Committee on Finance. - Finance Bill, 1956—Committee Stage. – Dáil Éireann (15th Dáil) – Wednesday, 13 Jun 1956

Committee on Finance. - Finance Bill, 1956—Committee Stage.

Question proposed: "That Section 1 stand part of the Bill."

Mr. Lemass

The Minister in his Budget statement indicated that he was prepared to consider a more general review of the code of direct taxation than was undertaken recently by the Committee of Inquiry into Taxation on Industry. It is desirable to make it clear that we here would strongly support that proposal. There is need now for a comprehensive review of our system of direct taxation. The report of the Committee of Inquiry into Taxation on Industry, and particularly chapter XI dealing with the general body of taxpayers, emphasises, by the information which it provides as well as by the observations of the committee, the need for that review. The committee in their report stated at paragraph 209:—

"It appears that income taxation in Ireland is neither broad nor general in its incidence, and that there is an unequal distribution of the total burden over the different sectors of the community. It is no longer a relatively simple tax, levied at modest rates. An increasingly formidable volume of legislation, and case law, adds to its complexity from year to year."

The information contained in the body of the report gives rather remarkable evidence, not previously available in the same form, of the increased incidence of direct taxation particularly as it affects wage and salary earners, those whose tax is calculated under Schedule E. Since the dates chosen by the committee pre-war, there has been an increase from 45,000 to 138,000 in the number of wage and salary earners paying income-tax, an increase from 62 per cent. to 79 per cent. of the total body of direct taxpayers. Furthermore, as a table published in that section of the report makes clear, the reliefs now given in respect of earned income to married men and to people with dependents, are relatively considerably less than they were before the war. The actual rates of relief have been increased, but the increase in each case was not in proportion to the decline in the value of money in the meantime.

The committee indicated that they had received evidence that the present rates of taxation on wage and salary earners had a serious disincentive effect. Salaries and wages carried about 18 per cent. of the direct taxation burden before the war, but are carrying 27 per cent. of that burden now. Having regard to the changes that have taken place, to the effect of the deterioration in money on the incidence of direct taxation, to the many anomalies to which the committee made brief reference, the time would appear to be ripe for undertaking the general review of the whole code to which the Minister referred.

The annual conference of the Fianna Fáil Party last year passed a resolution favouring, in principle, the introduction of a pay-as-you-earn system of taxation on personal incomes. I do not know if the Minister has as yet given any consideration to the type of inquiry that is to be set up or to the terms of reference to be given to those undertaking the inquiry; but it would appear to be desirable that there should be specific reference to the practicability and desirability of introducing here a pay-as-you-earn system of taxing earned incomes.

It is to be recognised that there are many difficulties likely to be experienced in devising a simple and workable system and it is clear that, before any official decisions are taken, it will be necessary to have consultations with those who are likely to be involved in the operation of such a system, whether as employers or as workers. Indeed, I think that the terms of reference of the inquiry should be drawn widely enough to permit of the examination of the possibility of abolishing income-tax altogether. I do not want to be taken as suggesting that the Fianna Fáil Party has taken any decision in principle in favour of the abolition of income-tax or has come to the conclusion that it would be practicable to abolish income-tax. But there is, I think, a growing volume of opinion in favour of the view that taxation of income should be replaced, if possible, by some system of taxing expenditure. In theory, it is altogether desirable that persons should be taxed on the basis of what they spend rather than on the basis of what they earn.

In this country, where there is very urgent need to encourage increased savings, it would seem to be wrong policy to tax income which is saved at the same rate as income which is spent. It may be that no workable system of basing the direct tax system upon expenditure rather than income can be devised, but anybody or any committee that may be entrusted with the task of examining the whole code of direct taxation should not be precluded by the terms of reference from examining that possibility.

I should like to urge on the Minister also that there should be no delay in getting this inquiry under way. We have had the experience of the Committee on Industrial Taxation and we know that it took a long time for that committee to produce its report: and, in matters of this kind, time is important. Having regard to the experience of the working of that committee, I think the Minister should consider entrusting this wider inquiry to people who can give a considerable amount of time and are prepared to sacrifice a considerable amount of time to the work. Many of the delays which are experienced in the working of Government committees and commissions are due to the inclusion in their membership of persons, who, while undoubtedly qualified by their experience to express views on the subject upon which they are asked to report, are not, because of other obligations, able to give any considerable time to the inquiry.

The work of investigating the whole of our code of direct taxation is likely to be a very specialised type of task. Not many people will be available who are qualified to come in with the initial information which would enable them to get down to the work without delay. As I say, I do not know whom the Minister has in mind. If he contemplates a committee in which members of the Dáil may be asked to participate he can assume that the fullest co-operation of this Party will be available to him. But we would like to feel that the work will begin soon and that the organisation of the work will be such as to offer a fair prospect of having it completed within a reasonable time. That will involve not merely the careful selection of members of the committee of inquiry because of their availability and willingness to give time to it but will also involve ensuring that they will have at their service an adequate staff to do the necessary research work. If the Minister is now in a position to indicate when he hopes to get the inquiry under way, what type of inquiry he contemplates, to whom he proposes to entrust it and the terms of reference, that information will be very useful; and, if he is in a position to do that now, I would urge him to consider the desirability of getting the whole process started at least during this session of the Dáil.

Mr. Morrissey

I find myself to quite a considerable extent in agreement with Deputy Lemass on this matter. Where I differ from him is when he tries to suggest that the necessity for this examination did not arise until now. I think this type of examination might very usefully have taken place long before now, and perhaps at a time when it would have been much easier to get the type of inquiry needed and when, perhaps, it would have been much easier to bring in effective measures to deal with the matter.

It must be freely admitted that the type of direct taxation dealt with here in Section 1 has a very bad effect, particularly on producers. There is a deterrent against going beyond a certain point. Deputy Lemass referred to the workers, who, for the first time, are coming within the scope of the income-tax code. Personally, I am glad that we have reached the stage where they are within that code. That is something I used to wish for very heartily many years ago.

It is true that, apart from whatever injustice there is, particularly in certain types of cases, in deducting income-tax from earnings, it has a very bad effect on production. We know that even under the pay-as-you-earn system tried out on the other side, which Deputy Lemass now advocates here, when earnings reached a certain point and income-tax impacted on them an enormous increase in abstentions from work resulted; in a considerable number of industries—very large industries and, in the main, key industries—a full week was rarely worked by the entire staff. I do not know whether that has happened to any extent in this country, but it has happened across the water and it could happen here or it would be likely to happen in a similar set of circumstances.

There is no doubt whatever of the adverse impact on producers, whether they be farmers who pay income-tax— if there are any such—or whether they be industrialists or people engaged in ordinary forms of commerce. When a man reaches the stage where the harder he works, the more efficient he becomes, and the more he earns the less he will get, human nature being what it is, that man says to himself: "Why should I work six months of the year for nothing?" That is what it amounts to in some cases.

That is one side of the story. The other side of the story is that the inquiry is only the beginning. If the inquiry reports on lines which will lead to a reduction in the rate of income-tax, corporation profits tax, supertax or any other aspect of that particular range of taxes, or a changing about of it, will the sum to be collected from the taxpayer be any less? If there is any reduction in the gross amount collected by way of income-tax, from what other source will it be sought?

