I move the Second Reading of the Finance Bill, 1927. As Deputies will see, the Bill is of much smaller proportions this year than in previous years. There is a number of remissions which were not before the Dáil already because it was not necessary to have resolutions in regard to them. The first is in Section 3, which provides for the exemption of the emoluments of representatives of other Governments of the British Commonwealth of Nations from income tax. The position at the moment is that the High Commissioner and his staff in Great Britain are exempt from British tax. We have no representatives in other British Dominions, but if we had them they would be exempt from tax, and it is desired that we should be in a position to give exemption to representatives of other Dominions who are or may be here.

Section 4 provides for the giving of relief from double income tax in respect of profits from the business of shipping. It is desired to be in a position to enter into agreements with a number of Governments in this matter. There is, in fact, a special case for relief from double taxation of shipping profits because a tramp steamer might call at ten different countries in the course of a round voyage and be liable to income tax in each of them.

The basis of taxation of British dividends was changed when we adopted the new system of relief last year. We have departed from the three years' average and we charge them on the actual year of assessment. The result is that assessments have been made in certain cases which are in excess of the amount of the income, and there is at present no means of giving relief. It is proposed that power should be given to the Revenue Commissioners to give relief in respect of any excess in assessment.

Section 6 covers cases which have caused a good deal of trouble. During the disturbed years a great number of people were prevented from using or remaining in possession of their land. In many of those cases income tax was not paid, and in equity, the tax should not be paid. The tax has not been paid, and because it is still outstanding considerable difficulty has been caused in dealing with the land. The Land Commission have been up against various sorts of difficulties as a result of it.

Section 7 also deals with cases which have caused a good deal of trouble. Certain lands were bought all over the country by co-operative societies, and being held in trust by the co-operative societies for individuals they were liable to income tax, although if they had been divided none of the individual owners would have been liable to income tax. The tax has not been collected, and at present there is difficulty in dividing the lands; tenants are not willing to accept possession because they fear their stock would be seized for any tax owing.

It is proposed in section 8 to make it possible to discharge quarterly assessments irrecoverable without an unnecessary amount of clerical labour and consequent expense. Section 9 is, to some extent, complementary to Section 5, and it enables the Special Commissioners to direct payment on account of income tax where some point in regard to the assessment remains outstanding.

Section 15 enables us to give relief in cases where legacy duty or succession duty is charged here and in Northern Ireland. The arrangement will be the same as the arrangement with Great Britain. When the general double taxation arrangement was being entered into with Great Britain, the Government of Northern Ireland declined to accept the basis of relief then agreed on between the Saorstát and Great Britain. That Government is now willing to accept the same arrangement as the arrangement between the Saorstát and Great Britain. It is proposed that the relief should be given.

Section 16 proposes to reduce the penalty for having an unlicensed dog from £5 to £1. That will mean the effective penalty will be 5s., because the District Justice will be able to reduce the fine to 5s. Heretofore he could only reduce it to 25s., and that meant that a great number of appeals for remission of taxation had to be considered by the Revenue Commissioners. It is felt it is proper to reduce the penalty. I think these are the only points to which I need refer.

Before going into the main questions raised in this Bill, I would like to refer to a point connected with Section 3, which was not mentioned by the Minister previously, and which has reference to the exemption of representatives of the other members of the British Commonwealth of Nations. I understand this exemption will only apply to representatives of those Governments which offer a similar exemption to our representatives in their countries. This would only apply to the representative, when he is appointed, of the United Kingdom of Great Britain and Northern Ireland. We have no representative in Canada, and consequently any representative of Canada will not enjoy the privileges of this section. I do not know exactly, as a result of the Adaptation of Enactments Act, what is the position in this country with regard to the exemption of representatives of other countries outside the Commonwealth of Nations. I presume, by some enactment the Minister of the United States would be exempt from all income tax and, I hope, all rates and taxes of every kind. I presume that is the case with regard to our Minister in Washington.

I do not know, and I am not aware if the Minister knows, what is the position with regard to Consuls-General of countries that have not got diplomatic representation in this country, but that have Consuls-General who perform a quasi-diplomatic function in relation to the Government of this State. I do not know whether their goods, their effects, are free from customs duty when they come into this State. It would be advisable if the Act were extended so as to include the representatives of other nations besides those included in the British Commonwealth of Nations.

