Finance Bill, 1935—Report.

Mr. MacEntee

The purpose of amendment No. 1 is met by amendment No. 3.

Amendment No. 1 not moved.

Mr. Costello

On behalf of Deputy Fagan I move amendment No. 2:—

In page 4, before Section 3 (2), to insert a new sub-section as follows:—

For the purposes of the foregoing sub-section and of sub-section (1) of Section 2 of the Finance Act, 1934, any house or buildings used or occupied by a person for the purpose of farming or working lands shall be deemed to be a farmhouse or a farm building.

I think the Minister understands the purpose of the amendment. There are certain assessments being made on buildings which are attached to farms in the country and they are not assessed as if they were part of the farm. They are assessed separately, and accordingly more income tax is being got out of them than if regarded as farmhouses.

Mr. MacEntee

I am not accepting that amendment. It is much too wide. In that connection I should like to make the following statement: I am informed by the Revenue Commissioners that in their opinion a house which is being used as a farmhouse and which is occupied with lands for the purpose of farming such lands by a person who makes his living by farming may reasonably be regarded as a farmhouse for the purposes of this section and of Section 2 of the Finance Act of 1934, even though the house was not originally constructed for use as a farmhouse. Instructions will be issued to inspectors of taxes throughout the country accordingly.

I think that will cover most of the case which Deputy J.M. O'Sullivan and Deputy Fagan were interested in when this matter was being discussed on the Committee Stage of the Bill.

Mr. Costello

Would the Minister see his way to put that into the Finance Bill so that it would not be left to the discrimination or discretion of the Revenue officers throughout the country? Each case will have to be decided on its own merits. In other words, each particular inspector in charge of an area will use his own discretion and accordingly the position will vary all over the country.

Mr. Cosgrave

Would not the Minister have the courage of putting it down on paper so that there will be no ambiguity as to the position? We will assume that there is a case in which a man has, say, £2,000 invested, from which he gets an income of £100 a year. That income has been diminishing in the last two or three years. Will there be any advertence to the fact that a reducing income from other sources, will leave this man in exactly the same position of being solely dependent on the farm? Will it be taken into account? I instanced the case of a man having £3,000 a few years ago invested, but who now has £2,000, which is bringing him in £100 a year. That is not sufficient to maintain the man, but it is necessary for him in order to balance his accounts. In a case of that sort what would the figure be which the Revenue Commissioners will consider is a sum of money which debars that man from being regarded as solely dependent upon the profits of his farm?

Mr. MacEntee

Again, I think in that case we will have to leave it until we see the figures for each separate case. The important condition in the statement I have made is that the person must make his living from the farm. That does not mean that he must be devoid of any other income but that his principle means of livelihood must be the farm. Then we will assume that his residence is the farm house for the purpose of the Act. At least, the Revenue Commissioners have formed an opinion that in that case his residence could be regarded as a farm house for the purposes of the Act.

Mr. Cosgrave

I know, but still my point arises. He may have some other source of income. Does that debar him from being regarded as being entirely dependent on his farm? From his farm he gets say from £300 to £400 a year and this income from his investments is a small proportion of his income.

Mr. MacEntee

I think the Deputy assumes that the phrase I have used —that the person must make his living by the farm—implies that he must be entirely dependent on the farm. If it is clear that he makes his living from the farm then his residence will be treated as a farm house. In the case to which the Deputy has referred even though the man derives some income from an investment and from property it seems clear that the income he is making from his farm is his principal source of income.

Mr. Brennan

Take the case of a farmer who is a rate collector in the country. The decision in each of those cases will be left to the discrimination or discretion of the inspector. The same would apply in the case of a small shopkeeper who is making some of his living from a farm. The Revenue Commissioners or the inspectors will come along and decide what the position will be. What will be the position of the farmer who has a shop or some other means of living in these cases?

Mr. MacEntee

I am not going to go into details based upon hypotheses. These simple questions of fact will be determined by the inspectors of taxes from whom there is an appeal to the Special Commissioners. These will find what the facts are. I am not attempting here any definition of "farmer" beyond what I said. If it is quite clear that the person though he has a farm does not make his living by the farm, then his house if it is a mansion, if it is a house that is not obviously and patently used as the habitation of the farm, will not come within the terms of the statement I have made.

Mr. Costello

Will the Minister deal with the point I raised—that the concession he is prepared to give will be made part of the Statute Law. The Minister has just stated that if the inspector refuses to give relief there is an appeal to the Special Commissioners. Presumably, there is also an appeal to the Circuit judge. Whatever the Commissioners may do the Circuit judge will only act on the strict letter of the law. He will not be able to exercise any discretion. My suggestion is that whatever the Minister wishes to give should be put into words and made part of the statute law of the country. Otherwise, there will be no security for the individual taxpayer.

Mr. Brennan

It is not really fair to let these people open to the ravages of the Revenue Commissioners. There ought to be statutory safeguards which would protect their interests.

Amendment withdrawn.

Mr. MacEntee

I move amendment No. 3:—

In page 4 to add at the end of Section 3 a new sub-section as follows:—

" (8) This section shall not apply to or have effect in the County Borough of Waterford, and accordingly tax under Schedule A of the Income Tax Act, 1918, shall be assessed and charged on tenements and rateable hereditaments situate in the County Borough of Waterford as if this section had not been enacted."

