Committee on Finance. - Finance Bill, 1937—Committee Stage.

Question proposed: "That Section 1 stand part of the Bill."

On Section 1, Sir, is that the income-tax resolution?

Well, I made a representation to the Minister, on the Second Stage or on some stage of the Resolutions, directing his attention to the matter of the owners of stallions. He replied that the only effect of this would be to put money into the pockets of a very restricted group of persons. The Minister must know that that is not true, and he must know that his own colleague, the Minister for Agriculture, shares my view. It is not the sum of money that will be saved. It is to remove the disparity between revenue practice here and revenue practice in Great Britain. So far as I am concerned, I do not mind whether the Minister induces the British Treasurer to impose taxation under Schedule A on stallion owners, or whether he does it himself, or what method is adopted. All that I want is uniformity. So far as Great Britain is concerned, it does not matter a thraneen to her, because for her the horse-breeding industry is comparatively a trivial business, whereas for us it is of immense importance. It is the preservation of the famous stallions in Ireland that is so important, because, when a great race is run and won, the first thing that international commentators remark is the breeding of the winner, and the breeding in horse-racing circles, apparently, is judged predominantly by the identity of the sire.

Now, if the sire of a winning racehorse is an Irish sire and is attached to an Irish stud, that in itself constitutes an immense and invaluable advertisement for Irish horse-flesh, and the result is that you have people coming from all parts of the world to buy horses in Ireland. If the present revenue position continues, some of these sires will be brought to England.

The Deputy does not know what he is talking about.

The Minister now interjects with this rather impertinent observation: "He does not know what he is talking about." If I do not know what I am talking about, it is the Minister's fault. I asked him for information when the Resolution was reported, and the Minister replied. The Minister said on that occasion that the situation was that the British could do what they liked and that we would do what we liked, that my proposal would only result in putting a few pounds into the pockets of a few racehorse owners in this country, and that he could not see his way to levy taxes on the plain people of this country in order to recoup wealthy horse owners. My chief concern is to make identical the revenue system in the two countries. If I have not correctly stated the facts would the Minister be good enough to intervene and tell us what the real facts of the situation are? I have stated them to the best of my knowledge.

Surely we are not going to go through Committee with the Minister for Finance saying to me: "You have incorrectly stated the facts; you do not know what they are," and then, when I ask him what the facts are, he will not even tell me. That is grotesque.

It is a very unusual procedure on the Finance Bill, which covers such a wide range of income-tax law, to raise a question in the fashion in which Deputy Dillon has raised it now. If the Deputy wishes an aspect of the income-tax law to be changed, it is usual, and it was the practice when there was an orderly Opposition, to put down an amendment.

On a point of order, could I move an amendment which would operate to place a charge on the Exchequer by reducing a tax?

The Chair can only rule on an amendment which is before it. There is no amendment before the Chair.

Such an amendment would not be in order?

I am sorry there is such a great conflict of opinion on the Front Opposition Bench as to what is or is not in order because, Sir, Deputy John A. Costello and Deputy Richard Mulcahy have down here amendments on the Order Paper which propose to place a very substantial charge on the Exchequer.

To reduce a charge on the people.

Would the Minister point out what amendment on the list proposes to put a charge on anybody?

Let us keep to Section I.

What does Deputy Dillon propose to do?

As far as I could follow the Deputy, he wishes to take off a tax and Deputy Mulcahy proposes to take off a tax.

I thought you said we were putting one on.

Not for the first time have we divided counsels on the Front Bench. We had it in the last debate on External Affairs. We had Deputy Dillon making a plea for an armed League——

That is in no way concerned with the question before the House.

Except to point out merely that not for the first time——

We want no moralising.

I know the Deputy does not want morals.

We want information.

Not for the first time have we divided counsels on the Front Opposition Bench. Deputy Dillon thinks that he would not be in order in putting down an amendment to this section but Deputy Mulcahy does not think that he would be out of order in putting down an amendment of a very similar character.

The Minister seems to be in a fog.

However, I sent for the reports in order that I might look up, for Deputy Dillon's information, the debates on this matter and refer him to the full-dress debate which took place in this House on this matter in 1934. The Deputy is not a neophyte in Parliamentary affairs. He has at least five years' experience of this House, and he knows that this whole question was debated here at length two or three years ago. If the Deputy wants the facts, and if he wants to correct some of his own misstatements, I would refer him to the Parliamentary Debates.

Of course, this invites obstruction. It means that we must have a whole debate on this section. If the Minister studiously refuses to give information, the result must be that you have got to keep at him until you drag it out of him. If the Minister does not know and cannot answer my question now, I am prepared to give him every facility to get information. The Minister's attitude at present will not get him anywhere. A completely new situation has arisen since this matter was raised in 1934 or 1933.

Would the Deputy tell us what the situation is?

Of course I shall, but the Minister should know. The Minister is receiving a very large salary to know these things.

I am putting a question to the Deputy. He has asserted that a new situation has arisen. Will the Deputy please tell us what it is?

