Finance Bill, 1931—Second Stage.

I move the Second Reading of this Bill. The Finance Bill embodies the various Budget Resolutions which have been passed by the House with, in certain cases, modifications arising out of representations since received either in the House or outside the House. It also gives effect to certain other proposals which were outlined in the Budget statement. There are also in it a number of minor supplementary provisions. The only thing of importance which has not been before the House is the provision in Section 31 which provides for the payment of interest by the Local Loans Fund. It has always been intended that the Local Loans Fund, which is supplied by the Exchequer with capital out of borrowed money on which interest has to be paid, should pay interest to the Exchequer. In the early years the amount of money actually outstanding in the Local Loans Fund was small, and no steps were taken to provide for the actual payment of interest to the Exchequer. The sum has increased very much in the last two or three years. It has now become substantial. It is accordingly provided that interest shall hereafter be chargeable, and also that Local Loans Fund money may be used by the Exchequer as it has been used in the past. When that occurs interest shall be payable to the fund for the use of that money. I think that is the only matter of importance in the Bill.

Surely the Minister is going to give some explanation of Section 2, which proposes an amendment of Section 8 of the Finance Act of 1925; of Section 4 which introduces a new principle into the income tax law; of Section 28 which proposes to extend the privileges of certain public utility companies, and of Section 32. These are matters which were not touched on at all by the Minister in his statement. I think that before asking the House to agree to the Second Reading of the Bill he should explain it in greater detail than he has done.

Section 2 arises out of a dispute which occurred recently as to the liability of executors to pay duty on unpaid income tax over a period of six years prior to the year of assessment in which a deceased person died. Where a person is still alive, of course the assessment can be made and the duty can be recovered for the six year period. It was intended, and possibly if the matter were litigated out to the full it would be held, that the same liability fell on the estate of a deceased person. However, the section is put in to make certain that the tax will actually be recoverable in such cases. With regard to Section 4, it really arises also out of a case which was in the courts recently.

And is still in the courts. The cases that Sections 2 and 4 deal with are still in the courts.

Not Section 4. Section 4 arises out of a case in which a public servant persistently declined to furnish any returns of income. Certain proceedings were taken against him in respect of that failure. They were successful in the High Court, but failed in the Supreme Court on the grounds that proceedings could not be taken until, as a matter of fact, the assessments had been made and had become final and conclusive. It is considered necessary, for reasons which I shall detail on the Committee Stage, that there should be power to proceed immediately against a person who fails, neglects, and refuses to make returns of income. It would be unsatisfactory and anomalous that some estimated assessments would have to be made without the information that ought to be available for the making of them, and that proceedings could only be taken after they had become final and conclusive. Section 28 is for the purpose of continuing the exemption of certain public utility societies, such as railways and building societies.

And tramways?

Certainly, railways.

And gasworks?

The companies which have heretofore been exempted since the tax was first introduced. There is a proposal to add the Agricultural Credit Corporation. There are certain other exemptions which are of very little financial importance in favour of the Agricultural Credit Corporation. It is clear that these exemptions have to be made if the Credit Corporation is to have a chance of continuing its work on any sort of a reasonable basis.

Before the Minister leaves that section would he explain how it is that so far as public utility companies are concerned—gasworks, waterworks, tramway undertaking, etc. —that the limit of 1934 is substituted for the limit of 1931 in regard to these exemptions?

It has been renewed each year for a period of three years. The last time it was renewed was in 1929. That was for a period of three years, and we are simply continuing that. It might easily be made permanent if that is what the Deputy has in mind, because I think there will always be a case, unless we are to have extraordinary changes in conditions, for these exemptions.

Can the Minister justify the exemptions?

I do not propose to justify them on this stage of the Bill. I will do so on the Committee Stage. This is merely carrying on a provision that has been in existence since the Corporation Profits Tax was first imposed. Section 32 is simply a machinery section which arises out of the dissolution of the old Department of Agriculture and its re-arrangement incidental on those changes. The Acts which have necessitated this section are the repeal of the Agricultural and Technical Instruction (Ireland) Act by the Vocational Education Act of 1930 and by the Agriculture Act of 1931.

The Minister and I think the House have been under the misapprehension that from year to year the Finance Bill is merely a redaction as it were, first of all of the financial statement that the Minister makes every year, and secondly of the consequential financial resolutions which he submits to this House. But I think the questions which I have put to the Minister have shown that in fact that is not the case, that without due notice given to the House, very important changes in the law might be proposed in the Finance Bill submitted to the Oireachtas every year.

The Minister has proposed at least two amendments to the existing income tax law. In that connection I would suggest another which he might fittingly propose. It arises out of Section 1 (3), which proposes that the several statutory and other provisions which were in force during the year beginning on the 6th day of April, 1930, in relation to income tax and surtax shall, subject to the provisions of Part 2 of the Finance Act, 1929, and of this Act, have effect in relation to the income tax and surtax to be charged as aforesaid for the year beginning on the 6th day of April, 1931.

Amongst several statutory and other provisions continued in force under this section will be Section 3 of the Act of 1925 which provides that military gratuities and demobilisation pay to officers of the National Forces or the Defence Forces shall be exempt from income tax. I do not wish to enter into the merits of that provision at the present moment. Some people may have good arguments from the Ministerial point of view to put forward in support of it, but I say that the House which has granted this privilege of exemption to certain military pensioners, at the same time should see that the pensions awarded to the dependents of the men executed in 1916 should not be assessed for income tax; that the pensions awarded to widows of 1916 men shall be equally exempt from income tax with the pensions of officers who have served in the National Forces, which I presume mean the National Army and the Defence Forces. I cannot see any reason for discrimination, and I am sure the Minister could not justify that discrimination to the House. I am, in fact, aware that the pension of one lady has been assessed for income tax. When the opportunity presents itself on the Committee Stage I hope the Minister will amend the law so that there shall be no discrimination as between these cases and pensioned officers of the National Army.

In relation to Section 2, the position in that regard seems rather extraordinary. Originally under the Act of 1918 trustees of deceased persons who furnished wrongful or misleading returns were liable within three years to have an additional assessment made on them. It happened however in the year 1923 that Rule 18 of the General Rules was amended to extend the period under which trustees or executors are liable from three years to six years. Two years after that the Act of 1925, sub-section 1 of Section 8, was passed by this House, and it states:

(1) Subject to the provisions of this section, an assessment or an additional first assessment in respect of income tax chargeable for the year beginning on the 6th day of April, 1922, or any subsequent year may be amended or made (as the case may be) under Section 125 of the Income Tax Act, 1918, at any time not later than six years after the expiration of the years of assessment.

I think the position was that so far as trustees were concerned they were not dealt with in the original Acts, but were dealt with in the Rules. There was nothing, as Section 2 of the Bill before the House shows, in Section 8 of the Act of 1925, which amended the General Rules and particularly Rule 18, made under the original British Act of 1918. Apparently those who drafted the Act of 1925 were under the impression that the writ of the British Houses of Parliament still ran in this country, and that there was not any necessity for them to amend the Bill; that automatically the Act of 1923, passed by the House of Commons amended the General Rules in relation to income tax here in 1925.

Members of Fíanna Fáil have often been twitted in the House, while labouring under all the disabilities which Private Deputies do labour under, when they draft legislation. They were twitted on their slipshod and faulty draftsmanship. In my opinion there was very little justification for that charge at any time. Any proposals which we have ever submitted to the House have been carefully thought out and were put in such a form as to be easily understood and were never ambiguous or doubtful. As a consequence members of Fíanna Fáil have never had to introduce Bills to remove doubts, as we have many times seen Ministers on the other side do, to clarify ambiguous and doubtful phrases in one of their own measures, and in some very important measures. At any rate the law remained as it is at present from 1922 onward until a case was brought to court, and there for the first time the Minister, and the Revenue Commissioners charged with the administration of the income tax law, found that, after all, occasionally the law may be on the side of the taxpayer, and that in fact trustees or executors were not bound to accept this additional assessment— at least that additional assessments could not be made on trustees unless made within the period of three years from the death of the deceased. I think that is approximately the position. The wording of the section is rather obscure.

The attitude which I take up in regard to this is that I do not see that a good case has been made for the amending of the existing rules. After all a man acting as a trustee, as an executor or administrator of an estate, discharges a very onerous and a very responsible duty and I think if he is called upon to accept liability, at least his liability as far as income tax is concerned should not be extended from three to six years. I think a three years' period is long enough taking into account the fact that when a deceased person dies, quite a lot of information comes into the hands of the Revenue Commissioners, which normally they did not get during the lifetime of the deceased. Surely inside three years they ought to be able to make whatever investigations are necessary to satisfy them whether the additional assessments should be made or not. If they are not able within three years to do that, I think the executor or administrator should be released from any further responsibility in the matter, and be allowed to wind up the estate as quickly as he can. For that reason, we are not disposed to adopt this amendment unless the Minister can put forward a very good reason for it.

I have not anything very much to say in relation to Section 4. I merely wanted to have it brought out here that again the Income Tax Commissioners have been pursuing the income taxpayer without having the law on their side. This matter had to be carried by the Commissioners to the Supreme Court before the attitude which the taxpayer took up was vindicated. It has now been vindicated, and the action taken by the Minister is one of revenge, not indeed upon the individual taxpayer concerned but upon every taxpayer in the community. He seeks to amend the law, so that when next the sleuthhounds get upon the trail they will not be on a wrong scent so far as the persons affected by this section are concerned.

Sections 5 and 6 of the Bill are possibly, from the point of view of the community, the most important sections. Section 6 is the one under which the tax upon sugar is proposed to be increased by ½d. per lb. In that connection, I would like the House to feel that this is going to impose a very heavy burden upon the poorer sections of the community. The excuse which the Minister has offered to the House for increasing the tax on sugar is that he proposes to provide something like three-quarters of a million pounds for the relief of rates upon agricultural land. During the debate on the general financial resolution here we had some statements as to the burden which this tax upon sugar was going to impose upon the general body of the taxpayers.

While we contended that it was going to be a heavy and significant burden so far as the small farmers and agricultural labourers of the country were concerned, and so far, too, as the industrial workers in the towns were concerned, on the other hand, the Minister said that our figures were grossly exaggerated; that the people in the towns and the country nowadays took very little sugar, particularly the poorer sections of the community, and that consequently an increase in the sugar tax was not going to be a significant impost upon the community at all. We had a debate here shortly after that dealing with the cost-of-living bonus, and one of the arguments which was put forward in that connection was that the household budgets upon which the cost-of-living bonus was computed were not truly representative of a particular class in the community—were not what might be considered a normal budget in the household of the civil servant. But nobody either from these benches or from the benches opposite contended that the figures were not fairly representative so far as the general body of industrial and agricultural workers were concerned.

Accordingly, when I started an investigation into this matter the first group of statistics to which I had resort were the statistics compiled by the Committee which was set up to report upon the cost-of-living in the Free State in 1922. According to the Report of that Committee we find that sugar is responsible for 3.25 per cent. of the total expenditure in the standard household budget, in which 57.05 per cent. of the total expenditure is on food. In that connection I would like to point out to the House that the smaller the income enjoyed by the household the larger the portion of that that is spent upon food, and that is clearly proven by the figures given by that Committee on the cost of living. According to the figures supplied by them in households in which the income is about £3, the net expenditure on food is 61.1 per cent. of the whole, as contrasted with the average percentage of 57.05 for all household budgets under examination, in which cases the incomes ranged from £3 up to £6 and over. Consequently, in households in which the income is £3 and under, the expenditure on sugar is 3.47 per cent. of the whole in a standard household. A standard household, according to the Cost of Living Committee, is one in which there are two adults and three children. It roughly works out at that number of persons per family in the agricultural districts in the country; actually the figure is 4.67 persons in each family.

Let us consider on the basis of these figures what the effect of a tax on sugar is in the household of an agricultural labourer or a small farmer. In order not to go into the matter in too great detail, and not to have too many calculations, I propose to take the average income of the small farmer or agricultural labourer as ranging from 27/- to 30/- per week. I know that there are large numbers of agricultural labourers getting nothing like 27/- a week. Some of them are getting as low as 18/-. I think 25/- a week is the figure in many districts.

Not in my district. None of the labourers there get less than 30/- a week in cash.

The official returns of the Department of Industry and Commerce give the average wages in Kildare at 26/- a week.

Irrespective of such things as potatoes, fire, housing, milk, and other things, I know that it is 30/- in my district.

According to Deputy Lemass the average is 26/- in Kildare, and I am taking the figure at 27/- to 30/-, so that it cannot be contended that my figures are unduly favourable to the arguments I am putting forward. The smaller the income the larger the percentage of it that is spent upon food. Consequently, if the wages I have taken for agricultural labourers are a little too high, neverthless not even Deputy Wolfe will state they exceed 30/-.

Mr. Wolfe

I did not say in every case, but I know that in quite a large number there is nothing less paid in cash to the labourers than 30/-. That is in actual cash, irrespective of his house, potatoes, fire and milk.

Well, that is the highest in actual cash. I am dealing now with cash incomes. Sugar has to be paid for in cash. The maximum that Deputy Wolfe would pay would be 30/- a week.

Mr. Wolfe

If you take into account the other things it would come to £2 a week.

In such households the expenditure on sugar amounts to 1s. 0½d. per week, and that is the equivalent to 4½ lbs. of sugar in a poor household of five persons. Any person who has ever had anything to do with a public institution or who knows anything about an internment camp will know that four and a half pounds of sugar per household per week for five persons is not by any means an excessive consumption for that commodity. An additional impost of ½d. per lb. on sugar in these households is equivalent to a tax of 2¼d. a week or 9s. 9d. per year.

Probably the Minister will say the figure I have chosen of 4½ lbs. a week is too high. I would like to deal with that in advance. I am sorry I have to quote so many figures, but we have to try to make some sort of definite estimate as to what the sugar tax will mean for our poorer people. It is very important that the farmers should know exactly where they stand under the de-rating proposals of the Minister, and realise that he is robbing them with one hand, while bribing them with the other. We want them to see that while there is a comparatively small section of them who will gain, the vast majority of them will lose substantially.

It has been difficult to get exact figures as to the consumption of sugar in the Free State. I have taken the average of the years 1924 to 1927, the years before the sugar factory in Carlow was brought into full swing. The average import of sugar into the Irish Free State during the years 1924 to 1927 was 82,000 tons per annum. That, I think, fairly represents the total consumption of sugar for all purposes in the Free State. The number of private families in the Free State, according to census returns, is 622,687. In addition to that number there are 181,000 odd individuals—I do not mean odd in the sense of being peculiar. There are, at any rate, 181,000 and somes hundreds of individuals living in religious communities, institutions, barracks, hospitals, and in other forms of solitary or community life.

The average consumption of sugar in the Free State is .55 cwts. per annum per person. The amount of sugar, therefore, consumed elsewhere than in private families is just under 5,000 tons. We are thus left with 77,000 tons of sugar, which is consumed one way or another by the 622,687 private families in the Free State. This gives an average consumption per household of 2.48 cwts. of sugar per annum. The corresponding estimate which I have derived from the cost of living figure is 4½ lbs. per week, 234 lbs. per year, or 2.09 cwts. The figure which I derived from the national aggregate consumption is 2.48 cwts. per annum, almost a difference of .4 cwts., or 45 lbs. of sugar. As the figure derived from the Cost of Living Committee's report is so very much lower, I think it is a tolerably exact figure, indicating the consumption of sugar in all its forms in the poorer households of the community.

