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Dáil Éireann debate -
Thursday, 17 Jul 1924

Vol. 8 No. 14


The first recommendation from the Seanad is "That Section 2 be deleted."

It will be within the recollection of Deputies that this particular Section was debated in the Dáil for a considerable time. It proposes to relieve taxpayers of that one-sixth deduction that was granted to them in respect of premises which were subject to Income Tax. The matter was debated here at considerable length, and on more than one occasion. The case that was put up was that in certain instances through the country where the owner was in occupation of a large house that this was a hardship, but I find, on a general examination of the question, that the average valuation of a fairly large house would be about £100. The outside figure would be about £120, and that would probably represent the valuation of a castle. Now the deduction of one-sixth in that case would simply mean relieving the owner of £20 a year, at 5/- in the pound, and I think that is not an unreasonable charge, even if it were an extra charge. Examining houses in the country and houses in the towns, I think it will be found that comparing a mansion in any part of the country, outside of the metropolitan area, its valuation is at less than fifty per cent. of a house in town. In one particular case that was brought to my notice, I enquired as to the valuation, and I found it was £26. I think that any house in the country valued at less than £30 would, in the city of Dublin, be valued at about £70. The main case put up was in respect of these country mansions. I do admit that large country mansions would entail considerable cost on the owner, but generally speaking this particular advantage that has been derived here for a number of years and which is compared occasionally with the situation in England, is not a fair representation of the facts.

In England the one-sixth is allowed off the rent, but here it is off the valuation, and to that extent there is a considerable advantage to a person owning premises here. Take it that a man has a country house valued at £30. In that particular case only the £30 is added to his income for the purpose of assessing income tax on that particular property. The property would probably cost £1,000, and taking it at the lowest possible calculation the annual value of £1,000 would be £50, whereas the assessment is in respect only of the £30. In the circumstances I am not in a position to ask the Dáil to accept this recommendation from the Seanad. There is there at the very lowest possible computation £1,000 worth of property, which should, in normal circumstances, bring forth an assessment of £50 per annum, but the assessment is only £30 in respect of it. There are cases, of course, which are different from that. However, as a general case, I think, although the Seanad did not agree with me, the advantages we are giving in the case of persons having an income of £8,000 a year and over, more than compensates for this.

Will the Minister say whether that £30 house which he puts against the £50 interest on the £1,000, is the equivalent of the £70 house in Dublin? If so, the difference between the £70 valuation of the town house and the interest on the £1,000 is the equivalent to the difference on the other side between £30 on the country house and the £50 interest on the £1,000.

Yes. A house valued for £70 in Dublin would probably be equivalent to a £3,000 investment. In other words, a house on which the valuation was £70 in the city, would not sell certainly under £2,000.

Is the President moving that the recommendation from the Seanad be not agreed with?

When I saw on the Order Paper that the Seanad had sent up a recommendation to this House on the subject that I had the privilege of bringing before the Dáil on previous occasions, to have it again considered, it greatly added to my appreciation of the Seanad, and while I had very high appreciation of the Seanad before then, this added considerably to it. I am afraid that the discussions that took place, even the recent one in the Dáil, have not helped to make clear to Deputies what exactly this clause means. Prior to the inclusion of this clause in the Finance Bill, for a great many years it has been the privilege of those who own houses and live in them to deduct one-sixth of the income tax payable. That deduction was originally agreed to for the purpose of meeting the cost of repairs on houses. The cost of repairs in the days when this privilege was first accorded was very much less than the cost of repairs to-day, so, consequently, if the argument was good a number of years ago, the position is greatly strengthened by the increased cost of repairs to-day. Now this clause, as incorporated in the Finance Bill, means that if a person owing a house sets it, and agrees to pay for the whole of the repairs, he is at liberty to deduct one-sixth of the income tax. If the owner lives in the house, and pays for the repairs, he is not at liberty to deduct one-sixth. That is what the clause means. If a man owns a house and sets it, provided he undertakes to pay for the repairs, he is at liberty to deduct one-sixth, but if he lives in the house which he owns and pays for the repairs, he cannot deduct one-sixth. I have heard of absurdities in the making of laws, in which I myself have very little experience, but this appears to me to be one of the most extraordinary clauses I ever heard of. I am afraid this clause was not understood by the Dáil, otherwise the Dáil would be of the unanimous opinion which the Seanad appears to have been on this proposal.

