Public Business. - Finance Bill—Committee (Resumed).

The Dáil went into Committee.
Debate resumed on Section 5.

I would like to know whether the Minister has come to any decision with regard to white spirit and turpentine where they are used for manufacturing purposes, whether the Minister considered excluding these from the scope of the section?

Turpentine is excluded by the use of the word "mineral" in line 2. White spirit is chargeable and will have to be dealt in the same way as petrol. We have examined that question and we find that we could not exempt it without endangering the Revenue.

Could it not be imported under licence?

So it can. Under hydrocarbon it can be imported under subsection (2).

Section 5 agreed to.
Question proposed: "That Section 6 stand part of the Bill."

We have already indicated our attitude towards this section in the debate on the Second Reading Stage. I do not propose to add anything to what has already been said. This is an additional tax upon a necessity of life and upon a commodity which is most generally used by the poorer sections of the community. We believe that the Minister for the purposes which the Minister has in view in imposing this tax could have procured the money in other ways out of economies and retrenchments, and for that reason we see no justification for imposing the additional tax upon sugar. Accordingly we propose to divide the House upon it.

Question put.
The Committee divided: Tá, 62; Níl, 43.

  • Aird, William P.
  • Alton, Ernest Henry.
  • Beckett, James Walter.
  • Bennett, George Cecil.
  • Blythe, Ernest.
  • Bourke, Séamus A.
  • Brodrick, Seán.
  • Byrne, John Joseph.
  • Collins-O'Driscoll, Mrs. Margt.
  • Conlon, Martin.
  • Connolly, Michael P.
  • Cosgrave, William T.
  • Craig, Sir James.
  • Crowley, James.
  • Daly, John.
  • Davis, Michael.
  • De Loughrey, Peter.
  • Doherty, Eugene.
  • Doyle, Peadar Seán.
  • Duggan, Edmund John.
  • Dwyer, James.
  • Egan, Barry M.
  • Esmonde, Osmond Thos. Grattan.
  • Finlay, Thomas A.
  • Fitzgerald-Kenney, James.
  • Gorey, Denis J.
  • Heffernan, Michael R.
  • Hennessy, Michael Joseph.
  • Hennessy, Thomas.
  • Hennigan, John.
  • Henry, Mark.
  • Hogan, Patrick (Galway).
  • Holohan, Richard.
  • Kelly, Patrick Michael.
  • Keogh, Myles.
  • Leonard, Patrick.
  • Lynch, Finian.
  • Mathews, Arthur Patrick.
  • McDonogh, Martin.
  • McFadden, Michael Og.
  • McGilligan, Patrick.
  • Mongan, Joseph W.
  • Mulcahy, Richard.
  • Murphy, James E.
  • Myles, James Sproule.
  • Nally, Martin Michael.
  • Nolan, John Thomas.
  • O'Connell, Richard.
  • O'Connor, Bartholomew.
  • O'Donovan, Timothy Joseph.
  • O'Higgins, Thomas.
  • O'Reilly, John J.
  • O'Sullivan, Gearóid.
  • Redmond, William Archer.
  • Reynolds, Patrick.
  • Rice, Vincent.
  • Roddy, Martin.
  • Shaw, Patrick W.
  • Thrift, William Edward.
  • Tierney, Michael.
  • White, Vincent Joseph.
  • Wolfe, George.


  • Aiken, Frank.
  • Anthony, Richard.
  • Boland, Gerald.
  • Boland, Patrick.
  • Bourke, Daniel.
  • Briscoe, Robert.
  • Broderick, Henry.
  • Buckley, Daniel.
  • Carty, Frank.
  • Colbert, James.
  • Corkery, Dan.
  • Corry, Martin John.
  • Crowley, Tadhg.
  • Davin, William.
  • Derrig, Thomas.
  • De Valera, Eamon.
  • Moore, Séamus.
  • Morrissey, Daniel.
  • O'Connell, Thomas J.
  • O'Kelly, Seán T.
  • O'Leary, William.
  • O'Reilly, Matthew.
  • Fahy, Frank.
  • Flinn, Hugo.
  • Fogarty, Andrew.
  • Geoghegan, James.
  • Gorry, Patrick, J.
  • Goulding, John.
  • Harris, Thos.
  • Hayes, Seán.
  • Hogan, Patrick (Clare).
  • Houlihan, Patrick.
  • Jordan, Stephen.
  • Kent, William R.
  • Killilea, Mark.
  • Lemass, Seán F.
  • Little, Patrick John.
  • MacEntee, Seán.
  • Ryan, James.
  • Sexton, Martin.
  • Smith, Patrick.
  • Walsh, Richard.
  • Ward, Francis C.
Tellers: Tá, Deputies Duggan and P. S. Doyle; Níl, Deputies Gerald Boland and Killilea.
Question declared carried.
Sections 7, 8 and 9 agreed to.

