It has been customary, in moving the Financial Resolutions for each year, to make a financial statement in which the general economic position of the State is surveyed. In every financial survey made during the past decade it has been customary to observe that "conditions during the year became increasingly bad." We have to say that of the financial year 1931-1932, as I fear we shall have to say it of 1932-1933, except in so far as the new Government, by a wiser policy, may mitigate the evils of our depressing heritage. The economic consequences of the Great War have involved almost every State, whether vanquished or victorious, in an equal disaster. The collapse of huge speculative undertakings has left investors everywhere possibly much wiser but undoubtedly much poorer. These circumstances have co-operated to restrict, first of all, industrial production, and, as a consequence, to narrow and depress the market for our agricultural products.
This State might have escaped the worst consequences of the present situation. It is well known that in agricultural communities changes in economic conditions always lag behind but correspond to the changes which take place in associated industrial communities. When, therefore, industrial conditions became universally depressed, it followed inevitably that agriculture, though at a later date, would become depressed also. The Hatry crash gave us an ample forewarning of what was to come, and if at any time thereafter, as disaster supervened on disaster, culminating in the departure of Great Britain from the gold standard in September last, our financial and fiscal policies had been informed with a little prudence, a little foresight, a little courage, we would to-day be facing the future with greater equanimity.
What, however, is the position in which we do find ourselves? It is my duty to set it truly and plainly before the Dáil, and before the country, so that all may realise the magnitude of the task to which our minds must be set.
Let us take the debt position first. On the 31st March last the direct liabilities of the State amounted to £38,687,469, made up as follows:—
|
First National Loan |
£8,020,280 |
|
Second National Loan |
6,674,864 |
|
Third National Loan |
5,744,075 |
|
Compensation Stock |
66,850 |
|
Savings Certificates |
8,139,000 |
|
Exchequer Bills |
1,000,000 |
|
Dáil Eireann (Internal) Loan |
50,000 |
|
Dáil Eireann (External) Loan) |
1,000,000 |
|
Capital Liabilities under:— |
|
|
Telephone Capital Acts |
859,054 |
|
Telegraph Acts |
59,920 |
|
Public Offices Site Act |
25,268 |
|
Railways Act and Marine Works Act |
28,108 |
|
Liability under Land Acts, 1923 to 1931 |
2,396,700 |
|
Compensation Annuity |
4,623,350 |
|
Total |
£38,687,469 |
Against these debts we have to set the following cash items amounting to £2,939,422, as follows:—
|
£ |
|
|
Exchequer Balance at bank |
1,739,725 |
|
National Loan Sinking Fund unapplied |
503,697 |
|
Savings Certificates Interest Equalisation Fund |
696,000 |
|
together with certain Exchequer Advances amounting to £13,373,076, which are repayable as follows:— |
|
|
£ |
|
|
Unemployment Fund |
318,000 |
|
Shannon Electricity Fund |
5,764,930 |
|
Electricity Supply Board |
3,020,386 |
|
Road Fund |
640,000 |
|
Local Loans Fund |
2,536,237 |
|
Land Commission—Payment in lieu of Rent Account |
130,000 |
|
Purchase of Creameries |
463,500 |
|
Great Southern Railways |
179,400 |
|
Agricultural Credit Societies |
28,505 |
|
Shares of Agricultural Credit Corporation |
292,118 |
|
£13,373,076 |
There is also an additional liability yet to be provided for in the shape of compensation for property damaged or destroyed during the Anglo-Irish and Civil Wars in respect of applicants who were disqualified under Sections 9 and 15 of the Damage to Property (Compensation) Act.
There are in addition contingent liabilities amounting to £25,369,909 as follows:—
|
£ |
|
|
Land Bonds |
24,226,509 |
|
Trade Loan Guarantees |
143,400 |
|
Shares and Bonds of Agricultural Credit Corporation |
1,000,000 |
Nor can we leave out of consideration the capital items amounting in the aggregate to £92,565,000, which our predecessors in office held to be intergovernmental obligations, namely:—
|
Land Purchase Annuities (under Land Acts prior to 1923) |
£ |
|
76,000,000 |
|
|
Local Loans Annuity |
5,300,000 |
|
Royal Irish Constabulary Pensions |
11,265,000 |
The total of these two groups of contingent liabilities is £117,934,909, against which may be set assets, valued conservatively at £25,250,000, leaving a net deficit on this account of £92,684,909.
Taking all these items into consideration, this little community of ours finds itself burdened with a net State or public debt, direct and contingent, amounting to no less a sum than £115,000,000.
