Seanad Éireann díospóireacht -
Wednesday, 13 Jul 1960

Vol. 52 No. 19

Finance Bill, 1960 (Certified Money Bill)—Committee and Final Stages.

Sections 1 and 2 agreed to.

SECTION 3.

Question proposed: "That Section 3 stand part of the Bill."

Dr. O'Donovan

On Second Stage, I stated that a person paying tax this year would have to pay a half year's tax on 1st January, a half year's tax in July and three months' tax in respect of October, November and December.

I referred specifically to the calendar year 1960. The Minister purported to reply to that point. He spoke of my saying that a person would pay 15 months' tax in a year. I said in the calendar year, 1960.

I do not see any point in the Minister pretending to reply to an argument when he did not reply to it. He took the financial year 1960-61 and said he would get only 11 months' tax in the 12 months. It was gilding the lily to imagine he would get only 11 month's tax in 12 months. He was pushing the matter further.

In his speech, the Minister three times referred to lies. I do not see why he should twist my words. He can look at the Official Report. What I said is quite plain. I referred to the calendar year 1960. There is no answer to the case that any person who will go on P.A.Y.E. will pay a half year's tax in January or February, a half year's tax in July or August and he will pay a further three months' tax.

As a person whose duty it is, in this context, to represent the taxpayers, I do not care if the Minister gets in only ten months' tax in the year owing to the creaking of the system. That is not my function here. He can plead that if he likes. However, he must not pretend to answer something I said and twist it when, in fact, he is not answering the point. He will not get away with it. I do not see why the Minister should pretend to refer to the case I made which was specifically related to this calendar year and say, in effect: "Oh, no; I am getting in only 12 months' tax in the current financial year."

We had all this out on the Finance (No. 2) Bill last year. The same kind of case was made by the Minister. There is no question that any taxpayer on a salary and subject to P.A.Y.E. will pay 15 months' tax in the calendar year 1960. I do not mind what case the Minister makes otherwise. He can make any case he likes but he will not make such statements about my remarks on the Second Reading without protests from me. He will not twist what I said. As reported in the Official Report of 6th July, 1960, Column 1943, he said:

Therefore, instead of Senator O'Donovan being right when he said that we will receive 15 months' tax instead of 12 months' tax, we will actually receive 11 months' tax. That is so far as the Exchequer is concerned. Still, we are facing that and we hope things will turn out all right.

It is the usual blatherskite.

An Cathaoirleach

The Senator will appreciate that the Chair has been somewhat indulgent. This matter should have been raised on Section 1.

Dr. O'Donovan

With respect, Sir, I think that Section 1 went through very rapidly, indeed. This whole part of Part 1 of this Bill refers to income tax. I do not think it really matters upon what section the matter is raised. It is a general point about income tax.

An Cathaoirleach

Section 3 apparently deals with business taxes. The Senator may continue.

Dr. O'Donovan

Let us put it on any section we like. It can be put on the Final Stage of the Bill. I do not mind.

An Cathaoirleach

If the Senator wants to reply——

Dr. O'Donovan

I can make the rest of my statement on the Final Stage of the Bill.

Dr. Ryan

Although you have ruled the Senator out of order, Sir, perhaps you will allow me to say a word in reply. We have in these matters to talk about the financial year. You could make all sorts of fantastic calculations if you do not stick to the financial year. In my case, having paid income tax on 1st January and 1st July, I could claim that I paid a full year's tax in seven months. That is the sort of case Senator O'Donovan would like to make in order to embarrass everybody. It does not lead us anywhere.

Professor Stanford

The taxpayer is not interested in whether the Minister or Senator O'Donovan is right. What he is interested in is whether these new regulations are going to cost him more in the two years 1960 and 1961. Could the Minister answer that specific question?

Dr. Ryan

If you take the two financial years, it will cost exactly the same.

Dr. O'Donovan

Senator Stanford asked was it going to cost the taxpayer as much in the two years 1960 and 1961. In reply, the Minister speaks of the two financial years and not the two years 1960 and 1961, the two calendar years. There is no use in the Minister trying to get away with that kind of slick answer.

Dr. Ryan

There is no use taking an arbitrary period and saying you will pay more.

Dr. O'Donovan

There is nothing arbitrary about the period I took. It is the period for the commencement of this tax. I did not make it arbitrary. I had nothing to do with it. The Minister can make any case he likes but he will not twist my words. I referred specifically to the two calendar years. My exact words, at column 1848 of the Official Report, were that as far as the ordinary man was concerned on a salary or wage on PAYE, he will pay 15 months' tax in the calendar year 1960. The Minister says "in a year." I did not say in a year; I said in the calendar year 1960. With the introduction of PAYE, there is no question about it that in the two calendar years 1960 and 1961, the taxpayer will pay 27 months' tax.

Mr. Murphy

I think this section has to do with the introduction of PAYE and if I am in order—

An Cathaoirleach

The matter should have been raised on Section 1. Senator O'Donovan was not in when the section was taken and the Chair allowed him to advance his arguments on this section.

Dr. O'Donovan

I must say that Section 1 was passed very rapidly. I was here and sitting in my place.

Tomás Ó Maoláin

It is your funeral.

Professor Hayes

I think the Chair was quite right when nobody offered to speak on Section 1 to say that Section 1 was passed, but in the peculiar circumstances here where somebody wants to get a question asked, it could be allowed if the Minister does not mind answering it.

Mr. Murphy

The difficulty is that we passed Sections 1 and 2 before we had opened the Bill. That is not the Chair's fault. The question I want to ask is in relation to the document which was circulated in connection with the introduction of PAYE. That document shows certain allowances and I think that those allowances would have been changed as a result of the new current Bill. There is, however, some confusion about it amongst the ordinary workers who got the document and who are trying to ascertain their position and I would like very much if the Minister would clarify the matter for me.

The document, for example, shows that the allowance for each child is £133. It seems to me that the correct figure now would be £160. Of course, this document is still going round and is still being studied by the workers who are trying to ascertain their position.

