This Bill, in its present form, still contains certain proposals with regard to excess profits duty and certain proposals with regard to taxation. I should like, at this stage, to remind the present Minister for Finance of what he said in previous years with regard to taxation generally and more especially with regard to excess profits duty. The present Minister for Finance, speaking on 4th June, 1930, said:—
"In introducing his Budget in 1928, referring to the proposed new measures of which the country so bitterly complains to-day, the Minister said:—
‘For this coming year, we propose to get a substantial part of the extra income required by a resort to expedients which will give us revenue for one year only. We intend to speed up the collection of abnormal arrears of income tax.'"
This is the comment upon that of the Minister for Finance who has imposed still greater taxation upon the country:
"And the Minister has been as good as his word. It is true that he has not used the thumb screw and the rack, favourite devices in mediaeval days for extracting revenue, but, short of these physical instruments, there is no procedure to which the Minister has not had recourse in order to secure the extra sums which he euphemistically describes as ‘abnormal arrears of income tax.'"
The present Minister continued in one of those flights of fancy which we should have expected of him:
"From inquiries which I have made, I am perfectly satisfied that large sums of money, described as "abnormal arrears," have been in many cases nothing of the sort, have been simply blood money which harassed and broken men have paid to escape an even more unbearable victimisation. The Minister smiles. It is no laughing matter for the men who have been put out of business by the Minister's Department; no laughing matter for the men who have been ruined in health, mentally and physically; no laughing matter for the country and for the industries which have suffered because of the enormous and unjustifiable sums which the Minister has extracted from them. It would scarcely be correct, I suppose, to describe these payments as blackmail but the methods which have been adopted to secure them are similar to the methods adopted by those who extort such unwilling tribute."
On the Committee Stage of that Bill, on 5th June, 1930, the present Minister for Finance said:—
"I am sure most members of the House are familiar with the situation which has been created in this country by the efforts of the Revenue Commissioners to collect, particularly in the case of excess profits, moneys which should have been paid to the British prior to 1921-22. The position is that taxpayers to-day are being asked, first of all, to pay taxes not paid to the British Government; secondly, they are asked to pay interest on such taxes from the date upon which they should have been paid to the British Government; and, thirdly, they are asked to pay penalties for not having made returns in their proper time of their full income to the British Government."
May I stop the quotation there to remind the Minister that this is all applicable to himself now? Whatever force and intelligence these comments then had, they have application to his own methods to-day. The present Minister then went on:—
"The important factor in connection with all this which the House ought to remember and which the Minister for Finance should take into consideration is that in 1919 practically every income tax office in the country was destroyed by order—notwithstanding anything the Minister may say to the contrary— of the Irish Republican Army. Every man who destroyed such an office was guilty of a crime against the then existing British law in this country but practically every person who engaged in that physical act of destruction has since been exempted from penalties or proceedings by the various Amnesty Acts. But the people who broke the British revenue laws in this country, particularly those relating to excess profits, are still, I think, being visited with penalties and threatened with proceedings by the Minister."
Again let me pause. At that stage the law was that the only assessment in relation to excess profits duty that could be made was one in respect of which the Revenue Commissioners were of opinion that failure to make returns was due either to fraud or to wilful neglect. It was stated that wilful neglect had to be such as to amount to fraud. We have an enlargement of that since. Now, an assessment can be made whether or not there was fraud or wilful neglect. Even in the restricted conditions of assessment in those days, the Minister was pungent. This is what he said:—
"In connection, first of all, with the excess profits duty, I have to refer the Minister to the report of the Revenue Commissioners, in which they say that they cannot make further assessments for excess profits duty unless, in their opinion, there has been fraud or wilful neglect on the part of the taxpayer. That is quite emphatic and very definite. It means that the only case in which the Revenue Commissioners are now assessing is where, in their opinion, Irish taxpayers have been guilty of fraud or neglect."
