Finance Bill, 1929—Report.

With regard to the first two amendments on the Paper in the name of Deputy MacEntee, each of them raises an important question, and concerns matters which, it seems to me, should have arisen on the Committee Stage. As a general rule, the Chair is adverse to the idea of raising an important new matter on the Report Stage. That is particularly the case in regard to Finance Bills. I am not prepared to accept amendments such as these two amendments, which raise completely new and important matters, at this particular stage.

I quite realise that these amendments should have been brought in on the Committee Stage of the Bill, but I would like to point out to you, A Chinn Comhairle, that I did raise the matter on either Financial Resolution No. 1 or No. 2, on which the Bill is based. In view of that I would suggest that possibly I might be allowed to speak to the amendments even if they are not put from the Chair.

The Deputy's point, as I understand it, is that he referred to these matters in debate. Of course the Chair could not accept notice such as that, and can only take cognisance of amendments tabled in the usual way. The view, as I have already explained, is that an amendment should not be offered on the Report Stage which raises an important new matter. Such amendments should be offered in Committee. If these amendments arose out of other amendments proposed in Committee, or out of matters consequential on proceedings in Committee, they would be on a different footing. I am afraid it is impossible to allow the Deputy to discuss an amendment if the amendment is out of order, and if no question can be put upon it. It is a fundamental rule that there must be something before the House, or a Committee of the whole House, before debate can arise. Therefore I am sorry that I cannot allow the Deputy to discuss the matter now if it would not be, in fact, in order to move the amendment.

I move:

In page 15, line 45, Section 31 (1), to insert after the word "shall" the words "if he has reasonable ground for suspecting fraud in connection with any entry in or omission from such document or in connection with any transaction to which such document refers."

This amendment follows certain remarks of Deputy Good. It provides that the officer of Customs and Excise shall remove these documents only if he has reasonable grounds for suspecting fraud. I think this goes as far to meet Deputy Good's point as it is reasonably possible to go.

In so far as this amendment does meet the objection which we raised to the removal of documents, we are glad to see that the Minister for Finance has introduced an amendment more or less to limit the powers of the officer in regard to their removal. I think there was another important matter which we raised upon the Committee Stage of the Bill. That was as to who was to have the right of option to make a copy or to have the original document. In sub-section (2) of Section 31 we have the following statement:

Whenever an officer of Customs and Excise removes a document under this section he shall on demand made by the person from whom he obtains such document at any time when such document is detained under this section either (at the election of such officer) furnish to such person a copy of such document or allow such person to inspect and take a copy of such document.

I suggest that as the original document in this matter belongs to the person inconvenienced, if not aggrieved, by its removal he should have the right of election, that it should rest with him to say as to whether the officer shall furnish a copy or whether he himself shall inspect the document and take a copy. There is quite a possibility that there may be cases where he should prefer that rather than another person inside the Department of Finance having access to the document, he himself might make a copy. On the other hand, it might be very inconvenient for him to make a copy, and in that case he might be quite content to ask the Revenue Commissioners to make a copy for him and supply it to him. I submit, on the ground of fundamental equity, since the document in effect belongs to the person from whose office it was taken and is not the property of the Revenue Commissioners, that the person who owns the document is the person who should be least inconvenienced and that, therefore, he should have, as I have suggested, the right of option in the matter, and not the officer of revenue.

I think that in this case ordinarily no difficulty would arise. The person would be allowed to get the copy or to take it. These documents are seized where, as we have put in the section and as it was before, there are reasonable grounds for suspecting fraud. As a matter of fact, it may be taken that the position is even stronger. It is because not only are there reasonable grounds for suspecting, but the officer has substantial evidence. While we do not want to inconvenience the person to whom the documents belong any more than is necessary, although he is going to be prosecuted, still it is not desirable to put him in the position where he might hinder the investigation of the documents or might deliberately delay the investigation of the documents. For instance, a man might demand a document, take a copy of it, and take a considerable time in copying it. He might take one document after another. He might delay unduly. As I said the other day, time is an element in all those prosecutions. As a rule, there is a six-months' limit. I have known cases where very special steps had to be taken to rush out summonses. I know of a recent case where extreme steps had to be taken—there was only a day left—to get the summonses out in time. I think that in 99 per cent. of the cases no question would arise. I would be afraid if an election were given to the person rather than to the officer occasionally you would have people who would avail of it really to prevent a prosecution taking place.

Amendment put and agreed to.

I move amendment 4:—

In page 18, line 10, Section 38, after the word "Act" to insert in brackets the words "(except the duties on mechanically-propelled vehicles)."

Might I ask the Minister whether he has been able to look into that other matter, the drawback in reference to motor parts?

We can consider that on the main question.

Amendment put and agreed to.
Question proposed: "That the Bill be received for Final Consideration."

I want to say a few words before the Bill passes through its final stage with particular reference to the tariff on woollens. I want to suggest that some of the woollen manufacturers in this country are not fulfilling the obligations which were implied, when many of us in this House supported a tariff on woollens. Personally I never contemplated, in supporting a tariff on woollens in or outside this House, that some at least of these millers would have gone behind the obligations which are implied in their evidence before the Commission. In paragraph 107, which relates to the possible effects of a tariff on the manufacture of yarn, we find what is perhaps more than a suggestion. It is stated that the Commissioners felt that their report would be incomplete if it did not contain a reference to the question of imported "tops" and yarns. It goes on to say that the millers, in their evidence, indicated that they were then manufacturing 85 per cent. of the yarns used in the finished product, but we find since the tariff was imposed that many of those millers are importing their yarn from France, Belgium and England.

Now there is a very appropriate addendum to the report by no less a person than Professor Whelehan. I think we are all agreed that he is a very able economist, and has been very useful, if perhaps at times academic. At the same time he is a recognised authority on matters of this kind. He adds in his report—I am not going to use his own words—that it is of the first importance that the production of yarn should be stimulated and recognised. What I want to point out is that it was also stressed in the report of the Commission that, though the production of woollens was very largely increased, the yarn industry in itself would give even more employment than the manufacture of the finished product.

The position to-day is that many of the millers who have been protected are importing their yarn from France, Belgium and England. It will considerably alter my relation to the whole question of tariffs if the Executive Council do not take this matter up with the woollen manufacturers in this country. We had, within recent weeks, evidence of certain reactions after the passing of this tariff on woollens. We have the question of the ready-made industry adversely affected by certain changes in our fiscal policy, and I am going to ask the House to be very slow in future—I am speaking as one who has taken some little interest in the whole question of tariffs—in putting on any tariff without having fully considered it in all its implications and ramifications. The effect of the woollen tariff which I supported has been, up to the present at any rate, rather disappointing. We have a large number of people who were engaged in the spinning industry put out of employment who I, at least, thought would have been fully employed when I supported the tariff. For that reason I am going to be very slow in future in supporting any tariff, however attractive it may appear, if it is going to have the result that this tariff has had. The moment the tariff was imposed on woollens, which I supported, the reactions were felt in the ready-made business, but a reaction which I consider far more serious is the reaction it had on the spinners engaged in those mills. We had a declaration from the persons who sought the tariff, and succeeded in getting it, that they were able to spin 85 per cent. of the yarn used in connection with the industry, but we find to-day that many of those persons who were engaged in the spinning industry are now unemployed.

I want to warn this House—I am speaking now in my personal character and not on behalf of my Party—that we will have to subject every other application of this kind, whether recommended by the Tariff Commission or not, to a very careful analysis before we will commit ourselves to any further tariff, because I find, in the operation of this tariff, it may have meant for a few individuals much overtime and employment, but for many others it meant unemployment.

Could I ask Deputy Anthony to inform us as to the authority on which he is making those statements?

Yes, but I do not think it would be advisable to publish the authority. I can mention a mill in my own area where the number of workers engaged in the spinning industry has been reduced and possibly overtime in other departments has been increased. That is my answer to Deputy Lemass.

