Amendments Nos. 23 and 24 are being discussed together.
Finance Bill, 1975: Committee Stage (Resumed).
According to the Minister's amendment, a gaming machine shall be deemed to be available for play in certain circumstances. In explanation last night the Minister stated that a second machine could be substituted if a machine were unplayable. He accepted this apparently as reasonable enough. Because of the increase in the licence duty on the premises plus the heavy duty of £50 per annum per machine, the Minister ought also to take into consideration some system of rebates on machines out of action for a certain length of time. I do not know if the Minister is aware of the frequency with which these machines can become ineffective. I would ask him to have a look at this and introduce some system of rebates. The duty of £50 per annum is quite a sizeable levy particularly when coupled with the increase in licence fees. Will the onus be on the proprietor to prove a machine is not functional? If there are 75 machines and the licence extends to 50 operable machines, is the onus on the proprietor to prove the others are not functional or will the Revenue Commissioners come along and declare which are functional and which are not?
Deputy Colley's amendment which is being discussed in conjunction with the Minister's amendment seeks the deletion of paragraph (c) in its entirety. There is no doubt as to the faults we find with the Minister's amendment and the deletion of paragraph (c) would be an important step forward. The section it is proposing to delete indicated that it was the Minister's intention that a machine, operating or otherwise, was deemed to be available for play and to be liable for duty notwithstanding the fact that it was not fit for play if it was positioned in such a way that it could be played. The Minister mentioned that the Revenue Commissioners could put a seal on a machine and I presume that would involve the Revenue Commissioners putting tape on the machine indicating that it was out of order.
The amendment is welcome in that it does away with the proposed paragraph (c). There is the difficulty of detail as to the capacity of the amusement caterer to put in a replacement machine when a machine is out of order under the existing licence but I do not think that enters into the matter at this stage. It is no harm to have spelled out that a machine which is not available to the public and is not seen to be available to the public for playing need not be taxed. I can see a slight problem arising in relation to that portion of the amendment which deals with the condition of the machine and where it is stored. It is obvious that the proprietor of an amusement arcade will be anxious to get a machine back into action as quickly as possible because he makes his money on such a machine. The problem I see is that when the Revenue Commissioners call they will see that a machine is not operable because a number of component parts are faulty but it would be disastrous if when they returned they claimed that they should be taxed on the basis that it was not left in the "aforesaid state". In addition, in relation to the place where it should be stored, the Revenue Commissioners, being suspicious of a particular caterer, might say the machine has been moved and technically because it was moved it should be taxed.
It was natural that the Minister should be anxious to replace paragraph (c) but the straightforward amendment of Deputy Colley's should have been accepted without the inclusion of the qualification headings introduced by the Minister.
Paragraph (c) in subsection (2) was, as we pointed out on Second Stage, totally unreasonable and unworkable. It was for that reason I put down amendment No. 24. The Minister's amendment is designed to delete that subsection and to substitute the words in the amendment. To that extent I welcome the amendment and I also welcome the fact that the Minister now recognises that paragraph (c) was unreasonable and probably unworkable.
I move amendment No. 25:
In page 23, line 11, subsection (6), to delete "be issued" and to substitute "remain in force".
This is a drafting amendment which is self-explanatory. It was recommended by the parliamentary draftsman.
Is there some particular significance in the period for which a licence remains in force being different from the period for which it is to be issued?
The parliamentary draftsman requested that this be made and he said it was the appropriate language to be used in respect of a licence which is issued in circumstances of this nature. The licence states the period for which it will remain in force and it will remain in force for that particular period.
It is not a major point and I was just interested in the nuance of difference in it.
Amendment No. 26 is in the name of Deputy Colley and amendments Nos. 27, 28 and 29 seem to be cognate. They may be taken together or separately as the Members wish. Shall we take these amendments together?
Yes. I move amendment No. 26:
In page 23, line 12, to delete "£12.50" and substitute "£6.25".
My amendments are designed to have the proposed charge to be levied in respect of each gaming machine to which the licence relates. In many cases the people concerned are not in a big way of business and are to a great extent depending on a short season. The cost for them of their normal overheads is increasing at a substantial rate. There is a danger that some of the smaller business people may be put out of business if the amount of the licence duty involved is too great. The Minister referred to the amount payable in similar circumstances in Northern Ireland but I believe he was somewhat misled in regard to the position there.
The Minister will find that if he compares the position in the North with what is proposed in these amendments he will see that they are not too much out of line. The Minister's proposed increase is substantial and could result in some people being put out of business thereby causing a certain amount of unemployment. I would not say it would be a major contribution to our unemployment figures but at this stage we ought to do everything we can to prevent any contribution to our unemployment figures. For that reason I would urge the Minister to accept this amendment and the others which follow the same line and to recognise the fact that the consequences of what he is proposing to do in so far as revenue is concerned cannot at all compensate for the adverse consequences in the way of people being put out of business and some unemployment being caused.
I have tabled an amendment to tailor the duty according to the occasions on which the machines are played. The amendment in question is amendment No. 30 which provides that if a machine is played only on Sundays and public holidays the licensee may obtain a licence at a rate of only two-fifths of what the rate would otherwise be. This takes account of the small operator who operates seven days a week for only part of the year and only at weekends for the remainder of the year. But, there are some gaming halls, in Dublin for instance, where the machines are operating all day, every day, and we have to try to strike an appropriate duty for such machines and for machines that are used only occasionally during most of the year.
The particular duties which we now have, provide for a different rate of duty according to whether machines are played for one-fourth, one-half or three-fourths of the year or a full year, with a special rate for machines played only on Sundays and public holidays taking account of the different circumstances of the different proprietors of the machines and that is the most appropriate way to do it rather than to reduce the duty on all machines including machines which produce a very handsome reward to the owners of them because of the fact that they are played virtually non-stop.
This amendment comes to the kernel of the new law, as it were, in this Bill. We have seen the licence duties increase. This, in fact, is a new tax. The Minister may state that later amendments which he has tabled may do something to ease the situation, nevertheless, this is a new tax and we ought to take cognisance of the fact that it might be too severe. The amendment as tabled by our spokesman would be more realistic and would be in line with what the representatives of the Amusement Caterers' Association of Ireland desire. If I may quote one sentence from them on the subject of the Finance Bill, with specific reference to the point:
We respectfully suggest that the maximum tax on a gaming machine should be £25 for a full year with corresponding adjustments for a lesser period.
The amendment as tabled by this side of the House meets the requirements of this association. In passing I would say that the Amusement Caterers' Association of Ireland has a high reputation and very strict rules of membership which they enforce.
I would ask the Minister to remember that this is a new law with a new levy and I would urge him to have another look at the rates of levy and to accept the amendment.
I have listened very patiently to the Opposition. I must agree with the Minister in regard to the amount of profit involved in these machines. Anyone who suggests that £50 on a slot machine is too much must not know the profit that is involved. It is generally accepted that on average these machines show a net profit of £500 and many of these machines show a profit far in excess of this figure. A tax of 10 per cent is very little today.
May I ask the previous speaker to indicate how he arrived at the figures of net profit? It is a pity that the Deputy was not here last night when we dealt with the various types of machines and I went to great length to distinguish between what I would term a slot machine and the machine that is emotionally described as a one-armed bandit. Would the Deputy substantiate the figures he has given?
Is Deputy Murphy in the business or has he any knowledge of the business? The explanation is not so simple but the figures I have given are for a two-penny machine. It is very difficult to say that one machine makes so much and another machine makes so much more.
Are these figures derived from the Deputy's own experience?
From the experience of various friends who are pretty big in the business.
Would it be on the basis of a machine working the whole year round?
Yes. I am talking about a profit of £10 a week.
Where might these machines be located?
Anywhere around the country.
In whose premises around the country? Does the Deputy mean amusement arcades, cafés and public houses, et cetera?
I am talking about amusement arcades.
Not machines in private clubs, et cetera?
The Deputy is prepared to stand over those figures?
Of course I am. I will give higher figures than that.
When I put down these amendments I put them down on the basis of the Bill as it stood, on the case we made on Second Stage and on the Minister's reply to that. In substance, the case we made in this regard was that there were very many people operating in a small way and many people who operated only for very limited periods, sometimes only at weekends, and that the proposed rates of tax were so crippling that they would put them out of business. The Minister in his reply to that case did not accept that that was so and, indeed, as I indicated earlier, was misinformed or misinformed himself in regard to the comparable position in Northern Ireland. The fact that he has himself put down the amendments to which he has referred is clear acknowledgment by him that what we were saying is correct and that he has now found it to be so.
I would certainly concede to him that the amendments to which he has referred which he put down and which were put down after mine, go some of the way to meet the case we were making. I do not think that the Minister's amendments cover all of the difficulties involved but I do acknowledge that they go some of the way to meet the difficulties which arose clearly on the ground of the Bill and which were put down, as I say, after the amendments we are now discussing were put down by me. In the circumstances it is rather difficult to identify precisely those of the Minister's amendments which will give the necessary relief and those which will not. I agree with him that it is better, if one can avoid it, not to give relief in the case of those who are making very substantial profits. At the same time, it is essential to give relief in the case of those who, if not given it, would be forced out of business with the consequential results I referred to earlier.
In the circumstances it seems to me that the best thing I can do is to ask the Minister to examine further the case already made to ensure that, as far as possible, the amendments which he has down will meet the reasonable requirements of the smaller operator. I do not expect he will be able to do anything across the floor of the House but it could be that he might find it necessary to amend somewhat further the provisions of this Bill in order to meet what he has acknowledged by his own amendments to be a legitimate case. I ask him to examine the matter further before the Bill is enacted into law to see if some further amendments can be devised which will meet the legitimate case of the smaller operator.
The amendments to which the Minister has referred go some of the way we were trying to get him to go but I think there are still gaps left in the requirements. In the circumstances, having regard to the fact that the Minister's amendments go some of the way we were trying to get him to go and some of the way this and the associated amendments were designed to produce, I am willing to withdraw this amendment if he undertakes to look further before the enactment into law of the Bill to ensure as far as he can that all the reasonable requirements of the smaller operator are covered by his proposed amendments.
The request from the amusement caterers in the first instance for a halving of the proposed duty was understandable as there is hardly anybody who is subject to tax who does not wish that the tax be reduced. Furthermore, I think it was presented in the context of the absence of any special provisions which would allow a moderated duty in respect of machines which are usually played only on Sundays and public holidays in premises which are only opened at that time. I think we have gone a long way towards meeting that particular difficulty but if there are any other areas of special difficulty which come to notice we certainly will be ready to consider that problem.
