I want to say that I agree with the views that have been expressed by Deputy de Valera and expressed earlier by Deputy Colley in relation to this section or this purported or alleged abolition of death duties. The side-note to this section, which is dishonest and blatantly and demonstrably untrue, does not, under our Interpretation Act, form part of the section. It cannot be taken into account by a court in construing the section. Nonetheless, because it appears there and also in the index at the beginning of the Bill, it leads people to believe death duties are being abolished. On two grounds they are not; first of all, on the legal ground and, secondly, from the factual financial point of view.
Perhaps I might deal briefly with the legal aspect which has been dealt with in detail by Deputy de Valera and with which I need not deal in any great detail. If the Minister or this House were to provide for the abolition of death duties, there would be a section in this Bill, or more appropriately in one of the Capital Taxation Bills, to the effect that the Finance Act, 1894, and all amendments thereto are hereby repealed with effect in respect of deaths occurring on or after the 1st April, 1975. It might be necessary to put it a little more elaborately than that but that would be the bones of it, if the proposal was to abolish death duties but, as Deputy de Valera has pointed out, the proposal is not to abolish death duties. The proposal is not to levy death duties in respect of deaths on or after the 1st of April, 1975. It is a very different matter. It means that the whole corpus of our death duty legislation from 1894, indeed, under subsection (2) here the pre-1894 legislation in so far as it is relevant, remains in existence and part of our law. An analogy I might make to the House in income tax would be if the Minister for Finance for some reason were to decide that things were very bad in the country and in order to give everyone a bit of a boost he brought in a section in a Finance Bill saying that income tax shall not be leviable for a period of six months from the 1st April, 1975, to whenever it would be. That would have the effect that people would not pay income tax in that period. But all the income tax legislation would remain and come back into effect when the six-months' period, or whatever it was, had expired.
If this section is passed, as presumably it will by people who have no interest whatever in this debate but who merely march in and out occasionally to vote, there is nothing to prevent the Minister coming along next year, or even in a few months' time, and producing a Bill of one section which would say: "Section 45 of the Finance Act, 1975 is hereby repealed as and from the 1st of December, 1975." Without more ado, it would mean that the whole corpus of death duty legislation from 1894 onwards would come back into effect because none of it was ever repealed on our statute books and will not be repealed by this section. The death duty legislation is voluminous. In fact, it was only the other day I consulted the volume got out by the Revenue Commissioners which contains every unrepealed statutory provision since 1894 and some earlier relevant ones. It runs to almost 1,000 pages. It is almost as large as the corresponding volume on income tax. They are the statutory provisions only. In addition, there are hundreds and hundreds of decided cases which stand side by side with the statutory provisions, literally hundreds in Ireland alone apart from relevant ones in Britain. A genuine, bona fide, abolition of death duties would entail the setting out in a section in this or another Bill, more suitably in another, of a provision repealing all of those things. I do not think it would be necessary to get them all out individually. I presume it could be expressed in some way, such as that the 1894 Act is repealed and all amendments thereto but that is not done. There is no attempt whatever to do that; there is no attempt made to repeal or abolish death duties. What is being done is a non-levying of duty in respect of deaths from 1st April, 1975 onwards.
In order to bring the whole corpus of death duty legislation back into immediate effect, all that would be necessary would be the repeal of section 45. If it is proposed permanently to abolish death duties, why not say so? We are entitled to be suspicious about this, particularly when the side-note to the section is demonstrably untrue, and I think I have shown it to be so. It is not abolishing death duties. It says:
(1) Estate duty shall not be levied or paid in respect of any property passing or deemed to pass...
That is on the legal side of it. There is no question but that what Deputy de Valera and I have said in that respect is correct.
On the practical side of it, it is fair to suggest that, while death duties may no longer be leviable from the 1st April, 1975, they are replaced by a vast, complex series of taxes which taken as a whole can be no less onerous and, indeed, in many cases, would be far more onerous than what they replace. Certainly, from the overall, national point of view they have a far more detrimental effect on the economy and country generally than death duties ever had. Of course, there will be individual people who will be better off but there will be many other people who will be a lot worse off. Leaving individuals out of it for the moment, it is undeniable— in the light of what we have seen in the last year or so—that the total package of four taxes being brought in allegedly to replace death duties, must have a serious effect on the economy as a whole and have been shown already, even before their enactment, to have had that effect, with large sums of capital, by common consent, going out of the country.
In case anyone would think that the inheritance tax, which is one of the two capital acquisitions taxes, was the only replacement of death duties, it is only right to point out that there are four taxes allegedly replacing it. There is the wealth tax; the capital gains tax; the gift tax and the inheritance tax. Instead of the death duty system we have had in operation since 1894—and which I might add it was open to the Minister to amend in any way he wanted over the last two years if he thought it needed amendment; and it would still be open to him to amend it—and with which everyone is familiar, we have four different, complicated taxes introduced. I am in no doubt that, from an overall national point of view, death duties would be preferable and far less harmful to the economy than these four taxes introduced in substitution. In the case of many individuals, they will probably be better off under what is substituted, but an awful lot of other individuals will not.
One aspect to which I should like to refer—and which I think has been referred to already, to some extent, by Deputy Colley—is the question of a whole lot of reliefs which exist at present under the death duties system which apparently, from one's reading of the Capital Acquisitions Tax Bill, will not exist under the new system. An interesting case was brought to my attention in the last few weeks to the effect that under the death duty system succession and legacy duty were payable by the spouse of a beneficiary at the same rate as that which would have been appropriate to the original beneficiary if he had been alive. In other words, if a testator left property to his daughter-in-law she stood in the same relationship to him for succession and legacy duty purposes as her husband would have had he been alive, and even if he was alive, she stood in the same relationship.