The President has pointed out that valuation varies. It does vary, as we all know, but to try to make comparisons between city valuations and country valuations is impossible. Valuers consider all the circumstances of the case when making a valuation. The circumstances in a city are quite different from the circumstances in the country, and, consequently, the basis of valuation in the city is quite different from the basis of valuation in the country, and to try to make comparisons between these two valuations, made on different basis, is to try to do the impossible, because there is no comparison. The President has pointed out the differences there are in valuations, and we are all agreed that there are valuations which ought to be revised. But, if you want to revise old and inaccurate valuations, do not do it by taxing everybody who owns his house. Do it by altering your valuation, which is the proper businesslike way of doing it. With regard to the City of Dublin —and no one knows the City of Dublin better than the President—it cannot be said, for the purpose of supporting his argument, that there are old valuations there, because, as we all know, house in the City of Dublin were valued as recently as 1916. The President said in that connection, when the matter was before the Dáil, that the value of property had increased very much since 1916. I agree; but I think the President will also agree that house property stands at a very inflated value at the moment. I have heard him say on more than one occasion that house property was too costly. Does he propose, when house property is in an inflated state, that a valuation should take place? I would say that the proper value, the mean value, of house property would be somewhere about its value in 1916, and I would strongly oppose any further valuation upon a later basis, because it would be on an inflation, which will, we hope, last only for a limited period. This is a question that ought to be explored much more than it has been. There is a principle underlying this proposition which I would like to urge, and that is that this rebate has been an encouragement, in the past, to people to own their own houses. That encouragement will be done away with under this clause, and that will be a disadvantage, not alone to the private owner, but also to the public authority. Public authorities to-day, almost without exception, are endeavouring to sell houses that they have erected, and are trying to get the tenants to become owners of their houses. Up to the present, where they have succeeded in selling houses, one of the inducements has been that a tenant who becomes an owner would get a reduction of one-sixth in the income tax. Now that incentive is to be done away with, and I want to lay stress on the fact that to encourage people to own their houses is to encourage, what Deputy Wilson very properly called, a civic spirit.

We encourage people to become better citizens because in owing their own houses they have to pay local rates and other charges, and when they have to do so, they take an interest in and try to keep down as low as possible these rates and charges, whereas, as is the case with many houses in Dublin where they are set at a rental including taxes, they take no interest in civic affairs, because whether the taxes go up or down the rent they have to pay is the same. There is only one other point I wish to mention, and that is that the Minister for Finance, whose absence we all deplore, when discussing this matter previously said that the subject had been considered in Great Britain where the one-sixth is allowed while it is refused here, thus adding another burden to taxpayers of the Free State. We asked the Minister, why, if it was so advantageous to the Government to do away with the one-sixth, it had not been done away with in Great Britain. He admitted they had considered the question and found that the revenue that they would receive from it was not worth the injury and trouble it would cause. I am quite satisfied that what has been true of Great Britain will also be true of the Free State, and that in refusing to give this rebate we will do away with the few attractions we have at present to induce people to own their own houses, and furthermore it will cause, I am sure, amongst householders all over the country a considerable amount of inconvenience. Possibly I might explain one point which may not be clear to some Deputies. In valuations, particularly in rural districts, there are many cases where the land and house are valued together and in such cases there is no rebate of one-sixth. The modern system is to value the land separately from the house. Where the house is separately valued from the land and where the owner occupies the house, he is entitled under the clause, as it stood formerly, to that deduction of one-sixth, but under the Finance Bill, as now proposed, he is no longer entitled to that. I do not know if I would be in order to move a direct negative, that we agree with the recommendation of the Seanad, but if I am in order I would move it.

We could take a question that we do not agree, and the Deputies' Níl in that cause would be enough.

Supposing the Níl is carried, then would there not require to be another Motion?

I submit that it would be more orderly and satisfactory if we had a direct Motion to agree.

In this case we require first to agree with the recommendation, and then we require to move an actual amendment to the Bill to carry out the effect of the recommendation, which could not be carried out in the Seanad as it was a Money Bill. The measure was introduced by the Minister for Finance, and we have generally adopted the procedure allowing the Minister, when the Bill comes back from the Seanad, to move to reject or accept the recommendation of the Seanad. I take it if the President were defeated on this question that the recommendation be not agreed to, he would not oppose a Motion to delete the Section.

I think I would have to do that. If the Deputy moves that the section be deleted I would accept the decision of the House.

We could not carry that, as we have to take the recommendation first and agree or disagree with it. If the President withdraws his motion I will take Deputy Good's motion.

On one occasion I think you told me that the regular method was to move directly whatever we proposed to do with it. I think we had better continue that practice.

I think this is the first instance, though I am not sure, in which we had a recommendation as distinct from an amendment from the Seanad in regard to a Money Bill. That, I think, makes a difference.

I think there was a recommendation last year.

Did the Minister move to agree?

I think he did.

This is the first time the Minister has moved to disagree. I will take the question that the Committee do not agree with the Seanad in this, and if that is carried and the Report of the Committee agreed to, I will take a Motion to delete the section without any further Motion. Would that not give the desired effect?

If it is decided against the President I would take a motion to delete the section according to the Seanad's recommendation. That would accomplish the desired effect if carried, and it would place the President in his original position. The question is, that the Committee does not agree with the Seanad in Recommendation 1.

