Wealth Tax Bill, 1975: Committee Stage (Resumed).

SECTION 8.

I move amendment No. 17b:

In page 11, subsection (2), after line 54, to insert a new subsection as follows:—

"(3) In estimating the market value of shares in a company part of the assets of which do not constitute taxable wealth the total value of the shares shall be reduced by the same proportion as such assets bear to the total assets of the company".

There are, as the Minister knows very well, in the previous section a list of different kinds of items which are exempt in effect from wealth tax. If a company owns among other assets some bloodstock or superannuation funds coming within the terms of section 7, then such items as bloodstock and superannuation funds are, according to section 7, exempt from wealth tax. The purpose of this amendment is to ensure that where such exempted items form part of the assets of a company, then the valuation of the shares of that company for the purpose of wealth tax will reflect the exemption of such items by being reduced proportionately as indicated in the amendment.

I am sorry, but the amendment is not acceptable for a number of reasons including the following: Firstly it proposes that the value of the shares "be reduced by the same proportion as the exempted assets bear to the total assets of the company". This assumes quite wrongly that the only matter taken into account in the valuation of the shares of a company is the asset basis, which of course is not so. In valuing shares underlying assets are but one of the many elements which are taken into account, in addition, for instance, to a company's current performance, its past history, its future prospects, its dividend record, the nature of its products, its gearing, its liquidity, the market and so forth. To isolate just one of these aspects, to take out the whole or part of the underlying assets of a company from all the other constituents which go to make up the value of a share and then to apply the exemption to those particular assets and to none other and have the exemption reflected in the value of the shares would in fact be virtually impossible. It would be particularly difficult to carry out this operation where the shares were quoted on the stock exchange. Secondly, even if it were possible it would present enormous difficulties for both the private and the public sector to reach agreed valuations. In fact I would say it would be virtually impossible to do so and we would have endless arguments as attempts were made to reconcile different approaches. Thirdly, the amendment is of little practical significance as the majority of exemptions apply to assets which are not normally owned by a trading company, for instance, a private dwelling-house and its effects, superannuation benefits or their funds——

Superannuation funds?

Who owns them?

Artistic objects, gardens and growing timber. These are not normally the assets of the trading company. Superannuation benefits or their funds are not the assets of a trading company; they may be assets of the intended beneficiaries but they are not assets of a trading company as such which are taken into account in valuing the shares of the company. If they were, then they would not be within the control or available for future benefit of the beneficiaries if they were assets of a separate entity, the trading company. Fourthly, the fundamental problem is this: exemptions from tax can only be given to property which is liable to tax. Since the property comprised in a trading company is not liable to tax an exemption cannot be applied to it. It is the shares only which may be liable to tax if the wealth holding of the owner of the shares is such as to exceed the thresholds, but one cannot say that all the shares are held by one person and that accordingly the assets of the firm which are exempted from tax should be reflected by a reduction in the shares of that particular person.

I am sure that even though Deputy Colley might wish to pursue the line of the principle which he set out in his amendment, he will see that it presents impossible practical problems. The shareholders who own shares which are liable for tax are not entitled to the underlying property because we are dealing with two separate beings, the company on the one hand and the person on the other. The ownership to the property lies in the company, not in the persons. Therefore the shareholders are not entitled to any exemptions to which an owner of the property would be entitled. In any event, the small number of cases which would be involved I am convinced would not justify doing a very serious violence to a fundamental and logical element in the tax, especially when the parties who are interested have control over the situation. If they want benefits they can obtain the benefits themselves.

For these reasons I would urge that the amendment, whatever be the motives behind it—I am not being disparaging about them—is not capable of being worked and, in any event, would not be of any value to the normal case under the Bill. If it was to be of assistance it would only be of assistance in cases that were being created for the purpose of avoiding tax.