Yes, and with greater facility than the Minister has displayed so far in answering more relevant questions. In 1934 the Minister and his colleagues were conducting an economic war, and in 1936 in pursuance of an agreement, whereunder the land annuities were to be paid to the British Government, he induced the British Government to take the tariff off horses and to put it on hens. He did that for the purpose of coming to the aid of the horse-breeding industry. He said publicly that it was going to take £50,000 off horses and put it on hens in order to save the horse-breeding industry from extinction. Now, he released the horse-breeding industry from that serious burden and the result of that has been that not only has that £50,000 been saved for the horse breeders every year but a substantial additional sum has been secured for them by getting a free market for horse flesh. Horses are now the only live stock that can be exported to Britain without tariffs of any kind upon them. My submission is that having put this substantial burden on hens, in order to relieve the horses, we ought to exploit the advantage we have got for the horses to the utmost limit. To do that we ought to bring back into this country the most famous sires that are available. Up to this we could not do that, because so long as the tariff was there a mare which had a foal in this country and which came over to a sire here, had to pay an immense duty on the foal when she was going back to England. That difficulty has been got rid of but, in the meantime, a new difficulty has arisen and that is that the British Revenue Commissioners have been directed by the House of Lords in Great Britain to leave to horse breeders or stallion owners in Great Britain, the option of having income-tax levied on them under Schedule A or Schedule D. In this country the Revenue Commissioners have reserved the right to determine whether income-tax will be levied on horse breeders or stallion owners under Schedule A or Schedule D, and in practice they insist that where a man derives a large income from fees for the services of a stallion income-tax shall be levied in the same way as on ordinary income and not on the valuation of the farm. The result of that may well be that such breeders will keep their stallions in England. A man may have an income of £10,000 or £15,000 a year in fees by having two or three famous stallions. If he finds that he would have to pay much more in income-tax in this country he will move those stallions to England, whereupon all their progeny will be reported by the racing and sporting newspapers, when they win races, as being English-bred horses, with the resultant publicity and advantage to the English horse-breeding business.

If those stallions were induced to stand in Ireland, and the stud farm were maintained in Ireland, a great deal of valuable employment would be given directly on the stud farm, and indirectly to farmers all over the country, who would share the reflected glory of the classic race winner which was returned as an Irish-bred horse. This concession would not cost the Exchequer of this country more than £20,000 or £30,000, so far as I am aware, but it would make a contribution to the horse-breeding industry as a whole out of all proportion to what it would cost the Exchequer. It would have this additional advantage, that, although the Exchequer might lose money now, it would get back all that it lost and more in the employment that would be provided directly and indirectly as a result of this policy. That is the case I make. I outlined it as succinctly as I could on the Resolution. I did not press the Minister for a copious answer then, because I felt it was a matter which he might wish to look into more closely, and it was clearly forecast at that time that he would deal with it more fully on this stage of the Bill.

It was not.

It was the Minister's job to familiarise himself with this very relevant question which was raised on the Resolution, and to give an exhaustive statement now. If he would do that instead of hopping about like a herring on a griddle, and puffing and blowing——

The Deputy does a lot of puffing and blowing.

——and spreading his tail like a peacock, we could get on with the job, but if he tries to bluff he will merely delay himself and delay the House. We are asking for information which we are entitled to get. We are not asking for it in any acrimonious or contentious way. We are making proper representations to the Minister to get that information in a reasonable and proper way.

If the Deputy had any sense of shame he would not refer to his conduct on the Report Stage of these Resolutions, because the Chair ruled him out of order when he attempted to raise this matter. The Chair ruled him out of order, and he ought to have sufficient respect for the dignity and good conduct of this House not to try to call attention to his own breach of the Standing Orders.

As the Minister's remarks are so important I should like to suggest that he ought to have a House to listen to them. There is no House.

The Deputy apparently did not think Deputy Dillon's remarks of sufficient importance to provide Deputy Dillon with a House.

He was only teaching the Minister.

Waste of time.

I cordially agree with the Deputy. If the Minister would behave himself we could get on with the business.

Notice taken that 20 Deputies were not present; House counted, and 20 Deputies being present,

I was calling attention to the fact that it is customary in this House, when a question of this sort is raised, to put down an amendment. Deputy Dillon said he did not put down an amendment because it would have been ruled out of order. I suppose, at any rate, the action of the Chair when Deputy Dillon endeavoured to raise this matter on the Report Stage of the Resolution dealing with income-tax and surtax—of which the present section of the Finance Bill is a duplication—had at least that salutary effect on Deputy Dillon that he did not wish to offend against the rules of order. I have already called the attention of the House to the conflict of opinion which has arisen between Deputy John A. Costello, Deputy Richard Mulcahy, and Deputy Dillon, of course——

The Minister is wrong, as usual.