Last night, due to mental fatigue suffered on both sides of the House, the figure of 20,000 gaming machines being in the country was mentioned. That figure is not correct. The estimate is that there are about 2,000 gaming machines in the country in licensed amusement halls. Since the budget proposal was first announced quite a number of representations have been made complaining about gaming machines in premises licensed for the sale of alcoholic liquor and in clubs. It is permissible in certain circumstances to have such gaming machines in premises in Northern Ireland and in Britain but it is not permissible in the Republic. Any person who operates gaming machines in any place other than in a licensed amusement hall or in certain circumstances in a travelling show or circus is committing a serious offence and is liable to be prosecuted, convicted and punished. It is desirable in the public interest and in the interest of people being misled into placing such machines on their premises to issue a warning that the presence of such machines in premises licensed for the sale of alcoholic liquor will not be tolerated. I am certain I have the support of all sides of the Dáil and Seanad in giving that notice to people who may have been led to believe that it was permissible to have such gaming machines in their premises but it is not. This legislation will produce revenue which is necessary for essential purposes.
(Dublin Central): I agree with the Minister that those machines should be made illegal in premises licensed for the sale of alcoholic liquor. Does the same apply to social clubs, say, golf clubs?
The same applies. The Gaming and Lotteries Act, 1956 prohibits the playing of these machines in any places other than licensed halls or if they are part of a travelling show or circus or certain charitable events and providing in these cases that the gaming element is only a minor aspect of their activities. Those are the only circumstances.
(Dublin Central): Therefore, it is illegal for a golf club to have one of these. Would the same apply to any sporting organisation?
What about cafes?
The same applies to a cafe unless it is a place which is licensed under the Gaming and Lotteries Act as an amusement hall.
Can we take it that a licence to operate such machines would not be granted either for a premises which has an intoxicating liquor licence or the type of premises which have been mentioned, such as social clubs or cafes? Is that the position?
I have the 1956 Gaming and Lotteries Act here but as I mentioned last night it is not a function of this Bill to amend that Act and I am not holding myself forth as an expert or giving legal advice because that is inappropriate even in Parliament. It is a matter for the courts in each case to determine the suitability of premises for the purpose of carrying on gaming but gaming on premises which are licensed for the sale of intoxicating liquor is expressly forbidden by section 9 of the Gaming and Lotteries Act, 1956.
I welcome the Minister's warning to non-licensed people. Would he also give the same undertaking for the licensed amusement arcades that operate illegal machines? By such machines I specifically refer to 5p machines which are illegal. Would he also give an undertaking that the Revenue Commissioners will take very strong measures to see that those machines do not continue in the country?
The responsibility for enforcing the Gaming and Lotteries Act, 1956, is primarily a matter for the Garda Síochána. The Revenue Commissioners are charged with the responsibility of collecting such duty as may be payable in respect of licences issued under that Act or any other Act. The House may be assured that the Garda will be rigorously enforcing the law, first of all, because Oireachtas Éireann has already laid down the conditions under which gaming and lottery should be conducted and it is desirable in the public interest that those conditions are observed. Now that the licensed operators of gaming machines are called on to pay duty in respect of each machine, in fairness to them it is desirable that the law should be rigorously enforced against any people who may be committing breaches of the law. We want a situation in which, if gaming is carried on in licensed premises, under proper supervision, it will be on the record. We do not want to have a situation develop in which gaming is conducted in unlicensed premises on machines on which the proper duty is not being paid.
I move amendment No. 30:
In page 23, before subsection (7), to insert the following subsection:
"(7) (a) A gaming machine licence may, pursuant to a request contained in the application therefore, be expressed to relate only to Sundays and holidays in the period specified in the licence for which it is to remain in force and, where a licence is so expressed—
(i) the duty of excise imposed by subsection (6) of this section shall be charged, levied and paid on the grant of the licence at two-fifths of the rate at which it would have been chargeable if the licence were not so expressed, and
(ii) the licence shall be deemed, for the purposes of subsections (3) and (9) (b) of this section, not to be in force on days in the period aforesaid other than Sundays and holidays.
(b) In this subsection `holidays' mean days which are public holidays for the purposes of the Holidays (Employees) Act, 1973."
I referred to this amendment when speaking on the previous one. It is designed to allow gaming licence holders to take out a gaming machine licence which would be valid only in respect of Sundays and public holidays during the period for which it is taken out. The rate of duty chargeable on such a licence will be two-fifths of the rate chargeable on a full gaming machine licence, that is, a licence which would extend over all days of the week. This is to meet the situation in which some proprietors of licensed amusement halls and fun fairs open, only at weekends, or rather, on Sundays and public holidays, during the off-season although in fact they may operate on a full-time basis during the summer months.
As a consequence of this amendment, if it is accepted, and section 42 and other sections of the Bill, such people who operate amusement halls and fun fairs at holiday resorts will be able to take out a full licence for such period of the year as suits them, so that they may operate every day of the week during such peak period. They may then opt, if they so wish, for a Sunday and public holiday licence for the remainder of the year.
This amendment certainly goes some of the way to meeting the difficulties to which we drew attention on Second Stage. Therefore, we welcome it. However, there are one or two small points I should like to put to the Minister. The first one is how was the proportion set out in paragraph (a) (i) of two-fifths arrived at? The second question is whether the definition in paragraph (b) of "holidays" as public holidays for the purposes of the Holidays (Employees) Act, 1973 is sufficient, having regard to the fact that I presume there are parts of the country still in which a public holiday might well be a Church holiday rather than one of the holidays referred to in the definition and where this problem could arise. I am not saying this with authority; I do not know this positively of my own knowledge. But I rather suspect that it is still so in parts of the country. Therefore, I wonder whether the definition in subparagraph (b) is sufficient for the purpose the Minister intended.
We are satisfied that it is. "Public holiday" is defined in the Holidays (Employees) Act, 1973. They are the days which are officially recognised public holidays as distinct from days which may be local or traditional holidays but not what I might call State-recognised public holidays.
The Deputy asked why the proportion of two-fifths was taken. Presumably, he is wondering why the proportion of two-sevenths was not taken. Any general knowledge of trade and activities would recognise that each day of the week does not carry an equal volume of traffic and that the peaks in the particular activity tend to be on Sundays and public holidays. In those circumstances, having regard to the fact that those are the days on which most profit might be expected to be made, it was considered appropriate that the proportion be higher than two-sevenths and nearer to two-fifths. In fact the situation could arise in which a person might have a licence for a whole week and do two-fifths or even half of the business on a Sunday and a tiny fraction of business only on each of the other five or six days of the week. I think the proportion is a fairly fair one having regard to the fact that most business is likely to be done on a Sunday, even by a person who is operating for the full week.
I wanted to get it on the record as to how it was arrived at. I do not wish to pursue this matter too far because I am not absolutely certain of my own knowledge what is the position. I do know that some years ago, in parts of the country, particular Church holidays were of more importance than what are commonly called bank holidays. I wonder if that is not still the position in some parts of the country and, if it is, does this amendment meet the situation?
In any cases where there might be exceptional local holidays—I am talking now at random and from my own knowledge—they tend to be in the summer season in any event, in which case the amusement caterers would probably have a licence to cover them. For instance, I am thinking that 15th August is a great day in Wexford, as we all know, but it is not a recognised public holiday. I would be very surprised indeed, if gaming machines in any of the resorts in Wexford were not operating under a full licence at that time of the year.
I move amendment No. 31:
In page 24, subsection (13), line 15, to delete "May" and to substitute "June".
It was originally intended to have the commencement date of the excise duty on gaming machines as 1st May. That was because we ambitiously hoped the legislation would be through before that date. We know now it will not be through before 1st May and, in order to allow adequate notice to be given to the amusement caterers and allow applicants to make application for licences and so on, we now propose 1st June.
On the section I want to refer the Minister, first, to subsection (2) (a), paragraph (b), on page 22, lines 16 to 20, where it says:
A gaming machine which provides more than one individual playing position shall, for the purposes of this section, be treated as a number of gaming machines equal to the number of individual playing positions provided on the machine.
I presume the Minister has received representations in regard to this matter. Certainly I have and I want to confess that I have never seen the kind of machine which is creating the problem here. Therefore, I am in some difficulty describing the problem to the House. But I am led to believe that, if the definition or provision in paragraph (b) is adhered to, the cost of duty on quite a number of machines will become totally prohibitive and they will have to be scrapped. Machines costing perhaps £3,000 might well be liable to duty of that amount. Therefore, in regard to that matter, I want to know whether the Minister has received representations and, if so, what is his reaction to them.
I should like to verify the position with regard to subsection (4) (a) namely, that it covers the necessary number of machines, that if one machine were replaced the existing licence would cover the total number of machines. I want to verify that it is not confined to specific machines but to the number.
That is so. I take it the Deputy has not been inside an amusement arcade for some time. There are quite a number of machines that can be operated by a number of players, each of whom has a slot into which money is inserted. These machines are very popular and it would be inappropriate to levy the same duty on a machine that is operated by only one player at a time. In effect the duty will be related to the income the machines will earn. For instance, if there are six points where money can be placed in the machine, the income will be six times higher than in a machine with only one intake point.
Did the Minister say it would be inappropriate to charge the same duty?
It would not be appropriate to levy the same rate on a machine operated by one player as that levied on a machine that could be played by six people. The income earned from the latter machine would be six times greater than that obtained from the former.
Perhaps we might clarify the matter further. I understand that in a machine that has six playing positions each of those positions has a choice for the player, that he may back six different things. He may choose one, two or even the six options. I understand it is theoretically possible, although unusual, for more than one person to use that place. Is each one of the six options treated separately?
No, it is just the place.
I am glad Deputy Colley clarified that point. When I read subsection (2) (b) I understood it to mean the reverse. When the Minister replied earlier to a question a certain anxiety crossed my mind because some of these machines have up to 48 intake points and they can cater for six or eight players. Now that Deputy Colley has pursued the point it is clear that the slots are treated as one unit.
The Deputy may be assured that it is the playing position taken by a player and not the different combination of arrangements in the machine that determines the duty.
There are many varieties of this form of multiple machine. Some are the direct slot type and in others a very small amount of skill is involved. I am thinking of a machine that would have playing space for eight people; for instance, the game where people roll a penny and hope it will enter the correct spot. Will this be in the same category as the machine where people insert a coin and wait for the machine to operate?
If I understand the Deputy's description correctly, the apparatus to which he has referred requires some skill by the player. It would not be regarded as a gaming machine. The Amusement Caterers' Association invited the Revenue Commissioners to tour their premises recently and the Revenue Commissioners were glad to avail of the invitation. I am glad to say the caterers offered the Revenue Commissioners the stakes with which to play so there was no net gain or loss to the Exchequer.
I remember encouraging the Minister to tour the amusement arcades to verify the position.
At any rate some agreement has been reached on what are regarded as gaming machines and what are not so regarded and I do not anticipate any difficulty. There are still some machines that have not been adjudicated upon but, having regard to the earlier agreement, I do not think there will be any difficulties that cannot be resolved.
Could the Minister provide a list of machines that might be regarded as gaming?