The main point with which I wish to deal touches on a question which has not yet been discussed in the Dáil, or, so far as I know, in the Press. I refer to the question of the continued operation of Section 8 of the Finance Act, 1919, and similar sections in other Finance Acts of the British Parliament; in other words, the operation of imperial preference in this country. I have no desire to raise any general discussion. In view of the terms of the Finance Bill and the Budget statement, which does not impose any fresh customs duty, it would not be advisable to start a general discussion on tariffs at this point. I think it would be advisable if the Minister made some statement with regard to the position as respects imperial preference. So far as I understand, the 1919 Act and the other sections of other Finance Acts are still in operation as a result of the Adaptation of Enactments Act.

In the 1919 Finance Act it is stated that imperial preference on certain goods will be given from certain countries in the British Empire. It is defined in that Act that the British Empire means any of his Majesty's dominions outside Great Britain and Ireland. Many tariffs have been imposed since the Saorstát came into being, subject to the 1919 Act. That is to say, that the manufacturers in Great Britain and other parts of the British Commonwealth of Nations and the British Empire enjoy a preferential rate as compared with the rates charged on goods from other countries. There are other tariffs which have been imposed, and which, apparently, are not subject to imperial preference. For instance, in the last few Budgets the Executive Council has removed the imperial preference on sugar and tobacco, and the duty on tea has been removed. I think it is important that the country should know exactly what is the position of this State with regard to Northern Ireland and Great Britain in the matter of imperial preference.

I am inclined to believe, as far as I have been able to read the figures, that we are giving a far larger preference to Great Britain and Northern Ireland —we are giving a far larger reduction in customs duties to goods from Great Britain and Northern Ireland—than Great Britain and Northern Ireland give to goods from the Irish Free State. I was particularly struck, in the course of the Parliamentary tour in Australia, with the importance which the Australians attach to the question of imperial preference. The British members of the delegation repeatedly protested, either in private or in public, against the imposition of tariffs by the Australians against British goods. I remember a very forcible speech that was made by the Premier of Victoria, Mr. Allen, or as he is better known, Mr. "Cocky" Allen. "Cocky" is the Australian term for farmer. He is head of the Farmers' Party and Premier of Victoria. He made a very forcible speech, pointing out that Australia was giving about £9,000,000 a year to Great Britain by way of remission of customs duties through the operation of imperial preference, while the imperial preference given to Australian goods in England was comparatively negligible. Deputies, I am sure, would be interested to hear what is the corresponding figure in the Irish Free State to that sum of £9,000,000 a year which the Australians give as a free gift to British manufacturers. Unfortunately, we have no statistics. The statistics published by the Government do not clearly differentiate between those imports which are liable to full duty and the imports which are liable to preferential imperial duty. In this connection we should not forget that it is not only a cash remission which we give the British manufacturers: we also give them an increased market. A reduction in the customs duty gives them a greater capacity for selling their goods in this country than they would have if they had to pay the full duty, and therefore the benefit to British manufacturers must be considered not simply as a cash reduction in the customs duty, but also in reference to the increased facilities they get for the sale of their goods in this country.

I think the Minister would do good if he made a statement giving the general figures with reference to the operation of imperial preference in this country. There has been a lot of very loose talk, particularly in the Press, with regard to our best customer. It is important for us to know in terms of pounds, shillings and pence what benefit exactly we give to our best customer. They apparently give to us, according to the leader writers of the "Irish Times," that venerable organ of classical reaction, their good-will. We give them, apparently, imperial preference. I think, in order to get a clear understanding of the political and economic relations between this State and Great Britain and Northern Ireland, that we should have definite figures on this matter, and perhaps it is more important that we should have these with regard to Northern Ireland than with regard to Great Britain. We give, apparently, imperial preference on some articles. There is nothing to prevent this House from giving a national preference, by agreement, to Northern Ireland. There is nothing to prevent us, as a sovereign Assembly, from giving a national preference to goods certified by the Northern Government as having been produced and manufactured in Northern Ireland. I do not say that this would be advisable or feasible, but there is nothing certainly to prevent us from doing it. There is a danger, although perhaps this does not come exactly within the terms of this Bill, of Northern Ireland drifting economically away from the Irish Free State. There is a danger of Northern Ireland seeking more and more its markets in England and Scotland and neglecting the markets of the Irish Free State, and it is quite possible that the establishment of a national preference would be a valuable means of keeping close economic relations between these two sections in this country.

