Dáil Éireann debate -
Thursday, 5 Jun 1930

Vol. 35 No. 5

Finance Bill, 1930—Committee Stage.

The Dáil went into Committee.

SECTION 1.

Mr. MacEntee

I move:—

Before sub-section (2) to insert a new sub-section as follows:—

"Section 21 of the Finance Act, 1920, is hereby amended by the substitution of fifty pounds for thirty-six pounds and of forty pounds for twenty-seven pounds as the deductions in respect of children."

One of the claims which have been made by the present Government and which they have very often advanced in order to secure support for themselves, is that the rate of income tax in this country is lower than it is in Great Britain. Admittedly, the nominal rate of income tax is lower. Here we are supposed to pay income-tax at the rate of 3s. in the £, as compared with the nominal rate of 4s. 6d in Great Britain. Whatever advantage there may be to the general taxpayer by reason of the fact that nominally the rate is lower in this country than in Great Britain, it is entirely neutralised by the fact that the allowances, rebates, and deductions, allowed to the taxpayer before the amount of his assessable income is arrived at, are almost in every case very much lower than in the case of Great Britain. The practical effect of that is that, so far as the great mass of income taxpayers in this country are concerned, they are paying much higher rates than in Great Britain.

I will give some examples. In the case of an income taxpayer who is married, who has three children, and who is drawing allowances in respect of his wife and children, he would pay on an earned income of £400 tax to the amount of £3 7s. 6d. a year. A taxpayer similarly circumstanced in Great Britain pays nothing. A taxpayer here with a wife and three children and an income of £600 would pay £16 17s. 6d., while a taxpayer similarly circumstanced in Great Britain would pay £11 10s. 0d. A man here with an earned income of £800 would pay £43 17s. 6d. as compared with £32 2s. 0d. in Great Britain. A man here with an income of £1,000 a year—I think in reaching £1,000 a year I have dealt with fully 50 per cent. of income taxpayers—would pay £70 17s. 6d., whereas in Great Britain a taxpayer similarly circumstanced, with a wife and three children, would pay £69 12s. 0d.

The incomes which I have dealt with are what is known as earned incomes, but the same position applies, though in a lesser degree, to those in the enjoyment of unearned income. It is only when a £700 limit is reached that the income taxpayer with an unearned income begins to pay as much here as in Great Britain. Therefore, the statement which, as I have said, the Ministry so often advance and which their supporters so often argue in their favour, that income tax in this country is lower than in Great Britain, is quite unfounded and illusory. So far as the general mass of taxpayers are concerned, they are paying at a very much higher rate than those in similar circumstances in Great Britain and Northern Ireland. The purpose of my amendment is to endeavour, so far as the smaller taxpayers are concerned, to redress that inequality to some extent and to bring the position, so far as those on lower incomes are concerned, into accord with the public statements of the Minister for Finance and his colleagues. For that purpose we propose to increase the allowances paid for children by increasing the allowance for the first child from £36 to £50, and in respect of the second and other children by increasing the allowance from £27 to £40 per annum.

In the previous year we put down an amendment embodying not only this principle, but also a principle which we thought would have afforded compensation to the Exchequer for any loss which the increase in allowances might occasion. Unfortunately, since that proposal would have involved an increase in the tax on taxpayers with higher incomes, we were precluded by Standing Orders from moving it. I am perfectly satisfied that if the Minister would only in this regard imitate the proposal recently put before the British Parliament in regard to income tax, he could find sufficient compensation for any loss to the revenue which the allowances we propose would result in by re-grading or limiting allowances to people with incomes below £600 and by reducing proportionately the allowances paid to taxpayers with incomes above that sum.

In the course of my speech on the Minister's financial statement I had occasion to point out how the burden of taxation on those with smaller incomes had increased after the years 1925-6. As I said, I calculated that in the case of incomes not exceeding, I should say, £300 or £350, the amount of tax paid increased from £21 18s. 10d. in 1925-6 to £23 14s. 7d. in 1929-30. On the other hand, however, I pointed out that a person with an income of £1,000 was this year paying about £97 13s. 0d., whereas in 1925-6 he was paying about £119 17s. 5d. Similarly in 1925-6 a person with an income of £3,000 would have been paying tax at the rate of £726 per annum, whereas in the year just closed the amount which he would have paid would not have exceeded £351. It would seem to me, from the figures I have given showing the general trend of taxation in this country, that the Minister is bound in duty and in conscience to consider the position of the poorer people in this country. The poorer people in this country are not only those who earn their livelihood with their hands, but those who occasionally have to use their brains, those generally included in the denomination "middle class." I think that the great bulk of our people come within the category of those whose burden of taxation has increased during the past four or five years.

I certainly think that the person with a family, living in middle-class circumstances, who has to pay income tax is in a very uncomfortable position—is in a position in which he can ask the Minister to grant him some relief, particularly in view of the figures I have cited as to the general trend of taxation in relation to those with higher incomes. As I have said, I am perfectly certain that if this amendment be accepted, whatever loss the acceptance of the proposals in their present form may give rise to, the Minister, who has power to regrade the allowances so far as they relate to people with higher incomes, can make good if he will only imitate the example recently set by a Chancellor in another place.

Mr. T.J. O'Connell

I strongly support the proposal to give relief in the direction indicated in the amendment. I support the general principle, too, that taxation should be on a different basis from what it is. Year after year, demands have been made for special consideration for the smaller income taxpayer, and especially for the family man. In the discussion on the Budget, I indicated my belief that this system of taxation was a special encouragement to the bachelor and a special hardship on the man who had a family which he was endeavouring to educate. That demand has been repeated year after year, as long as the present Minister has been in office. Every year he hardens himself against the proposal. He has pointed out that while he is personally in sympathy with the demand, he sees no way of finding the necessary revenue. He can find the revenue if he simply changes the incidence of taxation, and makes the people who can best afford it pay. That is the obvious way to find the revenue for this purpose—putting on the tax and seeing that it is collected. I think this is particularly the type of tax that the well-to-do people should be asked to bear a bigger share of. Indirect taxation, from which we get the greater part of our revenue, falls much more heavily on the poorer classes of the community than on those in better circumstances. It is only fair that those in better circumstances should be asked to pay a bigger proportion of the direct tax which is raised through income tax. I support the amendment.

Mr. Blythe

Deputy O'Connell says that this matter has been pressed on a number of occasions, and that, while I expressed sympathy with the demand, nothing was done. This matter has been specially pressed since 1927. It has happened that since 1927 there has not been the possibility of giving an actual remission of taxation. In 1928, we had to find very considerable sums of money, and fresh taxation had to be imposed. Last year also, there were difficulties in balancing the Budget without increasing taxation. While this year there were not the same difficulties, there was no surplus available for giving relief to the taxpayer. I have repeatedly stated that if we found ourselves in a position to give remission of taxation, whatever sum could be made available should be devoted to this purpose. I adhere to that. I do not think, however, that that is so desirable that we should increase taxation —that we should actually impose a burden simply for the purpose of being able to give this relief. If we were making a number of changes in our scheme of taxation it would be a different proposition. If we had to increase other taxes for other reasons I think it would be all right so to arrange the increase that some part might be made available for this purpose. But I should not like to propose new imposts on some classes of the community simply for the purpose of giving these reliefs. It is well to bear in mind that while certain people, who cannot have much money to spare, are liable to income tax, the tax is not heavy. Take the individual with an income of £400, to whom Deputy MacEntee referred. The income tax in the case of a man earning £400 a year who is married and has three children works out at about 2d. in the £. That is not a heavy rate of income tax. though, when he has to find the £3 odd, it is doubtless hard for him to do so. It is an exaggeration to say that our present scheme is an encouragement to the bachelor and is directed against the married man with family responsibilities. There are reliefs which are not inconsiderable and which operate to exempt very large numbers of married men from income tax. Where these reliefs do not exempt them altogether they bring down the charges to very small proportions. I still adhere to the view that when it is possible—either because there is a surplus available for distribution, or because of convenience when making larger changes in regard to taxation this relief should be given. But I should not like to assume responsibility for imposing taxation to the extent of £75,000 or £80,000 in order to give this relief.

Amendment put and declared lost.

Mr. MacEntee

I move amendment 2:—

Before sub-section (2) to insert a new sub-section as follows:—

Section 16 of the Finance Act, 1920, is hereby amended by the deletion of the words "equal to one-tenth of the amount of that income" and the substitution therefor of the following:—

(a) in respect of an income of less than £400, equal to one-sixth of the amount of that income; and

(b) in respect of an income in excess of four hundred pounds, £66 13s. 4d. together with a sum equal to one-tenth of the amount of that income in excess of four hundred pounds.

This amendment deals with the allowance in respect of earned income and, in so far as incomes of less than £400 are concerned, it proposes to increase the present allowance of one-tenth of the amount of the income up to one-sixth and in respect of an income in excess of £400 to make the allowance £66 13s. 4d., together with a sum equal to one-tenth of the amount of that income in excess of £400. We propose, so far as the allowance in respect of earned income is concerned, to have that allowance granted in respect of incomes up to £400 at the same rate as it is granted in Great Britain, and above incomes of that amount to retain it as it is at present. I do not know that it is necessary to add much to what I said on amendment No. 1. This is one of those allowances which, because they are less in this country than in Great Britain, operate to make the real rate of income tax upon the lower incomes higher here than it is in Great Britain.

Perhaps I might cite one or two cases. Owing to the changes recently made in income tax in Great Britain, it is not possible, within the limits of the lower incomes, to secure corresponding cases, the citation of which would show how unfairly the present scale of allowances operates as between the person who is in enjoyment of an unearned income and the man who has to earn his income. As I have said already, below the figure of £700 income, the tax paid in Great Britain, whether on earned or unearned income, is uniformly lower than it is here. Let us take the case of a person with an income of £800. A person with an unearned income of £800, who has a wife and three children, pays here £55 17s. 6d. In Great Britain, that person would pay £62 2s. 2d. If this income were earned, the same person would pay £43 17s. 6d. here, and in Great Britain he would only pay £32 2s. 0d. Thus, in the case of an unearned income of £800, the Irish taxpayer would enjoy an advantage over the British taxpayer of £6 4s. 8d., while if the Irish taxpayer earned his income he would pay £43 17s. 6d., while the British taxpayer, in the same circumstances, would pay £32 2s. 0d. Thus while the rentier with an income of £800 would be £6 4s. 8d. worse off in Great Britain than here, the worker —the man who earns his income— would be £11 15s. 6d. worse off here than in Great Britain. I think that case is fairly conclusive. I think it does show that the present scale of allowances operates unfairly on the man who earns his income. The importance of that is that the real income in the case where income is earned is very much less than is the income which is drawn from investments. For one thing, it is, as a general rule, much less certain.

For another thing, there are certain considerations—loss of time, and so forth—which have to be weighed before the real income of a person who is earning it can be arrived at. It is for that reason that this particular allowance is given. I submit that the circumstances in this country are such that the amount of real income in the case of a man who has to earn his income is probably less even than it is in Great Britain, and that, therefore, the allowance made in respect of earned income in this country should be higher than it is in Great Britain. I am not, in this amendment, asking that this allowance should be equalised throughout the whole scale, but I do suggest that, so far as the lower ranges of income are concerned, the allowance ought to be levelled up to what it is in Great Britain. It is for that reason I have suggested that up to the limit of £400 of income the allowance should be made at the rate of one-sixth of the income. Above that I am content in the present circumstances of the country that it should remain as it is, but I think there is an unanswerable case for lowering the allowance in the smaller income.

Mr. Good

Does the Deputy not think that the question of increased cost of living enters into this problem?

Mr. MacEntee

Very much.

Mr. Good

If he takes that into account it will affect his arguments very injuriously.

Mr. MacEntee

It operates to strengthen my arguments, because it does prove the contention I made that the real income of a worker in this country is lower than the real income of a worker in Great Britain, even though their nominal incomes may be the same.

Mr. Good

There is this other aspect of the question. The Deputy took the case of the married man and said that allowances are not made in this country in proportion to what they were in Great Britain. I was interested in hearing the Deputy quoting Great Britain in these matters as a country which should be followed, but leaving that aspect of the question for the moment, as we all know, in this country those who have families have heavier burdens to carry in the matter of the cost of living in supporting these families than those in Great Britain. So here we have some of those compensating advantages or disadvantages, but they very seriously affect the problem, and I would like to have heard the Deputy dealing with them in that particular connection.

Mr. Blythe

It is very difficult to estimate what the passage of this particular amendment would mean, but two or three methods have been tried in the office of the Revenue Commissioners to arrive at a figure, and the method which gives the lowest figure works out at somewhere between £100,000 and £110,000. It is obvious that we could not give a remission that would lose the Exchequer £110,000 without proposing taxation to find that sum. I would like to reply to Deputy MacEntee's main argument that we must follow the reliefs that are given in Great Britain in all cases by saying that I do not think that possibly reliefs that in Great Britain might only cost, say, one-tenth of the income tax revenue, could operate here to cost us twenty-five per cent. or thirty-three and one-third per cent. of the revenue. An enormous proportion of the British income tax is got from very wealthy people, of whom we have few here, and reliefs of the kind that Deputy MacEntee is proposing cost us a much greater percentage of our total income tax revenue than similar reliefs cost in Great Britain. I do not accept it as a conclusive argument when it is stated that when relief is given in Great Britain it should also be given here. It is quite possible that you might have a whole series of reliefs of this nature given in Great Britain over a period of years, and if we were to attempt to follow that our revenue from income tax would be reduced out of all proportion to the reduction that these reliefs would give in Great Britain. In any case, consideration of this particular matter must, in my opinion, be held over for another occasion. When I had a Committee examining it a year or so ago they contemplated finding some of the money that would be lost by such a relief by reducing the range over which the half rate would be allowed. In brief, we will have to face up to these problems of relief for ourselves and with regard to our own social conditions generally, and I think those definitely forbid us attempting to adhere precisely to the scales of relief which may be given in England.

Mr. MacEntee

Possibly there is not such a great deal of difference between the Minister and myself in that regard. Does not the Minister think that if he changed his attitude it would be honester instead of pretending that our income tax is chargeable at 3/- in the £ to say that it is charged at a very much higher rate? The point is that any benefit that has accrued from the fact that we have a lower nominal rate of income tax is an advantage confined entirely to those whose incomes are more than £1,000 per annum. As far as any taxpayer with an income of less than that sum is concerned, there is no advantage. As a matter of fact the actual rate of tax paid by him in this country is very much higher than in Great Britain, in some cases almost 50 per cent. higher. Therefore, would it not be much honester and fairer to the people of the country if the Minister candidly said that the rate of income tax was very much higher than in Great Britain?

