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Dáil Éireann debate -
Thursday, 23 May 1935

Vol. 56 No. 13

Financial Resolutions—Report Stage. - Financial Resolution No. 3—Income Tax.

I move: "That the Dáil agree with the Committee in Financial Resolution No. 3." This is the Resolution which proposes henceforth to make assessments under Schedule A upon five-fourths of the annual value "of all tenements and rateable hereditaments (other than lands and other than farm houses and farm buildings occupied with lands for the purpose of farming such lands) rather than, as heretofore, on the annual value." The justification for it is that the income which is actually derived from the ownership of such buildings is, in general, very much greater than the annual value of such buildings as assessed for poor law purposes. Accordingly, there is no reason why this income should be treated any more favourably than income derived, say, from the profits of a business or the exercise of a profession or other occupation.

Would the Minister be good enough to give the House some indication as to the basis upon which he arrived at his figure, and as to the probable yield of this tax? It was suggested, he will remember, last night by Deputy McGilligan that the yield of that tax was almost certain to be very much greater than anticipated by the Minister, in his Budget statement. I pointed out in my speech on the Budget that not only were the income tax calculations of the Minister pessimistic in comparison with those of the Cumann na nGaedheal Minister for Finance — pessimistic as to the amount that would be produced by a given 6d. in the £ on income tax — but that also, according to the Minister's own Budget statement, there was a notable short fall even on these pessimistic calculations. That being so, I am wondering whether this novelty with regard to Schedule A is designed to bring in a more substantial amount of money, and so prevent a similar disagreeable short fall occurring next year.

I take it that, when this Resolution is finally implemented, it will operate in such a way as to make a person who has become the owner of a house in recent years liable for income tax, if he is otherwise liable for the payment of income tax, on the basis of four-fifths of the existing valuation. As everyone knows, house building has been costly, due to a variety of causes since the war. In recent years the Dublin Corporation has been erecting houses and selling them on a hire purchase basis to tenants. These tenants are legally liable for the payment of income tax on the valuation of their premises. Valuations have been placed on these houses in recent years and, because of modern circumstances, the cost of building them has been high. The valuations have been based on existing circumstances. Consequently, houses of that class are clearly not in the same category as houses which were built 40 or 50 years ago. Those houses were built at a much lower cost than the houses built since the war period. As those who have inquired into the matter know, the valuations on those old houses are very much lower than the valuations placed on the houses built in recent years.

Consequently it would seem to me that if this Resolution is passed, the effect of it will be that a house erected 40 or 50 years ago, when house building was not as costly as it is to-day and which had placed upon it a valuation not related to the circumstances of to-day, will be revalued for income tax purposes in the same way as a house erected recently which has been costly to build and which has been valued in the light of prevailing circumstances. I think that that is an unfair burden to place upon tenants of small houses. If the Minister does not want to impose further burdens on a section of the community which is not able to meet these burdens, he should make provision to ensure that, in respect of any ordinary dwelling which costs not more than £1,000 and which was erected, say, since 1920, there should not be any addition to the valuation. The effect of this Resolution will be to swell the amount which these people are liable to pay for income tax purposes at a time when they have borrowed a substantial sum at a high rate of interest to build their houses, and when their houses have been valued in the light of modern conditions. I suggest to the Minister that this Resolution should be drawn in such a way as to exclude medium-sized houses built in recent years. In that way, the Minister would avoid the imposition of burdens on a section of the community which is not able to meet them.

I suggest to the Minister that he is making a serious mistake in this Resolution. It is aimed at the owner-occupier whom it is most important we should encourage. Everything done to encourage people to own their own houses makes for stability in the State. Anything that makes it more difficult for people to own their own houses is detrimental to the real interests of the State. I strongly support what Deputy Norton has said on this Resolution. The proper lines of amendment would be to exclude the owner-occupier. A very serious burden was placed upon him last year by removing the fraction of the valuation —one-sixth — allowed him because he lived in the house he owned. Take the case cited by Deputy Norton — a very unusual case. The house was valued at £100—I take the percentage figure— and the occupier paid on something over £80. Now, he will have to pay £125. That means a 50 per cent. increase in the tax which the owner-occupier will have to pay as compared with what he had to face last year.