The "Irish Times"

Could Deputy Anthony give us the figures?

I will give them to the Deputy in private, but I will not publish them to the four winds of Heaven.

Could Deputy Anthony, without breaking the seal of confidence, give to the House the total number of people who were employed in spinning before the tariff and the total number of people who are now employed in spinning after the tariff?

I always prefer to stick close to facts. I could give a rough estimate, but I prefer not to I will give the correct figures to the Deputy when he requires them. I do not make wild statements. I am always very accurate in any statements I make, particularly when I am concerned with an industry of this kind. If it is necessary and convenient for the House I will quote from the message I got from my own district without mentioning any particular mill. The letter states: "As you are aware, the industry has been protected, the workers have advocated tariffs in the hope that they would be provided with a means of livelihood and decent conditions of labour." I am not giving it exactly word for word. I will hand this letter to Deputy Flinn if he requires it. "We find instead of being an advantage to those who give their services it has been the direct opposite."

I want to remark that this is a man who has not got an Oxford education and his diction is not very perfect. You cannot blame me. He states: "I will give you a few concrete cases." He mentions a certain mill equipped with the most up-to-date carding and spinning machinery capable of preparing the major portion of the yarn utilised in the manufacture of their cloths. But the millers are importing the bulk of the yarn from Belgium, France and England, whilst our local workers are unemployed and thrown on the unemployment list. He goes on to speak about Church holidays and things of that kind, with which I do not concern myself very much.

There is no "Oh!" at all about it. I am only concerned with the position of the operatives, materially if you like. I am not quite so concerned with their spiritual interests. I rely mainly on the recommendations of the Tariff Commission, particularly paragraphs 108 and 109. Paragraph 108 states: "The combing of wool (i.e., the making of ‘tops'), the preparation of wool for carding, its carding and the spinning of yarns from ‘tops,' or carded wool, give considerable employment. It has, indeed, been estimated that in some cases the manufacture of a certain quantity of raw wool into yarn affords as much employment as do the processes which the resultant yarn subsequently undergoes in its manufacture into the finished tissue."

The Report goes on to say, in paragraph 109: "Since one of the chief objects of the protection of an industry is to afford employment, we consider that, prima facie, it would only be equitable to afford a greater measure of protection to those manufacturers who perform all processes, from the raw wool to the finished cloth, and who thus give the greatest amount of employment, than to those who do no sorting, scouring, combing, or carding and spinning, or who do not sort, scour, comb or card and spin all the wool they require for weaving, and who therefore, relative to their output of finished fabrics, employ much fewer workers."

Another sentence taken out of paragraph 110 would be most appropriate as emphasising one of the points already made. "Though it will not be an easy matter for our home manufacturers to compete with the Yorkshire wool-combers and spinners, it may be advisable in the general interests for them to endeavour to secure, in the near future, the establishment in this country of combing and spinning plants of a capacity to supply the normal home demand for worsted yarns."

I consider the most valuable contribution to this report on the application for a tariff on worsteds and woollens is made by Professor Whelehan. "It seems to me," he says, "of the first importance that the production of the yarns at home should be stimulated and recognised. If the matter is left in its present inconclusive state there is nothing to prevent the industry from relying more and more on imported yarns, and developing the industrial weaving to the greater detriment of yarn spinning." His final sentence is: "This investigation should be undertaken immediately, so that the Tariff Commission may have the benefit of its result should the review of the question which this addendum would contemplate be made effective."

I want to stress the last few words in Professor Whelehan's addendum: "This investigation should be undertaken immediately so that the Tariff Commission may have the benefit of its results should the review of the question which this addendum contemplates be made effective."

He, therefore, indicates that it is essential, in his view, at any rate, that a review of the question should be immediately undertaken in order to have this tariff have the effect which was contemplated, not alone by some of those engaged in the industry, but by me and many others who voted for the tariff.

Having reviewed the position as it appears to me, and as it appears to many others who have given any thought whatsoever to the question of tariffs, under Section 23 of this Bill, I felt I was in order—I do not believe the Ceann Comhairle would have allowed me to proceed unless I was—in drawing attention to this matter in the hope that the Irish millers who at present are able to manufacture their own yarns, but who do not, will do so. They are doing so. Possibly they are aiming at greater profits and at making themselves richer and their customers somewhat poorer. Because of that fact I suggest that a review of the whole position should be undertaken at an early date to see how far this has brought about the position contemplated in the report— namely, larger numbers of people employed in the industry, and also to see how far they have gone in the direction which they themselves suggested they were able to undertake— namely, that they could manufacture 85 per cent. of the yarn used in the worsteds and woollens made at home, That is my only contribution to this discussion. I do hope that the Minister will take serious notice of what I have said on account of the unemployment created under this tariff.

I would like if the Minister for Finance would, for the purpose of this debate, ascertain whether there is any evidence in the possession of the Minister for Industry and Commerce that there has been a reduction or an increase in the number of people engaged in spinning and carding. If he could get that information it would help us.

It is not my purpose to intervene in this debate except to draw attention to a statement which was made during the discussion upon the Committee Stage by the Minister for Industry and Commerce with reference to a certain member of the Seanad. The Minister for Industry and Commerce attributed a statement to that member of the Seanad which was to the effect that when the firm of which he is a member associated itself with an application for a particular tariff this particular member of the Seanad stated that he did so although he was a life-long free trader and believed that the effect of the protection would inevitably be to raise the price of the protected article to the full limit of the protection given.

That statement was a particularly serious one for the member of the Seanad in question, in the first place because he has been associated with the Fianna Fáil Party and has declared himself a supporter of the Fianna Fáil policy of protection, and in the second place because it might be believed that the firm of which he was a member might be endeavouring to give practical effect to the prophecy which he is alleged to have made. I asked the member of the Seanad concerned whether he made that statement, and he informed me that he did not and that the Minister was drawing on his imagination when he stated that he did. I think it is only fair that that statement should be made by me now. I am making it with his authority and at his request.

Was that statement, attributed to a member of the Seanad, made in the Seanad?

It is very desirable that it should be stated that it is merely an accident that that particular gentleman is a member of the other House. I regret the allusion was made to that or that his name was mentioned.

The fact that the gentleman is in public life and is associated with the Fianna Fáil Party is where the importance of the statement comes in. With regard to the statement made by Deputy Anthony, I do not feel that I could take the information given to him by his informant in this matter as necessarily accurate, nor do I think that he should rush in here to condemn the Irish woollen millers as a body because of circumstances which are alleged to have arisen in one particular mill. It is of the first importance that the production of yarns at home should be stimulated. If the Irish woollen millers are acting in the manner which Deputy Anthony speaks of, that is, if they are dismissing the yarn-spinners in their employment for the purpose of enabling them to import foreign yarn, then a situation will have arisen which will necessitate action to be taken. But I am not prepared to agree that that statement represents the real facts in the case. Nor do I think that it should be assumed to be the case even if such a set of circumstances has arisen in one particular mill.

The fact that Deputy Anthony warns us, of course, that he would be very slow before he supports any other application of a tariff is a matter of minor importance. There has been no general rush in the matter of tariffs and, particularly, no rush in this matter of woollen tariffs. This tariff was under consideration by the Tariff Commission for two and a half years before the Report was submitted to this House. Then, after the expiration of two and a half years, it was found that they were unable to produce a Report which they could stand over when the matter was referred back to them for further particulars. If there had been less delay and less hesitancy about applying a tariff to Irish industries there would be, I am certain, a very different situation facing us to that with which we are faced now. I hope that the Minister for Finance will secure from the Minister for Industry and Commerce the information which Deputy Flinn asked for, so that we will know whether there has been a diminution in the number of hands engaged in spinning in the Irish mills or that the quantity of the yarn imported has shown a very substantial increase since the tariff was imposed. If the statements made by Deputy Anthony are not correct, it is desirable that they should be contradicted definitely and as soon as possible. If the statements are correct, then there has arisen a situation with which the Tariff Commission and the Dáil should be asked to deal.

