Dáil Éireann díospóireacht -
Wednesday, 16 Jul 1975

Vol. 283 No. 10

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

Debate resumed on amendment No. 21:

In page 14, subsection (3), after line 14, to insert the following proviso:

"Provided also that, in the case of property consisting of stock or shares in a trading company whose assets on the relevant valuation date consist wholly or mainly of premises registered in the register of hotels, kept by Bord Fáilte under section 24 of the Tourist Traffic Act, 1939, and the assets of the business carried on therein, this subsection shall, in respect of the valuation date falling in the year 1975 and the two valuation dates next following that valuation date, have effect as if ‘30 per cent.' were substituted for ‘20 per cent.' in paragraph (a), and ‘70 per cent.' were substituted for ‘80 per cent.' in paragraph (b).".

—(Minister for Lands.)

Minister for Lands (Mr. T.J. Fitzpatrick,

Cavan): Before we adjourned we were dealing with amendment No. 21 to section 10. I had explained that the purpose of the amendment was to increase from 20 to 30 per cent the deduction allowed in respect of shares in companies, the principal asset in which is a hotel. The amendment is in ease of the taxpayer and it was accepted by the House. Before we adjourned Deputy de Valera was suggesting that I should insert 50 per cent instead of 30 per cent or alternatively I should insert 80 per cent instead of 70 per cent. The effect of what Deputy de Valera was saying would be to breach the principle I argued on the previous amendment on the basis that only the same proportion of debts should be allowed as the value placed on the property. In other words, if only 80 per cent of property was taken for wealth tax purposes then only 80 per cent of the debts claimed should be allowed.

We argued that fully on the previous amendment. I established that the principle was a sound one. Although Deputy Colley did not agree with that I do not see any point in having the same argument all over again especially as we are operating within a time limit. I, therefore, recommend this amendment to the House as being in ease of hotels operated by a company.

Mr. Colley

In so far as this amendment is in ease of hotels operated by a company it is welcome. However, in my view it is far too limited. It does not attempt to provide a comparable relief in the case of family owned hotels operated through a company as is provided in the case of individually owned hotels. The limitations are clear. It applies only for three years, and I do not think it is a sufficient answer to that for the Minister to say, "well these things have a habit of being extended." If the Minister wants to argue that it is only needed for three years and that, hopefully, the downturn in tourism will then be out of the way, that is a tenable argument. But that is not the indication he gave when Deputy Belton queried this. On the contrary, his answer was that these things have a habit of being extended. If the thinking is that it should be a permanent feature then it should appear in that way in the Bill.

I object to the alleged principle the Minister is talking about which is to reduce the deductions for debts as he reduces the valuation of the assets. It is not clear to me as to which kind of hotel is getting the bigger relief now. On the one hand there is the individually owned hotel with the provisions of subsection (1) which are limited to such portion of the hotel as consists of bedrooms and, on the other hand, as provided in this amendment, company owned hotels where the relief proposed applies across the board to all the assets of the hotel, indeed all the assets of the company which are wholly or mainly an hotel. I do not know if the Minister can throw any light on it as to which is going to get the greater relief now, but it seems to be possible that the greater relief is now going to be given to a company owned hotel whether it is a family or publicly owned company.

Mr. T.J. Fitzpatrick

(Cavan): As the Deputy knows the 50 per cent reduction is given in respect of bedrooms where the hotel is owned by an individual. In this case where the hotel is owned by a company relief is not given in respect of bedrooms as is given in the case of the individual but the 20 per cent productive asset allowance is increased to 30 per cent. It is difficult to be precise or to say which is more beneficial, but by and large it is probably six of one and half a dozen of another. It is difficult to be precise.

Mr. Colley

I appreciate that.

Mr. T.J. Fitzpatrick

(Cavan): Of course, the Deputy will realise that in the case of the privately owned hotel all portions of the hotel other than the bedrooms will qualify for a 20 per cent allowance.

Mr. Colley

Would the Minister repeat that?

Mr. T.J. Fitzpatrick

(Cavan): The Deputy will appreciate that in the case of the hotel owned by the individual all the hotel with the exception of the bedroom portion of it will qualify for the productive asset relief of 20 per cent and the bedrooms will qualify for the 50 per cent relief.

Mr. Colley

Presumably, the correspondingly different allowances in respect of debts. I do not know how the Minister is going to apportion these as between the bedrooms and the rest of the hotel. That is another problem that will arise.

Amendment agreed to.

Mr. Colley

I move amendment No. 21a:

In page 14, subsection (4), lines 16 and 17, to delete "pasture and woodland" and substitute "pasture, woodland and timber growing thereon".

This amendment may not be necessary in view of the amendment which the Minister moved earlier, amendment No. 17, and was accepted by the House. It adds the words:

trees or underwood growing on land in the State and in the same beneficial ownership as the land.

as an item exempt from wealth tax. It is possible that my amendment may not be necessary in view of that. Logic would seem to require that the Minister ought to include "growing timber" in line 28, on page 14, with "livestock and bloodstock". If livestock and bloodstock are to be taken into account for the purposes of this section because they are exempt it would seem that growing timber should also be taken in. I am not urging this. There are so many illogicalities in the Bill perhaps the Minister might deal with this also.

Mr. T.J. Fitzpatrick

(Cavan): I agree with Deputy Colley that his amendment is not necessary because I have gone further with amendment No. 17. This amendment would have the effect of including growing timber in the definition of agricultural property. The result would be that in common with other agricultural property growing timber would qualify for special relief in subsection (1), the lesser of 50 per cent or £100,000. I introduced amendment No. 17 to section 7, paragraph (k) whereby trees and underwood growing on land in the State and in the same beneficial ownership of the land are exempted from tax. The Deputy agrees that has gone further than his amendment?

Mr. Colley

That is true.

Mr. T.J. Fitzpatrick

(Cavan): It is difficult to value growing trees. They could just have been planted a few days or be 40 or 50 years old and it would be difficult to value them and we decided not to bring them in at all.

Amendment, by leave, withdrawn.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 22:

In page 14, subsection (4), lines 22 and 23, to delete "is engaged in farming on a full-time basis and".

The amendment concerns the definition of genuine farmer. In the Bill as drafted two main tests were adopted for determining how such a person could be identified. The first that he should be engaged in farming on a full-time basis and the second that at least 75 per cent of his property should consist of agricultural property. With a view to meeting representation, including representations from the IFA to the effect that the first test was too restrictive and might exclude individuals who would legitimately be regarded as farmers, I proposed in the original amendment, No. 22 to substitute for "in farming on a full-time basis" the words "wholly or mainly in farming in the State". In the meantime further detailed consideration of this amendment has resulted in the conclusion that use of the words "wholly or mainly" will give rise to enormous practical difficulties of definition and that it would be wiser to drop completely these words.

Some of the reasons leading to this conclusion are as follows: While the second test of property ownership, 75 per cent agricultural property, is a question of fact and readily ascertainable and susceptible of proof. A test based on time and involvement will present enormous difficulties for the private and public sector. In the final analysis the first test, viz. a time basis, boils down to a question of the time spent on running a farm. For example, it could often be logically argued that persons such as Dáil Deputies, Ministers, teachers, local government officials, full-time officers of organisations and so on could not be "wholly or mainly" engaged in farming. On the other hand the opposite argument could sometimes be used with effect.

Others, however, such as professional men or women would probably have less difficulty in coming within the definition. Straight away an element of unfairness as between taxpayers arises which is compounded in that it could be argued that the less time one spends on a profession for which one is paid the greater are one's chances of being treated as a farmer with the attendant benefits. The test assumes, not necessarily correctly, that the best yardstick of judging any activity is the time spent on it. In the marginal cases, those where the problem may be of major significance, the question would be difficult to prove or disprove and, accordingly, all the more contentious.

To arrive at the facts necessary for a decision would require searching inquiries and corroboration both of which would most likely lead to resentment on the part of the taxpayer. In all the circumstances it seems clear that the test necessarily based on time spent on running a farm is far from ideal. So long as 75 per cent property test is retained the elimination of the time test altogether should not give rise to too much abuse. In the context of the relatively low return which is claimed for farming not less than 75 per cent is a high proportion of one's wealth to retain or invest in lands. It is a proportion sufficiently high to ensure that a hobby farmer would hardly hold it unless he intended to, and did, in fact, take an active part in farming.

In relation to 5th April last no question of abuse can arise. As for future years the matter can be kept reviewed so that the benefits accruing to the ownership of property by persons who were engaged in farming are not acquired by persons for whom these benefits are not intended. Accordingly, I propose this amendment which has the effect of deleting from the definition of farmer the requirement that the individual be engaged in farming on a full-time basis.

There of course, remains the condition that 75 per cent of the wealth of the individual should consist of agricultural property. In this context agricultural property refers only to land in the State and the stock, machinery, effects and so on thereon. As I have indicated, the position will be kept in view and if any tightening up is required this will receive attention.

Amendment agreed to.

Mr. Colley

I move amendment No. 22a:

In page 14, subsection (4), to delete lines 34 to 36 inclusive and to substitute:

"‘hotel premises' means premises registered in the register of hotels kept by Bord Fáilte under section 24 of the Tourist Traffic Act, 1939;".

The object of this amendment is to provide that in the case of the benefits given under subsection (1), so far as it relates to hotel premises, it will relate to all of the hotel premises and not merely to the bedroom portion as provided in the section. There are a number of reasons why this should have been done. In the main the definition in the section is such as to exclude virtually all facilities attached to a normal hotel without which they would not be registered with Bord Fáilte, although registration is part of the condition.

The division of the assets as between the hotel bedrooms and the rest of the hotel is going to present very considerable difficulty to taxpayers and to their valuers, and of course to the Revenue Commissioners, in trying to ascertain the part of any hotel accommodation attributable to the bedroom accommodation. Any sub-division of the hotel will have to take account of the actual amount of the hotel premises attributable to the bar, lounge reception area, ballroom, restaurant, kitchen, toilets and corridors.

I have touched earlier on another very difficult problem that seems to me to be arising, that is, the distribution of the debts as between the bedrooms part of the hotel and the rest of the hotel. I do not see how that is going to be done; yet it will have to be done under the Bill as it stands, because there are different proportions of the debts allowable as a deduction depending on whether one is dealing with the bedroom part of the hotel or the rest of the hotel. This amendment seeks to abolish this division in the case of a hotel. If, however, the Minister feels that it simply must be divided, it seems to me that it would be far more practical and workable if the arrangement were to be made that there would be an abatement on the residential portion of the hotel which would then include the essential portion of the hotel which is given over to the servicing of the residential accommodation. I do not think there are any easy ways of doing this if one must avoid them. It would be far better not to divide them, but if it must be done and I think it can be done in a better way than is done in the section.

Mr. T.J. Fitzpatrick

(Cavan): As the House knows hotel premises in the ownership and in occupation of an individual, first of all, gets right across the board a 20 per cent productive asset relief. Then in respect of the bedroom portion that 20 per cent is brought up to 50 per cent. That is done on the basis that there is a distinction between the bedroom portion of the hotel, which might not be worked to capacity at all during the year, and the diningroom, bar and lounge portion of the hotel, which is worked to a much greater capacity than the bedroom portion.

For example the bedroom portion can be and is reliant to a very large extent on the state of the tourist industry and on strangers coming to the locality, whereas in modern living and in present conditions the diningroom and bar are very often worked to capacity all the year around, the bar catering for locals and people from an area that is served by the hotel, and the dining room and function rooms are used very considerably for functions. That is the basis on which the difference has been made, the larger relief being given to the bedroom portion. The amendment is concerned with the definition of hotel premises which, as it stands in the Bill, embraces only bedroom accommodation in such premises. The result is that the relief in subsection (1) of section 10, the lesser of 50 per cent or £100,000 from the market value, is confined to bedroom accommodation. This relief recognises the seasonal nature of the hotel business which has the effect of giving a low return in capital representing bedroom accommodation. The same is not true of the other activities associated with hotels, kitchen, bar business, dining room facilities. The latter are in much the same position as other businesses, some of which have also seasonal features. Accordingly hotel assets other than bedrooms qualify for the same relief as any other property which is in the State——

Mr. Colley

That was written before the Minister's amendment.

Mr. T.J. Fitzpatrick

(Cavan): Yes. “hotel assets other than bedrooms” but still stands good.

Mr. Colley

All right. I will not argue.

Mr. T.J. Fitzpatrick

(Cavan): Accordingly, hotel assets other than bedrooms qualify for the same relief as the other property which is in the State, section 10 (3), 20 per cent. The amendment seeks to extend the 50 per cent or £100,000 relief to the entire premises, but such an extension would not be justified here. The amendment is therefore not acceptable. To deal briefly with Deputy Colley's suggestion that, if I cannot go as far as he suggests, I should go at least as far as dividing the residential portion——

Mr. Colley

It would take in those portions of the hotel necessary to service the residential——

Mr. T.J. Fitzpatrick

(Cavan): What exactly would that be?

Mr. Colley

It would seem to me that it would certainly have to include the diningroom and the kitchen.

Ruairí Brugha

As far as I understand, you cannot register as a hotel unless you are able to provide full meals for the day. That includes the diningroom and the kitchen.

Mr. P. Belton

Bord Fáilte will not give you any money for your bar. You must provide that out of your own resources.

Mr. T.J. Fitzpatrick

(Cavan): If I were to go as far as Deputy Colley suggests I certainly would be discriminating between the hotel bar and the bar up the street.

Mr. Colley

No, I am not assuming that the bar is——

Mr. T.J. Fitzpatrick

(Cavan): But as the amendment is drafted, if I were to go that far I would be discriminating as between the hotel bar and the bar on the street. I also think that if Deputy Colley says I should go as far as the diningroom, in many cases the diningroom is also a function room or part of a function room which is worked to capacity in many hotels all the year round. The object of the 50 per cent or the £100,000 here was to cover the bedrooms and to have regard to the seasonal type of business that is carried out.

Mr. Wilson

I want to ask a few questions both with regard to the circumstances when a hotel is privately owned and when it is owned by a company. Take, for example, a hotel which has a golf links attached. The Minister knows some of these all over the country from Cork to Donegal. Take the case of a privately-owned hotel with a golf links and the golf links is really the basis of success for the hotel. In assessing, will the golf links be included in the assets and, if so, by what method of calculation will it be valued?

Mr. T.J. Fitzpatrick

(Cavan): In the case of one owned by an individual?

Mr. Wilson

I would like the answer in the case of an individually-owned and a company-owned one. It so happens on occasion that the golf links is the raison d'etre of the hotel, that the hotel is regarded as a place where people take golfing holidays, and most of the business would be based on golfers. I would be interested to know what the basis of assessment or value of the golf links would be. How do they reckon them on the assets and what kind of a relief is that likely to get them? I know cases where there is private ownership and cases where such hotels are owned by companies and have the amenity of a golf links.

Mr. T.J. Fitzpatrick

(Cavan): Take the case where the golf links is attached to a hotel owned by an individual, and I would say those are few and far between if they exist at all.

Mr. Wilson

The Minister knows some of them exist.

Mr. T.J. Fitzpatrick

(Cavan): I cannot think of any one owned by an individual. There are companies and the Deputy knows more about them than I do, but I am dealing now with golf links attached to hotels owned by an individual other than a company and, as I say, they are few and far between if they exist at all.

Mr. Wilson

I am thinking that there is dangerous talk coming——

Mr. T.J. Fitzpatrick

(Cavan): Such a hotel with a golf links owned by an individual would be valued first of all as a golf links, because that is what it is being used as and it would, with all the hotel property, with the exception of the bedrooms qualify for the 20 per cent allowance and the bedrooms would qualify for the 50 per cent allowance or the £100,000.

Mr. Wilson

The Minister has intrigued me by saying golf links would be valued as a golf links, because the criteria for valuing golf links escapes me.

Mr. T.J. Fitzpatrick

(Cavan): If it is attached to the hotel and it is going to be used as a golf links it will be valued as a golf links on the basis that it can only be used as a golf links.

Mr. Wilson

Would valuers have a set of criteria for valuing?

Mr. T.J. Fitzpatrick

(Cavan): Deputy Wilson probably knows more about the activities and thinking on values than I do. They would have their own wealth value and having regard to the other golf links which would be owned by the hotel which is operated by a company, you have no problem there at all because the shares are simply subject to a 30 per cent reduction. The shares are valued as any other shares are valued, and then there is a deduction of 30 per cent.

Mr. P. Belton

Is there any hotel owned by an individual at all?

Amendment, by leave, withdrawn.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 23:

In page 14, subsection (4), line 40, to delete "within the meaning of section 6".

This amendment is similar to that proposed in section 9 (2) (c), page 12, line 43. By definition in section 1, a private non-trading company has the meaning assigned to it by section 6 (3). Any references throughout the Bill to a private non-trading company must mean a company within the meaning of that section. The words being deleted are therefore unnecessary, and it is really a drafting amendment or a tidying-up amendment.

Mr. Colley

I made some observations on the earlier similar amendments to which the Minister has referred. All I want to say is they apply equally to this.

Mr. T.J. Fitzpatrick

(Cavan): I will take them as applying.

Amendment agreed to.

Question proposed: "That section 10, as amended, stand part of the Bill."

Mr. Colley

There are just a few observations I want to make on the section. First, it seems to me that if the section were really taking account of productive property, as it purports to do, in the side note, which is "Net market value of productive property". I do not think that you would have subsection (2) (a) in the section at all. You would have quite a different approach, one on the lines that we have suggested all along, where productive property would be exempted from wealth tax. However, I am not going back over that ground again.

I want to draw the Minister's attention to a couple of points that arise. There is a special provision in regard to land which is near an urban area or within a mile of an urban area. Since this section is purporting to give certain reliefs in regard to property, presumably the criteria involved should be whether they are productive or not. While agricultural land close to an urban area may have a greater value than land in what we call a rural area, it does not necessarily have any greater productive value. There may be some slight exceptions in the case of market gardening in north County Dublin or something like that—I am not sure —but in general it is true to say that they have no more productive value when near an urban area than when far away from it. The criteria which appear to be applied on the basis of this section do not apply here and should not be applied here.

Secondly, in regard to the definition of "farmer" I want to urge again that the reliefs being given to the individual farmer should apply to the family company which is running, and there are such. In fact there are quite a number where the assets consist—it is a family company as defined in the Bill—wholly or mainly of agricultural assets. I know the Minister says this would be wide open to abuse but I want to suggest to him also that if he wanted to do this he would have no great difficulty in having methods devised which would prevent any avoidance or evasion that might be involved.

There is also in the definition of "farmer" a requirement that not less than 75 per cent of the market value of the property comprised in the taxable wealth of a farmer at the valuation date should consist of agricultural property, farm machinery, livestock and bloodstock. There is considerable difficulty involved in this provision. I understand of course why he has to draw the line somewhere. But nevertheless I think it would not be right to allow this to pass without drawing attention to the difficulties that can arise, because whether 75 per cent of the taxable wealth of a farmer on the valuation date, that is one particular day in the year, consisted of the kind of asset listed in the section or not could well depend on whether at that time the farmer had sold cattle or sold crops. If he had done so and had the cash, not having reinvested it in other agricultural purposes, he could find himself outside the 75 per cent limit. Similarly if he happened to have, in addition to his agricultural property some stocks and shares, fluctuations in the market value of those could alter his position. I recognise the difficulty that is faced here in trying to define what is in effect a genuine farmer. Nevertheless, these kinds of difficulties are going to arise.

I also wonder whether it is necessary in regard to the definition of a farmer to confine the farmer who qualifies as an individual to one who is both domiciled and ordinarily resident in the State, and whether it would not be sufficient to confine it to one who is ordinarily resident in the State, ignoring the domicile. In subsection (2), paragraphs (a) and (b) it says if "it is shown to the satisfaction of the Commissioners". Who is going to show this to the satisfaction of the Commissioners? Is it the Commissioners themselves, and, if so, would it not be more appropriate to provide something like "if the Commissioners are satisfied that" and so on?

I also want to suggest to the Minister that the deduction provisions which arise here under both subsections (1) and (3) ought to include provisions for relief for death duties payable after 5th April, 1975, for prior deaths in respect of the sale of property specified in section 28 of the 1931 Finance Act. I think that relates to heirlooms or things of that nature. Similarly there should be provision for relief in respect of estate duty payable after 5th April this year in respect of timber under section 9 of the Finance Act of 1912. These are two cases in which liability for death duties can arise in the future. If that is correct, I am suggesting that there should be provision for deduction in respect of them.

Mr. T.J. Fitzpatrick

(Cavan): It was probably my fault but I did not get the point the Deputy made in regard to land which is situated within a mile of a town.

Mr. Colley

I was saying while such land may be more valuable, it is not necessarily more productive and that this section is purporting to give reliefs in the case of productive assets. There is, in effect, a higher value being put under this section on land which is not necessarily more productive, though it may be more valuable.

Mr. T.J. Fitzpatrick

(Cavan): This provision is very much in ease of the taxpayer. Everybody knows that land situated adjacent to a town, even a small town, is in reality very much more valuable than agricultural land situated a distance from the town. Deputy Colley makes the point that it need not necessarily be productive but the section as a whole visualises this relief being given to property which is going to become productive. Five years has been mentioned in some place. It could even be land that might be bought by a local authority for industrial or housing purposes or might be suitable for that. That is the sort of property we have in mind. It is very much in ease of the taxpayer. Deputy Colley suggests that the reliefs and exemptions given to an individual should be extended to the family company which operates a farm. My experience, which would not necessarily be very great because I did not practise in a part of the country where it would be likely to crop up, and my information are that the number of farms that are operated through or by companies is very limited indeed.

Mr. Colley

The Minister knows I am talking about family companies.

Mr. T.J. Fitzpatrick

(Cavan): Yes. I am also satisfied that where a company was incorporated, even by a family, to run a farm, the principal object of that operation was the avoidance of death duties. One does not like talking about experiences but in my fairly considerable experience I had only one instance of a farm that was incorporated into a company and in that case death duties avoidance was the object. That will no longer be necessary in family circumstances now. If people are going to be caught up in this wealth tax because the farm is being run by a company, it will be a comparatively simple and inexpensive operation to put it into liquidation. It is a very rare occurrence to have a company formed for the purpose of running a family farm. I said that it can be unscrambled by putting the company into liquidation. If I were to accept Deputy Colley's suggestion and apply the exemptions and reliefs to a family company I am advised that by having different shareholders and directors in cases of big farms the device could be used to avoid wealth tax, just as it was used in previous times to avoid death duties.

Deputy Colley stated that he appreciates that there must be some test in regard to a genuine farmer but he thinks that the provision to qualify as a genuine farmer, that 75 per cent of the wealth on the appropriate day must be agricultural property, may lead to difficulties. We think that it is the fairest test that we can provide, that if a man is so involved in agriculture that he has 75 per cent of his wealth in it, then he has a genuine interest in agriculture and he is genuinely involved in it.

Deputy Colley mentioned the case of a person who, by the sale of stock, might change the balance and find that on the relevant day less than 75 per cent of his wealth would consist of agricultural property. All I will say about that individual is that he would likely be a marginal case anyway and he would very likely have considerable other property such as stocks and shares. It would probably be doubtful whether he was ever a genuine farmer if he could be so easily transferred from one category into another. We have provided that to qualify the farmer should be domiciled and ordinarily resident in the State. I do not want to go into this in too much detail but our object is to try to confine these concessions and reliefs to genuine Irish farmers. I do not think too many people will object to the policy behind that so far as it can be operated.

In regard to death duties which might be a liability at 5th April last in respect of a death which had occurred prior thereto, if such a claim for death duties exists, then it will be regarded as a debt due by the individual and can be claimed.

Mr. Colley

As the Minister knows, it says "is incurred in connection with the property and the business, if any, carried on in connection therewith or in the acquisition of the property". Would they come within that definition?

Mr. T.J. Fitzpatrick

(Cavan): Not alone would it be that but I think it would be an actual charge on the property.

Ruairí Brugha

It could not be in the case of a company.

Mr. T.J. Fitzpatrick

(Cavan): I understand section 11 deals with it and we will be coming to that shortly. As Deputy Colley knows, death duties, if there is a liability, would also be a charge on the property and there would be no difficulty in identifying them and claiming for them.

Mr. Colley

The fact that they were a charge does not necessarily mean that they were deductible.

Mr. T.J. Fitzpatrick

(Cavan): It does not.

Mr. Colley

It is not just anything that is a debt or a charge. It is the debt or incumbrance incurred in connection with the property or the business, if any, carried in connection therewith, or incurred in the acquisition of the property. There is a limitation as to what qualifies for deduction.