But the dead-weight burden of the public debt will not be appreciated if we assess it merely in terms of the capital magnitude of the debt itself. A much truer measure is its annual cost to the community. Expressed by this standard we find that the annual cost to our citizens of our public debt commitments in 1931-32 was £7,159,888, made up as follows:—
|
Interest and Sinking Fund on National Loans and short term debt |
£ |
|
2,046,297 |
|
|
Land Annuities under Acts prior to 1923 |
2,976,591 |
|
Royal Irish Constabulary Pensions |
1,152,500 |
|
Compensation Annuity |
250,000 |
|
Bonus and Excess Stock Annuity |
134,500 |
|
Local Loans Annuity |
600,000 |
|
£7,159,888 |
|
So much for the capital position of the State. I should like now to speak for a moment of the present capital position of the citizens and to compare it with the position as it was at 31st March, 1931. Taking that date first, we find that during the year preceding it we had an investment income of approximately £9,735,000 gold, derived largely from investments in Great Britain. The capital value of those investments was about £177,300,000 gold, equivalent—stated in another standard—to 41,779,087 gold ounces. In 1931-1932 our investment income shrank to about £8,950,000 sterling, equivalent to 1,640,948 ounces gold, and the capital value of our investments at 31st March, 1932, was reduced to about £163,960,000 sterling, or 30,061,421 ounces gold. It will thus be realised that due to the default by Great Britain in her gold obligations this country has lost no less a capital sum than 11,717,666 gold ounces or, expressing it in terms of the value of sterling at 31st March, 1932, of £63,900,000. Similarly, our annual income from these investments again expressed in terms of gold converted into pounds sterling, has decreased by £3,560,000, mainly due again to the departure from the gold standard. It is to be hoped that these facts will be kept in mind by every section of the House when the question of the land annuities comes to be discussed.
And now what is the substructure of trade which maintains this capital position and upon which the whole fabric of our finances is borne? In 1930-1931 the total value of our import and export trade was £98,068,000 gold. In 1931-1932 that value expressed partly in gold and partly in paper pounds, was £85,750,000. The contraction, even expressed in this way, is startling enough. It is much more startling if the trade is considered in terms of the same unit for both years. Taking the gold ounce as our standard of value, we find that in 1930-1931 our total import and export trade was worth 23,108,807 ounces gold, whereas in 1931-1932 it was only worth 15,721,925 ounces gold. The decline, therefore, in 1931-1932 was equivalent to 7,386,882 ounces gold. So that, in 1931-1932 the total value of our import and export trade was only 68 per cent. of what it was in 1930-1931, and only 63 per cent. of what it was in 1927-1928.
In such circumstances it is not to be wondered at that at the close of the financial year 1931-1932 the Budgetary position was extremely unsatisfactory. Revenue shrank in almost every direction, except where it had been artificially expanded by an increased impost. On the customs and excise side the more notable deficiencies in this regard were the beer duty, which declined by £666,042, to £2,761,611; the duty on motors and tyres, which produced £393,896 or £115,087 less than in the preceding year; and the duty on tobacco which for the first time in many years failed to expand, and at £3,426,471 was £13,980 below the yield for 1930-1931. The most noticeable disappointment, however, was the duty on hydro-carbon light oils which, despite the fact that the rate of tax was doubled during the year, yielded only £535,218 or £114,782 less than the estimate. The diminished revenue from the beer duty to which I have referred was not, I am sorry to say, occasioned by any notable increase in temperance. It was mainly due to the fact that my predecessor collected in 1929-1930 duty upon beer which did not go into consumption until 1930-1931. Similarly, the decreased yield which I anticipate for 1932-1933 is due not at all to any decrease in domestic consumption, but to the fact that duty was paid in 1931-1932 upon the libations of this year. In this connection, however, I may confess that I have some hopes that during the current year certain travellers coming from the dreary desert of prohibition may do something to revive one of the ancient glories of the revenue.
On the Inland Revenue side, honest Seán Citizen, under the pleasing and effective persuasion of buff papers, white papers and red letter papers, and, in the latter part of the year, of the additional stimulus of an extra 6d. in the £., exceeded Exchequer anticipations by £325,124 and yielded up an income tax and sur-tax of £4,600,124. Excess Profits Duty beat the book by £52,000. But Death was not so kind as my predecessor had expected, and, were it not for the fact that the Exchequer had a windfall of about £200,000, the Estate Duties would have been lower than the estimate by about £85,113. Stamp Duties again disappointed us, and at £365,000 odd were lower than the estimate by £30,740 and lower than the yield for 1930-31 by £11,529. In the gloom of the Exchequer, however, twinkled one bright, if lonely, star. The duty on Wireless Apparatus had in 1930-31 brought in £34,600, and last year when expected to account for only £35,000 actually yielded £43,129. Disappointing from a Revenue point of view in almost every way the year closed with a deficit of apparently only £639,234.
I suppose that in certain quarters, where omissions and commissions alike are accepted as remarkable achievements, a deficit of £639,234 would in any event be held up to admiration as the final triumph of a businesslike administration. But to allow it to remain at that would be to deny to the late Government all its due. It required much ingenuity and a certain manipulative skill to reduce the deficit, even in appearance, to only £639,234. I shall try to make clear how it was done.
In arriving at the aforementioned figure of £639,234 all expenditure has been treated as normal, and all revenue as normal, but we find that the late Minister intended to treat as abnormal the following items which, in strict propriety, ought in my opinion to have been regarded from the outset as normal expenditure, viz:—
|
Contributions to Local Loans Fund |
£570,000 |
|
Public Works—New Works |
160,000 |
|
Forestry |
29,000 |
|
Wireless Broadcasting |
18,000 |
|
Land Commission—Improvement of Estates |
20,000 |
|
£797,000 |
In addition, he actually appropriated from the Local Loans Fund and used for the purpose of meeting "Normal" expenditure a sum of £100,000. Nor did it end at that. There fell into the Exchequer during the year two very handsome plums in the shape of £295,000, representing arrears of interest due from the Electricity Supply Board, and £100,000, representing what was called surplus interest transferred from the Post Office Savings Bank. My predecessor transferred these to revenue. In doing so, however, he overlooked the fact that he had left uncovered £424,000 of accrued interest on Savings Certificates. I presume it was an oversight. After all the objurgations which we have heard during the past ten years about honour and honesty and the Ten Commandments, nobody could believe it was anything else but an oversight. In this way, however, a real and effective deficiency of £1,195,000 was made to appear as a book deficiency of £639,234. But the shrinkage has been in appearance only, just as though our eye had been put to the wrong end of the telescope. The difference of £556,000 between the real and the disclosed deficiency has been met by appropriating to revenue what should have gone to the reduction of debt.
