Vol. 83 No. 18
I move amendment No. 1:—
1. In sub-section (2), page 3, lines 21 and 22, to delete the words "such rates as shall hereafter be appointed by the Oireachtas" and substitute the words "the same rates as those at which it is charged for the year beginning on the 6th day of April, 1940."
I again want to draw the attention of the House to a certain aspect of the income-tax code to which I have referred on previous occasions. This Section 1 must be read as a graft on the existing income-tax code which is enshrined in the whole series of previous Finance Acts, in which Acts this House makes provision for the man who has a family.
The Deputy must confine his remarks to what is actually covered by this section—sur-tax.
I am dealing with the section on income-tax, and I think you will agree that I am bound to read that section as a graft on all previous income-tax sections in the finance code. I have to take cognisance of the fact that this is not an average rate of 7/6 on everybody's income, earned or unearned, or whether the person is married or single. It is a tax of 7/6 bearing in mind certain reservations, one of which is that if you earn a part of your income a lesser level of taxation applies.
Another consideration is that this 7/6 is not levied on a man with a wife and a large family until due allowance has been made in his assessment for the liability to provide for that wife and children. I drew attention on another occasion in this House to the fact that, in the case of a man who has an income of £1,000 a year, by the concession devised in previous Finance Acts we ensure that if he has a wife and four children he receives an annual allowance from the Exchequer of approximately £150 to help him to provide for them. He gets that by way of remission provided under this section of this Finance Bill in the light of previous Finance Acts. I want to put it to the House that if we can properly find money to give a man who is earning £1,000 a year a family allowance of £3 per week, surely we ought to be able to devise some plan whereby the man earning £78 a year would get some help to provide for his family.
The Deputy is now going outside the code.
I do, Sir. Surely I am entitled to argue that if we are going to provide a family allowance for one class of the community we should provide it for another, or we should provide it for none.
On the Second Stage of the Bill, possibly.
But my proposal is that this section should be deleted. I am not trying to strain the rules of order. I am making this case, that it is calculated to give public scandal that this Oireachtas provides a family allowance of £3 a week for a man with an income of £1,000 a year, when we are providing nothing for the man with £78 a year. Surely that is a valid argument. I think it can be closely related to this particular section of the Finance Bill. Surely the Minister, in the interests of public order and right reasoning, should get up and tell the House why he is asking us to provide a family allowance of £3 a week for a man earning £1,000 a year, when we are making no provision for a man exactly similarly circumstanced whose total income is in the order of £78 a year?
Such provision cannot be made within the ambit of this section.
No, but——
If it cannot be made, it may not be advocated.
These family allowances of £3 a week can be withdrawn under this section. It is open to the Minister to say that if he can justify this provision in the £1,000 a year case——
That is under another section.
—— he can say he has as good a case——
The Deputy may advocate the withdrawal of concessions but may not make counter proposals, which are irrelevant.
I prefer to say to the Minister: "Justify to me this family allowance of £3 a week for the £1,000 a year man. Justify it." I am suggesting to the House that it cannot be justified unless the Minister is prepared to demonstrate to us that, while he is making a family allowance to an individual with an income of £1,000 a year, no one else in the State similarly circumstanced has any legitimate reason to be jealous. My suggestion is, that we are making provision which gives legitimate grounds for jealousy to perfectly honest and bona fide persons who may come to know of it, and I think that is a wrong provision. If we make fair provision for all, that is fair. If we are not in a position to do that, let everybody dig with the same foot and do the best they can. Surely it is dangerous to select one section of the community—as we are doing under Section 1 of this Bill—and give them the benefits proposed in sub-section (3). if we are not prepared to say that analogous benefits are being provided for another section of the community similarly circumstanced.
I have raised this question time and time again and it has not been answered. The reason it has not been answered is that the Minister could not answer it. I think the Minister knows in his own heart that there is no answer to my argument. We must realise that when we come up against an obvious dilemma, out of which the Minister sees no way, there is no use in sticking our heads in the sand and saying that this thing must be tolerated. If we do that, what happens is that a meeting is called in Gloucester Diamond and sub-section (3) of the Finance Bill, 1941, is read to the populace, and a gentleman says: "Do you know what that means? That means that so-and-so, who has a family, and who is well off has got a family allowance of £3 per week, whereas such another person who is in poor circumstances will get nothing at all." And at that stage we find that we cannot deny that. It is perfectly true.
The Deputy may object to the Minister giving certain concessions because family allowances are not universally granted, but family allowances cannot be discussed on this section.
I am not discussing them. I am saying—and saying in all seriousness—that, if you allow an anomaly of this kind, the type of situation I now describe will arise. Some agitator will get up and point to an individual who is earning a substantial income, and say that that man is receiving, under Section 1 of the Finance Bill, a concession which amounts to £3 a week in respect of his wife and family, while there is a poor man getting nothing. To that allegation we have no reply.
But not under this section.
I am saying to the Minister that either the benefits under sub-section (3) should be withdrawn or he should appreciate the implication of these concessions and announce now that, if he intends at this stage to give a concession of the character outlined in sub-section (3) to a certain class of the community, it will be offset by a suitable concession to such other sections of the community as may bear their share of the burden of taxation requisite to make up the deficiency created by granting the concession under sub-section (3). That is a grave matter.
The Chair is not prepared to hear the Deputy further on his scheme for family allowances.
I will now concentrate my remarks on sub-section (3). This is a grave matter, and I invite the Minister to deal with sub-section (3) and to examine it from the point of view of fair dealing between one class of taxpayer and another.
We may as well have a friendly talk about what is involved in this. I think Deputy Dillon completely misreads the provisions of sub-section (3). This is not a question of giving an allowance to anybody. It is a question of the Minister refraining to take money in taxation from people who have not got it. A person may have a particular income, without a wife and family; or he may have a particular income, with a wife and a family. The Minister comes along to take 7/6 income-tax off these two people. He is taking it off one person who has it. He is trying to take it off the other person who has not it. I think it would be a mistake for anybody, either in the Gloucester Diamond or anywhere else, to invert the position and make it appear that sub-section (3) of Section 1 was presenting £3 a week to a particular person, instead of its being a provision in which the Minister says: "I would like to get this money from this particular person, but he has a wife and family and has not got it, as the money has gone out in other directions, and a lot more, too." Therefore, sub-section (3) of Section 1 simply states that, in the circumstances in which that man, with a wife and family, has not got the amount of money credited to him, the Minister graciously refrains from attempting to take it. Anyone who thinks that 7/6 in the £ could be taken off the income, even of a person with £1,000 a year who has a wife and five or six children to provide for, is thinking of something which cannot possibly be done. We should not mistake the meaning of sub-section (3).
It is one of the refreshing qualities of democratic Parliament that one can arrive at the truth by patience. I have heard Deputy Mulcahy's point of view, and it is that expressed so often by the Revenue Commissioners. They have become quite excited——
I never heard them become excited over my difficulties.
No, but they have become excited about mine. My answer is that, whatever may be the trying circumstances of the man with £1,000 a year, with a wife and four children, even if they take 7/6 in the £ off every £1 he gets, he is still a damn sight better off than the person with 32/- a week. If you take 7/6 in the £ off a man with £1,000 a year, he is left with approximately £600, which is more than £10 a week. Is he not far better off than the man who is starting with 32/-?
You would have to get that into the back of his mind.
It may be that he cannot reconcile himself to living anywhere but in Fitzwilliam Square or Rathgar, and feel that it would be a hardship for him to move in more modest surroundings. I do not want to abolish family allowances on the income-tax code. I am most anxious to continue to develop that type. The difficulty is that Parliamentary procedure is such that I am precluded from doing so now. However, there are more ways of killing a cat than that of choking it with butter. I am not asking for family allowances.
The Deputy seems to be advocating them again.
I am only explaining, if the Chair will allow me. Surely, the Revenue Commissioners' case is one of not taking taxation from somebody who has it. Of course, even if you take 7/6 in the £from a man who is in receipt of £1,000 a year, and who has four or five children, is that not better than taking it from a man who has £78 a year, also with a wife and four or five children? My sole concern is to equal approximately the position of the two men.
The Deputy has reverted to his pet schemes.
I think everybody in the House will agree with my view. I am not trying to make the case that some people in this House are hard-hearted and indifferent to the trials of the poor.
Such agreement does not bring it within the rules of order.
I believe I am entitled to say this, that I think everybody here recognises that the stomachs of one class of the community are precisely the same as the stomachs of any other class of the community; and, when we consider the stomachs of comfortable men, surely we ought to give some consideration to the circumstances surrounding other classes perhaps not quite so comfortable.
Now, the Deputy has gone full circle.
One point arises on the phraseology of Section 1 (1), where it is set out that income-tax shall be charged at a particular rate. It is the popular belief that income-tax is a tax on income actually derived by a person. In fact, it is no such thing. It is a tax on what is deemed to be a person's income under certain statutory provisions. That works out inequitably in respect to one type of income. Under an early Finance Act provision was made for the establishment of new businesses—that is, something additional to what a person was ordinarily at—and under the impact of that this situation may arise. A person may be making money out of some trade or profession and he may start on something new. Let us say he starts in the middle of a financial year. Over a particular period, which the Revenue Commissioners may take as a test, it is ascertained that the profit he is deemed to have made is £1,000. In the next year he makes £500, and in the following year £500, and then the business departs. He is deemed to have made £1,000 profit one year, and a profit of £500 in each of the succeeding two years. He pays income-tax on £1,000 twice and on £500 twice, and he cannot recover anything. That seems to be entirely unjust. The Minister is now going to charge a tax on that type of statutory income which the person never, in fact, gets. I should like him to look into the matter.
I admire the persistency of Deputy Dillon in his campaign for family allowances. He has raised it—with all due respect to the Chair—in season and out of season. I do not say that it is out of season on this occasion. I think the whole House agrees that if certain changes such as Deputy Dillon advocates could be made in a manner that would not be too costly to the State, it would be to the advantage of the poor and they should be made. At any rate, that matter is being investigated—the question of family allowances—and some day soon we will have a report on it. I thought Deputy Dillon was advocating that these family allowances that are included in the present income-tax code should be abolished.
I was not doing any such thing.
I thought the Deputy said that they should be taken out, and he thought the Minister might be prepared to say that he was introducing something else.
It does not matter what the Deputy said. What does matter is what the Deputy meant. I had to hang the family allowances on something.
If the Deputy were really serious on the subject he would have put down an amendment, so apparently he did not mean it seriously.
I was hanging family allowances on something and I hung them.
I shall have the matter referred to by Deputy McGilligan examined.
This is a new section and it makes allowances for people who have been for years in other countries, and who come to reside here. Representations have been made to the Department of Finance about having some provision made for a reduction in tax for people who retire from businesses and professions in places abroad, and who come to live here—some consideration sufficient to induce them to come and live here—and we are making certain allowances.