The President was very adroit when he referred to the question of the valuation of large houses and mansions in the country. Of course, there is a case to be made for them because in both cases they are surrounded by pleasure grounds and gardens, and although the valuations of the mansions are low, the valuations of the pleasure grounds are as high as if they were remunerative, instead of being an expense to the owners. Persons who own such houses need every concession and would be glad to get it even if it were only a five pound note. This section, of course, applies not only to the mansions in the country but to every house in which the owner is living, whether it be a mansion or a cottage which a working man bought out of his savings to live in to the end of his days. The allowance will be removed from each and every one of these if the motion is carried, and even though it is only a small allowance, I would suggest that this is not the moment to add to the burden of income tax payers who are worse off than income tax payers anywhere else, and to whom this tax may be the last straw. I happen to live in a house which I own. If I happen to let it to Deputy Good, and if I go and live in Deputy Good's house, although I could not afford it, then we both would obtain this allowance. What is the sense or logic in that? The President said that he did not convince the Seanad. He did not convince a single person in the Seanad. The Seanad is a remarkable body. I hope it is not rude to call it a heterogeneous body, as it is composed of various classes of people, yet on this point they were unanimous, and they recommended the deletion of this section. I believe if a free Vote of the Dáil were given the Dáil would be found to be very nearly unanimous also. I do not know what action the Labour Party would take here but I know what they did in the Seanad. I urge upon the Government to agree to this recommendation, but if they do not I shall have much pleasure in voting against them.

There is a real difference between Deputy Major Cooper letting his house to Deputy Good and occupying it himself. If he were to let it to Deputy Good, although I know the Deputy is not a hard man at bargaining, I submit it would be foolish to let it at anything less than a sum which would be a fair return on the capital cost of the house. Let us take a £1,500 house. At what sum will that be let? If it be let at all I should say that it would be let at 8 per cent. on the £1,500 and the rent that will be charged is £120.

Does the President know I have let houses which only bring in one per cent?

I know that. That is why I said the Deputy is generous. There are not many such cases, but I know a man who lets a house valued £1,200 for nothing.

I want to know if there are any people who get 8 per cent. on a house.

Eight per cent. is the sum assessed by able economists. If it be in dispute can the Deputy suggest that a house the value of which is £1,000 or £1,500, is let at less? Can Deputy Good tell me where I can get a house at £120 a year which I would be able to buy at a price not less than £1,500? That is the point. If a person has a house worth £1,500 he will not let it under £120 per annum. The sum is £120 per annum. Deduct if you like the cost of the rates, and that house would be valued at £30 or £32 per annum if it be a township house——

Does the President imply that a house costing £1,000 will be valued at £30 only?

I will mention a sum—the Deputy would like, say, £36. It will be found I am not very far out in my figures. I was making some inquiries about that class of house within the last few years that would be let at £120 per annum. £36 a year is the valuation. 15/- in the £ would be £27. £27 from £120 leaves £93. £93 represent the annual income from property, the income tax on which would be charged on £36 per annum. If I am wrong I would like to be corrected.

May I put the President a concrete case as against his hypothetical one. I did not accept 8 per cent. The interest on the purchase money of my house at five per cent. is £150 a year. The valuation is £130. There is not much difference in those two.

If Deputy Cooper were a business man and were letting that house, I would like to know what rent he would expect to find.

I tried to last year. The rates are £80. I asked for £250, but did not get it.

That is probably one of those country mansions.

No, it is a suburban villa.

The £3,000 is usually beyond the market for the ordinary public. The Deputy will admit that. We run from about £1,000 up to £1,500. I would like to take this class of house not because it will prove my case but rather because it has a ready market. £3,000 houses have not ready markets. To some extent for the last couple of years the people who would purchase such houses are not disposed to invest money in such property now. They are either not here or are considering the purchase of smaller houses, but my case for the £1,500 is sound. If it is not sound I will take £1,000. In any case I know people who would be willing to pay £100 per annum for such a house. The valuation of that house was not more than £30. That leaves £70 on the £1,000. The income tax in respect of that particular investment is on the £30, and the case that has been made by Deputy Good and, I think, made as ably by Deputy Good as it was in the Seanad, here or elsewhere, is that we should allow one-sixth of that £30, which has a potential value of an income of £70 per annum. I may be out 10 per cent., but even if I am, it is only £60 you would get for that house. I would take three or four of such houses, £1,000 houses with a valuation of £30, for people who want them if such houses are available.

Is the President arguing that our basis of valuation, as it stands at the moment, is wrong? If he does, surely it is not by income tax or a Finance Bill that we put that right.

No, I am not; but the case that the Deputy put up and which was put up in the Seanad is that we are interfering with the basis of assessment of income tax, which did not prevail during the time of the British here, which was unfair to people with an income, and which was placing a burden on people with house property. On more than one occasion I said that while our taxation is heavy, most of those who know it is heavy bear a burden which would not be borne in England by the same class of person. It must be admitted that while that is the case, the actual taxation per head here is relatively less than it is in Great Britain, but it falls on a certain order here by reason of the fact that they are the plutocrats in this country. Deputy Good would——

If the President would address me instead of Deputy Good it would be better.

What I should have said is, I say to Deputy Good the fact is that we must regulate the taxes in this country according to the capacity of the people to bear them.