Mr. Blythe

It would not be correct to say that because, as I pointed out in one particular case, the operative rate was 2d.

Mr. MacEntee

And it is nothing in Great Britain, and there is a great difference between 2d. and nothing.

Amendment put and declared lost.

Mr. MacEntee

I move the following amendments:—

3. Before sub-section (2) to insert a new sub-section as follows:—

"If any claimant proves that any portion of his income arose directly from stocks, shares or other investments in a manufacturing undertaking (or undertakings, as the case may be) established in Saorstát Eireann he shall, for the purpose of arriving at his assessable income, be entitled to a deduction of one-fifth of the income which thus arose."

4. Before sub-section (3), to insert a new sub-section as follows:—

"If any claimant proves that any portion of his earned income arose directly from profits in a manufacturing undertaking (or undertakings, as the case may be) carried on in Saorstát Eireann, then for the purpose of arriving at his assessable income, he shall be entitled, in addition to the earned income allowance already provided for under Section 16 of the Finance Act, 1920, to a further deduction of one-tenth of such portion of his income as arose as aforesaid, but such deduction shall not exceed £200 in the case of any individual."

I think we might take 3 and 4 together. I am quite aware that the drafting of these amendments leaves a good deal to be desired, but what I am concerned about is the principle which we have advocated before from these benches, that any person who invests his capital in Irish industries, in view of the many things that have been said about us, in view of the uncertainty of returns from certain of these ventures, in view of the fact that the general mentality in financial circles is to regard enterprises abroad with much more favour than those here, in face of these difficulties, disadvantages and discouragements should, because he has the patriotism and often good sense, receive more encouragement at the hands of the Minister. I am not putting in any quantity arithmetical argument to show him how these arrangements would operate and effectively stimulate interest in Irish enterprises in regard to the investors who invest in them. I have shown—at least, it did operate until this year—that even if we had a lower rate of income tax here for unearned income that that did operate to make foreign investments often more attractive to the Irish investor than they were to the native investors in those countries in which the undertakings were located. For instance, I advanced arguments last year and the year before to show that the shares of some well-known industrial enterprises in Great Britain would be correspondingly more attractive to Irish than British investors by reason of the fact that the rate of income tax on unearned income was lower in this country than in Great Britain. I think that it applies with even greater force to-day. I think these investments are correspondingly more attractive to the Irish investor than to the British investor and for the reason he is able to go into the market and buy shares in those at prices which the English investor would regard as more or less prohibitive.

Apart altogether from that, there is the fact that our industries are generally in need of capital and that a good deal of discouragement awaits the man who proposes to invest his money in Irish enterprises. Bankers and stockbrokers will tell him that it is foolish and possibly his prejudices will operate in the same way. If he overcomes these, I think he is entitled to consideration at the hands of the Minister. It is that some inducement be offered to neutralise the discouragements which await him that we put down these amendments which I have asked the Minister to accept.

Mr. Blythe

Deputy MacEntee in pointing out in his opening sentence that probably the wording of the amendments may leave something to be desired, put his finger on one of the difficulties of the situation. If the matter had been simple it would have been comparatively easy for the Deputy to have drafted an amendment which would cover it. First, it seems to me that tremendous difficulty would be experienced in administering a scheme of this sort no matter how carefully the legislation might be drafted and, of course, I think that very intricate legislation would be necessary. There is a question which will arise of what is a manufacturing undertaking. Remember I do not think it can be suggested that it would be confined to undertakings which were concerned solely in the manufacture of goods which they sold wholesale, because there are a great many sorts of manufacture carried on which are part of a mixed business. A very common sort of manufacture, for example, is the manufacture of certain articles of apparel which is part of a drapery business. In the case of a drapery business where dressmaking is carried on, a certain part of the profits would go to the retail side of the business, and another part to manufacture, and often very great difficulty would arise as a result of that. That goes right through many shops engaged largely in the manufacture or sale of furniture. If a manufacturing business in furniture is, going on troubles of all sorts would arise in connection with deciding what proportion of their profits were entitled to this relief, and what proportion were not. A good deal of the loss which would arise in connection with such a relief would be loss which seems to me would give no result. For instance, apparently a man who had an income of £5,000 from Guinness's shares would get a tax relief of about £150 per annum. Take that as a particular case. No benefit at all is going to arise to an Irish industry as a result of giving relief to the man who happens to have invested in the shares of that particular company. Difficulties would arise then in connection with firms like the Imperial Tobacco Company. That is a manufacturing industry established in the Saorstát which has Saorstát shareholders.

If a certain proportion of the dividends which a man received here from the Imperial Tobacco Company were to be ascribed to the manufacturing of that concern in the Irish Free State considerable difficulties would again arise. It would be impossible, of course, to estimate what such a thing would cost until properly framed legislation had been drafted, but no doubt if we were to legislate in the terms of the Deputy's amendment a very great amount of revenue would be lost, because the courts, both here and in Great Britain, in interpreting income tax law, generally take the view that if there is the slightest doubt about the taxpayer being liable the taxpayer goes free. In a case between the Revenue, which represents the general public, and the individual taxpayer, the courts do not really look at the equity of the matter. If there is any doubt at all the taxpayer goes free, and if this were carried into effect it would probably happen that all sorts of firms that did no manufacturing at all, that perhaps even did no repairs at all, would get the benefit of it. I believe there is one firm which imports furniture and French polishes it, but does no other manufacturing process on it, and if these amendments were passed it would almost certainly get relief. Undoubtedly, in respect of companies like the Imperial Tobacco Company relief would be given and the loss to the Revenue would be very considerable.

There are certain peculiar things in connection with these amendments, taken together. One is that the person with unearned income, the person whose income is derived from stocks and shares, would get a reduction to the extent of one-fifth, whereas the individual who is working in the industry, who is running it himself, would only get one-tenth, and the total deduction is limited to £200, so that in this case the person with unearned income would be treated in a very much more lenient manner than the person who is actually working in his industry.

Mr. MacEntee

That is explainable.

Mr. Blythe

However, that is only a matter of detail.

Mr. MacEntee

As a general rule, the investment is a voluntary one, whereas in the case of a person engaged in the actual business, very often he is there on account of circumstances over which he has no control, because he has to live in the country, and because he has to do something in the country. But the voluntary element is much greater in the case of the person affected by amendment 3 than in the case of the person affected by amendment 4.

Mr. Blythe

However, I think one of the big arguments is really that it is not anything connected with income tax that prevents investment here. It is not even so much a question of the earnings of the investment as the feelings which have become widespread for a variety of reasons, and for causes operating for a long period, that probably there would be no earnings at all, and that there is a risk of the capital disappearing. These are the things that I think encourage people to invest abroad readily, and that make them unwilling to invest here. There are, of course, a variety of other factors, but they are of this character, that they frequently cause a person to hesitate to invest here, even when the prospects of earning, so far as they can be seen, are very good, and it seems likely that large dividends will be paid, and to invest outside in what appears to be something less attractive. I do not think that you could overcome that feeling in this way. I believe the difficulties of operating this sort of thing, the administrative expenses, and the dissatisfaction that would arise from such a complicated system, would weigh very heavily against it, and that it is by other methods which have been applied, whether Deputies think they have been sufficiently applied or not, that we should seek to encourage industry. If we were to think about it, it would certainly require an extraordinary amount of consideration. I do not think that legislation dealing with a matter like this could be drafted unless we had a Departmental Committee working on it for probably two, three or four months. Frankly, I am no believer in this system.

Mr. Flinn

The Minister has now reached the stage of if he were to think about it. That is really a remarkable stage to have reached after all this time. If he thought a little bit more slowly he would be going very rapidly backwards. He puts up a number of difficulties, but the onus of proof is on the person who wants to benefit. All the difficulty is on him. If he does not think the benefits worth while to take the trouble, then he will not take the trouble. Why the Minister should be worried because there would be a difficulty on somebody else to do something I cannot imagine. Guinness is an existing business. One of the difficulties in dealing with all these income tax questions is that people want to concentrate on new business. Personally I regard the existing businesses in Ireland merely as the foundation. You exempt, say, Guinness shares in order to produce an inducement to people to invest in other things than Guinness's shares. Take the Imperial Tobacco Company. The Imperial Tobacco Company has a certain relatively small interest in this country, and they might not take the trouble, having regard to the fact that the vast majority of their shareholders and the vastly larger portion of their interests are outside, and that the vastly larger proportion of their shareholders and their shareholders' incomes would not come under this provision. As far as I can see, the Imperial Tobacco Company would not lose the Minister very much money.

The Minister says that the slightest doubt in relation to an income tax matter is resolved by the courts in favour of the taxpayer. I suppose that is one of the reasons why the Revenue Commissioners are a court unto themselves, and even to the extent of violating the Constitution they make laws for themselves. But if it was a question of doubt, surely having regard to this Bill we are now discussing, a Bill to remove doubts would provide no difficulty to any Minister.

All he has got to do is to introduce a Bill to say what was is not, that what is not was. He said that income tax had nothing to do with investment. If you could provide a place in which people would be immune from the activities of income tax collectors, often of themselves well meaning, but very ingenious and utterly remorseless people, as an American said to me, you would not find standing room in this country. I do not know whether that is a good argument in favour of the proposal. But it is not right to suggest that the amount of income tax is the only thing in relation to it; the methods of collection and all the rest of it have to do with it also, and anything in the direction of relieving that would be useful. My difficulty is this: If the Minister is against the principle, then he says no, and that is all there is about it, but it is not the slightest use simply to put up a whole series of difficulties. If he does want to do it, the thing can be done, and the onus of all the trouble can be put upon those who want to get the benefit of it. If he would only face that fact we could get on. With reference to this sort of tenth reason business, there was a certain town council on one occasion which did not ring its bells on the coronation of a certain king, so they sent ten burghers, each with a reason to explain to the king why they did not ring the bells. Nine of the reasons were excellent reasons but they were forgotten, because the tenth reason was that they had not any bell. In exactly the same way the Minister has given us about fifty-five difficulties, but the real reason is that he is not prepared to lose revenue for the benefit of Irish industries.

Mr. Leonard

I would like to bring before the Minister the unfair way in which income tax inspectors treat some of the small people. I have a case in mind concerning a man who has a small shop and who is also the owner of two small farms.

An Leas-Cheann Comhairle

Will the Deputy tell me what that has to do with the amendment before the House? That is a matter for the Estimate of the Revenue Commissioners.

Mr. Leonard

I am sorry, but we have been talking so much about income tax——

An Leas-Cheann Comhairle

The Deputy can raise that on the Estimate for the Revenue Commissioners.

Mr. Leonard

Everybody is talking about income tax, and this is income tax.

Mr. Flinn

Perhaps the Deputy does not know that the Estimate of the Revenue Commissioners will come on after this Bill.

Amendments 3 and 4 put and declared lost.

Mr. Flinn

I move:—

To add at the end of sub-section (3) the words—"Provided that in the case of a manufacturing undertaking any undistributed gains or profits arising out of such undertaking and employed to the satisfaction of the Revenue Authorities in extending premises or in installing new plant shall be exempt from tax, while so undistributed."

This is becoming a hardy annual, and probably will remain so until the Minister retires to that long, well-earned rest which we are now carefully preparing for him. Still, as it is the Minister's own amendment, and as the Minister is too modest to advertise the virtues of the thing he has himself produced, it is only fair that he should have the opportunity of seeing it in the light of day, and of either acknowledging it or refusing to acknowledge it in the face of the House. On a previous occasion the Minister said that this was the one line of country upon which he thought he could probably travel; in fact he was going into an intensive state of study in the intervening year, and at the end of the year, he was again prepared to enter upon an intensive study of this particular matter. Probably he will, in another five years, come to the stage at which he might, as he says, begin to think of it. Why does not the Minister do it? Here again the onus of proof and all the trouble in relation to making it clear will rest with the beneficiary. It is merely a matter for him to make those regulations. If it does not pay the people to get this amount of benefit they will not go to the trouble; if it does pay them, they will go to any amount of trouble.

I think I will refer here to a case where the Harbour Board of Cork were building a wharf for Mr. Henry Ford, and in order to meet the income tax on the making of the wharf, they had to pay the Government £233. They had to pay that sum in income tax for attempting to produce a condition in Cork from which the Minister is getting in-directly—due to the fact that there are millions of pounds being spent in wages—an enormous revenue. In exactly the same way the Minister here refuses to set the seed from which he might get considerable benefit. I do not regard this thing as in any way a reduction of his revenue. I regard it as the seed of very considerable revenue in the future. The idea that we can more or less stereotype things as they are and be satisfied with existing conditions is a wrong idea. We have got to get outside our present conditions and look at ourselves from the outside with the pre-supposition of a distinct and definite change in our condition. We cannot envisage the condition in which under three millions of people are continuing to live narrow, meagre lives here. We have to look at it from the point of view of what we can produce in the way of an effective change. This is one piece of machinery. Within its limits it is an effective piece of machinery to bring about that change. It is time that the Minister did acknowledge his own child, and did glory in the fact that at least one good idea had penetrated from him into the economic possibilities of the country.

Mr. Blythe

This is an idea which various writers on taxation have advocated. It is a proposal which might, without very great difficulty, be applied in the case of a joint stock company. If it were applied in the case of private owners or private companies a considerable amount of difficulty and very many complications would result. It might be necessary, in order to make the scheme actually workable, to extend it very far indeed. On the other hand, it is not at all certain that it would be possible, and I am not sure either that it would be fair, to give such a concession to a joint stock company, a public company, and to refuse it to a private company, to a partnership or to individuals. It has not been possible to have the matter fully explored, and I could not agree to accept the amendment.

I do not take Deputy Flinn's view that an amendment of this nature, if it were passed, is going to lead to extensions of business all round the place. In fact its position would be that in certain cases it might facilitate and it might case extension, but extension depends on the need for it and on the business that is to be done. All that a thing like this would do, even in the case of a joint stock company, would be to make it possible to do it with a certain amount of additional case in favourable circumstances. All these income tax proposals have this characteristic, that the various reactions of them are difficult to see, and the adoption of a new principle without the most adequate examination might only lead to a loss of revenue in a manner that would bring no return and might only lead to irresistible claims from different sets of people being put forward which in themselves would entail a loss of revenue without any compensating advantage to the community or to industry generally. It is because of that fact that, while I do not say to Deputy Flinn that I would never accept this amendment, I am not in a position to say that I would accept it now.

Mr. Flinn

Could the Minister suggest some time within human anticipation when he would make an attempt to embody this principle in legislation? If he finds difficulties in the extent of the area or something of that kind we are all prepared to meet him in the matter; but when will he do something as distinct from asking us to wait while he thinks it out and worries about the possible reactions of things which he has not tried? All I am asking him to accept is the principle of the matter, and I am asking him to get on with it in a limited manner only. If he is afraid of the reactions, let him find out what the reactions are within a limited area and within a limited time. Let him do something rather than be content with putting it on the long finger.