Leaving behind us that unedifying past, we may now turn to the year before us. It presents a grim and forbidding aspect. It will be a hard year, a year of self-denial for all of us. But it will be an honest year. We shall honour our obligations to our people, and we shall pay our way. According to the White Paper giving the Estimate of Receipts and Expenditure, issued some days ago, we shall require to provide during the year £4,824,377 for Central Fund Services and £21,969,623 for Supply Services. The latter figure, however, makes no provision for the additional funds which will be required under the Old-Age Pensions Bill recently introduced, and under a minor Bill modifying the Military Pensions Act, which will be introduced in due course by the Minister for Defence.
Nor does it cover any additional expenditure which may be occasioned by the report of the Committee on Widows' and Orphans' Pensions, nor provide for anything in the nature of special relief grants nor for works to create employment. It represents the cost of existing supply services solely, together with the two minor items which I have mentioned.
The published requirement for Central Fund Services includes the earmarking of £900,000 for the purposes of the Road Fund proper, the provision of £650,000 for sinking fund payments, and £1,768,750 for interest on outstanding debts. The total provision for the service of debt is £2,419,650, or £373,353 more than last year. Of this sum £150,000 is to cover the cost of issue and the capital charges in this year upon a new loan which may have to be raised. The increase in the balance remaining over what was provided last year is almost entirely due to the fact that we are putting £450,000 to the Savings Certificate Interest Equalisation Fund. We are thus making complete provision for all interest accrued to 31st March, 1932, on £7,020,000 of Savings Certificates issued. By doing that we are doing more to establish the credit of this community at a high level and upon a sound basis than—to use an expressive Americanism—all the "Ballyhooing" which has been indulged in during the past ten years about the credit of this State.
Coming now to the Supply Services, in the White Paper these stood at £21,969,623. In former years something was always knocked off this item for savings. The custom engendered a tendency in the spending departments to inflate estimates in anticipation of the cut. The Estimates which we are now considering were prepared under these conditions. They undoubtedly contain an element of this inflationary character. If I were to follow the example of my predecessor I should avail myself of the whole of this element and utilise it for the purpose of securing a balance. There are special considerations in this particular year which render it inadvisable to follow, to the fullest extent, this precedent.
The general speculative and economic position abroad, and the new taxes to which I am compelled to resort, impart a larger element than usual of uncertainty to our estimates of the tax yield. I do not propose, therefore, to write down the Estimates to the fullest extent as was previously done, but to reserve a part of such elements of over-estimation as they contain to meet any deficiency in the revenue which may arise from the causes to which I have just referred. At the same time, I do not propose to be content with what are, after all, merely hypothetical savings. I feel that new administrative methods in the Civil Service would eventuate in real economies. It is our intention to set up special machinery to secure these, and we propose, for the purposes of the Budget and for the extra services which I shall detail later, to take credit for them.
The vexed question of the segregation of items of expenditure into the categories, normal and abnormal, remains to be dealt with before I proceed to the more arithmetical side of the Budget. I am convinced that in the main both the extent to which and the manner in which the segregation has hitherto been made are indefensible. No authority on public finance would attempt to justify borrowing to provide for services like Public Works and Buildings, grants to Universities and Forestry. The position, however, becomes not merely unjustifiable but farcical, when we have every little fiddle-faddle of public expenditure arbitrarily classified as abnormal merely to achieve a balance. That is not to say that there are no expenditures which may be classified as abnormal. There are. But they must be unusual in their magnitude, and generally unusual also in their character. On these grounds the cost of the Shannon Scheme would properly be defrayed by borrowing. Public Works, where these are definitely of a recurring character, and are not of such a nature as will yield a certain and immediate economic return, cannot be regarded as abnormal and should not be provided for out of borrowing. On the other hand, abnormal expenditure arising, for instance, out of military operations of a costly nature may properly, in the earlier years at least, be regarded as abnormal. If the operations, however, were long drawn out so that a war-like condition became the normal habit of the State, then a large part of such expenditure would have to be regarded as normal. Similarly, the provision of emergency relief in the case of widespread famine or a national catastrophe could properly be classified as abnormal expenditure, whereas the expenditure necessary to relieve the continuous or recurring distress of poverty-stricken elements of the community must be regarded as normal and must be provided for out of normal revenue.
According to these well-established principles, it is permissible to regard as abnormal expenditure some portion of the costs of a war, and, possibly, all the costs of replacing property damaged or destroyed by war. But it is not permissible to fix, as my predecessor did, an arbitrary figure as the level of the normal expenditure on the Army, and to classify all expenditure above that figure as abnormal and to meet it by borrowing. If it were possible to justify proceedings of that kind by any principles of public finance then we could justify its application to every service in the State. The procedure would eventually become a cloak and an excuse for every sort of administrative ineptitude, extravagance and corruption.
