Committee on Finance. - Financial Motions by the Minister for Finance. Resolution No 28—General (Resumed). – Dáil Éireann (8th Dáil) – Wednesday, 22 May 1935

Committee on Finance. - Financial Motions by the Minister for Finance. Resolution No 28—General (Resumed).

Mr. Norton

The President intervened in this debate last night. His speech was distinguished for unnecessary heat and the importation of a good deal of unnecessary vigour into a discussion from which, so far, those disturbing qualities have been absent. I rather think that the President was needlessly peevish in the manner in which he took exception to Deputy Davin's statement. I do not know what it was in Deputy Davin's statement that irritated the President, or whether his irritation was due to the fact that Deputy Good had blessed the Budget. Nothing that Deputy Davin said seems to me to supply the meaning for all that irritation and peevishness, and I must, therefore, come to the conclusion that Deputy Good's benediction in respect of this Budget is the sole thing which has disturbed the President. Of course he had good reason to be disturbed by Deputy Good's praise of this Budget. Deputy Good, in the course of his broadcast speech on the Budget, said that while business men might object strongly to some specific taxes which had been imposed, it could not be denied that the Minister had succeeded in distributing taxation over a wide field. Of course, Deputy Good was perfectly right when he said that. The Government has succeeded in distributing taxation over a wide field. It has succeeded in putting taxation on people who are incapable of bearing it, and it is for that reason that Deputy Good, representing the particular viewpoint which he does represent, finds it possible to make a broadcast speech in which approbation is pretty thickly distributed. Of course the whole philosophy of Deputy Good in respect of this Budget, and in respect of taxation, comes out in a later portion of the Deputy's broadcast speech. He said that most business men who are in favour of sound finance would have to compliment the Minister on having the courage to tell the people that if they wanted certain services they must pay for them. In other words if old age pensioners are to continue getting the old age pension they must have a tax on tea, on sugar, on flour, on bread and on coal. Deputy Good goes on to say that the Minister had the courage to impose all-round taxation to emphasise the fact that those services must be paid for. I do not know whether the Minister takes Deputy Good's references to his courage as bouquets. I do not know whether the Minister takes it as a bouquet that he has felt it necessary to impose taxation on tea, sugar, wheat and coal, in order to impress on old age pensioners and the recipients of unemployment assistance benefit that they must pay for the services which they get.

The President complained because Deputy Davin said that old age pensioners and recipients of unemployment assistance benefit had to bear a burden under the Budget. It is perfectly obvious to everybody that the recipients of unemployment assistance benefit, or those who were denied the receipt of unemployment assistance benefit because of the Budget provisions, and potential claimants for old age pensions will in future have to bear a burden. Not only will they have to bear a particularised burden in respect of unemployment assistance and old age pensions, but they will have to bear a burden in respect of various other imposts which are made in this Budget. The saving of £100,000 in respect of old age pensions looks to me to be a measure of economy rather than a measure of curing abuse. If there were evidence of any widespread abuse there might be a case for dealing with the abuse; but this proposal to save £100,000 is introduced at a time when we are told it is absolutely necessary to raise the money this way for budgetary purposes and not for the purpose of curing any abuse.

In respect to the Unemployment Assistance Act, there is a naked confession in the Minister's statement as to how the money is going to be saved. In his statement the Minister said:—

"As employment upon relief works financed out of public funds in whole or in part will be confined to persons entitled to receive unemployment assistance, and as, since the Estimate was prepared, two Employment Period Orders have been made, and as it has also been decided to introduce amending legislation affecting various changes in the Unemployment Assistance Act, the combined effect of which will reduce expenditure, I have decided, with the concurrence of the Minister for Industry and Commerce, that the figure for unemployment assistance may be reduced by £300,000, that is from £1,600,000 to £1,300,000."

Let us examine the significance of this statement. It is clear that the giving of preference to persons on relief schemes is not going to reduce expenditure to any great extent in respect of unemployment assistance benefit, because that preference was there last year and it will be there this year and these factors will be common to both years and no special reduction may be looked for in that respect. But there are going to be two Employment Period Orders in respect of two periods of the year during which persons formerly entitled to unemployment assistance benefit will not be able to get that benefit.

We had a statement from the Minister for Industry and Commerce here recently that these Employment Period Orders were imposed willy nilly, that there was no special investigation made to ascertain whether in fact employment would be available for the persons concerned, that the Minister had no evidence that such employment would, in fact, be available and that the Employment Period Orders were imposed in order to deprive those persons of benefit, the belief being that the employment might be available or that they might be able to get employment on the land. I think before the Minister imposed these Orders there ought to have been a much more thorough examination of the problem and the circumstances existing in the years to which these Orders would apply and there ought to have been a much more close and sympathetic examination of the needs of the persons affected. However, the Employment Period Orders are going to contribute a saving in respect to unemployment assistance and the amending legislation which is to be introduced, and which many people thought would be utilised to improve the rates of benefit, is put into the Minister's statement as one of the factors which will make a contribution to the saving of £300,000 on unemployment assistance benefit this year. Is it not patent to everybody that there will be £300,000 less for unemployment assistance benefit? Can the Ministry say they have made any examination of the unemployment assistance problem such as would justify them in stating that there will genuinely be a lesser demand to the extent of £300,000 for benefit this year than existed last year or than exists at the moment?

If Deputy Davin required any corroboration for his statement that old age pensioners and recipients of unemployment assistance benefit would have heavy burdens placed upon them, and if he wanted to make a general statement that the body of workers in the country would have new burdens placed upon them, surely the Press of the last few days has supplied convincing evidence in that respect? We have the sugar tax, which has resulted in the price being increased. Not only will sugar be increased, but all the commodities, including jam, of which sugar is an essential part, will also be subject to an increase. We will have a rise in tea prices, and the tax on wheat has already begun to show itself in the form of an increase in the price of the loaf. The coal tax of 5/- is going to remain. Some time ago it was admitted by the Minister for Industry and Commerce that the price of coal on board at the city port was 17/- per ton. That was before the coal-cattle pact. The present price of coal delivered in similar circumstances is 22/- a ton, and on that coal a duty of 5/- per ton is imposed, so that in respect of the consumption of British coal the consumer is paying 10/- per ton more than before the coal-cattle pact.

No reference to the tax on coal imports would be complete without a reference to the circumstances under which the tax was first imposed. In the first instance that tax was imposed to keep out British coal, and at that time an alternative supply of coal was made available to the people. The effect of making available to the people that alternative supply was to give them coal at a price not higher but in some instances less than they paid for British coal. Now the Ministry have changed their whole policy in that respect. They are now giving a 90 or 95 per cent. preference to Britain in respect of all our coal imports. The alternative source of coal supplies is cut off, and we are now only permitted to import coal which is subject to duty of 5/- a ton. What was put on in the first instance to keep British coal out of the market is now being utilised as a penal tax upon the only coal which the people can consume. It is very unfair that a tax imposed in certain circumstances should be utilised as a revenue raising tax now.

We have another novelty in the Budget by which houses are to be valued in future for income tax purposes at five-fourths of their present valuation. I would like to call the Minister's attention to the fact that many of these houses built in recent years, especially in Dublin City, are being purchased on the hire-purchase system by the tenants. All of these houses which have been erected in recent years have been valued in the light of modern circumstances and conditions. It is obviously unfair to ask the occupants of a house which was erected during the last ten years and which was valued under modern circumstances to consent to a revaluation based upon five-fourths of the existing valuation for income tax purposes. In any case the whole method of valuing houses in a Budget statement is, in my view, a questionable novelty and the Minister might not have prejudged the issue of imposing an additional valuation on the houses for income tax purposes in the manner adopted. If houses are not bearing a proper valuation at present let us have an inquiry into the valuation; but to anticipate the result of the valuation in this manner seems to me to be unfair in principle and to rule out the possibility that some of the houses may be reduced in valuation under any examination that may be instituted.

Let us take stock of these imposts— a tax on sugar, a tax on tea, a tax on coal, a tax on wheat, as well as the reduction in unemployment assisttance benefit, and more stringent regulations, based upon the needs of the Exchequer rather than on known cases of abuse, are to be applied in respect of old age pensions. If we examine the effect of these imposts on old age pensioners, on persons in receipt of unemployment assistance benefit, on persons in receipt of 24/- a week under minor relief schemes, or on the forestry workers referred to by Deputy Davin yesterday, we will find that these are the people who are going to bear the heaviest burdens in respect of these new imposts.

