Dáil Éireann debate -
Wednesday, 18 May 1955

Vol. 150 No. 12

Committee on Finance. - Financial Resolution No. 5—General (Resumed).

Mr. MacEntee

When the debate was interrupted I was dealing with statements which had been made by Deputy McGilligan — first of all, that which he made on what was virtually the eve of the election and then that which he made in this House on the 10th March last. It is quite clear from the terms of the statement made in this House that Deputy McGilligan must have been compelled to make it either with a gun at his back or at the point of the bayonet. I do not know whether it was the Minister for Finance who was holding the gun or the bayonet or the Taoiseach himself. In any event, it was done for one purpose. I do not think Deputy McGilligan would have troubled to come in here and address himself in such object terms to the Chair as he did if he alone were concerned in the matter. I think he must have done it under coercion. I think he was not a free agent when he swallowed his words in that humiliating way. Therefore, I assume he has made this retraction because the Taoiseach, in terms, has demanded it.

What does the Taoiseach hope to get out of this public humiliation which he has imposed on his Attorney-General? It is quite clear. The Taoiseach hopes to get himself out of the commitments which Fine Gael entered into with the electors who voted for him. He finds that having got a Labour tail in the Coalition, he is not able to give effect to these sweeping economies which every person who voted for Fine Gael candidates was led to expect. A lot of "medicine bottles"— as I think the Taoiseach once referred to them — were going to be broken up and we were going to be able to enjoy cheap pints, cheap smokes, cheap petrol and a lower rate of income-tax, as a result.

The political exigencies in which he finds himself have caused the Taoiseach to want to go back on the word which he gave to the people. Therefore, he came into this House and repudiated his Attorney-General. However, the Taoiseach is not going to get out of it quite as easily as all that. The Taoiseach knew, when this Government was being formed, what the Attorney-General, as Mr. McGilligan, said to the people on the 7th May, 1954. He knew what the Attorney-General had promised the people at that time. He knew that, in fact, the Attorney-General had secured the votes of the people — those who voted for him, at any rate—by false pretences, an offence which, I think, could be made the subject of a criminal charge if anything else than votes were obtained.

What has the Taoiseach done to the man who treated the Irish people in such a shameful way? He has made him Attorney-General. Mind you, it is not the Government which appoints the Attorney-General: it is the Taoiseach. It is the Taoiseach, who sits for my constituency, who has appointed the Attorney-General here as head of the Irish Bar, as the person responsible for every prosecution which takes place in our courts whether that prosecution be for false pretences, for securing money under false pretences or for mere drunkenness. The Taoiseach has appointed Deputy McGilligan Attorney-General and has cast his mantle over him. He has taken Deputy McGilligan as his principal adviser and as the principal adviser to the Government. Therefore, he must have accepted, with Deputy McGilligan, all the things which Deputy McGilligan had committed himself to. There is no use in the Taoiseach's coming in here and saying that he has no responsibility for what Deputy McGilligan said on the 7th May——

Mr. Sweetman

Did he?

Mr. MacEntee

Yes.

Mr. Sweetman

He did not. What he said was that he did not make the statement which you quoted but that somebody else did.

Mr. MacEntee

Precisely. He tried to divorce himself from Deputy McGilligan——

Mr. Sweetman

He tried to make it accurate.

Mr. MacEntee

Tweedledum and Tweedledee, Codling and Short. Whatever way you want it. As I said earlier, the Taoiseach is politically Mr. Facing-Bothways. Deputy McGilligan was reputed to be the brains carrier of the Fine Gael Party — the "financial wizard", as he had been termed. He was reputed to be a person who had studied these matters and he was the person who was going to guide the Fine Gael Government, if they took office. He made those statements. Surely he made them after taking counsel with his own colleagues in the shadow Cabinet of Fine Gael? Surely he did not go out and make that broadcast as an irresponsible confidence trickster or as a dishonest confidence trickster? Yet, this man who made that broadcast, this man who secured those votes on the basis of that broadcast, is the person who has been appointed by the Taoiseach as Attorney-General of this State.