The motive behind the amendment is, of course, as can be seen on its face, to try to get some degree of equity into this Bill. How the Minister manages to drag in, as he does in the very last sentence he uttered, the question of avoidance is beyond me. It is really quite a simple matter that is involved in this. To talk about its not applying because in the case of a trading company the company itself is not liable to wealth tax ignores the terms of the amendment which relates to the value of shares in a company. The Minister said that in the case of superannuation funds they would not belong to the company, they would belong to the person contributing to the fund. On the previous section the Minister for Lands, who was standing in for the Minister for Finance, said the direct opposite. When I suggested that the position was as the Minister for Finance has just said, the Minister for Lands assured us that paragraph (e) of subsection (1) of the previous section did not mean that at all. It is very difficult to know, especially with the Minister for Lands alternating with the Minister for Finance, if they are saying contradictory things.

Of course, they are not. Deputy Colley is putting an interpretation which——

He never said that.

Which of you did not say that, may I discover?

We did not say what Deputy Colley is accusing us of saying. I think that is a good start.

(Dublin Central): The Minister for Finance has not been in here for a long time.

Could we find out which is the official view on this matter? If there are superannuation funds, say, in an insurance company, in the Minister's view, are those funds the property of the company or are they the property of the person who subscribed to the superannuation fund?

Those funds are held in trust for the beneficiaries. They are not reflected in the asset value of the company.

What the Minister said was they were not the property of the company.

They are not reflected in the asset value of the company, yet Deputy Colley wants to get exemption for them on the grounds that they are supposed to be reflected in the share value.

What I want to know is did the Minister not say that such funds were not the property of the company but were in fact the property of the person subscribing to the superannuation fund? Is that not what the Minister is saying?

They are not reflected in the asset value. Yet Deputy Colley wants to take them out. If Deputy Colley wants to fight over semantics——

No. I am trying to find out what exactly the Minister is saying because it appeared to me that the Minister for Lands deputising for the Minister for Finance said precisely the opposite in regard to paragraph (e) of subsection (1) of section 7. However, we will have to rest with the fact that we get differing interpretations depending on what argument is being put forward or is sought to be put forward by the other side.

We have had conflicting representations from across the floor.

Would the Deputy care to give me an example? I hope he will not talk about the complaint of foreigners being taxed and Irish people being discriminated against as an example of inconsistency. It is perfectly consistent with our whole theme that there should be no wealth tax on productive assets.

I do not like to embarrass Deputy Colley, but I have now looked at the section to which he refers and companies do not come into it at all.

Companies do not come into which section?

Section 7 (1) (e).

The Minister was not here. May I briefly point out that I was suggesting to the Minister that he ought to be careful about the wording of that? It seemed to me that it was only relating to the right to receive certain benefits or periodic payments as distinct from the actual benefits or payments. The benefits or payments could be interpreted as meaning the capital value of people's periodic payments. The Minister for Lands said it did not mean that. It meant the right to receive and when received they were then taxable in the hands of the recipient. It is not relevant to this amendment. It is only relevant to something the Minister for Finance said in response to it.

The basic thinking behind this amendment seems to be quite straightforward and simple. Let me illustrate it this way. Admittedly it is an extreme case. I do not think it is an impossible case but it illustrates the point at issue. If you have a company 50 per cent of whose assets consist of bloodstock and 50 per cent of other property, is the Minister saying that whether you include the value of the bloodstock or not virtually makes no difference to the value of the shares because of all the other factors which have to be taken into account? I do not think the Minister would contend that and, if that is not so, if it would make an appreciable difference in the value of the shares, then the whole point of this amendment should be quite clear to the Minister. It is an attempt to get the value of the shares to reflect what is stated in section 7. The beginning of section 7 says:

Tax shall not be payable in respect of the following property and such property shall not be taxable wealth.

It then lists the various kinds of property. According to what the Minister is now saying that should read:

Tax shall not be payable in respect of the following property and such property shall not be taxable wealth provided that it does not form part of the wealth of a company.

That is what the Minister is now saying. That is not what section 7 says. The Minister now tells us that is how this Bill will operate. If that is so, it is a little unfortunate that it was not spelt out in section 7. It seems to me that the principle involved in this amendment is clear and equitable. If the Minister does not choose to accept it, there is not very much I can do about it. I have drawn his attention to what appeared to me to be an oversight. Now it appears to be deliberate. If it is deliberate I regret that section 7 was not properly drafted to make quite clear what the position is, as the Minister now indicates it to be, and as he wants it to be.