Before Section 10 is passed I wish to ask the Minister whether he will be introducing an amendment dealing with the matter of motor parts.

It is intended on the Report Stage to introduce a new section exempting certain unmachined castings and forgings.

Sections 10 to 13 agreed to.

This section is consequential upon the Sugar Tax.

Not exactly. An ordinary contractor at present, if he has entered into a contract to supply say sugar or any other article prior to the imposition of the increased duty, can charge the amount to the person to whom he supplies it. But a doubt has arisen in the case of the Combined Purchasing Department as to whether or not a contract has been completed until the order has been given. That is to say a contractor tenders with the Combined Purchasing Department to supply goods at a certain price. Then these goods are ordered by the local authority and it has come to be believed that under the law as it stands the contract was not completed at the time that the person tendered and was accepted by the Combined Purchasing Department. Consequently he would not be able to charge the increased price caused by the increase in duty and this is to enable him to charge it.

He will now be able to charge an increase to the amount of the duty during the running of the contract?

Sections 14 to 19, inclusive, agreed to.

I move amendment 2:

Before Section 20 to insert a new section as follows:—

In lieu of being charged at the present rates, entertainments duty, within the meaning of Section 1 of the Finance (New Duties) Act, 1916, shall, on and after the 1st day of October, 1931, be charged, levied and paid at the following rates, that is to say—

Where the amount of the payment for admission, excluding the amount of duty—

exceeds 4d. and does not exceed 5½d.—one and a half-pence;

exceeds 5½d. and does not exceed 8d.—twopence;

exceeds 8d. and does not exceed 1s. 1d.—threepence;

exceeds 1s. 1d. and does not exceed 2s. 2d.—fourpence;

exceeds 2s. 2d. and does not exceed 3s. 0d.—sixpence;

exceeds 3s. 0d. and does not exceed 5s. 0d.—ninepence;

exceeds 5s. 0d. and does not exceed 7s. 6d.—one shilling;

exceeds 7s. 6d. and does not exceed 10s. 6d.—one shilling and sixpence;

exceeds 10s. 6d. and does not exceed 15s. 0d.—two shillings;

exceeds 15s. 0d., two shillings for the first 15s., and sixpence for every 5s. or part of 5s. over 15s.

The increase in the duty on sound films places an additional burden on cinema proprietors which, in accordance with the general principles governing the incidence of taxation, they should be in a position to pass on to the public. This they can only do, of course, by an increase in their charges of admission. In any case, however, in which a proprietor is already charging the highest possible price appropriate to any particular rate of duty, he cannot increase that price without incurring liability to a higher rate of duty. The common inclusive price of 2s. 4d. may be taken as an illustration. This price is made up of a 2s. charge for admission plus 4d. duty. If the proprietor wishes to increase his charge by 1d., the increased charge will be brought within the scope of the next higher rate of duty, viz.: 6d., and the new inclusive price will be 2s. 1d. plus 6d.—i.e., 2s. 7d. An increase of 3d. on the 2s. 4d. price would probably be resented by the public, and would result in some transference of patronage to lower-priced seats, thus defeating the object aimed at. The same argument applies to the inclusive prices 6d., 9d., and 1s. 3d., all of which are very popular prices. There is, therefore, a strong case for some modification of the scale which will provide for increases of charges at these points without any increased liability in respect of duty.