It would be very difficult to produce such a list because they change the titles very frequently. The mere title of a machine might not be an adequate guide. The licensed premises will be inspected by the officers concerned who will receive guidance from headquarters. I do not anticipate there will be any difficulty.
Will the Minister verify the point I put forward with regard to subsection (4) (a) namely, that the licence relates to a number of machines and not to particular machines? If a machine is replaced, although the total number remains the same, am I correct in assuming the licence will cover the total number including the replacement?
That is correct. This was discussed at length last night and I am happy to confirm what the Deputy has said. The licence will be issued for a certain number of machines. For instance, if it is for 50 machines, so long as only that number of operable machines are accessible to the public the law is being complied with. Any of the 50 may be taken out and replaced with an equal number.
I should like to refer the Minister to subsection (5) (b) which states:
A holder of a gaming machine licence who causes or permits one or more gaming machines in excess of the number specified in the licence to be made available for play on the premises to which the licence relates shall be guilty of a separate offence in respect of each gaming machine so caused or permitted to be made available for play and shall be liable...
On the face of it that appears to mean that if a man has a licence covering 25 machines and if he is found to be operating 27, he becomes liable for a penalty in respect of 27 rather than of the two machines. That may not be the intention but that is what the paragraph is saying.
The paragraph states: "... shall be guilty of a separate offence in respect of each gaming machine so caused or permitted to be made available for play..." As is stated in this subsection what is involved are the machines in excess of the number specified in the licence. A person causing two machines in excess to be played would be liable to two penalties of £300 each and the forfeiture of the two machines.
I can see that is the intention and how it is thought it will be executed. It does seem to me that there is a certain ambiguity involved in this. However, if the Minister is satisfied that the intention he has in mind is being clearly carried out I will not pursue the matter. I am just drawing his attention to a possible ambiguity in this.
I am grateful to the Deputy but I do not think it exists.
Time will tell. Of course, the Minister appreciates that if it is found to be uncertain the effects may be to rebound on the Revenue Commissioners, not on those committing the offence.
Let me now refer the Minister to subsection (8) which provides:
On the application of the holder of a gaming machine licence, the Revenue Commissioners may, subject to such conditions as they think fit to impose, permit the transfer of the licence from the holder to another person.
On principle, I am unhappy about phrases like "such conditions as they think fit to impose" in regard to the powers of the Revenue Commissioners. Does the Minister not think that wording like "such conditions as may be reasonable in the circumstances" or some such phrase would be far more appropriate? Why give this kind of blanket power to the Revenue Commissioners who, I am sure, do not want it anyway?
The Deputy will recall an earlier debate we had regarding the legal interpretation of the phrase "think fit". The courts have held that the thought processes of the Revenue Commissioners must always be reasonable and if they think unreasonably, then the courts will intervene to protect the person against whom an effort is made to impose unreasonable conditions. They may only think fit within the fitness which is appropriate to this Bill and that is to ensure that gaming machines are operated in accordance with this Bill and to ensure payment of duty which is fixed by this Bill.
There will be cases obviously from time to time where premises are sold or where they could be destroyed or damaged or where transfer would be necessary following the death of the holder of the licence. Such circumstances must be provided for so that the machines may continue to be operated without new duty having to be paid by a new licence holder. While a casual reading of the phrase might suggest to a lay person that it is too extensive, in truth it can only be operated within the legal constraints which already exist and are, indeed, well recognised.
While I accept that the legal constraints exist, I also contend that the level of legal constraint imposed by the wording in this section, as distinct from wording of the kind I have mentioned, is different. It may be a subtle difference but I think there is a difference in the interpretation that would be applied to it by the courts. However, as the Minister said, we have argued this point at some length on another section and I do not propose to repeat that except to say that I am unhappy with this kind of phrasing in a Bill of this kind, in particular when the Minister says it has the same effect as the kind of wording I suggested. I think it would be preferable not to have this apparently blanket power given to the Revenue Commissioners.
I would now like to refer the Minister to subsection (11) which reads:
The Revenue Commissioners may make regulations to secure the duty of excise imposed by this section.
Could the Minister give an outline of the kind of regulations that are envisaged?
It is not possible to give any detailed account of the regulations which are envisaged. The power to make regulations to enforce the law is given from time to time to the Revenue Commissioners so that in the light of experience they may lay down conditions under which the activity which is liable to pay duty is carried on. The kind of regulations which may arise here would be in matters which would require inspection by the Revenue Commissioners, their right to inspect and the obligations which lie on the holders of gaming machines to allow such inspections, the placing of a seal on premises where machines are alleged to be inaccessible to the public, the placing of seals on machines which would prevent them from being operated without the knowledge of the Revenue Commissioners and so forth.
I take it that such regulations must operate within the framework of this Bill.
Subsection (12) reads:
Nothing in this section shall operate to make lawful anything which, apart from this section, is not lawful.
What kind of thing is envisaged here?
Reference was made this morning to the fact that a number of machines are being played within the State at the moment with stakes in excess of 2½p. Such machines are illegal and they will not be made lawful if they happen to be in a premises in respect of which a licence had been issued for the premises or a licence had been issued to cover a number of machines.
The maximum stake is 2½p. That would have been covered in this section without any ambiguity.
I agree but the imposition of duty on machines will not make an unlawful act lawful. Lest it be argued, as, indeed, I would expect it to be argued by some lawyer on some occasion that such a machine was being operated under the umbrella of a licence which had been issued in respect of a particular premises, it is better to put it beyond all doubt.
A machine which accepts a ten penny piece and allows four attempts is still legal.
It is not.
I am willing to say that I am more familiar with certain amusement arcades than the Minister is. There are many machines available at the moment in those arcades which respond to the insertion of a ten penny piece. I contend that 10p is not the stake in that the machine allows the player four opportunities to press the lever.
The 10p is not the factor there. The stake is 2½p per incident. That is a matter for the application and interpretation of the Gaming and Lotteries Act and not the Finance Act.
I still contend that I am more correct than the Minister but I will not pursue it.
I move amendment No. 32:
In page 24, subsection (4), line 24, to delete "Subsections (1) and (2)" and to substitute "Subsections (1), (2) and (3)".
The effect of this amendment is that the increased penalty, from £2 to £10, for keeping an unlicensed dog will apply from a date to be appointed by order of the Minister for Finance rather than, as the Bill now provides, the date of the passing of the Finance Bill. This brings the date for the increased penalty into line with the date on which the increase in dog duty will take effect.
The proposal in section 43 is to increase the annual licence duty payable in respect of a dog from 25p to a £1 and to increase the annual licence fee which covers any number of dogs kept by a licensee from £10 to £25. The representations asking for this increase have come from the following associations: the IFA, the ICMSA, the General Council of Committees of Agriculture, Macra na Feirme, Macra na Tuaithe, Muintir na Tíre, the ICA, the Irish Veterinary Association, Bord na gCon, the ISPCA, the Cavan and Roscommon County Committees of Agriculture, Waterford City Council, The Dublin Cats and Dogs Home and the Animals Home, Cork. The reason why representations have been made requesting the increase is that these organisations consider the existing duty to be derisory and, on that account, to be of no assistance in ensuring an adequate record of the owners of dogs.
The animal protection societies have been very concerned about the increase in the dog population. The various other organisations, particularly those associated with farming, are concerned about the large numbers of uncontrolled dogs. All of these organisations believe that the increased fee will be associated with stricter enforcement and also that it will provide a fund which can be used to ensure better arrangements for dealing with the problem of stray and unwanted dogs.
I mention the organisations which have sought this change because some people seemed to think that the amendment was nothing more than a giggle. When responsible organisations have pressed for such change, their views deserve to be responded to and treated a little more seriously than some of the commentators have been prepared to treat them up to now.
I represent a constituency in which much damage is caused by stray dogs. Consequently, I welcome the increase in the fee from 25p to a £1 and I trust that this will result in tighter control in so far as packs of ravaging dogs are concerned, dogs which cause so much injury to sheep. There is also the problem of stray dogs in housing estates. I am pleased that the Minister has been able to respond to the representations from the various creditable organisations mentioned.
Regarding the substitution of £25 for £10 for a pack licence, I wonder whether this will represent an imposition on people who maintain kennels as a business or on greyhound owners and trainers. The people involved in this business would not be the ones who would cause concern in regard to stray dogs.
Perhaps, too, a concession might be granted to old age pensioners whereby they would not have to pay any licence fee for a dog. Very often a dog is the sole companion of an old age pensioner.
On the first point, if a person has fewer than 25 dogs he would be likely to opt for paying the £1 licence in respect of each dog. It would be inequitable to increase the licence fee for each dog from 25p to £1 and not to increase the charge for a licence covering a large number of dogs. I understand that such a licence is taken out by people who have a very large number of dogs—for instance, greyhound breeders and those who keep packs for hunting. Having regard to the fact that the licence is being increased from £10 to £25, these people are getting off lighter than those who must now pay a £1 instead of 25p for each single dog.
Guide dogs used by blind persons are exempt from this duty. There is a difficulty in extending the number of people who might be given licences free of duty. There would be the question of control and the possibility of licences being sought in the names of old age pensioners who would not have dogs. Having regard to the value of money today compared with 1925, the charge is very small. The duty was introduced in 1925 because it was regarded as a necessary element in the control of the dog population.
I have in mind people who are in the dog breeding industry and who are building up an export market. Generally, people engaged in the export business are afforded inducements rather than having impositions placed on them. However, I do not wish to pursue this matter further.
Amendment No. 33, and there is also an amendment to amendment No. 33. When the Minister has concluded, I will call Deputy Colley.
I move amendment No. 33:
In page 24, before section 44, to insert the following section:
"(1) The Orders mentioned in the Table to this subsection are hereby confirmed.
S.I. No. 174 of 1974—Imposition of Duties (No. 213) (Customs Duties and Form of Customs Tariff) Order, 1974.
S.I. No. 350 of 1974—Imposition of Duties (No. 214) (Mineral Hydrocarbon Light Oil) Order, 1974.
S.I. No. 356 of 1974—Imposition of Duties (No. 215) (Customs Duties and Form of Customs Tariff) Order, 1974.
S.I. No. 5 of 1975—Imposition of Duties (No. 216) (Excise Duties) (Vehicles) Order, 1975.
(2) The appropriate repayments shall be made having regard to the provisions of the Imposition of Duties (No. 216) (Excise Duties) (Vehicles) Order, 1975, in accordance with such directions as may be given by the Minister for Local Government."
The purpose of this amendment is to confirm the Imposition of Duties (No. 216) (Excise Duties) (Vehicles) Order, 1975, and to provide for appropriate repayments which may arise because of that order. The paragraphs of the amendment which confirm the other three orders mentioned in the section are reproduced from the original section of the Bill as circulated.
I wonder if the Leas-Cheann Comhairle could give me some guidance on a matter of procedure. There is a question which I wish to raise with regard to the Minister's amendment. Should I do that now or should I deal with my own amendment first?