Amendment put and declared lost.

Mr. MacEntee

I think we might take amendments 6 and 8 together, because they are more or less similar in their nature.

An Leas - Cheann Comhairle

Amendment 8 is to a different section, but the Deputy may argue the two of them together.

Mr. MacEntee

I beg to move amendment 6:—

To add at the end of sub-section (3) the words—

"Provided always that no Income Tax, Corporation Profits Tax, Surtax or Excess Profits Duty shall be assessed, levied, or collected in respect of any income or profits in any accounting period prior to that beginning on 6th day of December, 1922."

Amendment 8 is a corollary to that. Amendment 6 provides that no taxes are to be levied or collected in respect of any period prior to that beginning on the 6th December, 1922. First of all, no person should be made amenable to penalties in respect of anything which may have occurred prior to that period. Up to the present moment persons have been liable to penalties in respect of certain wrongful returns which they may have made during that period or subsequent to that date or because of wrongful declarations which they may have made prior to that date. We propose that in the case of "any person who, on or before the 1st January, 1931, submits amended declarations showing their income from such investments for the three accounting periods prior to the 5th day of April, 1931, no proceedings for any penalties or otherwise shall be taken against such a person making such amended declaration in respect of any non-disclosure contained in any declaration made by such person prior to the making of such amended declaration, but the person making such amended declaration shall be liable for any arrears of income tax or surtax, and only for such arrears which may appear from such amended declaration to be due by such person for the said three accounting periods."

What I have to say in support of this amendment has been argued already before the Minister. I am sure most members of the House are familiar with the situation which has been created in this country by the efforts of the Revenue Commissioners to collect, particularly in the case of excess profits, moneys which should have been paid to the British prior to 1921-22. The position is that taxpayers to-day are being asked, first of all, to pay taxes not paid to the British Government; secondly, they are asked to pay interest on such taxes from the date upon which they should have been paid to the British Government; and, thirdly, they are asked to pay penalties for not having made returns in their proper time of their full income to the British Government. The important factor in connection with all this which the House ought to remember, and which the Minister for Finance should take into consideration, is that in 1919 practically every income tax office in the country was destroyed by order—notwithstanding anything the Minister may say to the contrary—of the Irish Republican Army. Every man who destroyed such an office was guilty of a crime against the then existing British law in this country, but practically every person who engaged in that physical act of destruction has since been exempted from penalties or proceedings by the various Amnesty Acts. But the people who broke the British revenue laws in this country, particularly those relating to excess profits, are still, I think, being visited with penalties and threatened with proceedings by the Minister.

In connection, first of all, with the excess profits duty, I have to refer the Minister to the report of the Revenue Commissioners, in which they say that they cannot make further assessments for excess profits duty unless, in their opinion, there has been fraud or wilful neglect on the part of the taxpayer. That is quite emphatic and very definite. It means that the only cases in which the Revenue Commissioners are now assessing is where, in their opinion. Irish taxpayers have been guilty of fraud or neglect. Fraud upon whom? Not upon Saorstát Eireann, but upon the British Government, because the excess profits duty, I believe, officially ended in August, 1921, long before the Free State was established and the Government came into office. The point is that taxpayers are now being visited with pains and penalties because they did not pay excess profits duty to the British Government. Whether or not there was an official declaration that the people should not pay these taxes, at any rate, there was a very general understanding that they should not be paid where it was possible to avoid paying them. It was only in circumstances where a man's business or fortune might be jeopardised by the non-payment of income tax that the payment of such income tax was connived or winked at by those responsible for guiding the Republican movement at the time.

I referred last night in my speech to the methods adopted by the Revenue Commissioners. I am informed that the real reason why these threats of penalties are held up to the taxpayer is, not so much that arrears of income tax may be collected, but that the taxpayer may offer to permit the Revenue Commissioners, in lieu of penalties with which he is threatened, to make such an extended investigation into his affairs as will permit them to come to a conclusion as to what he should have paid by way of excess profits duty to the British Government, and as to what he actually paid, and to endeavour to collect from him, not only the duty, but also the penalties for the non-payment. I think that on the facts as I have related them, and as the excess profits duty ended finally in August, 1921, before the establishment of this State, the part of this amendment which relates to excess profits duty must be acceptable to the House and does not require any further argument to justify it. So that whatever the Minister may have to say in regard to income tax, I certainly think that he has not a leg to stand upon so far as excess profits duty is concerned and that the amendment, so far as it relates to that duty should be acceptable to him.

In the case of the people who made wrongful returns to the British authorities in 1922 in relation to income tax, I think that what I have said in regard to excess profits duty largely applies also. Again, you had the same circumstances: the destruction of the income tax offices, the wholesale interference with the machinery for the collection of the tax, the general belief fostered and encouraged by those who were responsible for guiding the Republican movement at the time, that it was an unpatriotic thing to pay duty or tax to the British Government whenever that could be avoided without involving the person who failed to pay in undue consequences or penalties. In view of these facts, I think we must come to the conclusion that it is scarcely justifiable for us, even after the Treaty, to become income tax collectors for the British Government. The British ceded their claim upon the taxes, and the Minister comes along some years later and tries to collect the taxes in virtue of that cession. But the circumstances have altogether changed. The economic circumstances of the individuals who are called upon to pay the taxes are not at all comparable with their circumstances prior to 1921 or 1922. Some men who were affluent between 1914 and 1922 are in comparative poverty to-day. There must be some equity in the matter, and certainly, since we did connive at the non-payment of taxes prior to 1921, I do not think that we are entitled to come six or seven years later and try to exact our pound of flesh, even though we did make a bargain with the British whereby our profits would be derived from the pound of flesh, and from no other source whatever.

Whether it is expedient, even from the point of view of revenue, to endeavour to collect these taxes, is a matter that is capable of argument. Many men, warned by the fate of their neighbours, knowing what worry is in store for them, have placed their funds abroad. A considerable amount, I am informed by those who are in a position to judge—by bank managers and others in similar capacities—of Irish money is on deposit abroad in British banks. The country receives practically no benefit from that. I do not believe one-tenth of the interest upon the deposits ever comes home, because it is difficult to get it home, and when one has it, it is difficult to employ it here. The money is lying there in British banks financing British industry, when it ought to be and could be employed with much better advantage in this country. As well as that, on the income that it earns, small and all as it is, the Minister receives no return—he gets nothing. The Exchequer which benefits from the income earned by these Irish moneys is the British Exchequer, not the Irish Exchequer. On the whole, if a balance were struck, it will be found that this country has lost rather than gained. Even taking the narrowest and the nearest point of view which the Minister can take regarding his own immediate difficulties, and giving no thought whatever to the future, I believe that, looking at the question in that way, and striking a balance, it will be found that on the whole the Minister has lost by the proceedings which he has adopted to collect this revenue.

We think that the time has come to end that. We think it is no longer profitable, even for the Minister, to continue these proceedings. It certainly is not profitable to the taxpayer. There are many men in the country to-day incapable of attending to their business because of the worry which they have suffered at the hands of the Commissioners and of the Minister in their attempts to collect these taxes or to force the disclosure on the part of these men of the assets which they have abroad. As well as that, the Minister himself, not only in his last Budget statement, but in the preceding one, admitted that the well of arrears has run dry. That simply means that they have, so far as any attempt to discover these assets are concerned, come to the end of their tether. Notwithstanding all the extraordinary measures taken to locate Irish property and investments abroad, the Minister has now come to the last bone in the cupboard. There is nothing, at any rate, that his agents can discover. He has nothing further to gain from continuing the proceedings which he has adopted during the past five or six years. Therefore we say that, since any further proceedings are likely to be fruitless, the time has come when he might possibly change his methods. If he does change his methods and gives to these people, who are at present living admittedly an uneasy life, the chance and the opportunity to make a full disclosure, they will possibly be glad to avail of that. When that full disclosure is made there will be available for the Minister a much larger taxable income than he has been able to make available to himself by the methods adopted up to the present. That is the great justification which we are advancing in support of these amendments. If the Minister will accept the principle of them, and will agree that, in justice and in equity, he has no right to attempt to collect income tax, corporation tax, sur-tax or excess profits duty in respect of any accounting period prior to 6th December, 1922, and then goes further, and says to these individuals, many of whom have been driven into wrong-doing by his attempt to collect taxes in respect of the period prior to 1922, that provided they make a full disclosure a full and complete amnesty will be granted for all the periods, and that he will only ask them to pay tax in respect of the three accounting years prior to 5th April, 1931, those who are now worried and harassed to death will be glad of the opportunity which the Minister will present to them to make a full disclosure, to set themselves right with the Commissioners, and to attend to their business unworried and unharassed.

I believe that the effect of that will be that there will be, first of all, made available for the use of industry in this country huge sums, possibly five or six millions, of Irish money at present concealed in Great Britain. There will be made available that capital sum for the use of Irish industry and, as well as that, there will be made available for the Minister, for the purpose of assessing income tax, the income which that sum would earn. That cannot be an inconsiderable sum. The Minister will, as well as that, for the first time have an accurate figure as to the amount of Irish capital which is returning an investment income, and upon that basis the revenue, instead of being losers by the proposals which we submit, will be ultimately gainers—not only the revenue but, of course, the citizens as a whole. It is because we believe that the citizens as a whole will be ultimately the gainers if these amendments which we propose are adopted, that we are proposing them, and not because we are concerned about any person who has been guilty of wilful fraud, who has been driven into fraud by courses over which he has had full and complete control, whose fraud has not been occasioned by the particular and peculiar circumstances which existed prior to 1921-22. We propose the amendments because we think that if they are adopted the State and the community as a whole will be benefited by them.

Mr. T.J. O'Connell

I rise to oppose this proposal made by Deputy MacEntee. The particular people, according to the Deputy's own statement, who are mostly concerned in this are people who have to pay excess profits duty.

Mr. MacEntee

Who did not pay them to the British to help to finance the war and the Black-and-Tans.

Mr. O'Connell

Who did not help the British to finance the war but who battened on the miseries of their own fellow-countrymen at the time. In any case, what were excess profits? They were not ordinary profits made in the ordinary way, but profits made by that wise type of individual, the war profiteer, the man who, as I say, made hay while the sun shone. I would have more respect in a way for the man who had invested his money in war loan at the time than the man who selfishly hoarded it up for his own special interests. If we adopt this proposal it means this, and only this, that the man who was honest enough to make his returns honestly and fairly and who paid up at the time he should pay up his tax is not to be considered at all. But we must have consideration and pity for the individual who has succeeded up to the present in bilking the Revenue authorities of the amount that is due to them. He has succeeded up to the present in doing that in spite of all the efforts of the Revenue authorities that we have heard so much about. That is the type of man that Deputy MacEntee speaks for and wants to get off. What encouragement is that to the honest taxpayer who made honest returns at the time he was asked for them and who did pay?

Mr. MacEntee

And at the time he was asked not to make them by the Republican Government.

Mr. O'Connell

We will take that in a moment. These are the people we are now asked to encourage and asked to be merciful to, people who made excess profits during the period when the going was good, and stuck on to them, and have stuck to them up to the present. I am surprised at Deputy MacEntee. I could quite understand the argument coming from Deputy Jasper Wolfe, but I cannot understand Deputy MacEntee's attitude that we should not have collected that money which should have been paid to the British in view of his arguments on another question and in view of his contention that we should give ourselves the benefit of every possible doubt. The position is that we took over the assets and also the liabilities, and it was mentioned. I believe, by the Minister for Finance on previous occasions here that as a result of the taking over of the assets and liabilities we had to make repayments from our revenue to people who made overpayments of tax to the British.

Mr. MacEntee

That was their folly.

Mr. O'Connell

That was the position in any case, and I do not remember that Deputy MacEntee objected to it.

Mr. MacEntee

I did very much.

Mr. O'Connell

In any case, that was what was done. If we were not to collect income tax that was due to the British, and that we were entitled to collect from the better-off classes in the community—namely, the income taxpayers—they would have got off with a considerable amount of taxes, the revenue here would have suffered, and the people generally would have to pay it by taxation on tea, sugar, or in some other form of indirect taxation. There was a very considerable amount of arrears collected here from people who had the benefit of that money. It was a good job that they did not pay it to the British, and if the orders issued by the old Republican Party—I will take Deputy MacEntee's word for it—had that effect it was a very good job.

Mr. MacEntee

We have got to take the consequences of the change.

Mr. O'Connell

The consequences are all to the good. Our revenue has benefited to a very considerable extent, and the money has been collected from people who can best afford to pay it. Deputy MacEntee talked of the income tax collected going to the British. He knows that that is not the position. This money comes into our own revenue, and it is money that would have to be raised some other way if it was not raised in this particular way. He made the plea that if a gesture was made these people would come along and make a full confession of their incorrect returns. Deputy MacEntee has more faith in that class of individual than I have. I have no hesitation in saying that I do not believe that a half per cent. of them would come forward and make a disclosure of that kind. Not a bit of them! They will make that disclosure when they are found out, and no sooner. We have had experience of that before. In 1922 or 1923 there was a notice published to the effect that people who had up to that time refused or failed to make returns or correct returns could make them then, and that they would be assessed on those returns. I believe that was so.

Mr. Blythe

Twice.

Mr. O'Connell

I further believe that the number of people who responded to that was very small indeed, and I believe that because these are a different class, a class who are better skilled as it were in the art of concealing their profits and liabilities, and that they would have more to lose by disclosing them, even a smaller percentage of them would make any such disclosure as Deputy MacEntee suggests they would make. It is, perhaps, difficult to discuss this without bringing in matters under another heading when we hear such language as we heard last night from Deputy MacEntee about blood money and harassed and broken men. I think he was altogether over-painting the picture. Something like £150,000 was recovered last year. If the Minister could give us not only the amount but some information as to amounts recovered from individual people who have been discovered in these particular transactions, I think it would be helpful. I know of one or two cases myself where people came to me and asked me to plead with the Revenue Commissioners on their behalf, and where very considerable sums were recovered. I would be no party to letting a person of that type get away with it, just because he happened to hide successfully from the Revenue Commissioners or the tax collectors the fact that he made these profits in the year 1921 or before 1921. I see no justification whatever for encouraging that type of individual.