——in regard to what type of amendment it would be in order to put down to the Finance Act, but a much more serious position than that emerges. The deputy-leader of the Opposition is actually at variance with the leader of the Opposition as to the type of amendment that might be put down to the Finance Act. Deputy Dillon comes along here and thinks that, when he shoots a question across the floor of the House, I or any other Minister should be sufficiently versed in the twenty volumes of decided cases on income-tax law to be able to give him an answer, and to be able to give him all the relevant figures. If he had actually wanted this information, if he had actually wanted to read a discussion on the matter, he could have referred to the debate which took place in this House on 19th June, 1934, on the Finance Bill of that year, a report of which appears at column 608, volume 53, of the Parliamentary Debates. Notwithstanding Deputy Dillon's very decided views as to what type of amendment would be in order, the Deputy's leader—or is he still the Deputy's leader, because I notice that he scarcely ever appears when the Deputy is prepared to speak in the House—had this amendment on the Order Paper:—

‘"I move," said Mr. Cosgrave, "amendment No. 8:—

"Before Section 7 but in Part I of the Bill to insert a new section as follows:—

"‘In order to remove doubts it is hereby declared and enacted that income derived from fees charged for the service of stallions kept at a farm for stud purposes shall be treated as income coming within the terms of Schedule B and not of any other Schedule of the Income Tax Act, 1918.'"

Now, Sir, the Deputy who has risen here to-night to ask me for information actually spoke in that debate. I do not know whether the Deputy would like me to repeat what I said in reply to Deputy Dillon, himself on this matter.

And which should have silenced him then? Is that it?

That would be a work for Hercules.

The Minister had better not attempt it then. No two men were more unlike.

As I say, the Deputy —who, apparently, during the past two years has allowed his very vigilant mind to fall asleep in regard to this matter—comes in here to put me some hypothetical questions, and wants me to say whether such and such is the position. I would refer Deputy Dillon to his speech on that Finance Bill—it was not so long as usual—which started at column 621 and finished towards the end of column 624, when I began to reply to Deputy Dillon in these terms: "I do not know whether it is really worth while taking Deputy Dillon seriously." I have had no reason to change my opinion, or, shall I say, nothing has induced me to take a more serious view of what Deputy Dillon had to say on that occasion, and which he has tried to repeat to-night. Just as previously his speech was full of misconceptions and error with regard to the position, so, again, to-night. For instance, the Deputy said that latterly a new position had arisen. I do not know if the Deputy was conscious of what he was saying but he seemed to imply that, since the import duty which was formerly imposed on horses imported into Great Britain from this country had been removed, the House of Lords had given a decision which changed the schedule under which a stallion was assessed. I may have followed the Deputy imperfectly but I understood that that was what he said. If he did not say that, he wished, at all events, to convey that, some time in recent years, the House of Lords had come to a decision which had altered the whole position of the British stallion owner as compared with the Irish stallion owner.

No. What I said was that the fact that you had taken the tax off the horse and put it on the hen had altered the position.

I do not suppose anything will cure Deputy Dillon of the delusion under which he labours in that regard. He happened to think that it was rather epigrammatic to say, "Take the tax off the horse and put it on the hen." All I can say is that in that regard he has discovered a hen in a mare's nest. It was made quite clear by the Minister for Agriculture, when the Estimate for his Department was under discussion, that there was no truth in that statement, which is being repeated so often by Deputy Dillon.

What statement?

The mere fact that the statement does not happen to be true will not deter Deputy Dillon from repeating it ad nauseam. We shall hear of this tax, taken off the horse and put on the hen, during the whole course of the general election. After that, so far as Deputy Dillon and this House are concerned, there may be silence. I could not possibly get the drift of Deputy Dillon's argument in regard to this question of stallions. He said that the fact that stallion owners were chargeable to income-tax here under Schedule D would prevent good stallions being kept in this country. I cannot see the grounds upon which Deputy Dillon bases that statement. It could only be made by a Deputy ignorant of the income-tax code, because where a stallion stands does not matter; it is where the owner resides that determines whether or not the owner of the stallion will be assessable to our income-tax from the profits he derives from the keeping of the stallion.

What is the position? If a resident in Ireland owns a stallion which stands in England, he is chargeable with income-tax here on the profits derived from that stallion. What advantage will it be to the horse-breeding industry of this country to relieve that person of income-tax—to relieve him of income-tax at the expense of the poorer taxpayer and, in many cases, of the indirect taxpayer? That is what Deputy Dillon is pleading for—that a person who is wealthy enough to maintain a stallion standing in England should be relieved of tax. A person who can do that must have a considerable amount of capital. All the labour consequent on the maintenance of that stallion would enure to the benefit of persons resident in England. The profits might be very substantial. The profits which might be secured by keeping a stallion of the reputation of "Blandford" might amount to £14,000 or £15,000. That person, residing in this country and keeping a stallion standing in England, is to be relieved of the burden of paying income-tax upon an income which may amount to £14,000 or £15,000, an income, at all events, that would quite easily run into four or five figures. It is not demonstrable that any advantage would enure to the people of this country because of that.

What is the other position, which is the commoner position? That a person who resides in England, if he keeps a stallion here in Ireland, which has the reputation of being an Irish horse, is not chargeable to income-tax according to our law at all, and is possibly not chargeable to income-tax in Great Britain either.

He may be.

Deputy Dillon said that the reason he wanted to debate this point was that a person who resided in England and owned a stallion was not chargeable under Schedule D, but was chargeable under Schedule B. That is the justification Deputy Dillon has advanced for raising the question here.

