In Committee on Finance. - Resolution No. 3—Income Tax. – Dáil Éireann (7th Dáil) – Wednesday, 1 Jun 1932

In Committee on Finance. - Resolution No. 3—Income Tax.

Mr. MacEntee

I move that the Dáil agree with the Committee in the following Resolution:—

(1) That an individual who makes, in the manner prescribed by the Income Tax Acts, a claim in that behalf and makes a return in the prescribed form of his total income shall, for the purpose of ascertaining the amount of his assessable income for the purpose of income tax, be allowed a deduction from the amount of his earned income equal to:—

(a) one-sixth of so much of that income as does not exceed four hundred and fifty pounds, and

(b) one-tenth of so much of that income as exceeds four hundred and fifty pounds,

but not exceeding, in the case of any individual, the sum of two hundred pounds.

(2) That sub-section (1) of Section 18 of the Finance Act, 1920, shall be construed and have effect as if the words "one hundred and twenty-five pounds" were substituted therein for the words "one hundred and thirty-five pounds."

(3) That sub-section (1) of Section 21 of the Finance Act, 1920, shall be construed and have effect as if the words "each such child to a deduction of fifty pounds" were substituted therein for the words "one child to a deduction of thirty-six pounds and in respect of each subsequent child to a deduction of twenty-seven pounds."

(4) That an individual who makes in the manner prescribed by the Income Tax Acts, a claim in that behalf and makes a return in the prescribed form of his total income shall be entitled to be charged at half the standard rate of tax on the first one hundred pounds of his taxable income.

(5) That Sections 16 and 23 of the Finance Act, 1920, shall be repealed.

Professor Alton

I move amendment No. 1:—

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

"That an individual who makes, in the manner prescribed by the Income Tax Acts, a claim in that behalf and makes a return in the prescribed form of his total income shall, for the purpose of ascertaining the amount of his assessable income for the purpose of income tax, be allowed a deduction from the amount of that income such sum or sums as he pays in wages to domestic indoor or outdoor employees."

I am sorry that the Minister was not able to help me in arguments with the Revenue Commissioners. Perhaps he would be able to give me the figures later on. However, I am trying to help him now. I have spent some thought on this amendment and I am putting it forward in a non-controversial way, as an honest amendment that will be of social import. It is one that should commend itself to every member of the House. It is to the effect that payers of income-tax would be allowed to deduct from the assessable total of the income such sum or sums as they paid in wages to domestic indoor or outdoor employees. In spite of the assurance of the Minister that income tax payers are suffering no hardships, that the burden he has put on their backs is only a straw, I can assure him that many of those income tax payers— decent, honest citizens who are as much interested in the welfare of the country, in the social uplifting of the country, as any Party, Government, or Opposition in the House—find it a very serious hardship and they will, as Deputy Dillon said, have to tighten their belts this year.

Unfortunately, a private citizen differs from a Government. He has to cut his coat by his cloth. He is not allowed the luxury of a deficit. That is forbidden by his bank account or, in the case of many, by his bank overdraft. He has to look round and deny himself in all directions. I am speaking of people who are in that position, people, as I say, who are trying to do their duty as citizens and yet pay this extra income tax and carry on during a year of emergency, people who only wish to see their country out of trouble and are willing to pull their weight and pull it honestly, but they will have to make curtailments in all directions.

This amendment of mine was designed to relieve them of what would be a very unpleasant prospect for many of them, a curtailment in the way of getting rid of some of their domestic indoor or outdoor employees. I think the last thing a decent man would like to do is to let down a faithful servant, his best friend, but unfortunately many people will be reluctantly obliged to do it this year. I do foresee that unless some relief of this sort is given there will be a very considerable number added to the roll of the unemployed from the field of domestic labour. My amendment is designed to meet such a contingency, and it is one that should commend itself to all Parties in the House, particularly the Labour Party, of which there is one representative present—I mean the official Labour Party. This principle is not a new one. It is a principle which is recognised and has been recognised by all of us in business. What shop or factory, what kind of business could be carried on if it had to pay income tax on money disbursed in the way of wages or salaries? It would be quite impossible. If they were obliged to do that they would find immediately that they would be compelled to face a very thorough reduction of staff or bankruptcy. I do not see any difference between domestic employees and employees in other fields. Domestic service is as honourable, is as essential and as useful to the State as any other form of labour. It is only a Hyde Park orator, as I heard one once, who would refer to domestic servants as instruments and parasites of luxury. I do not think we will hear that in this House. What would be the position in many homes if such employees as domestic servants were not available? One can visualise the Minister for Finance having suddenly to retire in order to prepare the family dinner or, perhaps, put the children to bed. The Dáil could not sit from 3 o'clock until 10.30 were it not for the benevolent industry of this class of employee.