The method of collection is a different matter altogether and one that we can discuss on the Revenue Commissioners Vote. The position is that we make laws; we say that certain taxes are to be collected; we appoint certain people to collect them in a lawful way. If they do anything that is unlawful or illegal they are liable just in the same way as any other person who would do an unlawful act would be liable. The value of Deputy MacEntee's whole proposal would depend on the number of people who would come forward voluntarily to pay their tax or who would voluntarily withdraw their money from where they have it hidden in England or somewhere else and invest it in Irish industries for the benefit of the country. But the particular type of individual that is concerned has not that sense of civic duty so well developed that would encourage me to believe that he is going to do any such thing. I do not for a moment believe that it would be in the interests of the country as a whole or in the interests of the revenue as a whole that Deputy MacEntee's proposal should be adopted. I hold very strongly that it would be a discouragement to the individual who, when the burden was laid upon him, took it up and disclosed honestly and faithfully the amount of tax he was liable for and paid it up when it was due. It would be a discouragement to that type of man to see these particular individuals, just because they were able to hold out long enough, finally getting away with it. It is not a popular tax. No one wants to pay income tax if he can help it, but this would be an encouragement to people to hold out as long as they possibly could, hoping that in some way something would turn up that would relieve them from their burden. I will certainly oppose this as strongly as I can.

Mr. Flinn

Deputy O'Connell says that no one likes to pay income tax. That is a wild delusion. I know a man who lived on income tax, whose sole income was due to the existence of income tax. If the income tax had been abolished he would have no income. That is an actual case. It would be worth while giving the details. Possibly it might be better to give them more exactly than I can give them at the moment. They amounted to this. Just before the war a man who had a considerable collection of stocks of one kind or another deposited them with the bank and borrowed money for the purpose of buying more stocks. When the war broke out the stocks which he had bought disappeared practically in value, while some of those which he originally purchased remained good. He had lost more on the stocks bought with the money advanced than the whole of his property. In other words he had no money in the world whatever. He was bankrupt, but the law had been altered to the extent of preventing the transference of shares in the interval. The result was that the bank was not able to transfer to themselves the shares which they held as security. The income tax was deducted at the source and the bank had to certify for that income tax, and that income tax deducted at the source had to be handed back to the man, and until it was possible to transfer those shares to the bank he was in possession of an income because there was an income tax, and for no other reason whatever-So Deputy O'Connell will agree with me that even most unlikely things do occasionally happen. I might say that this happened in Cork.

Deputy O'Connell also holds a wild delusion as to the enormous benefit everybody receives from profiteering. That was one of the biggest and wildest delusions, I think, in the world. Here is an actual case in relation to that. During the war I was in a big ship repairing yard in Liverpool. It was a time when ship repairs were at almost unbelievable prices. It was cheaper really to buy a ship than to repair one. I was in this place when a big shipowner came in and he asked whether gun metal could not be put in the place of cast iron and whether mahogany could not be used instead of ordinary plain wood.

That shows you the value that money really has, and the complete inversion of business methods which that extraordinary system of excess profits produces. It was a wild illusion in many cases. Take the case of a man who had made £1,000 a year pre-war and started profiteering. Deputy O'Connell is under the impression that that man was having a great time. He was not. Of the £1,000 pre-war he probably had £900 nett. Of the £5,000 during the war, of which £4,000 would be excess profits, he would probably pay £3,200, so that that would leave him £1,800. He would pay another £500 of that, leaving him £1,300. The prices of commodities went up threefold, so that he would have a net income of £400, as against £900 pre-war.

Mr. O'Connell

You are fifteen years late with that argument.

Mr. Flinn

There are a lot of illusions in these matters. The actual facts are entirely different to what Deputy O'Connell thinks. So far as this amendment is concerned, broadly speaking, I have no great sympathy with people in these cases. My line of country is directed against the methods of examination, extortion, blackmail and sabotage which the Revenue Department indulge in at the direct instigation of the Minister for Finance. When you say to the Revenue Commissioners: "I have scourged you with whips and now I will scourge you with scorpions," they are not absolutely blind, deaf and dumb. They respond to a delicate hint of that kind. They can see the drift of the mind of the Minister.

An Ceann Comhairle

This is irrelevant to the amendment. Will the Deputy come to the amendment?

Mr. Flinn

I will. My reason for advocating this particular proposal is that all that will go, and that we will get back to the position in which people who try to create wealth in this country will not be harassed and worried in this way. I do not believe that the Minister would lose one penny if he adopted this proposal, but if he wants to take the line of scarifying the last man available, nothing can prevent him doing so, except a general election, and I think that that will.

Mr. Blythe

I do not think that anything has been said that really would justify these two amendments. I think that they must be rejected because, as Deputy O'Connell pointed out, they would work injustice as between one citizen and another. That would mean that a citizen who paid would have to pay twice because somebody else did not pay, and we would be deliberately preventing the ordinary machinery from working in such a way that he would have to pay. There is some confusion in Deputy MacEntee's mind about the question of arrears. When I spoke about arrears in the Dáil I always spoke of assessed arrears. When I said that the well of arrears was running dry I was saying that the well of assessed arrears was running dry. I was not saying that all income tax which remains uncollected, and that all cases in which fraud had taken place, had been disposed of.

Take the question of assessed arrears. Since 1923-24 we have collected income tax assessed in 1922-23 or previously, most of it previously, amounting to £5,607,000 odd. There is still about £100,000 of arrears, which are collectable, outstanding. We have a large number of people whose income was not collected by the British from whom we have collected income tax. We are asked in these amendments that they should have an additional burden thrown on them in order that people who either did not pay income tax or excess profits, and who, since the establishment of the Free State, defrauded the State, should not be asked to pay. I think that it would be working a grave injustice on those who always paid since the establishment of the Free State that they should be asked to pay again for those who did not pay. During the coming year we expect to collect about £80,000 in excess profits duty. That would not be collectable if this amendment were passed. We expect to collect something like £40,000 of the £100,000 assessed arrears outstanding. That would not be collectable. Other receipts, which would fail to materialise if the amendment was passed, would bring the total to, at least, a quarter of a million pounds in the present year. That means that in order to get the revenue to ease the cases of those people who have fraudulently held on to the tax all those years we would have to put three-pence per pound on those who have always paid. I think that that is a thing that cannot really be justified.

The Deputy suggested that penalties were being extracted from people because they made false returns to the British. No penalties have been imposed in respect of false returns made to the British. If penalties have been imposed they have been imposed in respect of false returns since the establishment of the Free State. In respect of income tax, anybody who has committed fraud on the Free State can be tackled, and when a person is found to have been making fraudulent returns in respect of income tax he finds himself liable to penalties. There are cases where people preferred to pay the maximum penalty because it was cheaper, but where they think it is cheaper to make a disclosure rather than to pay the penalties they make a disclosure. All they are asked to pay, even in the worst cases, is a comparatively small sum in respect of false returns, and the amount of duty with interest. In the great majority of cases, owing to the change that has taken place in circumstances, the full interest is not charged. In many cases no interest is charged, and in a great many cases the full amount of the tax is not taken, as that would mean putting a person out of business.

Deputy O'Connell asked me what sort of amounts I had to deal with. I have a list here and at random I see sums of £9,000, £6,000, £20,000, £3,000, £5,000, £8,000, £10,000, £16,000, £11,000, £14,000. That shows the position. People are not being put out of business. From a person who is liable for £25,000 and who can only pay £5,000 only £5,000 is taken. What he has been asked to pay is the tax which he retained. After the Free State was established in 1923 the Government asked the people to make returns and announced that they would not be liable for any penalties.

Mr. Flinn

Could the Minister give the date of that?

Mr. Blythe

Not now.

Mr. Flinn

At some time?

Mr. Blythe

Notices were published in the papers.

Mr. MacEntee

Was it early in 1922 or 1923?

Mr. Blythe

If the Deputy puts down a question I will give him the date. Only a small number of people responded at that time, but a good many have responded since for various reasons. Some people felt uneasy and were advised by accountants and others that the best thing to do was to make a full disclosure. Since then a large number of people have made a full disclosure. It would be a very scurvy trick if people like those who answered the appeal of the Government should be asked to pay while those who made no disclosure should get off. It would create a situation which would make income tax collection for many years to come much more difficult than it has been. It would be something in the nature of bad faith to make people who made voluntary disclosures pay and, as I say, allow the others off. Very large sums would be required in that case which we could not contemplate providing out of revenue.

In the same way, there are different classes of accountants. There are accountants who assist and incite people to defraud the revenue. There are others who do their duty fairly well but who, perhaps, would not altogether stand up against a client who wanted to defraud. Then you have the good class of accountant who will say to his client: "You must pay the tax," and who will see that there will be no monkeying with the accounts. By these amendments you would damage the good accountants who say to their clients: "Make your peace with the Revenue Commissioners." You would encourage and give kudos to people who take the wrong line. That would affect revenue administration for many years ahead. With regard to the penalties, Deputies should remember that notices were published in 1923 fixing a date by which people had to make disclosures if they wanted to escape penalties. In fact, the people who came entirely voluntarily since had no penalty or, perhaps, only a small nominal sum imposed. If a person came, not because his case was being inquired into—he may, of course, have anticipated that —but if he appeared to come entirely voluntarily, penalties were not insisted on, and if he paid the amount of the tax the whole matter was disposed of.

It seems to me that while one may say a good deal—it comes in on another estimate—about the administration of this tax and about the point I have been raising myself as to not driving anybody out of business, the person who has been defrauding the Free State should be liable to penalties. When he is liable to penalties, I do not think there can be any doubt that the mitigation of those penalties should be determined by the amount of money which he has withheld. There is not much point in going back on the question of what happened before the Truce. The people were not told not to pay. They were told to refrain from paying as long as they could.

Mr. MacEntee

They were told, in other words, not to pay as long as they could.

Mr. Blythe

No. They were certainly given to understand by everybody in authority that the tax would be payable ultimately. As a matter of fact, there was considerable attention devoted to the preparation of a scheme whereby people would pay their income tax into a fund established by Dáil Eireann, out of which fund compensation would be paid to those who suffered as a result of prosecution by the British. It was found that the amount of penalties that would likely be incurred in the case of big firms would be such that compensation could not be given, and the compensation scheme was dropped. The idea was not that the people were going to get this money for themselves as a sort of patriotic penance, but that they were going to pay ultimately.

The second amendment by Deputy MacEntee would have peculiar effects in certain respects. It would mean that in respect of the years up to 1925 and 1926, we would be making a present to the British Exchequer in a considerable number of cases, because double tax relief in these years can only be claimed when the assessment is made here. In respect of the years 1926-27 and 1927-28, it would mean that the fraudulent taxpayer who was resident in the Saorstát and had no residence in Great Britain but who derived income from British investments could claim repayment of British tax and be liable to no tax at all. There is no foundation whatever for the statement—I am quite satisfied about this—that measures like this would bring money in here. Nothing which emerged in the investigations that have taken place—and a great number of cases have been investigated and there have been voluntary disclosures in other cases— would indicate that there are big sums on deposit in English banks. I am quite satisfied that no money worth talking about would be made available for development here as a result of this proposal. I think Deputy O'Connell dealt with that matter quite correctly. These people would invest their money abroad if they were going to invest it at all. If there are people with money in banks elsewhere, they might take it out of the banks and invest it abroad, but no benefit would be derived here. The result would be to open up a new source of demoralisation. It would put a temptation before all sorts of people who have now made up their minds that they have got to be straight with the Revenue to try some new sort of fraud in the hope that there would be some new relief measure. I believe it would do that and that there would be no benefit at all to the State.

However people may object to it, income tax is a fair tax. It is the only tax that has any relation to the capacity to pay. It is unfair in so far as it is not fully collected. It is unfair if one man pays his full rate of income tax and his neighbour escapes with half the amount he should pay. One may discuss methods and details, but what we should have is a full collection of the tax. If we could get that, we would get perhaps £350,000 that is not being paid—more than would enable us to give all the reliefs that Deputies are claiming. We must bear in mind that there is not a good conscience in the country, that there is not a universal, conscientious feeling that people should pay the tax. Large numbers of people who would never think of cheating anybody in business think nothing of going to the greatest rounds to defeat the Revenue. The position here is largely different from the position in England. I have spoken to many officials with experience of income tax work in England, and they say that there is the greatest difference in this respect between the two countries. The difference is due, undoubtedly, to historic causes. But we do not want to prolong the evils that spring from that attitude of mind. We want rather to get people up to the point of feeling that income tax has to be paid, that those who escape it are actually imposing a burden on their neighbours, and are doing something that, vis-a-vis their neighbour, is dishonourable. If we were now to take any steps like these, I believe we would be a very long time before we would get any improvement in the situation. We would create grievances and make many men who came in feel that they had been very foolish and ill-advised in not holding back a bit longer.

So far as administration is concerned, that is another matter. I believe in dealing sympathetically with these old cases, and especially with cases where people have become poorer. But we cannot tell by the amount a man complains or by the number of Deputies he visits whether his case is a hard case or not. I had a case before me recently of a man who went to all sorts of people to get them to intercede for him. When some facts in the case were disclosed to me, I found that, while he was being asked to pay £21,000, in addition to considerable other property, he had £50,000 in War Loan. He was able to give a cheque for the amount without suffering in the least. £21,000 is worth having, and he would interview a lot of people in order to stick to that amount.

Mr. J.X. Murphy

Did the Minister say that there were certain classes of auditors or accountants in this country who incited people to make false returns? If that is so, is there not a way of getting at these auditors? People are very often deluded into thinking that they will get something out of their income tax that they are not entitled to get.

Mr. Blythe

It is not easy to prosecute in these cases. However, the accounts of these people are never accepted again by the Revenue, and that tends to force them out of business. It is very difficult to get such a case as would lead to a conviction.

Mr. MacEntee

I think some of the statements made by Deputy O'Connell warrant reply. It is quite obvious that Deputy O'Connell's outlook on the period 1918-21 is not the same as the outlook of the people upon these benches. The whole principle of this amendment is directed to removing the disabilities which certain people have been placed under, due to the historic causes to which the Minister himself has referred. Deputy O'Connell said that the acceptance of amendment 6 would be a discouragement to the individuals who paid the tax when it was due. When was this tax for the period between 1918 and 1922, when this country declared its independence, due? To whom was it due? To whom was it paid by those individuals who paid it every year?

Mr. T.J. O'Connell

Perhaps the Deputy would allow me to say that what I had in mind was payment into the Free State during the period 1923-24 and since. If I said anything else, that is what I intended to convey.

Mr. MacEntee

My amendment referred to the period preceding the 6th day of December, 1922. Amendment 6 had not any relation to what happened afterwards.

Mr. O'Connell

Those who had not paid their tax up to that date were liable for payment of it in here.

Mr. MacEntee

For what reason? Because the Minister for Finance had entered into some sort of bargain which, I think, was unjustifiable.

