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Dáil Éireann debate -
Wednesday, 5 May 1943

Vol. 89 No. 18

Financial Resolutions. - Resolution No. 1—Income-tax and Surtax.

I move Resolution No. 1:—

(1) That income-tax shall be charged for the year beginning on the 6th day of April, 1943, at the rate of 7/6 in the £.

(2) That surtax (other than excess surtax) for the year beginning on the 6th day of April, 1943, shall be charged in respect of the income of any individual the total of which from all sources exceeds £1,500 and shall be so charged at the same rates as those at which it is charged for the year beginning on the 6th day of April, 1942.

(3) That where the total income, within the meaning of Section 5 of the Finance Act, 1941 (No. 14 of 1941), of any individual for the year beginning on the 6th day of April, 1943, exceeds £1,500 and includes any such profits as are mentioned in the said Section 5, an additional duty of surtax (in this Resolution referred to as excess surtax) shall be charged for the said year beginning on the 6th day of April, 1943, at the rate of 7/6 in the £ in respect of so much of the said income as is made chargeable therewith by sub-section (1) of the said Section 5 as modified and applied by the subsequent paragraphs of this Resolution.

(4) That the several statutory and other provisions which were in force on the 5th day of April, 1943, in relation to income-tax and surtax (including excess surtax) shall have effect in relation to the income-tax and surtax (including excess surtax) to be charged as aforesaid for the year beginning on the 6th day of April, 1943.

(5) That in the application (by virtue of the next preceding paragraph of this Resolution) of Part II of the Finance Act, 1941 (No. 14 of 1941), to the excess surtax to be charged as aforesaid for the year beginning on the 6th day of April, 1943, the said Part II shall have effect with and subject to the following modifications, that is to say:—

(a) the expression "the 6th day of April, 1943," shall be substituted for the expression "the 6th day of April, 1941," wherever that expression occurs in the said Part II;

(b) in paragraph (b) of sub-section (3) of Section 7 of the said Act, the expression "the 5th day of April, 1944," shall be substituted for the expression "the 5th day of April, 1942," and the word "seven" shall be substituted for the word "five" and the expression "the 5th day of April, 1943," shall be substituted for the expression "the 5th day of April, 1941".

(6) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

The main characteristic of the Budget in connection with which the Minister has just made his statement is, of course, its size. Even with the taxation which is now in force —and it never was higher in the history of this State—the bill is not met. Whatever criticisms may be urged in this connection, it will be conceded that the Government entered into office in this State charged, according to itself and to all its undertakings, to promote trade and to stimulate employment. Everybody, not only in this country but outside it, realises the great difficulty there is in providing employment for the people. In addition to their responsibility for stimulating trade and helping to swell the number of persons in employment, since the emergency the policy of the Government has been directed towards securing, maintaining and regulating supplies, controlling prices and dealing generally with the administration of those activities which arise from the emergency.

In so far as this Budget before us to-day is concerned with the expenditure that has been added for these purposes, the House has reason to be dissatisfied with the result, if we exclude entirely from our consideration now the war period and take the effect of Government policy on employment. They were apparently dissatisfied with the expansion of employment taking place in this country prior to their taking office. In the last five years of their predecessors in office— the years 1927 to 1931—an additional 57,000 persons were added to the numbers in employment, or an average of 11,400 per year. Take now what has happened from 1932, each year inclusive, down to December, 1939. The addition that was made in those eight years was 75,000, or an average of 9,025 per annum. Therefore, they were 2,000 per annum under the pace of acceleration of their predecessors. Had they been able to keep up the pace of their predecessors, there would have been on December 31st, 1939, 16,200 extra persons in employment in this country.

The most disturbing feature of these statistics—which are to be obtained in Government publications—is that, in the last of those two years—that is, 1938 and 1939—only 1,000 additional persons were added each year to the roll of those in employment. That information will be found in the Statistical Abstract for 1942, published by the Department of Industry and Commerce, page 104. Had trade been stimulated, had employment been increased, had supplies been maintained and prices kept under control, this Budget, notwithstanding its size, would have had at least one plea of justification for it. One of the most depressing of all publications issued by the Government is that dealing with our trade. Before this Government entered into office, they complained about the fall in trade. One Minister recently asked if I were aware that the total trade of this country had gone down by £20,000,000 in the last year. I am not aware of it; it went down by about £15,000,000. The best year of trade that we have had—including the war years, when prices are up, and when the index of prices is far in excess of what it was some ten or 11 years ago—and the best year that the Government has been able to show, is still £7,000,000 under the worst year of the previous administration. That is a matter from which we derive no satisfaction. Considering that that particular drop in the acceleration pace of persons going into employment was marked as long ago as 1938, one would have expected that some special attention would have been directed towards the policy of the Government with a view to improving it, rectifying whatever was wrong and improving, above all, the most important and the most exhaustive store for expanding employment, namely, agriculture.

