This Budget, coming at the time at which it does come, is something more than a mere annual budget with which any State has to contend. We are facing quite an extraordinary situation, having regard to our national problem, and for that reason, in our economy as in our general policy, it is essential that we should organise the resources of the State to give us the economic, moral and general strength necessary for facing the national problem upon which our attention has been very drastically forced by events. In order to face that problem it is essential that the strength of this country should be built up. If we are serious about facing this problem, then we must be serious about the steps necessary to give us the strength to cope with it. Our ability to cope with that problem will to a great extent depend on how our moral and economic and general strength here are developed. It is with that background we must face this Budget. We must face it with the realisation that if we are serious and not merely talking about this problem a degree of discipline and organisation amongst ourselves will be necessary and it may call for some variation in what I might regard as the normal financial viewpoint. With these general remarks I wish to come now more specifically to what is involved and to the repercussions that I see in this regard since the Minister took office. I do not wish to be taken now as in any sense merely criticising the Minister. That is not my purpose. I simply seek the facts objectively. Taking these facts objectively let us examine the trend up to the present moment in order to discover what we should do to face the situation in which we find ourselves. Calmly and fairly let us examine whether the policy of the Minister, who directs finance and who largely controls the entire economic progress of the State has given the results which he himself sought and whether these results are the best that could have been obtained from the point of view of the community. In doing that I shall be anxious to give the Minister credit for achievement where I find it.
What is the position? What is the trend? Last year the Minister in his Budget statement, and prior to it, approached the problem from the point of view of effecting economies with a view to lightening the burden of taxation. That was his professed objective. He also expressed the view that there was a limit to the burdens which the taxpayer could bear in regard to social services generally. He saw very acutely the likely repercussions and the inevitable consequences of demands for wage increases. Last year, without any apology and of his own set purpose— the set purpose of the particular Party also to which the Minister belongs—he came forward and, where he could get agreement, he made certain substantial reductions in such things as the Defence Forces, wireless broadcasting and so forth. In an effort to lessen the burden of taxation on the ordinary citizen he gave relief on spirits, tobacco, cinemas and so forth. Some of us differed from him in his approach. He, nevertheless, continued his course. He made a very strong statement with regard to the control of wages.
In that Budget last year there was a definite statement of policy. Definite action was subsequently taken to implement that policy and during the past year that policy has been pursued. What do we find now? I am afraid that the Minister has in the past year found things difficult from his own point of view. From the figures which I shall deal with in a moment it is quite apparent that, whereas he has been successful in shifting the incidence of taxation in certain respects, he has not been successful, because of the demands made upon him largely by the people who support him, in achieving any substantial over-all reduction in taxation. He has been foiled to that extent by virtue of the fact that certain outgoings could not be denied. He has been conspicuously unable—note that I do not charge him with failure, I say "unable"—to achieve a reduction in expenditure on public services and administration. He has been unable, as many of us told him he would be unable, to implement the policy expressed by him in regard to the stabilisation of wages. He has had the inevitable and unenviable problem of every Minister for Finance of trying to find moneys where increased expenditure has been unavoidable. That is the general picture.
Let me now paint the picture more specifically. Notwithstanding the decleared policy of the Minister, he is faced with the fact that over-all increases in tax revenue last year were something in the region of £6,000,000. In the coming year it looks as if something over a further £2,000,000 will have to be collected. That is almost £9,000,000 over the last financial year before this Government took office. That is the first difficulty in which he finds himself. Whether he likes it or not, he has to contemplate an increase in over-all taxation. With that condition imposed upon him, he can only do what he has tried to do in this Budget —that is, to reapportion. In that particular respect I would like to express a certain general approval of some of the things the Minister has done, reserving my possible criticism for the things he has not done. I am glad that he has given relief in income-tax. When he took off the taxes that were imposed under the Supplementary Budget I suggested at that time that he should also remove the 6d. that was imposed on income-tax.