In many cases, people have attempted under great difficulties to become the owners of the houses they occupy. It was really doubtful in many cases whether they could meet their liabilities in respect of the rents they were paying to enable them to become owners. I am sure that Deputy Norton and the Minister know many cases in which those who made that attempt had to give it up because they were not able to meet their obligations. The increase in this income tax obligation will turn the scale in many cases and cause a great deal of hardship to those who had attempted to face the future by paying certain rents so as to enable them to become owner-occupiers. This is a very rough and ready way of doing what the Minister really ought to do — that is, undertake a proper valuation. As Deputy Norton has pointed out, the valuations throughout the country are on a most inequitable basis. To say that you will increase the tax on everybody is not a fair way to meet that problem. It does not tend to get rid of the inequalities. It might be a slower method, but it would be a much safer method to re-value the houses that are undervalued and bring them up to a proper level. The result might be greater or might be less than the result of this method — the man in the street cannot say that — but I suggest to the Minister that it is most unfair to hit equally those who are living in houses which are properly valued and those who are living in houses not properly valued. I urge him to consider enterprise which really makes for an increased feeling of stability in the State and not to do something which goes in the opposite direction and which will tend to produce a feeling of insecurity and doubt as to the future of the property holder.

We are starting in this Resolution to supplement what the Minister estimated he was going to receive from existing taxation. We are setting out to consider what will leave the Minister, after allowing for the remission of duty on pig carcases, a sum of £1,185,000. In my speech in the Budget debate, I drew attention to the fact, as it appeared to me, after analysing the figures, that the Minister had consistently over-estimated expenditure and under-estimated the produce of taxation. I should be glad to know from the Minister on what figures he bases his yield under each of the Resolutions or couple of resolutions, taken together, in building up his figure of £1,185,000. On this Resolution, I agree with all that has been said by Deputy Thrift and Deputy Norton. Last year, the Minister, in his Budget speech, said: "There will be a Resolution to remove an anomaly in the income tax code whereby the owner-occupier of certain classes of buildings receives for income-tax purposes a repairs allowance on the double." I do not want to debate that point now. It was debated pretty fully last year, and I do not think that the honours lay with the Minister. Up to then, there was an allowance under Schedule A of one-eighth for maintenance in respect of land and one-sixth in respect of buildings. The Minister said that there was a mistake made a long time back by the Revenue Commissioners — that the Valuation Office took into account the cost of repairs before assessing the valuation. I pass from that. The Minister has discovered something else about the valuations this year. Although he succeeded in getting the allowance for repairs abolished last year, he says the valuation should really be increased by a quarter. I wonder the Minister has not instructed the officer responsible for the Valuation Office to put on the right valuation. Previous speakers have referred to the need for a new valuation. What is the need for a new valuation on houses that have been valued for the first time within the last twelve months? The Minister says that that valuation is wrong. The Valuation Office then must not be doing its duty. Why does not the Minister look after it?

The Minister let us into more information in his few introductory remarks when moving this Resolution. I think his statement was to the effect that the income value of such property owners far exceeds the poor law valuation. I do not think the Minister is at all satisfied to let it remain at five-fourths. That is only the thin end of the wedge, if I understand what was at the back of his mind in his introductory remarks. I want the Minister to bear this in mind, that the tendency —and it is a good one — in new houses and generally on the housing question is to create owner-occupiers. The Minister should bear in mind the amount of public money borrowed by local authorities either from the public or through the Government for which they will be responsible to the Local Loans Fund in future, of which the Minister will be the manager. He should bear in mind the amount of public money lent for house purchase. That is an important factor. Up to 80 per cent. and in some cases 90 per cent. of the market value of houses was lent. Public money was lent for that purpose on a falling market. Not being able to rent houses people bought them and in many cases pinched themselves to do so. Perhaps in most cases they had to borrow the cash deposit to qualify for an advance. These people are owner-occupiers. Does the Minister not see how he threatens the margin of security that the Government and local authorities have in these houses? I wish to draw particular attention to the financial position of the Dublin Corporation which, as the Minister is aware, in the last two or three years invested over £900,000 in order to help people to buy their own houses under the Small Dwellings Act. That £900,000 is not a very big margin of security, and by this Resolution and by last year's Act that margin of security is being diminished. As suggested by Deputy Norton, the best thing that could be done would be to exclude occupier-owners. That would only be an instalment of fair play.

This is one of the worst features in the Budget, considering the present state of housing. A development of housing is out of the question by way of any speculator coming along and building houses to rent. That can be ruled out. There will be no extension of housing accommodation in that direction. The only extension of housing accommodation practicable at the present time is by house purchase. The Minister is now going to add another weight to house purchasers. They are already overweighted. The thin end of the wedge was got in last year, by depriving them of the advantage of one-sixth for maintenance, while one-fourth of the entire valuation is to be added this year. The result will be that people will get nervous and will not want to buy houses on the purchase system. It will create a state of nervousness about the whole position, and, all the more, when the public hear the statement that the Minister made in introducing his proposal, which, obviously, betrayed a policy of extending this principle. He stated that the poor law valuation of a house is not at all commensurate with the value of the house. That shows that the Minister intends to develop along these lines. Regarding the poor law valuation of houses valued within the last couple of months, a case was brought to my notice in the last few weeks where the valuation of a house recently valued will now have one-fourth added. How could it be added when the valuation was fixed within the last couple of months? Is the machinery for valuation gone wrong? If it is, the Minister should look after it.