I commend this amendment to the serious consideration of the Minister. I observe he is smiling. It is a smile not of sympathy nor of benevolent neutrality; rather is it a smile of sinister significance. That is the smile he had when he enumerated the various straws that he was laying on the backs of those least able to bear them. The Minister's smile is like the moonlight on a tombstone. I hope that my arguments in favour of this amendment are sinking into the Minister's heart. I am putting them forward seriously, though I may appear to be talking lightly. This is really an important thing and it would be a great concession if the Minister accepts the proposal. I hope the matter will be discussed in a non-party, non-controversial way and ultimately it should be left to an open vote of the House.

Professor O'Sullivan

I presume that because of the great anxiety the Minister professes for employment and his determination to see that there is no one thrown out of employment by this Budget, he will be grateful, as Deputy Alton suggests, for this opportunity of honouring at least one particular pledge. I am sure he will have the support, not merely of the Independent, but also of the dependent Labour Party. I am not going into the figures that the Minister gave us. I do not wish to refer too much to the past, but I have a vague idea that last so, the experience we had of his calculate about income tax. Candidly, if the Minister does not mind me saying so, the experience we had of his calculations in regard to income tax and tax matters generally on that occasion were not such as would induce any of us to accept, without more ado, all the various calculations and the results of calculations that he gave to the House this evening. However, that is a matter especially concerned with super-tax and into that we need not go now.

So far as I am personally concerned, I would like to be assured that these figures are not the mere creation of the Minister's own brain but that they come from responsible Departments at his back. Leaving these figures aside, whatever they are, there is one thing that cannot be got over, and this amendment draws attention to it. There is a large number in this State employed out of the incomes other people have. The Minister may say it only make a difference of 2d., 3d. or 1/- in the £, but the fact remains that between the increased income tax, sur-tax and corporation profits tax, together with what he is taking out of the banks, he is taking out of the employment fund nearly £1,500,000. Half-pennies, shillings and even pounds—if the Minister makes a difference of £20 or £100, a little confusion of that kind does not matter—all go to make up the employment fund and that fund is being diminished. The result will be felt especially by the class that Deputy Alton, in his amendment, refers to. That is the class that will feel it first.

That class will not be vocal. They will not go in deputations to the Minister; they will not threaten him that at the next election their votes will be cast against him in an organised fashion. They have no method of getting themselves heard. Therefore, I fear although there is an excellent opportunity offered now by Deputy Alton, that the Minister will be deaf on this occasion again to the voice of reason. By income tax, sur-tax and other taxes of a similar nature we are taking out of private hands nearly £1,500,000 and I suggest we are going in the wrong direction. We are going in the direction by which employment will be taken out of the hands of the private individual and put into the hands of the State. It is obvious that large classes, especially those referred to in this amendment, will suffer right through the country if the Minister remains deaf to Deputy Alton's appeal.

Mr. Anthony

I am supporting this amendment for two reasons. In the first place, I believe it will negative very largely, and tend to dispel, the rather gloomy forebodings entertained by many Deputies who voted against Resolutions 1 and 2, dealing with income tax and sur-tax. My second reason for supporting the amendment is that I feel it will encourage many who have courage enough to engage in Irish enterprise and to employ Irish labour. Many of the income tax payers in this country circulate a good deal of their money in the way indicated in this amendment. It gives employment through the engagement of domestic servants. They are, as Deputy Alton says, a very necessary class in the community. Their employment, though sometimes derided, is as necessary to the community in general as is the employment of even the most prominent Ministers in the State. The class mainly affected comprises people who, like some income tax and sur-tax payers referred to by Deputy O'Sullivan, do not make themselves vocal. They are rarely, if ever, heard of on political platforms or at political meetings. They include chauffeurs, gardeners and domestic servants. If the super-tax and income tax payers circulate money in this way it is a good thing for the country.