This is a matter which, I suggest, the Dáil and the Government and the "Irish Times" should favourably consider. As far as I know, it has not been discussed or considered previously. I think it would be a mistake if this matter was not mentioned before this Dáil ceases to exist. There has been amongst the Press, and particularly in that venerable organ to which I have already referred, a persistent wail as regards the imposition of new tariffs in this country. If one reads the financial articles published within the last few years one will see that many of the tariffs which have been imposed have conferred a preference on British manufactures in the Irish market, a preference which they did not previously possess. I do not wish to delay the House further, but I think these are matters that should be mentioned before the Dáil comes to an end. I hope the Minister will make some general statement as regards the whole position in this country as far as imperial preference is concerned, as to the possibility of developing the idea of a national preference with regard to Northern Ireland, and as to how far this matter affects our economic and commercial relations with Great Britain and Northern Ireland.

I hope the Minister, when he comes to reply, will give us some additional information with regard to the changes it is proposed to make under Sections 2 and 15. I was not able to gather from the brief speech which the Minister made on the Second Reading of the Bill what exactly he had in mind in making these proposals, and therefore I think a little more information from him would be extremely useful.

Some time ago I asked a question about visitors coming to the Free State. I referred in particular to the case of Stanley Howard Harrington of Killarney. I would like to know if any change has taken place since I put that question that would encourage visitors of Mr. Harrington's type to remain for any portion of the year in this State. Stanley Howard Harrington gave very good employment, but only remained for a short time in this country, because, as I understand, as a result of his failure to get some concession. I would be glad to hear from the Minister if any change has since taken place.

I want to ask for some further information on the points that Deputy Good has raised, particularly in respect to Section 15 dealing with the Saorstát and Northern Ireland. It was explained by the Minister that Northern Ireland did not take advantage of the opportunity before, and now we are asked to enact that as soon as they are willing our authorities here may be entitled to give them that advantage. I think, before we make such a provision in our Finance Bill, that we ought to have information as to what has been the effect, if it is known, of the relief given in previous Acts. I think that until we get that information as to what has been the effect of legislation in this respect that we should not go any further in the matter, and that if there is any loss to the Free State by enacting this relief scheme we should not increase that loss. On the other hand, I do not think that we are called upon to go out of our way at this stage until we have had information as to the effect of previous enactments, to pass this legislation in respect to Northern Ireland alone. I take it that they believed, when they refused before, that it was of no advantage to them and unless some change has since taken place they will continue to believe that. Consequently there would be no advantage to anyone in our passing this provision. But in any case whatever may be the ultimate result of making this special provision, we ought to have some information as to the effect upon our own Exchequer and of the relief given by previous Acts.

Before passing from this, I think the Minister ought to take this opportunity to tell the House what is going to be the effect upon the finances in the current year of the judgment given by the Judicial Committee of the English Privy Council in the case of Wigg and Cochrane. That is surely a matter of importance as affecting the finances of this year. Before we pass this Bill, I think it is requisite that we should have some information from the Minister as to his estimate of the cost to the State of that judgment, and how that is going to affect the taxation scheme. Obviously it will have some effect. One would think that it would almost require a new Budget statement, and consequently proposed changes in the taxation proposals of the Minister. I, therefore, invite him to give us this information before we pass the Second Reading of this Bill.

With reference to Deputy Esmonde's first point, Consuls-General and the representatives of other countries are exempt from income tax at present. It has always been the custom to exempt such people, and the exemption, which depends rather on international courtesy than on specific enactment, has been continued. In regard to representatives of States of the British Commonwealth, there has been no exemption heretofore. There has been no custom to enable the Revenue Commissioners to give exemption without specific enactment, and that is why the enactment is now proposed. So far as Canada is concerned, there would be exemption for a representative of ours there, if we had one. Consequently, a representative of Canada here would receive exemption immediately, apart from our actually having a person there to take advantage of the exemption.

I do not know if the terms of sub-section (4) will fit in.

They do. It gives it. We may not be there to receive it. With regard to imperial preference, the position so far as we are concerned is that we have effected very little change. As the Deputy said, we abolished imperial preference as respects sugar and tobacco. We have imposed a number of new customs duties, and there is no provision for imperial preference in any of them, except the sugar confectionery duty and the cocoa preparations duty. Otherwise we simply have let the position remain as it was. I could not give any information at present as to what it costs the Exchequer to give this relief, and what is the actual gain to Great Britain and Northern Ireland. In many cases there is no real loss to the Exchequer, because the abolition of imperial preference would be simply tantamount to an increase in the duty, and whatever the Exchequer gained would be borne entirely by the citizens of the State. There may be cases in which the citizens, if imperial preference were abolished, would not bear the whole cost of the increase of revenue, because it may be that in certain instances British manufacturers, because of the imperial preference, have not to cut their prices as finely as they would have if there had been no imperial preference. It is a matter on which it would be difficult to get accurate figures.