Would the President allow me to direct his attention to the point which is at issue, namely, why he permits the anomaly that when you let a house you are allowed one-sixth, and if you live in it yourself you are not?

I was proceeding to do that, but owing to the remarkable strategy of Deputy Cooper he got me off the point by pointing out the value of his £3,000 house. If I live in a house and own it, and the value of that house is £1,000, I have mentioned that I am actually in possession of a potential £70 per annum. On the other hand you may let that house, and get £120 per annum. I have mentioned already that I know three persons who will take such houses at such a price. What do they get? The difference between the rates to be paid on that house, and the £120, that is £90 per annum.

We are charging income tax on £30 per annum in respect of that house. Take the case of a person who is paying that £120. He is paying out £120 from his income. He negotiates the purchase of a house, and he pays £1,000 for it. He pays £60 for the house, and £30 in rates, £90 in all. That is his whole outgoing. But he has something which is worth £120 per year to him, and he has the advantage in consequence that according as he pays off the amount the asset becomes very much more valuable; even if he has to borrow the money in the bank, and pays six per cent., he still has an advantage, and that is the reason for the difference between the two. You will not find in many cases that a person who has to rent a house will get it at the economic value that a person who can afford to put down the money will get it at.

For these reasons, although there is remarkable wisdom in the Seanad, and although I would accept Deputy Good's advice upon matters of business, in this case, looking at it from the point of view of the revenue of the State, and from the point of view of distributing the tax as equitably as possible on the shoulders that are best able to bear the burden, I think it is not a sound amendment. The people who pay can square their chests and say: "We are the citizens of a great State, and we bear the burden."

I am not able to follow the complexities of this kind of argument. I was not able to follow it on the original discussion. But the Minister has involved me in intricacies that I cannot see my way through at all. I have two friends living next door to each other, in houses built together of the same type. One pays a rent to his landlord. The other has become infatuated with the philosophy of Deputy Good, and thinks it is a most glorious thing to be the owner of his own house. But he is not the real owner of his own house. He has borrowed the money and is paying interest on it. Now, I cannot for the life of me see from the President's argument why the alleged owners of these two houses should be treated differently. The man who has borrowed the money and is paying interest on it is presumed to be the owner. He is called the owner. He is living in the house, and therefore has to pay more than the man who is the owner of the house next door and lets it. I cannot understand that for the life of me, and I hope the President will be able to make much clearer than he has why the owners of these two houses should be treated differently.

I am sorry I was not in here to hear my learned friend advocating the advantages of the resolution that has come down to us from the Seanad. I do not always agree with resolutions coming down from the Seanad. In this particular case I have heard the President evidently trying to controvert the arguments advanced in favour of this recommendation. Of course, the President, and prior to that, the Minister for Finance, have dished up the case to bear out their arguments that the man who owns his own house should be deprived of the privileges he had in the past in connection with income tax. The President talks about houses of a £1,000 valuation, and I think that Deputy Cooper must have been talking about houses of £3,000 valuation. But from my point of view at the present time, to talk about houses and their valuation is practically an absurdity. Take a large house in the neighbourhood of Dublin or in the County Dublin, or in the other parts of the country. The value of that house is in inverse ratio to its size. In fact, under the present order of things a large house is an incumbrance rather than of any great value to the owner. And correspondingly on the other side, owing to the great shortage of housing, a small house is a very distinct asset, inasmuch as there is a very great scramble for the prospective tenancy of any such house that becomes vacant.

Therefore, when you talk about the valuation of houses you are talking about a thing that is quite out of the ordinary as far as business is concerned. We all know that in the past couple of years, people who have had to buy their houses have had to pay preposterous prices for them simply because they required accommodation for themselves. The precariousness of a man being tenant of a house induced people to look upon an investment in the nature of houses to cover their heads as something out of the ordinary range of business proposition. Therefore, when the President comes to talk about the values of houses, he is talking, I think, of a thing that at the present time is in a chaotic state and in which the relative values have ceased to operate. In this matter what is the law of the land, and what has been the law of the land? Income tax and rates are chargeable on valuation. Whether that valuation is right or whether it is wrong, the valuation is based on something that purports to be the value of the thing that is being made chargeable for rates and taxes. A man pays £1,000 for his house and gets the money from the bank at 6 per cent., which is £60 a year. He pays on a valuation of £30. Does he by any means get rid of the obligation under which this allowance has been made for the repair and wear and tear of the house, or is that one-sixth allowed in the past for that purpose by any manner of means excessive? If the valuation is lower in the case of these particular houses it must be equally low in relation to houses that this does not affect at all or does not operate in connection with. But as I think I heard my friend, Deputy Good, say, if you want to go and alter the whole system of taxation as regards the valuation, it is not right, in my judgment, to take one isolated instance and one particular class of people and penalise them, because you are penalising them in respect of a thing that has been in operation for a very large number of years in this matter. When men or women purchased their houses over a period of years, I take it that they did so with full regard to the allowances that they would get off the payment for income tax in relation to the repairs that they were going to undertake. When you try to assess the relative importance of these allowances as compared with the different people, I say you are trying to individualise in your taxation—a thing that has not been recognised in the past as being a reasonable attitude for the State to take. In taxation the State is impersonal. I claim that this recommendation that has been passed by the Seanad is fully justified and that the action of the Minister for Finance in removing or trying to remove by his financial measure this allowance that has been operating for years past, is not alone unjust but is done in an entirely irregular fashion. He introduced his Budget. There was no statement with regard to this matter in the Budget. He introduced his Budget resolutions and there was no reference at all to this in them. But now at a certain stage in the proceedings he comes in with this. Who put him up to it? Why is it more important now than when he was framing his Budget, and on what grounds does he bring it up at this stage?