I am not even certain that I am justified in taking too low a figure. I think it is too low, but it is one, at any rate, with which I can back up other figures and calculations which I will submit now, and for that reason I am selecting that figure. We have to remember that in the smaller households, in the country districts particularly, tea is a staple article of diet. It is taken at all meals. Very often it is the substitute for the principal meal. That is so in a considerable number of cases. I believe, therefore, that as the consumption of tea in the smaller households is very much higher than among the wealthier sections of the community, the consumption of sugar in these households is correspondingly higher. I am not bringing that forward in support of my case. I am relying entirely on the figures which I have given to the House. I submit that the normal consumption of sugar among working-class families in this country is 2.09 cwts. per annum. Under the Minister's proposals that involves an additional tax of 9/9 per annum upon the households of industrial workers, small farmers, and agricultural labourers.

The tax upon sugar is not the only additional tax upon the community which the Minister proposes in this Bill. Under Section 5 we have a proposal to increase the tax on petrol. I think this impost is regarded by many members in the House as being less serious from the point of view of the farming community than the sugar tax. I am not certain that that is the correct view. When I take into consideration the amount of money the Minister proposes to get from this tax, £450,000, I feel that a very considerable proportion of the tax will be passed ultimately to the consumer. As the agricultural community consumes by far the largest portion of manufactured goods and imported foodstuffs, I believe that a very considerable proportion of the tax upon petrol is going to fall ultimately on the shoulders of the agricultural community. The Minister proposes to collect £450,000 as a result of the petrol tax. If we ascribe one-fifth of it, or £90,000, to the motoring which is done purely for pleasure I believe we shall not be under-stating the proportion of it which is so derived, and I should say legitimately derived. I have no objection whatever to taxing the person who motors purely for pleasure. I have not any objection to taxing luxury motorists.

Allowing for that £90,000 which is to be collected from pleasure-seeking motorists, the remaining £360,000 is a charge upon production, an encroachment upon the standard of living of the people, absolute so far as the urban dwellers are concerned, and partial so far as it affects the agricultural community—partial because of the relief which the Minister proposes to give by way of an increased agricultural grant. Of the £360,000 about £120,000 is, I presume, derived from petrol used in the transport of passengers and £240,000 is realised through the transport of goods. I propose to treat the whole sum of £360,000 as a burden upon the community. During the course of his financial statement, the Minister, defending this tax in advance, stated that after all it was not going to mean very much because the companies were not going to raise fares and this tax was not going to be passed on. It is quite true that the bigger passenger-carrying concerns in the Free State are not raising their fares. How long are they going to refrain from raising their fares? They are not raising them immediately because they have another purpose in view. They know that a large number of the buses owned by private individuals, a large number of which are one-man concerns, are finding it very hard to make ends meet. They know that the imposition of this tax is going to be a crushing blow to these competitors of theirs.

Therefore, the Irish Omnibus Company, the Great Northern Railway Company, and the Dublin United Tramways Company are not going to raise their fares at present. They are going to drive their competitors out of business first. When they have established themselves in a monopoly position, they are going to make the passenger pay, not only for this increased tax on petrol, but also for the losses which they suffered in driving their competitors off the road and securing the monopoly. The Minister by approaching these bus companies, in the first instance, and securing that promise from them played into their hands. In telling the community as a whole that the buses need not raise their fares to their passengers if this tax was imposed, he was helping the policy of the I.O.C. and the other people who are attempting to establish a transport monopoly in this country, because he made it impossible for the smaller competing concerns to raise their fares. If they raise their fares, the public will say: "The Minister has said that there is no reason why these fares should be raised," and they will naturally feel aggrieved and go elsewhere. The traffic will be diverted to the tramways, the railways and the big bus companies, and the smaller concerns will be driven out of the field. That is the purpose of the Minister.

The fact is that, according to the returns, none of the bus companies is making a profit. The I.O.C. made huge losses last year. The buses run by the G.N.R. Company lost last year. If, with untaxed petrol, the bus concerns lost last year, how can they, with taxed petrol, make a profit this year? Their working costs have gone up and they are not, as the Minister for Industry and Commerce would probably agree if he were here, in this business for pleasure. They are in it for profit, and if their working costs are to be increased they are going to recover those costs in some way from the community.

I suggest that the way they are ultimately going to recover them is by creating a monopoly and then holding the community to ransom. Before that comes about, there is going to be a war fought between them and the smaller buses. The people who will have to pay this tax immediately are the workers in those concerns because bus companies cannot continue to run at a loss. They have got to pay the tax on petrol which the Minister is collecting from them and one way in which they will seek to make good that tax on petrol will be by a reduction of wages or staffs, or in some way like that, which will throw the whole burden of this tax back upon the general community—upon the farmers, the workers and the shopkeepers of the city. The farmers, the shopkeepers and the members of this House should not be under any misapprehension. If the Minister is going to get £360,000 out of the business of transport of passengers and goods, then the community and nobody else—certainly not the bus companies or the petrol companies—are going to pay that £360,000. When the Minister hands back to the farmers £750,000, there will be included in it a large part of the £360,000 collected from them through the petrol tax.

Let us see exactly how much this petrol is going to mean to the average householder in the Free State. According to the census return, there are 622,678 private families in the Free State. Those account for about 95 per cent. of the population. I am taking it that the burden imposed by the petrol tax will be distributed. There is no other way in which you can deal with a problem of this sort. The burden of that tax is eventually distributed over the whole body of the community. If we are to divide the £360,000 which the Minister is going to procure by a tax upon the transport of goods and of business men, workers, shopkeepers, farmers going to market and others—if we are to divide that £360,000 by the 622,678 families which are in the State, we find that the average burden imposed by the petrol tax is at least 11/6 per household per annum. That is the average figure for the whole of the Twenty-Six Counties. In the case of householders living in remote parts of the country, distant from the principal seaports and the distributing centres, the tax will be much more.

So far as the poorer districts are concerned, I believe it will be even greater because the tax upon petrol is going to mean that considerably more traffic will be sent by rail and, in the case of towns remote from the railways, there are going to be increased charges for completion of the journey by motor. At any rate, we have got two figures to consider. We have the 9/9 which is going to fall upon the average household as a consequence of the tax upon sugar, and we have the 11/6 which is going to fall upon the same household in consequence of the tax upon petrol. We find, therefore, that in this Finance Bill the Minister is going to impose an additional burden of 21/3 upon the average householder in this country. What are we going to receive in exchange? So far as the skilled and unskilled labourers are concerned, nothing. So far as the small farmers—fifty per cent. of the farmers of the country— are concerned, very little. I should like to deal with that also at length.

In the Twenty-Six Counties, according to the report of the De-rating Commission, there are 117,000 holdings having an aggregate area of 1,115,000 acres and an aggregate valuation of £254,000. The average size of these holdings is 9½ acres and the average valuation of these buildings is 4/7 per acre. The average valuation of an average holding of this type is therefore, about £2 3s. 6d. per annum. The aggregate valuation of all the agricultural land in the Twenty-Six Counties is £7,556,000. The additional grant in relief of rates which the Minister will, I suppose, shortly submit to the House, is £750,000 or just under 2s. in the £ per £ of valuation. The average relief which will, therefore, be afforded by this grant to the farmers holding 10 acres or less will be 4/4 per annum, against which they will be taxed to the tune of £1 1s. 3d. per annum. There are 40,780 such small farmers' families, numbering 203,900 souls, in the Irish Free State.

Again, let us take the farms of from £4 to £7 valuation. According to the De-rating Commission, there are 52,881 such holdings in the Free State. They have a total area of 1,116,574 acres and an aggregate valuation of £302,160. Their average area is 21 acres and their average valuation is £5 15s. According to the census, about 60,000 families live on such farms. These families will be relieved of rates to the extent of 11/9 per holding, but will be taxed in return to the extent of 21/3.

Again, take the case of the farm of from 15 to 30 acres. There are, first of all, 44,516 holdings in the Irish Free State, having an aggregate area of 1,495,417 acres, and an average area of 33 acres. There are also 40,346 holdings, having an aggregate area of 1,112,194 acres, and an average area of 21 acres.

For the purpose of finding out what benefit these farmers of from fifteen to thirty acres are going to derive from the Minister's proposals, I propose to take the average of these two classes, because the class which gives me the average area of the farm as 33 acres, is fairly representative of the farmers at the top end of the scale, and the class which gives me the average area as 21 acres is fairly representative of those at the bottom of the scale. The aggregate valuation of these 84,682 holdings is about £900,682. Their aggregate area is 2,607,000 acres, and their average valuation is about 7s. per acre. Their average area is 30.8 acres. There are altogether 75,000 families living on holdings of from 15 to 30 acres. In the case of those living on 15 acre farms, they will be relieved to the extent of 10s. 6d., and in return will be taxed by the Minister by just twice that amount. In the case of the 20 acre farms, the householders would be relieved to the extent of 14s. and taxed 50 per cent. more. In the case of the average 30 acre holding, whose valuation is £10 10s., the Minister will give to the farmer about 21s. with one hand, while he picks his pocket to the tune of 21s. 3d. with the other.

It is clear therefore that so far as farmers who have up to 30 acres are concerned, none of them will benefit by the Minister's proposal. These farms support 150,267 families out of a total farming population of 268,930 families.

Under the Minister's proposal about 56 per cent. of the farmers will not benefit at all. In fact some of them will lose very heavily. I do not propose to weary the House. I have shown, I think, fairly clearly, and I think irrefutably, that so far as 56 per cent of the farmers of the country are concerned, they are not going to benefit, but instead are going to lose by the proposals which the Minister has submitted to the House in this Bill, by the proposals to impose an additional duty on sugar and to tax petrol in order to provide £750,000 for the relief of rates.

In the debate on the general financial resolution, I think I showed fairly clearly, and I think any Deputy who has examined the matter since for himself will agree with me, that the only people who are going to benefit by the Minister's proposals are the big farmers and the big graziers, men with farms of 200 acres and upwards, with valuations running from £200 upwards. They are going to benefit very substantially—make no mistake about it. Let Deputy Sheehy, and those who are here representing the congested areas, and the small farmers in general, realise that if the big farmers in certain districts, the graziers in Meath, in Kildare and elsewhere, are going to benefit, they are benefiting at the expense of their poorer neighbours and the small farmers, the people who really need relief in these hard times.

Of course that is only in keeping with the general policy of the Minister. As has been said often since the Government came into office, they have made the rich richer and the poor poorer. To those who have much they have given more, and from those who have little they have taken away.

If we wanted any further proof of that, we would find it in Section 28 of the Bill.

I do not know whether the House paid any particular attention to the case which the Minister made for Section 28, but in explaining it to the House he started off by saying that this section was designed to relieve the Agricultural Credit Corporation of any liability for excess profits. That was his first statement. A body like the Agricultural Credit Corporation is intended to fulfil a long-felt want. It is ostensibly supposed to provide financial accommodation for the farmers at reasonable rates of interest. But these rates are not nearly so reasonable as they might be, if the Agricultural Credit Corporation was not so much under the thumb of the banks, and if the Minister, on occasions, as Minister for Finance, intervened in order to ensure that, whenever the Agricultural Credit Corporation made an issue of stock, the price of issue would not be determined beforehand by banks at such a level as would maintain their rate of interest on agricultural loans in this country at not less than 6 per cent. per annum. However, this is a matter that would more appropriately arise in the debate on the Minister's own estimate.

As I say, at the beginning, the Minister stressed the fact that the main purpose of the section, as I gathered, was to help the Agricultural Credit Corporation. But the main purpose of the section is to do nothing of the sort. The main purpose of the section is to continue for a further period of three years the exemption which, under Section 28 (a) of the Finance Act of 1920, certain public utility companies enjoy in relation to the Corporation Profits Tax. Section 28 (a) of the Act of 1920 makes the Corporation Profits Tax not to apply to a public utility company limited in respect of price or dividend. By Section 33 (2) of the Finance Act of 1929 a public utility company is defined as meaning such company as is mentioned in paragraph 6 of Section 52 (2) of the Finance Act of 1920, which defines it as a company which carried on wholly within the United Kingdom any gas, water, electricity, tramway, dock, or canal undertaking. First of all, I am not quite clear upon this point. It would seem to me that the drafting of the Finance Act of 1929 was faulty, in so far as under sub-section (2) of Section 33 of that Act a public utility company is defined as meaning such company as is mentioned in paragraph 6 of Section 52 (2) of the Finance Act of 1920. The definition there is by reference to Section 52, sub-section (2), of the Finance Act of 1920, and the terms of that Act are quite explicit, because it defines a public utility company as a company which carried on wholly within the United Kingdom any gas, water, or electricity, tramway, dock or canal undertaking. I do not know what the position would be of any company not definitely a Free State company if it were to challenge the Minister's right to collect Corporation Profits Tax from it. I am sure lawyers would reap more profit from such litigation than the Minister would. I think the drafting of that particular section of the Act ought to be looked into.

But to come back, it will be noticed here that Section 28, paragraph (a), proposes to amend Section 33 of the Finance Act of 1921 by the substitution of 34 for the figure 31. That is, to continue the exemption of certain public utility undertakings in this country. Public utility undertakings are defined as undertakings for the manufacture and supply of gas, the carriage of passengers by tramways, and the manufacture of electricity. The two companies with which I am concerned are the companies which have a monopoly of the supply of gas and the supply of electricity in the City of Dublin. The Corporation Profits Tax does not apply to a company such as the Gas Company, whose dividends are limited so that they bear some relation to the price at which the gas is sold. Under this section I think that the Dublin Gas Company will be exempt from Corporation Profits Tax. I presume that the grounds upon which the Minister will justify that would be to say that the dividend of the company cannot exceed a certain rate so long as its charge for gas is not below a certain figure. Of course, public utility companies and large corporations, when they come to publish a balance-sheet and declare a dividend, do not as a general rule make a complete show down of what their actual profits are. We had a case in London the other day where it was admitted that it is the general practice of those huge undertakings to accumulate hidden reserves and thereby not to disclose their full profits immediately. One of the ways in which hidden reserves can be accumulated and huge profits remain undisclosed and, to a certain extent, a fair share of those profits distributed, also indirectly, to certain privileged persons, is when an undertaking of this sort goes in for wholesale extension of its plant and machinery, very often before this plant and machinery is worn out. In that way a considerable proportion of the real profits of the company can be distributed among friends of the company, amongst those who are shareholders in subsidiary undertakings, amongst those who, while they may be on the board of the company, may be also interested in other companies which supply these public utility undertakings with the plant and raw materials for the manufacture of their products. So that really this question of the limitation of dividends, ostensibly in the interests of the consumers, very seldom affords the consumer any real protection against the monopoly.

There are many ways in which this monopoly deals unfairly with the consumers but I am not going to enter into them now. I am merely addressing myself to the question of whether, in view of the fact that its dividend is limited in relation to the price which it charges for the commodity which it produces, there is any case for exempting that particular company from excess profits tax. It is in a monopoly position and is making much higher profits than were dreamed of when the original Bill was before Parliament. I think it ought not to be exempted. What I have said in relation to the Gas Company applies also to the tramway undertaking. I do not think any clear case can be made for exempting a monopoly concern from the operation of the Corporation Profits Tax. It is only one way in which the community as a whole can recover some share of the proceeds of the monopoly from the monopolist.