It is a good thing he was not appointed Minister for Finance. If he had, we would have had a worse Budget. That is one of the mercies that inconsequently have flowed from that broadcast by Deputy McGilligan. The Taoiseach has appointed Deputy McGilligan, who gave that pledge, as his Attorney-General and, with that appointment, he has accepted full responsibility for the commitments which the Attorney-General, as Deputy McGilligan, entered into with the people who voted for him. Therefore, it is not good enough for the Taoiseach to deny that he did not say what Deputy McGilligan had said. What Deputy McGilligan stated was said, I believe, with the connivance and the cognisance of the Taoiseach and with the connivance and the Cognisance of every other member of the Fine Gael Executive.

Mr. O'Donovan

Of course the Deputy said that the Taoiseach repudiated Deputy McGilligan which is a very different thing.

Mr. MacEntee

He played the little schoolboy's trick.

Mr. O'Donovan

He did not.

Mr. MacEntee

The Taoiseach said: "Please, it was not I said it; it was the other fellow". On the whole, having regard to the loyal and unscrupulous service which the Attorney-General has given to the Fine Gael Party, I do not think it was a very creditable performance on the part of the Taoiseach. However, we shall leave Deputy McGilligan and the background of the Budget behind us and come now to the Budget itself.

Mr. O'Sullivan

It is about time.

Mr. MacEntee

I know the Parliamentary Secretary would have liked if I had come to it sooner, but if he had not put up the Attorney-General this morning I would have come to it long ago.

Mr. O'Donovan

And look at what we would have missed.

Mr. MacEntee

When the Minister for Finance read his Budget there was one thing that leaped to my mind and I am perfectly certain that the same thing struck every other person who read the Minister's statement on the following morning. There was one salient characteristic, one unblinkable fact, about it and that is that it has sounded the death knell——

Mr. O'Leary

Of Fianna Fáil.

Mr. MacEntee

——of any hopes the taxpayer might have had that there would be reliefs or remissions of taxation under the Coalition Government.

Mr. O'Donovan

Wait and see.

Mr. MacEntee

Otherwise I do not think anybody would describe it as an epoch-making Budget. On the contrary, it has been criticised on the grounds that it is an unimaginative Budget. With that criticism I would in the main agree because its chief merit is that it is an unimaginative Budget. On the contrary, it is a realistic one.

Mr. O'Leary

A good one?

An Leas-Cheann Comhairle

Deputy O'Leary must cease these interruptions.

Mr. MacEntee

This Budget shows that the Minister does not imagine that the public purse can be filled otherwise than out of the public pocket. It shows that he realises that we cannot distribute public largesse with both hands, that we cannot give millions away with one hand unless we take millions away with the other. It shows, in short, that the Minister for Finance has left behind him the fantastical world of Fine Gael and Labour propaganda. This year's Budget may not be an imaginative one but at least —let me talk of its merits first—it is a realistic Budget. Though it is not an epoch-making Budget or an imaginative one, it is in fact a significant Budget, significant in the fact that it marks a return, though a hesitant and tentative return, to financial sanity and public probity in the minds of some elements in the Coalition. No matter on what side of the House we are, we can commend the Minister for Finance from that point of view.

The Minister, unlike his colleague the Attorney-General, did not broadcast during the last election campaign and, no doubt, when he came to prepare the Budget he was thanking his lucky stars he did not. Perhaps the Minister on the hustings was as uninhibited in his pledges to reduce taxation and expand social services as were the Attorney-General and the Minister for Education. He may have been, but I do not know. Whether he was or was not, fortunately for his public reputation it is not recorded of him that he suggested, as did the Attorney-General in his pre-election broadcast, that taxation could be reduced in this very year by several million pounds, nor is he reported to have said, like the Minister for Education when he was plain Deputy Mulcahy, that the Fine Gael Party, if in office, could reduce taxation by £10,000,000 in ten minutes. In order that there can be no doubt about the authenticity of that I shall quote the reference.

That statement was made on 13th May, 1952, by the present Minister for Education, then Deputy Mulcahy, as recorded in Volume 131, column 1439 of the Official Report. On that day he said that, if Fine Gael were in office, Deputy Costello, his leader and the present Taoiseach, would reduce taxation by £10,000,000 in ten minutes. The Minister for Finance, therefore, was freer than most of his colleagues to consider the public interest and to deal honestly with it and because of that he has refrained in this Budget from reducing taxation. He has not cut income-tax. He has not cut down expenditure which would be the essential preliminary to reducing taxation. He has not reduced the taxes on beer, spirits, tobacco or petrol. All these reliefs were promised in a specific way by the Coalition leaders but the Minister for Finance in this Budget has not been able to concede them.