Bearing these arguments in mind, there are only two items in the present year's Estimates which I feel can be regarded and treated as abnormal. These are first the provision which is to be made under Vote 14 for Property Losses Compensation, and, secondly, the provision made in the Central Fund Estimates to complete the repayment of the Dáil Eireann (Internal) Loan. These two items together amount to £137,100.
As to whether our contribution to the Local Loans Fund should be regarded as normal or abnormal there may be some room for argument. In view of the fact, however, that the fund is now being mainly used to finance public health works and housing schemes, which, the former particularly, cannot be said to yield a full economic return, it is my opinion that these contributions should now be regarded as a provision which should normally be made out of revenue. Otherwise, we shall be compelled to continue the same high charges for loans from the fund as have hitherto prevented many local authorities from proceeding with necessary public works. As this year's contribution to the fund, however, will be made out of revenue of an unusual and, perhaps, non-recurring character, the question will remain open for another year.
Having thus cleared the ground we shall now attack the main problem. As I have said, in the estimates of expenditure on the Supply Services which were prepared by my predecessor, nothing was included to cover the additional provision which, arising out of the Old Age Pensions Bill recently introduced, has to be made this year for Old Age Pensions, nor for additional Wound and Disability Pensions, all of which are to be provided under the terms of a new Army Pensions Bill to be introduced at an early date by the Minister for Defence. These items will require the Exchequer to find an additional sum this year of not less than £270,000, of which about £250,000 will be absorbed by Old Age Pensions. The total amount, therefore, to be provided will be:
|
£ |
|
|
For Central Fund Services |
4,824,377 |
|
For Supply Services (Original Estimate) |
21,969,623 |
|
For Old Age Pensions and Military Pensions |
270,000 |
|
£27,064,000 |
From this amount I propose to deduct the sums required for Property Losses Compensation and to complete the repayment of the Dáil Eireann Loan, and thereby to reduce to £26,926,000 the amount to be provided out of taxation for the aforementioned purposes.
From the White Paper it will be seen that the existing taxation will bring in only £19,893,000, and that this with the non-taxable revenue of £3,417,000 will produce an additional revenue of £23,310,000. We have thus to find at the outset £3,616,000, over three and a half millions.
The raising of that amount under present circumstances is a truly terrifying task. The late administration went to the country because they would not face it. We propose to do it, however, and to do something more. We must do it in order to maintain existing services, and we have to do something more to accelerate the provision of houses, and in order to enable local authorities to provide relief in the form of employment for those of the community who are workless and hungry. We shall not be able to rely solely on taxation to provide to the full extent that something more. We shall have to ask the personnel in every branch of the public service to come to the assistance of the community. We shall have to secure rigorous economies in the existing administrative machine, and we may have to borrow. One thing, however, we shall not do. We shall not cut the social services, and we shall also, so far as may be possible, suit the burden to the back.
In addition to the provisions to which I have just referred, it is also necessary, in view of the special emergency, to make additional provision for the relief of unemployment, partly by means of free grants for housing and public health schemes, partly by loans at low rates of interest from the Local Loans Fund, and partly by special road works financed from borrowings undertaken by the Road Fund. These unemployment relief items, taken together, will reach a total of £1,550,000, in addition to which there will be available £550,000 already provided under Vote 8 for the Local Loans Fund. Moreover, something must be done this year for the relief of agriculture and for children of those families who are in receipt of home assistance. In respect of the first we propose to make an additional supplementary grant of £250,000 in relief of rates on agricultural land, thus giving effect to the resolution which we put before the House when in opposition. In respect of the second, we propose to give a sum of £100,000 to assist local authorities to provide milk for the children of families in receipt of home assistance.
In order, therefore, to arrive at the total deficiency which we must cover, the sum of £1,550,000 for the emergency unemployment relief schemes, together with the sum of £350,000 for agriculture and the contribution to Home Assistance, must be added to the figure of £3,616,000 already mentioned, making £5,516,000 in all.
It may be asked here are there no reserves to which we might turn in this desperate situation. I regret to have to say that there are none. Every asset that could be realised was realised by my predecessor, and realised largely to defray expenditure which, if not altogether to be avoided by economies, ought to have been met out of normal revenue. Not merely was this the case, but even the future has been mortgaged by him. At the end of last year the Government granted £250,000 for the relief of unemployment. The basis of that grant, which was taken from the Road Fund, was a hypothetical payment on account of a hypothetical award which it was expected would be made in our favour by an arbitrator appointed to determine our claim for a share in the Road Fund of the United Kingdom. If the arbitrator does not award us anything, I shall have to make good to the Road Fund that £250,000 which was appropriated from it last year by Deputy Blythe. It has been said of some men that their successors in a fairy estate have remembered them by their deeds—their title deeds. I fear that we shall remember our predecessors only by their mortgages. They are about all they have left to us. And since they have left nothing in the chest, and nothing in the stocking, it will be seen that we have nothing left to us but the taxpayer's pocket, to which, with great regret, we have now to turn.
I have said we must suit the burden to the back, and to those who are best able to give we must first have recourse. I shall not deny that, strictly speaking, we are a poor community. I readily accept that, judged by the standards which prevail elsewhere, the extremes of great wealth scarcely exist among us. But in the kingdom of the blind the one-eyed man is king, and in our dire necessity, even the only moderately well-to-do must take a very heavy share of the burden which, unfortunately, must fall upon every section of the community.
