I move that the Dáil agree with the Committee in Financial Resolution No. 3.
Financial Resolution No. 3—Income-tax.
I do not think that this Resolution has ever been fully explained. I should like the Minister to explain the effect of the Resolution on this stage.
The result of this Resolution is that it effects a reduction in the personal allowance of a married man from £225 to £220, and in the case of a single man from £125 to £120. It is a complementary part of the Budget proposal. The Deputy will remember that when I announced this reduction in personal allowances, I stated at the same time that I proposed to increase the allowance in respect of earned income from one-sixth to one-fifth, subject to a maximum allowance of £300. It is not necessary to have a Resolution to give effect to that, as it represents a mitigation of the tax imposed on the taxpayer. It is necessary, however, to bring forward this Resolution to reduce the personal allowance to the extent which I have mentioned—£5. The proposed additional burden is mitigated by the increase in the allowance in respect of earned income. It is necessary, as I say to have this Resolution as it is a complementary part of the whole scheme.
Could the Minister give us an example of how the tax will affect one or two families?
Yes, I have to give it as part of the whole scheme.
Is this a plan for robbing Peter to pay Paul?
No, it is not.
Are you taking the tax off one group of taxpayers and putting it on another?
The reduction in the personal allowance applies to all taxpayers, but in the case of those whose income is mainly earned, the other part of the proposal will represent a relief to them. I shall give one case since the Deputy has asked for it. Take the case of a single man having an income of £150, all earned. Under the pre-Budget arrangement, his earned income allowance was calculated as one-sixth of the total amount of his income, £25. In addition he had a personal allowance of £125, bringing his total allowance up to £150, so that he would pay nothing. His position will remain unchanged under the present proposal because while his personal allowance is reduced by £5, namely, to £120, his earned income relief will be increased from one-sixth to one-fifth, or £30. He will be in the same position as at present, since his total allowances will amount to £150. In the case of a married man having an income of £270, all earned, and having no children, his allowances prior to the introduction of the Budget would be as follows: He would have an earned income allowance of one-sixth, namely, £45, and a personal allowance of £225, leaving his income of £270 tax free. Take again the case of a married man with no children, and having an income of £275, all earned. Under the present proposals, his earned income relief would be one-fifth of his income, or £55. His personal allowance would be reduced from £225 to £220, leaving his total allowance £275, so that he would be better off under our proposed scheme than he would be last year, to the extent of the tax on£5.
If he had an unearned income of £270 he would be worse off.
There is a question I should like to ask the Minister. There has been a number of cases down the country in recent years where you had small businessmen who operated small shops and who, because they had certain difficulty in keeping their accounts and so forth, converted their shops into limited liability companies, and then continued in much the same position themselves but proceeded to draw interest on the shares they held in the company. I presume the Minister sees the point. They now, I take it, are in receipt of an income that is not an earned income whereas, prior to converting the business into a limited liability company, the income received from carrying on their little businesses, I take it, was regarded as earned income in the ordinary course of their business. Is it intended that they should occupy an inferior advantage in the eyes of the law? I think that this comes strictly within this particular Resolution, which has to do with the distinction between earned and unearned income. Is it intended that as a result of their improving their accounting system they are to be put in an inferior position vis-á-vis the income-tax law to that in which they were before they constituted themselves a limited liability company, or is their only resort the fraudulent practice of paying themselves, by way of salary, the entire profits of the company every year?
I shall deal more fully with that matter on the Committee Stage of the Finance Bill, but I should like to say this: That I have yet to learn that a small shopkeeper goes to all the trouble and expense of converting himself into a limited liability company merely to improve his accountancy arrangements. If the Deputy can produce that case to me, I would say that it would be a classical case and one which we would have to study very closely.
Resolution agreed to.
Question proposed: "That the Dáil agree with the Committee in Financial Resolution No. 4."
Does this cover the whole schedule of customs?
There are two Resolutions.
In this, the one that deals with bicycles?
Yes, bicycles and bicycle parts.