Then the Minister paused and asked:
"Fraud upon whom? Not upon Saorstát Eireann, but upon the British Government because the excess profits duty, I believe, officially ended in August, 1921, long before the Free State was established and the Government came into office. The point is that taxpayers are now being visited with pains and penalties because they did not pay excess profits duty to the British Government. Whether or not there was an official declaration that the people should not pay these taxes, at any rate, there was a very general understanding that they should not be paid where it was possible to avoid paying them. It was only in circumstances where a man's business or fortune might be jeopardised by the non-payment of income tax that the payment of such income tax was connived or winked at by those responsible for guiding the Republican movement at the time."
The Minister tied that up with income tax. He said:
"In the case of the people who made wrongful returns to the British authorities in 1922 in relation to income tax, I think that what I have said in regard to excess profits duty largely applies also. Again, you have the same circumstances; the destruction of the income tax offices, the wholesale interference with the machinery for the collection of the tax, the general belief fostered and encouraged by those who were responsible for guiding the Republican movement at the time, that it was an unpatriotic thing to pay duty or tax to the British Government whenever they could be avoided without involving the person who failed to pay in undue consequences or penalties."
Now we have a man who was himself one of those guiding the Republican movement of that day bringing people into court who cannot have even the charge made against them that there was fraud or wilful neglect when they failed to make correct returns. The Minister had another argument. Fur ther on he says:
"Whether it is expedient, even from the point of view of revenue, to endeavour to collect these taxes, is a matter that is capable of argument. Many men, warned by the fate of their neighbours, knowing what worry is in store for them, have placed their funds abroad. A considerable amount, I am informed by those who are in a position to judge—by bank managers and others in similar capacities..."
It is interesting to see that the Minister, in those days, was doing a certain amount of business with bank managers. Bank managers, in those days, were almost felon-setters and treason-mongers, according to certain opinion at that time.
"... a considerable amount of Irish money is on deposit abroad in British banks. The country receives practically no benefit from that. I do not believe one-tenth of the interest upon the deposits ever comes home, because it is difficult to get it home, and when one has it, it is difficult to employ it here. The money is lying there in British banks financing British industries, when it ought to be and could be employed with much better advantage in this country."
And so on. The Minister also made a proposal that a notice should be published indicating that if people would make returns, he thought that a sum, which he estimated at about £10,000,000, would be recalled by people then withholding it for fear of the Revenue Commissioners. Last year he gave notice in his own terms and one interesting piece of information has been withheld from the House so far. What was the result? How many hundred thousand pounds of the £10,000,000 he thought was coming home, in fact, did drift home by reason of the notification as to leniency which the Minister caused to be published last year?
Deputy de Valera, as he then was, in an earlier Finance Bill—that of 1929 —had given his point of view upon this matter; first of all, as to whether there ever was an order for the destruction of income tax buildings, or as to whether or not income tax was payable to the British authorities. We got this clarity from the man who is now President.
"Was it not quite clearly understood, and is it not a matter of commonsense that it should be so understood, that we were anxious that money should not go to the British Government during that period, and the only reason against definite instructions being sent out to that effect was that we thought there would be hardships imposed upon some of the people if definite instructions of that kind had been sent out and had to be obeyed?"
Later, Mr. de Valera said:
"I am perfectly satisfied that the general impression throughout the country, so far as we could create it, was that the people were not to give the British income tax or any moneys if they could avoid it. We did not make it a definite order because we thought that the penalties on those who obeyed might be too great."
Later, in col. 1898, interrupting the then Minister for Finance, the present President de Valera said:
"Before the Minister passes from that, I would like to ask a further question. How far is this inquisition going back? I have been told that it is going back to 1914 and to 1911."
A little later, he said:
"Is it fair that a person should be asked to produce books as far back as 1911, and to show the state of his business from that year up to 1914, and even since? Take the case of the average business man. Supposing that I were a business man and I felt that I had done nothing wrong and that no penalty should be enforced against me, I do not want to pay the penalty and I am not in a position, without putting myself to endless worry, at a time when I want to be looking after my business, to produce records going back to 1911 and 1912. I think it is ridiculous."
Later on, after the then Minister for Finance had spoken about eight lines, there was another interruption to this effect:
"I should like to know what the offence is? Is it an offence not to have disclosed to the Free State arrears of tax due to the British Government? Would that be regarded as an offence?"
