Skip to main content
Normal View

Dáil Éireann debate -
Wednesday, 18 Apr 1923

Vol. 3 No. 4

RÚIN AIRGID—TUARASGABHÁIL. FINANCIAL RESOLUTIONS—REPORTED.

INCOME TAX.
1. That (a) Income Tax shall be charged for the year beginning on the 6th day of April, 1923, at the rate of 5s. in the £, and the same super tax shall be charged for that year as was charged for the year beginning on the 6th day of April, 1922, under the law then in force in Saorstát Eireann, or in the area now comprised therein; and
(b) the several statutory and other provisions which were in force in Saorstát Eireann, or in the area now comprised therein during the year beginning on the 6th day of April, 1922, in relation to income tax and super tax shall, subject to the adaptations and modifications made in such provisions by or under the Adaptation of Enactments Acts, 1922 (No. 2 of 1922), and subject to the provisions of the Double Taxation (Relief) Act, 1923 (No. 8 of 1923), have effect in relation to the income tax and the super tax to be charged as aforesaid, for the year beginning on the 6th day of April, 1923; and
(c) the annual value of any property which has been adopted for the purpose of income tax under Schedules A and B for the year 1922-23, shall be taken as the annual value of that property for the same purpose for the year 1923-24, but subject to the provisions of any Finance Act, to be passed by the Oireachtas in the current year.
And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
INCOME TAX.
2. That
(1.) where any employed person has omitted to make payment of any income tax under Schedule D or E, due and payable by him for any year, the Revenue Commissioners may give notice to the employer of such person at any time after a period of three months has elapsed since such income tax became due and payable, requiring such employer to deduct the amount of income tax so in arrear from any remuneration payable by him to such employed person.
(2.) on receipt of such notice, the employer shall deduct such sum or sums, not exceeding in the aggregate the total amount of income tax so in arrear, at such times, and in such manner, as the Revenue Commissioners may direct, and shall forthwith pay over the amounts so deducted to the Accountant-General of Revenue.
(3.) if any employer refuses or neglects to pay over to the Accountant-General of Revenue any such sum or sums within the time specified in such notice, such employer shall be liable to pay such sum or sums as if the same had been duly assessed upon him, and proceedings for the recovery thereof may be taken in any manner prescribed by the Income Tax Act, 1918, including the issue by the Special Commissioners of their warrant to the Collector in whose collection the business premises or property of the said employer are situated, requiring him to distram the said employer by his goods and chattels, and failure on the part of the employer to deduct any such sum or sums from the employed person shall not be any bar to the recovery of such sum or sums by proceedings or distraint.
(4.) any employer who neglects or refuses to comply with the provisions of this Section shall be liable to the penalty imposed by Section 107 of the Income Tax Act, 1918, upon a person who neglects or refuses to deliver a list, declaration, or statement, and such penalty shall be recoverable without prejudice to any other remedy provided by the Income Tax Act, 1918, or this Resolution.
(5) where the employer is a body of persons, the provisions of Sub-sections (2) and (4), Sections 105 and 106 of the Income Tax Act, 1918, shall apply in relation to anything required to be done under this resolution.
(6) nothing in this Section shall affect the provisions of Rule 11, Schedule E, of the Income Tax Act, 1918, or of Rule 7, Schedule E, of the same Act, as amended by Section 18 (3) of the Finance Act, 1922.
(7) an employer who pays over to the Accountant-General, or to the Collector in whose collection his business premises or property are situated, any such sum of income tax is required by notice from the Revenue Commissioners as aforesaid, shall be acquitted and discharged of so much money as is represented by such payment as if that sum of money had actually been paid as remuneration to the employed person.
(8) and it is declared that it is expedient, in the public interest, that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
INCOME TAX.
3. That notwithstanding any provision contained in any Act of the Parliament of the late United Kingdom of Great Britain and Ireland, the interest on all securities issued by the Government of the United Kingdom aforesaid subject to the condition that the interest thereon should be exempt from income tax, shall be liable to the income tax for the time being charged in Saorstát Eireann, but subject to any arrangement for relief which may for the time being exist with the Government of Great Britain under or by virtue of the Double Taxation (Relief) Act, 1923 (No. 8 of 1923), or otherwise.
And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
INCOME TAX.
4. That in Sub-Section 1 of Section 187 of the Income Tax Act, 1918, the expression "purchase aanuity" shall mean the first or original annuity payable before any redemption or statutory reduction.
And it is declared that it is expedient in the public interest that this resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
INCOME TAX.
5. That in Sub-section 1 of Section 187 of the Income Tax Act, 1918, the words "the respective surveys and valuations from time to time in force for the purposes of poor rates" shall not apply to the annual value of concerns contained in No. 111 of Schedule A, and such concerns shall, for the purpose of Schedule A, be assessed and charged under Schedule D, in accordance with the rules applicable to Schedule D, so far as the same are not inconsistent with the rules of the said No. 111 of Schedule A.
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
CUSTOMS.
6. That the several duties of Customs specified in the first column of the Schedule to this Resolution, and which were first imposed by the enactment mentioned in the second column of the said Schedule, and are payable in Saorstát Eireann up to the dates specified as regards the said duties respectively in the third column of the said Schedule, shall continue to be charged as from those respective dates up to the dates specified as regards the said duties respectively in the fourth column of the said Schedule. Provided that the provisions of Section 8 of the Finance Act, 1919, shall apply to the duties aforesaid with the substitution of the expression "Saorstát Eireann" for the expression "Great Britain and Ireland."
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
SCHEDULE.

Duty.

Finance (No. 2) Act, 1915 Section.

Date to which Duty is in force.

Date to which Duty is continued.

Additional Duties on Direct Fruit

8

1st Aug. 1923.

1st Aug. 1924.

New Import Duties

12

1st May, 1923.

1st May, 1924.

7. That the Customs Duty at the rate of eight pence in the pound which is payable on tea imported into Saorstát Eireann before the 1st day of August, 1923, shall continue to be charged on all tea imported into Saorstát Eireann on or after that date until the 1st day of August, 1924. Provided that the provisions of Section 8 of the Finance Act, 1919, shall apply to the duty aforesaid with the substitution of the expression "Saorstát Eireann" for the expression "Great Britain and Ireland."
And it is declared that it is expendient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
GENERAL TAXES AND DUTIES.
8. That
(a) the several Taxes and Duties specified in the Schedule to this Resolution shall until the Oireachtas shall enact to the contrary, and subject to the existing statutory provisions as to drawbacks, repayments and allowances continue to be charged, levied, raised, imposed and paid in Saorstát Eireann; and
(b) the several statutory and other provisions which were in force on the 6th day of December, 1922, in the area now comprised in Saorstát Eireann, in relation to the said taxes and duties respectively shall, subject to the adaptations and modifications made in such provisions by or under the Adaptation of Enactments Act, 1922 (No. 2 of 1922), continue to have effect in Saorstát Eireann in relation to taxes and duties aforesaid until the Oireachtas shall enact to the contrary.
Provided that the provisions of Section 8 of the Finance Act, 1913, shall continue to apply to such of the taxes and duties aforesaid as the same applied on the 6th day of December, 1922, but with the substitution in that section of the expression "Saorstát Eireann" for the expression "Great Britain and Ireland."
And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913.
SCHEDULE.
The duties of Customs.
The duties of Excise.
The duties payable by way of Stamps, including duties payable upon or with reference to death.
Corporation Duty.
Corporation Profits Tax.
Mineral Rights Duty.
Motor Vehicles Duty.
AMENDMENT OF LAW.
9. That it is expedient to amend the law relating to Customs and Inland Revenue (including excise) and to make further provision in connection with Finance.
Resolution No. 1 read a second time.

