I move that the Bill be read a second time.
There are no matters of importance in the Bill in addition to those which were the subject of the Resolutions which have already been before the House.
PUBLIC BUSINESS. - FINANCE BILL, 1928—SECOND STAGE.
I take it that at this stage of the Bill the discussion is to confine itself to the principle of the measure only. Therefore I intend to confine myself to considering the purpose of the Bill and the method of securing it. This Bill proposes to increase taxation, and to aggravate the already too heavy burden upon our people and upon their industry. We must ask ourselves whether such an increase is justifiable and unavoidable, and whether also it is equitably distributed. According to the figures supplied to us, the minimum amount to be raised by taxation in the current year is £20,735,000. The actual amount raised last year was £20,396,000, so that at the very lowest computation taxation during the current year will be heavier than last year to the tune of £339,000. Can we impose such an additional burden? Will industry sustain it, for if industry cannot sustain it I submit that we are not justified in imposing it. At the present moment, in proportion to our resources, in population and in wealth, we are the most heavily taxed country in Europe. I daresay that we are almost the most heavily taxed country in the world.
Last year the total amount paid in local and State taxation by the citizens of the Saorstát was 25½ millions. Next year, if the Minister's proposals are carried, the total amount will be not less than £25,830,000, or 20 per cent. of the estimated National income. That is not the worst aspect of the problem, because though excessive taxation is bad enough in itself, we have to remember that a considerable proportion of the money thus collected passes into the hands of the citizens of the Saorstát and back again to the source from which it came—the industry of the mass of the people. In addition to this money which, by taxation, industry is temporarily denied the use of, industry has to pay another toll which, in this case, is an irrecoverable loss, and that is the sum of £5,325,000 which, under the Treaty and the several agreements entered into since the date of it, has to be paid annually to Great Britain. The burden of our taxation is heavy enough, so heavy, as I hope to show, as to cripple industry, but heavy and all as it is, it is not nearly so damaging in its effects or so detrimental to our prosperity as that foreign tribute is.
I do not wish to make any debating point about the matter. I simply wish to draw attention to the question, irrespective of Parties, in order that it may receive the serious consideration of this House, for I believe relief from that tribute is one of the first things necessary to restore prosperity to the Free State. There is no use in attempting to minimise that payment. When I was referring in the discussion on the financial statement to the amount of money we paid by way of land annuities the Minister for Agriculture interjected a remark and asked me how much of these annuities come back to citizens of the Free State. I thought it worth while to inquire, and I found that out of £3,400,000 paid in 1925-6 the actual amount that came back by way of interest to the citizens was £211,000. That is thought by the Minister for Agriculture to be some justification for a financial transaction of that description but then on top of the combined burden of the tribute and the taxation we have the effect of our adverse trade balance. The real difficulty is in the trade balance, which in the calendar year amounted to £8,750,000, representing the value of the actual assets which we had to realise in order to meet our external commitments.
What is the Government policy as embodied in the Finance Bill now before us? It is first of all to withdraw from the process of production the sum of £39,880,000 of which £25,835,000 is temporarily withdrawn, and of which £14,000,000 is permanently withdrawn. Of this £14,000,000, £8,750,000 definitely represents a diminution in the national capital and in the national wealth which will not be made good or replaced until the adverse trade balance against us disappears for a term of years and is replaced by a favourable one. With these figures before us we can understand how hard it is for industry to flourish in the Saorstát, and why it is so hard to establish new manufactures here and foster and develop them. In these figures lies the reason for the fact that, as the Tariff Commissioners reported, of 38 firms owning mills equipped for the manufacture of flour two of these businesses were at the time the application for a tariff was made to the Commission in the process of being wound up and ten had ceased to manufacture. These figures explain why it is when an offer is made to the public of shares, such as those in the Agricultural Credit Corporation with every guarantee of the Government behind them, and with every inducement to an investor to put his money into them, that we find the investing public of Ireland, those who might have a surplus over and above their everyday needs, were only able to take up something like £20,000 worth. I submit, in view of the fact that, as the President has claimed here so often, the majority of the people of the country uphold his Government and support and endorse his policy, if they had been in the financial position to do so they would have supported and endorsed that policy of his in a practical way by putting their money down.
When they got the opportunity of doing that we found they were unable to do so. Why? Because this country instead of having a surplus over and above its everyday needs is compelled every day, largely by the fiscal policy of the Government which is embodied in this Finance Bill, to withdraw some part of that capital from industry in order that it may meet its external obligations and commitments. That £39,880,000 explains why it is that so long as the present policy of the Government in relation to taxation and expenditure continues the cost of production for any commodity in this country must be higher than elsewhere, even though the real rate of wages paid to workers is lower. These figures explain the decline in industrial activity, the derelict breweries, the bankrupt distilleries and the general industrial position so precarious that one of our best-established industries is working on a margin so narrow that it cannot afford to incur the slight extra cost not in raw material, as this Report bears witness, but any trouble which would be involved in attempting to save an essential industry from extinction. In short, under our present system the old-established industries are as it were in the grip of a boa constrictor and the infant industries are being strangled at their birth.
Is the Dáil going to connive at that process of industrial strangulation? Is it going to cry halt and face up to the Executive Council and say boldly "You are asking more than the country can give, more than industry can afford and survive"? That is the real situation. We are being taxed far beyond our capacity to bear or pay. Taxes indeed have been screwed up and up until now they show a diminishing return. I think that is the most ominous feature of the financial table explaining the Budget which was furnished to us by the Minister for Finance. We have found that taxes which years ago yielded an increasing return to the Exchequer are giving a steadily diminishing yield, and that the Minister for Finance has been compelled to drop some taxes altogether as being unproductive and worthless. That very fact is of the gravest significance. It indicates that the danger signals are up and that we must call a halt to this extravagant expenditure or go smash.