Now, Sir, this is a duty which it is proposed to impose upon bicycles. As to the propriety of imposing a duty on bicycles at all, I think there could be very considerable argument, particularly when it is proposed to impose the duty without any statement from the Minister for Industry and Commerce as to what, according to his expert information, the resultant increased cost of bicycles to the consumer is going to be. All of us are well aware that the bicycle is the wage earner's motor-car. We can see hundreds of them, thousands of them, in our cities every day carrying the wage earner to his work and back, and we all know that in rural Ireland the average working fellow travels between his place of residence and his job on a bicycle. Whether you ought to impose a tax upon that, in my judgment, is very doubtful. I do not think you should. However, to-day I do not propose to open a general discussion of the desirability of taxing commodities of this kind. I want, rather, to confine my inquiry to a particular case which I know has been brought before the attention of the Minister for Industry and Commerce. The Minister for Industry and Commerce asked that towns which particularly desired the establishment of some industry within them should approach him with a plan, and said that there was no use in coming to him with vague suggestions that something ought to be done; that he wanted them to come forward with a plan as to what was to be done and also a plan for the financing of the proposed undertaking.
Now, the town of Clones, in County Monaghan, was getting along very well. It is very peculiarly situated, because it is on a promontory projecting into the territory of Northern Ireland, with the result that it has the Border on three sides of it. The original institution of the Border injured Clones, but it was not until the frantic tariff policy of the Fianna Fáil Government was embarked upon that Clones was really struck a deadly blow by the Border. That was bad enough. Its business was immensely injured, a great deal of its trade went to the towns on the northern side of the Border, and the consequent unemployment was very serious. Clones, however, had the advantage that it was a great pork market, and that provided a great deal of direct employment for the people of the town. It also served to bring an immense number of people into the town because the pork market there was a notoriously good one and there was always a ready clearance of all the pork that was offered and as much competition as was ever to be found in a Northern Ireland market. Hit by the institution of the Border originally, Clones then woke up one day to find that the Minister for Agriculture had prohibited the pork market—simply like that—had forbidden the holding of it, whereupon everybody employed in it was thrown out of the job, and, besides that, the result was that there was no reason for people to come into the town at all. You could buy Indian meal at 2/6 cheaper, and clothes and other commodities from 10 per cent. to 30 per cent. cheaper, within half a mile of Clones town than in the town of Clones itself.
I hope the Deputy will soon conclude his introductory remarks and come down to the Financial Resolution.
Yes, Sir. This is bearing on the Resolution. In these circumstances, Clones found itself practically paralysed and, with an enormous number of unemployed persons located in a new housing scheme which the Minister for Local Government and Public Health required the town council to provide. A large number of the occupants of the new houses, that had been constructed out of borrowed money by the council, are unable to pay the rents because they are out of a job.
The Deputy will realise that, if the history of every provincial town's financial or economic position is to be discussed in that fashion, it will take some time to report these Resolutions.
This tariff has to do with bicycles.
Quite, but the Chair has not yet heard a word about bicycles.
It was the council there that first produced a scheme for the manufacture of bicycles to the Minister. Labouring under the economic difficulties that I have outlined, the people of Clones raised £10,000 to help their own neighbours. That is a very creditable record, and that £10,000 of local money was raised because they wanted to provide employment for those whom the Executive Council had thrown out of employment. They came to Dublin with a scheme for the manufacture of bicycles, with a continental bicycle manufacturer who was prepared to sponsor the scheme, and with a body of Irish capital sufficient to finance it and also with an undertaking that he was experienced in the production of cheap bicycles on the Continent and was prepared, with his Irish colleagues, to produce them in Clones if the Minister would provide the requisite facilities.
Has the Minister for Finance any responsibility?
I understand——
On the Financial Resolutions the responsibility is on the Minister for Finance.
I presume the Minister for Finance had joint responsibility.
Would not this matter have been relevant to the Estimate for Industry and Commerce?
I was frantically trying on that Estimate to get the Minister to see the light and I did not want to get his goat. He is now gone over to the enemy camp and I have declared war.
On the Minister for Finance?
