Deputy de Valera referred to the extraordinary steps that had to be taken last year in order to obtain the revenue that was required. I think that the event has justified the taking of the extraordinary steps. The only other thing to do at that time would have been to have made definite increases in taxation to a very much greater extent than we did. We used extraordinary means of getting some revenue for the year, in the hope that at the end of the year the position would be better. The position, one way and another, has become better, and the use of the extraordinary steps, such as the shortening of the brewers' credit, in my opinion, has been completely justified.
Deputy de Valera referred to the question of unemployment. I am quite clear on this, that the problem of unemployment is not going to be solved by increases in Government expenditure, that no attempt to meet the difficulty by giving extra employment in public works is going to get us anywhere. I am very anxious, and other members of the Government are and have been anxious, to give employment on public works of a fully reproductive character. One of the incentives to the undertaking of a big scheme such as the Shannon scheme was the fact that there would be immediate employment given. But simply to spend more money on undertakings which the Government might carry out does not do more than provide some temporary palliation, and if you carry expenditure of that sort to any excess, it perhaps delays the coming into being of conditions which will reduce unemployment to the minimum amount, which, I suppose, must always exist. When we try to reduce or keep down the burden of taxation we are trying also to reduce unemployment by encouraging the development of private employment in the State. The greater number of people who are employed are employed by private individuals, whether those private individuals are persons or joint stock liability companies. Unless we face up to things in a way that I do not think the majority of the people of the country have any inclination to face up to them, we cannot contemplate having the great majority of people who are employed in the service of the State. We cannot hope, therefore, to solve the problem of unemployment by having the State offer employment to those who happen to be unemployed. We must try to encourage and develop industry in the best ways in which we can do so, so that through industries conducted by private enterprise employment would be given to absorb the labour of the State. Deputy de Valera referred to the fact that millions of pounds worth of goods which could possibly be made here were still being imported, and that if they were stopped employment would be given to 60,000 people. This is a question that would require more time to discuss than could be given to it at the present time. It is certainly believed by many people, and I think rightly believed, that the putting on of tariffs in an unconsidered way, while it might give all the employment expected at some particular point, might quite readily cause as much unemployment at another point. I certainly do not accept the view at all that our unemployment situation can be remedied by simply trying to prevent the importation of goods which could conceivably be made in the country.
Two or three Deputies have referred to the question of a preferential rate of income tax on incomes arising from investment or employment in Irish industry. That is a thing that in my opinion can only be dealt with by the giving of relief. I think that if we were to try to differentiate by increasing the tax on income coming from outside, we would immediately increase the incentives to evasion and the incentives to the concealment of foreign incomes, and in consequence difficulties of a very acute kind would arise. It is quite probable also that a number of people of smaller income living on investment and who do not gain anything substantial from the lower rate here might, when there is a discrimination against them in that way, leave the Saorstát and lose to the country the ownership of the money they possess, and lose to the country the benefit of the income which they derive.
I think this is a thing which if it is to be done at all cannot be done by imposing burdens on income invested outside Irish industries; it would have to be given by way of relief. If we give relief there are a great many difficulties. I do not think it will be politically practicable to confine the relief or the preference to money arising from investments in that way, I cannot see how that is to be done. It would have to be extended much more widely than that. It would have to be extended to incomes from all investments except income arising from investments outside the country. In certain cases it could be shown to be unjust to introduce at any rate any very substantial difference. Whether a small margin of discrimination, which I believe is all that would be really practicable, is going to bring about any changeover of investments, I do not know. It is a fact that people living here who have money to invest are extremely slow to invest it in any sort of Irish industry. It is true that they will engage in what are practically gambling speculations in industrial stocks, the stocks of companies of foreign countries and they are quite ready to take their chance of losing the money. But even these will decline entirely to invest at all here or to take any risk.
On the other hand, the experience that has been gained from the working of the Trade Loans (Guarantee) Act does not show that there are many good propositions here which are not carried through for want of capital. I think the experience that has been gained under the Trade Loans (Guarantee) Act, if anything, would lead to the conclusion that the way to get money invested in Irish industries, and the way to overcome the difficulty which Deputies have in mind when they suggest a preferential tax, is really the method of the imposition of a customs tariff which has been adopted. If there is a customs tariff or something like that, it gives to industry, perhaps, a better and a surer chance of earning a profit. Then the difficulty of obtaining capital will be fairly readily overcome. Deputy de Valera thought that the tax on sugar might have been reduced again. I think he, perhaps, during the year, would have better grounds for fearing that the tax on sugar might be increased, because we had for the balancing of last year's Budget to rely on a very substantial slice of income which is not obtainable in the present year, and it certainly was not an easy thing to be in the position of doing without that without adding definitely to taxation.