The draft clause renders it possible to make increased charges without increasing the rates of duty. The existing rates of duty are as follow:—

Where the payment for admission, excluding the duty,

exceeds 4d., but does not exceed 4½d.


exceeds 4½d. but does not exceed 7d.


exceeds 7d. but does not exceed 1/-


exceeds 1/- but does not exceed 2/-


exceeds 2/- but does not exceed 3/-


The proposed rates are:

Where the payment for admission, excluding the duty,

exceeds 4d. but does not exceed 5½d.


exceeds 5½d. but does not exceed 8d.


exceeds 8d., but does not exceed 1/1


exceeds 1/1 but does not exceed 2/2


exceeds 2/2 but does not exceed 3/-


The higher rates are not affected by the proposal, since the highest inclusive price for admission to a cinema (unless on some exceptional occasion) being 3/-, there is no case for carrying the revision further. In any event, the classes of entertainments to which the higher rates will apply will, in view of the exemptions embodied in the Finance Bill, be very limited, and the number of such entertainments held very few.

Under the amended scale the inclusive prices of 6d., 9d., 1/3, and 2/4 may be increased to 7d., 10d., 1/4 and 2/6 respectively, or to any intermediate figure, without any increase of duty. It is not probable that there will be any substantial transference of patronage to lower-priced seats on account of any increases which will actually be made, and consequently the yield of the duty will not be appreciably affected by the change. I hope, therefore, that the Minister and the House will accept this amendment.

It is perfectly evident that unless something of that kind is done the great majority of cinemas in the Free State will have to close down in view of the tax which has been put upon films. The exhibitors are in the difficult position that the renters can charge what price they like, and they have notified the exhibitors that they will put this increased duty on them. If this amendment is carried it will meet them in a small way, and I hope that the Minister and the House will accept it.

This amendment gives greater flexibility to the owners of picture houses in regard to the scale of charges at certain points of that scale. It is not a change that will make for any loss in revenue. Representations in favour of it have been very strongly made by representatives of the picture house owners. Without accepting absolutely the whole of their arguments, I think that there is no harm in giving them this increased measure of flexibility in the matter of charges, and I am prepared to accept the amendment.

I should like to say that I am very glad this amendment has been accepted. I am not speaking for the moment on the actual details of the proposal put forward by Deputy Shaw, but there has undoubtedly been trouble in the past, due to lack of flexibility, and the amendment, which does give a little room of that kind, is undoubtedly valuable and practicable.

On the question of flexibility, I agree with the Minister and Deputies Shaw and Flinn, but I am not quite so certain whether we are justified in giving all the flexibility that the amendment proposes. It would seem that those behind the amendment have in mind the idea of passing on to the public the full burden of the tax on films, and not only passing on the full burden, but possibly making a substantial profit, and using the tax as an excuse for increasing the charges to the public.

This amendment has not been presented to the House in a manner which would satisfy me that its terms are entirely justified. We have had no figures to show what the average revenue of a first-run picture house in the City of Dublin would be, nor have we any particulars as to the burden of the tax upon such a house for a week's run. I think that before the Dáil can agree to accept in full the proposal put forward by Deputy Shaw, we ought to have some further information upon these points. Personally, I would very strongly object to the whole of this tax being passed on to the public. After all, the people whom I think the Minister had in mind as victims in the first place were not the public, who are already sufficiently shorn in this country where they are subject already to a very strong ring and monopoly, but the film renters. Now if, owing to certain political exigencies, the burden of the tax is going to be diverted from the huge monopolistic concerns which control this industry in Ireland and passed on to the public, I should very strongly object to that. I do see that there is some case to be made for the exhibitors, but I do not believe it is anything so strong as Deputy Shaw has made it, nor do I think that we would be entitled to make this amendment so flexible that the whole burden of the tax should be passed on to the public. For that reason I think we should get some fuller information with regard to it. Do I take it the Minister is going himself to introduce an amendment?

Yes, because I think it it will have no effect on revenue.

It is not going to have any effect on revenue admittedly. The whole tax is going to be collected. The question is, from whom is it going to be collected? Is it going to be collected from the public who go to the picture houses, or from the exhibitors, or from the film renters—that is, virtually the people who make the films? If I have any say in the matter, it is going to be collected from the renters.

That is impossible. The renters are in the position that they can dictate their own terms. There is no other way to obtain films than through renters. You must either shut down or take the films at whatever price they care to charge.