This amendment is designed to meet a case of the Borough of Waterford in connection with which undoubtedly special circumstances exist. The City of Waterford was revalued after the passage of the Treaty and the establishment of the Free State. The new valuation came into force in March, 1926. That new valuation had the effect of increasing the valuation of the city from £51,000 odd to £76,000 odd, or an increase of about 49 per cent. From these figures and an examination of specimen cases Schedule A assessments in the County Borough of Waterford will work out relatively at least as high as the 25 per cent. increase that has been put on in other parts of the country.

General Mulcahy

I move amendment No. 4:—

To insert after the word "Waterford" where it first occurs the words "nor in the case of tenements and rateable hereditaments constructed or reconstructed after the 6th December, 1922, in respect, of which new valuations have therefore been made since that date," and to insert after the word "Waterford" where it secondly occurs the words "and in the case of tenements and rateable hereditaments constructed or reconstructed after the 6th December, 1922, and in respect of which new valuations have therefore been made since that date."

This is an amendment to the Minister's amendment with regard to Waterford. It is quite true that Waterford was revalued and that the new valuation was an increase of nearly 50 per cent. on the old valuation. When Waterford was revalued it was not revalued on any new principle. It was revalued as a whole and the old principle was applied. That old principle dealt with modern circumstances. What that change means can easily be seen if one takes the valuation of Waterford and compares it with the valuation of Limerick. My amendment would mean that as well as extending this relief to Waterford where the whole property in the city was revalued, the relief would also be extended in the case of tenements constructed after the 6th December, 1922, in respect of which new valuations have probably been made after that date.

Let us see how the City of Dublin is affected by revaluations carried out since 1922. When revaluations were carried out in the City of Dublin after 1922, the same thing happened as happened in Waterford, except that in the City of Dublin it applied to a certain number of individual people, but in Waterford it applied to property owners as a whole. If we take the old City of Dublin before the 1930 extension, we find that the valuation in February, 1922, was £1,170,000, and that the valuation of the same area in February, 1935, was £1,580,000. So that in that area, as a result of certain rebuilding—because inside the city the extension of new buildings was not very great—the valuation of the city was actually increased by 29 per cent., something over half, I think, of the increase in Waterford. As regards particular property in the city, we find that the valuation of a certain property in O'Connell Street before it was destroyed in 1922 was £6,501, and that the valuation of the property when rebuilt was £14,283, so that the valuation had gone up by 120 per cent.

Now the Minister proposes to put on top of that revalued property in O'Connell Street, and in other parts of the city where revaluation has taken place, an increase which he thinks it would be unjust to property owners in Waterford to put on them. I therefore think it is only reasonable that the amendment should be accepted; that relief that is proper, and that no one will deny is just in the case of property owners in Waterford, is equally just and necessary to be given in the case of persons who own property in the rebuilt areas in O'Connell Street and many other places in the City of Dublin where revaluations have been carried out since 1922. I think that Deputy Cosgrave, with his more intimate knowledge of the city, can say that that also applies to Cork, as it also refers to many other parts of the country. I think that justice should be extended to individuals in various parts of the country who are in the same position as the property owners in Waterford.

Mr. Cosgrave

What Deputy Mulcahy has explained with regard to Dublin also applies to Cork, Balbriggan, and other places where property was destroyed and subsequently rebuilt. It must be remembered that, not alone was the valuation in these cases increased, but that, in so far as building costs enter into the question of valuation, and I rather think they do, the cost of building at that time was much higher than it is now. As far as these premises are concerned, no subsequent revaluation would increase the valuation. It is quite likely, on the contrary, that it may be reduced. In one case in Cork the valuation was actually increased from £75 to £300. You can see at once, therefore, how much hardship was involved on a firm having premises of that sort, which had been entitled to a deduction of one-sixth two years ago and had been assessable on £250, who now find themselves having to pay on an assessment of £375.

There are not many cases involved. In the case of Dublin, my recollection is that after 1916, although reconstruction did not take place for many years, the increase in the valuation of premises in O'Connell Street was in the neighbourhood of £32,000. If the new buildings were more adapted to and did more business, no question would arise; but it is very unlikely in the case of Dublin, Cork, Balbriggan, or any place where property was destroyed, that there has been such an increase in business. For over ten years, apart from certain concessions in respect of local taxation that were given to them, they have borne the full assessment of income tax on the higher valuation. They certainly have got as strong a case as Waterford has.

In the case of Waterford, I should say that they have this advantage: that the city has not been so extensively reconstructed during the last few years as in the other cases. The premises in question were rebuilt at a time when building costs were high and the owners who have had to bear the income tax assessment over those years, are now put in the position that within the short space of two years they are to be liable for an assessment 50 per cent. in excess of the highest valuation that could be put on the premises. That does not appear on the face of it to be equitable.

