Dáil Éireann debate -
Tuesday, 26 Apr 1927

Vol. 19 No. 15

ORDUITHE AN LAE. - MOTION 8.—AMENDMENT OF LAW (RESUMED).

Mr. LYONS

When this debate was adjourned on Friday I was dealing with the question of unemployment, and I said that a great deal depended on the farmers in regard to the relief of distress amongst the unemployed, who are, in the majority of cases, in a destitute condition. I feel sure, after the Second Reading of the Agricultural Credit Bill to-day, that when farmers get loans they will be able to give great help in that respect. I did not use the word "farmers" in the same way as other Deputies have used it during this debate on the Budget. I did not mean to convey that the farmers were narrow-minded, or were not out to give employment, if they could possibly do so. I meant to convey that owing to high taxation and inability to market their produce and to get guaranteed prices for it, the farmers were not in the position to provide work for agricultural labourers who were unemployed. It is a well-known fact that there is not more than one agricultural labourer now working on the land where there were forty pre-war.

There are something like 3,000 agricultural labourers in Westmeath, and of that number there are not 250 in employment. In Westmeath and Longford the farming industry has gone down completely. In 1920, when there was a great circulation of money, and when everything was at top price, the farmers did well. As was mentioned to-day, during the debate on the Agricultural Credit Bill, there was at that time an Agricultural Wages Board, and the farmers in Longford and Westmeath were quite content to pay the wages fixed by that board. Owing, however, to what has happened since 1920, people have been over-taxed, and the burden is now so heavy they are not in a position to hold out any longer. Had I not read the Agricultural Credit Bill I would not have any hope for the farming community being able to give extra employment during the coming year, but some help will be given to them by means of that Bill, and I hope, in that way, they will be in a position to give more employment at a living wage to their agricultural workers.

With regard to the tax on wireless sets and parts, we are told by the Minister that this cannot possibly be removed or reduced. The yield to revenue from this tax was about £19,000. Why is there a tax on wireless parts that cannot possibly be manufactured in the Saorstát? I hold it would be better from the point of view of the State to abolish that tax because its abolition would be the means of giving employment to a number of engineers in putting those wireless parts together, and disposing of them. There is a good market for them at present. The Government might as well put a tax on tea because it is not grown in the Saorstát as to put a tax on wireless parts that are not and cannot be made here. I think some consideration should be given by the Minister for Finance to my suggestion on this matter.

I feel sure a number of Deputies regretted that they voted for the betting tax. I wonder has the £59,028 got from that tax in any way recouped the taxpayers for the amount of money they have had to contribute to the different labour exchanges towards the unemployed. It is a well-known fact that a number of motor drivers and stable hands have lost their employment owing to that tax, and those who produce food for horses also suffered. I think only about 13 Deputies in this House voted against that tax. No return is given as to what it cost to collect the £59,028, what it cost to relieve unemployment as a consequence of it, and what it has cost the county boards of health. I was sorry to see the majority of the Labour Deputies voting in favour of that tax. I am not going to ridicule them, but I really think they should have had better sense than to vote in favour of a tax that they knew would be the means of throwing numbers of people out of employment, and I cannot understand why a party who were doing everything in their power to improve the position of the workers should do such a thing and make their position far harder. I urge the Minister to abolish this tax also, as the amount of money it yields when put against the cost of collection and the distress it has caused shows that it is not worth continuing.

I am surprised that there has been no reduction in the cost of the postage stamp. It is 100 per cent. over pre-war days and one halfpenny more than in Northern Ireland and in Great Britain. People living at a certain distance from a post office have to give sixpence per mile for the delivery of a telegram. A man living 3½ miles from a post office has to pay 3/6 for delivery. I know a man in Athlone area who had to pay 3/- for the delivery of a telegram, and I do not think the boy who delivered the telegram got one penny out of that. Some reduction should be made in these charges. The sixpence per mile charge is uncalled for. People who live a couple of miles outside a town will not allow telegrams to be delivered to them except the sender pays for them, and he does not like that. I do not know why the Government should charge twopence for a stamp. It might be that the extra halfpenny is charged for dyeing it green, which might be dearer than the English red. They might get their dyes cheaper from Germany like they got their engineers for the Shannon scheme. As regards beer duties, down the country a half-barrel of stout can be purchased for £4. Out of that the Government receives £2 10s. 0d., and there is left £1 10s. 0d., to pay the grower of the barley, the freight from Dublin and back, the brewer, the carters, the publican and the shop assistants.