I would have considered it a much more equitable thing a year ago when he was removing the taxes imposed by the Emergency Budget of 1947, if he had taken off this 6d. which he is now remitting. In other words, what he is doing now is to complete the job which he started of removing the major taxes imposed by the Emergency Budget. I am glad he is doing it because one of the difficulties always has been—and many of us have mentioned it in this House previously— that a certain class of worker does not get sufficient consideration because he belongs to a scattered and unorganised group. I refer to the worker known as the white-collar or black-coated worker. That unfortunate worker, because of easy assessment, is subject to the incidence of income-tax more severely than other groups. For that reason I am very glad the Minister is doing what he proposes now. In that connection, the depressing feature about the Budget is that, whereas the general economic trends of the last year were such that the need for the Emergency Budget—which was explicitly designed to be of a temporary character—had expired, in the ordinary normal course of events this tax should have been abated or removed by this time; having regard to that fact, although I am glad the Minister has done it—and I want to compliment him as much as I can on the matter—I should like to be able to say that its removal represented a real benefit to the community as a whole.
In the real Budget of 1947, or perhaps it was in the Budget of the previous year—at any rate, since the war —the previous Minister for Finance, notwithstanding the war circumstances, was able here in this House radically to reduce taxation, including income-tax. Then you had the crisis of 1947, a rise in the cost of living during the early months of that year, culminating in August of 1947, traceable largely to the increased prices in the world market, immediately affecting our subsidies cost in a very serious and inevitable way. You had the general repercussions of the world situation here and, in particular, the necessity for removing the standstill Order, resulting in further tendencies to an inflationary situation. You had all these matters, including the better price which our farmers were getting for produce on all the export markets which were open to them, with, of course, the unpleasant corollary that the price of similar produce to home consumers also went up in 1947. All these things culminated in the crisis of 1947, which was nothing more than an aberration of the post-war situation. It was met by the then Government and, as a matter of fact, safely met. The figures show that the then Minister for Finance was budgeting safely. It was hoped that would largely be a temporary situation and that there would be a return to a more favourable condition within a couple of years.
Where are we now? These forecasts have been justified. There was a return to more favourable conditions. During the past year the trend was much more favourable. We had a saving on food subsidies alone of £3,000,000, made possible largely by an improvement in that trend. What is the Minister for Finance actually doing? Already he has taken off most of the taxes that were imposed at that time. He has now taken off 6d. in income-tax imposed by that Budget. In other words, he is doing nothing more in this regard than had been hoped for and that could be confidently expected at that time. The previous Government confidently anticipated that some adjustment could be made in that regard within these years. That expectation is now being fulfilled. The minor taxes which the Minister has left on, such as the stamp duties—they were Emergency Budget taxes to a large extent—are not very serious items in the general picture. So when one sees the proposals put forward by the Minister one can say that he is bringing us back only to the position that obtained prior to the Emergency Budget. He only fulfils the expectations that we could get back to that position within a couple of years. Incidentally, in regard to the dance hall tax, it is interesting to note that that was one of the things in which Deputy Aiken, when he was Minister, was able to give relief. Against that—let us be fair—the present Minister has given relief in regard to small cinema shows which I think is a step to be commended, so I think we shall let these things balance out for the moment.
The student of our economic development would, therefore, see it thus: that thanks to our neutrality, largely —and that is a question of thanks to God—we rode the war and arrived at a relatively favourable position. By 1946 the Minister for Finance was able to come in with an optimistic Budget embodying a substantial decrease in taxation, including a decrease in income-tax. The post-war crisis one can accept as a normal economic event resulting from the perturbation of the war. That crisis arrived in 1947 with its repercussions—repercussions which the student will have no difficulty again in understanding. It was met by the then Government in the only manner in which it could be met, and, as I have said, a little bit safely. The student will not be surprised to find a return to easier conditions in the next few years and, therefore, the extraordinary provisions of that Budget going, so that what we are getting in the Budget on this occasion is what one would normally expect in the ordinary course of events.
Carrying on the policy of the previous Administration, after the war one would expect that by this time the incidence of taxation resulting from the emergency would have been lessened so as to leave us a picture similar to that presented in 1946. That is what has happened as far as the special items in the Budget are concerned but, as I say, the over-all taxation, the amount of money the State is collecting from the people, has increased. In considering that increase one has, of course, to look also at the other side of the picture where one would normally have expected an increase in expenditure. For that reason, I am not attempting on the line I am thinking at the moment just to charge the Minister with extravagance in that regard. But I do say that all he has done in regard to these specific items of taxation is what one would have normally expected.