If the Minister is making a concession for the purpose of inducing certain classes of people to reside here, it might be no harm if, at this or some other stage, the Minister would describe the nature of the concession. This is a very long section. A careful perusal of it leaves my mind in a state of complete bewilderment. If it is designed to induce certain classes of persons who have resided abroad to live in this country, would it not be well to state the nature of the concession? Is it that the incoming pensioner will pay income-tax at the rate obtaining in the country he left, or is there some concession of another character?
This section grants a measure of relief from double income-tax for individuals coming to reside here, who have spent a considerable period in a foreign country and receive income therefrom. Sub-section (1) is the operative sub-section and it provides, broadly, that the Revenue Commissioners may grant such relief as they think just where they are satisfied that for any year of assessment an individual has paid tax in this country on any part of his income arising in a country to which the section applies, that he has paid tax in the foreign country on that part of his income, that prior to the year in question he was resident in the foregin country for a period or periods not being less than ten years, and that for such year he is domiciled, resident and ordinarily resident in this country and is not entitled to double taxation relief under the Finance Act, 1928, that is, as a double resident, a person resident both here and in Great Britain or Northern Ireland, or to relief under Section 2.
A limit is imposed on the relief which may be granted to the individual. It is not to exceed the lesser of the following amounts: (a) one-half of the amount of his Irish income-tax or (b) the amount of tax payable in the foreign country after deduction of any relief in that country. If such a limit were not imposed and it were possible for the individual to get relief, say, to the extent of the Irish tax, it would mean that in respect of the part of his income arising abroad he would be paying less than on a similar amount of income if it arose at home, which would be an unjustifiable position. It should be explained in this connection that the foreign tax in cases of the kind contemplated is, as a general rule, considerably less than the Irish tax.
Suppose a person is an American citizen and has an income of 1,000 dollars a year on investments which he holds in America. He comes to reside in Ireland and the 1,000 dollars are paid to him here after United States income-tax has been deducted. Does he pay 7/6 in the £ on the whole of that 1,000 dollars, or what does he pay?
He pays whatever the Revenue Commissioners think just.
Under the new dispensation.
Deputy McGilligan suggests that he pays whatever the Revenue Commissioners decide. The Revenue Commissioners look at the colour of his hair, admire the shape of his whiskers, consider his general appearance and then make up their minds what he ought to pay. They say to him: "Sonny, you will have to pay so much." That is not a very satisfactory basis on which income-tax should be assessed. I imagine there should be some higher degree of certainty about assessment than that.
Subject to an upper limit?
I will give an example. A.B. is a married man with three children. He has income of £1,000 derived entirely from investments in a country to which Section 3 of the Finance Bill, 1941, applies. That is the new section. External income-tax amounting to £100 has been deducted from the income before receipt by A.B. Foreign dividends £1,000, after deduction of external income-tax. Allowances, married £220, child allowance £180, i.e., a total of £400. Taxable income is £600. He pays on £100 at 3/9, £18 15s., and on £500 at 7/6, £187 10s. The amount of his Irish income-tax is £206 5s. One half thereof (a) equals £103 2s, 6d., (b) external income-tax equals £100, relief allowable, the lesser of (a) and (b) £100, i.e., the full amount of external tax suffered.
The Revenue Commissioners may grant relief not exceeding that amount, but they need not.
I imagine they must.
The phrase that qualifies relief, "as is in their opinion just" could wipe that out.
It is allowed under all the income-tax codes. The expression exists all through.
But if they want to cut it out it is easy to do so.
The Deputy knows that the Revenue Commissioners have not the slightest intention of cutting it out.
They do. They exercise discretion.
The example the Minister gave merely means a recoupment by the Revenue Commissioners of the amount of income-tax paid in the United States of America.
In the case of this example that is what it amounts to.
While not committing the Minister to the statement that it would give relief in every case, broadly speaking it would result in recoupment of the bulk of what was paid abroad. Having paid abroad the Revenue Commissioners would recoup the amount and collect at the Irish rate. While there would be a slight variation, that is the general purpose here.
It is.
That is very valuable information to have.
What is the meaning of the provision dealing with total income? The section states that it means total income from all sources
"computed without regard to the provisions of paragraph (3) of Rule 6 of the Rules applicable to Cases 1 and 2 of Schedule D of the Income Tax Act, 1918, or the provisions of Section 14 of the Finance Act, 1929."
There is a later reference in Section 43 from which it appears that there is a distinction drawn between an individual or two individuals in partnership and a company. I should like to know whether this section has any governing influence on the later section.
If the Deputy does not mind, I will come back to that later and get a note dealing with it.
Amendment No. 2 is the first of a series of amendments (Nos. 2 to 14) which implement concessions with regard to excess surtax.
I move amendment No. 2:—
In sub-section (1), page 5, lines 13 and 14, to delete the words and figures "the Finance Act, 1940 (No. 14 of 1940)" and substitute the words and figures "sub-section (2) of Section 1 of this Act".
Dealing with this amendment reminds us that this is the first of a series of amendments that embody a promise I made about dropping retrospective taxation. I have a note here which deals with practically all the amendments in my name on the Order Paper. They all relate to the same thing, the dropping of the retrospective tax and the raising of the exemption limit from £1,000 as originally proposed to £2,500. I shall move later a series of amendments relating to corporation profits tax covered by Part V. The series of amendments follow an amendment I made in modification of the tax. As the House is aware, and as I pointed out in my Second Reading speech, corporation profits tax is a tax on companies or corporations, and the idea of the excess surtax is to provide for a change on "excess" profits accruing to individuals, whether they operate solely or in partnership, which would be comparable to the excess corporation profits tax on companies. It will be readily appreciated, in consequence, that the changes to be effected in the original corporation profits tax proposals, in so far as these relate to the "excess" tax, call for analogous changes in the excess surtax scheme.
So far as excess surtax is concerned it is proposed that it shall be charged in respect of the year 1941-42, to be payable on the 1st January, 1943, instead of the year 1940-41, to be payable on the 1st January, 1942; that the individual may choose as his standard the profits or income, as the case may be, of the best of his standard years instead of having to average two years in certain cases; and that the minimum standard of profits or income shall be £2,500, instead of £1,000 or £1,500 respectively, as provided for in the Green Print of the Bill as introduced. The corporation profits tax amendments will arise at a subsequent stage of the proceedings, but it may be as well at this point to indicate their general trend.
Amendments Nos. 19 to 29.
It was originally proposed that the non-liable margin or exemption limit for the purpose for ordinary corporation profits tax should be lowered from £5,000 to £1,000; that companies hitherto liable at a rate of 7½ per cent. should be charged at 10 per cent.; and that companies hitherto liable at a rate of 10 per cent. should be charged at 12½ per cent; and that these increases in the charge should operate as from the 1st September, 1939.
Under the modified proposals, however, the old exemption limit and rates of charge will operate until the 31st December, 1940; the new exemption limit will be £2,500 as from the 1st January, 1941 (instead of £1,000 as provided in the Bill as introduced); and the new rates of 10 per cent. and 12½ per cent. will come into force as from that date.
With regard to the excess corporation profits tax the broad effect of the amendments which I intend to move will be as follows:— To allow a company to choose as its standard the best single trade year to which accounts have been made up ending during the three years to the 31st August, 1939, instead of the average of the two best trade years ending during the three years to the 31st December, 1938.
That is an amendment that was pressed for by several Chambers of Commerce, the Industrial Credit Company, ordinary companies and by members of the House. The amendments will also provide that the minimum standard shall be £2,500 instead of £1,000; and to make the charge for excess corporation profits tax operative as from the 1st January, 1941, instead of from the 1st September, 1939. That covers most of the amendments on the Order Paper in my name.
Are we to discuss the corporation profits tax on this statement of the Minister?
Deputies might wait for the section.
This amendment meets to a very large extent, though not entirely, what is called the retrospective effect of the Budgetary proposals, but it does not meet the other point put to the Minister regarding an expanding business, or of a company which employs a certain amount of its reserves towards an extension, other than a normal extension, of the ordinary business that it has been doing hitherto. By reason of the emergency, some firms have gone into a new line of business, a line differing very considerably from that which they had been doing formerly. As a result of this new development, they have been able not only to keep their staff employed, but actually to add to it. Under this Finance Bill, they are being classed in the same category as profiteers, so called. Further, provision is being made to give consideration to companies which, by reason of developments, have had to ask for new, or extra, money from their shareholders and others. In their case, this new money is being classed as money that is entitled to earn money. Very different treatment, however, is being meted out to the firms which are using their reserve funds for the purpose of extending their business. No allowance is being made to them although the extra money that they have put into the extension of their business is new money.
Let us take a particular case. Assume that a firm has £25,000 in reserve. It has been put there over a series of years, to be used as a sort of cushion for difficult times, or possibly to finance developments that may take place when the state of the money market is such as not to encourage the investment of more money. Let us say that £10,000 of that £25,000 which formerly brought in a certain revenue— say that it was earning 4 per cent. or thereabouts—is now put into the business. If it be for a normal extension of the business, it is going to remain. After the war or the emergency, as the case may be, there might be something to be said for less consideration being paid to it, but if the money be employed for an extension, the soundness of the investment will depend upon the length of the emergency. My point is that such a firm is being penalised with regard to any profits which it may earn arising out of the investment of that sum of money. To that extent, the Minister has not met the real point that was put to him in connection with an expanding business or an extension of business, or in relation to the firm which, although it earned more money, kept its staff in employment during a very difficult period—a firm which, in certain cases, was in a position to employ more people in gainful occupation at a time when the field of employment was severely narrowed.
I want to say a word in amplification of what Deputy Cosgrave has said about similar cases. I want to make this perfectly clear, although I may be unorthodox in this view, that I rejoice in the taxation of what is properly called the profiteer. I think the fellow who is out to make a kill now at the expense of his neighbours who are in straitened circumstances and in difficulties, should be mulcted, in so far as it is possible to mulct him. But I do not want to allow our zeal in that task to bankrupt the entire mercantile community of this country. The manufacturers have their own troubles. I am more familiar with the problems which concern the retail and wholesale distribution trade. If I read Government policy, and the policy of the nation as a whole, correctly, it would seem to me that the best service which the wholesale and retail distribution trade can give at the present time, is to get supplies wherever it can put its claw on them, and, if necessary, to borrow money in order to get those supplies for the community which that trade deserves. If that is what the State desires the wholesale and retail distribution trade should do, it means that the stocks of those in it are going to increase largely in volume. People in it are going to keep much larger stocks than if they were thinking of nothing else but the economic operation of their trade.