I shall begin with the tax which, at any rate in its first incidence, falls upon the more comfortably circumstanced amongst us. The British income tax in September last was increased to 5/- in the £. Ours, in October last, was only increased by sixpence, to 3/6. Why the increase was so small I do not know, since an additional halfpenny per lb. was imposed on sugar, which is a necessary of life, particularly among the very poor. I propose to emulate the good example of Mr. Snowden, in praise of whom certain Irish papers were lyrical a few months ago, and to increase the standard rate of income tax to 5/- in the £, and to confine the half-rate relief to the first £100 of taxable income. I realise, however, that for those who earn the lower incomes this would be a very heavy burden, and I propose, in the case of earned incomes, to increase the earned income allowance to one-sixth of the amount earned up to £450, leaving the allowance in case of any balance in excess of that figure at one-tenth of such excess, subject to a maximum earned income allowance of £200 in all.
Furthermore, when the Fianna Fáil Party sat on the benches opposite we indicated by amendments which were put down to successive Cumann na nGaedheal Budgets that the relief in respect of children should be increased, and the figures then aimed at were £50 for the first child, and £40 for each other child. Our amendments were rejected. They came from the Fianna Fáil Benches, and, as a matter of course, were immediately dubbed impossible by the then Government. I find they are neither impossible nor impracticable. In fact, we can do very much better than we had hoped, so that the allowance, not for the first child merely, but each child, may be increased to £50, and I propose to make that commendable reform accordingly.
The fact that I am to make an allowance in respect of children fills me with pity and concern for the forlorn bachelors among us. How can a Minister for Finance do anything for a bachelor? He cannot, for instance, grant him any relief in respect of children. The problem has caused me earnest cogitation, because since I am in this mood of beneficence I should like—I am afraid I cannot long maintain it—to be beneficent towards everybody. Unfortunately, circumstances will not permit me, by increasing the married allowance, to gild the bonds of holy matrimony, but possibly by making the drear loneliness of bachelordom more repellent I might drive many an eligible young man to take the plunge. Accordingly, I propose, by reducing to £125 the personal allowance made to unmarried persons, to add a gold-tipped arrow to Cupid's quiver, and to make matrimony the refuge of bachelors and spinsters with taxable incomes.
It is good to think that, even for a Minister for Finance, virtue may bring something more than its own reward because as a result of this entirely beneficial rearrangement of the Income Tax reliefs and allowances I hope to bring into the Exchequer an additional £35,000 this year and about £56,000 in a full year, apart altogether from the sum of £1,000,000, which I hope to get from the Standard Rate. Furthermore by the rearrangement of reliefs and allowances a large number of taxpayers who are paying income tax on the old scale even at the 3s. 6d. rate, will be relieved altogether of income tax even in the new scale.
There are two other changes of first importance which we intend to make in regard to income tax. I have already indicated that the allowance in respect of earned incomes up to £450 will be increased to one-sixth. We have now to do something for the possessors of investment income on condition that they in turn do something for the country. With a view to encouraging our own citizens to invest their capital in Saorstát industry, we are, therefore, including in the Finance Bill a clause providing for an allowance for income tax purposes of twenty per cent. in respect of dividends arising from subscriptions to any issue of capital made after the passing of the Bill by a Saorstát public company which satisfies certain conditions. These will be broadly that the company's trade is carried on mainly in the Saorstát, that the company is managed and controlled in the Saorstát, and that the whole of the issue of the capital to which the concession applies is devoted either to the establishment of a new business or the extension of an existing business. Certain types of businesses will be excluded from the benefit of the concession. The allowance will be granted to the individual investor who must be resident in the Saorstát and not resident elsewhere, and will have effect not only for income tax but also for sur-tax purposes. The concession will apply to new issues of the Agricultural Credit Corporation. The high rate at which it will be made will render it very valuable. It should make forthcoming issues of the Agricultural Credit Corporation in particular much more attractive even than they have hitherto been, and should put the Corporation in a position to raise funds on terms which will enable it to reduce substantially its rate of interest upon agricultural loans.
By the other major change in the income tax law to which I have referred it is proposed to make assessments under Schedule D. on the recipient of a rent from business premises where such rent exceeds the amount assessed under Schedule A. on the basis of the valuation. Owing to various circumstances this change will only produce about £13,000 in the current year. We are planning for the future. It is a change, however, which it is hoped, like the grain of mustard seed, will grow into a mighty tree beneath whose foliage luckier Ministers for Finance than I will sit at ease to catch the glittering prizes as they fall.
There are several minor amendments in the income tax law which will require resolutions but which I do not intend to dilate upon at this stage.
I am anxious to pass on from income tax to sur-tax. We shall have to make changes there also. It is a well established fact that many folk in comfortable circumstances are quite prepared to pay a good deal to rub shoulders occasionally with the rich. We propose, by reducing from £2,000 to £1,500 the level above which sur-tax is payable and to give a few who are in the top section of the income tax scale the opportunity of rubbing shoulders with the rich all the year round. At the same time we shall not charge them very much for the privilege, since the rate in respect of the first £500 of excess over £1,500 will only be sixpence. For wealthier individuals the principle of coequality must be given effect to, otherwise the possession of an inferiority complex might be imputed to us. The imputation is one which no self-respecting citizen of the British Commonwealth could for a moment endure, so we propose to raise the rates of sur-tax throughout the rest of the scale to something like the British level. We do not, however, propose to follow the British practice by adding an over-riding 10% throughout the scale. We shall leave that also as an Imperial Preference. The changes in the sur-tax, it is anticipated, will bring in an additional £77,000 in the current year.