Surely some adjustment could be made in the price of beer. If the Government could not see their way to reduce the price of spirits, they should, at least, have followed the example of the British Government, who reduced their figure of 100/- in 1923 to 80/- per barrel. Four pounds per barrel should he quite enough clear profit for the Government to get, without any labour whatsoever. The position of the Government is a very favourable one if you contrast it with the position of the man at 30/- per week who has to make eight different entries in connection with these transactions, or with the position of the workman. To the workman a drink is part of his food. For his dinner he has a sandwich and a drink. Why should not some relief be given to that man? It would be most popular for the Government to do so. I know that pressure has been brought to bear on the Minister for Finance to refuse this reduction, because these teetotallers and converted teetotallers, and people on whom total abstinence is compulsory, judge others by themselves. They say that if any relief is given there will be an abuse as regards intoxication. I do not think any workman could afford, on his present wages, to get even slightly intoxicated. The publichouse does not act as a magnet on the workman. If £1 a barrel were taken off beer, and the price of the pint reduced by a penny or twopence, it would give employment to the worker, and it would provide a market for the farmer. If the pint were reduced by twopence, the shilling per week the working man would save would be devoted to the welfare of his children. But we must stick to the prices that were fixed from 1919 to 1921, when everybody was rolling in wealth. Now we are financially embarrassed and the workman is not able to pay the same price for drink that he paid in those years. The Minister is out for temperance. He reminds me of the chairman of a district council in Edenderry who spoke from a platform in 1901 against emigration. Workers were then receiving 11/- per week. The only way, this gentleman said, to prevent emigration was to reduce the wages of the workers, so that they could not save sufficient to pay their passage. The Minister thinks he is going to foster temperance by maintaining a high duty on liquor. The Edenderry gentleman did not, prevent emigration and the Minister is not going to prevent a man getting a drink because the price is high.

I realise that the Minister has reduced the demand on the people this year from £27,000,000 to £23,000,000. The balance of the money required will be borrowed. When the Minister can borrow about three and a half million pounds, what is to prevent him borrowing a much larger sum? Succeeding generations should be made bear some of the cost of establishing this State, and particularly the amount that it has cost to keep the Free State functioning from the end of 1922. I think the figure is somewhere in the neighbourhood of £50,000,000.

The people at present have to be overtaxed until that amount is paid back. I was pleased to hear the Minister say that our credit was good. That is very welcome news for the people of the Saorstát, but it would be better if the Minister said: "We are going to borrow thirty or forty millions to reduce taxation for the purpose of paying the overdrafts of the county councils." Primarily through the political strife every county council in the country has an overdraft of from twenty thousand up to a hundred thousand pounds. The ratepayers are saddled with that. The Westmeath County Council had at one time an overdraft of £60,000. About £3,400 per year was paid as interest on the over draft. I have been a member of that Council since 1920. The overdraft is there owing to the political strife, through swearing allegiance to Dáil Eireann the grants were stopped.

AN CEANN COMHAIRLE

The Deputy must get on to the Budget and forget about the history.

Mr. LYONS

I think the least the Minister could do would be to look for a loan whereby the overdraft of each county council could beat least paid off, or otherwise give the county council a longer term in which to pay, and so save the ratepayers of those counties. At present you have over 80,000 people idle in this country. The county councils are not in a position to give employment owing to the heavy rates and their overdrafts. I ask the Minister to do something to relieve distress amongst people willing and able to work. There is due by the Labour Exchange something over £1,400,000. From what sources can that money be paid back? Surely we cannot expect the Labour Exchange at present, where there is such a heavy demand by the unemployed, to be in a position to pay back to the State that amount of money. I think it would be much better if the Government floated a loan for a greater sum and started industries to find employment for the workers. I have no hesitation in saying that the people I am associated with, the workers of Westmeath and Longford—and I am sure they are voicing the opinion of the Saorstát— do not want the dole. They want employment, and every Budget in this House has only been adding extra numbers to the unemployed. This one will add to the unemployed. You will have more distilleries closed down and more men dismissed from the shops. Instead of trying to help the workers of this country, you are doing everything to make the worker a beggar. That is the position to-day. I know highly respectable workers in my own constituency whose wives are put in the position of going with their hands out from door to door when at the same time the men are quite willing to work. They cannot get employment because the people are overtaxed. The people who will give employment cannot give it owing to the high duties imposed by the Government. As a result the people must starve.

It is no use in saying that the teetotallers will not have any reduction in duty. The workers have greater ideas of temperance than any other class in the State. I am sure there is not any workman who has been dismissed from either brewery or distillery but would welcome and appreciate the removal of £1 per barrel off beer and £1 2s. 6d. off spirits. It would mean constant employment for them, and they would be able to provide for their wives and families. At present they are not able to do it. The result is that they are getting degraded. I cannot put forward the beautiful picture some Deputies put forward. I see nothing but disaster confronting us. I see nothing confronting my fellow-workers but that they will become eventually a band of wasters. Whom should we blame? We must blame the Government, who do nothing to find employment for them. What can we expect? We cannot expect great things. We cannot expect the Minister for Finance to make an appeal to the wealthy classes of the Saorstát, or even to apply to the British Government, as under the Land Act of 1923, for a guarantee on the land bonds for £30,000,000. The Government will not apply to the British Government for a long term loan to try and find employment for their citizens. They will not ask the British Government, or any other Government, to give a guarantee that if they float a loan of thirty or forty millions the money will be quite safe.