Whether we like it or not, the price level is rising and must continue to rise. It is a price level that we cannot control because we are not in a position to control the price of the cotton grown in North Carolina. Therefore the merchant who acquires large stocks at the present time appears to be making handsome profits. That is perfectly true. If he is a short-sighted merchant who thinks that everything is lovely in the garden, he buys himself a new suit of clothes, a new suite of furniture, three pianos and a new house, but if he is a prudent merchant, what he will say to himself is this: "It is quite true I am making larger profits now as a result of the increase in the value of my stock while it rests upon my shelves, but some time there is going to come an end to this boom period, at the end of which I am going to be carrying an inflated stock, so that in one 12 months I am going to suffer a big loss. Now either I have to accumulate a fund to cushion that loss, or I am going into the bankruptcy court." You see it is quite easy to control prices if there are during a period fixed maximum prices above which no merchant will be allowed to go, but at the end of the period you cannot make a merchant's customers go in and pay to him a high price for accumulated stocks when his neighbours are offering the same stocks, recently purchased, at the depreciated prices that will obtain at the end of the inflationary period. Unless the merchant who has consistently carried large stocks for the service of the community has a reserve accumulated out of which he can write down the large stock he holds at the end of the boom period, he is done for. The British Government collected excess profits at the rate of 80 per cent. for the greater part of the last war but, when the crash came, the British Government went to every merchant in this country and Great Britain and said:—
"Write down your stocks now to current values and we will recoup you, out of the excess profits you paid during the war, the amount of the loss you are involved in by writing your stocks down to current value, thus putting you in a competitive position with those who bought stocks on the day before yesterday."
I do not mind whether you take this money into the Exchequer or not, provided the Minister binds himself to recoup the losses that will be experienced at the end of the boom period. I think that it is better for you not to pursue that course of conduct because, if you do, you accept responsibility for every merchant in the country. I think that it is wiser to leave it to the merchants themselves to appropriate a prudent share of the profits they may be making now to act as a cushion for the losses which they must anticipate experiencing at the end of the boom period. If any man chooses not to do that but simply to have a good time while the going is good, the devil mend him if he goes into bankruptcy; it is his own funeral and we cannot go around teaching business sagacity to every shopkeeper.
That is not the job of the legislature but we ought to make it possible for the prudent man to make the necessary provision if he desires to do so. What I apprehend is that this system of regarding any extra profits made during this inflationary period as illegitimate and as proper spoils for the Exchequer will involve us in a mercantile collapse at the end of the period of crisis from which we shall not be able to recover. It is bad enough to look around and see thousands of men unemployed but, if you make every potential employer unemployed as well, you will create a problem with which no community can deal. Unless we keep that constantly before our eyes, we may get ourselves into a morass now, the disastrous nature of which we shall not fully appreciate until it is impossible to remedy it.
I am well aware that the Minister is in the difficulty that, if he attempts to meet that situation now, he will lay himself open to the charge of conspiring with profiteers to enable them to benefit by their profiteering. The Minister has simply got to make up his mind that he will go after the profiteers, but that he will also protect the legitimate interests of the ordinary, prudent merchant who is an integral part of the economic life of the country. So far as I am concerned, such measures as he may deem it expedient to take with that object, I shall defend, because I know how vital it is that they should be taken and I know how susceptible these measures are to misrepresentation. I think that you have got to face misrepresentation, and I think that all of us should cooperate with the Minister in effectively pursuing the genuine profiteer, who is unjustly trying to exploit his neighbour, while we, at the same time, protect the honest merchant who is trying to get a reasonable profit and make prudent provision against the catastrophe which, he knows, he will have to surmount when the general clean-up falls to be made at the end of the emergency.
I move amendment No. 8:—
In sub-section (3), paragraph (b), page 6, line 56, to delete the figures "1941" and substitute the figures "1942", and in line 57 to delete the word "four" and substitute the word "five", and in line 58 to delete the figures "1940" and substitute the figures "1941".
I have been favoured by the Minister with an explanation respecting the point I raised on Section 43, and which affects this amendment. That section gives a certain advantage to either an individual or a company succeeding a company. What I want to elucidate is whether or not, in connection with sub-section (3) of Section 7, and Section 43, provision is made for the four separate types of case that could possibly arise—an individual succeeding an individual, a company succeeding a company, a company succeeding an individual and an individual succeeding a company. It is obvious that any one of these four cases may arise. Provision is made for an individual succeeding an individual. He gets the benefit of his predecessor's standard year. A company succeeding an individual gets similar benefit. Does an individual succeeding a company get the same benefit? Assuming we wipe out the persons concerned and leave only the business, is there any restriction with regard to the benefits of the standard year in respect of whoever succeeds—whether a company or an individual, and whether from a company or an individual?
All the cases except that of a company succeeding a company are covered.
Would the Minister direct me to the words which meet the case of an individual succeeding a company?
Section 42.
That refers to a company which succeeds to an unincorporated business.
This matter does not strictly arise on the amendment.
I want to ask where is the provision made for the individual succeeding a company?
Perhaps we could deal with the four separate cases, and if there is a reason for the exclusion of any one, I suppose we shall get it.
I was told that they were all right.
The matter is dealt with in paragraph (b), sub-section (3) of the section which states:—
Where a trade or business to which this Part of this Act applies was carried on by an individual (either solely or in partnership with another person or other persons) during the whole or any part of the year ending on 5th day of April, 1942, and was so carried on by him for less than five consecutive years ending on the 5th day of April, 1941, and was, immediately prior to being so carried on by the said individual, carried on by another person or by two or more persons not including the said individual, the profits of the said trade or business while so carried on by such person or persons may, on the application of the said individual, be treated, for the purpose of calculating the standard profits of the said individual, as profits of the said individual if he so carried on the said trade or business as aforesaid solely or as profits of the said individual and his partner or partners if he so carried on the said trade or business as aforesaid in partnership with another person or persons.
That covers the point the Deputy asks for. "Person" includes company.
The word "person" covers either an individual or a company?
Is that right—that "person" always includes "company"?
Yes.
I find most of the Bill taken up with sections which are phrased in terms of companies and not of persons.
The real point is that it includes "person" and "individual."
It does here.
Would the Minister say whether these four points are dealt with: (1) a person succeeding a person, (2) a person succeeding a company, (3) a company succeeding a person and (4) a company succeeding a company.
The last one is the one that is not included—a company succeeding a company.
A case of that sort has been brought to our notice, a company succeeding a company, though not exactly in that form. It is the case of a person succeeding a company who may have to turn the business into a company.
He may have to turn himself into a company.
If he were prohibited from doing that it would interfere very considerably with him. There would be penalisation in that case and it was scarcely the intention to penalise such a person.
Why does the Minister object to a company succeeding a company?
The company has a substituted standard to fall back upon but the benefit will not be as generous in the case of a company succeeding a company. The equivalent standard might not work out as generously. It is an equivalent benefit, which does not perhaps work out on all fours with the other cases.
I see the point of the Minister's position because if the standard is to be a transferable asset from one company to another, it becomes a very valuable asset. What I am puzzled at is this: if we feel reluctant to permit this transfer to a succeeding company, why do we permit a similar transfer to a succeeding individual? If it is undesirable to permit a company to sell its good standard year as a valuable asset to a succeeding company why do we think it unobjectionable to sell it to a succeeding individual? I cannot see for the moment what the difference is.
There has to be some equity in the matter and the individual could not get the substituted standard. That is reserved to the corporation.
Does it not seem clear to the Minister that we are in fact creating a situation in which a continual, constructive fraud can be perpetrated on the Exchequer? Our purpose is to ensure that we shall not create a valuable asset by law, transferable for valuable consideration, to wit, a good standard year. Now we find ourselves in this dilemma that the Finance Bill is so drafted that we have an alternative foot rule to apply to a new company. They can get a substituted year but the substituted year is not made available by the terms of the Finance Bill to an individual. Therefore, if I want to get valuable consideration for this good standard year created by statute as part of my property, all I have got to do is to find an individual, whether he comes from middle Europe, as he probably will, or elsewhere, with a good nose for a bargain, who is in a position to say to me: "You have got to sell it to some individual if you are to get cash. If you do not find one man with the cash, you will have to sell to a company and you will find when you are selling your business to a company a very valuable asset vanishes into thin air." If, on the other hand I have a company with a standard year which I want to negotiate, and a group of Irishmen form a new company, put up the capital and proceed to purchase my asset in the company from me, when they embark on the business, they are only permitted a substituted year. Is that not so?
There is the equivalent.
In fact, suppose my standard year is very much superior to the substituted year. An individual then comes along and he says: "I shall give you a price for your property. I admit that the price I offer does not represent its full value. It is worth more, but I am in a position to pay you more for the property because I can use your standard year, whereas the company cannot use your standard year and, therefore, it is not in a position to pay you a better price." That seems to me to be the acme of inequity. Why do you not amend the Finance Bill in some way to provide that a company succeeding a company can use the standard year, or if you have made up your mind—and I think a forceful argument can be made of the contention that we ought not to be creating by statute new assets in a balance sheet —why do you not say that no transfer of a company will be allowed with any level but the substituted year, and let there be an equal rule for everybody?
Two cases have been put to me in this connection. One is that of a company already carrying on business which takes on, as a going concern, the business of another company. The inspector of taxes contended for the principle of succession which enabled him to make separate assessments in respect of the business taken over. These people say that, in all fairness, the standard profits of the business acquired should be added to the standard profits of the old business to get a fair comparison with the profits of liable accounting periods. As the Bill stands, it appears that there is no provision for this. There is the second case of a company carrying on two separate and distinct types of business and which sells one. The standard profits of the business sold were substantial and would be much greater than the substituted or minimum standard. It is contended that the new company clearly is entitled to the standard profits of the business sold, but, as the Bill stands, that is not so. A third case, which may possibly be a mixture of the two others, is that of a business with a profit of £10,000 which acquires a business with a profit of £5,000. Under the new dispensation, my information is, that assuming that the profits remain the same, the new company is allowed to earn only £12,500 and the £2,500 is scheduled as excess profits. I do not think that just; and I should like to know if these three aspects have been examined to ensure that injustices of this type do not result from this new legislation.
I cannot say that I have examined the last type of case referred to by Deputy Cosgrave. The other cases, I think, have, generally speaking, been examined, but I know that there are a number of points which will arise, and that, where it would be equitable to meet them powers should be given to the Revenue Commissioners to meet them. I do not want, as Deputy Dillon suggested, to drive any more people out of employment. I want to keep as many industries, manufactories and companies as possible in existence and making profits from which the Exchequer will benefit, but it is impossible for any Minister for Finance to make any effort to get more money by income-tax, profits tax, or excess profits tax without hitting and hurting somebody. I admit, in reply to Deputy Cosgrave, that there are certain types of cases which he represented on the earlier stages of this discussion should be considered and that I have not met them. I went a very long way to meet points put up by Deputies opposite, but I know that there are points I have not met. Some of these were mentioned by Deputy Cosgrave to-day, but, so far as excess tax in regard to some of these is concerned, it will be another year, and another Budget will have to be introduced, before these taxes become payable. We shall have time in the meantime to examine all these cases, and perhaps to put something into the next Finance Bill that will meet the types of cases Deputy Cosgrave, Deputy Dillon and other Deputies have in mind. I realise that I have not met the case mentioned by Deputy Cosgrave of an expanding business, but if I am to get anything this year out of the extra taxation, income-tax, surtax and excess profits tax, I do not think I can go any further at this stage.