Mr. Norton

There are features in this amendment which I dislike, but I dislike them less intensely than I do the provisions of the Finance Bill. Taking a choice between them, with all my objections to it, I prefer Deputy Mulcahy's amendment to the section in the Bill. I think the whole principle of this section is bad and unsound. It is retrospective legislation in its most vicious form. Not only is it retrospective legislation, but in existing circumstances it is a particularly objectionable type of retrospective legislation. On the Second Reading of the Bill I expressed the view that it was unfair that working-class dwellings built, let us say, since the war period should, for income tax purposes, have their valuation raised by 25 per cent. An effort was made by the Minister to show that the increase in valuations in these cases did not mean an increase in income tax. If that is so, why does the Minister object to inserting a provision to exclude dwelling-houses of that kind? The Minister persists in getting a blanket charge to increase the valuation of houses for income tax purposes by 25 per cent. While I am not, in existing circumstances, opposed to certain persons, fairly well-endowed with this world's goods, making a contribution for budgetary purposes, I am strongly opposed to any kind of blanketing code such as is enshrined in the section, which enables the Minister to exact this tribute from persons who come into the category of ordinary working-class folk. For that reason, although I have objections to it on another score, I prefer Deputy Mulcahy's amendment to the proposal of the Minister.

It is, I think, as everybody knows, true to say that within the last 20 years house-building costs have been high. Houses have been erected in an atmosphere of high building costs and the erection of those houses has consequently meant an expenditure of a sum of money which, perhaps, would not be spent to-day in the erection of a similar class of dwelling. Many of those houses have been bought by working-class people on the hire purchase system. They have not merely to pay high outgoings in the form of annuities to extinguish the loans which they have received, but now under this section a considerable number of these people may be caught in such a way as to compel them to pay an additional sum for income tax purposes, arrived at by deeming the house to be value for five-fourths of its valuation. If the Minister is so satisfied that working-class people will not come within the scope of the section, then I cannot see any reasonable objection to excluding houses of that kind. I think the effect of the section would be bad from the house-building point of view and that in existing circumstances it would not be desirable that we should create another impediment in the way of house-building activities. The Minister now wants to claim that for income tax purposes he is entitled to take the valuation as five-fourths of the present figure. If the Minister is entitled to take the valuation of dwellinghouses for income tax purposes at five-fourths of the present figure, how can he resist a claim by the local authorities that the same method of calculation should be applied in respect of rates? If the income tax authorities are entitled to base their assessments on five-fourths of the valuation, and if any case can be made for that viewpoint, I think a still stronger case can be made for asking the owner or the occupier of the house to pay rates on the basis of five-fourths of the existing valuation. The whole principle seems to me to be vicious. It presupposes an increase of 25 per cent. in the valuation of all houses.

There is apparently to be no appeal against a minimum increase of 25 per cent., because in the meantime the Minister will have collected his money. I am sure the necessary legislation will be drafted in such a way that there will be minimum increases of 25 per cent. in order to protect the Minister against the liability to make refunds. If we are going to increase the valuation of dwellinghouses, surely we ought to do it only after detailed inquiry? Surely we ought to examine the merits of the claims of particular towns and cities for exemption, and their plea as to why they should not be treated in the same way as other towns and cities.

Under a simple section such as this without any detailed or expert inquiry, we are now proceeding to revalue every piece of property in the land for income tax purposes, not in the interests of tenants, but with a view to squeezing from the tenants more money in income tax. I think this is a revolutionary proposal, and it is a dangerous kind of revolutionary proposal. Revolutionary proposals in themselves are not bad, but this is a reactionary revolutionary proposal because it embodies retrospective legislation and it will create, I believe, obstacles to house building. At the same time, in a period of acute depression we are going to increase valuations for income tax purposes by 25 per cent. I think the whole proceeding is an outrageous proceeding. I think it cannot be justified unless you take the view that when you want money you are entitled to strike anywhere, and grab at anything within your reach. That may be good reasoning for the purposes of balancing a Budget, but it is not good reasoning in any other sense. Although I dislike some of the implications involved in Deputy Mulcahy's amendment, I think the amendment on the whole is preferable to the section in the Bill.

Professor Thrift

I objected on previous stages, as strongly as I could, against the Minister's proposal in the Bill. I find myself in agreement with what Deputy Norton has said about it.

I hope very strongly that the Minister will accept the amendment of Deputy Mulcahy. One of the great objections I made previously was that the Minister's proposal tended to increase manifest injustices and inequalities which are at present in existence owing to the very different kinds of valuations which are in force on different dwellings. The Minister's proposal will make these inequalities more marked than ever. To a certain extent, if he accepts the amendment of Deputy Mulcahy, these inequalities will be smoothed out. I hope the Minister will see his way to accept the amendment which will be a decided improvement on the original proposal.

Mr. MacEntee

It is impossible to accept the amendment for many reasons. In the first place it would be practically impossible to administer it and, if it were adopted, it would be better to discard the section altogether. Secondly, it has no ground of equity to support it. The amendment is to exempt buildings which have been reconstructed after the 6th December, 1922, in respect of which new valuations have been made, and tenements and rateable hereditaments, constructed or reconstructed after the 6th December, 1922, and in respect of which new valuations have therefore been made since that date. The case of Waterford is not at all analogous to what is proposed here, because in Waterford the whole city, including new and old property, was revalued. The considerable increase in the valuation to my mind in the case of Waterford springs undoubtedly from the revaluation of old property. I may say, Sir, that what convinced me that something should be done in this case of Waterford was the statement made that when appeals from the assessments of the Commissioner of Valuation were before the court, the court took the view that more regard should have been paid than heretofore was paid to the existing incomes, which could be derived from the letting of the property, and that, in fact, the Commissioner of Valuation seemed to have taken such incomes into consideration——

General Mulcahy

What is meant by income?