Turning to the Corporation Profits Tax it will be necessary to increase the general rate of that tax to 7½ per cent. in the case of Saorstát companies and foreign companies which maintain a register or branch register of shareholders here, and 10 per cent. in the case of foreign companies trading in the Saorstát which have shareholders resident in this country, but which do not maintain here a branch register of the shareholders. The scope of the tax will be enlarged to bring in public companies, the liability of whose members is unlimited and which distribute profits amongst them. The exemption granted to public utility concerns, working under statutory limitations as to prices or rates of dividends, will be withdrawn, except in so far as it applies to dock, canal or railway undertakings, or to certain building societies or the Agricultural Credit Corporation. The tax free allowance will be reduced to £5,000 instead of £10,000, and the tax will be charged in respect of every accounting period ending after the 31st December, 1930. As a result of all this, we hope to secure for the Exchequer an additional £230,000 in the current year.
Over and above the fee payable to the Currency Commission by banks in respect of the Consolidated Bank Notes which they put in circulation, we propose to impose an additional 1½ per cent. on such notes. There will be a further tax of 3 per cent. on that part of the respective quotas allocated to the several banks which are not in circulation. In this way we shall get £90,000.
The total amount which I propose to raise by means of the aforementioned Inland Revenue taxes is £1,445,000. We have now to call in the assistance of the Customs and Excise. In October last my predecessor imposed an additional tax of ½d. per lb. or 4/8 per cwt. on sugar. Sugar has a very high food value and it is an absolute necessary of life. A tax on sugar is a "hard" tax. It cannot be imposed without a corresponding increase in the cost of living. It, therefore, falls heavily on the very poor. Tea, on the other hand, has little value as food. It is not a necessary of life. A tax upon it is a "soft" tax; that is to say, a tea tax need not necessarily involve a diminution in consumption or an increase in the amount spent upon the commodity. The poor can adjust themselves to it more easily than to a tax upon sugar. They will not have to pay more for tea, and I have no doubt that with a tax on tea we shall have enterprising grocers proclaiming to the public that their "2/8 tea is still 2/8." I propose, therefore, to replace by a duty on tea the additional duty which last October was imposed on sugar and sugar composite goods. That is to say, a Customs and Excise duty at the effective preferential rate of 4d. per lb. (the full rate being 6d.) will be imposed on tea, while the Customs and Excise duty on sugar will be reduced by 4/8 per cwt. or ½d. per lb. The change will make virtually no difference in the revenue; the remission of the sugar duty costing £400,000 with the tea duty just about balancing that at £418,000.
The growing practice, found particularly among large distributing firms and multiple shops, of importing their commodities ready packed for sale has been noted. The custom, undoubtedly, has restricted opportunities for employment here. We should, at least, be allowed to pack and parcel for ourselves the foreign foodstuffs which we are compelled to eat. I hope at one and the same time to help the revenue and to provide employment by imposing a package tax at the rate of twopence per packet or parcel and twopence per bottle the capacity of which, I think, does not exceed two pints. The tax will apply to all articles of food and drink, and I am sure it will gratify the many male citizens who were good to write to me in this connection when they learn that it is going to apply to cosmetic and medicinal preparations packed ready for sale.
In the present circumstances it would not be justifiable to refrain from extending the tax on entertainments, much less to reduce it in any of its applications. It is necessary, therefore, to enlarge the scope of the tax to cover all forms of entertainment, including dances, for which an admission fee is charged. The duty will cover outdoor sports, horse racing and greyhound coursing, and will bring in £84,000 in the current year. There will be no change in the duty on cinematograph films, nor will the existing exemption on theatrical entertainments be withdrawn.
The question of an increase in the tobacco duty must now be considered. At the present moment the customs duty on tobacco in this country is 1/4 per lb. less than in Great Britain. It will be necessary to increase the duty by 1/2 per lb. In this connection, however, special consideration must be given to the position of the smaller manufacturers vis-a-vis their more powerful competitors. When the duty was increased in Great Britain in September last the manufacturers there were able to shoulder the burden of the tax and to refrain from passing it on to the public. It would not be possible for our native manufacturers to do this. Some of them are, in fact, working at a slight loss so far as the manufacture of pipe tobacco is concerned. We propose, therefore, in the case of firms which were carrying on business in the Saorstát continuously since 1st April, 1922, as manufacturers of tobacco, and which have since remained in the beneficial ownership of Irish-born residents, to grant a special rebate of 7d. in respect of every pound of unmanufactured tobacco received by them. This will enable them, by increasing their charges slightly to the public, to make good their losses. In that connection I ought to say that there is no reason whatever why there should be any change in respect of cigarettes. In the case of the more powerful and foreign-owned firms in this country we expect that they will act in the same spirit of self-denial towards our citizens as they did towards those in Great Britain. The net amount which I expect to get this year from the increased tobacco duty will be £350,000.