Deputy Shaw is under a misapprehension—at least he is endeavouring to leave the House under a misapprehension. There are other sources from which films can be got besides Hollywood or Elstree. There are excellent films done in English made in Germany and there is a very big film industry in Russia whose films have been admired and praised as masterpieces. The only thing about it is this, that the film exhibitors in this country are so tied up with both British and American concerns that they will not go elsewhere. There are French firms making pictures which are creating astonishment in London, even though the major portion of the dialogue is in French. These pictures are being shown to crowded houses, to people who scarcely know a word of French. There are also Italian and Norwegian films. The fact of the matter is that if the exhibitors are content to continue and endeavour to preserve the monopoly which certain American and British interests have created in this country, then undoubtedly these renters are going to make exhibitors pay. If they go further afield and develop what Deputy O'Higgins and Deputy Esmonde possibly are fond of describing as the continental mind, and really try to get in touch with continental culture in the matter of the cinema, then I do not believe they will be subject to that extortion which Deputy Shaw fears. I certainly am not disposed, until I hear some further argument in favour of it, to support this amendment. I think that the Minister would not be justified in permitting exhibitors and renters between them to pass this tax on to the public. I believe that if the exhibitors show sufficient independence and enterprise they can get just as good films outside ring sources as are being shown in Dublin. They can get French, German, Italian, Russian and Norwegian films, and films from other countries which are turning out real masterpieces, and can help to break this ring and compel the Americans and the British to meet them fairly in the matter. I hope the Minister is not going to accept this amendment in its present form and that he will insist that there is included in it, at any rate, some condition to safeguard the public to some extent.

There is nothing that would please every exhibitor better than to be able to break the monopoly. If Deputy MacEntee can convey to people in that business—I do not know much about it myself—that he could get them suitable films, he will find that they are most anxious to break that monopoly, and if he can get people in foreign countries to supply them they will be only too pleased. So far as my knowledge goes I never heard that any of these foreign films offered were refused by any exhibitors in the trade.

I can tell Deputy Shaw that two pictures, "End of St. Petersburg" and "Storm Over Asia," films produced in Russia, have aroused demonstrations of admiration wherever they were shown. These films were hawked up and down Dublin and not a single one of the prominent exhibitors who were tied up to the Paramount and the British International firms would look at them.

I am delighted to hear it.

Of course, but that is because the Deputy did not see the films and because he has no receptivity of mind, no openness in this matter. I went to see them. I went to see them many times, because I am interested in the cinema. They were most wonderful productions, but those people who profess not to be able to break a monopoly would not look at this. The picture "The End of St. Petersburg" had to be shown in a very small cinema where few people go, but it attracted a crowded house. The picture of the "Storm Over Asia" had to be shown in a small picture house in Lower O'Connell Street, but there again the house was crowded for three weeks. The big picture houses would not show them because they had the same sort of mind as Deputy Shaw has. They were not sufficiently enterprising to risk the experiment. People of that sort are not entitled to any consideration.

My opinion about the two films about which the Deputy speaks is that it was a very good thing they were refused, because Russian pictures are anti-religious, and should not be shown here.

That does not touch the point. I am somewhere between Deputy Shaw and Deputy MacEntee in this matter. I think in principle what Deputy MacEntee has said is perfectly correct, but the practical business of putting it into effect is entirely different. It is true that, broadly speaking, we are in the hands of a ring. It is also true it would be very desirable for us to break that ring. I doubt very much myself unless we could get co-operation from the Executive authority whether we would be able to produce inside the cinema industry in Ireland that unity and effectiveness that would enable us to break it. I think we all agree in principle that this monopoly is undesirable, and that this monopoly is exercising the ordinary functions and custom of monopoly in taking monopoly prices. It is also perfectly true that they have attempted to hand on the whole of this cost to the community. I am not suggesting that it could be done in this, not for a moment, but I am suggesting that when it is recognised that there is this monopoly at present in existence, that there are real difficulties in getting the cinema industry as at present organised in Ireland to break through that ring on its own, and that the Minister recognising the extra cost put upon the Free State due to the power of that monopoly, should between now and the next Budget or ad interim, in consultation with those concerned, see whether something could be done. I think something could be done, but I do not think it could be done very easily. Another point is this—it will not refer to Deputy Shaw's particular interest in the matter—a certain amount of the extra cost of films is undoubtedly due to preventable, and very unwise and stupid competition between different cinemas in the cities themselves. The whole blame is not on the monopoly. The monopoly is getting, as all monopolies do, its monopoly prices, on top of a fool price, due to lack of organisation. If I thought the cinema industry itself was absolutely clear of blame in the matter I think I would press the case very much more strongly on the Minister.

