maintain employment. If this continues on the European and the world markets, it is problematical whether our economy will expand at all during the year, particularly as costs will continue to rise. Some £28 million has been taken from industry because of the increased cost of the social welfare stamp. The unfortunate employees will have to pay about 40p and this will more than offset the tax relief they received in the budget.

There are many points in the Bill that will have to be dealt with on Committee Stage. In section 13 of the Bill there is the anomaly which we tried to eradicate in the income tax code with regard to threshold points and allowances. In this section two single people are allowed a threshold of £70,000 each while a married couple are allowed only £100,000. I thought we were getting rid of that anomaly in the income tax code but it still exists in this Bill. If a couple live in sin, without going through the ritual of marriage, they are allowed £140,000, while people who do the respectable thing are allowed only £100,000. The Minister should try to eliminate this anomaly.

This Bill has been introduced at the wrong time, when the economy is declining. We should try to encourage expansion and ensure that industrialists have confidence in the economy. I agree that the Government have not been completely at fault. I know that external pressures have been the cause of some of our troubles but the Government must take their share of the blame. The report of the Central Bank before Christmas pointed out that only 50 per cent of inflation was of an imported nature, that the rest was under the control of the Government. Nobody has greater control over the matter than the Minister for Finance and he must accept responsibility for 50 per cent of the inflation.

The Minister should not add to the inflation already raging in the country. It has nearly wrecked the world economy and at this stage we should do our utmost to try to control it as it affects us. However, the policies of the Government to date have not been directed along these lines. We should not have introduced the Wealth Bill at this time, certainly not until other European countries put it on their Statute Books. It was a mistake to introduce this legislation in advance of England; if they do not adopt a similar taxation measure they will have an advantage over us.

Rising prices and other factors have affected the economy. Unit costs are one of our greatest problems and we have lost the advantage we had in this direction four or five years ago. Now we are exporting to the European markets on a par with European firms and this will not help us. I agree our exports last year were good but we need to maintain and expand that record. I do not think this will happen and I do not see how we can absorb the 104,000 people at present unemployed. We are also faced with the prospect of providing employment for school-leavers and if we wish to keep them in the country we will have to do something positive with regard to industrial development.

The average wage-earner wants the Government to give him a guideline, at least to let him know if there is a future for young people here. They will have to see some prospects if they are to remain. At the moment the outlook is dismal and it is up to the Government to ensure that their policies are directed towards promoting industry and services and generally building up the wealth of the country. Then we will be in a better position to help social welfare recipients, the old age pensioners and those receiving disability benefits. We will be able to help them attain a good standard of living but if we continue with the present negative taxation policy we will not be able to help even the social welfare recipients.

One of the promises of the National Coalition was the removal of estate duties but little did the people know they would be saddled with many other forms of taxation. I do not claim to be an expert on taxation or on the legislative proposals that have come before the House recently with regard to taxes on capital gains, wealth and so on or on the Bills that are about to be brought into the House. I come from a rural area, mainly agricultural. In my opinion, this tax will have an adverse effect on the farming community. Take the farmers with small holdings. These men used to do contract work for the bigger farmers with over £100 valuation. They have decided to discontinue that for the reason that the farmers of £100 valuation and over will have to make returns to the Revenue Commissioners and the smaller farmers will also have to make returns. The small farmer, whose average acreage is about 40 acres, has to find some other means of income in view of rising costs and the high cost of living, in order to keep his head above water. It is as simple as that.

I want it to be clear and I want to put it on the record of the House that I am not against people paying a fair share of taxation, but I realise and most of the people in the country realise that the timing of the Bill that is now before the House is wrong. Let us have a look at the timing. The Bill is being brought in at a time when business firms are operating a three-day or two-day working week. It is no joy to any firm to be on a short working week. The overheads and the running costs remain high. A prolonged period of short working would have an adverse effect on a company.

Most of the companies as I know them, especially in that part of the country where I am involved, are working on bank overdrafts and the past year was a very difficult period for them. That is undeniable. Those industrialists and the men with the money who came into this country will now have a look at the situation and will consider what effect a wealth tax will have on them. An industrialist who has come here with thousands of pounds, maybe millions, to start up an industry here will now find if he has assets abroad that he will have to pay tax on them also. I do not know how it is intended to collect the tax. An industrialist who is giving good employment here has industries in England, America, or anywhere else, will be caught for tax here also. How is it intended to collect it? Is it intended that Revenue officials will be sent around the world in Aer Lingus jets to investigate? Are the Revenue Commissioners about to take on a new role in the collection of this tax? The Coalition Government got no mandate from the people at the last election to bring in such taxation. It is taxation that will cripple every industry in the country.

Let us consider the ordinary industrialist operating here at the moment. Take a man who is on the threshold of £100,000. Trading at the moment is very difficult. He is faced with competition from the other EEC countries and from countries outside the EEC who were sending goods here at very low cost. He has a problem. I have been speaking to many of these industrialists and they have said to me that the incentive to expand is gone and the incentive to provide additional employment is gone because from 25th April they will need to have a special staff employed to keep account of all this taxation. They will be inundated with documents, returns, queries and so on.

At this point in time there are 104,000 persons unemployed. The country can be divided into two categories, a tax-ridden country and a dole country. How is it intended to pay all those who are on the dole? Where is the money to come from? The money comes from the business and working people. The social insurance stamp has been increased to £4.60. The employer has to make an increased contribution of 80p and the employee, to pay for the people who are on the dole, has to pay an increased contribution in the region of 30p. If this situation continues, if there is no expansion in industry, if there are more persons coming on the unemployed register, the economy and the industrial life of the country will be brought almost to a halt. That is the situation at the moment.