I sincerely hope that if the Minister does float a loan he will float a decent loan. I have no hesitation in saying that the people of the Saorstát will subscribe it. You have at present quite a large number of ex-servicemen. They fought against foreign powers, against their own fellow-men at home in some cases against their own brothers, and we find that even of the pensions that are given them, that portion of the money, is to be borrowed. If that item of £55,000 is to be borrowed for National ex-servicemen's pensions, why is it that an extra amount cannot be borrowed to give them constant employment? I hope that every Deputy realises that it is not yet too late for the Government, even at the eleventh hour, to do this. The Minister can, even before the election, ask leave to borrow a greater amount. He can put forward his schemes from the industrial point of view. He can, in conjunction with the Minister for Industry and Commerce, put forward schemes for the purpose of starting industries in order to give employment. I appeal to the Government to do something for the workers before they dissolve the Dáil. I appeal to them not to leave the workers in a worse position than they were when this Government took office. When the Government took office in 1922 the workers were in a good position. If the Government cannot better their position they should leave them in as good a position as they were in in 1922.

The most lamentable proposition ever put forward by any Government was the reduction of the old age pensions. That was one of the worst crimes that could possibly be committed, and if I had been Minister for Justice at the time I really think the Minister for Finance would now be "doing time." I hold that reduction was barefaced robbery. We were told that the reduction was one shilling, but in some cases it went as far as six shillings. Now, after three years the Minister cannot restore that shilling to old people who are 81 and 82 years of age and who have no other means of livelihood. They are now getting 9/-, but they are entitled to 10/-. Had they been 80 years of age at the time of the passing of this reduction they would be getting 10/-. Surely that is a crime that is calling for vengeance and vengeance will fall on somebody. If not at the election time it will fall sooner or later. I am very pleased that I was not associated with that act. I did everything in my power against it, speaking and voting against it, and the least the Minister could have done at the end of three years was to restore that shilling. He is not going to benefit a lot by it. A sum of £500,000 has been given to income tax payers, people who never go to bed without their supper. The man who pays income tax has always his loaf on the table. But in the case of the old age pensioner the loaf has been taken away from him by one of the Government officials, and it is put on the table of the income tax payers.

I hope that the Minister will put into effect the findings of the Old Age Pensions Committee that was set up for the purpose of going into this whole question of old age pension. The State had to bear the expense of that Committee but the result was that the whole thing was a bottle of smoke, for the findings were never put into force, simply because they did not find in the right direction. Had they found that the pension was too much and that it ought to be still further reduced the findings would have been put into effect very soon.

Then there is the case of the national teachers who in the interests of economy suffered a ten per cent cut in their salaries. Increased work is being put on the national teachers month after month and yet their salaries are reduced ten per cent. The salaries of the Governor-General and other well-paid officials are not reduced by ten per cent. I had hoped that the cut in the old age pensions would this year be restored and also that the cut in the teachers' salaries would be discontinued. I cannot possibly see how the people of the Saorstát can praise this Budget. There is no citizen outside of the 60,000 taxpayers who will benefit by the reduction in income tax. If the Government cannot increase wages or find employment then they should do something to reduce the cost of living so as to enable the people to rear their families. I do not want to criticise the Minister for his reduction in the income tax. Personally I never paid income tax as I had so many dependents that when the exemptions were deducted I owed none. I know that the reduction in income tax will be a help to those who have been paying it. I trust the Minister will see his way to give some help to the other sections of the community.

Mr. CONNOR HOGAN

I do not suppose that there will be any opposition to the terms of the motion that it is expedient to amend the law relating to Customs and Inland Revenue including Excise, and to make further provisions in connection with finance. But this is an occasion for a review of the policy of the Government with regard to finance and policy generally and to criticise the Budget speech.

AN LEAS-CHEANN COMHAIRLE took the Chair.

Mr. CONNOR HOGAN

I am not resisting—I distinctly welcome—the proposal to reduce income tax below the British level; but my mind goes back a few years to the time in 1924 when our income tax was fixed at 5/- and the British income tax was fixed at 4/-. I then put down an amendment to the Finance Bill to reduce our income tax at least to the British level. The Minister for Finance replied that it was a ridiculous proposal, no less, to reduce income tax to the British level. At the time I pointed out to him not merely the facilities in the matter of money, but the social amenities that would be brought about. I pointed out the advantages that a lower cost of living than Great Britain would offer to people; I mentioned that it would steady incomes and would prevent people who had no ties in the country leaving it to take up residence in England and elsewhere. The Minister for Finance, like Shylock, would have his pound of flesh, and, despite all reason, his mute, brute majority prevailed and carried the proposal to have a 5/- income tax. To-day he is in the unhappy position that he has to make a substantial cut below the British level in order to attract, as he bluntly admits, some of the capital and some of the wealthy people who have flitted from this country.