With regard to the statement made by Deputy Anthony in connection with the spinning of yarn in Irish woollen mills, I am aware that he has a letter here from a certain gentleman in connection with one mill. As for one very large mill with which I am well acquainted, that is, the Athlone Woollen Mill, I can tell the House that the wool brought to that mill is combed and spun into yarn in their own machines and by their own hands, so that the spinning department is working full time. I would say that this particular mill almost makes 100 per cent. of the yarns it uses. The statement made by Deputy Anthony does not therefore refer to the Athlone Woollen Mills, with which I am acquainted.

I think we are all glad to learn that even if Deputy Anthony's statement were well-founded, it refers only to a particular and possibly an isolated case. Before we pass this Fourth Stage of the Finance Bill, I think it only right to direct the attention of the House to the fact that over twenty sections of the Bill concern themselves with income tax and with the various means under which it may be assessed and collected. With regard to that, I think before the Bill goes through and becomes law we should have some assurance from the Minister for Finance that the method which has hitherto been adopted to collect what has been euphemistically called arrears of income-tax, will be mitigated somewhat. I do not want to be taken as saying that I should wipe out all the arrears; but I do feel that there were certain definite periods in this country during which income-tax was withheld from the then authorities which should receive special consideration in the position in which we now find ourselves.

We are all aware that in 1919, in pursuance of the then de jure Government, and in pursuance of the policy which that Government had adopted either by overt act or by direct proclamation and publication, the impression was conveyed to the people of this country, who stood for the independence of this country, that it would be a patriotic act to withhold from the British Income-Tax Authorities any tax which they up to that time had been collecting. Arising out of that, a considerable number of people did withhold income-tax. I am not going to argue that everyone who withheld income-tax was actuated by motives of the purest patriotism. Possibly in many of the cases some selfish element was behind the idea; but others did it through patriotic duty. It was a patriotic duty in the case of men particularly, who could be made amenable for the withholding of the income-tax; men upon whom penalties might easily be imposed.

At any rate, at this late stage it is not possible to segregate into one or other of the two categories the people who withheld income tax—to divide them between the sheep and the goats—the men who were pure patriots and the men who were purely selfish. Arising out of that situation, when the change of régime took place in this country, the Income Tax Department carried on as a going concern, carried on as the successors of the British at Dublin Castle, and endeavoured to collect all the income tax in respect of which assessments had been made. That had been continuing for a number of years upon more or less normal lines. I think, however, that the speech which the Minister for Finance made when introducing his Budget for the year 1928 seemed to foreshadow, and actually did foreshadow, a rather intensified campaign in this direction. In the course of that speech he said:

For this coming year we propose to get a substantial part of the extra income required by a resort to expedients which will give us revenue for one year only. We intend to speed up the collection of the abnormal arrears of income tax.

The ordinary methods which before that had secured some sort of lip service were now thrown over and a new department in the office of the Revenue Commissioners seems to have been set up. A form of criminal investigation was instituted —a form of income tax inquisition. I think—and—the Minister will correct me if I am wrong—the Department was manned by three of the senior officials of the Revenue Commission, possibly assisted by some of the staff of the Minister's own Department. These men proceeded in this way: they secured from the income tax offices all the available returns of taxpayers for several years, including all the British years. Owing to the action taken by the Irish Republican Army in 1919 they were not able to get all the papers which would cover the whole of the preceding years. They did get whatever papers they could, and whenever these papers seemed to indicate that a taxpayer had evaded payment of the tax to the British—I would like to emphasise that point—a letter was sent to that taxpayer which seems to have been more or less in set and formal terms. I will give a typical case. A taxpayer made incorrect returns to the British, omitting all dividends and under-declaring the income of his business. As from the inception of the Free State, this taxpayer returned all his British dividends, and as these showed a very substantial increase over the British returns in the hands of the special investigation department of the Revenue Commission, a letter was received by the taxpayer more or less in the following terms:

A personal interview is necessary with you in connection with the incorrect returns of your income made by you for a number of years. Unless you are prepared to facilitate us in securing correct details of your capital at 1st January, 1914, and all your profits for each year since, we shall have to institute penalty proceedings against you.

I would like to make the point that this man admittedly withheld income tax from the British authorities, but he dealt honestly with the authorities of the Irish Free State. His very honesty in this matter was the man's own undoing. Because he did make the returns, admitting a larger income in the years subsequent to 1922, he received a letter in the terms which I have recited to you demanding that he should furnish correct details of his capital at 1st January, 1914, and all his profits for each subsequent year. When as a result of that letter the taxpayer in question called upon the officer in Dublin Castle, he was informed that the investigation department required that a special investigation should be made into his affairs by a firm of auditors to be named by one of the three investigators, one of the three officers of the Revenue Commission.

I think that was rather unfair. I do not think it is right or equitable that in the case where the taxpayer stands on the one hand as against the tax-collecting authority on the other hand, the tax collector should have the right to appoint an investigator, because quite obviously the continuance of that investigator's appointment must depend upon the satisfaction which he gives to his master. If there is to be an investigation of a taxpayer's books so as to establish justice as between him and the Revenue authorities, that investigation ought to be carried out by some independent person. After the investigation had been made, what happens to the taxpayer? He is required first of all to pay over to the Revenue all debts found not to have been paid to Great Britain, and then he is required to pay the interest on the debts as from the date when they first became due to the date upon which they were finally paid. Over and above all that, he is required to pay a sum by way of mitigation of penalties for not having paid the British promptly.

Various other expedients as well as this audited investigation have been adopted. Certificates are demanded from taxpayers showing certified returns of bank accounts for all years from 1914 onwards. Statements of capital before and after the war are asked for. Threats are used setting out that if the taxpayer refuses to give the investigators whatever papers they want the whole matter will be referred to the solicitors' department to take whatever action may be advised. Lastly, and I think most shameful of all, taxpayers have been caught in this way and asked to play the fox without the tail, to supply any information possible which will incriminate other taxpayers.

I would like again to point out that this violent inquisition is directed solely against those who did not or would not—I am not going to question their motives—supply England with full or any details. At that period it was considered a cowardly thing and an unpatriotic and unjustifiable act for any citizen to facilitate the English authority in this country in any way. These taxpayers withheld that information from the British. I should like to say that they withheld it at their own peril and risk, and it is surely a poor return to make to them that, having carried out what were the direct instructions of the Dáil at that time and the direct policy of the Dáil at that time as exemplified by the general burnings——

I heard the President and the Minister for Finance stating that this was not Dáil policy, that this was not public policy at the period when these returns were withheld.

On the only occasion on which this matter was brought before the Dáil it was decided not to take up the policy that has now been announced by the Deputy.

Could the President or the Minister for Finance say what justification there was for the general burnings of income tax offices and the documents in those offices during 1919?

That is another matter.

Those burnings took place all over the country and there was the one idea of preventing the British from collecting the tax. One way to prevent that was to destroy their offices and documents and create general disorganisation. Another way, and the way generally adopted, was for the taxpayer not to make any return, to withhold all the information he possibly could, and to withhold the money.

I personally advised people to make their returns, informing them of the penalties they would incur if they did not.

I am not concerned with the point as to whether the President did or did not at the time loyally abide by the policy of the Dáil.

I have a distinct recollection of the Ard Chomhairle of Sinn Fein at the time when that question was discussed, and it was generally taken that the people were not to give returns.

The Deputy mentioned the Dáil. I am answering for the Dáil.

But you do not stand over the action of Sinn Fein in those days?

I have contradicted the Deputy on one point. I am not concerned with the other point. I entered into the question of the Dáil and I am standing over that.