Mr. MacEntee

Therefore, in the case of Waterford, a comparatively small town, the valuation had been increased, as I have said already, by 49 per cent. There is no other area in the Free State of which the same can be said. A great deal of the case for this amendment has been based upon the valuations of buildings which have been built to replace property destroyed, and there has been, I think, some confusion in the minds of the Deputy who proposed the amendment and Deputy Cosgrave, who supported it, because they seem to regard the old property which was destroyed and the new property which rose like a phoenix from the ashes, as being one and the same property, one and the same building. Of course, it is quite clear that this was not so. You have only to look at O'Connell Street now, and cast your mind back on what it was like prior to 1916. I know there is one building there, the first and second storey of which were occupied as a dwellinghouse by the manager. The dwelling accommodation has been replaced by three magnificent suites of offices, the income from which, I venture to say, is not less than £400 a year. It is quite clear that a building which formerly might have provided living accommodation for the manager of an establishment was not at all comparable with the building that has replaced it, which has been constructed as a modern office building with all the amenities of offices, which give the fortunate owner an income of £400 a year from lettings alone.

It is largely as the result of valuations of new buildings that this increase in the valuation of certain areas in Dublin has taken place. In striking the valuations for every one of these new buildings, the Commissioner is bound by earlier decisions of the High Court and Supreme Court to have regard to the principle of relativity and even these new buildings have been considerably undervalued, having regard to the income which may be derived from them from year to year. It is quite clear that no case can be made on grounds of equity for the exemption of buildings of this type from the section in the Bill because their valuations have been artificially depressed by reason of the fact that, in general, the valuations of buildings in this State are not at all proportionate to the income which is derived from them.

There is another point. Most of the buildings in O'Connell Street and elsewhere are business premises. It does not make any difference to the occupiers of these premises whether this section in the Bill stands or not, so long as they do not happen at the same time to be owners who let part of them. If they are merely owner occupiers, then for the purpose of assessment under Schedule D an increased allowance will be made for the income tax which they pay. That income tax will be increased correspondingly under Schedule A, so that so far as the occupiers of business premises are concerned, provided they do not own the premises and do not make a profit from other sub-lettings, they will be in no different position to what they are now.

On the question which Deputy Norton has raised, I think he also is under some misapprehension. He has attacked the section because he feels that it proposes to squeeze from the tenants more money in income tax. The fact of the matter is that under the Schedule the tenants do not pay income tax; it is the landlord; the owner of the premises.

Mr. Norton

But where the tenant is the owner?

Mr. MacEntee

I want to clear up that point later. The owner occupier is not obviously in the same position as a tenant. We are now dealing with the statement that tenants are being squeezed for income tax. I want to make it quite clear that so far as the proposal in the Bill is concerned, tenants are not going to find themselves in any worse position than they are in to-day. It will be the landlord, the owner of the property, who will pay the income tax. Deputy Norton, however, may have had in his mind the case of a man who is purchasing his house, possibly through the Corporation or through a building society. As I have already said, in these cases the amount of interest almost invariably exceeds the Schedule A assessment and will still, I believe, exceed the increased Schedule A assessment, so that no charge will fall on the tenant purchaser. Let us take an example. There are, I understand, possibly 5,000 houses falling under the Corporation easy purchase scheme. Only £50 is paid by the purchasers of these houses at the outset. The amount of the interest on the balance of the purchase money is so large that as a practical measure no Schedule A tax is being collected on the property. The Corporation account direct to the Revenue by reference to the tax on the interest, etc. Take the case of a house on which the poor law valuation is £26, a house completed subsequent to 1923. A house of that sort would sell normally in Dublin for from £950 to £1,000, or possibly £1,050, subject, maybe, to a ground rent of £10. Unless the purchaser is so well off that he can put down ready cash for a very large proportion of the purchase price, it is obvious the ground rent plus interest on a house of that description would exceed £32 10s., which would be the amount of the new Schedule A assessment, so that it is quite clear in a case of that sort, and I think it is an extreme case, the occupier will bear no tax.

Again, take the case of a house of which the poor rate valuation is £20. A house of that sort would sell in Dublin at from £700 to £800, subject to a ground rent of about 1 per cent., say, £7. Here, again, it is obvious that the charges for interest and ground rent almost invariably—in fact, in the great generality of cases—will exceed the Schedule A assessment, and of course we cannot legislate for the particular case. Take, again, even the case of the small owner occupier who has been able to purchase his house outright. The allowances, in normal circumstances, in such a case as that, are such that the man is, in fact, exempt from income tax. Take, say, a man with £6 a week of earned income, equivalent to £312 per annum, who has two or three children. His allowance for earned income will be £52. His marriage allowance will be £225. His allowance for each child will be £50. If, therefore, he has only two children, he cannot become liable to income tax until his income, other than income from his employment, amounts to £65. If, of course, he has three children, he cannot be liable until his income, other than earned income, is about £115 per annum. I think that on a consideration of these cases, it must be clear that the proportion of the members of the wage-earning classes who will be affected by the section in the Bill must be very insignificant—in fact, I should say that it would be negligible indeed.