There is a fundamental principle that exemptions and taxable liability go hand in hand. You cannot have an exemption unless there is a taxable entity in the first place. In other words, there must be a taxation liability before the exemption comes into play.

May I point out to the Deputy that section 7 provides that this long list of items shall not be taxable wealth without reference to the taxable entity?

Where there is a taxable entity. That is the point.

Is the Deputy saying there is no taxable entity involved here?

The Deputy is dealing with the assessment of market value. He is getting back to the principles behind the whole business. There must first of all be a taxable entity. Then the exemption applies. An exemption does not apply unless there is a taxable entity.

Surely the Deputy is not saying there is no taxable entity involved in this amendment.

I am a bit puzzled about what this amendment means.

The Minister does not seem to have any difficulty in understanding it and rejecting it.

I am not making a snide remark but it seems a contradiction in terms. I do not quite understand it. If the Deputy is looking for an exemption it means there is a taxation liability in the first place. What must be realised is that as far as a trading company is concerned the assets are different from the shares.

This relates to the market value of the shares. If the assets of the company were represented as to 50 per cent by bloodstock, can it be seriously contended that the value of the shares is not affected if one ignores the exemption in section 7 for bloodstock?

With respect to the Deputy, he is a solicitor. How can you define or break down the assets behind a share?

People are doing it every day of the week.

It cannot be written into an Act.

The Deputy is changing his ground now. A moment ago he was talking about principle. He is now saying it cannot be done in practice. The principle is very clear and equitable. If it is contended that it cannot be done, let us say that is the only reason and not attack the principle which I think is eminently reasonable.

Deputy Colley acknowledged that the case he mentioned was an extreme case. If an individual is the owner of shares in a trading company which owns bloodstock and he does not like the arrangement under this Bill, he can very cheaply and very quickly rearrange his affairs to get whatever benefits he wants. It is not for us to legislate in order to deal with extraordinary situations. It is not for people who have arrangements which can be quickly dissolved to adjust themselves to the legal provisions if they want to get the genuine benefits intended in the Bill without creating a huge paraphernalia of complexities.

The Minister is very fond of appealing to this question of rearrangement.

That is always done.

It is a wrong approach for us to take. It is a wrong for a Minister to say that everybody else except the State is to make adjustments. The Minister has appealed to that principle a little too often.

It is a consequence of change to have to make change.

In reason. You cannot escape out of every situation on that argument. I want to ask the Minister a couple of questions. The word "company" can mean what is called a public company. I do not mean a semi-State body but a public company within the meaning of the Companies Acts, a private trading company and a private non-trading company. In the case of any company quoted on the Stock Exchange I take it that the Revenue Commissioners will prima facie accept that as a valuation of the shares. This is so in another Bill. Can we start on the assumption that that would be the first normal standard?

Market value.

That would be the determination of market value. The accounting yardstick would be to take the shareholders' funds, that would be the assets, in a sense, and to relate that to the number of shareholders. Is that not so? Is that not what you do?

That is only asset valuation.

It is the valuation, the market value of the share.

Yes, but not necessarily assets alone.

Then you have one of two things. You have either that, or you have a measure of actual transactions. In the case of certain private companies I quite agree there may not be transactions. But if you have the market transactions, surely bona fide transactions in the market would be what would determine it. Is that not so?

The Deputy is talking about a public company now?

Any company where there would be a trading in its shares. It is conceivable that you could trade in the shares of a private company. The standard that would be taken there would be, first of all, I take it, that by an analogy with the acceptance of the standard of the Stock Exchange if there were bona fide transactions that they would be the next thing taken as market value by analogy. If you have not either of these two things available—but remember I stressed both of these as being the norm, I mean the natural and normal meaning of the word “market value”—then you look at the accounts and the balance sheet in particular and take as a norm what would by and large determine the market values in shares that were on the market. In other words, there are many cases where you could see how the values of shares have gone up and down. I know the perturbation of the economic situation does confuse the argument. Supposing one talks about normal times, the performance of the profit and loss account in the balance sheet would be interpreted in a certain standard way and that standard way would largely determine the Stock Exchange quotation. Therefore what would have determined the Stock Exchange quotation, I would imagine, would be the standard that the Revenue Commissioners would try to apply. If that is so, then the assets of the company, whatever it may be, private or public, come into play and Deputy Colley's amendment makes sense.