I feel if this amendment is accepted it will very largely dispel any doubts there may be in the minds of many people in the country as to the Government's intentions towards those people who give a good deal of employment in this way. It has been suggested that the number of super-tax payers in the Free State is very small and that we could do with a lot more. We might make it more attractive for those people who reside amongst us and this is one of the gestures by which we could make it attractive to those people who have money to spend. That money would find its way through various channels. It would encourage industry and would be otherwise a great advantage. I am speaking as one who supported the present Government in their first two Resolutions because I felt the arguments were all on their side. I feel that here is a case where the Government can make at least this gesture to those people, that they do not intend to drive them out of the country altogether. I ask the Minister to take serious note of and to consider sympathetically the amendment moved by Deputy Alton.

Mr. Blythe

This is an amendment against which, I think, a strong theoretical case could be made. This Budget is a peculiar one and it is going to cause much hardship. We hear from the Minister that these imposts are temporary. I think that in all the circumstances, in order to avoid unemployment, or at any rate to mitigate the unemployment which will certainly follow the imposition of all these taxes, the Minister ought to accept the amendment. The Minister is very seriously wrong in the calculations which he gave to the House. He has a habit of making very hasty calculations about the effects of income tax. On a famous occasion the Minister discovered that an increase of the 3/- tax to 3/6 would double the income tax payable by a large number of people. On the present occasion he seems to have made a similar calculation. I was not in for the Minister's statement on that point, but I gather that he was dealing with the case of an income tax payer with £1,500 earned income and £500 investment income, and he indicated that as between the present scale and last year's scale there would be a difference of only £27. The difference in fact would be over £112, so that the statement the Minister made in the House was quite misleading.

Mr. MacDermot

This appears to be a meritorious amendment. I want to put it to the Minister that he might regard its acceptance as a measure of emergency unemployment relief. I want to put it to him moreover, that it seems to follow logically from the concession that he has made with regard to people who put money in the new issues of capital in this country. He has done that to encourage new industries here. I suggest that if individuals can be found to start new industries, small or large, there is no reason why something should not be done to encourage them as well as to encourage public companies.

Mr. Morrissey

I would like to support the amendment. I opposed the Budget when it was introduced largely because I thought that the effect of it would be to lead to the disemployment of many more person than it would secure employment for. I am satisfied from my experience and from what I have learned during my visits down the country since the Budget was introduced, that many persons, particularly domestic servants, male and female, who have been in employment which they had come to look upon as permanent will, as a result of this Budget, be disemployed. I feel that if the Minister were agreeable to give the relief asked for in the amendment he would probably save many of those persons from being thrown out of the employment in which they are to-day, and in many cases have been in for a number of years.

I do not know what case the Minister can make against this amendment, or whether he proposes to make any case, but I put it to him that he ought to look at it not merely from the point of view of the income taxpayer but from that of the person who is employed by the person who is called upon to pay this increased income tax. I ask him to look at what the effects of his refusal of this amendment will have not upon the income taxpayer but upon the unfortunate domestic servant. I am not particularly concerned with the person who has to pay income tax or sur-tax. As Deputy Anthony has said, I think we have shown that in the vote we gave to-day on Resolutions No. 1 and 2. We have voted for the Minister's proposals because we realise that if the Minister is to go ahead with the proposals that he has made to the House for social services he must get money somewhere. I suggest to the Minister that if his Government and himself are sincere in their statements with regard to finding employment for people who are unemployed, and keeping those who are employed in employment, this is an amendment which he ought to accept. I again take the liberty of emphasising that he ought not to look at this amendment from the point of view of the income taxpayer, but from the point of view of the unfortunate domestic servant, because if the Minister insists on his Resolution and refuses to accept this amendment I am satisfied that the income taxpayer will pass on the imposition, and that the person to suffer will not be the income taxpayer but the person employed by him. I suggest that the amendment is a reasonable one and ought to be accepted.