The case of the Irish tobacco grower has often been argued in the Dáil with great force but with little effect. In order to give him a fair chance to establish a new agricultural industry in the country, I propose to remit altogether the excise duty hitherto chargeable on tobacco grown in the Saorstát.
Passing from tobacco, it is natural that we should come to the tobacco dealer, and I propose to make some slight alteration in the terms of the tobacco dealer's licence, and to relate the amount of the licence duty to the Poor Law valuation of his premises, where such valuation exceeds £10. On valuations which are not in excess of that figure the licence duty will remain at 5/3. In the case of premises on which the valuation is greater than £10, there will be charged on the excess an additional excise duty at a rate equal to 1 per cent of the Poor Law Valuation.
Minor changes will also be made in the duties on matches, and a tax will be imposed on mechanical lighters.
Arising out of representations which were made to me by a deputation from the Licensed Trade I had the existing position of the Brewing and Distilling trades carefully investigated. There is no doubt that the smaller breweries particularly have been hit extremely hard by the depressed economic conditions of the past ten years. Many of them are on the verge of extinction, the output of some of them being not even so much as 5,000 barrels. It will be admitted that their position is most precarious. The policy of the Government is to decentralise industry so as to distribute employment over the largest possible area. Workers would be thrown out of employment over the number of the smaller towns of the Saorstát, and to some extent also farmers in the immediate vicinity of these towns would be affected if the small breweries were to close down. In order to keep them alive, it is proposed to grant a relief in the form of a remission of 5/- per standard barrel of the Excise duty charged upon the first 5,000 barrels. This concession will cost us £9,750 in the current year, and its benefits will be limited to breweries which malt or roast here not less than 80 per cent of the grain used by them.
One of the anomalies of the existing position in regard to the tax on musical instruments is that records for the reproduction of music by means of gramophones, pianolas, and other similar instruments, were exempted in 1924. It is difficult to defend this exemption particularly when violins, pianos, etc., by means of which professional musicians earn their living, are subjected to a tax. I propose, therefore, to reimpose a Customs duty in respect of all such instruments, and to charge it at the rate of 33? per cent. of the value of such records. Musical sound films, being subject to the high rate of cinematograph duty, will not be subject to the new duty.
In order to encourage the assembly here of wireless apparatus from ultimate component parts it is proposed, whilst continuing the existing duty on the parts, to increase the rate of duty applicable to any complete apparatus and to any substantial assembly of component parts to 50 per cent. ad valorem.
It is also proposed to make permanent the duties which are popularly referred to as the "McKenna Duties." These duties on musical instruments, clocks, watches and cinematograph films were first imposed in 1915, and have been annually renewed since. There does not appear to be any good reason for continuing this inconvenient procedure. It was first devised at a time when every Liberal had to be a Free Trader even after he had become a Protectionist. Times have changed since, and I understand that nowadays a Liberal may be anything he likes, and everything he likes, provided he is nothing long. The procedure remains merely as a relic of a vanished age in British politics. I propose to abolish it.
The particularly difficult position in which many small passenger-carrying concerns have been placed by the imposition and increase of the petrol tax and by the seating tax on omnibuses has been brought under my notice. I have had the situation carefully investigated, and I am satisfied that, unless some relief be afforded, many of these concerns will be driven out of business and many people thrown out of employment. The Government could not permit such a position to arise and, accordingly, have decided to reduce the seating tax in the case of buses by 33? per cent. as from the end of the current quarter. This concession will cost about £23,000.
The net result of all the changes which have been made up to this point still leaves a very considerable sum lacking to balance what I may describe as the normal Budget. I have still to find an additional £1,508,750. My position would, indeed, have been a hopeless one if the need of the Revenue and the policy of the Minister for Industry and Commerce had not chanced to coincide. New duties to the number of 43 are being imposed on the advice of the Minister for Industry and Commerce. All are necessary for the fulfilment of our industrial programme, since we are capable of producing here everything to which they are applied, and they will yield to the revenue £910,000. The full list of duties will be set out in the schedule attached to the necessary Resolution, but I may say at this stage, for the information of the House, that among the more important of them is a tax on newspapers and periodicals imported in bulk quantities, and of which the superficial area of page or front cover does not exceed 320 square inches. In this case the full rate of duty will be 1½d. per copy, with a preferential rate of ld. During the period in which I have been considering the Budget proposals I have had urgent and emphatic demands from many quarters for the imposition of such a duty. Undoubtedly, its imposition now will help both our native printers and our native writers.
Another important duty will be a tax on constructional steel imported fabricated and ready for erection. We may not be able at this moment to roll steel sections here but, undoubtedly, we are able to drill and fit and erect them. At this moment practically none of the fabrication of these structures is being done in the Saorstát, and similarly their erection is being carried out mainly by outsiders.
The position at this stage is that allowing for the remission in sugar duty, the bus seating tax, and the beer duty, we have provided for £26,260,250. But on our normal Budget we require, as I have said, £26,926,000. I shall have to ask for sacrifices from those who are engaged in public employment to help me to find the remainder. I propose to find by reductions in salaries and allowances in the various branches of the Public Service, and I hope I may be able to say later that this has included the Judiciary, the sum of £250,000. In the light of the community's urgent need this cannot be regarded as too large a sum to ask.