I have handed in an amendment to paragraph (b) of Resolution 1:—"To delete the words ‘and subject to the provisions of the Double Taxation (Relief) Act, 1923 (No. 8 of 1923),'" My object in moving this amendment is to assist the Minister for Finance in meeting the charges that he deems to be necessary for the current year, and further to provide him with an opportunity of explaining, in more detail than we have yet learned, the effect of this Double Taxation (Relief) Act, and the cost of it to the Free State, provided such arrangements as have been suggested in regard to Income Tax are brought into operation. This particular Act dealt with Stamp Duties, for instance, and other things besides Income Tax, but it seems to me that the provisions relating to Income Tax ought not to come into operation without our knowing pretty definitely what it is going to involve. We know, as a matter of common knowledge, that a very much greater sum of money is invested in British undertakings by residents and citizens of Saorstát than is invested by citizens of Great Britain in undertakings in the Saorstát. I do not think it can be considered in the light of a reciprocity arrangement unless reciprocity means giving away 5s. for the sake of getting in return 1s. Some time ago there was an estimate, taken, I think, from Official Returns, published that some £108,000,000 or £109,000,000 were invested in British Government and Indian Securities from Ireland. Then, we know of very considerable sums invested in railways, corporations, insurance companies and industrial undertakings of one kind or other, having their headquarters and chief operations in Great Britain. The income which is derived from those investments by citizens of the Saorstát ought, as I understand it, be liable to taxation in Ireland, and no case yet has been made which convinces me that there is any necessity for making any remission or giving any relief because they have already paid an Income Tax to the British Government. The effect of this relief is to encourage Irish investors to send their investments over the water. I think the policy should be just the contrary—to encourage or induce or prevail upon Irish investors, by a fiscal provision, to invest their moneys in Irish undertakings. I suppose it would not be an exaggeration to say that from Saorstát Eireann £100,000,000 is invested in British undertakings. It may be more, it may be less; it is only a guess. But in any case it is a very large sum. How much of the dividend from those investments is subject to deduction of Income Tax at the source, I cannot tell. Possibly the Minister is able to give us some enlightenment. But, in any case, it is a considerable sum. It may amount to half a million pounds, or it may amount to much more. It may amount to less, but it is going to be in the hundreds of thousands of pounds, and it seems to me that the finance of the Saorstát cannot afford to allow that sum to slip through its fingers.

There is going to be a loan called for. I suggest that it would be a considerable inducement to the investors in British undertakings to transfer their investments to the loan if this responsibility for Income Tax was imposed upon the holders of foreign securities. It might even be found profitable—I think it would be found profitable—for investors to take up loan stock and they would not have any complaint to make that they were being deprived of security. Surely, to a citizen of the Saorstát the security of the State is good enough. If it is not, then I think the person of the investor ought to follow his investment. It is said "where your treasure is there will your heart be also," and if we encourage, by this system of relief, investors to invest their money in British securities we shall find that the minds and the thoughts and the ambitions of the said investors will follow their investments and that they will take more interest in British affairs than they will take in Irish affairs. This sum of money that might be drawn into the coffers of the Saorstát might very well go to reducing the tax—the one tax that touches in a direct way every child, every woman, and every man in the community—on sugar. It is an imposition that I think should be lightened at the earliest possible date. I suggest that if the Minister for Finance in his scheme thinks that the inducement to investment in the loan that is proposed is sufficient, without using this particular relief of taxation, that the sum might very well be used to reduce the tax on sugar. But whatever may be the use made of this sum of £200,000 or £300,000 or £500,000 or £1,000,000, it is well it should be made use of by the Irish Government. I think from the point of view of revenue, from the point of view of industry, from the point of view of citizenship, that it is desirable that the citizens who have investments in British securities should be called upon to transfer those investments to Irish securities. And if they decline to do that then they should not be relieved of the taxation that every other citizen who is prepared to invest his money in Irish securities has to undergo. I know there will be all kinds of arguments used regarding credit and trust funds and widows and orphans, but I submit that the Minister can make quite certain that no harm will come to the widows and orphans and the trustees who are responsible for the maintenance of such trust funds. He might even suggest some means whereby there will be relief from Income Tax for investors in such a loan. In any case I would urge that the interest of the State will be better served by giving no relief in respect of Income Tax and that in consequence this particular phrase in sub-section D of Resolution No. 1 should be deleted and accordingly I beg to move the amendment.

I beg to second.

A few more speeches like that to which we have just listened from Deputy Johnson, and there will be very little capital left in this country at all. Let us consider for a moment the people who are likely to have money to invest in internal loans and in Irish securities. A great part of the invested moneys of the people who are for the moment citizens of Saorstát Eireann are funds paid under the Land Purchase Acts to landlords whose properties were sold to their tenants. Many of these men are living, we hope temporarily, in England until the Bill that was before the Dáil the other day which will enable them to rebuild their houses, has been passed. They have no estates to manage; they have bits of demesnes left, and they look forward to coming back here and resuming their places as citizens mainly on the ground of sentiment. But sentiment is a very light thing when you set up against it cash, and you will find, I have no doubt whatever, that if they are made to pay heavily for the pleasure of coming back here, they will not come back at all. You might get a little from them, if the Amendment were accepted, in the way of Income Tax, but that is only a drop in the bucket compared with what you would lose by people going away again, and not coming back. You may lose not only a comparatively trifling amount drawn from them by way of Income Tax, but when any one of these dies, as a citizen of the Saorstát, the State takes a heavy toll in Death and Estate duties, and the consequence of such a proposal as this might be that you would be driving away by taxation, not only so much Income Tax, but accumulated Death duties, out of the coffers of this State in consequence of a person being denied the relief that is extended to residents in Canada, Australia, or other Dominions because of investments they may have over there.

Now, the people who have invested money are the monied class, or what is called, I suppose, capitalists—more or less wealthy people who live on incomes derived from trust funds. You cannot get an industrial concern to put their money into loans of this description, because if the country prospers they will invest their reserve money in their own concern and their own business. These people do not have large sums to invest; they do not have anything except comparatively small reserves to invest in loans. What we want is men who are what is called flush of money to put it into investments in this country and to put it into loans in this country. You will not find many people beside the existing citizens of this country who will produce money for that purpose, and therefore our first and main object ought to be to keep those people we have, and to make sure that these monied people, temporarily out of the country, will not remain permanently out of it, but will come back and resume the place as citizens that they held heretofore. It may be said it is not a very patriotic thing to run away from Ireland and go somewhere else. It is not; but one must make excuse for those people. They have been up against rather dangerous circumstances for the last two or three years that have not been a great encouragement to them to remain in their native land. This new Oireachtas ought to see that they will be welcomed back, and will not be placed at a disadvantage if they come back, and will not be treated differently here from what they would be treated in England if they changed their residence to England, or if they went to Canada or Australia. We want to keep everybody here, as the Minister for Finance said, who has a £5 note or anything else in his pocket. Let us encourage such people to stay here and to produce that £5 note for our own internal government. I am not interested at all in trustees, or widows or orphans, or matters of that kind, and I hope I will not hear any cheap gibes about my clients. My only client in this matter is the Exchequer of the Free State, and it is because I believe that the proposal put forward by the Deputy opposite, in the way it is put forward, would be absolutely disastrous to this country in making sure that all the capital that could flow out of the country would go that I so strongly oppose it.

Now, it is within my own knowledge that a very wealthy man indeed, living in comfort in a small house where he made up his mind to live for the rest of his life here, in this country—a very wealthy man indeed, who pays something between £15,000 and £20,000 a year in income tax and super tax into the coffers of the Free State, and whose estate would pay I do not know what sum in death duties when he died, did clear out of the country, and went away in consequence of very similar proposals to that we have just heard this afternoon. That is one case, but there are any number of very much smaller people no doubt, but monied people all the same, who would follow his example. I quite agree that could not be described as patriotic, but, after all, money talks and people will not make great pecuniary sacrifices for the sake of sentiment. I know many people again who have a most strong desire to come back to this country, and to live and die here, and who are not living here now, but who are waiting and hoping for an opportunity to come back, but who will abandon that hope, and will not come back unless they see that they can come back on equal terms with those they receive in the places in which they are resident for the moment. It will be time enough, after they are settled down here again, to consider what measures we are going to take, but if you once begin what you may call a system of threatening to conscript capital which can go across by the mail boat at a moment's notice, and go for ever, you will find it will be pouring out of the country and that when you come to float your internal loan, the people who have money to lend and who would be prepared to do so, and who would be prepared to take their money from English investments and put it into your Irish loan, will not be here in this country at all.

It does appear to be the very worst policy in the interest of the State that we should even seem to countenance the possibility of such penalisation of people who have exercised the right that every person who owns money has to put it into such concerns as will remunerate him best. If they think this is going to be a prosperous country, and that this country is going to make good they will put their money into loans here, but if you adopt this method of coercion you will not find them consenting to draw out their money from foreign countries or from the other Dominions to put it into Irish industry.