Another aspect of that which is called into question amongst trade unions is a comparison of the allowance. I should like the Minister to let me have his observations. It shows that the allowance for an unmarried person is £312 per annum, whereas for a married man, it is £525. The comparison is made that two single persons living together would each have an allowance of £312, whereas a married man, supporting a wife, would have an allowance of only £525. It seems, therefore, that a brother and sister, both working and living together will be on a total allowance of £624, whereas a married couple would have only £525. I am assured that it is just as expensive to maintain a wife as it is for a sister to maintain herself. Would the Minister say why it is supposed that to maintain a wife is somewhat easier than to maintain two single people?

A third question on this which has been asked by the trade unions is in relation to the personal allowance. It is pointed out that some workers, by reason of their work, have a very heavy wear and tear on clothing, as can be appreciated. The purchase of dungarees does not protect the person's suit if he has dirty work, for example printers and such people. I wonder if any provision is made to deal with the problems of special categories of workers. What should they do about the matter? Would the Minister say whether they should either through their trade unions or as individuals approach the income tax people to ascertain what allowances can be given to them in respect of the wear and tear of their clothing?

On the question of allowances, if the Cathaoirleach will bear with me for another moment, it is suggested that employers are allowed on their contributions to chambers of commerce for income tax purposes. I do not know whether that is true, but if it is, I think the contributions made by an ordinary worker to his trade union should also be considered. The purpose roughly seems to be the same: to join together for collective protection and if it is a fact that employers can claim contributions to chambers of commerce and such like bodies for income tax purposes, the contribution of individual workers to their trade unions should similarly be allowed for income tax purposes. I wonder would the Minister be kind enough to let me have his remarks on those three points?

Dr. Ryan

The figures already issued for P.A.Y.E. will have to be amended where a taxpayer has children. That is the only amendment that is necessary.

Mr. Murphy

Will £160 be the correct figure?

Dr. Ryan

With one child, yes.

Mr. Murphy

For each child?

Dr. Ryan

With one child; with five children it would be a whole lot more. In regard to the discrepancy arising between a married person and two single persons, before P.A.Y.E. came in, a married person had roughly about twice as high an allowance as a single person but now a person's earned income is amalgamated and it gives a different result. The married person has an earned income allowance on one salary or wage but the two single persons have two salaries and therefore it usually comes to a little more than what the married person would get, on account of the earned income allowance being amalgamated.

With regard to the Senator's request for a personal allowance for special clothing, these things are broached by the individual and sometimes by a group but it is preferable to the Revenue Commissioners to deal with a group. If the Senator had any particular point to make on behalf of the trade unions, the Revenue Commissioners would be glad to hear the case made.

I am not sure but it may be that an employer would be allowed his contributions to chambers of commerce. It must be remembered there is a difference between the Schedule D and Schedule E taxpayer. The Schedule E taxpayer is a person receiving a salary or wage and the theory is that he gets that without any further trouble of advertising himself or anything else and therefore he is not as kindly treated as the Schedule D people because a Schedule D person must look for his living. For that reason, he may be allowed his contributions to a chamber of commerce. I know he is allowed subscriptions in certain cases where the Schedule E person would not be allowed them. For instance, a professional man who is working in the Service as a civil servant and receiving a salary could not be allowed his contributions to certain scientific organisations because he has got a job and there is no more trouble as far as he is concerned. However, the professional man who is in practice outside must keep himself up to date, must keep himself before the public and so on, and as I said, for that reason, he may get a concession of that kind, where a Schedule E person would not get it.

Mr. Murphy

The Minister would agree that the normal Schedule E taxpayer, a salaried or manual worker, has his particular salary and rate of pay and whatever permanent employment he has largely by reason of the action of his trade union and in that way is somewhat comparable with the businessman mentioned by the Minister. I wonder would the Minister look into the matter later on?

An Cathaoirleach

I am afraid I cannot permit any further discussion on this section.

Question put and agreed to.

Sections 4 to 11, inclusive, agreed to.

SECTION 12.

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

Dr. Sheehy Skeffington

On this section which deals with the remission of entertainment duty on cinemas, I should like to make the point that it seems to be legitimate for the Minister to remit some of this tax for the reason that though there was a time when cinemas were making very big money and it was fair enough then to tax them and make them contribute very handsomely to the revenue, it is now obvious that for a variety of reasons, the amount of money being made by the cinema proprietors is considerably less, and therefore this is an equitable section, reducing as it does the entertainment duty.

Nevertheless, when the plea is made for a reduction of this tax, which has been granted by the Minister, we should recollect two points. One is that large amounts of money were made in the past by cinema proprietors, and that consequently the poor mouth which some of them are now making is not really justified by past circumstances. The second point is that some of the falling off in revenue, for which they are being compensated in this section, is due to a past neglect of the interests of the public. The public was not infrequently treated by the cinemas, when they were coining money hand over fist, almost with contempt. It was allowed to queue in the rain and kept outside for longer than was justified by the numbers inside, for the purpose of putting up the price of certain seats and so on, and while recognising, therefore, that the Minister is right in making this concession, one should recall that some of the reasons for loss of revenue have been sins of commission and omission, on the part of the cinema proprietors in the past, who did not make things all that easy for the public when they were having it pretty good themselves.

Mr. Donegan

I cannot understand the workings of Senator Sheehy Skeffington's mind. We cannot tax past income. The Minister is quite right in reducing the tax on the cinemas. The impact of television on the cinemas has meant that their income has been much reduced, while their overheads remain the same. With regard to this question of past omissions and commissions I feel that any cinema proprietor who would keep people standing longer than necessary when he had seats inside would not be the horrible type of person Senator Sheehy Skeffington suggests but would be a person better locked up in a lunatic asylum because he would be refusing money. I feel this queer sort of tangled expression of opinion on profits by Senator Sheehy Skeffington is ridiculous and the Minister is quite right. Incidentally, chambers of commerce are not collective protection societies. The comparison which Senator Murphy made is not as between chambers of commerce and trade unions, but as between federated unions of employers and trade unions.

