If that is so the Minister is in a worse position than I thought he was because we have got the very grave anomalies and injustices that are arising under this provision whereby if people obtain property under a will when they dispose of it in due course they are going to be assessed to capital gains tax on the alleged gain arising not from the time they acquired it but from the time the deceased person acquired it. This is so demonstrably unreasonable that if the Minister supports it, having considered the whole position, his position is, to put it mildly, untenable. The fact is that this kind of proposition is totally wrong, and it is aggravated by the fact that the Minister has refused point blank to provide in this Bill for provision against inflation. Therefore, the whole accumulation of alleged gain over many years is of course going to be an artificial gain related to inflation and yet the Minister proposes to tax that gain at 26 per cent and to apply that, not to people who are engaged in speculation, but to people who are engaged in farming and business which by nature of the section must be the kind of situation in which they have engaged over many years. It is the kind of person who, in my view, should not be affected at all by capital gains tax who is really going to be hit by this section as it stands.
There is a rather ominous mentality revealed in this section and in the Minister's attempted justification of it. The Minister has on a number of occasions boasted in this House and outside it that he was abolishing death duties and he has quoted quite substantial exemption limits and thresholds but what he actually is saying to justify his action is: "If I accept your amendment, then people will be enabled to inherit property below the threshold limit for the capital acquisition tax and pay nothing." What he is saying is: "I am going to impose a form of death duty in a case like this." That is, in effect, what he is saying. He has actually used the argument—he used it today but used it on the last occasion too—in case there is any doubt I will quote him. At column 1676 of the Official Report for 13th May, 1975, the Minister said:
If a legatee were to be treated as acquiring the asset for capital gains tax purposes at its market value, he could dispose of it immediately or very soon after acquisition and escape capital gains tax while, at the same time, because of the very high exemption thresholds which are afforded in the capital acquisition tax he might not be charged to any capital acquisition tax. This is particularly relevant in the case of transfers on death by parents to their children where the threshold of exemption in respect of each child is £150,000. The possibility of a charge to capital gains tax on a disposal is intended to ensure that tax is payable at the time of liquidity.
If we take first of all the case the Minister mentions, the passing by will of property by a parent to a child, the Minister has said that nobody will be affected by this except the very wealthy; there is an exemption of £150,000 in respect of each child. That is what he said in connection with capital acquisition tax but what he is saying is: "I am not going to let them away with that. They are going to pay capital gains tax and going to pay it at a value assessed away back, not to when they acquired it but to when the parent acquired it."
This is, in my view, a situation, as called for by Deputy Fitzpatrick, where the public should be told clearly by the Minister just what he is doing. When he talks about applying these exemption limits—generous, he says, and they would be generous, particularly if he were allowing for inflation, which he is not—why does he not tell people at the same time that he is applying another form of death duty to those who are exempt as well as to those who are not by calculating capital gains tax at 26 per cent on an artificial gain calculated from a date not when the person acquired the property but when their parents acquired the property?
I regard this as just sleight of hand and misleading the public to be pretending to abolish death duties in a case like that and then using the very argument that these people are being exempt from capital acquisition tax to say: "We are going to apply capital gains tax."
The fact is that in the Government's While Paper it was said that this would not be done. This is another instance where the Minister went back on what the White Paper said was going to be done. The White Paper said: "We will not apply capital gains tax and capital acquisition tax to the one transaction" but it is being done here and it is being done because the Minister says that otherwise people would avoid liability. But, is that not the whole case the Minister has been making, that they are avoiding liability, that they are so much better off than they were under death duties, according to the Minister? But, when you look at the small print, how much better off are they? It is almost certainly true in many cases that people will be far worse off by reason of the small print the Minister is introducing in this way and unlike death duties calculated on the market value on the date of death, in this case it will be calculated on alleged gain accrued back over many years.
That is the case where you apply the high exemption limit the Minister was talking about but, of course, the Minister knows, as we do, that there are very many other cases where there is no such exemption limit at all. I referred to one of them, the case of the nephew or niece who has not been living on the farm, if we are dealing with a farm situation. The limit there is £15,000. So that in such a case the Minister would take this artificial value, alleged gain, going back over many years, make no allowance for inflation, apply capital gains tax to this alleged gain and then if the market value at the date of death is over £15,000 will also apply capital acquisition tax.
I do not know how the Minister thinks he can justify this kind of approach and, in particular, how he thinks he can justify it where he is clearly dealing, not with speculators, but with people who have built up a farm or business over many years, the very people who should not be subjected to capital gains tax. They are the ones who are really being hit here and they are being hit because the Minister will not listen to the case being put forward. We put it forward on Committee Stage and the Minister indicated that he could see considerable force in it. He saw snags in dealing with it. It seemed to me that if he were anxious to deal with the problem he could certainly have done so. He did not do it. We tried to give him the benefit of the doubt as to why he did not do it but he insists on telling us he did consider it fully and arrived at this decision. If he did, shame on him to be guilty of such an imposition on people who have worked hard over the years to build up a business or farm and then to be subjected, not alone to a capital acquisition tax but to this underhand form of death duty which the Minister is introducing on a much worse scale than we ever had before. It is unforgivable of the Minister to do this and even more unforgivable of him to do it in this way when most people do not know that he is applying a form of death duties in this way.
I would ask the Minister, in the interests of accuracy, honesty and truth, from now on to stop telling us in relation to any particular one of these capital Bills to look at the position under them as compared with death duties. Would he tell us in all honesty to compare the total position?
This whole operation that the Minister and his colleagues have been engaged in is a confidence trick on the people, pretending that they are abolishing death duties when in fact, they are imposing a number of other taxes and, apart from what they have announced as in this case, a number of underhand forms of replacement of death duties, as the Minister is doing here.
I want to tell the Minister that we on this side of the House will have no part in that kind of underhand transaction he is trying to put through here. He cannot say it happened inadvertently. His attention has been fully drawn to it on Committee Stage and now on Report Stage and he is persisting in doing it. He is doing it. We are not.