This is not the first time that we have heard from Deputy Johnson this curious doctrine of liberty—that we should force those who have money to invest, to invest it in Irish enterprises. Anyone who knows the elements of business is aware that the way in which you get capital invested in any enterprise is by making it attractive to the investors. You will not force people who have money to spare to invest it in any undertaking merely by declaring that you will tax and tax, and double tax, whatever dividends they would get from other sources. They will adopt the resource that is far too frequently adopted in Ireland, even in the best of circumstances— they will hide it under the hearthstone, or they will put it in the stocking, or transfer it into paper and hide it between the pages of the family Bible. They will do all sorts of things with it except the one thing—make it fruitful. The last thing that is possible by coercion is to make people invest money in something in which they have no confidence. I say that even if you could do that, and it is notoriously impossible—but if you were to do it, it would be execrable tyranny. If a man, through his self-denial or excessive work, or through any other exercise of his energy, has a surplus above what meets his present needs, surely he has as much right, consonant with ordinary morality, to do with that what is reasonable, as he has with any other of his possessions. We are not all obliged to work throughout the twentyfour hours of the day. Our capacity for work and our energies are so far at our own disposal. After all, accumulated capital is pretty much the same thing, and if you are going to take away from the citizen the right to dispose of that, you might as well take away from him at the same time the right to dispose of his labour or to dispose of his mental energy. Would the Deputy introduce an Act which would compel all men to write articles for six hours of the day and lecture for six remaining hours, and for six other hours to labour in the fields to recuperate? I suggest, though that seems to be fantastic, the parallel itself is in principle on all fours with the proposal to force people to withdraw against their wills and against their better judgment, or against their own conception of the fitter circumstances in individual cases, the money which they had invested, and to compel them to put it into something else. Deputy Fitzgibbon has pointed out an alternative which seems to have escaped the attention of the advocates of this particular form of liberty, that capital can fly, and that the bird with the capital will fly——

It always does.

And will go elsewhere. The proposal amounts to this: that we have not sufficient faith in the future of the Free State and have to try to give it an artificial stability—to try to make it appear a better thing to the world of credit than it is and to take steps to keep a larger measure of capital unwillingly within its shores. I say to keep it so is not to have it remunerative capital; it will leave a sense of grievance with the owners of it. It seems to be incredible that anyone who advocates liberty with the persistent zeal and ability that Deputy Johnson invariably does should, as he thinks, in the interests and for the betterment of the country, propose to deal what is in some sense a fatal blow to confidence. because everyone will ask the question: Why is it necessary to make an enactment of this kind which is so obviously harsh in the way of its application, and why should it be necessary, in this initial stage of fiscal control in the Free State, to make this enactment? It can only be because these people do not believe that voluntarily their own citizens would invest their moneys there. Now I have faith, and I am sure Deputy Johnson has no less faith than I have, in the future of the Free State, particularly as from now on. We are entitled to be hopeful, and to be very optimistic with regard to it I think what we ought to do is to lessen income tax and lessen the taxes on necessities, and make this an attractive place for people to come to live in who have a little surplus of money to invest. If we succeed in doing that it will go a long way to stabilise the Free State.

I rise to support the amendment proposed by Deputy Johnson. I am sorry that Deputy FitzGibbon and Deputy Magennis should have taken up an attitude of opposition to it. I think that we in this country. have no longer any room for drones who simply lodge their money in the banks and do not utilise it for the benefit of the people, or for the advancement of the interests of the country. In my opinion these people should utilise the money they now have lying in the banks for the benefit of the people who were instrumental in raising such capital for them. It seems to me that there are Deputies in this Dáil who want to save people with money lying idle in the banks. The fact that there is so much money lying idle in the banks is largely responsible for the big amount of unemployment that exists at present in this country. There are thousands of men out of work at present, and both they and their dependants are suffering the greatest hardship because of the fact that they are unable to get employment.

There is no one sweating in this country anyway.

I do not see any reason why this amendment proposed by Deputy Johnson would not be agreed to. It is not calculated, in any shape or form, to penalise any capitalists in the country. It simply deals with income tax. We all know that there are a great many wealthy people in this country who have all their money lodged in the banks. The money is locked up in them, and is not of any use to the country. In my opinion the Minister for Finance, instead of charging them 5s. in the pound income tax on that money, should increase the charge to 10s., or else these people should be made take the money from the banks and utilise it for the development and benefit of the country. If that were done, I think it would be a great means of saving the State. As I have already said, we want no drones in this country. We want every man to take off his coat and to do his part in helping to make the country prosperous and happy. It is a terrible thing to reflect that you have thousands of people in this country living in circumstances of the greatest poverty and hardship, while there are millions of money lying idle in the banks. Something will have to be done to relieve all these cases of hardship, and I hope the people with money will come forward and help the industrial movement in the country. The settled conditions that now obtain in the country go to show that the present Government represents the majority of the people of this country, and when that fact is fully realised, I am sure capitalists will be only too delighted to pay the 5s. in the pound income tax in order to relieve the State of its great responsibility.

I have listened with great interest to the speeches on this subject. I do not think that Deputy Fitzgibbon need hold the gloomy view that he seems to hold, because in reality the proposition made by Deputy Johnson is not taken very seriously throughout the country. The advocacy of Deputy Johnson on any question connected with industry and finance does not carry very far, and I think he will find that out at the next election. We have heard a good deal about Irish securities. The reason that there is no confidence in Irish securities at present is because everything in Ireland is looked upon as absolutely insecure. Any little industries we had during the last few years have been spoiled by the people engaged in them. It is not a question of providing money in Ireland for industrial purposes; it is a question of distributing money amongst certain people who will not work.

Pay them.

The first thing they try to do is to break up the industry. We hear a lot about paying them, but we get very little return for what is paid to them. There has not been very much of a return. Go through the country and you will find industries broken up, because there is no effort made on the part of those engaged in the industries to work, and, consequently, there is no security. Industries of that description in any other country in the world are a success. Why are they a failure in Ireland? That is a plain question, and I want an answer to it. Present methods will result in turning not alone the people Deputy FitzGibbon referred to, but every man in the country who has an investment, out of Ireland. They will not continue to pay double income tax; they will not pay tax here and in England. They will either live here or in England. If we were turning only a few landlords out of the country, it would not be a very big matter; but you will be turning ten times as many people out. You will be turning anyone who has any stake at all in the country away from it. The only way to restore confidence both in the country and in its industries is to show that our securities are really secure. We have heard talk here about patriots. I would like to know how many people in this country are really patriots. I think patriotism is trotted out a bit too much. The great factor of human feeling seems to be lost sight of altogether when we talk about patriotism. I have not met a lot of patriots in my time. I met a few—but real patriots are very scarce. When people talk about patriotism it is really only claptrap with a great many of them.

As Deputy Magennis has said, this proposition, coming from the people who put it up, is a confession of no faith in Irish industry and Irish effort. I do not think they have any faith in them; a good many of us have not. Except their attitude is changed altogether, I see no future for Irish industry. Distribution would be a better word than investment; it would be nearer the mark and nearer the true meaning of the proposal. There was a reference to people sweating. If we had a little more sweat we would have a little more security. Deputy Lyons spoke about sweat. I have not seen a man sweating for twenty years. If there were a little more, there would be greater security and confidence in industry. I would like to tell Deputy Lyons this——

The Deputy must address the Chair, and perhaps he had better refrain from telling Deputy Lyons anything.

I would like to say one thing. It does not follow that a man is a drone because he is an investor. There are a good many drones amongst the workers.

I would like to explain the meaning of the word "drone."

I think the Deputy need not explain; the meaning is already very well known.

I do not think that Deputy Gorey knows it.

If Deputy Gorey does not understand the term, then that is his loss.

I should imagine it is the honey they are trying to get.