If the Deputy would move his own amendment, we could then discuss the two together.
I move the amendment to amendment No. 33:
To delete "S.I. No. 350 of 1974 Imposition of Duties (No. 214) (Mineral Hydrocarbon Light Oil) Order, 1974."
The effect of my amendment would be to refuse to confirm the order imposing an additional 15p a gallon on petrol, the notorious increase imposed by the Minister. I do not propose to go on at any great length on this matter. The amendment is put down in the hope that the Minister will have learned— apparently he did not know it at the time he did this—of the vital importance of taking every step open to him to reduce inflation.
The Minister will be aware that the increase which this order confirms was one of the items which led to a record increase in prices in the quarter ending mid-February, an increase of 8 per cent in that quarter, of which 40 per cent was a direct consequence of action by the Government including this increase of 15p a gallon on petrol. Recently, in different places and from different people, the Minister will have learned that there is now general agreement—indeed, there was a good deal of agreement long ago—that the first economic priority should be to attack inflation in any way open to the Government.
One way open to the Government would be to refuse to confirm this order which imposes an increase of 15p a gallon on petrol. This contributed substantially to an increase in the cost of living. That was carried over into wage claims. The Minister justified the increase largely on the basis that it was keeping us in line with other consumer countries in Europe, and in the EEC in particular. He must admit now that there is no obligation on us to do that, and that we ought to relate our approach to this matter to our own circumstances. If it is necessary to restrict consumption of petrol, there are other steps open to him.
As I said, I do not propose to labour this point. The position is quite clear. Of itself this order is notorious because of the enormous increase in tax it imposed and because of the effect it had on the cost of living. In this amendment we are giving the Minister an opportunity to strike one blow, at any rate, in the battle against inflation. He can do that by accepting this amendment and thereby reducing the price of petrol by 15p a gallon.
Of course, he will say there would be a substantial loss of revenue if he did that. There would be. There is no doubt about that. At the moment we do not know the total overall position as regards revenue and expenditure, although we may have our ideas. Therefore, we are not in a position to say how this problem might be tackled. We were in a position to say so before the budget, and we did say so, but the Minister did not take our advice and we are now working in a situation created by the Minister.
The fact of the matter is that, having imposed this increase and thereby having imposed a burden on the community, not just of the increase but of the effect on the cost of living carried into wage claims, the Minister must now see that the overall economic requirements are that he should do anything open to him to reduce prices rather than increase them. This is a notorious example of this Government's disregard for increases in the cost of living brought about by their actions. I hope that by now the Minister will have realised the vital importance of taking steps to reduce inflation. We invite him to accept this amendment with a view to taking one step on that road.
Like all economic arguments, this has two sides and I will give the other one. This duty was imposed for two purposes: first, to discourage an increase in the consumption of petrol. On the basis of the information available to us since the imposition of this duty, it is having that effect.
There have been other factors too, of course.
The growth in the consumption of petrol which had been a feature of our economy for many years past stopped first of all when, as a result of the price increase charged by the oil consumers, the price went up. Towards the third quarter of 1974 the effect of that increase began to wear off and consumption began to increase again, with the result that our balance of payments position would have been very seriously worsened if action had not been taken by the Government to correct it.
The unpopular increase in this tax led to a reduction in consumption. It nipped in the bud the tendency towards increased use which otherwise would have arisen. In our own interests we should decrease our consumption of foreign energy which has to be imported at exceedingly high prices, thereby jeopardising our balance of payments and also, as a consequence, increasing our living costs. If additional money has to be expended, it is better that that money should be paid by way of a transfer within our own community from the better off group to a less well off group, rather than that the same amount of money should be paid to foreign suppliers of energy for oil which we purchase from abroad to suit our own convenience and our own pleasure.
The increased tax which has produced revenue for necessary purposes has all been spent within our economy. If the same amount of money had been spent on the purchase of additional petrol from abroad, the money would have gone abroad, and we would have had to borrow more money from abroad to replace it. That, too, would be most inflationary. Last autumn this Government said in the White Paper on National Partnership that any additional indirect taxes which transferred resources from the better off to the less well off ought not to be used as a basis to seek income increases because that would negative the benefit which could flow to the community by a transfer of such resources.
A number of countries, including Denmark, have a different base for the calculation of wage claims other than the consumer price index. They deliberately eliminate from the base all indirect taxes.
I have asserted on several occasions, and as recently as last Saturday in Killarney, that it is unwise for us to be using as a base for income calculations an index which includes several items of indirect taxes on non-essentials. True, an amount of petrol is used for essential purposes, but all petrol is not used for essential purposes. I have no doubt it would generate a re-echo of bellicose laughter if I were to point out, as I pointed out last December, that all motoring is not essential. There are apparently people of a different view who maintain that all motoring is essential. I saw in today's paper someone expressing the joy of having walked last week and saying he feels the better for it.
The effect of accepting this amendment would be to encourage people to believe that energy is cheap, that it can be consumed without harm to the economy and that excessive consumption is itself in no way inflationary. That would be most damaging to national morale and to the need for a sense of national discipline at this time.
The increase last December was not by any manner of means a significant increase as a result of tax impositions. On a previous occasion when the duty on petrol was increased in May, 1969, the tax element was 66.7 per cent. Those who are now preaching to us imposed in May, 1969, taxes as a result of which 66.7 per cent of the price of petrol was attributable to tax. Today only 53.7 per cent is attributable to tax.
(Dublin Central): Different figures now.
What matters is the percentage—the percentage of the price attributable to tax.
(Dublin Central): That is a misleading figure.
The misleading comment comes from Deputies opposite who want to try to convince themselves that the percentage of the price of a gallon of petrol today which goes in tax is much larger than it was in 1969. The fact is that it is much smaller than it was in 1969 when Fianna Fáil, long before an energy crisis, long before this incontrovertible necessity to reduce the consumption of energy, so increased the tax on petrol that 66.7 per cent of the total price represented a tax element. When all is said and done, we have in this Republic—remember, we are further away from the oil fields than any other European country—one of the cheapest petrols in Europe. I am not certain what variations there may have been in petrol prices since last December in other countries but, if we have not the cheapest petrol, we are certainly the second lowest in price in all Europe. It is significant that the price of petrol in Northern Ireland is three pence to four pence per gallon dearer than it is here and, even though we were chastised for doing what all other countries found it necessary to do, Britain has found it necessary to increase the price of petrol by more than the increase in the price of our petrol since last December.
It is not, of course, popular to increase taxes on any commodity. Petrol is regarded by many now as a necessity. I do not deny it is a necessity on certain journeys and for certain purposes, but we cannot escape from the unpleasant constraints that apply to us and, if we want to survive these difficulties, we have to exercise more self-discipline than we have been wont to do. If we are to meet necessary outgoings and the demands made by people, including the present Opposition for further public expenditure on what they regard apparently as essentials—they have been demanding the expenditure of hundreds of millions here within the last month——
To run the State machine.
To run the State machine, Deputy de Valera says. Where does he think the revenue from petrol is going? It is going not merely to run the State machine but also to redistribute money.
(Dublin Central): Why not generate more employment? That would be the best way of doing it.
How can we abolish taxes and, at the same time, spend more money? The Fianna Fáil Party were long enough in power to do that, if it were possible to do it. The Opposition Deputies know they are now talking arrant nonsense.
We did not have the unemployment this Government have.
We will deal with that at six o'clock this evening. In the meantime we will deal with the harsh realities of the modern world, realities which dictate that we be less wasteful in the national interest of costly imported energy. Deputies opposite do not apparently like the way we went about discouraging people from using petrol. They would have wanted Ireland to be the only country in the world to introduce petrol rationing. What are the circumstances so peculiar to Ireland to justify petrol rationing in Ireland? I would like to hear them. Why should we have had petrol rationing when every other country used the price mechanism rather than the imposition of a costly administrative wasteful procedure? No doubt Deputies opposite would have wanted to employ more inspectors, to engage in more paperwork, to build up an expensive and inefficient administrative machine in order to allocate petrol according to the whims and dictates of different categories so that a huge black market could operate. Several countries, including our own, considered the problem and it was quite clear that at a time of plenty—the supply is plentiful—and at a time of peace society would not accept rationing of a commodity like petrol. Had we introduced rationing, all we would have done was create a magnificent bureaucratic mechanism which would have produced nothing except frustration and annoyance. This mechanism could only have been established by charging the cost of it to the consumer, the consumer who would be frustrated by the operation of a mechanism he resented so much. That is the reality. If Deputies opposite think we were wrong, then I should like to hear their advice which I will gladly convey to all the countries in the world so that they can see that they are all out of step except the Fianna Fáil Party.
The Minister is engaging in his usual simplistic and misleading arguments. I do not intend to waste time on them. To argue as he has done that what is really important to the man-in-the-street is the percentage of the price of petrol taken in tax is sheer nonsense. To imply, as he did, that it is of no importance to people really that he was increasing the price per gallon by 15 pence or 3s per gallon in 1969 terms, is also sheer nonsense. Would the Minister stop insulting our intelligence because he knows as well as we do that that kind of argument is totally unreal. He makes a somewhat similar argument when he talks about the necessity to hold down the consumption of petrol in this country. We have been telling him the necessity to do that and have regard to the effect on our balance of payments for well over a year but virtually nothing was done by the Government about it. Finally, he comes along and imposes this enormous increase just to get the revenue, not to save consumption. That is the kind of unreal argument we are faced with.
The Minister talks as though there were no other way of holding down consumption. He referred, in passing, to rationing, which is one possibility, and to a two-tier price, which is another possibility but that does not exhaust all the possibilities. He ignored completely the consequence of what he did in that collection and other collections on the cost of living. If he wants to talk about comparing us with other countries and say that this party are out of step with everywhere else in the world, would he mind making the comparison in the cost of living? Would he mind comparing the cost of living in this country, with a rate of inflation at 25 per cent, with that in West Germany today and then tell us that we ought to take the same line of approach as West Germany? There are many other countries where the same comparisons could be made but the Minister chooses to compare when it suits him. If he wants to compare the performance of these countries with ours, let him compare across the board.
I am talking and was talking about what was required in our circumstances, particularly having regard to the rate of inflation. The Minister totally ignored the effect of what he did on inflation and the argument put forward in that regard. I did not expect him, quite honestly, to do anything else but it is important that it should be pointed out now, when it is so clear to everybody, surely even to the Minister for Finance, that the first priority is to tackle inflation. When that is so, it is not good enough for the Minister to engage in these simplistic misleading arguments when he is talking about these things. However, he has imposed this increase.
This amendment gives the Minister an opportunity to take it off and thereby contribute to a reduction in the cost of living. He does not choose to do so and he tries to justify his refusal by the silly arguments he has put forward. One cannot, I suppose, expect anything better and we are stuck with the Minister and his approach to the management of the economy for the moment. I hope it will not be for too long. The sooner his grip on the economy is broken the better or we will end up with more and more of this kind of economic nonsense which is producing inflation at 25 per cent and more and unemployment of unprecedented levels.