It is not just quite as simple as setting up an inquiry. I am in favour of setting up the inquiry and, with Deputy Lemass, I have some appreciation of the difficulty the Minister or any other Minister will have in getting suitable personnel who will be able to give a good deal of time to it so as to get us a good report and to get it for us in as short a space of time as possible.

Does anybody approaching this seriously think that you can relieve certain groups from the impact of income-tax without shifting it on to the shoulders of other income-tax payers or on to the shoulders of the general taxpayers? Does anybody think there is any possible chance of reducing this tax or of giving any relief that will be of any great use or provide the incentive that is so desperately needed for more production, if expenditure is to keep on for ever mounting? We are still carrying on in this House what we have been carrying on since the State was founded. To-day we are demanding—from whatever side of the House we are on, let us be clear on that and admit it—more and more expenditure, and to-morrow we are demanding lower and lesser taxation. We go on doing that year in and year out. Everybody is looking for a larger slice of the loaf and at the same time everybody is insisting that the ingredients that go into the loaf are costing too much.

We all know that one of the reasons why taxation is impacting so heavily on and affecting adversely the economic life of the nation is because every one of us is insisting on spending more than we are earning. It is not necessary for me to say in this House to people who know me that I am not an economist, and I certainly have not much knowledge of finance in the sense of the word generally accepted. But I have, I hope, a little commonsense, and I have some fair knowledge of the country and the various sections that go to make up the country.

I think I can claim to be at least as anxious as any other member of the House to raise the standard of living of our people as high as I possibly can. I think I can claim to be as concerned about providing as good a social code as any other member of the House. But we are not going to raise the standard of living and we are not going to provide an effective and lasting social code of services here by closing our eyes to the facts. I respectfully suggest—and I am not now talking in any Party manner—that Deputies, both inside and outside the House, and particularly when they are speaking on other public bodies, ought to have a little more regard to the real position of affairs in this country and a little less concern about scoring points— apparently trying to score political points against their political opponents, but, in fact, doing definite harm to the credit of the State.

As I say, I find myself in considerable agreement with the reasons which Deputy Lemass advanced in the course of his speech. I favour the setting up of this committee of inquiry, but, any more than Deputy Lemass, I am not so foolish as to expect that, unless we are prepared to do our own part here and to do it long before this committee will be able to report, however sound its recommendations may be, we shall not be in a position to give effect to those recommendations.

Mr. Aiken

We are making some slight progress in the economic and financial life of this country when we hear Deputy Morrissey, when talking about financial problems, saying that we should face the facts. For a certain number of years Deputy Morrissey, and those who voted with him in this House, would not face the facts. Whenever they thought of some good idea that would cost money to put into operation, when they were in opposition they always suggested that it would be quite easy to find the money by reducing expenditure. In fact, they had one wizard who, when he was in opposition, told the people of this country that they could reduce expenditure by £20,000,000——

Mr. Morrissey

I suppose it would be too much to expect that you could rise above that level.

Mr. Aiken

I would like Deputy Morrissey when he goes out now to send for that wizard. Let him come in here——

Mr. A. Barry

We do not need him when we have Deputy Aiken here.

Major de Valera

Tá an fhirinne róshearbh ar fad. The truth is too bitter for you.

Mr. Aiken

Let him come in here and tell us how to reduce taxation and avoid putting on income-tax or, if this commission which the Minister for Finance suggests, meets and recommends a reduction in certain sections of the income-tax code, where the money is to be found. Deputy McGilligan did say that if there was a Minister for Finance put in here who had the will and the know-how to effect economies we could reduce taxation by £20,000,000. All that propaganda in those days undoubtedly did harm. It created the impression in the minds of many people that the Government elected by the people, the Fianna Fáil Government, was deliberately salting them, trying to hurt them, trying to damage the country by imposing a level of taxation that would meet our day-to-day bills. We are getting somewhere when a Deputy like Deputy Morrissey, who was so loud in his demands for all sorts of expenditure and at the same time a reduction in taxation, tells us that we should face the facts.

The present Government did not face the facts when they should have been faced. In 1948 to 1951, they spent money like water and left the bills to their successors to pay. Even in the beginning of this term of office, they paid sums to civil servants which they had no legal nor moral duty to pay. The only section of the people whose incomes they cut down were the farmers who should have been encouraged to do something to build up the production of the country about which Deputy Morrissey speaks to-day. The whole cry was that all our ills could be wiped out overnight by some financial wizardry. There was no relation to the total income of the country, to its total production. Everybody could have a higher standard of living without working harder, simply by pouring out more money.

It was only when this Government came to the end of its tether, when the people refused to put up even 50 per cent. of the money that was required for capital expenditure, at a greater interest rate than was ever offered in this country, that the Government started to face a few of the facts. They are facing only a few of the facts and, if we do not face them all in relation to our economic and financial life, we will be brought up hard against it some day and, unfortunately, I am afraid it will be sooner rather than later.

It may effect some good purpose if the commission spoken of by Deputy Lemass and previously by the Minister is set up. It would be a good thing also if the Government themselves sat down and had an inquiry into the effects of their total financial operations. Undoubtedly, one financial operation, the saving of some money on wheat in the price given to the Irish farmers, will save the Exchequer a little, but at the expense of our balance of payments. If our balance of payments position becomes more difficult our business is bound to go down, our general production will tend to decline and the income-tax that we are now discussing will require to be even higher to meet the commitments that the Minister for Finance has to meet.

If only we could get the benefit of the advice of Deputy McGilligan, if he would just tell us how the economies of £20,000,000 were to be effected, we would not want this section in the Bill at all; we could do away with income-tax. The people, seeing that the general taxation has been so much increased and income-tax not lowered, will at least expect the Minister to inquire as quickly and as thoroughly as possible into the income-tax code, to see if something can be done to speed up production and to effect some of the savings which Deputy Morrissey said were so necessary.

We are all involved in this. The ill effects of a financial policy do not stop at the ranks of the Government or the Government supporters, no matter what that Government may be; they reach the whole community. At this time of dire need for more production, it is well that every aspect of financial policy that affects the level of production should be examined. There is much greater need to-day than ever there was to take all the measures that are open to the Minister for Finance or any other Minister to encourage increased production. If we do not increase production, if we do not increase the size of the loaf, people cannot get a bigger division of the loaf. We tried to add to the loaf, the national income, the volume of our total resources, by pursuing a steady policy over the years.

An Ceann Comhairle

The Deputy's survey is too wide and general for a debate on the section.

Mr. Aiken

I do not intend to go into every aspect of the Finance Bill, a Cheann Comhairle, but if we had a higher income, in money terms, even, the rates of income-tax which we are discussing in this section could be lowered and incomes would be higher. It might be, of course, that, with the higher monetary incomes, we could buy less goods and that the standard of living would fall. Indeed, some sections of the community to whom this present Government doled out money find themselves in a worse position as a result of the increases they got because prices rose faster than even the Government were prepared to dish out money.

Let us hope that, before this debate ends, we will find the wizard, Deputy McGilligan, coming in to show the Minister for Finance how the economies could be effected which would reduce income-tax and other taxes and stir him up to effect these economies. His proposition was two-fold. There must be a Minister for Finance with the will and somebody with the know-how. We want Deputy McGilligan to show the Minister for Finance how to do it and stir him into activity to get it done.