Speaking yesterday, a Deputy on the Government Benches laid down this philosophy in respect of the taxable capacity of the country. He said that he would define the taxable capacity of the country as the amount of the total income over the income which was required for the subsistence of its population. Let us assume, for the sake of argument, that 24/- a week is a subsistence level for any citizen in the community—although, of course, everybody knows that it is far from being a subsistence level—but let us assume, for argument's sake, that it is the subsistence level and that it has been regarded as a subsistence level: What will be the effect of these new imposts on a person who is compelled to tolerate that standard of subsistence? The obvious effect of imposing a tax on tea, sugar, tobacco, coal, flour and bread, will be to drive that person down below the subsistence level; and if, as was suggested yesterday, you have a subsistence level, and if you invade that subsistence level by imposing new taxes on the people who are compelled to exist at that level, then the result, inevitably, will be to force them down below that level. It will mean that every person in receipt of a small income, on which he is barely able to subsist at the moment, will have a still smaller income when these new burdens are imposed. Every person who has had, in existing circumstances, to subsist on that small income, will find it harder to do so. He will have to face more burdens and more hardships as a result of these new burdens and there will be less food for his family. That is the inevitable effect of imposing this new taxation on small incomes which are at present inadequate to provide decent subsistence for the persons concerned.

The Minister for Industry and Commerce made what I think was a heroic effort to explain the Budget the other evening. He talked about the Government's industrial policy and about all the additional people who were being put into employment as a result of that policy. While I concede that additional people have been put into employment and, while certain towns and cities may have derived certain benefits from an industrial policy which has resulted in new sources of employment being made available, we have got to remember that there are a great many places in the country where no benefit has been derived as a result of the Government's industrial policy.

As a matter of fact, in the rural areas, one finds it difficult to produce any instance where rural areas have benefited by any policy of creating new industries, whether by means of tariffs or by any other means. What, then, is the effect of this Budget on these small towns and the rural areas? They have not felt any benefit from the industrial revival but, apparently, they are still expected to make a contribution in the form of additional taxes in order that the Government may pursue an industrial policy which, at any rate so far, has conferred no benefits on them. Can anybody doubt that the imposition of these new duties on foodstuffs and coal will have the effect of still further depressing the standard of living of the workers in the small towns and the rural areas?

In my view, the difficulties referred to by the Minister for Finance, in the course of his Budget statement, and the difficulties referred to by other speakers from the Government Benches, in respect of the balancing of the Budget this year, arise mainly, if not solely, out of last year's spectacular gesture in cutting income tax. Last year we had a dramatic gesture from the Minister for Finance in cutting income tax. Obviously, the Minister must have thought that he would be justified in doing so without recourse to taxation of food this year. Instead, however, we find that the Minister who, last year, cut income tax, finds it necessary this year to impose fresh taxation on food. I want to ask the House, and the members of the Government Party in particular, to look at the remarkable swing to the right which is evidenced in this Budget. One would think that the Minister for Finance had had long conversations with the banks. In 1934 income tax was reduced and the tea duty was abolished. In other words, there was a levelling up and, perhaps, a wider distribution of benefits. The rich were to have income tax reduced and the needy section of the community were to have the tea duty abolished. Now, look at 1935! We find now that the duty on tea is to be restored, while the reduction in income tax is to be continued. In other words, this year the poor are going to pay more than those who are able to pay income tax.

In that very change this year, you have clear evidence that the Government, in taking the choice between increasing income tax and putting a tax on the foodstuffs consumed so generally by the poor, have definitely voted in favour of taxation on foodstuffs and leaving the income taxpayers in the position in which they placed them last year. In a choice between these two alternative forms of taxation, we might well ask ourselves who is the more capable of bearing the burden—the income taxpayers or the unfortunate people who will be compelled to bear these taxes on food and who are finding it difficult enough already to meet their obligations on their present sources of income? I should have imagined that, faced with a situation of that kind, the Government would have placed the burden on the back that was broadest and most capable of bearing it. We had good reason, in any case, to believe that that was the policy of the Government. Speaking in this House on the 29th April, 1932 (Col. 909, Vol. 41, Parliamentary Debates) the President spoke as follows:—

"Our purpose as a Government is to see that these burdens rest heaviest on the shoulders of people who are best able to bear them and rest lightest on the shoulders of those least able to bear them."

That was in 1932, shortly after the Government came into office. The whole philosophy of the Government at that time was to put the burden on the shoulders of the people best able to bear it and to put the lightest burden on the shoulders of the people least able to bear it. Let us try to reconcile that philosophy with the way things are being done now. Deputy Good has told us that the burden of taxation is being distributed over a wider field so as to emphasise that certain people must pay for the social services that are to be made available. In other words, while the President says that he would put the heaviest burdens on the shoulders of those best able to bear them and the lightest burdens on the shoulders of those least able to bear them, we find that by this Budget burdens are being put on the backs of old age pensioners, on the backs of lowly-paid workers, on workers receiving 24/- a week, on old age pensioners and even on forestry workers referred to previously by Deputy Davin. All these classes are going to have these burdens put upon them. Are these the best backs to pick out for the imposition of new taxation? Are these the backs best entitled to bear the burdens? I would like to ask the Minister for Finance to reconcile the philosophy of the President's speech with the burdens imposed by this Budget. I think the Minister will find it extraordinarily difficult to do so. Every member of his Party will likewise find it extremely difficult to do so.

The President's speech last night looked to me as if he wanted to imply that the Labour Party were restricting the development of social services. Lest anybody should hold that misconception I want to say now very definitely and positively that we are anxious that the existing social services should be continued. We make no apology to anybody for demanding an extension of the existing social services which at present can in no way be described as liberal or extravagant; nor will we make any apology for asking, as the President asked in 1932, that the cost of maintaining these social services, necessary as they are under our present system of society, should be placed on the backs of those most capable of bearing them. In his statement defending the Budget last night the President said that there was no way in which they could bring up taxation to their expenditure except by the methods suggested by the Minister for Finance, and that if those burdens were extended to all sections of the community it was not because the Government wanted to put them on, but because they must do so. While there are other Deputies to speak on this debate to-night—and I understand that the debate is to conclude to-night—there is one aspect of the President's statement on which I want to speak. On his statement I want to say that I do not believe it was necessary to impose burdens. I believe that the money could be found elsewhere. The introduction of his Budget is a confession of inability and a confession of failure on the part of the Government. They should have brought in a Budget that would make the wealthier classes pay their contribution towards the cost of government. The President said that it was necessary to tax the food of the poorer classes. That, in effect, is what the Budget states. I say I do not believe it was necessary to tax the food of the people by imposing new taxation. I do not believe it was necessary to raid the Unemployment Assistance Fund. While we as a Labour Party are anxious for progressive, national, social services and that a progressive social policy should be put into operation in this country, on the other hand —and I speak for my colleagues of the Labour Party in that respect—we are not going to vote to place burdens on the poor and needy sections of the community while there are other sections with broader backs more capable of bearing these burdens.

Mr. McGilligan

It is very interesting to find that this debate should have almost concluded before Deputy Norton decided that he would give his views of the Government's taxation proposals for the year. It is rather amazing to me to find Deputy Norton after having so often asked for the present scheme for economy into which he has led and is leading the country under Fianna Fáil auspices, now complaining of the taxation needed under that scheme. He has a scheme of his own—but he will not now tell us what it is—for carrying on the affairs of the country. The Deputy has never thought fit to tell us what that scheme is. One hates to talk of the plan. That word has indeed got attached to it a sordid sort of history. It only occurs now in connection with dishonest promises set forth in the most disgraceful and sordid way in order to cajole not only the Labour Party, but that sort of intelligentsia of the Labour movement. The Deputy talks of a progressive policy. To-night, he has found himself making a request for more social services. He has not faced up to the question of how these social services would be provided if he himself were in office. He has not thought fit to tell us whither the particular new type of economy, that we are told is to be produced here, is likely to lead the State or whether these social services are to be provided by the very wealthy section of the community only. It has been said that there is a happy period in a man's life. It has been said that when a man is going down so quickly and when he has burned so many of his boats that the burning of still another will not affect him in any way. That is the position of Deputy Norton. He finds himself swimming in a cold sea of disillusion at the present moment. But Deputy Norton must remember that he himself helped to put these taxes on the people. The Deputy told us to-night about the injustice of the coal tax. But Deputy Norton voted for the coal tax. The Deputy could go to his unfortunate constituents and say: "You are always going to pay a little more for your coal. For that I can only call you a patriot." Now he admits he was a complete fool for leading them into that. The same thing may be said of the tax on sugar. The Deputy did not think of the deprivation caused to the old age pensioner by the tax on his tobacco. He did not think last week that this deprivation caused by the sugar tax, the tea tax and the tobacco tax in the case of the poor, made it worth his while to vote against the Government. The Deputy voted last week a couple of times for these taxes. Deputy Davin was not here to help him in voting for them.

Mr. Davin

I voted last week. I did not vote for the tax on tea and sugar. I will vote for a tax on tobacco.

Mr. MacDermot

Yes, and wheat.