I do not think it would be fair to push this amendment, because we undertook that by reason of the change in the setting up of the Saorstát persons having investments should not get a jolt which any discrimination against them in the shape of double income tax would impose. It would certainly not be fair. There was no notice given that it was our intention to saddle them with an extra imposition, and any withdrawal of the relief which would be accorded by the double taxation order would certainly amount to a breach of faith, and would affect your credit not alone with regard to those people, but with regard to others who might possibly be inclined to invest in our own loan. There is nothing to prevent you in six months time from saying: "We borrowed under very great difficulties; we were in a tight corner; and now we will take up this loan at 10 per cent. discount," or something of that sort. It would not be fair, having regard to all the undertakings we have given, to withdraw now from any of those undertakings. With regard to the second question mentioned by Deputy Johnson, I know full well that for a great many years past a good deal of criticism has been passed on the Banking Institutions and Corporations having their investments in British or Foreign securities, as the case might be. One must realise what the position of a Bank is. A Bank takes in deposits and undertakes to pay them out again at very short notice. It has never got what we would call a lease of any of the monies that are lodged there. We know that people will not go into a bank on a given day and say: "We want all the money that is there on deposit." The banks, without at least some authority, must certainly have equivalent securities for the monies that have been lodged with them, so that they may be readily available and easily liquidated at very short notice. There was no security in this country available for such investments. That is natural in a country like this, which had not got its own Parliament, and had not got the ordinary investments which would be easily liquidated. Even if it had, I think it will be admitted that it is not wise for any country to restrict itself solely to investments within its own borders. It will be recollected that a few years ago one of the most powerful countries—perhaps one of two of the most powerful countries—was confronted with a very, very serious banking crisis. Those who studied that particular difficulty at the time know well what a serious thing it was for industry, commerce and business, and for the ordinary people of that nation. The hundred millions or so that the Banks of this country have invested in English securities form a sort of reserve. They can easily liquidate those investments, and there is not any likelihood whatever of what we call a banking crisis in this country, having regard to the way in which the Banks' investments are made. If one were to say to the Banks: "You must sell out those and invest in something in this country," I believe you would impose at once a banking crisis. In the first place, a huge quantity of investments would be unloaded on the market; and even if they got rid of them, what is there in this country to invest one hundred millions in at the moment and without inflating the prices? Then, when it is invested, supposing it were put in Railway stock, Corporation stock, Guinness or any of those stocks, where is the reserve? Each one of those particular investments would be at a higher price than what would be the normal price. I do not think that there would be any justification for that. Our business is to grow steadily, slowly, on a sound basis. Even if one were to start new factories and large factories and so on, one would scarcely be justified in indulging in an experiment of that sort without making sure that there is a market, and without making sure that there will be stable industrial conditions and so on, Then we know very well here that it would be unreasonable to expect sound industrial business men accustomed only to running small businesses to branch out at once into huge extensions of the business they have experience of. Also, if these experiments were not a success you would find that other people would be deterred afterwards from making such experiments. These experimental roads must not be tampered with, because there are very considerable concerns whose success is really attributable to the number of failures that have gone before them. As people sometimes say: "Fools build houses for wise men to live in," but if the wise men had built the houses they would be probably in the same position as the fools. They are benefiting by the experiments of others. We have £100,000,000 at the present moment invested in British securities. I do not know if there is any machinery available at the moment to enable me to give the Dáil a return of the amount of British capital invested here. I agree thoroughly that in order to stimulate interest in our own commerce, industry and business we ought have our money in it. But I do not think that it would conduce towards investing our own money in it if you were to put a prohibition, or any coercion, upon the people who have other investments. These investments, at this moment, are equivalent to a surplus of exports over imports. We know that the British system of finance and British credit, if I might say so, has been built up not to-day or yesterday, but over a very long period of years, and that on the Continent British banks and British securities generally hold a high place in the opinion of financiers. That has been built up without any extraordinary alteration in the system, but by a gradual growth. People who invest in them know that revolutionary changes in their financial system will not be embarked upon, and that it is as a result of long years' experience and of close attention to a particular system that they have succeeded in maintaining their position even after the war. A couple of years ago the English pound was worth 13/-. It is now worth 19/-. One sees there, at least, that there has been considerable industry in the financial operations that have enabled them to restore the position with regard to that. During the war, when there were great drains upon their resources, the system of taxation and everything in the nature of impositions were gradual. After the undertaking that we have given and the promises that we have made and the actual equity of the case, I do not think we would be justified in refusing or in postponing the carrying out of the terms of the Order that we have already agreed to—the Double Taxation Order—and any infraction of it now would seriously damage our reputation and our credit.

Might I speak again in reply to what the President has said?

By the general Orders, the mover is not entitled to speak again, unless he gets the leave of the Dáil.

Ní fhuil ach beagán agam le rádh ar an g-ceist seo, ach ba mhaith liom an beagán sin do chur os cómhair na Dála.

I think that we have been discussing something in this resolution that is very trifling in importance compared with some of the things that have been overlooked, so far, in the course of the debate.

Does the Deputy understand that we are now on a particular amendment?

I know that, and I am not going to transgress the rules of debate in that respect. I merely want to make a remark. The essential thing in relation to the amendment moved by Deputy Johnson, on the other side, is that, in the first place, in laying the foundations of the financial affairs of this country of ours, we should give security. That is the first essential for success— that security should be given. That security is being established, and that condition of affairs is being arrived at when the investors can realise that they are going, in the first place, to have security. After security comes returns. That is the profit from their investment. The fact of whether they will engage in investment here or somewhere else would be measured by them in relation to the extent or amount of profit that they are liable or likely to secure in return for the investment. We must try, as far as we can, to give them an opportunity of being able to prove to themselves that they are on the road to make a good return— or as good a return, or perhaps a greater return—in the Saorstát than they will receive if they invested anywhere else, and that they will have an advantage instead of a disadvantage in investing here. We, in laying the foundation here, should be anxious to have capital invested in this country, not because we stand behind capitalism, not because we are wedded in any way to capitalistic influences, or that we admire in any way the spirit that permeates and animates capitalism, but because we want to use capital as a means by which our people here may be enabled to earn their living, to secure a good position in which they can work out their own affairs, and bring up their families, and keep themselves in fair and reasonable conditions. That is the fundamental issue with regard to capital here. We do not want it as capital, but we want it for this express purpose that I have defined. And these people, who have control of capital—if we want to use them we have to give them the advantages that I have here pointed out.

Now, I think this double taxation merely means not to charge twice. I think it relieves those who are resident in another country, and who have capital here, from paying Income Tax on that capital in both places—in the place where they earn the money and in the place where they reside. I think that is the meaning of this Double Taxation Bill. I am sure it should be an equitable thing to say that we have no right to tax a man, first where he earns the money and then where he resides.

If we do that we certainly will make him take the money from the country where he earns it into the country where he resides, and where he is only likely to be called upon to pay one Income Tax. We have only one grievance with regard to our people here in this country. A great many people tell us there is not much money in the country. I think myself that that to a large extent is false. I believe that there is in this country a good deal of capital lying dormant. It is in the hands of individuals who are not using it for any public purpose, or to any national advantage, or even for the laudable purpose of earning something on it for themselves. There is a certain spirit of frugality in this country. It has induced people to hoard money, and a great many of them have not yet learned how to invest it. They are not versed in investments as people in other countries are. The ordinary labouring man in other countries if he has capital to invest knows how to invest it, and he trusts to the security he gets. Here we have a great deal of money lying uninvested. A good deal will depend on ourselves at the start in this country, and upon the conditions, and I am very much afraid, I must admit, of this present Budget. I am afraid it is going to be too oppressive. I am very much alarmed about the danger of driving from the country the capital that will be necessary to lay for us here the foundations that we would wish to see laid. It is very important and very imperative that we should have preferential conditions here over any of the neighbouring countries. We are only divided here from a foreign country by a fence, and on all occasions the advantages of living at the other side of the fence will be pointed out. I think it is up to us at the present time to study very carefully whether we cannot by some financial ability perhaps— and we have that financial ability, I am sure, amongst the men who are in charge of the financial affairs here—discover some method by which we would not alone make secure the financial condition of affairs in the country, but at the same time not leave it in the mouths of those who are opposed to us in the countries that adjoin us to insinuate that this is a country to live out of. Rather we should try to compel them to admit that this is a country to live in. I do not like the 5s. Income Tax.

Perhaps the Deputy is going to allude to the amendment now.

I am certainly against the amendment of Deputy Johnson. As regards the Double Taxation amendment, I certainly think that that should be removed altogether, and that people living out of the country, who have money invested in it, should be encouraged to keep it here rather than be penalised for doing so. I would want to profit by things that are valuable and useful to the country, but I certainly would not like to profit at the expense of the character of the country by destroying the confidence of people who live outside the country, and who have investments in it.

I am going to allow Deputy Johnson to make a brief speech in reply.