Indirectly. A plan was laid before the Minister for Finance or the Government——
Suppose I deny that such a plan was laid before me.
Then we shall have a clash. This is a grave matter for the people of Monaghan, as the Minister for Finance must know, because he knows County Monaghan.
The Deputy should keep his eye on the Resolution.
I am keeping my eye on bicycles and nothing but bicycles. Here was a town in which the people came forward with their own money and with their plan and who were prepared to hire a firm of costing accountants to produce costings of bicycles in order to enable the Minister for Finance to adjust the tariff to a figure that would give them no more than a modest margin of protection. That plan having been outlined and the circumstances being well-known to the Government, as well as the peculiar emergency existing in Clones, a tariff is here imposed. By this imposition without any reference to the scheme laid before the Government, it becomes abundantly clear that a firm is to be brought in and established in Dublin or some other urban centre for the manufacture of bicycles to the destruction of the plan adumbrated for the establishment of this industry in an area in which there is at present a grave emergency not created by local causes but created in all its details by the policy of the Government.
Not by the policy of the Minister for Finance.
Purely by tariffs.
It was not tariffs which closed the pork market.
It was tariffs closed the market town of Clones and it was the Minister's colleague closed the pork market. Between you, you did it. All these people are asking is to be left alone.
It was the influence of the Border that affected Clones.
The people of Clones are entitled to ask to be restored to the status quo ante. The Government should, in the circumstances, come to their aid on the same lines as the British Government came to the aid of the distressed areas in Great Britain. If this area is to be turned into a distressed area by the Government, the people should get at least as much consideration from the Government as the distressed areas in Great Britain got from the British Government. I do not want to be unreasonable. The Minister for Industry and Commerce or the Minister for Finance may say: “Very well, there were overriding reasons of a grave nature which made it impossible to locate that particular industry in Clones, although we propose to locate it somewhere else.” All I ask them to do is to say: “In as much as these people put up the money and prepared a scheme in order to co-operate with the policy of the Government, we are prepared to give them the undertaking now that, as we have failed to meet what was a highly constructive effort to meet us, we will undertake, in the course of a reason able time, to locate some kind of permanent employment scheme in the Clones area which will absorb the unemployed which we have prevented local people from absorbing by their scheme.”
The Deputy is now getting away from the Resolution.
I shall not go further than that. If this Resolution were introduced to the House with some kind of assurance on these lines, it would make it much less offensive to a body of people who are doing their best to help their neighbours in a grave emergency which is the result of the policy of the present Government.
I suppose it is too much to hope that Deputy Dillon will ever get anything right—even the facts of an important matter relating to his own constituency. I do not know whether or not Deputy Dillon made any attempt to get his story right, but there is no single part of it, as he related it, which is not completely remote from the truth.
The bulk of the information I have imported to the House I got from the Minister's own Department.
I contradict that statement at once.
It is, nevertheless, true.
I do not believe that any officer of my Department would be guilty of so grossly misleading Deputy Dillon, as, apparently, he has been misled. The idea of manufacturing bicycle parts has been in our minds since we first commenced our programme of industrial development. It was an obvious thing to consider. Bicycle parts had been manufactured here before and, clearly, could be manufactured here again. There was a substantial market for bicycles in the country—sufficient to ensure economic production. There seems to be no technical or other reason why factories should not be established here for that purpose which would be completely successful. We have been a long time trying to promote plans for that purpose. We started by imposing duties upon assembled bicycles in order to procure for our people, at least, the employment which can be given by the assembling of bicycles. In fact, no assembled bicycles are being imported at present. They are all imported in parts which are assembled by various firms.
As the second stage, we desired to get the parts made here and that is the main idea behind the duty imposed by this Resolution—to get these parts made here. Naturally enough, we took steps to ensure that somebody would be interested in the manufacture of these parts before a duty was imposed. We have had negotiations, stretching over five or six years, with a number of firms. They put up proposals of one kind or another for this purpose. We never until now got into a position in which we were satisfied that the imposition of a duty would be followed by the establishment of the industry. May I say that it is true that we got from the Clones Industrial Development Committee proposals for the manufacture of bicycle parts there, but it is an exaggeration to say that we got a scheme for that purpose. We never got a scheme for that purpose.