Mr. McGilligan

Very well; the Deputy, however, did not appear here to make any complaint against the coal tax, the bread tax or whether the butter that the poor are sometimes able to put on that bread is to be taxed. Except that the Deputies will make an odd speech in the House they are doing nothing to prevent the imposition of these taxes on the people. But Deputy Norton is now going to have more than the Post Office Vote in which he can exhaust his energy in belabouring the Government in his speech and then supporting them in every one of these duty impositions. We cannot expect more from Deputy Norton. I remember when the tax on coal was put on he went to his constituents and when asked for a justification, he said he wanted no justification. It was a thing he had learned in his cradle. There was no need for him to justify the nationalism that he had about him in his cradle. His economics were also economics that he had learned in his cradle—"cry and you will get enough."

Mr. Norton

Deputy McGilligan got little nationality in his cradle.

Mr. Davin

What about the lying statements the Deputy is making? The Deputy has been lying since he got up to speak.

Then let us have agreement on this—that Deputy Davin has not voted and will not vote for taxes on sugar and tea. He probably will take an early opportunity of voting against the tax on coal, but he will vote for the tax on tobacco and wheat. I think I cannot even be called inaccurate in what I have said now.

Mr. Davin

What you said in the beginning was inaccurate.

Mr. McGilligan

I hope I have purged myself of anything wrong that I said previously and that everything is now right between us. Let it be remembered that the Labour Party as a group are responsible for the condition of things now brought about. Have the Labour Party an economic scheme on which to found their social policy? We know that they have a social policy, that is to ask for more social services. Have they any scheme to make this country better able to bear the burden of social services? Because, if so, in the dearth of schemes that the Government find themselves suffering from, and in the interest of the country, it is time to have it brought forward. If one half of the community, the agriculturists, are reduced to the point where they cannot buy as much as they bought before, and if, in addition to that, through a system of tariffs, the prices of manufactured goods in the country go up beyond what they used to be priced at, is it not clear that the town workers inevitably must suffer by the combination of these two circumstances?

I have on occasions heard Deputy Davin state that there was not as much money circulating amongst the farming community as previously and, therefore, there is not the same purchasing power—and they represent more than half the community. I have heard Deputy Norton say with regard to certain tariffed items, if not all of them, that their costs have gone up. Let the two of them join in conference outside this House and put these two ideas together and rattle them together and they will certainly come to the conclusion that in the circumstances this country is not getting richer. They brought that situation about. They have supported this Government in the economic war. They can wave the cradle of nationalism in regard to that, but they will not face up to the facts. In the third or fourth year, when the results are now becoming clear and apparent to anybody, they content themselves simply with bemoaning that in an emergency, and a great emergency, which is on the Minister he has found it necessary not to draw any longer from a small group of people, the income tax payers, who are, in fact, in the main, the producers of this country; but that he has to go looking for small sums from a big number of people out of which he is going to get more revenue than by putting a large tax on a relatively small number of people.

Deputy Norton is not the only, one who has burned his boats. The President recently paid a visit to that scheme for which the Minister for Industry and Commerce did not think it was right to accept responsibility, and attributed it to the fertile brain— I query the word—of the Minister for Defence—the turf business. The President thought fit to give the industrialists of this country, and through them the people as a whole a lecture. Listen to this:

"We have not much experience as a people of widespread commercial activity. We have not any long industrial tradition. Peoples that have these traditions know that there is no such thing as getting rich quickly. If they try to do that they are going to kill the goose that lays the golden eggs. It is only by strict honesty, keeping to bargains, scrupulously fulfilling contracts, and being on time with orders that we can succeed in business."

Excellent teaching. We will see the practice in a moment.

"If I were to be asked what is the greatest benefit that can be given to our people by our schools, I would say that it is by teaching the simple virtues of truth, honesty and fair dealing, one with another."

We want truth, honesty and fair dealing, one with another, and it is only by scrupulously fulfilling our contracts and keeping to bargains that we are going to succeed. Let me produce what I call one contract—the Plan.

Mr. Donnelly

I was wondering if you had forgotten it.

Mr. McGilligan

It is not a matter to be laughed at. I am dealing with this from the angle of truth, honesty, fair dealing and scrupulously keeping contracts. We were told about all the things the Fianna Fáil Government were going to do. I will come to employment later; I will come later still to the agricultural end of it. But, in this plan, there was a definite statement that full derating was going to be given to the people of this country. Let us think all the time in terms of scrupulous adherence to contracts, and honesty and fair dealing as between ourselves. I am not going to confine myself to the advertisements. On the 7th May, 1931, the present Minister for Industry and Commerce said:

"As Deputy de Valera said, this Party has committed itself to carry out a scheme of full derating."

There is no doubt about what that meant. The President himself was quoted in this House under date the 27th March as saying:—

"The overhead charges of the farmers are too heavy for them and must be lightened. One of the heaviest of these charges is the payment of local rates. We propose to derate agricultural holdings."

I have it six or seven times repeated, not from the President only, not from the Minister for Industry and Commerce only, but from the group that are now the Government. Previously, on the relief of agricultural land debate the Vice-President told us that there was never a promise to derate, that it was only a phrase used with this meaning: if we save, and we can save, the money from England, there will be available for derating £2,000,000. He stressed the phrase used in one of the advertisements: "Derating can be done for £2,000,000." That is not what was said precisely by the present Minister for Industry and Commerce and the President previously. They promised full derating. Last night the President said that was not promised. The President, who preaches to the community in the bogs that we want honesty, truth, and fair dealing, last night told us that there was no such promise. There was this promise: that £2,000,000 would be made available.

Again let us think in terms of keeping scrupulously to contracts. The President pretends that that promise to give £2,000,000 to the farmers—let me leave derating aside—has been carried out. The President made that statement last night and was interrupted, and I propose to continue the interruption made last night. There has been no remission of £2,000,000 to the agriculturists of this country. The situation at present is in this way different from what it used to be. In the old days, the farmers paid something like £3,000,000 in annuities. At the present moment, on their produce in the main, there has been levied, not £3,000,000, but very nearly £5,000,000.

In addition to that £5,000,000, the present Government in this country collects another £2,000,000 or tries to collect another £2,000,000. So far they have succeeded in getting about £1,330,000. And the man who definitely promised derating tried to wriggle out of it by saying that he promised that £2,000,000 would be allocated to the relief of the farmers. He pretends to believe that £2,000,000 has been allocated. The fact of the matter is that the farmers to-day are paying every penny of the moneys and we hear it gaily said there would be no difficulty in paying the £2,000,000 the Government collects from them or tries to collect from them. Last night—again I want to roll this up into the atmosphere of honesty and fair dealing, truth in statement and propriety in action—I referred to the President's attitude on this question which can very easily be decided. Are we or are we not at this moment paying the land annuities to England? The President said "No." For one person I say "Yes." I do not think there is any querying of the figures that have been given in the House of Commons, and about which questions have been asked here and replied to affirmatively.

Mr. Donnelly

They did not say they were paid. They said they collected tariffs equivalent to a certain sum.

Mr. McGilligan

That is honesty and fair dealing. This year the Chancellor of the Exchequer in England said that at one time they set out to get the equivalent of the moneys that were withheld and that they expected to get in the year 1935-36 £500,000 more than they set out to get. Deputy Donnelly will, I suppose, sit and ponder over that and awake to say still that the British are not collecting the moneys. The Deputy made a useful intervention. He says they are not collecting these moneys, but are getting something on tariffs. Remember that was foreseen and we were assured that it could not happen. The Minister for Finance told us, on the 14th July, 1932, when this thing was starting:

"Every organ of economic thought in Great Britain has stressed the fact, that whatsoever the temporary inconvenience caused to Irish producers may be, the tariff whether it be 20 per cent., 40 per cent. or 100 per cent., if they chose to erect it as high as that, would be paid inevitably by the British farmers and consumers."

I am glad to say, for the sanity of this House, that a member on this side of the House used the word "question" on that point. The Minister for Finance continued:

"Moreover the trade relations between this country and Great Britain are such that for every penny piece which she robs from us by a tariff on our agricultural produce we can recoup ourselves by a tariff upon her manufactures."

That wheel has moved around. Let us see the gyration. We were not going to pay. The present Minister for Industry and Commerce said that the people who told the country that the British would put on retaliatory tariffs were talking nonsense. The present Minister for Finance told us that even if they did he could get alternative markets. And the Irish Press, in its editorial columns, told us that we were the strongest bargaining nation of the world because we had the trade of this country to offer to every nation outside and we could get bargains. And so we swung into the economic war with England. The British are in fact collecting the moneys that we said we would withhold. The Minister for Finance told us that if those circumstances did arise the English farmers and consumers would pay every penny of it. Would he still say that? He told us further that even if that fond hope was blasted we had another weapon; we could levy off the British manufactured goods as much as was levied off our agricultural products. Are we doing that? Is there truth and honesty and fair dealing in the people who said all those things? It is necessary to stress that point, because the one way in which people can still be flogged into a little bit of enthusiasm, when they are thinking mournfully of the tax on tea, sugar, and butter, is by talking to them about Ireland and the great fight that is on.