Section 3 of this Bill states:

Subject to the provisions of this Act, the taxable wealth of an individual who is domiciled and ordinarily resident in the State on the valuation date shall comprise all the property wheresoever situate, to which he is beneficially entitled in possession on that date.

I should like to know if this concerns property a person owns, property outside the State. I presume it does but how does the Minister propose to collect the tax if the property is outside the State?

Last week some respected Members, noted businessmen, spoke against this Bill because they felt it would have an adverse effect on industrial and business life. The Minister stated that only a small number of people would be affected by the tax but he must have realised when he was scrubbing the estate duty he would have to look elsewhere for the money the Exchequer collected from that duty. My estimate is that the Minister will collect in the region of £20 million on this new duty. Most of the big businesses are owned by foreigners and these people will have another look at the situation before they extend their business. I am tired listening to organisations—I do not mind saying this because one gets no votes for speaking on a Bill of this nature—saying that certain people are getting away without paying enormous amounts of tax. In stating this they are talking about the wealth they say exists here but I cannot see the great wealth they refer to. It is possible that a few individuals —they are very few—have considerable wealth.

I should like to point out, to the workers in particular, that the people with money give the employment and if they withdraw their money there will be little or no work. It should be realised that a number of companies, including some in my own constituency, have intimated that they are unable to pay the recent 10 per cent increase in wages and salaries. These firms have pointed out that if they have to pay the money they may have to close down resulting in further redundancies. We cannot have our loaf and eat it.

There should be initiative from the Government to encourage capital inflow but the Government are driving money out. If a person has £1,000 on deposit for a period in excess of 12 months he pays income tax, something I could never understand. That figure should be increased to at least £10,000 tax free. If that was done we would be encouraging investment, something which is badly needed. I agree that speculators should be taxed. The person who moves in, buys property and makes a quick return should be taxed at a heavy rate.

Some organisations have accused me of supporting the rich and the big businessmen in my comments on the Capital Gains Tax Bill. I challenged them last year to give their views on taxation and financial affairs but they have not done so. It should be remembered that if we do not have people willing to invest their money in our industries, to expand them and create further employment, a lot of our small industries will go to the wall. When Fianna Fáil were in power those who went abroad to encourage foreign industrialists to come here were in the happy position of being able to point to the tax concessions for new industries but such industrialists will be hesitant to come here in view of this type of taxation.

I believe that the IDA have had a falling-off in the number of inquiries from abroad. Speaking about the IDA. I should like to state that when they issue figures for job potential I divide their figure by two. In 90 per cent of cases my division by two of their figure results in a more realistic projection. There is a general feeling in industry that small firms should not be asked to pay tax at the same rate as the large firms and that is only right. Most companies are working on loans from the banks and after going through a very difficult year or 18 months there is no company that I know of making what can be called big profit.

I hope the national wage agreement will be brought to a satisfactory conclusion. When we were on the other side of the House we were always constructive on that issue. We always put the interests of the nation before politics or vote catching. We intend to be as constructive as we possibly can in opposition and to put the situation to the Government as we see it. With all the taxation being introduced at present there is a scare on. The men with the money, the will and the skill to expand are scared. Why would anyone expand when he will be riddled with income tax? Forms will be coming every day in the post and some companies will have to employ special staff to deal with all the forms and queries. There is no use in anyone saying that companies are making big profits. They are not. Some of the men who are heads of companies work seven days a week. There are no nine to five men in any company that I know of. They must go abroad to look for markets and to negotiate, they must ensure that orders are met and that they can compete. They find now that the more they do and the more employment they give the more they will be taxed.

This is the thin end of the wedge. When this Bill becomes law all the Minister for Finance has to do is to introduce an amendment. Many average people did not realise but they are beginning to realise, especially the farming and business communities, and the workers too, that this taxation is the thin end of the wedge. The next time this comes before the House in the form of a Bill or Financial Resolution the small print will be put in and the £100,000 will be reduced to £80,000 and, perhaps, to £50,000. The farmers are terrified at the moment. They say to me: "One is taxed at present on a valuation of £100 but what will it be next year? Will it be reduced until we are all in the net?" I spoke earlier of the small farmer who did contract work for the larger farmers. Such a small farmer will not now work for the bigger farmer because when the bigger farmer is making out his return he will mention that the other man worked for him and then they will be after him. Any man with a farm of 40 acres, which is the average according to the latest survey carried out, must supplement his income by some means.

What is happening now is that most of those men are selling their machinery and much of their machinery was bought on HP. The factories where this machinery was made and the suppliers gave employment too. Sales of agricultural machinery have taken a nose dive. All this taxation, especially on wealth, is bad. We are in favour of a Capital Gains Tax Bill provided it is put through in a proper way. I believe in taxing the man who is in for a quick profit overnight but I believe that in the case of people who own property, who have developed it, repaired it, carried out major improvements, if they want to dispose of it after 15 years they should not be liable for income tax or capital gains tax.