From savings due to over-estimation in the cost of the Supply Services we hope to get, say, 1½ per cent. of £21,969,000, the amount of the original estimate. This should produce £329,535. My predecessor last year took 2½ per cent. as the figure for over-estimation. In addition to this we propose to have the whole system of administrative routine in the Public Services, and with it the question of office accommodation; the lighting, heating, and furnishing of offices, the utilisation of modern business appliances; purchase of stationery and consumable stores generally; printing, etc., examined by a body of experts specially engaged for the task. Taking into consideration the magnitude of the services concerned it should not be difficult for an investigation of this kind to produce a saving of not less than £100,000 in the current year. As a result of the sacrifices and economies which I have indicated, we shall be able to reduce the expenditure figures for the normal Budget by approximately £679,535, leaving the net expenditure on that side of the Budget at £26,247,365. Against which we can now set tax and non-tax revenue amounting to £26,260,250, leaving a surplus at this stage of £12,855.
It were well that we could close the accounts here and compliment ourselves that our great task was nearly done. Unfortunately, however, it is far from ended. We have still to remember the plight of the unemployed. There is no need for me to describe the position of those who are workless and hungry. We have heard a good deal about them both inside the House here and outside it. We have, however, the inspiring thought that the Opposition party by their votes in the early afternoon of this day fortnight indicated that they are at one with us in our endeavour to provide the funds which will give effect to the principles embodied in Deputy Morrissey's proposals. During the past few weeks also it has been consoling to note that responsible organs of the Press have recently been urging us in the same direction and emphasising our obligation to discharge our Christian duty to our needy citizens. I am glad at this stage, when even the stoutest spirit might flag, to reinforce my resolution by the thought that I have behind me the weight and influence of responsible newspapers, that always mean what they say.
The House was told last week by Deputy O'Connor that there had been a complete cessation in the speculative building trade. I have no doubt that there was, and that the cessation was due entirely to the defective provisions of the Housing Act for which the ex-Minister for Local Government and Public Health, Deputy Mulcahy, was responsible in the last Dáil. We propose to set aside the sum of £100,000 to increase considerably the grants which were made available under the last Housing Act, the grant to be payable only on the condition that the work on the house is commenced before the 1st September next.
In addition, we propose to provide for local authorities either as a free grant or as a grant-in-aid, according to the nature of the works upon which it will be employed, the sum of £350,000 to be spent on public health works, minor road works, e.g., cul-de-sac roads, and arterial drainage schemes. It will naturally take some time for works of this description to get under way, and, in the meantime, for the immediate alleviation of distress we propose to make a grant of £150,000 to be used in works which will absorb the greatest possible amount of labour, for example, in the clearance and preparation of derelict sites for building. In addition to the £877,000 which, after the remission of the bus-seating tax, will be available from the Road Fund for the normal purposes thereof, we propose to provide for special road works of a more comprehensive character than would be covered by the grant for immediate relief works the sum of £1,000,000 to be raised by borrowing on the security of the Road Fund. In addition, we propose, out of the Local Loans Fund, to place at the disposal of local authorities to immediately finance local public health works and housing schemes a sum of not less than £550,000 to be repaid by them on the annuity system at a much lower rate than at present to cover interest and sinking fund. Apart altogether from the £877,000 which will be available in the normal way from the Road Fund, the special provisions for the creation of employment which I have indicated, and which are necessary to give effect to the principle contained in Deputy Morrissey's motion, will amount to £2,150,000. I believe that this will be regarded by everybody as an adequate and full discharge of our commitments in that regard, and a complete fulfilment of our pledges to the unemployed.
Taking into consideration the amount required to be provided out of the Local Loans Fund, and by borrowing on the security of the Road Fund, we are left with a balance of £600,000 still to be provided for the creation of employment. In addition, we have to provide £350,000 for the additional Supplementary Agricultural Grant, and for the Grant-in-Aid of the provision of milk for the children of necessitous persons. As a first step in this direction, I propose to transfer from the normal to the emergency section of the Budget the surplus of £12,885. For a large part of the balance I shall have to turn to the proceeds of the sweepstake. I have had to consider many proposals in this regard. They were all rejected in favour of one which was submitted by the Emergency Committee of the Hospitals and which outshone all others in its attractive simplicity. I propose to levy 25 per cent. on the hospitals' share of the proceeds of all sweepstakes drawn after the 1st March, 1932. This, I hope, will bring me in not less than £650,000 this year. In view of this change in the original scheme, I propose to ask my colleagues in the Executive Council to reconsider the present allocation between public and county hospitals of the proceeds of the sweepstake.
It has often been represented to the Government that a large amount of Irish capital is concealed here and abroad, frozen up, and withheld from Irish industry. I have been told that the owners of such capital, having made themselves liable to heavy penalties for offences against the Revenue, are afraid to put their funds to a profitable use in this country. In view of the fact that the new economic policy of the Government must be adequately financed, and that it is desirable that every available source from which capital can be secured may be open to Irish enterprise, the problem of liquifying these resources has engaged the serious attention of the Government. Apart altogether from this aspect of the matter, however, I think it will be generally agreed that the present position is unsatisfactory from a revenue point of view, and that measures should be taken to clear it up expeditiously. Whilst I am entirely satisfied, from the evidence produced to me, that the Revenue Commissioners have been dealing with this difficult question in a most reasonable and humane spirit —that is my sincere conviction and it is the conviction upon which I am going to act in future——