Dr. Ryan

I have not very much to say on this. I think the figures would show that, over the past two or three years, the patronage has not gone down but that expenditure has gone up. I refer to the past two or three years. For that reason, the cinemas needed some relief. I must say that I made the two points raised by Senator Sheehy Skeffington when I had discussions about this matter with the cinema people. I said they had made good profits in the past, and they said those profits were gone. I made the point also—I am not a very great patron of the cinema myself—that complaints had been made to me that the general run of the pictures shown were poor and that, for that reason, they had lost a certain amount of patronage. They admitted that, but said they could not afford in present circumstances to show better pictures. They admitted they were not as good as they would like them to be, and they said that, with further reliefs, they might be able to improve the programmes as well as cover their losses.

Mr. Carter

I should like to make one point on that. The Minister quite rightly considered the point of view of the cinema proprietors. Whatever about the cities, the position as outlined by Senator Sheehy Skeffington does not obtain in the country, and I know of no cinema proprietor who would deny a person admittance. We all know that the advent of T.V. has made inroads on cinema attendance. As a matter of fact, I am not a cinema fan at all, but I must say, in fairness to the cinema proprietors, there were group meetings at which accounts and balance sheets for a number of years were produced which convinced the group meetings that the cinema proprietors had a reasonable case to make to the Minister for a remission of taxes.

Dr. Sheehy Skeffington

I just want to make this point clearer than apparently I did. With regard to what I said about past neglect or even contempt of the public, what used to happen was not that the cinema proprietors kept the public out of the dearer seats by compelling them to queue for the cheaper seats, but that there were cheaper seats kept vacant in order that as many as possible would be driven into taking the dearer seats.

Dr. Ryan

I did not catch that point.

Dr. Sheehy Skeffington

That is a minor piece of contempt for the public which was very prevalent in Dublin.

Question put and agreed to.

Sections 13 to 17, inclusive, agreed to.

SECTION 18.

Question proposed: "That Section 18 stand part of the Bill."

Dr. Sheehy Skeffington

This section deals with the imposition of duties and taxes on hydrocarbon oils. I should like to ask the Minister if he has gone into the question of what would be the result of an increased duty or tax on petrol used for private purposes, and also whether he has gone into the question of the revenue possibilities of increasing the price of petrol, as is done in many Continental countries as a kind of gauge, as it were, of luxury or semi-luxury spending, which it is within the power of the individual to spend or not to spend; but in so far as he does spend, he contributes to revenue.

Dr. Ryan

This section deals with heavy oils duty which was taken off where they were used for industrial purposes, say, for combustion engines, and so on. With regard to the question asked by Senator Sheehy Skeffington, I think nearly every Minister for Finance is obliged, we might say, to look at all the taxes every year to see if he can get more tax on any particular item. We were advised that this is as highly taxed as possible and that if it were increased we would lose and not get as much out of it. With the present price of petrol, an increase in tax would mean that less petrol would be used and the Minister for Finance would be no better off. I think that is roughly the position.

Question put and agreed to.

Sections 19 to 22, inclusive, agreed to.

SECTION 23.

Question proposed: "That Section 23 stand part of the Bill."

Dr. Sheehy Skeffington

Section 23 deals with death duties and Sections 23 and 24 both deal with the points I want to raise. Section 23 deals with the Second Schedule and sets out the rates per cent. of duty on the amount. I notice in the Second Schedule the amount now starts at £5,000 instead of £2,000 as it was previously, and that is brought about by the next section. Section 24. I regard the principle underlying these changes as a mistaken one. The Minister is, in fact, raising the exemption limit from £2,000 to £5,000 and the taking of duty from the estate of a deceased person will not start in future until the estate is worth £5,000.

With your permission, a Chathaoirligh, I should like to mention now something that arises partly under Section 24 and partly under Section 23 Section 23 makes it quite clear that because of the Second Schedule, it starts at £5,000 now and not at £2,000 as previously. The argument put to us in favour of this concession to the better-off sections of the community so far is that death duties act as a "disincentive" to saving. I should like to question that. I wonder is that really so? Does a person say to himself: "I have an estate worth £2,000, but I am not going to add to it because if I do, I shall have to pay three per cent. duty, or my heirs will when I am dead, on the third, fourth and fifth thousand pounds." I do not believe he does.

Furthermore, I do not believe the duties in operation now are in any sense punitive. I think they are entirely legitimate and I think there should be such things as death duties for redistributing usefully, by Government channels, wealth which has over-accumulated. I am not in favour of increasing the accumulation of wealth in fewer and fewer hands. While the Minister's change is a small one, I think it is a small step in the wrong direction. I should like to examine the question of incentives to savings and disincentives to saving. It is sometimes argued that people want to save money and leave it to their children which is true of course and legitimate. I feel, however, that in so far as the State is doing its duty to cherish all children equally and by giving in relation to clothing, housing and education equal opportunity to all, the necessity for providing for such things for one's children by means of one's own accummulated wealth will decrease. In other words, it should not be necessary or possible to buy privilege and advantage for one's children, in such fundamental matters as education, housing and clothing.

What I would like to see is the State tackling it from the other end and making it apparent to parents in particular that there is no particluar merit in leaving large estates, and that they would be just as well to distribute them before they die. That is a way that is now open to them to avoid death duties, and it is rather a good way. Many parents might be encouraged to prise themselves loose from their property many years before they die and pass on their responsibilities, whether property or money, to their children.

The Minister by raising the exemption is making a mistake. After all, if the children have the merits of their parents, the best way to bring those merits to fruition is to start even with the children of other parents. A hundred yards champion does not expect to leave his championship to his son, who if he is to become a champion, must prove his own merits. The accumulation of wealth should be minimal and not maximal, and the Government should be moving in the other direction of increasing death duties and lowering the exemption limit rather than decreasing the duties and raising the exemption limit.