The President said he advised people to make these returns. I am not personally concerned, and I do not think the debate is going to turn on a question of fact—whether the President did or did not loyally abide by the policy of the Dáil at that time. But at that time I happened to be a member of the Executive of the Irish Volunteers, before which many questions of major policy came, and certainly they did decide that the burning of those income tax offices should be carried out generally, in accordance with the settled Dáil policy.

The then Minister for Defence took my view in regard to the matter also.

Well, I suppose there is no use in trying to settle this by cross-talk. It is sufficiently important, I think, to have the documents investigated, and I believe it is sufficiently important, in view of the position which it has created in the country. But to get back. As I say, the position now is that taxpayers are being asked to pay taxes which they did not pay to the British, to pay interest on the amount of such taxes from the date when they should have been paid to the British, and to pay penalties for not having made returns in proper time of their full incomes to the British. I believe that is exactly the position at present. I notice that the Minister for Finance shakes his head. My information is that penalties have been exacted.

Will the Deputy give the Minister the names?

I have not the documents at my disposal at the moment.

It certainly is not the policy to impose penalties in respect of failure to pay the British or to give false returns to them.

The policy of the Department is to collect the money.

That is a different matter.

All the difference between money and penalty. Money yes, but penalty, no.

Deputy MacEntee is addressing himself to the question of penalties at the moment.

I am quite prepared to take the assurance of the Minister that, whatever may have been done in the past, henceforth penalties will not be imposed upon those who withheld returns or taxes from the British authorities in this country. I suppose the Minister will give me that assurance?

As a matter of fact, I have given the Deputy an assurance that penalties have not been imposed in the past in respect of returns.

I would ask the Minister whether he considers that the issue of a levy warrant, followed by a body warrant, is not a penalty?

That is only a verbal quibble.

That is another question.

I will take it, then, that it is not the practice of the Minister. I am informed to the contrary, but I would like to have the Minister's specific assurance that it is not the policy to impose any penalties in respect of any tax due prior to 1922.

That will satisfy me, although I reserve the right to raise the matter if the information which I——

I do not know that cases did not happen, but I know what the policy is. If the Deputy has a case, or if the case did accidentally happen, I would like to hear of it.

I have dealt with the method of collecting arrears. In connection with that, I would urge upon the Minister this point of view, that a considerable number of taxpayers at that time may have taken advantage of the situation which prevailed to withhold taxes, but circumstances have now changed very much. At that time we were going through a boom period. Everything was inflated; money was plentiful, and people spent money easily. Possibly a large number of people spent money which should have gone to the Exchequer of the country if there had been any authority justly entitled to collect it. Then suddenly a change came. After the boom period there came a period of depression, and people who would have been quite well able to pay their income tax during the boom period but who, for one reason or another, either from motives of patriotism or from purely selfish motives, withheld the tax, were suddenly faced with a demand to pay it when their ability to pay it had become much less than it was before. Now, there is that special circumstance. That special circumstance would not have arisen if it had not been for the feeling which prevailed in 1919 and in the subsequent years that the money should not be paid to the British if one could possibly avoid paying it. If it had not been for that, people who owed income tax would have paid during the boom period rather than run the risk of incurring penalties. When the boom period passed, they were no longer in a position to pay the large amounts which were demanded from them in respect of the boom period, and they continued to evade payment. Possibly the position might be represented in this way, that people who could quite easily have met their obligations prior to 1922 were faced with bankruptcy if they were to fulfil these obligations in 1923, and in view of that I think that the Minister would be, on grounds of public policy, well advised to say: "We will cut our losses"—I do not know whether he is entitled strictly to call them his losses in respect of the years preceding 1922—"we will not try to collect this money, because we do think it would create general disorganisation in the business of a number of people, and we will be quite satisfied if these people will come forward now and make a full and frank disclosure of their incomes for the present year."

I know, of course, that it will be argued that some men have been detected in making these false returns and that some men have been compelled to pay up. Very well. I suppose that is their misfortune. But I think we ought to face the position now. There has been an amnesty for acts of physical sabotage and violence which were carried out prior to 1922. This also might have been held, and has been justified by some, to be an act against the British. I am not arguing on that ground; I am arguing, simply on the ground of public expediency, that it would be advisable to call off the dogs, stop the inquisition and give the harassed taxpayer some little ease. He does not get very much from the Minister for Finance, and he might get this little concession. I believe that public opinion on the matter is such that some time or other we will be compelled, to do this thing. Possibly the next Government will be compelled to do it, but I would prefer to have it done by the present Government. I think it would be rather regrettable if it were left for somebody else to do, because it might establish a wrong precedent, a precedent which I would be sorry to see set up. The person who can do all this and the person who is best entitled to do it, because he has had the fullest benefit from the course which was pursued, is the present Minister for Finance. Arising out of that, there is the other question of investments abroad. I think the Minister should consider that position very carefully. A number of people who withheld these moneys from the British have been very astute; they have been able to place them abroad in investments which have been more or less remunerative. They have had the best and most expert advice which they possibly could get to enable them to conceal these investments.

At the same time I do not think they are quite happy in the situation, but they are intimidated against disclosing because of the fact that penalties will be imposed on them, even in respect of the returns they have made for the years 1923 and 1924. They have seen how those who made candid returns in 1923 were treated and the very fact that those who made returns were severely treated has intimidated the people who did not do so, and has confirmed them in the course of concealment upon which they embarked.

I think it is of the utmost importance that the Minister for Finance, as a tax collector, should have the fullest possible information at his disposal as to the capital and income of particular citizens. On the mere ground of expediency it would be wise to take a step which would secure that full disclosure. In view of that, and in view of the fact that he is this year, or in the near future, going to float another loan, I think it would be a good opportunity to give those who have concealed their capital abroad an opportunity, first of all, of investing it without fear of the consequences in the new issue which he is about to make, and, secondly, to make a full disclosure and to start with a clean slate.

Does the Deputy think that fair?

I think it is advisable. I think possibly it would be hard to justify in the face of the treatment which the Government have meted out to those who have been discovered. But the point is that the time has come when we have got to have an amnesty in this as in other matters. There were many things done on both sides during the British struggle and during our own struggle which people might find it hard to stand over and justify. We have wiped these out without punishment; we have granted an amnesty; and I think the Minister for Finance ought, in the present year of grace, grant an amnesty to the taxpayers. That is what I am pleading for; and I think that should commend itself to the wisdom of the Dáil. I am sure that the practical results would justify the Minister if he saw his way to take such a step.

I do not propose to intervene in this internecine discussion regarding the events of 1919. What I want to ask the Minister is this: As Deputy MacEntee has said, there is a very considerable part of this Bill dealing with income tax which was not discussed at all, either on the Committee Stage or on this stage. A great number of clauses were not discussed at all, and no explanation was given as to the meaning of the majority of them. Obviously the time is past when we should go back into many matters of detail, but I want to ask the Minister one question that is of some importance. It would seem to arise out of Section 10. It is one of the sections which the Minister did explain, but only very cursorily. He said: "Section 10 is consequential. It will avoid certain difficulties in connection with assessments where investments are changed. All invested income will be regarded as issuing from a single source, and assessments will be made on the basis of the income of the preceding year." Is that really the whole effect of that section, taken in connection with Section 11, which I think the Minister did not explain at all? I wish the Minister would explain the effect of the words "be deemed to issue from a single source." Supposing this happens, and it is a fairly common case, that a man's total income is £800 yearly, of which £200 is drawn from investments which would be chargeable under case 3 of Schedule D. Suppose that, being obliged to pay off a bank overdraft or to make provision for some other debts, he has to sell out portion of his capital, and is not able to re-invest it. That particular source of income has in fact disappeared. For the sake of argument let us say that his income the following year is not £800, but £600. I would like to know from the Minister the effect of the words "be deemed to issue from a single source." Is the effect of those words to make the income in the year when he is getting only £600 chargeable upon £800? Offhand I think it is, but I would like to have an explanation from the Minister on that point.