What benefit and what advantage will the people of this country derive if we relieve a stallion owner who resides here of a particular duty and obligation which is imposed on every citizen—that of paying tax upon the income he actually enjoys? Are we to relieve him of that merely because he happens to keep a stallion? If we do relieve a person of the obligation of paying income-tax simply because he keeps a stallion, why should we not relieve another person of paying income-tax because he keeps a threshing machine or because he is a road contractor, or because he is a dispensary doctor or because he has rendered some other public service? Is it not quite clear that, once you grant a concession to a particular class of the community, other people will come along with just as good claims to exemption because of the nature of the services which they have rendered to the community? I shall put it to the common sense and intelligence of the people of the country that a person who serves the community as a dispensary doctor or as a school-teacher or as a Civic Guard is just as much entitled to exemption from income-tax as a person who makes a very substantial income out of the keeping of a stallion. That is the sort of proposition that is put up to us from the other side. Mind you, it is only the really substantial people who are engaged in the horse-breeding industry who are involved in this. It does not touch the ordinary small farmer because the profits he might derive from keeping a stallion would not in most cases be sufficiently large to bring him under the income-tax code; but there are four or five people who do derive very substantial incomes from the keeping of stallions; and if you were to exempt these four or five people, it would cost £14,000 or £15,000, and that £14,000 or £15,000 would have to be found by their much less fortunate confreres in that industry.

Again, I ask how is the horse-breeding industry going to be helped by a concession of this sort? There are four or five big men who would benefit at the expense of the small men, the small farmers and the small income-tax payers, and the income-tax payers of other categories who are not so fortunate as to own a stallion and to make a substantial income out of it. As a matter of fact, the great handicap under which the horse-breeding industry admittedly lay during the last four or five years was caused by the import duties which were imposed on horses bred in this country and going into Great Britain, and on mares which came to this country for service here and upon which, when going back with a foal, a duty was levied on the assumed value of the foal. That was the trouble and that was the difficulty. Now that barrier has been removed. It was one of the reasons which induced English residents who had stallions standing here to remove their stallions temporarily to Great Britain. Now that the import duty has been removed, I have not the slightest doubt that we will see the stallions which used to stand here returned to this country, because, mind you, the experience of their owners has not been too happy with them since they were brought to England. There is something here in our soil, or in our climate, which is particularly advantageous to the horse-breeding industry.

Why did not the Minister say "to live stock"?

I will say "live stock," but we are talking about horse-breeding at the moment, and I am anxious, even if the Deputy was not, to keep strictly relevant, and I have endeavoured to be. I say that there is every reason to believe that we shall have the good class stallion back here again, but even if we do not, even if private enterprise in Great Britain does not send them here, I do not see any real fear that stallion-owners here, so long as they get the price for yearlings which they are getting now, have got this year and will probably get during August next, will go out of business here; but if they do, we have already made provision in the Estimates for the Department of Agriculture to purchase first-class stallions and to let out their services at reasonable rates to the owners of Irish mares which will do everything which Deputy Dillon thinks ought to be done in order to enhance the reputation of Irish-bred horses. We are encouraging the horse-breeding industry under the Vote for the Department of Agriculture in a much more defensible manner than Deputy Dillon asks me to do it here to-night, because we are doing it in a way in which the great mass of small breeders will be benefited, and we are not giving a concession at a cost of £14,000 or £15,000 which will go mainly to the benefit of four or five people in the industry.

The whole object of the proposal is to prevent these owners changing their domicile. I apprehend that if a man has a stud and a horse-breeding establishment capable of accommodating valuable sires, it is highly likely that he will maintain his domicile there, and, in fact, where some of the most valuable Irish sires are standing, their owners at present maintain their domiciles. There are such establishments on the Curragh of Kildare and in County Kilkenny with which we are familiar. The Minister says that this would cost the Exchequer £15,000 approximately and that about five persons would be affected. That means that some of these persons may be affected to the tune of £5,000 a year. With the extraordinary proximity of this country to Great Britain, the similarity of conditions and the interchange of acquaintance between the two countries, what is more likely than that a man, in order to save £5,000 a year, would simply change his domicile and his establishment to Great Britain? Ninety per cent. of his horses on which he depends for these high fees——

We will wait until one of them changes.

The trouble is dual, because if they change they will not come back.

That is not our experience.

The second difficulty is that I not only hope to maintain in this country the breeders we at present have—and the Minister has said that we have a natural advantage for the horse-breeding industry—but I should like to encourage other wealthy breeders to come and set up establishments here to replace some of those who went during the last few years.

Would the Deputy give me the name of one stallion owner who changed his domicile during the past four years?

On more than one occasion it has been pointed out that, in dealing with the personal affairs of individual citizens of this State, it is not expedient to name them in this House.

Will the Deputy be good enough to pass me over a note?

No, I cannot.

The reason I ask the Deputy——

Does the Minister give me the excellent news that no such person has gone, or no such establishment has closed down? My recollection was that one such establishment did close on the Curragh, but I am not certain.

The question was as to whether a stallion owner changed his residence.