The proposal in respect of an expanding business is a constructive proposal. If the cases I have mentioned are correct—and nobody outside income-tax experts can say so—the policy of the Bill is utterly destructive. Surely it is not intended in respect of a business which made £X last year that, if it is sold, half of these £X are to be regarded as excess profits? Let us assume that we have a business which made £5,000 every year for the last ten years, if such a company can be said to be in existence. It is sold, but by reason of the terminology or phraseology of the Finance Bill, half of these profits are to be regarded as excess profits. Surely we are stepping beyond our powers altogether if we regard these as excess profits? We have not got the right to do these things. We may say that we have the power to do them, but we are flying in the face of Providence, because it is against natural law to do them.
I do not know that I could accept that. If a company has moneys available for the purchase of another business making £1,000 or £10,000 profit, and if that business continues to make that profit—£10,000, £5,000, or whatever you like—is the company which makes that purchase not adding considerably to its own profits, and is it not a considerable additional revenue for that company? For that company, it represents an excess of profit over what it previously made. It happens unfortunately to come in a time of emergency when excess profits legislation is in existence. That excess profits legislation, I presume, will not be in existence after the emergency, and if we are to get something out of people who make profits— legitimate profits, admittedly; there is nothing illegal or immoral about making a profit of that kind—I think it is a profit which is fairly taxable as an excess.
The Minister has put forward an aspect of this matter which nobody outside the Ministry would put.
Outside any Minister for Finance?
No, the present Ministry, because the sum and substance of it is that no company in its senses is to purchase any other company or expand its business, because if it earns money in excess of what it is earning at present, that money will be regarded as excess profits. It is contended that if a company has £100,000 in reserves and sells these reserves to purchase some other concern, and, having acquired this other business, continues the persons engaged there in gainful occupation, and keeps the business going, it must do so on the basis that half the profits made are to be subject to 75 per cent. tax? I do not know that there will be any extension of business at all. I think it is extraordinary.
I think it is good to clarify this, because it seems to me we can get puzzled. What we are discussing at present is not a proposal to reduce a man's standard profits in his own business; what we are discussing, in effect, is the reduction in the standard profits of a firm if it passes into new ownership. Is not that so?
If it passes.
If it passes into new ownership. Very well. We can do one of two things: Either create a statutory new asset in the balance sheet of the firm to be transferred, by saying that in a good standard year it could continue to make good profits on the basis of that standard year in new ownership without becoming subject to surtax, or we can say that if this firm changes ownership and becomes the property of a new company it will be immediately driven back to the substituted standard year of £2,500. Is not that the case?
It is worse than that. If it is sold to a company already making money, half of its profits will be regarded as excess profits.
And the purchasing company is fixed with notice.
Now?
Yes, under the Finance Bill. It did appear to me that the Finance Bill fixed him with notice, that if you buy a company, with the £5,000 standard year so long as it remained in the old ownership, once it passes into your ownership you will be driven back to the £2,500 and therefore must adjust your price to meet that less favourable position. If, however, the Leader of the Opposition is correct in making the case that a person, without being fixed with notice, has already purchased the firm, and if this Bill is going to operate to take away from him one half of his standard year which he had every reason to believe, in accordance with legislative precedent, would be accepted as the basis of profits on which surtax for the future would be levied, then I think a real hardship is being done. I cannot imagine that the Minister will not meet the case of transfers of property that have taken place prior to the passing of this Bill. I think that if he were to say in respect of transfers of businesses prior to the passing of this Bill, which will be affected by this section, that he is prepared to cut them out but that from this day they must take notice that transfers must be made in the light of the knowledge that, in the new ownership, it is the substituted profit year that will be had regard to, and not the actual profits in the best standard year, then that seems to me to be a reasonable course to adopt, if it were adopted. Surely, the Minister will do that?
No. I do not see why I should. No matter when a Budget is brought in, you will be up against hardships of one kind or another. Deputies may have knowledge of some companies that have purchased other companies within the last year or two and that are going to be hit by the legislation now under discussion. The same might happen if this legislation were introduced six months later on. There would be some other companies coming in. No matter when you introduce legislation, there will be some company which, a few months before, will have bought some other business and which will be brought in under the legislation. That is how such hardships will arise in particular cases, and we try to avoid it as much as possible. But I do not see how I could meet that point. I think all the Opposition Deputies will admit that I have gone a long way to meet the objections that were put up originally.
The Minister refrained from committing a sacrilege, but he did not mind committing a mortal sin.
Oh, I do mind —to some extent anyhow—but I doubt if there is anything mortal in any of these propositions in regard to these companies. I should like to repeat, that most of this tax will not be payable until next year, and with regard to the cases put up by Deputies opposite, I shall have them carefully examined and if such cases are presented, where there are difficulties, I will guarantee that they will get full and sympathetic consideration before the next Finance Bill is introduced. That is as far as I can go.
On this question of ownership, I think it is clear that the company succeeding a company is not met by the substituted year and is not intended to be met?
Yes.
As far as the individual succeeding the company is concerned, that depends on Section 7 (3) (b), and that depends on the question whether the word "person" includes "company"?
Yes.
The effect of Section 7 (3) (b) is definitely that if the individual who eventually becomes possessed of the company was at one time a member of the company which he takes over then this does not apply. It says there:
"Where a trade or business... was carried on by an individual... and was so carried on by him for less than four consecutive years and was, immediately prior to being so carried on by the said individual, carried on by another person or by two or more persons not including the said individual."
Yes.
Very good, but if the individual was a member of the company—I am reading that as being equivalent to two or more persons— there is another case that may occur. There has been a situation developed here, which is rather notorious in the public view, where there may be harsh treatment under this section. Take the case of a business that has been carried on by a company and that has not been doing too well and comes to a point where there is either a holding company or receivership conditions established. You have a further company formed to take over, namely, the holding company, and it does business in a halting and impeded way for five or six months and is then succeeded by an individual. What are going to be the standard profits there?
But still the holding company is a company.
Yes, but it has been carrying on in a halting and impeded way and has not been able to make money. It has been going down the hill. The succeeding individual is going to be harassed therefore, by what the holding company made.
I am afraid so.
I think the Minister knows the case to which I am referring, and I do not wish to say more, but that is a case in which the individual who succeeded there is going to be put on the basic line of, say, the amount that was made in the interim period and he is going to suffer very heavily.
I shall look into that case also.
I move amendment No. 10:—
In sub-section (1), page 7, line 16, and also in sub-section (2), page 7, line 52, to delete the figures "1940" and substitute the figures "1941."
I move amendment No. 11:—
In sub-section (1), page 7, in paragraph (a) to delete all from the word "half" in line 24 to the word and bracket "consecutive)" in line 28, and in paragraph (b) to delete all from the word "half" in line 34 to the word "each" in line 35, and substitute in each case the words "the amount of his total income for one (to be selected by him or (in default of such selection) by the Revenue Commissioners)."
I move amendment No. 12:—
In sub-section (1), page 7, line 29, and line 36, and line 45, and line 48, to delete the word "one" and substitute in each case the word "two."
I move amendment No. 13:—
In sub-section (1), page 8, line 5, and also line 22, to delete the figures "1940" and substitute in each case the figures "1941".
I move amendment No. 14:—
To delete all words after the word "Where" in line 37 to the end of the section in line 54 and to substitute the following words:—
"the net result of the carrying on of a trade or business to which this Part of this Act applies in the accounting year or the two or three accounting years by reference to the profits for which or for one of which (as the case may be) the standard profits of an individual from such trade or business are computed has been a loss, such loss shall, to the extent to which it exceeds the profits of such individual from the said trade or business for the accounting year next following the said accounting year or the last of the said two or three accounting years (as the case may be), be carried forward and, so far as it will extend, be deducted from or set-off against the profits of such individual from the said trade or business in respect of which he is chargeable with excess surtax.
The fact that the individual, in the ascertainment of his standard profits, will now be entitled to select the best of his standard years instead of, in certain cases, having to average two years, necessitates the consequential re-writing of Section 10.
That is the effect of it in writing.
I put no cap or cloak on it, I do not understand what the amendment means. Am I to take it that where a man has sustained a loss in one year and a profit in two other years, you add the two profits together and subtract the loss and then divide the result by three? Or what do you do?
It is only where the loss exceeds the profits.
In the Bill he was to take an average. The amendment gives him the benefit of a loss over the standard year.
What is all the business about a loss? The whole section seems to deal with the question of where a loss has arisen.
This section provides that where, over the three trading years out of which the individual selects the best year for "standard" purposes, there has been a net loss, such loss—to the extent to which it exceeds the profits of the trading year immediately following the last standard year—is to be deducted from the profits to be assessed to the "excess" tax. The relief is similarly given when there are only two trading years available for standard purposes, or there is only one.
If in the three years a loss of £1,000 has been sustained, and in the first year that the firm becomes liable to surtax it makes a profit of £2,000, you subtract from the £2,000, £1,000.
What?
I am trying to pick my way out.
Surely it is only if the loss exceeds the profits?
Naturally.
Read the amendment.
I take it that the purpose of this amendment is that, where there is a loss exceeding the profits in the three years which were previously the three standard years, the three years for computation—the three years immediately preceding 1940 it would be now—he is allowed to carry that loss forward and deduct that from any liability which he has. Is that the position?
I will give the Deputy an example. Take three standard years. The company makes a profit in the first year of £3,000; the second year it makes a loss of £10,000; the third year it makes a profit of £5,000; in the intervening year, 1940-41, there is a profit of £500; in the year of charge, 1941-42, a profit of £8,000. Year No. 3, being the best year, will be selected as giving the best standard profits. It is assumed that the comparison of "total income" makes it evident that the "excess" chargeable is governed by a comparison of profits. The charge will be computed as follows:—
|
1941-42, profits |
£8,000 |
|
Standard profits |
£5,000 |
|
“Excess” |
£3,000 |
Net loss over standard years, £10,000, minus (£3,000 plus £5,000), equals £2,000.
This exceeds the profits of the intervening year, 1940-41, by £2,000 minus £500, that is £1,500.
Relief in 1941-42 by reference to loss, £1,500.
Excess chargeable after relief, £1,500.
That is what I thought.
That clears up that amendment and I think we understand it, but I take it that that only deals with losses incurred before these standard years are selected, that the loss which the Minister has given us is only brought in in relief where it arises in the years preceding the special standard year. But there is another case that might quite easily result, namely, how long does the Minister propose to carry on this corporation profits tax and excess corporation profits tax? Will losses be allowed after 1940-41—I think that is the year they become liable—after that, will losses be able to be set against profits?
Sufficient for the day is the evil thereof. We have another time to discuss that question.
This is a very serious thing for the community, namely, that if they make a profit in one year and a loss the next year——
It does not arise at the moment. It may arise later. I am sure we will hear a lot about it later.
I am sure you will.