Deputy Belton says that this is one of the worst features of the Budget. There are many bad features in the Budget. but, if we are to take this as a straw showing the direction in which the wind is blowing, then it is quite easy to show that this is one of the worst features. The condition of affairs is that the Government is called upon from day to day to provide for the maintenance and upkeep of an increasing number of people without any means of subsistence, from the man with heavy family responsibilities to young people without such responsibilities, who can for a little while live with their own people. The Minister has raked every direction he could possibly rake in order to find additional taxation and additional sources of taxation. People who have some kind of property that provided them with homes or with a livelihood find themselves attacked more and more because they are the only people who can be got at. The Minister has looked around to see where he could scrape in a few more hundreds of thousands of pounds. He said to himself: "I can get them off people who have houses, shops, factories and mills and people on the land." He takes £100,000 from people who own land and houses on land and £100,000 from the amount that was made available last year for the relief of rates on agricultural land. That class is hit to the extent of £100,000.

That class does not come under the tax proposed in this Resolution.

This Resolution covers all tenements and rateable hereditaments, other than lands and other than farm houses and farm buildings occupied with lands for the purpose of farming such lands. I want to see the tax now being put on houses, shops, mills and factories, as well as the analogous kind of taxation, being lifted off the farming community through the reductions I speak of. The direction in which things are going shows the length to which the Minister for Finance and his colleagues are prepared to go blindly —not knowing where the end of the road is. People with homes and with roots that cannot be shifted are the people on whom the heaviest burdens are going to fall. What makes this one of the worst features of the Budget is that it tends to turn our people from people with roots in the land and in the homes which they own in the cities and towns into a nation of carpet-baggers, who can slip from one place to another and pick up such relief in one way or another as the Government are providing them with, but who cannot be caught on any particular night in any one place, so that their homes can be robbed and their pockets robbed by the Government. The Minister laughs.

It is very farfetched.

Is it very farfetched? Let the Minister take himself into the home of a Dublin artisan who, say, in the year 1926, 1927 or 1928, got a home in the City of Dublin recently built by the Dublin Corporation and, as Deputy Belton says, squeezed himself in the necessaries of life in order to have a home around him, because it is as necessary, if we are to have a civilised or Christian life for our people, or any kind of a life, to have a home as it is to have the means of subsistence. The Minister's colleague, the Minister for Local Government, can tell him to what extent it has been found that new housing schemes in many countries have brought about a position in which, in order to get homes around them, the people have had to deny themselves the necessaries of life. There have been various reports showing to what extent the health of the families has been reduced through lack of nourishment after going into new homes, because they stinted themselves to have those new homes about them.

I do not want to interrupt the Deputy——

I am most anxious to hear the Minister. Our difficulty is that the Minister sits there with a Resolution before him and challenges Deputies to dodge about and see how much information they can extract from him and dares Deputies to get any information about these matters. I willingly give way to the Minister to hear what he has to say.

I merely want to ease the Deputy's mind in regard to one point. This also applies to some part of the speech of Deputy Norton. It is extremely unlikely that those who have bought their homes under the hire purchase system and, in particular, those who have bought them from public authorities, will be affected, and, in fact, I will go so far as to say that they will not be affected, by this at all, for the simple reason that the interest which they pay is set against their Schedule A assessment.

Will the Minister accept an amendment excluding that class of person?

Of course, he will not.

What is the inducement to include them?

The existing provisions are quite sufficient to safeguard them.

The machinery is there and the class who own their homes, their shops, their factories and their land are people who can be caught in the machine. There is no weak spot to be left in the machine which the Minister anticipates may have to be drawn tighter and tighter around the people who are caught in it. The Minister says he is going to get £60,000 out of various Resolutions with regard to income tax, but the class we speak of, when you take into consideration the measures taken against them last year and taken against them now, are going to have the valuation upon which their income tax payment will be assessed increased by five-twelfths of what it was before last year's change was made.

