(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——