Although the danger signals are up, the unfortunate thing for the country is that we have a Finance Minister who, though he sees the danger signals, cannot read them. Financially, he is colour-blind, and like the driver of the ghost train he is rushing past them and driving on to inevitable disaster—and not alone the Minister for Finance but the whole Executive Council. There they go rushing down the line like the little puffing Billy at the head of the Flying Canadian whose driving power has recently been enlisted to carry them, and the whole country is being dragged after them. The signals are against them and one day or another they are going to come up against inevitable disaster. Those who have to earn their bread in ordinary avocations, farmers who have to work in their fields, shopkeepers who have to make ends meet, and workers who have to find their wages at the week-end, who know the financial and economic position of the country and not those who live in sheltered avocations, who are not in touch with the industrial position, and whose only concern seems to be to collect money and spend it, realise that at present the Government are draining the life blood of Irish industry.
I have said that the Minister for Finance sees the danger signals and disregards them. One wonders whether he does that in malice or in folly. Whatever his motive or attitude is, the one thing that is undeniable is that he sees the signals, for in the statement explaining the Budget which he circulated he estimates that this year the tax revenue on the present basis of taxation will be only £19,650,000. Last year these same taxes, imposed on the same people, the same industry, and the same population, yielded £20,396,000. This year the Minister, on his own confession, estimates that he will not be able to get more than £19,650,000. What does that indicate? It indicates that the Minister sees the danger signals. He knows that the capacity of this people to pay taxation is becoming exhausted. What steps has he taken as a Minister and a member of the Executive Council to secure a remission of that taxation, to give relief to that over-harassed and over-driven people? There is one way and only one way in which that relief can be given, and that is by a reduction in every service that is not essential to the well-being of the people. I wish to emphasise the qualification because I do not want any person to say to me afterwards, "You are in favour of reducing old age pensions; you are in favour of curtailing expenditure upon education." I am not in favour of any one of those things. I believe that every social service that is given in any other country under God's sun should be given if we can possibly do it, and I believe we can, if only we restrict our expenditure to those things which are absolutely essential and which should be enjoyed by the poor and the workers amongst us, who are the real producers of wealth and are entitled to the first share and first charge upon it.
The Minister already realises that henceforward, if taxation is continued at the same rate as heretofore, he is going to be faced every year with the problem of a diminishing return. What would a Finance Minister in a normal country, faced with such a situation, do? He would consider the whole economic position of the community and his Budget would be devised if not to improve industry, at least not to aggravate the position for it. Obviously taxation must be reduced if industry is to prosper and taxation cannot be reduced unless expenditure is reduced. The ratio of non-producers to producers in this country is altogether too high. The number of drones is altogether out of proportion to the capacity of the workers to support them. The number of men in services like the Army and the Gárda Síochána should be reduced, not in order that they may starve, but in order that they may be absorbed in industry and given employment as producers of wealth. At the present time they are only consumers of wealth, maintained by the rest of the population, maintained in a state of luxury to which the general mass of our people can never aspire, and in conditions of comfort that the general mass of our people do not know. The services which they render to the community are not at all commensurate with the awards which they draw from the community. The awards are altogether out of proportion to the resources of the community.
Every one of us knows that the situation here with regard to the Gárda Síochána is not a normal one. This country and our people are not any more lawless than people anywhere else in the world. As a matter of fact, civic life in Dublin compares very favourably with life in Glasgow or London, and the general aspect of the people in the twenty-six counties, so far as the ordinary normal course of the law is concerned—that law which has not a political aspect—is as good as the attitude of the average Englishman or Scotchman. Yet under the present Government, we find that it requires 23 policemen to every 10,000 inhabitants to preserve the public peace, as compared with 12 in England or 13 in Scotland. Is there any justification for that? Is there any justification for maintaining that extra quota of Gárda Síochána in a comfort that the ordinary mass of the people do not know? I agree that they may have to be maintained. I agree that if we cannot find work for them they may have to be maintained, but the surplus members of that force should not enjoy any special or privileged position here.
As the average worker has to be content with very much less for doing practically the same thing as the ordinary Civic Guard does, so the surplus members of that force should get no more than the average person out of employment demands as of right from the State—maintenance in a frugal way, maintenance at such a rate, or upon such a scale, as will enable him to keep himself in good health and remain a good citizen. There is no justification, therefore, upon any ground whatever, except possibly the ground of political patronage, for maintaining the Army and the Gárda Síochána at the present rate. The same might be said in reference to a number of other Government Departments. We do not want the strength of the Gárda Síochána and the Army reduced, or the personnel in the Government Departments reduced, in order that men may starve, but in order that, the burden upon industry being lightened, industry may be able to absorb them into employment, instead of making them consumers of wealth, as they are at present—drones living upon the general produce of the workers —to make them producers of wealth who will add to the common stock of the community.