On getting an answer to his question, the present President proceeded:
"Supposing somebody said, for one reason or another, that there was no obligation on him to pay tax to the British Government, and that he withheld payment and spent the money, thinking it was an annual charge which he had got rid of, and that then he made a return to the Free State Government and did not disclose that in these years he had not paid the British Government, would that be accepted?"
The philosophy of those days was that arrears of income tax were more or less the result of patriotic action and that certainly any man who withheld statements with regard to excess profits was withholding them from the British authorities and preventing them from getting moneys, and that the Free State Government had no right to these moneys. The idea was that men were being distracted from their business and harassed into their graves because the Revenue Commissioners were endeavouring to get returns that should have been disclosed to the British Government but were not disclosed for patriotic reasons. In 1929 and 1930 the philosophy was that these moneys should not be sought because it was patriotism that prevented these sums being paid and that it was going against patriotism to attempt to collect them. Again, I want to repeat that that was a time when it could only be a case of fraud or neglect. Now, when there is no question of fraud or neglect, we can distract people from their business to which they ought to be attending, as President de Valera said, and annoy and harass them in order to get these returns from them, all the time neglecting the fact that whatever had been done was done in the name of patriotism and it is only those patriots who are now going to be mulcted.
On the 24th April, 1929, the present Minister for Finance is reported in Vol. 29, Col. 794, speaking on the resolution about income tax and excess profits, as having said—and he got down to concrete figures on that occasion and they ought to be given again to the House:
"It has been represented to us, and I believe with a great deal of substance and foundation, that Irish investors have considerable sums of money invested abroad which they have not disclosed to the Revenue Commissioners—the proceeds, or rather the profits, of income they secured in earlier years and failed to disclose to the Revenue Commissioners. The position in regard to them is difficult."
To interrupt the quotation, the Minister's conscience was not as hardened in April as it had become by June of 1929. He is a little bit tender about this:
"One does not like to ask the House at this stage to condone a wrong. Undoubtedly it was wrong that these concealments should be made. But I understand that a considerable number of them were made at the time when the position in the country was very uncertain. A number of them related to profits earned and incomes secured in 1919 and 1920. At that time the income taxpayers were generally warned not to assist the British authorities in any way in collecting revenue in this country, and even those of them inclined to make a disclosure were more or less prevented from doing so."
May I ask, at that point, if some taxpayer, now threatened with pains and penalties, makes a statement to the effect that he was willing to make a statement previously but was prevented from doing so, will he be subjected to the thumbscrew and the rack or will the bloodhounds be called off?
The Minister continued:
"They did not disclose their profits for income for the boom years. They were faced afterwards, in 1922 and 1923, with being compelled to disclose them."
This is very appropriate to present circumstances:
"And they were compelled to disclose them in the very height of the deflation period when they found that their annual income had fallen practically to vanishing point and when the profits made in 1918 and 1919 were gone entirely beyond the hope of repetition. In that way I believe a number of people did refuse to disclose their incomes for income tax, and I suggest that the Minister might now, purely on the ground of expediency, issue a notice stating that if these income taxpayers came forward and disclosed their present investments abroad he would not proceed to carry any inquiry further back than the year 1923—six years ago—and that he should see, by legislation, if necessary, that the Revenue Commissioners would not exact penalties for false returns made prior to that year or since that year."
Look at the position then—no penalties for false returns made prior to 1923 or since that year. Then the Minister continued:
"The reason I am making that suggestion is this: It has been represented to me—and I made inquiries from a number of bankers—that the amount of Irish capital concealed in that way is not less than £10,000,000. Many of the people have that money on deposit in English banks. I understand that English banks cater specially for these concealments on the part of Irish income taxpayers and investors for the reason that they have the use of that money at something like three and a half per cent. or, at any rate, a comparatively cheap rate, and they are able to secure from five to six per cent. return for it. Therefore, from their point of view it is a traffic which should be encouraged, and the Irish investor should be encouraged to conceal his profits, if he can, by investing in English banks. The traffic has gone on on these lines and the English bankers are deliberately encouraging it."