I think we might frankly recognise that it is desirable that films should come into Ireland from more than one source. If that is to be done it is necessary that films coming in, say, from some of the alternative sources should have reasonable opportunity. Most of the cinemas at the present moment are booked up with one or other of the branches of the monopoly. What the Minister may well do—I am not putting it in any definite form, as it is a matter for consideration—is that he might take a ration system say next year, or whoever is running the Finance Department next year, might do so. They could say that ten per cent. of the films shall come in from France or from England or Germany, or some other country. They might be able to divide it up into three, and in that way they would be able to guarantee to the alternative sources of supplies that they would have a market when they came here. At the present moment the position is that if any of these Russian films attempt to come in nobody can take them without breaking existing contracts and existing good-will in the matter of preferences as to when precisely they are going to get films to show. Deputy Shaw and everyone knows that the whole film industry is honeycombed with preferences and queer things of that kind, and it is very difficult for people who want to be quite honest and straight to get through things of that kind. It is not so easy as Deputy MacEntee imagines or so impossible as Deputy Shaw thinks, but it may require the co-operative of the Executive to make it effective. My sole agreement with this amendment is because it is flexible. I always desire to be perfectly frank in a matter of this kind, and I am speaking with some knowledge, as I am interested, and the House is entitled to discount what a person says who is interested to that extent, I like flexibility. Anyone who has attempted to arrange prices in different portions of the house knows how completely we have been tied up in the past. You have got to make huge jumps. If you have four or five different prices and if you try to vary them you will find it is very difficult in the present schedule.

I personally would prefer that, where it was possible, some system of percentage on the total takings and complete freedom as to the prices which they were charging, would be allowed. But if the Minister cannot do that, then I would prefer anything that makes for flexibility and for the benefit of the entertainment consuming public. I would very much like if the Minister would take two lines—one the line proposed by Deputy Hogan last year and that is that the lower-priced entertainment, because it has certain social and psychological values, should be as far as possible exempted. I would exempt all entertainment to a cost of 6d. and after that I would allow the entertainment houses to pay upon a percentage total basis and give them complete freedom as to how they would regulate the prices.

There is another point in connection with that and that is that Deputy Shaw has made a point that the renters are going to pass this tax on to the exhibitors, and I object to this amendment. It means that they are going to pass that tax on to the public. So far as Dublin is concerned, there is one picture theatre with a seating capacity of over 3,000, which is run by a film manufacturing concern. There is another one with an equally large capacity which is closely related with a British film-making concern and there is a third one not so closely related with a film-making concern but which has certain affiliations with them. Those two or three theatres between them account for a total seating capacity of 9,000. In their case, if Deputy Shaw's amendment were not accepted by the House they would not be able to pass the tax on. The tax would remain with the renters. If Deputy Shaw's amendment is passed the tax is going to be passed by the renters on to the public. There is one way in which Deputy Shaw's point of view may be met. I take it he is interested in the smaller and provincial picture theatres. For them, I have a considerable sympathy and if the principles, not the exact terms, of Deputy Shaw's amendment were to be applied to houses with a certain limited capacity I would see much less objection in it. It it were not to apply to houses with a seating capacity of over 1,500 or between 1,200 or 1,500, or if the terms were changed to reduce its flexibility or to prevent the renters or exhibitors passing the tax on to the public my objection to it would be diminished.

There is, at the present time, a scarcity of films, and many picture houses in Dublin have had to show the same film for two successive weeks because they were unable to procure others. There is also at the present time, due to our strict censorship of which we approve, a disposition on the part of a great many film companies not to send pictures to the Free State, and if any person from any side can suggest any way by which the renters can be penalised I shall certainly be very glad to hear it. But none of the deputation to-day on behalf of the picture houses of the country were able to make any suggestions.