I am talking as an individual now who has been involved in this situation of a private company. There are a large number of aspects that must be taken into consideration, and the persons who look at the share first of all think of two things. First of all the asset backing, the net asset backing. The second one they think of is: "How much lolly do I get into my pocket per share per annum?" That is not the whole picture.

We have one good decision here in our MacNamees case which went into the valuation of shares in, I think, a private company in Drogheda or Dundalk. I think it was a milling company or something of that sort. Numerous things had to be taken into consideration. I am not talking about majority or minority shareholders. I know one case where, on a quick look at it, the shares were valued—I will not mention names—at £65 per share. By the time all the various aspects were taken into consideration, this is the message that came back to us from the Revenue Commissioners. We are in Committee and we are talking about a factual situation. It happened to be a 56 per cent shareholding. It ended up when the whole thing was finished at £22 or £24 per share.

I am not faulting the Deputy on his approach to this because he has put his tentacles out in dealing with the aspects that have got to be considered on this. One of the things one has to bear in mind in deciding on a share is history. History is a peculiar thing because in this case it was accepted over a period of 20 years. I am saying this advisedly in this House because the practice to date has been on the advice sent out to an executor dealing with shares in a private company: "Give us your accounts for three years." I have always questioned that because of my experience of this case where we went back 20 years and made a difference between £65 and £24 or £25, or something like that, as the ultimate valuation per share. There is far more to it than just looking at assets and dividends. You have got to look at the liquidity situation. You have got to look at the past history and you have got to look at it from the point of view of the prognosis for the future.

Whatever you have to look at is not the real point at issue here. Does the inclusion or exclusion of what are exempted under section 7 make a difference or not? Is that not the net issue?

This is one of the problems. It is very hard to define what is the excluded asset and what is the included asset for the purpose of tax. It could have various rights built up on included or excluded assets. After all, the taxpayer is being asked to pay tax on the share as it stands on the notional market value, what an expert accountant or financier would advise the person to pay for the share. The section goes further because you must look at the share from the point of view of a seller of the share. This is where private enterprise has its hand in the thing, and rightly so, because you do not want to see a vendor kicked around. After all, he owns the property. It is only right to look at it from the point of view of the holder of the share, the holder of the property and the rights to it.

May I say another thing here? Deputy de Valera will appreciate this and I am sure Deputy Colley will appreciate it. I am not making a distinction between the two learned gentlemen, both lawyers. The point is this. Shares are quite distinct from the property that underlies them. Law courts, over and over again, both in taxation, liquidation and other disputes, have always made that distinction.

Our system of law makes a clear distinction between the two and only look at the share. Basically, our approach on this—I am not talking from the point of view of tax, I am talking from the point of view of everyday lawyers and businessmen dealing with this—is a just and fair way. I understand that on the Continent there are other more sophisticated methods looked at but if I was a banker advancing money to a company I would feel very happy about the way the Irish Revenue Commissioners value shares because one knows where one is going. Under the common law system we have an elastic mind in business. I am not using that phrase in a nasty way.

Dealing with what we deal with outside this House, as lawyers and accountants, we have a very good modus vivendi with Revenue. I am sure Deputy de Valera will admit that there is a good understanding in practical terms in valuation of property which is what we are dealing with under this section.

My reference was internal, not external.

Fair enough. On the valuation of shares there are so many imponderables. My experience, and a lot of lawyers and accountants will agree with me, is that there has been a fair and reasonable understanding in particular cases. Basically, the Revenue Commissioners approach the matter on the basis, "there is the share, maybe one in a hundred, that is the valuation and that is the way the company stands". I have had a lot of experience dealing with the Valuation Office and they have always understood a special case. If they want to knock one they will always tell that person why they are doing it and they will give the evidence. If a man stands back and likes to do it by way of distant correspondence and threatening writs and so on he gets into trouble, fair enough but if a man is fair and straight with the Revenue Commissioners they will be fair and straight with him.