With regard to the trade balance, I think every one of us must realise that as the actual trade balance, which is derived after taking into account the visible and invisible exports, is against us, it is a matter to which we should give very serious consideration, because in so far as it is not offset by reproductive capital expenditure, it represents an actual decrease in the general wealth of the country. It represents so much money withdrawn every year from productive processes and paid away abroad. Other countries have been faced with that problem and have regarded it as a very serious one. Italy, which, only two years ago, was in an even more precarious financial position than we are, was faced with the same problem and took steps to deal with and redress it. I believe that we ought almost contemplate exactly the same steps here. In the present mood and disposition of our people, following, I think, the example of Government extravagance which has been set them, there is only one way to redress that adverse trade balance— I know that Deputies O'Hanlon and Gorey will be very angry with me when I suggest it—that is to restrict imports, particularly unnecessary luxury imports, to make our people keep their money or spend their money at home.
Hear, hear.
If, therefore, the Minister had to find increased revenue, had to increase the burden of taxation, as he has had to do, in order to meet the expenditure to which the Government is committed, instead of putting an added burden on the people, as he does by way of a sugar tax, which gives no compensatory return by creating employment; instead of handicapping our dying industries by restricting the credit which the State hitherto allowed to them, he should have imposed, if you like, another tariff, or increased the present tariff on boots and shoes or clothes, upon sugar or sugar confectionery, upon toilet preparations, or patent medicines—luxury motor cars if you like—any one of those things which we can either do without or make at home.
There are other aspects of the Finance Bill which I should like to deal with, but I think that we can best consider these in detail on the Committee Stage. I feel, however, that we ought not to allow the measure to go through without calling attention to the fact that it discriminates very heavily against the poorer classes of the people. It is the boast of the Government for a long time that the rate of income tax in the Free State was lower than in Great Britain. That was only half a truth.
So far as the wealthier classes of the community are concerned, no doubt it was so; but so far as the people with the smaller incomes were concerned it was not so. In the Free State the married man with an income of £300 a year, after the allowances to which he is entitled are taken off, would pay in income tax the sum of £3 7s. 6d. A married man enjoying the same income in Great Britain, and after securing rebates and allowances to which he was entitled under the scale in operation, would only be paying £2 10s. 0d. in income tax. So that, instead of the income tax on smaller incomes being 25 per cent. lower, as apparently it is, in actuality the income tax upon the smaller incomes in the Free State would be 35 per cent. higher than in Great Britain.
The Minister proposes to give an extra £150,000 to old age pensions. We do not quarrel with that. Our only quarrel with it, indeed, is that it is not sufficient, but while the Minister gives £150,000 to the old age pensioners, or to the section of the community from which they are drawn, he, with the other hand, takes away in the form of a sugar tax something like £200,000 from exactly the same section of the population. A device like that is, to my mind, like dropping a penny, attached to a string into a blind man's tin to make it rattle. It is just as senseless and unjustifiable and just as hard. For the reason, therefore, that the Finance Bill does not consider the economic needs of the State and people, because it does not propose to grant any relief to industry and the workers in industry, and because it makes no attempt whatever to deal with the adverse trade balance which is draining our capital, and because the whole incidence of the taxation which it proposes to impose is inequitable and unjust, we feel on those benches that this Finance Bill should not be given a Second Reading.
I do not propose to dwell at any length on the proposals in the Bill at this stage, because most of what I shall have to say would be more properly raised on the Committee Stage, but I would like to protest against the continued policy of the Minister in his failure to give any relief to the poorer classes of the taxpayers. As mentioned by Deputy MacEntee, there is no doubt that discrimination is shown against the smaller taxpayers by the Minister in his income tax policy. That is a matter we have raised year after year for the past three or four years. There was a time when there was hope that the Minister would give consideration, and very full consideration, to the claims that have been made for a greater measure of relief to earned incomes as against unearned incomes, and a greater measure of relief especially to men with small incomes but large families to support. There was a discussion on an amendment in 1925 which I moved to increase the allowance on earned incomes from one-tenth to one-sixth, and the Minister is reported as having said on that occasion:
"I would like to say in regard to this amendment"—that was the amendment to increase the amount of the allowance from one-tenth to one-sixth—"that it is admitted that one-tenth is not a sufficient allowance for earned incomes. Previous to the inauguration of the present system in regard to income tax there was an allowance of 25 per cent. It is clear that a person who depends on earnings and who, if his labour ceases for any reason, will have nothing to fall back upon, ought not to pay tax on as high a rate as a person who is getting his income from investments. That is clear enough."
And later on he said:
"If a time comes at all soon when it is possible to contemplate further reductions of income tax, it will be a matter for consideration whether we should not rather try to do something in the way of reliefs to the poorer taxpayers than spending anything we can afford for income tax reduction on the reduction in the standard rate."—(Official Reports, Vol. XI, 6th May, 1925.)
That statement of the Minister in 1925 held out some hope that when the opportunity arose for the reduction of income tax relief would be given to the poorer class of income tax payers. His main excuse that year was that they were reducing the standard rate from 5s. to 4s. and that that was all they could afford to do. In 1927 he was in a position to reduce the income tax again, but instead of giving that relief, as was clearly indicated in his statement in 1925, either by way of increasing the allowance on earned income or giving a bigger allowance in regard to children, he again reduced the standard rate from 4s. to 3s., and the main measure of that relief went to those who have big incomes or whose incomes are derived from investments. On the same occasion he made what might be regarded as a definite promise in respect of an amendment to increase the allowance for children. He said:
"I believe that before, or concurrently with, any further reduction in the standard rate some increase in this allowance should be given."