I am not to be submitted to interrogation——

The Deputy has made a statement which I am anxious——

And the Minister can controvert it, if he so pleases, but I am not to be made the subject of categorical cross-examination of the kind the Minister is now attempting.

The Deputy often attempts to submit the Minister to such cross-examination.

The Minister can speak when I sit down, but not till then. I have pointed out that my solicitude is not only to keep the men who are present here still here, but also to induce others to come. I have not heard the Minister for Agriculture on this subject, but I have reason to believe that he shares my view that it would be desirable, from the point of view of the industry, to make this concession, and that it would probably yield a satisfactory profit to the State as a whole, although the Revenue Commissioners may temporarily lose.

I think that it would be well if the Minister for Agriculture would appear in the House and tell us what his view is on this subject. It is evident that the Minister does not know very much about it. It is a very great mistake to imagine that it is desirable from any point of view philosophically to wait until stallion owners begin to leave and then to express one's readiness to take action. If it is desirable to take action, it ought to be taken now. If it is not desirable to take action, then the State should not submit to being blackmailed into taking action by the threats of any citizen.

I think from the point of view of the public weal it would be good to take action now to keep these establishments we have in being and attract new ones. I believe it will be money well spent. I believe it would be an expenditure analogous to that at present being made by many local authorities, recommending this country for its tourist amenities and that to put ourselves on a financial footing with Great Britain in respect of the horse-breeding industry would be good business from the point of view of the State. If it did yield a few individuals £10,000 or £15,000, the community as a whole would be amply repaid for whatever they yielded up.

Deputy Dillon has just stated that it would be an undesirable thing for us to wait until we were blackmailed into giving this concession by a threat made by some person or other to withdraw from this country and to change his domicile. So that Deputy Dillon admits that there is something in the nature of blackmail in the whole of this agitation. That is Deputy Dillon's gloss upon it. I am not prepared to go so far as Deputy Dillon in that regard—not at all. But, if Deputy Dillon thinks that there is an element of blackmail in this, I suggest to him there are two ways in which you can deal with the blackmailer. One is to stand up to him and have done with him for ever; and the other is to give in to him and endure him for ever. Deputy Dillon is asking us now, at this late stage, to give in to the blackmailer. There are Irishmen, people who have a natural obligation to pay taxes to this community, who are saying: "If you do not allow us off income-tax, even though we enjoy a substantial income we are going to move to England," and Deputy Dillon's reply to that sort of threat is, "Please give in to the blackmailer."

I asked the Deputy a very pertinent question, which the Deputy evaded by becoming abusive, saying he was not going to stand for any categorical cross-examination by the Minister. He took refuge, first of all, in a specious plea coming from Deputy Dillon, who has not hesitated, as we all know—we had an example of it on last Friday morning—to bandy the names of individuals about this Assembly when it suits his book, and when he thinks he has a fact to back up the bad case he is making. Deputy Dillon said he had been several times warned by the Chair that names of individuals should not be mentioned in the course of Parliamentary debates. Then when I asked him to pass over a note giving the name of one single Irish resident who kept stallions and had changed his domicile because of the fact that we levied income-tax upon his true income, as represented by the profits from the keeping of the stallions, Deputy Dillon became abusive, as I said, tried to raise a smoke-screen, and stated that he was not going to stand for any categorical cross-examination by the Minister.

This question was debated in this House in 1934, and the very arguments which Deputy Dillon advanced here to-night to justify the position which he has taken up in favour of four or five wealthy people, begging for a concession for them at the expense of the rest of the community, were advanced by Deputy Dillon's leader, Deputy Cosgrave, in 1934, when we were told the self-same threats were used, that if we did not give in on this question, these wealthy residents would transfer their domicile to Great Britain. A lot of them, I think, are very glad to-day they did not do it, because they would find themselves out of the frying-pan into the fire with a vengeance. We did not give in to the blackmail of Deputy Dillon's friends in 1934. I asked the Deputy to give me the name of a single person who had changed his domicile since. I do not know of any, and I follow these matters very closely. This matter has been under review more than once, because Deputy Dillon's blackmailing friends are indefatigable. They were at Deputy Cosgrave in 1934 and have been at Deputy Dillon recently; and I suppose next year we will have Deputy Dillon making the self-same case on their behalf.

If he is here.

I suppose in that regard Deputy Dillon is optimistic. That is what we were told in 1934— that those wealthy owners and their stallions would go to Great Britain. Deputy Dillon cannot give me the name of a single person who has transferred. On the contrary, there are rumours, possibly with some foundation, that the people who did go, not because of income-tax, but because of other circumstances in earlier years, when we were not even in power here, are thinking of coming back.

Question put and declared carried.
Question proposed: "That Section 2 stand part of the Bill."

On Section 2, I should like to give notice that I propose, on the Report Stage, to introduce an amendment the effect of which, broadly, will be, that income from invested funds which is settled to, or for the benefit of, a child of the settlor, under an irrevocable settlement, shall, to the extent that such income has, in fact, been accumulated for the benefit of the child, be treated as not being the income of the parent.

