I move: That the Dáil agree with the Committee in Financial Resolution No. 1.
This is the Resolution which fixes the rate of income tax and surtax.
Financial Resolutions—Report Stage. - Financial Resolution No. 1—Income Tax and Surtax.
Is the Minister not going to take advantage of this opportunity to offer any observations about the standard of income tax, the yield of income tax and the future of income tax?
I think we have heard quite a lot these last few days about the future of income tax.
Does the Minister accept the figures submitted to the House last night by Deputy McGilligan?
In what way—is it in regard to the yield for 1929?
Yes.
I do not think that the Deputy really made any case as to what the future yield would be. He drew certain inferences from the past but he forgot that the allowances for children were considerably increased by the Act of 1932.
The reason I am raising that question is because the President made no attempt to present figures to the House dealing with this matter, and the Minister for Finance did not either.
He was only peevish.
I can assure the House that Deputy McGilligan has not forgotten for a moment the figures to which the Minister for Finance has referred. The point Deputy McGilligan made about income tax was that a 4/9 income tax, under the present dispensation, yielded scarcely any more than a 3/6 income tax rate under the Cumann na nGaedheal dispensation. That is a very formidable fact for the Minister to have to explain away. I did not oppose the increase of the standard rate of income tax from 3/6 to 5/- in the Minister's first Budget. I have never opposed in this House the resolution settling the standard rate of income tax, because I am fully in sympathy with the proposition that whatever our necessities are and however gratuitously those necessities may have been occasioned by the wrongheadedness of the Government, the broadest shoulders in the community must bear the greatest part of the burden. Consequently, I am not going to oppose this Resolution. Nevertheless, I do think that it is a duty which the Government owe to the House and which they have not fulfilled, to state frankly what the situation is with regard to income tax. It was, at any rate, something that the President announced the night before last that the effect of our increasing our standard rate of tax beyond the British would be to bring about a reduction in yield. I think perhaps we might have been given a few particulars on which the calculation is based so as to make us quite sure that it is so. If it is so, it is a very serious fact for all of us who are interested in the finances of this country.
Here is a matter that we should take into consideration. It seems to me probable that there will be a General Election in Great Britain before the next Budget. It seems probable, though by no means certain, that the National Government will be returned again to power. It seems to me probable also that in that event next year the British Budget will see a reduction of 6d. in the standard rate of income tax. If that is so, what is going to be the repercussion on us? The Minister for Finance should take these possibilities very seriously into consideration.
The fact that I have never opposed the income tax resolution here, and that in discussing the Budget I have laid stress altogether on the indirect taxation, does not mean that I consider the income tax payers in this country have no grievance and that they are not suffering a hardship from the very high rate we have got. Their position is worse than that of income tax payers in Great Britain and elsewhere, in so far as they derive income from investments in Irish corporations because of the operation of the corporation profits tax, which causes a double income tax in respect of that income. In Great Britain the corporation profits tax has been abolished. In America there is a corporation profits tax, but the individual investor pays no income tax on the dividends drawn from the ordinary stock of these corporations, though he does pay surtax on such income. I do not know whether at present there is any other country but this where there is a deliberate duplication of taxation of that kind. It is an incitement to investors here to have their money elsewhere than in Irish corporations. I think, in considering the extent which the general income tax resolution bears upon the income tax payer, you have to take into account that extra hardship to which I have been referring in connection with the corporation profits tax.
Then we have the new arrangement with regard to valuations under Schedule A. That is more properly discussed on the resolution actually referring to it, but, as was pointed out, one effect of that new resolution is to bring new people within the ambit of income tax and, as was pointed out by, I think, Deputy Norton, it seems a very strange procedure, instead of having a new valuation if a new valuation is required, to jump to the conclusion that each and every bit of house property in existence deserves to be valued at 5/4ths of the valuation which hitherto existed.
Will the Minister say what has been the cost to the Exchequer of increasing the amount of the earned income allowance and the allowance for children, which was granted in 1932, I think?
I am not in a position to say that at this stage. If the Deputy had put down a Parliamentary question I might have been able to secure the information. Owing to the high pressure at which the Department of the Revenue Commissioners has been working, we have not yet had the report for 1933. Until that is available, I am not in the position to give the information; but I can assure the Deputy that they were substantial.