I would say this for the Minister's Budget speech: it is, probably, the best he has delivered up to this. It faces up to a difficult situation with, perhaps, more candour than has distinguished some of the previous Budgets to which we have listened. I would remind him, however, that if he looks up the Banking Commission Report, he will find this reference, in paragraph 278:—

"It may be, perhaps, added that the wild inflationary movements which have been witnessed after the war have not been due, in the degree that is commonly believed, to excessive lending by private credit institutions, but to other causes and essentially to an abuse of credit powers for meeting State expenditure... The fall in prices tends to increase the real burden of debts, to arrest economic activity, to intensify trade depressions, and cause widespread unemployment, equally undesirable from an economic, social and moral point of view. A fall in production and a shrinkage of national income, though unequally distributed, must to some extent affect all classes."

When we lecture other people about the dangers of inflation, and while we take steps to prevent inflation as far as the activities of other persons are concerned, the efforts of the Government in that direction have not been marked with any degree of success. No private person since the beginning of this war has been borrowing money at the pace at which the Government has borrowed.

If we take any sphere of activity to which one would expect them to pay more than usual attention during the last few years it is the rise in the cost of living. Let us compare the cost of living in this country with what it is across the water. I think the rise in food prices has been claimed by the Minister for Finance in Great Britain as not having exceeded 30 per cent., and it is at present as low as 20 per cent. The cost of living here, according to the Minister's statement, has increased by 60 per cent. It has certainly increased by over 50 per cent. of what it was when hostilities broke out. It is in that direction that I would advise that even greater precautions should be taken than in many others that have been mentioned. In the course of his statement the Minister said that the agricultural index figure had gone up about 75 per cent. It is a relative figure, which has probably gone up 75 per cent. from the outbreak of war down to the last date on which the index figure was published for December, 1942. The average for 1939 was under 121. The average for 1942 was not quite 83, so that the increase in the index value would be only about 50 per cent. instead of 75 per cent. Times are difficult. Nobody will deny that, but it does appear to us that responsibility for a good deal of the disturbance, for the lack of provision of essential commodities, and the increase in the cost of living can be traced to the Government by their action or inaction during the last few years. There is no reason why, in a time of emergency, with practically every power that the Government sought granted to them, the House should not be taken into the confidence of the Government.

Let me take one case that was mentioned here during the last two or three years, the Stabilisation of Wages Order No. 166 and all its amendments. Why should not a case for that be made in this House? Would it not be fairly considered? Would not recommendations be made to the Government? Were they not told, before taking up the flat-footed attitude of allowing no increase, that there should be some Department of State to which applications could be made in certain circumstances? This is a time in all countries, whether neutral or belligerent, when there should be co-operation in the representative institutions, in the way of bearing whatever burdens fall on the Administration.

There has been no reluctance in this country to share those burdens, but there has not been candour or approach on the part of the Ministry to the House and, as a consequence, we have a whole series of orders, regulations and things of that sort which are made in the vast majority of cases without consultation with the persons concerned. Nothing could be more irksome or more objectionable. Perhaps it is too late now for the Government to mend its ways in that respect but, whatever time there is left for doing so, it would be well before further action is taken in connection with interference with trade or business that there should be consultation.

Have we not good reason to be dissatisfied with the sum and substance of the Government's embarkation on the provision of fuel when it costs this State 87/6 per ton? People outside are sometimes amazed when they hear that turf is costing 87/6 for a ton. It is dear at 64/- but what about 87/6? The quality is unsatisfactory—highly unsatisfactory—and all the satisfaction one gets when complaints are made is a sharp answer from the Minister or something of that kind. We may have questions of high policy in international affairs, and high sounding terms of one kind or another but what concerns the majority of the people in this State are supplies, and nearly everywhere we hear dissatisfaction with regard to the shortage that prevails, with regard to the high prices of things that are available. Of all countries in the world there is now a shortage of potatoes in the City of Dublin. Although reference has been made already to these matters when dealing with the Estimates, I repeat, we are dissatisfied for these reasons with the action that has been taken. We are satisfied that with the amount of money available and at the disposal of Ministers there ought to have been better results.