Last night, in a debate about which Deputy Norton has passed the proper remark, that it should have been conducted without heat, the President raged about maintaining the national position. And this Budget, apparently, is in some way fortifying us in our defence of the national position. Public memories are short. Let us get back to what the national position was. We withheld the land annuities. The British retaliated by tariffs. There were various movements towards a settlement, and Deputy Norton helped, at any rate, by going to London and in the end, on a suggestion made first from this side, an attempt was made to have negotiations. We sent representatives to London. They came back and it emerged that the suggestion had been made that there should be a negotiating body consisting of two from each side. That was accepted, and two from each side, without prejudice to the position, were appointed. They were sent to negotiate, and then an awkward crux arose. This is history and recent history, and people should be clear about it. The British said: "Pay us the money that is in dispute." And our Government said: "No, we will keep it in a suspense account for you." The British said: "We will hold it, and if negotiations result in your favour we will remit the moneys." The answer here was: "We will keep it in a suspense account, and if you win we will pay it." The British retort to that was: "Very good, keep the money; we will keep on the tariffs and we will negotiate." We refused, and we refused on a ground in which no national position is involved. There is only that point of punctilio——

Mr. Donnelly

That is not so.

Mr. McGilligan

It is historically accurate. We read it in the newspapers.

Mr. MacEntee

In the newspapers! But you said it is historically accurate.

Mr. McGilligan

All the documents dealing with these negotiations got full publicity.

Mr. Donnelly

That is not what Mr. Chamberlain said.

Mr. McGilligan

This is not a matter on which there should be any heat. It is either right or wrong. If it is wrong it can be refuted. But I stand over that statement, and I think it will awaken the memory of many people listening to me, that it is perfectly accurate as told to us. There is the situation. We had got locked up in this terrible struggle over this point. We would keep the money. We have not kept it in the suspense account, but we were going to keep it. The British said: "Very good, you keep the money; we will try to get it by tariffs, while we will negotiate." But our pride or at least our sense of national position was going to be destroyed and would not allow us to accept that bargain. So we drifted along till last Christmas. Then suddenly we found there was a coal-cattle pact negotiated, and revealed to this House. That was done while tariffs were on. Not merely that, but it proposed the continuance of the tariffs, and not merely that, but a change of a tariff, which had been a retaliation against British coal, in favour of British coal and, apparently, our national pride was not humbled; apparently, our national position was not jeopardised. But God knows our economics were sadly weakened by what was done. I would like Deputy Davin, if he chooses to incline in the end to vote for tobacco, to explain to the people whose tobacco he is increasing in price that it is all for their good and it is because there is that horrible dilemma of the national position. The President turned his back on British negotiators because their attitude was: "If you are going to keep the money we will keep on our tariffs," and on that alone, as far as the public have been allowed to know, does the struggle rest. That is the general outline of this matter of the land annuities.

As far as the people of this country were concerned they were promised, first of all, that it was going to mean no retaliation. They were promised, secondly, that it was going to mean great benefit, and the benefit was precisely stated—full derating. They were told that even if the British did attempt to retaliate they would pay in the end themselves, and that if they did not we would make them pay through the goods that came in here.

These two arguments taken together meant that this country was going to be far better off by keeping these moneys than if it paid them. Now the President rages because anyone dares to say that these moneys are being paid, that not merely is derating not being granted but that the farming community are paying the full £5,000,000 of which they used only to pay three-fifths, and are paying an extra £2,000,000 gathered by the Government. The President rages, further, if you say that in fact it means we might as well pay a cheque across to Britain. We would be more profitably occupied, if we paid that cheque in one lump sum to Britain, if we could get trade relations back again with her. In the absence of any real answer to that all we get is talk about the national position. If I am wrong about what the breach occurred over, let us hear clearly what did bring it about and let us then see what the strength of the national position is, instead of the present position which is certainly not a position of strength or a position that anybody can take pride in.

The details in this Budget, apart from their reflection of the worsening effects of the economic war in which we fired the first shot, are interesting in themselves. I cannot gather from the very few speeches that have been made from the other side any attempt at support of this Budget. What is the real support for it? I know this, that never did I see such a complete wall of silence grow up among the members of this House sitting on the back benches of Fianna Fáil as has been brought about by this Budget. There is not a chirp out of one of them in connection with it. There is not one back bencher to be found brazen enough to stand up and defend it. There is not one man there able to tell us why £100,000 must be taken off the old age pensioners, and there is not one man over there able to say that he approves of it.

That is one item. When I think of all they said about the poor, about the humble little homes, the tables that never saw anything but necessity, and how they wept over that, then you begin to think not exactly of the pleasure but of the chastening effects it must have on them to be forced to walk into the Lobby and, from these tables on which nothing but necessity appeared to subtract something by way of a little bit extra on tea, sugar, bread and butter: to take a little bit away from the household in the way of an extra tax on coal, and to take whatever little there may have been in any of these humble homes in the way of pleasure by taxing tobacco with Deputy Davin's permission.

Mr. Davin

Yes.

Last night, I was surprised to hear the President state something about calls for a national Government. I do not know who called for a national Government. I know that the Minister for Finance called for a national Government at one point—that we should help him to get a proper conversion operation in regard to the First National Loan next December. I think the Minister will only get his proper return on that proposal, when it comes forward, by being frank with the people; and I do not regard myself as doing the credit of the State any harm in putting out arguments here— in the deliberative assembly of the country — which the Minister can answer, and, if he has a case, can make his case in respect of them and can, therefore, show a great position of strength and so assist himself and his Loan. I do think it is the duty of anybody who has the views I have here, and has the facts and documents to prove those views, to state—even if it is for the purpose of having them answered—how those views present themselves to him. The Minister must tell us, first of all, what the country is going to save by this conversion operation; what amount of money is involved; at what, when he changes from a certain rate of interest, is he likely to borrow again; and on how much are we to count the reduced interest payment. Then we will know what the amount in question is.

The Minister cannot go blindly to the public as he did in respect of his Fourth National Loan. The Minister cannot go to the public, which definitely whether he likes it or not, has come to regard the bounties as a normal item appearing yearly in our Budget, when they know that he is borrowing to meet these normal items of expenditure, and he certainly cannot go to them with any hope of success if he presents himself as borrowing that disputable item on an equally disputed fund. If the Minister has a case with regard to these matters which is capable of being set out in precise terms and the figures produced, the intelligence of the people should be appealed to instead of this nonsense about the national position and jeopardising the situation.

I will stand no criticism from any member of the present Front Bench, nor will any person on this side of the House, when an allegation is made with regard to sabotage. This Party was never guilty of sabotage. There was never an act—and, mind you, there are many acts and monuments to those acts left throughout the country for what you people did in the way of sabotage—and never even talk or wild statements from this Party, such as the present Minister for Industry and Commerce thought it right to utter on the morning of the flotation of the 1930 Loan, when he announced, without an argument, without stating a fact, or without going through the figures, that this country was travelling fast towards the bog of bankruptcy. Would the Minister for Finance allow me to use that phrase on the morning on which he goes for his conversion, and will he give me the pardon the Minister for Industry and Commerce now thinks the people ought to give him for that wild utterance? That was not the only one. The gun was not heavy enough for the Minister for Industry and Commerce. It had to be double-barrelled, and the Vice-President fired the second barrel on the same morning: The prospect was as black as night. We went for the Third National Loan with the present Vice-President saying that the prospect was as black as night, and the present industrial hero of the country telling us that we were wallowing in the bog of bankruptcy. Those people can sit and applaud when the President, guilty of more sabotage than any other individual in the country——

Mr. Donnelly

That is not so.

General MacEoin

It is so.

Mr. McGilligan

——preaches at us about refraining from any acts of sabotage. This is the Budget occasion. It is the occasion upon which the finances of the State should be considered; it is the occasion upon which such items as the yield of income tax, national income and the drain on it for Government services, should all be brought out, and it is making a farce of this place as any sort of deliberative assembly, if, because people criticise and seek to expound their views, they are to be told that they are guilty of sabotage. The Minister has his platform in the Finance Bill, and in all the Resolutions, to get quite clear to the people of the country what is the financial situation. The Minister for Industry and Commerce, in his two Votes, can get down to these figures he has given to us and tell us clearly and distinctly where is the new productivity in the country.