I know the problems the Minister has, because all this taxation that has been introduced is Labour Party social policy. Is it Labour Party policy to have the dole and to tax to the hilt everybody who has anything? In the long run there will be no money to pay the dole. Recently the Government borrowed £187 million abroad. I looked through various documents to see did we ever borrow that amount, and we never did. The Minister stated in his budget speech that he will borrow more, I presume on the foreign market. Who will pay the interest? It is like a man who borrows one year, borrows again the next year, and the following year he reaches the point of no return.

Is it the Government's intention to sell us down the river? If it is, they should state that in the House. If it is, it is the Arabs who will own us. They will dictate the terms. It is the person who provides the money who dictates the tune. Are we to sell ourselves to the Arabs and let them dictate the tune to us? I do not believe in that. It is time the Irish people opened their eyes. Some of them have, but some of them have not yet seen the light of day. Some people believe that so long as the dole keeps flowing everything is all right. I have heard people saying that so long as the money comes on Friday night they are all right. They must ask where is this money coming from.

There was no money in the budget for expansion. We need something in the region of £400 million to keep our services in operation. That is my calculation. There are two options open to the Government. They can go to the foreign market, or they can go to our financial institutions. The Central Bank have intimated that they will release some extra finances, I presume, to the subsidiary banks. I hope that when they do, the Minister will not step in and grab it and leave nothing for the private individual. If the Minister takes all the capital made available by the Central Bank, there will be no capital available for private expansion. That would lead to a very serious situation.

There are 33 sections in this Bill. Some of them are very complicated and will have to be explained to us on Committee Stage. We will want to know what the involvement will be, what the means of collection will be, how property will be valued, and who will value it. Will it be the Revenue Commissioners? Will they have the right to send down an inspector to value property? These are some of the questions we will be asking.

The Minister watered down the White Paper he introduced last year. He had to bend before a great deal of pressure. The Minister said the White Paper was open for discussion. The timing of this Bill is very bad in view of the economic state of the country, in view of our balance of payments, in view of the unemployment position, and in view of the lean times through which companies small and large are going. I do not think anybody can deny that. So far as I know the Bill comes into operation on 5th April and the first instalment will be due three months later. If you do not pay up, the interest rate is rather high. This must be looked into.

The Government stated that all the problems were due to the Arabs and to oil. Not so long ago the Central Bank stated that only 50 per cent of our inflation was imported and that the rest was due to our own bad management. Last year the Central Bank spoke very strongly about the way the Government were running our affairs. They did not say it directly. What I fear is that all in all the Government have decided to bring in a tax that will cripple industry, agriculture and every other walk of life. The ordinary people see it as the thin edge of the wedge.

I do not want anyone to think I do not believe in people paying a fair share of taxation: I believe everyone should pay according to their ability to do so. I also believe that no tax should be imposed which would interfere with expansion in employment and which would in that way interfere with job creation which is badly needed at the moment. No tax should put jobs in jeopardy. I am afraid this Bill will mean a stop to industrial expansion and that would be the sad day for Ireland.

The debate has been well worthwhile. It has afforded a number of Deputies an opportunity to get a lot of emotion off their chests. The Bill has nothing to do with doctrinaire socialism, doctrinaire conservatism or doctrinaire philosophy of any kind. It simply proposes a reasonable alternative form of taxation of capital to replace death duties, which will be abolished in three weeks.

Companies did not pay death duties.

Companies will not pay wealth tax in the manner described by so many Deputies, but I will come to that later. At this stage I want to deal with the rather puerile, unrealistic and emotional speeches we have heard, particularly from the Opposition, who cried "ruination" and flung at us accusations of a doctrinaire approach to the whole problem. I want to go to the root of Government thinking and action in this matter. It is to be found in the statement of intent of the parties forming the National Coalition Government on 7th February, 1973. It stated very simply, very honestly and quite courageously:

With a view to relieving the heavy and unjust burden on ordinary house purchasers and farmers, the National Coalition Government will abolish estate duties on property passing on death to widows and their children and replace them with taxation confined to the really wealthy and to property passing on death outside the immediate family.

The proposal was explained in detail as follows about ten days later in a document entitled The Cost of the National Coalition Programme:

The National Coalition will abolish estate duties. The money involved will be recovered through a new form of taxation of capital, which will be paid during the lifetime of the owner of the capital.

It then went on to suggest an exemption threshold of £40,000. The Bill provides much more generous thresholds of £70,000 for single people, £90,000 for widowed people and £100,000 for married people, plus in all cases the principal private residence, contents and one acre. Our paper of 1973 forecast that taking a threshold of £40,000 would relieve about 92 per cent of all estates liable to estate duty. With higher thresholds the number being relieved is much greater, in excess of 95 per cent of all estates now liable. They will not be called on to pay one penny of capital taxation, one penny of wealth tax or of the other taxes in the package of taxes which will replace estate, legacy and succession duties.

Our document of 1973 stated that all but about 500 people would, under the National Coalition scheme, pay less tax than under the estate duty code. The document also stated that new taxes would be imposed on assets passing outside the immediate family. I expect tomorrow to be introducing the Capital Acquisition Tax Bill which will be circulated shortly afterwards and this will enable the House and all interested parties outside to have a full view of the capital taxation package before we come to discuss the Committee Stage of this Bill and the other capital taxation Bills. It will enable this discussion to become realistic. Hopefully the House will then deal with hard facts and escape from the quagmire of unrealistic emotion and accusation in which so much of the discussion has been conducted up to now.