I represented to the Minister that while I recognise that revenue had to be raised, it was legitimate to suggest certain modifications which would not cost the Exchequer much, but which would make material difference to a section of the community deserving of consideration. I sell snuff, and I used to charge old age pensioners 5d. a half-ounce. After the last Budget I raised the price of snuff to 6½d., and after this Budget the price has gone up to 9d. a half-ounce. The old age pensioner has not very many consolations in this world, and I do not believe the concession of reducing the price of that half-ounce of snuff would mean very much to the Exchequer, but it would mean a lot to those people. Would it not be possible to give the snuff manufacturers a rebate which would reduce the price of snuff to somewhere about 6d. an ounce? Has the Minister considered what it would cost?
I should like to join with the Deputy in showing some sympathy with those poorer people, but it would cost me £54,000, and I am afraid it is too much.
To reduce it to 6d.?
Yes. It would cost £54,000.
If the consumption goes down you may lose it!
While I am in agreement with what Deputy Dillon has said, I realise that the Minister has necessarily to get revenue, and in those times he probably has to throw his net much wider than in ordinary circumstances. I am not one of those people who regard tobacco as a type of luxury, but you may almost extinguish its use by the imposition of continuous taxation.
I hope not.
Quite, but the Minister is rapidly doing that in the poorer section of the community.
All sections of the community.
Well, that may be. Some sections of the community may be people of iron will, and they may very well say: "I am not going to smoke tobacco at the price at which the Minister makes it available now," but in respect of a large number of people the use of tobacco and the cheap brands of cigarettes has become much more than a luxury. If the Minister were to mix with the ordinary workers he would know that, given the choice between a cup of tea—even a cup of strong tea, which is now just a memory—and a cigarette of the cheapest kind, the ordinary worker would prefer his cigarette. You cannot tempt him to give up his cheap cigarette even for a cup of good strong tea. The effect of the imposition of those recent duties on tobacco has been to impose a very considerable hardship on workers of that class, and the hardship is not eased by the fact that you keep down his wages and prevent his getting compensation for the rise in prices. You are saying to the worker that you are going to tax what he regards, rightly or wrongly, as a necessity, something which relieves to a certain extent the dreary grind to which he is condemned by economic circumstances, but you prevent that worker from getting compensation for the increases which you impose on him by additional taxation. I think, in respect of plug tobacco and the cheap brands of cigarettes, the Minister might very well endeavour to make a discrimination, as compared with the higher priced cigarettes and the higher priced tobaccos, because a greater hardship is imposed on workers by reason of the higher prices than is imposed upon the wealthier sections of the community who may have to pay a higher price for the type of tobacco and cigarettes they consume. I would urge the Minister, while there is yet time, to review the whole question with a view to easing the taxation in respect of the cheaper brands of cigarettes and tobacco, and thus making it possible for workers to obtain those commodities at a lesser price than they are being compelled to pay to-day because of the steep rise in taxation.
Deputy Norton has just covered a few points which I wanted to raise in this connection. I wanted to ask the Minister, if it is at all possible, to reduce the taxation on the cheaper brands of tobacco, especially twist tobacco. I heard a complaint recently that those who used to be able to pay 1/- for a packet of cigarettes are now going in for the cheaper brands, owing to the increased taxation, and that those who dealt in the well-known Woodbine now find that there is a scarcity of that brand because another type of person has stepped in and is taking that cigarette. Yesterday, I referred to the desirability of the Government proceeding to encourage the growing of Irish tobacco, so that next year there will not be those long queues of people waiting for cigarettes. I understand there is a scarcity of cigarettes, but before it is too late I would suggest to the Minister that the experiments in the growing of Irish tobacco should be continued.
It will be taxed all the same.
Yes, but there might be a plentiful supply. Taxation is one matter, but having no tobacco at all will be another matter. If it can be done, I think the Government's experiments in the growing of tobacco should be continued, so as to make sure that there will be a supply. I do not know the time it takes tobacco to grow or to dry, but now is the time to make provision so that next year the people who smoke twist or plug or any of the other brands of tobacco or cigarettes will not have to be told there is none available.
Meanwhile, I would appeal to the Minister, if it lies in his power, to reduce the tax on the cheaper brands, and give those workers the opportunity of getting their smoke without paying too much for it. Deputy Norton and other members have made reference to the fact that the workers are prevented from getting higher wages to compensate for the increased prices due to the new taxes on cigarettes and tobacco. I also join with Deputy Dillon in asking that the tax on snuff should be reduced. Snuff is going out of use in the City of Dublin, but in the country one can still see the old people carrying the usual small tin of snuff, and it is now nearly doubled in price compared with what it was five or six years ago. Those poor people are bearing more than their share of taxation in that direction.
There is not much use in expressing my sympathy with the smokers on the price they have to pay, when I have to insist on the tax. I have to insist on getting the money. I am glad to say that, from my reports, there does not seem to be much diminution in the amount of tobacco and cigarettes being purchased. I could not think of doing what Deputy Norton suggests—reducing the price of the cheaper brands of cigarettes and tobacco—because it is from the wide consumption of those cheaper brands that the greater part of the revenue comes. If the tax were to be doubled or perhaps even trebled on the costlier brands, and a big reduction on the cheaper brands given, the revenue would fall enormously, because it is from the big consumption by the greater number of people that we get our revenue.
You dropped £500,000 very softly.
I know we did, but we have come to the limit of concessions.
Unless larger supplies of tobacco come into the country than are coming at present——
They are not coming in at all. That is the difficulty. They have not come in, I suppose, for eight or nine months. We are hoping that tobacco will come in now.
With the new shipping service everything will be lovely.
The "Vassilios Destonnis" will probably bring it.
Deputy Dillon's flagship.
Call it what you like, as long as it brings the stuff in. Last year, when representations were made by Deputy Dillon and others, I gave in on the question of plug tobacco and it has cost over £200,000. That is a considerable sum and I cannot see my way to give any further concessions at this time. We have given concessions with regard to home-grown tobacco in the Schedule. One may not recognise it, but it is there. There is a basic duty on foreign tobacco containing 10 lbs. of moisture in every 100 lbs., of 18/10, as compared with 17/9 on home-grown tobacco. The difference of 1/1 represents a concession of 3d. compared with the previous year when the difference was 10d. There has been an increase—I do not know to what extent —in the past year in the acreage under Irish tobacco.
I hear Deputies Byrne and Norton advocating a considerable increase in the growing of Irish tobacco.
I did not.
I think it is time that the House should know what came before us at a meeting of the Public Accounts Committee, that is, that a substantial rebate had to be made on Irish tobacco, which was shipped out of this country as perfectly unusable. It is only right that the House should know that, after we had subsidised the growing of a quantity of tobacco here, the manufacturers had to get a rebate from the Revenue Commissioners because they had to ship it out of the country as rubbish.
Not at all. They used portion of it.
I am telling the Minister that I raised the question with the Revenue Commissioners at the meeting of the Public Accounts Committee, and that he will get it in the evidence of the committee. I think it was Mr. Carey who was the Accounting Officer for the Revenue Commissioners on that occasion. I pressed him as to the reason for this refund, and the answer was the plain fact that a cartload of it had to be shipped out as rubbish.
They did use some of it.
I am warning Deputies who are talking about getting us to grow more of this. There is no use in growing stuff which has to be shipped out as rubbish.
It was not all rubbish.
Did the Deputy ever smoke any of it?
I did.
I bet the Deputy 6d. he is not smoking any of it now. I bet he has got his Sweet Afton, or Gold Flake in his pocket.
The tobacco is mixed.
I do not know, but if the Deputy ever smoked it in the virgin state as I have smoked it, he would realise that he would need to be a stronger man. In this generation, let us stop the cod of arguing that you can grow beautiful tobacco here— because you cannot. You can grow stuff which can be closely identified with an inferior grade of cabbage, and you can force the manufacturers to buy it, if you start a sufficiently furious political propaganda, and get the mohawks to say that if you do not use it you are a West Briton. What is the use of going on with cod like that? The tobacco grown in this country is closely analogous to inferior cabbage, and everybody knows that it was first started because Seán MacEntee, the Minister for Finance, wanted to demonstrate that Ernest Blythe was a Freemason and a West Briton. That was the whole purpose of it, and after two years he discovered that Ernest Blythe knew the business better than he did. It has been dragging on ever since. Why not admit it, and stop the codology? There are very few things in which I am at variance with Deputy Byrne, but this is one where I join issue with him absolutely. The proposals about growing Irish tobacco are something like the old Kathleen Ní Houlihan type of fraudulent codology, and it is high time to be sensible, and to realise that we should cut out the cackle and get down to business.
All the tobacco grown here within the last five years is being used by Irish tobacco manufacturers.
Indeed, I know it is.
It is being mixed with other tobacco.
Or shipped out of the country as rubbish.
No; in one year there was a whole crop shipped out of the country, and in other years the stems and stalks have been shipped out.
I know all about that.
But all the tobacco grown here in the last five years is used—except, of course, the stems and stalks.
Except what was shovelled out as unfit.
That was only in one year.
Is it not a fact that the manufacturers of tobacco are not in favour of the Irish tobacco?
I could not say that, considering that they are using it.
The manufacturers have been prepared to buy rather than to go without it.
They would be glad to have a little more.
Petrol seems to have become a very popular source of revenue. The Minister for Supplies saw that although there was a strong argument against making petrol available for bread-vans and lorries, the argument of preserving in employment all the drivers of these bread-vans and lorries was strong enough to justify his making a substantial allocation of petrol in order to keep them in their jobs. Petrol is costing 2/10 or 2/11 per gallon, and I warn the Minister that he is making it impossible to keep bread-vans on the road. I do not know whether he wants to put them off the road or not. If so, well and good. If, however, he puts them off the road he will put a number of fellows out of a comfortable business which they had built up and throw them on the scrap heap.
Deputies may not know the basis on which most of the bread-vans operate in rural Ireland. A fellow who gets a job driving a bread-van usually builds up his own clientele. He goes round from house to house and is well known; he is pleasant and obliging, he carries parcels for the neighbours and has a trade connection. It is that very connection that gets him employment. You hear that Tom is a good fellow with a big connection and you are anxious to get him on your bread-van, and you are seeking to get Michael, too, because he has the next best connection. In so far as these men have these trade connections, they are in the sphere of skilled craftsmen. If you break off their trade connections, you throw them back into the class of common labourers. I do not think we should do that if we can help it. These are like individual traders, they are independent units carrying on their own business as self-supporting men, rearing a family and I think it would be a very great disaster if we deprive them of that living.
If you are going to retain the price of petrol at the present level I do not believe the bread vans can carry on. A bread van will travel about 14 miles on a gallon of petrol, and this last tax means that you have raised the cost of petrol for the bread van to about 3d. a mile. You cannot sell bread at the present rates of profit and pay, for petrol alone, 3d. a mile. You have to add to the 3d. a charge for oil, depreciation and wages, and I do not believe that we can carry on much longer on this basis. I would advise any man with a bread van to carry on for at least 12 months, even though it is not a paying proposition, in order to see if some relief will be available at the end of the 12 months, rather than let men be knocked out of employment. If we have made profits in other years on bread vans, perhaps we could carry on at a loss this year—that is, if it is desirable to do so—in order to see if relief will come at the end of the year. But you have reached a point in petrol taxation which, unless you want a social revolution—which you may want—is dangerous. What is the total tax on petrol?