Mr. T.J. Fitzpatrick

(Cavan): If property passes to me subject to a claim for death duties, that debt clearly falls into that. In order to possess the property and with a clear title, I have to get rid of the death duties.

Mr. Colley

If the Minister is enunciating the official approach of the Revenue Commissioners it is helpful to have it on the record.

Mr. T.J. Fitzpatrick

(Cavan): I have no hesitation in putting that on the record.

Question put and agreed to.

Section 10, as amended, agreed to.

SECTION 11.

Amendment No. 23a not moved.

Mr. Colley

I move amendment No. 23b:

In page 14, subsection (1) (b), line 53 to add "provided that this paragraph shall not apply to debts or incumbrances incurred in the acquisition of shares in private non-trading companies to which section 7 (1) (j) refers".

Subsection (1) (b) of this section is intended to prohibit the deduction of debts incurred in acquiring property, which property is exempt from wealth tax under section 7. That is not an unreasonable proposition. Where the debt was incurred in purchasing shares in a private non-trading company the assets are subject to wealth tax and without benefit of a threshold. I presume it was not intended that in such circumstances there would be no deduction allowed in respect of the cost of the acquisition of the shares. This amendment is designed to cure this.

Perhaps if I give an example of the kind of situation that can arise it might make it clearer. Let us assume that a man borrows money to take up shares in a private investment company which, in turn, purchases a portfolio of investments. The company will be taxed without threshold because it is a private non-trading company but the man who borrowed the money to buy his investment in the company will not be allowed to deduct the amount of the debt that he incurred. It seems, on the face of it, that this is an oversight. I cannot believe that it was intended to achieve this effect and that is why I put down this amendment.

Mr. T.J. Fitzpatrick

(Cavan): The private non-trading company is a taxable entity under section 6. The assets of the company are the taxable wealth of the company. Shares in such a company are not taxable in the hands of an assessable person. This is done to avoid taxing both the assets of the company and the shares of the company. The exemption of shares is provided for in section 7(1) (j).

Section 11 states what debts may be deducted in arriving at the net market value of the taxable wealth of an assessable person. It also specifies the debts that may not be deducted. Among those not deductible are those referred to at paragraph (b), namely, debts which are incurred in an acquisition of exempt property. On general principle, and to preclude tax avoidance, allowance cannot be made for debts incurred in the acquisition of exempt property. There is no bar to the acquisition of exempt property as such.

If a person wishes to expend all his assets in the acquisition of exempt property he is free to do so. What is not allowed is the deduction of a debt incurred to acquire such property against other taxable wealth. An example of avoidance that allowing such a debt would give rise to is as follows: A has assets worth £250,000, tax payable on £150,000. He borrows £100,000 to purchase exempt property. His assets are now £250,000, £100,000 exempt property. Under the section, as drafted, £100,000 debt is not deductible. In effect it is set against the £100,000 exempt property. His taxable wealth remains at £150,000 and his tax bill remains unchanged. This result reflects the true position. If the debt were allowed against the £250,000 his assets would be £150,000 and tax would be payable on £50,000 only instead of £150,000.

It will be argued that a debt incurred in the acquisition of shares in a private non-trading company is in a somewhat different category, in view of the fact that the assets of a company are liable to tax. An example might clarify this point. A has taxable assets of £500,000, tax payable on £400,000. He borrows £200,000 to purchase all the shares in a private non-trading company. The company being taxable as an entity, would pay tax on £200,000, assuming that to be the value of the assets. In effect, since A owns the company, A would be paying tax. Nevertheless his taxable wealth remains at £500,000 payable on £400,000 as no allowance is permissible for the debt of £200,000. In the circumstances this is unfair since he has paid wealth tax on £600,000—£400,000 and £200,000. The amendment seeks to remedy this situation by providing that this £200,000 should be allowed as a debt. It should be remembered that we are dealing only with companies that are investment companies, which are private companies and which are under the control of not more than five persons. The shareholders therefore will normally be relatives of each other. The conditions are necessary such as to lend themselves to tax avoidance. If the amendment were accepted debts incurred in the purchase of these shares would be allowable as debts against the taxable wealth of the individual and this would immediately lead to tax avoidance.

Take for example A and B who hold 60 per cent and 40 per cent respectively of the shares in such a company and each has taxable wealth of £500,000 apart from the shares which are not taxable wealth in their hands. Shortly before the valuation date A contracts to sell two-thirds of his holding to B, and B contracts to sell his 40 per cent holding to A, the consideration for each transaction being £300,000. As a result of these arrangements their respective shareholdings in the company remain unchanged but each has a debt of £300,000 which under the amendment could be deducted from the £500,000 taxable wealth, thus saving tax on this amount. The contract of sale may or may not be rescinded by the parties subsequent to the valuation date. This collusion avoidance is available to all shareholders in this type of company. In view of the possibilities for tax avoidance which these companies generally present and the particular further scope which the amendment would offer, the amendment proposed is not acceptable. That is highly technical but apparently that would be the result of the amendment being accepted.

Mr. Colley

I follow reasonably well the case the Minister was making. He acknowledged that the situation which arises under the Bill as it stands is unfair. In substance, what he is saying is that to remedy this unfairness in the way suggested in this amendment would provide a vehicle for tax avoidance. Could I ask the Minister, if that is so, is there not any device open whereby the unfairness can be got rid of but the door would not be open to tax avoidance?

Mr. T.J. Fitzpatrick

(Cavan): I am prepared to put this suggestion to the Deputy. I would be prepared to accept his amendment provided he is prepared to insert after “acquisition” in the third line “prior to 5th April, 1975”.

Mr. Colley

Yes, I think that goes a very long way towards meeting the difficulty. I would be quite happy to accept that.

Mr. T.J. Fitzpatrick

(Cavan): I am prepared to insert that because I think that any debts that were incurred were obviously incurred in good faith and not for any ulterior motive.

Mr. Colley

I appreciate that.

Acting Chairman (Mr. Carter)

Is the amendment withdrawn?

Mr. T.J. Fitzpatrick

(Cavan): If it meets with the approval of the House, I am prepared to accept Deputy Colley's amendment with these words added: after the word “acquisition” in the third line to insert “incurred in the acquisition prior to 5th April, 1975”.

Amendment, as amended, agreed to.

Question proposed: "That section 11, as amended, stand part of the Bill."

Mr. Colley

The remarks which I made earlier in regard to estate duty liabilities which can still subsist, apply also in regard to this section. I do not think it is necessary for me to repeat them.

I should like also to know what is the position under subsection (1) (b) in regard to a life assurance policy which was mortgaged as part of a house purchase transaction. The house is exempt but the policy, I would suggest, in such a transaction is an integral part of the transaction which cannot be separated out from the house. I would appreciate some clarification on the position of a life assurance policy which is mortgaged in that way.

Also, in regard to subsection (1), paragraph (c), I think the Minister will agree that very often it could take a considerable time to demonstrate that reimbursement could not be obtained. It would almost certainly be necessary to take court proceedings and such proceedings might well take a few years. So that it would take a few years to demonstrate that reimbursement could not be obtained.

Mr. T.J. Fitzpatrick

(Cavan): These are debts payable out of the country?

Mr. Colley

No. I understood that they were really ones in which a person was, say, a guarantor and had a right therefore of reimbursement in regard to a guarantee. I think that is one case that would be covered anyway. The point I am making is that to demonstrate to the satisfaction of the Revenue Commissioners that one could not, in fact, obtain reimbursement, could take quite some time, in some cases a few years. If that were to happen the question is, would the debt be allowed to be deducted in respect of previous years' assessments as well as the current year in which it was demonstrated it could not be recovered? Remembering that wealth tax is an annual tax, this problem could be of some importance.

Mr. T.J. Fitzpatrick

(Cavan): In reply to the last point made by the Deputy, the debt would only be allowed when the tax bill had to be paid. It would not be reasonable to allow the debt year after year because it would be paid only once.

Mr. Colley

The provision of paragraph (c) is that even though the taxpayer has paid it he is not to be allowed it if he has a right of reimbursement unless he cannot obtain the reimbursement.

Mr. T.J. Fitzpatrick

(Cavan): The question that the Deputy posed is, if he had to pay it in respect of the year 1978, if it were established in respect of the year 1978 that he could not reimburse himself and it was allowed then, would he also be allowed it in respect of 1977 and 1976? The answer is no. He would not be entitled to it. He would only be entitled to an allowance in respect of the one operation when he paid it. One could not keep a debt hanging over one's head indefinitely, year after year.

Mr. Colley

But does the Minister not visualise that, in general, on deduction of debt, if a person has an outstanding mortgage or an outstanding overdraft which he does not reduce and it is existing on one valuation day and then on the next valuation day, he will be allowed deduct it on each occasion. As a measure of his assets, surely it is deductible? I am speaking now not of the special case mentioned here but just as a general proposition.

Mr. T.J. Fitzpatrick

(Cavan): That would seem to be right. That would be an overdraft that would be a charge on his property and would be unpaid. I think there is a difference between that and what the Deputy has in mind.

Mr. Colley

No. What I am suggesting is that, if there is a debt outstanding, as long as it is outstanding and unpaid it should be deductible, assuming it is a genuine debt. If you want to measure his net wealth, as long as he owes money, you have to deduct this to measure it. In the special case here, as I understand it, he may have the debt and he may pay it but he will not be allowed to deduct it if he has a right of reimbursement. Only if he can demonstrate to the Revenue Commissioners that he cannot get this reimbursement will he be allowed to deduct it. That is again a reasonable proposition. But the question I am posing is if he demonstrates that in fact he could not get reimbursement and the demonstration of that takes a few years, what he will be demonstrating is that, say, two years previously he had this debt and he was unable to get reimbursement. Should he not therefore be allowed that deduction?

Mr. T.J. Fitzpatrick

(Cavan): Yes. I will have a look at the point raised by the Deputy speaking now. The other point raised by Deputy Colley is in regard to an insurance policy which was effected to secure a loan for a house. Deputy Colley suggests that that should be treated in some way as a house is treated. I could not agree to that.

Mr. Colley

You really want to receive some clarification as to how it will be treated.

Mr. T.J. Fitzpatrick

(Cavan): No. It is separate and distinct from the house. He could sell the house in the morning and still have the policy.

Ruaíri Brugha

Is an insurance policy not normally against a mortgage?

Mr. T.J. Fitzpatrick

(Cavan): It might and it might not. You could have an insurance policy separate and distinct from a house or mortgage as a great number of people have——

Mr. Colley

This is the point I was making—where the policy is mortgaged as part of the house purchase transaction.

Mr. T.J. Fitzpatrick

(Cavan): Yes but it is an asset certainly. Therefore it is intended to be treated as an asset.

Ruairí Brugha

The house is exempt is it not?

Mr. T.J. Fitzpatrick

(Cavan): Yes. Deputy Brugha and Deputy Colley are attacking it from two different angles. It would not be chargeable as a debt against the house because the house is exempt property. But Deputy Colley wants me to ignore it altogether and say it does not exist not only from the point of view of a debt but from the point of view of an asset. The Bill intends it to be treated as an asset.

Ruaíri Brugha

Does not it get lost in the house?

Mr. Esmonde

What Deputy Brugha is thinking of is the mortgage indemnity policy—the one that decreases as the liability on the policy decreases. It dies with the mortgage.

Ruairí Brugha

You have to take it out in order to get your mortgage.

Mr. Esmonde

The first one that was suggested here was one where you take the policy out separately.

Mr. Colley

No, where you take out a life policy and mortgage it for a security against the loan.

Mr. Esmonde

It is a collateral. Would the mortgage be allowed as a deduction?

Mr. T.J. Fitzpatrick

(Cavan): No. It is a debt then incurred in the acquisition of an exempt asset.

Mr. Colley

Is it, because the policy is not exempt?

Mr. T.J. Fitzpatrick

(Cavan): The insurance policy is not a debt. The insurance policy is a security for the debt. The debt is incurred in acquiring exempt assets.

Mr. Colley

As the Minister said earlier, correctly in my view, the policy is an asset and worth whatever it is worth and will be treated as such. But if it is mortgaged, is the mortgage not a debt against that asset?

Mr. T.J. Fitzpatrick

(Cavan): It is a mortgage on the policy, as a collateral security, to acquire the house. You might as well say, I suppose, that instead of having an insurance policy you had A, B, signing a letter of guarantee that A, B, could then claim as a debt against his private dwelling the debt due. It is the same thing.

Major de Valera

If you put it this way: supposing that I have an insurance policy, that is an asset, is it not? Supposing I get an overdraft on the security of that policy, that is a debt. I can set one off against the other.

Mr. T.J. Fitzpatrick

(Cavan): No.

Major de Valera

Do not ask me why I want my overdraft. I go to the bank and I have a life insurance policy, that is a chargeable asset. I get an overdraft, a sum of money. That is a debt that can be put off against my overdraft. Now I have a sum of money that, if you like, is chargeable. Cannot I then buy the house? What is the difference? In other words, if I do the transaction that way or represent it that way, is that not Deputy Colley's case?

Mr. T.J. Fitzpatrick

(Cavan): By virtue of the Bill and by virtue of the sections, I will have to ask you what are you going to do with the money that you have borrowed. The Revenue Commissioners must find out what was the purpose of the loan because sections which we have dealt with say that only debts incurred for certain purposes are allowable. The real purpose of the loan which Deputy de Valera would be getting would be to buy an exempt property, to buy the house.

Major de Valera

Yes, that is so but you would have to go right down to the details of inquiry.

Mr. T.J. Fitzpatrick

(Cavan): Yes. That is where he runs into trouble. That is where the debt loses its value as an allowance.

Major de Valera

Surely some ingenuity would get over that if what I have said is right?

Mr. T.J. Fitzpatrick

(Cavan): No doubt, some ingenuity would try to get over it and we will have to try to deal with that when it arises.

Major de Valera

How would one deal with this? If there was some other money available and I simply got the overdraft as one transaction, using the life insurance policy to get it but there are a number of transactions together and a separate transaction to get the house, it might be very difficult to correlate the lot. The trouble I see about this is that the abuse would occur in just the type of case the Minister wants to capture and hardship will occur, as in the case of the old death duties, in just the cases where he would be glad to give relief. It is a point to be considered.

Ruairí Brugha

I do not think there is a question of evasion here. It does seem to me that there could be inequity. Could the Minister look at it before Report Stage?

Mr. T.J. Fitzpatrick

(Cavan): I do not want to give an undertaking about too many things. Certainly we will look at it.

Mr. Colley

There is a slight ambiguity in it somewhere.

Mr. T.J. Fitzpatrick

(Cavan): I do not think so. We have created the ambiguity ourselves.

Question put and agreed to.

SECTION 12.

Mr. Colley

I move amendment No. 23c:

In page 15, subsection (1), lines 29 and 30 to delete "real property or of shares which are not dealt in on a stock exchange" and to substitute "any property".

The object of this amendment is to have some degree of certainty, in so far as it can be obtained, in values agreed between the Revenue Commissioners and the taxpayer. Where an accountable person has furnished all the information necessary to enable the commissioners to ascertain the market value of any property, then it seems to me that that is sufficient to have it agreed between them. The section in subsection (1) provides:

where an accountable person has furnished all the information necessary to enable the commissioners to ascertain the market value of real property or of shares which are not dealt in on a stock exchange comprised in the taxable wealth of an assessable person on a valuation date,

certain things shall happen. The purpose of this amendment is to say that these things should happen in relation to any property where the taxpayer has, as the section says, furnished all the information necessary to enable the commissioners to ascertain the market value of any property, then I am suggesting the provisions of subsection (1) should arise. I know that further on in the subsection there are references to the real property and the stocks and shares but I am suggesting that it should cover any property and that it is not really necessary to make this distinction at all.

Mr. Esmonde

What the Deputy is suggesting might have a bad effect on the taxpayer in shares quoted publicly because they could, say, be very high on 5th April, 1975, and very low on 5th April, 1976. A person in that situation with a share that is publicly traded would be pinned to the higher value, because this subsection deals with the three years and it hopes to deal with real property, that means immovables, that is the definition under the definition section—it has not the legal connotation the Deputy or I might understand it to have—and it deals with shares in the private company. If you make it apply to all property I can see that the taxpayer could lose very badly. The idea of this section is to stop harassment in the way of accounts. If they can come to an agreement then it will last for three years.

Mr. Colley

Strictly speaking, to get the picture of what I am trying to do, one has to look at the next amendment as well.

Mr. T.J. Fitzpatrick

(Cavan): The purpose of this section is to enable the Revenue Commissioners and an accountable person to agree the value of real estate and certain securities. For the purposes of the Bill this includes all immovable property and shares which are not dealt with on the stock exchange. The agreement thus reached holds good for three years subject to certain conditions which are not relevant as regards this amendment. The amendment seeks to extend the scope of the section to all property.

The amendment is not acceptable. If the section were so enlarged in scope it would include quoted securities. There would be no point in doing this. The value of securities which are quoted is readily available and nobody would enter into an agreement to last for three years which could be shown in the event to be unrealistic. Neither party could be expected to agree, for three years, to the value of a portfolio of securities as a whole either. Apart from being sold and reinvested or spent there could be extraordinary fluctuations in the value of individual units in the portfolio over a period of three years. Once factors such as those must be taken into account for individual units there would be no advantage to either party to agree a portfolio as a whole over a period of three years. The chances of the agreement being entered into or remaining would be removed. When account is taken of the exemptions for chattels, livestock, bloodstock, artistic objects, growing trees, there is very little personal property left to value, apart from securities, whether quoted or not. That is the thinking behind this.

Mr. Colley

As I indicated to Deputy Esmonde to get the picture of what I was trying to achieve one has to look at the next amendment too. I was trying to achieve a situation in which, on the one hand, you could have a degree of certainty, say for three years, if there were agreement between the Revenue Commissioners and the taxpayers. If, on the other hand, either the Revenue Commissioners or the taxpayer felt that there was a change in the situation which would warrant going back on the agreement then they should each have the right to do so. As the section stands the Revenue Commissioners have the right to do so but the taxpayer under subsection (1) would be bound for three years, no matter what material changes occurred. I was trying to achieve, in the combination of the two, that if both parties agree and are satisfied then the agreement can operate for three years but if either party is dissatisfied that they have equal rights to revoke the agreement because of material changes coming about. Perhaps it might be in order if I could move the next amendment at the same time.

Acting Chairman (Mr. Carter)

The Deputy may not move the amendment but he may discuss it with the other amendment.

Mr. Colley

Very well. There is one point I wish to make in regard to amendment No. 23d. It could be argued that as the amendment is worded it would omit the situation arising in the event of fraud or non-disclosure of material facts. If that is so, I would have no objection to its being included. As the section stands it seems that it is pretty well loaded in favour of the Revenue Commissioners. For instance, subsection (1) (a) refers to and envisages an increase or decrease but paragraph (b) does not refer to or envisage an increase or a decrease in the value. It says "a material change", whereas (a) materially increases or decreases.

Mr. Esmonde

It says: "or in their market value"—a material change in the assets of the company or in their market value.

Mr. Colley

Yes. I do not know. Perhaps it is just to be different that the draftsman used the different phrases in the two paragraphs. Usually these differences have a significance. The first paragraph refers to "which would materially increase or decrease the market value". The second paragraph refers to "a material change in the assets of the company or in their market value". There may be some significance in the different phrasing. It seems to me that under the arrangement in the section the taxpayer can do nothing for three years.

Mr. T.J. Fitzpatrick

(Cavan): He can. In the circumstances set out either party can opt out of the agreement.

Mr. Colley

He can in relation to real property or stocks or shares. But if my first amendment is accepted then the position will be in relation to any property which is valued.

Mr. T.J. Fitzpatrick

(Cavan): What other sort of property has the Deputy in mind?

Mr. Colley

This brings up another question I want to raise. Would the Minister include in the term "real property" leaseholds and land registered in the Land Commission?

Mr. T.J. Fitzpatrick

(Cavan): That is included. It is in the definition section.

Mr. Colley

What about goodwill? That will be a rather difficult area.

Mr. T.J. Fitzpatrick

(Cavan): Goodwill might attach to the property and for estate duty purposes unless in one well-known exception, the goodwill and the property are valued together.

Mr. Colley

Suppose there is difficulty in regard to the goodwill— would it come in under either of these paragraphs, that is real property or stocks or shares?

Mr. T.J. Fitzpatrick

(Cavan): No. I concede that the Deputy has picked on the only possible property——

Mr. Colley

If I put my mind to it I might come up with another. Just let us take that for the moment. The object of the two amendments taken together is to provide that any property which is to be valued can be (a) the subject of an agreement between the Revenue Commissioners and the taxpayer which would fix the value for three years if both parties are satisfied, or (b) in relation to any property, if either the taxpayer or the Revenue Commissioners believe that there has been any material change affecting the value of whatever property is involved either upwards or downwards, either party would have the option.

Mr. T.J. Fitzpatrick

(Cavan): They have.

Mr. Colley

I think it is right to say that the taxpayer will not have such an option in relation, say, to goodwill. If he has agreed to it he is stuck with it for three years. Is that not true?

Mr. T.J. Fitzpatrick

(Cavan): No, if you want to be really technical you cannot agree goodwill for three years.

Mr. Colley

It cannot be agreed because of the nature of the asset or because of the terms of the Bill?

Mr. T.J. Fitzpatrick

(Cavan): It is not real property or shares which are not dealt with on the stock exchange.

Mr. Colley

I agree. That is so as the Bill is drafted, but it would not be so if my amendment were accepted.

Mr. Esmonde

I do not know why the Deputy is so insistent upon getting the goodwill. It is a very ephemeral sort of subject. It has no substance and it might be unwise to highlight it. It only attaches to property as such and it might have a shading effect on the value of property.

Mr. T.J. Fitzpatrick

(Cavan): I have a rather extensive note here that might be helpful to Deputy Colley if I put it on the record. I am not sure that I understand Deputy Colley's amendment. However, to ensure that there is no misunderstanding in the proviso I propose to set out briefly what it seeks to do. It provides that the agreed values are not binding if there is a failure to disclose material values in relation to any part of the taxable wealth of the assessable person. The reason for this is obvious. The necessity for the reference to any part of the taxable wealth may not be so obvious. An example will explain—agreement could be reached very speedily on the value of property where the taxable thresholds are not reached. The matter would be academic for both parties. However, such agreement might not have been reached if the Revenue Commissioners had been aware of other property which brought the aggregated wealth above the threshold of liability. The Commissioners must, therefore, have the right to reopen valuations in such circumstances. This approach benefits the taxpayer and the Revenue in cases where there is no question of non-disclosure. It makes for flexibility and ensures that time and energy are not wasted by either side when there is little or nothing at stake. Most of us have had the experience of submitting a schedule of assets where there was a small estate and where there was obviously no liability for death duties. There was no difficulty at all with the Revenue Commissioners if no liability was obvious. It was different if there was.

Paragraphs (a) and (b) of the proviso set out further circumstances in which agreed values may be reopened. Paragraph (a) relates to real estate and provides that where there is a change in the tenure under which the property is held or let the agreed value may be reopened. This would apply for instance where new terms of a lease were negotiated within the three-year period or where a person with a leasehold interest acquired the fee simple. Further if there is any change whatever whether affecting the real estate in question or any other property which would materially increase or decrease the market value of the property the value may be reopened. Even though the reference here is to "any change whatever" the value of the property has to increase or decrease materially, so that a change which causes a slight change in value would not be sufficient to have the value reopened. The increase or decrease must, however, be over and above any increase or decrease which might be normally expected apart from the change. The increase or decrease which would normally be expected might be due to the rise or fall in market value due to the economic climate, so that an increase due to inflation or a decrease due to recession would not be a ground for reopening an agreed value.

Paragraph (b) of the proviso applies to shares which are not quoted on the stock exchange. If there is an alteration in the capital or ownership of the capital or the rights of the shareholders inter se an agreed value is no longer binding. The capital of the company in this context is the share capital, so that if there is an alteration due to, say, the issue of further shares, the redemption of shares, the transfer of shares by one shareholder to another or the passing of a resolution which alters the rights attaching to the shares and, therefore, the rights of the shareholders inter se the agreed value is no longer binding. Neither will an agreed value remain binding if there is a material change in the assets of the company or in the market value of the assets of the company over and above what might normally be expected. Normal fluctuations or changes in assets or in their values are ignored, for example those brought about by favourable or unfavourable trading conditions.

