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Dáil Éireann debate -
Thursday, 21 Mar 1929

Vol. 28 No. 13

Finance (Customs and Stamp Duties) Bill, 1929—Second Stage.

I move the Second Reading of the Bill. Most of the items in this measure have been already dealt with. Sub-sections (2), (3) and (5) of Section 1 are identical with the resolutions adopted here on the 6th March. In Section 1 there is a slight variation in sub-section (1) from that contained in the resolutions. It is proposed to exempt from duty tissues which are less than twelve inches wide. This has been inserted to allow for the free importation of ribbons and similar narrow tissues which it was not intended should be included in the scope of the duty. Section 2 of the Bill raises the duty on woollen wearing apparel from 15 per cent. ad valorem to 20 per cent. ad valorem. Part II. of the Bill has for its purpose the granting to the Agricultural Credit Corporation of exemption from payment of stamp duties on debentures and certificates of charge issued by it, and also on deeds of trust and transfers in connection with the securities to be transferred to trustees, as securities for an issue of debentures or certificates of charge. The loss to the Exchequer under the provisions of this particular section will amount to a few hundred pounds and the loss under sub-section (3) will amount to £5,000 if the capital of the Corporation is doubled. The margin of profit on the loans of the Corporation is very low, and it is necessary to relieve the Corporation of as many burdens as possible if it is to pay its way. Other parts of the Bill deal with the admission of tractor cars free of duty. The number of tractors purchased annually in the country is somewhere about 100 or 120. It is unlikely that tractors will be imported in the future, and this particular remission of duty will facilitate the manufacture of tractors, such as are being undertaken on a very extensive scale in the one motor factory in the country.

I do not wish to re-open the question which was discussed here on the Report Stage of these Resolutions. With reference to the effect which the increasing of the duty on wearing apparel to 20 per cent. only is likely to have on the ready-made clothing industry in the city, the President may possibly recollect that in speaking on those Resolutions the Minister for Finance stated that he understood the clothing manufacturers would make a representation through the Advisory Committee for the trade, established in connection with the Department of Industry and Commerce, for the purpose of putting their point of view. He undertook, if they brought any new facts to light, which did not appear to have been properly or adequately examined by the Tariff Commission, that the Tariff Commission would be asked to consider these special points separately. I would like to be informed if such representations have been made through the Advisory Committee, and if so, with what result. When I was listening to the speech delivered by the Minister for Finance on that occasion, it seemed that there was a very reasonable case against increasing the duty beyond 15 per cent. Since then, the printed report has been circulated, and I have had an opportunity of reading what he said. On detailed examination the case appears to be less convincing. Statements which have been made by those engaged in the ready-made clothing industry, to the effect that their interests will be seriously prejudiced by the operation of this new set of duties, appear to be quite seriously founded and would require very serious consideration before they are finally rejected.

The Minister for Finance appeared to be under the impression, as he said himself, that they just wanted to make things beautifully easy for themselves, and he appeared to think, of course, that any proposal to make things beautifully easy for an Irish industry was not worth considering. The Minister also stated that the clothing manufacturers will continue to exercise a substantial advantage over importers, even though the advantage which they exercise will be much less than that which they hitherto enjoyed. That seems to raise a question which I would like answered and with which the Minister did not deal. The question is whether the 15 per cent. ad valorem duty which was originally imposed was required, and if it was required in 1925, in 1926 and 1927, why is it thought that it is not required in full now? Has the industry, in the opinion of the Minister for Finance or the Tariff Commission, so developed itself and so established itself that it can now do with the very substantial reduction in duty which it is proposed shall come into operation?

The Minister for Finance, of course, made the point that the clothing manufacturers who use Irish cloth in the suits they make will, in fact, have an increased advantage under these proposals. We would not like to see any lessening of the inducements to the clothing manufacturers to use Irish cloth, but I do not think—and I have carefully considered the matter— that the increase of the ready-made duty to 20 per cent. would in fact lessen the inducement which the clothing manufacturer has to use cloth produced in this country. There will be still 20 per cent. on the cloth and there is competition between manufacturers. A manufacturer anxious to beat his competitors will have a strong inducement to purchase Irish cloth if he can get it and thus be in a position to cut his price by the 20 per cent. duty which the other man has to pay. The Minister also said that even if the cloth, which they require, is not available from Irish mills now it is likely to be available. That is in part true. In a very short time it is not at all unlikely that the cloth required will be available in quantity, but we have got to bear in mind that a very large part of the trade in ready-made clothing is represented by suits bought by young men who are more concerned with the cut, design, shape and pattern of the suit than with the wearing quality of the cloth, and if the Irish manufacturers are not, and it does not appear that they will be able for a considerable time to supply cloth in the designs which are in demand, and in a sufficient variety of designs, one result will be to increase the importation of British ready-made suits despite the duty. The woollen manufacturing industry, as I said in the discussion on the Report Stage of the Resolutions, is more important than the ready-made clothing industry, but we want to keep both, and there is no reason why we cannot keep both flourishing in this country. It only requires the increasing of the duty on ready-mades by something more than the 5 per cent. which the Tariff Commission recommended.