The total tax is 1/3.
What was the revenue collected from it last year?
It amounted to £750,000.
Nearly 50 per cent. of the entire cost of the petrol is revenue.
At 10d. the revenue was £1,265,000.
You ought to know your minds between this and 12 months hence, or if you do not you will create a situation in which a large number of fellows will probably lose skilled jobs.
While on the subject of petrol, although not immediately on the tax, I should like to draw attention to a matter of some importance. One of the patent scandals of the present time is the shocking abuse by the military of petrol driven lorries. One has only to stand in any of the streets of the city to see empty lorries clattering backwards and forwards. Quite recently I was going down my own road and I had ample evidence of this. If one were to stand at the kiosk out in the Ballsbridge direction one could observe the spectacle of soldiers driving those lorries into the city and out of the city, empty. So far as I could see, there was no cargo, certainly nothing that came above the side of the lorry. Only in one out of every 12 lorries did you see men being carried. That is the experience of people in the city, and I may say that it is a matter that is causing a great deal of talk. People simply cannot understand, when we are supposed to have such limited supplies of petrol, why the Army appears to be able to get all the petrol they require for the most obvious type of idling or joy-riding or motor trips that, so far as one can judge, are not connected with military duties.
If you travel the country roads, I am told, you are in danger of your life from these military lorries. They clatter along the side roads. Apparently they stick to the side roads— whether it is for the purpose of keeping out of the public eye or not, I cannot say—and again they are mainly empty. They have been described as something like a caravanserai, something like the vehicles that would be used for the transport of Duffy's Circus from one town to another. Over £9,000,000 are being expended in this poor State for military services and I should like to know how much is spent on this particular service. I wonder would the Minister, for the purpose of carrying out a check on these activities, authorise certain people—they would have to be civilians—to stop the military lorries for the purpose of investigation? It would be necessary to establish some method of stopping the lorry. Perhaps you could get some civilians with a small red flag.
Will the Deputy relate these matters to the Bill?
I could not possibly do so. I am merely asking the Minister to tolerate what I am suggesting. Perhaps there could be some scheme to provide civilians who would be armed with authority and they could ask for duty chits showing what particular duty the lorry was engaged in. I believe that if you do something like that you will have a great improvement in the petrol situation.
I will have the matter considered.
I should like the Minister seriously to consider the effect this increase will have on the type of business to which Deputy Dillon referred; that is, the delivery of bread by lorries. This tax will weigh most heavily on that type of trader who operates along the Border. The bakeries up there are subject to keen competition because of the fact that in Éire the bread is of a different quality compared to that manufactured in Northern Ireland. At the present time large quantities of white bread are crossing the Border, much to the detriment of the local bakeries, which are finding it very difficult to carry on. This increase in the price of petrol will have the effect of practically compelling these people to dismiss some of their employees. I trust the Minister will give serious attention to this matter, in so far as it affects the people along the Border.
On the last occasion the Minister said he would give the House the arguments used by the people whom he met as a deputation in connection with the transfer of the betting tax from the shoulders of the racecourse men to the off-course men.
Generally, their argument was that the tax on the S.P. betting, while they did not welcome it, would not do harm to Irish racing—at any rate, that it would have less effect. Their arguments were similar to the arguments used here, that the tax on Irish course betting would harm Irish racing, and, bad as the situation was here for Irish racing, the prospects would be much worse. That was the main argument used to me by a deputation representing the course bookmakers and the starting price bookmakers.
Did they say that 2½ per cent. on the course betting would affect Irish racing?
They did.
How did they demonstrate that?
One argument they stressed was that it would reduce attendances. They said the attendance had improved in recent years, especially since the tax was dropped some years ago. They thought the dropping of the tax had considerable weight in influencing the attendance, and if it were put on again the attendance would drop.
What this section proposes to do is to impose an additional 2½ per cent. duty on S.P. betting. The existing tax is 5 per cent. This is a matter with which I can claim more than a mere nodding acquaintance, and whilst I congratulate the Minister on his wisdom in withdrawing from his original intention, as expressed in the first Budget statement, with regard to the 2½ per cent. tax on racecourse betting, at the same time it takes the gilt of the gingerbread, so to speak, when we find that the Minister, in withdrawing the tax on course betting, is merely passing the baby on to another type of betting, which is in even a less favourable position to bear any additional taxation.
I understand calculations as to what the additional taxation would yield are based on the assumption that the volume of business would remain static, or at the level at which it now exists, and that the additional revenue which would accrue from the 2½ per cent. would be about £35,000. There is very little prospect of the volume of business remaining at its present level, because it is quite reasonable to envisage an intensification of the war situation and the further curtailment of English racing, on which by far the greater volume of business is transacted. Already this business has suffered very severe jolts as a result of the war, and many small men have been put out of business and their staffs disemployed. The regrettable feature is that there is no prospect of alternative employment for these people.
This business is already subject to very heavy expense. There is a 5 per cent. tax, in addition to the £20 which has to be paid in respect of each betting office, and £10 for a certificate of personal fitness. In addition there are exceptional expenses apart from the wages paid to the staffs. I have not the slightest hesitation in saying that the effect of this additional tax will be to put every small man out of business and even many men in a fairly big way. I understand from those who are in a very big way that if this additional tax is imposed they will withdraw, because they are not making any profit, and are only carrying on for the purpose of holding their clientele, in the hope that better days are in store. Therefore, I urge the Minister to consider seriously the representations made to him. If the extra tax of 2½ per cent. is not withdrawn there will be a diminution in revenue, more people will be unemployed, a number of offices will be closed, and a number of telephones put out of commission, involving a greater loss to the revenue than this tax can hope to bring in, even if the volume of business were to remain at its present level.
Can the Minister say how much he hopes to raise by increasing the tax to 7½ per cent.?
£25,000.
While I think it is perfectly legitimate in normal times to regard bets of this kind as something on which taxation might be imposed, I do not think it is fair to impose it in existing circumstances. Already there is a tax of 5 per cent. on bets in bookmakers' shops, but, in fact, under a device for making credit bets liable to taxation, it is really 5½ per cent., so that it is proposed now to increase the tax from 5½ per cent. to 8 per cent. In fact, it may be 8½ per cent. by the device of calculating credit bets. In existing circumstances to impose a tax of 8 per cent. on this class of business would be a considerable hardship on people who follow that type of employment, and I fear it is going to have very serious repercussions on a considerable number of people who find employment in starting price shops. If the Minister examines the statistics he will find that there has been a substantial closing of betting shops, due to a paucity of business, which was probably aggravated by the emergency situation. Now it is proposed, in circumstances which rendered the closing of betting premises necessary, and resulted in the disemployment of staffs engaged in S.P. offices, to increase the taxation on such bets. If that is done the inevitable result will be to close more offices and disemploy more staffs, as well as cause a shrinkage in revenue from the betting tax, and eventually the Minister may find that the imposition of the additional taxation will not bring in any more revenue.
Under ordinary circumstances I would have thought that the betting tax of last year and even the current year would be much less than in previous years. In 1930-40 I think the tax raised by betting was about £50,000 less than in the previous year, and while I have not the figures for 1940-41, I believe they will show a decline as compared with the preceding year. Under our laws bookmakers are entitled to operate and their occupation is regarded as a legitimate one. Our legislation recognises that. I do not think we ought to do anything that would put more of these people out of employment. Bookmakers and their staffs are suffering great hardship by reason of the curtailment of racing in Great Britain, and by a similar curtailment here. The position is aggravated by racing being curtailed here owing to the outbreak of foot-and-mouth disease. I saw a deputation from the Starting Price Bookmakers' Association and I asked for some information concerning the reduction in the number of racing days. That information indicates that whereas in 1938-39 there were 244 racing days, on which they earned a living, in 1939-40 the number of days dropped to 85, showing that there was only one-third of the racing that took place in 1938-39. One has only to look at the figures, and not be living in the clouds, to realise what the effect must be on the revenue of bookmakers, and what curtailment of employment must result from the curtailment of racing. I understand from the Minister for Lands, to whom I addressed a question in the absence of the Minister for Finance, that it is hoped to receive £25,000 from this tax.
It is not a large sum. It is a small thing in a Budget of approximately £40,000,000. It is not a sum which, I think, will be realised when the collection of the tax comes to be made. I would urge on the Minister, seeing that he has already dropped £500,000, some of it from the bacon curers and some of it from the millers, that he might very well review this matter, and not impose this tax on starting price bookmakers, especially at a time when their opportunities for giving employment have dwindled considerably, and when the economic plight of their clientele is such as probably to cause a still greater falling off in revenue, so far as they are concerned.
I had not the privilege of meeting the deputation of bookmakers, but I did meet a couple of the clerks employed in these starting price offices. The Minister expects to raise £25,000 a year under this tax. I ask him, is it worth while to go on with it, seeing that it may eventually result in the disemployment of at least 100 clerks? I understand that about 100 clerks are being kept on at the moment. If the imposition of the tax is persisted in, it may mean the final blow so far as they are concerned, so that you will have 100 clerks, each receiving about £3 a week, losing their jobs. The sum that they are earning in wages comes near the figure the Minister hopes to realise by the tax. I suggest that if it is going to lead to their disemployment the tax is grossly unfair. I know, of course, that the Minister has to raise money to meet the demands that we make on him. I put it to him that he should promise to drop this tax.
The Minister is to be congratulated, I think, on withdrawing the tax from racecourse bets, inasmuch as it would have a bad effect on racing generally, but I think he has been ill-advised to shift the burden from one set of men in the betting business to another who are not, perhaps, in any better position to bear it than those who have got the relief. The House, I suppose, would be divided on the question as to whether it was wise to have registered betting offices, but the position is that the State has recognised them and made them legal institutions. The Revenue Commissioners collect £30 a year from every bookmaker in the State. Some of them are in a small way of business and can ill afford it. Is it just, having recognised their existence by taking that licence fee from them to enable them to carry on a particular class of business, to impose a new burden on them, the effect of which will be to put them out of business? Is it not a fraud to take £30 from a small bookmaker, and then immediately pass on to him a burden, the effect of which will be to put him out of business? As I understand the position, what will happen is that if the larger operators choose not to pass on the tax to the person who makes a bet, that will have the effect of putting the small man, who cannot afford to give that concession to his clients, out of business. I think the method the Minister has adopted, of passing on this tax from one set of bookmakers to another, is unfair at the present time, when in many places there is no racing at all. Therefore, whatever business there is for bookmakers, it must be dwindling. For the reasons I have advanced, I think the Minister ought to drop this tax.