The last thing I have to say concerns a matter that was put before me by an income-tax expert, who complains that there are occasions in connection with which this charge falls, when it is practically impossible for people in business to keep track of the manner in which the charges are made. He says that in the case of an individual trader surtax or ordinary excess tax is not considered until about June, 1943 in respect of profits made in the year ending 31st December, 1941. He says that these people will almost have forgotten the figures which have very puzzling permutations. The worst feature is that surtax is not assessed until the fall of 1943 and is not payable until January, 1944. Why legislation is framed in this manner, he observes, is a mystery and he says that in case of taxation imposed in a neighbouring country there is a simplification of the charge without any hangover from December, 1941 to December, 1943. I shall give the Minister particulars of the case if he wishes.

Would the Deputy let me have the particulars later?

In the course of his lengthy introductory speech the Minister as if suffering from the results of introspection in respect of the Budget, said that his review of the nation's finances and its general outlook might not be inspiring or exhilarating. In saying that, the Minister said the truest thing that has ever been said in connection with an economic or fiscal review of the nation's affairs because, indeed, the Minister's review was neither inspiring nor exhilarating. The Budget was most colourless, the most unimaginative, and certainly the most disappointing Budget, introduced in this House for the last 11 years.

What could you expect?

Even using that yardstick, it is the most colourless and unimaginative Budget we have had for the last 11 years.

What could you expect from a balance sheet of Fianna Fáil for the last 11 years?

It is not an election Budget.

It is not an election Budget. You will get your walking papers on this Budget far more quickly than you would have got them before it was introduced. I take the view that taxation in any country, if commonsense is exercised, must be related to the productivity of the nation, to the national income in goods and services and must take cognisance of the standard of living of the people. We have got therefore to view this Budget in the light of the circumstances in these spheres.

What is the position to-day? It is not necessary for me to assert what the position is. The Minister has reviewed the position in the course of his statement and, for the purposes of my remarks, I can accept the Minister's statement. The Minister has told us that notwithstanding compulsory tillage and what he described as the high prices for agricultural produce, there has not been much alteration in agricultural output in 1943 as compared with 1937. In the four years of the war we have not increased to any material extent the agricultural output of the country. In other words, production in agriculture is stagnant to-day. Is it any wonder it is stagnant? Whilst we might have been unprepared in the first year of the war, whilst we might have been caught on the wrong foot as it were in the first year and suffered the repercussions of that in the second year of the war, this is not the first or the second year of the war. This is the fourth year of the war and one would have imagined that our agricultural activities would have been geared up sufficiently to ensure that we would be producing to-day the maximum quantity of agricultural and dairy produce from the 12,000,000 acres of arable land available for cultivation in this country.

What is the position? In the fourth year of the war with all the Governmental approbation of increased agricultural activities, we find in this predominantly agricultural country, a shortage of butter, a shortage of sugar, a shortage of flake meal, and now, paradox upon paradox, a shortage of potatoes in a country that has been always famous for the production of potatoes. We had potato queues in the last two weeks in Dublin. Last year we had bread queues, and the Minister for Supplies then told us that there was plenty of bread, but that the people were looking for hot bread. I suppose the Minister for Agriculture will explain the potato queues this year by saying that the people want hot potatoes or new potatoes. However, that is the position, that in the fourth year of the war in this predominantly agricultural country there is a shortage of agricultural produce, and, so far as one can judge from the answers received from the Government Benches to questions in the House to-day, there is not much hope of any improvement in the position in the near future.

The Minister for Industry and Commerce has told us that there has been a 20 per cent. fall in the output of industry in the country. The same Minister also told us that there had been an increase of 60 per cent. in prices. That percentage increase is arrived at by adopting the limited medium of measurement used in the compilation of the cost of living index figure, but everybody knows that certain commodities, commonly used in households, have increased by much more than 60 per cent., fuel being an outstanding example. Wages have increased in twelve industries engaged in the production of transportable goods, according to the Minister, by not more than 9.4 per cent. While prices have risen by 60 per cent., wages —the passport to goods and services and to a civilised standard of living— have increased by 9.4 per cent. according to the Minister for Supplies. As if that were not sufficiently gloomy, we have the further paramount fact that we still have in the country 80,000 unemployed persons, with thousands not registering at the exchanges because of the miserable pittance which they get there, and this notwithstanding the fact that during the past two years we have exported approximately 100,000 people to the Six Counties and to Britain, and also notwithstanding the fact that approximately 40,000 young men have joined the Army. In a condition such as that—agricultural output stagnant, industrial output down by 20 per cent., prices up by 60 per cent., wages increased by less than 10 per cent., 100,000 of our population gone out of the country, and 80,000 unemployed still at home—in this type of national workhouse we proceed to earmark £4,000,000 a year for the service of debt. I wonder could anyone imagine any more cheerless or depressing picture than that revealed by the Minister's statement?