One would imagine that this double taxation arrangement had been ordained at the time of Adam Smith, and that the absence of such relief between one country and another would mean the impossibility of investments as between one country and another ever taking place. But it is quite a modern innovation, and was arranged between Britain and her Colonies, but it was arranged in such a way and at such a time that the income tax in those particular dominions was very much smaller than the income tax in the British Isles. The amendment does not attempt to curtail or to prevent or to interfere with the rights of the owner of monies to invest in securities outside the Saorstát. There is no attempt to prevent any exercise of that liberty. What it does try to bring about is that you are not going to use the machine of legislation and the finances of the country to induce Irish capitalists to invest their money in England, because that is what the effect of the Relief Bill is going to be. It is going to encourage and induce Irish capitalists to invest their money in England.

One heard with some regret the speech of the Minister for Finance on this Bill, because it showed, I think, pretty plainly that he had been completely caught up with the British ideas of finance and economics and commerce, and I think that it is a bad look out for the future of the country. We all know the extraordinary position that the City of London has occupied in the financial world for many years, and of course we know that the Continental banks recognise that fact. But Continental investors have money invested in England, and British investors have money invested in France and other countries. There is no reciprocal arrangement of this kind, and it does not prevent investments between one country and another. The British financial system, no doubt, has been extraordinarily beneficial to British financiers. It will continue to be successful, and just as long as we are prepared to be drawn to that system, to follow it implicitly, to allow ourselves to be caught up in the toils of it, just so long are we going to decline the benefits that political liberty would bring in its course. It seems to me, from the Minister's statement that we can look forward to a financial and commercial policy which will ensure that there will be no change in commerce and industry and finance from that which has prevailed hitherto. That, I think, is a very regrettable decision on the part of the Minister for Finance.

Deputy Gorey put a plain question when he asked "Why are the factories through the country idle; why have they been a failure?" Partly because of the extraordinary pre-eminence of British finance —because of the extraordinary position the British commercial system has allowed Britain to occupy, and partly because of the inability of Irish owners of factories and workshops and fields to get the most out of their businesses and to organise them properly. Inefficiency on the part of the owners of fields and farms and factories—that is the reason that these undertakings have so often failed. One would imagine that the picture that Deputy Fitzgibbon drew of capital going across, day by day, by the mail boat was one that represented the truth. The facts are, of course, that this country, as every other country, lives by its yearly produce, and though it might be a comparative calamity and regrettable that gentlemen whom Deputy Fitzgibbon spoke of, should decide finally never to return to Ireland and that such investments as they have in Ireland should be transferred—presumably to effect the transfer it would be necessary for somebody to purchase their holdings— although that might be regettable, it is not going to be all calamity. The country can survive even the absence of any particular group of its present citizens who prefer to have their homes where their investments are. The credit of the country, as has been said before in the Dáil resides in the ability of the people of the country to extract wealth from the soil of the country and that can go on as long as the people are here to labour and to consume. We are not going to be frightened by the picture of capital leaving by the mail boats. We are told that the proposal to refrain from relieving investors abroad from income tax—to make sure that the investors in London North Western Stock, for instance, would be just as much entitled to pay income tax to the Irish Exchequer as the investors in Great Southern and Western Stock—we are told that if we remove the relief we are offering the investors in British securities, we are compelling people to invest money in securities in which they have no confidence. The proposition does not do anything of the kind. It simply says that if they prefer, above all things, to have their investments in British securities they shall not by that fact be relieved from paying income tax to the Irish Exchequer. It seems to me that the case made for relief has not been sound or conclusive. I do not know what promises or undertakings have been given that the Minister for Finance referred to. I do not think the Dáil has given any undertakings. It passed an Act respecting the relief of taxation. There was nothing in that that said that it would be taxation of income that there would be relief from. It provided that certain arrangements might be made. The Dáil has not yet passed any particular arrangements, and I do not think that any undertaking that the Dáil has not entered into need necessarily be fulfilled. I feel that the amendment is one that ought to be pressed, and that we ought to test the feeling of the Dáil upon it. Therefore, I propose to ask the Dáil to express itself by a division.

At this stage An Leas Cheann Comhairle took the chair.

Amendment put.
The Dáil divided. Tá, 11; Níl, 36.

  • Tomás de Nógla.
  • Riobard Ó Deaghaidh.
  • Tomás Mac Eoin.
  • Liam Ó Briain.
  • Tomás Ó Conaill.
  • Aodh Ó Cúlacháin.
  • Seán Ó Laidhin.
  • Cathal Ó Seanáin.
  • Seán Buitléir.
  • Domhnall Ó Muirgheasa.
  • Ristéard Mac Fheorais.

Níl

  • Liam T. Mac Cosgair.
  • Donchadh Ó Guaire.
  • Seán Ó Duinnín.
  • Domhnall Ó Mocháin.
  • Padraig Mag Ualghairg.
  • Darghal Figes.
  • Seoirse Ghabháin Uíi Dhubhthaigh.
  • Seán Ó Ruanaidh.
  • Ailfrid Ó Broin.
  • Micheál de Staineas.
  • Domhnall Mac Carthaigh.
  • Maolmhuire Mac Eochadha.
  • Sir Séamus Craig.
  • Gearóid Mac Giobúin.
  • Liam Thrift.
  • Eoin Mac Néill.
  • Seosamh Ó Faoileacháin.
  • Seoirse Mac Niocaill.
  • Fionán Ó Loingsigh.
  • Séamus Ó Cruadhlaoich.
  • Criostóir Ó Broin.
  • Ristéard Mac Liam.
  • Proinsias Bulfin.
  • Séamus Ó Dóláin.
  • Aindriú Ó Láimhín.
  • Próinsias Mag Aonghusa.
  • Peadar Ó hAodha.
  • Séamus Ó Murchadha.
  • Seosamh Mac Giolla Bhrighde.
  • Liam Mac Sioghaird.
  • Tomás Ó Domhnaill.
  • Earnán de Blaghd.
  • Uinseann de Faoite.
  • Domhnall Ó Broin.
  • Séamus de Burca.
  • Mícheál Ó Dubhghaill.
Amendment declared lost.

It was stated yesterday that, owing to the shortness of the time for giving notice, amendments might be moved in manuscript, and, therefore, I rise to move in paragraph A of the first resolution to delete the words, "five shillings in the pound," and to insert in lieu thereof, "four-and-sixpence in the pound." That amendment is open at once to the suggestion that was more or less thrown out yesterday by the Minister for Finance that, though some of us had adversely criticised the adoption of the English system, nevertheless we desired to get conformity with it now. I think, of course, that is a perfectly possible and perfectly plausible charge to make, but the substance of the reason for such a deduction is this: that if are going to adhere without change to the general system of taxation that we have taken over from the previous Government in this country, it then becomes a matter of the very first importance to us to see that in taking over that system we should not permit any part of it to fall behind in comparison with what the English system is changed to, and so that we may not have what I described yesterday as an invidious comparison to be thrown up against us. I said here yesterday, and I think the Minister for Finance agreed with me in general terms, that ultimately it will become necessary to revise our entire system of taxation and our entire fiscal policy, so as to make it suitable to the conditions of this country, because the system we have taken over was provided and devised so as to be suitable to the conditions of a country wholly different from this. As the Minister has said, a change will have eventually to come about, but the present system will last for a large number of years—he said ten years—an unnecessarily long time—but he stated a very important truth when he said that the change would have to come in instalments, bit by bit, and not entirely and at once. I think it is unfortunate, seeing that this change will have to come about, that it should not begin at once. However, I am not going into that, at the moment, because it is possible that there will be no change. So far a decision is taken, and it will be very difficult to alter it, but seeing that we have undertaken what is practically a facsimile of the English system, then I urge it should be kept as a facsimile until we have decided to make certain drastic changes. I do not propose to repeat any of the arguments that arose on the previous amendment.

An Ceann Comhairle resumed the chair.