I know very little about the technique of betting, but it seems strange to me that the Minister should take the tax off course betting and transfer it to the S.P. offices. I think he said he was impressed by the case which the deputation, composed of bookmakers and turf accountants, made. The deputation represented two types of turf accountants. My information, however, is that it did not represent the starting price accountants at all, and that is their grievance.
Hear, hear.
The Minister, I understand, has been so informed by the Starting Price Turf Accountants' Protection Association. I am surprised at the Minister allowing himself to be impressed by any sectional view on a matter of this kind, because, as far as I know him, he is a man who would like to hear the views of all sides before making up his mind. The Minister may have heard the views of the starting price turf accountants who are also course accountants, but I submit that he has not heard the views of those who are purely S.P. turf accountants. They were not represented on the deputation that waited on the Minister, and I understand they have since taken steps to put their case before him. I believe it is at present before the Minister. I hope he will consider it favourably, and deal equitably with those men before the Bill is passed.
This is a Bill to get money. It is not a Bill to consider the business of betting. I doubt very much if the Minister will get the money if he pursues the course he has indicated. The case has been put to him that there will be a reduction in revenue if this tax is persisted in. I think Deputy Bennett was not quite correct in stating that from every betting office opened the State gets £30. I think the position is that there is, first of all, what is called a personal fitness licence, which costs £10 for the person who takes up this business, and then a £20 licence for each betting shop that that person opens.
I understand that is the position.
Already a number of these betting offices have been closed, so that for every one that is closed the Minister will lose £20 a year.
I am discussing this matter entirely from the point of view of the money that can be got out of racing. I am not arguing for or against racing. The business is going down because of certain circumstances that cannot be controlled. These circumstances will be aggravated no matter what we do. If we impose a further burden in order to get increased revenue, the law of diminishing returns should operate, if it ever operates. I question very much that the Minister will get any increase in revenue from this tax. It is estimated that it will yield £25,000 but I wonder if it will. A number of shops have been closed and statistics have been put before the Minister showing what has happened in the past few years. I am not in a position to say whether they are correct or not but, taking the common-sense view, if a business is going down, it will go down further if the circumstances that automatically depress it continue to operate and if you impose an additional burden upon it. For every shop closed down, there will be a loss of £20 to the revenue. In addition, the volume of business will become less. I do not see, therefore, how the Minister will achieve his object.
A number of these people have been thrown out of work because of the depression. I am with those who made the point that men should not be thrown out of work in this way in a business which has been allowed to grow up and prosper. It should not be the Minister's function, in present circumstances, to throw more men on the unemployment market. I appeal to him to reconsider this matter. If these shops are closed down and remain vacant, the local authority will lose the rates upon them, men will be thrown out of work and general depression will be caused. For what? I should like the Minister to apply two tests—is it equitable to put the tax on one section and take it off another and — perhaps, a more important point — is he going to get any additional money out of this tax? If he is convinced he will, I should like him to explain what has led him to that conviction. The information at my disposal would lead me to believe that less revenue, instead of more revenue, will be derived if this tax is imposed.
Has the Minister the returns for the 5 per cent. tax for the past two years? The last year for which I have been able to get a return is 1938-39. The figure for that year was £219,000.
The figures are: for the years ended 31st March, 1938, £218,000; 1939, £219,000; 1940, £169,000; 1941, £104,000.
So that, in two years, it has gone from £219,000 to £104,000.
Yes.
You have halved the vield of the tax and that is the situation in which it is considered fair to put on an extra tax of 2½ per cent. So far as the immediate surroundings are concerned, they are as described by Deputy Belton. The Minister saw a deputation which described itself as an association of off-course and on-course men. They were to deal with the proposed tax on racecourse betting and they had no authority to do anything but deal with that tax. There was one S.P. bookmaker on the deputation, but he refrained from reporting back to his association what he had done and they have been looking for him since, so to speak. This House might enjoy his company on this occasion when we are discussing the matter. The argument that convinced the Minister was that the 2½ per cent. tax on course betting had broken down attendance at the race meetings — that that tax, carried on for two years, had nearly halved the attendance. Of course, the people who attend at the courses have other expenses, but the argument was that this tax had depleted the attendance by 50 per cent. The Minister, in a happy mood of optimism, with the yield of the tax reduced to half what it was in two years, decided to impose an additional 2½ per cent. with a view to getting £25,000.
One other figure may be of use to him. For a long time after this tax went on, S.P. commission agents levied it off their clients. They decided, then, that it was not good business to do that and they commenced to bear the tax themselves. The revenue went up as between the years 1936-37 and 1937-38 by, peculiarly enough, exactly the amount the Minister hopes to get from this tax this year. They got in extra revenue by refraining from passing the tax on to their clients.
They increased the revenue by the exact amount the Minister hopes to get by forcing them to put 7½ per cent. on their clients. How, by any facile optimism, he hopes to achieve that result, I cannot understand. The Minister has warning of three things— (1) the depletion of the revenue, as it is at present going, (2) what happened when the bookmakers decided that they would bear the charge themselves, (3) that the 2½ per cent. levied on the course so depleted the attendance as to make him swerve from his project of putting 2½ per cent. on course betting. Nevertheless, he decides to persist.
Further statistics have been given to the Minister. The Minister might, in fairness to these people, have allowed them to make their case to him. He did receive what he called a joint deputation, but I think it was made clear that what emerged from that in no way represented the view of the S.P. agents.
That was not made clear to me.
I can assert that they were in no way representative, and the Minister must have thought it peculiar that any group should have come in to him and suggested this tax. He should have had his suspicions aroused and inquired what was the exact business carried on by members of the deputation.
I did inquire and satisfied myself as to that.
The Minister received an unofficial deputation which purported to represent the S.P. agents.
The two sets.
I hope the Minister is not quibbling about the use of the word "deputation".
No. I saw the two sets.
There was only one deputation.
Yes, but I saw the two sets on one deputation.
The second was a chipping off from the first and had no right to speak for the association.
That is not my information.
I am giving my information and I think that it will stand the test of examination. The Minister was asked to receive a separate deputation from the people affected by this tax and he would not do so.
They had not an opportunity of putting their case to the Minister but they put up a memorandum. One of the facts which emerge from that memorandum is that the returns taken from the best of those sent in show that the average gross return by some of the big offices amounts to about 16 per cent. Half of that is used for payment of overhead expenses—necessary expenses incidental to the running of the business. That leaves 8 per cent. on which to carry on. It is proposed now to take 7½ per cent. in tax and, on the device the Revenue Commissioners have adopted, that will amount to more than 8 per cent.
The statistics presented are not statistics which were suddenly brought about or suddenly made up for the purpose of this particular argument. These are statistics prepared for the purpose of an individual's business. They are presented by the accountant who drew them up and they are vouched for by him. If they represent anything like a true return, the Minister's chances of getting any money as a result of this tax are infinitesimal. Further, the tax will have the result which the Minister does not want to see, namely, that a certain number of people will be thrown out of employment directly given by these betting offices and certain others will lose incidental employment. Apart from the fact that the revenue which the Minister hopes to collect by this tax will not be forthcoming, there is the danger of detriment to the State in its financial arrangements. The Minister may not be aware of the peculiar repercussion of this tax on these people whether they win or lose. When a bet is laid with them, and they lose and a client wins, the bookmaker having paid his client, returns him his stake and his odds on the stake, then pays his tax on the stake even though it has brought him nothing.
The Revenue Commissioners have hit upon a happy device by which they are able to put the screw still further on the unfortunate person who conducts a betting office. Most of the bets, particularly those laid by poor persons, are made on what is known as the accumulator system. A person comes in with a modest stake in the morning. He puts that stake on the first race with an instruction that if anything is won on that race it is to be carried on to a second race, and that if there is a win on the second race, that is to be carried on to a third race. The Revenue Commissioners call that three bets, and although the client may have only wagered one shilling on the original bet, the bookmaker is taxed as if three distinct lots of money had been laid with him. In that way, what is called a 5 per cent. tax, and what will now be a 7½ per cent. tax, in fact works out at a much higher rate. The Revenue Commissioners, of course, can argue that if the man were standing at the counter and heard the result of the first race, if it were in his favour he would put all the money back on the second race, and similarly with the third race, but that is not what happens. Whether it is a winning bet or a losing bet, the bookmaker has to pay on it. If there are accumulator bets he pays according to whether it is a double or a treble as if there were two or three distinct bets put on.
These people have been adding to the State revenue by paying the tax themselves. They found that it was a good proposition both for themselves and for the State, and, in fact, as has been pointed out increased the revenue of the State by some £25,000. They believe that it will not be possible for them to bear that tax any longer. That means that they will have to put the whole of the 7½ per cent. on to their clients, and they believe that the effect of that will be to show a decrease in the revenue corresponding to the increase that previously accrued when they accepted liability for this tax. Apart from that, in the present situation there is less money for betting as for everything else. The Minister himself is aware that the revenue from these offices on the 5 per cent. basis has been going down. I do not know how the Minister, merely as a matter of business, leaving out all question of morals or equity as between the two classes of bookmakers, hopes to get a single penny from this additional tax. I think he would be well advised to consider the arguments which these people have put before him and to pay some heed to the facts and to the warnings that are contained in the memorandum.
I wonder does the Minister really appreciate the amount of employment given by betting establishments, particularly in the country districts? There are a considerable number of persons in clerical employment in these offices. That class of employment is very difficult to get at all times, but particularly at the present time. Having regard to the effect that this tax is likely to have on such employment, I think it would be very well worth while for the Minister to reconsider it. There has also to be considered the convenience of people who wish to make a bet in the country. As far as I can see, under the arrangement that has been come to, people living in the metropolitan area, where the majority of race meetings are held, will have a definite advantage. I think that people residing in country districts should have, and up to now it has been recognised that they should have, reasonable facilities for making bets without being put to the expense of travelling to the various race meetings. It seems to me that this tax will operate in favour of those who reside in the metropolitan area as against those who reside in the country. I do not believe that the Minister will get an extra 25 per cent. revenue as a result of this tax. In fact, I think that it is more likely to result in a loss to the Exchequer of more than 25 per cent. There is no doubt from the speeches made here to-day that a very good case has been made for the people affected by this increase and I should like the Minister to reconsider his decision in the matter.
I rise for the purpose of asking the Minister not to give way to those Deputies who plead for these betting offices as if they were important industries. I do not think Deputies who speak in that way recognise the emergency through which we are passing. I have heard it said that people are likely to lose their employment as a result of this tax. If they lose employment in these offices, cannot they be turned to productive work where they will be more usefully employed than they were in betting offices?
Where will you find employment for them? Do you think they should be turned out to tramp on the roads?
I believe these betting offices, as I know them, are breeding grounds for gangsters. We have too many of them in the country and we should try instead to place our people in some useful employment.