That was a very definite statement of the Minister in the year 1925, but when money was available in 1927, and he was in a position to reduce the standard rate, he evidently forgot his promise, and there is no indication in this Finance Bill that the Minister proposes to do anything in the future in the direction he indicated. I think I am safe in saying that all parties in the House and in previous Dála joined in pressing upon the Minister the advisability of changing his policy so as to give further relief to the poorer taxpayers. It is quite evident that indirect taxation presses more heavily upon the poorer section of the population than on those who have big incomes. A man with a number of children pays a considerable portion of his income away in direct taxation— apart altogether from the increased taxation—on clothing and boots, because on all boots a man has to provide for his children he has to pay the import duty.
I certainly protest against this continued neglect, and what appears to be now the definitely settled policy on the part of the Minister to give whatever reliefs may be given to the richer classes in the community. I think it is a mistaken policy, and I think it is quite wrong. There will be further opportunity to discuss these matters on amendments which will be submitted to the sections dealing with income tax. There is a matter that would also perhaps be a Committee point, but I would like to raise it here in order to give the Minister an opportunity to look into it in the meantime, if he has not already considered it. It is in connection with Section 23 of the Bill under which certain reliefs are given from the entertainments tax on racing. There is a condition set down there that relief will be given to meetings, and only to meetings which are held under the Irish National Hunt Steeplechase Committee or under the Turf Club Rules. I do not know whether the Minister is aware that there is another Association in Ireland, the Irish Racing Association, under which races are held throughout the country in the rural areas. Small meetings are held under the auspices and control and under certain definite rules of the Irish Racing Association. I have a list here of some 140 small towns and villages throughout the provinces in which races have been held during the past year or two.
Flapper meetings.
They are popularly, I believe, called "flapper meetings," but they are run under regular rules. If the argument for reducing the entertainments tax on racing generally has anything to do with the horse-breeding industry, I think that argument could be equally well applied to these races. It may not be the same class of horses that you have running at these meetings as at the others. But if the argument is good in one it is good in the other, and I think there is no justification for the Minister making a distinction. If he is going to remove the tax in the one instance he should do it in the other.
I do not think there is any entertainments tax collected at these meetings.
Mr. O'CONNELL
I know that there is. I am in a position to say that there is. I had representations from two race committees in my constituency last week to say that they have been informed by the Customs and Excise officer that he will collect the tax. It was in that way it first came to my notice that this special exemption or condition was made in the section. These races might be described as the poor man's races, one day in the year. The amount of the tax is not very large, because I understand that in a great many cases there is no entrance fee charged except in the case of motors, and that is because these races are got up by the people in the towns. They are not got up by a regular company for the purpose of making money. They have no enclosures. They cannot charge an entrance fee to the ordinary public. They charge perhaps on motor cars that go into the course. Very often these races are got up for some purpose connected with the town, by towns improvements committees, or, in fact, they are got up in connection with some charitable purpose like the Vincent de Paul Society, and in one or two cases that I know of they are got up for the improvement of the local church and schools.
I do not know whether the Minister has given any consideration to this, but I think that he should not make any distinction, and that if he is going to take it away in the case of one class of races that he should take it away altogether. I believe that this tax would not pay for the trouble of collecting if left on in these other cases. We know what happened in the case of football where the tax was left on. In the case of one set of rules the tax was allowed and eventually the Minister saw the wisdom of doing away with it altogether. There is a strong claim from the small towns and villages that get up this class of races. I intend to raise this matter here again and I intend to put down amendments on Committee if the Minister does not himself do so. I want to know what the Minister's intentions are with regard to the matter and whether he is giving it any consideration?
There are several things which are ignored altogether by the Minister when he brings his Budget before the House. Many of these have been mentioned already by Deputy MacEntee. The Minister leaves out of account from the point of view of what people have to pay, several very important matters, but there is one thing he has ignored altogether, and it has an overriding significance. That is not a matter of opinion, but it is a matter of the Constitution. I refer to Article 37 of the Constitution. The words of that Article are: "Money shall not be appropriated by vote, resolution or law unless the purpose of the appropriation has in the same session been recommended by a message from the representative of the Crown acting on the advice of the Executive Council." That means, I take it—I stand under correction if I am wrong—that all money Votes must be submitted to the representative of the Crown, and that means that the British Government is privy to all the proposals before they come before this House. If that is so, of course there is a dominating influence exercised in the matter, and everything that is done in connection with the Money Bills is on a different footing altogether from any other Bill. It is bad enough that a Bill, after being passed here, should have to go for the Royal Assent, but here the matter is apparently canvassed and discussed in London before it comes before the House. I notice that whenever questions of a serious nature, involving a certain amount of abstract argument, and when questions of fundamental principles arise, the attitude of the Government is always one of flippancy which leads one to suspect them to be even more servile than one would like to suspect them of being, because if they were sincere they would probably deal with the thing from a very different angle altogether.
Certainly.
At any rate, the Article is there, and when considering the Budget it is always well to bring before the people's mind the fact that the Article is there and that it has a certain hampering effect.
It does not concern the Finance Bill.
Oh, yes. Article 37 is there.
It does not concern the Finance Bill.
I take it under Article 37 that the money "shall not be appropriated." Surely this is a case where the money is being appropriated.
The Deputy does not understand the point.
The Deputy is giving an interpretation to Article 37 which is, to say the least of it, extraordinary. In any event this Bill does not appropriate money at all. This is not an Appropriation Bill and it does not appropriate money. It is a Finance Bill dealing with taxation. An Appropriation Bill follows the Estimates. It shows the objects for which the money is being appropriated. The question of appropriation does not arise at all in the Finance Bill.
Unless the money was being appropriated for some purpose it would not be raised.
There are two separate processes. This is the process of raising money.
There is a pretty close connection between the two.