It is with considerable trepidation that I join in this debate. Like Deputy Johnson, I do so in order to get some information, after the confusion into which Deputy Good and Deputy Cooper plunged us. I understood Deputy Cooper to sum up the situation in the way which I will presently describe and in which he, I think, reproduced the force of Deputy Good's argument. He has a house, and he occupies it. He pays income tax on the valuation. Deputy Good is in a similar position. In order to get the benefit of this one-sixth reduction, they let the houses to each other. They then get the benefit of the one-sixth reduction. That is the problem, so far as I understand it. I think the ordinary person who has ever looked at the list of houses of any house agent in the City of Dublin will be faced with the fact that houses of this valuation of £45 are charged for at the present time at £2,000. What happens in the hypothetical case put up by Deputy Bryan Cooper is, that in order to get the value of the one-sixth rebate, he will have to pay income tax on £120 instead of on £45. I know he will get something off for repairs, but in any event the net income of that house to the person letting it will be, at the very lowest, £80. In order to get the sum of £45 reduced to £37 10s. he will plunge himself into the necessity of paying income tax on £80. That, so far as I understand, is the result of the paradox Deputy Cooper presented to us. And that, so far as I understand, is the justification for the original recommendation that was sent on from the Seanad and which the combined wisdom of what I may call the aristocratic House—I heard one of the Senators refer to this body as the democratic House the other day—sent down to us.

I think Deputy O'Sullivan has managed to confuse the issue still further.

Still seeking enlightenment, may I put the case as it appears to me, and may I ask the President if he will explain the apparent injustice in a concrete case I will put to him. There are two men living in houses alongside each other. They each pay a rent of £70, the valuation being £35. The second of these two men decides to purchase his house. The original landlord of the first house gets an allowance of one-sixth on the valuation. In the case of the second house, the man having bought it, and become the possessor of his own house, loses that reduction which the landlord of the house, prior to the purchase, received. In the case of these two particular houses, why should that disparity be created by the resolution, and where is the value received by the man living in his own house for that extra £5, which represents the difference between the two?

Instead of Deputy O'Sullivan making the matter clear, I think he has made confusion worse confounded. Would the President take the case of Deputy Johnson? Deputy Johnson has put up the case of two small houses. The owner lives in one and sets the other. He does not get any rebate of one-sixth in respect of the house in which he lives. In respect of the house which he sets, he gets a rebate of one-sixth. Will the President deal with that case?

Before the President deals with that case, would the Deputy say what the income is in the case of the house which is set?

I think the President's figures are right to a certain extent, and I want to take his example. But I do not think his figures are quite complete. As illustrations have been put, I will put one. Deputy Alton and myself are setting up house, and we decide to buy two houses. We can afford to buy two identical houses. Instead of my living in my own house, I live in Deputy Alton's house, and Deputy Alton lives in mine. We pay the same money and we pay equal rents, one to the other. Therefore, we are just clear. Now, we can deduct one-sixth part of the valuation, as each of us has let his house to the other. If, on the other hand, I had lived in my own house and he had lived in his own house we would not have been allowed to deduct the one-sixth. That illustration puts the case as well as I can put it.

Would the Deputy not charge the economic rent to Deputy Alton?

I have endeavoured to make the matter clear to Deputy O'Sullivan by giving him a case in point. If he can show I am wrong I will sit down. The landlord letting his house to a tenant does not pay income tax on the rent he receives but on the valuation. Deputy O'Sullivan is quite wrong, because he assumes that the landlord is paying income tax on the rent he receives.

I now come to figures. Before I come to the President's own figures, I want to take a concrete case. I admit it is very difficult to argue from concrete cases just at present, owing to the abnormal situation as regards prices and rents. But this was an actual case. A man was living in his own house that was valued for £70. He was obliged by the landlord to buy out that house, and he bought it out for £1,800.

Now, being his own landlord, he pays £46 for rates; he pays £12 for ground rent; he pays £17 for income tax; and he pays £6 for insurance on a house of that kind. And you will have to allow —and this is a point which the President really omits—at least £15 for repairs. I think that would be really a small allowance. That means that although that man owns the house he really pays about £96 a year for it. Suppose he did not buy it and that he was paying rent for it, what would his position be? At the time that he was compelled to buy, the rent was £120. If he had not bought he would have his £1,800 capital, and he would be getting £90 a year on that at 5 per cent. He would have to pay on that £90, say, £23 income tax. That leaves £67. And the net result of that is that he would have £67 with which to pay his £120 rent, and he would have to pay £53 out of his pocket for his house as compared with £96. That is the way a concrete case works out under the new system. It is all against the man who owns his own house.