Mr. P. Byrne

This section extends for a further year the legislation in force on 5th April last in respect of income-tax and surtax. This legislation consists of the various Finance Acts passed by this House since the establishment of the State, together with a large volume of British law taken over under the Adaptation of Enactments Act. No one denies that it is both obsolete and archaic. The Minister in his Budget statement announced the somewhat indefinite intention not to review this code of income-tax but to consider the question of having it reviewed. I urge the Minister to treat it as something of great importance.

The tax code is extremely inequitable in its impact on very many of our people. The report of the Committee of Inquiry into Taxation on Industry, as Deputy Lemass pointed out, has produced evidence for the first time which makes that very clear. May I say, in passing, in regard to the information revealed in chapter 11 of the report—information regarding the yield of the taxes and the spread of the tax burden—that I hope that information will continue to be made available to us each year in the annual report of the Revenue Commissioners, which in its present form is a most inadequate and uninformative production as far as the information which it makes available on income-tax and surtax is concerned?

Our tax code was originally laid down in its present form as far back as 1853 and we are now being asked to extend it for the 104th year. That, to my mind, is a rather extraordinary state of affairs. Having regard to the information now revealed and the inequitable impact of the tax code, particularly upon the wage earners and salary earners—those under Schedule E —I would urge upon the Minister to see to it that this is the last year upon which we will be called to extend this obsolete code.

This report makes available much valuable information in its survey in regard to the general body of taxpayers. That section is the most valuable section in the report. I am well aware that there are serious problems confronting the industrialists of our country, but I feel that, relatively speaking, industrialists are not by any means the most sorely depressed section of taxpayers. I welcome the concessions made to industry in this Budget and I hope they will be fully availed of, but, at the same time, I would state that, until such time as the Minister gives an instalment of justice to those who are assessed under the other schedules of our income-tax code, industry has for the time being received enough by way of concession.

I am compelled to agree with the opinion expressed in Reservations 1 and 2 of the report by Mr. Leo Crawford and Mr. Patrick J. Dempsey respectively, who agreed with the majority recommendations and, with the Chair's permission, I should like to draw the attention of the House to a passage from Mr. Dempsey's reservation which, to my mind, sums up the position very admirably. He said:—

"I must qualify my concurrence in the recommendations with the proviso that if the reliefs to industry are to result in any increase in the present tax burdens of the salary and wage earner it would, in my view, be essential first to investigate the entire existing tax structure with the object of providing a system of taxation more equitable than the present one."

An Ceann Comhairle

Would the Deputy give the reference?

Mr. P. Byrne

I quoted from the final paragraph of Reservation No. 2 of the Report of the Committee of Inquiry into Taxation on Industry. The report reveals that, as compared with pre-war, the number of wage earners and salary earners now paying tax has increased threefold. The number of persons paying tax under the other schedules has remained relatively static. I think they have actually increased by 18 per cent. The contribution of wage earners and salary earners amounts to 27 per cent. of the total income-tax revenue and that is notwithstanding the fact that the relative share of the national income accruing to wage earners and salary earners has declined somewhat.

These people are regarded as fair game by the Revenue Commissioners in assessing income-tax. Their income is readily ascertainable and their employers are forced to act as collectors. They are obliged to return the salaries which they pay and altogether I am of the definite opinion that they get a very unfair crack of the whip, so to speak. The rule as to expenses which may be claimed by wage earners and salary earners is most inequitable as compared with the position of persons paying income-tax under Schedule D, that is, commercial persons and professional people. As wage earners and salary earners are taxed for every 20/- in the £ in respect of the annual amount of their salary, they have no way out of the mesh. Even this week, I think it is true to say that there is not an employer in the City of Dublin who is not, on instructions from the Revenue Commissioners, deducting arrears of tax from his employees.

The principle upon which relief is granted to wage earners as compared with other taxpayers is completely inequitable. The rule as to expenses is enforced with extreme rigidity. I am aware of numerous cases where the same item of expense allowed to, say, a commercial person assessed under Schedule D is disallowed under the tax rules applied to those who are taxed as salary earners under Schedule E. It is extremely serious that the Minister is relying on salary earners to such a great extent—to such an inequitable extent—for his revenue. The position merits special treatment. Some concession should be made to these people.

As I said a few moments ago, and as Deputy Lemass pointed out, this report has revealed some very significant figures for the first time. To my mind, there is one piece of information which has been revealed which is really startling. It is, to me, a matter of considerable surprise that it has not been commented upon either in the Press or by any informed commentators in the past few weeks since it was revealed. I should like to refer the Minister and the members of the House to Table 49 of the report where the estimated yield of income-tax for each schedule is shown.

Under Schedule A, property owners and householders contribute £1,500,000 to the tax revenue, constituting 7 per cent.; Schedule C—certain dividends and interest—2.7 per cent.; Schedule D—commercial and professional profits, largely—63.1 per cent.; Schedule E— salary earners—£5,500,000, which is equivalent to 27 per cent. Under Schedule B, our major industry, farming, contributes the princely sum of £105,000, which is equivalent to half of 1 per cent. of the total tax revenue. Comment on that is superfluous. The report points out that that is the case notwithstanding the fact that agricultural profits have increased fourfold since pre-war times according to the Statistical Survey of Estimates of the National Income.

The report also points out that we have in this country a large number of farmers whose rateable valuation exceeds £100. I am not for a moment suggesting that the majority of farmers should be liable for tax as ordinary business people would be liable. They certainly would not and it would be completely uneconomic. Nevertheless, I suggest that £105,000 paid in income-tax is a miserable contribution for the agricultural community. It would be better for the Minister to abolish the tax and leave them alone because I doubt if it is worth while collecting it.

We have 7,000 farmers of over 200 acres. We have 11,700 farmers, as this report reveals, whose rateable valuation exceeds £100. That is a fairly sizable rateable valuation. Those men are in business in a fairly big way.

The Vote for the Department of Agriculture alone takes £10,000,000. The relief of agricultural rates costs £5,000,000. The capital services for agriculture amount, I think, to about £3,000,000. By how many subsidies, bounties, reliefs and doles of one form or another are the agricultural community benefiting? These large farmers—the 200 to 300 acre men—have the benefit of an agricultural policy designed by a benevolent Government to enable the small producer, in many cases the owner of an uneconomic holding, to make a reasonable living from agriculture. To that extent, they have a differential profit, an excess profit from their holdings. I think every member of this House knows that the big farmers nowadays are in the money in a big way.

Mrs. O'Carroll

Hear, hear!

Mr. P. Byrne

That is as it should be, but it is also unfair that they should be exempted from contributing their share to the tax burdens.

Mrs. O'Carroll

Hear, hear!

If that is the case, we can despair of any improvement in the future. If the Government are to give way to the farmers in this matter, because they represent a powerful vested interest, we would just be throwing considerations of justice and equity to the wind and we could despair for the very future of democracy in Ireland.