There is a small matter to which I would like to draw the attention of the Minister. In the ordinary course of collecting income tax, the correspondence between the tax collectors and the taxpayers is conducted in private. At least all the envelopes are marked "Private," and there is supposed to be no disclosure of a man's business. But when there are disputes which eventually end in cases being taken by one party or the other to the High Court, privacy ceases, because the courts are open to the public and to reporters. What I want to suggest to the Minister is that perhaps he will consider an amendment, or even a new clause being introduced, following clause 5 of sub-section (4) giving the right to the individual to demand that such a case when it comes before the High Court should be heard in camera rather than to have his affairs made public property. I think that I am right in saying that in cases before the Circuit Court Judge the proceedings are heard in camera. I do not see why the Minister, after consideration, should object to having the same procedure applied to the High Court.

My reason for objecting to the passing of this Bill is because it is dishonest finance. It is because it contains incidents which are part of the logical and continuing sequence of dishonest finance. Whatever other virtue it may possess—and, frankly, I have gone through it with a microscope without finding very many evidences of virtue—it is blasted from beginning to end by the fact that it represents dishonest finance. This Finance Bill is supposed to provide the finances towards balancing the income and the expenditure of this country for the last year. In the ordinary way, and amongst ordinary people, income and expenditure have a definite and quite an ordinary meaning. For the purpose of enabling the Minister for Finance in the past to persuade himself to persuade his colleagues to deceive the people into the idea that he was balancing his Budget he has invented all sorts of new methods of defining income and expenditure.

He has income which is normal and income which is abnormal; he has expenditure which is normal and expenditure which is abnormal. I have never agreed with any one of the definitions which the Minister has taken either of normal or abnormal income or expenditure. But we have not to stand over the difficulty at the moment of difference of definitions. The Minister has himself never agreed one year after the other with his previous definition of what he calls normal and abnormal expenditure. For instance, in this particular year he sold £3,000 worth of scrap from Haulbowline—£3,000 of an existing asset. It immediately became income. On exactly the same basis he could sell the whole of Haulbowline and regard it as income; he could sell any other property or investment which the State possesses and treat it in exactly the same way. I find in the estimates I have here in relation to education, that no less than £247,000 in one particular year of existing securities, of existing capital assets, has been realised and treated as income. And that is only part of a continuous series of malversation and defalcation of public funds by the Minister for Finance.

That is an extraordinary phrase the Deputy has used about the Minister for Finance.

In his capacity as Minister for Finance.

The Deputy must not accuse the Minister for Finance of malversation and defalcation of public funds. He used that phrase deliberately, and he must withdraw it.


Does the Deputy withdraw it?


The Deputy must not use that kind of phrase again—he must not be offensive.

We have here a case of £247,000 which was an investment in a security. I want to make that very clear. It was an investment in land stock. That £247,000 of stock was sold and it was brought into income, and that £247,000 was only the end of one particular story, in which, over the period of his occupancy of the position of Minister for Finance, under that particular head alone, he has converted one and a quarter million pounds of securities into income.

The Minister for Finance in the Finance Bill provides himself with the means of dealing with Savings Certificates. He has been gathering in millions of pounds in Savings Certificates. He has borrowed the money; he has used it as income, and he has not made provision of any sort or kind up to the present to accumulate the interest or to have at the disposal of those whom it concerns the interest upon that money which, as Savings Certificates, he borrowed as capital and used as income. £400,000, according to his own estimate, he is in debt. We asked him how much, and he said: "I do not know; it would take an actuary to find out." He can just make a guess at it. If I owed him any money, my suggestion that an actuary might intervene would not, I think, be regarded as satisfactory. I think the method of intervention would be the sheriff and a writ, and from my calculation of what the Minister for Finance does owe under the Savings Certificates, I am quite sure that if he offers £400,000 to satisfy that existing debt to those to whom it is owed, the answer will be a writ also, for even his estimation is not correct. We could pass these over if these were just casual sins imposed upon the Minister for Finance by the necessity of fooling the people this particular year in relation to the balancing of his Budget. But, unfortunately, it has been part of a custom. Nearly £1,000,000 of C.D.B. money has gone the same way. Money which was issued as capital to the Land Bank to the extent to which it was recovered—a couple of hundred thousand pounds—also became income. Imagine the financial rectitude, the standard of financial decency, which is represented by a Ministry of Finance that borrows money on Savings Certificates and does not make any attempt to provide for the interest—leaves that to its successor; that sells one and a quarter million pounds worth of stock belonging to its Educational Department, uses it as income, and leaves its successor to pay for it. But he says: "Under the administration of this Government that has always balanced its Budget, that has looked with infinite and fatherly care to the credit of this country, we are stable, we can borrow money." He also said: "We have an asset of £881,000 against the money we have borrowed on loan," and that £881,000 is, to his knowledge, a debt. He puts down as part of the capacity of the State to borrow the fact that there is still to be put upon industry in this country, merely to make it fulfil its previous obligation, £881,000 of money, which it has not been able under his system of taxation, and under the cost of his Government, to pay and which it still has to pay into its insurance fund.

Backwards and forwards, throughout the whole of this calculation, you have money which appears first as capital assets, and then appears in his returns as income. There is another £200,000 here this year that he is getting back. He already has told us in one part of his financial statement that it is there as capital value, and then, three or four pages further on, we find that it is included in income. The dishonesty and the futility of this finance is what should condemn this Bill. Take another case. He has in his Bill this year the residuals of pre-Treaty income tax arrears. If ever there was an asset which was non-recurrent, which ought to have been put against capital charges by anyone with any respect whatever for financial rectitude, it was the £5,000,000 of pre-Treaty income tax arrears which we have collected. But no. These non-recurrent assets were used unhesitatingly as income, and everything that he could possibly call non-recurrent expenditure is put upon capital charges, and then the capital assets which he has in his hands, whether C.D.B. money or educational money, or anything else that he can lay his hands upon, are sold year by year for the purpose of income. That is how the Budget of the Free State up to the present has been balanced. It is because that is the standard of financial rectitude for which the present Ministry of Finance stands, of which this present Bill is an example, and because this country cannot afford to finance itself on that despicable standard of financial rectitude, because it is good neither for reputation nor for credit, nor for income nor for commerce in this country—and because this Bill enshrines all these principles, and is a declaration to this House and the country that as long as the Minister is allowed to remain that custom and system and standard of rectitude in finance will be maintained, that I ask the House to reject this Bill.

I heard with amazement that in my absence denial was made here of a statement which I made in the House some time ago, when I quoted from memory a phrase which I attributed to one of the firm of Dowdall, Cork. I am told that it is denied that this statement has ever been made. The exact statement which I then quoted from memory is:

"Personally I am a Free Trader and am against tariffs, because the inhabitants of the country levying the tariff pay the tariff in the cost of the goods which they purchase, both so far as the amount of the tariff is concerned and in the extra profit obtained by the home manufacturers whom the tariff protects."

That is the statement. It is on my file, and it is also on the files of the Tariff Commission. That was sent to me in 1925, with a statement signed by the three margarine manufacturers in the Free State at that time, of whom the firm of Messrs. Dowdall was one. And the covering letter said that with this statement the writer was enclosing a copy of a letter written to Mr. Blythe, T.D., when Minister for Trade and Commerce, and some remarks followed. That came into my Department in 1925 as part of the case to be made for a tariff on margarine, and eventually, when the question of the tariff on margarine was put before the Tariff Commission, one of the Dowdall brothers came to my Department to get a copy of the letter and sent it as part of the statement of the case to the Tariff Commission, and the other brother gave evidence on foot of that letter. That is the statement.

I would like to clear up one point. Is that letter to the then Dáil Minister for Trade and Commerce?

Yes; that is right.