He has been criticised for that, even by his own supporters, even by Fine Gael's satellite, the Licensed Vintners' Association of Dublin, but, in the muddle-headed way of the Coalition, these gentlemen who criticise him for not reducing taxation are demanding even greater expenditure. Not even the Labour elements can have it both ways. That is where the Budget, as a Budget, teaches the Labour Deputies a lesson. It teaches them the lesson which the Fine Gael elements in the Government intended the Budget should teach them. I hope the Labour Party are not too dense to grasp it.

I have already said that this year's Budget is a significant one and I should like to repeat that view. It does give some hope that the present Minister for Finance has rejected the shameful and cynical approach, not only of his colleague, the Attorney-General, but of other members of the present Government, to the problem of public finance. If that trust proves to be justified then we can approach this matter in an objective, even though critical, mind, having left behind us the debating school politics which have heretofore been the stock-in-trade of the demagogic Coalition groups. We shall hear no more about murderous Budgets. We shall hear no more about halfpenny Budgets and, as I mention the word, there is not even a halfpenny relief in this Budget for the majority of the people of this country.

Mr. O'Sullivan

There is only 2/6.

Mr. MacEntee

I am thinking of a phrase which the Parliamentary Secretary to the Government used —"for the general good"— and that is what we are here to do — we are here to govern in the general good and for the community as a whole.

Mr. O'Leary

Not for the dance halls, like you.

Mr. MacEntee

Pipe down, Deputy.

An Leas-Cheann Comhairle

Will Deputy O'Leary cease interrupting?

Mr. MacEntee

As I was saying, I hope we shall hear no more about "murderous Budgets" or "halfpenny Budgets" because, when we come to closer grips with this Budget, we have no doubt as to its character. This Budget is founded on the 1952 Budget. This Budget harks back to the 1952 Budget. The Coalition have not disowned the 1952 Budget. They have adopted the 1952 Budget; it is their baby now.

Mr. O'Donovan

I hope not.

Mr. O'Leary

This Budget is better than the 1952 Budget anyhow.

Mr. MacEntee

This is the 1952 Budget, though it has been brought up to date by the Minister for Finance to meet the demands of the Coalition but it is emphatically the 1952 Budget.

Mr. O'Leary

That put you over there.

Mr. MacEntee

It is emphatically not the type of Budget which is required in 1955. It is not the type of Budget which I would have brought in this year if I had been Minister for Finance. It does not give those reliefs to the taxpayer which, flowing from the 1952 Budget, would have been practicable this year and could have been readily given by a Minister for Finance whose Party was master in its own house.

Mr. O'Leary

That cock will not crow any more.

Mr. MacEntee

The crying need of the general public interest, the crying need of the people in present world conditions is a reduction in taxation. The Fianna Fáil Budget of last year, apart from providing £900,000 to reduce the price of bread, reduced taxation by virtually that figure. That Budget was mangled by the Coalition and in consequence it closed with a deficit of £1,630,000, a deficit which must now be borrowed for and, of course, repaid this year in part and in part in all the years to come. But, as I introduced the Fianna Fáil Budget on the 21st April last year, it balanced with a surplus of revenue over expenditure of about £350,000.

I have reminded the Dáil that last year the Fianna Fáil Government reduced taxation by £900,000. I am now going to state categorically that if I were now Minister for Finance I would, on the basis of the Minister's estimates for revenue, have reduced taxation this year by at least £3,000,000. Why would I have done that? Last week, Deputy O'Donovan, the Parliamentary Secretary to the Government, told the Dáil that "in the general good the greatest boon the Minister for Finance could confer was a reduction in income-tax of 6d. in the £". With that view I emphatically agree. I think our whole economy is being distorted by the fact that income-tax, which was intended to be a mere incidental and insignificant impost, has become disproportionately large in relation to the incomes upon which it is now being levied. Therefore, I said that the Parliamentary Secretary to the Government was on very sound ground when he made that statement.