The last report we have from the Revenue Commissioners gives us information on this point only in respect of the year 1930-31. We see that the assessments under Schedule A were made on a total of £3,565,000 in respect of housing, tenements, etc., other than lands, farm buildings and farmhouses. We are anxious to see where that property lies. Of that, £1,697,000 lies in the city of Dublin; in the other county boroughs, about £460,000 lies; in the urban districts, £729,499. We can take it that the £3,500,000 is made up, after that, by about £800,000 in respect of buildings in the county board of health areas, where the total valuation of the property is about £1,400,000. We are entitled to hear from the Minister how much of this £60,000 is going to be raised by way of this Resolution and, in view of his suggestion that owners of property bought from the Dublin Corporation within the last few years will not come under this, how exactly, based upon this particular valuation, is he going to raise the money under this, and how much of the £600,000 is going to be got in that particular way.

The position with regard to income tax indicates that this is a sinister proposal for the reason that I explained in the beginning, and if the Minister thinks anything of public confidence, the House should get a clear statement from him on the exact effect of this proposal. I say that it is going to fall on houses, shops and factories. The Minister shakes his head, but the phraseology of the Minister's Resolution is such as to secure that it does. If the Minister considers that it should not fall on shops, factories and mills, I would ask him again, as I asked with regard to the small owners, will he accept an amendment to exclude shops, factories and mills from this proposal?

I am afraid the last speaker is unaware of the conditions that prevail with regard to shops and factories.

They were rooked long ago.

I think the great fault with this Resolution is that, as Deputy Thrift said, it strikes at the stability of the State and that is a matter which, particularly in this country, we should always have before us. I am afraid also that it will make the difficulty of local authorities very much greater in future in providing moneys than has been the case in the past. They find a difficulty, as I understand the position, in getting owners for many of the houses which they are anxious to dispose of. Take the case of an owner who purchased three or four years ago. He found the money and provides the money out of his weekly income, after making sacrifices which possibly we would not agree it was necessary for him to make or which he should make, but he has to do it in order to get housing accommodation. Last year he found that he was free from burden to the extent of the remission of one-sixth which he enjoyed heretofore, and which he had taken into his calculations when purchasing his house. Imagine the position of that man when he finds that his difficulty is added to this year by a further 25 per cent. I am afraid the reaction of this particular proposal will be more considerable than we think. There is one Deputy in the House who has considerable experience of the housing difficulties of the Dublin Corporation, and I should like to hear that Deputy— Deputy Kelly—on this proposal.

I might inform the House that he is Chairman of the Housing Committee of the Dublin Corporation.

We want Deputy Kelly.

The Minister has indicated that this new assessment will not apply to shops? I should like to have it quite clearly from the Minister as to whether this 5/4ths provision applies to shops.

May I put it this way —that if the shop is owned by the occupier, this resolution does not affect the amount which he will pay under the two schedules A and D. He will receive an increased allowance in respect of the income tax under Schedule D. He will have to pay a correspondingly increased amount under Schedule A, so that if he owns the business premises his position still remains unchanged.

This resolution covers shops and factories.

Not in the sense in which the Deputy was trying to put it —that this was going to be an increased burden on those who were producers in this country.

What I should like to find out from the Minister in connection with this resolution is as follows: Does it not appear to him that this proposal will operate to take from young married persons who are in the process of purchasing their houses, or who have purchased their houses, a good deal of the benefits which he purported to confer upon them in the altered incidence of income tax which is provided for in the Finance Acts of 1933 and 1934? Take any young married couple who invested their savings in the purchase of a house, and who recognised gratefully the remissions in income tax that were made in the Finance Acts of 1933 and 1934, are they not going to find, by the increased assessment placed on their houses now, that the greater part of those concessions is being taken back from them? Does not this financial resolution result in a complete reversion of policy in respect of marriage and family allowances, about which the Minister made such a hullabaloo 12 months ago? The Minister has said that the interest which any person who is in the process of buying his house on mortgage will have to pay will be allowed to him, and as a result this increased assessment will very rarely affect such a person. It is a rather remarkable commentary on the general situation obtaining in this country that at a time when all the building societies in England are reducing their rates of interest, reducing the burden on the backs of young married people who are buying houses on the instalment plan, we are taking precautions to ensure that if any similar reduction is made here it will be made not for the benefit of the individual but for the benefit of the State, and that if there is any reduction in the interest rates on mortgages which have been raised for the purchase of a house, the whole benefit will pass over to the Exchequer.

And that at a time when house purchasing facilities have nearly dried up.