I was going to say something in relation to Section 32, but in view of what the Minister said in introducing the Bill I am going to let that stand for the Committee Stage. In the meantime I think the Minister in his reply ought to give us some fuller information as to the funds which are now being wound up in consequence of the Vocational Education Act and other Acts which the Oireachtas has passed. I should have thought that this diversion of the annual income derivable from the surplus of the Irish Church Temporality Fund into the Exchequer would have been one of the matters to which the Minister would have referred in his financial statement. According to information which the Minister furnished me in reply to a question the surplus from the Irish Church Temporality Fund arose from the property which was placed at the disposal of the Parliament of the late United Kingdom by Section 68 of the Irish Church Act of 1869. The Minister stated it is not possible to state what the capital value of that surplus is but he stated it was originally valued at 6½ million pounds and has since been considerably reduced. According to him the income from the invested fund in the year 1929-30 amounted to £77,909 and in the year 1930-31 to £79,465. The income seems to be a growing one. It was originally applied towards the payment of the annual statutory charges on the Fund. According to the Minister's statement, however, the income has been in excess of these statutory charges since the year 1912. Consequently I take it in normal circumstances any excess income which might arise from the fund over and above the statutory charges which were made upon the fund would be applied to the reduction of capital debt. That is a point of view which has often been advanced in this House by Deputy Flinn and others, where monies accrued in this way they should be used to reduce the capital debt of the State and thereby make available, from year to year for the ordinary social services of the community, a greater portion of our annual income from taxation.

I do not want to go into the matter any further at this stage, but I do hope the Minister for Finance will give the House some fuller information regarding the funds which have been wound up by recent legislation, and let us know what provision he proposes to make to replace the money which he is now diverting from these services into the Exchequer.

There is just one other question I would like to touch upon before I sit down, and that arises in connection with the discussion which took place in another place the other day. During the discussion in the British House of Commons on the Unemployment Fund, Colonel Wedgwood, who was a member of the previous Labour Government, and enjoys a position of great influence and prestige in the British Labour Party, made a suggestion which I think a Minister who has a certain responsibility in this House for the Currency Commission ought to advert to. He said this: "Their manufacturers had to compete with people abroad who had written off their debts and who were bound to cut them out of the trade of the world.""We shall," he said, "have to get rid of something of our national, municipal and private debts in order to give the country a chance of starting again on equal terms with other countries, and take advantage of any improvement in trade that may come hereafter as a result of the Hoover proposals.""We shall have to get rid of something of our national debts"! Sir Robert Horne, a Conservative member, who was an ex-Chancellor of the Exchequer, described this as a very remarkable pronouncement, and said it was the first time the realities of the situation had been openly faced. Colonel Wedgwood had suggested desperate remedies. He had described the inflation of the currency as the only method by which they could save the situation if they were to save their wage scales. That was a severe remedy. He (Sir Robert Horne) would not say it might be a resource to which they might not have to turn if they went on as they were going, or even if they allowed things to drift. Mr. J.H. Thomas (Dominions Secretary) replying, agreed that sound finance was essential. It would be extremely dangerous to let it go forth that any section was in favour of an unbalanced Budget.

The point I want to make is this, that our whole currency system depends upon something like £7,400,000 of British securities that we have. If there is going to be any re-valuation of the British pound—if the British Government are going to take Colonel Wedgwood's advice and get rid of something of their national debt I hope that the Minister will take time by the forelock and realise and turn into cash this seven and a half million pounds of British securities which the Currency Commission holds. Personally, I do not believe that he should re-invest them. I think that, even if we lose a certain amount by not re-investing, the feeling of confidence, security and stability which would be created by the knowledge that at least our currency was upon what is, as compared with the gold exchange standard, a solid basis would amply compensate the Minister for any loss in revenue which he might suffer in consequence of the fact that he had realised or compelled the Currency Commission to realise these investments in British securities. There is a clear indication in the discussion which took place in the British House of Commons that this question of writing off as they say—of inflation as it really is—is receiving the serious consideration of a number of influential members in that Assembly and I think that the Minister charged to a certain extent with the responsibility in this House for the Currency Commission ought to direct the attention of the Currency Commission to that fact and ought to ask them to consider seriously whether the time has not come to realise those British securities. I suggest not to invest the money elsewhere, but to bring the gold home if he can get it. Failing that he should re-invest these securities in some other State where the prospects of devalorisation of the national currency does not arise.

A certain section of this Bill makes provision for the remission of duty on sugar over a certain quantity manufactured within the State. I would like to know from the Minister for Finance what is the estimated cost to the taxpayers of the State for putting that section into operation during the current financial year. Certain questions affecting the beet sugar industry were raised in the House four or five weeks ago and the Minister for Agriculture, for apparently good reasons at the time, thought or was of the opinion that a discussion in the House at that particular period might prejudice certain negotiations which were then going on. I have read certain statements which were made by the Minister since that date at public meetings in the country, in the course of which he made certain candid admissions. He said the Belgians have behaved well by the country in establishing a factory in all the circumstances. He went on to say then quite impartially that there was no question about it in his opinion that they could have given a better price for beet this year. He also said that he was satisfied that this dispute would be settled on two conditions, namely, that the parties concerned were organised and that they approached the matter in the spirit of co-operation and fair play. It is particularly in connection with the latter statement that I want to hear something from the Minister for Finance, the Minister for Agriculture or some other Minister speaking for the Government.

How does the Deputy connect that with the Finance Bill?

There is a section in this Bill which makes provision for the remission of duty on sugar manufactured in the beet factory at Carlow.

A new remission?

It is part of the financial policy of the State, as the Minister for Finance knows, and part and parcel of the yearly finance Bill since the subsidy was first voted by this House under the terms of the Beet Subsidy Act, 1925. I think that this House is entitled to some explanation from some Minister regarding the present position of the Government in any negotiations that may now be going on in connection with this whole dispute. There is no doubt about it, whether we be beet-growers or workers or part and parcel of the general taxpayers of the country, that this dispute has been provoked by the action of the directors of the beet factory in definitely challenging the right of the farmer or grower to organise for industrial purposes, challenging the right of the Beet Growers' Association who represent the majority of the beet-growers of the country, small and large, to act on behalf of the growers with the directors of the factory in protecting the price conditions paid from time to time by the factory to the growers. There is no doubt about it also that their action in provoking the present dispute was quite deliberate. In fact repeated communications were addressed to the directors of the factory at the end of last year to open up negotiations for the current year or for the remainder of the subsidy period. The directors of the factory quite deliberately refused to meet the representatives of the Beet Growers' Association until they felt fairly certain that the farmers who had been growing beet had been prepared to put in the crop for the present year. Then they came along suddenly and sprung a proposal for a reduction of 8/- per ton in the price of beet. They have now definitely declined to recognise the Beet Growers' Association. That is a challenge to the right of collective bargaining, and if the Minister for Agriculture or the Minister for Finance have any sympathy with the farmers in their right, as I believe they have a right, to organise for industrial purposes, then it is their duty to tell this House, and particularly the people concerned, what is the present position, so far as the Government is concerned.

There is an estimate for the payment of the sugar beet subsidy. Does this question arise here rather than on the estimate for the subsidy? I do not understand how the Minister for Finance is responsible in this particular case, considering that there is an estimate on the Paper which must be discussed at an early date.

If you, sir, give me as much time to reply as you are giving to Deputy Davin, even though it is out of order, it will do.

There is an estimate for a sugar beet subsidy. Is not that the proper place to raise this question? Will it be raised again on that estimate as well as on this Bill?

The estimate does not cover the remission of duty. There are two ways of putting money into the pockets of the directors. One is by the remission of duty on sugar manufactured in Carlow and the other by the direct payment of a subsidy.

Will the Minister meet that point of the remission of duty in this particular section?

There is no new remission.

Sub-section (4) of Section 6.

That does not remit any duty on the sugar beet factory at all.

It raises the whole question.

A customs duty is being imposed and an excise duty also on the sugar beet factory. I realise that a debate on the matter will be in order at some time. Whether it is in order on this Bill rather than on the estimate is what I should like to establish. Whether we are going to have one debate on the matter on this Bill and another on the estimate, and whether the debates are going to be identical, I should like to know from the interested parties.

I thought I was entitled on this section, which is certainly going to cost the taxpayers something, to ask for a statement from the Minister as to the present position in regard to the negotiations that have been going on, more especially in view of the very pronounced statement made by the Minister for Agriculture at a recent meeting in the country.

If you will allow me, sir, I am prepared to answer the Deputy.

This sub-section in Section 6 is part and parcel, I admit, of the agreement signed between the Government and the directors of the factory subsequent to the passing of the 1925 Act. But, it is within the right of Deputies from year to year to say whether this should remain in the Bill or not. As long as the present dispute lasts, and the Belgian directors of the factory refuse to recognise the right of the Beet Growers' Association to bargain on the question of price, and as long particularly as these Belgian directors refuse to pay an economic price for the raw material. I think I am quite justified in opposing that particular sub-section in the Bill.

There are one or two questions I should like to ask the Minister. In fact, I have been requested to bring certain things to his notice in regard to the collection of sur-tax. I think that comes under Section 2. There is a very great want of knowledge as to the basis on which this sur-tax is charged. Everybody who is honest wishes to pay the correct amount, and to do it at the proper time, but it is extremely difficult to understand it, and I have been asked to elicit information from the Minister on the subject. An individual of my acquaintance who has the misfortune, or the good fortune as some people would call it, to pay sur-tax made a return on 5th April this year, and he will pay tax on that on 1st January, 1932. That is, of course, all right. His figures were agreed to as being perfectly correct. He was rather astonished, however, on receiving from the Revenue Commissioners a request to pay on a considerable sum that he had not got. It was natural that he was a little astonished at this, as anybody would be. He requested information, but the information was given in such an involved manner that he was more confused than he was before. It was to the effect that his income had fallen £300 or £400 under what was returned on 5th April, 1930, and that they halved that £360 and charged him on half of what he had paid previously in the year 1930. That is a most extraordinary arrangement, and contrary to all ideas of justice. Perhaps the Minister will be able to give an explanation of it. As a matter of fact, neither this individual nor myself can really understand it, although we tried to get an explanation from the Commissioner. We only became more fogged as the information proceeded. Perhaps the Minister will be able to make it clear. At any rate, it seems to be extremely unjust that you should be taxed on what you have not got. It is perfectly right that you should be taxed on what you have got. No one can say anything about that, but to be taxed on what you have not got, on an imaginary thing, seems to be beyond the limits of justice. Perhaps the Minister will inquire into that matter.

I should also like to refer to the price charged for sugar and tea, which more or less comes under the head of taxation. I see tea in the shops marked at 3s. per lb. That seems to me to be monstrous as there is no tax on tea in this country. The growers of tea in India cannot find a market for it. I have acquaintance with some people in Ceylon who can get absolutely nothing for the tea they produce and they are on the rocks. I have myself been offered the very best tea at 1s. 2d. per lb. Here I see it marked at 3s. and 3s 6d. per lb., so that there must be some infamous over-charging somewhere, which should be inquired into. Then as to sugar. Those who grow the best sugar in the West Indies are also on the rocks, as they can get nothing out of the sale of sugar, while a considerable price has to be paid for it here. The matter is beyond my comprehension and needs some inquiry. The working classes, of course, will have nothing but the best tea. They will not buy tea unless it is marked at a high price, as they think it is not good. That is what keeps up the price of these things. Unless there is a high price charged for them they will not have them.

I wish to thank the Minister in the first instance for getting rid of a very real grievance by the amendment which he has made to Section 27. That amendment has got rid of a very great hardship and a real injustice. In many cases the amount of duty involved would be something like £1, but in addition to that £1 certain expenses had to be incurred, because solicitors cannot live on air alone, and to pay that £1 a person who succeeded under a settlement and not under a will or an intestacy had also to pay a sum of two guineas in order to get liberty to pay the £1. I put it to the Minister, as he has got rid of that injustice, that he should make the section retrospective. I do not at all suggest that in the case of duties already paid the amount should be refunded. That would be impossible and under the circumstances entirely impracticable. In many cases, £2 or £3 duty would be got at an expense of £2 to the individual and at an expense of £3 to the State. I would not ask that. Subject to that, I say in regard to these outstanding small items, which should never be collected, now that the principle has been admitted, which was all along apparent to everybody, that this section should be made retrospective.

I wish I could thank the Minister for Part I. of this Bill dealing with income tax. As I have been elected to this House to support the Constitution, I cannot in all conscience support sections of this Bill which are flagrantly in violation of the Constitution. I refer to Sections 2 and 4 of the Finance Bill. They are not merely without precedent, but they are against the Constitution, and I am sure no one knows that better than the Minister and those advising him. What do they mean? They mean this, that during the last year there were two people who had pluck enough to stand up against the Revenue Commissioners, and they beat the Revenue Commissioners. In one case the matter is still sub judice or, at all events, under appeal by way of case stated from Circuit Court Judge Shannon. What do the Revenue Commissioners say? They say we do not care whether you beat us or not, we will go to the Dáil and get a section passed that will reverse the decisions of the courts. Section 4 is in exactly the same position as Section 2. Another taxpayer went to the Court of Appeal. He was charged with certain penalties. The Court of Appeal found in his favour, and the Revenue Commissioners said: "We care no more about your Courts of Appeal than we do about Circuit Court Judge Shannon. We have as much contempt for the one court as we have for the other, and with the assistance of the Minister for Finance we will tear up the decision in both courts, and make this thing retrospective." That is not only a violation of precedent, but of practice in every country. I respectfully submit this is a clear and open violation of Article 43 of the Irish Free State Constitution. That Article states:—

"The Oireachtas shall have no power to declare acts to be infringements of the law which were not so at the date of their commission."

Where are we? Are we to pass sections of this Act that would on the face of them be ultra vires? I put it to the Minister that he is creating a precedent which is not merely against the Constitution but is also against the best interests of this State. I think the passing of these two sections in their present form will only tend to bring the State and our legislation into contempt. I would most strongly urge upon the Minister not to do this. I would ask him not to make Sections 2 and 4 retrospective. I would ask him to make them clearly not retrospective. Then he will be acting within the terms of the Constitution, and he will be doing what precedent says he can do.

I would submit the meaning of Section 2, in plain language, is that a court has held that an executor of a deceased is only liable to account for the deceased man's unpaid income tax for three years and not for six years. The Revenue Commissioners say we will make that six years, and we will run in this section and reverse the decision of the judge. I would say in regard to this Section 2 that as a matter of fair play it is impossible for the executors to go back without very great inconvenience and expense to the estate, and I would submit that no change should be made in the law in regard to the liability of the executors as regards unpaid income tax. In the absence of the dead man the tendency of legislation should be to reduce the present period of three years to one year, which is at present for decision and which is quite arguable and has yet to be decided, rather than to go back and increase it and back up the Revenue Commissioners to six years. It is a monstrous injustice and it ought not to be done, and it is only putting additional power into the hands of the Revenue Commissioners.