There is one matter arising out of this section to which I would like to direct the Minister's attention. The Minister stated that he intends on the Report Stage to bring in an amendment providing that the income from invested funds which is settled to or for the benefit of a child of the settlor under an irrevocable settlement shall to the extent that such income has in fact been accumulated for the benefit of the child, be treated as not being the income of the parent.

Yes, if it is accumulated for the benefit of the child under an irrevocable settlement.

Then the others will remain as contemplated in the present section?

In this matter covered by the present section, I want the Minister's assurance that when the income of the child is treated as the income of the settlor, that the settlor will get the usual allowances in respect of that child. I wish to have the Minister's assurance that I am correct in my interpretation of the section.

On the nett point that the Deputy has put to me, yes, that is, where the income-tax liability of a settlor is being calculated he will get the usual children's allowances in accordance with the provisions of the Income-Tax Acts.

Section 2 put and agreed to.
Sections 3 and 4 put and agreed to.
Question proposed: "That Section 5 form part of the Bill."

I move amendment No. 1:—

Before Section 5, and in Part I, to insert a new section as follows:—

"Section 3 of the Finance Act, 1935 (No. 28 of 1935) shall be and is hereby annulled."

The object of this amendment is to repeal the provision that was inserted in the Income-Tax Code under the Finance Act of 1935, artificially raising for the purpose of income-tax the valuation of houses by 25 per cent. The section in question enshrined, under the form of a mathematical nightmare, the Revenue Commissioners' extraordinary idea, and the extraordinary fraction of five-fourths was inserted into one of our statutes. I have little hope that even consideration will be given to this amendment. But it affects a very large number of people who unfortunately are not sufficiently vocal in their hardships to make themselves felt. Representations have been made to me to draw the attention of the House and the public to the hardships that are being caused through the operations of this artificial tax because it is nothing else but artificial. It is a tax imposed on a limited class. It was always supposed to be very wrong in principle to impose taxation on one class and not on the general taxpaying community. In this respect the justification for this extraordinary addition to the income-tax on property owners was made on the basis that the valuation of property was being made either on wrong principles or on principles that had long since gone out of date. Even taking it on that basis the justification for this imposition of 25 per cent. additional is one that cannot stand examination.

It was stated that houses are being valued in such a way as to cause inequities. In this instance what happened was that in every case a flat rate of 25 per cent. increase was put upon property owners. That imposition followed upon the taking away of one-sixth relief that had up to that been given to property owners in respect of repairs to their houses. The particular class on whose behalf I put down this amendment are really the small property owners and especially on people who bought their houses before this extraordinary conception of the Revenue Commissioners was thought of. They bought their houses on the basis of the existing valuation, the valuation of their property under the existing code. It may be that people who own large houses are able to pay these additional taxes, just as they would have been able to pay additional income-tax if it had been imposed upon them. But people who receive their annual income out of property on low valuations of from £14 to £17 are very hard hit as I am informed, by the incidence of this particular tax.

Property owners of that type of house are subject still to the provisions of the Rent Restrictions Act. They are subject to restrictions preventing them from increasing the rents of their houses or obtaining possession of them so as to enable them to sell in a free market. They are prevented from doing this by the Rent Restrictions Act. They therefore find themselves in this position, that they are limited in respect of the amount of increase in the rent that they can impose on their tenants. But then this additional tax comes down upon the owners as additional income-tax. This is imposing a tax on a particular class. It is a tax that is not extending to the general income-tax paying community. These owners of small houses cannot recoup themselves for the additional income-tax they are paying. They cannot recoup themselves out of the rent their tenant pays. On top of that they find it difficult to keep up their obligations, where such exist, to keep their houses in a proper state of repair because of the increase in the price of labour and material for house repairing. Generally speaking, that particular class in the community who own small property valued at from £14 to £17 valuation, and who obtain their income from tenants occupying those premises, find their income gradually reduced much more in proportion than other people. It is impossible to justify this particular artificial increase imposed under the Act of 1935. The people on whom this tax presses most heavily are the section of the community who are not particularly vocal and in the nature of things cannot bring their grievances to such a point as to make their views felt. I do not know what effect on the Exchequer the imposition of this tax on houses valued from £14 to £17 would be and I do not know what the acceptance of my amendment would mean to the Exchequer. But I think the Minister ought to consider the cases of the smaller valuations or cases within the limits I have stated. The Minister ought also to consider the position of persons who have bought their own houses and which are within these small valuations.

I am perfectly aware of the type of argument the Minister will put up. He will argue that if you have so many children you will not have any tax to pay. But we all know cases where this will press very harshly on individuals. I have before my mind cases of people who are making their living out of small properties and small lodgings whose incomes have been much decreased. I have one instance of a case where a person owns a fairly large house and in order to get rid of the liability he purchased a new house, letting the old one. He got a certain rent for the old house. Then he found that his income was not increased, whilst tax was. He was caught both ways. I have no hope whatever that the Minister will accept or even consider this amendment but I did think that it was my duty to put it down and to direct public attention and, if necessary, harness public attention against this imposition, this method of raising additional income without increasing the rate of the income-tax, so that the Minister could say: "Our income-tax here is only so much; look at what they are charging in England." I wonder what would be the amount of the standard rate of income tax if we added the various items that are tacked on to our income-tax code? What would be the standard rate of our income-tax if all these matters were taken into account? It would certainly be considerably more than the face value of the present figure. The Minister has taken away the old reduction of one-sixth for repairs that up to the time of the Minister coming into control of finance in this country had always been allowed. This particular imposition is quite unjustified and this item, particularly, should be remitted by the Minister.