Take the President's own case. He assumes the case of a house the valuation of which is £30, and it is sold for £1,000. It works out very simply. I allow £10 for repairs; £5 for ground rent; £20 for rates, and £8 for income tax. That works out to £43 a year, although he owns the house himself. Supposing he was renting that house, I do not think he would pay more than £60 a year for it.

Oh, he would take a dozen of them at £60 a year.

In normal times he would not pay anything like £60 a year. But let us take it at £70.

Deputy Good's face is shrivelling up at the conception.

Let us take it at £70. Five per cent. on his £1,000 would give him £50; he would pay £13 income tax on that £50; and the net result would be that he would have only to pay £33 out of his pocket as against the £43 he would be paying if he bought the house. Again, it is against the man who owns the house.

The whole matter is really a very small item. I admit that. But my real feeling against this proposal is that it is about the last link in the general trend of taxation in modern times, that it is absolutely against encouraging any sort of thrift. I say that deliberately.


Thrift ought to be encouraged.

Yes, he ought to be encouraged. I do think that this is a very regrettable feature in the tendency of modern taxation. You penalise the man who has put a little by; you make him pay extra taxation on unearned income whether that unearned income is the result of his own economy or is given to him by his predecessors. You penalise the man who makes provision for a rainy day. It is the general trend of modern taxation. By it the State does not give encouragement to the people not to live up to their means but to make some provision for the future. And one of the best ways in which they can make provision for the future is to buy their own houses. The State should give a little encouragement to the young man who has started house to pay a little more at the commencement, perhaps by borrowing money, in order that he may be in a position to meet the responsibilities that come later on. Under present circumstances it is the man of small means who is hit most. It is not the labour man; it is not the rich man; it is more or less the man with a fixed income, who is not organised, who has nothing to protect him on the one side and who is crushed by the burden of taxation on the other. It is for reasons like that that I would urge the reconsideration of this matter. It is a little matter, but it, after all, involves an important principle.

I should like to add a word in support of the feeling in favour of the recommendation of the Seanad. We must have, in building up a State here, a definite social policy; we must have particular principles behind all our legislation and behind our financial policy; and it would, everybody will agree, tend to the stability and tend to the wealth and happiness of the State if every citizen in the State owned his own house. It seems to me that the President's exposition of the proposal, as a blackboard exposition of perfect financial equity, may be all right, but I submit that it is no more than that; and I submit that on the face of it what the proposal in the Finance Bill would mean is that if every house in the State was occupied by its owner the Revenue would stand to make a good lot out of it under the proposal. Now, I submit that if you have a State here of the stability that a State would have if every house in it was occupied by its owner, it would be unnecessary to attempt to increase the revenue in the way that it is suggested here now. And I would urge the dropping of the proposal, because it is a very definite propaganda against the principle that we should endeavour to get established in the State here for the purpose of building it up, and that is, the principle that as far as possible every person should own his own house.

These distinguished University Deputies have succeeded in confusing the issue to such an extent with their jumble of figures that I believe they have confused the President as well as myself. The ordinary man who owns a house and is now refused the concession of a one-sixth reduction on the assessment of income tax will not look at the figures at all. He will not be troubled with the figures when he sees that this one-sixth reduction has been conceded in England and Scotland, and also in the Northern area. And I agree with Deputy Mulcahy that a great deal of propaganda will be made out of this; and I would strongly urge the President and the Executive Council associated with him to agree with the Seanad recommendation. The ordinary man in Donegal or Cork, or anywhere else will not trouble himself calculating the figures. He will know that the one-sixth concession that he used to get has been refused to him by the Free State Government. I would strongly urge the Free State Government to agree to the change made by the Seanad in this matter. My address may not be of a very learned or up-to-date nature, but at the same time I think that I have been able to convey to the President and the Executive Council what the ideas of the people in the area from which I come are in regard to this matter.

I should like to clear away a misconception that several Deputies have fallen into. Deputy Wilson described it as an anomaly when he stated that the owner of a house was refused the abatement of one-sixth, and that if the owner of the house had let that house to a tenant he got that abatement. But that is not so. The landlord does not get the abatement of one-sixth if the house is let at an amount one-sixth more than the poor law valuation. For instance, if the poor law valuation of a house is £36 and the house is let at £43——

We know that years ago.

There is no one-sixth abatement. There would be an abatement if it was let at the poor law valuation, but a house valued at £36 is usually let at a great deal more. The rent would run up to £60 at least. Therefore there is no abatement.

On a point of order, I put the case to the President when we commenced the discussion that where the owner of the house let the house I was justified in the argument that I had taken up, and he agreed. Can we now be told by Deputy Dolan that the President is wrong and that he is right?

