It is a pleasing duty on an occasion like this— I suppose it is a duty always pleasing whenever it would occur, but particularly so now—to congratulate the Minister for Finance on the honour that has befallen him of introducing the first Budget statement in this new State, and also to congratulate him on the clarity with which he put the essential facts before us. In the course of his speech he made reference to what I think is one of the essential and salient features of the Estimates that we have had put before us. That is the difference in the two classes of Estimates, expenditure not only in the coming year, but in the past year. He touched upon it briefly. He stated that a large amount of expenditure might strictly be stated as non-recurrent expenditure. I think, when the Estimates were reduced to Budget form, he might with advantage have remembered that difference and classified the entire expenditure of the Nation under the two separate categories, strictly recognisable in finance, of recurrent and non-recurrent. That expenditure which is recurrent, which is due to every year as each year succeeds another, is expenditure which each year must liquidate within itself by some manner or another. But as regards that which is not recurrent, which is special to that year, and is more or less in the nature of an establishment charge, it is not proper in finance to expect to liquidate it completely within the financial year in which it is incurred.
I had, therefore, rather hoped that before one got the White Paper that was put into our hands this principle would be observed, and had it been observed it would then be apparent to us that, instead of being faced, as we are now, by an apparent deficit, the deficit would be seen to disappear, to strictly disappear, in a correct estimation of the financial aspect of this Budget. I may mention it in a very simple way by giving a very simple illustration; that is, if a certain person were to have an income of, let us say, a thousand pounds a year, and that in any given year he bought a house for, say, two thousand pounds, there was no necessity for that person to contemplate entering into bankruptcy proceedings in regard to that year, because his large expenditure is an expenditure that would be placed over a number of years. I, therefore, proceeded to take up several of the items given in these Estimates— Estimates for the year that closed at the end of last month, and Estimates for the year now entered upon—abstracting those which are non-recurrent in order to discover, if one could, what exactly the difference would be, and the difference is fundamental. Take item eleven, for example. I am now dealing in the same progress with which the Minister himself treated these matters by touching upon 1922-3 first and then passing on to 1923-4. Item eleven of 1922-3 for Public Works and Buildings comes to £659,000 odd; £56,000 for Railways; Property Losses Advances came to a quarter of a million; Property Losses Compensation to over £10,000,000, and Personal Injuries Compensation to a quarter of a million—giving a total of eleven and a quarter millions expenditure, that can strictly be regarded as non-recurrent, because it was peculiar to the incidence of this time—war expenditure, which it would be folly for any country or any nation to expect to liquidate in the year in which it occurred. It should be regarded, being non-recurrent, as being strictly fundamental overhead charges for which a number of years should be required to bear. In addition to these there are certain others that are of not quite so clear a character, but which, nevertheless, should be regarded in part at least as non-recurrent.
The army expenditure for 1922-23, the year that closed last March, is set down at £7,500,000. Exactly what our future army will cost is a matter that might be open to very grave question, and will be, no doubt, very earnestly debated in the future. I would like to think that if we would not entirely dispense with the army, we would at least cut it down to a very small figure. I should like to think that we in this country would give a lead in that direction. I am prepared to have historical examples put up to me of what was done under Grattan's Parliament in the same regard, and the tragic events that befell as a consequence of the disbanding of the Volunteers. The parallel leaves me entirely unmoved. The circumstances are entirely different. Warfare has taken an entirely different character. I would like to think that we here would dispense entirely with the question of a standing army except for our own private needs, which will disappear as time proceeds. In any case, if I were to estimate that a standing army under normal conditions would cost £5,000,000, I think it would be agreed that I had taken a figure that was considerably higher than I might have rightly taken; but that would leave a balance on the last year of £2,500,000 that can strictly be called non-recurrent. There is another non-recurrent charge that was discussed before in the Dáil— the Secret Service. Under those two items there would be an additional £2,700,000 non-recurrent, and that would give an entire total of £13,997,000 odd, or, roughly, £14,000,000. That means to say that of an entire expenditure during the past financial year of £31,500,000—or, rather, under that figure—£14,000,000 are non-recurrent. To that it is necessary that an addition should be made, if one