I talked about truth and honesty and fair play at the beginning. This is the sort of thing we had to put up with when we were a Government. Mr. de Valera, speaking of unemployment at the Ard-Fheis—it is not dated—tells us—and this is, of course, a scandalous comment and it was from the President, who so often preens himself on not being guilty of any unworthy conduct, although his back benchers may have been guilty, with his connivance, and guilty of a lot:—

"Can it be that the people are deluded by these politicians and journalists who are always turning imaginary concers on the road to an illusory prosperity—"

The Minister for Finance has turned three corners in the last three years and the prosperity is still far off. Listen to this as criticism from a man who was going to be President of this country

"—and by the parade of the motor races, the pageants, the banquets and the tattoos organised to beguile us into the belief that all was well?"

That was—may I use a vulgar expression?—a dirty comment, but it was a good political comment. It was going to excite a certain amount of envy in which this country is rich, and the men who could sit under that do not scruple now—and they are perfectly right not to scruple—to organise the same banquets and tattoos and Easter Week celebrations. We do not know whether it was for the purpose of beguiling us into the belief that everything is well and that we are on the road to prosperity. I do not criticise the present Government for having those banquets and tattoos. They are part of the machinery of government and are a necessity in certain circumstances, but that is the way they were presented to the people in the middle of an unemployment discussion. The man who said that, if he pays any attention at all to truth, honesty and fair dealing, should come into this House and say that his experience during the last two or three years has been such as to show him that that was an unworthy comment. The Minister for Finance ended his Budget statement by telling us that around us is a world that has been possessed by madness; that every unit of it is claiming for itself more and more of what should be the common stock of mankind. When I first read that I wondered if he meant it. The world is being possessed by madness. What is the madness? Economic nationalism—the Fianna Fáil programme, fortunately only a programme and not an achievement. The Minister this year could say what we often said to him, that there was a lesson to be learned from the outside world, when you regarded the world and all the nations that had hurled themselves into their own territory and decided to cut off exports and imports. We told him that a lesson could be learned, because in those countries you could see increased unemployment and a lowering of the conditions of life, and it was clear to anybody who had a thought in his head that if what is the common stock of mankind is not freely distributed on equal terms the population of the world is going to live at a lower rate. The Minister has now decided that this economic nationalism is madness. Possibly the Labour Party will help him to some better degree of sanity in that regard. They have got the first lesson this time; they have got the first shock of consciousness of what is bound to develop in those circumstances. They see that you cannot continue to exact taxation from a small party or community; that when you are really getting to the end of your tether you have got to get down to the mass of the people, because even a small amount of money gripped from each one of a large number will give you more than trying to grip a whole lot from a small crowd.

Deputy Norton, Deputy Davin and Deputy Corish know well that not merely agricultural labourers in this country but the workers in the towns are having their standard of living steadily reduced, are having less money given to them with which to buy things. They have got the first shock of taxation. They see it is only from such things as are taken by the mass of the people—sugar, tea, butter and bread—that you can gather in any big store when you have come to the point of exhaustion on such taxes as a tax on incomes. They must realise now, if they did not realise it in their cradles, that this sort of economic madness must come back on the people. They now show some resentment at being asked to put upon the people some little burden with regard to one or two taxes. If matters go as they are going at this moment Deputy Davin will not be complaining next year of even putting on a sugar and tea tax; it will be just as much a necessity then as it is now. Remember the economic nationalism. First of all, if there were no economic war, it is part of that Party's programme, and you are helping to put it on foot. In so far as it is not part of their programme it is the result of the economic war which they started, and that economic war is for the national position as I have explained it, that we will not negotiate while tariffs are on, although we did that with disastrous effects to the people of this country last Christmas.

Minister for Finance (Mr. MacEntee)

The speech to which we have just listened to is one of the tragedies of which we have frequent examples in this House, because it is a tragedy for this country that a Deputy of Deputy McGilligan's searching and acute intelligence should waste the time of this House and the time of the people in making the sort of speech to which we have just listened. On Wednesday, the Deputy told us about the habits of certain mosquitoes. They bite, he said, not to give pain but to live. I think that those who have listened to the vain effort of Deputy McGilligan to attack this Budget in any significant or vital particular must have thought of the simile of the mosquito and the battleship. There was not a word about the Budget in his speech. The first part of it was a criticism of the attitude of the Labour Party. In the next part he referred to newspaper advertisements, now three years out of date. When the Deputy produces those advertisements we all know what he is going to say, because we all know the fixation complex which possesses the Deputy. It would be a good thing for the Deputy, and for the Party of which apparently he is an important and influential member, if he would have himself psycho-analysed in regard to those advertisements. The latter part of his speech was a protestation of what they had to suffer when they were in office and we were in opposition, but on the matters which touch the lives of the people of this country there was not one helpful suggestion, one sound or salutary criticism. I regret that, because, as I said, the Deputy is a man of great abilities, with which he ought to serve his country better.

He did make one or two passing references to some aspects of the Budget. He referred to the position in regard to income tax, and he repeated—not in precisely the same words as on a previous occasion—what he had to say in that regard. On Wednesday last he declared, as reported in column 882 of the Official Debates, that the Chancellor of the Exchequer in Great Britain was able to say that on the 4/6 income tax rate he got more money than he previously got on the 5/- rate. To-night the Deputy has mended his hand a little. I am going to refer to this because the Deputy has made a great parade of figures here in the House from time to time, particularly figures dealing with the condition of employment in the country. In regard to those figures, he has asked the House to take his interpretation of them, his examination of them, and, on his good faith, certain conclusions which he has drawn from them. On Wednesday last, as I pointed out, he said that the British Chancellor of the Exchequer, on a 4/6 rate, derived more from income tax than he had got on the 5/- rate in the preceding year. To-night he said that he derived as much. I was rather interested in the statement of the Deputy, and I took the precaution of looking up the British official returns in this regard. I find that for the year 1933-34, when the British rate was 5/-, the amount of income tax collected was £228,932,000, and that for 1934-35, when the rate had been reduced to 4/6, the amount collected was £228,877,000—practically the same, but not the same, and certainly not more. Yet Deputy McGilligan, in order to make the point that the economic condition of this country was worse in the year 1934-35 than it was in 1933-34, attributed to the Chancellor of the Exchequer a statement which I do not believe he made, but a statement in any event which is not borne out by the British official figures. The Deputy is fond of metaphors relating to cardplay. I wonder when he made that statement what cards he was bidding with—was it knaves or lower?

Then, he continued his examination of the question of income tax. He mentioned 1928-29, and once again we can see how the Deputy changes his position in the course of the debate. When he opened the debate on Wednesday last the year upon which he relied was not 1928-29, which he mentioned to-night, but 1927-28. His statement is in the official record here. In column 882 he is reported:—

In 1927-28, when income tax here was 3/- in the £, it produced £3,600,000, and the calculation on which we worked, and which was always borne out by facts, was that an extra 6d. brought in an extra £500,000. Suppose we had a 3/6 income tax in these years, we would have got at that rate £4,120,000; but here, with an income tax which last year effectively was 4/9, ... the Government got in £4,216,000.

The point I want to make here is in regard to the figures for 1927-1928 when, according to Deputy McGilligan, the tax was 3/- in the £. When the Deputy was speaking he did not disclose to the Dáil that the rate of tax for the year 1925-6 was 4/- in the £ and for the two years previous was 5/- in the £. Moreover, he withheld from the Dáil this very significant fact, of which he must have been, since he was a member of the Executive Council at the time, aware, that during the year 1927-28 not less than £1,600,000 of the tax collected in that year was in respect of the year 1926-7, when the tax was 4/- in the £, and that about £430,000 was in respect of 1925-6 and earlier years.

A much more accurate idea of the yield of income tax in 1927-8 is given by Table 77 of the Revenue Commissioners' Report for the year 1929. I presume that Deputy McGilligan is not going to tell the House—he is not here to tell them, which is so characteristic of Deputy McGilligan—that he was unaware of the existence of this Table. It shows the net produce of the income tax from assessments actually made in 1927-8 was £3,020,000, or a cool £580,000 less than Deputy McGilligan on Wednesday last proclaimed to have been the fact. Moreover, even this figure is increased to some extent by the fact that it includes the proceeds of the additional assessments made in 1927-8 in respect of earlier years, when the tax was 4/- in the £. Here is an attack on the Budget—because Deputy McGilligan's first speech on the first Resolution was a considered attack on the Budget— which is based largely upon two false premises, two erroneous statements regarding facts which were within the knowledge of the Deputy.

We had to-night a further instance of the Deputy's unreliability in matters of this sort. He stated that it was a matter of historical record that the negotiations, the conversations, between us and the British representatives regarding the matter at issue between us had broken down upon what he called a punctilio. When he was challenged for his authority for that statement he referred to the newspapers. What is the most significant statement that has appeared in the newspapers in relation to the whole question of this dispute? It was a statement of Mr. Chamberlain, the British Chancellor of the Exchequer, and he disclosed very frankly—and confirmed what the President said last night—that these conversations had broken down, not on any point of punctilio, but had broken down on a question of national principle regarding the national status, had broken down because we were required to accept a stricter interpretation of the Treaty and the Treaty obligations than even the Government of which Deputy Mulcahy was a member was ever called upon to accept. But Deputy McGilligan comes along here and, notwithstanding Mr. Chamberlain's statement, declares that these negotiations were broken down on a point of punctilio and that therefore the whole of this economic dispute has been waged around insignificant minutiæ.