Just let us consider how income-tax bears on every single business transaction. If, for instance, a limited liability company sells raw materials or semi-processed materials to a manufacturer, then, out of any profit it makes on any single transaction, the company has, in nine cases out of ten, out of every 20/- of profit it makes 9/-to hand over to the Minister for Finance, and it does not end there. So that the public, in order to enable this importer, this supplier of raw materials, to make a normal and reasonable profit, has to pay, not the 11/- profit which he requires in order to maintain himself in his business but 20/-, of which the Minister for Finance and the Government take 9/-.

It does not end there, as I have said. When raw materials which have been imported or which, perhaps, have been obtained in this country are passed on to the manufacturer we have the same thing repeated over and over. The man who makes the finished commodity again has to provide, when he is fixing his charges to the public, 9/-in the £ for the Minister for Finance. Of course, he does not provide it; it is the consuming public that provide it; it is the workers and the employees who have to provide it.

When the transaction is finished, when he has made the commodity and passes it on to the distributor, again the same process is repeated and again the man who sells the articles, not the man who makes them, not the man who supplies the raw materials with which to make them but the man who sells them, whether he sells them as a wholesaler or as a retailer, once again, when he is fixing the price of the article has to remember that, in addition to the money which he requires to maintain himself and his staff, he has to find 9/- in the £ for the Minister for Finance.

Then, when we come down to the employee, to the worker, to the clerical officer——

General MacEoin

It is a pity the Deputy did not know all this sooner, when he was over here.

Mr. MacEntee

If I had been over there we would have a different Budget.

Mr. Sweetman

Somehow I think that is true.

General MacEoin

If the Deputy had known last year what he is telling us now we would have had a different Budget last year.

Mr. MacEntee

Well, you got the Budget last year and, whatever you may say about the 1952 Budget, the vast majority of the workers, the vast majority of the employed people in this country, the vast majority of the small shopkeepers and small manufacturers, the small men of this country, were paying a good deal less in income-tax than they were paying under Mr. McGilligan.

General MacEoin

Not likely.

Mr. MacEntee

The Deputy will not put me off the track. When we come down to consider the employees of the man who provides the raw materials or the man who manufacturers the articles or the man who distributes them, the same tale is told. Once again, what happens if he wants to have, say, 15/-, 18/-, 17/6, to spend? I am not talking now about the man in the top notch grade, about the man in the higher levels. I am talking about the people who keep this country going. If they want to spend 18/- they have to earn 20/- or, to put it this way, if they want to spend 17/-they have to earn 20/-.

Strange as it may appear, the Minister for Finance is multi-handed. In every man's pocket there is the hand of the Minister for Finance filching away his shillings from him. Is it any wonder that, as I said, our whole economy has become distorted by the fact that the standard rate of income-tax bears no relation to the realities of the world in which we live?

Mr. O'Sullivan

Taxation rests lightly on the land.

Mr. MacEntee

Let the Parliamentary Secretary to the Government take this as some sort of tribute to him that he has an occasional glimpse of common sense on some of these matters. Therefore, when he said — and this is a point for the member of the Labour Party — that "in the general good the greatest boon the Minister for Finance could confer was a reduction in income-tax of 6d. in the £", I agree, for the reasons which I have tried to give in a highly popularised and simplified way to this House — I am not writing a book on the incidence of income-tax—with the view expressed by the Parliamentary Secretary. But he went on to say something else and again it is the moral of this Budget and it is a measure, let me say, of the merit of the Minister for Finance, of his tenacity, of his stubbornness and his refusal to run away from the realities of the situation as the last Fine Gael Minister for Finance did.

The Parliamentary Secretary not merely said that "in the general good"— these words should be inscribed above the Ceann Comhairle's Chair —"the greatest boon the Minister for Finance could confer was a reduction in income-tax" but he also went on to show where the nigger in the woodpile was. He told us that the Minister for Finance did not grant a reduction because to do so would cost £1,500,000 and the Minister for Finance has not got £1,500,000 to reduce taxation. Why not? And if he has not, whose fault is it?

Mr. O'Leary

Yours.

Mr. MacEntee

And if the Minister for Finance had not, as the Parliamentary Secretary states in extenuation of this Budget, got £1,500,000 to confer that greatest boon on the general public, I say why has the Minister for Finance not got that £1,500,000? In last year's Budget not only was I able to reduce the price of bread but I was able to reduce taxation by almost £1,000,000. I have said, and I repeat, that if I had been Minister for Finance I believe that a further reduction in taxation this year of about £3,000,000 would have been possible. However, the Parliamentary Secretary has stated that is not possible.