Surely that is not a point of order.

In any case that is the position, and several speakers have fallen into the error, like Deputy Good, I am sure in good faith. There is no abatement. Undoubtedly there was an abatement before this Bill was introduced, an abatement of one-sixth to the owner of a house who occupied it himself, and that has been taken away in the Bill. But it is not fair to compare the assessment with the assessment in England, where it is made on a different valuation. It is made on a rental valuation.

Compare with the Six Counties, and not with England.

It is made on the rental valuation; and the difference there is very great. I think that the good sense of the Dáil will see that we are right in recommending the Dáil not to agree with this recommendation.

I have listened to the arguments and to the figures. I have been compelled to buy my house, and I know what that one-sixth means every year. When I had saved that one-sixth I felt I was rather going down the street on which Deputy Good and Deputy Hewat have advanced so far, and that I had made a small economic triumph, and I was proud of being the owner of my own house. Now that feeling is taken from me, and I am going to look around for a landlord, for some person foolish enough to let me a house so as to get out of the awful hole into which I have let myself. Jesting apart, this section will do a lot to discourage many an individual from attempting to become the owner of his own house, and, as has been pointed out very clearly, it will be another mark against us that we are inferior to the Six Counties, and are not able to manage our affairs as well and that we had to put this little burden on the already over-burdened taxpayers.

I want to approach this not so much from the point of view of the city or town dweller, but from the point of view of the unfortunate person who lives among the fields, the woods and the babbling brooks, and who under the existing circumstances of life is hardly able to make a living, and pays an income tax of 5/- in the £, in addition to his annuity to the Government. The allowance hitherto given him towards the repairs to his cottage or house, or mansion is now to be removed. He finds himself with a diminished income, and is called upon to subscribe to the civic spirit by paying more and more to the country's exchequer. I want to approach the question from that angle. We are overtaxed, and we should begin to get back to where we ought to be, to where the people in the Six Counties are, and I contend this is a fresh imposition on us and should be resisted. We on these benches are going to vote in favour of the Seanad's recommendation.

I can only say that in hearing some of the arguments I was reminded of Euclid who, when exhausted by a proposition, said that could not be because it was absurd. A couple of Deputies have mentioned houses, particular houses. Deputy Alton, I think, mentioned his, but he did not tell us what he paid for it, and he did not tell us what he paid in the way of rent before he bought his house. Deputy Thrift has mentioned the case of the £1,800 house. That house can only be in Merrion Square, Fitzwilliam Square, or possibly Harcourt Street.

Harcourt Road.

I was not far away. Now, the man in occupation of that house had to pay £120 a year. I suppose he was ordered to get out. We were not told if the £120 a year rent would continue. He was compelled to buy. What compelled him? The fact that if he did not buy he would have to pay a rental of £160 or £170 a year.

Not under the Rent Restrictions Act.

A rent of £70 a year keeps him out of the benefits of that Act. If my recollection of that Act is right, a rental of above £50 or £60 a year is not within the scope of the Rent Restrictions Act, so that this man was fair game, and I think I am backing a sure thing when I am backing Euclid in that particular proposition. Now, in the figures produced the £70 valuation, we are told that the ground rent was £12, and the income tax £17 on the £70. When I had to discharge some responsibilities before I came here my recollection is that you were allowed to deduct from the income tax whatever amount was paid to the ground rent landlord. Therefore, the actual amount in that case would be calculated on £58. The landlord bore it in respect of the £12.

That would not affect the argument.

I think it does, for it reduces considerably the amount that has to be paid for income tax, and as regards the question of £6 for insurance on the £1,800 property, my recollection is that the price is 1/6 per £100, and eighteen times 1/6 would be £1 7s., and £6 is an estimate that would not be passed by a business man. I notice that Deputy Good's face is getting longer as I am disposing of these figures one after another. We have an inflated case put up, and the case must be weak that needs such extraordinary figures to back it up. If this man did not buy his house he would not be allowed to continue in it at £120 a year. He would have to pay £170 if he was going to stay there, so that it is not against that £120 that you have to consider this particular outgoing of £80, and the difference between this inflated £80—we can reduce it very much below that figure—and the £170 would be £90. That bears some relation to the interest on the money which he would sink in it. The fact is that a great number of persons have bought their property within the last few years, and they have benefited by it. Deputy Johnson cites the case of a man who had to borrow money and is paying £60 interest on it, but he can put down that £60 in order to reduce the £500, and he is assessed on £440.

Is that in respect of the house?

It would more than wipe out anything he would be responsible for in connection with the house. If the valuation of the house is £60 and he pays £60 as interest on £1,000, that particular item of £30 assessment for income tax on that does not concern him. He not alone gets that off, but £30 off his gross income tax assessment as well.

Does the President say we can all deduct the interest on our overdrafts from income tax returns?


Then the farmers are safe.

There is nobody doing so well as the farmers now. They are getting back the money they paid in Excess Profits Tax during the profitable years.