That was a statement made in the year 1919?

In the year 1922.

Of course a good deal of water has flowed under the bridges since then.

So little water flowed since that in 1925 the same statement was sent to my Department when making application for a tariff on margarine, and again in 1927 the same statement was demanded from my Department in order to be put in as evidence before the Tariff Commission—demanded by one of the brothers, and the other gave evidence on foot of it.

Is that a signed statement?

The covering letter was signed by Mr. O'Mahony, of the firm of Dowdall, O'Mahoney, and stated: "I am instructed by Mr. Dowdall to send you a copy of a letter which he wrote to Mr. Blythe in 1922."

Which Mr. Dowdall?

I hope these letters will be made available to Mr. Dowdall.

I shall make them available immediately.

May I ask before the Minister concludes whether he has been able to obtain the information which we asked for arising out of the statement of Deputy Anthony, and showing that as a result of the woollen tariff there has been considerable disemployment of men in the spinning and carding industry?

With reference to Deputy Anthony's statement, I have no information as to whether there has been disemployment of the kind stated in the spinning industry in the preparation of yarn, but in any case I do not think that that can be attributed to the tariff. I think the Deputy also should make up his mind that when a tariff is granted people who have got a tariff will, for the most part, buy in the cheapest market, irrespective of the fact that they themselves have a tariff. Perhaps individuals amongst those who have received the advantage of a tariff may take special steps to get their requirements here, but the great majority of them will carry on as if they had no tariff at all. I think it would be unwise for anybody to take any attitude in regard to tariffs based upon another point of view.

With reference to Deputy MacEntee's argument on the point of arrears of income tax, I think the question of patriotism does not enter into it at all. I am quite satisfied, and I was present at most of the Dáil Cabinet meetings, that no instructions went out from the Dáil Cabinet that people should make false returns, or even refuse to make returns, in relation to income tax.

Was it not quite clearly understood, and is it not a matter of common sense that it should be so understood, that we were anxious that money should not go to the British Government during that period, and the only reason against definite instructions being sent out to that effect was that we thought there would be hardships imposed upon some of the people if definite instructions of that kind had been sent out and had to be obeyed?

I think the thing never got to the point that Deputy de Valera suggests. I have a recollection of certain conversations and discussions in which it was stated that people should not give the British authorities an opportunity of penalising them. I remember it being stated that if people failed to send in returns estimated assessments would be made out against them far in excess of any sum that they would be entitled to pay. I remember a discussion in the Cabinet where it was definitely stated people should make returns to prevent that happening. The view that was taken at that particular time was simply that people should go slowly, that they should withhold payment as long as possible, but that they should do it in such a way as not to give the authorities opportunities for penalising them.

I have kept silent on this for a long time. I am perfectly satisfied that the general impression throughout the country, so far as we could create it, was that the people were not to give the British income tax or any moneys if they could avoid it. We did not make it a definite order, because we thought that the penalties on those who obeyed might be too great.

Who issued the orders for the burning of the income tax offices and what was the object?

The object should be obvious to the meanest intelligence. I am not going to insult the Deputy by telling him the reason.

Does the Minister share responsibility for that?

That has absolutely nothing to do with the point we are on. There is no doubt that the policy was one of endeavouring to prevent the British getting money, but the individual had nothing in the nature of instructions, and, so far as I know, when advice was sought by an individual, the advice was that he was not to put himself in a position in which he would be penalised. It was that he should pay at the last moment, even before the bailiffs came in.

Pay, if compelled to, but avoid paying by any means if you can. That was the general Dáil policy.

Within limits. A number of people withheld payment, declined to make returns, or else made returns that were inaccurate, and in a great many of these cases there was a dual motive. I have known cases where patriotic motives did not exist. I have known cases in which people who claimed that they did not pay on the ground of patriotism, were at that time against the national movement. In any case, when the Government of the Saorstát took over, the position was that income tax had to be collected, and there was considerable difficulty in collecting it and inducing people to make their payments. I do not think that the man who simply withheld his income tax previously for patriotic reasons had any ground for thinking that he should hold on to that for good. The object was not that he might be enriched personally, that it was a patriotic business, but that the British Government might be deprived of the sinews of war. When the change of Government came there was no reason why that person should regard himself as being entitled to hold on to that money which was legally payable as tax. Therefore the view that was taken was that collection should be made and the arrears brought into the Exchequer of the Saorstát. I do not think that that was a hardship. It would have been impossible to remit them. There were large numbers of people who availed of the confusion caused by the burning of income tax offices, and who for other reasons withheld payment of the tax. It would have made future collection of taxes impossible if such taxes were not collected. I think it must be admitted that a fairly large number of those who withheld payment or who made inaccurate returns were not actuated primarily by patriotic motives. If there had been a remission of taxes by the Saorstát, the resistance which those people would have offered to any collection of income tax in the hope of some further remission would, I believe, have made the collection of taxes altogether impossible.

I have already by way of interruption dealt with one point raised by Deputy MacEntee, that penalties were imposed because people evaded paying or made incorrect returns to the British. My policy has been that that should not be done. If that happened it was by way of accident or error. The policy was entirely contrary to that, and unless the Deputy can bring me cases of that kind I must be satisfied that it was not done. The Deputy cited an individual case, but it is hard to discuss a case when one has not heard the other side of it. It is clear that the person to whom the Deputy referred had defrauded the Free State, as otherwise there could not have been a question of penalty. That must have been a case in which there was a question of false returns, or something else, since the setting up of the Free State. If such person paid his tax honestly since the Free State was set up, I do not think that there would be any means of proceeding against him. What is commonly done is, that if a person was guilty of default in recent years, and therefore liable to penalty, the Commissioners instead of proceeding to recover the penalty would say: "We will take all taxes due, plus some mitigated penalty, and if you pay them we will not take the penalty." It is common for people, rather than face a penalty, to go over their books and pay all the tax due during that period. If the Commissioners were prevented from making arrangements like that it would probably be to the disadvantage of the taxpayers, as the disposition of the Commissioners would be to proceed for the payment of penalties. If a person feels that he owes a large amount of old taxes he would probably refuse to pay, and he would pay the penalty. The lever which the Commissioners have for getting old taxes is that there has been fraud in recent years. I think it was in August, 1923, that an advertisement was issued in the Press stating that those who withheld particulars of income tax or otherwise understated their liability would be given an opportunity of reaching an understanding with the Revenue Commissioners, and that if that opportunity were availed of taxpayers would avoid trouble in the future.

Might we have the exact date of that? We found it difficult to trace it.

On 20th October, 1923, there was a notice in the daily Press to the effect that, having regard to the peculiar circumstances of recent years, the Revenue Commissioners were prepared to consider favourably the waiving of penalties in cases in which taxpayers came forward of their own accord by 20th November and made full disclosures to the inspector, and furnished him with particulars necessary to enable him to determine the correct liability. It further stated that in cases in which full disclosures had not been made by that date the penalties would be vigorously enforced.

I am aware that a notice to that effect has been issued, but it did not come under the notice of the general public. I believe a number of taxpayers, who would have been willing to make a disclosure if they saw the notice, never saw it. It was published rather obscurelv. It was an ordinary official notice, a standardised Government advertisement of a couple of inches. My information is—and I have been at pains to verify it by making inquiries amongst income tax agents and others—that the great majority of the people who would be willing to make disclosures never saw the notice.

I have been for a considerable period anxious to get hold of that particular notice, and I have never been able to lay hands on anyone who could tell me where I could find it.

It should be borne in mind that conditions were not normal at the time.

The date of the first notice was the 2nd August and then there was a second notice on the 20th October. Conditions were then practically normal. It was not merely the end of the Civil War. If the notice were published in April or May it might be said that people did not get much notice. In any case, it was published in the daily Press. It was not an obscure advertisement. It was not, of course, a half-page advertisement or anything like it, but it was not obscure.

