Before progress was reported I was posing the question as to whether the imposition of a wealth tax is good or bad for our economy. There is nobody who can say that the imposition of a wealth tax in our economy will create one new productive job or will cause an increase in the export of any commodity, except capital. It will not contribute towards breaking the inflationary spiral which is the now acknowledged prime target of economic policy. I say "now acknowledged", because although we have been telling the Government for quite a long time, it is only in recent weeks that there has been any acknowledgement by the Government that this is so.
If one were to look at the state of our economy in early 1973 when Fianna Fáil handed it over to the present Government and tried to judge whether the imposition of a wealth tax at that time would have been a good thing, I think the conclusion one would have had to come to was that, despite the very great strides in the expansion of our economy which had been achieved, nevertheless, in comparison, say, with our EEC partners, our economy was still at a stage of development way behind that of our EEC partners. Yet some of the most wealthy countries either do not have a wealth tax at all or have one on such a limited scale that it does not compare with what is before us in this Bill. When we look at the situation today and try to consider the thinking behind this measure, it escapes my understanding as to what kind of thinking produces the imposition of a wealth tax in our circumstances today.
It is hardly necessary to recite the litany of woe in regard to our economy. The state of our economy is a monument to the incompetent economic management of the Government and an indictment of the Government and of the individual Members of the Government who claimed to have expertise of some sort in the management of our economy. It is not an excuse which carries any weight any longer to compare our situation with that of other countries. The level of our inflation now gives the lie to all the claims that were made in the past to justify the failure of the Government in regard to inflation. As a consequence of being at the top of the inflation league, we are not alone in the position where we are suffering unemployment at this time of the year in the region of 103,000 persons but we are also producing a situation in which more unemployment is going to be created as a direct result of that level of inflation with the consequential level of wage inflation.
We have this enormous problem of galloping inflation, worse than that of any other member of the EEC; we have a very serious and worsening situation in regard to unemployment; we have various business firms just teetering on the brink of bankruptcy —those who have not closed down. The Government choose this time to introduce a wealth tax. On Second Stage I invited any Members on the Government side, whether from the Fine Gael Party or the Labour Party, to indicate to the House some economic argument in favour of the imposition of this wealth tax. Nobody accepted my invitation. I repeat the invitation. I would be very pleased to hear some economic argument in favour of the wealth tax. Are there some arguments with some degree of credibility that would indicate that by passing this legislation charging a wealth tax, we would improve the economic performance of this country, some argument to show that by the imposition of a wealth tax, we would reduce unemployment or reduce inflation or increase our exports? Any one of these would give some degree of credibility from an economic point of view to the imposition of a wealth tax.
So far, nobody on the Government benches has attempted to argue any such thing. The arguments put forward are that it is in the interests of equity, that it will achieve a redistribution of wealth and that it will bring a more equitable distribution of wealth. These things are said glibly, particularly by people like Deputy Barry Desmond, but no attempt has been made to examine this and to see how true or false the argument is. On the admission of the Minister for Finance, there will be no redistribution of wealth as a result of the wealth tax. I say that because the Minister has admitted that, even taking the whole package together, not just the wealth tax but the wealth tax, the capital gains tax and the capital acquisitions tax, the total sum he expects to get into the Exchequer will equal the amount heretofore collected under death duties. Therefore, from the point of view of redistribution of wealth as commonly understood, that is, by the State taking from the rich and giving to the poor, there can be no change in the situation if the Minister's estimates have any basis in reality. But more than that, when pushed on this matter, the Minister for Finance said that redistribution would take place amongst members of wealthy families. In case you might think that this is an incredible statement, I am not making it up. The Minister said that.
Are we seriously to believe that the social argument, the argument in equity and justice for wealth tax, is to achieve a redistribution of wealth amongst members of wealthy families? Is this seriously put forward in this House? As I have indicated the question of redistribution of wealth as normally understood simply does not arise on the admissions of the Minister for Finance. The question of redistribution of wealth between members of the one family is too ludicrous to be put forward as an argument in favour of a wealth tax. So, what arguments are we left with in favour of the imposition of a wealth tax as proposed in this section? An argument which is based, as far as I can see, on an appeal to the politics of envy, an argument which begrudges the success of Irish people in business or in any enterprise, an argument which ignores the role of such people, not only their capital but their entrepreneurial skill in providing employment in this country. It has been a truism of economic policy in this country for many years that if we were ever to attain full employment— something, I admit, that sounds like a bad joke in present circumstances—it would have to be attained primarily through the development of industry. Of course the development of industry brings with it consequential creation of employment in the service industry but the primary effort had to be, still has to be and, at any time in the future, will have to be based on the development of manufacturing industry.
It is clear from some of the things we heard this morning, particularly from Deputy Barry Desmond, that there are Deputies on that side of the House who do not understand, or else do not want to understand, the role of those who invest their capital and those who invest their skill in the development, in particular of manufacturing industry in this country. There is some specious argument coming from the other side of the House that the wealth tax will not affect detrimentally industry in this country. I do not know how any rational men purport to put forward that argument. It is, of course, true to say that in the case of a trading company wealth tax will not be charged or levied. If anybody is foolish enough to think that therefore there is no charge levied which will offset the operations of a trading company all I can say is, God help this country if it is in the hands of people who think that.
The reality of the situation, as Deputies opposite should well know, and as was pointed out earlier today, is that essentially trading companies consist of shareholders, and whether those shares are held through other companies or any other way, ultimately you will get back to individuals, individuals whose money is involved, individuals who make the decision whether to invest the money, whether to withdraw it or not. If those individuals are adversely affected, can anybody say that can happen without any adverse effect on the trading companies concerned? Quite apart from the current economic chaos, many companies in this country have been built up over the years in which no dividends and no directors' fees have been paid and the profits have been ploughed back into expanding those businesses. What is the position in the case of a company like that? The position is that the shareholders who are liable for wealth tax will have to pay a certain amount of wealth tax based on their personal position.