The number involved does not amount to more than 7,000 and I hope the Minister will not tell me it would be administratively impossible to undo this great wrong. I do not believe it would, and it should be quite a simple matter to assess all those whose holdings are valued, say, at more than £100 per year. Under the rules of Schedule D, as the Minister is aware, the whole basis of assessment under Schedule B has long since been abolished in Britain—for about 10 years at least. To my mind, one of the most significant features of our Finance Bills is the extent to which we reproduce here those features of the British Finance Bills by which we turn the screw tighter on those unfortunates who are in the tax mesh, without at the same time adjusting our tax code to current conditions and without bringing in those modifications introduced in Britain from time to time which have served to ease the lot of the taxpayer.

There is one further point to which I should like to refer. As I said at the outset, the tax code is based on outmoded principles. The economists of the last century are nowadays largely discredited. They have left us one most unfortunate legacy in our Schedule A income-tax, commonly known as property owners' tax. I think that is a misnomer: I call it the householders' tax. These economists of 100 years ago told us that the ordinary householder, the independent type of man who owns his house, perhaps through buying it on mortgage, paying heavy rates, and hard-set, perhaps, to keep it in repair, has what they call a "notional cash income" from his ownership of that house and it is assessed in tax accordingly.

Such a man has no more a notional cash income from his house than I have a notional cash income from the shoes on my feet or the hat I wear. It is a crackpot theory. It operates extremely unfairly against that type of person whom it is most desirable for social reasons to encourage. He is the man who wants nothing but to pay his way and he acquires his own house, perhaps on mortgage. His only boast is that he can meet his overheads out of his own slender resources. The more independent homeowners we have in the State, the more stable will be the population. This Schedule A tax is based on crackpot economics and I would appeal to the Minister to review it.

I want to point this out to the Minister too: I think it is a most important point of which some Deputies might not be aware in regard to Schedule A. Its yield appears at £1,500,000, according to the figures recently made available. That is a most deceptive figure. The effective yield of that tax is a lot less than that and I suggest to the Minister that it is correct to say that the only people who are effectively paying their tax under Schedule A are very largely the resident occupiers of their own houses. I am aware that Schedule A tax is assessed on owners of commercial property, on business people, but it is important to remember that those people receive allowances in computing their profits under Schedule D, commercial profits, and an allowance is given them on tax already paid under Schedule A.

As far as they are concerned it is obvious that what the Minister makes on the swings under Schedule A is lost on the roundabouts under Schedule D. If the tax is abolished, therefore, there will be nothing like a loss of £1,500,000 because a considerable portion will be recouped under Schedule D. Pending the abolition of this tax, I suggest to the Minister that the time has come to make some concession to the independent homeowners by restoring the repair allowance, which I think was abolished at some time during the '30's.

Major de Valera

There is undoubtedly a need to review the whole income-tax code now. Unfortunately, I feel that it is a problem coming for examination not at the best time as there is a certain urgency in regard to other problems which affect this one. But I suppose we have got to take it as it is. In regard to this examination, the first thing I would like to say is this: the examination should be on a practical basis with a view to definite implementation. It would not be sufficient to draw general conclusions. In fact, many of those have been drawn for us already. It is a question of translating into practical fact and practical legislation provisions for collecting the taxes that are required. I am not going to go so far as to say the whole question of income-tax in principle should be examined, but maybe it should.

The taxation of industry has been dealt with fairly fully in the report which has been mentioned and I do not intend to delay on that. There are other aspects of the matter as well as that. I think there is something in the contention that the present incidence of taxation where industry is concerned has a certain inhibiting effect and that there is a case for revising it, and particularly for revising it with a view to stimulating development and the replacement of plant.

There is, however, the question of the incidence of taxation on the community as a whole. The last Deputy spoke of a class of people with whom everybody has a great deal of sympathy—the lower paid salaried classes, the so called white-collar workers. Up to about ten years ago workers in other grades were not taxed because of their rates of pay. Tax did not attach to them; there was no question of collecting it from them and, consequently, they were not so interested in the question of income-tax except in so far as income-tax was advocated by certain people, who professed to represent them, as a mode of getting money off other classes.

That situation has changed very much in recent years, seeing that workers in these categories are now faced with the problem of taxation. Nevertheless, the load has tended to fall on the middle register even more strongly than it did before. One finds that the clerical worker is completely unable to avoid the payment of tax, whereas in other classes of employment the incidence of income-tax is more elastic. The question which must be worked out in the national interest and in the interest of justice is how much must be taken from that class of worker in comparison with other classes. The answer will not be found merely in an adjustment of the scales.

The rates of pay of people employed in manual labour, even of a casual sort, are now, in most cases, sufficient to attract the attention of the Revenue Commissioners so that tax is payable in respect of them. Nevertheless, there are problems of collection and so forth that need attention. First of all, an outcry in respect of income-tax is coming from a quarter from which it did not come before. I do not think that calls for much comment, as it simply means the problem of finding the money for all of us to live in the community is being spread over a larger number in the community. In the second place, it must be looked at from the point of view that it means a levelling up at one end or a levelling down at the other in incomes, so that the problem of providing the money for our own housekeeping is being levelled out over the whole community more evenly.

This involves another type of administrative problem—how is this income, particularly in respect of casual workers, particularly in respect of certain manual work which may be intermittent, to be provided for? The pay-as-you-earn system has been advocated, but I think it was Deputy Morrissey who pointed out that even that solution is not without its disadvantages. Some solution needs to be found, particularly in reference to the permanently employed worker who has no escape from paying income-tax. That is the fair play side of it, but the other side represents the point of view of the worker who, in various ways, is earning a certain income that is taxable but in respect of whom the tax return is not made equally but by divers successive employers. Many of us know of such cases. That worker's taxable income may be traced down and the man may find himself faced with a large debt to the Revenue Commissioners. He then has a problem. I know of such problems and I know of cases where people have emigrated to escape them.

Mr. McQuillan

They go off to England straight away.

Major de Valera

I have known of such cases. In fairness to the rest of the community and to the people themselves some adjustment is needed there. If a man finds himself faced with a bill of £200 or £300, if he is a single man he is likely to say: "My fare is only so much. I am off". I have not yet heard of such people coming back under other names to repeat the process, but that would seem to be the logical thing to happen under this system. That is a fault in our system and what the answer is I do not know. This "tax evasion" does mean a disproportionate division of the burden, as the last Deputy pointed out.

So much for the narrow viewpoint in respect of income-tax—that is, thinking of it as income-tax and of the ordinary mechanics of collecting it and thinking in terms of adjusting the system. Over all, there is another side of this which affects both industry and farming. The last Deputy complained about the farmers. I do not think we should lose sight of one important fact in respect of farmers. That is, that we all live on the farmers. It is not inappropriate that I, representing a city constituency, should point that out. As a community we live and depend on the farming community. Without going into a general debate on the subject, our urgent problem is to step up our production in our main industry, agriculture, and also we must be aware of the fact that it is the exports of our farmers' produce that enable us to maintain the standard of living we have. Whether we be salaried workers, workers on a building scheme, businessmen or professional men, by and large, with the sole exception of such other industries as are exporting—we have one or two significant exports as well as agriculture—our agricultural exports are our mainstay. It is by virtue of our agricultural exports that we maintain the standard of living we enjoy and that the money that is left after the deduction of income-tax is of any value to us at all.