The subsection ends by stating that the market value may be ascertained again by the Revenue Commissioners for each of the relevant valuation dates. This does not necessarily mean that the agreed value would be changed for any one or all three of the valuation dates. It merely means that the values for each of the three dates might be reconsidered. Changes which take place before the third valuation date only are taken into account. Changes taking place after that date are ignored as far as the agreed valuation is concerned.

It should be noted that the agreement can be reopened by either side where these conditions arise. I am not entirely clear what Deputy Colley intends in his amendment beyond that under his amendment the Commissioners could not reopen the agreed valuation even if there were failure to disclose material facts. There is no time limit as to when the event must occur which materially increases or decreases the agreed value. In the Bill it must occur within the three years. The Commissioners' powers to reopen are less wide in the Bill, certainly as regards non-quoted shares. On the first ground the amendment is unacceptable. Perhaps, however, in the light of all the factors the Deputy might consider withdrawing the amendment. The section is fair and reasonable as between the Commissioners and the taxpayer and it is not, as Deputy Colley seems to suggest, weighted in favour of the Revenue Commissioners.

Mr. Colley

As I indicated earlier it might be said, as indeed the Minister said in reading from his brief, that this amendment did not take into account the non-disclosure of material facts. I have no objection to that being incorporated but I have tried to indicate by taking the two amendments together, what I thought would be perhaps a more satisfactory way of approaching this. It is not a matter, I must confess, in respect of which I am imbued with a crusading spirit. Therefore I have no objection to withdrawing the amendments as the Minister has suggested.

Amendment, by leave, withdrawn.

Amendment No. 23d not moved.

Question proposed: "That Section 12 stand part of the Bill."

Mr. Colley

Subsection (3) provides:

Any agreement or determination made under this section in respect of any property comprised in the taxable wealth of an assessable person shall be binding only on that person and on all persons who are accountable persons in relation to tax payable by that assessable person as such.

I am not quite sure what is intended to be conveyed by this. Is there any question of that being binding on the Revenue Commissioners? It does not appear to say that such agreements or determinations are binding.

Mr. T.J. Fitzpatrick

(Cavan): Subsection (3) provides that an agreement under subsection (1) or a determination under subsection (2) is binding on the relevant assessable person and on all persons who are accountable persons in relation to tax payable by the assessable person as such. Suppose there are two taxpayers A and B with shares in the same private trading company, an agreement or determination regarding the value of these shares in A's case will bind A himself and all persons accountable for tax in his case. The agreement or determination will not, however, affect B regarding the value of similar shares. B and his accountable persons will be free to argue his case separately.

Mr. Colley

I see the point. I will not pursue it further.

Question put and agreed to.

SECTION 13.

Mr. Colley

I move amendment No. 23e:

In page 16, line 18, to delete "£100,000" and substitute "£140,000".

This amendment is designed to procure for a husband and wife an equal threshold with two single people or a separated couple. The section is worded as, indeed, are earlier sections in the Bill by reference to an individual whose wife is living with him. I do not wish to go back over all the ground we went over before, but I do want to record again my view that the actual drafting of this Bill and provisions of it, as worked out, clearly reveal an intention to treat a married woman living with her husband as an appendage to the husband, and brought in because it is necessary to bring her in but for no other reason. The practical effect of this approach is to deprive her of a threshold which would be available either to a single person or to married couples who are separated.

In order to achieve that kind of equality it would be necessary to accept this amendment and to provide that at least in the case of the husband and wife together the threshold would be £140,000 as double the amount of the £70,000 for the single person. The £70,000 is not only the allowance for the single person. It is also the allowance for each of the partners of a separated marriage, if I may put it that way. I believe this should be done both from the point of view of equity and from the point of view of giving recognition to the role and status of a married woman who is living with her husband.

Mr. T.J. Fitzpatrick

(Cavan): When we discussed section 4 Deputy Colley argued quite strongly that there should be a separate threshold in respect of a husband and a wife and that threshold should be £70,000 in each case. I pointed out then that the effect of that would be to reduce the married allowance or married threshold provided in the Bill. Deputy Colley's argument then was that the husband and wife should each retain a single threshold of £70,000. I pointed out that the effect of that would be a loss of threshold in many cases. In most Irish situations one or other of the spouses has the wealth and the other may have little or none. It is usually the husband who has the wealth because he inherits the family farm or the family business.

I also pointed out on that occasion— I will not go over all the ground again —that to do what Deputy Colley was suggesting then would bring economic pressure to bear on the husband to transfer a portion of his wealth to his wife, a portion of his farm, a portion of his business, in order to avail of the threshold, and that might lead to difficult situations and have consequences which were not thought of.

The threshold provided for a married couple is £100,000. Deputy Colley has drawn attention to the fact that, in the Bill in various places, we refer to the individual whose wife is living with him and he goes on to make the political point that, in some way or another, that is a reflection on the wife and regards her as an appendage of the husband. There is no such reflection intended good, bad, or indifferent. The actual fact is that we have to have an accountable person and in a family situation where there is a man and a wife and minor children, the accountable person is the husband and reference, therefore, is made to the wife.

In this amendment Deputy Colley, as he is perfectly entitled to do, makes a different case from that which he made on section 4 and says now that there should be two individual thresholds of £70,000 each but that there should be a joint threshold of £140,000. I cannot accept that because I do not think it is necessary. What I am doing in the Bill is striking a happy medium between Deputy Colley's suggestion on section 4 of providing an effective threshold of £70,000 for the husband, unless he divested himself of some of his wealth in order to qualify for a double one, and the joint one here of a £140,000. I am striking a happy medium and I am providing a married threshold of £100,000 which I think is reasonable.

There are reasons why a double threshold is not necessary. First of all, I repeat that two people living together —and I am not suggesting that they can live cheaper than one——

Major de Valera

That is a very oldfashioned idea.

Mr. T.J. Fitzpatrick

(Cavan): I am not suggesting that they can live cheaper than one person, but I am suggesting that they can live cheaper than two people living separately, and distinct and apart. There is also the exemption of the family home and its contents. The provision of an exemption from wealth tax of the family home and its contents, in a wealth tax situation where you have comparatively wealthy people, much more than compensates for the £40,000 Deputy Colley seeks. Deputy Colley is saying that a married couple should have twice the threshold of two single people. I say that a married couple in every case will have a threshold of £100,000 and, in addition, the family home and its contents will be exempt. That is a reasonable approach.

I will concede that there is more force to the case Deputy Colley is making now for the £140,000 threshold than for the two separate thresholds of £70,000 for the husband and £70,000 for the wife which he made on section 4. The more I thought of that argument the less merit I saw in it and the more pitfalls I saw in it. In this situation, I do not think there is a necessity or justification for doubling. Deputy Colley now accepts the basis of a married threshold by suggesting it should be £140,000. I agree with this principle but I do not agree that the married threshold should be double the single threshold for the reasons I have given.

Other countries provide thresholds. Some of them give a greater threshold for a married couple than for a single person: others do not. I will just put this on record. This amendment seeks to increase the threshold of liability of a husband and wife from £100,000 to £140,000, double the threshold of £70,000 which is available for a single person. The aggregation of the property of a husband and wife for the purpose of wealth tax seems to be the practice everywhere. Various countries differ in treatment of the thresholds for married couples as against single persons. The figures below set out the position in European countries. It can be seen that in Sweden and Denmark there is no distinction. The threshold is the same for a married couple and a single person. In Norway and the Netherlands the threshold for married couples is about one-third greater. In Finland it is one-fifth greater. In the remainder, Germany and Luxembourg, the threshold is doubled.

Under the Bill, as drafted, the threshold is increased for married couples by about 43 per cent. The comparison, however, does not end there. The thresholds for married persons here is about three times greater than in the highest European threshold. It is significant that, in the countries where the thresholds are doubled, Germany and Luxembourg, the thresholds for married persons are as low as £24,000 and £2,200 respectively. In the light of these facts and additionally in the context of the other reliefs and exemptions in the Bill, there is no case for increasing the threshold to £140,000. I must accordingly reject the amendment.

However, if the Deputy insists that married persons should have a double threshold, I am quite prepared to consider that. I would then have to reduce the individual threshold to £50,000 each. If left to my own devices, I am against the individual threshold for the reasons stated. I do not think it lends itself to the Irish situation. I do not think it lends itself to the case where the husband usually owns the business, or the farm, and usually wishes to pass it on. The converse could be the case, too. I made the argument the last day in regard to where a man on an income married a lady who was a farmer with a business. If we were to have the two thresholds she might be pressured economically to transfer her property, or a considerable proportion of it, to her husband in order to qualify for a threshold, and that might not have desirable results either. What we have done here is the reasonable thing. We have given a 43 per cent higher threshold for a married couple than for a single person and we have done what no other wealth tax country has done: we have given exemption for the residence and its contents.

Major de Valera

I should like to ask the Minister a couple of questions about this amendment. First of all, the Minister says he is prepared to consider the separation of the two. That raises the whole question of——

Mr. Colley

I think he is prepared to consider a joint one by reducing the individual one.

Mr. T.J. Fitzpatrick

(Cavan): I do not believe in the principle.

Major de Valera

So the Minister said. This arises on the wording of the section but, as it is an integral part of the amendment, when the amendment is read into the phrase, I have to mention it here. Suppose the couple are not living together, that they are a separated husband and wife——

Mr. T.J. Fitzpatrick

(Cavan): They get separate thresholds of £70,000 each plus a residence.

Major de Valera

The section says "whose wife is living with him on that date," that is, the valuation date. What exactly does that mean? Does it mean she can vanish for two days on either side of the date and then he gets £70,000 and she gets £70,000.

Mr. T.J. Fitzpatrick

(Cavan): Does the Deputy remember all the fun we had over the definition section?

Major de Valera

I do. The reason I raise this here now is that the Minister seemed to concede in an earlier amendment that Deputy Colley's interpretation of an analogous phrase in that sense was right. There is one practical aspect of the problem. It would arise only where substantial property was involved. The £40,000 difference Deputy Colley is talking about will not mean a lot of money to the Revenue here. If it did, that would be an argument in its own right. There is not a lot of money involved. There are other considerations involved such as the one I have raised just now. What is the construction to be put on the phrase "is living with him on that date" in relation to either Deputy Colley's amendment or the section as it stands?

Mr. T.J. Fitzpatrick

(Cavan): It is defined.

Major de Valera

I may have overlooked the fact that it is defined. A certain stage can be reached, and this is a social problem with married couples, at a certain stage of their lives, that if they have the wealth necessary to make them consider the threshold seriously, there is a positive inducement here to separation. The Minister may shrug his shoulders at that but it is not unknown that this type of problem arises for other reasons with married people at a later stage in life. The Minister might find more cases in which people opted for the single allowance and double residence than he might have allowed for. Would that be a good social consequence? All these things suggest that possibly it might be well to make the allowance double the single one. If this is done, I fail to follow the necessity for arguing that we must halve the single one.

I am back to the point of the difference of £40,000 in wealth. If it is taxable it is not going to occur in a large number of cases as yet. It is going to be a relatively insignificant sum for the Revenue. On the other hand, I freely allow that as inflation is going these limits may be such that this will not be talked about as a wealth tax; it will be talked about as a poverty tax, if you know the distinction I am making. At the moment it is property that is above certain thresholds and the Minister, and the Government, are selling it as a tax on wealthy people who can pay for the benefit of people who cannot pay, to achieve the equality of wealth, but if inflation continues at the present rate a situation can arise where, in the future, this will be found to be a more general property tax. With a little forethought, therefore, I suggest that the Minister give consideration to Deputy Colley's figure.

With regard to comparisons with other countries, my point is reinforced by the observation that the Minister will find, when he looks at thresholds fixed for other countries, that they were fixed before this rampant general inflation afflicted the Western economy. Desperate efforts are being made to control that inflation. Nevertheless, it is estimated that this year the order of the inflation will be about one-fifth, 20 per cent. If this goes on it will not be long before these sums are of such proportions that they will be little better than the proportions in income tax allowances to the sums involved. These arguments are worthy of consideration.

The inflation that is reflected on the face of the Book of Estimates is to a large degree housekeeping inflation. The cost of running the State. If that type of inflation continues it will not be long before a figure of £100,000 is equivalent to what £10,000 is today. With these arguments there is merit, apart from anything else, in Deputy Colley's suggestion, and I do not think, even if the Minister takes the principle of separateness which he does not like, it follows that he must cut the single allowance.

Ruairí Brugha

The Minister says that there is a principle involved here. There is a principle of a different kind, a principle of equality. Marriage, after all, is a partnership. I would prefer to see a joint figure, transferable, rather than two separate ones. That would be a much better arrangement.

What is happening here is if two people marry, both of them, depending on their circumstances, are being deprived of the difference or half the difference, which Deputy Colley is talking about. Where they separately qualify for a residence each they now qualify for one residence when they marry. I am inclined to agree with the Minister in a sense, depending on the inflationary situation, in regard to thresholds and, particularly, in regard to the residence.

I would not quote European examples because they are not good arguments. For example, in the case of Germany, income tax charges are allowable, so that the rate of 1 per cent can come down as low as 4 per cent against our 1 per cent. That sort of argument does not carry a lot of weight. Everybody is inclined to say that the wife, in effect, ceases to be a full person because when she gets married it is moved up. I suppose it can cut the other way. It could be the husband who is dropping the £40,000 in some circumstances and not the wife. There is a principle of equality here. It is a principle which has been spoken about a lot and is an idea adopted by the European Community. The Commissioners are in a better position to assess it than we on this side of the House but I do not think there could be an awful lot. The Minister is introducing new legislation and most of the members of the European Community—four of them have a wealth tax and three or four have not—if they were introducing it today would be considering the principle of equality. They would be considering allowing the two people about to be married to become the equal of two single people for tax purposes, using the overall sum of £140,000 Deputy Colley suggested beneficially within the marriage.

Mr. T.J. Fitzpatrick

(Cavan): In effect, this debate is a repetition of the discussion which we had on section 4.

Ruairí Brugha

We have been brief, Minister. Have we not?

Mr. T.J. Fitzpatrick

(Cavan): We have been but it is a pity to prolong it, especially since we are operating within a timetable which is the fault of the Opposition; I would not say it is not the fault of the Opposition.

Mr. Colley

The truth is coming out at last.

Mr. T.J. Fitzpatrick

(Cavan): It is the fault of the Opposition and there are as yet many sections to be dealt with. Germany has been mentioned and I have been told that it is not relevant to discuss European countries, but for the record I should like to say that the German threshold was fixed this year at £24,000 for husband and wife.

Mr. Colley

I should like to know on what year's values?

Mr. T.J. Fitzpatrick

(Cavan): This year's.

Mr. Colley

It may have been fixed this year but my understanding is that they were operating on 1955 values and some time ago were proposing to update it to 1965 values.

Mr. T.J. Fitzpatrick

(Cavan): My information is that it is on 1965, plus 40 per cent. Deputy Brugha said something about income tax. Up to 1st January this year, wealth tax was deductible for income tax purposes, but it is not any more. What we have done is reasonable and I am not going to go on repeating this. We have provided a happy medium between the single threshold of £70,000 and double the single threshold, £140,000. I do not think a serious argument can be put forward to say that people will separate and live apart just for the purpose of getting a threshold.

Ruairí Brugha

We do not know what will happen in 100 years' time.

Mr. T.J. Fitzpatrick

(Cavan): I do not accept that. I can tell Deputy de Valera that people will not be treated as living apart because they decide to get two separate houses and live apart. They must be really living apart within the meaning of the Act. They must be separated and no longer living as husband and wife.

Major de Valera

That is a new corps of police for the Revenue Commissioners. They might be like the ones tried by the Department of Justice a few years ago.

Mr. T.J. Fitzpatrick

(Cavan): They are not going to get away with it by living in houses across the road from each other. I regard to inflation, a Finance Act will be introduced each year and the thresholds can be policed if the partners are not policed. If it is necessary to increase the threshold because of inflation that can be done.

Mr. Colley

I am not going back over the ground Deputy de Valera and Deputy Brugha covered because they put forward a number of points I would otherwise have made. On the last occasion we discussed this the Minister put forward certain arguments in favour of a joint threshold and against separate thresholds for a husband and wife. I do not agree with the argument he was putting forward but this amendment at least gave him the opportunity of accepting the principle. When it came to the crunch he may have accepted the principle but not the practice and that is what counts. The Minister found himself unable to agree that although single people and separated married people are entitled as individuals to a threshold of £70,000 plus residence, he could not agree to a threshold of £140,000, plus one residence for a married couple. It is unfortunate he could not agree but hardly surprising in view of the line which he, and his colleagues, have taken in regard to this whole question of the role of women, and the role of married women in particular. There is a good deal of propaganda but when it comes to the crunch, this is what we get.

Mr. T.J. Fitzpatrick

(Cavan): This Government have done more to emancipate women than the Fianna Fáil Party did in the last 30 years.

Mr. Colley

The Government have done nothing in that regard, but the real test is in a situation like this. We had it in the capital gains tax also. Again, we have this unfortunate antediluvian approach which treats the married woman as an appendage and when it comes to the crunch the Government are not prepared to concede to her even the same rights as the separated married woman. It is unfortunate, but that is what we are saddled with at the moment.

Major de Valera

On the question of policing, remember what happened in England with certain social services with a similar type of problem. I made the point facetiously but it has happened in Britain where that type of distinction test has been brought in.

Mr. T.J. Fitzpatrick

(Cavan): The Deputy is not serious.

Major de Valera

I am perfectly serious. In the case of social services in Britain where there are similar types of tests, where questions of cohabitation or questions of genuine widowhood arose—of living together or apart—some difficult questions arose for the social services. It involved a certain type of policing that was found to be extremely objectionable. It is only in that sense I make the point.

Mr. T.J. Fitzpatrick

(Cavan): If we want to be serious about this, there is infinitely more incentive and has been over the years to put forward this sort of case. To allege living apart or to separate for the purpose of the Income Tax Acts and the income tax code has not been apparent. There is not a significant number of cases and it is absolutely certain that it is not being used or abused for that purpose.

Question: "That the figures proposed to be deleted stand part of the Bill" put and declared carried.

Mr. Colley

I move amendment No. 23f:

In page 16, after line 32 to insert a new subsection as follows:

"(2) Each of the sums mentioned in subparagraphs (a), (b) and (c) and in the proviso to subparagraph (c) of subsection (1) shall be appropriately increased on the 5th day of April, 1976 and on every subsequent valuation date in accordance with the calculations of the Central Statistics Office relating to the reduction, if any, in the value of one Irish Pound, during the period of one year commencing on the next preceding valuation date and such increased sums, if any, shall be deemed to be inserted in place of the corresponding sums in subsection (1) on the appropriate valuation date."

This amendment is designed to build in in the threshold set out in the section provision for adjustment in line with inflation. I want to suggest that with inflation running as it is at the moment here at 25 per cent per annum it is simply sharp practice not to build into this section such a provision. I know the members of the Government frequently made a point in regard to the wealth tax to the effect that it will affect a very small number of people. What they mean is a very small number of people will have to pay it. In fact, it is going to affect every single person in the country, but even in so far as one can say that a small number of people will be obliged to pay it, that certainly will not remain true for very long if inflation continues at anything like the rate it is going and if this amendment is not accepted or something very similar to it.

I think it is quite clear that inflation, if it is to continue at anything like its present rate, will bring in many thousands of people to liability for wealth tax, people who think that it can never apply to them in the way of their having to pay it. I indicated in connection with another matter on an earlier section—but it illustrates the kind of thing that is happening—that if we assume an average rate of inflation of 15 per cent over the next ten years, in ten years' time a particular grade of civil servant will have an annual salary of £44,500 per annum with no improvement whatever in his standard of living over today. That gives a fair indication of what is going to happen with inflation running at this level. By the way, as I say, I take an average of 15 per cent per annum as against a 25 per cent per annum at the moment. I feel it is simply not good enough if the Minister is going to say to us, as the Minister for Finance did before, that the Government will review this from time to time. Three-yearly intervals, I think, was mentioned by somebody as the interval for review. Maybe the Minister for Lands would say it would be at shorter intervals but it simply is not good enough with inflation running as it is not to build in provision for it. The refusal of the Government to do it in this Bill and in the Capital Gains Tax Bill, I suggest, is very ominous.

It is one thing if the Government were to argue that it was not necessary, but clearly they cannot argue that but to fob off the provision for inflation by saying, "Well, we will do it in due course when it is necessary: we will review it from time to time", immediately raises the question, if the Government are prepared to do that, why not build it in now.

One is also reminded of the fact that promises were given to review in the same way in the light of inflation income tax allowances, with the clear indication that they be adjusted at least in line with inflation where in fact that did happen. The adjustment was considerably less than inflation. For all these reasons, it seems to me the Minister should accept this amendment or another version of it, if the Minister wishes—in fact, at this remove from the time I put down the amendment I could improve the wording of it myself. It is not so much the wording of this amendment that I am concerned with as acceptance of the principle that we should build into this section automatic adjustment of the thresholds in line with inflation. If the Government fail to do that, as I say, it is ominous when one combines it with the refusal to do it in regard to the capital gains tax, and I can only suggest that there is a clear intention on the part of the Government to bring more and more people into the wealth tax net as distinct from the impression which the Government are at present trying to give that the wealth tax will apply only to a few people who are very wealthy. The test of the Government's intentions in this regard arises on this amendment and on the reaction of the Minister to this amendment, not in relation to the wording of it but in relation to the principle of it. If the Minister is not terribly happy with the wording of this that does not put me off in any way. But if the Minister were to say that he accepted the principle and would introduce his own amendment to effect it, then he would be establishing the bona fides of the Government in this regard. But unless he is prepared to say that, it is reasonable, to say the least, to suspect that the intention of the Government is to bring in to the wealth tax net as many people as possible in the coming years.

Mr. T.J. Fitzpatrick

(Cavan): The amendment proposes a statutory adjustment mechanism whereby the thresholds would on 5th April in the year 1976 and in each subsequent year be increased to take account of the estimated reduction in the value of the Irish £ in the year commencing on the next preceding valuation date, namely, that on 5th April, 1976, if the rate of inflation in the period 5th April, 1975, to 5th April, 1976, were 25 per cent the threshold for a married man would be increased from £100,000 to £125,000.

That I accept the principle involved in Deputy Colley's amendment is an indisputable fact. Since the White Paper was published the Minister for Finance has repeated in this House and elsewhere the Government's commitment to reviewing the thresholds for the new capital taxes to take account of inflation. In so far as the wealth tax is concerned there is a firm commitment on the record of this House to review the thresholds in 1978. The maintenance of the thresholds now proposed in the Bill for three years should be looked at in conjunction with the section 12 provision to accept values agreed in 1975 for the next two valuation dates also. There is therefore a frozen situation for a three-year period.

Naturally when the thresholds come to be reviewed before the 1978 valuation date, the change in the value of money between now and then will be one of the factors to be taken into account in making adjustments. It should be remembered that the weight of the wealth tax can be varied by changing other elements of the tax, for example, the rates, exemptions, reliefs, and ceiling provisions, apart altogether from the thresholds.

In a new tax such as wealth tax it is acknowledged that in the first year extra work will arise for the taxpayer and his advisers and for Revenue in arriving at valuations and agreeing assessments. Once having agreed this year's valuation and assessment in the light of the provisions of the Bill, I am sure that the work involved in compliance and administration in the immediately succeeding years will be that much lighter. It was with a view to a further easing of the burden that the Bill provided, in section 12, for the freezing of valuations for the next two valuation dates. Naturally if the valuation is frozen, except in the particular circumstances indicated in the section, it is logical that the thresholds should also be frozen for the same period. This is why the Government's commitment to review the thresholds refers to a three-year period rather than to a one- or twoyear period. The greater degree of certainty and the reduction in compliance costs which this three-yearly revision of valuations and thresholds will give to wealth tax payers will I am sure be generally welcomed by them.

In short therefore I am at one with Deputy Colley in recognising the need for review of thresholds to take account of inflation. I differ from him in so far as I do not accept as the sole indicator or criterion for such review the CPI index mentioned by him.

Other factors and other indicators would be relevant. I do not accept that the inclusion of a review provision in the Bill is any more guarantee of meeting his wishes in this regard than the firm Government commitment already given to such review. I have provided in the Bill for a freezing of valuations once agreed for a three-year period, the commitment to review the thresholds also refers to a three-year period. For those reasons I do not think the amendment is necessary and I do not propose to accept it.