Deputy O'Connell suggested that the policy of the Government had been too conservative and that money should be borrowed more freely. I think there is only one object for which we might have borrowed that we have not borrowed, and that is housing. If the position of the money market had not altered since the last issue of the National Loan I think that there is no doubt that before now we would have opened the Local Loans Fund for the giving of housing loans. I quite accept the position that a Local Loans Fund must, at the very earliest suitable opportunity, be opened for the issuing of housing loans. But the present time is a bad time for substantial borrowings and some delay must take place.
But if we open a Local Loans Fund for the giving of housing loans, the assistance of the kind that is at present given could not continue to be given at the present scale. I do not know whether, in fact, more houses will be erected. I think there is a very good movement for the erection of houses now, and if that will continue, only a comparatively little speeding up would be necessary. I do not want to follow Deputy MacEntee over his remarks with regard to the Minister for Justice, except that I do think that the remarks of the Minister for Justice, and the action that has been taken, would indicate that there is a very small conspiracy against the State which can be dealt with by moderate means.
With regard to the question of sums invested abroad, and some undisclosed fund of one sort or another, that is a matter about which various Deputies have spoken to me before now, and it is a matter which I am having investigated. I do not anticipate that anything like the results Deputies on the Fianna Fáil Benches have just now suggested, or that other Deputies previously suggested to me, will ensue. I have not been able to get information about that. Most people think that even if another opportunity such as was given in 1922 or 1923 were given now, so that people might make a clean breast of their affairs, practically nothing would follow, and that nearly all the people who have undisclosed profits would take their chances and hope that on some further occasion they might be given a further opportunity. I have no doubt at all that the amount of money that is hidden abroad is small. There was nothing in any investigation that has taken place to indicate that there are such large sums. There are, perhaps, certain amounts, large for the individual concerned, but no investigation of the problem has so far indicated that there are very large sums from the national point of view.
The only argument with any great force that I ever heard in connection with the matter was used by Deputy Jasper Wolfe, who holds that people of quite different political views were not aware, owing to the disturbed conditions that existed, of the fact that an opportunity of making a clean breast was given in 1923. He held, also, that the comparatively small result then was really due to that and the preoccupation of people with other things, and it could not be taken as an indication of what would happen if another chance were given. I admit it is a matter that merits a good deal of consideration. It would require examination of such facts as have come to light on investigation so far, so that we might get some idea of the magnitude of the problem. I would like to say that, as regards the justice of the matter, what happened in 1919 and 1920 about the payment of income tax was not that anybody was urged to make a false return or to refuse to make returns. What the people were urged to do was to delay and, finally, not to pay until the bailiffs were in or about to come in. A project was discussed for paying income tax into the Treasury of Dáil Eireann and the setting up of some sort of an indemnity fund, but that broke down and the position remained that nobody was urged not to pay. Finally, nobody was urged to do more than delay and nobody was given any hint that he or she should make a false return. When people suggest that they withheld income tax for patriotic reasons, in my belief in the vast majority of cases they are telling something that is completely false. As a matter of fact I mentioned before in the Dáil that at one time the Revenue Commissioners were contemplating the use of the special powers which they have to arrest an individual who was somewhat prominent politically, and who had always been a Unionist. Because of these things it was thought that some furore might have been caused about it. The Chairman of the Revenue Commissioners told me that he was going to do it and I told him to go ahead. That particular individual alleged that it was through patriotic motives and from a purely national point of view that he had declined to pay his tax. I think people who were nationalist and who alleged that they withheld taxes for patriotic motives were, in most cases, not stating the real facts of the case.
I do not remember exactly what discussion took place in regard to the taxes on undistributed profits. It is a matter that has been before me for a good while, and it is a matter on which I have requested the Revenue Commissioners to make certain investigations. Any change of that sort, any remission of taxation, really involves a loss of revenue and must be left aside because there is not any surplus revenue available. I have hopes that we will not only simplify the income tax code by degrees and bring it more into relation with the existing needs here, but that we might also develop a scheme of reliefs and allowances which would be suitable and beneficial. But the simplification can only be done by degrees, and any reliefs or allowances which may be desirable can only be given when there is a surplus of revenue or when some general changes in taxation are being made which will make it equitable to give them. I do not think that it would be equitable to get the money for any income tax reliefs by say, an increase in the duty on tea and sugar. I believe that means throwing a substantial portion of the burden on to people who are very definitely poorer than those who would benefit.
With regard to alterations within the system, I would not object to certain small increases being imposed on certain people for the purpose of giving allowances, but as far as I can see it is not very desirable to deal with children alone and leave the smallest range of earned income untouched because some of those who have that very small earned income, if they have not children may have other dependents. I think any rise, particularly in the classes of earned income, would be really undesirable, and it would be better to let the matter stand as it is for the present. The only result of the examination that has taken place is that there has been worked out a scheme which would enable what would be appreciable reliefs to the poor taxpayers to be given at the very minimum of cost to the Exchequer. If that minimum amount were available for remission of taxation, then we could go ahead with it.