I do not think the Minister can deny that. Several Deputies before me have pointed cut that it is a very essential part of any comprehensive housing scheme that private building should be stimulated and encouraged in every possible way. The Government have protested loudly that such is their ambition. They have provided for additional grants; they have exhorted people to enter building societies; they have explained that they need not hesitate to come for any assistance they want when they contemplate building a house. Surely it seems to be wholly irrational and illogical to pursue two entirely different lines of policy on two closely analogous occasions. We have the Minister for Local Government and Public Health pushing everybody into the purchase or construction of houses, and we have the Minister for Finance warning anybody who becomes the proprietor of a house that he will have to pay more by way of income tax under Schedule A on that house than he ever had to pay before. Lastly, I think this Resolution is deserving of criticism inasmuch as it is grossly unjust in the way that the extra assessment is arrived at. As Deputy Belton has pointed out, there is going to be an increase of 25 per cent. on all valuations without any regard at all to when the valuations were made. We all know that the Minister wants money, and he thought that this was a rather smart way of getting £1,000,000 by a back-stairs method. He grossly under-estimates the prospective yield, and he imposes the taxation in a way which he thinks the average man in the street will not understand.

£1,000,000!

I should have said £100,000. I apologise.

It is going to be more than that.

We do not know what it is going to be, and the Minister will not tell us. On the information of persons whose judgment I trust in this matter, I believe it will run into six figures instead of five. The Minister can very well afford to jeer any Deputy who has not at his disposal the sources of information which the Minister has.

I beg the Deputy's pardon.

I frankly admit that the assessment of a figure of this kind is extremely difficult to anyone who has not recourse to the Revenue Commissioners. The Minister has refrained from telling the House how he arrived at this calculation. I do not want to pursue this line, or I might reflect on the Minister's capacity to make the calculation himself if he had not his officials to turn to. The Minister proposes to raise, by a back-stairs method, a sum which I believe to be substantially in excess of his estimates. He does it in a way which he thinks the man on the street will not readily recognise. In order to get that enormous revenue he does something which he knows as well as we do, is inequitable. He raises everybody's valuation by 25 per cent., although a great number of houses in the country at the present moment have been valued within the last two years. He boasts of the fact, on other occasions, that there is a great number of houses in the country that have been valued within two years. The only fact upon which I am prepared to say that the Fianna Fáil Government is deserving of one scintilla of credit from the nation as a whole is the fact that I believe they have created a situation in which there has been a very substantial addition to the number of houses in the country.

Not as much as they say.

Possibly not as much as they say, but we have learned by experience not to expect any promise from that side of the House to be fulfilled. Deputy Mulcahy agrees with me that there has been a very substantial increase in the number of houses in the country since Fianna Fáil came into office. There was a very substantial increase in the number of houses built during the first ten years of this Government. In the numbers of new houses built we have nearly reached the number of houses burned. It was a pretty fast race, but we did it. For the past three years we have been adding to the total number of houses. Having done that, and taken pride out of that fact, the Minister for Finance is going to advance their valuation to the same valuation as those houses valued 10, 20, 30 or 40 years ago. He knows that is not just. I asked him to answer us on that head, to explain to us the calculation whereby he arrived at the figure of £60,000 that he expects this tax to yield and to say does he think it fair that, when persons bought houses on a mortgage and legitimately expected the rates of interest to fall, as in England, that the whole of that benefit should go to the Exchequer in Ireland, while it is going to the owner-occupier in England?

There are some of us who would like to understand this question more thoroughly and become more enlightened in regard to it, but the debate is not helping us. One Deputy asked that the owner-occupier be excluded and another Deputy proposed that factories, shops and apparently all business buildings should be excluded. It does not look as if the Resolution were being discussed seriously at all. With regard to the point about new valuations, would it not be the case that in arriving at these valuations advertence must be made to the valuations of existing buildings and that there must be a certain relation between new valuations and previous valuations? I take it they could not be valued so that there would be a substantial difference between two houses of the same capacity and quality.

Is the Deputy speaking with authority now, or is he merely guessing?

I am inquiring.

Ask the Minister.

The Valuation Department, I take it, have to have regard to existing valuations in making any new valuations and, consequently, the point raised by Deputy Belton would have no real effect with regard to the present Resolution. All valuations that will come under this Resolution have been calculated on the same standards. I think that should be obvious. I suggest the best way would be if we could agree on an example or two as to how far this Resolution is going to affect the class of person who has struggled to buy a house in recent years. A fairly high valuation for that class of person would be £24 a year. For this purpose it is being raised to £30 a year. If he is of the struggling class he is not paying more than 2/3 in the £ income tax, and the net effect of this Resolution would be, therefore, to raise his gross income tax by 13/6 in the year. Is that a typical case, I wonder? Is that the grievance that is alleged against this proposal? If that is an average case, and I think it would probably be above the average, then I hardly think that the proposal deserves all the censure that has been passed upon it. A little over 1/- a month is not a great deal for a property owner to pay by way of increase in income tax, especially when the Minister is able to state that the valuations are entirely out of date and that under a new valuation it is very likely all valuations will be increased. Up to the present I can see nothing in the case made against this Resolution.