Mr. Dillon

This is an amendment that I welcome. I think it is conceived in a most admirable spirit and I trust it is one that will commend itself to the Minister. The incidence of this income tax, in the case of a large number of people, may I think be received in a spirit of panic, and in that spirit I can conceive that the first people likely to suffer would be those who are in domestic service. Deputy Anthony has said that they are a defenceless class. Very largely they are people who had good reason to hope that they were in permanent employment. I believe that if income tax payers viewed the matter calmly that class would not suffer. But human nature being what it is, I think it very possible that, of all classes, domestic servants may be in the greatest danger of experiencing unemployment as a result of increased income tax.

I think that if the Minister were to accept this proposal of Deputy Alton's it would be one means of effectively averting that. I do not believe that the concession asked for would be very costly, because I imagine that a considerable number of domestic servants in the smaller households would be the servants of persons who might not be liable to income tax at all. In the larger, wealthy households the proprietors of which go on Mediterranean tours and take half-a-crown off their labourer's wage lest they go into bankruptcy as a result of the increase in income tax, something in the nature of this proposal might serve to still their panic. Though one may argue that the State is ill-employed remitting taxation in order to soothe somebody's ruffled nerves, I think that Deputy Morrissey hit the nail on the head when he said that the Minister should look on this remission from the point of view of the person threatened with unemployment rather than from the point of view of the people who are actually going to enjoy the remission. I have very little doubt that if he can see his way to accept the amendment, he will have removed what I think is almost the only serious danger of undesirable repercussions resulting from the temporary imposition of the substantial income tax that he intends to put on in this Budget.

Mr. Brasier

This amendment, if accepted by the Minister, will be taken, I think, as a gesture that would do much to minimise the effects of the increased tax which has been imposed on those who pay income tax. It is not always the amount that would, perhaps, be saved by curtailing employees that will have the effect on the income of a person paying income tax, but a gesture of this description would allay, as Deputy Dillon has said, the fears of these people. When you look on the number of employees of this class in the country, those who, perhaps, may cater for the amusement or the taste or even the ordinary requirements of people who pay income tax, I think it would have a most desirable effect. There are those in what I might call the middle-class life, in country districts, who employ a fair number of people, and it will have a very good effect in promoting such employment, when they see that they would not have to suffer. I support the amendment, and I hope the Minister will see his way to adopt it.

Mr. Bennett

I should like to support this amendment also, and, like Deputy Morrissey and Deputy Dillon, I would ask the Minister to look at it from the employer's point of view, that there will undoubtedly be, as a result of the increased tax, a considerable lessening of indoor and outdoor employment, in relation to gardeners, chauffeurs and other such people. I got up mainly to say that I do not believe that the fact is, as Deputy Morrissey said, that income tax payers will definitely pass on this tax, even though they could afford to refrain from doing so. I know myself very many instances where taxpayers of the class mentioned, who are heavily taxed. have been maintaining their employees for a number of years, even though it is almost impossible for them to bear the expense, but they are hoping against hope that the period would arrive when their expenses might be lessened, and they would be able to keep on the employment of men and women on whom they looked as friends, old retainers of their families for perhaps twenty or twenty-five years. Every Deputy knows these types of servants who have spent the greater part of their lives with these people, and who are more friends than servants of their employers. I know of cases where some of these particular employers have had to approach their employees and tell them that the time had, at last, come, when it was impossible for them to meet their expenses, and they were forced, by necessity, to get rid of some, or reduce the wages of all. I can give the Minister instances of such cases, if he likes, and I would appeal to him to accept the amendment of Deputy Alton. It will be a boon to a great lot of employees, who will lose their employment if it is not accepted.

Mr. McGilligan

I want to make just two remarks on the amendment. We are discussing the amendment only at the moment, I presume?