Now, I think we ought to have a glance at the other side of the picture. I think we ought to have a glance at the sort of case we are trying to catch: the case of a man who derives a substantial income from the ownership of property and who, hitherto, has been paying very much less than his just share of the national taxation. Take, say, a house with a poor rate valuation of £20. That house is likely to let, in present circumstances in Dublin, at £80 per annum clear, or it may be a house of the same kind with a poor rate valuation of £26, which is likely to be let at £100 per annum—and I may say here that the Revenue Commissioners actually have particulars indicating that even higher rents than this are paid in some cases—let us assume that a landlord has 12 such houses valued for what would be an average figure at £24 each, all built since 1923. At a moderate estimate, he will get £100 per year for each house, the owner paying the rates and, in many cases, owing to the provision as to relief from rates, the rates would be negligible. If it be assumed, however, that the rates and repairs on each house cost him £25 a year, which is a very liberal estimate, his real income from each house will be £75 per year, and his total net income, taking one year with another, will be £900 per annum. At present he is assessed for income tax purposes as though his income, instead of being £900, were only £288; in other words, £612 of his income escape scot free from income tax. Now, the point is this: that if the amendment, in the form in which it is now before the House, is carried, it will make the proposal in the Bill impracticable. We would have to drop it, if, of course, a greater cataclysm than that did not occur and we had to swop horses. But if we had to drop these proposals, the effect would be that an individual, in the circumstances I have mentioned, enjoying a nett income from property of £900—an income he has enjoyed— would be taxed as if that income were only £288, and he would be free of income tax on the balance of his income, amounting to £612, at the expense of the rest of the community, including, of course, the workers for whom Deputy Norton speaks and with whom he is particularly concerned. Not alone that, but we would have to make good the cost to the Exchequer of the exemption which that man would continue to enjoy—the exemption that he has had up to the present —by imposing a heavier duty upon some other commodity. I think, as I said before, there is no justification in equity for the proposal, and I hope the House will reject it.

Professor Alton

There is one thing to which I should like to draw the Minister's attention. The Minister put forward very elaborate arguments but he left out of the question altogether the case I put before him of the owner occupier—not the man who is deriving a large income from investments in house property, but the owner occupier who had this one privilege that was withdrawn last year and who is to have this extra burden planted on him this year. There is no equity for placing that burden on such a man.

Mr. Norton

There is one question I should like to ask the Minister. My object is to show how certain wage earning classes will be exempt from the scope of this. Let us take the case of a widow.

An Leas-Cheann Comhairle

The Deputy is putting forward an argument, not a question.

Mr. Norton

This is a question, Sir, and not an argument. Take the case of a widow with £3 10s. 0d. per week income—a widow with young children —repaying £400 with interest to the Dublin Corporation for a period of 35 years, living in and owning on mortgage a house valued £20. Will not that woman be caught in this section?

Professor Thrift

There is one question I should like to ask the Minister. Is the Minister of opinion that where there were two houses under the same valuation before one was destroyed and rebuilt by compensation grant, the two houses remain of the same valuation after reconstruction? Both houses were of the same valuation, but one was destroyed and rebuilt by compensation grant on exactly the same plan as before. Is the Minister of opinion that the two houses remain of the same valuation after that rebuilding took place?

Mr. MacEntee

Obviously, the Deputy has two concrete examples in his mind. He knows very well that I could not express an opinion on the sort of vague generality he has made.

Professor Thrift

But there is a general principle involved here.

Mr. MacEntee

The general principle is that the new house would be valued in relation to the valuation which is being imposed on the old.

Professor Thrift

The general principle is whether reconstruction since 1922 affected the valuation; whether the valuation was on a different basis after the reconstruction.

Amendment No. 4 put.

The Dáil divided: Tá, 45; Níl, 53.

Tá

Alton, Ernest Henry.
Anthony, Richard.
Belton, Patrick.
Bennett, George Cecil.
Bourke, Séamus.
Brennan, Michael.
Broderick, William Joseph.
Burke, James Michael.
Coburn, James.
Cosgrave, William T.
Costello, John Aloysius.
Daly, Patrick.
Desmond, William.
Dockrell, Henry Morgan.
Doyle, Peadar S.
Esmonde, Osmond Grattan.
Everett, James.
Fitzgerald, Desmond.
Fitzgerald-Kenney, James.
Holohan, Richard.
Keating, John.
Keyes, Michael.
Lavery, Cecil.
MacEoin, Seán.
McFadden, Michael Og.
McGilligan, Patrick.
McGovern, Patrick.
McMenamin, Daniel.
Minch, Sydney B.
Morrisroe, James.
Morrissey, Daniel.
Mulcahy, Richard.
Murphy, Timothy Joseph.
Nally, Martin.
Norton, William.
O'Higgins, Thomas Francis.
O'Leary, Daniel.
O'Mahony, The.
O'Sullivan, Gearóid.
O'Sullivan, John Marcus.
Pattison, James P.
Redmond, Bridget Mary.
Rogers, Patrick James.
Thrift, William Edward.
Wall, Nicholas.