May I say that I myself went to the Minister's Department to ask them to allow us to place the matter in the hands of costing accountants in order to give particulars of the scheme——
If I am to be allowed to speak without further interruption, I shall continue. We got from the Clones Industrial Development Committee a proposal that there should be established at Clones a factory for the manufacture of bicycle parts. We never got a scheme—that is, in the sense in which I used that term. We never got detailed plans for that purpose. We knew that they were in touch with a Continental firm of manufacturers in order to secure the technical assistance that would be required for the purpose. We knew that they were relying on the Industrial Credit Company, or some other financial group, to provide the finance, but an essential part of the scheme was the prohibition by legislation of anybody else engaging in the same business in this country.
I do not think that this is an industry which should be established upon a monopoly basis. I think that there should be room for more than one concern in the manufacture of these parts and that we should not confine the industry to any one concern. In so far as the Clones Industrial Development Committee are concerned, they are now free to proceed with their scheme. The imposition of this tariff will enable them to proceed with their scheme, subject to their being able to finance it and to their willingness to engage in the manufacture of bicycle parts in competition with other firms or, at least, to face the possibility of other firms engaging in the same business. They will get the same facilities, the same assistance and the same encouragement from me and my Department as any other firm will get. I shall give Deputy Dillon and the Clones Industrial Development Committee this assurance—that no British firm will be enabled to engage in the business, that no licence under the Control of Manufactures Act will be issued for this industry, and that only firms qualified as Irish firms, in accordance with the Control of Manufactures Act, will be allowed to manufacture these goods here. I can, however, tell the Clones Industrial Development Committee that I know they will not be the only persons engaging in the business. We have received a large number of proposals from different committees in different parts of the country, from different groups of individuals and companies to enter into this business. We are proposing to say to any one of them, "You can go ahead." It is within our knowledge that certain people will certainly do so. Study of the list of new companies registered in the trade in the Official Journal, or wherever that information is published, will give the same information to anybody. Companies have been established and registered, for the purpose of manufacturing these goods. They are free to do so. We are imposing a duty upon those parts that we want manufactured here. There is a licensing clause attached. Our intention is to issue licences for the free importation of these goods until somebody is manufacturing them here upon terms and conditions in the quantity and of a quality and price which we approve. When that situation has been reached the licences will be withdrawn, subject to a further condition. There are, as I have said, a number of firms engaged in the assembling of bicycles. It is our intention that the position of those firms will not be disturbed, that these firms will get the parts which they now import from manufacturers of those parts in the country on the same conditions that they are now getting them. If, in fact, no matter how many people may engage in the manufacture of parts, we find that any of the assembling firms are unable to secure supplies of the particular parts they want on the usual terms and conditions the licence for the importation of those parts will continue to be issued.
This will be an industry of some importance. We expect that some 300 or 400 workers will be employed in it and we think that is a useful development to promote.
We are proposing, now that the duty has been imposed, to notify all the firms and individuals that have been interested in the matter of our intention, of their liberty to proceed with their plans, and of our willingness to assist them if they do. But, we are not going to give any one firm a monopoly. That may mean—I think it will mean—that some of the projects that have been submitted to us will not be proceeded with because they were based on the idea that there should be only one production centre, one firm, engaged in the business. I think the Clones plan involved a monopoly and I think it will probably be abandoned if a monopoly is not possible. A monopoly is not possible and, in these circumstances, it may be that that particular endeavour of the Clones Industrial Development Committee will come to nothing. If they are willing to proceed on the basis of manufacturing there in competition with any other manufacturing firm that may go into the same business they will be treated by my Department in precisely the same manner as any other firm. I am at least equally anxious, if not more anxious than Deputy Dillon to assist in the promotion of some industrial activity at Clones. Time and again I have sent to that town intending industrialists who had approached my Department with projects of which we were prepared to approve. I asked them to go, in the first instance, to Clones to see if conditions there would be suitable to their enterprise. Only in the last few days I did the same thing again. Possibly, at some stage, some of these efforts of mine will be successful but there is no good blinking the fact that it is extremely difficult to get industrialists, who are not tied to Clones by sympathetic considerations or by any need of getting capital in that locality, to go to such a town as that. It is far away from the main centres of consumption and not suitably located for the purpose of distribution. Nevertheless, there are certain forms of industrial activity which could be usefully carried on there and perhaps in the end we will succeed in getting some of them started.