Imperial preference exists at present in regard to cinematograph films, clocks and watches, motor cars and motor cycles and their parts. As far as the last is concerned, we get reciprocity, because motor car parts are manufactured in Cork and get the advantage of the imperial preference in going into Great Britain. The other articles are musical instruments, cocoa preparations and sugar confectionery. So far as cocoa preparations and sugar confectionery are concerned, the effective competition with the home manufacturer is the British competition and there is no doubt that, if we abolish imperial preference, if any additional revenue was obtained the burden would fall entirely on the taxpayer. In the case of spirits the imperial preference is 2/6 per gallon. There again, if we abolished the imperial preference, the increase would fall on the consumer. The Deputy will see that the list is not a very formidable one. In respect to the articles which are of any importance we have protective tariffs, and the abolition of imperial preference would simply mean that the tariff would increase. I do not propose at present to take any steps in the matter of abolishing imperial preference. On the whole it costs us very little—that is, it costs the people of the country very little— and the abolition of it might cost them a good deal more, even if no drastic steps were taken—as I do not believe there would be—in response to the abolition of imperial preference. With regard to national preference— preference for goods manufactured in Northern Ireland—I do not think such measure would do any good—that it would produce any different attitude.

Deputy Good asked about Sections 2 and 15. Section 2 was the subject of a resolution, and when that was before the House I explained that it was to prevent certain super-tax payers who were doubly resident from getting relief largely in excess of the relief they would have got if they had been resident solely in Great Britain or in the Free State. It is simply removing a flaw in the legislation giving effect to the double income tax agreement of last year. It will mean additional revenue of between £100,000 and £150,000. If we did not adopt this it would mean that certain people would, in effect, in respect to the year of transition, to a very large extent escape taxation through getting excess relief.

Otherwise I take it the present basis of assessment is not altered?

No. This is only as regards that particular class of people and it only affects the transitional year. In regard to Section 15, the position is that when the general arrangement about relief from double taxation was being entered into the Government of Northern Ireland accepted the arrangement proposed in regard to estate duties, but in regard to succession and legacies, which are of very much less importance, that Government was not satisfied that the proposed basis was a fair one, and refused to enter into the agreement in respect of that. Since that time certain people have been subject to double taxation. They have had to pay double succession duty in the Free State and Northern Ireland, and were unable to get the relief that they would have obtained if it had not been a question between Northern Ireland and the Free State, but between Great Britain and the Free State. The amount of money involved is very small, but it is a hardship that taxpayers should be doubly taxed.

Deputy Johnson asks what has been the effect of previous enactments. That sounds more like a conundrum than a question in the ordinary way, and I simply give it up—I could not answer it. But I say that if there had been no arrangement for relief it would have inflicted grave injustice and hardship on considerable numbers of people, and by the infliction of that hardship, even although the Exchequer of this country and the Exchequer of Great Britain might have benefited, the community would not have benefited, and I do not believe, owing to the disturbances that would have arisen and the attempts that people would have made to shift property and domicile in order to escape double taxation, it would have produced any advantage. Deputy Johnson also asked about the effect of the judgment in the Wigg and Cochrane case. I have not had time to inquire into the full effects of that particular judgment yet, and consequently I am not in a position to make any statement about it.

Is the Minister in a position to say what the financial consequence of Mr. Justice Meredith's judgment was?

No, because we appealed against that judgment, and consequently it was not necessary to examine the matter closely. The financial effects of the present judgment, of course, must now be examined, and the Government will have to decide what their attitude will be.

I notice the Minister did not make any reference to the point I made about visitors.

I do not want to refer to individuals, but the people who tell the stories that Deputy Byrne appears to credit do not keep strictly to the facts.

Is the Minister aware that when I asked the question in the Dáil concerning Mr. Stanley Harrington I based it on his own statement made to a newspaper representative?

I do not want to say what I think about the statements that individual citizens make, but I would like to assure the Deputy that there is no reason to make any change, and that the many people who allege that the iniquities or defects of the income tax law are the cause of their behaviour are just trying to say something that they think will go down very well with those who do not inquire into the matter.

The Minister may have thought that I was urging him to abolish imperial preference. All I wished to do was to draw the attention of the Dáil to this whole question of imperial preference and the possibility of national preference, which I think may have an important bearing on our relations with Great Britain and Northern Ireland in the next few years.

Question put and agreed to.
Third Stage ordered for Tuesday next.