An Ceann Comhairle

That is all.

Mr. McGilligan

I have two remarks to make, and the first is, that anybody who examines the volumes of the census report, recently issued, will find that the class of female labour in which there was most unemployment shown was that of domestic servants. It was rather hard to understand that figure when it was brought to the public first, because it seemed to coincide with a considerable demand for domestic servants, which had not been met, but I understand that the explanation was that a considerable number of people who had been in domestic service, and who, because of the failing incomes of the people who supported them in service, had been removed from domestic service, with the consequent result, as I have explained, that that type of female employment was the one which showed the greatest number of people unemployed, so far as 1926 was concerned. The other matter which, I think, is relevant to this particular amendment, is this, that domestic service is exempted from the provisions of the Unemployment Insurance code, and, consequently, if any domestic servants, that is, domestic servants as properly defined, are thrown out of employment, their cards will not have been stamped, and there is no unemployment insurance for them.

Professor Thrift

I only want to say a word in support of Deputy Alton's amendment, which, I think, is really based on a sound principle. I want to assure the Minister that I know that this will have a tendency towards avoiding a very real problem. From the Minister's own point of view, and to show that he is interested in trying to avoid this unemployment which is going to come to a certain extent, whatever he does, I would suggest it is very desirable that he should accept this amendment. I do think that it will have the effect, to a certain extent, of mitigating this unemployment which is likely to come about in this particular class of work.

Mr. MacEntee

Could we take the division on the Resolution and the amendment together?

Mr. McGilligan

Then we could have a debate on the Resolution, I presume?

Mr. MacEntee

The point is that these Resolutions must be reported tomorrow night.

Mr. McGilligan

Very good. There is plenty of time.

Professor Alton

I do not want to be obstructive, or to delay the Minister in his desire to get these Resolutions through, and if the Minister would like to consider my amendment more carefully, and to make the necessary calculations, I would be willing, with the consent of the House, to withdraw it and to move it on the Finance Bill.

Mr. MacEntee

I was going to suggest, when I thought the debate would be prolonged, that the proper place to consider this would be on the Committee Stage of the Finance Bill. The amendment was handed in late last night, and we have not had time to look on the practical effect if it. I do not wish to hold out very much hope, at this stage, because Deputy Blythe himself admitted that there was a sound theoretical case against it, and he knows as well as I do, that the basis of it is that the income tax code does not take into consideration, the manner in which income is ultimately spent. The manner in which the individual chooses to dispose of his income could not, at all, affect his liability to taxation. Apart altogether from that, which is the basic principle underlying opposition to it, there is this fact, that this is likely to be most expensive amendment if one were to give effect to it. It introduces an allowance never before considered, and which no person, even in the happiest times when the Exchequer might have had money to give away, would have had the hardihood to put down. I do not wish to enter into any extended argument against it, because I do not want the discussion, which, if Deputy Alton withdraws the amendment now, will inevitably take place on the Committee Stage of the Bill.

If Deputy Dillon says that he anticipates his income by borrowing £100 to spend on his own pleasure, if that is brought into his income in anticipation of what he is going to earn in later years, he will pay the interest on that £100, but he will be entitled to deduct the amount paid from the lender.

Mr. Dillon

If I expend my income paying interest to a bank on a loan, I am entitled to recover from the income tax authorities the income tax on the amount I expend in discharging interest on the loan. Why, then, cannot I recover income tax on the amount I expend on paying domestic servants?

I assure the Minister that I am serious about the amendment. Either stick to theory or practice. The Parliamentary Secretary stated the other day that income tax in theory was an abominable tax, but in practice it was the only expedient we could resort to this year. For the sake of consistency, we should be either theorists or practicalists, one or the other. Do not try to ride two horses at the same time; do not speak with two voices. In the text-books of ethies I read that the ordinary excuse of the sinner before sinning and breaking the general law is, only this time, I make an excuse for this occasion. That is what they seem to be doing here.

An Ceann Comhairle

I wish to remind the Deputy that the House is not in Committee, and that I have given him considerable scope, seeing that he has already spoken.