I just rise because the discussion centres round Dublin. I would like to remind the House that there are cinemas and picture houses in other places and they are very hardly hit by the action of the film renters. The theatres in Dublin with a fair seating capacity have a good way of carrying on and can fight against it, but the smaller cinemas in the country are practically left to the mercy of the film renters. I know of my own experience how very difficult it is to carry on cinemas and I must say this whole amendment of Deputy Shaw's is disappointing. Cinema exhibitors in the country have been looking forward for years expecting to get remissions, as Deputy Flinn says up to 6d., but this amendment leaves the smaller houses, for which I think we ought to have some consideration, in practically the same position as they were before. For instance, in any of the popular price seats there is no change. If he charged unusual prices he might make something, for instance if he charged 7d., but the 4d. is the same, the 6d. is the same, the 9d., 1s., and 1s. 6d. prices are the same, and in any of the regular prices there is no change. Our grievance is that the tax on the lower seats is too high. When you come to the higher seats it reduces down to one-eighth. It is meant for the seat apparently. For 2s. 4d. you charge 2s. 6d. now; for 2s. you charge 2s. 2d. There is no such seat in the smaller country towns. The working class seat used to be 6d. This has ceased to exist in the country. They get in at 4d. now free of tax. The 4d. seat is not much good in the country and the whole seating accommodation pulls in £5 or £6. I would like to stress the point that there is nobody making money in the country on cinemas at the present time. They have to meet all these charges that the exhibitors put on, and if given free up to 6d. they would have 3d. as well as 4d. and 1s. seats. They should be allowed to put a 2d. tax on the 1s. price. It is really impossible between the attitude of the renters and the continuation of the exorbitant entertainment tax to carry on.

Although I am interested, I would like to make it clear, and everybody recognises, that the cinema in the country is the only entertainment the people have. My own experience is that I think the lower price seats should be treated more generously. I think a jump of 1½d. is too much. A 1½d. tax on a 4d. ticket is too much. I would ask the Minister to bear in mind that in the country it is difficult to carry on cinemas. I believe that he will be convinced that it is necessary to be somewhat more generous on the lower price seats.

I do not think that we could contemplate at present any changes in the scale which would mean less revenue because the whole revenue position is not such that we could afford at the moment to make changes which would involve a loss. On the question of flexibility, there is no doubt if it could be done that an ideal thing would be to give flexibility by simply charging a percentage of the takings. That has been my view for some time. The difficulty is, however, that for various reasons it has not been possible to allow all houses to pay on certified returns. The house which pays on certified returns has a certain advantage in that respect and if you give it a further advantage by allowing it to have complete flexibility, which the house not paying on certified returns could not have, then you will increase the difference between them. We always felt that it would be very severe, for reasons which were sufficient from the revenue point of view but which might not appeal to the house whose returns were not accepted, to put that house at a very definite disadvantage compared with some other houses. For that reason we have not been able to make up our minds to arrange for complete flexibility. On the other hand, I think that any changes in the scale which will make for it are to the good. People are of the view that by giving them that measure of flexibility you are giving them a certain bargaining power in dealing with the renters in certain cases. I think there are cases in which that would occur. Moreover, there might be cases in which if the renters succeeded in passing on the tax the proprietor would be driven to put up the price, if he had not flexibility and, in addition to putting up the price a penny or so, the tax might be increased further, which I think is not desirable.

I think the present difficulty that exists in the matter of obtaining films will disappear. I do believe something could be done towards getting films from sources that are not now tapped. I think also that as the making of talkie films is a relatively new industry the shortage people have experienced will be modified and that there will be an element of competition if the cinema proprietors really operate as they might operate. If it were possible for the State to give help certainly it should be given, but I think anything of that nature can only be done when the cinema proprietors are well organised and had decided on some plan of campaign themselves.

Would the Minister consider the application of this amendment to houses not exceeding a certain seating accommodation? In its present form it does enable some of the tied houses to pass the whole of the tax on to the public. Under the Act as it stands these people, because they will have to meet competition, will be compelled to pay the tax themselves. The point is whether these big foreign concerns are going to be benefited by Deputy Shaw's amendment. It is designed to help the smaller country houses, but these big concerns are going to be enabled to pass the tax on here to a large body of the people.

I could not answer that at the moment because it would require more information than I have at the moment.

Perhaps the Minister would consider it between now and the Report Stage.

Amendment put and agreed to.
Section 20, as amended, put and agreed to.
Sections 21 to 27, inclusive, ordered to stand part of the Bill.
Question proposed:
"That Section 28 stand part of the Bill."

I made some objection to this section and I do not think I was satisfactorily answered by the Minister. I pointed out that it exempted public utility companies who were limited either in regard to dividend or to the price which they could charge to the public, by charter or law, from the corporation profits tax. I have yet to hear the Minister make a case for that. I do not think that the limitation as to dividend and the price charged by the concern for the commodity manufactured by the company, is in actual practice an effective one because it simply means that the distribution of these dividends is deferred until such time as a sufficiently large sum has accumulated to warrant their making a bonus distribution of shares. That is what has happened in a number of undertakings in this country which would be effected by this measure.