I am now putting Deputy Colley's amendment to amendment No. 33.
Could the Minister briefly indicate what is the purpose of the Imposition of Duties (No. 216) (Excise Duties) (Vehicles) Order, 1975, the one that he has added into the section?
The order provides that school buses which are taxed at the private car, minimum annual rate of £22, may be used without paying road tax at the large public service vehicle, annual rate of £56, for the carriage of children or children and teachers to or from school or to or from school related physical education activities. Previously this facility was only available when the buses were going to and from school. It did not cover journeys if the buses were used to bring children to activities outside of school, for instance, to swimming pools or to physical training, football matches and the like. This order enables them to be so used without paying the additional duties.
I move amendment No. 34:
In page 24, before section 44, to insert the following section:
"Section 1 of the Imposition of Duties Act, 1957, is hereby amended by the insertion after paragraph (e) of the following paragraph:
`(ee) where a customs duty on goods of any particular description—
(i) is terminated by the order and, in the opinion of the Government, the whole of the duty was of a fiscal nature or there was a fiscal element in the duty, or
(ii) is varied by the substitution for the rate at which the duty was chargeable of another such rate and there was, in the opinion of the Government, a fiscal element in the duty before such variation and the substituted rate is equal to the rate for which it was substituted less so much thereof as, in the opinion of the Government, was the fiscal element in the duty,
impose, whether with or without qualifications, limitations, drawbacks, allowances, exemptions or preferential rates, and as from any specified day, on goods of that particular description imported into the State an excise duty at a rate equal—
(I) if, in the opinion of the Government, the whole of the customs duty was of a fiscal nature, to the rate of such duty, and
(II) if, in the opinion of the Government, there was a fiscal element in the customs duty, to the part of the rate of such duty that, in the opinion of the Government, was the fiscal element therein,
and the references in paragraph (e) of this section to any excise duty and in paragraphs (h) and (i) of this section to any duty shall be construed as including references to any duty imposed under this paragraph and a duty imposed under this paragraph shall be deemed, for the purposes of the said paragraph (h), to be a customs duty and an excise duty;'."
Under Article 38 (3) of the Act attached to the Treaty of Accession to the European Communities we are obliged to convert our present customs duties of a fiscal nature or the fiscal elements of such duties into internal taxes by the 1st January, 1976. The customs duties in question are those on spirits, beer, wine, tobacco, cider and perri, matches, table waters, oils, motor vehicles, parts including tyres and tubes.
The purpose of the provision in Article 38 (3) is that in accordance with the provisions of Article 17 of the Treaty of Rome customs duties of a fiscal nature have no place in the common customs tariff which contains only customs duties of a protective nature or charges under the common agricultural policy. Over the transitional period Ireland is bringing its protective customs duties into line with the common customs tariff.
In accordance with the decision of the Commission taken under Article 38 (3) of the Act to the Treaty of Accession any protective elements in our fiscal customs duties have been identified. These protective elements must be treated in the same manner as other protective duties. The remaining fiscal elements must, as stated above, be converted into internal taxes. To comply with Article 38 (3) it is proposed to convert these fiscal customs duties into excise duties chargeable alike on imported and home produced goods. This is in keeping with the proposals for harmonisation of excise duties on a Community level.
The basic problem is, therefore, that of a legal change in the nomenclature of the duties while at the same time leaving intact legal and administrative machinery for collection and management. It is necessary to replace the existing legally separate customs and excise rates, exemptions and so forth by a single excise rate applicable to a particular commodity with the same exemptions. At the same time, we must retain existing excise laws for the control of, for example, home brewers and distillers, for the purpose of securing the revenue on home produced commodities. Similarly, existing customs laws must continue to apply to imported goods, even though subject to the new excise duties, for the purpose of revenue control and prevention of smuggling, false declarations and so on. Application of existing laws would entail, of course, continuance of existing penalties.
An order made by the Minister for Finance or the Government would appear to be the most appropriate means of effecting the conversion. Otherwise, it would be necessary to introduce, by means of a Finance Act, voluminous legislation bringing about what is in essence a change of form rather than of substance.
The Attorney-General has advised that the European Communities Act, 1972 is not adequate to permit of a ministerial regulation to be made to give effect to the change. He has advised that the most suitable course would be the introduction of an amendment to the Imposition of Duties Act, 1957 which will empower the Government to make by Order the necessary changes in the legal status of the customs duties in question. The need for amendment of the Imposition of Duties Act, 1957 arises from the terms of section 1 (h) of that Act which at present precludes the application of the relevant provision of customs law to an excise duty on imported goods.
(Dublin Central): Was it under this particular section that the motorist coming from Northern Ireland had to pay tax on the petrol?
No. This is no more than changing the category and the nomenclature but it is not imposing anything new. There will be no net change in the amount of cash a person has to part with, which is probably the important thing.
(Dublin Central): A lot of people were confused because they thought they were entitled to bring in £52 worth just as they were entitled to bring in other goods to that value under EEC regulations. I believe this did not apply to petrol.
That exemption has nothing to do with it at all. At present a person may pay a customs duty on certain articles if they are in excess of £52 but in future such will have to be deemed to be an excise duty rather than a customs duty. It will not change the rate in any way.
This section abolishes death duties in connection with the death of any person dying on or after 1st April, 1975. The existing duties will not be leviable in connection with the death of any person who died after 1st April, 1975 or in connection with an event not being a death which occurs after that date. Arrears of duty which accrue due before 1st April, 1975 including, for example instalments of duty chargeable in connection with death before that date but not payable until after that date, will continue to be collected.
This section deserves more than passing attention and there are some unique features in the Act itself. It appears as a part of the Act. I am not clear as to what the function of dividing an Act into parts is, but the system has been adopted. This section is unique in the sense that it comprises Part (III) of this Bill under the general heading, "Death Duties". The note in the margin reads: "Abolition of death duties". The Minister's statement a few moments ago confirms this. Incidentally, death duties are a name for certain duties or taxes that were imposed on a succession through death, the transmission of property through death, whether through a will or an intestacy. These death duties comprised estate duty, legacy duty and succession duty.
Presumably these are the duties which the Minister says he is abolishing. It is important that we are clear on what we are doing in this section both substantively and procedurally. I submit it is so serious a matter that we cannot afford to indulge in either political by-play or frivolity. We are dealing with a matter which has a bearing on the function of this House and legislation. The Minister's statement here seems to be completely in line with what he said in answer to a question put by Deputy Colley on 30th January, 1975. I should like to quote the Minister's reply which is contained in Volume 277, column 1466 of the Official Report of that date:
I cannot be any more specific than to say that we are going to get rid of the whole wretched system of death duties that has given rise to those complaints, to these hardships, to these delays, to these impositions on family fortunes, and nothing could be more effective for getting relief to the people than to get rid of this iniquitous system which ought to have been got rid of long ago.
Again at column 1467 of that volume the Minister said:
I am saying we are abolishing death duties and that is the most effective way of dealing with the problem. We are not answerable for Fianna Fáil's mistakes and failure to adjust the whole capital taxation system.
I take it the Minister does not wish to disown those statements. Therefore, I am entitled to interpret the Minister as saying that he is abolishing death duties.
This is so serious a matter that I wish to take it in the most objective and responsible way possible. I do not wish to take any advantage of the Minister, nor do I wish to make it a political debate. If what I have stated is accurate the fact is that technically in this Bill the Minister is proposing to abolish death duties but, having regard to the Capital Acquisitions Tax Bill, which presumably will be passed, death duties are not being abolished. What the Minister is providing for is a continuation of death duties. I accept that there is adjustment and I do not want to be taken as considering that some of the Minister's proposed amendments at a later stage are not desirable. However, it is a complete misrepresentation to pretend that we are abolishing death duties; we are not. Legacy duty, succession duty and estate duty are death duties. They are going, but they will be replaced by an inheritance tax or taxes, and that also is a death duty.
If it is allowed to go out of this House that we are abolishing death duties it will be a misrepresentation. I am deliberately restraining myself when I do not describe it in stronger terms. I say it is a misrepresentation for political purposes that does not accord with the truth, that it is a resort to a technicality which does not accord with the actual practice as it will impose itself on the taxpayer. For that reason the device is adopted by the Minister to pretend that he is abolishing death duties, because death duties is a general term that applies equally to the inheritance tax that will carry on the same without any hiatus.
Even here a minute ago the Minister was careful to point out that the death duties still owing and collectible will continue to be still owing and collectible, and the taking over under the name inheritance tax does not abolish anything in fact.
I am careful to give and wish to give the Minister credit but this, unfortunately, we have on another Bill. He certainly is making adjustments, but I do object strongly for the good name of the Government, the good name of this House and our honesty to the public and to the voters who put us here—I do object to the type of thing that pretends in this Bill that we are doing something that we are not doing in fact. That is the basis on which I think this section is an unworthy one.
If I may say so, I am at some disadvantage in the method the Minister takes of doing this. I do not wish to break the rules of order and to go into the Capital Acquisition Tax Bill where everything is put back with effect, with modification, from the same date, without any gap in date. This is where the misrepresentation occurs. I do not impute it in any impertinent sense but I will say there is lack of honesty rather than dishonesty. I am trying to be responsible and restrained in my language, but there is a lack of frankness, a lack of honesty, in this.
Why, for instance, could this section not be in its proper place? You can argue technical points but if you wanted to deal with this whole thing and facilitate debate in the House and comparison, why is section 45 in this Bill, why is it not in the Capital Acquisitions Tax Bill, where it appropriately belongs and where it would naturally appear in all the legislative principles of this House as a repeals section? Why is that procedure not adopted?
Am I going too far, am I being unreasonable, if I suggest that the political propaganda and the talk of the Minister and people like him about abolishing death duties in the past have influenced this and instead of doing the thing the straightforward way having regard to the quotes I gave, this device is being adopted? In short, lest there be any misunderstanding, what I am saying is, yes, you are abolishing the existing death duties in so far as they are classified as estate duty, legacy duty and succession duty. You are consolidating them into an equivalent tax called inheritance tax, and that is as much a death duty as anything else, and that is what I am saying here.
I am also saying, of course, in fairness to the Minister, that in the course of doing this he is bringing in certain reforms and there are certain provisions for which he should get credit in this reform, but I am also saying—and I would like to be told where I am wrong—that when he has technically abolished what at the moment are loosely described as death duties but are specifically described as estate duty, legacy and succession duty and replaced them with inheritance tax, he has widened his tax net in this area; it is a wider net and he has narrowed the mesh.
There is a lot of the way I will go with the Minister but I am objecting to the lack of frankness. I am objecting to the resort to technicality. Again I have to restrain myself from words I might use. I am objecting to the resort to technical devices for window-dressing purposes.