Níl

Aiken, Frank.
Beegan, Patrick.
Blaney, Neal.
Boland, Gerald.
Boland, Patrick.
Bourke, Daniel.
Brady, Brian.
Breathnach, Cormac.
Breen, Daniel.
Briscoe, Robert.
Concannon, Helena.
Cooney, Eamonn.
Gibbons, Seán.
Goulding, John.
Hales, Thomas.
Harris, Thomas.
Keely, Séamus P.
Kehoe, Patrick.
Kelly, Thomas.
Kilroy, Michael.
Kissane, Eamonn.
Lemass, Seán F.
Little, Patrick John.
Lynch, James B.
MacEntee, Seán.
Maguire, Ben.
Maguire, Conor Alexander.
Corbett, Edmond.
Corkery, Daniel.
Crowley, Fred. Hugh.
Crowley, Timothy.
Derrig, Thomas.
Doherty, Hugh.
Donnelly, Eamon.
Dowdall, Thomas P.
Flinn, Hugo V.
Flynn, John.
Flynn, Stephen.
Fogarty, Andrew.
Moane, Edward.
Moore, Séamus.
O Briain, Donnchadh.
O'Grady, Seán.
O'Reilly, Matthew.
Pearse, Margaret Mary.
Ruttledge, Patrick Joseph.
Ryan, James.
Ryan, Martin.
Ryan, Robert.
Sheridan, Michael.
Smith, Patrick.
Victory, James.
Walsh, Richard.

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

Amendment No. 4 declared lost.

Amendment No. 3 put and agreed to.

Mr. MacEntee

I move amendment No. 5:—

In page 8 to insert at the end of Section 11 a new sub-section as follows:—

(3) Section 106 of the Customs Consolidation Act, 1876, shall, in its application to any article chargeable with the duty mentioned at reference number 15 in the Second Schedule to this Act, be construed and have effect as if the words "or shall be found to be of less value for home use than the amount of the drawback claimed" contained in the said section were omitted therefrom.

The necessity for this amendment arises on a section of the Customs Consolidation Act, 1876, which contains a general provision that the drawback shall not be payable on any goods whose value for home use is less than the amount of the drawback claimed. The application of this principle to the duty on printed paper is one of the matters to which the amendment relates. It is well known that unsold papers are returned to the proprietors of the different newspapers and are ultimately exported as waste paper. At the moment the prices which are obtainable abroad happen to be in excess of the duty paid on the raw material—that is on printed paper. But circumstances might arise which would seriously depress the price at any rate on the home market for waste paper. The home market is limited and a strict application of the principle might result in the refusal of the drawback. In these circumstances it is necessary to enact that this provision shall not apply to the duty.

Amendment agreed to.

Amendment put and agreed to.

Question put: "That the Bill, as amended, be received for final consideration."

The Dáil divided: Tá, 60; Níl, 43.

Tá

Aiken, Frank.
Beegan, Patrick.
Boland, Gerald.
Boland, Patrick.
Bourke, Daniel.
Brady, Brian.
Breathnach, Cormac.
Breen, Daniel.
Briscoe, Robert.
Concannon, Helena.
Cooney, Eamonn.
Corbett, Edmond.
Corkery, Daniel.
Crowley, Fred. Hugh.
Crowley, Timothy.
Derrig, Thomas.
Doherty, Hugh.
Donnelly, Eamon.
Lemass, Seán F.
Little, Patrick John.
Lynch, James B.
MacEntee, Seán.
Maguire, Ben.
Maguire, Conor Alexander.
Moane, Edward.
Moore, Séamus.
Murphy, Timothy Joseph.
Norton, William.
O'Briain, Donnchadh.
O Ceallaigh, Seán T.
Dowdall, Thomas P.
Everett, James.
Flinn, Hugo. V
Flynn, John.
Flynn, Stephen.
Fogarty, Andrew.
Gibbons, Seán.
Goulding, John.
Hales, Thomas.
Harris, Thomas.
Jordan, Stephen.
Keely, Séamus P.
Kehoe, Patrick.
Kelly, James Patrick.
Kelly, Thomas.
Keyes, Michael.
Kilroy, Michael.
Kissane, Eamonn.
O'Grady, Seán.
O'Reilly, Matthew.
Pattison, James P.
Pearse, Margaret Mary.
Ruttledge, Patrick Joseph.
Ryan, James.
Ryan, Martin.
Ryan, Robert.
Sheridan, Michael.
Smith, Patrick.
Victory, James.
Walsh, Richard.

Níl

Alton, Ernest Henry.
Anthony, Richard.
Beckett, James Walter.
Belton, Patrick.
Bennett, George Cecil.
Bourke, Séamus.
Brennan, Michael.
Broderick, William Joseph.
Burke, James Michael.
Coburn, James.
Cosgrave, William T.
Costello, John Aloysius.
Daly, Patrick.
Desmond, William.
Dockrell, Henry Morgan.
Doyle, Peadar S.
Esmonde, Osmond Grattan.
Fitzgerald, Desmond.
Fitzgerald-Kenney, James.
Holohan, Richard.
Keating, John.
Lavery, Cecil.
Lynch, Finian.
MacEoin, Seán.
McFadden, Michael Og.
McGilligan, Patrick.
McGovern, Patrick.
McMenamin, Daniel.
Minch, Sydney B.
Morrisroe, James.
Morrissey, Daniel.
Mulcahy, Richard.
Murphy, James Edward.
Nally, Martin.
O'Higgins, Thomas Francis.
O'Leary, Daniel.
O'Mahony, The.
O'Sullivan, Gearóid.
O'Sullivan, John Marcus.
Redmond, Bridget Mary.
Rogers, Patrick James.
Thrift, William Edward.
Wall, Nicholas.

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

Question declared carried.

Question proposed: "That the Bill do now pass."