Deputy Norton says that Deputy McGilligan last night did not prove that what he said was right.
I did not say it, but I say it now.
I should have said the Minister for Finance stated that Deputy McGilligan did not prove what he said last night.
You are too much concerned about us.
There is no use in being concerned about the members of the Labour Party at this stage in their history.
You have enough to do to look after yourself.
The President, however, the previous night told the House that, for the very same reason that Deputy McGilligan alleged, he could not acquiesce in the invitation of the Labour Party to put an additional tax on incomes. The statement was made by Deputy McGilligan here, after the situation had been admitted by the President in what he regarded as a very important statement dealing with the financial provisions for the year. It is a matter affecting the credit of the State, which the Minister is so anxious that we should all be solicitous about, and which he is no doubt very solicitous about himself. We have had occasion to complain here that the Government have been getting after, in every possible way, people who make statements reflecting on their policy and the effects of their policy.
The case put forward is that statements that are made with regard to the condition of the country, brought about by the Fianna Fáil policy, reflect upon the credit of the country. That is the Government's case for pursuing the methods which they are pursuing, for withdrawing advertisements in the newspapers which dared to criticise their policy, and for threatening to do it. That is the excuse for sending detectives after the Press to get information as to who is responsible for odd statements here and there in the daily and local Press. If the Government think that the ordinary run of statements reported in the Press, the various reports of one kind or another, have to be hunted down by open threat or by penal action, such as withdrawing advertisements in the Press, or by third degree methods recently pursued through the police; if the credit of the State is such that it must be defended in this particular way, surely the Minister is failing to discharge a very obvious duty if he does not give the House the information that would rebut the statement which Deputy McGilligan made last night, or provide the President with the information that would keep him straight. The Minister surely does not say that he cannot give us the deductions made in respect of gross income in regard to various personal allowances and reliefs made, say, in respect of the years 1931-32, 1932-33, 1933-34. I do not see why we could not get an estimated figure even for 1934-35 of the deductions made within that period. I understood the Minister to say that he has not yet got the figures for the year 1931-32.
1932-33.
So that we are now in May, 1935, dealing with the financial position of the country, and we are faced with a certain case made with regard to the capacity of our people to bear the present rate of income tax, and we are not able to be told what the personal reliefs were in respect of children and earned income for the years 1932-33 and 1933-34.
The Deputy has had 12 months to put down a Parliamentary question to elicit these figures. That is the principal use of a Parliamentary question.
I hope the Minister will meet the House in the way he should meet it when a question comes to be put down, because the question is an important one. As I say, the Government, which could send police round the country, and could send their threats to the Press, ought to be sufficiently solicitous about public opinion in an important matter like this that the Minister for Finance should not have to wait to be asked a Parliamentary question on these important points. He makes a general statement in the matter to the country, which has been fed upon general statements made by the various Ministers from time to time, and has had time to see the chemical composition of these statements, and see how little of actual fact or truth there has been in them.
One cannot be expected to give very great credit to a general statement thrown out in the casual way that the Minister for Finance threw out that particular statement. I think it is treating an important subject lightly. The Minister, I submit, should have given the information when putting the Resolution before the House, and I hope that before the Finance Bill is taken he will answer questions put to him, intended to elicit the information.
Yes.
On the general question of income tax—I will deal with it more particularly on Resolution No. 3—I understood the President to make the statement the other night that, in fact, we had reached saturation point. The Minister for Finance, in his Budget speech, referred to the necessity of keeping step with the British rate of income tax, owing to the inter-relations and inter-actions between the two countries. Deputy McGilligan's case, as I understood it last night, was to substantiate that fact, but the Deputy used it as an indication of a decline in our national income. I wonder why, if we have reached saturation point as regards income tax, we did not adopt that and act on it, and why the Minister for Finance should try by a fiction to extract more income tax under Schedule A by saying that "if a premises is valued at £100, I am going to say that in future the value of it is £125." In effect he is saying, as regards that particular item, that he is increasing the rate of income tax by 25 per cent. It is regrettable, I think, that he found it necessary to do that. I do not want to develop an argument on that because, as I have said, I will deal with it more fully on Resolution No. 3.
Question put and agreed to.