One of the most encouraging aspects of the abolition of death duties and their replacement by instalment taxes payable during life is that the people who expect to be affected by the new taxes have suddenly developed a tremendous life expectancy. Ever since we proposed the abolition of death duties, people, liable to the new taxes believe themselves to be gifted with immortality. Reasonable people in the past were concerned that their next-of-kin might have to pay death duties on their demise. They took steps, as best they could, to avoid payment of death duties.

In certain cases they engaged in the legitimate avoidance practice of distributing their property more than five years before death. That was a luxury which could be engaged in by the well-to-do, who could distribute most of their wealth and still retain ample to maintain themselves in comfort. The overwhelming mass of people who had property in excess of £7,500—which was liable to duty when we came into power—were not in a position to alienate from them such capital as they had because, prudently, they had to maintain their homes and savings in order to ensure that destitution would not be their lot in the autumn of their days. The people who had more than usual wealth were able to distribute large sums and yet retain ample for themselves.

Prudent people also, if they were concerned to avoid imposing death duties on their next-of-kin, took out insurance policies so that, on death, a lump sum would be payable to enable their next-of-kin pay estate duty. As I pointed out earlier, over 95 per cent of people now at risk of paying estate duty will be entirely freed from that liability, or any capital taxation in the future. But of those who will be called on to pay capital taxation in the future, the amount which they will pay one year after another, in many cases, will be less than the premium they would in the past have paid on a policy taken out for the purpose of paying estate duty. All of which indicates that, far from the taxation being a punitive and extortionate one, the taxation package we are offering as an alternative to the archaic system—which has been rightly condemned—is one which is very carefully tailored to the ability of people to pay and will enable people to make adjustments in their wealth holdings and their incomes in order to pay the tax.

Of course, the new capital taxes will lead to adjustments in wealth holdings in Ireland. That is not necessarily a bad thing. There is a great deal of idle wealth in this country. There are many assets here which do not yield an adequate income, adequacy being measured by the capacity of such assets to produce income. Countries which introduced wealth taxes found that people who tended to hold on to assets of low yield disposed of them and converted their wealth into forms of assets which would produce a much better income. If that occurs here— and I expect it will—it will be a very good thing, not alone for the taxpayer but indeed for the economy.

When examples of other countries which have wealth taxes were quoted here it was claimed that they were countries with greater economic fortune than ours. The question might well be asked: why is it that other countries have done better? Of course, there are many reasons why other countries do better. They may have more natural wealth, more industrialised economies. Many countries in the past had empires, lands which they conquered and from which they took considerable wealth without making a fair return. But wealth can be generated and accumulated in a country if its taxation system is such as to encourage people to use their assets to best advantage. If the wealth tax here leans on some people so that they look hard at the poor yield they have on their assets, it may well encourage them to reinvest their money in productive outlets which will generate resources for themselves and the community as a whole.

The only form of capital taxation we have at present was designed in 1894. I do not think there is any Member of this House who was even born at that time. Certainly there is no Member of the House who, at that time had reached the age of reason. Yet that is the only tax which today affects or influences in any way, holdings of capital in Ireland. I do not know of any other country where the capital tax situation has remained stagnant for so long. We followed the British with the system we are now abolishing. But even the British found themselves obliged, for good social and economic reasons, to make radical changes in their capital taxation system. For instance, they have long experience of a capital gains tax. They are now proposing new taxes like wealth taxes at levels far higher than anything we in Government propose.

It has been suggested that the Bill is based on a philosophy which does not respect property. It has been said that the promoters of the Bill consider capital to be a bad thing. Nothing could be farther from the truth. I have never heard anybody suggest that taxation of income is an infringement of the principle that the labourer is worthy of his hire. Is there anybody so daft as to suggest that because wages are subject to income tax it is tantamount to saying that a person should not be paid for his labour. I find it very difficult to accept there is any worth in the argument that taxation of property is an infringement of the right to acquire or own it. I cannot accept that to tax property is an infringement of the right to enjoy the profits arising out of its ownership. Possession of property confers a capacity to pay tax. I enunciated that principle at the beginning of this Second Stage. Nobody in the House has contradicted it.

Nobody has denied it directly but, by inference, accusations have been made that there was something basically wrong in thinking that possession of capital conferred a capacity to pay tax. Of course, there is a very good reason why it could not be denied. That is the principle that has been in operation ever since the Finance Act of 1894 when estate duties were introduced. They were a form of capital taxation but capital taxation that was paid in what I would regard as confiscatory amounts. Between the top rates of estate duty and legacy and succession duties as much as 65 per cent of some estates could be confiscated at time of death. That disruptive tax has done serious harm to business in Ireland. It closed down several businesses, particularly family businesses. That is a tax which has forced families to sell off large portions of the family farm because it operated at very extortionate rates.

One of the great disadvantages of estate duties was that it was tax which occurred by accident and not by design. It could occur in rapid succession affecting some families seriously because of frequency of deaths in certain families. While there was some reduction granted in respect of rapid succession, it operated in such a way that some families found themselves, over a decade or so, almost deprived of any of their real assets, while other families in precisely the same originating circumstances were, during and at the end of the same period, not subjected to any tax at all. It is foolish to maintain a system of taxation which operates by caprice, hits the innocent and can be avoided by the well advised. In 1973 we took a decision to end such a system and to replace it with one which would be known, would be calculable and unavoidable, and would be payable without real harm or difficulty. That is what we have done.