The Deputy must allow me to think that there is no connection whatever. This is the process of collecting or raising money. The other process is quite separate from that. The process the Deputy speaks of arises when the Money Resolution—the Resolution for the expenditure of money—is submitted for the approval of the House. It will arise on the Estimates. It does not arise in this Bill at all. The whole process does arise in the House, but under different headings, for different purposes and for different Bills. This is not an Appropriation Bill in any sense of the word.
I submit to the Ceann Comhairle's ruling in the matter that to discuss the question of appropriation here would be out of place, but my contention is that unless you have your purpose clearly defined you are not going to appropriate money for it, and there is a close connection between the raising of money and its appropriation. When it comes to dealing with an outside source, there is nothing about which this House should be more jealous than allowing any other nation to be privy to what the plans of our Government are about money matters of any sort or description. I submit that this Article gives an outside Power the opportunity of using an influence which is not a proper influence to use upon the finances of any nation.
Any construction that the Deputy or anyone else can give to this Article will not have relevance to this Bill. No construction of the Article, no matter how far-fetched that construction is, can be relevant to this particular Bill. In any event, it appears to me that this, or any other Bill, cannot be used to debate Articles of the Constitution, their value or appropriateness. This is a separate question altogether. Article 37 has no connection with a Finance Bill. We appropriate money by Resolution in the Dáil. We appropriate it eventually by law, but we appropriate it preliminarily by motion.
I submit to the ruling of the Chair, but my point in general is that it is a very difficult thing to discuss the raising of money without referring to the appropriation of money. When you refer to appropriation it involves discussing certain powers which dominate the appropriation of that money. I do not propose to pursue the matter, but no one can consider the Budget as a whole without taking into consideration certain very important elements, certain very important factors, in the situation.
The National Debt of this country ignores altogether the Land Loan, which amounts to £120,000,000. It is all very well on technical grounds and there is a question of controversy in this matter. Some people hold those annuities are paid, not in respect of a National Loan, but in respect of what you might call a public debt; that it is more or less a private concern as between the people who lend the money and the people who have the benefit of the money and who have to pay back annuities. That is one point of view. The other point of view is that it is in the nature of a National Loan, a public debt. Whether you regard it from one point or the other, the payment of this money is all coming from the pockets of the Irish people. When it comes to a question of raising money from the people who are already paying these things, it explains how hard normal taxation falls on the shoulders of the Irish people. That is a factor which one must take into consideration and it would be far better for the Minister for Finance frankly to admit these restrictions. It would be better to admit that we are raising money in the country, making for the poverty of the people, rather than push these matters aside, ignore them and not consider them. If the Minister were to go so far as to admit that these things were burdens upon us, it would be one step towards getting united action from the whole State towards the relief of this situation, which can only be achieved by united action. With that strength it would be possible to reopen the negotiations connected with the annuity.
Another burden which is upon us is the fact that the Six Counties are excluded from the area of taxation. These are pretty rich counties and that again throws back the burden of taxation upon the Twenty-six counties. You have in the other Six Counties a Government which has no reason for its existence at all. Perhaps there is nothing which tells so much against the people as that Government in the North from which a contribution is going to England and for which there is no return. I do not want to pursue the discussion because it is a little bit outside the actual question, but at the same time it is very difficult to consider the question as a whole without making some reference to it.
As to the trade balance, when one considers the invisible imports and exports, one must take into consideration that the money which comes in from the emigrant is considered as an invisible export. That is quite proper, but the actual value of the emigrant, the capital value of the emigrant, is not considered. Again, the investments of Irish capital in England have to be considered and the dividends upon those investments are considered as invisible exports, and properly so; but on the other hand the actual loss of the capital is not allowed for. If these things were considered it would increase very much our adverse trade balance. There are other matters concerned of a more detailed nature, but I do not know whether one can discuss them on the actual sections of the Bill or whether it would be better to refer to them here.
As regards the administration of income tax, I would like to refer to the powers in the hands of the Commissioners of Inland Revenue. Their powers are very arbitrary and they act at the one time as the persons who are making the claim for the money and the judges. For instance, in the case of excess profits, the excess profits tax as a whole has gone, but if the Commissioners decide in any case that there has been wilful neglect or fraud on the part of the person who should pay income tax, then the Commissioners can reopen the whole case and charge excess profits for the period over which they think fraud or wilful neglect has been committed. It is most unfair that these Commissioners should at the same time be the people most interested in collecting the money and then be the judges whether it is fraud or wilful neglect. It would be far better if some authority or tribunal were appointed. Almost any tribunal would do, whether it would be composed of laymen or lawyers. It would be a matter that could be easily decided, provided that judgment would be given by somebody who would be independent of the people who are in a sense interested in getting the money. Naturally one is prejudiced, and the more earnest one is in carrying out one's duties as a public servant the more anxious one is to get money and one's mind would be biased in the matter. I suggest the Government give consideration to the possibility of setting up some sort of tribunal to deal with a question like this. It is a matter bearing on the gathering in of revenue, because experts think more arrears of income tax would be paid if there were not the menace of this excess profits at all. In fact, the best thing would be to abolish the collection of excess profits. The sum is very small and only arises in very few cases, to people who have in the past failed to send in proper returns of income tax. Take the people who have done it through wilful neglect or fraud. They are not going to make proper returns. They will either clear out and we will lose the benefit of the income tax or do their best to evade it. Evasion of law is always expensive to those trying to administer the law. Therefore, from the financial point of view, it would be better to abolish excess profits and give people an opportunity of paying up arrears of income tax and clearing the debt which is there. I know from experience that where people owe £2,000 or £3,000 in arrears of income tax, they are willing to pay that, if they thought it was all. But they know that behind that, if they show their hand, they will have to pay £10,000 or £15,000 in excess profits. If the excess profits in those cases were abolished, it would make it far more easy for the Government to collect its income tax, and it would be far less expensive also from the point of view of the actual collection.