Mr. Donegan

I feel that Senator Sheehy Skeffington has put words in the mouth of the Government and of previous Governments which they did not utter or wish to utter. He said— and I have taken a note of it—that death duties were useful for the purpose of re-distributing wealth that has over accumulated. I do not think the Minister or any of his opposition ever said that death duties were useful for the re-distribution of wealth, rather I think that neither the Fianna Fáil Party, Fine Gael Party, the Labour Party nor any other Party ever suggested that they wished to re-distribute wealth, because in my view that is the end of our way of life; it is the end of Christian and Catholic families and the end of Ireland as we know it. The re-distribution of wealth is not our job. If one were to quibble over words the word over-accumulation could scarcely apply to a person dying with £5,000 which is £10 a week for ten years.

Dr. Sheehy Skeffington

Paying duty at 3 per cent.

Mr. Donegan

A man at the end of 30 years' work who through his own, ability, earning £40 or £50 a week, succeeded in saving something over £10 a week for ten years for his children is not a man in a position of having over-accumulated wealth.

Dr. Sheehy Skeffington

Why should he not give it to them before he dies?

Mr. Donegan

I refuse to be taken off the point. The Minister with regret said that he had to collect death duties. The purpose was to collect £3,000,000. It was not and I hope never will be to re-distribute wealth.

Why does he not give it to them before he dies? I know a man whose father died unexpectedly. That man was farming hundreds of acres of land and paying his employees about 25 per cent. more than the minimum agricultural wage. The capital expenditure on that farm by his father over 25 years has been extraordinary. Now it has to be sold because of death duties. I am quite certain that that would be a subject for regret by the Minister, by the people on this side of the House, and that the prospects of re-distribution of wealth had nothing whatever to do with the law that unfortunately means that from 18 to 20 people's livelihoods are now in jeopardy. They live now—a most rare thing in rural Ireland—happily and with security of employment and with all the things a large farm can give such as firing, free milk and so on, and a decent wage 25 per cent. better than their fellows; yet all that has to go in the name of re-distribution of wealth. How much of it will ever come to those families when it will go through all the maw that exists and must exist in the running of the State?

I was asked by Senator Sheehy Skeffington why he does not give it before he dies. How does anybody know when he is going to die? God forbid, but if Senator Sheehy Skeffington and I were to walk today out of the Seanad, how do we know that we would ever arrive at the bottom of the stairs? In the last analysis, it is the employees of those businesses and farms and properties whose livelihoods would be in danger in the name of re-distribution of wealth. The thing is of course completely against all the things this State stands for.

Dr. Sheehy Skeffington

What about the Land Commission's work?

Mr. Donegan

I do not think the Cathaoirleach would like me to go so far, but an opportunity will exist later for that. Why should all we hold dear be imperilled by the suggestion that death duties should be increased? The Minister's statement was one which, I am sure, everybody on this side of the House would most heartily support and is what the people of Ireland think, namely, that it is most regrettable that £3,000,000 must be collected in death duties, and that if there was a way to collect that sum otherwise, the Minister would do so. If the Minister came from this side of the House, his attitude would be the same.

The suggestion has been made twice in the Seanad that these moneys should be used as a means of re-distribution of wealth. The State, it was said, must cherish all its children equally in matters of housing, clothing and education. There must be equality. That I think hits completely and absolutely against the Christian and Catholic family, because after all what has a man worked for 99 times out of 100 but to provide a better living for his children, and the law of the State and the law of God will see to it that if he does not work, if he drinks his earnings or gambles them away, unfortunately that will fall not only on himself but upon his children.

Dr. Sheehy Skeffington

That is monstrous.

Mr. Donegan

The suggestion that the amassing of money for which you work and the using of it for the furtherance of your family is wrong is quite monstrous, to use Senator Sheehy Skeffington's word. I feel that the Minister and everybody else in this House and all the people of Ireland would feel that the idea that death duties should be used for the redistribution of wealth is wrong.

Mr. Barry

I find myself at variance with both the last speakers. I think that Senator Donegan can do nothing about the re-distribution of wealth or taxation in this country because it has been going on for 30 years, and Senator Sheehy Skeffington need not be so pessimistic, because the pattern of depreciated money which we all see in our lives—exactions made on those who had money, using this money for social services, the borrowing of great sums by the State and local authorities to pay for social services, housing and repaying of them in many years' time for much less value in money, plus death duties and plus very high taxation, have effectively accomplished the transfer of wealth in my life.

Death duties are not levied generally on liquid wealth. Only a completely unknowing person would claim that they were. Property is held when a man dies, and on that property, which is what he holds in excess of what he owes—there are a great many creditors to be satisfied—taxes are paid. Great hardship has very often been imposed by this levy on property which must in many cases be sold to discharge the debts claimed on the estate. This is a trend very slightly to improve that situation and I welcome it.

Dr. O'Donovan

The Minister will be in clover with this section. I disagree with all three previous speakers.

Seán Ó Donnabháin

It is no trouble to the Senator.

Dr. O'Donovan

At least it is evidence that we think about the subject. We have not the uniform monolithic point of view that is so prevalent in certain parts of the political set-up in this country. I agree with the Minister about this matter. Strangely enough, when I read Senator Sheehy Skeffington's remarks in the Official Report, Volume 52, No. 18, Column 1934, when he said:

It seems to me that in this country ... class privilege has been growing up and increasing,

I agree with him in general but I think he is clamping it on to the wrong target. I would agree that in recent years class privilege has been increasing in this country, but I do not think a discussion on the question of death duties is a suitable time to attack that phenomenon.

Let us consider the new rates the Minister imposed. Let us take an estate of £200,000, a sizable private business but not an enormous business, by any means. The rate of death duty is 50 per cent. Therefore, £100,000 will go in death duty. Suppose the estate goes to a single son. Then, on the next death, 40 per cent. of that £100,000 will go in death duties. That estate of £200,000 will in a period of 30 or 40 years dwindle to only £60,000. I think that is steep enough.

I agree with the Minister absolutely in excluding from death duties estates up to £5,000. It is socially good because the handling of these estates was greatly complicated for the people who have to deal with them. Very often, a man will leave a sum like £5,000 or £10,000. It will be represented by a shop, a farm, some shares, a little money in the bank and little pockets of money here and there. If the people handling the estate have to put it through the Estate Duty Office, it complicates the matter greatly.