Mr. O'Connell

Following the Second Dáil, that was accepted.

Mr. MacEntee

It was not. The Treaty which the Second Dáil accepted did not contain a single statement relating to income tax or to the income tax which had not been paid up to then.

Mr. Blythe

The Second Dáil was not as good as the Third Dáil.

Mr. MacEntee

Possibly. At any rate, some of the people for whom I was speaking were people who had been loyal to the First and Second Dála, who had accepted the Republican position and regarded themselves as citizens of the Irish Republic. They did not pay income tax to the British, and afterwards, when the tax came to be collected by the Government of the Free State they suffered undue hardship owing to the change in economic circumstances and to the change in the value of money in the meantime. That is one section of the people I had in mind.

As to the question of the profiteers in the period 1918-21, I hold that any man who withheld the Excess Profits Duty to the British at that time was, wittingly or unwittingly, performing a patriotic service—a patriotic service even looked at merely from the economic point of view. That Excess Profits Tax was in the nature of a capital levy, considering the sort of products we were selling to the British at that time. It was livestock which was being chiefly exported at that time. That was our main source of income. There were inflated prices then obtaining and there was an inflated currency. The British were taking by this duty half the value of the commodity that was being sold to them. There was very little profiteering in the matter so far as the relations between Great Britain and this country were concerned. No man who withheld Excess Profits Duty in this country defrauded his neighbours here, however his action may have operated against the interests of the citizens of Great Britain. He was perfectly entitled to withhold this tax, seeing that this money was going to be utilised to finance a war against the Irish Republican Government. He was perfectly entitled to withhold every penny piece he could from the British. If he was patriotic enough to do that and if he were sufficiently patriotic to defy the British Government even to the extent of incurring penalties, then, when circumstances changed, when the whole economic position had changed, when we had reverted to the gold standard and the value of money began to rise and prices began to fall, the State had no right to go to that man and proceed to collect from him Excess Profits Duty upon the former basis—upon the basis of the money values that prevailed in this country between the years 1918 and 1921. Yet, that is what the Minister is doing and that is the proceeding which Deputy O'Connell is prepared to justify. I say that since we encouraged nonpayment of this tax, the State should have made allowance for that fact when it came to collect the tax itself, having made a bargain with the British in regard to it.

With regard to amendment 8, no person even under that amendment is going to get off scot free. If that amendment were acepted by the Minister, it would mean that those who made a full disclosure would still have to pay income tax for the three years preceding. The Minister will collect it for six years. Until the British Income Tax Act was amended in the year 1923, three years was the statutory period over which income tax was collectable. If the Minister had not adopted a similar amendment to that made by the British, he could not collect tax for more than three years. When we say that, if a person makes a full disclosure, the Minister's power to collect income tax should be limited to the three years preceding the disclosure, we are only asking the Minister to revert to the position which prevailed in this country in the year 1922. We are not asking that the person should go scot free. We are asking that the Minister should content himself with collecting three years' income tax and assess no penalties on the man for not having made a full disclosure, and we base our case for that request on historic facts. We say that many men enter into this course of wrongdoing by reason of the fact that they had not made disclosures to the British in the years 1918 to 1921. Having once done that, possibly some of them thought they could get away with that; some others believed if they did make the disclosure they would have to pay to the Minister the penalties for which they made themselves liable to the British, and it was that, far more than anything else, the fear that they would have to pay to the Minister these penalties, which led those men to conceal from the Minister the full facts as to their revenue. I think the Minister should not now mulct those people with penalties, and that he should content himself with reaping the advantage of the statute as it stood in the year when the Free State was founded.

Amendment put and declared lost.

Mr. Flinn

I move amendment 7:

To add at the end of sub-section (3) the words—

"Provided always that notwithstanding anything to the contrary in the foregoing section or in any previous Act, Port Authorities constituted under statute will be relieved of tax under Schedule A, Case 3, of the Income Tax Act, 1918, save except as enacted in Schedule D, Case 3, of that Act."

This amendment is put forward on behalf of the Cork Harbour Commissioners, who are a board constituted under statute and who are called upon to pay income tax under Schedule A, Case 3. We suggest exemption from income tax for these boards, except as indicated in Schedule D, Case 3, namely, on income from their investments, that is to say, money which is put into a sinking fund and invested, and on which they would receive interest. That is not proposed in this amendment to be made exempt, not because we accept that this is in fact a thing on which income tax should be paid, but because we do not wish to confuse the issues or to raise a large question on a small issue. Our contention is that the whole of the rest of the income of such a board as the Cork Harbour Board should be exempt from income tax. The total actual net income of the board last year was £287. The income on which we were assessed was £16,992; all the rest were expenses. The difference between the £287 and the £16,992 for which we were assessed as income was expenses. Now what we are suggesting is that expenses necessarily incurred by the board which have to be added to the cost of the services which the board carry out is not a subject for income tax. We think it is unjust. It involves the Commissioners in expenses to which they ought not to be put and involves those of whom the Port authorities are simply the agents in the expenses thereof. In a statement made by the Board it is stated: "It is a foremost desire of the Commissioners to encourage and develop manufacture and trade in the South of Ireland generally, but to facilitate this end is no easy matter for the board, as in most cases they are called on to make improvements either for handling, warehousing or dredging, involving considerable outlay, all of which is subject to taxation, or practically an addition of 1/7th on the cost. For instance, to briefly cite a recent matter.... the firm of Messrs. Henry Ford and Son, Ltd., who are a great acquisition to the Port and the whole Saorstát, made application to have certain dredging done in or near their works to permit of large steamers coming to their wharf to ship their products. The cost of their requirements was estimated at £1,296. The board were unanimous in conceding the request of Messrs. Ford, but before the work was put in hands were advised by their auditor that the outlay would be an inadmissible charge against revenue for income tax purposes, which means that our board will have to pay a sum of £222 11s. 2d. to Mr. Ernest Blythe, on above outlay for facilitating shipping to the port." Personally, that seems to me to be pure lunacy. Again, renewal of wharves which get worn out and are beyond economic repair is looked on as capital outlay and subject to tax. Every single item we ask to be taken off is an item which, if it is taken off can be taken off the cost of services, and which, being put on, must be added to the cost of services. So far as the Harbour Board of Cork is concerned, and other Harbour Boards are in the same position, the Minister is actually getting income tax from their expenses.

I have here in this present account a sum—it is part of the £16,992 of expenses of which the Minister wants one-seventh—of £447. That is cost of inquiry by Rates Advisory Committee into board's application for power to increase tonnage dues, an ordinary portion of the board's work which they would have to do. The outlay for increasing revenue is not allowable under the Income Tax Act. In other words, if they try to find machinery by which they could provide themselves with an income to enable them to do more for commerce in the South of Ireland the cost of that effort will be regarded as income, it will not be allowed as expense. There is a sum here of £336. It is made up of more or less small sums. The first is subscriptions and donations, of which £256 were disallowed for income tax purposes. If any of those charges which they have put under subscriptions is a donation which they were entitled to give, then I think it should be stopped, but certainly the method of charging income tax on it is not good. There are several items here. £100 was given to the Western disaster in the West of Ireland, a fund of which we will all be glad to hear some detailed information in this House. Then there is the Shipwrecked Mariners' Society, the Irish Nautical College and Training School, the Cobh Technical School (Nautical Class), the Lifeboat Institution, Cork Sailors' Home, Hospitals and Widows, etc. No money of that kind that is given out by a harbour board is an income. There are certain things they have to do. For instance, the Western Disaster Fund is most certainly a thing which did require the support of all those engaged in shipping and commerce and in the same way the hospitals and the others.

The next item is Interest on Stocks, £5,408. The interest which the Harbour Board pay on the stock, which is the income of somebody else and which is their expense, is an income according to the present law. I need hardly tell you that that is to be added to the cost of services. It is no more an income, as far as the Harbour Board is concerned than I am a geranium.

The next item is Income Tax, £923. The money is deducted at the source from the revenue to be paid to shareholders for the benefit of the Minister for Finance. It might seem that was a legitimate income of his, but I suggest that £923 is also directly a charge on the cost of services, because if we were to float our loan free of income tax, free of the necessity of collecting £923 a year for the Minister for Finance, we would be able to finance our efforts by that amount less money and, therefore, for ourselves it would be cheaper. I personally cannot see why either the £5,408 or £923 should be liable for income tax. The next item is £242 for last year's income tax. Our last year's income tax is income as far as the Minister for Finance is concerned. Certainly it seems to me to be an expense. Then there is a Cork Harbour Bill, 1927, £50, which was outlay in the promotion of the Cork Harbour Bill, which stands adjourned. What could be more directly an expense of a harbour board than a Harbour Board Bill to regulate its facilities and so on? But that is income. For sinking fund contributions there is £3,868. Again that is money which if it had not been paid would be available for either increasing the facilities or reducing the cost of facilities. Every single item there is an expense. We have £5,000 to depreciation and a great deal of that was recovered. There you have a whole series of items, every one of which is an expense. The Minister in the last debate said that he could not exempt these boards, because if he did he would have to exempt the Electricity Supply Board.

As a matter of fact, at that time he had exempted the Electricity Supply Board. The Minister for Industry and Commerce to-day said that the Electricity Supply Board under its charter of 1927 was obtaining no income, was by statute prohibited from having an income, because all it paid was interest and sinking fund. Here you have interest and sinking fund in a precisely parallel case. Evidently when it suits the Department interest and sinking fund are income and when it does not suit them they are expenditure. I see no reason whatever why the actual profit of £287 in this case should be increased to a nominal profit of £16,000 when the whole of the items are made up of expenditure—provision re advisory committee, interest on stocks, income tax on these stocks, and the cost of promoting its own Bill. All of these are regarded as revenue by the Government, but in my opinion none of them is revenue.

Mr. Blythe

The Ports and Harbours Tribunal took evidence in regard to the question of the taxation of harbour authorities, and they will report on that. I do not know whether or not they will recommend any change in the present position. If they do their recommendations will be considered and, if they seem to be reasonable and fair, will be adopted. So far as Deputy Flinn's amendment is concerned I have really nothing to add to what I said in the Budget statement. We cannot of course, relieve one harbour authority merely; we would have to relieve others. I do not think we could make harbour boards the only type of local authority relieved from income tax, and I pointed out that if we did relieve them on the ground that they are discharging a public service we would be driven to relieve the Electricity Supply Board, and we would be driven to exempt certain charitable organisations which are at present liable for income tax, and altogether we feel that if we were to open this matter at all we could not avoid taking the logical course and giving a series of exemptions which would, it is estimated, amount to £60,000 or £70,000 a year and possibly to a substantially larger sum later on. The position is that, apart from any other consideration, it is not possible in this year to give concessions of the kind asked for by the Deputy.

Mr. Flinn

I quite recognise that after all we are dealing with a Finance Bill now the provisions of which are to a certain extent tied up, due to the bounds of income and expenditure. If the Minister is prepared to go into this matter to see how far it could be met between now and the next Budget, that would be quite satisfactory as far as we are concerned.

Mr. Blythe

I will certainly go into it, because I know that the Harbours Tribunal will deal with it in some way, and their report, whatever the character of their recommendations will be, will be an occasion for going into it. It will certainly receive consideration.

Mr. Flinn

On that I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Section 1, as amended, put and agreed to.

Section 2 put and agreed to.

SECTION 3.

(1) If any person, who was assessed and charged to tax for the year ending on the 5th day of April, 1930, in respect of income arising or accruing from securities outside Saorstát Eireann or from stocks, shares or rents in Great Britain or Northern Ireland, proves to the satisfaction of the Revenue Commissioners in the manner provided by this section that the aggregate amount of the income so assessed was greater by more than twenty per cent. than the aggregate amount of the income actually arising or accruing to him for the year ending on the 5th day of April, 1931, from securities outside Saorstát Eireann and from stocks, shares or rents in Great Britain or Northern Ireland, he shall be entitled, on making application in the manner hereinafter provided, to have the assessment made upon him for the year ending on the 5th day of April, 1931, under the Rules (other than Rules 3 and 4) applicable to Case III. of Schedule D of the Income Tax Act, 1918, adjusted to a sum to be computed on:—

(a) the aggregate amount of his income actually arising or accruing in the year ending on the 5th day of April, 1931, from securities outside Saorstát Eireann and from stocks, shares or rents in Great Britain or Northern Ireland; and

(b) the amount of all his other income assessable under the Rules (other than Rules 3 and 4) applicable to Case III. of Schedule D of the Income Tax Act, 1918, actually arising or accruing for the year ending on the 5th day of April, 1930, or the year ending on the 5th day of April, 1931, whichever is the greater.

(2) A person who makes application under this section for adjustment of an assessment shall be entitled to repayment of such part of the tax paid by him as is equal to the difference between the amount of tax so paid and the amount which would have been payable if the assessment had in the first instance been computed under the foregoing sub-section.

Mr. Blythe

I move:

Before Section 3 to insert a new section as follows:—

(1) In order to remove doubts it is hereby declared and enacted that for the purpose of determining liability for assessment to and payment of income tax, the Electricity Supply Board is not and never was the State or a branch or department of the Government of the State.

(2) The annual value with reference to which tax is to be charged under Schedules A and B of the Income Tax Act. 1918. in respect of any tenement or hereditament in the exclusive possession or control or the occupation of the Electricity Supply Board and for the time being exempt from assessment to poor rate shall be ascertained according to the surveys and valuations made under the Valuation Acts.

This amendment gives effect to the Resolution which was before the House yesterday.

Mr. Flinn

This amendment starts with the words, "In order to remove doubts." Can the Minister tell us on what section of the Act the Electricity Supply Board are relying for their contention that there is a doubt in this matter? Does he know under what section of the Act they claim that they are free from income tax?

Mr. Blythe

I do not know the section, but I said yesterday that their advisors were relying on the contention that they were a Department of the State, or a Department so exempt. It would be easy to find the section for the Deputy if he requires it.

Mr. Flinn

With every possible respect to the Minister, it ought not to be left in this haphazard fashion. It was said that it has always been intended that they shall be liable to income tax, but here you have a responsible body, set up by the Government, who have been satisfied that they had no power to pay income tax and they refused to do so. Surely the Minister ought to know under what section of the Act they make that claim? He went to these people and they said, "We are not liable." Perhaps they simply took the line: "We are not liable and you can take your own line." I do not think they would. Surely they must have indicated their position in some definite form? There seems to be two or three places in the Act in which it is indicated that they shall not pay income tax. I may not be relying on the right clauses, because I can tell you quite frankly that I find this measure a very complicated one to read, but Section 21 (2) says:

All charges made by the Board after the appointed day for electricity sold by it in bulk or direct to consumers and for goods sold and services rendered by it shall be fixed at such rates and on such scales that the revenue derived in any year by the Board from such sales and services, together with its revenue (if any) in such year from other sources, will be sufficient, and only sufficient (as nearly as may be) to pay all salaries, working expenses, and other outgoings of the Board properly chargeable to income in that year.