I quoted here last year a letter from the Revenue Commissioners telling a widow how the executors were to be treated in her case and how she and her children were to be treated. Looking over the schedule of assets it was found that a sum of £140 had been on deposit and on the strength of that a charge of fraud was framed and levied by the income tax officials against the dead man. There was not a word of truth in it. The money was put in the bank three days before he died. The man died in Cork hospital and bills and money unexpectedly came in and his executors deposited the money in the bank. On that alone a charge of fraud was based against the dead man and upon that foundation and that only the order went forth from Dublin Castle to the executors that they should employ a firm of auditors to examine into the dead man's affairs. And the name of the firm of auditors had to be submitted to the office in Dublin Castle so that the firm of auditors might be suitably instructed. They must be auditors approved by Dublin Castle and if the auditors do not get that approval and if they do not do what Dublin Castle wanted them to do and if they are not at the beck and call of the Revenue Commissioners, then they are to be black listed. If the auditor has the pluck to do his duty on this case he is in danger of being dismissed and that has occurred to my knowledge. The very telephone wires in Dublin Castle are used for the purpose of levelling the charge of fraud against the dead man. I have myself known other instances of that kind also. I suggest in all fairness to the Minister that even if Judge Shannon's decision is reversed it should not be made retrospective. I submit to the Minister that he ought not to reverse the judgment and that he ought to consider the matter from the point of view of the widow and the orphans. It is putting a monstrous burden upon them to ask that when the mouth of the one man that could speak is closed in death that it is most unjust that this enormous expenditure should be undertaken under the direction of the Revenue Commissioners in order to try and resurrect and fake up accounts and pay duty that should never be paid to the Revenue Commissioners. I suggest that the Minister should delete Section 2.

As regards Section 4 I agree it is on a different level. There is a state of affairs there disclosed in a case which the Minister had before him when he got this Bill drafted which it may be necessary to meet. Section 4 deals with a live man who is able to answer for himself but I say that as regards Section 4 where he is against the Constitution, is against fair play and is against precedent the Minister ought to make it clear that it shall not be retrospective. If he does that I would say then it is for the Minister to say whether the law should be altered so as to make Section 4 operative in future within reason. But I do not know how it can be used and I am afraid it cannot be used well. But still such as it is I agree that people who owe income tax ought to pay it. I suggest that these amendments are in violation of the Constitution. As a supporter of the Constitution I cannot support them.

I think the point taken by Deputy Wolfe has been well taken in relation to retrospective legislation. On many occasions since I became a member of the House I have in the House called attention to retrospective legislation. Deputy Wolfe has pointed out a case where retrospective legislation, in his opinion, and he speaks as a lawyer with some knowledge on these matters, is a direct violation of the Constitution. What I would point out is how this Bill has been introduced to the House. The Minister for Finance got up and made that usual semi-inarticulate statement which we are getting accustomed to from members of the front bench when introducing Bills. He made no allusion of any sort, kind or description to the fact that he had inserted in the Bill retrospective legislation of this kind, and retrospective legislation which was a violation of the Constitution. I rather gathered from him in his answer to Deputy MacEntee that the Second Reading stage of the Finance Bill is, in his opinion, a purely formal stage: that it requires no explanation from Ministers either of old or of new matters in the Bill, and that the House as such requires to have no understanding of the fact that there is new matter introduced into the Bill, or why it is introduced before we are asked to accept the principle of the Bill which is discussed on Second Reading.

I suggest to the House that from a Minister for Finance conduct of that kind in relation to a Finance Bill is utterly irresponsible conduct in relation to finance. When under examination by Deputy MacEntee, and since in the explanations which we have received from Deputy Wolfe, we discovered from the Minister that really fundamental and serious alterations have been made. It is grossly to his discredit, and it has been grossly disrespectful to this House. It is a gross dereliction of his own duty as Minister for Finance that he should have introduced the Finance Bill in the careless, casual and inarticulate manner in which he has introduced it. If the statement made by Deputy Wolfe is correct, then, unfortunately, it is typical of a great deal of the respect for the Constitution, respect for the rights of the subject, respect for the existing law and respect for the authority of the courts which is part of the conduct of this Ministry.

I have deliberately pointed out in the past, and I deliberately point out again now, that under the actual retrospective legislation in this House in relation both to finance and to contracts, the position is that there is no contract existing in this State between any individual in this State or between the Government and any individual in the State, which cannot, in accordance with the actual precedent of their previous conduct, be rendered null and void by legislation in this House. There is no security for any existing contract. According to Deputy Wolfe there is no security that a man may not now at this stage be made to have committed a crime in 1922 and 1923. If that is the sort of responsibility with which Ministers approach the sacred Constitution, I certainly think that some other name than the Constitutional Party should be put forward.

As to alterations generally in relation to income tax, I am in agreement, too, with Deputy Wolfe to this extent: that there may be changes desirable. They have to be argued and justified upon the facts, but we are not entitled by inserting 1918 in an Act which was passed in 1925 to make a man retrospectively liable for something which the courts of this country said that neither in 1918 nor in 1931 was he, in fact, liable: that anyone who does that tears up, not merely the fundamental law of the State, but tears up, or pulls down if you like, the basis of respect upon which the average citizen in this country can be required to obey and respect the law. These are revolutionaries and anarchists, pure anarchists. The principle of anarchism is a disrespect for law as law. It can be shown in a small particular or in a large one. I say to the House deliberately that in relation to retrospective legislation in the past, and taking Deputy Wolfe's definition of this clause as correct, in actual practice in this Bill their attitude towards the existing law is purely anarchic; and as long as they are there carrying on, administering and introducing law in that spirit, no one who has respect for the Constitution, and no one who has respect for the law, should have respect either for them or for their laws.

I think the lesson which the Minister has received to-day from one of his own supporters should show him that this ought to come to an end. This is not the only piece of retrospective legislation. Nothing that we can do now, unfortunately, unless we go back and destroy the whole of the retrospective legislation, can get away from the consequences of the retrospective legislation already introduced. We have done it time after time. We have said: What is now has to be taken as if it had been different, that the decision of the courts shall be interpreted to mean the exact opposite to what the decision of the Court is. How anyone is going to carry on, to enter into contracts or into commitments in the future, while things of that kind occur, I do not know.

There is not a pension of any single officer in the country which is secure, which cannot in a perfectly legal manner, following the precedent of the Minister, be destroyed. There is not any contract which they have entered into which cannot be declared to have been voidab initio. I hope that on the Committee Stage the Minister will at least make a deathbed repentance as Finance Minister, and not in the last stages of his existence in that position; that in articulo mortis, at any rate, he will refuse to persist in the course of conduct in which he, as Minister for Finance, has succeeded so far in degrading any technical respect there can be for the law as administered here.

Part II. deals with minerals, hydrocarbon light oils. I am of opinion that the position is satisfactory, but I want to get an assurance that it is. When this clause was introduced it was introduced specifically for the purpose of dealing with petrol, but as happens in all these cases, other things were incidentally dragged in—at any rate the equivalent of petrol used for other purposes. Two oils were dragged in under this careful technical definition, white spirit and turpentine, which are used for industrial purposes. At first the Minister told us—a natural mistake probably—that turpentine was not included in the tax. He then discovered that, in fact, it was, and that white spirit was included all the time was admitted. I am not saying that he specifically exempted turpentine. He agreed to exempt turpentine from the tax, but there were certain technical difficulties in the way of administration in exempting white spirit as well. All I want is an assurance that clause 2 of Section 5 completely exempts turpentine and white spirit when used for the purposes of manufacture. Can we take it that that is so?

I am asking the Minister whether we can take it that white spirit and turpentine are now exempt from tax when used for manufacturing purposes. If the Minister prefers to remain inaudible—he having started by being inarticulate—when it comes to the Committee Stage we will get an answer. There is one rather curious point in relation to white spirit which the House, perhaps cynically minded, a bit in regard to taxation, will be glad to know is to the credit of those concerned. I was in fairly close touch with this particular matter. The people who came to me and asked for an exemption of white spirit were, curiously enough, those who did not use it. The people who came to me were some of the largest manufacturers of polish in this State and they did not use white spirit. They came specifically to have it exempted on the grounds that it was being used by small manufacturers and that if it were not exempted these smaller manufacturers would be wiped out, which would be to the benefit of the larger manufacturers. I think that is a rather unusual procedure, one which I think we may well put on the records of the House to the credit of those responsible.

As to petrol generally I agree with Deputy MacEntee that luxury petrol, joy riding petrol, etc., that it is purely and simply a matter for the Minister to get what he can out of it quite independendtly of whether it is going to be spent specifically for the relief of agriculture or not. It is a perfectly legitimate source of taxation like the entertainment tax. When you come to tax petrol used for industrial purposes and used for the transport of goods or people on ordinary occasions you are simply adding to the cost of production. You are adding to the cost of the goods which we are selling in competition before we sell them. It is fundamentally in defensibleper se where a tax on petrol is put forward as an alternative tax then you exempt it in relation to the difficulties and disabilities which are occasioned by existing taxes which it substitutes, and if the disadvantages of the existing taxes are greater, then there is something to be said for the petrol tax even if it goes on industrial production. Personally I cannot justify a tax per se which goes on industrial production. I agree with Deputy MacEntee that the cost of the petrol tax in so far as it is used in production or in transport will simmer down and will be distributed over the consumers of the goods and of the transport which it covers. To say that this is a method of finding relief for agriculture seems to me absurd, simply taking it out of one pocket and putting it into another.

There is one thing I would like the Minister to deal with when concluding. On previous occasions the President told us that the Minister had balanced his Budget. I say that the Minister has never balanced his Budget, not a single Budget that he has introduced. He has taken pre-existing assets and converted them into money. He has sold them to pay his current expenses. He has in that way misappropriated the total amount of pre-existing revenue, which is equal to what he acknowledges to be the National Debt of this State. That statement has been made in detail in this House, and the Minister declined to answer it. But you do not get away from facts by not answering them.

I will only give one example. The Minister on one occasion had to admit here that he was in arrears to the extent of £400,000 for the provision of the payment of savings certificates. In other words, he had not provided the interest, and had not provided the redemption up to the extent of £400,000 for the savings certificates which he had got. When he meets the thrift body in the Mansion House to-day I am quite sure he is not going to tell them that. When he does come to speak we want to know what is the present position in relation to savings certificates, whether or not he has charged up to revenue up to date the amount which he is actuarially liable to put aside to meet the accruing charges on the savings certificates. We will simply take that as a test case. If he is up to date with that, then we will begin to deal with other matters. Unless he is up to date on that the position is that he has not balanced his Budget in that respect. He has put £5,000,000 of pre-Treaty income tax arrears into his ordinary Budget, and he has sold everything else that he could lay his hands on. That is how he has succeeded in balancing his Budget, and it is neither creditable to him nor creditable to the House which has allowed itself to be fooled in this manner year after year without proof. On the last Budget when we had to deal with this Minister we had to say that he had no conception of the dynamic as apart from the passive use of taxation. There is no evidence in this Finance Bill any more than in the previous ones of a desire to build up. The Minister is simply here to collect all the money he can, to sell all the goods which are loose, to empty out the larders, so that when his successors may come in, they will have his commitments and they will not have the advantage of the assets. In addition to that, as Deputy Wolfe has said—and he has given us one example of the extraordinarily bad effect of retrospective legislation— the Finance Bill does not redound in any way to the credit of the Minister, and it is not a Finance Bill which in its various principles makes for the stability of the State, whose credit the Minister for Party purposes defames.

If this Bill contained only the section which seeks to put an additional tax on sugar I would feel it my duty to oppose it and to oppose it strongly. When the legislation imposing this tax was under discussion here before I said what I found it necessary to say by way of protest against this tax. I gave figures to show the incidence of the tax upon the poorer members of the community. I do not propose to-day to go into details, except to say that those figures advanced from these benches, and from the Fianna Fáil Benches have not been seriously questioned. They may differ slightly as to the extent of the burden that will fall on the working class family as a result of this taxation. That burden may be 10/- or it may be 15/- in the year, but whether it is 10/- or 15/- the burden is a heavy one, and any attempt to make light of that burden will not be successful and will not persuade the people on whom the tax will fall that it will be a light burden.

Year after year in this House the point has been made that taxation on the necessities of life, on food and on essentials of that kind falls much more heavily proportionately upon the poorer classes of the community than upon those better able to bear that burden. But for some reason or another that does not seem at any time to have had that appeal to the Minister for Finance or to the Executive Council that one would expect from people who make such protestations such as they do.

What about tariffs?

Mr. O'Connell

I will talk about them later. This tax on sugar is put up in order to give relief to a certain section of the community. Surely if it is a question of giving relief to a certain section of the community, the section of the community that deserves and needs that relief most should have the greatest consideration. In seeking the wherewithal to give relief, consideration should be had to the ability of particular sections to bear the burdens for the purpose of finding relief for other sections. That has not been the case here. Very definitely it has not been the case. We have, on the one hand, a definite refusal to increase a tax such as income tax because it is supposed to work back, as it were, eventually to the poorer classes, but you have definitely placed a direct tax on the poorer classes in order to provide this relief that is being given to the farmer. And the children in the back lanes of our towns, and the industrial population and the working class people here in Dublin are called upon to make this sacrifice to provide this measure of relief.

There are children in the slums of Dublin who have never seen a cow and probably never seen a green field who will be expected to bear their share of this burden in order, as has been pointed out, that those who have big ranches and a very big share of this world's goods may get relief in their rates. I do not think that is an equitable proposition and I do not think it can be defended on the grounds of equity. Deputy MacEntee has called attention to the fact, and it is undoubtedly a fact, that the chief people who will benefit by this proposal of the Minister will be the big farmers and the big ranchers. At the same time I cannot help reminding Deputy MacEntee that he himself and his Party set a rather bad example to the Minister for Finance and to the Government in that direction when they themselves proposed a method equally objectionable; a method under which the big farmers and the ranchers would have walked away with the bigger portion of the relief grant. It may be said that that was only temporary and that this is going to be permanent. But, temporary or permanent, the principle is bad, and we must not forget that Deputy MacEntee and his Party very definitely turned down the motion from the Labour Party which stated that the tax for the relief of the farmers should not fall on the poorer section of the population. I am sorry that a very bad example was set to the Government in the method of the allocation of the grant. I will say this much also, that as between the methods of allocation, if we had to choose we would certainly choose the one which is proposed by the Government because it is more equitable as between county and county, though within the county the principle is the same. Still it is more equitable than the proposal which came from the Fianna Fáil Benches under which the counties with the high valuation and a small population were going to walk away with the greater part of the benefits. The proposal to raise relief in this way and to tax those who are least able to bear the tax is one that deserves condemnation. So far as the tax on petrol is concerned, it is not, so far as I am concerned in any case, open to the same objection.

There is just one point in Deputy MacEntee's speech to which I would like to refer. The Deputy spoke of the smaller concerns or firms which are running buses suffering as a result of the tax on petrol because there has been no increase in the fares by the bigger concerns, who can afford to pay the extra tax in the hope that the small concerns will die out. Deputy MacEntee appeared to me to be at some trouble to make the case for the one-man concern that is finding it hard to get on. Is there any justification for the one-man concern in transport services of this kind?

If there is going to be a transport service run on well-organised, economic lines, it cannot be run by a one-man concern or by a small concern. The more highly organised it is, the better the service and the better the conditions of the workers. I do not stand for the small concern that is trying to keep its buses, that are got on the instalment system, on the roads, and that pay something like 10/- a day to workers who are obliged to work at least sixteen hours each day. If a concern like that can treat its workers in that way, and carry on a service in that way, then it is much better that its buses should be off the roads. There must be taken into consideration also the protection of the public and the convenience of the public. In matters like transport the more highly organised a service is the more economic it will be to run it. If not, why have we unification of railways, and not a a multiplication of small companies? The same principle is behind all those matters. Deputy MacEntee says there may be a monopoly, and once the bigger concerns have crushed out the smaller concerns there will be a monopoly that will salt the public and do what it likes. This House would not be doing its duty if it allowed that to take place.

It is already permitting it.

Mr. O'Connell

The way to deal with the problem is to prevent that monopoly, to organise and unify transport and control transport rather than allow everybody to get on the roads and facilitate them in doing so.