There is another matter too. I have no desire to raise these questions out of their proper time, but I do not see where it will come in under the Finance Bill. It is a question which vexes lawyers and other people having to do with the transfer of property. Income tax may have been paid in respect of certain parts of property, and not paid in other cases. In the transfer of property the lawyer applies to the Inland Revenue Authorities, and they are informed that income tax has been paid and the property sold. Some years afterwards the same property is sold again, and a new claim for income tax arises. The certificate or letter— it is not even a certificate—given by the income tax authorities is of no value. It is not binding on them, and they can always go back for the same thing again. I suggest that the certificate given by the Inland Revenue Authorities should be binding, and some machinery should be established so that when, on the conveyance of property, inquiries are made from the authorities to know if the income tax is paid, some machinery should be set up to ascertain whether income tax has been paid or not. It is due to some extra departmentalisation under different schedules that at one time it would turn up and at another would not. It would not be discovered for the time being; it certainly would facilitate the payment of income tax and would be an advantage to the income tax people, because in all these cases everyone is anxious for anything that would expedite payment of income tax. It would be an advantage from the point of view of the public in general, because it would remove a vexatious matter on the transfer of property.
I would be glad if the Minister, in reply, would indicate where amendments dealing with the matters I have mentioned could be introduced, or whether the Government would be willling to consider these matters themselves.
I would like to draw the Minister's attention to the question of agricultural shows. Everyone knows the educational value of those shows and the great difficulty there is in attending them. You have driving and jumping competitions at them and Irish Feiseanna. I wish to ask the Minister if he can see his way to exempt agricultural shows from entertainment tax?
Deputy MacEntee treated us to a very carefully prepared discourse, but I do not think it left us any wiser. If he has any definite things in mind he will have an opportunity to put them forward during the discussion on the Estimates. What he said with reference to the police can very well be discussed at length on the Vote for the Department of Justice or the Civic Guard. I think, however, it has got to be recognised in this country that people are not yet, and perhaps will not be for a generation, as willing to co-operate with the police as they are in certain other countries, and this altogether apart from offences of a political character. Perhaps the readiness to co-operate may come more quickly than I have suggested, may come within a generation, but I think anyone will recognise that in this country a single Guard living in a village by himself will not be effective in the way I understand the village constable is effective in England. It seems to me until a considerable change has taken place in the public mind and habits of the people that we are bound to find the policing of the people more expensive than that of any neighbouring country.
Then again, additional duties outside the ordinary police duties have here been imposed on the Civic Guards, and the tendency is to impose new duties on them. The view has been taken that so long as it is not possible to have a single policeman living by himself, we must have Guards living in barracks. One of the ways of reducing the cost of the Army is to give additional duties to police, so that they will be giving public service that policemen do not give in other countries, and another thing that has to be borne in mind is that we find the work that is done and that is to be done here by the police is done by outside authorities in Great Britain. I saw lately in England great numbers of the employees of the Automobile Association doing point duty. I do not think we are likely to have any outside organisation in this country employed to do point duty for a considerable time. The question of the Army can be discussed when the Army Vote comes on. There is not much use in the sort of statement that Deputy MacEntee makes that all kinds of popular expenditure will be maintained and increased, and that great savings will be effected in directions which will meet with no general opposition.
We have to bear in mind in addition that the hardship of taxation depends in part on the actual weight of the burden and in part on the return or the lack of return that is given for it. I think I have invited Deputies on the Fianna Fáil Benches to put forward any suggestions they may have for the abandonment of services that do not seem to be worth the money spent on them. Deputy MacEntee talked about the subscriptions to the Agricultural Credit Corporation. No doubt if a big effort had been made more people could have been induced to subscribe, but it has to be borne in mind that it was not as good an investment as National Loan, because it was issued at par, and the rate of interest was 5 per cent., while the National Loan had been issued at 97. When we did issue the National Loan we made a big effort to get money, and plenty of money was obtainable.
Deputy MacEntee talked about the decay of breweries and distilleries, but there are two factors in operation there. So far as breweries are concerned there has been a process of centralisation and there has been a tendency for the smaller breweries to go out of operation. So far as both breweries and distilleries are concerned there has been a decline in the consumption of alcoholic liquor. That has been brought about very largely by the high taxation, but it is not due entirely to high taxation. There was a change taking place in the habits of the people in any case. I have been informed by people who took an interest in the matter that before high taxation was introduced there had been a fairly steady increase in the habits of temperance in the country. High taxation besides making it impossible for certain people to procure liquor and so operating to reduce consumption, has operated in an indirect way also in preventing people, who might otherwise have done so, from taking to the use of liquor. It is one of those cases where one could hardly say that the industry has been killed by taxation because there is another factor responsible also. In so far as distilling is concerned the distillers have had to face competition from a country where whiskey is made by a different and a cheaper process which leaves a margin to the manufacturers for advertising that manufacturers carrying on under the old process here have not. Then the distilling industry has been very much injured by legislation in other countries. It has been tremendously affected by the enactment of prohibition in America. The placing of that industry on a basis which would give it some hope of recovery is a difficult matter. It is one in which distillers have been very much engaged of late, in which they have been in consultation to some extent with the Government and in which we are anxious to assist them.