The arguments advanced by several deputies on the previous amendment are, generally speaking, applicable to the amendment now before us, because where one's treasure is, as Deputy Johnson said, quoting from a very high authority, one's heart must be also. There will be a tendency undoubtedly, a very natural tendency, that we cannot question or criticise, to the sending of treasure out of this country, if it can be done so profitably. I think that we cannot, at the present moment, afford to allow ourselves to be subjected to the unfortunate comparisons that were made in this regard yesterday. In the public press they put the citizen of this country, in this particular matter, at a very serious drawback, seeing that people who have capital to dispose of could easily transfer themselves and their capital to England, and so live under a cheaper rate of income tax. Now, I have endeavoured to assess what the change might mean. I notice, in one of the papers given to us, that property income tax includes super-tax, mineral rights' duty, and comes roughly, in round figures, to £5,000,000. One might safely assume that every shilling brings in a million of revenue. A reduction of that by sixpence would, therefore, mean that the State would have to forego revenue up to a sum of £500,000. I notice, also, among the estimates for the new year, that the estimate for the Army is £10,664,000. One is very glad to note definitely that the conditions of war that have prevailed for the last seven or eight months are disappearing, and that we are definitely approaching a period of peace and settlement. I suggest that under the changed conditions it might be very easy to economise in the estimated army expenditure to the tune of the odd sum of £664,000, and to employ the savings so made to the relief of income tax. Let the one balance against the other, with this end in view: in the first place, that we might be saved from the criticisms that the benefits to the country projected under the Free State are not accruing, and, in the second place, citizens may be enabled to be maintained in this country, and not be obliged to go abroad because of a lower scale of taxation. Had the system been changed, such criticisms as I am now making—and this is the whole purport of my present amendment—might not necessarily have matured, but seeing that we have frankly taken over, without change, the English system, then let us frankly abide by the condition, so that there may be no unfortunate comparisons.

I beg to second the amendment.

Deputy Figgis, in referring to certain statements made by me yesterday seems to have misunderstood a good deal of what I intended to convey. Perhaps I did not convey it, but I will convey it now. What I see useful in the English system is, number one, its success, and, number two, the fact that it is evidently built on a sound basis. The difference between the British Budget and our Budget, both last year and this year, is a very considerable difference. In one case there is a surplus of money and in the other case there is a surplus which nobody has discovered except the Deputy who proposes now to reduce this Income Tax by sixpence in the pound. Now, as far as they are concerned, they are entitled to reduce their Income Tax by 6d. in the £, having also reduced other items. One of them, I am sure, is a tax that the Deputy does not take any interest in, and others perhaps are taxes which other people do not take any interest in. At any rate, there has been a generous distribution of the benefits that have been derived from a very successful financial year. Have we got these benefits? We have not. Evidence is brought before me occasionally that wages are not as high in England as they are here. Now, if wages are higher here, obviously the circulation of money must be, to some extent, affected beneficially, and the people must have gained by that extra wage that is paid here. If that is the case, obviously people who handle more money proportionately than they are handling in England are better able, by reason of that money they are handling, to pay Income Tax to the amount they are asked to pay here, that is, 6d. in the £ over what they are paying in England. Now, in the first place you have got no surplus. You have not got a balance or anything approaching a balance, and you have not yet considered the Estimates, and no matter how you would consider them, if you are going to reduce this from 5s. to 4s. 6d you ought to be able to show somewhere or other in that estimate a method of reducing your estimated expenditure to the tune of £500,000. Even taking it on the method that the Deputy suggested yesterday of spreading over a number of years the charges that are not legitimate charges to be placed upon this particular year that we are entering into now, it must be borne in mind that these charges cannot be looked upon as a National Debt, because you could not say that any national benefit has been derived, which shall extend over a number of years, by reason of the discharge of the liabilities which we have to bear under the Damage to Property Act. Even having paid them, and having discharged your liabilities to the people to whom this compensation is due, you have got no national benefit to look to, nor can we say we have got material benefits on which we would be entitled to bank. Looking at it in that way there has been no case put up for a reduction of Income Tax from 5s. to 4s. 6d. There are other taxes which affect other people very much more materially than this tax of 6d. in the £ over England, and those people are entitled to ask: "If there be a reduction in taxation where is our portion of it?"

Now, of all the taxes that are being imposed that I know of, I think there is no tax as fair as Income Tax, and the pity is that the entire taxation of the country is not raised by Income Tax on every person in the country, no matter what his income is. If we pay taxes on tea or sugar or beer or whiskey we know full well that the cost of collection of that tax is out of all proportion to the cost of the collection of the Income Tax. In other words, it does not matter to a trader who takes a puncheon of spirits out of bond and who has to pay £300 in duty whether he has to pay it to the manufacturer or the Government. This money has to be paid down, and it is immaterial to the trader to whom he pays it. If he has to borrow it he has to pay 5 per cent., and in handling that money it is the same to him as if the manufacturer had charged him that price. He must also have the profit, and his profit is the cost of the collection of that £300 for the State. To that extent it appears to me that there is a considerable waste in certain of the taxes, but that is the system that the various countries in the world have adopted in collecting their revenues. I regret very much indeed that in this the first year of the Saorstát our taxes should be in excess of the taxes of another portion of our State. We are entering into a consideration of the boundary question at a serious disadvantage, and at a time when, if it were not for the disorders that have occurred and for the non-acceptance of the people's decision with regard to every question in the country, we might be more favourably circumstanced. We had to enter into the consideration of that very important question at a most serious discount, and it is no argument to put back to us that we are not able to solve every question when people take the ground and materials for solving those questions out of our hands. It is no use to us to say that the particular portion of the instrument that we have subscribed to is defective when other people have made that instrument as defective as they can, and if they take from us every opportunity we would and should have if it were not for a certain madness seizing upon certain people. I appreciate the importance of that particular tax being at the same figure in the South as in the North, but I wonder has the Deputy considered what is the respective ability in both the South and North to bear this particular tax at the moment. As I said before, on the question of our fiscal arrangements and on our financial matters to-day, one cannot solve or hope to get a solution for such important questions in mere amendments or mere alteration or mere arbitrary suggestions regarding the method of treatment. When the time comes to consider not alone the question of taxation but also the fiscal question, even after the most careful examination that can take place on it, one will find that amendments will have to be introduced year after year to meet the changing circumstances or to meet certain misinterpretations or miscalculations that will inevitably creep into a subject so vast and so exhaustive and so important to the State. The most important consideration I put to the Dáil in dealing with this matter is, "are you justified in reducing the revenue of the State by half a million pounds simply because the British Government has been able to reduce its particular taxation under that head?" I submit that having regard first to our liabilities, to the serious and enormous liabilities that we have got to undertake, in order that this State may function, that we must bear some of the taxation in this, the first year of our new State. If you start out by showing not alone to your own people, but to the whole world, that you want to be able to shout out the battle cry of freedom or your equality with the North or your equality with Great Britain, and the cost of that is refusing to pay your debts, I think that you are going to do more damage to the credit of the State, and to the State's estimate of its responsibilities, than you are going to gain from the mere paltry saving of half a million pounds to the pockets of people affected.

Now, I observe in looking at the newspapers, in the very limited time that I have to look at them, that one particular paper has urged a reduction of the Income Tax from 5s. to 4s. 6d. The same paper, dealing with some of our taxation, or at least dealing with the setting up of our own Customs and Excise, wanted to know if the Border Customs and the collection of Customs at the Port of Dublin, direct by ourselves, means that we are to lose immediately £3,500,000, because that particular item in our estimate is lower by £3,500,000. One can see at once what infantile experts there are engaged, when such a question as that is put. I do not think it is necessary to explain to the Dáil that by reason of a huge firm like Guinness's paying its Excise Duties here, when the British Government collects its duties at Holyhead, there must be an extraordinary difference in those two items. That is responsible for that particular item, and not the setting up of the Customs as a fact in itself. In other words, the mere setting up of Customs does not mean that we lose £3,500,000 at once; it simply means adjustments that had to take place, and they will not be shown in the same way next year. I feel rather keenly about this matter. I think, having regard to the fact that there is a big expenditure of money on the Army this year, a much larger expenditure than there was last year, and a very much larger expenditure than there will be next year, when we contemplate that within 12 months there will be decreed in our courts something like twenty millions of money, and when that sum will be put into circulation in the country I think it is a year in which the people can better afford to bear sixpence in the pound more on their Income Tax than even they can bear in the North or in England. Certainly we are justified in that distinction anyway as between here and the North. I do admit that in certain cases there is an unequal charge. There are, for example, people who have small investments and nothing else; they will certainly have to bear it. The country, however, could not go through what it has, I hope, successfully emerged from for the last twelve months, without at least bearing some of the cost. For that purpose and for the purpose that we may in this, our first year, make a special effort to meet the costs we have to meet, I think the Dáil ought to be satisfied that we have not increased taxation. If there is to be a decrease, it ought not to be on one particular item of taxation alone, and therefore, I could not accept the amendment.