The Minister regarded the British as at the root of the difficulties as usual. It was British banks who were trafficking in this big gain and in order to get the money back the Minister might issue a notice stating that there would be leniency. There was not less than £10,000,000 to be brought back for financing Irish industry. The notice was issued last year. Will the Minister even now tell us what was the return; how much money came back? Let us have, at any rate, this evidence that the money came back by the Minister telling us what profits accrued to the revenue through this lenient offer of his.
There are numerous other quotations about these excess profits and these arrears of income tax, but they are all on the same lines. The people who had withheld returns were regarded by the Minister in these days as patriots, as people who deserved commendation, certainly who should not be harassed by the income tax authorities or the Revenue Commissioners and their coterie, even although it was only on the ground of fraud or wilful neglect. These people deserved something better from us than that. If they did engage in fraud it was not fraud upon any Government in Ireland; it was only fraud upon the British Government; and as fraud upon the British Government had been actively urged by those in charge of the Republican movement, according to the present Minister for Finance, it was only just and equitable that these people should be let off making returns in 1929 and 1930.
There is one other quotation which the Minister should hear from himself. The Minister at the end of his speech on the Budget on 25th April, 1929, reported in Volume 29 of the Official Reports, column 925 and onwards, summed up by asking what was the real economic position of the people under the present Ministry? He had made a certain contention that the country in 1919 was overtaxed. "That is serious," he said. It is in print here, and the present Minister said it. Then he went on:
"The truth of that contention is corroborated and upheld by the declining yields from the Stamp Duties, which show that business and industry are declining; by the falls in income tax and Corporation Profits Duty, which show that we are earning less, and by the position as disclosed by the figures in connection with the Estate Duties which I have just submitted to you and which show that we are saving less."
This was his peroration:
"Dwindling trade, smaller earnings, whether wages, salaries or profits, diminished savings and an overburdened, overtaxed community. In such a situation as that what is the policy which the Minister has set before the Dáil? Not to lighten the burden, not to give the country a chance to recuperate and recover, but to continue to oppress it by maintaining taxation at a level which every factor of economic significance unites in proclaiming that the community is unable to bear. It is because of that this present Budget is entirely unrelated to the economic condition of this State. We ask the Dáil to take that view of it, and we ask them, irrespective of Party, to press that view here and elsewhere, so that there may be a complete reconsideration of the whole position."
Then we get back to what was then foremost in the Minister's mind:
"Expenditure must be cut down. That is quite clear from the figures that I have put before you. Economies must be secured. I want to guard myself against misrepresentation, and I mean by that, not economics secured by the curtailment of the social services, but economies secured by more efficient administration. There should be economy in every service which does not yield a due and proper return for the mass of the people who have to pay for it. There should be economies in the Army and in the Civic Guard. As regards the latter, possibly there should not be economies in their scales of pay but rather in their numbers. There could be economies in the trimmings and trappings of the State and the Executive."
I wonder did that visualise the 19 guns and the red carpet and the top hats in France?
"These must be further and ruthlessly sought."
I see I was wrong because the Minister continued:
"Let there not be a mere skimming of the surface, taking only the scum of waste,"
That is, I suppose, what he would have described them as in those days:
"a mere saving of £172,000 where at least a million is required, but to change the metaphor, a paring of waste and extravagance remorselessly to the very bones. That is the financial and administrative policy the community requires in its present extremity, and until it has been definitely embarked upon by this or some other Government there is no room, no ground, and no reason for optimism."
Then the Dáil were asked to reject the Budget of 1929. Will the Minister ponder a little bit over what I have read? Will he think of what he said in regard to excess profits duty payers or non-payers as he stood for them in 1928, 1929 and 1930? Let us neglect this appeal to patriotism, because the Minister did not mean it and nobody who spoke in that strain meant it at all. There may be certain people who did refuse to make payments because they thought certain orders had been issued and then even their fortunes had declined and they had not the money. The Minister knew quite well that the majority of the people for whom he was speaking could not come under that description and never did come under that description. He was all out for mercy for them in those days and for denouncing the people who stood for extracting the moneys. On the lower ground of expediency it would be better not to try to extract these moneys from these unwilling people who were unable to pay, was really his comment.