Professor O'Sullivan

I presume that it is rather late now to appeal to the House to bethink themselves of what they are doing in passing this Budget. I wonder whether the members of the, for the moment, Government Party have given consideration to the disastrous effects this Budget is bound to have on the country—that it cannot avoid having. That was pointed out on the Budget statement of the Minister for Finance and on the Second Reading, and this Bill has passed through this House now practically without amendment. A few minor concessions have been given, but taking the burden of taxation as a whole, no concession has been got from the Government so far as the ordinary people of this country are concerned, and, as far as I know, no concession was asked for by the members of the Government Party in connection with the burden of taxation that the Government has chosen to put on everybody in this country. Still, the Budget is so bad, the financial policy that it represents seems to me to be fraught with so much danger to the country that we do feel bound to make a last appeal to the House not to pass this Budget.

There was one thing that was not quite so evident, perhaps, at the start, but which became a little more evident as the various stages of this Bill progressed and that was the light-heartedness with which, at least, the Minister looked upon all this imposition of taxes. One thing became evident, and I think it was quite evident, especially in the course of the past week, and that was that the one thing that never seems to have occurred to the minds of the various Ministers was the capacity of the people to pay or the wisdom of putting these burdens on the people. They considered other things in connection with the imposition of many of these taxes, but it is quite obvious that that was a consideration that was altogether beyond their purview. We object to the Budget as it stands. We object to this Bill—to the Budget as it is in reality—in so far as it pretends to be a statement of national finances and of taxation. It is nothing of the kind. Under the system that has grown up—and this is quite relevant when we are asked to impose taxes on the people — and that has developed with alarming rapidity in the last couple of years, many of the more serious taxes no longer appear in this Bill. To those we have directed attention already, and when people are asked to pay a tax on their sugar, on their tea, on their tobacco, and on practically everything they use or eat, it should be borne in mind that there are other things also on which these unfortunate people have to pay taxes that are not mentioned in the Budget; such things as butter, bacon, a large portion of the sugar tax, and above all on bread. In addition to these, there is another sum collected which is incalculable—incalculable in the sense of being very difficult to calculate; in fact, it is practically impossible to calculate it. I do not think that anybody could give even a guess as to the effect that the imposition of tariffs has had in increasing the prices of commodities manufactured in this country and consumed in this country. That should also be borne in mind when we are asked to impose these further new taxes or even to continue the old taxes on the people of this country.

It is not, as I say, in this Bill alone that these burdens appear. It is not in the Resolutions to which this Bill refers. This is not the only instrument that imposes new taxes on the people. There are many other methods also by which new taxes are imposed on the people, and it is extremely bad finance and shows extreme callousness to the real burdens that the country has to bear, not to be conscious of these things when we are imposing these new burdens or even keeping on the old ones. If, therefore, anybody wants to get any kind of a real idea as to what the running of the country costs, he must go far beyond the present Bill or the present Budget statement to which the Bill has reference. He must go even beyond the Estimates. These things only deal with a portion—a gradually diminishing portion, if you like, owing to the rapid increase in the other methods of getting money out of the people—of the taxes from the people. But even though the unacknowledged Budget is mounting up and up, it is still far from the enormous sum represented in this particular Budget. There are other charges as well that the people have to bear. What is the excuse for all this? With what do those who support the Government try to salve their consciences or to win over their people? The excuse they offer is the necessity for keeping up the social services. There were additional social services legislated for this year, such as the Widows' and Orphans' Fund. Let anybody ask himself what the worker has to pay in the way of additional taxation to meet that social service. He will then see how hollow the plea is. It is not in the social services that a great deal of money is unnecessarily spent. It is unnecessarily spent where it would be well for the country if it were not spent. We object, and we have objected all along, to the immense sum that this House is asked to provide, because the expenditure which it is meant to meet is not justified.

Now, Sir, I do not want to deal again with matters that have been already dealt with. I do not want to stress the wrong point of view displayed at the present time by putting a tax on the necessities of life, whether it be bread or sugar, or butter or tea; but even in the matter we discussed last week, and to which I already made reference to-day and shall not now repeat, when we asked the Minister for Industry and Commerce to give us some justification for the extraordinary number of Schedules he or his colleague has in this particular Bill, I think long as was the discussion and frequent as were the interventions of the Minister, there is one thing which was not made clear, and that is: who precisely benefited by many of those impositions. In regard to the figures published by his own Department, we know that according to the Minister they mean nothing, or if they mean anything they mean the opposite to what they seem to mean, but it is quite clear that the wages fund of the State is not benefiting. There may be people getting benefits from those tariffs; there is a view abroad that many people are making rather easy money as a result of the tariffs. The attitude taken up by the Ministry of Industry and Commerce last week in increasing many of those tariffs from 20 per cent. to 40 per cent. only makes it easier for those people to make easy money at the expense of the people. Undoubtedly, as Deputy Dowdall reiterated in his repudiation, the ordinary manufacturer will make the money, and why should he not? That was the point. Luckily, we had last week a case in which it was clear that the tariff had put up the price. It was the one case in which we did not get the usual stereotyped reply from the Minister, that as a result of the tariffs everything would be cheaper; that if you put on a tariff of 20 per cent. the article would be cheaper than if you put on no tariff; if you doubled the tariff the article would be cheaper still, until possibly, if you put on 100 per cent. the people would almost get it for nothing. He did not go quite as far as that, but that was the direction in which his rather absurd argument was tending on that particular occasion.