I would like to point out that to my knowledge there is a one-man concern—and when I say that I mean one bus service owned by one individual or, at the most, two individuals of the same family — and it pays higher wages than some monopoly undertakings.

Mr. O'Connell

I am quite ready to admit that, but in the nature of things there must be exceptions. While making these points on special sections, about which we talked at some length on the general Resolution, I would rather address myself to the general principles involved in the financial policy of the Government in so far as it is embodied in the Bill and especially in so far as it concerns the matter of tariffs. The Finance Bill is a measure which enables us to collect a certain amount of money every year, but it ought to be very much more than that. The taxes imposed and the relief given ought to be such as would give a general direction to our economic policy. I think we have a right to inquire how far that has been done and with what success it has been done by the present Government through the proposals which are embodied in this and previous finance measures.

On the question of tariffs, I think it is essential that the whole matter should be immediately examined as to whether or not it is a method which is going to bring about what we are all agreed should be brought about, the revival and development of our industries. It is essential that such an enquiry ought to be immediately instituted. I feel sure that in the very near future this is going to be a subject which will be discussed all over the country. It will be the subject, possibly, on which the next Government may be elected. It will be one of the subjects which will determine very largely the fate of many candidates, and perhaps of Parties, too. Have the people sufficient knowledge of the subject to judge and act when the time comes to act? Will they have full knowledge of the effects of the policy which has been in operation for some six or seven years, and will they be aware of the likely effect of an advance in that particular direction in regard to that policy?

When tariffs were introduced here six or seven years ago, our Party supported the idea. The object was good, and we agreed then, and I agree now, that a tariff should not be put on for a short time and then taken off; that there should be definite security in the minds of the people who would take advantage of a tariff, that it was not going to be put on for one or two years and then taken off. I think, however, the time is now ripe when we can say that tariffs have been tried for such a length of time that one can form a judgment as to their effects, as to whether or not they should be varied, and in what manner they should be varied. It strikes me that there ought to be some kind of an investigation, not into one particular tariff, but into all the tariffs that have been imposed from the very beginning. I refer now to protective tariffs, and not merely the ones put on for the purpose of raising revenue only.

In the case of protective tariffs there ought to be an exhaustive enquiry by some commission or committee in order to find out whether or not the objects which this House had in mind when the tariffs were put on are being achieved, and what is the measure of success they met. I have been looking into some figures recently with regard to one particular industry on which a tariff was placed. It was a tariff for which I voted in 1924. I refer now to the tariff on boots. A very great amount of money has been paid in the case of boots, by way of tariffs, by the purchasing public of this country. The object of putting on a fifteen per cent tariff in 1924 was obviously quite clear to everybody. It was to develop the industry in the country. Are we satisfied that that development during the last seven years has been everything that it ought to be? Are we satisfied that judging by the rate of development that has gone on during that period, we are justified in doing anything more to continue the tariff on boots? The figures show that six years after the tariff was put on the import of boots has increased by 104,000 dozen pairs. Those figures apply to 1930. We have that definite figure in excess of the boots imported in 1924. I admit there are other factors that would account, to some extent, for that increase; but the fact remains that £1,750,000 is still being paid for imported boots.

We have this big market here and we have the tariff wall of 15 per cent. We are entitled to ask our boot manufacturers, our industrialists and our capitalists what steps they have taken and what steps they propose to take to cater for this market. If nothing further is to be done than is being done I, for one, would reconsider my attitude towards the tariff on boots. The tariff appears to me to be nothing more than a revenue tax and a tax that falls very heavily on those of the community who can least afford to bear it. We have some evidence of the progress that was made in this industry during the years 1926 to 1929. We find from the Census of Production that the nine principal factories engaged in this business increased their number of workers by 126 in three years. The wages bill, on the other hand, fell by £5,500. Although this big market was open to them, although 1¾ million was going out of the country and although 104,000 dozen pairs of boots were imported, those engaged in the boot industry increased their output by less than £1,000 per factory during those three years. If nothing better can be done by the tariff policy than that, we should, in the interest of the country as a whole, and not as a Party matter, consider whether merely continuing the tariff is going to help an industry like this. How is it going to help even if the tariff is increased considerably and made possibly prohibitive? Who is going to supply the market? I cannot see anything, in that event, except increased prices for the product turned out. I should like to have a statement from the Minister as to whether he is satisfied in this particular case. I give this as an example and I admit that it is, perhaps, the best example from my point of view and the worst example from the point of view of the effect of the tariff policy. Is the Minister satisfied that things should be allowed to continue in that way or should there not be some revision, some new consideration taken into account that would enable us to capture that market?

My own belief is that the tariff policy, by itself, is not sufficient at all. I have said that more than once. The Minister cannot be satisfied. I should like to hear from, say, Deputy Lemass whether he is satisfied that the position will be met by increasing, or doubling the tariff, or making it prohibitive. Will that be satisfactory unless the plan that we have stated definitely here should be adopted is adopted—direct intervention, direct positive action, the organisation and development of industry by State funds, State credit, State direction and, if necessary, State control. Is there any way short of that by which the capitalists, the industrialists and the manufacturers will be induced to develop the industry and meet the market that is there — the home market that we hear so much about? This is a very important matter at this stage. It is important to enlighten the people of the country on the merits of tariffs since they will be called upon in the near future to decide on that issue. It is very important that they should have the fullest possible information.

I do not know whether or not the present Tariff Commission has the right to make inquiries into tariffs already granted. I think they have. If they have not, they ought to get that power, or some commission should be set up which would go into this question as a whole—not into one particular tariff but into all the tariffs—and let the public see what is the general effect and what chances there are that these tariff measures will have the effect by themselves that they are generally supposed to have by those who advocate them so strongly from time to time. It is important from every point of view that steps should be taken to develop our industry and to develop it at a much more rapid rate than it is being developed at the present time. We hear that the adverse balance is going down. The adverse balance could disappear altogether; if we were not able to buy any goods from other countries, there would be no balance one way or another. That would be one way of bringing it down but it would not be a healthy way. I can conceive circumstances in which it would be a good thing to have a good adverse balance. We hear of the price given for National Loan. I have more than once pointed out here that that, of itself, is not a healthy sign of a country's prosperity. It might be like the bright blush on the face of a person in the first stages of a wasting disease. When money is tied up in securities of that kind, it means that it is not free for industrial purposes. It is quite a common thing to see very high prices for Government stocks and securities at a time when there is very great unemployment and industrial depression. We are told that we have escaped the wave of depression to a greater extent than other countries. That may be so but, if we have been hit to any extent by the wave of depression and if it can be shown that we need not have been hit so hard if other measures had been taken, then we are blamable.

I have risen specially to urge upon the Minister that the time has now come when the operation of tariffs ought to be very fully and impartially examined, and examined away from the atmosphere of the political platform. If it is impossible to get an impartial examination of the effects of the policy which has been in operation since 1924, I think the country should have it and have it as soon as possible because it would enable us to judge whether or not we should continue along that line. In view of the developments that have taken place, or rather the want of development, I have very grave doubts whether we should continue along that line. If we cannot continue along that line, let us have some considered view as to the line our industrial policy should take for the purpose of doing what all of us agree should be done and what all of us agree would be a good thing if it were done.

I was not in for the whole of Deputy O'Connell's speech but I heard the portion of it which he devoted to the tariff on boots. I rise for the purpose of endeavouring to extract from Deputy O'Connell information as to the policy of his Party concerning that tariff. I am no clearer now than I was before Deputy O'Connell spoke as to whether Deputy O'Connell and his Party are opposed to the tariff on boots or not. He asks that we should have a considered view on the matter. He wants the tariff reviewed but he has not clearly indicated whether or not the Party for which he speaks wants that tariff removed, maintained or increased.

Mr. O'Connell

The policy of my Party with regard to this matter and a great many other matters can be purchased in a little booklet by the Deputy for the sum of 3d. I am sure he knows all about that booklet and has read it and studied it. If the Deputy asks me on this particular matter what is my view, I say that if I were to think that there was to be no further development, or that development was not to come at any greater rate, I would be quite prepared to reconsider my position and to take off the tariff altogether if nothing more could be done. But I would not be content to leave it at that if I had the opportunity. I would take special and more effective measures to increase the manufacture of boots here.

Deputy O'Connell has made an explanatory statement in which he used the word "if" five times. I am no wiser now as to what his policy is than I was before.

Mr. O'Connell

I cannot help that.

It is important that we should realise what his policy and the policy of his Party is on this matter and there is considerable doubt as to what their policy is.

Mr. O'Connell

Not on the part of ordinary people.

The Minister for Education made a speech at the League of Nations in which he described the Labour Party as a "Free Trade Party." That description of the Party appeared on the records of the League of Nations and it is something which Deputy O'Connell must take into account. Apparently he has made up his mind that since the Party has been described as a Free Trade Party, it must live up to the description though he has spasmodically supported a tariff policy in this House. What is the position as regards this tariff on boots? This tariff has been selected for attack by the advocates of free trade principles in this country. Apparently, they think that they have discovered a weakness in the tariff policy in its application to the boot industry and that if they hammer at that sufficiently they will bring down the whole tariff wall. Deputy O'Connell has mentioned that only 120 more people are employed in the boot manufacturing industry than there were employed in 1926. I think that that is something to be satisfied about.

Let us consider the industries in which the number of people employed is less than it was in 1926. Deputy O'Connell made a study of the Census of Production in relation to boots. Let him make a study of the Census in relation to a number of other industries and he will find that it shows that the number of employees has decreased considerably. If the tariff on boots had done nothing else but maintain employment in the industry at the 1926 level it would have justified itself. The coach building industry has not been able to maintain the position in which it was in 1926 because it was not protected. The paper-making industry has not been able to maintain the position in which it was in 1926 because it was not protected. The flour milling industry has not been able to maintain the position in which it was in 1926 because it was not protected. Employment in these industries is much lower than it was in 1926 and if any proposal had been made to the Dáil, or if any proposal were now made in the Dáil, which would result in increasing employment to the 1926 level would not all of us be pleased about it? I think Deputy O'Connell would be the last to oppose it.

What is the position here? Is it fair in the first instance to judge the effect of the tariff over four years such as have elapsed since 1926? During that period not merely this country, but the whole world moved into a depression. There was a slump in business and a slump in industry. The consumption of boots in this country has decreased since 1926. Deputy O'Connell can work that out from the Census of Production also. If despite a decrease in consumption the Irish factories have increased production, it means that they are gaining proportionately a greater portion of the market than the figures would, at first, appear to show. I have worked out the figures and I have arrived at that conclusion. The number of persons employed has increased despite the slump in consumption. The part of the market which the factories are able to supply has increased despite this decline in consumption. The industry is probably more firmly established now than it was at any time in the recent history of the country.

Deputy O'Connell drew attention to the fact that despite a small increase in the number employed, there is a decrease in the wages paid. There is an explanation for that. The explanation is that in 1926-27, when these factories were being built up, it was necessary to bring highly skilled operatives from abroad for the purpose of training the workers here, and to pay these skilled operatives very high wages. The industry is now evidently in a position in which it does not require the services of skilled operatives from abroad. The native workers have proved their skill, and are able to conduct the factories without outside assistance at all. I am not saying that there may not have been some fall in wages, I do not know whether there has or not, but I know that the fact I have mentioned is one explanation for the apparent diminution in the total amount of wages paid in all factories during the year 1929 as compared with the year 1926.

Let it be clear however, that it is no function of Deputies on these benches to defend the existing boot tariff. One thing we will argue is that there is an unanswerable case for the protection of the boot manufacturing industry in this country. If there is any industry capable of being established here that is one. We have the raw material, we have the skilled workers, and the market at our doors.

Mr. O'Connell

I agree.

Deputy O'Connell agrees with that. We are agreed that the industry can be established here.

Mr. O'Connell

There is no doubt about that.

The question is whether the method adopted by the Government to protect the industry is the best method that can be adopted. Let me say that the existing tariff, even though I was probably one of the strongest critics of that tariff when it was first imposed, has done good. It has preserved the industry at a time when other industries were disappearing. I think there can be no doubt whatever that if the boot tariff was increased to 30 per cent. or 40 per cent. you would get made here all the boots required by the people of the country, but you would not get them all made by Irish-owned factories. The position is that there is a great number of factories in England, the greater part of the trade of which is with this country. These factories do not regard this 15 per cent. duty as a sufficient inducement to come in here. They were able by price cutting, by the utilisation of their trade machinery and because of the strength of their trade connections to overcome that tariff barrier. They were able to maintain their position here in spite of it.

The Dublin Technical Committee at the time the tariff was imposed, sent a deputation to examine the boot factories in England. The main purpose of the deputation was to acquire the information necessary to enable them to prepare classes for the training of operatives in the industry here. They discussed with a number of English manufacturers the probable effect of the tariff, and the English manufacturers whom they met told them that they were not worried at all about a 15 per cent. duty. They said 15 per cent. duty would not hamper them in the least in this country, but that if a 35 per cent. or a 40 per cent. duty were imposed they would be all in here in a week. We have to face that position. We can get all those factories here in a month by increasing the duty to 40 per cent., but is that what we want? Is it our sole desire to get these factories established here irrespective of who owns them or under whose control they will be? The whole difficulty of the tariff policy is that, side by side with it, you must have some method of securing native control of industry in this country. What that method will be is difficult to say, but it will have got to be decided. Some means will have to be devised. Various suggestions have been made here by Deputies from time to time. These suggestions have not found favour with other Parties in the House. The Government seem to have ignored that aspect of the question altogether. They have not made any attempt during their period of office to restrict the operations of these foreign companies within the country. The plausible argument that these companies give employment is advanced and it is not one which is easy to answer in a period like the present. Deputies here must take a longer view than that. They must consider the ultimate possibilities. There can be no doubt that if we can allow the industries of the country to pass, as the flour industry is passing, into the hands of external owners, in the long run it will result in less work, less employment and more depressed conditions here. We cannot take that risk. I believe through the operation of a scheme of State assistance similar in principle to that embodied in the Trade Loans (Guarantee) Act we can make it possible for native-owned concerns to take advantage of any protection which we give them in the Irish market.

The building up of industries here which are being controlled by natives of the country would be a very distinct asset. That is a question on which we are very anxious to know the attitude of the Labour Party. Statements have been made by members of that Party that they would just as soon have British capital as Irish capital.

Mr. O'Connell

If that is all that was to be in it, if there were to be nothing further done.

I am not quite sure what the significance of that remark is. The importation of capital, I suppose, is not a bad thing in itself, provided it is subject to native control. Is that what Deputy O'Connell means— that he considers Irish capital as bad as English capital, and that it does not matter to him whether factories are owned by Irishmen or by Englishmen? If we had a clear, definite statement from the leaders of organised labour on that matter, it would be of very great advantage.

There has been a tendency in some quarters to misrepresent the attitude of Fianna Fáil upon this issue. It is not merely that we desire to protect the interests of certain individuals who have invested capital in industries in this country. It is that we think it would be decidedly nationally harmful to have the greater part of the industries of our country controlled by persons who have no direct interest in its welfare. We have seen the effects of allowing that to happen in one or two industries, and we do not want to see it any more. If we are going to increase existing tariffs, side by side we must take action to maintain native control of the industries concerned.

Mr. O'Connell

Where will you get the capital to be invested in them?