Mr. O'Malley

It would appear from what the Minister says that he accepts the principle advocated by Deputy Colley. The only real point of disagreement between Deputy Colley and the Minister is the question of whether or not the consumer price index should be the criterion for the judgement for inflation in future. To my mind that is a rather minor point. If the Minister feels that some other criteria are relevant to the judgment of inflation or purposes of this particular tax, he should say so. We might be able to agree with whatever formula of additional criteria besides the CPI the Minister might wish to suggest. I ask him, if he feels something further is necessary, to tell us what it is. There is every possibility that we would agree to that.

Mr. T.J. Fitzpatrick

(Cavan): The Minister for Finance on a number of occasions has given a firm commitment to review the thresholds at the end of three years in the light of the working of the Bill and in the light of the change in money values and in the light of inflation. This is an annual tax which will be taken as a criterion for the operation of other taxes. It would not be possible to write an inflation clause into this measure without writing an inflation clause into the income tax code. I think the Deputy will accept that. It would not be understood. This is an annual tax; so is income tax. If an inflationary clause was written into this an equal case could be made for writing it into the income tax code. It is not written into the income tax code. It never has been. Tax here is virtually frozen for three years. Therefore there is no inflationary safety valve necessary for that period. The Minister for Finance has on several occasions committed himself to review the threshold and/or the rates of allowances, thresholds and so on, to have regard to the situation three years from now. That is as good a guarantee as can be given. It is not reasonable to ask for more.

Mr. O'Malley

The Minister in what he has had to say secondly in relation to this amendment differs markedly from what he had to say firstly. Firstly, when he read out the brief he was all sweet reasoning, telling us how right Deputy Colley was. He then came to the gist of his objections the second time. I cannot accept that because there is not an inflationary clause in the Income Tax Act, therefore we cannot have it in this. There is not such a clause in the Income Tax Acts, but it has been strongly advocated that there should be such a scheme.

This whole question of inflation and taxation whether it is income or capital taxation has really only become important in the last two or twoand-a-half years. Up to 1973 we never had inflation in the country at a figure in excess of 10 per cent per annum. We now have a figure of 25.2 per cent up to mid-May this year. When inflation was in single figures it was not vitally important. It affected a lot of people but only to the extent of a fraction of its present effect. The fact that we have not yet had an inflationary clause written into the Income Tax Acts does not prevent us having one in a Finance Bill which will come up here within the next week or two. If the Government so choose, they have a perfect vehicle for it. A section could be inserted in the Finance Bill without any great difficulty.

I recall the Minister for Finance promising last year in general terms that the allowances in relation to income tax would rise in future at the same rate as inflation rose from year to year. This year unfortunately the increase in allowances lagged far behind the rate of inflation over the past year. There is no validity in the Minister's argument. It is open to the Government to change the income tax law within the next week. They will certainly get no opposition from this side of the House if they chose to put an anti-inflationary clause in the income tax code. We feel that in justice it should be here and in the income tax code.

The Minister made reference to the fact that under section 12 valuations were frozen for the first three years. It appears that this only applies to real property shares not dealt with in the stock exchange. That is a very limited category of property. Real property——

Mr. Esmonde

Immovable property. It includes leaseholds.

Mr. O'Malley

Allowing that it includes chattels it still is a pretty narrow category.

Mr. T.J. Fitzpatrick

(Cavan): Exemptions and livestock.

Mr. O'Malley

The obvious exception to this is quoted shares. Most people of some wealth would have a great proportion of their wealth in quoted shares. It makes no allowance for people who can acquire certain property during that period. Presumably a 75 per cent valuation cannot apply to something that is acquired after valuation date in 1975. Cash is an obvious example also, together with a whole series of other movable chattels and various other forms of property. The Minister tells us that no problem will be caused to anyone because there is a firm commitment to review in three years' time. It depends of course on what meaning you wish to put on words, but as I understood it there was a firm commitment on the part of the Government last year to review income tax allowances this year in the light of inflation and that they failed to do. They increased them somewhat but at a rate that was way below the rate of inflation. Is the firm commitment that the Minister for Lands talks about now in relation to this the same sort of firm commitment? Is it going to be honoured or not honoured in the same way as the firm commitment in relation to income tax was not honoured?

The Minister speaks of a three-year period as if it were just a very short time, that inflation could not have any great effect in that period. I would like to point out to the Minister that if inflation continues to run at the rates it ran last year and this year after a three-year period the nominal increase in the value of property would be something over 80 per cent. That is 25 per cent per annum for three years compounded. It would be perhaps 81 or 82 per cent. To say that that is not significant, as the Minister I think seeks to imply, is just ludicrous. It will mean that on paper any piece of property which is not a wasting asset will nominally be worth 81 or 82 per cent more in 1978 than it is in 1975. Everybody knows that that piece of property will not be worth any more in real terms, which are the only terms that matter. To say, therefore, that there is a firm commitment to look into this thing again after three years is a joke.

If equities were to increase in value at the annual rate of inflation, which unhappily they do not do nowadays but in theory they should, nominally they would be worth 82 per cent more in 1978 than they are in 1975. Nobody could suggest that they are worth any more in real terms because they are not, they will not be and they could not be. The increase in real terms in that period, assuming the current rate of inflation, would only take place when the increase in their value over the three-year period exceeds 82 per cent. Therefore, to have a situation in which a capital tax is charged on an annual basis without any reference to or allowance for inflation, at a time when inflation is running at more than one-quarter, is patently unfair.

The fact that you are dealing at the moment with a small number of people who may not evince much sympathy from the great mass of the public does not get away from the fact that this is an inequitable proposition on the part of the Government. Equally, it does not get away from the fact, as Deputy Colley has pointed out clearly, that many thousands of people who today think that wealth tax has nothing to do with them in the sense that they are not now liable, and never will be liable in their opinion, will be liable by 1978. God only knows what the rate of tax will be at that stage. It may not be the comparatively low rate which is in the Bill at present.

Deputy Colley has put across the need for this amendment very clearly and very cogently. It is self-evident. The Minister seeks not to disagree with the principle but on spurious grounds he refuses to accept the amendment. I do not think he can have it both ways. If the amendment is right in principle as the Minister feels it is, then I think it should be accepted, and the fact that there is a constant valuation for some limited number of things for three years is not relevant. The majority of assets are not subject to that constant valuation for three years and, as I pointed out to the Minister, if inflation continues at its present rate— and the indications are that it probably will—then even though someone's assets increase on paper by 82 per cent between now and 1978 they will be worth no more to him than they are today. If the change as suggested in this amendment is not made there will be the situation that people will be paying far more than they could envisage and, equally importantly, thousands of people who are not now within the net and could not see themselves within the net will be in the net well before 1978.

Mr. Esmonde

This matter has given rise to quite a deal of discussion by people outside the House. To allay the fears of the public the Minister has quite categorically given an undertaking to review the threshold and other elements that are involved in this wealth tax in three years' time. I want to refer to the fact you are not just dealing with thresholds under this Bill. You are dealing with the various items that go into the taxable entity and that includes matters like exemption and partial exemption and systems of valuation. All of us have to admit that in the last five or ten years the world has really turned upside down in financial terms, not alone in inflation but in respect of the different values being put on different properties. What I am getting at is that you can have different properties, some of which will appreciate in value and others which will not appreciate in value. One cannot look at matters at this time and say what is the proper way to measure wealth or measure the threshold in three years' time. It would be very dangerous for us to pin ourselves to any particular criteria on which a review should be based in three years' time. I mention the fact of different properties and different exemptions.

Deputy O'Malley has dealt at some length with the matter of inflation. You should bear in mind that when you are dealing with matters of inflation you might only be dealing with consumer goods which go to the consumer price index. You may not necessarily have the necessary capital element to give a proper reflection in the consumer price index. We should also bear in mind that the expected and accepted and demanded income from assets does not always go up or down with the value of the assets. All one has to look at is the price of Government securities quoted on the stock exchange to see how the capital value of Government securities goes up and down like yo-yos because they are trying to adjust the income on those Government securities with the income that is obtained from other securities in a different section of the financial market.

One would be taking an unwarranted and a very ill-advised step to pin oneself to any particular basis on which the review should take place. I think the Minister has made it quite clear in his undertaking to this House and to the country on behalf of the Government that a person who is exempted and has a certain threshold in relation to his property today will get the comparable threshold and exemptions in three years' time. That is quite clear from the Minister's undertaking and that is the way it is interpreted by the public. Deputy O'Malley is a lawyer and I am a lawyer. I have never seen any clause in any lease that provides for a review in the wording or on the basis as presented in this proposed amendment.

Mr. O'Malley

Because the court would fix the rent on the review. That is why you would not get something like this.

Mr. Esmonde

No. I am dealing with the case where I draft a lease and I present it to you to accept for your client as the lessee, and I have a fiveyear, seven-year or three-year revision clause. I do not tie myself down. You do not tie yourself down as to how the rent is going to be assessed. It is left very general and left to arbitration in default of agreement.

Mr. Colley

There is no clause here.

Mr. O'Malley

It has to be because the parties have their rights under the Landlord and Tenant Acts. If they do not agree they can go to court.

Mr. Esmonde

No. I disagree with the Deputy's legal interpretation of the situation and the rights under these leases. The lease continues. You can only have a review of rent in a court of law if the lease terminates. You take a 21-year lease with revision clause every three, five or seven years. The lease still continues. It is just the rent that you are dealing with.

Major de Valera

That is the position up to the moment.

Mr. Esmonde

That is accepted commercial practice. I have never seen a revision clause on this basis.

Mr. Colley

I have.

Major de Valera

In present-day transactions that question is arising.

Mr. Esmonde

I should not like to have to try and interpret this one.

Mr. O'Malley

Draft a better one and we will be glad to accept it.

Mr. Esmonde

I have drafted many commercial leases but I have left them open for review, agreement and consideration in five years' time, and in default by arbitration.

Mr. Colley

Is there anything remotely resembling that clause in this section?

Mr. Esmonde

The Minister has given an undertaking. You do not put a section like that in a statute, as the Deputy knows.

Mr. Colley

You do, when inflation is 25 per cent per annum.

Mr. Esmonde

You do not put in a clause of that kind.

Mr. O'Malley

I recall some members of the present Government giving an undertaking in February, 1973, that prices would never rise again.

Mr. Esmonde

I think the Deputy has an artistic type of mind, full of imagination.

Mr. O'Malley

I do not think some of the unfortunate people who were codded in February, 1973, would think it is just artistic to remind people of it now.

Mr. Esmonde

They were not codded in February, 1973, in relation to death duties.

Major de Valera

There was a provision very recently in which a relief was given under the form of a suspension for only a year.

Mr. Esmonde

It was a question of a negative relief. It did not set up any such framework.

Major de Valera

It was relief for company taxation in regard to stocks.

Mr. Esmonde

First of all there is the value of money and the value of land. There is the value of shares and inflation must be considered. These four elements must be considered. They need not all necessarily move upwards in what I might call numerical terms; one could go down, another could be up. If you pin yourself to something like this, I think the taxpayer could lose out badly on this. If I saw something like that being put in by way of relief for a client of mine in a legal document I would not have it and if the client wanted it I would take no responsibility. I think that would be a most dangerous clause to have.

Mr. Colley

In the absence of a better one——

Mr. Esmonde

The Deputy conceded that this is a very difficult area to define. The criteria of values may be completely different in 1978 and one may have to look at properties from a completely different angle. I think that in all seriousness a taxpayer would be very ill-advised to have himself pinned down to something like this. For instance, the cost of living might not go up 25 per cent but the value of land might go up 30 per cent per annum although it is exactly the same property. If the taxpayer pins himself to the consumer price index he is a dead loser on that in 1978. He would be pinning himself to something of this nature if in an Act he tries to legislate for 1978 when we do not know what the circumstances will be then.

It would be the height of negligence to agree to a clause of this sort. I am not criticising Deputy Colley personally on this. I can see a frightful difficulty in trying to draft a clause that will be fair for the taxpayer. I believe that Deputy Colley's intent is to assist the taxpayer in his situation, but I do no think he is doing that. He might be putting a noose around the taxpayer's neck. Once it is written into a statute it is going to be very hard to get it out, and that is why I disagree with this proposed amendment. I appreciate the spirit and I go along with it. We said that from this side of the House. There is no doubt about that. We are in common agreement on that, but the question is how to do it and I do not agree with this method.

Mr. Colley

I think we have made some progress in regard to this matter when we now find that both the Minister and Deputy Esmonde agree in principle with us. This first arose in connection with the capital gains tax and there was no agreement in principle from the other side. We have made that much progress.

I think it is important in the context of this proposal to build in a protection against inflation in relation to the thresholds and to bear in mind again that this Bill is taxing productive assets. With regard to people in the distributive trade and their stock in trade, what will happen to the value of that stock and trade over a period of three years in money terms, with no real increase in stock, assuming inflation to continue at something like its present rate? One can see immediately the enormous damage that can be inflicted unless something is done about it.

I must give Deputy Esmonde credit for having put forward very well an ingenious argument as to why we should not do this, but he left out one vital element in the whole thing, that is, he presented the matter as though we had a choice between putting in an amendment of this kind or putting in a better provision that would reflect more accurately what precisely was going to happen or that would have that effect in due course. That is not the choice we are faced with. The choice is either to leave the section with no provision whatever for adjusting for inflation, or to take this amendment which without hesitation I admit does not cover all situations. Deputy Esmonde thought that to accept this could put a noose around the neck of some taxpayers, say, somebody who had real property which might increase, say, by 30 per cent per annum if the inflation rate were only 25 per cent.

Mr. Esmonde

Or if he had stocks and shares.

Mr. Colley

I want to put it to Deputy Esmonde through you, Sir, that if you ask any ten possible payers of wealth tax which would they choose, this section as it stands or this section with this amendment in and with the inherent difficulties that Deputy Esmonde sees, I will guarantee that ten of them will choose the section with this amendment in. Of course, they will.

Mr. Esmonde

I guarantee that if Deputy Esmonde was advising them they certainly would not accept this amendment.

Mr. Colley

May I suggest that Deputy Esmonde is omitting the very vital part of it, that this section contains no provision whatever for adjustment? Furthermore if a taxpayer were to find himself in the position envisaged by Deputy Esmonde he would not get an adjustment fully in line with the adjustment that had occurred in the value of his property, he would at least under this get such adjustment as related to the consumer price index. If Deputy Esmonde were all that concerned about it, no doubt he would do his best to ensure that the Bill would be amended to cover the situation of this man who had a particular property adjusted at a different rate from that provided in this. This would not be impossible, but the important thing is that we build in now a provision for adjustment.

The alternative we are offered is an assurance by the Minister on behalf of the Government that this review will take place in three years' time. I do not wish to cast any undue aspersions on an undertaking from the Government but I do want to say that even if that means—it does not mean it but even if it were to mean it—that in three years' time these thresholds would be adjusted in line with inflation, in the meantime what is going to happen to people whose property is being affected in this way. As Deputy O'Malley pointed out, the provision in the other earlier section does not cover quite a number of items which would be affected by wealth tax. That is number one. Number two, we had a similar amendment to this down to last year's Finance Bill and it was resisted with exactly the same argument and an assurance was given and an undertaking was given.

Mr. T.J. Fitzpatrick

(Cavan): I think it was the 1973 Finance Bill. You cut it down immediately you got out of office and before there was any inflation at all.

Mr. Colley

I think the Minister is mistaken, but if he thinks there was no inflation in 1973—I know as compared with now it might seem so—in fact inflation was a problem in 1973. An amendment of this kind was resisted by the Government and in substitution we were offered an undertaking to review the following year the income tax allowances. They were reviewed. What happened? Inflation was 25 per cent and the adjustment was 15 per cent. None of the criteria that Deputy Esmonde was talking about came into this one. This was a straightforward adjustment in line with inflation as measured by the consumer price index. That is what happened.

In the light of that history does Deputy Esmonde seriously suggest that a taxpayer would choose this section as it stands and the undertaking that we heard as against an amendment inserted into the section on the lines we are discussing? Nobody in his senses would make that choice. Some adjustment, however imperfect, is better than none at all. If we are going to talk about the method by which you are going to measure the different inflation that occurs in regard to different assets we could argue about this until the year 2000 and nothing will be done about it. What is important is what is done now in this section today. That is what is really important. That is what people will use as the test to judge the Government's intentions in this regard.

Having regard to the facts I have outlined and particularly what happened in relation to the similar amendment moved to the Finance Act and the manner in which that was resisted and the reasons given and what happened to that, there is no reason why anybody should accept with any degree of confidence that they can expect to get the same benefit from the undertaking given on behalf of the Government as they would get by the insertion of this amendment.

For that reason I want to urge the Minister to demonstrate the Government's bona fides in this matter by accepting this or a similar amendment —if he wants to draft it and put it in at the Report Stage I will be very happy with that situation—by accepting the amendment rather than refusing it and asking us to rely on the kind of undertaking that was given in relation to the Finance Act with the result that flowed from that. Failure to do this can only be interpreted in the way I indicated earlier as an unwillingness on the part of the Government to make the adjustments that are necessary. If such an amendment were incorporated and if it were necessary subsequently to make other adjustments for the relief of the taxpayer on the lines outlined by Deputy Esmonde, there is nothing to prevent that being done. What is important is what is done now.

Mr. Esmonde

Can I ask one question? The Deputy's suggested amendment is based on consumer price index.

Mr. Colley

That is right.

Mr. Esmonde

Land is not included in that. So the unfortunate farmer might get a right belting.

Mr. Colley

Has the Deputy grasped the fact that in the absence of this amendment he will get nothing?

Mr. Esmonde

He has an undertaking from the Government.

Mr. Colley

I have told the Deputy —was he listening—what happened in precisely the same circumstances, with almost the same wording in the amendment, and it was rejected from the Government side on the ground that the income tax allowances were going to be reviewed. There was a firm undertaking to do that. I pointed out to the Deputy what resulted from that.

Mr. Esmonde

The Deputy's approach on this is completely wrong. He is on the wrong line.

Mr. Colley

What I am saying is that we could argue until the year 2000 as to what is the right way to do this, but it is better to have one even rough and ready approach than to have none at all. That is the choice we are faced with.

Mr. Esmonde

I do not want to be pinned down in the wrong corner, but the Deputy might be pinned down.

Mr. Colley

You can be pinned down in a corner where there is nothing or you can be pinned down in a corner where there is some adjustment. That is the choice you are facing.

Mr. Esmonde

I like manoeuvrability.

Mr. T.J. Fitzpatrick

(Cavan): This Government are pledged and committed to a fair system of taxation. That is the reason that we introduced the capital gains tax, to have some fair relationship between the PAYE system of income tax and complete freedom from tax on huge capital gains. This Government are committed to a fair system of taxation. That is why we abolished death duties. In looking around for a tax to replace death duties one of the factors we decided upon was wealth tax. We published a White Paper and before we introduced this Wealth Tax Bill we gave very detailed consideration to the proposals. The best assurance and the best guarantee that the taxpayers have in regard to this Government's future operations in regard to tax is their thinking on wealth tax as outlined in the Bill. I put it without fear of contradiction, that in this Bill we have a reasonable wealth tax.

Mr. Colley

I contradict that.

Mr. T.J. Fitzpatrick

(Cavan): A fair and a reasonable wealth tax. The more Deputy Colley argues about it and the more he keeps us in this House, the more clearly it is being brought home to the people that it is a fair system of wealth tax. The longer Deputy Colley keeps us here and the more he talks the more he is convincing the people that it is fair and the less fear they have of it. It is a fair system of taxation with, first of all, very high thresholds, by far the highest in Europe. It is no answer to say that the European ones are of many years' standing. Some of them have been reviewed as recently as this year. The threshold is exceptionally high. The personal allowances are very generous. There are exemptions of the private residence and its contents, the generous treatment of agricultural land, livestock, machinery, the generous treatment in spite of what the Opposition say, of productive assets——

Mr. Colley

If we could swop their economies we might swop their wealth taxes also.

Mr. T.J. Fitzpatrick

(Cavan):——the generous treatment, notwithstanding what Deputy Colley says, of productive assets, discount of 20 per cent right across the board, 50 per cent or £100,000 in respect of agricultural land, hotels, bedrooms, boats and an exemption of 30 per cent in respect of shares in hotel companies.

Mr. Colley

I do not like to interrupt the Minister, but what has this got to do with inflation and the provision of the thresholds?

Mr. T.J. Fitzpatrick

(Cavan): The Deputy does not like to hear it but it is evident——

Mr. Colley

I like to hear it but it is an irrelevant factor. I cannot deal with it without being totally irrelevant.

Mr. T.J. Fitzpatrick

(Cavan): I will relate it all in the next sentence. That is very pertinent when we come to think about the Government's commitment to review this tax, at latest in three years, and we are not prevented from reviewing it next year or the year after because it is an annual tax but we are committed to review it in three years. We are not prevented from reviewing it in 1976 or 1977. That is the relevance of the arguments and the case that I am making. The Government's thinking on wealth tax now will be the Government's thinking on it next year and the year after that and in 1978, when we are committed to review it.

Mr. Colley

You will not be there.

Mr. T.J. Fitzpatrick

(Cavan): I will take the Deputy up on that. Assuming that the people go daft——

Ruairí Brugha

They did that three years ago.

Mr. T.J. Fitzpatrick

(Cavan):——and return Deputy Colley to Finance, he has no problem: he has nothing to worry about.

Mr. Colley

I have a great deal to worry about at the consequences of this Bill and what it is doing to our economy.

Mr. T.J. Fitzpatrick

(Cavan): I am confident that the country will not go daft and that we will honour the commitment we are giving here.

Of course, Deputy Colley is quite right to avail of this matter to make his political arguments but he is talking about his threshold regulator, his cost of living regulator, his inflation regulator, as if that was a safety valve, as if it was a fire escape. Everybody knows that an inflation regulator on its own is useless because a Government could write an inflation regulator into it and then tinker with the rates, then tinker with the exemptions and you are back to where you started from. The inflation regulator on its own is simply no good. It does not give the protection that the Opposition seek to convey to the people that it does give. Deputy Colley knows perfectly well that you cannot go regulating one thing piecemeal, that you cannot introduce a regulator into one tax without introducing it into another. You cannot introduce a regulator into tax without also introducing it into items of income over which the Government have a say, like interest on Post Office deposits and so on.

This is a good Opposition amendment. It is an amendment that one would expect from any Opposition but it is not a realistic amendment. It is not an amendment that gives the security that it sets out to give and it is not an amendment that can be realistically accepted because, as I have said, you could not think of writing a regulator into your capital tax code without writing it into your income tax code. That cannot be seriously said.

The Government, as I said, are committed, through the Minister for Finance on numerous occasions, and I am now repeating that assurance, that the principle of Deputy Colley's amendment is accepted, that there is necessity for revision of thresholds to keep in line with changing values of money, and so on. That will be done, and the best evidence of it is that we have already frozen values for three years. I do not accept Deputy O'Malley's brushing aside of the freezing of valuations as being insignificant or as being of no help to the taxpayer because we have frozen real property and, as the House knows, real property, as defined in the Bill, covers all movable property; it covers leaseholds, it covers real property and chattels real. We have also frozen, if the taxpayer wants to avail of it, shares in companies which are not quoted on the stock exchange. As I said earlier, when you add to that the list of shares that are not quoted on the stock exchange it covers all the various shares in companies that the Opposition have been so concerned about throughout this Bill. The private family company is also covered

When you add to that list the very long list of complete exemptions such as the family residence, the contents, livestock, bloodstock and all the rest of them, there is very little left, unless the shares that are quoted on the stock exchange. If they continue on their present trend, which I hope they will not, the taxpayer will have no worry in regard to them. I repeat that this is a purely Opposition amendment, put down in the hope that the arguments put forward in its favour and the headlines which it may get, will be accepted without thought, without any analysis, by the people and that the Opposition will be regarded as good boys and the Government will be regarded as bad boys. But that is not the position. I do not want to take up any more time beyond saying that I am convinced that every day that goes past people are becoming more aware of what is involved in this and the Opposition are simply wasting their time if they think that there is political mileage in it. Whatever political mileage they got out of it in the very early stages of the discussions on it is long since gone. The people know it and they want to get it out of here and get it on the Statute Book.

Mr. Colley

I thank the Minister for his political advice and lecture and I do not wish to prolong the discussion on this, but I want to say two things: one, it is notable that in the somewhat lengthy and, without being too disparaging, I may say, somewhat blustering reply we have had from the Minister, never once did he comment on what is our real experience of an undertaking given by the Government in response to precisely the same kind of amendment on the Finance Act. That speaks for itself.