Their charges for electricity and for all other services shall be so set that their income "shall be sufficient, and only sufficient, as nearly as possible to provide the outgoings properly chargeable to income." Any Deputy who has attempted to charge up income tax as "outgoings properly chargeable to income" knows what sort of reception he got from the Department of the Minister for Finance. It is no use taking up every Act that we pass, and simply when the Government found that they had made a mistake, or that the intentions with which they passed the Act had changed, due to necessity, that they should simply come here with a sort of whitewash brush called "in order to remove doubts." There is certainly a clear indication here that the Electricity Supply Board were not to charge for electricity or for other services an amount of money which would enable them to pay income tax.

The second point at issue is the amount which is involved in this matter. We are not concerned for the moment as to whether it is right or wrong in principle, but we want to know the amount. Very often we put up proposals to the Minister for certain things, and he says: "That will cost £250,000 a year, and I cannot do it," but if it cost only £25 a year he could do it. That element arises here again. If we are going to put on to electricity a cost of this kind, what is the amount of the cost we are putting on?

The next difficulty I have is this: the Minister for Industry and Commerce said that the Electricity Supply Board cannot have an income, and yet we are passing a Bill to charge them income tax. He said that in the charter of 1927, under which this Board was set up, the Board could not have been taken over by any commercial undertaking because it was not allowed to make an income.

Mr. J.X. Murphy

I think he said that it could not make a profit. Surely it must make an income?

Mr. Flinn

Yes, I agree. It was not allowed to make a profit. But it is on our profits that we pay income tax. If this Board is prohibited by statute from making profits, why should we arrange to make it pay income tax?

I want to find out whether or not the whole of the money that is paid into the exchequer of the Electricity Supply Board over and above its expenses is to be regarded as income. There will be immediately roughly nine million pounds to be dealt with by the Board. I should say that the total revenue of the Electricity Supply Board would have to be well over a million pounds. There would have to be, roughly speaking, £500,000 for interest and sinking fund. Is that liable to income tax? Curiously enough, they are compelled under the Act to make an income out of selling fittings and out of installations in houses; they are not allowed to make a loss and, therefore, they must make a profit. Is the income tax to be confined to those ancillary services, or is it to be taken on the whole of the interest and sinking fund? These are things that the Minister has not told us. It seems that we are going to have a good many more doubts on that point.

In introducing the motion yesterday making the Electricity Supply Board liable for income tax, the Minister for Finance gave a reason for doing so which was diametrically contradicted by the Minister for Industry and Commerce when he introduced a Bill to-day to make the Electricity Supply Board liable for rates. The Minister for Finance said:—

We are quite clear that the Electricity Supply Board ought to be liable to income tax. In the first place, it is to a certain extent in competition with private firms. It is in competition, for instance, with gas companies which are liable to income tax. It is in competition with firms which are engaged in the wiring of houses and the selling of electrical appliances, which are also liable to income tax. It has taken over a number of private concerns which are making profits to the extent of about £120,000 per annum and which are liable to income tax.

We assumed that the outlook of the Executive Council as regards the Electricity Supply Board had not changed overnight, but when, in the discussion to-day with the Minister for Industry and Commerce, we indicated the assumption that that was so, he flatly contradicted us and said it was nothing of the kind; that it was not in competition with these things, and it was not because it was not in competition with these things that it was being charged rates. What are we to believe? Will somebody remove the doubts as between the Minister for Finance and the Minister for Industry and Commerce in relation to this matter? Are we simply going to go on building doubt upon doubt? If I am legally advised that a thing is so, it is only necessary for the Minister for Finance to say it is not so in order automatically to alter the Act, but I may say I am advised that the income tax is going to run into a very considerable sum of money. Estimate for yourselves the income tax on £500,000. There is the income tax on the interest and the sinking fund. This is the first specific question I put: Is income tax going to be charged on the interest and sinking fund portion of the revenue of the Electricity Supply Board? The second question that I put is: What other portion of the revenue of the Electricity Supply Board outside interest and sinking fund is going to be charged with it? We want to know the amount which under the Act at the present moment this Board contends, and did contend, belonged to it, and which this House is now going to take away. We ought to have that information before we go any further.

Mr. Blythe

Interest paid to the Exchequer will be allowed as an expense. The Board will pay income tax on sinking fund and on certain reserves which it will create.

Mr. Flinn

Is not that an absolutely parallel case to the one the Minister has just turned down where they allow interest on a loan to the Electricity Supply Board? They allow that as an expense in precisely the same case, the case which he himself chose as parallel. They charge the Cork Harbour Board income tax on exactly the same kind of fund.

Mr. Blythe

Does the Board not deduct tax from the interest?

Mr. Flinn

£923, but that is money which is deducted from the people. It has to be added in.

Mr. Blythe

The Board do not pay it.

Mr. Flinn

The Board do not pay that income tax, but it is regarded as part of their income because they were assessed on it and you deduct the money. It seems to me the Minister ought carefully to consider this matter. I do not want to press him, because I know that their minds over there are confused. Where we get two diametrically-opposite statements like the statements of the Minister for Finance and the Minister for Industry and Commerce within twenty-four hours of each other in relation to precisely the same thing we have to recognise there is a state of confusion. The whole Bill we have been dealing with confesses to a state of confusion and I suggest that the Minister should take time to clear his mind. Surely he has some staff that can estimate what amount of liability is being put on to the Electricity Supply Board and therefore on to the cost of electricity by this Bill. He ought to be able to tell us that, and if he is not, he is not able to tell us anything about it.

Amendment 9 agreed to.

Section 3, as amended, agreed to.

Mr. T.J. O'Connell

I beg to move amendment 10:—

Before Section 4 to insert a new section as follows:—

"Section 8 of the Finance Act, 1927, is hereby amended by the deletion of the word ‘Gaelic' now contained therein."

This is an amendment that arises from a matter I raised on the Second Reading of the Finance Bill. Section 8 of the Finance Bill of 1927 provides that "Exemption shall be granted from tax under Schedule D of the Income Tax Act of 1918 in respect of so much of the income of any body of persons established for the purpose of promoting the games of Gaelic football, hurling and handball or any of them as the Revenue Commissioners are satisfied has been or will be applied to such purpose." I suggested on the Second Reading that it was hardly correct that in our legislation discrimination of this kind should be made as between one form of game and another. That received support from several Deputies in the House. The Minister stated that while he was not prepared to put down an amendment himself or make any change, he did not think that he would oppose an amendment if it were put down. That was what he told the House. I felt that I would be meeting the wishes of many people in the House if I put down an amendment such as I am now submitting.

The Minister has stated that the financial effect will be very small— hardly worth counting. It does not do any injury whatever to the Gaelic games. It will not have that effect, but it will have the effect of giving whatever little concession is there to other forms of football as well. I think the general principle is sound and that we ought not to make any discrimination. In any case, the discrimination is not worth a very great deal to the Gaelic games and it will not injure them if a similar concession is given to other forms of football.

Quite a number of people follow other games besides Gaelic games, and they are all taxpayers. I think this is a case where there should be no form of discrimination. The amendment will have no detrimental effect on Gaelic football or hurling, and handball, of course, will still be included. I suggest the Minister should accept the amendment.

Mr. J.X. Murphy

I desire to say a few words in support of Deputy O'Connell's amendment. I do not think any one form of football should be subsidised as against another. Because this is a free country the people should be allowed to play any form of football they like and they should get the same convenience for doing so. I hope the Minister will accept the amendment.

Mr. Esmonde

I am very glad that Deputy O'Connell has put forward this amendment. He is really doing a great service to the ordinary working classes of Dublin and particularly to the children of the working classes of Dublin. There are very large numbers of the struggling classes in the poorer districts of Dublin, and in the larger towns in the Free State, that suffer from this slight discrimination. Various associations, leagues and clubs help each other in their financial difficulties. In remitting this tax the Minister would be really assisting all the clubs, not only the large and prosperous clubs, but the small clubs as well. I do not think it would be in any way detrimental to the Gaelic Athletic Association. I hope to find in years to come that a friendly spirit will exist amongst the various sections of sport. I think that in other countries sport, and particularly football, is the bond which unites all sections of the people, but in this country within recent years it has been rather as loud as a saxophone in the jazz band of national discord. I believe that in years to come that will gradually die down. I think the Minister will be conferring benefits on the ordinary working class, particularly in Dublin, if he agrees to this amendment.

Mr. Blythe

I said that I would leave this matter to a free vote if it were a matter in which a division was challenged. I would just like to say a word or two on the other side of it.

This concession was given first to the Gaelic games exclusively, largely for the reason that the propagation of these particular games had been, as it were, part of the movement which led to the establishment of the Free State, and, secondly, because these games of our own do suffer a handicap from being national and not international games. Rugby clubs, for instance, do derive great assistance and benefit from the fact that we have Rugby international matches which draw very large crowds. So far as Association football is concerned the same thing applies. The interest in Association football is stimulated by the contests which occur not only here but outside the country. A game that is practically confined to this country does not get the publicity or the advantages which those other games enjoy, and therefore the local or national games do labour under a certain handicap.

I do not agree, of course, with the point of view that would make adherence to these games an article of faith or would brand a person who played another game as being a bad Irishman or anything of that sort. I do not take that point of view at all. But without going to that extreme I feel that these games, being of necessity under a certain handicap, might well be allowed this small advantage over the others. It was a mere concession. In the ordinary way we would not have exempted this income from tax. The exemption from tax was given as a sort of subsidy. As a matter of fact if we were wanting to put them all on a level the best thing would be to repeal the whole section and let them all pay because, of course, there are objects, quite as worthy objects, in respect of which income tax has to be paid. If it was a question of mere theoretical equality it could be achieved by putting it on; but it was taken off, not because we felt that these games should all be free from tax, but because, as regards the G.A.A., a deputation of which came to myself and to some other Minister and appealed to us to give this little concession which amounts to very little—it is only a few hundred pounds a year—we felt they did merit that consideration. I would like the House to consider that point of view.

I have no sympathy with a lot of the propaganda and many of the contentions that have been brought into this question of games. I regret them, and in speaking in opposition to this motion I am not opposing them out of that spirit. I think that any Deputy who will consider the matter will see that the fact that the games are not played to any extent—these games are not played in England or Australia and there are no French-Irish internationals in that game—does tend to make it difficult to carry them on and does tend to throw them into the background. Without wishing that they should be exclusively played, I feel that there are advantages in having games peculiarly of our own and that perhaps we should continue to extend some little preference to them.

As I say, while I am prepared to leave the matter to an open vote, I shall myself vote against the amendment.

Mr. Fahy

I am against the amendment, because I agree with the Minister for Finance as to the handicap under which the G.A.A. games suffered for want of international competitions, and also because I consider the games essential, or, at least, a great help towards the development of a national spirit in this country. I am not hostile to the other games, but I do not, and I know many of my colleagues do not, consider that the essentials of Gaelic civilisation or nationality are yet so absolutely safe in this country that we can afford to dispense with games, language, music, art, or anything else, which is Gaelic. It is for that reason mainly that I oppose the amendment, and not in any hostility to other games.

Mr. Good

What would be the loss to the revenue if this amendment were passed?

Mr. Blythe

A few hundred pounds. The matter is not of any real financial consequence, one way or the other.

Mr. Carey

I should like to say that those connected with the G.A.A. have a lot to contend with, and they should get some sort of concession. I would not be a party to interfering with any foreign games. It is a matter for those who play games to choose what game they wish to play, but we in the Gaelic movement are entitled to some concession from a native Parliament. We have fought to uphold the national pastimes, and it is only right that some little concession should be given to us under this Bill. Small though it is, I believe it is highly appreciated by those connected with the G.A.A.

Mr. O'Connell

Lest this debate might develop into a question of Gaelic versus Association, I might explain to Deputy Carey that there is no concession whatever being taken from the G.A.A.

Mr. Carey

We are entitled to a preference.

Mr. O'Connell

Neither Deputy Fahy nor the Minister has attempted to show that Gaelic will be in any way injured.

Mr. MacEntee

The revenue will be.

Mr. O'Connell

A few hundred pounds, one way or the other, is not going to bring the followers of Gaelic over to Rugby or Association.

Mr. Moore

Will the Deputy admit that this is at least an indication of appreciation?

Mr. O'Connell

I have heard that too often in this House to pay much attention to it. There are quite a number of struggling clubs to whom this concession would be beneficial and it means only a few hundred pounds. I do not think it means very much in the way of encouragement or even in the way of indication of appreciation. The G.A.A. came along and got a concession. I am sure they did not make the point that they ought to be given a preference as against other people. They had a certain burden on them and they came to get relief.

Mr. Blythe

That is not so.

Mr. O'Connell

I am sure that is what was at the back of their mind, whatever they stated to the Minister. They got relieved of the burden, small as it was, and I am sure they would not object to this amendment. Since I raised this matter a week or ten days ago I have got no representation of any kind, and I am in touch with a good many Gaelic players, that they would object in any way if the concession which they had themselves obtained were granted to other people. I think it ought to be given and that there is no use in making it a big national question.

Mr. MacEntee

I have listened to the debate and I have come to the conclusion that, on the merits, I must vote against the amendment. I cannot see how, in the present precarious state of the Minister's Budget, he can afford to forego his right to collect even a few hundred pounds in tax from any source.

Mr. Esmonde

The Deputy is willing to give £300,000 to old age pensioners and this is only a question of a few hundred pounds.

Mr. MacEntee

I certainly think that even Deputy Esmonde's supporters in Wexford will agree that it would be much better to give £300,000 to old age pensioners than £200 or £500 or £1,000 to a football association, because that is what it amounts to. After all, we have to remember that the G.A.A. did establish the right to a special concession under the Revenue laws, because when an attempt was made to impose the entertainments tax upon football clubs in this country the G.A.A. stood out against it and refused to collect the tax, when the football association for which Deputies Esmonde and O'Connell plead did not stand out. They did not take their stand with the rest of the people, but preferred to acknowledge the right of another country to impose that tax and collect it and they willingly paid it.

Mr. O'Connell

Very good Irishmen have played Association football.