There was the other class, people who had their money lodged safely in England, to whom he made the plea to bring it home, and again, also on the ground of expediency, the Minister pleaded that it was proper these moneys should be brought home, and that the way to do it was to offer lenient terms with regard to payment. He then suggested the terms should be so lenient that, even if false returns had been made, there should not be any penalty exacted. The Minister believed so much in the bankers with whom he mixed in those days that the amount represented not less than £10,000,000 which could be brought home to finance Irish industry, and be removed from financing competing British industry. Last year, there was a modified type of leniency, not the clean sheet, for anyone who made false returns, but, that if they came forward and made disclosures of what they withheld from the State, instead of payment of the maximum percentage, everything would be wiped out, that the State would take nothing more than 75 per cent. of the arrears, and that the money would flow into Irish industries.
We all know how much came in by reason of the Minister's allurement in that regard. It was disappointing, I know, because this is the Minister's excuse for what he said in his Budget speech last year. He said he was going to offer special terms to people in arrears of income tax payments, and he went on to say that if the leniency were not met in the proper spirit, he was going to turn another foot and to salt another class, people who had escaped excess profits duty. They should pay it this year, throwing aside all he said about patriotism, about expediency, and about the necessity of bringing home moneys that were financing British Industry. The Minister proceeds to search people who are not now protected, even by a mistake of an innocent type, for money that could only be got if there was fraud or wilful neglect, but now it can be got, if it is there to be got, whether the law entitled the Minister to get it or not, as long as he is capable of getting an amendment of the law. He is going to get it whether it has been put into industry in this country or not. He does that at a time, and the words can be re-echoed, when trade is dwindling, returns are neglected, profits have been exhausted and dissipated. Surely on the grounds of expediency alone, if there was any justification for what the Minister said in 1929-30, he ought to harken to what he did say, and relate that to present circumstances. He knows that men— whether patriots or not—who withheld money from the British Government are now faced with the necessity of repaying it, when trade has never been so bad, when profits have definitely declined, if not entirely gone, and when the main industry upon which the country depends has been shattered, possibly shattered without hope of any decent redemption, certainly beyond hope of decent redemption at an early period. I direct the Minister's attention particularly to the last quotation I read.
The Minister talked of the position in the country as disclosed by the Budget speech which the then Minister for Finance had made. Let me talk of the items of economic significance. Let him concentrate his mind on one that I pointed out on every occasion it has been possible to do so since the last Budget was introduced, the yield he expects from the increased amount which he is levying on income-tax payers. Let him analyse, when he talks of income-tax—it is of economic significance—and ask himself if it does not point distinctly to what has been said that the country is in a terrible state of decline, and that the measure which is called for is one for the reduction of taxation and not to increase the taxation which was imposed on the country last year, despite the promises to the contrary. That is one of the factors of economic significance that the Minister might pay attention to. Others have been stressed from time to time by other speakers on the Public Services (Temporary Economies) Bill, where we were told that the objective was to share the burden, leaving out of consideration, at the moment, how that burden came to be imposed. See how far the sharing of the burden has gone. The income-tax payers have been mulcted more heavily still, yet their returns are less, because there is no income from which the tax could be paid. It is only necessary to talk to farmers about income-tax and profits in these days and to hear their answers to realise how that position was brought about. Remember, despite the election promises and the safeguards given to people in particular positions, without any statement showing that the salaries paid were excessive, we have cut these salaries. We have the wages of those engaged in relief schemes now equated to labourers' wages, with excessive hours—more than ever worked before—and lack of facilities for getting to work. These wages are estimated to be between 21/- and 24/- per week. In addition, in order to make it clear, work which is somewhere being given in the numerous factories which the Minister for Industry and Commerce has claimed to have established, we are having a rapid turnover in employment; men in certain employment for months and for years are now going to be thrown out and replaced by others taken from the streets.