I agree with Senator Donegan, though I do not agree with his economics. Death duties are the well-known method of the redistribution of wealth in many countries. However, I agree with him that it is extremely hard as, for instance, in an estate of £100,000. Admittedly they are slightly lenient in the sense that the Revenue Commissioners do not value to the last halfpenny. The estate duty is £40,000. Theoretically, it is quite easy to lay your hands on £40,000 if you are worth £100,000. It is not easy at all in fact.

The Minister is to be commended for this move. Estate duties in the past in this country have been hard, though they were by no means as high as in Britain. I remember a case some years ago when a member of the Guinness family who lived in this country died, leaving £3 million. The estate duty pushed up the yield that year. The estate duty was £1.3 million. If he had lived in Britain, the estate duty would have been £2.4 million. In other words, by living near Dublin, £1.1 million was saved to his estate. I am glad he lived near Dublin and that that amount was saved to his estate.

One does not have to have a very big business nowadays for it to be worth £100,000. The income multiplied by a number of years' purchase is found to be the value of the estate. It is extremely hard and indeed there are all kinds of approaches. People take out insurance policies, turn their business into companies, and so on. They do not do these things out of greed for money but in order that the business may continue afterwards. Sometimes, they are compelled to do it by harsh necessity.

The Minister is to be commended for bringing in Sections 23 and 24. It is quite irrelevant to introduce something which is dear to my heart and dear to the heart of any reasonable person, namely that there should be better provision in this community today for education, particularly scholarships. When you compare our conditions with those in other countries, particularly in regard to higher education, it is extraordinary that 70 to 80 per cent. of the students of different countries are subsidised by the State through various forms of scholarship. That has my sympathy. However, it is not relevant to the problem before us.

We are not so short of resources that we cannot, in a Budget of £130 million, make things relatively easy so that a person of ability will not be deprived of a higher education because his father is an agricultural labourer. That is a problem that would be quite easy to tackle. It has not been tackled in this country. I do not think there is much point in it now unless Senator Sheehy Skeffington wants to hang his hat on something in raising it on Sections 23 and 24, unless he wants to demonstrate that class privilege has been growing up and increasing. I think it has. However, this is not the right place to attack it.

Mr. Murphy

The Minister probably knows from what I said on Second Reading that I am opposed to the abolition of death duties. I welcome the easement that has been given to what I might call very small estates indeed: the lifting of the level from £2,000 to £5,000. I do not agree with Senator Sheehy Skeffington in that criticism. People who are not housed in corporation dwellings, the bulk of the working population, are engaged in the purchase of their houses. When the houseowner dies, the value of the house, in all probability is about £2,000. If he has some insurance to cover him or some superannuation benefit coming on his death the estate he would leave to his widow and orphans, though no great yield, would very definitely exceed £2,000. I am talking now of the ordinary clerical worker or tradesman working in this city of Dublin. I do not think Senator Sheehy Skeffington would want us to believe that such individuals are wealthy people and that their estates should be taxed when they are passing them on to their unfortunate widows and orphans.

I heard Senator Donegan talk about the business that has to be sold out because of the impact of death duties. I referred on a previous occasion to the lack of evidence to commissions in Britain to support that sort of assertion. We can take it that the impact of death duties is very frequently used as an excuse by heirs who do not want the responsibility of carrying on the business, who say they have to sell out because of the impact of death duties but who simply do not want to be bothered to take the responsibility or to do the hard work involved in carrying on the business of the person who has died.

We seem to be discussing Sections 23 and 24 together. As I am on my feet, may I raise a question on Section 24? I read the section and I confess I found it impossible to understand. I think that that will readily be understood by the House. I turned to the Dáil debate to see if that could clarify the situation for me. It seemed to confirm the suspicion in my mind that this section could allow the parcelling out of an estate into £5,000 lots thereby avoiding death duties. It was clear that an astute lawyer could so arrange things that an estate of about £20,000 or very near that amount, could be parcelled out into £5,000 lots by various devices and thereby the State would not be able to collect estate duties. I do not know if that is really the intention of the Oireachtas or of the Minister. Are we really in earnest in providing that things could be so arranged, that people could employ solicitors who would know enough about so complicated a problem as this as to be able so to arrange things that death duties in respect of an estate of almost £20,000 could be avoided, whereas the estates of other people who would not be wise to these clever arrangements would, in fact be liable to death duties?

I hope the Minister will be able to clarify that for me. First of all, is it really intended or not that there should be this provision in regard to the parcelling out of estates? Am I right or not from reading this section and reading the debate on that section in the Dáil in supposing that is so?

Professor Stanford

The problem of the redistribution of wealth has arisen. I should like, if you permit me, Sir, to expose the fallacy of that by recounting an historical incident. The fallacy is that if we divided up all the wealth of the rich, we would have plenty for all.

It has been recorded, I think, that during one of the minor revolutions in France in the middle of the nineteenth century 12 revolutionaries broke into the house of the richest man in Paris, Baron de Rothschild. They rushed into his private room and immediately demanded a redistribution of his wealth. He took them very quietly and asked them all to sit down. He said: "Now, gentlemen, let us consider this as a practical proposition. The population of France at the moment is approximately 20 million people, say. My total wealth is approximately 100 million francs and 20 into 100 goes 5 times." He put his hands in his pocket, took out his francs and went to the first man and said: "Here are 5 francs for you." He went to the next man and said: "Here are 5 francs for you." So he solemnly went around the 12 men. By the time he had finished his little ceremony, they all began to wonder was it worth the trouble they had taken. I think that this anecdote exposes the fallacy that if we divide up all the riches of the rich people and distribute them to the poor, general prosperity will result. It is absurd.

To depart from the historical to the practical, I should like to emphasise that this wealth, as Senator Donegan rightly pointed out, is living, growing, fruitful wealth. If it is taken from its owners, turned into money and handed out in doles or whatever it may be, it becomes the dead money which Senator Sheehy Skeffington rightly attacked at our last sitting. I think that this catchword about the re-distribution of wealth needs serious consideration by many.