Then, again, we are told that there is a tariff on British coal which has been changed into a tariff to protect British coal. The Deputy is a master of language and can be precise enough when he wishes to wound or hurt or sneer or gibe. The one thing, as a former Minister for Industry and Commerce, he ought to be aware of is the difference between a quota order and a tariff. The tariff is not put on to protect British coal. Those who buy British coal have to pay the tariff, but there is a native fuel available to a good many householders that is being protected to some extent by that tariff. Apart altogether from the fact—which I do not deny—that the tariff produces very useful revenue, if there is any person who wants to deny the Exchequer that revenue he can buy Irish peat and Irish coal, too. Therefore as regards the tariff, whatever else it may have been imposed for, its primary purpose was not to protect British coal and it does not protect British coal. Deputy McGilligan, who complains about misstatements made by the former Opposition, has alleged here, with all the authority that he should carry as the principal speaker for the Opposition in closing this debate, that we have put on a tariff to protect British coal.

Then we have this question about the land annuities, which have been so often mentioned during the course of this debate. He tells us that the British are collecting the land annuities, and it would be much better if we were to pay these directly. Deputy McGilligan says that on Wednesday 22nd, but on Thursday 16th listen to what Deputy O'Sullivan said in connection with the tariff on sugar:

"The consumers have to pay more... They have to pay something like 21/- per cwt. on imported sugar, and on the sugar produced at home something like 4/6 per cwt. to the Exchequer..."

Sugar, however, is an import into this country, just the same as cattle is an import into Great Britain. When we tax foreign manufactured sugar, Deputy O'Sullivan gets up and tells us we are making the consumer pay more, and I admit that the consumer has to pay more; but when the British put a tax on cattle going in there, Deputy McGilligan gets up here and says that Deputy O'Sullivan, on Thursday last, did not know what he was talking about: that the position is the reverse: that, when a tax is put on an imported article it is not the consumer who has to pay more, but the producer. There is a certain element of truth in both of these views, but certainly each of them is not 100 per cent. true. Midway between the two is the point of veracity. In any event, one thing is clear: that we are possibly paying some part of the British tariff on cattle, but that certainly the British consumers are paying the other part. Otherwise, the tariff would be entirely ineffective to raise the price of home-produced beef in the British market. I hope that Deputy McGilligan and Deputy O'Sullivan will meet and resolve this difference between them as to whether a tariff on an imported commodity is paid by the producer or the consumer, because, obviously, there should be some reconciliation of the statements from the Opposition Front Benches.

Deputy McGilligan, in the course of his statement to-night, referred to the fact that we were borrowing for some part of the export bounties and subsidies, and, in that regard, he pointed to the fact that I have stated here on occasion that, in addition to the ordinary provision which we are making by way of the normal sinking fund to redeem any borrowings from the Exchequer which we might make on that head, we also have, as an additional security for the Exchequer and for the future taxpayers of this country, an asset in the way of the funded annuities. He said that I was borrowing against these funded annuities which amount to, approximately, £4,600,000, all told, but that this year, out of a total collection of a little over £2,000,000, we only collected about £1,300,000 and left about £770,000 of annuities in arrear. Now, the Deputy, quite naturally, tried to make the most of that fact. He is quite entitled to extract whatever polemic advantage he may get from the fact that there is a considerable accumulation of arrears of land annuities, and I am quite prepared to agree that regard should be had to that and that the £4,000,000 of funded arrears which we regard as an Exchequer asset ought to be written down accordingly. Very well. That is precisely why we are insisting that a large part of the export bounties and subsidies must be found out of taxation. If the collection of the land annuities were proceeding normally; if this campaign to prevent their payment, which is now being localised in the area represented by a portion of Tipperary, Waterford, Cork and Limerick, were once broken, we could, quite justifiably and without any abuse of the canons of prudent and careful finance, borrow a larger sum for the export bounties and subsidies and relieve the taxation by that amount. When we have, however, a carefully organised and well-planned campaign to prevent the collection of annuities, the Exchequer must ensure itself against the contingency of the success of such a campaign—remote as that contingency may be—and accordingly must cover that danger by increased taxation.

However, it will be a source of hope and comfort to the honest taxpayer and the honest farmer to know that that campaign is rapidly breaking down. Less than four months ago the arrears of land annuities uncollected amounted to £1,200,000, but inside of four months that amount has been reduced by almost £500,000. If the honester and wiser attitude, which now appears to prevail amongst that section of the farming community who have hitherto been misled with regard to these payments, is to continue, we shall be able to reduce our expenditure on police and other things which have become necessary for the reasons to which I have referred. If this honester and wiser attitude prevails, I am not without hope that we may be able eventually to lighten the tax burden considerably.

When Deputy McGilligan was talking here about the burdens we had cast on the local authorities and expressing the opinion that, by the operation of the Guarantee Fund, we had deprived the local authorities of £770,000 of local taxation grants which had been impounded in the Guarantee Fund and passed to the Exchequer to make good the deficiency in the collection of the land annuities, he might also have told us that the people principally responsible for that are Deputies who have been in this House for most of this debate; who have been very vocal in this debate, and who, last night had the ill manners to snarl and sneer at the President of this State, the man elected by the majority of the people's votes to be the head of this State. The men responsible for that are the men to whom Deputy McGilligan refers as honest and broken-down farmers. Deputy Bennett was here last night. I am sorry that he is not in the House at the moment. Deputy Bennett is one of the men who are leading this campaign and who are giving those who are trying to be dishonest the encouragement of their example and their exhortation. He said that when his cattle were being seized he could have paid his annuities if he had wanted to do so. Then we have Deputy Holohan who sits over there—not unconnected with a certain demonstration here to-day— who, for the last three years has not paid his annuities until the sheriff came along to his door to seize his cattle; but then out came the cheque-book of this honest and broken-down farmer and he paid not merely what was due in respect of the annuities, but the sheriff's expenses as well.

Then we have Deputy Fagan. Last October, I think, his cattle were being sold by the sheriff down in Mullingar, and on that day Deputy Fagan had a horse running for a valuable stake in the Curragh, a horse which, I think, finished second. He could not pay his land annuities, but the Deputy could afford to keep racehorses; that is the poor broken-down farmer of whom Deputy McGilligan talks. Then there was Deputy Wall. Only a fortnight ago, when the sheriff's men were out collecting in his district from people who had failed to pay their land annuities, they called on Deputy Wall. The Deputy did not allow his cattle to be seized however. His neighbours had their cattle seized on the same occasion and they were knocked down by the sheriff later for what they were worth. But Deputy Wall took out his cheque book and bought in his cattle. These are the four men for whom Deputy McGilligan is so full of sympathy.

Deputies opposite are now to go down the country telling the people that we are putting taxes on them. The people are to be told that we are putting taxes on bread, tea, sugar and tobacco. I have not the slightest doubt that Deputy Bennett will tell the country people that we are also taxing butter, though he voted for that himself. He disobeyed Deputy Mulcahy's Whip in helping to impose that tax. But when they go down the country and tell the people that they are being taxed in these things—just as they some time ago tried to disorganise and bankrupt the finances of the local authorities by inducing people to withhold the payment of their annuities that are justly due to the Exchequer of the State, even when by doing that they increased the burden of the local rates upon the honest men—let them tell the country too that they have also increased the burden of taxation upon the honest people.

We have this campaign from Deputy Bennett, Deputy Holohan, Deputy Wall, Deputy Fagan and other Deputies who are not so vocal as these. But though not so vocal they stealthily and secretly incite people, telling them not to pay their annuities. They should tell them also that when they keep them from paying their annuities, not merely do they help to increase the burden of rates, but the burden of taxation as well. If taxes to-day are higher than before, it is because of this campaign led by these Deputies who can say: "We are the people—Wall, Holohan, Fagan and Bennett—who are responsible for that."

Mr. Bennett

The Minister says so.

Mr. MacEntee

This Budget has been attacked from the Labour Benches also. The principal criticism which Deputy Norton had to advance against the Budget was the alleged absence of a provision for the relief of the unemployment problem. In matters of this sort I think we ought to have some standard to go upon. In case Deputy Norton should have forgotten what the position was less than four years ago and what the standard was, I would refer him to the information, which was included this year for the first time, in the comprehensive statement issued in the Volume of Estimates. I would ask him to examine the provision which was made for such relief from 1926 to the end of 1929. In 1926 and 1927 the expenditure on relief schemes amounted to £30,448. I may mention that the expenditure on old age pensions that year was £2,549,000. To-day, even after allowing for the economies which we hope to secure by a stricter administration of the Act, the expenditure will be £800,000 more than it was in 1926-27. I am afraid Deputy Davin has been, to some extent, induced to forget the benefits that the poorer section of the community are receiving at our hands. It is the nation as a whole that is paying for these things, but, at any rate, we had the courage, when we were told that everything ought to be pared and pruned down, to say that social services should receive attention no matter what the cost.