I wonder does the House really approve of this Budget? I know they voted for it. They voted for its various stages, but, in contrast to previous Budgets, we waited in vain for any strong speeches in its defence. It is easy to speak on the Fifth Stage now. A couple of general remarks to the effect that you approve of the Government policy and will stand by it, are quite easy, but when there was an opportunity, during the Committee Stage, of defending the taxes which the Government proposes to impose there was no such alacrity in coming forward. Now, on the Fifth Stage, I expect the intervention of a couple of the Deputies who are generally so vocal on financial matters, but who were so remarkably silent during the Committee Stage of this measure. Many of them have been muzzled; many of them may have assumed the muzzle. I think they were not sorry to be told not to speak and not to defend those particular taxes. As far as I remember, one Deputy, greatly daring, did stand up—Deputy Donnelly. Whether it was in defence of this or some similar tax, I cannot remember, but he did defend one of them. If the Government's policy—its international policy or its so-called economic policy, which is merely effecting the ruin of the foundations of the economy of this country— requires the kind of taxation which has been put on the people this year, without any great strain or stress to justify it, then it speaks very badly for the policy. It is in itself a condemnation of the policy of the Government. They speak of the social services, but they are largely financed now, it is quite clear, by taking the money out of the wages of the ordinary people of this country. Any increased yield from taxation no longer comes, as was boasted on the first Budget, from the richer classes. They have been drained dry, according to the confession of the Minister for Finance and of the President. They have had extracted from them the last penny, and now all those services —necessary or unnecessary; the increase in the Guards, the financing of the unnecessary economic war, and so on—have to be borne out of the ordinary wages of the bulk of the people of this country. Right through, as I said, there was no evidence of any kind that there was any thought given to the taxpayer and by the taxpayer I do not mean what used to be meant in the old days by ratepayers—people of property; I mean every individual citizen of this country, and practically every child in this country, because in so far as they are consumers of many articles in the way of clothes, and so on, they indirectly contribute to the taxation. They bear all those indirect taxes.

The interesting thing now is the increase not in the direct taxes but in the indirect taxes. That is the outstanding feature of the progress of Fianna Fáil finance in the last three years. They started off by trying to get money from the direct taxes, but gradually they have reverted to the indirect taxes, which bear on every man, woman and child in this country, and which everybody knows bear the heavier the poorer the person is. That is inevitable. It cannot be avoided. That is the characteristic of indirect taxation. It is useless to pretend that a tax on bread bears as heavily on a man with £10,000 a year, if we have any such people in this country, as it does on a man with £10 a year. It does not. There is no comparison. The same thing applies to several of the other taxes—the tax on tea, sugar, and so on. One thing which was apparently left out of account in the framing of the Budget, and certainly in every speech made in defence of it, was the capacity of the people to bear those taxes. Now, the Fianna Fáil Party cannot pretend that it is ignorant of the importance of that factor. Nobody, I think, stressed it more fully than the members of that Party. They are quite aware of the importance, when you are imposing new taxes, of taking into account what the people can bear. They were very eloquent in pointing out, when the taxes were much less than they are at present, that the people could not bear them.

The Minister for Industry and Commerce may shout that production is now much more than it was before. He will not convince the country of that because the country knows that the opposite is the case. Let him get all he claims for his new industries; supposing they are not what they are; supposing they are much better than they are; supposing they are what he claims for them—that in no way compensates for the damage to the principal industry of the country. If you take the productive capacity of the country as a whole, undoubtedly the production of the country is much less now, and the value of it is much less now than it was, say, six or seven years ago, when the Fianna Fáil Party was so eloquent on the incapacity of the then Government and the impossibility of the country bearing the amount of taxes that were put on. Yet that same Party year after year increases the taxes and that at a time when the taxable capacity of the country is decreasing. Well, it must be plain even to them that with the decline in trade, with the serious inroads that have been made on production, that a policy of that kind cannot help being disastrous; and that any shouting that they may indulge in and any pretending the opposite is simply—to use one of the oldest metaphors—whistling while passing the churchyard.

One thing, at all events has become clear and that is that the country is reckoning the seriousness of the situation. It is not merely the case of a tax on tea, or a tax on sugar or that these taxes are unpopular. It is not against these that the country is kicking. The tax on tea and sugar is rightly unpopular in the present circumstances particularly with the imposition in addition of the indirect taxes not mentioned in this Bill. The addition of this tax is rightly unpopular but it is not the unpopularity of the tax alone that explains the tendency of the people to kick against it. It is the growing conviction on the part of the people that there is only one place and that a particularly unenviable one to which the policy of the Government is leading. Let the Fianna Fáil Party contrast the glee with which the first Budget of the present Minister for Finance was received by that Party and the remarkable and almost chilly silence in the way of defence of the details with which the Party receives the present Budget. They know themselves that this policy is disastrous, and they ought to know that not merely may it be disastrous to them as a Party, but, what is much more serious, that it is bound to be disastrous for the country.

Dáil Éireann debate - Wednesday, 10 Jul 1935

Finance Bill, 1935—Report.

Tá

Níl

Tá

Níl

Tá

Níl

Dáil Éireann debate -
Wednesday, 10 Jul 1935