The attitude of the Government appears to be that anything which might possibly make things too easy for an Irish industry must be bad. Without giving the matter thorough examination, they just reject the suggestion because it appears to operate too favourably in the interests of the ready-made clothing manufacturers. There is a large volume of employment given by that industry, which has developed very rapidly under the protective duty imposed in 1924. It will probably be seriously hit if the measure of protection which it has hitherto enjoyed is reduced. These proposals do reduce that measure of protection. Of course, they still leave the Irish ready-made clothing industry with some protection, but it is only one-third of the protection that it had before. If a man in the business can use Irish-made cloth and can get what he requires in the quality and the variety of design he needs, then he will have an increased advantage. But from the statement made by the Minister for Finance on the Report Stage, and from the report of the Tariff Commission, it does not appear that the Irish woollen manufacturers themselves believe that within anything like a reasonable time they would be able to supply that cloth. In quantity they could possibly supply it forthwith, but in quality and in variety of design they do not even appear to be contemplating its manufacture. The suggested increased duty on ready-made clothing will not lessen the inducement to the ready-made clothing manufacturer to buy Irish cloth if he can get it. If our suggestion is carried out, he can even afford to pay 10 per cent. or 15 per cent. more for Irish cloth than for the imported cloth, and at the same time he can sell the suit cheaper than he otherwise would be able to do.

With regard to Section 3 of the Bill, the section dealing with the exemption of tractor parts from the motor car duty, we are in thorough agreement. The establishment and continued development of the motor factory in Cork has been of great advantage to Cork and to the country as a whole. We are anxious to facilitate the development of an export trade from this country, particularly a trade in goods, a large part of the final cost of which represents wages paid to labour. Our views upon matters of this kind have been constantly subject to misrepresentation. I recollect on one occasion reading a speech by the Minister for Agriculture, in which he said that the Fianna Fáil Party wanted to stop all exports. I suppose the Minister gets so accustomed to talking nonsense that he cannot deviate into common sense even when he is quoting the policy of Fianna Fáil. Those who have even a most elementary knowledge of that policy know that the stoppage of exports is no part of it. We are anxious to encourage exports which are of direct value to the people, and they include those exports in the final cost of which the highest percentage is represented in wages paid to labour.

There is one small point in connection with this Bill that I am not quite clear about. We are going to permit motor tractor parts in free of duty. Is it proposed to permit motor tractors free of duty? If not, how far must the assembly of parts have proceeded in order to become a tractor? It is proposed to let in tractor parts and permit the assembly of the parts. Does that include tractors themselves, or what percentage of parts must be absent in order to permit what is left to come in free of duty? There does appear to be some ambiguity about the matter. We are anxious to develop that industry and give it every possible chance to expand. In the last fortnight that firm paid £25,000 in wages to Irish workers. That is a very great asset to the country and we would like to see it preserved. We are glad this step is being taken and we hope it will result in the creation of a very large export trade from Cork in motor tractors. As the President said, the actual sale of tractors in the country is small. The bulk of the factory products will have to be exported. With regard to the remaining portion of the Bill, which deals with stamp duties, I have nothing to say. I suppose the Agricultural Credit Corporation must receive all the assistance possible. Certainly, it appears to be in need of it.

I desire to welcome this Bill. As far as the first two sections are concerned I am largely in agreement with Deputy Lemass that something should be done by way of adjustment of taxes as far as the readymade industry is concerned in order to meet a new situation which has arisen as a result of the protective duties on woollen goods. I am more immediately concerned with what is contained in Section 3. I must congratulate the President on his foresight in making these provisions in regard to motor car parts. He and those associated with him have shown some prudence and good judgment in that matter. I may mention that already there are a couple of thousand workers employed in the Ford factory, and as week succeeds week much new machinery and plant is arriving on the Cork quays, all of which goes to show that the Ford people are making provision for a very large output of tractors. As most Deputies are aware, the wages paid to those workers are on a fairly liberal scale, and it has undoubtedly been a source of wealth so far as Cork City is concerned. The workers are all contented, the conditions of labour are good and they are adequately, if not liberally, remunerated. For that reason amongst other reasons I welcome this Bill, and I congratulate the President on the part he has taken in the framing of this measure, for I understand he had a good deal to do with it. So far as the other portions of the Bill are concerned, I suppose that at a later stage we will have something to say by way of amendment or otherwise. On the whole I do say that this is an attempt on the part of the Government to respond or react to certain economic thought in this country. I think if they were to lean, perhaps, a little more to economic thought of this kind we might have a still more prosperous country.