I think it is very proper to point out that we have heard cases argued, which no Government have completely accepted, for the complete derating of agricultural land. Certainly, on all sides there is agreement on the importance of giving such reliefs and encouragements as are given to the farmers. I am not so sure that, because of their primary importance, similar principles should not rule in our taxation code. That principle may be extended also to such industries as are earning for us as a community. Those are industries which are producing for export. If you wish to include them in that category I will not quarrel because both are in a vitally important position, taking economics by and large, in the world in which we live. That being so, I for one would have no hesitation in subscribing in principle to the idea that these particular activities may call for a preferential, if you like to use that word, or a privileged treatment. In fact, it is not a privileged position. It is simply good business for the rest of us.

I would like to warn the Minister for Finance, when he comes to set up a commission for the examination of a problem of this kind, that he does not approach the question purely with an accountant's viewpoint. It is unnecessary to talk about the academic approach because I do not think we need worry about the academic economists, who, so far, do not appear to have deduced anything worth while. In getting down to the practical business of running the country, the Minister for Finance, is, to some extent, in the position of the accountant of the firm. That is a very vital and important position. Life is a dynamic thing and we have to take into the business of running the country the managerial functions of the Minister for Industry and Commerce and the Minister for Agriculture. These are equally important in this problem, to mention only two of the other important factors. The purely accountant's approach to this matter would be extremely dangerous. I think the matter should be approached from the larger point of view, from the point of view of the necessity for stimulating our exports and of producing towards that end, the necessity for stimulating activity at home here with the very particular objective of cutting out all importations from abroad, whether necessary or unnecessary, in any category where we can produce them at home, thus conserving our purchasing power abroad for the essentials which, in modern times, we must import to maintain our standards.

If the Minister, and I hope he will, seeks the co-operation of this side of the House in this matter, every co-operation will, as Deputy Lemass said, be given to him. There is the necessity for looking into this problem and for getting a practical result from the examination of it. In doing so, I would ask the Minister to keep the managerial aspect of the problem in mind as against the purely arithmetical or accountancy approach to the problem.

How many businesses have had this experience; they have salesmen out in the working territory opening accounts or selling some line. They have an accountancy department collecting accounts. If the accounts department and the sales department are not properly co-ordinated, and the accounts department is too greedy to get in the money, it sometimes can happen that the accounts which the salesmen open are closed down because the accounts department is in too much of a hurry to collect the money.

In the light of that, then, where the farmers are concerned, I do not think that we should be led into a controversy as to who, or what, are paying in relative proportions. By all means, let us get fairness and justice but one must look at the other fundamental aspects of the country's life as well. It will not help the people who are in receipt of salaries and wages to divert their attention from what is the real position to the discrepancy between what the farmers' position is and what their position is. There is something much greater than that involved and the less said about that aspect of the subject, the better.

Mr. MacEntee

I should like to endorse what Deputy Major de Valera has said about the undesirability of trying to set one section of our people against another, not with the object of trying to improve everybody's position, but with the object of loading everybody with an equal burden. I am sorry that Deputy Byrne took the line he did in regard to taxation of our agricultural producers. With that exception, I find a great deal to admire in his speech and it was a very valuable contribution to this debate. We sometimes forget that farmers have one good year, and perhaps two, out of three. They have one good year and they have long intervals of what some of them regard as a disastrous peace. We are emerging now from an era when the farmers enjoyed a sellers' market. Our farmers, in particular, are facing very serious competition abroad.

I think Deputy Byrne vitiated his argument by citing as a general one a solitary case of a well-capitalised and well-managed farm that has been in the hands of one family for many generations and telling us of the enormous profits made. I would suggest to Deputy Byrne that he look up the agricultural statistics and see how many of our farmers own enough land to provide them with anything more than a mere subsistence. There is no use in trying to get, out of a desire to impose upon everybody the same sort of imposition as income-tax payers, are subjected to, from farmers, year after year, a return under Schedule E. Many of them would find it a task beyond their capacity to do so. Even if everyone were compelled to do so, the return to the Exchequer would be insignificant in the extreme. As Deputy Egan, and some others, in their reservation to the report, have pointed out, the probabilities are that probably not more than 10, and certainly not more than 20 per cent. of the agricultural producers would fall to be assessed for income-tax at all.

Mr. P. Byrne

Surely the important question is the principle of social justice.

Mr. MacEntee

If we are going to deal with the administration of this country with regard only to that aspect, and not to the practical effects which will follow from our actions, I am afraid we shall find ourselves in a very queer position. I am not aware that any businessman operating his business operates it with regard only to the principle of social justice. He looks at the practical side of things and says: "Is it worth my while to bring everybody inside the net? Is it not much better that I should let these small fish escape because if I try to catch them the cost of doing it will be very much more?" That is the way in which a Minister for Finance dealing with this business in a practical way has to look at it. I know, of course, that there are politicians imbued with a certain political philosophy to whom the landowner is little better than vermin, something to be exterminated, but we have not evolved to that degree yet in this country.

Apart altogether from that, there is something to be said for cherishing our farmers, for treating them with some greater consideration, perhaps, than we extend to other producers in the community. They are the one section of producers who have to sell in a very highly competitive market. They are the one section of producers who are subject to all the vicissitudes and risks of the weather. They are the one section of producers who have to work hard, no matter how they may feel from day to day, and they are also the one section of producers whose terms of production—that is not precisely the phrase I want to use—is a long one. The farmers do not just walk into a shop and having opened it say: "I will have ten, 12, 20 or 30 individuals coming in here. I have everything put on my shelf and I will sell at a profit to-day." Their transactions are long term speculations; they have to look ahead. They have to take a gamble with all the unforeseen circumstances that may arise as between one year and another and even between one month and another.

Surely what has happened in regard to cattle prices within the last four or five months should make us all realise that the agricultural community cannot be treated precisely the same way as you can deal with those connected with ordinary manufacturing industry or ordinary commercial operations. Therefore, even for that reason alone, there is no justification and no sound ground for trying to equate the position of the farmer with that of an industrialist who enjoys in this country a very highly protected market or with that of the worker who has his conditions of employment set out for him and who has a whole corpus of social welfare legislation to betide him over bad times if he should be called upon to endure them.

There is another aspect of this problem on which it would be well if we pondered. We all know—it is a commonplace of our ordinary economic discussions—that our agriculture is under-capitalised and the fact that it is under-capitalised is manifested by the many demands we hear to provide our farmers with cheap capital. Would somebody tell me what is the rationality of collecting something from the farmers in the form of income-tax at very considerable expense, having regard to the return which would be received, and then giving it back to him at further expense in the form of cheap loans or heavy subsidies? Is it not much better that we should, for the time being, until Irish agriculture has developed to the situation in which it can compete equally in the world market with products of those economies which have developed over generations and which have not been subjected to the vicissitudes of our Irish farmers, allow whatever profits the farmer may make to remain in his own hand to fructify?

Mr. P. Byrne

To stagnate in the banks.

