Michael McDowell (Independent) | Oireachtas source

We are considering Second Stage of the Finance Bill in this House, which is subordinate to Dáil Éireann. We are progressing it through all Stages today and guillotining it in order to make way for a general election. We are allocating five minutes to Members of this House to speak on a Bill which deals with a variety of different subjects. Rather than attempt to skim over those subjects, I want to make one or two points.

I believe the time has come to look at the 33% capital gains tax and capital acquisitions tax rate in its entirety. When Charlie McCreevy was Minister for Finance in 1997, he reduced the rate of capital gains tax from 40% to 20%. The result of that single change was that the yield from capital gains tax increased by 500%. There was five times more money from capital gains in the year that followed 1997 than was obtained from capital gains tax rate of twice that rate, 40% rather than 20%. The point I am making is that it is easy to be ideological about this and say that if people become wealthier by the sweat of their brow, their hard work or whatever else it may be, their contribution to society should be seen in exactly the same way as a capital gain, but the alternative view is this. It has long been stated that the art of being a finance minister is to be able to pluck the goose without it squawking too much. If you can increase the yield from a tax by 500% by halving its rate, you have to ask yourself, with regard to social justice, where that money goes, what it is available to do, and what social welfare and redistribution that money can fund if that kind of increase takes place. It was 40%, it went down to 20% and the yield went up by 500%. I do not believe that 33% down to 20% would yield a fivefold increase, but I am absolutely confident that it would yield a twofold or threefold increase.

Because of the immense efforts of the accountancy profession, God bless them, to avoid capital gains tax and the loopholes we have provided in respect of it, people who know they are about to make a capital gain go and live in Portugal. This is what happens. I have seen it. I have never been tempted and have never had a capital gain of that kind but I have seen it in people I have come across in life. They just emigrate to avoid capital gains tax. That is wrong. They would not do it if it was 20%.

The second point is more philosophical. Movement of property from A to B is not the same as an annual income. In our Constitution, one of the directive principles of social policy under Article 45 is, "That there may be established on the land in economic security as many families as in the circumstances shall be practicable." It is the duty of the Oireachtas - not the courts, but the Oireachtas - under the Constitution to give security to as many families as possible on the land in family farms to carry out agriculture. I am happy with that and I am happy with the arrangements that are made for genuine farming families to ensure that a death does not have calamitous results, but I agree completely with what Senator Boyhan said. The idea that you look at taxation from the point of view of married people is wrong. Single people are entitled to social justice with relation to their family farm too. The second point I want to make is that if we really believe in family farms, as I do, the time has come to look at the taxation, through some kind of land tax, of the vast holdings that very wealthy people are now accumulating. Some of them have 20,000 or 30,000 acres, simply because they regard it as a clever long-term investment.

We spent a century up to the abolition of the Land Commission trying to stop great landlords from becoming the economic masters of people in agriculture in Ireland. Now, having abolished the Land Commission, we are reinstating a situation where the very wealthy who make their money abroad come back to Ireland, buy land and make tenant farmers their servants, effectively, a century after this country put so much effort into achieving economic justice in this area. In relation to capital acquisitions tax and capital gains tax, let us not be ideological but let us be practical and look at the 33% rate, because if people are really emigrating to avoid it and are succeeding in doing so, it shows that the goose is not being plucked in the delicate way that would yield much more money, but that the tax is structured in a way that wealthy people can avoid in its entirety.That is not socially just either.