A reason why one might not be too impressed by the complaints of some people about the new capital taxes is that their complaints have not been accompanied by any public recognition by them of the considerable tax reliefs which this Government have given in anticipation of wealth tax and other capital taxes. No account has been taken by several of the critics, in the course of this debate, of the considerable tax concessions which have been given by the Government in the Finance Acts of 1973 and 1974, and are being given in the Finance Act, 1975. Last year the Finance Act abolished sur-tax and it subjected income, whether it was earned or investment, what was called unearned, income, to a new unified income tax.

And exactly equivalent.

No. Unearned income used to have a heavier rate of income tax than earned income. There was one concession for people with property, who have investments and who have income from those investments. Last year's Finance Bill also gave very significant tax relief to holders of life assurance policies, a relief which was greatest for the people with the largest amount of wealth and the largest insurance policies. This year's Finance Bill reduces the top rate of income tax from 80 per cent to 70 per cent.

These moves were preparatory to, and associated with, the introduction of the wealth tax, and there would be little justification for making these concessions if a wealth tax was not to be introduced. I did not hear any people who criticised the wealth tax suggest that we should restore the previous levels of income taxation to the higher income levels and also to income from investments. They cannot have it both ways. Equity requires that people pay tax according to their capacity to pay, and it would be totally wrong to give considerable tax relief at the top level of income and property holding while people at the lower income level are being sorely pressed by tax.

It is the ambition of every Minister for Finance to relieve as many tax payers as possible and particularly to relieve people in the lower income and lower property holding groups. The only reason why further relief cannot be given is because of the pressing demands for public revenue to meet public needs. Our behaviour in Government to date clearly illustrates that we are a reforming administration and that tax reform is something we do not hesitate to pursue, notwithstanding all the difficulties, all the hard work and uncertainties and all the embarrassments which are concomitant with changes.

There is a natural inclination on the part of mankind to assume that what is old and known is respectable and good and that anything new is to be feared and will probably be dangerous. Other countries have succeeded admirably under the kind of capital taxes we are introducing, and there is no reason to anticipate that Ireland will not do as well as those countries when you bear in mind that we are abolishing death duties, which other countries did not do as they introduced capital taxes. It will be seen that the tax climate in Ireland as far as property is concerned will be much better at the end of the exercise than it was when we started out.

I want to emphasise something which has been overlooked in the fog and smoke generated in recent weeks in relation to this Wealth Tax Bill. There will be no wealth tax paid by any married person—and they represent the majority of wealth holders in the country—until such a person has a home and its contents and an acre around it and another £100,000 besides. It does not matter what the size or value of that home is, tax will not be payable on it. When tax becomes payable for the comparatively few hundred who may be liable to it it will be paid by them, not on the home or on its contents or the acre around it or on the £100,000 which is also allowed but only on the slice above that.

Deputy Fitzpatrick suggested that we should follow the example of Denmark. People have been very selective in the course of this debate, picking out of one taxation system or another something that suited them and overlooking what did not suit their argument.

In Denmark the level of exemption is £30,000 per person or for a married couple. There is no exemption for the home and its contents and no exemption up to £100,000 such as we are proposing. They also do not have the advantages and exemptions we are giving, such as the 50 per cent on £200,000 for agricultural land and the 20 per cent exemption on productive assets which, in addition to the other areas of exemption mentioned, will confer additional benefits on people of considerable property. That is why I consider it vitally necessary that a great deal of the mischief, which was maliciously generated, should be dissipated. People will then see the reality of the situation and understand how concerned this Government are to ensure that this wealth tax will not press on anybody who is not in a position to pay it without hardship.

I mentioned last night that our ancestors thought it proper, in the first half of the nineteenth century, to honour a British Under-Secretary, Drummond. They cast his likeness in bronze. It stands today in Dublin City Hall on a plinth which bears his famous words "Property has its duties as well as its rights". Drummond asserted that against the hostility of people of considerable substance and influence. We assert the same in 1975. It is sad to think that we must assert it against not dissimilar hostility.

Property has its duties as well as its rights, and vice versa. This Bill, and all this Government's capital taxation proposals, recognise the rights and duties of property. One cannot have a right without a corresponding duty and vice versa. From listening to Opposition speakers it would appear that they claim proprietary rights which carry no duty. They also appear to be asking us to accept that ownership of wealth does not confer any capacity to pay.

Drummond's precept has stood the test of time. It is as applicable today as it was in the first half of the nineteenth century. Society has developed and there is a better social conscience and sense of obligation towards less well off people today. In my view, Drummond's axiom is entirely pertinent and should not be forgotten in the course of all the debates on capital taxation.

I should like to remind the Opposition that Article 43 of the Constitution while guaranteeing the right to private property also recognises that the property rights may be delimited by law "with a view to reconciling their exercise with the exigencies of the common good." Is that doctrinaire socialism? If so, then Mr. Eamon de Valera and his party were guilty of doctrinaire socialism in 1938.

The late Judge Hanna of the High Court described that phrase "the exigencies of the common good" as "a kind of political shibboleth, the meaning and application of which has changed and will continue to change from one generation to another". Of course what the judge was saying is accepted as true by all reasonable people. He said that each generation has a right, within the fundamental law, to determine its own priorities and what way the resources of man should be distributed among its citizenry.

We have reached the stage in 1975, when the public conscience demands that there should be a fairer distribution of the nation's resources. There are different ways of effecting that distribution, but only one has been thought of in this debate. This Bill endeavours to redistribute property, not by the sole mechanism of taxation because quite clearly property is not significantly redistributed where a tax of only one per cent operates above £100,000 plus the house and its contents.