I am concerned principally at the moment with the provision which is made here in relation to tractors. I have read that very carefully, and what I want to be perfectly clear about in relation to this is that it is the intention of the Government in doing this to remove all the present administrative difficulties. I think it is, but I want an assurance that it is so. The actual position at the present moment in relation to tractors is that Messrs. Ford, in Cork, are contemplating a two-shift day of eight hours, in which they will turn out three hundred completed tractors per day. That is the present proposal, and each unit of the line of construction is based upon an output of 150 completed tractors per eight hours day. The actual consumption of tractors in Ireland, in all probability, will not absorb the output of that factory for six hours in the year; say six to eight hours in the year, would probably cover the immediate visible consumption.

At the present moment the motor parts which come in and which are incorporated into tractors are liable to duty on import, and, on export, a drawback is given practically to the amount of that duty. The duty would still be charged upon the imported motor parts of tractors which were internally consumed, if one may use such a term in relation to tractors. Now the actual existing amount of net taxation would be very small. But the administrative difficulty of keeping track of invoices and prices of goods, bills of lading and the rest of it have involved a very great deal of trouble and a good deal of expense, utterly unremunerative trouble and expense, on the part of Messrs. Ford. It has also involved a very great amount of completely unremunerative expense and trouble on the part of the Government. The object we had in getting this provision made was that that administrative difficulty, as distinct from the mere amount of taxation involved, would be dealt with. Personally I think the total amount of actual net taxation relief under this whole section will probably not be much more than one thousand pounds, if it is as much as that. But the amount of trouble and administrative expense which may be removed under this section, if the section is interpreted in the widest possible sense so as to get rid of that administrative difficulty and trouble, may be very great. The Minister for Finance is fully aware that this administrative difficulty, and not the taxation difficulty itself, was the main trouble. I take it that this section has been drafted for the purpose of getting rid of that administrative difficulty. I have read that section through, and as far as I can see if it is liberally interpreted by those who have to interpret it, it will get rid of that difficulty, and, to that extent, at no cost whatever to the State, a considerable saving in my opinion to the State, and a considerable saving of expense and administrative trouble on the part of this firm, will be brought about. A very great and a very real welcome to Irish industrial activity has been given.

Deputy Lemass gave you the figures of about the last fortnight. That was about £25,000 for fourteen working days. Now that hardly conveys even the present condition, because even during that particular time the number of men had increased very largely. The last figure that I had was somewhere about £18,000, that is before I got this figure of £25,000. The actual number in employment now is somewhere about 2,600 men, and I believe it is possible that in a few days the number will exceed 3,000. I hope to see 5,000 men employed in Messrs. Fords, not as a limit, but merely as the beginning of the industrial plant of Henry Ford in the City of Cork and in the South of Ireland. I think there are very much larger possibilities behind the Ford works in Cork and their tractor germ than a mere 5,000 men. I think that every possible aid and assistance should be given by every Party in this House, absolutely clear and distinct from any Party suggestion of using or abusing that thing for Party purposes. Fords is one of the things that should be kept perfectly clear of any possible Party advantage and Party controversy. I suggest that when we come to the Committee Stage of this Bill that we may be able to extend it in another direction, again in a direction which, in my opinion, will take practically nothing, if anything, from the revenue of the country and yet will be of very definite benefit to Messrs. Fords. At any rate it will show upon our part a welcome and a glad hand to that enterprise which at the present moment is employing more people and paying more wages as a single unit than any other industry we have in the South and which I believe even at the higher hopes that I have already stated is only at the beginning of possibilities of benefit for the South of Ireland.

When Fords were manufacturing cars here in this State and not manufacturing a great many of them, and when they were employing a considerably less number of men than they are now employing and when they were employing them on a basis which was infinitely more casual than the present basis which is tending to be a permanent basis of employment, certain concessions were given in relation to that manufacture. All Ford cars, for instance, with horse power nominally twentyfive, really about ninety, were given a certain concession. I have seen a Ford car driven at the rate of 94 miles an hour. It had to have a special arrangement for oil-cooling. The engine in a Ford car was about 50 h.p. A concession was given that the total tax upon that car would be £10 per annum quite irrespective of its nominal rating which I think is about 25 to 27 h.p. I suggest that we might consider that again in relation to this act of goodwill and welcome which is shown in this Bill. There are two types of passenger Ford cars now being made. There is a 15 h.p. and there is a 25 h.p. They are absolutely similar in outside appearance and, what is of infinitely more importance from the point of view of the public, they are absolutely similar in price. You can buy a 25 h.p. Ford car for exactly the same price that you buy the 15 h.p. Ford car. That is certainly rather an amazing proposition.