Dr. Sheehy Skeffington

Might I further comment briefly on some of the points made before the Minister makes his reply on these two sections? I would differ very strongly from the various Senators. I find myself closer to Senator O'Donovan. When it is suggested by Senator Donegan, for instance, that it is a good thing for people to be allowed to buy advantages for their children by reason of their wealth, in such fields as health and education I find myself differing very strongly from him. I do not think that these are fields in which one ought to be able to buy advantages. I do not think that advantages in education or health and so on ought to be granted simply on the grounds of the wealth of parents.

I asked Senator Donegan, but he avoided an answer, when he was saying that the whole spirit of our country was against the redistribution of wealth, what he thought about the work of the Land Commission. Is he opposed to all the work being done by the Land Commission in breaking up big estates and dividing them? I must take it on his speech to-day that he is totally opposed to any such notion since he would regard it as un-Irish, un-Catholic and un-Christian.

Mr. Donegan

That is so.

Dr. Sheehy Skeffington

A great number of people who regarded themselves as revolutionaries in this country have in Senator Donegan's eyes being wasting their time, and not only that, but flying against the principles upon which the State should be based. I must take him up with a query when he tells us that it would be anti-Christian to attack the accumulation of wealth. I know that Senator Donegan has a good deal more experience of agricultural matters than I have but I wonder has he any experience of trying to drive a camel through the eye of a needle?

We are told on quite good authority that that is an easier thing to do than for a rich man to get into Heaven. Therefore, I am rather surprised to hear him suggest that the accumulation of wealth in fewer hands, the greater accumulation of money, with fewer people becoming richer and richer, is in some obscure way more Christian than a greater, distribution of wealth. It seems to be that some of these people are going to find themselves in an even more difficult position, apparently, having accumulated all that wealth and failed to distribute it before they die, than the camel whose ambition would be to get through the eye of a needle.

The £3 million mentioned which are levied in this way at present Senator Donegan seems to think are not redistributed. I think they are redistributed in the best possible way. I differ from Senator Stanford. I am not prepared to accept the proposition that State revenue is simply handed out in doles and so on. A state run democratically is presumably spending its money intelligently for the community. It may be that in particular details we would differ. There is no question but that the £3 million raised in this way is redistributed for the benefit in general of the community at large.

Senator O'Donovan suggested that while that may be so, this is not the place to make the point but I should like to make the point that it seems to me to be just pretence on the part of such speakers as Senator Donegan to say that the £3 million are not redistributed. They are redistributed through the channels of State expenditure.

I do not accept at all, of course, the contention of Senator Stanford, because nobody said just redistribute the wealth unit by unit. What is required is intelligent and planned spending by the State, the running of a planned economy, not the handing out of a penny here and a penny there. The fallacy which he demonstrated was a fallacy of his own creation and not of mine. It was certainly not suggested by me.

I should just like to ask the Minister one point of detail: What does he estimate will be the loss to the revenue by the implementation of Sections 23 and 24?

Mr. Carter

No matter how much speakers may have disagreed with Senator Donegan, he has a point. I am also convinced that where Senator Sheehy Skeffington errs is that he is falling between two stools simply because of his half-way measures. In both Houses of the Oireachtas, we believe in the profit motive. If we do not believe in the profit motive, it is a matter of "the profit motive or else". The profit motive in the past has built up many fine economies. It has yet to be demonstrated successfully whether the "or else"—and I refer to socialism —will provide a comparable economy. Therefore, we may regard this argument as partly hypothetical.

The purpose of the section referred to is to raise the exemption for death duty. Any fair-minded person will agree that an estate of £2,000 is a very small unit at the present time. I assume that if the Minister could forgo the £3,000,000 which he proposes to collect from the altered rate of death duties, he would do so. The trouble so far as one can see is that we have not got enough monied men in this country and the pity of it is that at present, when we are trying judiciously to import capital, we cannot forgo death duties altogether.

Mr. Donegan

I feel I must join issue with Senator Sheehy Skeffington on some of his replies to me. First of all, he said that I stated it was a good thing that money should be used to advantage for a child in education or health and such like. Now, if you go back to the Rothschild story, if it were possible that the five francs per person in France could have provided every right for any child with the ability to justify it, the longest period of university education that was necessary for any height of academic brilliance, then of course you can have it any way you like. You can have it the way Senator Sheehy Skeffington would like to have it, equal opportunity for every child, but when you come down to practice, you find, in the richest countries in the world, that the old Christian and Catholic way of the parents saving to educate the child is a good precept, an excellent one and one which we should cherish. It is one which I cherish and which the people of Ireland, with a few exceptions, cherish. If that parent, while paying a just taxation, cannot save and give that opportunity to that child, a greater opportunity than the parent who did not save, who drank, squandered and gambled, then a very sad situation has developed; but the whole precept and way of life in this hemisphere anyway is that we should have the family and if we want the family, then we must give the parent the opportunity to afford a better opportunity to his child——

Dr. Sheehy Skeffington

What about the parent who is poor through no fault of his own?

Mr. Donegan

Well, we marry for better or for worse. That is the answer I give to that. Senator Sheehy Skeffington also said that according to my sort of ideology, all the work of the Land Commission in the redivision of holdings was bad and in fact had not had the effect it should have had and that if I had my way, I would never have had it started. To that, I answer "yes." I have examined the moneys handed to the Land Commission and I find that only a fraction of the money is devoted to land division and I think if the whole sum had been devoted to improving agriculture, it would have meant a great improvement in the wealth of the people who work on the land, of whatever station they may be.

He also said that my ideology would say it is anti-Christian to attack the accumulation of wealth. It is definitely anti-Christian to attack the just accumulation of wealth and I do not put a tooth in that. It is as clear as a bell that it is anti-Christian to attack wealth which has been justly accumulated. A man is entitled to that wealth. The idea of redistribution is incorrect. The only thing that arises here is where there is——

Dr. Sheehy Skeffington

Sell your goods and give them to the poor.