It has always been accepted that one of the principal justifications for estate duties was that they encouraged people to break up substantial accumulations of wealth in order to avoid payment of tax. That had a good social consequence. It prevented the concentration of wealth in too few hands. As we are getting rid of estate duties because of the hardship necessarily associated with them, it is essential we provide a system of taxes which will encourage people with vast accumulations of wealth to break them up and redistribute them.

That is not the normal understanding of the phrase "redistribution of wealth".

I would refer the Deputy to our White Paper on Capital Taxation now over a year old where we clearly identify one of the functions of capital taxation as the redistribution of wealth by encouraging people——

Within the family in the main.

Yes, within the family if needs be but not necessarily.

That is not the normal understanding of the phrase "redistribution of wealth".

It can also be distributed outside the family. The distributions we are allowing to take place within the family are quite considerable. Yet we have pitched them at a point which should encourage people to contemplate a distribution of some of their property outside the family. It is desirable to break up vast accumulations, even within families, rather than leave property in only one name. If we are to have a just society, it is appropriate that our capital taxes should have this redistributive effect. When that redistributive effect is combined with a better use of capital, it is bound to operate to the general good.

I have been asked to put an estimate on the yield of this tax. As in relation to estate duties, the more effective this tax in encouraging people to redistribute their wealth, even among their own families, the less revenue will the State obtain. We cannot say precisely how people will manage their property in the future. We do not even have an adequate picture of how property was held and distributed in Ireland under the old system of estate duty.

As I cannot point out too often, the biggest estates avoided payment of estate duty because people took avoidance action in good time and these estates have not come within the knowledge or the net of the Revenue Commissioners. But it is common knowledge that such estates exist. Their value and the frequency of transfer and so forth are not known, but they will be known in future. This is one of the reasons, possibly, why people of considerable property who avoided tax resent these new taxes because they realise the opportunity for avoidance will not exist in future since the possession and distribution of wealth will be monitored as it passes from one hand and one generation to another.

There is total policing of the income of wage earners. Employers are under obligation to make returns and pay tax on what is paid out by them. The wage earner has no opportunity of avoiding tax. I do not condemn people for wanting to avoid paying tax because, to do so, would be to condemn human nature. It is a natural inclination. But one section of the community, the section which includes some of the poorest people, has no opportunity of avoidance. Surely it is not inequitable to ask the better-off sections to accept a similar discipline so that they like others will be obliged to make a fair return to the community through which they have made their profits, the profits that have given them their property.

We have taken action in our Finance Bills and, if necessary, we will take further action, to prevent tax avoidance, to prevent people investing property abroad in order to avoid paying tax here. This necessarily means that policing powers, as it were, have to be given to the Revenue Commissioners to keep a watch on the movement of funds. There have been some emotive denunciations of this operation but I repeat, if such disciplines and constraints apply to wages and other incomes then, in equity, they must also apply to property holdings and to the distribution of property. There is absolutely no underlying view in the mind of the Government or in the mind of any supporter of this Government that capital or discretionary trusts or private non-trading companies are bad. In pursuit of our determination, however, not to permit avoidance operations we must treat discretionary trusts and private non-trading companies in the way in which they are treated in this Bill. If we did not do that there would be a very, very simple device available to anyone wanting to avoid payment of capital tax. It would be a nonsense to introduce a wealth tax and at the same time allow people distribute their property through discretionary trusts and private non-trading companies in such a way as would enable them to escape liability to payment of wealth tax. We are doing no more than any other country has done in an endeavour to operate taxes fairly. We have to ensure that people cannot avoid liability by resorting to legal fictions.

A great many of the points made in this debate are substantially Committee Stage debating points but some might, I suppose, be usefully dealt with at this stage if only to clarify the minds of Deputies and expedite the handling of the Bill.

Deputy Crinion suggested that the promise of the Government to abolish death duties was made only two days before the election. I have already pointed out that it was announced in a document dated 7th February, a long time before the election, and it was followed by a document ten days later which invited the Fianna Fáil Party and Deputy Colley in particular to challenge at that stage the National Coalition's thinking on the matter. The Fianna Fáil Party did not take up the challenge. They did not say at that time that we were wrong to replace estate duties by an alternative form of taxation, which would be paid by instalments. I find it very interesting, indeed, now that they are on the Opposition benches, that they should be expressing the view of people of substantial property that there is something wrong in the Government's thinking.

Clearly Deputy Crinion was mistaken and confusing it with the promise by the Taoiseach not to introduce a wealth tax, which was made two days before the election.

The policy of the National Coalition Parties was contained in these two documents of 7th and 17th February. I think Deputy Crinion was confusing a promise to miraculously abolish rates made by Fianna Fáil immediately before the election.

Is the Minister denying the Taoiseach made the promise?

I am saying Deputy Crinion confused the Fianna Fáil Party on-the-eve-of-the-poll promise to abolish rates with the firm commitment of the National Coalition Parties to form a Government which would abolish estate duties and replace them with taxation applying to real wealth, taxation to be paid under an instalment system.