That is probably due to the fact that they are manufacturing 25 h.p. Ford cars in amazing numbers for a very much larger market than is here at present, and they had to construct special engines for Europe and countries in which the taxation is based upon a h.p. basis. At present I think 99.9 per cent. of the Ford cars imported into this country are 15 h.p. cars. The 25 h.p. car people are not buying, simply and solely on the ground of the tax. I bought a 15 h.p. Ford car, as I could not see that I was doing any benefit to Fords by buying a 25 h.p. car, and I could see good reasons why I should not pay unnecessarily, because the 15 h.p. Ford car is a magnificent car in every possible respect. In speed, comfort, springing, hill-climbing, appearance, dignity, and in value for money, it is unimpeachably good value, and I am glad to be able to say that in this Assembly of the Irish Free State. But, if people could get a 25 h.p. car for the same price in tax contribution, as they can get a 25 h.p. car for the same capital cost, I think a very considerable number of people who are buying cars, and who have no association of any sort, kind, or description with this country would tend to buy a 25 h.p. Ford against some of the other cars.

I am afraid the Deputy is quite irrelevant to this Bill.

Possibly I am. With that little vague suggestion to the President, on a line of country which he and the Minister for Finance might later investigate, I will leave the matter. I understood there were some negotiations, or possibility of hope, that by an arrangement between the ready-made clothing manufacturers and the woollen manufacturers this difficulty of the balance of proportion between the two might be got over. My information is that there is a very good spirit of co-operation between these two trades, who have, for the moment, been thrown somewhat into a conflict of interests. I hope when we come to the Committee Stage of the Bill the Minister for Finance will recognise that it would be a tragedy that, in an attempt to benefit one particular industry he should seem to risk damaging another industry which has considerable possibilities. I know, for instance, that individual cloth manufacturers in this country are making experiments and trying to find a material which they can give, of suitable quality, design and price, to the ready-made clothing manufacturers from which to manufacture goods here for which at present Irish material is not available. My information is that there is a very good spirit of co-operation between these two trades, and without going further into it, or pressing the point, I hope the Minister for Finance, when he comes to reduce this Bill into its definite and final form in Committee, will find that he himself will be able to make a step forward in the direction of developing that co-operation and removing the difficulty which this Bill undoubtedly does create between a trade which we want to have and a trade which, in helping that other trade, we may to some extent harm.

Before the Second Reading of this measure is passed I hope the President will tell us if the Government have examined the question of whether it would be profitable to remit all duties on motor parts. I think representations have been made to them within the last year or two by people who are very much interested in this question. These people have been doing a little in the assembling of cars and, I understand, have had some success. They are very anxious to go ahead and have shown a certain ability to deliver the goods. I am not competent to say whether or not they have shown the necessary ability, but they have shown a certain ability, at all events, to deliver the goods. When we take into account the tremendous boon that even a small amount of additional employment would be to this country, it would be a pity if the question were not examined, particularly on an occasion like this when we are making a certain alteration in favour of tractor parts. There is the great authority of the Fiscal Committee, which sat in 1923, for believing that the duty on parts is not a paying one. That Committee stated in its report:—

The existing duty upon accessories and component parts, on the other hand, yields a comparatively small return to the revenue, is productive of a great deal of delay and inconvenience to the motor industry in An Saorstát, especially to that section of it engaged in repairs, and discourages any attempt at assembling being undertaken in An Saorstát. The Committee, therefore, recommends the withdrawal of the duty upon motor accessories and component parts.

Part of that recommendation would not now, I admit, be so applicable, because there has been a great improvement in the facilities for clearing goods, but there are still awkward delays in connection with consignments of motor parts which are urgently required, and it is still very doubtful, I would almost say it is certain, that the collection of the duty on parts is not a paying proposition.