were to contemplate, as I do, the funding of the non-recurrent expenditure and its distribution over a number of years. If one were to take interest and amortization at the high figure of seven per cent., which is liberal, that would give £1,000,000 to be added, and, therefore, we would find that within last year there was a financial indebtedness requiring to be met of £18,000,000 odd. For that year the financial revenue amounted to £28,000,000. Still, reckoning that non-recurrent expenditure as being set aside for a moment for funding purposes after the year was paid, nevertheless, for the interest and amortization on it at a high rate, we get a surplus of over £10,000,000 instead of a declared deficit of £4,000,000. On the new year, for which we now have only estimates on which savings may be effected—estimates that one hopes will not be increased by supplementary estimates being brought before us, as proved necessary some time ago—the same procedure would be necessary in connection with Public Works, Railway Property Losses advances, Property Losses Compensation, and Personal Injuries, which, according to the sums set out in the White Paper before us, amount to over £12,000,000. Still, taking the recurrent charge of the army at £5,000,000, we have another £5,500,000 to be treated with under the head of army charges as non-recurrent. I am perfectly sure that scattered through those estimates, if they were to be treated in this way, other items would be revealed that were strictly establishment charges, and strictly non-recurrent. But, leaving it at the figures that I have stated, we get a non-recurring charge for the estimates of the year on which we have entered, of £18,000,000. Taking the estimates for the entire expenditure at £46,000,000, and deducting the non-recurring item of £18,000,000, that leaves us with a balance of £28,500,000; putting the interest and amortization on again, it would be £29,500,000. The revenue estimated for the new year, however, is £26,500,000. Consequently one gets a deficit according to this method of regarding it—which I think is a method that would justify itself in any accounts presented before any public company; and, after all, what is the State but the very largest form of business—of £3,000,000, instead of a declared deficit of £20,000,000. That leaves free the non-recurrent charge for the new year of £18,000,000 to be funded, or, in some manner or other, to be distributed over a number of years, because it would be inequitable to require the new year to face the entire liquidation of the non-recurrent charge that befalls it within its own ambit.
The result gives this, briefly summarised and put into a clear form. We have two non-recurrent charges, one for the past year and one for the new year; one of £14,000,000 and the other of £18,000,000, giving a total of £32,000,000 non-recurrent. We have by abstracting these sums which no year should be required to pay for, as they are non-recurrent and establishment, a surplus for the past year of £10,000,000 and a deficit of £4,000,000, giving for the two years a surplus of a little more than £6,000,000. That figure is important. It would be necessary to raise, as the Minister has indicated, money in some form or other. I put before this Committee that it is a right procedure to recognise clearly that what we are going to raise money for is, not the ordinary expenditure of the State, but the extraordinary expenditure of two years of war. If it be regarded in that light and if we regard ourselves only as being called upon to fund or raise a loan for so much of our expenditure for these two years as will not befall other years in the future, or at least should not befall other years, we then have on the two years a total surplus on recurrent expenditure as against receipts and estimated receipts of £6,000,000. I know it is the custom in certain other places and in certain other countries to use any surplus that may accrue in this way for the liquidation of debt. As a point of fact this surplus, which is a true surplus, a surplus that in fact exists in the financial setting forth of the figures of this Nation, has been used to liquidate debt that has been incurred during the past year and that will be incurred, as estimated, in the new year. That has been done here in the same way as it has been done in other countries. I suggest that it should not be done in this country at the present time. The figures that I have given show that the non-recurrent charges of this country have been allowed for liberally, allowed for on interest and amortization. To do more than that during such strain as we have had during the past year and which we will have, to a certain extent, during the coming year, if only as the aftermath of trouble, would be to do what I do not imagine would justify itself in the conduct of any business house or of any business company and, I think, should not be treated in that way in the business house that we have now entered into control of, this Free State. I urge that we might justly consider the financial surplus, in the strictest, straightest terms of finance, of £6,000,000 that we have after making every allowance, as a surplus which should not be thrown into the liquidation of debt—which might be carried forward with ease into the future, as I will show—but should be regarded as required for the relief of taxation in this new financial year upon which we have entered.