I would like to hear the Minister again put forward to the House some solid reasons as to why these particular companies should be exempt from the operation of a tax which he has already indicated to the House he considers unfair when it is applied to less fortunate undertakings. If a company or an undertaking, enjoying a monopoly position in the country, is to be exempt from the corporation profits tax, why should another limited company not so fortunate, say, as the Gas Company, not enjoying a monopoly, possibly a manufacturing concern in this country, not be exempt from the corporation profits tax also?

There are many struggling concerns engaged in various industries which are just finding their feet under the protection of tariffs, and they are assessed for corporation tax. The Gas Company and the Tramways Company, I think, to which this section of the Bill in particular relates, have—at least the Gas Company has—an unchallenged monopoly virtually. The Tramways Company has a certain limited monopoly. In either case, the clause in their charter limiting their dividends in proportion to the price which they charge, is no effective protection for the public. We all know that the shares of these undertakings were standing at a very low figure in the markets some years ago. They are now standing at a comparatively high figure, and they are standing at that very high figure because the companies did not distribute anything like the major portion of their profits. They put them into mains and reserves, and ultimately the day will come when the shareholders are going to have these reserves distributed as bonus shares.

They are simply hoarding up these dividends and not distributing them. At the present moment, because they are hoarding up, they have nothing to pay with regard to the corporation profits tax. Their dividend is not supposed to exceed six per cent. That may not be the actual dividend of the company. The company is making £100,000 profit per annum. It distributes as a dividend £60,000 of that, and it has the other £40,000 to put into reserve. When they have done that for several years the reserve will have equalled the nominal value of the capital, and then they will distribute a bonus share to each shareholder for every share he holds. Then the nominal capital of the company will be one million pounds, and the amount distributed in dividends will have been increased from £30,000 to £60,000, and the shareholders who originally had one share in that company and were receiving six per cent. dividend on it will now be receiving 12 per cent. dividend on it, and the company will not have paid any corporation profits tax, because its dividends were supposed to be limited by charter. In actual fact, what is happening is that the shareholders will not take their dividends at once. They merely store them up until they are able to receive them as capital increments. The ordinary consumers living under the monopoly have had to pay such an excess price as to enable that capital increment to be created, and all the time the company is exempted from the corporation profits tax. For that reason, before we agree to the amendment I would like if the Minister would justify the exemption of these particular companies from the operation of that tax.

I do not propose to follow the last Deputy, as I will approach the matter from an entirely different angle. I do not regard the corporation profits tax as a good type of tax. It is really additional income tax levied on a number of businesses; therefore I do not think that it is an extremely good tax. It is, however, a tax which gives us substantial revenue, and it also gives us a revenue which I regard as coming in place of death duties from foreign companies.

As a matter of fact, the greater portion of our corporation profits tax comes from foreign companies not registered or controlled here, owning property and carrying on business here. If you take a foreign company which owns property here, with a great many shareholders who live outside the country, it means that in the course of a generation all that property may pass into the hands of new owners, but we do not get any death duties. The shareholders are living in England. I have several times said that until some new tax is devised that will get us the equivalent of death duties in respect of property owned here by foreign companies, I think the corporation profits tax should be maintained. The extension of the scope of a tax which I do not regard as a really good tax or a very defensible tax is another matter. Although we are only renewing what was a temporary exemption here, to fail to renew it, having regard to the fact that it has existed since the commencement of the tax would be equivalent to extending the scope of the tax and it is really on that basis that I propose the amendment. I admit that certain arguments of a limited value can be put up in favour of some of these companies, but my main point in connection with it is that to refuse to extend this exemption which has been extended time after time would be equivalent to an extension of the scope of the tax, and I do not want to do it.

Are the Dublin United Tramways exempted under this section?

Yes. I could not say every year. I think so.

They are, because they are limited in the price they may charge. The Minister says that the corporation profits tax is an objectionable tax. I am accepting the Minister's point of view in regard to that at the moment, but the Minister proposes to exempt the Dublin United Tramways Company, a big carrying undertaking which for years enjoyed the monopoly of transport in this city and which could virtually charge the passengers anything it liked provided it was able to make an apparent case before the Tribunal. He proposes to exempt that company from the operation of the tax, but as against that he proposes to apply the tax, say, to a comparatively small company which runs buses in this city, and which is assessed for corporation profits tax.