Professor Alton

I only want to assure the Minister that I gave him all the time possible, as I put in the amendment at the first possible opportunity.

Amendment put.

The Dáil divided: Tá, 54; Níl, 71.

Tá

Alton, Ernest Henry.
Anthony, Richard.
Beckett, James Walter.
Bennett, George Cecil.
Blythe, Ernest.
Bourke, Séamus A.
Brasier, Brooke.
Broderick, William Jos.
Burke, Patrick.
Byrne, John Joseph.
Collins-O'Driscoll, Mrs. Margt.
Conlon, Martin.
Cosgrave, William T.
Craig, Sir James.
Davis, Michael.
Desmond, William.
Dillon, James M.
Dockrell, Henry Morgan.
Doyle, Peadar Seán.
Esmonde, Osmond Grattan.
Fitzgerald, Desmond.
Fitzgerald-Kenney, James.
Good, John.
Gorry, Denis John.
Hassett, John J.
Hayes, Michael.
Hennessy, Thomas.
Hennigan, John.
Keating, John.
Keogh, Myles.
Kiersey, John.
Lynch, Finian.
MacDermot, Frank.
McDonogh, Fred.
McGilligan, Patrick.
McMenamin, Daniel.
Minch, Sydney B.
Mongan, Joseph W.
Morrissey, Daniel.
Mulcahy, Richard.
Murphy, James Edward.
Nally, Martin.
O'Brien, Eugene P.
O'Connor, Batt.
O'Hanlon, John F.
O'Mahony, The.
O'Neill, Eamonn.
O'Shaughnessy, John Joseph.
O'Sullivan, Gearóid.
O'Sullivan, John Marcus.
Reidy, James.
Roddy, Martin.
Thrift, William Edward.
White, John.

Níl

Aiken, Frank.
Allen, Denis.
Bartley, Gerald.
Blaney, Neal.
Boland, Gerald.
Boland, Patrick.
Bourke, Daniel.
Brady, Bryan.
Brady, Seán.
Breathnach, Cormac.
Breen, Daniel.
Briscoe, Robert.
Browne, William Frazer.
Carney, Frank.
Carty, Frank.
Colbert, James.
Cooney, Eamonn.
Corish, Richard.
Corry, Martin John.
Crowley, Fred Hugh.
Crowley, Tadhg.
Derrig, Thomas.
De Valera, Eamon.
Dowdall, Thomas P.
Everett, James.
Flinn, Hugo. V.
Flynn, John.
Flynn, Stephen.
Fogarty, Andrew.
Geoghegan, James.
Gibbons, Seán.
Ryan, James.
Ryan, Robert.
Sexton, Martin.
Sheehy, Timothy.
Sheridan, Michael.
Gormley, Francis.
Gorry, Patrick Joseph.
Goulding, John.
Harris, Thomas.
Hayes, Seán.
Hogan, Patrick (Clare).
Humphreys, Francis.
Jordan, Stephen.
Kelly, James Patrick.
Kennedy, Michael Joseph.
Keyes, Raphael Patrick.
Kilroy, Michael.
Kissane, Eamonn.
Lemass, Seán F.
Little, Patrick John.
Lynch, James B.
MacEntee, Seán.
Maguire, Ben.
Maguire, Conor Alexander.
Moane, Edward.
Moore, Séamus.
Murphy, Patrick Stephen.
Murphy, Timothy Joseph.
Norton, William.
O'Grady, Seán.
O'Kelly, Seán Thomas.
O'Reilly, Matthew.
O'Reilly, Thomas J.
O'Rourke, Daniel.
Rice, Edward.
Ruttledge, Patrick J.
Smith, Patrick.
Traynor, Oscar.
Walsh, Richard.
Ward, Francis C. (Dr.).

Tellers:—Tá: Deputies Alton and Dillon; Níl: Deputies G. Boland and Allen.

Amendment declared defeated.

Question again proposed: "That the Dáil agree with the Committee in the Resolution."