We, therefore, get according to the summary that I have made, a surplus of £6,000,000 and a debt of £32,000,000, non-recurrent charges that should be carried forward. It is that £32,000,000 non-recurrent charges that we should contemplate for the immediate future as being the money in respect to which a debt becomes necessary.
After all, we have no reason whatever to fear a National Debt. We are the only nation at the present moment without such a National Debt, and it makes for business stability, as has been frequently stated, if a nation should incur a National Debt, it being agreed that that National Debt should be borne by the citizens of that country and should not be levied upon those who are not citizens of that country. We can amply well afford it. We have a very strong national credit at the moment to which we in this country have been in a very large measure blind. We are at the present moment exporting nearly thirty per cent. more than we are importing. I do not know in what national credit exists except in the balance of production over consumption, and a balance of exports over imports is a balance of production over consumption. It means that, though we carry forward this funded debt to the tune of over £30,000,000, this nation is good for that sum on the balance of its trade of last year and of the year before, and there is every reason to suppose that the balance will be the same for the new year, as the balance has remained more or less about the same for a long time. In that connection, as the Minister for Finance has spoken about the creation of a debt, I would like to think that it would be a debt undertaken by him in collaboration with all the Irish banks, that the Irish banks should be called upon for their co-operation in the matter, that they should guarantee the finances, and, after all, it is a little thing to ask them to do, because ultimately all they are being required to do is to use the guarantee of the National credit for the issue of money and the issue of a National Debt.
This method of regarding the finances that have been put before us is, I am very well aware, a little unusual in terms of National Exchequers. It is a very usual one, and a very ordinary one regarded in terms of business, and I think it could with advantage be adopted by us to clear away all our non-recurring expenditure and to fund it; to look forward into the future, remembering that Ireland is not going to perish this year, next year, nor for a very long time. Finance and statesmanship require that one should take long visions, and if we have incurred, owing to causes that one need not enter into now, a very heavy debt—that criminal anarchy has brought upon this country—it is not equitable, and it is not right that we should wish to clear that debt off within one year or two years. The Minister for Finance stated in the Seanad some weeks ago that the debt that has been put upon our shoulders must be paid by us in our generation. These were wise words as long as they are adhered to, and we are not required to pay this exceptional charge as other than a debt of a generation, and not a debt of one year or two years, meanwhile bearing on our shoulders as we go forward so much of the expenditure as is required of these times. I put it before this Committee, and Deputy O'Brien will be interested to hear that there may appear to be a surplus. I state that if these figures be examined as they would be when put before any public company, separating recurrent expenditure and non-recurrent expenditure, and distributing non-recurrent expenditure over a number of years, it is apparent there is a surplus, and there is a certain sum that we have to bear, whatever the interest be on it for each year, sinking it as we go forward. I feel that this £6,000,000 should be used for the relief of taxation in the coming year, and I put that forward very strongly.