I am satisfied that there will be no difficulty at all in getting capital to invest if the State creates the right conditions here. We have a surplus of capital. Let that be clear to Deputy O'Connell. There are £200,000,000 of Irish capital invested abroad. The people who invest that capital can be induced to bring it back here if there is a use available for it here. It should be the policy of the Government to give an inducement to them to do that and afford opportunities for investment. The adoption of a protectionist policy is one way to afford an opportunity, but it is not sufficient in itself. As I explained, to get back to the boot tariff, the position is we have preserved an important industry. We have increased its productivity. We have increased the employment it gave, even though by a small amount. Other industries are declining. These facts alone justify the imposition of the tariff, even though that tariff was too small and was wrongly applied. I do not think those who are anxious to start a new Free Trade crusade would be very wise to select that particular tariff as an object of their attack.

Mr. O'Connell

What has the country paid for the tariff?

Let me explain to Deputy O'Connell. It is an elementary lesson, but it will do him good. A certain amount of revenue comes into the Exchequer as a result of the boot tariff. If that revenue did not come in in that way it would have to be got in another way. As a result of the tax on boots the Government were able to reduce the tax on tea, sugar, or some other commodity. The total amount of revenue which the Govern- ment get is the same. By the imposition of this tax they get revenue in a way that helps industry.

Mr. O'Connell

Could not that amount of money be better used to develop the boot industry than in the manner in which it has been used?

How could it be used? The money that came into the Exchequer has been used to meet the ordinary expenses of government. The revenue that came in would have to be got in some other way. The Minister for Finance will explain that later.

I want to add another word of protest against the imposition of the sugar tax. On every occasion that presented itself here we pointed out that the amount that is raised in indirect taxation bears in this country an unfair proportion to that which is raised by direct taxation. We have pointed out that to tax an essential article of food in circumstances like these is most unfair and most unjust. The excuse that the Minister has for bringing in this tax is that he wants to provide a sum of £315,000 in order to relieve agriculture. A more extraordinary method of relieving agriculture, I think, has never been presented to any assembly. Who are the agriculturists who need most relief? Is it not the small holders, the small farmer?

Mr. O'Connell

Hear! Hear!

We have the statistics published in 1912 proving to us that on small farms of from 15 to 20 acres there is five times as much labour employed as on farms of over 200 acres and on farms from 30 to 50 acres there is three and a half times as much labour employed, that more food is produced directly off the land in these farms than on the larger farms and that the stock that is raised is the kind of stock on which most labour is employed. When we know these facts, and they are patent to anybody who has any knowledge whatever of conditions in the country or anybody who takes the trouble to read the agricultural statistics, it is certainly very strange that we should have the Minister for Finance coming in and proposing to relieve agriculture by actually imposing on the small farmer a heavier burden than the burden he is carrying up to the present.

We have had calculations made for a number of counties and in these counties on an average it works out when you come to a farm of over £10 valuation—it goes up to £10 in most cases—a farmer and his family if he has a family of five will pay to the Minister for Finance more in this sugar tax than the amount of relief he is going to get by remission of the rates. In the case of farmers whose valuation is not over £4 they are relieved in rates to the extent of about 3s., and if they have average families of five they have to pay 10s. 6d. in order to get that 3s. or 4s. It works out an extra burden to them of 5s. or 6s. in the year.

The first point, therefore, is that this is not relief for agriculture. It is a burden on the particular agriculturists who deserve most consideration, and who are most in need of relief. That is due to the fact that the money required for the relief of the rates is being raised partly off the farmers themselves, and particularly off the small farmers. It is also unjust, because it has to be provided partly by the poorest of the non-agricultural sections of the community. It is unfair that it is the poorest of every section of the community who should be called upon to bear the principal part of that burden. It is the poor worker, the small shopkeeper and the small farmer who are providing this money, which is, for the most part, to be given for the benefit of the larger holdings.

Of course, it would be too much to expect that Deputy O'Connell would forgo the opportunity afforded on an occasion like this to tilt at the motion we brought in, but he knows full well that when we brought in that motion we stated expressly that it did not indicate our attitude towards de-rating as a permanent solution. We made it quite clear that as the report of the De-rating Commission was promised, we did not want to anticipate any discussion that might be upon that. The purpose of our motion was to bring pressure upon the Ministry to come immediately to the relief of the farmer.

Mr. O'Connell

Why did you not vote for our motion?

Because the motion brought in by the Labour Party did not do anything of the kind. It provided an excuse for anybody who wanted to avoid bringing in immediate relief to the farmers to get out of it. As a complete settlement of the de-rating question, it was unsatisfactory.

Mr. O'Connell

It did not pretend to be complete.

It was neither fish, flesh nor good red herring.

Mr. O'Connell

It was much better than the Deputy's motion.

It provided Deputies on the opposite benches with an excellent opportunity of saying that the proposals that were put forward were impossible. It gave them an excuse for voting against it. We put forward a definite motion of such a type that it could not be turned down on the grounds that it was unworkable or anything of that kind, because a similar proposal had already been in operation.

Mr. O'Connell

It favours the ranchers.

It proposed to give relief to the agricultural industry in such a manner that everybody, whether the small farmer or the large farmer, would be relieved in the same proportion. Everybody, whether he was a big farmer or a small farmer was going to benefit to the extent of one-third of his burden and then we are told by Deputy O'Connell that if he had a choice he would prefer the present system to the system of relieving everybody of one-third of his burden.

Mr. O'Connell

I would like to point out to the Deputy that as between the method of allocation set out in the Government proposal for the distribution of the £750,000 and the method of allocation in the million motion of Deputy de Valera there can be no doubt whatever that the county with the small farmers and the large population are doing better under the Government allocation than they would have done under Deputy de Valera's proposal. That is the only point I made. I had special regard to that seeing that the Co. Mayo, that I represent, has done better under the Government scheme.

Go and tell a small farmer in Co. Mayo that he would be relieved of one-third of the rates that he had to pay, and ask him would he prefer it to paying seven shillings in order to get three shillings.

Mr. O'Connell

We would have given him three-fourths and you voted against it. You also voted against the proposal in our motion that no proportion of it should fall on the small farmer.

We voted, as Deputy O'Connell very well knows, against his proposal because of the fact that it was simply introduced to queer the pitch.

Mr. O'Connell

That is not true and the Deputy knows it.

Deputy O'Connell knows that is true and well he knows that neither our motion nor his motion, in a House constituted as this is at present, had any chance of passing. Therefore it was introduced definitely in order to force the Government to give immediate attention to the needs of agriculture.

Mr. O'Connell

And set a bad example.

We set no bad example because we pointed out that the principle of discriminating in favour of the small farmer was a principle that we stood by.

Mr. O'Connell

And voted against.

The Deputy must be allowed to make his speech.

Deputy O'Connell may talk about his little manoeuvres here. That is all this thing was. The people outside are not such fools as Deputy O'Connell thinks. They are able to discriminate between the little manoeuvres here.

Mr. O'Connell

Hear, hear.

We can leave it to them very safely. We brought in our motion in order to force the Government to give immediate relief to agriculture. We said that. We said that the principle underlying it was proportionate relief to everybody and we stated that it was of such a kind that it could be applied at once and that no excuse could be made on the ground of further examination. This question had been two or three years in the hands of the De-rating Commission. The point is this: that the method by which this money is raised is a bad method and that is what I am interested in at the moment. The mode of distribution is bad, but what makes it utterly bad is the fact that the money is being raised off the particular class who most deserve benefit.

Mr. O'Connell

Hear, hear.

We are agreed then upon that. The next question that has been raised is this question of tariffs and our attitude towards it. Deputy Lemass has pointed out that one thing at any rate has been secured by the boot tariff and that is it has maintained that industry in a position in which it was able to give employment at least on the previous level when other industries that were not protected gave less employment. But we are not satisfied that the position of the boot industry is as it ought to be, not by any means. If we had our own factories supplying our needs in boots there would be employment for close on 6,000 workers. We want to see that employment given here and we want to see the money that is spent in giving employment across the water spent in giving a livelihood to our own people here at home. Our attitude upon the question as to whether the present tariff is sufficient or not is that a tariff that is not sufficient really to protect the industry is a useless type of tariff. We want to have adequate protection and I would class as adequate protection not merely protection against manufactures being sent in from outside but protection also against the invasion of foreign capital, such as Deputy Lemass pointed out was likely to come if we put up adequate protective tariffs. How does Deputy O'Connell imagine that we are going to get Irish capital put into these industries if the people who sink their capital feel that to-morrow morning some combine from across the water is going to come in and destroy whatever hopes they had of having their capital profitably employed? It must be obvious to Deputy O'Connell that if we are going to get Irish capital invested in Irish industries we must give it protection against invasion from outside of foreign capital.

And give up talking about war and the smashing of treaties.

Who is talking most about war?

You are.

I have not been speaking about war but I have been speaking about standing for our rights, national, economic and otherwise.

What about the interview you gave to an American paper and the talk about a show-down?

The Deputy must be allowed to proceed.

Deputy Shaw is not worth bothering about. I take it that what he is introducing has no relevancy to the present matter.

Nobody will invest money in this country as long as there is talk of that kind.

Money will be invested in this country when there is adequate protection given and when outside combines will not be allowed to come in and rob a man of what he naturally expects when he puts his capital into an industry. It is an urgent matter and a matter which will have to be attended to if the policy of protection by tariffs is going to lead us anywhere. I think, as far as our attitude is concerned, what I have said makes it clear enough that we are prepared to consider very carefully and sympathetically any proposals which will be made to protect Irish capital put into Irish industry, protect it from the invasion from outside. The capital is there. The £200,000,000 of Irish capital invested abroad has been referred to. It is only a short time ago since we saw it stated that there was £160,000,000 deposited in Irish banks. In one place it was given as £180,000,000, and in another place as £160,000,000. The figure given in a recent issue of the "Statist" was £180,000,000. Let us take the smaller figure of £160,000,000 as the deposits in Irish banks. It is estimated that there is already invested abroad some £200,000,000 which would be available for investment here. That money, in my opinion, will be available for investment the moment that the people who have that money to invest are satisfied that, if they build up industries like the boot industry here, when they have their factories started, their property is not going to be made valueless by the invasion of some combine from outside. There is another matter besides this invasion of capital from outside. Suppose we give to those Irishmen who are prepared to invest their capital in this country adequate protection and that that does not induce them to come and enter into industry, then I would be prepared, for one at any rate, to go the distance that Deputy O'Connell has suggested the Labour Party would go, and that is to take direct action, if necessary, rather than see our own people idle whilst money is being sent out of the country and giving employment to strangers.

To come back to the sugar tax. We are going to vote against it. We think there is no justification for it. There are other directions in which the Minister for Finance could look to provide that money and provide it in a way which would be fairer to the community as a whole, and which would really relieve agriculture, and not, as the Minister is doing, put a further burden upon a portion of the farming community which really deserves relief.

Deputy Shaw introduced what we might call a fresh breeze into a discussion upon what is otherwise regarded in the House as a rather dull Bill usually—namely, the Finance Bill. Coming back as I was from the front, so to speak, where I was in the atmosphere of tin helmets upon soldiers and Hotchkiss guns in ambulance wagons and other guns on the roofs of hospitals, and so on, I could not help feeling that Deputy Shaw, when he talked about war, must himself have come out of the war-like atmosphere of his own Party. There is no war talked upon this side of the House, and no war made upon this side of the House. It has nothing whatever to do with the investing of capital in Ireland.

I quite agree with the Deputy. It has nothing to do with the Bill, so let us leave it.

It is important to point out to people in this House and outside that the only thing which a capitalist has any regard for is the security of his investment, and that does not depend in the year 1931 upon any of the scare headlines set by the Government as to the possibilities of civil disturbance in this country. As the discussion proceeded, I could not help thinking of the City of Waterford, where there is a number of business men of considerable capacity, most of whom always invested their money outside Ireland, and some of whom have suffered very severely because of the big slump which has taken place in English investments. Now the business men in Waterford are beginning to realise that the only way in which they can have securities which are secure is to have them under their own hands in the form of industries upon the spot. We of the Fianna Fáil Party put it to these business men, that if they did not believe in our programme, if they did not believe in tariffs, they should try in some way or other under present conditions, if they believe in free trade, to build up the industries of Waterford.

I want to give them credit for their efforts. They certainly did try. They had annual exhibitions and visitations to factories and so on. But these have not done any good, and now business men of that sort, who are most antagonistic to us in politics, have admitted that it is absolutely necessary to have a tariff, as in the case of the bacon industry. Owing to the import of Polish bacon, there is more and more unemployment in Waterford and in the surrounding districts and, in general, depression amongst those who are producing the pigs. In that case you have an industry which is supported by prominent members of the Cumann na nGaedheal Party, but for some extraordinary reason, which it is impossible to fathom, no security in the form of a tariff is given in this year's Finance Bill for the protection of the bacon industry. Then again there is a boot factory in Waterford which has done very well under the small tariff, such as it is. The owner of that factory, who is a very amiable person, but who I suspect is a strong supporter of the Government, told me that if he were to get a bigger tariff he could extend the business and that would mean the absorption of a considerable number of the unemployed in Waterford. I speak about Waterford because a good concrete example which has general application drives a point home better than a very general statement.

Tariffs I admit can do more harm than good if they are applied partially, because you are not affecting the general producing power of the people; you are only affecting a few industries. If you want to get the benefit of tariffs you must spread them out as far as possible so that the purchasing power will be able to meet any slight increase there may be in prices in the beginning, anyway until they get well established and stable prices. So that once you have begun to introduce tariffs it becomes an absolute necessity, if you are going to get over the evils, to spread them out over as many industries as possible so as to increase the purchasing power to meet—I was going to say the argument of the Government against tariffs—whatever rise there may be in prices from time to time before the thing becomes properly stabilised. In Waterford you have the best example of a successful tariff in the case of margarine where, because the Government insisted upon a certain principle of fixing prices, you have had no deleterious effects from the tariff in the matter of prices.

I now turn to the case mentioned by Deputy Jasper Wolfe in reference to Section 2 of the Finance Act. I do not think the Minister and the Government realise how much they are penalising people who are in the position of executors. An executor is a person who generally has to do a considerable amount of difficult work, accept an onerous responsibility and very seldom is allowed to be paid for his work. He does it generally out of respect for the dead or out of family affection, and so on. It involves an amount of detail dealing with succession duty, estate duty, and so on, and he is now to have added the extra responsibility of going back six years instead of three years in dealing with the accounts of the deceased person. In England the period fixed was three years. The Minister seems to dissent, but I assure him the period is three years in England. I am certain of that, and they cannot go behind three years.

As a matter of fact, the whole history of this particular statute of limitation, so far as this House is concerned, is very interesting. At first the Minister, when I raised the question that he could not go back behind six years, denied it. Afterwards it was discovered that he could not go back beyond six years, and then the case was made that going beyond six years was in the nature of a penalty. We pointed out that this was a policy which was greatly deprecated in England. Judges set themselves against that particular attitude of imposing a penalty. They said if you want to impose a penalty, do so as a penalty, and do not make use of the ignorance of the public of the statute of limitation in order to get more tax out of people, and have the covering excuse, which is merely a penalty. At any rate, it became clear to the public that they could not go back more than six years. Subsequently it was discovered when the public became aware of this, that there was the possibility of taking action in court. Action was taken, and the Government was beaten, and as a result of that we have legislation which is retrospective, and which is not merely a flouting of the authority and respect for our judges, but is undermining whatever respect we might have for portions of the Constitution, and at the same time is inconsistent with the Government's own attitude upon other questions.