The Minister's silence simply draws attention to the fact that he knows that this is just what I might call a scrounger tax. After raising the income-tax to the height at which it is over 1931, and after searching out every item of domestic use, every item that goes into the building up of a house and the keeping of a house——

The Deputy's speech last year was almost identical. Could we take it as read?

Unfortunately, what the people have to put up with is this, that the things that troubled them last year and the year before, and the year before, still keep troubling them. Their troubles are piling up, increasing every year. The taxes that the Fianna Fáil Government imposed on the people in 1932 have been increasing every year, particularly on those who are the heads of families, those who are supporting families and who are keeping a house. The Government, having hunted the heads of families in every possible way in which they could be hunted, from the point of view of imposing taxes on them, proceed to take a group out of whom they hope to get a little more, the group of people who own their own houses.

Some years ago we used to hear the Minister and his colleagues expounding on what a glorious thing it would be to have a country where every man owned his own house, together with the other sorts of freedom that they were so full of platitudes about. When they took over control, what did they do? They set about taxing the class of people who were anxious to dig their roots deeply in the social life of the country in such a way that they could not be easily moved, the class of people who were a valuable asset because they could not be hunted out of the country. Amongst these were the owners of stallions, people who could not easily be dislodged, and they were seized upon by the Minister, who gave them another little squeeze in the taxation machine, down on top of the increased taxation on everything that went into a man's house, and everything that was done to the house by way of repairs and so on. The value of the house was increased for the purpose of taking additional income-tax, taking it from the heads of families who were anxious to root themselves and their families more deeply than would ordinarily be done in the life of the country. Such people in the normal way would be a valuable asset, but the Minister has them taxed almost out of existence.

When asked by Deputy Costello, to remove this tax or to give some explanation of its continued imposition, the Minister simply sits in silence. He knows the tax put on here is a tax put on by a financial scrounger who, having scrounged every penny and shilling that he could get from the poorer classes, the working classes, found that he had to scrounge further. We are perfectly aware of the protestations made by the Minister and his colleagues when they first put on £4,000,000 by way of additional taxation in 1932. From one end of the country to the other it was explained that that additional taxation was coming out of the pockets of the rich. But all that has slipped off the backs of the rich on to the backs of the poor, so much so that the Parliamentary Secretary had to say last year, "Why should the working man be taxed?"

Is this relevant?

Surely it is relevant to point out that the imposition of increased taxation by the raising of the value of the house is an imposition that has followed the introduction of taxation on every item that could possibly be thought of, on everything that goes into a house. The main incidence of that taxation goes on the fathers of families, men of the working classes. I think the Minister should give the House some explanation why this pernicious tax is being persisted in.

I am a constant listener to the debates and I should like to ask if the word "scrounger" is Parliamentary? I have never heard it used here before.

It is a great word and it is a grand description.

It may be, in the Deputy's eyes, but I think if words of that type are going to be used here, it is hard to say where it is going to end. I do not know what the word means.

The Chair is in the same difficulty of not being able to define the term.

I shall tell you what a scrounger is. He is a person who goes around in the meanest possible way in every direction taking lots of things that he would not be prepared to give an explanation about or to say why he is taking them.

That description might apply to the Deputy when he was Minister for Local Government.

In what book would we find that definition?

If you refer to the people who are correcting the spelling for the new Constitution, possibly they will be able to direct you.

The word should not have been used here and it comes badly from the Front Bench opposite.

In rising to support this amendment, I would like to point out to the Minister that when this tax was originally imposed it was represented that a revaluation was imminent and that this was merely put on as a temporary expedient. Now, as time goes on I am afraid that excuse becomes less and less entitled to be accepted as a pretext for a tax which, as has been pointed out, comes very unfairly on a type of investor which the Minister ought to be most anxious to encourage. I take it the Minister is anxious to encourage people to own their own houses. Certain inducements were held out to people in the past in order that they might invest in purchasing their own houses. Those concessions have been withdrawn and that has altered the yield of one class of investment as against another. That, I submit, is not what the Minister ought to do as between one section of the community and another. In fact, as I have before stated about this tax, it is really only penalising thrift and I would like the Minister to consider whether he can accept this amendment. We are, of course, aware that there are certain sections who, while it is charged to them, get an allowance for it so that it does not hit them so much; but it is the small class of investor who has purchased his own house owing to the concessions which were allowed and who paid a market price for it, that this tax bears most heavily and most unfairly on.

