Generally speaking, and with one exception, I agree with Deputy Colley's assessment of the Bill. On the Fifth Stage we are limited and not permitted to go into detail in regard to the other Bills which form part of the new capital taxation code. As Deputy Colley said, part of that code was rushed and in one case misconceived, in our economic circumstances, and the facts are beginning to prove this.
I agree this Bill is a good effort to solve a problem and to bring our inheritance laws up to date, but Deputy Colley is right when he said it will not be quickly understood by people outside and that practice will show up points where the Act will need amendment. In regard to the first, it might be as well to say what the Bill does, and in regard to the second, we cannot ever hope that any Bill will come from the stocks in perfect final form: indeed no Bill ever is in final form. In that connection the most immediate consideration, of course, is devaluation of currency and inflation.
I said there was one point on which I did not agree with Deputy Colley. I take a different view from him on these exemptions. I suppose that our society being in its present transitional stage, the Minister is probably right in regard to the scales and Deputy Colley is perhaps justified in the pragmatic attitude he adopted. There are in the Schedule cases where the allowances are perhaps too low but there will be erosion of these allowances because of inflation and devaluation of sterling. I should not like that it would go abroad that this measure is one of finality. Though we praised the Minister in regard to parts of this legislation, and although we will not ask him for a further commitment in regard to this Bill in this House—I am thinking of its debate in the Seanad—I should not be surprised in the present climate of inflation and devaluation if the rates were increased, but we should like to ensure that at least the parity of the position as defined at this moment by this Bill would be preserved. Perhaps I am standing on my own when I say that.
The Bill will go to the Upper House in different circumstances to those in which it came to us. Indeed there were different circumstances when the Minister proceeded to prepare this legislation than when it came before us. The economic climate was far different then. If we were now giving the Bill a Second Reading we might take a somewhat different view than we do when the Bill is to all intents and purposes passed. It is a matter for the other House to take into account the changes that have taken place, and there I leave that point.
There is one thing in the Bill that I have always felt will possibly be in ease of the administration, the Revenue, something that is not quite the type of thing envisaged by all the white papers and other documents beforehand. It is important that people know what this Bill is about.
Most people have the impression that this is a Bill which takes over the old death duties code and is notable for the reliefs it gives in an area where the former death duty code lay very harshly on certain people and particularly on families. That the Bill does and that impression is correct pro tanto. However, it is not quite as generally appreciated that this Bill as well as doing these two desirable things, bringing up to date our death duty code, if I may use the words without giving offence to the Minister who claims to have abolished death duties, gives reliefs and tidies up the old uncertainties and makes certain things definite—all of these things it does but, at the same time, it makes a certain fundamental alteration in the law which has the effect of substantially increasing taxation. That is something that should be realised. I am not arguing whether or not that increase in taxation is to be justified. We have said we are generally in favour of this Bill. That is quite a different matter from appreciating what is in the Bill and the function of the debate on the Fifth Stage is to bring out clearly what we are finally passing.
There is a substantial change in the law. Heretofore a gift tax was unknown to our law. A gift tax is a new tax and it is a new burden on gifts even in the closest family circle, subject of course to the generous exemptions—I go that far with Deputy Colley—the Minister is giving. Nevertheless this is a new tax imposed by this Bill. The Bill also imposes a new tax called an inheritance tax. That, however, should not be considered as a new tax in quite the same way because it is simply the substitution of what was essentially the old tax under a new name, with modifications, and again with generous reliefs, reliefs for which the Minister is entitled to credit. It is important to realise that basically this is what this Bill does. These are new taxes.
I come now to my second point, the aggregation of gift tax and inheritance tax. This is a continuing burden. I know the Minister will make the answer he is entitled to make and I concede it to him so he need not waste his breath. The limits of the reliefs make the practicality of what I am saying not so harsh but the fact remains that the tying up together of gift tax and inheritance tax has the effect of extending what used to be the five-year period. Under the old dispensation, when a person died his estate was reckoned to include—I am putting this in non-technical and general language—all gifts and dispositions within the previous five years. I think the period was extended to seven years in England. There was certainly a good deal of talk and possibly pressure to extend the period to seven years or even ten years here under Finance Acts in the past. But, although talked about, it was not done and there was strong arguments for not doing it. The position was that once the five years had elapsed the gift or the asset, or whatever it was, was free and no longer captured or accountable for the purpose of death duties. If I am wrong in that I will be glad if the Minister will correct me.
A moment ago the Minister talked about being away from practice for three years and I reminded him that I am 25 years away so I could easily make a mistake. The effect of that five-year period was that at the end of the period the gift or asset, or whatever it was, was free. The trouble here is it will no longer be five years, seven years or ten years. It will be the whole period from 1969 until the testator dies, if it is an inheritance, and it is an accumulation until the gift limit is exhausted, if it is not an inheritance. Is that an accurate summary? I rather think it is. Here then we have a Bill imposing new taxation which will operate against the taxpayer in so far as the liability over a five-year period now becomes an unlimited accumulation from 1969 to be captured when the limits are exhausted in either case and to be aggregated for the purpose of absorbing the allowances in the case of a decease. Hitherto gifts within five years were taken into account. Under this legislation all gifts over the entire period from 1969 until the giver dies will be taken in. I concede that this is compensated for by the allowances.
Does the Minister, I wonder, get the point? If the Bill stood alone on the ground of the new gift tax for which it provides and on the ground of this device—which I do not suggest was meant to be an underhand one or slipping one over but, in the legal sense, a substitution of what you might call the period of life or a period up to a very large sum on gift—it would be objectionable. I think we would find this grounds for opposing this measure, were it not for the benefits, the exemptions, the Minister has given. I freely concede that these measures are sufficient justification here.
That leads me backs to the point that we support the Bill generally and in the terms which Deputy Colley said, but, as I have said, there is no harm at all in our seeing what we are doing. In a nutshell, what the Bill does is to impose a new tax, to substitute for the old death duties a new type of death duties. It provides for aggregation over a period starting in 1969 instead of five years. As against all this, there are very substantial reliefs. Deputy Colley thinks in certain categories they are too much. There I have taken the democratic privilege of disagreeing with him, even as a colleague in the same party. However, I do agree with him that perhaps an adjustment—and we argued this on another Stage—for some of the other categories in table III or even table IV, but certainly table III, would have been helpful. But one cannot have perfection. For these reasons I might go so far as to take the unusual course for an Opposition of saying it has our benediction, shall I say without the candles or the holy water.
