I move that the Bill be now read a Second Time. The main purpose of this Bill is to give continuing effect to the taxes and duties embodied in the Financial Resolutions following the Budget, and which have statutory effect for a limited period under the Provisional Collection of Taxes Act, 1927. That being so, it is hardly necessary to deal with them in greater detail now or with the general financial position. During the debate on the Financial Resolutions I was described as a financial strategist. It was stated that in the previous six months I created an atmosphere that people would believe that there would be a general all-round increase in taxation, and that with the general feeling of relief at no further increases in taxation, the additional impositions of November last would be forgotten. I must first of all disillusion those who rate my powers of financial strategy so highly, as there was no such sinister intention behind the Supplementary Budget of November. On the basis of the experience then obtained and on the information regarding the future conditions it was estimated that there would be a serious shrinkage of revenue for the financial year 1939-40. That we were right in our forecast and in imposing extra taxation is borne out by the actual results.
The total tax revenue for the year amounted to £26,303,000 as compared with an original estimate of £26,485,000, showing that the amount actually received was £182,000 less than the original estimate. If the Supplementary Budget had not been introduced the difference would have been much greater; so that the actual results fully justified the introduction of the Supplementary Budget. The actual yields of revenue were better than was anticipated in November, and I have already explained in my Budget Statement why such improvement occurred.
Taxation here is now at a high level, and I do not wish to gloss over that fact despite statements and implications to the contrary. We are, however, living in critical and extraordinary times and that being so it can hardly be expected that the taxation would keep at the ordinary level. Apart from the previous existing commitments, various additional items of expenditure have been forced on us by reason of the present emergency. The provision for the Army alone is £3,355,420 as compared with estimate provisions of £3,252,209 last year, £1,995,684 in 1938-39 and £1,595,810 in 1937-38, showing an increase of £1,759,610 in three years. I am afraid in view of recent happenings the estimates for this year are going to be considerably increased. This has been accompanied by increased provision for new military barracks and works in the Estimate for public works and buildings the total for which amounted to £977,546 in 1937-38 as compared with £1,234,765 in the current year.
Emergency conditions are also responsible for a good part of the increased provision for the Gárda Síochána, the Estimate for which is at present £1,924,554 as compared with £1,883,725 in 1937-38. The new Department of Supplies requires a provision of £9,883 and would cost much more but for the fact that most of the staff serving in it are on loan from other Departments and their parent Departments still bear their salaries. A similar remark applies to many of the staff in the Censorship Service and to increases in the staff of the Department of Defence. There is also an additional £150,000 provided to meet the extra bonus on Civil Service salaries.
Certain economies have been and are being effected but these are only sufficient to offset some of the increases just mentioned. Declining yields from the various heads of revenue forced us to increase certain rates in order to preserve that total yield. The total of various capital and abnormal items to be defrayed from borrowing this year is £1,194,000 as compared with an estimated figure of £2,005,000 at the time of introduction of the original Budget last year. The difference of £811,000 had accordingly to be met out of current revenue, instead of being met by borrowed moneys. These various factors combined have forced upon us the necessity for increasing taxation beyond the levels that obtained this time last year.
After these introductory general observations, I now propose to refer briefly to those sections of the Finance Bill, that have not been already covered by the Financial Resolutions or have not been referred to in the Budget statement.
Sections 1 to 5—income-tax and surtax—have already been before the House in the form of Resolutions. Section 6 has also been before the House in the form of a Resolution. I may refer briefly, however, to a misunderstanding which arose at that stage with regard to the effect of sub-paragraph (d) in which Deputy Cosgrave is particularly interested. It was suggested that this sub-paragraph has been designed to obtain some advantage for the Revenue. This is not so. The clause, as a whole, is limited to cases in which more than one individual would, under the law as it stands, be entitled to claim relief in respect of the same child. Sub-paragraph (a) provides that in such a case only one deduction of £60 will be allowed. The remaining sub-paragraphs are concerned solely with the allocation of the £60 allowance between the individuals concerned. Whatever the allocation, the total allowance will still be £60. If Deputies are not clear as to the manner in which paragraph (d) affects the allocation, I can go into it more fully on the Committee Stage of the Bill. For the moment I merely wish to make it clear that, in so far as the allowance to, say, the father of a child is reduced as a result of sub-paragraph (d), there will be a corresponding increase in the allowance to the mother.
Section 7 is a new sub-section designed to grant an extension of the relief given by Section 32 of the Finance Act, 1921, in the case of funds having for their purpose the provision of pensions for employees. The new section extends the relief so as to embrace funds set up for the purpose of providing annuities for the widows, children or dependents of deceased employees. Section 8 is a relieving clause which is designed to provide exemption from Income Tax under Schedule A in respect of premises in the occupation of the owner which are occupied and used solely for the purpose of air-raid precautions.
Section 13 terminates the duty on imported butter. The amount of butter imported is negligible and, as importation is controlled by licence, the Minister for Agriculture is satisfied that there is no necessity to retain the import duty which is being removed mainly for administrative convenience. Section 18 relates to duties on hydrocarbon oil. It has been found necessary to amend existing legislation with a view to removing certain defects which have been experienced and in order to provide certain additional powers and penalties in administering the duties. Section 20 provides a licensing provision to import, free of duty, certain protected articles. Experience shows that such licensing provision is desirable to alleviate cases of hardship or permit importation where such importation would not conflict with the protective nature of the duty.
Section 22 is intended to confer certain customs powers and privileges on the new marine force and on certain members of the Coast-Watching Service. Sections 23, 24 and 25 have already been before the House in the form of Resolutions. Section 26 provides certain relief from estate duty in the case of the estates of domiciled Irishmen killed in the present war, in relation to relief in respect of double taxation. In regard to Section 28, where the Revenue Commissioners have obtained a court judgment for the arrest of a person who has defaulted in paying any tax or duty, they are advised that under the existing law the acceptance of an instalment from such a person would deprive the State of the means of recovering the balance, and they apprehend that, if they accepted the instalment and subsequently failed to recover the balance, the Comptroller and Auditor-General might question their action. In these circumstances, Section 28 will empower them to show leniency to the taxpayer by accepting instalments from him, at his own express request, without depriving the State of the power to recover the balance.
Section 29, which relates to the Post Office Savings Bank, and the next two sections, which relate to Savings Certificates and the Trustee Savings Banks, respectively, are in the nature of interim legislation. All these matters were exhaustively examined by the Banking Commission whose comments and recommendations are interlinked with other things, such as the suggested establishment of a debt and investment council. It is the intention to promote comprehensive legislation of a definite character as soon as the Government have taken decisions on the relevant points of principle arising out of the commission's report. Pending the formulation of such definitive proposals, it has been thought well to provide, as Section 29 proposes, that the pre-1922 corpus of law and regulations, in accordance with which our Post Office Savings Bank has been operated from the beginning, shall specifically apply, subject to the minor modifications indicated which have been introduced to facilitate administration. As regards Savings Certificates, Section 30 removes doubts which arose because of certain observations made by one of the circuit judges some little time ago as to the validity of the Savings Certificates Rules made in 1926. Copies of the rules are available in the library if Deputies wish to consult them. The position generally in regard to Trustee Savings Bank is anomalous and it will be remembered that this was one of the reserved matters mentioned in the Financial Agreement with the British Government signed on the 25th April, 1938. Negotiations with the British Government will be resumed when opportunity offers and meanwhile Section 31 remedies the position in which deposits have continued to be remitted to the National Debt Commissioners. In future, all deposits will be lodged to a special account in the Bank of Ireland in the name of the Minister for Finance.