I can tell Deputy de Valera, he may know about the case, that in the last six months where there was a question of value—I am talking about companies and so on—it meant a difference of 33 per cent and 24 per cent for estate duty after arguments across the table and a full disclosure of facts on both sides, there was fair treatment given. We were giving the better and fairer treatment. The Revenue Commissioners if given the law and a means of doing it will do it. Under this section they are given every liberality to be fair, as they have shown themselves to be up to now.

The only trouble that has occurred to date is that in certain cases the Revenue Commissioners have been restricted on valuation. Section 8, if I may use the phrase, is a grand old liberal section that gives us fair room to play with from the taxpayers' point of view. I would not like to see anything else there. I would be afraid that Deputy Colley might be bringing in a restrictive element rather like slicing little elements under a microscope, and I do not like seeing that where valuation is concerned. We have always had a tradition of the rounded term and the rounded valuation. It suited most people. That is a factual statement and it will be borne out by any other practising lawyer.

It is clear that the Minister does not wish to take into account assets which are exempted according to section 7 in the valuation of shares of any company. If he does not I am not pressing the amendment.

Amendment, by leave, withdrawn.
Question proposed: "That section 8 stand part of the Bill."

I understand that subsection (1) takes the relevant wording from the Finance Act of 1894 and that that wording has been judicially criticised in Britain, as recently as 1967, as going too far. The words in this subsection have been judicially held to mean that the valuation is to be based on a price that would be paid by a purchaser with a particular interest in the property. In one case where there was a residence adjoining an institution it was agreed that the value of the house as a residence was £750 but the trustees of the adjoining institution were anxious to acquire it for the purpose of extending their premises and were willing to pay at least £1,000 for the house. It was held in court that the statutory value of that house was £1,000. I mention that as an illustration of the effect of the words used in this subsection which have been judicially criticised. It seems unfortunate that they should be repeated again without an effort made to find a formula that would not go rather as far, than use a formula that was criticised for going too far.

It seems that there is a major omission in the section which deals with the method by which the market value of property is established. That major omission is that there is no provision made in the case of a business which is making a loss or for a reduction in the early years of a business when, in almost all cases, it cannot be expected to make a profit. It may be argued that wealth tax is totally unrelated to income. In one sense it is but in reality the ability to pay wealth tax must be related to income or alternatively the whole object of wealth tax is, in such cases, to cause property to be sold up for the purpose of paying wealth tax. I would not have thought that that was an avowed purpose of this Bill. If it is not then this omission is a serious one.

I wish to draw the Minister's attention to the consequences of section 3, subsection (4), in relation to reversionary interests and to suggest that section 8 ought to contain provision to the effect that a reversionary interest would be valued as such and not as property in possession, which it is deemed to be under section 3 (4). It does not seem on the face of the section that there is any provision for that and that, consequently following out the earlier provisions of the Bill, where there is a reversionary interest it is likely to be valued as such.

I understand that section 3 (4) refers to (ii). That is the note I have. This has been dealt with a few times. Section 3 (4) is dealing with an artificially created situation. In regard to an artificially created situation we were talking about the avoidance measures that could be created. Are we going to go into that, to value that artificial situation, when the whole tenor of the Act is to catch that as one unit, an artificially created situation by the owner of the property? That makes no sense at all.

The artificial situation, I suggest, is created by the Bill. Perhaps it is for the purposes of dealing with avoidance.

No, the Deputy is being unfair to himself because he saw there was an avoidance measure that could be created here. His remarks, or those of his adviser, in regard to section 3, subsection (4), are wrong on this. The Deputy agreed in this House that that (ii) at the top of page 3 was to avoid abuse, an artificially created situation. I may be wrong in this, but the Deputy agreed to this earlier on.