Now we are not so conceited as to insist that every line and comma of this Bill must be accepted without amendment. We will be only too happy to listen to reasonable comments on it and my hope would be that we would get down to more sensible working arrangements in the course of the Committee and later Stages of the Bill. If we do that we will be able to produce a Bill entirely suited to the needs of our time, a Bill which will avoid possible pitfalls. We have had to move with considerable speed in a very difficult and delicate area. Anybody who has experience in taxation law—barristers, solicitors, accountants, tax consultants, businessmen and so on—knows just how complex tax laws are. It has, unfortunately, taken a considerable amount of time to draft the necessary legislation to implement the simple idea we propounded early in February, 1973 and for which we were given a mandate in the General Election. Now that we have reached the stage of discussing the legislation we want to maintain the spirit and the practice of consultation, which we have had with interested parties ever since we published our White Paper in February, 1974.

I want to assure the Opposition that if they have any worthwhile amendments to make to this Bill we will consider them on their merits and we will not be in any way put off by the emotive abuse to which we were subjected in the course of the Second Stage debate. If we were doctrinaire about this we would, of course, not have produced a Bill with as many exemptions and privileges as this Bill has. We are anxious to assist any section of the community which may have particular problems. The fact that we have given an exemption to the farming community, a special exemption to the fishing industry, to the hotel industry, to holders of productive assets is proof of our readiness to tailor our proposals to the specific needs and requirements of particular areas. This will continue to be our policy as we process these Bills through the House.

It has been suggested that I have been encouraging people to live in sin because the thresholds for a married couple will be at £100,000 while that for single people will be £70,000. This argument is a fine debating point and that is about all it is. It overlooks what everybody knows, that wealth tends to be held in family arrangements. There are more single people but they are not all that common, who have considerable wealth of their own but the greater number of people hold their wealth in family situations.

Income tax treats income as being acquired jointly as between husband and wife. Perhaps it is because the law accepts what every romantic knows, that two can live as cheaply as one. It is not at all extraordinary that the wealth tax should treat property holdings in family situations.

Deputy Colley asked why the Bill treated a person as a minor up to 21 years of age. He said we should make the age of majority 18. It is some years ago since I had the privilege of being a rapporteur of the legal committee of the Council of Europe in which I proposed to the Assembly of the Council of Europe a resolution urging all countries of the Council to adopt the age of 18 as the age of majority. I am convinced that is the proper age of majority, that one should become a full legal person at the age of 18 years. We have a strange anomaly in our law whereby people may make wills over 18 years of age and yet we treat them as not having full rights and obligations until they are 21 years old. Against reducing the age of majority from 21 to 18 years, it can be argued that the age of majority carries with it not merely the privileges of maturity but also the obligations and, therefore, if you want to save people the burden of obligations you are doing them a favour by depriving them of seniority and majority until they become 21 years of age.

I am committed to the reduction of this age but this is not a Bill which can deal with that. It is a matter which embraces the whole civil law and would have to be dealt with in a separate Bill. I am sure Deputy Colley, as a lawyer, would appreciate how extensive the effect of changing the age of majority would be and it is not something which could be taken in isolation in a tax Bill. We may possibly move in that direction in the not too distant future. When we do I think there will be no difficulty whatsoever in adjusting all the tax laws so that wherever the age of 21 is the operative one in tax laws now the age of 18 will be the appropriate age in future. It would probably not be necessary to have a separate tax Bill but I am not speaking ex cathedra when I offer that opinion.

Deputy Colley also asked why the Bill referred to "a wife" in some sections rather than "a spouse". He will find there are several sections where in fact the spouse and the wife are separately mentioned and have to be separately mentioned. Possibly we could avoid using the word "wife" by talking about the sex of the spouse. I think the word "wife" is so sufficiently understood and is such a respectable status in any event that we do not have to be oversensitive about using it, as we do use it, for the sake of clarity in the Bill. In this and in all other taxation Bill debates there is forever a plea for clarity and simplicity of language. We could, perhaps, devise new phraseology and use new terms to mean what simple words mean. I see no harm in maintaining in our law such a simple phrase as "a wife", which is a status which is easily understood.

That is for the purpose of helping the draftsman.

I think we must be concerned not merely with helping the draftsman, although I consider it very proper that the burden of work falling on him should be eased if it can, but it is most important that we should consider the ordinary person who is trying to interpret legislation. If simple everyday words can be used rather than using gems of legalistic beauty then I think it is better to use the simple words.

It is a simple word.

Section 13 is a case in point.

I had a look at it and it would need to be redrafted.

Section 13 refers to spouse and wife in different contexts. Deputy Colley mentioned the discretionary trust which he says was getting special treatment in certain cases. He made a plea that special treatment would also be given to discretionary trusts set up to provide a fund for a daughter separated from her husband. Might I say in passing that when the Deputy identified that as a particular problem he was moving into the same simple and honest atmosphere as the one in which the parliamentary draftsman operates when he uses the term "wife".

That is just one example.

Nevertheless the Deputy mentioned it. I think there is merit in what the Deputy said in this regard. Of course, one does not like to move out the limits of areas of exemption because the further you move them the more people seem to be the other side of the anomaly line. You may get to a point where discretionary trusts could not be supervised at all. I will have a look at this and if we can handle it in an appropriate amendment I will not be averse to accepting it.

I appreciate that. Does the Minister understand I was simply using that as an example? I am concerned with the principle involved. It may involve bringing the Revenue Commissioners in to judge a person's trust but it should not be confined to the kind of case I mentioned.

Fair enough, but I have warned against the risks involved in extending the boundaries of exemption too far because then we get into an area of avoidance. In fairness to the general body of taxpayers we must not encourage avoidance practices.