Mr. McGilligan

This is the Resolution in which the bachelor discrimination is being made. I understand that that arises under Section 2 of the Resolution. The way the Minister introduced that particular novelty into the Budget was as follows:

The fact that I am to make an allowance in respect of children fills me with pity and concern for all the forlorn bachelors among us. How can a Minister for Finance do anything for a bachelor? You 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.

It was a serious contribution this time:

Unfortunately circumstances will not permit me, by increasing the marriage 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.

I want to point out that, so far as we know, we have not got the matter quite clearly before us. So far as we know, the Minister is not going to succeed in making matrimony the refuge of certain bachelors. So far as we understand, Ministers' salaries are to be free of income tax, so that a bachelor, for the future, has either to take refuge in matrimony or become a Minister. I understand that is the position. We have not yet got clear what the ministerial salaries are going to be. Apart from the ministerial salaries, we do not know whether other officers of the Government are going to have their salaries free from income tax or not, or whether they will be exempt in the matter of this reduction of allowance from £135 to £125. Is there any question of this matter being in order?

Mr. MacEntee

I am prepared to let the Deputy have his joke.

Mr. McGilligan

I may assure the Minister that it will not be any joke when the country gets to know the difference between promise and performance. What is the effect of Resolution 3 upon whatever are the proposals with regard to Ministers? We used to be told, when the income tax stood at 3/- in the £, and when a certain allowance now being made was not made, that a particular salary was sufficient salary for anybody in the country. That was never phrased as "£1,000 free of income tax." It was a sum obviously to be computed in relation to whatever the taxation was at the time. We understand that a certain sum is now proposed free of income tax. I would like to know if that is so, because if it is, a calculation will arise as to what is the effective salary it represents on a 5/- income tax, with everything else added in that has to be added in.

I suggest that in this Resolution it is an unfair thing to have one class in the community alone exempted from particular imposts, particularly when they are the people who are going to put those imposts upon other folks in the country. They do not feel the full effect of what this particular tax amounts to in the case of ordinary people. It is certainly not encouraging a proper sense of responsibility in regard to taxation proposals, especially in the matter of income tax proposals, if Ministers are to have their salaries entirely free of income tax payments. They should be subject to all the vicissitudes of bachelordum or marriage, and the changing amount of the income tax rate, the same as other people, if they are going to give serious consideration to the taxes imposed on others. Is it a fact that whatever remuneration is proposed for members of the Executive Council, and for members of the Government other than members of the Executive Council, is to be free from income tax, and are they to be exempt from making the returns other people in the community have to make, in order to enable tax officials to find out exactly what their position is in relation to State finances? That is a thing we should get information upon. So far as I know, until the law is changed, Minister will be subject to income tax, and will be subject to the indignity of getting a salary equal to what Ministers previously got.

Mr. MacEntee

They will not.

Mr. McGilligan

Will they be subject to taxation upon the old sum until it is changed, and at the present rate of 5s., and will the bachelor members of the Ministry be subject to this particular bit of beneficence that the Minister for Finance thought he ought to bestow on the community generally by taxing bachelors? These are points that arise and we should have some answer upon them so that we can test again the difference between the old promise and the exact performance which these people, so full of promises, now put up when they become a Government.

Mr. Gorey

I think the Minister left somewhat in doubt the position of a widow or widower. So far as I remember, he said that anybody who was not in the married state would have to conform to the £125 allowance. That is a thing that ought to be made clear. Let us take the case of a widow who has, say, two, three or five children. They may be young, of school age. The widow, apparently, is to be regarded as a single person and will get only the £125 allowance. The same would apply in the case of a widower similarly circumstanced. Is it to be taken that a widower, with a family, is better off than when his wife was alive? Is it to be taken that he has less charges on his income? It is generally understood that the cheapest housekeeper is a man's wife. If a widower has to hire a housekeeper there are certain additional outgoings and he certainly cannot be regarded as being better off. Although no amendment has been tabled, I will ask the Minister to give serious attention to the desirability of treating a widow, or a widower, as a married person, provided there is a family. They certainly should be put on the same basis as a married person.