Mr. O'Donovan

Would the Deputy have given 2/6 to the old age pensioners?

Mr. MacEntee

Nobody will believe, whatever else they may believe about any other Deputy in the House, that the heart of the Parliamentary Secretary is bleeding for the old age pensioners.

Mr. O'Sullivan

There was £2,000,000 for butter.

Mr. MacEntee

We will come to that. I will tell you what the Minister for Health or his brother, Deputy Michael O'Higgins, might have said if we had been giving away £2,000,000 for butter. We would have been told that we were taking £2,000,000 of the people's money to grease the palms of the hotelkeepers. I was saying that if we were in office to-day there would have been in this year's Budget a reduction in the standard rate of income-tax and there would have been a corresponding reduction of an equivalent amount in other taxes as well and there would have been no cut in the social services. We would have brought down the cost of living for the people in the way in which it can be brought down, by leaving the money in the people's pockets to spend themselves.

Mr. O'Leary

You took it out of their pockets.

Mr. MacEntee

Let me get back to the point I was making.

Mr. O'Leary

You are going off the track. Keep to the straight road.

An Leas-Cheann Comhairle

If Deputy O'Leary does not cease interrupting I shall have to ask him to leave.

Mr. O'Leary

It is hard to listen.

An Leas-Cheann Comhairle

The Deputy has a remedy.

Mr. MacEntee

Why do I say that if we were in office there would have been a reduction in taxation? — because every thinking man in the country, the people who think of the welfare of the country, the people who think of the general good to which the Parliamentary Secretary to the Government referred, the people who voted for Fine Gael, the mass of the people who voted for us, all of us feel that the burden of the public services weighs too heavily upon the backs of our producers and that, therefore, a substantial overall reduction in taxation is what the general public interest demands. I say this is what the people want. It is what the Fine Gael leaders promised them. I am sure it is what the Minister for Finance would like to give but has not been able to give. Our last year's Budget was an earnest of it, and it is what a Fianna Fáil Budget would have given. In our 1954 Budget £2,000,000 was handed back to the people. If this year's Budget had been introduced by me a further £3,000,000 would have been remitted by positive reductions in taxation.

Those who heard the ringing phrases of the Attorney-General — although to apply the adjective "ringing" to the Attorney-General's manner of speech would be a misnomer — those who heard the Attorney-General making those lavish promises about reducing taxation without much effort, those who voted for Fine Gael on the basis of those declarations are asking themselves to-day why has taxation not been reduced. They will not be fobbed off by silly statements that this Budget represents only a first instalment. That is a lame apology because the people are asking themselves: a first instalment of what? Do not forget that Deputy McGilligan and the Taoiseach promised that there would be drastic economies made in public expenditure, that it could be cut down by millions of pounds without much effort. They have been there now for 12 months. What efforts have they made? People are asking themselves, therefore, of what is this Budget a first instalment — of further increases in public expenditure? That is the only new thing of any significance in this Budget.

Last Sunday a weekly newspaper which supports the Coalition had a three column editorial spread-eagled with the heading: "The machine beats Mr. Sweetman." I do not know whether the Parliamentary Secretary to the Government was responsible for that editorial or not.

Mr. O'Donovan

Wings of poesy, flights of fancy.

Mr. MacEntee

It is generally believed, of course, that the editorials of the Sunday Independent and some of the evening papers are written by members of the present administration. There we had it, at any rate, spread-eagled over three columns: “The machine beats Mr. Sweetman.” The article tried to imply that in some way the Minister for Finance had been overborne by the Revenue Commissioners or by his advisers. Everyone who has had the pleasure of knowing Deputy Sweetman in private life will realise, of course, that there is no justification whatever for that innuendo, that he is just as well able as Deputy McGilligan or myself or anyone else, to stand up to his private and official advisers and take his own line, if he feels he is justified in doing so. Therefore, there was no justification whatever for trying to lead the Irish public to believe that.