It evidently takes a calamity to open the eyes of the Minister for Finance. Reason cannot prevail with the Minister. It is only a hard and bitter experience, the same as we have had in this country, will convince him of the reasonableness of a claim. It is no exaggeration to say that, with the difficulties created by double income tax and the involved and cumbersome methods to gain relief, people who were resident in this country and who drew largely from moneys invested in Great Britain were obliged to leave the country. A moderate estimate of the income lost to us annually would be at least a million. That involves anything up to twenty or twenty-five millions of capital. We lose income tax on every penny of that, and we lose also the purchasing power of the people who owned that money. The benefit of that money is lost to the general mass of our citizens. That is a very serious indictment of the Minister, to have pursued a policy for a number of years which has led directly to the withdrawal of very large sums of capital from this country, and the withdrawal also of wealthy residents who are now spending their incomes abroad. But we lose even more. We lose everything in the nature of death duties, and this represents a very considerable loss to the Exchequer.

On the question of relief of income tax it is well to point out that even with the reduction of one shilling the position is not yet quite satisfactory, owing to the fact that we have a high cost of living in this country and owing to the difficulties with regard to relief from double taxation. I have been credibly informed that notwithstanding the agreement entered into last year by the Governments of the Saorstát and Great Britain, together with certain assurances given by the Minister in the House and elsewhere under which a person who has income and who is resident in this country, but has money coming from investments in Great Britain, gets exempted from the British income tax, circumstances point to a different state of affairs. Demands are being made by inspectors through the country, and they are assessing people on the original amounts of their incomes. They are even pressing for payment. I do not think that is in keeping with the spirit of the agreement, or even the spirit of the Minister's own paper, headed "Irish Free State and Great Britain (or Northern Ireland): Arrangements in Respect of Double Income Tax." Paragraph 5 says:—

A person resident in the Irish Free State who is entitled to repayment of British tax on the ground that he is not resident in Great Britain or Northern Ireland may authorise the British Commissioners of Inland Revenue to make the repayment on his behalf direct to the Irish Free State Revenue Commissioners, to be applied in satisfaction of Irish Free State tax due from him. The authority should be given in the space provided for the purpose on the repayment form K.1. The Irish Free State Revenue Commissioners will remit to the claimant any excess of the repayment received by them over the Irish Free State tax due from him. (This arrangement is designed to prevent the initial double payment of British and Irish Free State tax on the same income without relief, and must not be taken as implying that the Irish Free State Revenue Commissioners will in any sense act as the claimant's agent in the prosecution of his claim to repayment of British tax...)

I understand that the Minister gave a distinct assurance that a clearing-house would be set up with regard to this very question. So far, I understand that clearing-house has not been set up, with the result that very considerable hardship has been inflicted upon residents in this country, people mostly of moderate incomes which is derived from investments abroad. I understand they are subjected to very great hardships by the demands and pressure put upon them by our income tax people to get income tax again which has already been paid in Great Britain and in respect of which relief is in process of transfer.

I say that is a position which ought not be, and a position which is not desirable. All this irritation can only tend to drive wealthy residents out of the country. I confess that I do not look for very substantial improvements in this country consequent on the reduction of 1/- in the £ income tax, except in so far as that reduction will attract people formerly resident in this country and induce them to return. I hope that perhaps other people will come in. I do not look for very substantial industrial revival as a result of this reduction in the income tax. If you had depressed industries you might have a substantial improvement, but where your industries are nonexistent they have to be created. For that reason I do not expect any great industrial revival as a consequence of this remission in the income tax rate. I think that attention must be given to the process of making this country attractive to wealthy people, people of means. I say again that the policy of the Government for the last four years, with their high taxation and high cost of living, has been to drive out those very desirable residents.

In his Budget speech the Minister gave us certain figures showing the extent of the National Debt. These figures are, in my opinion, somewhat inaccurate. The Minister did not give us figures of the commitments which this Government has entered into. He gave the amount of the National Loan, Compensation Stock issued, Savings Certificates, Irish Free State Bills, Ways and Means advances, Telephone Capital advances. Why did he leave out of his calculation the capital sum we are committed to under the London Agreement, 1925, amounting to about £5,000,000? That is a debt already incurred to which we are very definitely committed, and, on the Minister's showing, we are bearing the charge this year.

Mr. BLYTHE

No, next year.