I would like to correct a statement that the President has made. He did not interpret correctly the reason I put forward in moving this amendment. He used the words—not imputing them to me—"simply because of what the English Government has done." That is not the reason why the amendment is moved. It is moved for the reason I stated; if we decide to drop from 5s. to 4s. 6d. we will retain the citizens and lose half a million of money. If we keep the tax at the higher rate we will still lose the money, and we will also lose the citizens.

Amendment put and negatived.

I move that the Dáil agrees with the Committee in this resolution. I will make a brief explanation in regard to paragraph (c). The reason for continuing the annual value is that, owing to the amount of work involved in making assessments on property, it is not possible for the Revenue Department to face this question this year. A loss of revenue will arise on account of that, but this cannot be helped at the present, when the trained staff is not sufficient to cope with the difficulties. The bulk of the losses will arise in September.

Cuidighim le sin.

Motion put and agreed to.
Resolution No. 2 read a second time.

In moving that the Dáil do agree with this Resolution I may perhaps give a little explanation. It has been mentioned in the Press that we are going to call upon business people to do some accountancy work and to place them in the very unenviable position of imposing additional duties upon them, and to generally interfere with the ordinary discharge of their business. That is a misrepresentation of this resolution. The reason for it is that for the year 1921 there are 3,725 cases of persons owing under £100 and for 1922 there are 6,861 such cases. The taxes covered in this respect amount to not less than a quarter of a million pounds. As regards cases of persons owing more than £100, there are 200 for 1920-21 and 423 for 1921-22. The actual tax involved there is £115,000. The position as regards Dublin City is that the arrears due from employees, exclusive of workmen, amount to something like £365,000. Making allowance for deductions which may be claimed, the net sum involved is not less than £300,000 for Dublin City only. The exact method in which we intend to move in those cases is that an assessment will be served on the employer of a man having £1,000 or £500 a year, as the case may be. He will be ordered to deduct the tax from the salary of his manager or whatever official belongs to the firm. If the case be put up to the Revenue Commissioners that this man cannot pay the full first instalment at once arrangements can be made for having instalments extended over a certain period. Objections have been made by business people that pretty big claims for Income Tax, if demanded at once, would have a very serious effect on their business. I have not heard of any case in which, the circumstances having been explained by the person or the business firm, the Revenue Commissioners did not meet it fairly. No complaint has been made, but we must remember that unless some facility is afforded the Revenue Commissioners they will not be able to collect this money, and the collection of this money is vital to the revenue. After passing through two or three years of what we have passed through, and having a huge pile of arrears, exceptional steps must be taken in order to collect them. If there be a desire to pay there is a corresponding desire on the part of the Revenue Commissioners to meet the persons concerned. If there be a desire to evade responsibility, then we must take other steps to deal with them. This, as far as we know, is the most expeditious, the cheapest, and the most efficient way. It is an innovation, I admit, but it is an innovation that is certainly justified by the circumstances. Within the last few years I have heard of cases in which Income Tax Collectors were told that they would not be paid their money. They said: "Well, it is not different to what people have said to us who are different in political outlook to you." That is, it was not altogether a question of politics; it was really a question of money. That money is there; it should have been paid before this; it is now due. There is no more suitable method of collection that we know of. It is not an unfair method; it will not tax the resources of business establishments to any considerable extent. It will, in fact, be easier than affixing insurance stamps in regard to the National Health Insurance and deducting coppers from the ordinary working man. I move: "That the Dáil agrees with the Committee in this Resolution."

I have pleasure in seconding the motion.

Undoubtedly what the Minister for Finance said is true, that this is an effective method, and that in the circumstances an effective method of collection is called for. Can nothing further be said in favour of the proposal, for that is not sufficient to recommend it? The Minister for Finance has assumed the simplest case. It is the simplest case that he clearly has before his mind. A.B. has one source of income, and one source only. The income tax collectable upon that is to be paid by him within a certain date, or by his employer. In a case like that the machinery proposed is quite simple, always pre-supposing that the employer is willing to become a tax collector for the State. Employers have declared their unwillingness to take on that function. With them I have little sympathy. I may as well be frank and honest about the matter at once. I think a good citizen's duty is to assist the Government of the country in every way that is convenient, and that is not inimical to the transaction of his own business. Take the case of a man who has many sources of income, and this machinery fails to operate. I take the case of a man who is assessible in more than one district of the city or county of Dublin. Now, this is my own grievance. I am obliged to fill up a form, in which I disclose all my intimate affairs in several offices to several officials, who will, bye-and-bye, send along several separate collectors, each of whom carries in his pocket a complete account of my financial position. I shall be told, no doubt incidentally, that each of those is under a solemn vow of secrecy, but I know, under the late administration, in a moment when he was off his guard, a collector who had happy recollections of me as an examiner, told me he was only lent to this Department, whereupon I asked him, "Have you not taken the oath?" He said: "What oath?" and then I had him in my power. Supposing a person who is assessible in various districts has to go from office to office in order to get the exemptions to which he is entitled, you can imagine how many of his working days during a working year would be occupied with setting official after official right, because in those offices they have an unlimited capacity not for taking pains but for making pains. Genius has been defined as "an unlimited capacity for taking pains." They have a perverted genius of that type. How is my employer to deduct from me the Income tax that is due? He does not know. You may say he knows as much as concerns the transaction between him and me. Yes, but he does not know how far that amount is qualified by other sources of income. Am I to disclose to him what these other sources of income are? The thing becomes intensely complicated, and in its complication it becomes unjust. There is another thing; there must be reciprocity. If the employer is to come to the aid of the State by collecting the tax in this peremptory and exacting fashion, so, too, the collecting-side must undergo a transformation. There must be a new spirit. There has been no greater tyranny—I speak only of what I know—than the operations of the Inland Revenue under the British administration. Every petty clerk was not a petty tyrant but a monstrous tyrant. I make a claim for expenses. He refuses to allow them. There are all sorts of claims to which, in justice, I am entitled. He will hear nothing of them. The only answer that he will make is: "Very well, then, we will send in the bailiffs." There is no possibility of saving oneself from them. I hope that a new spirit— a clean heart—is going to enter into Income Tax collecting in the Free State. It will have to be reciprocal. If we are to pass legislation which makes it impossible for a man who receives a salary from an employer to escape paying Income Tax, it ought to be equally impossible for the Income Tax Collector to refuse to him those measures of relief to which he is supposed to be entitled. I know of income tax-payers who are assessed at random. I was told by one collector that a certain colleague of mine on the medical side had refused steadfastly, year after year, to fill up a form, and that they had been assessing him on an ascending scale year after year, and had not yet found his limit. That is delightful when one is in the medical profession, but it is very easy, unfortunately, to find the limit of most other men in that regard. I used to be under a foolish impression that one was entitled to a certain allowance for expenses. A barrister invariably charges a proportionate amount for his study because it is a place in which he transacts a certain amount of his business. Other men charge for a renewal of their libraries, and I very soon discovered that there was an insane regulation in regard to this matter. If I pretend that the amount I charge for books is in respect of renewal of books which, formerly, I had, and which got worn out, the amount will be allowed, but if, as is the case, the money is expended in the purchase of new books, which mean an addition to my library, I am not entitled to any allowance. I am only entitled to allowance for renewals.

A DEPUTY

Hear, hear.

How would Deputy Wilson like if he were to be allowed only for replacing an old plough, but if he ventured to buy a new plough, in order to make his farming operations more successful, he would not be allowed for that? I wonder how he would like that? I do not know why everyone treats income tax and everything connected with it as a huge joke. I think it is an attempt at stoic fortitude. I see nothing but smiling faces around me while my views are being unfolded. It shows either that those Deputies are determined to pay no income tax, or that they do not realise the gravity of their position.

I think the Minister is liable to be prosecuted under the Truck Act for making an employer pay his men less than they earn. However, I do not suppose that will apply in this case. In my opinion a lot can be said in favour of this proposal. Would it not be a nice thing if, through inefficiency, the revenue of this country were to be diminished by £300,000? It would mean that those men who willingly or who, through force of law, are paying their Income Tax, would be shouldering the burden of other people who, through inefficient methods of the Revenue, would be escaping. Therefore I think that this resolution will prove effective and very simple in operation. Although it will create friction between employers and employes, because it is an effective and useful resolution, I think it should be adopted without further comment.