Mr. McMenamin

I desire to associate myself with Deputy Gorey's request that some remission should be made in the case of widows and widowers. Very many people are deeply concerned about this matter. If the present proposals are applied, any other benefits given will be wiped out. Deputy Gorey has emphasised the cases that might occur. Looking at the matter casually, one might say that a peasant once married is no longer a bachelor or a spinster. It would be a very great hardship on people who have been married and who are left with children and all the responsibilities of married life, with the additional responsibility caused by the death of one of the partners, if they were not regarded as married for the purpose of retaining the allowance made under the income tax code.

If my recollection serves me correctly, I think the Minister indicated that these people would not be exempted. I would like to have that matter definitely explained now. We know that there are people who marry and, if one dies, for sentimental reasons, to honour the memory of the one who has departed, the survivor will not get married again. I would like to know from the Minister whether he proposes that such people should be exempted in the matter of the allowance. It might save an amendment being tabled later on.

Mr. MacEntee

I should like to deal with certain points submitted by Deputy McGilligan. Some of the matters he raised were quite irrelevant. He referred to certain allowances and salaries. The position as it existed in the last Government was that members of the Executive Council with the exception of the President were paid an amount by way of salary and allowances of £1,700. As Deputy McGilligan knows, not all of that £1,700 was subject to income-tax. The ordinary Deputy's allowance was first of all deducted and that left the Minister for the discharge of his Ministerial duties a salary of £1,340. Is that right, Deputy McGilligan?

Mr. McGilligan

That is right. It is the first correct calculation you have made.

Mr. MacEntee

Possibly, but it is correct anyhow. The present position is that Ministers are receiving a salary of £1,000, free of income tax. They are making a voluntary surrender of the balance, and I would like the House to understand what it means— a thousand a year from which we deduct a Deputy's allowance of £360, leaving Ministers a salary, free of income tax, of £640 for the discharge of their ministerial duties. We will add, if the Deputy likes, what would approximately be the income-tax on a salary of £640. In the case of a married man with three children it would amount to £30 per annum, making the gross value of that income to that married man of £670, and that has to be contrasted with the £1,340 subject to income-tax which Deputy McGilligan received when he was a Minister, or if not precisely Deputy McGilligan at least some of his colleagues.

I think that during some part of the period that Deputy McGilligan held ministerial office he was an unmarried man. In the case of unmarried members of the present Ministry the value of the allowance for income tax amounts to something like £57 or £58. That would bring the gross value of their salary to £697 or £698. Now I have not time to go very minutely into the figures on the basis of the old position, but I want to be perfectly fair and candid in the matter. A Minister in the last Government in receipt of a salary of £1,340 would, under our present taxation scheme, pay income tax of about £248, if he were a married man with three children living with him. He would have a net income of £1,092 as compared with a net income in the case of a married man, with three children, in the present Ministry, of £670. No matter how Deputy McGilligan may endeavour to misrepresent the position it is this: that so far as 90 per cent. or 80 per cent. of the present Ministry are concerned, so far as every member of the Ministry is concerned, they are kept as closely as possible to the £1,000 limit. That is all I have to say.

Mr. G. O'Sullivan

Why should they not pay income tax?

Mr. Blythe

The Minister is aware that there are cases in which the effect of the remission of income tax would be very much greater than the ones he has stated.

Mr. MacEntee

That is not so. I would like to correct that. If there are other sources of income they are chargeable for income tax.

Mr. Gorey

I would like if the Minister would deal with the case I put to him about the unmarried person and the widower.

Mr. MacEntee

The position in that regard is as it has always been even under the Government which Deputy Gorey supported—that is, that both fall due for the unmarried person's allowance of £125. In the case of a widower employing a housekeeper he gets what he hitherto had, an allowance of £45 and will continue to have that.

Mr. Blythe

They are not aggregated.

General Mulcahy

Does that not leave the position in this way: that under a Budget which attacks the bachelor the widow is also attacked?

Question put and agreed to.

Dáil Éireann debate - Wednesday, 1 Jun 1932

In Committee on Finance. - Resolution No. 3—Income Tax.

Tá

Níl

Dáil Éireann debate -
Wednesday, 1 Jun 1932