Mr. HOGAN

The British retained £900,000 they were to send over in order to meet the first instalments. The Minister had to find the money for the Property Losses Commission from some other sources. This money was going to the relief of that Vote. Now it must be found elsewhere. The money has to be found somehow. That point seems to have been ignored. We have in addition this question of Dáil Bonds. I believe the sum falling on the Exchequer is very considerable —over half a million this year. That is a debt already incurred. Why is it not regarded as part of the existing National Debt? The Shannon scheme inasmuch as we have definitely committed ourselves to it ought also to have been taken into calculation. The Minister states that the £16,290,000 is the total indebtedness at the moment. It would not be any exaggeration to say that, plus the London Agreement and the Dáil Bonds but excluding the Shannon scheme, our National Debt is about £22,000,000. There is a serious discrepancy between that and the Minister's figure of £16,000,000. The method by which the Minister proposes to balance his Budget is novel in the extreme. I consider it merely a piece of financial jugglery. The Minister stated that a couple of years ago he would have regarded the normal charge for the Army as £2,000,000. The figure is now reduced to one and a half millions. The Minister states that that represents a saving as compared with this year's net estimate of something like £650,000. Why stop at one and a half millions? The process could be continued until zero is reached. I fail to understand how the Minister can justify his proposals or claim that he has effected a saving of £650,000. It is only a paper saving.

Another point that the Minister has claimed as a saving is over-estimation. The attention of' the Public Accounts Committee has been drawn every year to the principle of over-estimation, and they made a very definite recommendation that over-estimation will be severely scrutinised. In a small Budget like ours I agree that it is impossible to come down to the fine relation of estimates and expenditure that prevails in Great Britain. In Great Britain the difference only represents 1.5. I do not think we could come down to so fine a figure. The Minister makes a gross estimate and hopes he will be able to save the £650,00 out of it. He thinks there is a little surplus included in every Estimate which will enable him to save the £650,000 which will be devoted to the relief of taxation. From that saving a reduction of 1/- in the income tax is granted. Does the Minister realise that his proposals mean that there will hardly be a penny in the Exchequer at the end of the next financial year, and that it will practically be as bare as ever Mother Hubbard's cupboard was, and that he must go out the next day and raise money by bills? If these are the savings the Minister claims to have effected I say they are very poor savings. The real saving is not this fine jugglery but rather in reduced expenditure. In several passages in his Budget speech the Minister has admitted that it is possible to reduce expenditure. Why has he not taken the necessary step to do so? He proposes to set up a Committee to investigate, and this precious Committee is to consist of a Minister and two heads of the Civil Service. In other words, the Ministry will sit in judgment on itself. I say that such a Committee cannot obtain public confidence and cannot obtain public respect. What other result could be expected from such a Committee of two officials plus a Minister who will be called upon to sit in judgment upon themselves, reviewing all the results of their policy for three or four years? A hopeful report is to be expected from it! Certainly the report, if it is to be published, will not be helpful, yet the Minister admits that a very considerable reduction in expenditure can be brought about. Why is it necessary to wait for this Committee? Why does he not take the matter in hands at once? He has not done so, and that is part of my criticism, that he has allowed several precious years to pass by without taking the necessary steps to reduce expenditure. As a matter of fact, except in abnormal items, expenditure is already very nearly stabilised. It is true that the huge Army expenditure at £10,000,000 in 1924 is now reduced to a gross charge of £2,666,000, that is, taking in not alone the sum for which the Accounting Officer is responsible, but other charges, such as the Board of Works, the Post Office and other services which are incidental and corelated to the service of the Army. It is true that the huge Property Losses Vote is reduced. But come down to other things. Certain aspects have been cut out, but have these been as much as the position of the country at the moment warrants, and which, if this country is to survive, it must demand? I say they have not.

You have got to come down to the taxable capacity of the people, and from first to last the Government has made no definite effort to ascertain what the taxable capacity is. They have got to realise whether all these services are actually necessary for the country in its present state of depleted finances. Facing up to that problem, I believe that there must be a scrapping of some of our services. How can a poor agricultural community, with thousands of holdings that are either uneconomic or barely economic, keep up the social services of a country with the wealth and immeasurable resources of Great Britain? In my opinion it is an impossibility, and that position must be faced. Every commitment— and the Government has entered into many commitments—imposes a charge upon the public purse. Their tariffs, for instance, are making it exceedingly difficult for the country to pull through. As I pointed out here last week, there is no tax so cruel, so unjustifiable, as the boot tax. The Minister told us that he put it on as an experiment. I presume that that is part of the policy of experimenting which led him in 1924 to impose an income tax of 5/-, while it was only 4/6 in Great Britain. He is now taking off two sixpences, when one then would have fitted the bill pretty well.

I believe that the Minister has imposed the boot tax for a period of seven years, and I presume at the end of that time he will have found out, what the rest of the country have found out already, that this tariff is not warranted and is absolutely unjustifiable in the case of poor peoople. Boots are an absolute necessity in winter or summer. People can wear rather bad clothes and they will keep them warm, but in our climate, and especially for young children, sound and absolutely waterproof boots are required. If you have not such boots you are risking the health of the coming generation, and I may say that the Minister's policy, in a period of acute agricultural depression, when every penny counts, of putting on a 15 per cent. tariff, especially in the case of the poor farmer and the poor agricultural labourer with a long family, is really striking at the health and the future efficiency of the country. I hope that a considerable volume of support, in this House and out of it, will be forthcoming to get rid of this tax. It brings in merely a quarter of a million, and while a quarter of a million is not to be despised, I do say that the price of boots is ruinous, and I say very definitely that the boot tariff must go. We could take the same line with other tariffs, but as the finances of the country are based to some extent upon the revenue that accrues from them, we cannot remove them altogether. But I do say that the boot tax is a most iniquitous tax as far as the whole population of the West of Ireland, from Tirconaill down to West Cork, is concerned. It strikes very severely at the people.