The amount of the tax raised from the duties on motor cars, cycles, parts and accessories for the last financial year was £255,119. Taking into account that there were probably at least 4,000 cars brought in, in addition to a large number of cycles, it is obvious that the proportion of that amount represented by duty on parts is very small. When one takes into account the trouble the Customs officers have in examining invoices and certificates of origin—and I believe they have at present to see affidavits from the exporter and the importer—and in going through various other forms before allowing the goods to pass, it is obvious, to me at least, that the duty cannot be a paying proposition. Could there be any real opposition to the removal of the duty on parts? I can think of none. If the people who are interested in the assembling of cars here—and they are by no means incompetent people—got a little encouragement and were even able to produce 50 or 60 cars, that could be called Irish cars, it would be a good deal done. It would inevitably lead to greater interest in motor engineering. It would, of course, give a good amount of employment, and, I think, it is a thing that the country would be rather proud of. Canada gets a very considerable income from the industry of assembling motor cars, and altogether there seems to be a very definite case for considering the point. I hope the President will be able to tell us that it has been considered, and I will be surprised if he will be able to tell us that it is either impracticable or not desirable.

Deputy Lemass enquired about a matter which had been the subject of a good deal of discussion on the last day—that is, the alteration in the duty on ready-made clothing. The cloth manufacturers have been requested to place their case before the Department of Industry and Commerce, but up to the present the result has not been furnished to the Minister. No action can be taken until the views of the Department on the report made by the cloth manufacturers have been received.

With regard to the point made by Deputy Moore, instances which happened in 1923 and judgments arrived at then have not much relation to what might happen in 1929. In 1923, for example, the entire customs system was very much altered. Up to the 1st April, 1923, cars and parts came in here free of duty. After that the staff of the Customs and Excise was placed on entirely different duties. Naturally there should have been delays. There were various complaints with regard to delays at that time, and I think it was with a view to seeing how improvement could be effected that that Committee considered the question of motor parts. In any case I would say now it is rather a matter that should come before the Tariff Commission. It is scarcely one which the Executive, in the light of all the circumstances, would like to pass judgment on, especially in view of the information which I think is available in some Department that the opinion of experts on the subject is that you would require very considerable output to justify an alteration in respect of removing the duty from imported motor parts.

Something like 4,000 or 5,000 cars come here in the year, and a factory with an output of 1,000 cars would be very desirable. But I think in the absence of a more favourable return than the Deputy has shown, something more would be necessary in order to get the duty on parts removed.

The intention that is behind Section 3 is to remove all the difficulties affecting the great Ford industry in Cork. I think Deputy Flinn and Deputy Anthony were quite right when they said that this was a very important industry. It is a matter of very great satisfaction to everybody in this country that one of the foremost of the American industrialists has seen fit to establish a factory in the Southern capital. I believe that the firm are well satisfied with the workmen and with the capabilities of the operatives there. It is everybody's desire that this factory should grow. There is I believe a desire on the part of practically all our people that our industries and manufactures should increase, but this particular factory and the two that we have in Dublin—Guinness and Jacob's—are of the most satisfactory kind, Ford's, perhaps, even more so than either of the others, because Ford's output will be more than 95 per cent. exports.

In the case of the factories I have mentioned in Dublin, their major business is export. In every big industry the real advantage to the country is in the export trade. I hope and imagine that the number of tractors in use in this country will be increased. I think they are an economical method of locomotion and that their advantages are not yet realised to the full here; but the intention, of course, is to facilitate this factory, and I believe that in this matter all parties in the State would be at one in easing the difficulties, if there are any, attending any industry in the country.

I think these are the only points raised in the course of the discussion.

Question—"That the Bill be now read a Second Time"—put and agreed to.

When is it proposed to take the Committee Stage?

On that point it appears to me that there ought to be no objection to taking all stages of the Bill to-day. The point mentioned by Deputy Lemass is one which can fall for consideration, I presume, on the Budget. But it is desirable. I think, that this particular Section 3 (6) should be passed without delay, and if there is no objection I propose to take the remaining stages to-day.

We have no objection.

The President said that negotiations in relation to getting over the difficulty as between the ready-made clothing trade and the woollen manufacturers have been held up by the fact that certain preliminaries have not been fulfilled. If they had been fulfilled, the Minister for Finance might be in a position, on Committee Stage, to make the amendments required. I take it that if the negotiations are satisfactorily brought to a head there would be no difficulty in moving again in some portion of some Finance Bill to remove that difficulty. If we leave this over for the result of these consultations, we would expect that facilities would be provided to give that effect afterwards.

I do not remember what the Minister said. I understood his view was that on receipt of the representation and the views of the Ministry of Industry and Commerce the matter would be referred to the Tariff Commission. I do not think we are in any worse position by letting this pass and having it dealt with on the occasion of the Budget.

That assurance would be satisfactory.

Bill passed through Committee Stage and reported without amendment.
Bill passed through its final stages and certified as a Money Bill.
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