Perhaps we are at cross purposes on this, but let me make it quite clear. First, I have no adviser who suggested I put forward this particular point; I am putting it forward of my own volition. I am doing so because while I recognise the purpose of the provision of section 3, subsection (4), and the provision at the top of page 3, I did at the time, and subsequently, and I now again say that the consequences of this is to have two persons liable for wealth tax in respect of the same property at the same time. The Minister for Finance —it may not have been he—in connection with that spelled out that in those circumstances the Revenue Commissioners would opt as to which one they would go for. That is not the point at issue here. The point at issue is this: that because of those provisions a person who is the owner of a reversionary interest is deemed for the purpose of the Bill to be entitled in possession. If the nature of his ownership is a reversionary interest it should be valued as a reversionary interest and not as if he were in possession.

No, he created the artificial situation himself.

Not in all cases.

This is the one that is dealt with here.

No, it is not. The provisions in the Bill cover limited interests of all types, not merely the reversionary expectant on the determination of a limited interest created by the person. Section 3, subsection (4), provides:

Where the property to which an individual is beneficially entitled in possession includes a reversion expectant on the determination of a limited interest, the individual shall himself be deemed to be entitled in possession to that limited interest and the provisions of this section shall apply accordingly.

That is quite independent of whether he created a limited interest or not. If what is in effect a limited interest but is artificially deemed to be an interest in possession——

Can we shorten this. The little word "include" is mentioned at the bottom of page 2. At (ii) the Deputy will find the little word "include" is included.

I might make the point that this is far removed from Section 8.

I agree it is. I have no desire whatever to get back on to section 1 or section 3. The only reason I made any reference to it was to point out that the earlier provisions of the Bill provide what is, as Deputy Esmonde said, an artificial determination in certain circumstances, not just the ones he mentioned, in others too. All I am saying in relation to this section is that, because there is such an artificial situation deemed to exist, does not mean that in valuing interests one is to ignore the reality of what the interest is worth. That is the only point I am making.

Section 8 is a very realistic section; it could not be simpler. It provides that the market value shall be the value which the property would fetch on the open market on the valuation date.

(Dublin Central): In the opinion of the Revenue Commissioners?

Yes. There is no changing of the rules between estate duty and assessment of value for wealth tax. These rules have stood the experience of some 81 years—a fair period of time—and they have caused little difficulty. During that period, certainly since 1910, there was only one appeal to the courts from the assessments which were made on the value.

If the Revenue Commissioners do not accept the assessment of the taxpayer, the Revenue Commissioners suggest another figure. The normal practice is for a compromise to be reached. Speaking as a practitioner, it was my usual experience that clients were content to accept the compromise figure, and they felt that if they pushed it to an appeal they might do worse. That is the practice that is going to operate under wealth tax also.

(Dublin Central): Is there not provision for an outside independent assessment?

Yes. The Commissioners may call in a valuer to give an assessment and may be responsible for the fee of the valuer. The provisions are extremely reasonable. Supposing we try to legislate rules for valuation, I am certain we would end up in an artificial situation. The rules of valuation, the relevant considerations of 1975, might not be those of 1980, 1985 or 1995. If we try to fit all valuations into a straitjacket it might do injustice to private citizens as well as to the Revenue Commissioners. In fact, what section 8 says is that the rules of the market place will apply. Of course, there is always room for argument about what is the appropriate value of a property. Every vendor thinks he is not getting enough, and every purchaser thinks he is paying too much.

(Dublin Central): The Minister will find the reverse situation in this Bill.

Human avarice and human need blend and the correct figures are struck. I was not quite in sympathy with the point Deputy Colley was making. He suggested that it was wrong if the value of a particular property was to be inflated because the neighbouring owner to that property wanted it more than anybody else in the world and was prepared to outbid everybody else. So be it. That is the value of the property, and if that property did not have its proximity to the person who was prepared to pay that high price, it would not have that value. That is what is relevant—its proximity to an occasion of demand; its proximity to an area which would command the high price. That is as relevant as fashion, as any other factor which determines the price.

May I ask a question of the Minister on Deputy Colley's point? In an exceptional case what evidence is required? Can I write in, for instance, and say I am prepared to buy X's property at suchand-such a price and then automatically escalate his valuation?

Yes, is the answer to that question.

The Revenue Commissioners would look into the Deputy's bona fide as a bidder. Obviously, they would not take the random demand or indication because if that were to be allowed every mischievous neighbour could create great embarrassment. It is the factors that operate on the market. These things cannot be legislated for, and I think that in trying to do it you would end up in a bigger mess than even the worst nightmares that the people might be dreaming for themselves at the moment.