I would like to hear Deputy Moore ask the Minister whether this proposal affects the pottery factory in Arklow, the Bray electric equipment factory and smaller industries in Bray.

We have not heard Deputy Kelly yet.

I do not pay any income tax; I do not know anything about it.

I would like to hear the Deputy on the Corporation.

He might tell us something about Ballyknockan granite.

There seems to be an amount of confusion existing as to what income tax is. Income tax is a tax upon income derived from the ownership of property, the occupation of land, the profits of industry, the wages and salaries of employment and the remuneration derived from the practice of a profession.

Excepting the Government Front Bench.

What is the proper basis for assessing the income derived from the ownership of property? Is it not the actual income paid by the tenant to the landlord, the actual income which the landlord derives from the payments which are made to him by the tenant? Surely we are doing no person an injustice if, instead of taking what was formerly a notional assessment of what that income might be, we should look into the case and see what the income really is and then proceed to tax the person who derives that income? We do that in regard to the owners of mills, the owners of businesses; we do that in regard to workers who are tenants of houses in the State. They are all charged upon what their income really is. According to the minds of some Deputies here, there has to be, even in the ranks of the income taxpayers, a special and privileged class. They are the people who own the property and they are not to be taxed upon what their actual income is, but they are to be taxed upon a notional income which bears no relation in the present circumstances to their real income.

The simplest way to deal with the situation would be, of course, as Deputy Thrift says, to have a revaluation of the whole country. That is in train; a Bill is being drafted in order to do that. It is a most complicated measure, because it has to have regard to the decisions of the courts which, in my opinion, have radically altered what was the original purport of the Valuation Acts of the country. Even when that Bill is drafted and is passed by the Oireachtas, it will still be a considerable time before the revaluation of the country is completed. In the meantime are members of this privileged class who own property going to be taxed at very much less than they ought to be and are they going to enjoy that remission, that concession, at the expense of their fellow-citizens, the people who derive their incomes out of the profits of their industry.

It must be very hard for the Minister to keep a straight face.

Take the case of properties in the City of Dublin. There are few Deputies in the House, I am sure, who are familiar with conditions here who could not parallel these cases with a considerable number of other examples. Take the case of a house in Sutton. The rent which is paid by the tenant is £80 a year, free. The landlord pays the rates and other outgoings. The poor law valuation is £21. The owner's approximate income, taking one year with another, from that house is £51. If the valuation of that house bore, as it ought to, a real relation to the rent at present being derived from it, then the valuation ought to be in the neighbourhood of £51 and not £21. We propose that the man who is paying now on a notional income of £21 will bear an increase of 25 per cent., and we propose to make him pay on a national income of £26 5s. 0d., although his actual income from the house is £51. In Pembroke there is a case of a house let at £160 a year. The poor law valuation is £50. The owner's approximate income is £102 and he ought to pay on that £102. Last year he paid on £50, but now he will have to pay on a notional income of £62 10s. 0d.

What prevents this proposal becoming an increase of rents proposal?

Could the Minister quote us a few cases from Mountjoy Square?

Or Clontarf, Marino or Cabra.

There is a case of a house in Milltown, the rent of which is £84 free. The poor law valuation is £18 5s. 0d. and the annual income, one year with another, is £56.

Has the Minister any case in Mountjoy Square in that list?

Or from Marino or Cabra?

I was dealing with Milltown. The approximate income derived from the ownership of that house is £56. The poor law valuation is £18 5s. 0d. That is what the owner had to pay on last year. This year he will pay on a notional income of £22 16s. 0d. There might be a case and there is a case for making him pay possibly even more——

Might I ask if the Minister——

In Dundrum there is a house which is let at £78 with rates. I can quite understand that people who have been talking in this House do not want these instances to go on record. The house is let at £78 and rates, and the poor law valuation is £25. The approximate income from the house is £62 10s 0d. We propose to make the owner pay on £31 5s 0d. There is another house in Donnybrook of which the rent is £120. The poor law valuation is £26 and under the new Schedule A we propose to make the owner pay on £32 10s. 0d. The income on which he should be assessed is approximately £80. I could go down the list further. There is not a single district in Dublin from which I could not give instances which are not exceptional cases at all, but instances of what is the general rule.

The Minister has not had the courage to cross the river yet.