Deputy MacEntee talked in his oratorical way about the tributes to England. If Deputy MacEntee has anything serious to say about that matter, or if any member of his Party believes in the things they have been saying outside about it, he can put down a motion in this House in reference to it and have it discussed. If it is all that they say it is, it is a matter worthy of consideration and much more worthy of having a motion put down in reference to it than many of the trivial matters that have been the subject of motions here. Deputy O'Connell referred to the question of the relief of small taxpayers. He says that I had in previous years expressed sympathy with his proposals and his arguments. That is quite correct. The difficulty that we have been up against here was the difficulty of doing something in the way of giving relief from taxation that would tend to stimulate industry and to encourage the giving of further employment. We gave a reduction in income tax in the hope and in the belief that it would have that effect and that it would benefit not merely the small taxpayer but also the person who is exempt from income tax by improving his chances of employment. It would be impossible this year to give relief to the small taxpayer unless we were prepared to impose some taxation not foreshadowed in this Bill. I do not believe that we could at the present stage make up the loss that would be occasioned by relief to the small taxpayers because we are setting out to get an extra £250,000 in the way of arrears beyond what the Revenue Commissioners could have obtained in the ordinary way.
If we decided at this stage to give certain reliefs to the small taxpayers and to increase the rate of taxation, that process would so impede the collection of the tax that it would be impossible to obtain from income tax the amount we estimated in the Budget. Consequently it would be necessary to impose some tax other than income tax to make up whatever the cost might be of the increase in the relief to small taxpayers. It is a matter to which I have given some consideration. I would cause a scheme to be formulated during the year to enable relief to be given to small taxpayers, but that scheme would certainly involve some other increase in the rates or some other changes affecting the larger taxpayers. If such a scheme were formulated and were ready in advance it might be possible in a subsequent financial year to give the reliefs that Deputy O'Connell has in mind to small taxpayers without reducing the yield in income tax. At this stage it would not be possible to do that, and it would simply mean that if an amendment were now to be introduced giving this relief to the small taxpayer we would have to look around and see what other tax could be imposed to make up for the money that would be lost in that way. With regard to Section 23 and the Irish Racing Association, I cannot claim to have fully considered this matter, but the Inter-Departmental Committee which sat to consider the position of Irish racing recommended that the entertainment tax should be taken off only in the case of meetings controlled by the National Hunt Steeplechase Committee or the Turf Club. I believe the view that is taken is that the flapper meetings are of no assistance to the horse-breeding industry and are not of any great commer- cial importance. In fact, the increase in the number of these flapper meetings has injured other meetings that are of commercial importance.
I am looking into the matter, but so far as I have gone into it that is how I understand it. The Deputy was slightly wrong in suggesting that at one time taxation was taken off one sort of football and kept upon the other. What happened was this: the tax was legally payable in respect of all sorts of football, but the British Government here illegally refrained from collecting it in respect of one association, and we continued their bad practice. The Comptroller and Auditor-General drew attention to the fact that the Revenue Commissioners were not collecting tax payable by the G.A.A., and we proceeded to regularise the position of the Revenue Commissioners by remitting the tax in the case of all these games.
Deputy Little talked about Article 37. I do not know whether I could at the moment satisfy Deputy Little about the matter, but these Money Messages are really obtained only in cases such as Estimates or Bills which propose the expenditure of money. The Money Messages have nothing to do with Bills which impose taxation, but only with Bills which deal with expenditure. For instance, a Bill in connection with which a Money Message was received was the Old Age Pensions Bill. With reference to the further point about outside people having the supervision of our business in connection with our money, I would like to tell the Deputy that what happens in connection with these Money Messages is that they are prepared by the Secretary of the Department of Finance. They are sent to the Governor-General and signed by him, and are then brought back by the person who took them up. That is about all that happens in connection with them.
A DEPUTY
About all?
Not all.
They are handed then to the Clerk of the Dáil.
That is not quite all that happens.
Give us the rest.
Is it not all? There is one difficulty in speaking to certain Deputies on the other side. In the first place they know nothing about these matters, and they are full of suspicion, absurd and ridiculous suspicion. When they are told the truth they are unable to believe it.
In order to make the position if possible clearer, what I would like to know is what happens between the Governor-General and the person from whom he holds? That is a thing over which we have no control. We do not know what happens, and we are therefore in duty bound to be jealous and suspicious of the connection. We want to know what happens in these cases between the Governor-General and the British Government.
DEPUTIES
Nothing.
Of course I know that it is quite useless for me to talk to the Deputy, but I will reply to him as if it were of some use.
Thank you.
Nothing happens. As a matter of fact we do not care whether the Governor-General reads them or not, provided he duly signs them. If he reads them that is all that he does.
If he did not sign them what then?
If he did not sign them there would be a Constitutional crisis. Deputy Little was one of the people who spoke about land annuities. That is a matter as I have said that, if people have the feeling that Deputy Little appears to have, certainly deserves a discussion. The collection of Excess Profits Tax is almost at an end. I do not think at this stage that it would be worth making any change. I am sure the Deputy had some particular case in mind when he spoke of it, and I will discuss the matter with a view to seeing whether in fact it would be desirable to do anything. At the moment I do not think so, but I will undertake to look into it.
With regard to the point about Schedule A, Property Tax, I have known cases where the solicitor acting for a purchaser did not take care to make inquiries as to whether the tax was paid or not, and people who purchased property found themselves liable for a tax that they did not anticipate. But in particular cases, one or two of which were brought to my notice, the fault lay with the solicitors. If Deputy Little could tell me of a case in which an inquiry was made from the Revenue Authorities, and an answer given which was then found to be in fact inaccurate or incomplete, I would be glad if he would give me particulars.