If the persons concerned with this cycle manufacturing project for Clones are satisfied that they can do as well there as some other firm can do anywhere else, they are free to go ahead. If they make their project successful there will be no one better pleased than I. I should say to them, however, that it is not probable they will succeed in getting financial assistance from persons outside those immediately associated with the enterprise. I think they would have some difficulty in that but, if they have not, I will be pleased. That is all I have to say on the matter.
Upon the general proposal here I think there can be no question. We are imposing this duty merely as an indication of our willingness to assist in this manner the establishment of the industry here. We are notifying the parties who have an interest in the matter, who are engaged in the manufacture of these goods. We are telling them that as soon as they do manufacture these goods in the quantities and variety of makes and at prices which we regard as reasonable the licences will be withdrawn and the protection given by the Resolution will become effective. There is one thing we are making clear to them, that is, whatever facilities or assistance any one of them will get will be equally available to any other Irish firm engaged in the same enterprise.
I would like to ask the Minister——
Does the Deputy wish to ask a question? We are not in Committee.
No, I do not. I wanted to challenge the Minister on a series of small statements, which I will reserve for another occasion. I could not conscientiously say I would confine myself to a question.
Question put and agreed to.
I move:—
That the Dáil agree with the Committee in Financial Resolution No. 5.
I would like to ask the Minister whether he has given any consideration to the effect that this increased duty is going to have on employment in the tobacco industry. The position at the present time is that, in spite of enormous expenditure in various directions by the Government, on relief works, unemployment assistance, housing subsidies and everything else like that, the figures for October last indicate that there was one person less employed in the manufacture of tobacco than there were before the Fianna Fáil Government took over the country to develop it along their lines.
Only one person? I remember the Deputy used to have a lot of talk about that.
Oh, yes. There were years when there were 200.
Exactly.
Nevertheless, we get sermons from time to time from the opposite benches that the real test of improvement in the country is the excise duties. We get increased excise duties from tobacco all right, but there is no increase in employment in the tobacco industry. As I say, according to the latest figures for the industry, there is one person less employed than there were in 1931.
The Deputy will remember that I told him once that the time would come when there would be no less employment. He emphatically contradicted me.
The Minister and I have to square a lot of figures yet. I will answer the Minister. Is it not a source of astonishment to him that there are not infinitely more people employed in the tobacco industry now than there were before the Minister took the situation over?
Was the Deputy ever in a cigarette factory? Machines turn out cigarettes at the rate of 1,000,000 a minute. It does not make any difference in the staff if they turn out more.
Does the Minister suggest that the efficiency of the machinery for the manufacture of cigarettes has improved since he came into office?
It is no less. It is all machinery.
Question put and declared carried.
I move: "That the Dáil agree with the Committee in Financial Resolution No. 6.
Would the Minister say whether it is proposed to give any exemptions, or any rebate, to any class of community in respect of this increased tax on petrol.
No. The tax will fall as under the existing conditions.
What is to be the position with regard to oil used for tractors employed for agricultural purposes.
In so far as oil of that type is liable to duty now, and has always been liable to duty, there will be no change.
Question put and declared carried.
I move: "That the Dáil agree with the Committee in Financial Resolution No. 7.
Question put and declared carried.
I move: "That the Dáil agree with the Committee in Financial Resolution No. 8.
Question put and agreed to.
I move: "That the Dáil agree with the Committee in Financial Resolution No. 9.
Question put and agreed to.
I move: "That the Dáil agree with the Committee in Financial Resolution No. 10.
Question put and agreed to.