There are a couple of other questions that I want to ask the Minister on this section. I have quoted the Minister on 30th January:
We are going to get rid of the whole wretched system of death duties.
As I said, in substance, he has not because, without any gap in date, on his own preliminary statement here, death duties are going back but the existing three are being consolidated in one, in effect, called inheritance tax but it is wide enough to catch the whole lot of them. The inheritance tax comprises legacy duty, succession duty, estate duty and the lot, all in one. Not only is he doing that, he is not fundamentally, as far as I can see, changing procedures and I want to ask a question here. Is the Estate Duty Office going to continue as it is? Is there going to be an abolition of or change in the Estate Duty Office? Under the new Act where these death duties will continue the net is wider to catch gifts inter vivos called a gift tax. This will entail a good deal of administration. Is the Estate Duty Office and its procedure to be changed, to be abolished. I say it is not, but I am open to correction.
It might be no harm for us to realise what the subject of this section is. Perhaps the House will bear with me if I give a brief summary of what is involved. As I say, there are death duties comprised of three taxes, estate duty on the gross estate, legacy duty on specific bequests and succession duty.
As I understand it, the procedure at present through the Estate Duties Office is that the party seeking a grant, or the person responsible, starts off by filing an inland revenue affidavit, in pursuance of which the Revenue Commissioners make a provisional grant assessment—colloquially referred to as a PGA—which is a provisional assessment of estate duty which is payable forthwith. When that provisional assessment is paid a receipt is either given or endorsed on the affidavit, or whatever document exists, and those are the primary documents. Only when one has done that does one go to the probate office and take out a grant of probate, if there is a will, or of administration in the case of intestacy. There then follows a certain investigation. As I have said, the provisional assessment was made on the gross estate as set out in the Inland Revenue affidavit. When the matter is being pursued at this stage, the Valuation Office usually comes into it, or whatever is necessary.
On a point of order, the questions the Deputy is now putting before me seem to me to deal with the operation of the Capital Acquisitions Tax.
They do not arise out of the abolition of "estate duty," in quotes, if you like. Therefore, they are not relevant to the Finance Act.
If the Minister is getting a little afraid of my pointing out——
No, but there has been an awful lot of repetition for months.
This is the procedure by which death duties are collected at present. If death duties were being abolished, presumably, the procedure would go with them. I shall come back to that now.
Anyway, if the Minister does not like it, I shall cut short what I was saying and continue and say simply that when final assessment happens, after probate, there is a corrective affidavit, final payments and so on. There is, finally, a certificate of discharge from the Revenue Commissioners when all payments have been made. In spite of what the Minister has said, what have I pointed out? Obviously, the Minister saw what I was getting at but he will not stop me because, not only has he not abolished death duties but, under the very Act he has mentioned, as far as I can see, he has reimposed all of the same procedure I have outlined. He has not even changed basically the procedure. The Minister says he is abolishing death duties, and he can get his reference from his own Act— his Inland Revenue affidavit remains with the same name. There is a provision for corrective affidavits; grants will not issue before the provisional assessment is met; there is a provision for receipts and for a certificate of discharge. They have not even changed their names.
It might have been better had the Minister allowed me take it in the way I was doing. I was very restrained and trying to be very objective on this. But, if the Minister wants another approach, he can have it and I will not pull my punches. If the Minister will allow this Parliament to function in a responsible way, understanding that I have been carefully giving the Minister credit, I have been careful to avoid personal imputations but, if the Minister wants it that way, I will use the words that should be used.
The relevance of what I have said is this: these death duties do not fall into the hands of the Revenue Commissioners automatically. There is a mechanism for their collection. If they are being abolished it is fair to ask what is happening the mechanism that goes with them. It was for that reason that I outlined here the procedure from Inland Revenue affidavit to provisional grant assessment, to corrective affidavit, to final assessment and to certificate of discharge.
I have asked the Minister is the Estate Duty Office remaining as it is. I think it will; it will have to remain as a section whether or not its name is changed. The Minister may change its name, as he changed the name of the death duties. He may make reforms of procedures. I hope he does, but even the wording is kept in his new Bill—Inland Revenue affidavit, corrective affidavit, discharge, corrective discharge. Those words remain. Therefore, I do not think I am wrong when I say that this is simply a repealing section that should be in the Capital Acquisitions Tax Bill, which simply readjusts the whole question of death duties. In plain language, they are not being abolished. They are being revised and, to some extent, the procedure is being revised with them.
Also I think I am in order in saying that I think it poor treatment of a Parliament that legislation be so fragmented, bringing in one section in one Bill and the remainder in others, rendering complete discussion of the subject difficult and, on the technical rules of order, often impossible. I do not think I am out of order in registering that protest. Again, I am anxious to approach this objectively. I am sorry the Minister saw fit to intervene in the way he did because I assure him I was trying to take this in an objective way. I can understand the political temptation; I know the Minister is a politician; so are we all. But our political proclivities in the less worldly sense of the term "political" should be restrained in this House. We should be able to rise to our political responsibilities at the appropriate level as representatives of the people. This we are failing to do manifestly in so far as this section—I repeat—is a deliberate misrepresentation of the facts. We are not abolishing estate duty; we are not fundamentally changing procedures; there is no hiatus. Yes, we are reforming the code and—as I have said before— in fairness to the Minister, let me repeat, in some ways, in a very desirable manner. It is a pity we cannot discuss this now, which would make myself and the Minister much closer in our approach. But that is the fact. I did not bring in an outline of the procedures involved merely as a red herring or out of order. It was exceedingly relevant.
There is a third point regarding procedures that is relevant. It is a difficult point to make because, unfortunately, it is the type of point one makes and, instead of the blame or reflection resting on the area where it should, it rests on another. In other words, the reflection in this is on the Government and on the Minister, not on the Estate Duty Office. I have made detailed inquiries from solicitors' offices as to the position of work in the Estate Duty Office and I can tell the Minister that office has been over-loaded. It has a reputation among solicitors of this city as being a most helpful and co-operative institution and I can say from my own experience that the staff of the Revenue Commissioners office give all the service they can in a most courteous manner. They serve the public and the solicitors as best they can and nobody knows that better than the Minister. He must also know they have been swamped with work.
There are delays and difficulties. I know that until recently there was a backlog in dealing with estates of more than £30,000. I can give the Minister examples of corrective affidavits and the history of cases going back to last October. The staff have difficulty in coping with the demand to get out the volume of PGAs. There is difficulty in finalising matters because of the technicalities and the complexity of the law, the administrative system forced on them and because of their resources in personnel.
As I pointed out before, we must consider the tasks we are giving these people to do. They have the job of making the legislation work, legislation which we pass so glibly in the House. Are the Minister and his top advisers satisfied that the implementation of this section as well as the transition is reasonably within the capacity of the Department who have to deal with the matter? That is why I asked about the future of the Estate Duty Office. It is obvious there will have to be re-organisation. There are benefits for some people but I pity the taxpayer who does not know the law. Deputy Esmonde is an expert lawyer in this field and I do not think he will disagree with me when I say the problems of our fiscal law in this area are formidable. On top of that, the unfortunate taxpayer is presented with this kind of legislation to mislead him further.
It is not only that. We have a Government and a Minister for Finance who proceed rashly to impose a load on the administrative organisation who have to make this legislation work, without adequate consideration for their problems. I hope I am wrong to some extent; I know I am not wrong entirely. I suppose that in substance this section will have to appear in one Bill or another but I would ask the Minister, before we leave this section, to come clean on this matter. He should be absolutely frank with the public instead of giving a rather diplomatic introduction to the section, telling us the Government are abolishing death duties but that estate duty will continue to 1st April, 1975 and arrears will be collected. Of course, there is no reference to the fact that after that date it will continue under the heading of the inheritance tax subject to revision. The Minister should put us right and he should put this section in perspective. I should like to think that nobody in this House will try to fool the public by pretending we are abolishing death duties.
I know the Deputy will not take umbrage when I say I am always deeply moved when he once again rides his own high horse of indignation. He has ridden that animal hard and fast this morning and he has warned us he will ride again. Personally I hope he does because I always enjoy listening to him.
We have faced the reality. We are abolishing death duties. We are abolishing estate duty which is a tax charged on all property that changes hands at time of death. There is no other legislation before the Dáil that proposes to charge a tax on all property that passes at a time of death. The abolition of death duties does not change the law so far as the handling of the estate of the dead person is concerned. There will still need to be an executor or an administrator; someone will have to be given legal title to the property of the dead person and such title can only be given by the Probate Office. Even if there were no capital acquisition tax, it would still be necessary to have an assessment made of the estate left by a person in order that a probate or a grant of administration might be given in respect of that estate. I am sure Deputy de Valera will not disagree with me on that point. It is an absolute necessity——
I am not saying it is not.
The Deputy has suggested it is wrong to say the Finance Bill, 1975 abolishes death duties because it will still be necessary to have an assessment made of the estate of the deceased. That was necessary before estate duties were introduced in 1894. There must be an assessment made of the value of an estate in order that authority could be given to some person to administer that estate. It is not anything shocking. It is not a denial of my assertion that death duties are being abolished to say that, of course, that exception will be made and it will be made as a matter of convenience by the Revenue Commissioners. However, any charge to tax in future will not relate to all the property left by a deceased but will relate when and only when a particular beneficiary exceeds the thresholds which may be set out by law.
That is true of estate duty too.
And then the liability to pay the tax will lie on the person fortunate enough to receive a gift——
Is that not true of estate duty?
The charge is on the property and the charge is assessed irrespective of the consanguinity of the beneficiaries.
It is applicable to the same property but there are exemptions under both codes.
No. There are certain concessions given where the beneficiaries are within the immediate family but all the property is first charged and the tax is assessed and there is only a small deduction made in certain cases if the estate is of a limited size.
In future no tax will be charged on the property left by a deceased. There will be a charge on a person who is receiving it, provided that person happens to be one of the very fortunate 1 per cent of people who will be liable for capital acquisition tax but 99 per cent of the people now at risk to pay estate duty, death duties of any kind, will not pay any tax at the time of death in future. That, to my mind, is abolition and it is not stretching language too far to call it abolition. If anybody is kneeling before the altar of technicality it is Deputy de Valera. At present estate duty is chargeable on all estates with a value of over £10,000 irrespective of who the beneficiaries may be.
That is not true.
In future there will be no tax charged on the property but any individual member of a family who receives personally in excess of £150,000——
The Minister's statement is not correct.
——will be required to pay on the excess. Thus in future a person could leave £150,000 to his spouse and to each of three children, that is £600,000, and no question of tax liability would arise. If such a person were to leave £600,000 today the duty chargeable would be 55 per cent. Of course we are abolishing that tax and abolishing it in toto and it is not correct to assert, as Deputy de Valera and others asserted, that there is not an abolition but simply a change of nomenclature. There is a total abolition of the concept that all property left by a deceased person will be liable to tax.