In 1926-27 the expenditure on relief schemes was £30,448. To-day, including the full provision which we are making in order to set the workless man at work, the figure is £500,000. In 1928-29, the figure was £27,408. In 1929-30 there was not one penny provided for relief works. That was a year which was fairly comparable with this year, because it was the third year of the last Cosgrave Administration. 1930-31 the provision was £121,000. In 1932 the provision was £156,000, while this year we are providing for relief works £500,000 or three times as much as in 1932.

Can it be with reason contended, as Deputy Norton has contended, that from the taxpayers' point of view we are not making a very serious contribution to the relief of unemployment? But the matter does not end there. I have already pointed out that in 1926-27 the total expenditure on old age pensions was a little over £2,500,000. To-day it is £800,000 more than in 1926-27. There was no expenditure on unemployment assistance then. To-day there has been provided a sum of £1,300,000 for unemployment assistance. I may assure the Deputy that no man will go hungry in this country if it should be found that the requirements of that service exceed £1,300,000.

In 1929 the proposed expenditure on public works was £685,000. This year it is proposed to expend £200,000 more than that figure. In 1926-27 there was nothing included in the Budget for providing those in receipt of unemployment assistance with cheap beef. In 1926-27 the allowances made for the purpose of closing down redundant creameries was £361,000. To-day the item in respect of creameries is £998,000, just £2,000 short of £1,000,000. If we take housing, relief schemes, afforestation, new building works and improvements of estates we find that in 1929-30 the total was £859,000. In 1930-31 it was £898,000. In 1932-33 the figure was £934,000. In the present year the corresponding figure is £2,230,000, which is almost equal to the total expenditure in the three years I have mentioned. If the members of the Labour Party or any other person who is seriously concerned with the social welfare of the people will study these figures carefully, I fail to see how they can maintain the argument that we have not made, so far as our means permit, proper and adequate provision for the relief of the unemployed.

Deputy Norton also criticised our attitude in regard to unemployment assistance and the reduction which we think can justifiably be made in the provision required by that Vote. There is a figure of £1,300,000 in the Estimates for unemployment assistance. Again I must repeat these figures, because Deputies should become familiar with them; if they were familiar with them I do not think we would hear so much of the criticisms in this House that we have heard on the Budget. These are the figures: £1,300,000 for unemployment assistance; £500,000 for relief schemes; £335,000 for the purchase of cheap beef for distribution amongst the recipients of unemployment assistance. These three items together make £2,135,000. Then we have, under various sub-heads in the different Estimates, increases over last year's provision of £142,000 for the building of schools and Gárda barracks; £80,000 for improvements on estates; £100,000 for afforestation; £235,000 for housing grants; and £100,000 for the building and equipment of industrial alcohol factories. When we add the increases under these various provisions to the £500,000 which is now being provided for relief works, we have a sum of £1,065,000 approximately for additional relief works alone.

I think that the mere fact that this expenditure is contemplated and will be undertaken is sufficient justification for any reasonable man anticipating that there would be a substantial saving on the original provision for unemployment assistance. To any Deputy who criticises us for taking a reasonable view of this and writing down the provision required in that Vote by £300,000, I put the question: What was the alternative? If we did not write it down by £300,000 we would have had to provide that money by additional taxation; and we might not have had, and I believe we should not have had, to use that money, and we should have been carrying it forward into next year as a very substantial surplus.

Therefore, the issue comes down to this, that you have either got to write down your estimate in the light of the facts that you have before you when you come to prepare your Budget, or you have got to impose taxation to the full amount of the estimate. Which would any Deputy on the Labour Benches have chosen? Would he have said: "We thought we would require £1,600,000 for unemployment assistance, and, whether we are going to require it or not, we are going to take it out of the people; and whether there is justification for spending it or not upon people who are in need or in want, we will distribute that £300,000 to some people who, we are satisfied, will not really require it at all"? That was the dilemma which we were in, and I think we have chosen prudently and well, and that we have acted in the best interests of the poorer section in the country in refusing to budget unnecessarily in order to provide moneys which we did not think we would require.

Deputy Norton also criticised the proposed tightening up of administration in regard to old age pensions. I wish to make clear what I have already stated in the Budget speech in this regard. Deputy Davin listened to Deputy McGilligan with a great deal of patience. It is very difficult to listen to Deputy McGilligan with patience, but it is more than usually difficult to listen to Deputy McGilligan when he starts talking, as he did to-night, of the poor and humble little homes, the poor and scantily-furnished tables from which we were going to take the bread, the butter and the cheese. The amount of the reduction which we hope to make in the provision for the old age pensions is £100,000. It is less than three per cent. of the total. Surely, on any estimate, when, as a rule, the allowance for overestimation ranges between two and three per cent., we would be quite entitled to anticipate that we would secure a reduction in that particular Estimate of possibly three or a little more than three per cent. We would be more than justified because of some facts which have come to my notice, in any event. I have made it quite clear that no person who, so far as we can interpret the intention of the Dáil when this Act was going through, would be entitled to a pension is going to be deprived of a pension. We do know this: that advantage is being taken of the provisions of that Act to carry through, in some cases, assignments which have not been genuine assignments, fictitious assignments merely, in order to get this pension.

I had under my notice one particular case in which a farm of over £100 valuation, well-equipped and well-stocked was assigned, and the man who owned that farm and his wife both claimed the full pension. That sort of thing has been going on over the country. We are quite anxious that the small holdings of people who are old and past their labour should be passed on to those who will till and cultivate and work them properly; but when we see an assignment like this taking place, and when we know that not one tittle of real authority over the goods of that household passed with the assignment from the man who originally owned the farm, then we are quite entitled to say: "Surely a son who gets a valuable holding like that is not entitled to pass on to the State the duty and the obligation of maintaining his parents in their old age." Yet that sort of thing has been going on and it is tending to grow. I am merely saying that out of that one source alone we shall probably save a considerable portion of that £100,000. I am sure that no Deputy in the Labour Party who is listening to me will get up and say we are not justified in trying to put an end to that abuse and taking credit for the saving which we hope will thereon ensue.

A large part of the criticism of this Budget has related to the manner in which decreases in the revenue returns from some commodities are being made good. There again, I think that those who have spoken on that head have not had due regard to the facts. In the Budget speech I showed how, as compared with the year 1931, the revenue from the sugar duties had declined by over £500,000, and that there had been correspondingly large decreases in the revenue from imported wearing apparel, imported boots and shoes, imported sugar confectionery, and cocoa products, and some other tariffed articles, which formerly provided a large part of the staple revenue of the State. Where has this revenue gone? The Exchequer has lost it, but some section of the community must have derived some benefit from the Exchequer's loss. In the case of the sugar manufacturing industry, the £510,000 which the State has lost has been distributed entirely between two sections of the population— between the rural population who grew beet and the semi-industrial population who converted it into sugar.

The State has provided all the working capital for the factory and, as yet, has not received one penny on its investment. The debenture holders and the preference holders between them have put £1,000,000 into the factory; possibly when they come to get their dividends on that amount, they will draw not more than £50,000. They may be taken to be an income tax paying element in the country, but they do not wholly represent them. A large number of these debenture holders are trustees, holding stock for widows and orphans. A large number of the preference shareholders in this company are very small people indeed, national school teachers and members of the Gárda Síochána. I have had an opportunity of looking at the shareholders lists. They do not by any means represent the whole of the taxpaying community. At any rate, out of this, after raising £1,000,000 capital, they get £50,000. The rest is distributed to those who work the factory, making the sugar or growing the beet.

It is the same in regard to other industries. What the Exchequer has lost has gone to the general mass of the people for by reason of the additional purchases which the original recipients make, the whole of this loss to the Exchequer has been distributed to the community at large. When, to make good that loss of money derived from indirect taxes which were distributed generally, money which now has been redistributed, owing to the success of our agricultural and industrial policy, the Exchequer goes again to the whole of the community, is there anything inequitable or anything unjust in making good to the Exchequer out of general revenue what has been distributed to the community as a whole? That is, at any rate, one ground upon which this system could be defended.

But there is a much stronger ground even that that. It is frankly this: That no Minister for Finance or no Government is justified in imposing taxes unless they feel certain that the taxes are going to produce a commensurate return. There are considerations in regard to the rate of income tax in this State which will always make it a very injudicious and very doubtful matter indeed for any Minister for Finance, no matter what his ideas about the social ethics of taxation may be, to raise his tax above the British standard rate. He may defeat the very purpose for which he imposes the taxes, and not only may he lose the fruit of the increased rate but he may lose it for a very considerable time, for a period of time so great that in the future any subsequent Government would consider the loss irreparable.