I feel regret that the Minister for Finance did not bravely throw the entire English system that we have taken over into the melting pot. It was drafted for conditions that are not suitable to this country. They are not applicable to this country, as they were never intended for the conditions here. We discussed in the Dáil at an earlier stage the taxation of motor cars. The taxation of motor cars was not primarily intended in England as a tax at all. It was intended as a form of protection, because England manufactured motor cars and wished the people living in England to buy cars that were made in England instead of buying cars that were made abroad. The primary intention was, not taxation, but protection, and the same is true of films. By taking over that tax into this country we have lost its prime intention, and I regret that we have taken over those two taxes at all. There are other taxes by which an incidental benefit of the protective sort has been conferred on Ireland and one of them is the tax on tobacco. But while the Minister for Finance has taken over the entire English system, he has not thought it wise to change the incidence of one of the taxes. A speech was made here last Friday and since then the Budget has been introduced in England, and because we have drafted our system upon the English system, leaving the incidence of taxes as they were last week, we are now left with a very invidious comparison to which attention has been drawn to-day in some of the papers, and I believe if that invidious comparison is left to stand as it is it will do the State no good. I do not believe that it need continue, in view of the financial surplus that, I contend, these figures actually reveal, and therefore I urge that when we pass to the consideration of the Finance Bill we should frankly consider the relief of some of the taxation that the Minister, in the Financial Resolution that we passed temporarily last Friday, has imposed. At present this country is bearing an enormous weight of taxation. We have grown accustomed to that ever since the European War, but practically in effect as it stands in the Resolutions that have been put before us, Ireland is bearing a scale of taxation first introduced by a foreign Parliament because of its own operations in the European War, and in addition to that, though other countries are getting relief from that high scale, we are still continuing it and I do not believe that the finances of this country, as revealed, justify it, and I am convinced that the economic state of this country will not justify it. I believe if relief were to be given now in bringing forward a National Debt into the future the consequences would be much greater productive power in the near future, whereas it seems clear to me that if the present heavy taxation should remain it will cripple our productive power for the future. I suggest that it is but wisdom to consider a relief at some point of the present taxation in order that we might be able to get a greater ultimate gain.
As I said before, financial statesmanship requires that long views should be taken. We are not considering a country which, if it does not clear up its finances this year or next year will have to go to the bankruptcy court. The generations will continue and they will become the heirs of a State that has been established in these years at much cost, incidentally much financial cost, and they should bear a proportion of that financial cost, together with those of us who happen to have passed through these events. I would like to think and would urge that in several matters we should relieve the taxation that these Financial Resolutions impose. I had it put to me that it would be right in making the suggestion that there should be relief, that one should also state where that relief might fall, and I would choose at once two items where I believe that relief could be gained with very great advantage to this country. One of them is tea and the other is tobacco, and both of these were imposed by England a long time ago when they were regarded as luxuries. We know that though they may be, in some measure, luxuries still, having passed so largely into normal life any relief given to them would be very substantial relief to the people. But there is another reason why these two items might have their taxes reduced, and it is a reason that we ought very carefully to consider and which we will have very soon to consider. It is this, that in respect both to tea and tobacco the major part of the distribution of those goods occurs from a city that we are proud to think of as an Irish city, but which is not a city yielding revenue to the Free State, and that is Belfast. I suggest that if both tea and tobacco were to bear in Dublin lower duties than they bear in Belfast the consequence would be that this city of Dublin, yielding revenue to the Free State, would capture the distributing trade that is now very largely taken by Belfast. There are, I think, two other taxes where relief should be given, where it has been put up to us, in point of fact, this morning relief should be given One is Income Tax and the other is Corporation Tax. We are at present bearing a higher rate of Income Tax than our neighbours across the water. We are at present bearing a higher rate of Corporation Tax than our neighbours across, the water, and while that continues the result to Irish industrial enterprise cannot fail to be bad.
I urge, therefore, to summarise the matter briefly, that we should clearly distinguish between the recurrent and non-recurrent expenditure of these times as common to the future and to ourselves, each year having to bear its own burden of the non-recurrent which falls within these years. We have properly not only to charge this year's, but to take the non-recurrent twenty-eight millions of the two years added together, and to fund it, and to call upon the Irish banks to put their imprimatur in association for the matter, in order that the fund should be taken up within Ireland. Having put the non-recurrent sum—for two years during the troublous time—of twenty-eight millions out of the way, then we should regard the remaining balance of expenditure and revenue as showing a surplus of six millions, and that surplus should be applied to certain relief of taxation, if only that to do so would give a greater productive power for the future. The result would be that in a matter of a few years the benefit would be felt, and the country would be enabled to make quicker progress, and, therefore, to advance more rapidly into a healthier state than is contemplated at the present moment, because if we are to permit the taxation to continue as contemplated in the resolutions before us, the result cannot help but be extremely injurious to the industrial enterprise of the Free State.