Property passed on death becomes liable under inheritance tax.
Another Bill, not this one, makes gifts in certain circumstances liable to tax.
There will not be the same amount of paperwork in the administration of the estates of deceased persons in future. At present there has to be a very detailed examination of all estates because of the very low figure at which liability arises and because of the multitude of different types of property which can appear on a revenue affidavit. It is quite frequently necessary to file a corrective affidavit because the tax liability applies to all the property and so corrective affidavits are quite normal because there is a variation in the ultimate valuation.
My point was that there is no essential change in the procedure.
There will be a change in the procedure and there will be a change in the detail and the frequency with which certain procedures have to be resorted to at all. There will be no question of a corrective affidavit where an estate and the beneficiaries are not remotely near the new threshold of liability. A corrective affidavit would only arise if and when the wealth being received by a particular person needed to be reassessed because of the possibility of liability and the amount of tax to be paid. That will happen in less than one out of every 100 cases.
Cases over £10,000, whether it is brother, sister, nephew or niece.
In the initial stages of an administration in future the beneficiaries will be identifiable. The question of any liability to tax will be ascertained at an early stage and it will be quite clear whether or not there is a need to reassess the situation and the values which are originally assessed. The work of the Revenue Commissioners in dealing with the administration of estates will be much less in the future than in the past. Deputy Colley will know from his experience that the amount of investigation of small estates is negligible compared with the amount of investigation on large estates, the reason being, I will not say de minimis non curat lex but the principle is applicable. The Revenue Commissioners are not concerned with variations in value on small estates which are not liable to duty at all, and as the thresholds have now been raised beyond all recognition the volume of detailed examination that will have to be conducted in future will be negligible compared with what had to be done in the past.
The Estate Duty Office will have to operate for some time to come as it has in the past because it will be dealing with the estates of persons who died prior to 1st April, 1975, but in the course of time the number of non-administered estates which are liable to estate duty will become less and less and the load of the office will, to that extent, become less and less. The people who have been engaged in this work will be transferred to other capital taxation work which may arise in the future.
What I said was that three taxes were, in a technical sense, being abolished and replaced by inheritance tax. The Minister seeks to escape that by a technicality. The Minister made the suggestion that the recipient of the gift was the point at which the charge lay. Under section 47 of his new Bill it is a charge on the property. That is a distinction without a difference. He talks about estate duty. His section 47 makes it a charge on the property. That is not good enough. Secondly, who is an accountable person? This is a continuation of the misrepresentation. But this is where I may be out of order by having to refer to a Bill that is not before the House.
A relevant reference is in order but we must wait for the appropriate Bill before going into detail in regard to it.
I apologise, Sir. The Minister talks of who may be captured. In the old Finance Acts there were schedules of exemptions. Under the new procedure a spouse will not be assessed but this provision is put in in the same way as has always been the case—a schedule of exemption. It is not frank to pretend that the net is less wide than it is. I realise the Government's problem. Also, I am concerned about the problems of the Revenue Commissioners but I was reluctant to refer to the difficulties of the Estate Duty Office lest it might be construed as a complaint against them because all my inquiries from solicitors' offices and other such places have elicited nothing but praise for that Office. I understand that the burden on them is becoming intolerable.
The Minister talks of the abolition of estate duties. Technically we may be abolishing estate duties but in substance we are replacing them by inheritance tax which in its first form is phrased so cleverly as to show a type of calculated artifice—representing something which it is not. When we come to dealing with the question of accountable officers we must ask whether there are not to be more people with legal liability now than there were before. Let us not try to cover up the fact that in a technical sense we are abolishing what up to now have been known as death duties. Procedures will remain the same although I accept what the Minister said regarding the intention being to reform. I regret that this section did not appear in the Capital Acquisitions Tax Bill where, perhaps, it would have enlarged the scope of both revisions to the betterment of the law. At a Committee Stage we should be endeavouring to form the best law possible.
Deputy de Valera tells us that this Bill is being misrepresented, that the public are being fooled. Regardless of what the Bill may be called, the people will be interested only in ascertaining how it will affect them. The electorate are not stupid. In the case of a widow and three children, there would be no charge on estate valued up to £600,000. In this context I might refer to a case of a widow and her two children whose husband, a cousin of mine, was killed in a car crash some months ago. He was 42 years of age and left estate valued at about £35,000. Both children are under five years of age and the Revenue Commissioners are taking about £9,000 from the widow. This is a disgrace when one considers that this woman must look after the welfare of those children for the next 20 years or so. If the Bill we are discussing were in operation, she would not have to pay anything. It will be seen, then, that this Bill is much better than any previous one of its kind but, perhaps, some relief might be given in regard to the property of persons who died in the past year and whose children are very young.
Deputy de Valera referred to the net being widened. Both he and Deputy Colley must know that if one goes to Jersey he will see there companies with such titles as Killiney, Ltd., Dalkey, Ltd. and so on. These are companies owned by people who made their money here on the fruits of Irish labour but who, having made that money, decided to get out. This Bill is designed to catch such persons.
Deputy de Valera mentioned persons calling in an expert like Deputy Esmonde and paying him a tremendous amount of money. There will be no need to call in anybody unless there is a huge amount of money involved, at which stage one could afford to call in somebody like Deputy Esmonde.
Before reaching Deputy Esmonde, he would have to go to somebody like Deputy Colley.
The law up to now has been very harsh in this regard. Therefore, I cannot understand why some people are objecting to the abolition of death duties.
Deputy Belton has been talking about another Bill.
The Deputy is guilty in that respect, too.
I have been trying to avoid that. As I have said already there are aspects in the Bill for which the Minister should be given credit. I do not wish to take away from the reassessments that appear in the Schedules of the later Bill. I do not want to detract or to appear to detract from the value of this. That is not my point. There is a point on the Capital Acquisition Tax Bill which I think it would be out of order to make, unfortunately, but it is very relevant. I will not make it. I should like it to be recorded that I have made that remark on this section.
We are not debating the Capital Acquisition Tax Bill. It will be dealt with on its merits. I am dealing with this section in this Bill. I am dealing with the popular misconception because of statements made by the Minister and borne out by the actual form of this Bill and the marginal note in particular: "We are doing a great thing. We are abolishing death duties." We are not. We are effecting reforms in certain ways.
Deputy Belton seemed to misunderstand completely the point I made. I could fault the Minister technically as to why it should be in this Bill. I fault him on the apparent content of the statements he made which, in substance, I submit in all sobriety, are not a frank representation of the facts in relation to this Bill. I will leave it at that.
I had not intended to get involved in this discussion but the contrivances of Deputy de Valera and Deputy Belton forced me to my feet. As a lawyer, I have always adopted a very sound rule which has prevented my doing an unnecessary amount of work or worrying unnecessarily about legal points. It is this. When a Finance Bill is introduced, I look at it but I do not analyse it. I wait until I see its final form.
There is an atmosphere abroad and, rightly or wrongly, people are seeing dangers and ghosts and imaginary situations. I am not accusing Deputy de Valera of doing that. Speaking as a lawyer, I want to make it clear that people are taking a very gloomy view of the financial instruments which have come into this House this year. From discussions I have had with lawyers and officials whose duty it is to administer our fiscal measures, I can say that there is very little ground for this pessimism and the fears generated in people's minds.
I would describe section 45 as the most far-reaching fiscal measure or section in any Act of Parliament dealing with finance which this Parliament has passed since the foundation of the State. This is an historic moment for the House. We are setting about the abolition of estate duties, the nasty death duties which are visited upon families when the breadwinner dies.
The reason why people are concerned about fiscal measures is this. Deputy de Valera and Deputy Belton were correct in part when they referred to my position as a professional man in relation to the existing taxation laws. I have to confess, as every lawyer must, that I spend a tremendous amount of time in advising people how to tax farm. The phrase is quite current and usual. People were indulging in taxation avoidance on a very large scale indeed. As the wealth of the country improved the demand grew for technicians, lawyers and accountants to assist and advise people. Because the taxation law was unjust it was an incentive to the ordinary person of property to go rushing to his lawyer or accountant. Very artificial contrivances were arrived at. As Deputy Belton pointed out, the domicile of many companies, the owners of which made their money out of this State, was changed to other countries.
I am glad to see that the general approach of all countries is to stop this false flight of the control of capital to other countries. When the money has been made in a particular country that country is now setting about protecting itself. People should direct their energies towards an economic path rather than a tax farming path. On many occasions a property transaction has started off by a simple offer and finished by a simple acceptance. Nothing was put on paper but six months or 18 months later that simple transaction ended up in about 12 different transactions and in at least three different countries with I do not know how many teams of lawyers or accountants involved. No document in that transaction told you what the effect of the transaction was. The whole purpose was to avoid being caught within the tax net. Unfortunately, this had the effect of greatly delaying economic progress. In this country a great deal of development was held up because of the unfairness of our taxation laws.
Section 45 does what this country had been crying out for for a long time. The net effect of this section and the other Acts referred to by Deputy de Valera will be that over 90 per cent of the people who heretofore either paid capital tax in the form of death duties, or who were liable for capital tax, will be completely free and absolved from any liability in relation to capital tax. That says enough for it without going into the finer technicalities of administration. These are lawyers' matters. I do not think they are really germane to the discussion of this section.
I see the points raised by Deputy de Valera but I do not think they are reasons or grounds for any criticism of this section. As I say, this is an historic section. This is an historic moment. It is good to be here while it is taking place.
I have the greatest regard for Deputy Esmonde, not only professionally but also personally, and I agree there is much in what he says. I would agree with him in regard to the importance of the section if it did what it is purported to do. But it does not do that. The Committee Stage is the stage on which we go into legal technicalities. If you replace a section like this by a section that puts on a tax with a new name, admittedly limited to the recipient, if you like, and in the next section go on to widen the scope and, in a later section still, make a charge on the property and, in another area, open up the accountability, surely then the balance is in favour of my contention and the point being made that the removal of estate duty as such is a mere technical quibble and not a reality. If that is the position, where then is the change?
As I pointed out, in previous Acts there were exemptions and there were rates of tax incidence in the Schedules. That situation will not be changed. Full credit to the Minister for the revision of the scales but, remember, the law will remain essentially the same. There may perhaps be some streamlining and there will certainly be scope for the Revenue Commissioners to plug loopholes but the position, if the section is passed, will remain essentially what it is with just what amounts to a revision.