Mr. MacEntee

I beg to differ with the Deputy. It may be that our farmers are not so prone to invest as they were during the periods 1920, 1921 and 1922, the period which I remember very well when our farmers not merely took their money out of the banks but went into the banks and involved themselves very heavily with the banks, and as a consequence of that, in 1930, 1931 and 1932, farms were lying derelict because the farmers could not meet their obligations to the banks or even the Land Commission. Our farmers have long memories; they have to have long memories. They remember the boom conditions that existed during the war of 1914-18 and afterwards, and they remember, too, how because they were filled then with the spirit of optimism, they wanted to acquire more and more land, wanted, if you like, to farm more progressively, and involved themselves in these heavy commitments that they were unable to face.

I am not saying that they are very wise in accumulating deposits in the banks. It might be better—I think it would be better—if they took them out and reinvested them in their own industry. But I am sure Deputy Byrne knows as well as I do that these deposits do not remain stagnant in the banks. They are going into Irish manufacturing industry. If the farmers do not use their own money, other people are using it for them. Let us look at this thing in its proper perspective; perhaps it is regrettable from the point of view of Irish farmers that they do not employ more of their capital in their own land and in their own industry, but if they did the people who are trying to live in the cities would be crying out because we should find it more difficult and more expensive to get capital for our manufacturing industries. However, what I intended to say when Deputy Byrne set me off in this digression was that from the point of view of the general community, and it does not matter which side of the House I would be on——

Mr. A. Barry

You are nearly on this side.

Mr. MacEntee

I am, and if you will only go to the country I will be. It is much better that, instead of going after the Irish farmer merely to put him in the same miserable plight as the urban income-tax payer, we should allow the money to remain in the Irish farmer's pocket. It would be best of all if he would use it on his own land and in his own industry but, if he does not use it on his own land, there are other people who will come along and use it for him, and are using it for him. It is a wrong approach to this whole question to say that we must, because we are groaning under the burden of income-tax, bring in the farmers and make them groan as well. I do not think that is the sort of angelic chorus we want.

Income-tax is a rather dubious tax in some cases because it is essentially a tax on production. It is a tax which discourages people from working as hard as they otherwise might. No tax, let me say at once, is a virtue. Taxation has nothing but disadvantages, by and large. I said that income-tax is an objectionable tax fundamentally because it is, in its present form, a tax upon earnings, a tax upon labour, a tax upon industry and a tax upon enterprise. From that point of view it is fundamentally unsound but as against that you have other taxes, indirect taxes, which are taxes upon expenditure and, if it were not for income-tax, we would speedily find ourselves in the position in which we were, before the Fianna Fáil Government changed the situation and freed tea and sugar from taxation, of being taxed upon foodstuffs. Therefore, since we have to get the money in some way, we have had to have recourse to the fact that we cannot get all the money by taxing expenditure and we have been forced to fall back on the fact that, where earnings seem to be large by comparison with the general average, we should take from those who receive this much larger than average —I shall not use the word "normal"— remuneration some part of what they earn.

But we have gone a long way from regarding income-tax as being merely a supplement to indirect taxes, a supplement to taxes upon expenditure. It has now become one of the principal elements in our tax structure and it has become that to such an extent that it has now evolved into what is in my view an inequitable tax, inequitable because it has become so burdensome upon a comparatively small proportion of our people. If the Minister for Finance were in a position to do so, I would re-echo what the Parliamentary Secretary said last year: the best way of helping this economy would be to reduce the standard rate of income-tax.

Mr. O'Donovan

But the Deputy increased it in 1952 by 1/- in the £.

Mr. MacEntee

That is quite true. But why did I increase it in 1952? Because the previous Coalition should either have reduced expenditure or, failing that, have increased the rates of taxation; so that the Budget would balance and expenditure would be paid for.

Mr. Sweetman

The Deputy knows very well that the deficit he had was of his own making.

An Leas-Cheann Comhairle

Order!

Mr. MacEntee

The Minister for Finance and the Parliamentary Secretary can surely be patient for a little while. We did this in 1952 but, after all, if it was not necessary to do it in 1952 why was it not reduced in 1955 and why has it not been reduced this year?

These are not the matters upon which I really want to speak. I was dealing with the question of income-tax but the interjections of the Parliamentary Secretary—I do not know why I should be always following this will-o'-the-wisp—led me off into this by-path. I said income-tax is a tax upon effort, upon enterprise, upon earnings and upon work and it is, therefore, a tax which is a discouraging tax.

One of the very significant things that I find in the report of the committee of inquiry which was appointed when I was Minister for Finance is the extraordinary figures which will be found on pages 75 and 76 of the report. What do we see there? We see, first of all, that under Schedule D, which may be described roughly as taxation upon profits and ownership, whereas in 1938-39 £2,950,000 was collected from all these sources, representing 58.1 per cent. of the total yield from income-tax, in 1954-1955 the yield had increased to £13,480,000, representing 63.1 per cent. of the total yield from income-tax and representing a yield which, expressed as a percentage of the 1938-39 figures, was 457 per cent. Similarly, under Schedule E, which as everybody——

Mr. MacBride

Would the Deputy repeat the last figures he gave us and show how he gets the increase?

Mr. MacEntee

457 per cent.—the yield expressed as a percentage of the 1938-39 figure, which is the only way in which the significance of it can be brought out. We were collecting 457 per cent. more under Schedule D, than we were in 1938-39.

Similarly, in regard to Schedule E, tax on earnings, in the year 1938-39, the total yield was £915,000, representing 18 per cent. of the yield from income-tax. In 1954-55, that yield increased to £5,713,000, representing 26.8 per cent—we may say 27 per cent. That is an increase of 50 per cent. in the fraction of the whole which Schedule E represents. But, expressed as a percentage of the 1938-39 figures, the yield was 622 per cent.

It is quite obvious that, under circumstances like those, when one sees these figures, it is easy to realise why it is that people are not disposed to earn overtime. There was a time when people would like to work overtime. There was a time when people would like to earn a few pounds more than they normally earn. We realise now why most people are reluctant almost to increase their earnings, particularly if these are earnings which are inevitably going to come under the review of the tax collectors.

Apart altogether from that, there is an obvious element of social injustice because, after all, while the percentage received from Schedule E tax has gone up by 50 per cent.—there is a 50 per cent. greater proportion of the total yield from the tax than in 1938-39— the earnings upon which this tax is assessed have declined very substantially in real value per unit of currency. That is shown in Table 47 on page 75 where we find that, although the exemption rate for earned income has jumped from £150 in 1938-39 to £240 in 1955-56, in terms of 1938 values it has in fact declined to £102.

It is difficult to try and convey what that means. It means, as far as I can follow it, that if we were suddenly to be transported backwards in time and we were to be living again in 1938, we should, instead of having £150 of earned income exempted, have £102 of earned income exempted from income-tax. Similarly—and perhaps this is a bit easier to explain—if I were a single person living in 1938-39, I should be getting an allowance of £125. That allowance has been increased in monetary terms to £150. But if I were back again living in 1938 then, in terms of 1938 values, what I am getting at the present day would only be worth £64 to me. The same thing is true in regard to the married allowance. Though it looks in terms of money to represent a substantial increase over the allowances given in 1938-39, in real fact it is a little bit more than half of what a married person would have got in 1938-39.