The other thing I want to mention is the fact that, whatever the reason, and the Minister has put many reasons on the record of this House, the Minister is refusing to build into this section a provision which would adjust thresholds in line with inflation as measured by the Consumer Price Index.

Amendment put.

The Committee divid ed: Tá, 66; Níl, 69.

Tá

• Allen, Lorcan.
• Andrews, David.
• Barrett, Sylvester.
• Blaney, Neil T.
• Brady, Philip A.
• Brennan, Joseph.
• Breslin, Cormac.
• Briscoe, Ben.
• Brosnan, Seán.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• Fahey, Jackie.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzpatrick, Tom.(Dublin Central).
• Flanagan, Seán.
• French, Seán.
• Gallagher, Denis.
• Geoghegan-Quinn, Máire.
• Gibbons, Hugh.
• Gibbons, James.
• Gogan, Richard P.
• Haughey, Charles.
• Herbert, Michael.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael P.
• Lalor, Patrick J.
• Leonard, James.
• Loughnane, William.
• Lynch, Celia.
• Lynch, Jack.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Murphy, Ciarán.
• Nolan, Thomas.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Power, Patrick.
• Smith, Patrick.
• Timmons, Eugene.
• Tunney, Jim.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Níl

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Clinton, Mark A.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Corish, Brendan.
• Costello, Declan.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• Dockrell, Maurice.
• Donegan, Patrick S.
• Donnellan, John.
• Dunne, Thomas.
• Enright, Thomas.
• Esmonde, John G.
• Finn, Martin.
• Fitzpatrick, Tom. (Cavan).
• Flanagan, Oliver J.
• Gillhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Patrick.
• Hogan-O'Higgins, Brigid.
• Jones, Denis F.
• Kavanagh, Liam.
• Kelly, John.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerard.
• McDonald, Charles B.
• McLaughlin, Joseph.
• McMahon, Larry.
• Malone, Patrick.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Connell, John.
• O'Donnell, Tom.
• O'Leary, Michael.
• O'Sullivan, John L.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Spring, Dan.
• Staunton, Myles.
• Taylor, Frank.
• Thornley, David.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Tellers: Tá, Deputies Lalor and Browne; Níl, Deputies Kelly and B. Desmond.

Amendment declared lost.

Business suspended at 7.35 p.m. and resumed at 8.35 p.m.

SECTION 13.

Question proposed: "That section 13 stand part of the Bill."

Mr. Colley

There is one point I wish to raise. If a married woman is living with her husband and she has money and he has virtually none, under which of the provisions in the section does she get the threshold? I raise this point because paragraph (a) refers to an individual whose wife is living with him and paragraph (c) appears to exclude a married woman living with her husband. I wonder under what provision does she get the threshold?

Minister for Lands (Mr. T.J. Fitzpatrick,

Cavan): The husband is the accountable person. The wife's wealth and his wealth are aggregated and he is taxed on it. He is given the threshold.

Mr. Colley

Is the individual referred to here—the property comprising the taxable wealth of an individual—an assessable person or an accountable person?

Mr. T.J. Fitzpatrick

(Cavan): The individual is the assessable person.

Mr. Colley

Is he assessable in respect of his wife's wealth?

Mr. T.J. Fitzpatrick

(Cavan): He is. Section 4 (1) (a) deals with that: “the wife of the individual, if she is living with him on the valuation date...”

Mr. Colley

That makes him both assessable and accountable in respect of his wife's wealth.

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

It illustrates further the point I was making in regard to the antediluvian approach in the Bill to the wealth of married women.

Question put and agreed to.

SECTION 14.

An Ceann Comhairle

Amendment No. 23g.

Mr. Colley

It seems that amendment No. 24 in the name of the Minister may cover the point I am trying to cover in this amendment. If the House were agreeable I would like to dispose of No. 24 first. If it covers, as I think it does, what I am trying to cover I propose to withdraw No. 23g.

Mr. T.J. Fitzpatrick

(Cavan): I am agreeable.

An Ceann Comhairle

I am advised that we must deal with No. 23g first.

Mr. Colley

It is a question of saving time. I do not want to go through this amendment and then find it is covered under amendment No. 24.

Mr. T.J. Fitzpatrick

(Cavan): I will be saying that I think my amendment No. 24 does, in effect, do what the Deputy would like to do in No. 23g.

Mr. Colley

I would like to be certain that is so. Surely if the House is agreeable we can change the order.

An Ceann Comhairle

I am advised that we must go through the Bill line by line. It is not usual to go back as such.

Mr. T.J. Fitzpatrick

(Cavan): If the Deputy moves it, I will read my brief on his amendment.

Mr. Colley

I move amendment No. 23g:

In page 16, subsection (1), line 37, to add to paragraph (a) "but if the property constituting the wealth of the individual is property to which section 3 (3) applies, the trustee or remainder man as the case may be".

Mr. T.J. Fitzpatrick

(Cavan): The amendment is concerned with extending paragraph (a) of section 14 (1). This paragraph states that where an assessable person is an individual the individual or, if he is dead, his personal representative is primarily liable for the tax whether or not he is absolutely entitled to the property or is entitled merely to a limited life interest in the property. The reason for this is that the individual is the wealth taxpayer. He is the focal point. The position is obvious where he is the absolute owner. Where his interest is a limited interest, he is deemed by section 3 (3) to be beneficially entitled in possession to the underlying property. Here he is again the focal point from which the following results follow.

The underlying property gets the benefit of all the exemptions and reliefs which apply either to him or to the property itself. His domicile and ordinary residence determine the extent of the claim for wealth tax on the trust funds, not the domicile of the trustees or the proper law of the settlement or any other chose-inaction. It follows logically from this that the individual should in all cases be primarily liable for tax. However, as regards the limited interest, the distinction between primary and secondary interest will be much less important, if the next amendment, amendment No. 24, which I propose is adopted.

Briefly, this will have the effect of enabling any accountable person who is liable for tax on a limited interest to recover the tax from the trust property. The individual, notwithstanding that he is primarily liable for the tax on a limited interest will, therefore, be entitled to reimbursement from the trust funds. This, in effect, means that the ultimate remainder man is footing the bill. In the circumstances, therefore, Deputy Colley's amendment which seeks to limit the liability in respect of tax on a limited interest to the trustee or remainder man, as the case may be, is of little practical significance as far as the taxpayer is concerned.

This is especially so since subsection (4) provides that tax shall be recoverable from any one or more of the persons accountable for the payment of the tax. The Revenue Commissioners, therefore, have a choice of persons to whom they may apply for payment. In practice their approach will depend on the facts of the case. For instance, if the trustees are here they would, in most cases, apply to the trustees first. If the trustees were outside the jurisdiction, they might apply to the life tenant in the first instance.

However, Deputy Colley's amendment is unacceptable for other reasons. There may be no trustees or they may be outside the jurisdiction. The remainder man may be unknown, and besides the trust property is not vested in a remainderman. A contingent remainderman may never become entitled to the trust property. On the other hand, there must always be a person primarily accountable in the person of the tenant for life. To accept Deputy Colley's amendment, which restricts the liability to tax of a limited interest to these persons, would prejudice the Revenue's ability to collect the tax, unless the life tenant were brought in again as an accountable person under another head. Supposing I were to move my amendment, amendment No. 23h, and deal with it, would that be helpful?

An Ceann Comhairle

The two can be discussed now but it cannot be moved until Deputy Colley's amendment is disposed of.

Mr. T.J. Fitzpatrick

(Cavan): My amendment No. 23h proposes on page 17, subsection (3) (c), line 51, after “discretionary trust” to insert “or a person who is, by virtue of subsection (2) or (3) of section 5 deemed to be beneficially entitled in possession to property”. Section 14 is the section which sets out the persons who are accountable for wealth tax. In subsection (1) it indicates the persons who are primarily accountable for the payment of the tax. Those who are secondarily accountable are set out in subsection (2). Subsection (3) provides that the person secondarily accountable shall be entitled to reimbursement from the person primarily accountable and then goes on to state how the person primarily accountable shall also be entitled to be reimbursed. This amendment is concerned with the latter subsection (3) which omitted to deal with the type of case dealt with in subsections (2) and (3) of section 5. This amendment remedies this defect. These subsections deal with special cases of discretionary trusts which where not treated as entities but where instead the property of the trust was ascribed to certain individuals, trusts solely for children of a marriage with or without parents and where a minor child is living——

Mr. Colley

Is the Minister now referring to No. 23h?

Mr. Esmonde

Yes.

Mr. Colley

We can take the three together, perhaps, if that is convenient for the Minister.

Mr. T.J. Fitzpatrick

(Cavan): This amendment is concerned with subsection (3) which omitted to deal with the type of case dealt with in subsection (2) and (3) of section 5. This amendment remedies this defect. These subsections dealt with special cases of discretionary trusts which were not treated as entitles but where instead the property of the trust was ascribed to certain individuals, trusts solely for children of a marriage with or without parents and where a minor child is living the property is deemed to be that of the husband, survivor of the parents, or of the minor children as the case may be, trusts for persons incapable of managing their own affairs, property deemed to be that of the individual concerned. In all these cases there will be a person primarily accountable for the tax, a husband, a widow, an orphan child, or an adult child. The tax will be on property which is deemed to be his but which is in the hands of a trustee. The amendment provides that a person who is deemed to be in possession of such property shall be entitled to reimbursement from the trust property. The whole purpose of these subsections of section 5 was to take these special types of trust out of a charge for tax which fell on discretionary trusts as entities. The intention was to ascribe the trust property to these persons who would not normally be liable to wealth tax. thus enabling them to get the benefit of the thresholds to which as individuals they would be entitled. It is not expected that liability should arise in many cases. However, there is always the possibility that a liability might arise. For that reason, it is desirable that the person deemed to be entitled to the property should be entitled to reimbursement. Amendment No. 24 is the amendment which does what Deputy Colley wanted to do.

An Ceann Comhairle

I take it we are taking amendments Nos. 23g, 23h and 24 together.

Mr. T.J. Fitzpatrick

(Cavan): Yes. In page 17, after line 55, it is proposed to insert the following subsection:

Any accountable person who is authorised or required to pay tax in respect of an interest which is a limited interest shall be entitled to reimbursement from the property in which the limited interest subsists or on which it is charged or secured or on which it is entitled to be so charged or secured and he shall, for the purpose of paying the tax, or raising the amount of the tax when already paid, have power, whether the property is or is not vested in him, to raise the amount of such tax, and any interest and expenses properly paid or incurred by him in respect thereof, by the sale or mortgage of or a terminable charge on that property or any part thereof, and any other accountable person who is entitled to reimbursement under subsection (3) shall have a similar power in relation to any property in respect of which he is authorised or required to pay tax.

The purpose of this amendment is to shift the liability for wealth tax in respect of a limited interest from the life tenant to the trust fund. To appreciate the necessity for this, it is necessary to look briefly at the background which led to the life tenant being treated as the person liable for payment of the tax and not the fund. A limited interest is made liable to wealth tax in the same way as any other property in the ownership of an assessable person. Section 3 (5) (b) states what a limited interest is. Broadly speaking it is an interest which is less than an absolute interest. It usually takes the form of a life interest or annuity. Section 3 (3) shows how a limited interest is treated for the purposes of tax. It makes the underlying property liable.

To take the more common form first, a life interest, section 3 (3), treats a person who has a life interest in property as being entitled to the whole or the appropriate part of the property in which the interest subsists or on which it is charged or secured. A person entitled to a life interest in a fund or in a farm is regarded as being entitled respectively to the fund or farm. If a person is entitled to a life interest jointly with another he is regarded as being entitled to half the underlying property. It flows from this approach that all the incidents referable to that property follow.

A person entitled to a life interest in, say, bloodstock, livestock or artistic objects will get the benefit of the appropriate exemptions. If he is entitled for life to a farm, hotel or productive assets he gets the benefits of the appropriate deductions. The Bill makes wealth tax payable by a life tenant the personal liability of the life tenant under section 14 (1) (a). There were several reasons for this approach, the prime being that the life tenant is in fact the person who is in the beneficial enjoyment of the property and the fact that in the vast majority of cases the life tenant should have no difficulty in paying the tax.

The combination of thresholds, reliefs and the ceiling provisions should ensure that the tax is in almost all cases payable out of income. There are no progressive rates of tax which might cause hardship. The flat rate, which does not exceed 1 per cent, and will invariably be substantially lower, raises no problems of priority of various types of property inter se for the purpose of liability for tax. The British, in their Green Paper on wealth tax, approached the position differently. Like us, and subsequent to our decision to do so, they proposed to make the underlying property liable to wealth tax. However, they make the tax referable to the life interest a liability on the trust fund, not on a life tenant. Their proposed rates of wealth tax which are progressive, rising from 2½ per cent to 5 per cent, would appear to have left them no choice. In many cases resort would have to be had to capital to meet the tax, especially as it is proposed to apply the top rates with certain deductions to settled property. Making the fund liable to wealth tax in respect of limited interests means, in effect, making the ultimate remainderman liable for the tax. Our view was that this would not be justified where the tax could in the vast majority of cases in fact be paid out of the income of the trust. However, two points might be made. Although very unlikely it is possible for a life tenant to be entitled for life to property which produces no income and, at the same time, own no property out of which the tax might be paid.

In some other cases wealth tax might cause a substantial diminution of the income, if again he had no other property and the income of the trust fund was negligible in the context of its underlying value. The fact that such situations can arise is itself a valid reason for ensuring that a life tenant be protected in all circumstances. This can only be done by making the fund liable. This approach has the advantage that there will always of necessity be available property out of which the tax can be paid. Deputy Colley suggested on Second Stage that the tax payable by a life tenant should be paid out of the trust funds. There have been other representations to the same effect. The suggestion presents no difficulties from the Revenue point of view.

Mr. Colley

In amendment No. 23 (g) what I was trying to achieve was to cover the kind of case I referred to on the previous section where, say, a widow has an annuity or, indeed, a worker who worked all his life, say, on an estate, has an annuity in each case charged on the whole property which might be of high capital value. As the Bill stands he or she could be liable for the wealth tax on the whole property. I was trying to achieve a situation in which this would not happen.

The Minister's amendment No. 24 achieves what I was trying to do. One problem arises in it. My amendment would have ensured that the kind of person I am talking about or the life tenant would not be primarily liable. The Minister's amendment still leaves them primarily liable. I appreciate the reasons the Minister has given. All of what I was trying to achieve could be achieved if the Minister could assure me that in cases of this kind the Revenue Commissioners would, in the first instance, go against the trustee or the remainderman if they were within the jurisdiction.

Mr. T.J. Fitzpatrick

(Cavan): I cannot give an assurance of course that will go beyond the terms of the Bill when it becomes an Act but I have said that that is the intention. That would be the approach of the Revenue Commissioners. If the trustees are in the country they will go after them first. If the life tenant is in the country they may go after him. If they did go after the tenant for life and the tenant for life has to pay he can claim over against the fund.

Mr. Colley

That meets what I was trying to achieve. In regard to amendment No. 23h, which the Minister referred to, I agree with this. The Minister will recall that I raised this point on section 5, subsections (2) and (3). What is being done here meets precisely the point I was making on that.

Amendment, by leave, withdrawn.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 23h:

In page 17, subsection (3) (c), line 51, after "discretionary trust" to insert, "or a person who is, by virtue of subsection (2) or (3) of section 5, deemed to be beneficially entitled in possession to property".

Amendment agreed to.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 24:

In page 17, after line 55, to insert the following subsection—

"(4) Any accountable person who is authorised or required to pay tax in respect of an interest which is a limited interest shall be entitled to reimbursement from the property in which the limited interest subsists or on which it is charged or secured or on which it is entitled to be so charged or secured and he shall, for the purpose of paying the tax, or raising the amount of the tax when already paid, have power, whether the property is or is not vested in him, to raise the amount of such tax, and any interest and expenses properly paid or incurred by him in respect thereof, by the sale or mortgage of or a terminable charge on that property or any part thereof and any other accountable person who is entitled to reimbursement under subsection (3) shall have a similar power in relation to any property in respect of which he is authorised or required to pay tax."

Amendment agreed to.

An Ceann Comhairle

As amendments Nos. 25 and 26 are consequential, I suggest that they be taken together.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 25:

In page 17, subsection (5), line 59, to delete "and any other person".

Subsequent to this Bill being published an erroneous impression got abroad that under section 14 the Revenue Commissioners could demand information concerning a taxpayer from all sorts of people, including his neighbour and if the neighbour did not supply information which he might have purely as a neighbour he would be liable to substantial penalties, including a penalty of £1,000. That was never the intention of the Government and was never the intention of the section.

I concede that the section, as drafted, left itself open to that argument or to that interpretation but that was never the intention of the Government or the Minister. The object of this amendment is to put the position beyond doubt and to write into the Bill that no such demand can be made. If anybody was foolish enough to make such a demand it can be ignored without any liability to the Revenue or anybody else.

Amendment No. 25 proposes in section 14, page 17, subsection (5) and line 59 to delete the words "and any other person". This subsection makes an accountable person and any other person in possession of information relevant to the taxable wealth of an assessable person liable to disclose such information to the Revenue Commissioners as he is required in writing by the Revenue Commissioners to do.

There have been numerous representations that this is going too far, giving powers to the Revenue Commissioners that are too wide, and that it should be sufficient for them to look to accountable persons only for information. It was also represented that the inclusion of any other person would be detrimental to the business of banks and investment houses and would also affect the principal and client relationship for solicitors, accountants, and so on. Many of the points raised could be rebutted and many of the fears are exaggerated. The matter is, however, controversial, and as it is thought that the collection and so on of the tax will not be adversely affected the offending words can be deleted. That amendment was circulated by the Minister quite a while ago. It never was the intention that the powers ascribed to the section should be invoked. This amendment now puts the matter clearly beyond doubt.

Mr. Colley

This amendment of the Minister's is all right as far as it goes, but it does not go far enough. I was intrigued to hear the Minister say that there was an erroneous impression abroad that this section provided that anybody, including a neighbour, could be obliged under pain of a penalty of £1,000 to give information to the Revenue Commissioners in relation to any other person's taxable wealth. There is nothing erroneous about this at all. That is precisely what the section says. It says an accountable person and any other person in possession of information relevant to the taxable wealth of an assessable person shall disclose to the Commissioners. There is nothing erroneous about it. In fact, it does not matter what kind of protests of innocence are made now, the fact is that that is exactly what was sought to be enacted in this Bill.

In this case we are dealing with what could now be referred to as the infamous spy clause in this Bill which provoked so much protest, as the Minister has indicated. It threatened the effectiveness of, amongst other things, the agricultural advisory service and a great many other things too, and seriously, because it could oblige anyone at all to give information about anyone else under pain for failure to do so of a penalty of £1,000, plus, possibly, £50 a day. Somebody said that this was George Orwell's 1984, nine years ahead of schedule, Recently, the Government saw to it that there was a special release to the news media to tell everybody that this open Government had graciously decided not to proceed with this spy clause as they had originally planned to do. The truth of the matter is, if one looks at the Minister's amendment, that they have only half withdrawn. That will appear clearly when my next amendment is discussed. Apart from that the Government still plan even with this amendment to impose this spying under penalty obligations on a husband in respect of his wife, and on a wife in respect of her husband, but perhaps even worse, on minor children in respect of their parents. As far as this side of the House is concerned this provision is objectionable, inquisitorial and, possibly, unconstitutional.

The effort made in the Bill as drafted to produce this situation in which anybody would be obliged under pain of heavy penalty to give any information about anybody else was one that should never have appeared. The fact that the Minister now proposes to amend it, while welcome, does not absolve the Government from having tried to do it in the first place, nor does the position arising even with this amendment present itself as a satisfactory position at all. It is one that is objectionable and one that we could not accept at all. The penalty cannot be reduced as the Bill stands, no matter what the circumstances, because the Revenue Commissioners or the courts do not have power to reduce the penalty. To impose that penalty on a husband if he fails to disclose the information sought in connection with his wife's wealth or assets, or on a wife in connection with her husband's assets, and, worst of all, on minor children in respect of their parents' assets is not acceptable. I hope the Minister will agree that it is unacceptable, and will be prepared to do something about it as I proposed to do in regard to the earlier part of the objection in my amendment.

It is not possible for me to amend the consequences which impose this obligation on the husband in respect of the wife and vice versa, and on the children in respect of their parents without a major change in the provisions of the Bill. Therefore, the obligation to cure that defect rests on the Minister. I do not know if the Minister is in any doubt as to why I say that this obligation arises, but if he is I will spell it out. Otherwise I am assuming he is aware that this is what the section, even as proposed to be amended, is doing.

Mr. T.J. Fitzpatrick

(Cavan): I do not mind the Deputy indulging in political argument but the argument the Deputy puts forward now is less than worthy of him. There was no question of this section ever applying to the wide range of people Deputy Colley spoke of. He must read the section as a whole: there is no use reading a little bit of it. The section says:

(5) An accountable person and any other person in possession of information relevant to the taxable wealth of an assessable person shall disclose to the Commissioners or such officer as the Commissioners may appoint such information within their possession or power as they may require in writing for the ascertainment of liability to, or the collection of, tax and shall make such disclosure within such time, not being less than 30 days, as may be specified in the requirement and any such person shall at all reasonable times make available for inspection by the Commissioners all books, accounts, documents or records in his possession or power which contain information which they may require for the ascertainment of liability to, or the collection of, tax and the Commissioners may take copies of, or extracts from, any books, accounts, documents or records made available for inspection.

Mr. Colley

That is only putting another name on it.

Mr. T.J. Fitzpatrick

(Cavan): That is clearly referring to somebody who is in possession of information, records, accounts, somebody who is in the nature of an agent for the taxpayer.

Mr. Colley

That is not what it says.

Mr. T.J. Fitzpatrick

(Cavan): Surely the Deputy does not propose to make the case that a neighbour is going to be in possession of records or books in relation to the taxpayer?

Mr. Colley

If he is, well and good. if he is not he is covered by the first part.

Mr. T.J. Fitzpatrick

(Cavan): If your argument is to stand up that he would be expected to have the books or records, registers, and so on, it was never intended to apply to this person. There is no doubt about that. Of course, the Deputy in his search for an attack on the Act grabs at this, and I am not complaining that he did so. It is obvious that the section, even as it stands, could not possibly apply to a person temporarily in possession of information, but the amendment puts it beyond doubt and restricts the requirement to accountable persons. As I say, that puts the matter beyond doubt.

Mr. Esmonde

I have already entered in the lists in the Press in respect of this problem, namely as Deputy Colley says, the notorious spy clause because the words "and any other person" was included in subsection (5) of section 14. It is a section that deals with the persons who are primarily accountable on the payment of tax. I am just wondering how many people who raised their hands in horror at these words bothered to go back to the history of accountability in capital tax. For those who did not bother to do so or who did not know how to do so, I would like to inform them that as far back as the Finance Act, 1894, under section 8, subsection (4), it is stated as follows:

Where a property passes on the death of the deceased——

some words were deleted by a subsequent Act

——every person to whom any property so passes for any beneficial interest in possession and also to the extent of the property actually received or disposed of by him, every trustee, guardian, committee or other person in whom any interest in the property so passing or the management thereof is at any time vested...

becomes responsible to deliver to the commissioners details of the estate. This section went further to say that if a person did not render the account there was a £100 fine or, alternatively, a fine equal to the amount of duty eligible in reference to the estate. That is not the end of it. We come to section 22 (4) of the Finance Act, 1965. That section dealt with property that came within section 2 (2) of the Finance Act, 1894, which dealt with the charge for death duty. Paragraph (1) of that subsection of the 1965 Act uses the following words:

Where the deceased was competent to dispose of such property within the meaning of the Principal Act——

that is, the 1894 Act, which gave rise to the charge for estate duty

——his executor, or as defined... shall, in addition to any other person——

again the words "other person" were used.

—be accountable for the duty and subsection (4) of section 8 of the principal Act shall have effect as if the words referring to the executor not being accountable were omitted.

It even goes further than this in the 1971 Act in which, again, stiff penalties are brought in. Section 42 of the Finance Act, 1971, says:

A person who fails to comply with subsection (3), (4), (5) or (14) of section 8 of the Finance Act, 1894, shall be liable to a penalty not exceeding £500.