Mr. MacEntee

That may be so, but we are not dealing with that. The Association which governs the game was not prepared to take up its stand with the rest of the people. Although I am not an admirer of the G.A.A., and possibly not even an admirer of the Gaelic game, the G.A.A. have this to their credit, they did take their stand with us and, therefore, they are entitled for historical causes to some sort of concession. If we approach this matter from the point of view of equality, I take up the position which the Minister has taken up. I say that rather than make a general remission of tax in this matter we should impose it on them all, but at the same time another consideration enters into it. I suppose this remission applies mainly to football games. There are three football games—Rugby, Soccer and Gaelic. Let us consider Soccer. The one objection I have to the Soccer game is the spirit of pure professionalism which is extending wherever it is played throughout the Twenty-Six Counties. When a game becomes a business, then I think that game, and those who govern it and make a livelihood out of governing it, should pay income tax in the same way as any person deriving an income from any other occupation. Therefore, prima facie, so far as the Association game is concerned, I do not think, in view of the spirit of professionalism with which it is imbued, that any case could be made for its exclusion.

Take the case of Rugby. There, again, the great majority of clubs are well established, in wealthy circumstances and well able to pay out of the revenue they enjoy from the game. There is no man debarred from playing Rugby by virtue of the tax imposed, but certainly the clubs should surrender some part of the profits which they derive from the public, and not all of which are used, in the Twenty-Six Counties, at any rate, to advance Rugby merely as a sport. There have been political associations and political implications attaching to the Rugby game in the Twenty-Six Counties to which we cannot, because we are a legislative assembly, shut our eyes. The unfortunate thing about Rugby, which I regard as the best of the games and which I would be prepared to support, is that it has had political associations and a political taint in the Twenty-Six Counties. The thing that appeals to me in connection with it is that if you do remit any portion of the tax, so far as that game is concerned it will not all go to the advancement of sport pure and simple.

The G.A.A. is not tainted with professionalism and it gets support almost entirely from the poorer sections, from the country boys throughout the length and breadth of the land, who play it because it is the one sport available on Sunday. There is very little of the professional spirit entering into it. Therefore it does not make money. It is not played purely or largely by the most prominent personalities as a money-making game. Consequently, it is not played, as a rule, by the wealthier classes. Therefore, upon these two grounds—that it is a purely amateur sport and that those who play it can ill afford to pay any money to the State—apart from historical causes, it has a right to special consideration and treatment at the hands of the Revenue authority. For these reasons, I am opposed to the amendment.

Dr. Hennessy

The opposition to Deputy O'Connell's amendment is rather small. I would remind the Fianna Fáil Party that a very distinguished supporter of theirs, who was a candidate for the North City at the last election, Mr. Oscar Traynor, was a very noted Association football player. I do not believe that the Party opposite would consider that the playing of Association denationalised him in any way. We are very nervous about nationality in this country. I do not see, when France plays Rugby without detracting from its nationality, why it should be objected to here. There is nothing characteristically Irish about Gaelic football. If the claim were made for hurling, I could quite understand it. After all Gaelic football is an amalgam game and there is nothing in it characteristically Irish.

Mr. Moore

How do you explain its popularity?

Dr. Hennessy

I have played all the games. Gaelic football of to-day is a comparatively modern thing. When I was a boy, Gaelic football was not at all what it is to-day. I do not know even that there has been an improvement. At any rate, I think we should pass this amendment, because it in no way penalises Gaelic football. Certainly it would remove a section from the statutes that seems wantonly to discriminate against other games. I need not remind the House that the best Irishmen are playing other games, simply as games and nothing else.

Dr. O'Higgins

I desire to support this amendment moved by Deputy O'Connell. I do so in the interests of sport generally and of health. I think that when there is an unfortunate spirit evident in some parts of the country to more or less break up sport and divide various forms of sport by barriers that it would be decidedly unfortunate if the Parliament operating for all the people, in the interests of all the people, were to discriminate in favour of some sections of athletics and against others. The carrying of this amendment does not in any way worsen the position of Gaelic football. It merely, to a very slight extent, betters the position of other forms of football and we cannot forget, particularly members who have any association with the City, that the very poorest people in our cities are followers of Association football, that possibly the brightest couple of hours or the only bright couple of hours, that they have in the whole week are when they get off on Saturday afternoon to see an Association football match.

The idea of this amendment is to provide a little more income for those clubs. That income will be voted to improving the accommodation and making it a little bit more comfortable for the poorer people who follow up these games. I think it is rather a pity that any voice should be raised against catering for athletics and catering for sport generally in the country. It would be a different thing if the suggestion was to take anything away from Gaelic football. It is merely to give something extra to other forms of athletics, and unquestionably athletics generally are good for the health of the individual, and, therefore, beneficial to the State. It is only reasonable to expect the Parliament to cater for athletics and encourage athletics. It produces both discipline and health. I hope this amendment will be carried.

Mr. Esmonde

I would remind the House with reference to what Deputy MacEntee said, that the Soccer Association did not support the G.A.A. in refusing to pay the tax, that there was an arrangement made through the action of the late John Redmond in the British House of Commons. I was sorry to think that Deputy MacEntee would wish to impose a tax upon all sections of football. There is, as a matter of fact, less professionalism in Soccer football in the Irish Free State than in most countries. I think it compares very favourably with the position as far as other countries of the world are concerned, and there are comparatively few people who make livelihoods out of it. There are also a few people on the staffs making livelihoods out of other forms of football, including Gaelic, so I do not think that spirit should be confined solely to the Soccer Association of the Irish Free State. There are, I admit, a few vested interests in football in this country. That is perhaps one of the reasons why it is difficult to bring harmony into sport at the present time, but in time those difficulties will be got over. Class distinction has largely broken down, and, as Deputy Dr. O'Higgins has pointed out, the Soccer Association, which previously was looked upon as somewhat of an English and shoneen association, because of the fact that it was an English game in those days, and was played by the British Army, is now largely played by the very poor working classes of the towns. People would hardly accuse the people of Ringsend and that section of Dublin, who are amongst the most enthusiastic supporters of the Rovers and the Shelbournes, of being excessively snobbish.

With regard to what the Minister said about a preference for the Gaelic Athletic Association, I personally would be quite willing that there should be an extra preference for Irish games. I think the Government has done less than any other Government in Europe to assist athletics and the development of sport, and I would be perfectly willing and very glad to see that, for instance, the Government should give official recognition to hurling as a national game and that the All-Ireland final should be in the nature of a national holiday, with full honours from the State. That would, I think, do a lot of good in preserving what is, after all, a very distinctive and a very remarkable national game. Most countries have got national games. The English have cricket, the Americans baseball, the Spanish bull-fighting, and so on. I think that we have in hurling a very distinctive, a very remarkable and a very spectacular game which should get more support and get special preference from the Government. But that is no reason why the Government should victimise the small clubs of other associations who are trying to struggle along.

Mr. P. Hogan (Clare):

I fear that I will have to vote against the amendment, and I want to say exactly why I will have to vote against it. We have to consider whether we have national culture and national games or whether we have not. If we have national culture and national games I think it is entirely denationalising to put foreign culture and foreign games on the same level with them. If you are going to give the same privilege to Rugby football as you are going to give to Gaelic football you are saying in effect that you have no national game of football and you are going to put Rugby football on the same level. I think it has a denationalising influence, and for that reason I will have to vote against the amendment.

Amendment put.

The Committee divided: Tá, 41; Níl, 49.

Tá

• Aird, William P.
• Alton, Ernest Henry.
• Beckett, James Walter.
• Bennett, George Cecil.
• Brodrick, Seán.
• Byrne, John Joseph.
• Cole, John James.
• Collins-O'Driscoll, Mrs. Margt.
• Colohan, Hugh.
• Davis, Michael.
• Dolan, James N.
• Doyle, Peadar Seán.
• Duggan, Edmund John.
• Dwyer, James.
• Esmonde, Osmond Thos. Grattan.
• Everett, James.
• Good, John.
• Heffernan, Michael R.
• Hennessy, Thomas.
• Hennigan, John.
• Henry, Mark.
• Jordan, Michael.
• Kelly, Patrick Michael.
• Law, Hugh Alexander.
• Leonard Patrick.
• Mathews, Arthur Patrick.
• McDonogh, Martin.
• Murphy, James E.
• Murphy, Joseph Xavier.
• O'Connell, Richard.
• O'Connell, Thomas J.
• O'Connor, Bartholomew.
• O'Higgins, Thomas.
• O'Mahony, Dermot Gun.
• O'Sullivan, Gearóid.
• Roddy, Martin.
• Sheehy, Timothy (West Cork).
• Thrift, William Edward.
• Tierney, Michael.
• Vaughan, Daniel.
• White, John.

Níl

• Allen, Denis.
• Blaney, Neal.
• Blythe, Ernest.
• Boland, Patrick.
• Brady, Seán.
• Buckley, Daniel.
• Carey, Edmund.
• Carty, Frank.
• Connolly, Michael P.
• Cooney, Eamon.
• Crowley, James.
• Crowley, Tadhg.
• Daly, John.
• De Loughrey, Peter.
• Derrig, Thomas.
• De Valera, Eamon.
• Fahy, Frank.
• Flinn, Hugo.
• Fogarty, Andrew.
• Gorry, Patrick J.
• Goulding John.
• Hassett, John J.
• Hennessy, Michael Joseph.
• Hogan, Patrick (Clare).
• Holohan, Richard.
• Houlihan, Patrick.
• Jordan, Stephen.
• Kent, William R.
• Kerlin, Frank.
• Killilea, Mark.
• Lemass, Seán F.
• Little, Patrick John.
• Lynch, Finian.
• McEllistrim, Thomas.
• MacEntee, Seán.
• MacEóin, Seán.
• McFadden, Michael Og.
• Mongan, Joseph W.
• Moore, Séamus.
• Mulcahy, Richard.
• Nolan, John Thomas.
• O'Hanlon, John F.
• O'Kelly, Seán T.
• O'Reilly, John J.
• O'Reilly, Thomas.
• Powell, Thomas P.
• Ryan, James.
• Sheehy, Timothy (Tipp.).
• Ward, Francis C.

Tellers: Tá, Deputies Esmonde and J.X. Murphy; Níl, Deputies Moore and Carey.

Amendment declared lost.

Question—"That Section 4 stand part of the Bill"—put and agreed to.

Question—"That Sections 5, 6 and 7 stand part of the Bill"—put and agreed to.

SECTION 8.

Dr. Hennessy

I move the following amendment for Deputy Gorey:

Before Section 8 to insert a new section as follows:—

Where the Revenue Commissioners are satisfied, in respect of any article of furniture (other than a bedstead) or any component part of any article of furniture (other than a bedstead) which but for this section would be chargeable with the duty imposed by Section 18 of the Finance Act, 1925 (No. 28 of 1925), that the quantity of wood contained in such article or component part forms only an inconsiderable portion of the whole of such article or component part, the Revenue Commissioners may, subject to compliance with such conditions as they think fit to impose, permit such article or component part to be imported without payment of the said duty or repay any such duty paid on importation.

The wording of the amendment furnishes its own argument and I ask the Minister to accept it.

Mr. Blythe

This amendment deals with a matter about which representations have been made frequently. I have had it examined recently and the Revenue Commissioners are satisfied that they could administer the Act if the amendment were adopted. It will have the effect of removing certain anomalies. It has sometimes happened recently that you might have an article valued for £5 but because it contained wood, even to the value of only a farthing, it would be liable to tax. There have been articles of metal with some portion of the handle in wood and, because they were considered to be furniture partly of wood, they were liable to tax. With this amendment adopted it would mean that the Revenue Commissioners would have authority to exempt such article. I think, on the whole, it is desirable that it should be done. Large importers have been able to avoid the tax by having the wooden parts removed and having them screwed in when the article arrived. Small importers, however, were not sufficiently well up in such matters to avoid the tax.

Mr. Law

I am glad that the Minister has been able to accept the amendment. The present system has caused much difficulty, especially in the Border counties, where people have been put to much annoyance. Though it is a small matter, I am grateful for the concession.

Mr. MacEntee

How will the Revenue Commissioners say "that the quantity of wood contained in such article or component part forms only an inconsiderable portion of the whole"? It seems to me that the wording is somewhat vague. The Commissioners will probably have to issue new regulations. Take the case of a bucket of which the handle only is made of wood. In that case would the bucket be liable to duty? Would the Commissioners have to issue a complete schedule showing the articles only an inconsiderable portion of which is made of wood and which will be admitted?

Mr. Blythe

What will happen will be that instructions will be issued to officers which will probably contain a schedule, or a list of cases, in which exemption will be given—something along the lines of the phrase which the Deputy used. They will probably state, for instance, in the case of buckets, that if the handle only is of wood they will be exempt from duty. That is the way in which it would be done. That information will be conveyed to importers. If any question of doubt arises the Commissioners will have to have a case submitted for their determination, and in the course of a month or two the whole matter will be inquired into.

Mr. MacEntee

The amendment is rather loose, and is probably capable of extension beyond the limits within which the House, in its present frame of mind, would like it to operate. The Minister indicated how the Commissioners would give effect to the amendment but, unless those were statutory rules and regulations, how do we know that cases may not arise in which the handle, though made of wood, might contain some ornament or fastening which would not be made of wood? Instead of saying "only an inconsiderable portion," there should, at least, be some definite figure laid down, say, one-fifth, one-tenth, or one-twentieth of the whole made of wood.

Mr. Blythe

We considered that and found that that would present still greater difficulties. Whether you mentioned bulk or value you would find that a fairly complicated schedule would have to be drawn up and that things which you wanted to have exempted would not be exempted and that other things were exempted. The only thing to do is to administer it for a time. The Commissioners will pay full attention to the word "inconsiderable" and will not admit any article in which the wooden part could be otherwise described. I think that the Deputy can take it that full attention will be paid to that and that the whole matter will be dealt with quite carefully. If, after a year or so, it is found necessary to define the matter more closely it can be done. At the moment, when a miscellaneous mass of articles has to be dealt with, it would be difficult to lay down a proportion of say one-fifth or one-twentieth of the value of the article. It may be impossible to determine the value but, on the other hand, if you talk of bulk you might get extraordinary results. You might have an article of which the wood might be really the valuable part.

Mr. MacEntee

But it would be an "inconsiderable portion of the whole." The amendment would not exclude the case which the Minister has given, the case of an article where the wood might be an inconsiderable portion of the whole yet, on account of the workmanship, it might be the principal feature of the article.

Mr. Goulding

I hope that the Commissioners, when interpreting this amendment, will bring to bear upon it a little more common sense than they do in other matters. I wish to bring a case to the Minister's notice. A case of cutlery was imported recently in which the case was far less valuable than the cutlery but they charged full duty on the parcel. They charged the import furniture duty on the cutlery though if the cutlery was taken out and sent in a separate parcel they would have only charged on the case.