May I say, as one who has never placed a 6d. bet in what is called an S.P. office, that I think Deputy Victory is, to say the least of it, unfair? I have heard betting offices accused of being responsible for a good many things, but until now I have never heard it said that they were a breeding ground for gangsterism in the country. If one were to look for the breeding ground of such gangsterism as may exist in the country, it is not to the betting offices or the bookmakers' offices one would go. I confess quite frankly that I know very little about this matter, but it does seem to me that what the Minister seeks to do is to remove a penalty from the big man and shove it on to the shoulders of the small man. That seems to me to sum up the matter in a few words. It is all very fine for Deputy Victory to sneer at either the men or the type of employment that is given by our bookmakers, but the emergency through which we are passing to-day has placed us in the unhappy position that we are only too glad to get any type of employment for the unemployed. Deputy Victory suggests that these offices should be closed and that those employed there should be turned into some gainful industry. Where is the gainful industry to which they can be turned?
The Construction Corps, if there is nothing better.
Without turning one person out of a betting office, we have tens of thousands of men and women queueing up at the labour exchanges. When we talk about the things that are likely to breed undesirable characteristics in our people or to lead to gangsterism, it is only right to say that such undesirable characteristics are more likely to be created amongst the queues of hopeless unemployed at labour exchanges throughout the country than amongst those who resort to bookmakers' offices.
Without repeating what has already been said, I think it is generally agreed that the Minister was wise in not proceeding with his proposed tax on racecourse betting, but I suggest that he would be equally wise in not proceeding with his proposal to impose this extra 2½ per cent. on starting price bets. Having met one section, I think his wisest course would be not to interfere with another section which is also ancillary to racing.
On the first occasion on which this proposal was brought before the House on the Budget, I advised the Minister to reconsider it, and I believe that in the course of my observations then, I suggested to him the desirability of considering whether it would not be better to add this tax to the existing tax on bets made away from the course. I was unaware at that time of the change that took place about 1935 or 1936, by which the bookmakers decided that, instead of deducting the tax from winning bets, they would themselves pay the tax. As a result of that change of policy, it would appear that a very much increased revenue was derived from this tax, and, so far as one can judge from the accounts furnished by people in this business, it will not be possible for them to bear this extra imposition. Assuming that the full tax was paid upon all bets, and that the return shows exactly one-twentieth of the sum of money wagered annually, a sum of something like £4,000,000 was wagered in 1938-39 and 1937-38, while almost that much was wagered in 1936-37. That is a very considerable sum of money, and while I am quite sure that the Civil Service computators would refute the case put by Deputy McGilligan that the 1/- is liable to be taxed several times, by saying that it is a new shilling each time it is wagered, the fact is that it is from only a certain sum of money, varying from £2,000,000 to £4,000,000 at the most, that this revenue, or any revenue, is likely to be derived in the future. The fall that has taken place is attributable to two causes. The first is the increase in the cost of living, which has left less money available for wagering. The second, which is a very striking one, is the reduction in the number of days of racing in Great Britain. It is generally conceded that there is not so much interest taken by the patrons of these establishments in Irish races, at least not to the same extent, as there is in races in Great Britain.
In considering this matter, we ought not to put into competition the Irish racecourses and those who attend racecourses with the advisability or inadvisability of putting this tax upon what are called S.P. arrangements. An examination was made of this matter of Irish racing some 12 or 13 years ago by a Departmental committee and some very striking figures were presented as a result of it. It appears that the attendances at Irish race meetings for a period of three or four years had gone down in some cases by almost 50 per cent., and in the report it was added that, while that reduction had taken place, it was not to be attributed to the imposition of the tax on bets at Irish racecourses. Of course, there is no doubt whatever that it was.
Reference was also made in the report to Irish racing establishments, which meant, of course, trainers' establishments, and it stated that the revenue of persons interested in racing was derived from three different sources and they put them in this order, in respect of what we call betting establishments, trainers' establishments which depended to some extent for part of their revenue on betting: winning bets, sales of horses and stakes, and in respect of non-betting establishments: sales of horses, stakes, and winning bets. In making a case for the removal of any tax upon bets at race meetings, these facts were present to our minds. That matter should stand by itself. This business employs, or is responsible for the employment of, a very much larger number of people than what are called starting price establishments, but the fact that that is so should not prevent us from giving a fair and impartial consideration to the other question.
So long as there is a restriction on racing, and so long as prices are as high as they are, I think the Minister must make up his mind that there is a smaller sum of money in circulation for wagering, and if, by reason of heavy additional taxation, it is presented to the minds of those who invest their money in that way, that the return is made still more precarious — and, from all accounts, it must be to some extent precarious — it is likely that wagering will be less and less. It is another question as to whether that is a good or bad thing. It is not for us to moralise on a Finance Bill as to what is good or bad. We are out to get as much money as possible. That is the Minister's main object, but, if in his desire to increase the sum of money coming in, he jeopardises his present revenue from this source, then we have reached a danger point.
We get an idea of the danger point from the returns published with regard to winning owners in Great Britain. The winning owner in Great Britain last year was credited with a sum of £6,800—"sovereigns" is the usual term employed, even though sovereigns are not paid over—while, in a normal year that sum would be about £26,000. The winning trainer was credited last year with a sum of £16,000, whereas the figure for a winning trainer would be £20,000, £30,000, or £40,000. That is the situation, and if the Minister thinks he is going to get this extra revenue under these depressing and altered circumstances I should say that he has a very optimistic outlook with regard to the wagering public, without talking at all of that section of wagerers who are called gamblers. I think the Minister ought to reconsider this.
I adopted the Deputy's advice on the last day we discussed this matter, but it appears now that, instead of satisfying him, I have gone a long way towards dissatisfying him. As I recall it, Deputy Norton backed him up upon that occasion, and now it would appear that I have not satisfied either Deputy.
No. I did not suggest transferring it to the bookmaker.
I thought that that was what the Deputy had in mind.
I did not suggest that.
Well, I have it here. In column 88 of the debate of the 7th May last, Deputy Norton said:—
"I suggest to the Minister that he might look into the matter with a view to endeavouring to amend the proposal, so as to exempt betting on Irish racecourses, whatever may be done in respect of betting in bookmakers' offices on races run in England."
I took it from that that the Deputy favoured the tax on S.P. betting rather than on bets on Irish racecourses.
No. Deputy Cosgrave had spoken suggesting that the tax ought to be taken off racecourse betting. I was in favour of that, but Deputy Cosgrave suggested travelling much further than I would be prepared to travel, and suggested putting the tax on to the bookmaker.
Yes.
Yes.
Deputy Cosgrave says now — and his explanation is understandable, because the figures are staggering — that the position is such that the figures show that the bookmaker cannot really bear any further tax.
Well, I may have been wrong, but that was the meaning I took out of Deputy Norton's words— that he was backing up Deputy Cosgrave's viewpoint on that matter.
On taking it off the course betting — yes.
Well, I am an optimist by nature, and I think that any Minister for Finance must be an optimist. He would have a very difficult job if he were not an optimist. At any rate, I believe that I will get the amount of money that I have estimated to get this year from this tax, because the tax will be passed on. I may be defeated if the number of days' racing goes down still further. It has happened, since the war started, that that number of days has decreased, and it may be that I may be defeated to a certain extent, but I believe that the money will come in. Deputy Cosgrave is quite right in saying that there is only a certain amount — and it is a considerable amount — that is used in wagering and bets. That amount may not be increasing, but it will probably be in or about the same amount in this current financial year as it was in the previous year.
In reply to Deputy McGilligan's point about the deputations, I was asked by two distinct organisations to receive them: one body representing the course-betting people and the other representing the S.P. people. I was receiving innumerable deputations and petitions at that time, and I suggested to the writers of the two letters, representing the two bodies, that if it were possible for them to come together to see me as one deputation it would save my time and also, probably, save their time, and they agreed to do that. The result was that one deputation, representative of the two bodies, came along and met me. Now, while they did not welcome the tax on the S.P. betting, the joint deputation accepted that tax rather than the other one. I inquired whether they were a representative body and I was told that they were. I did not know the gentlemen. I do not know the betting fraternity very well. There were one or two individuals—two of them, at any rate— whom I knew and had met before. One is a Deputy of this House, and the other I have met somewhere or another. I could not say whether these people represented the big men or the small men, but I was told that both classes of business were represented, and afterwards I got letters from two of the very big people, as I understand they are—men who do both classes of betting — and they said that they regretted that they were not present on the deputation but that they agreed with what had been put forward and what had been accepted by the deputation. I accepted the deputation as being representative of both classes of business. I understand that a great many people of the S.P. establishments did not belong to whatever organisation existed at the time, but that they have started an organisation since. Accordingly, this tax has had that effect, at any rate, that it brought them together and started an organisation.
I have had innumerable letters, telegrams and petitions, but all I can say is that, so far as this year is concerned, my mind is made up, and I am standing by this tax on the S.P. betting. I believe, moreover, that I will get the amount I have estimated to get out of that tax this year. I should regret very much if the tax were to cause unemployment, as has been suggested, but that same argument is used in connection with practically every tax that I have put on—the argument that it will cause unemployment. Some of the very people who are pressing me to drop these taxes now, were pressing me to give them hundreds of thousands of pounds for other projects. Where is any Minister to get the money? No matter whom you tax, you are hitting somebody, and you are hitting them in the sorest place on earth, and that is in the pocket. Of course, they kick against it, and shout as much as they can, but as far as this year is concerned, I certainly cannot afford to drop this tax.
What about next year?
Next year? Well, keep your heart up!
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Bartley, Gerald.Beegan, Patrick.Boland Gerald.Brady, Brian.Breathnach, Cormac.Breen, Daniel.Briscoe, Robert.Cooney, Eamonn.Crowley, Tadhg.Derrig, Thomas.De Valera, Eamon.Flynn, Stephen.Fogarty, Patrick J.Harris, Thomas.Hogan, DanielKeane, John J.Kelly, James P.Killilea, Mark.Kissane, Eamon.Lemass, Seán F.Little, Patrick J.Loughman, Francis.McCann, John. |
McDevitt, Henry A.MacEntee, Seán.Maguire, Ben.Meaney, Cornelius.Morrissey, Michael.Moylan, Seán.O Briain, Donnchadh.O Ceallaigh, Seán T.O'Grady, Seán.O'Loghlen, Peter J.O'Reilly, Matthew.O'Rourke, Daniel.Ruttledge, Patrick J.Ryan, James.Ryan, Martin.Sheridan, Michael.Smith Patrick.Traynor, Oscar.Victory, James.Walsh, Laurence J.Walsh, Richard.Ward, Conn. |
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Belton, Patrick.Bennett, George C.Brennan, Michael.Brodrick, Seán.Byrne, Alfred.Byrne, Alfred (Junior).Coburn, James.Corish, Richard.Cosgrave, William T.Dockrell, Henry M.Doyle, Peadar S.Esmonde, John L.Hannigan, Joseph. |
Hughes, James.Keating, John.Keyes, Michael.Lynch, Finian.MacEoin, Seán.McGilligan, Patrick.Mongan, Joseph W.Morrissey, Daniel.Mulcahy, Richard.Nally, Martin.Norton, William.O'Sullivan, John M.Redmond, Bridget M. |