One can go entirely through Table 47 and everywhere one will see that, in relation to every other tax which we are imposing—and not excepting the taxes on beer, cigarettes, tobacco and other things—our income-tax imposition has become progressively heavier and is falling with particular severity upon the employed person. I do not want to go on here all day about this, but there are many other figures which would be worth pondering over in this.

The main plea I am going to make to the Minister is this. I think we should have this examination of income-tax as it affects all classes of taxpayers, but we should particularly have it in relation to its incidence upon those who are employed and upon those who are dependent or whose income is mainly derived from the carrying on of a business or profession, whether that income accrues to them as the owner or as the employee in it.

In addition to that, we should consider whether we have not reached the stage at which income-tax has become positively detrimental to our continued economic development. It is, at its present rate, highly inflationary. It leads to all sorts of abuse. I do not want to try and shirk any part of the personal responsibility I may have had for the fact that it is standing at 7/6; but will somebody tell me what very great difference is 6/6 compared to 7/6, when you are considering income-tax as an inflationary factor in an already inflationary situation?

Mr. O'Donovan

Yes, it is much more serious.

Mr. MacEntee

To my mind it is not. I think that you have already, with the rate of 6/6, long passed the danger line, and that, if we are going to try and get any sort of control over our general price level and if we are going to try to effect it in any way, one of the first things you must consider seriously is the effect of income-tax upon all sorts of costs—and not merely on all sorts of costs, but upon all sorts of, perhaps, unjustifiable and improvident expenditure.

These are the things which I would suggest to the Minister. I think we have reached the stage at which there is no use in talking now about what happened in 1947 or 1948, about what happened in 1951, 1952 or 1953. I believe we are facing a very serious situation in this country and, fortunately or unfortunately, perhaps to the relief of many of us, it is the Government which made the promises and produced the situation that now has got to solve the problem.

Mr. McQuillan

Most of the discussion on this section has centred around the possible setting up of a committee of inquiry into the income-tax code generally. I have listened very carefully, as one who has no financial training whatever, to learn from the speeches made by men who have had experience in this House of dealing with financial matters and have been charged with the responsibility of guiding this State for many years. I felt that the discussion was rather fantastic at the present time. Deputy MacEntee, in his closing remarks, in the last sentence he spoke, painted a true picture of the situation. In that short sentence he indicated that he realised that a serious position was facing this country, and, rightly or wrongly, he said, he was more or less relieved that it was the present Government who would have the responsibility of meeting that serious situation.

The position is that all Deputies are anxious for an inquiry to be held in order to establish whether the present system of imposing and collecting income-tax is fair and just to all sections of the community. We had, on the one hand, speakers suggesting—I think, Deputy Morrissey and others— that, as far as the income-tax code was concerned, it was preventing the producers from expanding. It was harsh, and there was no incentive for production on the part of the producers. Deputy Morrissey did not tell us to whom he referred as the producers. Was he referring to the agricultural industry, or to the industrial arm that has been set up here in the last 30 years? Other speakers spoke about the harsh imposition income-tax means to the salaried and wage-earning classes, and, naturally, the general feeling throughout the House was that, so far as the farming community was concerned, they could not be touched at all.

At this stage, I would like to pay tribute to Deputy Paddy Byrne for what I think was his maiden speech in this House. He gave a very clear, concise statement setting forth his own personal views. Perhaps Deputies as a whole did not agree with his findings and his solutions, but nobody can contradict the figures and facts he has given. I shall come back to that again having arrived at the position that all sections of the community are clamouring for investigation, that they have complaints regarding the imposition of income-tax and want to sit around the table and take a bigger bite out of what Deputy Aiken describes as the national loaf.

As far as I can see, judging by figures made available to us in the last ten days, figures of the most grave import for our future as a nation, the inquiry that is to be set up to examine income-tax will have very little to examine if we continue losing our people at the rate we have lost them in the last five years. It is ridiculous to talk about dividing the cake in more equal portions when the people who should be producing are decreasing in numbers. If we face the situation bluntly and seriously, from that point of view, we would not be arguing here for a day on who should carry another 6d. or be relieved of 1/- with regard to income-tax; there is a far more serious matter facing us, and that is production and the stopping of emigration.

Deputy Morrissey made it quite clear that his view was that some people had or would have to work for the Government for six months of the year at the present rate of taxation, and that nobody felt like doing that. The suggestion, I presume, he is making is that the income-tax burden should be relieved as far as the industrial groups are concerned. On the whole, those engaged in industry for the past 30 years have got a fair crack of the whip. I do not think it can be denied that all Governments were sympathetic and helpful to all those who wished to establish industrial concerns in the State. We had the tariff walls, quotas, State loans, guarantees of all sorts, to those anxious to set up, and to this day protection is provided and foreign goods are not allowed in here except under certain circumstances; they are not allowed at any rate to do harm to what is produced within the State. Are we to take it that they are not satisfied with that protection, and that those industrialists, to expand further now, want further reliefs with regard to taxation? I think they have got a fair crack, and they should not press too far on this particular issue.

Deputy Vivion de Valera spoke about stimulating production as far as industrialists were concerned. I remember within the last fortnight I happened to go into a particular hotel. There was a large gathering there of prominent businessmen and industrialists from all over Ireland. While I was waiting for my meal which was being prepared, I went into the lounge and sat down and watched. In the course of that wait of three-quarters of an hour, quite a number of those gentlemen had refreshments at the bar, and for curiosity I just counted how many Irish whiskeys were sold in that three-quarters of an hour. There were three Jamesons sold, and 14 Scotch.

An Leas-Cheann Comhairle

How does this arise on the section?

Mr. A. Barry

It does not arise. It goes down.

Mr. McQuillan

It does, Sir. Those are the people who are asking for relief with regard to taxation in income-tax and so forth, who are saying that the burden as it stands at the present moment as far as income-tax is concerned, lies too heavily on them. They want that burden reduced. Not alone do they want it reduced, but they want protection for their industries. But when it comes down to setting a good example of supporting home industries they are prepared to spend their own money on something which comes in from outside. They cannot have it every way. I merely told that little story as an example of the mentality of possibly many of those people who want jam on it in this country.

I think there is quite a lot to be said for the case stated by both Deputy MacEntee and Deputy Byrne with regard to salaried groups and wage earners. There is no escape for them at all, but they would be satisfied if they did not find others every day of the week, escaping the net, who should be brought into the net as well. Their biggest criticism is the fact that their next door neighbour is getting away with something because loopholes are available or the inspectors are not aware of the situation with regard to the individuals concerned. As a matter of fact, apart from anything else, I think this House should set a good example. I do not know whether I am in order in stating this, but the House that imposes income-tax, if it was only for the sake of setting a good example, should be the first to pay the income-tax imposed on the Dáil allowances or the Dáil salary. In my opinion, there should be no such thing as freedom for one section in this House to tax people outside while not being liable for income-tax on what they receive as members of this House. They should set the good example in that regard. Perhaps there is no harm in setting up a committee of inquiry into the income-tax code. There was a commission that inquired into the problem of emigration for a number of years, but we do not see much sign of their report being implemented by the Government.

An Leas-Cheann Comhairle

That has nothing to do with this section.