Then it sets out the cases and says in subsection (2) (a):

Where a person fraudulently or negligently, for the purposes of the enactments relating to estate duty, delivers, produces, furnishes, gives or sends to the Revenue Commissioners or otherwise makes use of any incorrect account, return, estimate, statement, information book, document, record or declaration, he shall be liable to a penalty of—

(i) a sum not exceeding £500 and,

(ii) the amount of, or in the case of fraud, double the amount of the additional duty payable if the said account, return, estimate, statement, information, book, document, record or declaration, had been correct.

Under subsection (8), when a person failed to make the return he became liable for the duty as an extra penalty, in addition to the duty payable. Under subsection (8) you get down to people in the capacity of guardian, committee or other person. Quite obviously the original purpose of the words was to try to get anybody who dealt with the property in trustee capacity or pseudo-trustee capacity. It should be appreciated in this House—it is probably known to Deputy Colley and to anybody with any legal training—that you do not have to be described as a trustee to be a trustee. You can, by your action, place yourself in a position of trustee and place yourself in the position of being an executor. There is such a thing as an executor de son tort and if you do that you place yourself with all the liabilities and all the responsibilities of a trustee or an executor de son tort. I imagine when this was originally drafted the purpose of “other person” was to cover these cases. However, in view of the fuss that has taken place and the alarmist campaign that took place without having regard to the previous revenue history of dealing with accountable persons for taxation purposes, it was thought better to delete these words and then there could be no grounds for complaint. Deputy Colley is a very good advocate. I concede that, but his ability as an advocate has been overstretched this evening——

Mr. Colley

I cannot compete with the Deputy.

Mr. Esmonde

——when he was talking about husband and wife spying on themselves and minor children spying on their parents. What we are dealing with here is a sizeable amount of profit in the family unit where the exemption is given to the family. It is in the interest of all members of that family unit to look after that property and to account for it as a unit where they are dealt with as such. There cannot be any fault found in relation to that. Certainly, in most of the legislation that has come through this House, be it social welfare or otherwise, no matter where the legislation came from, whether it came from Deputy Colley's side of the House or this side—the family unit has always been observed and I do not think it has ever been the intention of any party in this House to set up that sort of situation where a close relative like a parent, would spy on his or her children or children spy on a parent. It is a contrived situation that is taking place here this evening. The Minister quite rightly said that Deputy Colley was not doing himself justice in taking that line.

If I may just repeat myself and say that in regard to accountability in the past in the operation of estate duty, the accountability was far more severe than is provided for under this section and the penalties were far more severe. A person might have to have a penalty of £100,000 estate duty. There have been cases where there has been possibly £1 million eligible for estate duty.

Something else we can bear in mind has just occurred to me because I had the situation of having to give an opinion under section 8 of the 1894 Act some years ago. We are an island here and there are many estates here where the income goes into other hands. Basically the tactic adopted by lawyers and accountants is that when they take money into their hands they always account for it to the Revenue Commissioners to keep on the right side of the law. In handling another person's money, say, collecting rents for him or something like that, they have placed themselves in the position of trustees and they are actually managing and dealing with somebody else's property. If that property is subject to a Revenue charge they rightly account themselves to the Revenue Commissioners for this property. There is a principle of rectitude and correct conduct in all affairs, particularly in professional matters. It is always adhered to certainly by the old and correct school of lawyers and accountants or estate agents. There has been a great deal of smoke and wind blown across this section which is quite unjustified and, before the amendment came into print I wrote to the newspapers saying what the obvious intention of the section was and pointing out that there had been a past history in the matter of accountability that had been ignored by the flakmen who spoke in certain areas down the country to alarm the agricultural community. They said everyone was going to be straining themselves to look over their sceachs at their boundaries to count the cattle on the farm next door. That is the most ridiculous piece of propaganda that has ever been put forward, and I regret it seems to have emanated from some sort of professional source—I do not know from where—or else it was translated into language and given to the Press, but it did not make sense.

Mr. Colley

Deputy Esmonde has told us about smoke blown across this section. There has been quite a cloud of smoke blown across it now by Deputy Esmonde himself. He very carefully glossed over what this section is doing and when he had ransacked the precedents, the best he could come up with was a reference in the 1894 Act and another in the 1965 Act. One was on penalties, which is irrelevant, except as a factual statement of what the penalty is for failure to comply under this Bill. That is the only relevance of penalties. The real issue is that the other Acts to which the Deputy referred specifically provide that they are making accountable people who either have the property vested in them or dealt with it in some way. Deputy Esmonde spoke at some length afterwards about the role of such people and quite rightly. Everything he said was correct. But what he did not say was that this section said a great deal more than accounting for property with which he had some dealings or which were vested in him. It says an accountable person—and that is the kind of person who is talked about in the other Act—and then it goes on "and any other person in possession of information", and it spells out that any other person in possession of information is obliged to give it in relation to anybody else.

There is no Act of Parliament passed that I am aware of prior to 1922 and never in Dáil Eireann in which it was sought to do what was sought to be done in this section. No amount of contrived pleading—to use Deputy Esmonde's phrase—or special pleading can get over that fact. Nobody ever attempted to do what was attempted in this section. The smokescreen from Deputy Esmonde will not conceal the fact that it was never attempted by anybody before.

Mr. Esmonde

The 1965 Act attempted it.

Mr. Colley

Would the Deputy care to quote it again?

Mr. Esmonde

Yes. Subsection (4) of section 22.

Mr. Colley

Would the Deputy mind quoting it again?

Mr. Esmonde

Certainly I will quote it:

Where the deceased was competent to dispose of such property within the meaning of the Principal Act, his executor (as defined in paragraph (d) of subsection (1), section 22 of that Act) shall, in addition to any other person, be accountable for the duty...

Mr. Colley

Has the Deputy noticed "be accountable"? It does not say "be obliged" or "to furnish information to the Revenue Commissioners". Clearly if you are making somebody accountable, you cannot make a neighbour accountable, but you can make a neighbour disclose information. You cannot make a neighbour accountable if he has no interest in the property or has not dealt in it in any way. Therefore, there is no precedent whatever, and the Deputy is making a valiant but unsuccessful attempt to cover up the fact that there is not in existence any precedent—and I doubt if any effort was even made to introduce one at any time in the past—for a provision which would make any person liable to disclose information to the Revenue Commissioners, any person who had nothing to do with the property. If the property was not vested in him, if he did not manage it, if he did not inter-meddle in any way, he could not be asked to do this. That is the alleged precedent quoted by Deputy Esmonde, but there is no precedent in anything he says for providing, as this section does, that somebody in whom the property did not vest, who had no connection of any kind with the property, is obliged to furnish information to the Revenue Commissioners. That is what this section sought to do.

In my view it is a disgraceful effort that it should have been tried on. I suppose we can rejoice that something is being done now to step back from it, but as I pointed out, not enough is being done to step back from it. This arises on my next amendment and I presume I am not in order in discussing that, but I hope that I am in order in pointing out that even with the Minister's amendment, that even with my amendment inserted, the section would still read that an accountable person is obliged to furnish information in respect of the taxable wealth of an assessable person, not in respect of the person for whom they are accountable, but of any assessable person.

With regard to the point made by the Minister to try to show that the second part of this subsection which says "...and any such person shall at all reasonable times, make available for inspection books, accounts" and so on, again that was a pretty valiant effort by the Minister, but it does not really stand up because, first of all, that phrase would cover a person who had such records and it would also cover a person who had not; furthermore, any such person must refer both to an accountable person and to any other person. Clearly an accountable person would be the kind of person who would have documents and records, or might well have, which should be produced to the Revenue Commissioners. The reading of the section as it was produced and brought into this House is quite clear. It sought to do something that was never done before, and to the best of my knowledge was never even sought to be done before, to make a person liable under pain of serious penalty to disclose any information he had about anyone else. That is what the section is doing.

I am pointing out that even with the Minister's amendment it is still making an accountable person liable to furnish information in respect of any assessable person, not just the assessable person in respect of whom they are responsible. An accountable person should be liable to give information only in relation to the taxable wealth, to use the phrase in my amendment "in respect of whose tax he is an accountable person".

Mr. Esmonde

The accountable person has to be read in relation to the assessable person under subsection (1). Is that not so?

Mr. Colley

If the Deputy were correct in that I think it would be quite clear on the face of the section that that was what was intended but it is by no means clear. In fact, I would contend on the contrary that it does not say that, and when one has regard to the portion of the section which the Minister now proposes to delete and the implications of that, one can reasonably assume that what is sought to be achieved is to make an accountable person liable to furnish information under pain of penalty in respect of the taxable wealth of any assessable person. Will the Minister say which assessable person would be involved in that?

Mr. Esmonde

It has to be relative to what is set out in section 14 (1).

Mr. Colley

If that is supposed to be the meaning of the section, how does the Deputy explain the inclusion of any other person giving information in relation to the type of wealth of an assessable person?

Mr. Esmonde

The amendment takes it out.

Mr. Colley

We have to read the interpretation of the section as it was drafted. As it was drafted it is quite clear the reference was not to an assessable person, only in relation to this person. It related to any assessable person. The taking out of any other person does not alter that construction. Therefore, an accountable person is still being made liable to furnish information in respect of the taxable wealth of any assessable person. That is the only way one could have construed the section as unamended. The amendment does not alter that meaning in relation to the phrase "an assessable person".

We get back to the position that the amendment which the Minister introduces restricts one aspect of the section but in my view it does not restrict it nearly enough. It is vitally important, having regard to what was in this section, to spell out unambiguously just how far these powers are to be allowed to go. I believe it is the duty of this House to spell out in that way what exactly is intended to be done. I am making it clear in my amendment how far we are prepared to go. If the Minister, Deputy Esmonde and their colleagues are prepared to go further they should be obliged to say so in this House and put it on the record.

Mr. T.J. Fitzpatrick

(Cavan): It is obvious that Deputy Colley is hard put to get an argument on which to base an attack on the wealth tax when he is prepared to spend so much time on this section with over 15 sections still to go. It is obvious from this section as originally drafted that the intention was that it was only the assessable person or such other person who might be acting in one capacity or another for him and who might have books or records who was being called upon. That is in the interpretation I put on it and it is the interpretation the Minister put on it from the very beginning. Once the opposite allegation was made, the Minister said, to put it beyond doubt, he would introduce an amendment. He drafted an amendment and it was circulated six weeks ago.

I remember that in 1971 when the Finance Bill was going through it was obvious then that a serious obligation was being placed by the then Minister on a variety of people in respect of returns being made for death duties. I remember objecting to it at the time because it was then enacted that "where a person fraudulently or negligently for the purpose of the enactment relating to estate duty, delivers, produces, furnishes, gives or sends to the Revenue Commissioners or otherwise makes use of any incorrect accounts, returns, estimates, statements, information, books, documents, records or declaration he shall be liable to penalties of £500" and, as Deputy Esmonde says, to double the amount of the duty. Let us take the case where Deputy Colley is acting for a client and some clerk in Deputy Colley's office incorrectly, but innocently, completes a schedule of assets that goes to the Revenue Commissioners. That clerk whom Deputy Colley entrusted with this becomes liable to a criminal offence.

Mr. Colley

That is interesting——

Mr. T.J. Fitzpatrick

(Cavan): Under Deputy Colley's own enactment he is making an innocent person who negligently, because he does not have a high degree of expertise and because he does not return something that should be returned or because he omits a nought from something and returns it as £50——

Mr. Colley

This is a glorious red herring.

Mr. T.J. Fitzpatrick

(Cavan):——and under Deputy Colley's Finance Act of 1971 that person is guilty of a criminal offence and liable to £500 or double the amount of the duty. It is time that Deputy Colley stopped trying to——

Mr. Colley

Where is the spy element in that? If there is not any, what has it got to do with this?

Mr. T.J. Fitzpatrick

(Cavan): It is analogous. Here you are making an innocent person liable to a penalty of £500 and double the amount of the duty for making an innocent mistake. The person who piloted that legislation through this House has the neck—I am not saying it in any offensive way—to come in here and make the case that Deputy Colley is making.

Mr. Colley

It is a different case.

Mr. T.J. Fitzpatrick

(Cavan): He must know on reading the section as drafted that it could not apply and never was intended to apply to the sort of person that he has in mind. He is hard put to it. I say, to get publicity if that is all the case he has.

I was rather amazed to see that there were some people about who did not know months ago that this amendment had been drafted and circulated all over the country and was on sale in the Stationery Office. This amendment was drafted months ago. Deputy Colley was responsible for the delay in respect of this particular section. If Deputy Colley has not any more worthwhile points to make on the other 15 or 16 sections left to be dealt with he is bankrupt of arguments against this Bill.

Mr. Colley

I make no apology whatever to the Minister, to the House or to the public in this country for exposing precisely what was being done in this section. It was a most disgraceful performance, never tried by any other Government of any political party. The glorious red herring that the Minister has tried to introduce is nothing but that. He knows that on the 1971 Finance Bill there was a long discussion on the point he is talking about and it was dealt with. Whether one is satisfied with it or not, it has nothing whatever to do with it. There is nothing in the 1971 Finance Act, or in any other Act passed by Dáil Éireann, that seeks to make any person under pain of penalty produce information about the other persons in respect of whose property they have no interest whatever. That is what was sought to be done here.

Mr. T.J. Fitzpatrick

(Cavan): The Deputy knows it and I regret to have to say it——

Mr. Colley

Not alone do I know that that is true but anybody who reads the section knows it is true. In case the Minister did not pay enough attention when he read it, let me read this part to him:

An accountable person and any other person in possession of information relevant to the taxable wealth of an assessable person shall disclose to the Commissioners...

Mr. T.J. Fitzpatrick

(Cavan): Will the Deputy read on?

Mr. Colley

The other part the Minister says to read on is:

...and any such person shall at all reasonable times make available records...

Is the Minister seriously suggesting that an accountable person would not under normal circumstances have records which he should disclose to the Revenue Commissioners? Of course he would. And if he would, does that not explain the second part of the subsection? Of course it does. The Minister is grasping at straws.

The fact is that the Government brought in here a subsection which sought to do something which is anathema to the people of this country. When finally the enormity of what they were doing was brought home to the Government they brought in an amendment. They are now trying to bluff their way out by saying: "It never meant that at all; but we are making doubly sure by bringing this in." Having brought this amendment before us, the position, which much more satisfactory than it was, is still totally unsatisfactory. Perhaps I can best deal with that on the next amendment and partially on the section itself. I would not propose to delay the discussion on this amendment any longer except to repeat that I have no apology to make to the Minister or to anyone else for highlighting the enormity of what this Government sought to do in this section.

Mr. T.J. Fitzpatrick

(Cavan): I would not expect an apology from any person who set out to misrepresent this section as Deputy Colley has misrepresented it. I want to deal with Deputy Colley's reference to “any such person” and to his argument that any such person means the accountable person. That is not so.

Mr. Colley

I said it includes the accountable person.

Mr. T.J. Fitzpatrick

(Cavan): If it only meant to impose on the accountable person the right to produce records and so on it would not have been drafted as it is drafted. It would have been drafted in this way, “and the accountable person shall at all reasonable times make available...”

Mr. Colley

The Minister is making assurance doubly sure. There is a chance that the neighbour might have some records that would show up. The Minister is covering every possibility.

Mr. T.J. Fitzpatrick

(Cavan): If Deputy Colley is prepared to put at risk his bona fides and his sincerity about this measure on the basis of this section I think he will lose out. If line 6 which refers to “any such person” only meant the accountable person it would have said in black and white “and the accountable person.” Deputy Colley makes the argument that the accountable person would be required to produce all the records and the neighbour would not.

Mr. Colley

I did not say that. I said the Minister was covering that possibility too.

Mr. T.J. Fitzpatrick

(Cavan): Is the Deputy seriously telling us that the intention of the section was to call on the neighbour to produce to the Revenue Commissioners at all reasonable times for inspection, all books, accounts, documents and records in his possession? Is the Deputy serious?

Mr. Colley

Does the Minister not know that a neighbour could have to produce information relevant to his own property which would disclose information about the adjoining property? That is precisely what the Minister is trying to do. He can try all the bluff he likes. That is what the section says. All the red herrings about the 1971 Act and the 1894 Act do not alter what the Minister is trying to do.

Mr. T.J. Fitzpatrick

(Cavan): It is not what is in the section as originally drafted. Not alone was it not intended, but no court would interpret that section which would be virtually a criminal section, creating a criminal offence, in that way. Given the two alternatives, taking the section as a whole, any court would be obliged to interpret the section in a way that would exonerate the innocent person when that interpretation was open to it, as it is open to it, and the Revenue Commissioners were foolish enough to try to invoke the section to do what the Deputy says. The 1971 Act dealing with estate duty has not been invoked but could be invoked, but to suggest that some clerk in a solicitor's office should be liable——

Mr. Colley

The Minister must know how he is showing up his case when he is going at that red herring.

Mr. T.J. Fitzpatrick

(Cavan): It is outrageous. It is there in black and white.

Mr. Colley

Of course it is but it has nothing to do with this.

Mr. T.J. Fitzpatrick

(Cavan): When he was Minister the Deputy steamrolled it through the House. He should be ashamed of himself.

Mr. Colley

The red herring is obvious now.

Amendment agreed to.

Acting Chairman (Mrs. Desmond)

Amendments Nos. 25a, 26a and 26b are consequential and may be discussed together.

Mr. Colley

I move amendment No. 25a:

In page 17, subsection (5), line 60, after "person" to add "in respect of whose tax he is an accountable person".

Even with the amendment we have just accepted from the Minister, the section still imposes an obligation on an accountable person in respect of any assessable person. An assessable person under section 1 of the Bill means an individual, a discretionary trust or a private non-trading company, so it covers virtually everyone. An accountable person includes such people as banks, accountants, solicitors, estate agents for collecting rents and many others. There should be no obligation extending beyond the property in respect of which one is an accountable person.

In section 15, subsection (2) a reference is made to "a return of all the property in respect of which he is accountable comprised in the taxable wealth of the assessable person concerned". Note that wording, which makes it perfectly clear that you are dealing with one accountable person and then the assessable person with whom he is concerned. Not so in this section, which simply says "an accountable person in possession of information relevant to the taxable wealth of an assessable person".

There is great significance in the difference in drafting involved in subsection (5) of this section and subsection (2) of section 15 to which I have referred. The amendment I am moving seeks to have this read "an accountable person in possession of information relevant to the taxable wealth of an assessable person in respect of whose tax he is an accountable person." In other words, to make it clear that we are dealing with somebody who is involved and that we are not leaving it at large. I would hope, having listened to the Minister's protestations of innocence in regard to this section and this subsection, that he will not raise any difficulties about accepting this amendment.

Mr. T.J. Fitzpatrick

(Cavan): I also propose to deal with the three amendments together, Nos. 25a, 26a and 26b. First of all, the section, as amended, makes an accountable person in possession of information relevant to the taxable wealth of an assessable person liable to furnish such information. As I understand the position, the purpose of the amendments is to ensure that an accountable person is liable to furnish information in respect only of the taxable wealth of an assessable person in respect of whose tax he is an accountable person. That is what the Deputy wants to do. That, in fact, is the aim of the section as drafted. An accountable person, A, in possession of information relevant to the taxable wealth of B. is required to disclose such information as the Revenue Commissioners require for the ascertainment of liability to/or for the collection of wealth tax. In the context of wealth tax the tax can be payable only by B. or his accountable persons. It is difficult to visualise circumstances in which A. could be asked to furnish information in respect of that wealth in connection with the taxable wealth of say X, Y or Z because X, Y or Z would not own that property.

The taxable wealth of an assessable person and information relevant to that wealth can be relevant only to the case of the assessable person who owns wealth and in whose hands it is liable. Furthermore, information can be sought only for the purpose of ascertaining liability to or the collection of tax. The question of liability to tax can arise only in connection with that assessable person. The Deputy will see therefore that our views on the scope of the section coincide and that there is no necessity for the amendments he has tabled.

Mr. Colley

Of course, I do not see any such thing. The question of liability to tax does not arise here. We are talking about seeking information and from whom it may be sought in relation to whom and what. In view of the fact that I drew the Minister's attention to the wording of subsection (2) of section 15, I am surprised that he did not refer to that or attempt to explain it. Let me refer him to it again. It is dealing with a very similar situation. It is providing that

a person who is accountable for the payment of tax by virtue of section 14 (2) shall, if he is required in writing by the Commissioners to do so, deliver to the Commissioners within such time not being less than 30 days as may be specified in the requirement on a form provided by them——

These are the crucial words

——return of the property in respect of which he is accountable comprised in the taxable wealth of the assessable person concerned.

There is no doubt as to what is intended in the wording there.

The Minister says that what he intends is what I seek in the amendment. If that is so, the Minister should have no difficulty and no hesitation in accepting an amendment which would make it clear beyond any shadow of doubt as to what is intended by this subsection. The fact that section 15 (2) to which I referred goes out of its way to spell out this relationship makes all the more significant the omission of anything like that in this subsection and all the more important that it should be spelt out without any ambiguity whatever. Therefore, if the Minister says that his intention is to ensure that an accountable person will only be asked to furnish information in respect of the taxable wealth of somebody in respect of whose wealth he is an accountable person, there is no reason why the Minister should not agree to spell that out in the subsection.

Mr. T.J. Fitzpatrick

(Cavan): I am advised that that is what the subsection means and I am satisfied that that is what it means. Otherwise it would not make sense.

Mr. Colley

Would the Minister then compare it with the wording in section 15 (2) and would he agree that when there is a difference in wording of that kind in very similar circumstances, the courts would interpret that difference as meaning there was a different intention?

Mr. T.J. Fitzpatrick

(Cavan): As I say, I am satisfied that subsection (5) as drafted does exactly what the Deputy wants. I do not want it to mean anything else. I am satisfied that it does not, but I am prepared to have a look at it between now and Report Stage.

Mr. Colley

Of course I accept that but I have to enter a reservation in this sense, that I will have to see what amendments the Minister puts in on Report Stage and have an opportunity then to put in my own. In other words, if the Minister does not have an amendment in to cover this point I will want to cover it on Report Stage. I will confess also that from our experience on the capital gains tax I am a little slow to leave the matter there because on that occasion when we were subject to a time limit we got very short shift from the Minister for Finance and, being Report Stage, we are limited, of course, by the fact that we can speak only once. What is in my mind is that the Minister ought to spell out now and put it on the record. If he says that the intention of the section is to do what I am seeking to do in the amendment does he not think it insufficient to say that he is advised that that is the effect of it having regard to the wording of subsection (2) of section 15? I know well the Minister takes clearly the point I have made about the contrast in the wording and the likely effect on an interpretation by the courts. Because of that contrast I am certain that the Minister takes that point very clearly and, that being so, the Minister has to go a little further than say he will look at it between now and Report Stage. The matter is too important. If section 15 (2) were not there it might be reasonably plausible for the Minister to argue that what is in the section is only doing what is intended by me and, as he said, by him. I would be inclined to argue that. But, in the light of the contents of section 15 (2) I do not think that argument is open to the Minister.

Mr. T.J. Fitzpatrick

(Cavan): I do not see the force of the Deputy's argument in relation to section 15 (2) at all.

Mr. Colley

I am surprised at the Minister saying that.

Major de Valera

I leave it to Deputy Colley to answer that point, but the wording in section 2 does limit. With regard to section 5 what at first sight I do not understand is this: if the Minister is satisfied on the principle, what objection can he have to putting in "in respect of whose tax he is an accountable person" because that is the only addition there after the word "person"? You qualify "person" by adding "in respect of whose tax he is an accountable person".

Mr. Colley

The next two amendments are consequential.

Major de Valera

Yes, the next two would be consequential. We are agreed on the principle. Supposing you leave it out, taking it purely on possibility of interpretation, I accept that that is the Minister's intention. We are agreed on that. "An accountable person and any other person in possession of information relevant to taxable wealth of an assessable person shall", and so on. That leaves it on the wording of that phrase, anybody who is an accountable person within the meaning of section 14 (1) and any other person in possession of relevant information as to the taxable wealth of an assessable person whether they are directly related to the accountable person or not. It leaves it open.

I am repeating an argument that was made generally earlier and I do not want to delay the House. If you do not qualify the words "assessable person" then the assessable person may be assessable in regard to something totally different from what the accountable person is accountable for. That is on the reading of that subsection. If we are agreed on the principle, surely the safe thing and the unambiguous thing to do is to take Deputy Colley's amendment, that is, provided the agreement is there, which is obviously so. The Minister has pooh-poohed the idea that there was ever any intention of, say, getting information from an accountable person who is accountable in respect of the assets of, say, B or any other person who has knowledge or information with regard to the assets of C, that these two could be used to give information, if they have it, about the assets of X. The Minister pooh-poohed that interpretation from the intentional point of view. But I do ask quite soberly, unless you put in that qualification, is not that a possible legal interpretation of the phrase as it stands, and if it is a possible legal interpretation, no matter how farfetched, why leave it to be an appeal to inference, why leave it to argument if you can copperfasten it by expressing the intention clearly and concisely by that qualifying phrase that is in the amendment.