Deputy Colley complained about the absence of valuation rules. The rules that will apply in future will not be dissimilar to the present rules with regard to the valuation of capital for estate duty purposes. They are well known and they have stood the test of time. It may be necessary to refine them in the light of experience and development and, of course, this can be done. However, the general rules of valuation are obviously the best ones. There is a great danger in spelling out rules of valuation and measurement in a statute so that they become the only rules that can be applied. Fixed rules could result in an injustice to taxpayers. Everything that is relevant to the value and the price of an article should be considered whenever valuations are being made. Deputy Belton made the same point about valuations.

Deputy Bermingham complained that the rates of tax were too low and when we consider the rates operating in other countries and the thresholds at which they operate it seems a fair comment. We have deliberately set the rate of tax at a mere 1 per cent and have set the thresholds high because we do not want to allow a situation to develop where there could be the remotest possibility of the harmful effects suggested by the Opposition.

A great deal of the debate has been about companies. This morning several Deputies on the Opposition benches spoke about the dreadful harm that would be done to industry by the operation of this tax. I want to emphasise once again that the tax will not apply to trading companies. The tax will apply to shareholders in companies but only to such shareholders as have property in excess of £100,000 net in addition to their private home, the contents and an acre of land around the house. The number of such people in Ireland is few; they are a tiny minority. I am not saying that their rights may be disregarded—far from it. We are considering their problems too by the several adjustments we have made in the ordinary system of taxes to date and in the provision in the Bill. This will reduce the rate of wealth tax if wealth tax and income tax combined exceed 80 per cent of income, subject to a brake of 50 per cent of the wealth tax below which the tax may not go. Instead of the gloomy picture painted by the Opposition that this tax will press harshly on companies, the reality is that only a tiny fraction of the thousands of shareholders in companies will have to pay a small annual instalment tax. Throughout this debate it has been assumed by all critics that the only property held by shareholders in companies is company property or shareholding in the company. These kind of people do not exist——

(Dublin Central): If they do not exist why introduce this measure?

What has been suggested by the Opposition is that the typical taxpayer has only one form of wealth and that is his shareholding in a company. They hold that if the tax presses on him it will press on the whole company and the company's assets will have to be liquidated to pay the tax. That is not the reality. It is unlikely that a person affected by this tax will have his assets in only one form; he will be a man of considerable substance and almost certainly his property will be scattered over a wide portfolio and in different forms. He will certainly be in a position to adjust his affairs to pay this comparatively benign tax during his lifetime.

There is some concern with regard to life estates where the life tenant cannot realise the assets, but perhaps this point should more appropriately be discussed on Committee Stage.

That is so but perhaps I might refer to it briefly now. If the life tenant is not subject to the tax, it would be a very simple avenue of avoidance. For instance, a person could make himself a tenant for life, afterwards his wife could be tenant for her life and then the children. If the life tenant were not to be liable for tax, liability could be avoided entirely on quite substantial property.

Will the Minister state how liability could be avoided if the trustee is made liable for the same amount of tax?

They could make several trust funds, all under the exemption limits.

The actual capital is legally vested in somebody.

In practice it might not make any difference, whether the life tenant, the trust fund or the trustee is subjected.

Deputy Esmonde made a point about the life tenant. It was pointed out to the Minister that in some cases the valuation of capital may be very substantial in relation to income.

That is the point. There might be a clause in the settlement precluding the touching of the capital. There are some such long-standing trusts in existence. I think power will have to be given to the trustees to deal with the situation.

The net result would be the same so far as the life tenant is concerned. However, these points might be discussed on Committee Stage and I shall be happy to debate them with the Deputies. We are not completely fixed on any particular way. I understand that in Britain it is proposed to make the trust fund liable for the wealth tax rather than the life tenant. We have looked at the situations obtaining in a number of countries and we find the practice varies from place to place. At this stage I am not completely in favour of any one system.

Is the Minister prepared to consider the matter on Committee Stage?

Certainly. The system we proposed seemed to be the most convenient from the administrative point of view and from the point of view of the taxpayer. Deputy de Valera quite properly has been at pains to point out that it is desirable that the convenience of the public administration as well as the private individual be considered because unless a tax system can be operated with reasonable efficiency it will fall into difficulties and ultimately the taxpayer as well as the public sector will suffer.

Deputy de Valera said he had difficulty in reconciling the policies of Fine Gael and Labour as announced. Our policies were set out in the National Coalition Statement of Intent. He seemed to rely upon that long-since-proven-to-be untrue image of Fine Gael which his party attempted to create in the 1920s, that Fine Gael was a conservative party. I would challenge anybody to justify that image on a review of the policy statements of Fine Gael over the last decade—just taking that period alone. I would challenge any historian in years to come studying Fine Gael over the last three decades to describe Fine Gael as a conservative party.

I think what I did was to point to two different views.

The Deputy was suggesting that there were two opposite and extreme views.

There could not be anything more conservative or laissez-faire than the Minister's own approach to the management of the economy.

I have avoided so far getting to grips with the Fianna Fáil Party that have tried to have a fourth budget debate on this Bill. No doubt they will try to have a budget debate even on the Committee Stage of this Bill.

That is your fault. There are budgets every day.

Will the Minister please move the adjournment of the debate?

I move the adjournment of the debate.

Debate adjourned.
Barr
Roinn