I am concerned with the fact that it is necessary, apparently, having regard to the standard rate of expenditure which the Government have decided to continue, that they should keep on, in order merely to balance their Budget, an impost of income tax which is definitely discouraging to the revival and the development of Irish industry. I am very greatly concerned with the fact that there is no suggestion on the part, apparently, of the Minister for Finance that there is any difference whatever, from the point of view of this State, between capital invested and income earned in the employment of labour and the development of industry in this country and capital invested and income earned in the employment of labour in other countries. I have no objection whatever, in present conditions, to any income tax less than that of surrounding States, which may compete for our capital, or Irish money which is invested abroad, which develops the industry of another people, develops the amenities and maintains the lives of the poorer people in other lands, but I am hostile entirely to a system of Government, to a standard of expenditure, to an outlook upon Government which, having regard to the narrowness of the resources of this country and the greatness of its wants, finds it necessary to take from production an amount that requires them to scavenge in every possible corner, to do the things which I know they would not desire to do, even to impose taxation which is a direct detriment to the development of industry here.
Some years ago, when income tax was higher both in this country and in another, when it was so high that it became a tax of a different nature to ordinary income tax, when it became an impost which drove people to expedients to avoid it which they would not use in regard to ordinary and normal taxation, when it was producing all sorts of complications and difficulties in the ordinary business life of this community and another, there was a great psychological opportunity to do a great big thing, to do it greatly and to produce a great result. That opportunity was allowed to pass, and the intervening years have not been marked by that policy in relation to expenditure, by that recognition of the narrowness of our resources, by a recognition of the consequences of the narrowness of our resources, by that reduction in expenditure which would have enabled us now to have thrown off this incubus upon initiative, upon enterprise and upon development. If we were in a position—when we come to discuss the Estimates we hope to show that by a different method we might put ourselves in that position—considerably to reduce the amount of money in proportion to the total amount which we are taking from production for the mere purpose of maintaining the State, I believe that the people who would benefit most immediately from it, the people who most anxiously ought to desire it, are the poorest people of the country. I made certain investigations at a previous time. We took typical trades in different parts of the country and took out, as against the income tax paid by those trades, the amount of money which was distributed. If any one of you will take the trouble to do that, or will ask some chartered accountant to give you some typical cases, or take some typical cases you know yourself, and take the amount the Free State gets from those enterprises compared with the amount which, in a productive business, they are compelled to distribute amongst the general community in taxes, rates and wages, you will find that there is an overwhelming case from the point of view of those who do not think that they pay income tax for the relief of those who do. I am stating, probably, what in the ordinary sense is an unpopular doctrine. I state it because I believe that, being understood, it can become the most popular doctrine. I mean "popular" in the sense of a thing upheld, maintained and fought for by the poorest people in this country. When I say I want to see considerable incomes earned in this country by men, I mean I want to see that they get them when they earn them, because I know, in the process of getting them, in the process of making incomes out of productive work, they must necessarily distribute for the general benefit of the community an amount much more considerable than they would save in income tax.
There is this other respect in which the thing is important in relation to the differentiation between income tax imposed upon home investments and income tax imposed upon outside investments. It is the only machinery I personally have yet been able to find, apart from the machinery of awakened national soul and consciousness, by which we can face the obvious dangers and defects of fiscal expedients in the matter of the development of industry. Take, for example, a country in which there is, say, a three shilling income tax. That is equivalent to fifteen per cent.
Take the case of a firm which comes over here and buys out one of our own firms. Take the case of two parallel industries, one owned in this country by Irish capital and another owned by foreign capital, and assume for a moment what you may regard as controversial, that it is desirable that our industries here should, in order that they may develop, be owned by ourselves. Take the case when they come to distribute a dividend. Of £100 dividend distributed in this country, if there is no income tax upon that dividend, the value is £100. If it is subject to income tax, it is paid at £85. Well, now, that is the position of the national upon the other side. He may get his £100 of dividend here, but when he goes back to his own Government his own Government will take the balance, and the result is that his dividend is worth to him £85. It is worth to a national in this country in relation to an industry here £100. In other words, we can buy back in this country, under that system, for £85 the capital which we could not otherwise buy for £100. There is a tendency, under that system. in the first place, to give an inducement to Irish capital to find investment in this country. There is, in addition, machinery by which it is more profitable for Irishmen to own the capital of industry in this country than it is profitable for a foreigner, and, therefore, the tendency is to come back. Broadly speaking, my objection to an income tax of 3/-, or any other amount at present, in face of the actual difficulties of this country, is because it is a tax upon initiative and incentive. Any one of you who has tried—and some of us have tried—to induce Irish capital at the moment to get into Irish enterprise of any sort or kind will know what a hopeless task it is. There are good reasons, of one kind or another, which make it difficult to do so, and unless we can find some very definite inducement to do that, we are simply going to find that our capital is still going to pour out to the ends of the earth, and that the ownership of all our industries and means of production are going to be in the hands of somebody else. I suggest that when the Minister comes to consider this matter, the difficulty is the change which has been made on the other side in the Budget. The tax on the other side is for ordinary incomes, lower than the income tax here. Of the two changes I would suggest, the first is: if any alleviation in this matter can be found, I believe it can only be found by a reduction in expenditure. If they can find some method of reducing their expenditure—and I think they can—and if they find they are in a position to make any relief, the relief should be made in the direction of giving larger exemptions to the lower rates of income, larger allowances for the maintenance of children, and in the differentiation between the burden on income earned in the investment of capital, in the maintenance of labour in this country, as distinct from money invested abroad.