Very well, then. There is a house in Dollymount let at £75 free. The poor law valuation is £18. The actual income received by the owner of the house, taking one year with another, is £49 and the assessment under this provision will be £22 10s. 0d. In Drumcondra there is a house let at £72 free. The poor law valuation is £14. The approximate net yearly income is £49 and under the new provision the owner will be assessed on £17 10s. 0d. There is another instance of a house let at £80 free. The poor law valuation is £18 and the actual income is approximately £53. The new assessment will be on £22 10s. 0d.

These are instances, as I say, that any Deputy, who is familiar with the conditions existing in Dublin City and County, can parallel with numerous others. There are also in Cork, Waterford, and other districts in Ireland, cases of this sort. It is the general rule in this country that the poor law valuation does not at all represent the actual income which is derived from the ownership of property. There may be cases on the other side. If Deputies know of such cases I should be very glad if they would send in a note of them, but I have the feeling that when I do get these alleged instances, we shall probably find that they will not be covered by this provision at all.

It is an increase in rent.

The justification for this clause is that income tax should be levied on income. If we were in Great Britain the assessment for income tax purposes would not be related at all to the poor law valuation. The income tax inspector would make the assessment on the actual income derived from the house.

When did that change come about?

It always existed, the only difference being that when we were governed from Westminster, and when they had to fix a basis of assessment for this country, they said: "There is one thing we will pin them down to. They have to value their houses for the purposes of the poor law for paying rates, and we will be satisfied with that as a fair assessment."

That is a very slippery statement.

There is a repairs allowance.

We know ourselves where these houses are, and we know the actual income derived from them. There is no case whatever for taxing them at any lesser rate than the rate at which income is taxed, which is derived, as I said before, from the pursuit of industry, from a profession, or from some other employment.

With regard to the alleged hardships which this provision will inflict on a certain class of owner-occupier. I say again that so far as houses that have been bought in recent years under the hire-purchase system are concerned, the interest which is chargeable on that transaction will in the vast majority of cases — I do not want to say in every case, because some person might bring an exceptional case to my notice — wipe out the assessment under Schedule A.

Deputy Moore has given us an example of an actual case. I shall take the case of a married man with three children and an income of £400, owing a house of £20 valuation. That case represents a considerable number of people who bought houses under these schemes. He will not come under assessment at all because of the allowances to which he is entitled. If by any chance he comes near the line of assessment, if he has to pay 20/- or 15/-, he would, in the great majority of cases, be able to set off against his Schedule A assessment the interest which he has to pay to the Corporation, the building society or the bank on the loan he has secured. On this question of the newer houses and the valuation which they carry, Deputy Moore is quite correct. The valuation which is assessed on these houses is fixed by the rent which would be derived from the letting of the new houses as compared with the rents which are already being derived from the letting of houses built long ago. And since the older houses, lettable as they are at a very high rent, carry very low valuations, so the newer houses correspondingly carry low valuations, too. My opinion is that we would have done no injustice to anyone if, instead of increasing the assessment in the Schedule by 25 per cent., we incretsed it more. But, in order to make sure that no injustice would be done I contented myself with fixing the figure at 25 per cent.

The Minister has not given us any particulars of the calculation by which he arrived at this assessment.

It is not usual to give such calculations. I am satisfied that the figure of £60,000 will cover not merely the increased revenue we expected to derive from this, but also the other minor provisions in relation to income tax and death duties imposed in Resolutions before the House. My information is that £60,000 represents the amount we hope to get in this year. But it may possibly be increased to £75,000 in the full year. That represents the amount, I am advised, we can count upon. There has been no case of writing up or writing down. The figures, as given to the House, have come to me, and I have sufficient confidence in the Revenue Commissioners to believe that they are not going to write up or write down so as to guard against a possible short fall on other duties. They are responsible for the estimate of revenue as a whole, and they could easily have guarded themselves against any short fall from our particular tax by writing down the yield which they expected from it. I do not see any substance at all in the point Deputy MacDermot raised.

There are two points that the Minister left obscure. This Resolution covers mills, factories and shops. The Minister has left the position in regard to them obscure. Secondly the Minister referred very explicitly to income. Is there any provision that prevents this from becoming an increase in rent? Is there anything that prevents the increased burden put upon those people who are getting the income, from being passed on to the people who pay rent for the houses?

Will the Minister say whether it is to be assumed that houses built by the Corporation or other local authorities in recent years are, in fact, valued on a day-to-day basis, so that tenants may anticipate an increase of at least 25 per cent. on their valuation?

Not at all.

I would like to hear that from the Minister. This estimate is for an increase of 25 per cent, on valuation.