The Minister is quite obviously convinced but he is just being extra cautious here—I can understand the Minister's caution in not wanting to take an amendment straightaway, but can anybody in the House give a good reason now as to why the word "person" in line 60, page 17, should not be qualified in that context by the words proposed in this amendment? If no good reason can be given, if the intention is agreed, the Minister should accept the amendment. I would agree possibly to rewording for the Report Stage, but I think he should go further than just saying he will consider it for the Report Stage.

Mr. T.J. Fitzpatrick

(Cavan):“Accountable person” is defined on page 1, section 1. It means a person who is accountable for the payment of tax by virtue of section 14. Under section 14 (1) a person is primarily liable and under 14 (2) other persons are also accountable. There it seems to say “the following person shall also be accountable for payment of any amount of tax for which the persons referred to in subsection (1) are made primarily liable and, if the assessable person is an individual, every person whose property is included with that of the individual under section 4 and every trustee except...”et cetera. It is clear from that that it is only an accountable person whose wealth is included in that of the assessable person.

Major de Valera

If it is clear why not put it in there?

Mr. T.J. Fitzpatrick

(Cavan): If you were to put anything into it beyond what is there you have bad draftsmanship. I am prepared, as I have said, to consider this in the light of what the Deputy has said and then I am even prepared to go further: I am prepared to give the Deputy early notice of whether I propose to bring in an amendment on the Report Stage or not.

Mr. Colley

Would the Minister indicate, if he thinks that the subsection means what he says, why should subsection (2) of section 15 be worded in that way: "a return of all the property in respect of which he is accountable comprised in the taxable wealth of the assessable person concerned"? The Minister will agree that that is quite a different approach to the wording.

Mr. T.J. Fitzpatrick

(Cavan): You have to take all of section 15 together. Section 15 (2) refers back to the accountable person in subsection (1) of section 15. You must take the whole section together. That is the reason it is drafted in that way.

Mr. Colley

Would the Minister agree that there is no doubt at all under the wording of that subsection (2) as to what is intended? It is perfectly clear there can be no doubt whereas it should be clear to the Minister by now that there can be doubt about subsection (5).

Mr. T.J. Fitzpatrick

(Cavan): I do not accept that there is any doubt but I am prepared, as I have said, to consider it and I will notify the Deputy in a matter of a couple of days. I understand the Report Stage is not being taken until next week. I will certainly advise the Deputy on Friday afternoon whether I am putting in an amendment or not.

Mr. Colley

Very well. I will accept that though I am very limited on the Report Stage if in fact the Minister does not do this. I shall not pursue the matter further except to make it clear to the Minister that personally I regard this as a vital amendment to be made.

Mr. T.J. Fitzpatrick

(Cavan): I accept that the Deputy does, but if I were to accept this amendment now without going fully into it, it might affect some other section.

Mr. Colley

I appreciate that, but the Minister will understand that what he has said was that he will have a look at it. Would he mean to have a look at it to make clear what we both say we want to do?

Mr. T.J. Fitzpatrick

(Cavan): Exactly.

Amendment, by leave, withdrawn.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 26:

In page 18, subsection (5), line 2, to delete "their" and to substitute "his".

Amendment agreed to.

Amendments Nos. 26a and 26b not moved.

Question proposed: "That section 14, as amended, stand part of the Bill."

Mr. Colley

There are a few points I want to raise. The first is one I referred to in passing earlier on one of the amendments. It is common case between us that an accountable person is obliged under subsection (5) to give information to the Revenue Commissioners when it is sought from him. But an accountable person, in accordance with section 14, can include a husband in respect of his wife's property and/or his minor children's property.

Mr. T.J. Fitzpatrick

(Cavan): We are still on subsection (5)?

Mr. Colley

I am on the section but I am referring to this part of subsection (5). It can also include in certain circumstances a wife and the minor children. I am putting it to the Minister, therefore, that subsection (5) has the effect of imposing an obligation on a husband in respect of his wife's property, and on a wife in respect of her husband's property, and on minor children in respect of their parents' property, to disclose all information sought by the Revenue Commissioners in relation to that property and to be liable, if they fail to do so, to a penalty of £1,000, with possibly £50 a day, and with no powers as the Bill stands to the Revenue Commissioners or to the courts to mitigate that penalty. Would the Minister accept that that is a correct interpretation of subsection (5)?

Mr. T.J. Fitzpatrick

(Cavan): I assume that the Deputy accepts that the Bill provides for the aggregation of the wealth of the husband, the wife and the minor children, and that he accepts that the husband is the assessable person. Bearing that in mind. I do not think the interpretation which the Deputy has put on subsection (5), which is the correct interpretation, is unreasonable.

The Revenue Commissioners are entitled to call on any one of the three people whose wealth is aggregated and who are treated as one for the purpose of tax to give the information required and there is no obligation on the Revenue Commissioners to sue for penalties, as the Deputy will be aware.

Mr. Colley

There is no obligation on the Revenue Commissioners to do what?

Mr. T.J. Fitzpatrick

(Cavan): To sue for penalties. As the Deputy knows, the income tax code is riddled with powers to enforce penalties which are hardly ever invoked unless in very extreme cases. Of course, the Revenue Commissioners have an overall power to mitigate and do mitigate penalties and compromise penalties.

Mr. Colley

Does that power apply to the penalties which appear later in this Bill although it does not say "not exceeding" or anything like that?

Mr. T.J. Fitzpatrick

(Cavan): I am satisfied that it does.

Mr. Colley

We will come to that on a later section, but at least on this occasion we are ad idem as to what is meant which is, I suppose, an advance. The Minister thinks in the circumstances it is a reasonable provision. I think in the circumstances it is an unreasonable provision and I would think that, in some circumstances, it could be held to be unconstitutional in the sense that to impose an obligation of that kind on a wife in relation to her husband, or on children in relation to their parents, is something which would not, as the Minister knows, be tolerated for an instant if the assessable person were a criminal accused of a criminal offence. It just would not be tolerated for a moment.

It seems to me that it is going very far to impose this obligation on the wife, or husband, or children of an assessable person. I realise the drafting difficulties involved in doing anything about this without going to the very root of the Bill. Nevertheless I would suggest that, if one were to take the view of this provision that I take, which is that it is unreasonable and inquisitorial and possibly unconstitutional one could perhaps get around it by excepting the husband and wife and minor children from the provivions of this in so far as this subsection arises where they are accountable persons but not for any other section of the Bill. One does not have to undermine the whole concept of the accountable person including the husband, wife and minor children, in order to deal with the problem. However, the Minister says he does not agree that it is an unreasonable provision.

Mr. T.J. Fitzpatrick

(Cavan): I do not.

Mr. Colley

I take a different view. I would hope that between now and Report Stage the Minister would think again about it and the implications of this. I am only speaking of subsection (5) in so far as it relates to the furnishing of information by husband, wife and minor children.

There is another matter arising on this section which was drawn to my attention, and I want to put it to the Minister. It relates to the operations of certain firms of accountants who, although they are an unlimited group, frequently work through an unlimited secretarial company as secretary of private non-trading companies and, in other cases, they perform the duties of secretary.

In other words, they come within the terms of reference of the Bill. They suggest that it is both unfair and inequitable that the secretary of the company should be fixed as the person primarily accountable for the payment of the tax. While admittedly an officer of the company is the secretary, the office of secretary is a subordinate one, and the secretary is at the bidding of the directors, and it would be quite unusual for the secretary to have power to dispose of the assets of the company or to operate a bank account on his own.

Mr. T.J. Fitzpatrick

(Cavan): Does he act as secretary of the private non-trading company?

Mr. Colley

Yes. If he acts as secretary or in the terms of the Bill if he performs the duties normally performed by a secretary. The right to reimbursement from the assets which is provided is hardly sufficient to encourage a secretary in a private non-trading company to remain in office, particularly as the secretary appears to have unlimited liability as against the director who, under subsection (2) (c), has his liability limited to the market value of the property or the income, as the case may be, which is vested in, or collected, or received by him, or to which he is beneficially entitled in possession. It appears that there is not such a limitation on the liability of the secretary.

Therefore, it would seen, that the provisions of subsection (3) paragraph (d) would produce a real danger which could inhibit professional firms from carrying out duties as secretary or acting as secretary of these non-trading companies to which they normally provide this service. Again, the situation is made worse because the professional firm itself is obliged to operate under unlimited liability. In a particular case of which I am aware, the operation of this section as it stands is likely to close down a secretarial department which employs a number of people in an accountant's office. I am not suggesting for a moment that that was intended. I am just pointing out that it is a consequence which seems to be arising in this matter.

I would point out also that in the case of many private non-trading companies that are unlimited the directors, therefore, have power to redeem the shares by transfer of the assets of the company in specie and possibly they could remove them even from the jurisdiction and leave the secretary holding the baby. It is the dangers of these kinds of risks with unlimited liability which are leading to the dangers I have mentioned. There are other points I want to raise but perhaps the Minister might find it more convenient if I stop at that point as he might like to comment on it.

Mr. T.J. Fitzpatrick

(Cavan): I should like to make a general remark in reference to professional people in general who assume responsibility for the affairs of other people like solicitors and accountants. I am sure that before a solicitor would undertake on behalf of a client an obligation which might involve him in a monetary liability he would make sure he knew his client, he knew who he was dealing with. I think immediately of a solicitor who goes to an auction and buys a property in trust for an undisclosed client. If my legal memory is correct, he makes himself thereby liable as principal, and if the client did not honour the transaction by putting him in funds to complete the purchase he would have no answer to an action for specific performance. Broadly speaking that is similar to the situation Deputy Colley speaks about here, where a professional firm of accountants offer their services to act as secretary of a non-trading company. Deputy Colley wants to ensure that they are not primarily liable. There is also a provision under some of the Income Tax Acts where companies whose registered place of business is outside the State have to give the name of a person within the State to accept notices and to serve documents on their behalf under the Companies Acts. I am not in a position to say whether that makes the person liable for their tax but I know there is such a procedure.

Mr. Colley

The Minister is touching on a very important point here. If there is nobody else within the jurisdiction the Revenue Commissioners can get at, I would make no case at all, but where there are other people who have a beneficial interest in the property in effect, I am suggesting that the secretary as such should not be liable.

Mr. T.J. Fitzpatrick

(Cavan): The type of secretary the Deputy has in mind is somebody who takes on the job as a professional secretary, and really he is a member of a firm of accountants from what the Deputy has said. Such a person is taking a calculated risk if he acts as secretary without satisfying himself that the private non-trading company is reliable.

I have a note here which might be helpful to the Deputy. Every company is required by law to have a secretary. Not alone is a secretary an officer of the company, he is an administrative officer. Prima facie, therefore, he is the person to whom everyone, including the Revenue, should apply to discharge the obligations of the company. It is not agreed that his office is a subordinate one. The courts do not appear to regard it as such. The suggestion that the primary accountability should rest on the directors is not a realistic alternative. A director need not be a shareholder of a company. While the secretary of a private non-trading company is the person primarily accountable for wealth tax under section 14 (1) (d), he is only one of several accountable parties under section 14(2) (c).

Under section 14 (4) the Revenue Commissioners can apply to any accountable party to discharge the tax. It is not necessary that they should apply to the person primarily accountable at that stage. It is not agreed that it would be difficult for the secretary to obtain reimbursement. Most of the documents issued by the company are authenticated by him and his co-operation is essential for a company. Besides, it is difficult to visualise a situation where a company secretary would not foresee the possibility of his being left holding the can. All he has got to do is resign. This is, perhaps, more true of companies which act as secretaries.

If in any year difficulties arise in the payment of wealth tax, the secretary, or the person who performs his duties, need never find himself in the same position again. In all the circumstances, therefore, it is not considered that the liability of a company secretary, or the person who performs the duties of a secretary for the purposes of wealth tax, should be altered.

The point one gets from that is that the Revenue need not necessarily follow the secretary who is primarily liable. They can follow the directors or other people mentioned by the Deputy, if they are within the jurisdiction and are marks.

Major de Valera

Do I detect in that a little note of discouragement for professional people, firms of accountants, to act at all as secretaries of private non-trading companies?

Mr. Colley

I thought I got a little whiff of that too.

Major de Valera

It is an impression.

Mr. T.J. Fitzpatrick

(Cavan): I would not say so. I would say the contrary is the case. If a reputable firm of accountants accept a contract to act as secretary for a non-trading company, they are giving status to that non-trading company. The fact that a reputable firm of accountants whose word is acceptable to the Revenue Commissioners, act as secretary of a non-trading company, as I say, gives status and prestige to that company. If they were not to accept the responsibility of secretary they might even be misleading the general public. It is desirable, in the interests not alone of the Revenue Commissioners but of the general public, that a professional firm who act as secretaries would only act as secretaries of firms they could stand over.

Major de Valera

That statement seems to be somewhat ambiguous. I should like to make a general comment on it. We are further progressing to what I might call the mandarin stage. We are going to proliferate as a result of this section, not only within the State service and the Revenue Department itself, more administration and more people employed in administrative work as against those in productive work. This will obviously be transmitted into the other side of the coin as well. Socially, a lot of this legislation has the undesirable consequence that there will be more and more bookwork, paper work, accounting, and so on, all at a money cost, and ultimately at the cost of people who are doing productive work.

I should like to make a comment about agents. We are on the section. I have always been concerned about intrusions on the role of solicitors. Perhaps, as I am not a practising lawyer, I can make this point without any embarrassment to either side of the profession and make it as a layman with, on the other hand, some experience and practical information on the subject. I have always thought, no matter who brought it in, that it has been a pernicious principle to hold solicitors, and the legal representatives of the individual in the State, accountable for the information reposed in them in trust. If there is any justification within the meaning of our Constitution, within the meaning of our whole legal tradition, for the existence of the legal profession it should be sacrosanct.

Mr. T.J. Fitzpatrick

(Cavan): Would the Deputy bear with me while I put a question? Does the Deputy agree that the accountant would not be liable as accountant; he would be liable as secretary of the company?

Major de Valera

I have gone away from accountants; I am dealing with solicitor under the word "agent". In this Bill, and the income tax code, the person is suitably described by the word "agent". Incidentally, in counsel's opinion, it is the same word that is usually used in giving agent directions. There is no doubt that agent includes solicitor. This section goes further in what I have described objectively as a very pernicious intrusion on the constitutional safeguards that our legal system provides for the individual as against Big Brother, the State, in particular. This is not new, and I am not talking about the Revenue Commissioners only.

Let us take criminal jurisdiction going back to Magna Carta, and enshrined in the Articles of our Constitution, Article 38. On the criminal side, I do not think no matter what we passed in this House, we would be able to breach that. If it was a criminal matter I would be willing to bet that our Supreme Court, on appeal, would maintain the rights of the individual, as it did in the case of Padraig Haughey reported in 1970, reports which may be in the news shortly, would hold that a solicitor was absolutely privileged, as also would be the barrister briefed by that solicitor on behalf of that client.

We are now dealing with a code of law that is coming perilously near, in its provisions, criminal provisions. Points of constitutionality may well arise.

Maybe enough rope is being given in this House to hang the whole lot on a constitutional point. This section goes further than its predecessors. There is no use telling me that the Income Tax Acts did this. The Income Tax Acts are as bad and there is provision in the Income Tax Act, 1967, section 176, which is equally objectionable, and my strictures apply to that also.

There is a difference between section 176 of the Income Tax Act, 1967, and this Bill. Precedent here is admitted but this goes further than the precedent established because section 176 makes every person who in whatever capacity is in receipt of any money et cetera shall, whenever required to do so by notice, prepare and deliver within the period mentioned in such notice a list in the prescribed form, signed by him, containing the particulars as set out. This captures solicitors, and that is what I am objecting to. I strongly object to that on the grounds of the confidentiality that exists between solicitor and client and that the individual with the complexity of our present law is entitled to have free, confidential advice and to consult and be in a position to find out what the law is and what his rights are without embarrassment by Big Brother, the State, in whatever department it may be, the police in a police state or anywhere else.

Section 176 captures solicitors and that is objectionable, but it can be said for section 176—objectionable and indefensible as it is, and the beginning of the slippery slope—it specifies certain things. This section captures solicitors as an accountable person in subsection (2) by the use of the word "agent", and in subsection (5) states that any accountable person—that must be taken as meaning any solicitor in the context—in possession of information relevant to the taxable wealth of an assessable person shall disclose to the Commissioners, or such other officer as the Commissioners may appoint, such information within their possession or power as they may require in writing for the ascertainment of liability or collection of tax and shall make such disclosure within a time not less than 30 days. The important thing is, "such information within their possession or power as they may require in writing".

Section 176 of the Income Tax Act, 1967, at least specifies what that information is. The section states, "any information", unqualified or general.

If we pass this section in its present form, notwithstanding and not controverting the precedents that are there —I say the Minister has gone further than the precedents—then any solicitor will be required, if this Act stands up in the Supreme Court, to disclose all that transpires between a client who consults him on the matters raised in this Bill. Is that a desirable situation? Does it not, in the first instance, mean that before one can consult a solicitor one has to consider what the risk is of talking to the solicitor at all? Furthermore, it is of interest if there is a criminal matter.

I am saying these things not in stricture of the Minister; it is a free expression of an opinion by a Member who seeks to have a point taken into account in our passing of this legislation. Nothing more. It is not to be taken as a stricture on anybody. The penalties are coming very near criminal liability. Unexpected things can happen and we should not rely too much on the English decided cases. The 1921 Tribunals Act and the 1970 Act are a good example as to what can happen when one has a written Constitution such as we have.

It behoves us to ask, "are we within the proper limits"? If there was anything savouring of criminality in this an embarrassing situation could arise for the Revenue Commissioners and cost to the State. I have not said all that for the sake of launching a delayed tirade against the Income Tax Acts and the building up of all this information-seeking legislation much of which I concede is necessary. Indeed, I have a great deal of sympathy with the problems of the Revenue Commissioners, and, perhaps I should say in all fairness, in the implementation of the legislation such as it is they have been entirely and eminently reasonable and understanding. That does not get away from my point; we are making law here. That is why I emphasise that it is not to be taken as a stricture on anybody.

The fact that it has been benignly and reasonably administered to date does not obviate the objection in principle and the dangers of running into a constitutional impasse here. The Minister, when he is considering the amendment on subsection (5), should take this point into account. If possible, he should limit the amount of information he is concerned with and take into account the possibility that a solicitor might be acting criminally on this. I want to give this possible interpretation as a guise here; I do not think it would be upheld but it could be embarrassing if there was any attempt to rely on it and lead into trouble.

If a solicitor were acting for two different interests, two different assessable persons, and in that sense accountable for both, and if in one case he was acting in a criminal capacity and the other had a relationship to it, then, as the wording of that section stands, it could be invoked to cross without Deputy Colley's amendment.

It is an unlikely point to succeed but we have a Constitution. The Supreme Court has been very strong on its right to decide judicial matters. It is, therefore, desirable that if the the Minister is looking at that subsection in regard to solicitors that some qualification should be put on the information required from a solicitor. The Minister will understand that I am talking purely about the solicitor and client relationship.

I greatly regret that this was breached in the Income Tax Acts. I concede, firstly that, and, secondly, it can be pleaded that it has given no difficulty to date and the Revenue Commissioners have been more than reasonable in it. That I also concede. Further it may be argued that a certain amount of benign co-operation has resulted in good relations to the benefit of the client, and I am certain in certain cases that would be so. All these points I concede, but nevertheless there is the principle of the interference to that extent of the confidential solicitor-client relationship which is so important in the modern world against Big Brother, the State, in whatever form. I am not applying that term to the Revenue Commissioners; I am applying it to the modern State as a whole.

I ask the Minister to consider all that in relation to subsection (5) and the amendment he promised Deputy Colley he would consider.

Mr. T.J. Fitzpatrick

(Cavan): I should like to bring this argument out of the clouds and into some sense of reality. One would be excused for thinking, listening to Deputy de Valera, that something was being proposed in this Bill which had never been operated here in relation to taxation previously.

Major de Valera

I have conceded that.

Mr. T.J. Fitzpatrick

(Cavan): There is nothing in this section which has not been in operation here since 1894 in regard to death duties.

Deputy de Valera talks about solicitors and the sanctity of solicitors but we are not dealing with solicitors here at all, we are dealing with rent collectors or estate agents.

Major de Valera

I am only talking about solicitors.

Mr. T.J. Fitzpatrick

(Cavan): They are not acting as solicitors. They are acting as estate agents or rent collectors. The Act of 1894 reads:

Where property passes on the death of the deceased and his executor is not accountable for Estate duty in respect of such property, every person to whom any property so passes for any beneficial interest in possession, and also, to the extent of the property actually received or disposed of by him, every trustee, guardian, committee, or other person in whom any interest in the property so passing or the management thereof is at any time vested, and every person in whom the same is vested in possession by alienation or other derivative title shall be accountable for the Estate duty on the property, and shall, within the time required by this Act or such later time as the Commissioners allow, deliver to the Commissioners and verify an account, to the best of his knowledge and belief of the property: Provided that nothing in this section contained shall render a person accountable for duty who acts merely as an agent or bailiff for another person in the management of property.

Subsection (5) reads:

Every person accountable for Estate duty and every person whom the Commissioners believe to have taken possession of or administered any part of the estate in respect of which duty is leviable on the death of the deceased, or of the income of any part of such estate, shall, to the best of his knowledge and belief, if required by the Commissioners, deliver to them and verify a statement of such particulars together with such evidence as they require relating to any property which they have reason to believe to form part of the estate of which Estate duty is leviable on the death of the deceased.

That has been carried down by one Finance Act after another. The latest one, that of 1971 is the law of the land at present. Deputy de Valera sat on Government benches when that was being done. He did not object. We are dealing with section 14 (2) (a):

If the assessable person is an individual, every person whose property is included with that of the individual under section 4 and every trustee, guardian, committee, personal representative, agent or other person in whom any property comprised in the taxable wealth of the individual on the relevant valuation date stands vested or by whom the property is managed or the income of the property is collected on that date or within one year thereafter and every person in whom the property becomes vested by alienation or other derivative title after that valuation date, other than by a sale for full consideration in money or money's worth.

Deputy de Valera is fearful that that may involve a solicitor in breach of confidence. He is only made an accountable person if he is managing an estate, if he receives the rent. There is nothing unusual or very new about that. I am satisfied there is nothing in that to oblige a solicitor to disclose advice which he gave to a client.

Deputy Colley and other solicitors in the House will know that since we commenced practice we have been receiving from the Revenue Commissioners forms requiring us to deliver up to them full detailed particulars of all moneys received by us on behalf of any person. They were asking us to do what is being done here.

Mr. Colley

I do not think the Minister filled them up.

Mr. T.J. Fitzpatrick

(Cavan): And I do not think the Deputy did either.

Major de Valera

Maybe I have a point.

Mr. T.J. Fitzpatrick

(Cavan): Furthermore neither of us ended up in the Bridewell or Mountjoy for failure to do it. We are not dealing with solicitors here. Solicitors are not mentioned. It could be the local doctor as well as the solicitor who could find himself, if he was collecting rents on behalf of somebody, in the same position. Deputy de Valera is unduly alarmed about this. It is not introducing any new law. We are simply borrowing from sections which have worked since 1894.

Major de Valera

I am thankful to the Minister. I will concede one point to him. He makes a distinction. If the solicitor is the executor he is not a solicitor. It is in his capacity quasi as a solicitor that I am talking. I see the Minister's point. On a strict reading of subsection (a) that is embodied there as well. I do not want to delay the House but it is difficult to make an argument like this without being prolix. I can see the distinction between the solicitor being an agent in the sense of being a trustee, a manager or an executor.

Mr. T.J. Fitzpatrick

(Cavan): Or a rent collector.

Major de Valera

Or a rent collector. I concede that distinction. This is where the difficulty arises. The interpretation of this section seems to depend on a comma. All the legal people will admit that a comma is very dangerous in a deed. Subsection (a) to which the Minister referred, all that follows after the word "person" is: "in whom any property comprised ...." An agent may stand alone. All of that, "in whom any property comprised ...", which corresponds to what is in the earlier Act and even in the Income Tax Act does not qualify the trustee, guardian, committee or personal representative.