The whole tendency of tariffs necessarily is to put up the cost of living. Does not that take very largely from the effect, when the cost of living has gone up beyond the figure in Great Britain and Northern Ireland, and does it not really cut across the Minister's proposal for the reduction of income tax to attract people back here? In the case of a person of very considerable income it would pay, with the lower rates of super tax and income tax, but in the case of a person with an income of £400 the reduction would only be something in the neighbourhood of 50/- or 55/-. Does the higher cost of living warrant a person with an income of, say, £400, to come from abroad in order to save these few pounds? I claim that it does not, and I say definitely that the Minister's proposal, as far as these small incomes are concerned, is absolutely defeated. It was part of the policy of members of the Government, in making speeches throughout the country last year, not to bemoan the high taxation that exists, but rather to justify it. They told the country that it was getting "damn good value" for its money. Therefore, on their own admissions. they agree that the country is taxed beyond its resources, and taxed far and away beyond its capacity, but they say they are giving good value. I was wondering whether the Executive Council ever had such a thing as a patron saint, and now I realise that they had, and that patron saint was the Good Thief—the Penitent Thief.

Mr. HEWAT

The Government are not penitent.

Mr. CONNOR HOGAN

I do say, with Deputy Johnson, that the position of this country is such as to cause anybody very grave anxiety who studies it. Ministers may speak of rosy prospects, of rounding the corner, and all that kind of thing. I submit that they are out of touch with their constituents and that they have no measure of the feeling that prevails in the country. It is only too apparent to any man who travels through the Midlands, through several portions of Clare, parts of Leitrim and parts of Kerry, that the land is very inadequately stocked and that there is much possibility that there will not be sufficient stock to eat this summer's grass. But more than that, in these stressed and pinched times farmers generally are obliged to cut expenditure in every direction, even in the case of the very necessary improvements that the land requires. There is no doubt that the carrying power of the land has very seriously declined within the last three or four years. The land is no longer as fertile as it was six or eight years ago. That is due to two causes: the inclement season of 1924, when the land became absolutely waterlogged, and the farmers, owing to the bad times through which they have been passing, not being in a position to put in the necessary fertilisers to maintain the fertility of the soil. That is a very serious state of affairs.

We are told that that is due to high local taxation. Who is responsible for the high cost of local services? I claim that the Government, and three Ministers particularly, must bear a very considerable share of that responsibility. These Ministers are: the Minister for Finance, who was responsible to a very great extent when Minister for Local Government; the President, and the Minister for Justice. In the years 1920-21 and subsequent years they involved the country in very huge commitments. They attempted to reform the social services and to base the normal expenditure upon the peak prices which then prevailed. That has happened at least in my constituency. Then there are the duties put upon local authorities by the legislation passed here in the last few years, particularly the Local Government Act of 1925. Very considerable sums have to be found under those Acts. The Government cannot escape individual responsibility, because there were definite proposals put up here which would have the effect of reducing the obligations of local authorities with regard to pensions, etc., which were carried in this House, but when they went to the Seanad the Seanad reversed the order established here, and the Government tamely acquiesced and actually divided the Dáil in support of the Seanad amendment, although previously they had taken the line that these commitments were not desirable.

I say then that it is not a fair position for the Government to adopt, to cast all the blame on the local authorities for their own failure. The local authorities are doing their best to get out of the very undesirable situation which the Government, and particularly the present Minister for Finance, created for them in 1923, when he was Minister for Local Government. They are endeavouring to undo his work, and it comes very badly from the Government to be accusing the local authorities of failure, when they themselves had stereotyped the commitments and had prevented local authorities from making any effort to reduce them. That question will be very definitely put up to them at the General Election—their complete failure to realise the poverty prevailing, especially in some of the Western counties and to make suitable provision to relieve the local authorities.

Whatever the Government may say, this country has very little reason to be grateful to them, especially on this question of finance. They have absolutely resisted the claims put up here within the last two or three years for a "Geddes" committee to examine the position—an independent committee, not a committee of Ministers or a couple of civil servants, to sit in judgment upon their own past administration. See what happened in England.