There are many instances where a testator had one or two children who pre-deceased him and if they were his only children he might wish to leave the property to their spouses, which would be a prudent thing to do. Assuming there are no grandchildren and that the property is left to a son-in-law or to a daughter-in-law, apart from any other taxes that would be payable, the inheritance tax alone would be payable at the rate set out in Table IV of Part II of the Schedule to the Capital Acquisitions Tax Bill. This would be the rate applicable to strangers in blood. Assuming the amount of the legacy or the succession was £13,000, the son-in-law or the daughter-in-law will pay inheritance tax at the rate of 25 per cent on that amount. That is a monstrous imposition on people who would not have to pay anything under the present system. There are dozens of these examples if one had the time and the inclination to go through them and pick them out.
The overall effect of the inheritance tax alone vis-à-vis death duties would seem to indicate that the people who will be better off are the spouse of the testator and his children. It seems to be geared in such a way that extremely rich people will get away without paying any duty because they are able to divide their estates between their immediate family. If we take the example of a man who is worth £750,000 and assume he is survived by a wife and four children, he can leave the entirety of that sum in slices of £150,000 to his wife and children without the payment of one penny in inheritance tax. It may be that some of them will become liable for wealth tax or for capital gains tax, in respect of which a death is regarded as a disposition, but payment would not arise so far as inheritance or gift tax is concerned. In principle it is wrong that somebody is able to pass on £750,000, even though it is to his immediate family, without one penny being taken from him. On the other hand, a man who tries to pass on £13,000 to his daughter-in-law will find she will have to pay 25 per cent inheritance tax, quite apart from anything else she may have to pay.
There are many serious anomalies in this package of alternative legislation. There are many other reliefs in relation to death duties and I am not going to go through them all but the majority do not appear to be carried into the alternative capital taxation system now proposed. There are items such as quick succession relief and special exemptions for certain shares in Irish companies under a number of Finance Acts. There are many items that do not arise very often but they are there to prevent injustice or unfairness and they were found to be necessary and desirable during the years. The provision for relief for a surviving spouse exists under the death duty system but it does not appear in that form in the alternative package of four new taxes.
The extraordinary thing about the purported or alleged abolition of death duties and their replacement by four new separate taxes is that the Minister has not told the House or the country what will be the estimated revenue, although he has been dealing with these matters for more than a year. There have been many guesses about them; at one stage they were to be about the same as death duties, then it seemed they would be less, then more, but it ended up that none of us was given a precise figure.
The introduction of other taxes in this House—we dealt with some of them yesterday—has always entailed giving precise estimates of the increase or decrease in revenue as a result of the change in tax. For example, we had it yesterday with regard to betting. The Minister was able to tell me to the nearest £1,000, according to himself, what the increase in betting duty will bring in, but he cannot tell us what four new taxes will bring in. We are asked to make a judgment between what is there at the moment—we know what the revenue has been in the last few years—and a radically different situation with four new systems of tax being introduced. Nobody can honestly make that judgment unless he has the figures. The Minister cannot honestly make that judgment unless he has the figures. Perhaps he has them and does not want to give them to us, but when a Minister for Finance is considering changing the law my experience of the Revenue Commissioners is that they are able to tell him extremely quickly how much more would be got in by an increase in tax or how much would be lost by a deduction in tax. Here we have a situation where a whole system of capital taxation is abolished and four new systems are brought in. It may be difficult for the Revenue Commissioners to judge with their normal preciseness exactly what will be the produce of these four new taxes, but I have no doubt there are many men in the Revenue Commissioners who are able to give, to the nearest million anyway, an intelligent approximation of what the likely revenue from those four sets of new taxes will be. They must have given such an approximation to the Minister. He has never given it to us. What the reasons for his failure to do that are I do not know. I can only speculate on them. It may well be that the Revenue have pointed out to him that the wealth tax, as proposed, is virtually uncollectable and that the cost of collecting it will exceed what will be got in from it and that, in their view, it is, therefore, a futile exercise.
The Second Stage of all those Bills except one has been passed and that is coming near the end. The Committee Stages of all of them will presumably begin within the next few weeks. We should be able to see a clear picture as between the old system and the new, but we cannot. We have never been given the figures. We can only guess, and the guess of many of us is that the amount that is likely to be raised by the four new systems of capital taxation will probably be a great deal more than what was raised under the death duties system. That is fair enough if it is so, but the really damaging aspect of it is that the nature of the taxes is such that they are a disincentive to investment and, irrespective of whatever amount may be got in, we are in the difficulty that we cannot validly make a comparison. Neither can the Minister validly make a comparison unless he is prepared to tell us what figure it is proposed to raise by this. If he is just stabbing at this in the dark, if he does not know, I would regard it as a deplorable situation because he does not know what way the thing will end up. If any Minister for Finance wants to introduce taxation in this House and give no idea what the revenue will be then his whole approach to balancing his budget is one of irresponsibility. I suppose in these days of deficits of £125 million, £150 million and £180 million that in itself is sufficient proof of irresponsibility and it does not matter a damn if one is £20 million or £40 million wrong one way or the other. It is all equal nowadays. It is burned up in inflation anyway.
I want to come back to the alleged abolition of death duties and point out again that it has been clearly demonstrated from this side of the House, and it cannot be contraverted by the Minister, that the only thing that is being done in relation to death duties is not that they are being abolished but that they will not be levied or paid in respect of certain deaths after a certain date.