It was the ordinary standardised notice. That is the ordinary practice, that it should get two or three inches single column.

There was some headline type in it, I think. The position was that while a number of people might not have seen the notice, a lot of people did see it, and they came voluntarily forward and made disclosures and payments. They made payments under the threat that if they did not make them they would be subject to penalties. The position would be that those who came forward on the face of that would find that they had simply lost their money, while those who lay low and refused to make any disclosure would have had all the tax remitted. It is some hardship on people to have to pay tax now which was due in respect of the boom years. That is to a certain extent a hardship, but I do not think it is a thing that should be taken into account. I think that nobody really heard anything that entitled him to believe that he would not have to pay, and it is a matter, I think, in which he must regard himself as at fault, if, instead of making provision to pay the tax at some later date, he spent the money. The great majority of the people did that, but these are not the cases where big sums are demanded.

I have had in one way or another a great number of cases before me of people who were obliged to pay arrears of taxes. People who were asked to pay substantial sums of £5,000 or £6,000 or thereabouts have come to me asking that time should be given, and although I have no functions in the matter and have tried to discourage them, I have not been able to refuse to see some people. In practically all the cases that have come before me the people had not expended the money which they should have paid in taxation. They held investments and were quite able to pay now. In a fairly large number of cases, the sort of case that came before me, there was no real hardship on them. They were people who had increased their investments during these boom years but who did not pay their tax, and are quite able to pay it now. The class of people who are hard hit are salaried people and people who are in arrears for comparatively small sums. So far as investments abroad are concerned——

Before the Minister passes from that, I would like to ask a further question. How far is this inquisition going back? I have been told that it is going back to 1914 and 1911.

What happens in an enormous number of cases is this. A person has been guilty of default in recent years, for two, three or four years, or any time during the past six years. He can offer to make a full disclosure and to pay all the taxes which he withheld at any time or he can allow the Revenue Commissioners to proceed for penalties. He can take his choice of paying the penalties or paying up all the tax which he has withheld. That has been the practice in connection with the revenue all along. It was the British practice prior to the change of Government, that a person would be given an opportunity to pay the tax, plus some mitigated penalty, rather than a full penalty.

Is it fair that a person should be asked to produce books as far back as 1911, and to show the state of his business from that year up to 1914, and even since? Take the case of the average business man. Supposing that I were a business man and I felt that I had done nothing wrong and that no penalty should be enforced against me, I do not want to pay the penalty and I am not in a position, without putting myself to endless worry at a time when I want to be looking after my business, to produce records going back to 1911 and 1912. I think it is ridiculous.

The position has this in favour of the taxpayer. He commits an offence and becomes liable to a penalty. Instead of proceeding for the full penalty, the Revenue Commissioners say: "Very well, we will meet you: we will take one-tenth of the nominal penalty provided you pay all the tax due." If the man is not prepared to pay the tax due, he has no complaint and the full penalty is inflicted. It is evidence of good faith.

I would like to know what the offence is? Is it an offence not to have disclosed to the Free State arrears of tax due to the British Government? Would that be regarded as an offence?

The offence I am talking of is of making a false return to the Revenue Commissioners since they were set up here.

Supposing somebody said, for one reason or another, that there was no obligation on him to pay tax to the British Government, and that he withheld payment and spent the money, thinking it was an annual charge which he had got rid of, and that then he made a return to the Free State Government and did not disclose that in these years he had not paid the British Government, would that be accepted?

No. There is just one case in which there might be interlocking. That is where the question of the three years' average would arise. But take any case where there is no question of a three years' average, if he made a correct return to us, then there is no offence committed. In a certain class of business it is rather difficult to do that.

Does the Minister not consider that from a purely practical point of view he would be more likely to get more disclosures if the menace involved in a disclosure were removed? If a definite limit were put on the period it would remove the menace.

Ordinarily the position is that if a man has made an honest return for six years, there is nothing of which he may be afraid.

Except the allegation of fraud is made. Does not that enable the Commissioners to reopen the matter?

That would not be in a case of income tax.

But it would arise in the case of excess profits.

I think so.

I am thinking of people who have large sums on deposit outside the country and who may have invested them in foreign investments or paid them into some foreign bank. They would have some way of paying them into a dual account that might never be disclosed. Would it not be better to consider that as something that, is going to be lost in any case unless you are prepared to deal on a practical basis with these people?

It would be practicable all right to publish some such notice as I presume was published in 1923, that if a person came voluntarily now there would be no penalties. The basis in 1923 was that he made a full disclosure and paid all the tax he withheld—that is, he did not pocket the tax that was at any time due. It is very difficult to see how any other basis can be adopted than that, whatever assurances you give people—that they pay all the tax that was due.

Would the Minister adopt that basis now? Logically neither basis can be defended; you cannot get a logical solution of any human problem. Will he take the line of making another offer to the people on the basis of their paying all they owe and no more trouble? The difficulty of the Minister is he is trying to be logical. You cannot be logical in human affairs. Humanity is not logical, never was, and, please God, it never will be.

I would need to think that offer over a little. I do not think it meets the case that Deputy MacEntee and others are putting up.

Will the Minister say how far he can go? We are asking him to face a problem which does exist. Cannot he see how far he can go and try to find a reasonable solution? I do believe that on a reasonable solution he will get more money than by any of his present methods. I suggest that he sees how far he can go to meet an actual and acknowledged difficulty. It is a matter for his brain.

This matter has been a great deal under discussion and it is very difficult. At the beginning I am perfectly satisfied that we could take no line other than the line we took. It is difficult to see how we can take some point of time and say to the people: "You will get off money you actually owe and which your neighbours have paid."

I would suggest the statutory limitation of six years.

That does not really meet the difficulty.

It is better to get six years' tax than nothing at all.

We are getting the tax all right. The argument that has been put forward that we are losing tremendous sums of money which we would get does not carry any weight with me. I have made inquiries about cases. It was discovered from documents which had been previously withheld when all the affairs came into the light there was not this big investment outside the country that otherwise might be in the country or anything of that nature. With regard to present methods—I think the phrase "present methods" has been used two or three times—in Great Britain there is an Investigation Department. If a case of fraud or great difficulty occurs there, the district inspector does not deal with it. He has no time to deal with it. He has such a large number of assessments to get through that he cannot spend the two, three or four days, or the week, or even a fortnight, that difficult cases sometimes require. He sends it up to the Investigation Department to be dealt with. We were in the position that we had not even two or three men who were necessary to form a small investigation department, and difficult cases were only dealt with in so far as they could be dealt with by the district inspectors. It meant that in a great many cases where the district inspectors had every reason to believe that false returns were sent in they could not spare the time to probe the matter.

What has happened now is we have brought into our machine what they have in Great Britain, an Investigation Department, and the difficult cases now can be passed by the inspector to a group of three or four officers who are not embarrassed by the ordinary routine work and who can probe those cases. As a matter of fact we do not go to anything like the extent that the British go—I do not like to use the word C.I.D. investigation—simply outside the papers that come to them, in order to get information that will enable them to elucidate these difficult cases. As a matter of fact there is nothing in the methods which should not be in them. If there were more staff there are probably other methods of detecting revenue frauds in the matter of income tax which would be adopted because it is thoroughly unjust that a person liable to income tax should be able to escape it. It is unjust to his neighbours in so far as the tax is a fair tax and it has the name of being fairer than any other method of raising taxation. It is only fair that everyone liable should be made to pay. It is a great cause of discontent and injustice that individuals who are liable and can well afford to pay should be enabled to escape it.

With reference to the point raised by Deputy Law the position is this, that if a man sells out his investments and spends the money he is liable to tax on last year's income on the basis of the preceding year irrespective of the fact that some of the investments may be gone. On the other hand if he increases his investments during the year he only pays on the smaller sum. He is charged on the basis of the preceding year whatever happens. As the law stands if he sells his investment and buys a house is he doubly taxed? He is not, because that would be a case of double assessment for which he would have relief.