I think I can do that.
I will have that looked into, as I agree with him that it would be much better that the Revenue Commissioners should give no answer at all, and so enable the purchaser to take what precautions he might be legally advised to take, rather than be given an answer which might be relied upon and turn out to be insufficient.
I will look into the point that Deputy O'Donovan raised about agricultural shows. I think we had it up last year or the year before, and we made certain amendments in the law as it was then. I do not know how these have worked out, but I will look into that matter further.
I want to raise a question in connection with the allowance for children over sixteen. The question was raised by Deputy Davin two years ago, and the Minister promised to look into it. It is with regard to the exemption of young men who are in ecclesiastical colleges like Clonliffe and Maynooth. I am given to understand that a man who has a son at one of these ecclesiastical colleges gets no relief in his income tax, whereas if his son is being educated at a university or a lay college he does get exemption. I would like to know what the position is. I hardly believe that there is no exemption in the case of these people, but if that is the position, I think the Minister ought to set it right.
I do not know whether or not that is the position. It surprises me if it is, but I will inquire about it.
On this matter of the agricultural shows the Minister promised, I think twelve months ago, when we made an appeal, that it would be settled. Is there any case where it has not taken effect with regard to agricultural shows?
There was an amendment introduced last year to meet the case. I understood Deputy O'Donovan to allege that it had not.
Question put.
The Dáil divided: Tá, 74; Níl, 55.
Tá
- William P. Aird.
- Ernest Henry Alton.
- James Walter Beckett.
- George Cecil Bennett.
- Ernest Blythe.
- Séamus A. Bourke.
- Michael Brennan.
- Séan Brodrick.
- Alfred Byrne.
- John Joseph Byrne.
- Edmund Carey.
- James Coburn.
- John James Cole.
- Mrs. Margaret Collins-O'Driscoll.
- Martin Conlon.
- Michael P. Connolly.
- Bryan Ricco Cooper.
- William T. Cosgrave.
- Sir James Craig.
- James Crowley.
- Michael Davis.
- Patrick Michael Kelly.
- Myles Keogh.
- Hugh Alexander Law.
- Finian Lynch.
- Arthur Patrick Mathews.
- Michael Og McFadden.
- Patrick McGilligan.
- Joseph W. Mongan.
- Richard Mulcahy.
- Joseph Xavier Murphy.
- Martin Michael Nally.
- John Thomas Nolan.
- Richard O'Connell.
- Bartholomew O'Connor.
- Timothy Joseph O'Donovan.
- John F. O'Hanlon.
- Peter De Loughrey.
- Eugene Doherty.
- James N. Dolan.
- Peadar Seán Doyle.
- Edmund John Duggan.
- James Dwyer.
- Barry M. Egan.
- Osmond Thos. Grattan Esmonde.
- Desmond Fitzgerald.
- James Fitzgerald-Kenney.
- John Good.
- Denis J. Gorey.
- Alexander Haslett.
- Michael R. Heffernan.
- Michael Joseph Hennessy.
- Thomas Hennessy.
- John Hennigan.
- Mark Henry.
- Patrick Hogan (Galway).
- Richard Holohan.
- Michael Jordan.
- Daniel O'Leary.
- Dermot Gun O'Mahony.
- John J. O'Reilly.
- Gearoid O'Sullivan.
- John Marcus O'Sullivan.
- Patrick Reynolds.
- Vincent Rice.
- Martin Roddy.
- Patrick W. Shaw.
- Timothy Sheehy (West Cork).
- William Edward Thrift.
- Michael Tierney.
- Daniel Vaughan.
- John White.
- Vincent Joseph White.
- George Wolfe.
Níl
- Frank Aiken.
- Denis Allen.
- Neal Blaney.
- Gerald Boland.
- Patrick Boland.
- Daniel Bourke.
- Seán Brady.
- Robert Briscoe.
- Henry Broderick.
- Daniel Buckley.
- Frank Carney.
- Frank Carty.
- Michael Clery.
- James Colbert.
- Hugh Colohan.
- Eamon Cooney.
- Dan Corkery.
- Richard Corish.
- Martin John Corry.
- Fred. Hugh Crowley.
- William Davin.
- Thomas Derrig.
- Eamon de Valera.
- Edward Doyle.
- Frank Fahy.
- Andrew Fogarty.
- Seán French.
- John Goulding.
- Samuel Holt.
- Michael Joseph Kennedy.
- William R. Kent.
- James Joseph Killane.
- Mark Killilea.
- Seán F. Lemass.
- Patrick John Little.
- Ben Maguire.
- Thomas McEllistrim.
- Seán MacEntee.
- Séamus Moore.
- Daniel Morrissey.
- Thomas Mullins.
- Thomas J. O'Connell.
- Patrick Joseph O'Dowd.
- Seán T. O'Kelly.
- William O'Leary.
- Matthew O'Reilly.
- Thomas O'Reilly.
- Thomas P. Powell.
- James Ryan.
- Martin Sexton.
- Timothy Sheehy (Tipp.).
- Patrick Smith.
- John Tubridy.
- Richard Walsh.
- Francis C. Ward.
Motion declared carried.
Tá: Deputies Duggan and P. Doyle: Níl: Deputies Allen and G. Boland.
Bill read a Second Time. Committee Stage ordered for Thursday, May 31st.