The Minister referred to the fact that considerable expenditure on social services was necessary. That is true, but even that expenditure is inadequate for the problem that has to be dealt with under our scheme of social services here. Our social services are not in themselves virtuous things. They are rendered necessary because of the inability of the citizen to make provision for his own needs. When we have a situation in which 80,000 people are denied an opportunity to create wealth, to earn wages that will enable them to buy food and provide clothing and shelter for themselves and their families, it is inevitable that the State will be compelled to enact legislation which will provide some type of relief for the unfortunate citizens who are affected by prevailing conditions in the country, We have to make provision for national health insurance benefit for sick people, the sickness being brought on by malnutrition which, in turn, is brought about by unemployment. We have to make provision for unemployment insurance benefit and for unemployment assistance benefit for the simple reason that we have not organised the nation in such a way as to provide regular employment for all our people. If we could do as the Government promised to do in 1939, abolish unemployment, if we could organise the nation on the basis of providing fulltime regular employment for all our citizens, then it would be possible to avoid the expenditure which is now necessary on social services because of our failure in that respect. The best way of economising on wasteful expenditure is to provide regular employment for our people at decent rates of wages.

The victims of our present system of society, those who are sick through malnutrition, those who have to go to the labour exchanges for the small pittance they receive there, those who have to look for food vouchers and fuel vouchers, do not desire those methods of assistance at all. They are driven to accept them because of the failure of the State adequately to organise the resources of the nation or to utilise the wealth-producing capacity of its citizens. Those people would prefer to be able to make provision for themselves, to be able to earn a decent living and provide themselves with the necessaries of life. If they are not able to do that to-day, it is because of the failure of this Legislature to provide them with the opportunity of doing so. When the Legislature fails to provide them with that opportunity, the least it can do is to provide social services for them. Although we are spending, as I have said, a large sum on social services, we are not spending half as much as the situation demands to-day, having regard to the condition of tens of thousands of our people. The Minister deplored the fact that large numbers of persons are looking to the State to assist them instead of making provision for their own needs by individual or co-operative efforts. I would suggest to the Minister, if he desires to pursue that line of argument, that he can best give a lead to citizens to turn away from complete dependence on the State to reliance on their own efforts by giving those people an opportunity of earning their own living instead of compelling them to look to the State for food vouchers, fuel vouchers, or those other artificial sources of assistance which must be made available to them to-day because of their inability to provide those goods and services for themselves.

I was most disappointed with that portion of the Budget which referred to family allowances. All Parties in this State, and indeed all progressive-minded citizens in this State, are in favour of the introduction of a scheme of family allowances, so as to make sure that parents who are blessed with large families will have an opportunity of rearing them in decency and comfort instead of being compelled to rear them under circumstances which do not permit of good physical development or good educational or cultural development. It was disappointing to me, and I think it will be disappointing to the country to learn that in the current financial year we will not have a scheme of family allowances, and from the Minister's statement in that connection I take it that it will probably be far into the next financial year before a scheme will emerge in a form suitable for application here. I think the Minister might well have pressed forward the introduction of a scheme of family allowances, which, as I have said, has been advocated by all Parties in the State and by many citizens in the State. The introduction of such a scheme would I think do more than anything else that is immediately practicable to take up the sag in low wages in agriculture and in other industries and services throughout the country. Before the debate on the Budget concludes, I hope the Minister will be able to give the House some indication that the introduction of a scheme of family allowances will be pressed forward with vigour, and will be introduced with the least possible delay.

Here and there in the course of the Budget statement the Minister touched on post-war planning and our relationship with the post-war world, from the standpoint of our trade relations and from the standpoint of our financial relations with other countries, whether they are in the dollar bloc or in the sterling bloc. As I listened to the Minister's statement in that connection, I was hoping that he would pull back the curtain and give us some picture of the post-war world for which the Government are planning, but not once in the course of a very lengthy speech did the Minister reveal any plans for the post-war period, or give any indication that the Government recognise the necessity for planning to meet the situation which will arise in the immediate and ultimate post-war years. In every country in the world, post-war planning is rightly occupying a paramount place in the consideration of matters of national importance affecting those countries. Whatever may be the position here behind the scenes, the public at all events are not being told much as to what the Government contemplates doing in respect of the post-war years. I said at the outset that the Minister himself had confessed that his Budget was neither inspiring nor exhilarating. As I have said, that statement by the Minister was perfectly true. I think it is a colourless Budget. I think it is a stale Budget. I think it shows no appreciation whatever of the difficulties through which the nation is passing, and offers the people no policy calculated to rouse them or to brace them for the tasks which inevitably must fall on any people in a time of crisis, in a time of war. All I have to say in conclusion is that if the staleness and want of imagination shown in this Budget is the best that the Government can give us, then an election to give us a fresh Government has much to commend it to the people.

Question put and agreed to.
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