The next question is: at what cost? What were the repercussions on the country's economy during the past year? The Government can legitimately and rightly say to us: "We put you back in the 1946 position with regard to these specific taxes." They can say: "Yes, the incidence of over-all taxation has gone up by the number of million pounds mentioned. We have collected more money from the taxpayer than you did, but we are giving better benefits." They can legitimately claim that they have done something. It is only a fool who would deny that they have increased the actual old age pensions and that certain salary increases in the administration have resulted and so forth. Admitting all that and facing these facts objectively and squarely, what is the cost? I understand that Deputy Lemass dealt with this matter in detail and I think it would not be proper for me to delay the House by a complete repetition of his arguments. I think, however, that I can add a couple of comments and document some of the statements made by him and I intend to do that now, and I am going to do it specifically for the purpose of answering the question: "What was the cost?"
The cost of living was one of the items concerned. One of the big boasts of the Minister for Finance was that, through his financial policy and the policy of the Government as a whole, it would be possible to reduce the cost of living. I am not going to turn round and say to the Minister, "You should have done it." What I am going to say is that it was not possible to do it, as we told you beforehand. Whatever its faults, the emergency Budget had caught the rising cost of living and had held it. It held it at a certain level which we shall call the 100 level of August 1947. In its initial tackle, so to speak, it not only held it, but pulled it down three points. Then the struggling monster wriggled a bit. But, despite all the present Minister and the present Government can do, the monster has managed to stay round about the 99 to which he wriggled back. It has managed to stay round about there so far in spite of the fact that I believe the Minister and his colleagues would, if they could find any practical way of pulling it lower, immediately seize on the opportunity of so doing. I think we can be all confident of that. It has managed to stay there and even shove a bit ahead, because the official figures of prices are not altogether a true reflection of the incidence of that cost on the person who has to pay.
This is not the proper occasion on which to raise that matter, but perhaps the Chair will just allow me to refer to it en passant. Just go down the City of Dublin and inquire about meat. There is an official list of prices. As I said on another occasion, I throw myself before a jury of the housewives of Dublin in saying this. In actual fact, are you getting value in your meat at a price equivalent to the controlled price? On top of that, you have the difficulty that the butchers are in a completely uneconomic situation. I do not intend to pursue that, however. The point I am making is that, even though there are official figures in regard to certain standard commodities upon which the estimated figure of the cost of living is based, does the housewife find that they are a true reflection of what her cost of living is?
The serious thing is that the Government, in an effort which I can understand, to try to have the burden borne by people who have money more plentifully than others, come along with the idea of unsubsidised varieties of commodities like the unsubsidised white flour. We have objected to that on another basis. But, from a purely financial point of view, there may have been something in the idea. But, mark you, the official cost of living figure is reckoned on the rationed and subsidised commodity. The same thing applies to the off-ration tea and sugar. These things have had their effect.
I went into one restaurant myself and noticed that the price of the bun had gone up. I asked why, and I was told: "You are getting white flour". I told them to give me the black stuff, but it was not there. Therefore, the people visiting that place were forced to buy the unrationed bread at a higher price. Of course, immediately that happens the whole theory of the thing falls to the ground. How far the prices generally of unsubsidised items have been passed on in restaurants I have not been able to ascertain in a very definite way, but I have been able to ascertain sufficient to make me confident in saying that the cost of living has not gone down anyway, and that is borne out by the index to-day. If the index is to continue to be based on commodities which are rationed in that particular way to the exclusion of commodities consumed, I think it will get further and further away from reality and that the point made in regard to that by Deputy Lemass is worthy of attention. However, that is slightly away from this debate.
The point is that the cost of living has not gone down. If anything, the trend was the other way for a good part of the year. Ask the average housewife about the price of eggs and similar things round about Christmas and during the winter. There is no use talking about figures. The real thing is what the housewife, the person who has to buy, the man in the street, in fact, feels. Let us go and ask them what they feel. Admittedly, the situation has bettered itself in other regards. But I think that, over-all, the burden and the incidence in regard to living costs have not decreased.
On top of that, where are we in regard to another item that should be taken into account in the cost of living —the cost of accommodation? In this city within the last few years the rates have risen to a degree that imposed very serious burdens on the people having to live in the city. In 1942 the rate was about 20/6 in the pound. In other words, on a house of £20 valuation in this city—that is not a big house, as you know—a man was paying £20 rates a year. Mark you, from 1946 onwards the burden was on the occupier, whether he was the tenant or whether he was the owner-occupier, both in law and in fact by virtue of the provisions of the Rent Act. It is a serious universal problem. What are the rates this year? I understand they are to be around 29/-. That is an increase in the cost of living.