Yes. There is a factory in the South of England, and I have no doubt the results obtained there are being watched, and that advantage will be taken of them.
In this matter of an experiment in Protection, I have had criticism from two sides—those who said we were not doing half enough, that we were not doing anything worth while, and those who said we were letting the country in irrevocably for a policy of Protection. It seems to me that neither criticism is justified. We are entering on this experiment hopefully. We are entering on this experiment with every desire and hope that it may be successful. Any reference to the hidden hand that wants to make the experiment with the idea of its failing may be simply dismissed as ridiculous. We are, I think, in all fairness, if we impose these duties, committed to their continuance for a fair period of years until the experiment gets a fair chance. I would not like to mention any period of years, because the progress of the experiment will be watched, and this Dáil next year or the year after, or the Dáil that may succeed it, will be entitled to make up its mind on whether the experiment has gone far enough and should be stopped, or whether it has been eminently successful and should be extended.
I do not think it will be any use in mentioning any period; there must be a reasonable period if the Dáil expects these proposals to encourage people to put in boot machinery—it must, in all fairness, give them a series of years in which they can be given a full and fair trial as to what they can accomplish. We are, therefore, committed to these duties. No Dáil could lightly or rightly, until a reasonable period had elapsed, turn down these duties or strike them off. On the other hand, we are not committed to additional duties. Every sort of industry applies for protection; it is the easiest way for the manufacturer, if he can get it. If he finds that business is not going well with him, he will ask to put a tax on competing products from abroad, and you will have all sorts of people applying for protection. That is no reason why these should be extended unless all concerned in responsibility, both on the Government benches and on the other side of the Dáil, are satisfied that it is desirable to extend it. If the results are eminently satisfactory, if these results show that we can carry on in this way, that we can extend industry and increase productivity in this country, that will be a matter that will weigh with those concerned. But, on the other hand, if the undesirable results some people anticipate are not to be found, or are to be found in only a very minor degree, then presumably the Dáil will presumably say: "Very well, see in what you can extend these." If undesirable results are found, then no matter what clamour is raised, though the Dáil may extend it for a year or two in the hope that it may turn out better, and if they are not turning out well, presumably when a proposal comes up for an extension of this experiment, and for the putting on of other duties, the Dáil will say— like Bernard Shaw—"not bloody likely." I have said all that it is necessary to say in that regard. This is an experiment which, I think, is a fairly good and a fairly reasonable experiment. The experiment has not been prejudiced by this question of duties. As regards the two main items concerned, confectionery and boots, in the case of one of them the duty was imposed immediately; in the case of the other, the duty was imposed after a delay which prevented forestalling. The forestalling was for all purposes negligible. A lot of people were anxious to get in goods, but they did not seem to get them in.
In regard to the other articles, there may be a little forestalling, which will not be so serious even in the case of bottles. My information is that up-to-date there has been no forestalling. It may be that there were such large stocks already in hand that that was discounted. At any rate, the big items in this experiment are confectionery and boots. And neither of these is an experiment that has been prejudiced in any way by the fixing of the dates. The opposition that the Government had to face was, I think, practically that stated here by Deputy Professor O'Sullivan, that with a deficit we could not rightly reduce taxation. It is all right to borrow for constructive work if you are not borrowing to an outrageous extent, and if the money is being well and properly spent, but it is no doubt a bad and unsound thing to borrow for the purposes of meeting ordinary current expenses. It would have been wrong for us to have reduced taxation in view of the considerable deficit that faces us. As I indicated already, I made a slight slip in my statement on the Budget, as Deputy Wilson has already pointed out. If we take into account the Compensation Charge and the abnormal expenditure on the Army we would have a deficit of something like a half a million, but even that deficit does not allow for an increased capital expenditure in regard to borrowing to meet interest on capital. We have that deficit. I said here last year that the Army should come down this year to £4,000,000 a year, and to £2,000,000 next year or the year after. I have no belief at the moment that we can bring it down to £2,000,000 next year, but I hope that we can in due time bring it down to £2,000,000. But suppose we were able to reduce the Army to that extent we would have this deficit of half a million, and substantially more than a half million, to meet. We could not, under these circumstances, propose a reduction of taxation. On the other hand, I do not think it is a desirable thing, in view of the poorness of this country, that we should have increased taxation to meet our full expenditure. It seemed to me that the real thing to do was to continue to aim at a reduction so that our expenditure should be brought down to the level of our revenue without any increase in taxation. We decided to make this proposal as an experiment, but we did not intend under cover of this experiment to increase to any substantial extent the revenue.
Deputy Johnson asked, I think, why we did not choose clothes instead of boots, for instance, for this experiment. One of the reasons we chose boots was that we were able to estimate the effect pretty well. We knew what the revenue tax on boots would give us; and we were able, knowing the revenue we would get from the boots, to propose a reduction in the tea tax, roughly, equivalent to the tax that would be put on boots, so that as far as we could manage it we would be able to carry out this experiment without increasing the cost of living. This experiment, in spite of the things that have been said from the Farmers' Benches, will not lead to any appreciable increase in the cost of living. I do not say that the amount may not be one or two points up, but there will be no appreciable increase. If we had chosen some article where we could not see what revenue we would get, where we could not estimate the effect of putting on a tax, then we might find ourselves forcing up the cost of living, because we did not dare to remit taxation corresponding to the yield which we would actually get or we might find ourselves remitting a yield which would not be realised and remitting taxation which should not be remitted, and we might find ourselves faced with a very largely increased deficit at the end of the year. That was really the principal reason why we chose boots rather than cloth when we were making a choice between these two categories. But now it has been suggested that we should take a certain amount of taxation off sugar. I explained in my original statement why that was not done. The amount that we could have taken off sugar would amount only to a ¼d. in the lb. We felt that there was very little likelihood of that reaching the consumer, and we, therefore, decided that 2½d. or 3d. should be taken off tea when there was a prospect of its reaching the consumer. The suggestion has been talked about of reducing the duty on beer or spirits. Well, that was considered. A Deputy suggested that we should have considered it. Strange as it may seem, we did consider it. We could not reduce the estimate in view of the evidence that was put before us that there was no likelihood of an increase in consumption—if that were desirable—which would lead to as good a yield being got from the lower tax.
Our estimate was that if £1 per standard barrel were taken off porter that it would mean a loss in revenue, allowing for any increase that might occur, and there would be no increase. It would mean a loss of three-quarter of a million pounds in revenue. A decrease in the spirit duty would have practically the same effect. It is impossible really to remit taxation and get an increased yield. You could by suitable remissions of taxation improve the condition of the country so much that the yield would be equal, if you could wait some years for your results. I have no doubt if we were able to drop our income tax 1s. 6d. in the £, that the effect of that would be a great stimulation to industry, and that we would ultimately get the full 1s. 6d. back in improved yield. But not this year or next year or the year after. Any good effect of such a remission would be neutralised by the bad effect on our credit generally and on our whole financial position of an increased deficit on the ordinary current expenditure. I would have liked to make a remission with regard to income tax, but I could not feel it would be justified in the present circumstances. I could not get any responsible opinion that we could accept that after a considerable interval, we would get as much yield from the reduced rate of taxes as we would from the present taxes.
It would be possible if you were dealing with a few firms to admit sugar for manufacturing purposes free of duty or at a decreased rate of duty. But those special regulations are troublesome, and they do generally lead to fraud on the revenue, and they are impossible. It becomes a question of giving a great number of exemptions and special considerations. It would be impossible to do what Deputy Gorey suggested yesterday—allow sugar in at a reduced rate for the purpose of jam-making——