When Sir Eric Geddes, who had been a Cabinet Minister, but had severed his connection with the Government, and who was a business man and not a professional politician, went into the question of expenditure there, it was found possible to make very considerable reductions. Considerable as they were, the British people are now forced under stress of circumstances to demand much greater retrenchment. Hard as conditions may be in England, they are unfortunately harder here. We have a country which is infinitely poorer. The fact cannot be sufficiently impressed on the people that we have only 1-66th of the earning resources of Great Britain, and if we take our expenditure upon that basis, it is relatively 2½ times the British expenditure. Our total expenditure this year, when we take into account loans, etc., amounts to £32,000,000, both for normal and abnormal services under the heads of voted moneys, expenditure out of the Central Fund and capital issues. That is a matter for serious consideration. People speak lightly of borrowing money, but every penny borrowed imposes a further charge. It is a good thing certainly to get it, but there must be wisdom and discretion in borrowing. We have entered into too many commitments—commitments far and away beyond the resources of the country. Those commitments may be very admirable and very successful in course of time, but they are beyond our financial resources, and that constitutes my severest indictment of the Government.

Mr. SHAW

I should like to ask the Minister if he could give us any further information as to whether any agreement has been arrived at as to the leasing or working of the totalisator.

Professor MAGENNIS

I trust my friend Deputy Connor Hogan will forgive me if I say that his speech, which we have listened to with so much interest, was a strange blend of practical wisdom and the veriest folly. When he indicted the Government and indicated its financial blundering he was admirable, but when he recollected that he is a member of the Farmers' Party and bound therefore, as he believes, to attack tariffs in aid of industries, he fell away sadly from grace. The Minister's whole Budget has the keynote of it indicated in the second sentence:—"The financial credit of the State has been securely established." In my reading of the Budget statement the whole effect that it is designed to create is that the Government has established securely the financial stability of the State. There are no doubt good items in the Budget. It would be difficult indeed to have a Budget that would be all bad. But I suggested in the criticism which I had the opportunity to make on the first resolution concerning income tax, that this was a great advertisement. I find that one of the Sunday papers echoes that description. There was nothing startling, it was clear, nothing spectacular, nothing in the way of a new departure, in the Budget.

The Minister seems to have played merely for safety, retaining practically the impositions of the former Budget. I think anyone who has followed the wiser portion of Deputy Connor Hogan's speech will have realised that the Minister has tried to make his financial position appear very much better than the searchlight of Deputy Connor Hogan allows us to see it to be. What evidence is there in the Budget that the financial credit of the State has been securely established? It is the duty of any national government to protect the three great assets of the State: Its land, its wealth, its people. Deputy Connor Hogan joins with the Minister in seeing nothing hurtful, nothing to be condemned, in a financial and fiscal policy that drives away, out of this State, the best and most valuable of its population. Once it became a question of a tariff upon boots Deputy Connor Hogan forgot the 30,000 emigrants that left this little State last year. His word to the farmers is: "Let your sons and daughters go abroad to protected lands to look for the employment that they cannot get at home," and, then, when he contemplates the reduction of the income tax he sings "Come back to Erin" to the poltroons that left the country before to escape its financial and other burdens.

This is the most heavily taxed country in Europe. Mr. Baldwin, in his statement, which I quoted before in another context, declared that we export more of our capital than any other country in Europe. We are exporting our population, and we are exporting our wealth with the rake's progress, and yet we are told, in this Budget statement, that national stability has been secured. There is, to the superficial reader, a certain show of stability. I claim as regards certain portions of it—the best features—that it was the pressure of the uprise of another party that brought financial light and leading to the Minister for Finance. When I made that claim, a Deputy of the Farmers' Party made a sign of derision. The document to which I am referring is dated January 22nd, 1926: "Outline of Clann Eireann's policy and aims." It declares:

"The immediate objective is the release of agriculture and business from the stranglehold of bad finance. The burden of taxation, national and local, is greater than farming can bear: and what with income tax, super-tax, corporation tax, enterprise in the other industrial domain is checked, repressed, even palsied. Our towns exhibit acute depression. The farmer is harried by a horde of State officials. Industries dwindle; unemployment and emigration alone expand. The Government's course must be stayed before irreparable disaster comes upon the country."

And one of the proposals which is the very latest proposition of the Government to deal with transport is insisted on, and so on right through the programme until we come to the statement that the present scale of spending and our national income are thoroughly out of relation. The document from which I am reading these few excerpts declares: "For constructive development the moneys requisite can be secured through the checking of waste and the pruning of extravagance." And it goes on: "The wrong organisation which mars the efficiency of the Department of Defence and of the Department of External Affairs provides additional notable examples of misspending."

Now the two remarkably striking features of the Budget proposals are the reduction in income tax and the proposal to reduce the Army down to a cost of only one million and a half. The ordinary reader in piercing beneath the surface of the proposal will see in that evidence of stability. It is somewhat inconsistent, no doubt, this Budget statement, especially with what Deputy Gorey calls the cross-roads protestations of political speechmakers. While at the cross-roads, Ministers terrify voters with the prospect that if they are not returned by the electorate it will be impossible to borrow money, and other horrors are prophesied as awaiting the country in the background. Yet, when it comes to the real financial proposals embodied in the Budget, what do we find? That the Minister is able to propose a reduction in the Army, and to substitute for it something in the nature of a territorial force. Which of these two doctrines, put before the public, is the truth? It is quite obvious, that we have that stability which makes it possible to reduce the Army, and by a species of political legerdemain in the Budget we are asked to believe that that stability and financial stability, which are to secure relief from national indebtedness, are the same thing, and obviously they are not. I proved that out of the Minister's own figures. We have the largest national debt.