The Minister expects the product of this tax this year to be £60,000, and in a full year to be £75,000. Will not this be a full producing year? Is it not starting to operate from the 6th April this year? Might I ask the Minister what is the advantage to the Exchequer from the discontinuance of the repairs allowance last year?

The Deputy may not ask that question at this stage.

Then on what stage?

The Minister concluded the debate. It is in the discretion of the Chair to allow subsequently certain relevant questions on points raised which a Deputy or Deputies consider the Minister not to have elucidated sufficiently.

What would be the position of an owner-occupier who bought his house from a public authority or a public utility society and repaid the capital advanced? Suppose the capital advanced was £700 over a period of 15 years, and suppose that the tenant in the course of three or four years was in a position to repay one-half or three-quarters of the whole, what would be his position in regard to the 25 per cent.?

That would depend entirely upon the arrangement he made with the building society. If it means that he is going to continue to pay the same rate as previously, the element of interest obviously is going to decline, and consequently the amount of the set off against the Schedule A assessments is going to decline.

Question put.
The Committee divided: Tá, 61; Níl, 46.

  • Aiken, Frank.
  • Bartley, Gerald.
  • Beegan, Patrick.
  • Boland, Gerald.
  • Boland, Patrick.
  • Brady, Brian.
  • Brady, Seán.
  • Breathnach, Cormac.
  • Breen, Daniel.
  • Cleary, Mícheál.
  • Concannon, Helena.
  • Crokery, Daniel.
  • Corry, Martin John.
  • Crowley, Fred. Hugh.
  • Crowley, Timothy.
  • Daly, Denis.
  • De Valera, Eamon.
  • Doherty, Hugh.
  • Donnelly, Eamon.
  • Dowdall, Thomas P.
  • Flynn, John.
  • Flynn, Stephen.
  • Fogarty, Andrew.
  • Gibbons, Seán F.
  • Goulding, John.
  • Hales, Thomas.
  • Harris, Thomas.
  • Hayes, Seán.
  • Houlihan, Patrick.
  • Keely, Séamus P.
  • Kehoe, Patrick.
  • Kelly, James Patrick.
  • Kelly, Thomas.
  • Killilea, Mark.
  • Kissane, Eamonn.
  • Lemass, Seán F.
  • Little, Patrick John.
  • Lynch, James B.
  • MacEntee, Seán.
  • Maguire, Ben.
  • Maguire, Conor Alexander.
  • Moane, Edward.
  • Moore, Séamus.
  • Moylan, Seán.
  • O'Briain, Donnchadh.
  • O Ceallaigh, Seán T.
  • O'Dowd, Patrick.
  • O'Grady, Seán.
  • O'Reilly, Matthew.
  • Pearse, Margaret Mary.
  • Rice, Edward.
  • Ruttledge, Patrick Joseph.
  • Ryan, James.
  • Ryan, Martin.
  • Ryan, Robert.
  • Sheridan, Michael.
  • Smith, Patrick.
  • Traynor, Oscar.
  • Victory, James.
  • Walsh, Richard.
  • Ward, Francis C.

Níl

  • Anthony, Richard.
  • Belton, Patrick.
  • Bennett, George Cecil.
  • Broderick, William Joseph.
  • Burke, James Michael.
  • Coburn, James.
  • Corish, Richard.
  • Curran, Richard.
  • Daly, Patrick.
  • Davin, William.
  • Desmond, William.
  • Dillon, James M.
  • Dolan, James Nicholas.
  • Doyle, Peadar S.
  • Everett, James.
  • Fagan, Charles.
  • Finlay, John.
  • Fitzgerald, Desmond.
  • Fitzgerald-Kenney, James.
  • Good, John.
  • Holohan, Richard.
  • Keating, John.
  • Lynch, Finian.
  • MacDermot, Frank.
  • McFadden, Michael Og.
  • McGovern, Patrick.
  • McGuire, James Ivan.
  • McMenamin, Daniel.
  • Morrisroe, James.
  • Morrissey, Daniel.
  • Mulcahy, Richard.
  • Murphy, Timothy Joseph.
  • Norton, William.
  • O'Donovan, Timothy Joseph.
  • O'Higgins, Thomas Francis.
  • O'Leary, Daniel.
  • O'Neill, Eamonn.
  • O'Reilly, John Joseph.
  • O'Sullivan, Gearóid.
  • O'Sullivan, John Marcus.
  • Redmond, Bridget Mary.
  • Reidy, James.
  • Rice, Vincent.
  • Rogers, Patrick James.
  • Rowlette, Robert James.
  • Wall, Nicholas.
Tellers:—Tá: Deputies Little and Smit h; Níl, Deputies Doyle and Bennett.
Question declared carried.
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