Apart from that, the whole burden of this attack on the Budget has come to this: why did not you go to the income-tax payers? I think it is time for us to realise that, after all, the income-tax payers are not public enemies. Last year out of £23,500,000 which we collected, £8,500,000 was collected from what may be described as income-tax payers, not an inconsiderable contribution from a very small section of the community. What we collected from them paid for old age pensions, unemployment assistance, primary education, secondary and technical education. Therefore, I do not think that even if taxation were to be regarded merely as a salutary punitive measure— which is of course unthinkable—a Minister for Finance, apart from other considerations, would be justified in going after the income-tax payers first of all. I can assure Deputies that if I felt income tax in this State would stand an increase, I would have less compunction in increasing it than I would have in increasing taxes on tea and sugar, but when you are up against the plain, hard facts, when you have got to consider every section of the community, as even the Labour Party when they come to occupy these benches will have to do—they will have to face up to the same considerations as we have—you will have to do justice to the community as a whole. Our social services are provided for very generously. The poorer sections of the community may not have everything that we desire. At any rate, they are immensely better off than when we took office, and we have had to endure the odium of imposing taxes on everybody in order to bring that position about. I can assure the Deputy and his colleagues that so far as I am concerned there has been no predilection in favour of one class framing in this Budget. It would be, I repeat again, extremely injudicious and unwise to increase the rate of income tax over that of the British.

Deputy McGilligan, in the course of his speech, referred to investments which we hold abroad. He made the point which had previously been made by Deputy MacDermot. He said that the fact that there had been a decrease in the excess of our external assets over our external liabilities indicated that our people were living on their capital and were eating into whatever resources they had. That was a very facile statement, based upon a very casual consideration of the figures which have appeared in some of the financial papers recently. The excess of external assets over liabilities of our banks on 31st January, 1932, was £80,275,479. On 31st December, 1932, they had risen to £91,886,000. Let Deputy MacDermot, Deputy Dillon and Deputy McGilligan cast their minds back and recall the speeches which they were making towards the end of 1932. If I were to produce those figures and, on a mere citation of them, say there was clear proof that the economic position of this country was improving, I know there is no person who would more strenuously deny the truth of what I had said than would Deputy McGilligan or Deputy MacDermot. On 31st December, 1933, those assets had fallen to £81,066,000. They are still almost a million over what they were on 31st January, 1932. When we find that, at the end of 1934, they have further declined to £73,638,000, Deputy MacDermot gets up and says that ruin has come upon us, that, our external assets, that the substance of the people is being squandered by the wild economic policy of this country. But he does not look for a more reasonable explanation of the figures than that. What are the facts? If he read the "Economist" or the "Statist" he must have seen one fact which was mentioned in these papers, and which has a very important significance in this connection.

Another factor influencing the change is that there has been a revival in the London stock markets, and our people, considering the size of this country, are very big operators there. Money that has been lying on deposit in our banks is now being taken out of them for the purpose of investment in the rising market in London. A further explanation is that quite a large portion of our money is now being invested here. These three factors account, mainly I believe, for the decline which has taken place in our external assets over liabilities.

There is just one other point in conclusion. In the course of the Budget speech I pointed to the fact that we were hoping this year to carry through a conversion operation. I did not ask for a coalition; I did not ask for a national government. The British carried through their conversion operation without a coalition, though they had the second largest Party in the State in Opposition: a Party that polled almost as many votes as the combined votes of those which constitute the National Government. They carried through that conversion operation; they carried it through by the co-operation of all Parties in the British House of Commons, whether they were in the Government or whether they were in Opposition. Now, I am asking the co-operation of the Opposition here. I am asking them to assist us in carrying through this conversion operation, because it is as much their duty and responsibility as it is mine. We are in office and immediately in charge, therefore I felt that it was my duty to ask for this co-operation. I am perfectly certain that the responsible members of the Opposition will feel that it is their duty to give it, because when this operation goes through there will be, we all hope, a reduction in the rate of interest. I am not in a position to predict what the new rate of interest will be. When Deputy McGilligan was speaking to-night I could not discover what exactly was the point that he wanted to make, because at one moment his attitude seemed to me to be this: that if the saving was going to be sufficiently great, then he was not going to help; and, on the other hand, if it was not sufficiently great he was not going to help either. It was a non possumus, a dog in the manger, attitude, which I am perfectly certain is not the attitude of the more serious and less partisan members of his Party.

I want to say now that we are in control of sufficient resources to make this operation a potential success. I am asking the Opposition, and everybody in this country, to co-operate in order that we so raise the standard of our credit in the eyes of our people that we may be able to reduce the rate of interest and secure substantial tax reductions not merely in taxation at the moment when we are in control of the country's finances, but a reduction in taxation of which any administration which succeeds us will also have the benefit. I refuse, notwithstanding Deputy McGilligan's speech, to believe that the Opposition will be so shortsighted as not to give that co-operation.

Question put.

The Committee divided: Tá, 65; Níl, 47.

Tá

Aiken, Frank.
Bartley, Gerald.
Beegan, Patrick.
Boland, Gerald.
Boland, Patrick.
Brady, Brian.
Breathnach, Cormac.
Breen, Daniel.
Briscoe, Robert.
Cleary, Mícheál.
Concannon, Helena.
Corish, Richard.
Corkery, Daniel.
Corry, Martin John.
Crowley, Timothy.
Daly, Denis.
Davin, William.
Derrig, Thomas.
De Valera, Eamon.
Doherty, Hugh.
Donnelly, Eamon.
Dowdall, Thomas P.
Everett, James.
Flynn, John.
Flynn, Stephen.
Fogarty, Andrew.
Geoghegan, James.
Gibbons, Seán.
Goulding, John.
Hales, Thomas.
Harris, Thomas.
Hogan, Patrick (Clare).
Houlihan, Patrick.
Keely, Séamus P.
Kehoe, Patrick.
Kelly, James Patrick.
Kelly, Thomas.
Keyes, Michael.
Kissane, Eamonn.
Lemass, Seán F.
Little, Patrick John.
MacEntee, Seán.
Maguire, Ben.
Maguire, Conor Alexander.
Moane, Edward.
Moore, Séamus.
Murphy, Patrick Stephen.
Murphy, Timothy Joseph.
Norton, William.
O Briain, Donnchadh.
O Ceallaigh, Seán T.
O'Dowd, Patrick.
O'Grady, Seán.
O'Reilly, Matthew.
Pattison, James P.
Rice, Edward.
Ruttledge, Patrick Joseph.
Ryan, James.
Ryan, Martin.
Sheridan, Michael.
Smith, Patrick.
Traynor, Oscar.
Victory, James.
Walsh, Richard.
Ward, Francis C.

Níl

Anthony, Richard.
Beckett, James Walter.
Belton, Patrick.
Bennett, George Cecil.
Bourke, Séamus.
Broderick, William Joseph.
Burke, James Michael.
Byrne, Alfred.
Coburn, James.
Costello, John Aloysius.
Curran, Richard.
Daly, Patrick.
Desmond, William.
Dillon, James M.
Dolan, James Nicholas.
Doyle, Peadar S.
Fagan, Charles.
Finlay, John.
Fitzgerald, Desmond.
Fitzgerald-Kenney, James.
Good, John.
O'Sullivan, John Marcus.
Redmond, Bridget Mary.
Reidy, James.
Holohan, Richard.
Keating, John.
Lynch, Finian.
MacDermot, Frank.
MacEoin, Seán.
McFadden, Michael Og.
McGilligan, Patrick.
McGovern, Patrick.
McGuire, James Ivan.
McMenamin, Daniel.
Morrisroe, James.
Morrissey, Daniel.
Mulcahy, Richard.
Nally, Martin.
O'Donovan, Timothy Joseph.
O'Leary, Daniel.
O'Mahony, The.
O'Neill, Eamonn.
O'Reilly, John Joseph.
O'Sullivan, Gearóid.
Rice, Vincent.
Rogers, Patrick James.
Wall, Nicholas.

Tellers:— Tá: Deputies Little and Smith; Níl: Deputies P.S. Doyle and Bennett.

Question declared carried.

Resolutions reported.

Report Stage ordered for Thursday, 23rd May.

The Dáil adjourned at 10.35 p.m. until Thursday, 23rd May, 1935, at 3 p.m.

Dáil Éireann debate - Wednesday, 22 May 1935

Committee on Finance. - Financial Motions by the Minister for Finance. Resolution No 28—General (Resumed).

Tá

Níl

Dáil Éireann debate -
Wednesday, 22 May 1935