I am thinking at the moment of a great cruelty that was done in a particular case in Waterford on an old man who went through great family sorrow. At the time his accounts should be made out his son was drowned, and he got ill, and because the time had run out during which he should have made his appeal he was come down upon and was threatened by bailiffs if he did not pay up £300. He appealed against that, and lost his appeal on the ground that he had not appealed in time. At that time the Revenue Commissioners apparently did not want to advert to the fact that they themselves, on a reasonable excuse, might have extended the time in a case like that. They did not do it, and the matter became res judicata and could not be reopened. Subsequent to that they passed a section in the Finance Act emphasising the powers of the Revenue Commissioners to extend the time under reasonable circumstances. Still they did not see their way to give any relief to the unfortunate man who had been mulcted in the original action for £300 which he should never have paid. See the contrast there. They make penal legislation retrospective, but legislation which might have brought relief in a very cruel case they do not make retrospective.

[An Ceann Comhairle resumed the Chair.]

The spirit of the Constitution as set out in Article 43 is that a man should not be penalised for something that was done before the Act was passed as if it had been done after the Act. The Minister, I hope, will reconsider his attitude towards that and bring in some sort of an amendment that will leave the public less exasperated by the income tax laws than they are at present.

There are one or two matters that I would like to make some suggestions to the Minister about, and which have been made to me by people in the trade. One is that motor hackney car men should be given the benefit of the relief given to owners of cars that are five years old. Perhaps the Minister will look into that. Another is that he should allow in all casting, stamping and forgings for the motor trade which have not been machined in any form. At present there is no importation of that sort at all. It does not affect the general trade. They would only be imported by people who are enterprising enough to wish to develop their engineering garages into motor works. There are only a few such at present. It might encourage more to go in for that, because it would mean those parts would be machined in the first place, and ultimately built into cars, and it would give apprentices and the trade generally an opportunity of developing trade so far not developed here. And I think it would not have the difficulty which made the Minister refuse last year drawbacks on motor parts which were machined, because it would be very easy for an officer to find out very rapidly whether parts were machined or not machined.

Then again I came across cases where men who started with little or no capital and after a considerable number of years had accumulated a certain amount of capital were charged with excess profits. The capital they had accumulated was not sufficient to put them in the way of being what one might call rich men, yet they were charged in respect of excess profits so much that it left them as poor almost as when they started, or at least with indebtedness to a Bank or elsewhere, to pay back their liabilities to the State. I think something should be done to give relief to small men in that respect. In conclusion I would urge the Minister to respect the authority of the Judges, to respect whatever there is good in his own Constitution and not to make those people who are in the position of executors to feel as if they were outlaws in the State.

Deputy Lemass and Deputy de Valera referred particularly to the sum of £200,000,000 which they say is invested abroad. There is a very large sum invested abroad but I think that figure is something over the mark. In reply to a question put in this House some years ago it was stated that the probable sum of dividends that came from investments abroad was something like £11,000,000 per annum and of course that sum would be considerably less now. I want to make it perfectly clear that this money will not be re-invested in this country until people are certain of a continuation of the conditions of stability existing in this country at the present time. I do not want to say anything controversial on this Bill. I did interrupt Deputy de Valera when he was speaking because of the fact that statements have been made inside and outside of the country——

What statements?

One statement was that if the Party opposite got into power very probably you would have a show-down with England.

Who made that statement?

I saw it in the newspapers.

You see lots of things in the newspapers.

I take it that the Chair did not encourage Deputy Shaw's interruption?

I thought not.

The point that I want to make clear is that if you want to attract back capital into this country then you have got to finish all this nonsense about smashing the Treaty. I know many capitalists who are prepared to invest large sums in this country and who are awaiting the results of the general election before they will do so. There are people who have money invested outside of this country——

They have lost a lot of it recently.

—who will not re-invest it here unless they feel that we are going to have stability.

What about the Irish investors who had their money in the Royal Mail Steampacket Company and in the Cunard Company? Where is that money now?

Deputies on the opposite benches talked about the sugar tax and the tax on petrol. Everyone agrees that large sums of money had to be obtained from some source to come to the rescue of the farmers. We all admit they are the wealth producers of the country. I did not hear one suggestion from the benches opposite as to where the money required for that purpose was to come from if sugar and petrol were not taxed. A tax is put on petrol but the price of petrol has been reduced by a halfpenny a gallon since. It ought to have been reduced by at least another halfpenny if we here were to be put in the same position as people in other parts of this country. I do not think the criticism offered from the benches opposite was fair for the reason that no suggestion was made as to where the money was to be got that was needed to give relief to the farmer. It is all very well to say that a tax should not be put on sugar or petrol but if that had not been done where was the money to come from? I think it is only fair to ask the Deputies opposite to say where did they think the money should have been found.

There has been a certain amount of discussion on Sections 2 and 4. These really are very minor provisions which aim solely at keeping the position in regard to the collection of income tax as it was understood to be prior to the hearing of two cases in the courts: to see that the practice which was in existence prior to a few months ago has full legal force and effect. There is no such thing as there being any contravention of the Constitution. If these provisions were in contravention of the Constitution they would be void and have no effect. They are not contrary to the spirit of the Constitution which simply dealt with the question of crime. It says that any act is not to be made by legislation a crime if it was not a crime at the time——

Will the Minister read the exact words in Article 43?

They are not in contravention to the spirit of the Constitution. In regard to revenue provisions we constantly must have retrospective legislation. That is the position in England too. The reason for that is that the courts in interpreting revenue statutes do so in an extremely strict way. They interpret them in this manner, that if there is any loophole at all for the taxpayer to get out, the taxpayer is let out. The courts, both here and in England, often give decisions which are really inequitable as between the taxpayer and the community at large on that basis of always interpreting revenue statutes with extreme strictness. Consequently, decisions are constantly given in the courts in this country and in England which mean that a gap has to be stopped up. Gaps are made, and chinks are worn as it were, in the revenue law and they have constantly to be stopped up. If the legislation stopping them up were not to have retrospective effect then great sums of revenue would be lost.

It is absolutely necessary that retrospective legislation should be introduced. That legislation generally is simply this, that it confirms something that was always understood to be the law. Often over a long period of say 50 or 60 years it has been acted upon by everybody as if it had been the law. It has frequently happened that something has been the practice, and then at the end of a very long period a case is brought into court. The courts in interpreting the revenue statutes, as they often do, find that the practice was illegal. What we are doing here is what is generally done in the case of these revenue amendments. We are simply restoring the position to what it was believed to have been and to what it was accepted as being by the public generally.

With regard to Section 2, I think that Deputy MacEntee was under some misapprehension in regard to it. Deputy Little was also wrong. The practice here and in England has been to go back six years from the year of assessment in which the death occurred, provided that was done within three years of the year of the death. We are not proposing to alter that. Deputy MacEntee apparently was in error slightly as to the intention of the section. All that we are proposing to do is to restore the practice as it existed here, and as it exists in England, where they go back six years prior to the death if the tax has not been paid. The additional assessment must be made not later than three years after the year of the death.

A case recently occurred where a man was returning an income of three, four or five hundred pounds a year. When he died it was discovered that his estate represented a capital sum of £80,000, most of it situated in England. The tax had not been paid on the full income of that estate. In fact, it is estimated that man had succeeded in cheating the revenue out of about £17,000. If we were not to be able to go back, as we have always gone back since the period when the present sections were passed, we would lose that sum of £17,000. There is no reason why that sum should be lost because if the man were living and the fraud was discovered he would have to pay up. We do not know really what view would ultimately be taken by the Supreme Court on this particular point. It has so far only been before the Circuit Judge. If we were not to legislate we would go to the High Court. Then presumably either the revenue authorities or the taxpayer would appeal and would have the matter dealt with by the Supreme Court. There are three possible decisions: that we could go back six years as we have been going and as they have been going in England, that we should go back three years or that we should go back one year. We see no point in going on with that prolonged and expensive litigation. We propose to put the law in the position that it was understood to be. By doing so we are not penalising anyone. There can be no rational objection to what is proposed unless one wants to take the view that if a man succeeds somehow or other in defrauding the Revenue up to the day of his death his heirs in all justice ought to get the benefit of his malpractices.

That is entirely wrong.

That is the only argument that can be put up against it.

The argument is that the subject is entitled to the benefit of the law as it stands, and if he is found right, and if the legal advisers to the Revenue Commissioners are found wrong, he is not going to be victimised.

We are always entitled to change the law, provided that we do not do an injustice in changing it. Of course, we cannot enact laws contrary to the Constitution. Within Constitutional rights the only thing is not to do injustice by changing the law.

What is the function of the judges?

The function of the judges is to interpret the law, and if the judges interpret the law, and in some particular sense it reveals a weakness or an anomaly, it is the business of the Legislature to rectify the faults which, shall we say, the judges have disclosed.

For the future, if you like.

Either for the future or the past, as is just.

In England the period is made for six years, provided the assessment is made three years after the death. That is the present position. With regard to Section 4, I do not think it can justly be termed retrospective at all, and in the case in which a decision was given, as a matter of fact, the court appears to have given the decision with great reluctance, and although they had to decide in their interpretation of the statute in the man's favour, his case had absolutely no merits. Again I think it would certainly be a most unreasonable and a most illogical position if you had to proceed, in the absence of information that a man ought to give, to ascertain his liabilities before you could bring proceedings against him for penalties for having refused the information which he ought to give.

Dealing with one or two minor matters, Deputy MacEntee argued that a gas company, or certain other companies, ought not to be exempt from corporation profits tax, because a limitation of their profits in various ways represented something that was not very effective as regards the public. Nevertheless, those limitations do put companies which are subject to them in a different position to companies that are subject to no limitation. Taking it broadly, I think it might be accepted that a company whose profits are limited in some way or another statutorily is in a different position, and is entitled to more favourable consideration in dealing with a tax provision than a company whose profits are not limited in such a way. These public utility services have been free from corporation profits tax from the beginning. In some way the corporation profits tax is an anomalous tax, but one which we have not been able to give up, because it brings in a very substantial revenue very easily. It is not levied upon the smaller firms. It is a sort of extra income tax which is levied on a limited class of firms, and I think in principle to some extent, it may be admitted, that corporation profits tax is an objectionable tax. Apart from everything else, I would not propose something that was in fact an extension at the present stage of the corporation profits tax.

If anything were being done I think the corporation profits tax ought to be reduced or abolished rather than extended. We could not abolish it unless a proper tax could be devised, or substituted, that would give us equivalent death duty in cases of certain businesses, where, if they were privately owned, even by people residing abroad, we would get death duties that we do not get at present. As it stands, whatever we may do with a different tax as a substitute for it, I would not be inclined to extend it at all.

Deputies asked some questions about Section 32. The Department of Agriculture was really the residuary legatee of the Church Temporalities Fund and received a certain amount which might be from time to time fixed by the Treasury, according to the amount the fund could afford to pay without encroaching on capital. We have abolished that arrangement and additional funds have been actually voted for the Department of Agriculture and Technical Instruction and for vocational education and this residual amount will now flow into the Exchequer instead of flowing directly to the Department of Agriculture. I have not any figures at hand about the income of the fund but I furnished some information to the Deputy.

Deputy George Wolfe asked about a particular surtax. I think it would be better if Deputy Wolfe would furnish me with some details when I will endeavour to get full information of what has been done and the reason for it.

The surtax has been paid on a particular amount every year. The year before last the amount was greater than it was this year. Say that a man paid in £2,500 this year and £3,000 last year. According to the rules he is now asked to pay not only on £2,500 this year but on the difference between the £2,500 and what he paid last year. That seems to be inequitable.

If the Deputy will furnish me with details I will have the case examined. I was asked was turpentine excluded from the tax. It is by the words "mineral hydro carbon oils." Deputy MacEntee told us what the sugar tax would cost the average family and what petrol would cost the average family according to his estimate. I think the Deputy's estimate for sugar at any rate for the poorer families, which we have most to consider in this case, is distinctly too high. I think that perhaps one-third might be taken off his estimate in order to get at the amount of the burden that would be thrown on the poorer families. I suppose you will not get any two families which are affected in exactly the same way, but I think if you assume in the case of the poorer family that the consumption would amount to something like what it was in the war time allowance for all individuals you would not be very far wrong. In better off families a great deal more sugar is used not only in tea but in the form of cakes, puddings, and sweetmeats of various sorts, which considerably increases the amount of sugar used as compared with the poorer families, per head of the population.

I think there is no real foundation for the Deputy's contention that we can assume that the burden of the petrol tax may be spread over all households equally. It seems to me quite clear that while some portion of the burden of the petrol tax may be passed on, even to people to whom it can hardly be traced, nevertheless it is clear that you could take thousands of families in particular districts and you could see pretty clearly that the petrol tax did not affect them at all, or affected them in no appreciable way. They are not direct users of petrol.

The question of bus travel is a small thing and not a regular daily item, or even a weekly item, of expenditure. In the case of goods there are really other means of transport, and, in fact, so far as one could see, the petrol tax would not affect them at all. If you take the ordinary family of the small farmer it is quite safe to say that the burden of the petrol tax scarcely reaches them. Of course, it is perfectly true that if you attempt to relieve agriculture by such a method as de-rating you cannot give as much to the small farmer as to the large farmer, and you can hardly affect the agricultural labourer at all except by way perhaps of insuring him a continuance of employment, or a greater measure of employment than he otherwise would have.

The people who are indirectly connected with agriculture in the same way can only benefit in so far as the increased prosperity in agriculture gives them employment or gives them trade. But dealing with direct benefits with any form of relief in the nature of de-rating it means that the small man cannot get much. No matter whether you spend £750,000 or £1,500,000, or £2,000,000 or £2,250,000 on de-rating you will find that the man who only pays £1 or £2 yearly in rates cannot be relieved by any scheme of de-rating to a greater extent than £1 or £2. The argument against going any further in the way of de-rating is implied in that fact. There is no doubt that there are few forms of taxation that do not spread far beyond those on whom they directly fall. If the taxes themselves are not passed on certain ill-effects arising from these taxes are passed on. You are bound to throw a certain burden on the man who is rich, or the man who pays no rates, if you spend £750,000 on the relief of rates. If you spend £1,500,000 you probably more than double that burden, because the difficulties of raising the additional money involve the throwing of the net much wider.

The labourer can get nothing directly but the farmer with £1, £2 or £4 valuation, and with rates ranging from 10/- to £1 10s., can only be relieved, at most, to the extent of his rates. Various people have talked about the farmer who pays 10/- or £1 in rates, and they have suggested that by their particular scheme of de-rating something wonderful would be done for the small farmer, whereas no matter how much we pay in de-rating the man who only pays 10/- would only benefit to the extent of 10/-. It seems to me that a lot of people who were talking about the matter have not examined the limitation of this system of de-rating at all. The benefit of de-rating is simply that immediately you can pass a considerable sum of money to agriculturists. Some proportion of that will come from the farmers themselves, but the greater proportion is collected, at any rate, directly from other sections of the community, and it does not seem to be passed on to the agriculturists. That is its advantage.

There are other methods that are intrinsically better, but they would be much slower. The majority report of the De-rating Commission pointed out methods that they thought ought to be adopted for the helping of agriculture and, intrinsically, these methods are much superior to de-rating. They have this disadvantage which was acknowledged in the majority report. They could only be slowly put into operation and the benefit to agriculture would only accrue from them several years ahead. Consequently, de-rating was adopted as something that would give immediate benefit but it was adopted with some knowledge of its limitations. Only partial de-rating for these as well as for other reasons was decided on.