The Deputy mentioned struggling concerns paying the tax. They can hardly be small struggling concerns, because the company has to be fairly good.

Shall we say that not a small struggling concern, but another concern competing with the Tramways Company would be assessed for tax? The Minister stated that the reason he wanted to continue this tax was because by means of it he was able to get at certain companies who were controlled outside this country and that when shares passed from one ownership to another, owing to death, he was not able to collect death duties. The Gas Company is not controlled in this country. It is controlled in London. Why should it be exempt since the Minister wants to get at these companies which are controlled outside this country? The Minister is not at all consistent in the attitude he has taken up. In order to get at companies which are controlled outside this country he proposes to apply this corporation profits tax, which he regards as an undesirable tax, to virtually every substantial company in this country, whether it is controlled here or not. The Minister could achieve his purpose and could achieve it very effectively by deleting paragraph (a) and substituting for it a paragraph which would make the corporation profits tax apply only to companies which were controlled outside this country, whether they were limited in respect of dividends or price or not. That is how the Minister could do it.

The Gas Company is controlled here.

The Gas Company is not controlled here. It may be registered here.

Controlled would be determined by whether it pays income tax or not. It is controlled and pays income tax.

Certainly the board of directors is nominated very largely by English interests. We will leave the Gas Company out. There is a gas company in Wexford and Waterford and they are not controlled in this country. I think they are controlled from outside. They would be exempted from corporation profits tax under this proposal because they are, to a certain extent controlled, as far as the price at which they can sell their commodity is concerned. I think the Minister should look into this matter further and tell the House exactly how many companies and what companies would benefit by the acceptance of this proposal.

For the information of Deputy MacEntee I might mention that the Wexford Gas Company is controlled in Wexford. I would like to ask the Minister if it is under this section harbour boards are required to pay taxes.

I would like to second not merely what Deputy MacEntee said but the spirit in which he has said it. I think the Minister has been hardly fair to himself in this matter. There is nothing controversial or party about it. We are simply anxious to understand the position, and the tenth reason, if I might use the expression, for this proposal. The obvious reason the Minister has given seems to break down on his own explanation. I think he might meet the suggestion of Deputy MacEntee and give us some schedule or something of that kind so that we would know the geographical area of this exemption. I have been more disturbed by the speech of the Minister than by any speech that was made against the proposal. He seemed to defeat his own argument by his own illustrations, and to destroy his illustrations by his arguments. I hardly think he was fair to himself, and he should put himself right with the House.

Question put and declared carried.
Section agreed to.
Sections 29 to 33, inclusive, agreed to.

I would like to know what this section means:

All taxes and duties imposed or continued by this Act are hereby placed under the care and management of the Revenue Commissioners.

Having regard to the fact that the Minister to-day blatantly told the House that the Revenue Commissioners do attempt to take care of and collect this tax, in particular cases if it does not suit him he damn well will not let them. That is the plain English of it. The Minister says here is a particular case. Deputy Myles, Deputy Murphy and all the other absent Independents who find it perfectly safe to go into the Division Lobby when they knew Labour was going to vote with Cumann na nGaedheal, put forward representations in favour of particular people, and immediately the Minister said this particular clause shall not operate. "All taxes and duties imposed or continued by this Act are hereby placed under the care and management of Deputies Myles, Thrift, Alton, Redmond, Murphy and other recalcitrant members of the Cumann na nGaedheal Party."

The Deputy ought to deal with the section and not with certain Deputies.

I am asking whether or not these Revenue Commissioners are an independent body with independent jurisdiction to carry out this section, or whether they may be interfered with by the Minister for Finance as and when it suits him to do so. If it means that "all taxes and duties imposed or continued by this Act are hereby placed under the care and management of the Revenue Commissioners subject to the parliamentary exigencies of the Minister for Finance," then we know where we stand. Does it mean that? Am I entitled to assume that the Revenue Commissioners in this case mean the Revenue Commissioners as knocked about, played about and ordered about by the Minister for Finance, or are they independent people? I think we ought to know.

A rhetorical question.

Section put and agreed to.
Remaining sections, schedules and Title agreed to. Report Stage ordered for Wednesday, July 8th.