I marvel at the hardihood of Deputy Mulcahy, who gets up here and makes a speech about the poor man, his cost of living and how he is borne down by the burdens which have been imposed on him by this Government. The Deputy gets up and makes a speech of that sort in support of a proposal that wishes to make not the poor man but the property owner a privileged class in this community, because if a man does not happen to be a property owner, if he does not derive his income from house property and if he does not own houses: if he has to work for his living, say, as a locomotive driver, as a clerk, a civil servant, a doctor or professional man and does not derive his income or any part of his income from property which he owns he has to pay in certain circumstances income-tax, that is, if the allowances to which he is entitled under the income-tax code do not relieve his income from assessment. In that case he has to pay income-tax. But Deputy Mulcahy says that if there is a person who derives his income from the ownership of property then that person is to be charged income-tax upon a notional income which will be considerably less than the actual income he enjoys. The Deputy gets up and talks about the poor man: the taxes on his table, on his clothes and on his boots, and the sum and substance of his argument is directed to this, to increase the burden on the indirect taxpayer, upon the poor man and upon the middle-class man who is not in a position to own house property. That is the purport of Deputy Mulcahy's speech, and that is the end to which Deputy Costello's argument was directed last year. We have been told in this debate that Deputy Costello was moved to put down this amendment because of the hardships which Section 3 of the Finance Act of 1935 had inflicted on certain individuals.

Now the Revenue Commissioners deal with all classes of income-tax payers. The case of every income-tax payer comes under the notice of the Revenue Commissioners' staff and of their inspectorate, and the Revenue Commissioners tell me that not one single case has come under their notice in which the section has worked inequitably: that is to say, not one case in which actual net income, taking one year with another, derived from house property, or which if the property were let could be derived from it, fell short of the Schedule assessment calculated in the manner required by Section 3 of the Act of 1935, the section which it is proposed to repeal. The Revenue Commissioners have knowledge, directly or indirectly, of the position of every income-tax payer in this country, and they advised me that no one case of hardship or of inequity has come under their notice, and yet Deputy Costello gets up and tells us that he has been moved to put down this amendment because, he says, of the hardship of which he has personal knowledge. Last year, on the Finance Bill, the Deputy made a speech in similar terms to that which he has made to-night. He made this statement:

"By merely introducing that section thousands of people find that not merely have they to pay an increased income-tax, but that the asset which they had put aside in a thrifty way as a provision for themselves and their families had been depreciated by the action of the Minister in his rapacity to get in more taxation by a very considerable amount in market value. The Minister has had 12 months' experience of the working of this section. We have been informed of the injustice which has been brought about."

I asked him: "Will the Deputy cite one case?" Birds of a feather flock together, and Deputy Costello's tactics on the 24th June last year were the same as those which Deputy Dillon adopted to-night because he replied to me in almost the self-same terms: "I will not cite any particular individual's circumstances. The Minister must know them as well as I know them." I said then and I say now that I know of no case of hardship occasioned by Section 3 of the Finance Act of 1935, and I challenge any Deputy opposite if he does not want to give me the name of an individual here to give it to me in confidence, and I will ask the Revenue Commissioners to investigate the case. If the Deputies opposite cannot give me the name of one individual let them for goodness sake stop this political ramp and not try to create a privileged class in this community. First of all it is the wealthy stallion owners that they want to give concessions to at the cost of the general community. Now it is the property owners. They come here to create a privileged class of taxpayers in the community and then talk about the burdens on the poor man.

The position is that this amendment has no merit whatever. The fact of the matter is that so far as the middle class element in this community is concerned they are better off in 1937 as far as the payment of income-tax is concerned than they were in 1931, and so far as poor people are concerned, the people who live in houses with a valuation of £24, £20 or £14, they are much better off than they were before. Practically none of them become assessable for income-tax under the terms of this section because they are exempt by reason of the increased allowances which we have made to them since 1932.

The Minister in the course of his observations has said that if he was given the case of a named person in confidence he would refer it to the Revenue Commissioners for investigation and report. To me that raises a very interesting question. Are the Revenue Commissioners free to report to the Minister personally on private income affairs which they learn of in confidence?

The Deputy knows as well as I do that I assume that if he were to give a case of that sort he would give it with the permission of the income-tax payer. The Deputy cannot ride away on that horse.

He has a whole lot of horses.

I take it then that the Minister has put his foot in it.

No, the Minister has not.

The confidence of the Revenue Commissioners remains inviolate then in that matter. They are not free to communicate the private affairs of individual tax payers to the Minister or to any other unauthorised person.

Any more than the Deputy would be free to communicate the name if he had not that private person's permission.

My submission is that the obligations which rest on the Revenue Commissioners are altogether different from those which rest on me.

The Deputy is wriggling now.

There is statutory obligation on the Revenue Commissioners to preserve the confidences that they receive in the case of individual citizens' income-tax returns. There is no such statutory obligation on me, and I think it would be a very unfortunate thing that even on the obiter dictum of so irresponsible a man as the Minister for Finance any doubt were cast upon the integrity of the Revenue Commissioners.

The Deputy knows that that is an absolute travesty of what was said, and if he were outside at this moment I would give him the lie.

I move to report progress.

Progress reported; the Committee to sit again to-morrow.
The Dáil adjourned at 10.30 p.m. until 3 p.m. on Thursday, 20th May.