At one stage I was going to ask the Minister could he not take this section and put it into the Capital Acquisitions Bill. If he did that a great deal of the acrimony would disappear and we could debate the matter more homogeneously. To take the section at its face value here and say "Stop" is a misrepresentation. There will not be one hour in which any one taxpayer can escape the law. There is absolute continuity. There will not be one hour in which liability is removed. What will happen is that on a particular date certain exemptions will be given. The scales are revised. The reliefs are given. We are here making the law and I am surprised that Deputy Esmonde should try to make the case that to go into the law here is un-becoming. We are making the law and it is specifically on Committee Stage that we make the law. If the Deputy adverts to that point he must agree with me that, in contemplation of law, the general liability is universal. I am not overstating the position when I say that simultaneously the net is widened and the net is narrowed. That will be the overall position applicable to everybody. What will happen then is that under the Schedule and specific provisions certain reliefs and exemptions are given. It could not be otherwise because, if it were, it would be wide open to evasion.
The Minister must not take me now as criticising. I am merely trying to put things into perspective. I do not want to be misrepresented by people trying to pretend I am criticising the reliefs and the reforms the Minister will effect under the Capital Acquisitions Tax Bill. We will come to that in due course. There are things in that measure for which I will commend it. That is not the point at issue here. The point at issue is that this section, standing alone in the Bill, will not for one moment effect what the marginal note would claim it will effect. That is the first thing. Secondly, because of the propaganda and because of the two quotations I gave from the Minister's answer to a question on 30th January last, there has been a certain misrepresentation abroad about the effect of what we are doing. Do not let us confuse this with the merits and demerits of what the Minister is proposing in later legislation.
I can see technical arguments for the Minister leaving the section here but, if he were absolutely frank, I do not think he would have evoked high horse indignation or any other kind of indignation; had he simply and frankly said it is necessary to put this section into this Bill to do what he wants to do but, of course, a subsequent measure will be doing it, that straightforward attitude with the public would have done none of us any harm.
Deputy Belton instanced a particular case of which he has personal knowledge. I think he said it was the case of a relative of his. Estate duty will be payable and Deputy Belton thought that it should not be payable. I agree with him. I think most people would agree with him. I refer to the matter because this whole discussion goes back to something much more fundamental than would appear from this section. It goes back to the last general election when this party undertook to do a fundamental reappraisal of the whole death duty system and the parties now in Government undertook to abolish death duties, which is what the marginal note to this section proclaims. This whole artifice arises out of that commitment by the present Coalition Government. If what one is doing is a fairly major review of the death duty system, with very substantial relief in many cases and with, perhaps, the introduction of a gift tax, one could do this without the abolition of death duties. The Minister and his colleagues were committed politically to the abolition of death duties. If they did not know at the time they made the commitment, they certainly found out afterwards that that was not feasible. Consequently, they applied a great deal of ingenuity to producing something which appeared to be abolishing death duties but, in fact, was not. That was the object of this exercise. That is why we have this section in the Bill. I think Deputy de Valera tentatively suggested it should be in the Capital Acquisitions Tax Bill. I will go further. I have no doubt that is where it should be and that it should not be in here at all. It is in here as part of this artifice, which is added to by the side note "abolition of death duties". Subsection (1) reads:
Estate duty shall not be levied or paid in respect of any property passing or deemed to pass on the death of any person dying on or after the appointed day.
That would be a much more honest statement if it had added to it "but inheritance tax shall be payable in respect of such property". The Minister knows as well as the rest of us that over the years a large body of legislation has been built up in connection with estate duty, legacy duty and succession duty but very significantly you can search this section from beginning to end and nowhere will you find the repeal of one portion of that legislation.
This section does not repeal the legislation which imposed and extended estate duty, legacy duty and succession duty. The significance of the failure to repeal that legislation is enormous. That, of course, is why Deputy de Valera was able to point out that the whole paraphernalia, which has operated in relation to death duties, will continue fully. We find, in order to continue this artifice, forced for political reasons on the Minister because of the commitment he and his colleagues made to abolish death duties, there is a very peculiar provision between subsection (3) and (4). Subsection (3) states that legacy duty and succession duty shall not be chargeable on any legacy or succession in so far as the duty would, apart from this section, be payable in connection with any event mentioned in subsection (4). That subsection lists a number of items. Anybody who believed that death duties were being abolished would say that the provision should simply be that where legacy or succession duty would, but for this section, be chargeable it shall not be chargeable as from the 1st April.
It is not possible to do it in any simple way. It has to be done in this complex way because the whole object of the exercise is to maintain the existing death duty legislation and to use it. It is not being repealed. No amount of shallow argument by the Minister or any of his colleagues can alter the fact that that legislation is not being repealed. All of this is not a matter of technicality but one of plain, straight politics. It arises because the Minister and his colleagues undertook to abolish death duties and they are not doing so. They are at their wit's end and using a great deal of ingenuity to try to conceal that fact. Apart from the side note to this section and the statements made from time to time by the Minister and his colleagues on the 1st April this year, there was a big hand-out from the Government Information Service celebrating the disappearance of death duties. Even Deputy Esmonde, who should know better, spoke about this being an historic occasion. If death duties were being abolished, would the legislation not be abolished? Would it not be repealed?
The legislation is not being repealed. That is the kernel of the whole argument that knocks the bottom out of all these statements by the Minister, hand-outs from the Government Information Service and so on. It is proposed to have substantial reliefs as regards the people who will be liable for inheritance tax who would also have been liable for death duties. Clearly substantial reliefs would have occurred under any review of the death duty system. In regard to the reliefs the Minister found himself doing the kind of things that would have been expected under the Fianna Fáil commitment in the last general election but the last thing he could do was to pretend that was what he was complying with. He had to pretend he was keeping his own undertaking, which he is not, because he is retaining death duties.
Those who have spoken about the exemptions proposed under the inheritance tax system are, in effect, talking about the kind of reliefs that would have been expected but they have not adverted to the kind of reliefs that are not being given. The Minister made some statements earlier which were factually incorrect in this regard. Under his proposals people will be liable for inheritance tax, which is the new name for death duties, where the sum received is over £10,000 if it goes to a brother, sister, nephew or niece unless in special circumstances. That is not just inheritance but one adds any gifts given for the past five years or any time in the future to the inheritance. If it then comes to over £10,000, duty will be paid.
That system will be operated and effected on foot of the existing legislation which is not being repealed. I suggest that this section is really a confidence trick, that it should not be in this Bill at all but should be in the Capital Acquisitions Tax Bill. It is put in here to try to get people to look at it in isolation and to imagine that the Coalition Government are fulfilling their promise to abolish death duties. It is all a most elaborate operation to try to mislead the public. This will not succeed once people realise that the whole paraphernalia will continue in operation without, as Deputy de Valera said, one hour's interruption. In many cases the liability will be even greater than it was under the old system. The reliefs given are those which clearly would have been given without any nonsense about the abolition of death duties but simply with a change in the death duty system which is what the Minister is doing, changing the thresholds. It is not true, as the Minister is trying to say, that there are fundamental changes in regard to the categories of persons who become liable because, as he knows, under the existing death duty system there are categories of consanguinity in the case of widows and children which bring about fairly substantial exemptions. They are fairly substantial but by no means enough especially with the way inflation has gone. The Minister has not given relief to those coming under the existing death duty system even to compensate for inflation. Some such people are being treated very badly because of the Minister's failure to afford them relief.
The Minister's concentration appears to have been almost entirely on this operation, this artificial operation of trying to make people believe that death duties are being abolished when they are not. We also have a very peculiar provision in subsection (6), one the Minister should explain. That subsection states that the appointed day means 1st April, 1975. The appointed day has been referred to in subsection (1). The Minister knows that in the normal way where there is such a provision the definition of appointed day is usually the day on which an order shall be made bringing the section into force. I cannot recall ever seeing a section which refers to the appointed day and then defines the appointed day by a specific date. Would the Minister explain why that, on the face of it, very peculiar form of drafting is used in this section? I am sure the Minister would agree that it is so unusual it calls for explanation.
This debate can go on for ever but the essential question is: Do the Opposition want to help the Government in carrying through the abolition of death duties? If the Opposition do, they should give their approval to this section and then we can get on with the remainder of the Finance Bill.
Why not abolish death duties?
Deputy Colley might like to pretend in public that he is a tuppence halfpenny ignoramus of a solicitor but he is not and he knows that well.
The Minister should not use a phrase which is derogatory to an individual in the House.
I was not speaking derogatorily. I was denying that the Deputy fits the description which he appeared to be giving himself. I was rebutting it. The Deputy knows well that deaths which arose before 1st April, 1975 give rise to a liability and until such time as these matters are discharged the legislation has to remain there so as to be applicable to those unfortunate events.
That is about .01 per cent of death duties which the Minister can easily deal with.
When all is said and done, two examples will give the reality of the situation and then we will leave it to the people to decide whether they are having their liability to death duties abolished or not. If a man died in 1974 leaving estate worth £500,000 to his wife and three children they would have to pay £275,000 on that estate. That amount would have been taken from them before they would have received any share in the estate. That kind of thing happened in small businesses and farms and many of them had to be broken up or massive borrowings had to be made, in many cases doing serious damage to viable businesses. On a death occurring after 1st April this year no tax whatsoever will be payable.
The Minister has raised the exemption limits and that is all that proves.
It does not. It proves we have abolished estate duty of £275,000 and that after April, 1975, no duty is payable because we are not imposing death duties. As a result of this Government's wisdom which the Deputies opposite are frustrating with their technical comments the saving to such people will be £275,000. If a man had £600,000 to be divided equally between his wife and three children and he died before 1st April of this year the liability would be £330,000 but after that date there is no liability.
The Minister has altered the exemption limits again.
We have abolished death duties.
The Minister must know that neither of the cases he has mentioned proves his point.
Gift tax is something different. The property which is charged is not the property of the deceased person as Deputy de Valera suggested.
I said inheritance tax.
Inheritance is a gift passing on death. What is charged is the property received by the beneficiary.
What about section 47?
The ultimate responsibility under the capital acquisitions tax, and this is a crucial test of the difference between that and other taxes, is that the liability lies with the beneficiary who has a capacity to pay and will receive the benefit.
Other people are liable also.
Estate duties were applicable to the property and had to be paid before any benefit was received by the beneficiaries.
Where there was a capacity to pay also.
Not in the case of businesses that had to be broken up in order to pay it. Apparently we are going to have into the long hot summer passionate orations on behalf of comparatively lucky people who will have the good fortune to receive from the next-of-kin assets in excess of £150,000. If the Opposition say that in respect of such people we have not abolished death duties and, therefore, we have failed to fulfil our promise, I will give them that and acknowledge they have won that debate. They have won something less than 1 per cent of the debate and they may have a present of that, go to the polls and seek the support of the people in whose defence they are holding up the business of this House. The masses who have obtained the relief will express their support for those who gave them the relief while others only wanted a pyrrhic victory in a debate.
It is interesting the point the Minister has been driven to. We are making law and are concerned what the content of the law is and it is wrong to proceed with the type of political diatribe the Minister has gone on with. The Minister is giving reliefs and nobody is questioning what is being done in the Schedule of the Capital Acquisitions Tax Bill but that is not the point. The point is that death duties are not being abolished in spite of the marginal note.