Deputy Connor Hogan asked for information with regard to taxable capacity, but he forgets that the Minister in the debate of December, 1925, told us how he and Mr. Winston Churchill, the English Chancellor of the Exchequer, arrived at their bargain under Article V. He said the British put it up to him—and, of course, whatever the British put up to him he accepted—that the relative taxable capacity of the two States might fairly be taken as indicated by the yield in their respective direct taxation, so that he got the ratio of one and a half to one hundred. Now the taxation which this country is called upon to bear should, upon that basis, be something between £12,000,000 and £13,000,000. Here it is £23,000,000, just a little over twice what it ought to be. And yet we are asked to believe that the Minister has done great things. Now the Minister says: "Great constructive schemes have been initiated and are being hastened forward. New help has been given to agriculture and industry. The burden of taxation has been appreciably reduced while the public debt remains low."

I find it somewhat extraordinary that the Minister for Finance should use the expression, "public debt," when I recall that in the Seanad on the 1st April he professed utter and complete incapacity to state what the term "public debt" means. It will be recollected that under Article V. of the Treaty it was stipulated that Ireland was to bear a proportion of the national debt. The words used were "Public Debt of Great Britain and Ireland," according to a proportion found to be just and equitable. In the Seanad on April 1st the Minister for Finance declared that he did not know what those words meant. He declared further that it was useless for him to suggest a definition, for the British representative might put forward another. Yet, here we have the very term itself employed in the introductory statement to the Budget, and obviously it is meant to be a synonym for State debt, the debt of the State That is to say, it is the same thing as what is popularly called the national debt.

The reason I am harping upon that is because in a recent financial settlement made by the Minister, and signed in March last, the Minister set his signature and seal to an arrangement whereby the finances of this country are to be drained still further away, and exported, so that what ought to have been cancelled under the cancellation of Article V., to wit, our indebtedness for portion of the public debt of Great Britain and Ireland, is continued as a financial commitment of ours by the Minister's settlement, and would have appeared, I have no doubt, in the items of the Estimates if we had an opportunity given us before the dissolution of this House to consider them. I maintain that the total public debt or State debt of the Irish Free State is not set out in this Budget statement, and that our national debt is represented at a lower figure than that at which it actually stands, and that the whole Budget is designed to give the impression of our occupying a better and a sounder financial position than we really are entitled to claim. Deputy Connor Hogan has dealt with the items of the national debt ably, and I leave the matter where he left it.

The Minister said that in his last Budget statement he estimated for certain excise duties and also spirit and beer duties, and from his results it would appear that the home-made spirit is getting a larger consumption than it had formerly. The Minister estimates no reduction in the coming year, notwithstanding that we have devoted quite a considerable amount of our time to the regulation of the drink traffic. The next item of the Budget statement is in regard to the taxes on motor cars. The Customs duty on motor cars and motor bicycles yielded about a quarter of a million. The Minister explains the fall in the yield by the diminution in the value of cars owing to the slump in the French and Italian currencies, and the discrimination in favour of the home-made car shown in the new basis of road taxes, and to the easing off of the brisk demand for cars which arose on the restoration of settled conditions. There is no mention in this connection of any effort to help the home industry. I made the point to the Minister for Trade and Commerce in the Provisional Government that we should allow the chassis of motor cars of all descriptions in, either free of tax, or with a very, very much diminished tax, so that only the ready-to-drive-away car should bear the heavy impost. In that way we could bring back again, especially to this city, what had once been one of its most thriving industries.

We have all seen evidence recently that even yet in the great towns of England, towns like Coventry and London, where coach-building is a fine art, and where the world is really out-rivalled in excellence of production, the leading workers are Irishmen. We had a pre-eminence in coach-building up to roughly about the time of the development of the pneumatic tyre. We lost this industry, and with it all the employment that it afforded both through itself and through cognate industries. We will continue to lose it so long as the motor car arrives in the Free State in a completed form. Now it is quite obvious that with the development of road transport in the form of buses, a great fillip could be given to home production of this type if the chassis for these vehicles came in without tax or at a diminished rate of tax. I find no proposition with regard to that in the Budget.

Mr. BLYTHE

I do not want to interrupt the Deputy, but I would like to point out that it has been there three years.

Professor MAGENNIS

Deputy A. Byrne and I spoke about this on the last Budget. I now move to report progress.

Agreed.

The Dáil went out of Committee.

Progress reported; the Committee to sit again to-morrow.

The Dáil adjourned at 10.30 p.m. to Wednesday, 27th April.