Mr. Esmonde

It is getting late.

Major de Valera

I know it is getting late. That only qualifies the word "person". I concede there is no comma after the word "agent". If it will depend on a comma I would advise that it be looked at. If "agent" stands alone like the others, then I say this Bill goes further. I will leave the point with the Minister. He need not even answer, but I have given him a point there. If that is so, in the section it is the generality of the information. Even if I take the Minister's interpretation and say that, on the one hand, it is only right and proper and indeed necessary in the interests of uniformity and equity that no distinction should be made in the case of an executor by virtue of the fact that he is in any other capacity and therefore, a solicitor executor is on all fours with a lay executor or an accountant executor, I still feel that in view of the solicitor-client relationship the lack of qualification of the word "information", in other words the phrase, "such information within their possession or power as they"—the Commissioners —"may require in writing", is dangerously wide and suggests a qualification. I do not want to prolong the argument.

If the Minister replies I am sure I will come up with another reply. Whether I agree with the Minister or not I do not think I will pursue it. I hope I made the two points clear, (1) that I would strongly vindicate the confidential relation of solicitor and client, qua solicitor; (2) that there are possible constitutional dangers here in that the word “agent” may or may not be qualified by the clause that follows—and without the comma it probably is. As I said, it is dangerous to depend on a comma and I think it would be safer to qualify “information”. We would ask the Minister to consider that and also Deputy Colley's amendment, which the Minister is going to consider in perhaps an even broader context than it was originally proposed.

Mr. T.J. Fitzpatrick

(Cavan): Very briefly in reply to Deputy de Valera, I think that trustee, guardian, committee, personal representative and agent are all qualified by the words which follow.

Major de Valera

I wonder are they.

Mr. T.J. Fitzpatrick

(Cavan): You have trustee, comma; guardian, comma; committee, comma; personal representative, comma; agent or. Probably Deputy Wilson, who might be an authority on this, will agree that it would not be usual to have a comma before “or”. You have a list of words, commas, then the last one and “or”. I would say that all those, including “agent”, are qualified by the words which follow, meaning that the property must be vested in them or they must be managing the property.

Major de Valera

I take that interpretation, but I put up the other one for consideration.

Mr. T.J. Fitzpatrick

(Cavan): I hope I have knocked it down.

Major de Valera

Will the court knock it down?

Mr. T.J. Fitzpatrick

(Cavan): Deputy de Valera is also worried about information being too broad and being wide enough to cover the confidential information which the solicitor might have obtained from the client. I think it is also qualified because it says: “Such information within their possession or power as they may require in writing for the ascertainment of liability to, or the collection of, tax.” That is all the information we can ask for. The word “solicitor” is not mentioned here. We have managers in it, and it is somebody who is managing property. This information would be sought from him qua manager or estate agent, not qua solicitor. I would also refer Deputy de Valera to the proviso to section 14 (2) (c) which says:

Provided that none of those persons shall be liable for tax to an amount in excess of the market value of the property or in excess of the income, as the case may be, vested in, collected or received by him or to which he is beneficially entitled in possession.

Major de Valera

That is only a liability to tax.

Mr. T.J. Fitzpatrick

(Cavan): Thereby linking the whole thing up to show that it is the estate manager we are after and not the professional adviser.

Major de Valera

I will not pursue it. It is a very interesting point.

Mr. Connolly

I spoke on the Second Stage of this Bill on this section. With all due respects to the legal people here, I am a layman, and I would like to know how would estate agents or auctioneers be involved in this type of transaction. I think they would come under the same heading as these legal people. There would be a certain amount of responsibility here also. Forgive me if I am wrong. I appreciate that I am on very technical ground here. Say for instance an auctioneer or an estate agent manages, or as the ordinary man calls it, lets land and gets a very substantial sum. He is in a very difficult position. Will he have to go to the owner and say: "I want your income tax returns or I want to know if you are liable under this Bill"?

I have seen grazing land being let on the 11-months' system and the client after letting the land returned to England to his employment. When the Revenue Commissioners wrote to him he either ignored the letter or it was returned and he could not be traced. The agent got a latti-tat from the Revenue stating that he was now liable. If the agent or auctioneer had paid all the money over he would be caught by the throat. This agent had to explain the position to the tax inspector. The income tax inspector said: "You should have known better." There are not many estate agents or auctioneers nowadays. When this man wrote home from England he kicked up a row. This should not have happened. This section is very interesting for the layman. Heretofore when you issued a bill it was the person or the persons from whom you could seek information, which could be your next door neighbour. I presume this means it could be an accountant, auctioneer, estate agent or a barrister. This gives very wide scope. If an estate agent or auctioneer disposes of the property or leases or rents the property or land, how will he fare out under this legislation? If the owner through some elusive way tries to wriggle himself out of his liability, will the agent or auctioneer then be liable, as he was under the Income Tax Acts?

An estate agent or auctioneer would want to be very sure of his grounds before giving advice or disposing of the property of a client. He would want to make sure that he would have himself covered because if he did not he could find himself in a very awkward position from a financial point of view and he could be held responsible. I am bringing up this matter because estate agents and auctioneers have been caught under the Income Tax Acts and I presume this may apply also in this case. People are not too anxious to disclose anything if they can help it.

The Revenue Commissioners with the powers they have under this Bill, have a lot of avenues open to them, such as banks, solicitors, accountants and various other people. I believe rent and rates collectors come into this. They may be in a position to give more information than possibly the estate agent or auctioneer, having really transacted the sale of the property or the leasing or letting. I am worried about the estate agent's liability. How can he ensure he will not be responsible? Has he to write to the Revenue Commissioners for a certificate in regard to this, or how does he overcome it? I am dealing with farmers who can have other incomes, and who may come under the scope of the Bill. How will the Bill affect such people? This is going to create an embarrassing position for the estate agent or auctioneer. Will he have to write to the Revenue Commissioners and ask them for a certificate regarding the liability of Mr. X or Mrs. M?

The Minister might be able to spell out more clearly how this will affect the people I have mentioned. I would not like to see a position where these persons or person could wriggle out and hold the agent responsible, which they can do now under the Income Tax Acts. At an auction not too long ago a person who came over from England said he was not liable and the auction was stopped. The estate agent involved said: "All right I am going to read it out at the auction that you owe me almost £400". When the man heard that it was going to be called off he had to change his tune. The Minister must admit that it put the auctioneer in a very awkward and embarrassing position but he had to do it in order to claim his money, and small blame to him.

I would hope that these people I am alluding to would have some way out of an awkward situation that may arise. As I stated earlier, most of the Members here who have spoken on this matter are highly qualified in legal matters. I am only reading it as I see it as an ordinary individual. I would like the Minister to give me some assurance as to the position.

Mr. T.J. Fitzpatrick

(Cavan): Deputy Connolly's contribution has put beyond doubt that I am not breaking any new ground in this Bill and I am not establishing any precedent in regard to liability for tax. I am familiar with the situation described by the Deputy in regard to income tax, where auctioneers and estate agents are liable because they collected rent on behalf of clients and parted with the rents without paying income tax. They should have deducted the tax in certain circumstances from the lettings and remitted it to the Revenue Commissioners. They did not do that and they were liable.

That has been the position for many years. Estate agents by virtue of acting as agents rendered themselves liable and sometimes they were held liable by the Revenue Commissioners and they had to pay the money. I agree with the Deputy when he says that the client invariably resisted violently any attempt by the auctioneer or estate agent to pay over to the Revenue Commissioners and he changed his auctioneer.

When there was Schedules A and B income tax auctioneers in their advertisements said they were advertising on the instructions of A who was in the United States or in England. That bit of information brought the Revenue Commissioners and the Inspector of Taxes along for six or 12 years arrears of tax. It did not amount to very much in £ s.d. but the client rebelled and resented it very much. At any rate sections A and B have been abolished and it does not arise in that way now.

Deputy Connolly asked me if the auctioneer is liable as an accountable person. I have to be honest and straight with him and tell him that he is, if the property comprised in the taxable wealth of an individual on the relevant valuation date stands vested in him or if the auctioneers manages the property or receives the income from the property. To that extent he is liable. I would invite Deputy Connolly to check over his clients and decide how many of them are in the wealth tax bracket.

He is dealing, as he says, largely with farmers. Before a farmer is liable for wealth tax, if he is a married farmer unless he has considerable other property he must have a farm without a house or without a hoof on it valued for £200,000. If Deputy Connolly is dealing with many of those he is a lucky man and I congratulate him. I would say that the number of such people he would deal with are very few and far between. If he is dealing with a person in that category I would ask him to be careful. He need not be all that careful because if he has to pay the wealth tax, the Revenue Commissioners will have a number of options and they will be able to follow the owner of this valuable property if they can get him. If he is readily available they will follow him instead of the auctioneer. If there are trustees of the property they will follow them instead of the auctioneer.

The Revenue Commissioners will act reasonably but, if as a last resort or perhaps for some other reason, they decide to follow the auctioneer and collect the money from him the auctioneer will not be any longer at the mercy of the client in regard to wealth tax, as apparently he was at the mercy of the client in regard to income tax, because we have taken the precautions here of conferring a right on that auctioneer who paid the wealth tax to recover it from the profit, to sue the owner and to follow the property which was liable to the wealth tax. The Deputy would agree I think that that being the position he has nothing to worry about. First of all, it is extremely unlikely that it will crop up, but if the auctioneer finds himself caught like this and obliged to pay the tax he will be able to follow the property for it.

Mr. Colley

May I put the proposition to the Minister that Deputy Connolly could be even more contented in his mind than the Minister suggests he might be—not just Deputy Connolly but all the persons covered by these provisions—if the Minister were to add a proviso at the end of subsection (2) to which he referred the effect of which is to limit the liability of the person concerned to the amount which is vested in him or which he will collect.

Mr. T.J. Fitzpatrick

(Cavan): That is what I have done. Does the Deputy want me to exclude Deputy Connolly specifically?

Mr. Colley

I want the Minister to provide in that that nobody will be liable under this to the extent that they have paid over moneys they have received prior to notification by the Revenue Commissioners. There is a similar provision in the Value Added Tax Act, 1972 in section 37. If there were such provision it would mean that from the point of view of anybody, not just an auctioneer but anybody else covered in this section, that if he receives the money or if it is vested in him and he is notified by the Revenue Commissioners then it is at his own risk if he parts with it. If he has already parted with it, I would suggest that to be notified by the Revenue Commissioners and held liable, even with the right of reimbursement, is not a situation that could leave Deputy Connolly or anybody else very contented.

Mr. Connolly

I note from the remarks made by the Minister that there is an option open to the estate agent or auctioneer. There is an option open to him all right but he has to sue the owner.

Mr. Colley

The only reason you would have to sue him is that the Revenue Commissioners could not get him.

Mr. Connolly

He could be outside the country or could go to another estate agent and then the auctioneer would be put in a difficult position in his own locality. I feel very worried that the estate agent or the auctioneer comes under this as happened with income tax. I have reservations about that also.

Mr. T.J. Fitzpatrick

(Cavan): The income tax situation would arise at least 100 times, or perhaps 1,000 times, for every once that the wealth tax situation is likely to arise. Indeed many an auctioneer could go through his professional life, earn a good living and save a lot of money and never be lucky enough to act for a wealth tax client. The auctioneers are not being singled out at all for treatment here. We are dealing with managers of estates, with people who manage estates whether they are solicitors, accountants or estate agents. Regarding the point raised by Deputy Colley to write in a proviso saving the person who passed over money without notice, that would be going too far in this wealth tax situation. I am satisfied that the provisions in the Act enabling the person who has been obliged to pay over the tax to recover it are adequate. My advice to Deputy Connolly, if he is unlucky enough to have to pay up one year is that he should simply say nothing about it but merrily go on and let the farm the next year again. Then when he has got the rent for it reimburse himself out of the next year's lettings and so inform his principal.

Mr. Colley

I would ask the Minister between now and the Report Stage to look at and consider carefully the good example given by the Minister for Finance in the Value Added Tax Act, 1972.

Mr. T.J. Fitzpatrick

(Cavan): I have followed the good example set by the same Minister for Finance in other Acts——

Mr. Colley

Unfortunately the Minister did not.

Question put:

The Committee divided. Táa, 69: Níl, 64.

Tá

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Byrne, Hugh.
• Clinton, Mark A.
• Cluskey, Frank.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Corish, Brendan.
• Costello, Declan.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• Dockrell, Maurice.
• Donegan, Patrick S.
• Donnellan, John.
• Dunne, Thomas.
• Enright, Thomas.
• Esmonde, John G.
• Finn, Martin.
• Fitzpatrick, Tom. (Cavan).
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Patrick.
• Hogan O'Higgins, Brigid.
• Jones, Denis F.
• Kavanagh, Liam.
• Kelly, John.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerard.
• McDonald, Charles B.
• McLaughlin, Joseph.
• McMahon, Larry.
• Malone, Patrick.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Donnell, Tom.
• O'Leary, Michael.
• O'Sullivan, John L.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Spring, Dan.
• Staunton, Myles.
• Taylor, Frank.
• Thornley, David.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Níl

• Allen, Lorcan.
• Andrews, David.
• Barrett, Sylvester.
• Briscoe, Ben.
• Brosnan, Seán.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Connolly, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• Davern, Noel.
• de Valera, Vivion.
• Dowling, Joe.
• Fahey, Jackie.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzpatrick, Tom. (Dublin Central).
• Flanagan, Seán.
• French, Seán.
• Gallagher, Denis.
• Geoghegan-Quinn, Máire.
• Gibbons, James.
• Brady, Philip A.
• Brennan, Joseph.
• Breslin, Cormac.
• Gibbons, Hugh.
• Gogan, Richard P.
• Haughey, Charles.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael P.
• Lalor, Patrick J.
• Leonard, James.
• Loughnane, William.
• Lynch, Celia.
• Lynch, Jack.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Murphy, Ciarán.
• Nolan, Thomas.
• Noonan, Michael.
• O'Connor, Timothy.
• O'Leary, John.
• O'Malley, Desmond.
• Power, Patrick.
• Smith, Patrick.
• Timmons, Eugene.
• Tunney, Jim.
• Walsh, Seán.
• Wilson, John P.
• Wyse, Pearse.

Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Lalor and Browne.

Question declared carried.

SECTION 15.

Mr. T.J. Fitzpatrick

(Cavan): I move amendment No. 26bb:

In page 18, subsection (1), after line 30, to insert the following proviso:

"Provided also that the reference in this subsection to three months after every valuation date shall, in relation to the valuation date in the year 1975, be construed as a reference to the period ending on the 5th day of October, 1975.".

Under section 15 of the Bill a person who is primarily accountable for the payment of tax in respect of taxable wealth must furnish a return of that wealth within three months of a valuation date. Under the Bill as drafted the interest-free period and the time allowed for delivery of a return correspond in both cases, three months from the valuation date. One of the objects of the amendment which I propose to introduce to section 18 is to extend the interest-free period for this year to the 5th October next. In view of this extension of the interest-free period it is also desirable to extend the time limit for the furnishing of returns to bring it into line with the interest-free period for this year. In all future years they will correspond, three months from 5th April. That is the purpose of the amendment which I am now proposing.

Mr. Colley

Could I ask the Minister if this would mean that in 1975 a taxpayer has until 5th October, 1975, to deliver a return?

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

If that is so, why does the Minister provide in amendment No. 28 that interest will be payable on tax which is paid on or after 5th October, 1975?

Mr. T.J. Fitzpatrick

(Cavan): The interest-free period and the date for making the returns in this year will correspond, 5th October, 1975.

Mr. Colley

Does the Minister not think this is a rather peculiar situation that on the day following the date on which a person can legally make a return he becomes liable for interest on the tax found to be due although he has legally made a return on 5th October?

Mr. T.J. Fitzpatrick

(Cavan): There are peculiar circumstances and conditions prevailing in this particular year of which the Deputy will not be unaware.

Mr. Colley

That is true. It goes to the root of the provisions in this Bill even related to other years. It highlights what the problem is. The problem is that the Bill provides that the tax is due and payable on the valuation date but it provides for a return within three months thereafter, in other words, in the ordinary year, 5th July. That is probably where the difficulty arises, that the tax is due and payable before the return is due. The problem is highlighted in this situation, and the difficulty that I am referring to is not a consequence of the delay in the enactment of the legislation; it is a consequence of the provision that the tax is due and payable on the valuation date but the effect of it in this year is, if the Minister's amendment is accepted, that it will be within the legal terms of the Bill to deliver a return on 5th October of this year. It will also be legal and in accordance with the provisions of the Bill to be subject to interest at 18 per cent per annum on outstanding tax from 5th October. Whatever the difficulty and peculiar circumstances of this year, I do not think they explain that situation which, on the face of it, is not reasonable and is an anomaly.

Ruairí Brugha

Properly speaking if one can refer forward it should be three months after 5th October which would be 5th January in this instance. If one is to look forward to the amendment No. 28 it should really be three months after 5th October.

Mr. T.J. Fitzpatrick

(Cavan): I expect this Bill will be an Act very shortly. It will then be open to a taxpayer to make a return straightaway.

Ruairí Brugha

The Minister is making the valuation date 5th October.

Mr. T.J. Fitzpatrick

(Cavan): No. The valuation date is still 5th April, 1975, but I am extending the period within which a return may be made up to 5th October, 1975. I am also extending the interest-free period up to that date. I know it is not any great compliment to do that, but I am doing it.

Ruairí Brugha

The wording of the Minister's amendment is that the valuation date in the year 1975, shall be construed as the 5th day of October, 1975.

Mr. T.J. Fitzpatrick

(Cavan): Ending on 5th October, 1975.

Major de Valera

There are extraordinary situations in this year. We need not go into what they are, but I do not think anyone can criticise the fact that a Bill of this nature should get the examination it has got. It was delayed by other circumstances. Would the Minister not consider that, in view of this being the first trial, no taxpayer will have any certainty until the Bill goes through both Houses o' the Oireachtas. There is a certain general warning all right, and it is something more than general once it passes this House. Let us concede that, but nevertheless there is no final certainty about the liability. There are penalties for wrong returns or wrong valuations. Is it not reasonable to give an exceptionally long period at the beginning for the return which the Minister is making? I am not quarrelling with that. This will be the first return. Many returns may be defective, or may raise queries, or there may be inquiries in regard to them, and many returns may require the assistance in the first instance of professional people.

People may have to have valuations done. People may have to consult either accountants or lawyers. People may have questions to pose to the Revenue Commissioners as well as furnishing the return. It is not unusual in furnishing returns that questions may be asked. There may be alternatives and an inquiry as to what alternative is applicable. In that case, would it not be reasonable to give some time? I am not necessarily going as far as Deputy Brugha and saying the Minister should add another three months, but give some time.

Mr. T.J. Fitzpatrick

(Cavan): Interest free?

Major de Valera

Interest free after the date. I would suggest that the Minister should consider that approach.

Mr. T.J. Fitzpatrick

(Cavan): If I may say so, the discussion about interest is not relevant on this amendment. It will be relevant when we come to amendment No. 28. I suggest that we leave it until we come to that.

Major de Valera

If the Minister leaves it open; that is acceptable enough.

Mr. Colley

The Minister referred to peculiar circumstances arising this year. I hope he will include in those peculiar circumstances the fact that the Government's White Paper said that the commencement of wealth tax would be on 6th April, 1975. This Bill makes wealth tax legally due and payable on 5th April, 1975. I hope he will bear that one in mind.

Mr. T.J. Fitzpatrick

(Cavan): That is one day, apparently.

Mr. Colley

The clear implication was that it was to be an annual tax, the commencement date was 6th April, the payment date would be 5th of April, 1976. The commencement date is 6th April, 1975, so effectively the wealth tax is being made payable in advance.

Mr. T.J. Fitzpatrick

(Cavan): No.

Mr. Colley

If the commencement date of an annual tax is 6th April, would the Minister not agree that to make the tax due and payable on 5th April is certainly making it payable in advance?

Mr. T.J. Fitzpatrick

(Cavan): This tax is payable on the valuation date.

Mr. Colley

That is right which, in this case, is 5th of April, 1975.

Mr. T.J. Fitzpatrick

(Cavan): Exactly.

Mr. Colley

In the case of an annual tax, if the commencement date is stated to be 6th April, leaving aside the contradiction involved in that, surely the Minister will agree that in those circumstances the wealth tax is being charged in advance.

Mr. T.J. Fitzpatrick

(Cavan): I do not agree.

Mr. Colley

Perhaps I am being dense about this, but if there was an annual tax and the commencement date was 6th April, when would the Minister normally expect it to be payable if it were not payable in advance?

Mr. T.J. Fitzpatrick

(Cavan): The wealth of the taxpayer would be valued on, say, the last day of the tax year, at present the 5th April. As a fixed annual date invites evasion, safeguards would be introduced to protect the tax base from artificial depreciation of market value of assets.

Mr. Colley

I refer the Minister to page 60 of the White Paper which reads as follows: "Annual wealth tax: the date of commencement will be 6 April, 1975".

Mr. T.J. Fitzpatrick

(Cavan): Are we not commencing it on 5th April, 1975?

Mr. Colley

The 6th of April.

Mr. T.J. Fitzpatrick

(Cavan): The Deputy wants to make the case that this is a tax payable in arrears. It is actually a tax which becomes due and payable on a fixed date. We fixed the date in April, 1975, and we are living up to that.

Mr. Colley

If I might refer the Minister further to paragraph 93 of the White Paper which says the wealth of the taxpayer would be valued on, say, the last day of the tax year, at present 5th April. As a fixed annual date invites evasions, safeguards would be introduced to protect the tax base from artificial depreciation of the market value of the assets. Fair enough. The indication there is that it will be payable on a fixed day, likely to be 5th April in any year. On page 60 it is stated: "Annual wealth tax: the date of commencement will be 6 April, 1975".

Mr. T.J. Fitzpatrick

(Cavan): Yes.

Mr. Colley

How can the Minister say in the light of that that it is not charging wealth tax in advance to charge it on 5th April, 1975, when the commencement date is 6th April?

Mr. T.J. Fitzpatrick

(Cavan): I am perfectly satisfied that Deputy Colley appreciates that this tax, although an annual tax, is payable by reference to the valuation date. The valuation date is the date which fixes liability. It is the focal point. The valuation date has been fixed on 5th April. That is the date on which the tax begins and that is the date by reference to which the tax should be paid.

Mr. Colley

It is described as the last day of the tax year. The 6th of April, not the 5th, is chosen as the commencement date. The clear implication is that the first day of the operation of the wealth tax year would be 6th April, 1975 and the date of payment would be 5th April. Is that not clear?

Mr. T.J. Fitzpatrick

(Cavan): No. Deputy Colley, like the rest of us, is so accustomed to dealing with income tax that he thinks this should run on the same basis as income tax. It is not operated in the same way as income tax.

Mr. Colley

I am talking about plain English.

Mr. T.J. Fitzpatrick

(Cavan): It is not payable over the entire year. If the person gets rid of the property a few weeks or months after the valuation date he is still liable for the whole year. That is the difference between this and other taxes. We said in the White Paper that the tax was beginning in April, 1975.

Mr. Colley

On 6th April.

Mr. T.J. Fitzpatrick

(Cavan): I will not quibble about a day one way or the other.

Mr. Colley

I am because it was specifically stated for a purpose.

Mr. T.J. Fitzpatrick

(Cavan): No.

Mr. Colley

It would have said 5th April otherwise. It specifically said the 6th.

Mr. T.J. Fitzpatrick

(Cavan): April, 1975, will not go down as the year the wealth tax was introduced. It will go down as the year death duties were abolished.

Mr. Colley

That is a very interesting observation. It does not answer the question raised on this amendment and on the wording of the Government White Paper. The intention conveyed to the public was quite clear. This Bill and the amendment are going back on that intention conveyed to the public. I know the Government are very badly stuck for money. Are they so badly stuck that they have to go back on this?

Mr. T.J. Fitzpatrick

(Cavan): The Deputy tells us we will not get any money out of it, so what does it matter?

Mr. Colley

It is an indication of how they are scraping the bottom of the barrel when they have to go back on an undertaking in the White Paper to get the little that will come out of it, to the detriment of the taxpayer.

Amendment agreed to.

Section 15, as amended, agreed to.

The Dáil adjourned at 12 midnight until 10.30 a.m. on Thursday, 17th July, 1975.