Mr. Donegan

That only applies to some.

An Cathaoirleach

Perhaps the Senator would avoid a theological discussion.

Mr. Donegan

I did not say that the £3,000,000 collected was not redistributed. Of course it was, but the Minister is quite right when he says he cannot raise it otherwise. The whole ideology of Senator Sheehy Skeffington is out of date and has been discarded. Socialism died in Britain ten years ago and was discarded by practical men since the time of the Rothschild story. It is dead as a dead duck.

Seán Ó Donnabháin

I should like to ask a question in regard to a deceased husband who leaves an estate, which may be comparatively small, to his wife and in the course of a couple of years the widow dies before the estate has been fixed up legally. Must death duties be charged on two occasions within a few years? There is a distinct hardship here where death duties have to be charged on the death of a husband and soon afterwards on the death of his widow. I have known cases where a business had to be sold because of a duplication of death duties within a very short time. I should like to ask the Minister is there anything in the Finance Acts —certainly there does not seem to be anything in, this Bill—to alleviate the difficulty created on such an occasion. It would be a great thing if there were a fixed period during which death duties could not be charged on two occasions on the same property.

Mr. O'Dwyer

I should like to support Senator Ó Donnabháin. There is very great hardship and injustice where death duties are charged twice within a short period. There should be some fixed interval.

An Cathaoirleach

I expect it will be accepted that the Minister will conclude.

Dr. Ryan

This debate has ranged over the question of the redistribution of wealth which was regarded as desirable by Senator Sheehy Skeffington and, I think, Senator Murphy, but Senator Donegan was opposed to it as being anti-Christian. I shall not go into the morals of the matter, but I am told that every Christian country all over the world has something of the kind.

I shall go on to the proposition about the £5,000. I think Senator Murphy is right when he says he is not in favour of the abolition of death duties but raising it to £5,000 is advisable because it allows in people who are not really wealthy. On the agricultural side, a farm of 30 or 40 acres, fairly well stocked, would probably be valued at about £5,000. As Senator Murphy says, even a working man today who has bought his house, and leaves it and a life policy would probably be leaving about £2,000 worth of an estate, which was the exemption limit up to now. So I do not think it can be argued that we are going into the realm of wealth when we make the exemption £5,000. It must be remembered—Senators may not beaware of this—that if the estate is more than £5,000, death duties will be paid on the lot.

If we take an estate of £25,000— where there can be no dispute about the amount being near the limit—they will pay on £25,000, not on £25,000 less £5,000. Another argument which was not used so much today is the argument that the abolition of death duties would attract wealthy people to the country. That matter was not raised today and, therefore, I shall not deal with it.

So far as revenue is concerned, the effect of this provision will be that, if we take the year as a normal one, of the number of estates which would be liable for death duties, more than half will be relieved from that tax. It must be apparent to Senators that, comparatively speaking, the administrative expenses of collecting this duty on the smaller estates is much higher than it is on the big estates. We have, in recent budgets, been moving in the direction of removing charges where the cost of collection was abnormally high. In this Finance Bill, we have abolished the duties on licences for tobacco because it hardly paid to collect them. We are also simplifying the liquor licences in order to make the collection very much easier. We shall collect less, of course, but proportionately at least it will pay us better. There will be a net loss, of course, but, as I say, proportionately it will be better. In the same way here, there will be an administrative saving by getting rid of these smaller estates.

I was asked what the cost would be. The cost is estimated this year at £50,000. The full cost of a provision of this kind does not fall upon the Exchequer for about four years because as Senators are aware, estates are rather slow in being cleared up. In about the fourth year, this provision will cost about £200,000. On the other hand, the yield is moving up because estates are becoming more valuable. To go back to the exemption on a 50 acre farm, 25 or 30 years ago, a 50 acre farm, fairly well stocked, would be valued at a lower figure than it would be valued at the present time. That applies to estates and every other type of property as well.

I was asked a question by Senator O'Donovan as to whether in a case where a husband dies and leaves his estate to his wife and she dies soon afterwards, she has to pay the full amount. There is some relief, if the death takes place within five years. I must confess I am not able to answer precisely what the relief is, but some consideration is given in such a position. I would be able to give more information on another occasion, if I were asked.

With regard to the question asked by Senator Murphy, it is possible to get relief on more than £5,000. I must say I was not very clear on this until the Bill was going through the Dáil or, indeed, I might have tried to deal with it before bringing in this relief, but that can be done at another time. This is a very intricate business and one would want to be a lawyer or an auditor to explain it fully. There is, first of all, a difference between settled and unsettled estates. If a man settles a certain amount on himself for his own lifetime and then it goes to his wife, that is treated separately from what he leaves in his will, and will come under the £5,000 duty exemption. There are different categories under which a person might be exempted.

The settlement might not be made by the man himself but might be settled on him by his father, and he passes it on after his time. Theoretically, one could have three amounts each under £5,000 and all would be exempted, but that would be very unusual and, of course, it is not within a person's own power to do that. He would have to be in the position first of all of having had money settled on him and then it is within his power, it is true, to manipulate his estate in such a way that he could get exemption on the two amounts of less than £5,000.

As I say, I was not as familiar as I could be with the matter. It was said in the Dáil that that could go on ad infinitum but that is not true. There is a limit. I believe there is one other case which I was told about but it was so remote a possibility that I did not take notice of it. As I say, I was not as au fait with all that business until it was being discussed in the Dáil or I might have tried to deal with the question, but there will be another opportunity.

Question put and agreed to.

Sections 24 to 29, inclusive, agreed to.

SECTION 30.

Question proposed: "That Section 30 stand part of the Bill."

Professor O'Brien

I think this is the correct place to raise the point that was raised in the Dáil on this section, and to which the Minister promised to give consideration. I refer to the Dáil Debates of 22nd June, column 215, Volume 183. Deputy J.A. Costello raised a point on this section dealing with deduction of income tax from dividends by companies which get some taxation relief on account of exports. An amendment was tabled by Deputy Costello which was ruled out of order, and the Minister stated that he would look into it. I should like just to raise the point again. As the Minister has promised to consider it, perhaps it might be no harm to remind him of that promise and to bring it to his attention very shortly.