I think the point Deputy Law made was suppose a man sells a house for £800 and does not reinvest the money.

A house is assessed on a different basis. He would invest the money in some way, even if it were only by investing it on a deposit receipt.

Deputy Law's point was that if he sold some investments in order to improve his house, the money is sunk in improvements.

He might be got that way. Take an extreme case: if he spends his money on a trip around the world, undoubtedly he is not allowed for that. I will look into the matter that Deputy Murphy mentioned, the question of whether cases could be heard in camera in the High Court. Although he mentioned it last evening it is not one which I have had an opportunity of looking into. I do not know whether it would be practicable or desirable. As a matter of fact, when cases go to the High Court they go on a point of law really. Very often there is not a great deal of discussion of the case outside the net point involved. I recognise, however, that there may be many cases where the whole circumstances of the business may have to be disclosed in order to have a point of law argued. The general view is, of course, that that is undesirable. It is undesirable that the circumstances of an individual business, in so far as it has to be dealt with for income tax, should be made public. It may be that it would be possible to have some system of hearing it in private. However, it is a matter that would require some time to look into.

Before the Minister sits down, I wish he would clear up a point. I think Deputy de Valera said he thought officials are going back as far as 1912 looking for arrears in cases where they thought fraudulent returns were made. I do not know whether the Minister said that that was so or not, but could he tell us how far in practice they are really going back?

The real position is that the Revenue Commissioners can only go back for six years as far as income tax is concerned, but if a man has been guilty of a fraud through that six years' period and is liable to a penalty, instead of proceeding against him for the full penalty it is a common thing for them to say: "If you pay any tax that you are liable for and which you have withheld over the full period we will accept the tax, plus a mitigated penalty."

The Minister is not able to go back more than six years. He told the House that they do not take penalties over this pre-Treaty period. What he does is he uses the penalties which he is not going to enforce in the ordinary way for the purpose of blackmailing people into disclosing their affairs for a period before the six years and into which he has no right to go. In other words, he is using the penalties for blackmail purposes. That seems to be the plain, simple English of it.

That is not the plain, simple English of it at all, as the Deputy well knows.

It is the simple English.

The Deputy is only entitled to make one speech on this. He has already made four.

Is it not a fact that they are going back fifteen years?

I know a case where they have gone back fifteen years?

I explained it as well as I could to the Deputies. The practice I have mentioned is an old one. It is as a matter of fact, a practice which was the subject of discussion in a law case before the House of Lords in England, and was approved of. It is a practice that really is to the advantage of the taxpayer.

It gives them a good conscience.

If the Revenue Commissioners did not adopt this practice they would proceed for penalties in a great many cases where they do not at present proceed.

The Minister stated that it was only in cases of fraud that the Revenue Commissioners go back over a period longer than six years. I would like the Minister to amplify what he means by that, because I have a letter here from a certain individual, where there is no suggestion of fraud whatever, but where they are demanding income tax arrears as far back as thirteen years.

If there is no suggestion of fraud the payer ought to tell them to go to put.

Will the Minister see that those sort of letters are not written again because it is fraud? They are assuming ignorance on the part of the unfortunate ordinary citizen.

Question—"That the Bill be received for Final Consideration"— put.
The Dáil divided: Tá, 71; Níl, 58.

  • Aird, William P.
  • Alton, Ernest Henry.
  • Beckett, James Walter.
  • Bennett, George Cecil.
  • Blythe, Ernest.
  • Bourke, Séamus A.
  • Brennan, Michael.
  • Brodrick, Seán.
  • Byrne, John Joseph.
  • Carey, Edmund.
  • Cole, John James.
  • Collins-O'Driscoll, Mrs. Margt.
  • Conlon, Martin.
  • Connolly, Michael P.
  • Cosgrave, William T.
  • Craig, Sir James.
  • Crowley, James.
  • Daly, John.
  • De Loughrey, Peter.
  • Doherty, Eugene.
  • Dolan, James N.
  • Mathews, Arthur Patrick.
  • McDonogh, Martin.
  • MacEóin, Seán.
  • McFadden, Michael Og.
  • McGilligan, Patrick.
  • Mongan, Joseph W.
  • Mulcahy, Richard.
  • Murphy, James E.
  • Murphy, Joseph Xavier.
  • Myles, James Sproule.
  • Nally, Martin Michael.
  • Nolan, John Thomas.
  • O'Connell, Richard.
  • O'Connor, Bartholomew.
  • O'Donovan, Timothy Joseph.
  • Doyle, Peadar Seán.
  • Duggan, Edmund John.
  • Dwyer, James.
  • Esmonde, Osmond Thos. Grattan.
  • Fitzgerald, Desmond.
  • Fitzgerald-Kenney, James.
  • Gorey, Denis J.
  • Haslett, Alexander.
  • Hassett, John J.
  • Heffernan, Michael R.
  • Hennessy, Michael Joseph.
  • Hennessy, Thomas.
  • Hennigan, John.
  • Henry, Mark.
  • Holohan, Richard.
  • Jordan, Michael.
  • Kelly, Patrick Michael.
  • Keogh, Myles.
  • Law, Hugh Alexander.
  • Leonard, Patrick.
  • Lynch, Finian.
  • O'Hanlon, John F.
  • O'Higgins, Thomas.
  • O'Leary, Daniel.
  • O'Mahony, Dermot Gun.
  • O'Reilly, John J.
  • O'Sullivan, John Marcus.
  • Roddy, Martin.
  • Sheehy, Timothy (West Cork).
  • Thrift, William Edward.
  • Tierney, Michael.
  • White, John.
  • White, Vincent Joseph.
  • Wolfe, George.
  • Wolfe, Jasper Travers.


  • Aiken, Frank.
  • Allen, Denis.
  • Anthony, Richard.
  • Blaney, Neal.
  • Boland, Gerald.
  • Boland, Patrick.
  • Bourke, Daniel.
  • Brady, Seán.
  • Briscoe, Robert.
  • Broderick, Henry.
  • Buckley, Daniel.
  • Carney, Frank.
  • Carty, Frank.
  • Cassidy, Archie J.
  • Clancy, Patrick.
  • Clery, Michael.
  • Colbert, James.
  • Colohan, Hugh.
  • Cooney, Eamon.
  • Corkery, Dan.
  • Corry, Martin John.
  • Crowley, Fred. Hugh.
  • Crowley, Tadhg.
  • Derrig, Thomas.
  • De Valera, Eamon.
  • Doyle, Edward.
  • Fahy, Frank.
  • Flinn, Hugo.
  • Fogarty, Andrew.
  • Gorry, Patrick J.
  • Goulding, John.
  • Houlihan, Patrick.
  • Jordan, Stephen.
  • Kent, William R.
  • Kerlin, Frank.
  • Killilea, Mark.
  • Kilroy, Michael.
  • Lemass, Seán F.
  • Little, Patrick John.
  • Maguire, Ben.
  • McEllistrim, Thomas.
  • MacEntee, Seán.
  • Moore, Séamus.
  • Mullins, Thomas.
  • O'Connell, Thomas J.
  • O'Kelly, Seán T.
  • O'Leary, William.
  • O'Reilly, Matthew.
  • O'Reilly, Thomas.
  • Powell, Thomas P.
  • Ruttledge, Patrick J.
  • Ryan, James.
  • Sexton, Martin.
  • Sheehy, Timothy (Tipp.).
  • Smith, Patrick.
  • Tubridy, John.
  • Walsh, Richard.
  • Ward, Francis C.
Tellers:—Tá: Deputies Duggan and P.S. Doyle; Níl: Deputies G. Boland and Allen.
Question declared carried.
Question—"That the Bill do now pass"—put and declared carried.
Bill certified as a Money Bill.