Deputy Davin asked what was the decision about negotiations in regard to sugar beet. It has already been stated that the Government did intervene in this matter with a view to having a settlement reached if it were at all possible. That intervention continued from the inception of the dispute right down to the end. The Government is still dealing with the matter and there is a good prospect that the negotiations will be resumed between the factory and the beet-growers, not with regard to the prices payable in the present season but with regard to the prices payable during the next four years. As the Government is the only body that can intervene, and as the Minister for Agriculture is in this matter very much in the position in which the Minister for Industry and Commerce is with regard to an ordinary industrial dispute, very little can be said about the matter. Certainly, if the Government's efforts with a view to having negotiations resumed and brought to a satisfactory issue are to be successful, as we have every reason to believe they will be, it is not possible for anybody on behalf of the Government to say very much about the details and the points that are in dispute. I think that no more can be said than has been said by the Minister for Agriculture when he indicated a definite opinion that the factory could have afforded to pay more for beet and should have agreed to pay more.

Deputy MacEntee referred to certain remarks in the British House of Commons about getting rid of public and municipal debt and the possibility of some measure of inflation. He suggested that steps should be taken to induce, although there is no legal power at present for that, the Currency Commission at a certain stage to sell out securities and to bring home gold. I think the Deputy may be assured that the Currency Commission will watch all such matters.

I would like to say that if it became necessary to sell out any particular class of securities, I would not be in favour of the policy of bringing gold home. I cannot see any advantages, in a country of this size and so situated, that would accrue from holding a stock of gold here. There would be trouble and expense connected with it. There would be no advantages and the loss of interest to which the Deputy refers as something negligible would, in fact, be a very important factor. Suppose that we were to have seven million pounds or thereabouts invested in some securities and, as a result of deflation, the value were to be reduced by one-half, even in such an extreme case we would not really be any worse off if we had already had seven or eight years' investment income from the amount so invested. When you take ordinary rates of compound interest, the investment income is really so important that over a period of fourteen and a half years it is as important as the whole capital sum involved.

In comparison with the resources and wealth and foreign investments of the country, the sum like £7,000,000 which is involved in Currency Commission investments is really a very small sum. Deputies sometimes seem to me to attach a far greater importance to these sums than is merited by the facts of the case. If there were any deflation in England to the extent that I have indicated, or even to a much lesser extent, the effects on this country in other directions would be so great that the effects on this relatively small sum invested by the Currency Commission would be entirely a minor matter. There is no reason why we should suffer these capital losses. In any case, they will be, as it were, made good in advance by the income that can be earned. I think it is purely doctrinaire, theoretical reasons which cause people to talk about the need for bringing gold home and the advantages there would be in having gold.

There are countries whose finances are on such a large scale that investments in the securities of other countries would not be a practicable method for them to dispose of funds such as the Currency Commission funds. When a country is small it may as well take advantage of any opportunities that its size makes available for it, because it certainly has to bear the disadvantages that its small size involves.

Deputy O'Connell referred to the question of tariffs, and particularly to the question of the boot tariff. I do not make any bones about admitting that I feel the boot tariff is rather on the low side. When it was first imposed, before there was any Tariff Commission, I suggested a 20 per cent. tariff. I was persuaded by some people whom I thought knew more about the boot trade and the effect upon it of protection than they actually did, to reduce the amount to 15 per cent., under the impression that that would be sufficient. Even 15 per cent. has undoubtedly led to an appreciable extension of the industry. Certain firms, of course, have taken little or no advantage of the tariff, but other firms—and it is their case that we really must consider, the case of the progressive firms—have taken advantage of it to a very considerable extent. They have extended their output and have gone in for new lines of business; they have trained hands and have built up connections and have, to some extent, accumulated capital for further extensions.

I do not believe, unless we were to import both outside firms and outside workers, that a very rapid extension of the boot trade could take place. I understand it requires a considerable time to train hands and make them fully expert in many of the operations that have to be undertaken. Consequently, the development of the boot-making industry is one which must take place relatively slowly. Undoubtedly, if we put on a high tariff, made no difficulties about admitting hands and threw no obstacles in the way of foreign firms coming in, we could in a very few years get five or six thousand hands, but, even apart from any of the factors to which Deputy Lemass referred, I do not think that would be desirable. The real burden of a tariff does not lie in the amount collected by the Exchequer. I find, as Deputy Lemass pointed out, that there is a very common error in regard to the boot tariff. A lot of people through the country say that because there is £250,000 a year collected by way of a duty on boots that it is actually costing the country that amount. That money is simply replacing the tea tax which was remitted when the boot tax was imposed.

Where the burden on the country comes in is in respect of boots which are sold at the same price to the public as tariffed boots and which yield no revenue to the Exchequer. If we got to the position where all the boots required in the country were made at home, and if they were sold at exactly the price which foreign boots would fetch after putting on the 15 per cent. duty, then we would have the boot industry costing the country £250,000 per annum and we could count the operatives in the industry and see what it was costing the country per annum to maintain each one of the operatives. So far the boot industry is, in fact, costing the country relatively little. If we put on a huge tariff like 40 or 50 per cent. it would undoubtedly put 5,000 or 6,000 hands at work. We might easily have no imports. We might have boots costing the public 40 or 50 per cent. more than they would cost if there had been no tariff. That might mean that the country would be paying £500,000, £600,000 or £700,000 per annum for the purpose of maintaining the boot manufacturing industry. If it cost £700,000 per annum and there were 7,000 people at work, you could say that it cost £100 per annum, or £2 per week roughly, to maintain each employee at his job.

The danger of putting on very high tariffs is that the factories are ill-organised and the workers never got perhaps the real expertness that they ought to get. Very often the plant is not renewed or kept up-to-date as it ought to be. Consequently, you have this net burden which a tariffed industry sometimes throws on the country increased beyond what it ought to be. If you have your tariff too high, you diminish the prospect of that industry being sufficiently organised and conducted that some time or another it might be possible for it to continue without a tariff —that is to say, that it would be so efficiently conducted that it would sell its goods, roughly speaking, at the same price that outside factories sell similar goods.

Is the Minister leaving out of account internal competition? Would there not be ordinary competition internally?

There may be internal competition, but if you have a relatively small country—it happens even in big countries, but I fancy it is easier to organise it in a small country —you are quite likely to have an internal arrangement amongst your manufacturers. In every business, to a greater or lesser extent—you may ignore it or not—this is one of the things which tend naturally to arise. If you have your tariff very high so that external competition does not count, you may have manufacturers going to one another, and saying: "Why should we be cutting one another's throats? Could we not do a great deal better, and have none of this cutting at all, since we have nothing to fear from outside?" I think it is worth while keeping a tariff relatively low, provided it will develop the industry—even though the result may be somewhat disappointing to those who would like to have big changes— where keeping it low makes for the ultimate health of that industry and the ultimate benefit of the people. I am not arguing at the moment in favour of the particular rate at which this tariff is fixed. There is, however, this to be said, that the boot manufacturers have, as I understand, met on more than one occasion—I heard of one meeting, at any rate—to discuss the question of applying for some increase in the tariff. No application was made to the Tariff Commission as a result of their deliberations. I do not know what disagreement arose amongst them. If there was not a majority against the proposal, there was not, at all events, sufficient agreement to allow them to proceed with an application for a higher tariff.

Is it not obvious that they would be afraid in a case like that of bringing in some outside combines?

I am sure that would be one of the factors which would be present to the minds of those who were considering the question. But the question of outside combines is not really disposed of by a reference to a matter of that sort. If we had had a law a few years ago against the coming in of outside combines, we would have no Ford factory in Cork. Points arose even since the factory was set up and if the Dáil had begun to legislate along such lines it would have created an alarm which, I believe, would have led to the factory being withdrawn, even though that involved big losses in the removal of plant and the scrapping of premises. I agree that after a certain point the coming in of outside concerns or the domination of industries here by outside concerns would not be in the national interest, that it would limit development in certain directions, that it would prevent any real heads of industries being trained and living here amongst us, that it would mean that in many cases industries would be run as branch concerns by people who had nothing to do with policy and no appreciation of the general policy of the industry in which they were engaged. But we have not at all reached that point at the present time. The number of firms that have come in is very small. I would like to remind Deputies that there are people who run industries here—I have come across cases of this kind—who would object to a foreign firm being allowed to start a new industry here but who are in favour of foreign firms being allowed to buy up existing industries. In relation to one industry, there was quite a ramp and an agitation carried on along these lines. Some of the people who were engaged in that ramp did succeed afterwards in selling to the foreign firms. Even in relation to the boot and shoe industry, there would not I think be any likelihood of foreign firms coming in to the extent of squeezing out the more efficient firms. They possibly might have some effect on some of the others but if we take everything into consideration there might be an advantage.

Deputy O'Connell urged that we should have something more than tariffs—that we should have direct State interference and, if necessary, State control. I do not believe that you would get any real progress in that way. If you are to have State control of industries, you will need all the machinery that is employed in the country in which you have State control—Tcheka and all the rest—if you are to make it really effective. There are certain things which a State can run very well. There may be even certain industries which a State can run efficiently. There are a great many others in which State intervention would only lead to difficulties of every sort. On the one hand, if you appoint people with too much freedom, you are going to have recklessness, because they will not be dealing with their own money. If you deal with them summarily on the Russian method——

Mr. O'Connell

Is there no intermediate stage?

There is an intermediate stage but it does not work out very efficiently. If you have something like the control that works back to the Comptroller and Auditor-General, then you cannot carry on an industry at all. What is called Parliamentary control is quite impossible from the point of view of carrying on an industry.

Mr. O'Connell

I agree.

Something that is a monopoly, something that is in the nature of a public service, it is well known, is carried on efficiently——

The Post Office.

The Post Office is not so bad at all. The Post Office does not pretend really to be a commercial concern.

Mr. O'Connell

It gives service.

It does not pretend only to have a delivery where a delivery will pay. It is quite a different thing from running a business which must be run on some sort of a competitive basis. I do not see that the State could really do anything by way of intervention. There might be certain instances in which it might facilitate coordination, amalgamation or something of that sort. I do not believe in the suggestion of Deputy Lemass that we should have a new Trade Loans Guarantee Act or some scheme of providing capital for private individuals which would, I presume, even go a great deal further than the Trade Loans Guarantee Act. I am satisfied that if we did provide facilities in that direction that, again, because we were giving some people easy money, money for which they had not to provide full security, you would have an inevitable spirit of recklessness in the running of the industry and almost inevitable loss. My belief is, in regard to the promotion of industry, while a little may be done in various directions by supplementary methods, not excluding technical education—quite a variety of minor methods may be of use and give some assistance—the imposition of tariffs is the best method and will generally give more satisfactory results. I think that the main difference I have with Deputy O'Connell in regard to that is that although one might like to see industrialisation proceed very rapidly there are certain advantages in going slowly. There are certain advantages in just giving industries sufficient protection to enable them to fight their way upwards and in order to fight having to be fully efficient all the time.

May I ask the Minister whether he will consider letting in the unmachined castings?

I will look into the position. I do not know whether the Deputy was referring to any difficulty that arose quite recently.

There were certain castings brought in for the purpose of being converted into motor-car parts. We found, under the law as it stood, that we were able to let them in, although we knew what they were for. In fact they were not identifiable as such by appearance. We were able, under the existing law, to allow them, and they are being used by a company carrying on that particular work.

Will that be the practice in future? These castings are not very recognisable. Will they be allowed in in future?

Some of them would.

It would be better to regularise the position.

I would not like really to strain the law; I would prefer to amend it. Considering that the sort of parts dealt with a fortnight or three weeks ago might be used not only for the making of motor parts, but for the manufacture of certain other things, I think they were properly allowed in under the Act, although we knew what they were for.

Will the Minister consider extending the Act?

I will consider the point the Deputy raised.

Perhaps the Minister would also consider the other matter in regard to extending the relief in respect of cars that are more than five years old to the hackney motor trade?

It was deliberately decided at the time not to extend it to hackneys for the reason that if a private individual cares to use a dilapidated old car or a car that had reached the danger point, that is more or less his own look-out, but it was felt that we should not encourage the use of absolutely decrepit cars for public hire. It was deliberately decided at the time to exclude these cars.

You could increase the tax again after ten years.

Would the Minister bear in mind the point which I have raised in regard to Section 7—the assessment of income tax on the pensions of the widows of 1916?

I will look into it but I could not give the Deputy any promise.

Would the Minister not put them in the same category as those other pensions?

There are probably a number of other pensions in the same category. I am not prepared to give the Deputy an answer at the moment, but I will look into the matter.

Question put.
The Dáil divided: Tá, 60; Níl, 30.

  • Aird, William P.
  • Beckett, James Walter.
  • Bennett, George Cecil.
  • Blythe, Ernest.
  • Bourke, Séamus A.
  • Brodrick, Seáan.
  • Byrne, John Joseph.
  • Carey, Edmund.
  • Cole, John James.
  • Collins-O'Driscoll, Mrs. Margt.
  • Conlon, Martin.
  • Connolly, Michael P.
  • Cosgrave, William T.
  • Davis, Michael.
  • Doherty, Eugene.
  • Doyle, Peadar Seán.
  • Duggan, Edmund John.
  • Dwyer, James.
  • Egan, Barry M.
  • Finlay, Thomas A.
  • Fitzgerald, Desmond.
  • Fitzgerald-Kenney, James.
  • Gorey, Denis J.
  • Hassett, John J.
  • Heffernan, Michael R.
  • Hennessy, Michael Joseph.
  • Hennessy, Thomas.
  • Hennigan, John.
  • Henry, Mark.
  • Hogan, Patrick (Galway).
  • Holohan, Richard.
  • Jordan, Michael.
  • Keogh, Myles.
  • Lynch, Finian.
  • Mathews, Arthur Patrick.
  • McDonogh, Martin.
  • McFadden, Michael Og.
  • McGilligan, Patrick.
  • Mongan, Joseph W.
  • Mulcahy, Richard.
  • Murphy, James E.
  • Murphy, Joseph Xavier.
  • Myles, James Sproule.
  • Nolan, John Thomas.
  • O'Connell, Richard.
  • O'Connor, Bartholomew.
  • O'Higgins, Thomas.
  • O'Leary, Daniel.
  • O'Mahony, The.
  • O'Reilly, John J.
  • O'Sullivan, John Marcus.
  • Rice, Vincent.
  • Roddy, Martin.
  • Shaw, Patrick W.
  • Sheehy, Timothy (West Cork).
  • Thrift, William Edward.
  • Tierney, Michael.
  • White, John.
  • White, Vincent Joseph.
  • Wolfe, George.

Níl

  • Boland, Patrick.
  • Briscoe, Robert.
  • Broderick, Henry.
  • Carty, Frank.
  • Colbert, James.
  • Corkery, Dan.
  • Davin, William.
  • De Valera, Eamon.
  • Fahy, Frank.
  • Fogarty, Andrew.
  • Geoghegan, James.
  • Gorry, Patrick J.
  • Hayes, Seán.
  • Houlihan, Patrick.
  • Jordan, Stephen.
  • Kent, William R.
  • Killilea, Mark.
  • Kilroy, Michael.
  • Lemass, Seán F.
  • Little, Patrick John.
  • MacEntee, Seán.
  • Morrissey, Daniel.
  • Mullins, Thomas.
  • O'Connell, Thomas J.
  • O'Kelly, Seán T.
  • O'Reilly, Matthew.
  • Sexton, Martin.
  • Sheehy, Timothy (Tipp.).
  • Tubridy, John.
  • Ward, Francis C.
Tellers: Tá, Deputies Duggan and P.S. Doyle; Níl, Deputies Little and Killilea.
Motion declared carried.
Committee Stage ordered for Thurs day, 2nd July.