Mr. de Loughrey

I would like to support this amendment and I am surprised that there is any objection to it. It is a matter that has been crying for redress for many years. The amendment is, I take it, to deal with obviously unjust cases that arise, similar to those to which Deputy Goulding has referred. I think that the border-line cases, to which Deputy MacEntee alluded, can be left to the discretion of the Revenue Commissioners and of the Minister. The real injustice that has prevailed all along has been in connection with cases where the amount of wood in the article was really infinitesimal. The worst feature of it was that you never knew what was going to be made liable to duty. I had recently an experience in connection with the importation of a portable electric lamp. A similar parcel had come in several times free of duty. Some revenue officer discovered, however, by removing a piece of baize at the bottom of the lamp that there was a sort of small wooden ferrule attached. It could probably be manufactured at twopence a dozen, and though the whole article was only worth about ten shillings, it was liable to duty. I take it that it is to rectify such cases that the amendment is proposed. Articles containing only a small portion of wood have been made liable to duty. I think that the proposal should have been in force years ago, and I take it that after a short time it will be found to work smoothly.

Mr. Colohan

Could the Minister inform us whether there is any duty on wooden wheel-barrows?

An Leas-Cheann Comhairle

They are not articles of furniture.

Mr. Blythe

A wheel-barrow is not yet regarded as a necessary article in every home.

Mr. Colohan

It is just as much furniture as cricket pads or cricket gloves, which Deputy Gorey mentioned.

Mr. Blythe

They were apparel.

Mr. Colohan

A wheel-barrow is much more useful. A considerable number of them have been imported recently though they could be manufactured at home more cheaply and better than the imported article.

An Leas-Cheann Comhairle

Is the Deputy advocating a new tax? He is a long way from the amendment.

Mr. Colohan

The amendment refers to articles of furniture, and I submit that wheel-barrows are articles of furniture. I hope that the Minister will take them into account and put a tax on imported wheel-barrows, thus giving people here a chance of making a living.

Amendment put and agreed to.

Question—"That Section 8, as amended, stand part of the Bill"— put and agreed to.

SECTION 9.

(2) This section applies to every mechanically propelled vehicle—

(a) which is a mechanically propelled vehicle to which paragraph 6 of the Third Schedule to the Finance Act, 1926 (No. 35 of 1926), applies but is not a hackney carriage within the meaning of section 4 of the Customs and Inland Revenue Act, 1888.

Mr. Everett

I move:

"In sub-section (2) (a), line 18, to delete all words after the word ‘applies' to the end of the paragraph."

In connection with this amendment, I desire to point out that originally all hackney cars were taxed at £12 per annum, but in the Finance Act of 1926 they were charged a licence duty at the same rate as private cars with a maximum of £20. The object of the amendment is to extend the rebate of 25 per cent. to hackney cars with six seats. I trust that the Minister will accept it.

Mr. Blythe

The reason why this concession, which was applied to old cars, was not applied to hackneys was that it was not thought desirable to encourage the employment of old cars, or cars that would soon become very old, as public-service vehicles. We have admitted that there are certain grounds for giving the private owner who is running an old car and who suffers the disadvantage of running an old car some concession, but I do not think we should go the length of doing what would be done by this proposal —encourage a position in which old cars would be practically the sole cars employed for public service, with the disadvantages which would tend to fall more frequently to the members of the public using those cars.

Mr. Everett

I can quite appreciate the Minister's point with regard to the protection of the public. But if a car is certified to be quite safe and in good order, would the Minister extend the rebate to taxis?

Mr. Goulding

There is another point in connection with this question—that many of those old cars are substantially sound but may require some new parts. The Minister would get the tax which is levied on the new parts and thereby get some slight recompense for this concession.

Mr. Blythe

The question is not so much the concession involved; the loss would fall on the Road Fund and the duty that would be collected on parts coming in would go into the Exchequer. This is really a question of whether we ought to encourage, as we would be encouraging, the use of old cars, to the exclusion of new cars, in the public service. It is not a question, either, of exposing the public to danger, because there might be some inspection system devised by which that would be avoided, but the public would be subject to delays and to uncertainty as regards arriving at their destination with the promptitude that they would be entitled to expect.

Mr. Goulding

May I point out to the Minister that we are importing too many new cars and that it would be far better to use old cars and avoid importing new ones as far as possible.

Mr. Blythe

That applies to the private car all right but we have given the concession to the private car.

Mr. Everett

Will the Minister extend the concession if a car be certified as suitable?

Mr. Blythe

It would be difficult to arrange that.

Amendment put and declared lost.

Section 9 ordered to stand part of the Bill.

SECTION 10.

Mr. Blythe

I move amendment 13:—

Before sub-section (4), page 6, to insert a new sub-section as follows:—

"(4) Where a person commits an offence under sub-section (1) of section 6 of the Hawkers Act, 1888, and the act constituting the offence is of such character that the proper licence within the meaning of that sub-section is a licence in respect of which the excise duty is ten pounds, such person shall incur a fine of fifty pounds over and above any other penalty (other than the fine of ten pounds mentioned in the said sub-section) to which he may be liable."

This amendment is proposed because the present penalty is simply £10. That is because the present hawker's licence is £2. We wish to provide that where the licence is £10 the penalty or failure to take it out will be £50.

Amendment put and agreed to.

Question proposed: "That Section 10, as amended, stand part of the Bill."

Mr. Fahy

This is a section on which there is much difference of opinion not only on all sides of this House, but throughout the Free State. In fact, radical differences of opinion exist. You have town versus country, and cross currents even there, as to the advisability of such a tax. You have differences of of opinion between local traders and dealers who come into their areas from outside. You have differences of opinion regarding the advisability of allowing agents for foreign goods to travel around with these vans. In certain cases, the section might lead to the abuse known as "trucking," against which the Truck Act was passed. There is no doubt that to a certain extent these travelling shops hit the towns. Whether they are inevitable as a part of material progress, I do not know. Whether the small towns are doomed in any case. would be also difficult to say. At any rate, the development is there, and the Minister has already advanced reasons for this tax. There are a few points in connection with it to which I should like to refer.

One matter was raised here by Deputy Ward—the danger of infection from second-hand clothes if they are allowed to be sold throughout the country. There should be some provision for seeing that such apparel is properly disinfected. I have had reports from medical men —I have not had particulars of individual cases—that in certain instances appalling and shameful diseases were caused through the importation of such clothes which had not been disinfected. If these clothes are to be sold at all, provision should be made whereby the poor who buy them will be protected against infection.

Another question that should be considered is whether booths or stalls should be allowed, on the fair or market days, in small towns at the very door of the ratepaying shopkeeper.

If the Minister wants to prevent these travelling shops carrying on business, he should consider whether or not this tax is adequate. We would like to hear if this tax is intended as a revenue tax or if the Minister thinks that a tax of £10 is going to prevent a motor travelling shop from going round the country. Is there not also the danger that the £10 tax, which is very small, will be passed on to the very poorest people who buy second-hand clothes and deal with those people who are known as "cheap jacks"? These people may simply add on a halfpenny or a penny to the articles they sell and pass on the £10 to the purchaser in that way. A tax may not, therefore, be a preventive and may not effect the purpose the Minister desires to effect. True, some people would say there should not be interference with a service rendered to the farming community. The shops travel round to the people's houses and it is argued that they provide a proper distribution of goods and afford the same facilities to the farmers, particularly in remote places, that the people in the towns and villages enjoy. Others say that the service is not required, that the country people like—as, from my own experience, I believe they do—to go into the town to see what is going on and to hear all the news. It is urged that this is not really a great service to them. We should also like to hear from the Minister as to whether he favours the travelling shop that buys produce from the farmer but will not give money in return. The farmer in some cases is obliged to take goods. Should not the farmer be given the option of taking payment in cash?

We notice that certain perishable foodstuffs are exempt, such as meat. fruit, bread, vegetables and fish. Farmers down in Galway do not use a lot of fish nor do they use much meat, except bacon. The Minister might state why he would not add tea and sugar to this list. There, again, you would have the opposition of the local shopkeeper, but we would like to have the Minister's opinion on that. They are essential foodstuffs and they are much more often a medium for barter or exchange than meat or fish or fruit. These are a few points on which we would like to have some information from the Minister.

Mr. Goulding

There is one point in connection with this section that is rather interesting. £10 means nothing to any of these travelling shops that are doing a fairly good business. It would seem as if a sort of multiple travelling shop is coming into vogue now. Is it fair to put the same tax on the multiple shop as on the little trader who goes around trafficking in eggs, carrying a few parcels of goods and using them in trading with the farmers for eggs? It seems hardly fair to put the same tax on the two classes of dealers.

I raised the point before that this tax should be left in the districts in which it is levied. The shopkeepers in the towns are losing a considerable amount of trade. They are less able to pay their rates and taxes than they were, and this impost, instead of being a revenue tax, should be devoted to lowering the rates which these shopkeepers have to pay. £10 is not a very large sum but, even so, if these travelling shops become more numerous it is quite possible that a fairly substantial sum would be levied in certain districts. That sum should go to the relief of the rates on the shopkeepers in the towns. It is not fair that it should be handed over to the revenue.

Mr. Blythe

With regard to the point raised by Deputy Goulding, it would not be possible to do what he suggests. An equivalent amount of money to that collected in this way will go to the relief of rates, because it will form part of the Licence Duties Grant, which is part of the Local Taxation Grant, which goes to the various local authorities. A corresponding amount to that realised by the increase in this duty will go to the various county councils. Of course, it might be collected in two counties, and it would be spread over the others just as the Licence Duties Grant is spread. Although you cannot relate the amount that is collected in any district to the extra amount that that district will get, yet, taking the country as a whole, there will be paid out of the Exchequer to the Local Taxation Account an amount equal to the actual amount that will be received from this tax, so that the whole additional amount will be devoted to local purposes in some part of the country.

Mr. Goulding

Will it go in relief of the county rate or in relief of the rate of the particular town affected?

Mr. Blythe

In relief of the country rate. I do not think the other course could be arranged. Deputy Fahy discussed the question of the tax generally. I explained in my Budget statement recently how we came to propose this particular tax. We had complaints about the way in which the small towns were being injured by the growth of the travelling shops and particularly by the travelling shops in motor vans. When we came to look at that matter, we found that whereas the travelling shop, which was a horse-drawn vehicle, paid the £2 tax, the travelling shop, which was a motor vehicle paid nothing. And we at once came to the conclusion that whether or not it would be of great help to the towns that at least it was fair that the motor shop should pay something more than the horse-drawn vehicle, and we came to the conclusion that a figure of £10 in view of the extra load which a motor van could carry and the extra range it could cover was not too much. I believe the £10 duty will tend to decrease the number of these shops to some extent. It will to some extent remove the inequality which exists between them and the shopkeeper who has to pay rates for his premises where the travelling shopkeeper has not to pay any, and then some small fraction of this tax will go to the shopkeeper in relief of rates. On further consideration and really as an afterthought we decided to apply the £10 tax in this section not merely to the travelling shop but to the person whether he has a horse-drawn vehicle or motor van who sets up a pitch or stall or establishes himself in a market place or street for the purpose of selling. I think it is really fair that a man who pays no rates and no rent should at least have some contribution levied on him. I do not think the travelling shop which will not give money should be encouraged. I think it should be rather discouraged. Deputy Fahy asked why tea and sugar were excluded. They were excluded because we were only including these articles which were perishable and of which a supply could not be taken home. I think the majority of vans which bring around tea and sugar would also bring around other articles, not articles of food, to sell, but if those particular vans are horse-drawn they are only liable to the £2 tax as before. One might say this is not adequate, but at any rate I do not think anyone can object to it in regard to the fact that the hawkers' licence is to be charged at the rate of £2 for horse-drawn vehicles. It will serve to give us information as to the number and location of these shops and give us information to decide whether any further imposts should or should not be made.

Sections 10 to 16 ordered to stand part of the Bill.

Mr. Blythe

In connection with Section 17 there will be a small drafting amendment on report.

Sections 17 and 18 agreed to.

Mr. Good

In Section 19 there is just one point I would like to draw the attention of the Minister to. It will be remembered when we were dealing with the Finance Bill last year we decided to alter the basis of assessment from three years, which had been the practice previously, to one year. But we found during the year that certain difficulties arose under the one year assessment, and a rather important one of those difficulties was brought to the attention of the Minister. That was where losses had been incurred in two years prior to the year of assessment, that is, the third year, and where the assessment is made on the third year the party has lost the advantage of the reduction that would have accrued if the two prior years had been taken into account. That difficulty was met in Section 2. We had it here before us to-day.

There is a further difficulty that has arisen, and my attention has only been drawn to it in the past couple of days. In the case of an assessment made in one year where the profits of that year are fairly large and the profits of the two preceding years are small, under our arrangement of last year where the assessment is made on the previous year it means that the taxpayer has to pay an undue burden in that particular year, because the assessment is made in one year. Deputies will see at once the point, that if the three years' average had been taken into account the two small years would have reduced the one large year, but owing to arrangements made last year the assessment is made on the year previous. Consequently in that case the assessment in some few instances—I do not say it applies to a large number—is an unfair burden, and I have been asked to put before the Minister that particular case to see if he cannot meet it, and if he could introduce something on the Report Stage that would meet the difficulty.

Mr. Goulding

With reference to the point made by Deputy Good, it is particularly apposite as applied to this present year. As a result of the work of the travelling shop and the serious drop in the price of butter, many country traders are going to have a bad year, and if their profits are based on the profits of last year, which were fairly good, it is going to be very hard on them.

Mr. Blythe

Any system would be hard on people whose business is going down, and Deputy Good has pointed out that it is sometimes hard on the person whose business is going up. Someone suggested that the taxpayer should be allowed a choice as to whether he was to be charged on the basis of last year or on the average of three years, but that would have the disadvantage that the taxpayer would gain and the revenue would lose, and whatever happened it would mean a definite net loss of revenue. If some individual hard cases were submitted to me I would consider whether anything could be done or not, but I do not feel inclined at the moment to adopt the solution of giving the taxpayer the choice because that puts him in a very favoured position. If the old system were retained there would be some who would be better off, such as those whose income is going down. The taxpayer would pay less if he paid on the basis of the preceding year—that is to say, he would on the average. I would only like to consider it on the basis of something like concrete cases that would be put up to the Department.

Mr. Good

I am obliged to the Minister. If he allows a reasonable time between this and the Report Stage I will be able to get these cases put before him.

Mr. Blythe

It may be done in the Seanad.

Mr. Good

Certainly I will get the information he requires. It is not because it applies to a large number, but hardships occur, and as far as we can meet these hardships we should meet them.

Sections 19, 20 and the Title agreed.

The Dáil went out of Committee.

Bill reported with amendments.

Report Stage ordered for Wednesday, 11th June.