In view of what Deputy de Valera just mentioned there what I might call the special purchaser Deputies were thinking of, I have to admit as a professional man that I settled the case on the basis of a bid made and I could have kicked myself afterwards when I thought that I was a little negligent in not examining behind the bid that was made. I am dealing with the strict terms of market value for estate duty purposes. I walked into it a little bit. Part of the reason why I walked into it—this is a confession now of a professional man talking and not mentioning clients—

We have no powers to give you absolution.

We have all had experience of this. I was in the Land Commission Appeals Tribunal one day and the price, we will say, was 70X, and in went my valuer into the witness box and produced a telegram: "I have got a bid for 80X as the price of the place", so that fixed the value and the Tribunal fixed the value on that basis. Of course neither the Tribunal nor myself nor the Land Commission examined behind that 80X. I took it as axiomatic and I used the same approach in another case in which I was at the paying end. I was at the grabber's end in the first one, at the paying end, and I did not twig it, and my clients paid the duty. Fair enough, on my advice, solicitor's advice, valuer's advice, and we agreed. Deputy de Valera is quite right to raise this question of the special purchase, particularly as we are a developing country. Anybody who has been involved in property evaluation realises that there are about 20 different areas that command 20 different prices and there are 20 different types of soil and 20 areas of climate. Open market values are what have to be considered. This is what has to be considered without limitations being written into the Act. Deputy Fitzpatrick said this section gives far too much power to the valuation commissioners. When I first looked at this Bill I wanted limitations. Section 8 is based on all the sections that are relevant to the valuing of assets for estate duty purposes. We all know estate duty was an unjust tax. The actual instruments in relation to valuing the property that was possibly subject to estate duty worked, and worked very well.

The Minister has mentioned various cases. As far as my knowledge as a lawyer goes, there were only three reported cases since the beginning of the century that dealt with the value of the shares in a company. They are the only ones that give difficulty, because the other ones can be dealt with by auctioneers' valuation by the national arbitrator. As regards going to court on the assessment values of shares in a company and in private companies, there are only three reported cases over that long period of time. I think I am right in saying that the three cases were the Jameson case, the Smith case and the McNamee case. The McNamee case was in 1948. If any layman is concerned about the powers of the Revenue Commissioners, he will see in the judgment of the late Martin Maguire a very good judgment in relation to what is evasion and avoidance and the way you value shares in a private company and all the possible matters that can come into the consideration of the valuation of the shares of a company. I would add one that may not appear in the report, that is, the historical interest of a company, and that can go back to Tib's eve. There is no limit on how far it can go back.

If one is a private practitioner acting for a person in relation to assets that have got to be valued for revenue purposes, this is the one skeleton in the cupboard or the unknown terror that we all have in relation to property. It is due to the fact that a lot of transactions take place rather under cover. Property is not sold by public auction or if it is sold by public auction, people do not appreciate all the conditions that are attendant on the title and value of the property. People say a property of 40 acres was sold for such and such but Jim Ryan's was sold for another price. How do you make that out? From my experience of negotiating professionally with the Valuation Office—I should not stigmatise it as the Valuation Office but the Commissioners always refer a case to the Valuation Office unless it is agreed in the first instance —I can say they are skilled in this matter. Might I say that the valuers are not just valuers; a lot of them have other sciences to their credit, agriculture, and so on. They take a very reasonable and liberal view provided they are presented with the proper facts and the proper case.

If some smart aleck comes in and tries to get away with portion of the value, fair enough, he will be resisted, but if a fair case is put to them they will understand it. They always have in my experience. I am not criticising them on this but in fairness they have always, if there was a doubt, because estate duty was such a criminal tax, erred in favour of the alleged criminals, to use the old common law principle; they have always erred in favour of the taxpayer. It is most important that that should have been their attitude to the matter. All I can say is that I have the highest praise for them. I know taxpayers may not think that way but talking to them as a professional man I know the difficulties they have to contend with.

Progress reported; Committee to sit again.