I am against this resolution for the reason that the introduction of this method of collecting debt is going to be harmful, as an example to the future. The intention is to permit these "leopards who do not change their spots," that Deputy Magennis has spoke of, not only to fix the amount of the debt but to name the collector of the debt and to punish the collector if he fails to collect. For two or three years back—the argument runs—men have not paid their Income Tax. My contention is, as I have stated before, that there has been no Income Tax due by any citizen of this State or lawfully imposed for the last three years, and that those people who have paid Income Tax have done it as a voluntary act and as a matter of voluntary taxation. The proposal is to put what is called an "Income Tax debt" in a category by itself, as compared with, say, the amount that one of Deputy Wilson's clients owes him for milk. I do not see why that particular debt should be put into a position of preference as compared with the tailor's bill, the grocer's bill, or the milk provider's bill. More than that, analogy is closer if one speaks of the amount due for rates. I see a very small difference between a proposition of this kind, which would allow the Income Tax officials to send an employer a notice that he must deduct from his employé's wages or salary a certain sum, weekly or monthly or quarterly, as Income Tax, and some other official of the Government saying to an employer that he must deduct from such and such a person so much weekly or monthly or quarterly for rates. Another official may come along and say that a judgment has been awarded for a debt for groceries, clothes, bread, or milk and that the employer must be called upon to collect that debt from the debtor. I foresee the danger of the extension of this principle and I think that it is a bad principle to introduce in regard to the collection of debts. The amounts involved, no doubt, are very large, but the collection of a debt for Income Tax—if it is a debt legally recoverable—surely ought to follow the ordinary courses of debt collection. Why should an employer in the one case, be called upon to act as a debt collector and why should he be brought into a new relationship with his employés— a new and a worse relationship than ever? I have no doubt that it will be quoted against me that the employer is already collecting Health Insurance Tax and Unemployment Insurance Tax, but that is in a somewhat different category inasmuch as it is insurance and an insurance in which the workman has a personal part and is a conscious participator. But here we have the case of debts that have been growing for two or three years back and in the case of these debts—and only in their case—we are asked to throw upon the employer a new responsibility and to create a further antagonism between himself and his employé.

Now I say it is a bad principle to encourage and there is no logical reason that I can understand why the same process should not be adopted for the collection of debt for rates and the collection of debt for milk or for groceries, or clothing or any other debt whatever. I believe that the process of the law in regard to debt collection should be availed of in this particular case as in every other.

I object to the imposition of this task upon the employers in the country. There must be some reason why this three hundred thousand pounds figure was not collected in the county and the city of Dublin The reason, I imagine, is that the official who should do this duty of collection has not fulfilled his duty. There may be another reason, and that is, that the Minister for Finance did not give him due support; but the collection, I imagine, should take place by the ordinary process of law. It is altogether too bad that employers, at any time, should be compelled to do the duty of officials, and to relieve officials of the duty they should perform and pass it on to employers. This is only one instance, but it may be applied to any number of debts handled by any individual of the State, and for that reason I absolutely object to this class of work whereby you make employers do the duty of some official who is paid to do that duty himself.

There is one consideration that is weighing upon my mind that I would like to put before the Minister for Finance and the Dáil, as to why I think it would be impolitic and unwise to adopt a procedure of this kind. Everybody knows in industrial matters that for every strike that occurs there are at least five or six occasions when friction between employers and employed gets very near to a strike. The least addition to that friction, on that margin point, will accumulate industrial disputes in the future. Now surely it is the intention of the Government, and should be the desire of the Government, to try and bring that friction down to the minimum point, not to give it an abundant opportunity of increase. Surely it is obvious that this Resolution is going to give that abundant opportunity of increase. I may prove to be wrong, but I do feel that the effect of this resolution will be to bring about such a spirit between employer and employed as will lead to continual irritation and continual exasperation which exists only too abundantly in a plentiful outcrop of industrial disputes that might have been averted had better relations been maintained. I do urge that this matter is worthy of careful consideration. Obviously as this Income Tax must be collected, there is no question but that this method would be a very effective method to achieve that end. My opposition is not on that ground, but on the ground that it would be peculiarly effective in creating a number of little exasperations and irritations as between employer and employed. There might be some moment when a little tact and a little understanding could establish all that good relation that may avert a strike or a lock-out in some industry, and that good feeling would be brought down to the lowest point by means of the procedure set up by this resolution which will produce industrial disputes that might otherwise be avoided.

Before the motion is put I desire to ask a question, though I am not inclined to take part in the discussion upon these rather bare Resolutions. I think the Finance Bill will give a better opportunity for raising a discussion on them. There is a matter, however, which I wish to bring to the attention of the Minister for Finance, and I think this stage, on this particular Resolution, affords me the best opportunity to do so. I refer to the position of persons employed in the Dáil during the time of the war with England. It seems to me that it would be manifestly unfair that these persons should now be compelled to pay Income Tax on their then salaries. I suggest it would be manifestly unfair for this reason: I do not think it can be denied that these persons, every one of them, were employed at whatever salary may have been fixed in any particular case, on the quite distinct understanding that that was a payment which they would receive without deduction. We had no Income Tax to impose, and these people were not expected to pay Income Tax imposed by British law. That being the case, I put it to the Minister that it would be only equitable that he should make provision whereby, when he is trying to recover arrears of Income Tax of the past years from people whose salary or remuneration was obtained on an express or implied understanding that it would not be subject to any deduction, they should not now find that they have a very considerable burden before them of finding money to pay Income Tax upon what at the moment of receipt they very naturally and very properly took to be remuneration which would not be subject to any such tax.

I would like to have further particulars about the cases to which Deputy Gavan Duffy refers. I would like also to inform the Deputy that the question is not one for the Minister for Finance whether "A" is only to be charged so much and "B" is to get so much of a deduction. That is a matter for the Revenue Commissioners, and, as I have said already, the Revenue Commissioners must get the last penny that they are entitled to, but they do not look for more, and they have not been unreasonable in any cases. They have not been unreasonable in such cases as those mentioned that I know of, even though they have more power in this matter than the Minister for Finance. These particular matter refer to Schedules D and E, and these Schedules do not affect the people Deputy Figgis has in mind. I now move: "That the Dáil do agree with the Committee in the said Resolution."

Question put.
The Dáil divided: Tá, 31; Níl, 15.

  • Liam T. Mac Cosgair.
  • Donchadh Ó Guaire.
  • Seán Ó Maolruaidh.
  • Domhnall Ó Mocháin.
  • Deasmhumhain Mac Gearailt.
  • Seán Ó Ruanaidh.
  • Domhnall Mac Carthaigh.
  • Maolmhuire Mac Eochadha.
  • Earnán Altún.
  • Gearóid Mac Giobúin.
  • Liam Thrift.
  • Eoin Mac Neill.
  • Pádraic Ó Máille.
  • Seosamh Ó Faoileacháin.
  • Seoirse Mac Niocaill.
  • Piaras Beaslai.
  • Fionán Ó Loingsigh.
  • Criostóir Ó Broin.
  • Ristéard Mac Liam.
  • Próinsias Bulfin.
  • Séamus Ó Dóláin.
  • Aindriú Ó Láimhin.
  • Próinsias Mag Aonghusa.
  • Éamon Ó Dúgáin.
  • Peadar Ó hAodha.
  • Liam Mac Sioghaird.
  • Tomás Ó Domhnaill.
  • Earnán de Blaghd.
  • Uinseann de Faoite.
  • Séamus de Burca.
  • Padraig Mag Ualgairgh.

Níl

  • Seán Ó Duinnín.
  • Tomás de Nógla.
  • Riobárd Ó Deaghaidh.
  • Tomás Mac Eoin.
  • Seoirse Ghabháin Uí Dhubhthaigh.
  • Liam Ó Briain.
  • Liam Mag Aonghusa.
  • Tomás Ó Conaill.
  • Seán Ó Laidhin.
  • Cathal Ó Seanáin.
  • Seosamh Mac Giolla Bhrighde.
  • Seán Buitléir.
  • Domhnall Ó Muirgheasa.
  • Ristéard Mac Fheorais.
  • Mícheál Ó Dubhghaill.
Motion declared carried.
Top
Share