It all arises out of the relief of taxation on exports under the Finance (Miscellaneous Provisions) Act of 1956, under which income tax and corporation profits tax earned on money received for goods exported out of the State are exempt from income tax. Any companies which gave that concession deduct from the dividends of their shareholders that relief, and therefore the shareholder pays income tax on the net rate which the company pays. That, I am told, is the law today.

On the other hand, on debentures, the company is entitled to deduct income tax at the standard rate, so that in that case the benefit in the relief gained by the profit on the exports goes into the pockets of the company and not into the shareholders' pockets.

Under the Companies Act of 1959, provision has been made for redeemable preference shares, and a number of people in the commercial world are anxious that shares of that kind issued in the future should be treated in the same way as debentures and not in the way of ordinary preference shares for the purpose of deduction of income tax. The suggestion is that the law might be amended to allow redeemable preference shares to be issued in future from which the income tax to the shareholder would be deducted at the standard rate, although the company itself might be paying a lower rate of income tax on account of this exemption from income tax in respect of exports.

The advantages in favour of that are, in the first place, that the company would retain more of its profits for investment and development, that the point of this exemption is to benefit the company rather than the individual shareholder and to enable the company to build up reserves and to invest money accumulated in that way for the purpose of increasing its exports.

The second advantage is that the present method of deduction does give preference shareholders an entirely unreasonable yield on what is invested, that if they have bought shares on the basis of 6 per cent. preference share, after income tax is deducted at less than the full standard rate, they are actually getting more than 6 per cent. on their money, which is an uncovenanted benefit to which they really have no claim.

Finally, no injustice would be involved to any existing shareholders as a result of the change, because the suggestion I am making is that there should be provision for future issues of preferential shares on this basis and that they should for this purpose be treated as debentures rather than as ordinary preference shares. The Minister promised to look into the matter when Section 30 was being debated in the Dáil, and I now remind him of his promise.

Dr. Ryan

The Senator is quite right. I did undertake to look into this question and I had given some cursory examination to it when the amendment was put down. It is an extremely complicated business. I should say, of course, that the company is quite entitled to retain the profits and not distribute them at all if they wish but that is not a satisfactory answer to the Senator. If dividend are paid, there are many difficulties in the present system. I am having the matter examined to see if we could get over them in any way, because naturally we would like to get rid of what may appear to be rather restrictive practices which we have at the moment, but there are difficulties.

Question put and agreed to.

Sections 31 to 35, inclusive, agreed to.

SECTION 36.

Question proposed: "That Section 36 stand part of the Bill."

Dr. Sheehy Skeffington

The present amount of fee charged for the issue of a passport is 30/-. I would like to ask what proportion of that is affected by this abolition of the stamp duty.

Dr. Ryan

As far as the person applying for the passport is concerned, he will still pay 30/- but the 6d. which was stamp duty that had to be passed on to the Revenue is being abolished.

Dr. Sheehy Skeffington

Passports are not becoming cheaper?

Dr. Ryan

They will be the same price.

Dr. O'Donovan

Would the Minister and the Revenue Commissioners not go through all these stamp duties? There is a big number of anomalous stamp duties.

Dr. Ryan

We have been reducing them.

Dr. O'Donovan

Could you not take a wipe at them all at the one go?

Dr. Ryan

Quite a number of them have been done away with.

Dr. O'Donovan

That is a very creeping form of operation and quite frankly, it is more than they are worth. The Minister knows the duties to which I refer. There are a big number of them.

Dr. Ryan

Some of them are very valuable.

Dr. O'Donovan

Some are valuable for reasons not connected with the Revenue.

Question put and agreed to.

Sections 37 to 43, inclusive agreed to.

First, Second and Third Schedules agreed to.

Title agreed to.

Bill reported without recommendation.

Agreed to take remaining Stages to-day.

Bill received for final consideration.

Question proposed: "That the Bill be returned to the Dáil."

Dr. O'Donovan

I want to say one or two words about the nature of the Minister's reply to some of the points I made on the last day. It looks very polite of the Minister in his reply to say that he would try to deal with the points made, but the fact was that in the four or five of my points he replied to, he did not deal with what I said. To take an example, I said in Column 1842 of Volume 52, that there had been in the previous year an increase of £45,000,000 in the gross State debt, and the Minister turned this into something entirely different, by saying at Column 1940: "Senator O'Donovan started by drawing attention to the fact that spending this year of £45,000,000 was the largest ever for the capital programme." I said nothing of the sort, and there is no connection whatever between those two matters, or if there is, it is extremely tenuous. Similarly with a number of others. However, that was the worst example.

My main point about this Finance Bill this year and the proposals for the raising of taxation to meet expenditure is that the Minister and all the people who have been talking with him are just whistling to keep up their courage. Since I spoke, there have been two further examples. The Chancellor of the Exchequer is leaving his office in Britain. That was something which was said earlier. I am afraid people generally are putting a certain construction on it. Then we have the announcement this morning that the British Government will raise £300 million for two years at 5½ per cent. at 99, surely a fantastic rate of interest. Its result here will be that if the Minister goes looking for a loan, he also will have to pay a fantastic rate of interest. There is no use in the Minister saying, as he did, that he prefers the Central Bank version of matters to mine. I would prefer it myself.

An Cathaoirleach

The Central Bank is not involved in this Bill.

Dr. O'Donovan

It is, because there is provision for capital services redemption account. It depends on the rate at which the money can be got. That can be determined by the Central Bank. I was only speaking the truth. I do not think the Central Bank was speaking the truth.

Dr. Ryan

I am sorry if I did not reply exactly to the point made by Senator O'Donovan with regard to the £45 million. I think he was referring to this year and that the comments I made on State borrowing would apply equally as a reply.

Question put and agreed to.