It was a very poor compliment to the Minister that somebody who purports to support and uphold him should come along and tell the Irish public, the Fine Gael electors who put their trust in him, that he was like putty in the hands of the Revenue Commissioners or the machine of the Department of Finance. The Minister admittedly, according to himself, could not afford to reduce income-tax this year. But if he could not afford to reduce it, it was not because he was beaten by the machine. Not at all; it was because he was beaten by his own colleagues in the Coalition. That is what beat him, that is what has deprived the taxpayers of the reliefs to which they were looking forward in this Budget. That is the reason, and the only reason, why there has not been a substantial reduction in income-tax this year.

What is the moral? The taxpayers may make up their minds that there will be no reduction — and now I hope to hear some "hear, hears!"— in taxation so long as the Coalition exists. There will be no relief for the taxpayers so long as the Government remains at the mercy of the petty Parties whose support is indispensable to them. The Budget this year demonstrates that position fully, as I shall show. I am going to hark back now to the Budget of 1952, the Budget upon which the 1955 Budget, whatever merits it has, is based. In 1952, it was necessary to increase the rates of taxation substantially. These substantial increases would not have been necessary if it were not for the fact that from 1948 to 1951 we were governed by a Coalition which embarked on far-reaching schemes of public expenditure and baulked at the necessary taxation to pay for them.

Mr. O'Leary

What did you do with the £42,000,000 in Marshall Aid? Tell the House that.

Mr. MacEntee

We had to increase taxation so substantially in 1952 because we had the hangover — and it was a pretty sickening one, let me assure you — from the Coalition.

Mr. O'Leary

With Captain Cowan hanging on.

Mr. Blowick

The £30,000,000 that we gave you; tell about that hangover.

Mr. MacEntee

The Coalition embarked on expensive schemes — necessary schemes, let us make no mistake about it. We implemented a social welfare scheme, we gave the people a Health Act and we did not break up a Government rather than give them a Health Act. We did not have to drive anybody out of our Government because a Health Bill was introduced into the Dáil.

Mr. Blowick

The people drove them out. They put the whole lot of you out.

Mr. MacEntee

We had to pay for it. Your Tánaiste, the then Tánaiste, the Minister for Social Welfare, as he was at the time — they did not make the mistake of reappointing him the Minister for Social Welfare. Ah! no, he has gone to fresh fields and pastures new. He has become the Minister for Industry and Commerce. He has left the murky records of the Department of Social Welfare behind him, he has left another colleague to implement the Social Welfare Act, the Social Insurance Act which the Fianna Fáil Government passed — which you had promised the people over three years——

An Ceann Comhairle

Would the Deputy use the third person?

Mr. MacEntee

Which the 1948 Coalition promised the people for three years they would pass, which the Coalition introduced and, rather than pass, fled to the country.

Mr. O'Leary

You would not vote for it — you and Cowan.

Mr. MacEntee

They left the Fianna Fáil Government with these commitments to shoulder. We shouldered them and other commitments also, commitments to the Civil Service and in respect of other items of public expenditure. We shouldered them and, therefore, since the Coalition made no provision in the 1951 Budget to meet this expenditure, that Budget closed with a deficit of £6.7 millions.

General MacEoin

It was £15,000,000 last night.

Mr. MacEntee

We are coming to the £15,000,000. The Minister for Defence need not think there is anything inconsistent in what I am saying and what the Leader of the Opposition said yesterday.

General MacEoin

You would be fired if there were.

Mr. MacEntee

I am coming to it. There was a deficit of £6.7 millions in the 1951 Coalition Budget. To provide for the Social Welfare Insurance Bill of 1951 — or 1952, as it became — and other increased social welfare payments and to maintain all the other public services at the level at which they were left by the Coalition, about £98,000,000 would be required. On the other hand, to meet this £98,000,000, the total revenue from taxation and otherwise was only £83,000,000. If the Minister makes a mental calculation, he will see that substracting 83 from 98 leaves 15 and, in terms of millions, that is £15,000,000. That was the gap that had to be covered in the 1952 Budget.

We now come to what happened in the 1952 Budget. In the 1952 Budget rates of taxation were increased. It is a queer thing that, three years afterwards, the Coalition which referred to that increase in very scathing terms, in most horrific terms, have not reduced a single one of those taxes. We still have income-tax at 7/6 in the £; we still have the beer duty at what it was then; we still have the spirits duty, the tobacco duty and the petrol duty, all at what they were then. I do not know which element in the Coalition claims credit for the fact that there has been no change. I move to report progress.

Progress reported; Committee to sit again.