Take the same case with the savings invested in two houses, would the President explain it then? A man invests in two houses. He lives in one and sets the other. He is not allowed the one-sixth off the one he lives in, but he is allowed the one-sixth off the one he sets.

Regarding the man who lives in one house and who is charged in respect of that house on the £30, as I said before, he has potential value invested there for £50. He is charged only on £30. The £1,000 that he paid for the house is worth £50 per year to him. But, suppose he is not occupying the house and that he lives in a hotel or a tent. He has £50 per annum sunk in that house, and we only charge him on £30.

Take it that the profit rental is the same as the Poor Law Valuation.

In that case it is more than possible that he would be charged on the exact value of his income. That was the case I was making. The basis of the case that is made against it is that he had some advantage, and we are taking it away. As to the case mentioned by Deputy Good, I have yet to come across a case of that sort where the house is let at such a price that it is only worth the actual valuation. I admit at once that this is something that is unusual. It is unusual by reason of the peculiar circumstances in which we find ourselves. Where a person has bought premises and borrowed money, in most cases I believe the sum that is asked to be put down in respect of such a property is half the amount; half the amount will be found, at six per cent. interest, to wipe out this particular liability on the whole of the valuation, apart altogether from the one-sixth. In the circumstances, I cannot see my way to recommend the Dáil to adopt this recommendation from the Seanad.

Question put.
The Committee divided: Tá, 30; Níl, 34.

  • Séamus Breathnach.
  • Seóirse de Bhulbh.
  • Louis J. D'Alton.
  • Máighréad Ní Choileáin, Bean
  • Uí Dhrisceóil.
  • Patrick J. Egan.
  • Desmond Fitzgerald.
  • John Hennigan.
  • Seoirse Mac Bhríghde.
  • Liam T. Mac Cosgair.
  • Pádraig Mac Giollagáin.
  • Eoin Mac Néill.
  • Seoirse Mac Niocaill.
  • Liam Mac Síoghaird.
  • Liam Mac Aonghusa.
  • Pádraig S. Mac Ualghairg.
  • Martin M. Nally.
  • Mícheál O hAonghusa.
  • Criostóir O Broin.
  • Seán O Bruadair.
  • Eóin O Dochartaigh.
  • Séamus N. O Dóláin.
  • Pádraig O Dubhthaigh.
  • Eamon O Dúgáin.
  • Aindriú O Laimhín.
  • Séamus O Leadáin.
  • Fionán O Loingsigh.
  • Pádraic O Máille.
  • Séamus O Murchadha.
  • Pádraig O hOgáin (Gaillimh).
  • Seán M. O Súilleabháin.


  • Earnán Altúin.
  • Seán Buitléir.
  • John J. Cole.
  • John Conlan.
  • Bryan R. Cooper.
  • Sir James Craig.
  • Osmond Grattan Esmonde.
  • Seán de Faoite.
  • Darrell Figgis.
  • Henry J. Finlay.
  • John Good.
  • William Hewat.
  • Connor Hogan.
  • Domhnall Mac Cárthaigh.
  • Séamus Mac Cosgair.
  • Maolmhuire Mac Eóchadha.
  • Tomás Mac Eoin.
  • Risteárd Mac Fheorais.
  • Seán Mac Garaidh.
  • Risteárd Mac Liam.
  • Seosamh Mac Craith.
  • Tomás de Nógla.
  • Tomás O Conaill.
  • Aodh O Cúlacháin.
  • Liam O Daimhín.
  • Eamon O Dubhghaill.
  • Seán O Duinnín.
  • Donchadh S. O Guaire.
  • Risteárd O Maolchatha.
  • Domhnall O Muirgheasa.
  • Tadhg P. O Murchadha.
  • Pádraig O hOgáin (An Clár.)
  • Liam Thrift.
  • Nicholas Wall.
Motion declared lost.

I will accept that, certainly. I am prepared to send in my resignation immediately.

Hear, hear.

I am prepared to give notice that I will tender my resignation at any moment. In the meantime, I want No. 1 and No. 2 dealt with, because to-morrow this Bill becomes law, irrespective of this vote that has been taken. So that unless the Dáil agrees to go on to-night these particular recommendations of the Seanad and the vote that has been taken go by the board.

Did not the President give an assurance that the result of the vote will be given effect to?


The question really is this: The 21 days expire to-morrow. This matter must be settled to-day. Recommendation No. 2 can be discussed now. The decision of the Committee in the matter of recommendation No. 1, and whatever decision it reaches on Recommendation No. 2, must be reported to the Dáil, and when the Report has been agreed to, if the Report is agreed to in the form in which it has been come to on Recommendation No. 1, I will take a motion to delete the section. That would give effect to the decision just reached, if the Dáil, on Report, agree to that decision.


2. Recommendation that in Section 23 (1), line 38, the words "15th day of July" be deleted and the words "1st day of September" substituted therefor.

I beg to move:—"That the Committee agree with the Seanad in Recommendation No. 2."

Question put and agreed to.