Mr. McQuillan

It has this to do with it, a Leas-Cheann Comhairle, that this question of committees to inquire into this business is sheer waste of time. There is nothing but committees being set up to examine problems in this country. I do not know whether it is a fair comparison or not, but this House is like Nero fiddling while Rome burns. This House is discussing petty little matters while the life's blood of the country is leaving it every week. No real steps are being taken by this Government, or were taken by the previous Government, to deal with the major evils that beset us.

Deputy Byrne mentioned in the course of his very interesting speech that the farming community subscribe very little, as far as income-tax is concerned. He gave figures that should interest this House with regard to holdings. When those figures are given by a city Deputy like Deputy Byrne, possibly more heed will be paid to them and he may impress the House more than I would, although I have given the very same figures with regard to holdings for years past in this House.

The position at the moment is that there are 11,600 odd holdings in this country with a total poor law valuation of £2,250,000 and there are almost 280,000 holdings with a valuation of slightly less than £2,000,000. In other words, 11,600 holdings represent 3 per cent. of the holdings of Ireland.

Mr. MacEntee

Three per cent. in area?

Mr. O'Donovan

Of the number.

Mr. McQuillan

Three per cent. of the number have a valuation of over £2,000,000; 70 per cent. of the number of holdings have a valuation of less than £2,000,000. That is the situation and there is agricultural stagnation. Let us face it from that point of view.

In spite of the so-called tremendous work done by land re-distribution programmes and so forth, no real impact was made on the group in the valuation scale over the £100 mark. It cannot be denied that the small man in the State has to produce in order to live. His methods may be bad. I shall not develop this, a Leas-Cheann Comhairle, except to come to the point that Deputy Byrne made. A small man has to produce in order to rear his family. The man in the over £100 valuation group is not paying income-tax. Deputy MacEntee says that he is a producer, that we all depend on the farmer, that he should not have to pay income-tax, that he should be allowed to plough this money back into production and to fructify. What do we find? We find that the money is deposited, perhaps, in the banks. Nobody sees where it goes then. Perhaps, if the Minister for Finance cannot get money for a national loan, he puts the squeeze on the bankers and gets some of that. Perhaps it is invested, without the farmer realising it, in British securities.

My point is that, as far as the farmer is concerned, if he feels like putting it in the bank, that is fair enough. As long as he knows it is safe and that he can draw a certain amount in interest rates, he does not mind if the banks give it over to the Government for reinvestment within the State. There is no need to ask the farmer to withdraw it. We know perfectly well that the farming community, those with money, are a conservative people and slow to change their attitude and mentality. They regard the bank as the safest place in which to put their money.

Mr. Donegan

The trend of this debate seems to have been as to whether or not there is a sufficient measure of taxation in regard to the farm or the factory. The speakers on both sides of the House—I should also like to draw attention to Deputy McQuillan's position speaking from the centre—more or less talked as if Ireland were the universe, as if there were not any outside influences, as if the Minister for Finance had no problems and as if this country could levy taxation as it liked.

The first thing we must remember is that Ireland is not the universe; that Ireland itself is a country which is, I suppose, affected more than any other European country by the winds of economic storms which may come from anywhere, America or England. For that reason and having regard to the peculiar structural framework of our economic set-up, it is rather silly to hear people say that industry bears too great taxation or that farming does not bear enough. These ideas must, of course, be examined by the Minister for Finance, the Department of Finance, the Department of Industry and Commerce and the Department of Agriculture minutely before anybody can come along and make broad sweeping statements that may probably hit the headlines in to-morrow's papers, gain or lose votes for one or other of us here and may please or displease certain sections of the electorate.

The thing we must remember is that successive Ministers for Finance, no matter from what side of the House they came, had a problem which was that Ireland had fought all her wars over a period of 700 years because of land. The wars were the land wars. Secondly, beside us, within a few hours distance for goods as well as passenger traffic, there was a huge empire which should, I think, be properly termed an industrial empire.

Of course. At the same time, the man who is earning £500 a year in Dublin, while he pays income-tax, is not paying on the same valuation. He is merely paying on his small shop, but he is not paying on what I regard as the farmer's stock-in-trade, his land.

Similarly, the industrialist can put up a case that he is paying certain taxes. If his company is a limited company he can point out that he is paying 7/6 in the £ on every £ he earns. Of course he is, but so is every businessman in every other country in the world—and the businessman here is enjoying a 33? per cent. protection and 50 per cent. protection if he competes against a rival on the Continent.

In my view, all these things are what I would call "pressure group arguments" and pressure group arguments would be an irritant to every politician in this House at some time or another, irrespective of the side of the House on which he might be sitting. We must say to all these pressure groups that any case they may put up to the Government as it stands to-day will be examined, not in the light of the pressure group argument that highlights the silver lining of the cloud that hangs over the other and the black cloud that hangs over themselves, but in the light of the common good. In my view, this Bill has examined the matter in the light of the common good. No section of the community can say they have been treated badly or roughly or have been forgotten.

I am sure that when I sit down there will be plenty of Deputies to stand up and introduce again arguments in favour of their own constituency or their own cartel, but it is not right to do so because we are here not as agitators but as legislators and, please God, we will always be here as such. I believe this Bill meets the difficult circumstances that exist as well, as comprehensively, and as kindly as possible, and I congratulate the Minister upon it.

Mr. Corry

Any Minister for Finance has got to find the wherewithal to carry on for the 12 months. The trouble in this country is that we have now piled up so much dead money—so much money that must go without bringing any return—that the burden has become too heavy on every producer.

An Ceann Comhairle

I have given the Deputy a good deal of latitude but if that is the way in which he proposes to address himself to the section, I shall have to ask him to resume his seat.

Mr. Corry

I shall not say much more. I have listened here for the past hour to both Deputy Byrne and Deputy McQuillan and also to Deputy Donegan, and I think the best thing I could do now is to resume my seat under the circumstances, until I get a change of Government, so far as this House is concerned.

Mr. Allen

Section 1 of the Bill provides for income-tax in the coming year. I think I would be in order in suggesting that one of the points in the programme of the present Minister for Finance was that income-tax would be reduced and I think that was one of the arguments that helped to put him on the other side of the House. I remember that in the 1952 Budget when income-tax was increased by the Fianna Fáil Government we had weeping and gnashing of teeth by those who compose the present Government and those who supported it.

I believe that pledges were given at that time that if the electorate supported the members of the then Opposition—which unfortunately for the electorate since, they did—income-tax would be reduced. I am asking the Minister for Finance when will the Government carry out that pledge to the income-tax payers? It was pointed out at that time that the wage earners, the white collared workers and the salaried workers were carrying an unfair burden. Yet, this is the second Budget of the present Minister and of the present Government and there is no sign whatever of that El Dorado that was promised to the income-tax payers. The designate Minister for Finance, on the eve of the last general election, went on the radio and promised that if the people gave support to his Party and to the satellite Parties, he would guarantee them that £10,000,000 would be saved. Why is part of that £10,000,000 not now being devoted to relieving the burden of the income-tax payers? On that occasion, Deputy McGilligan was like King Midas of old who was reputed to have been able to turn everything to gold. According to the Taoiseach he was the principal financial genius of the Fine Gael Party; he was a Rothschild and a Reginald McKenna and all the other financial geniuses of the world in the past 100 years rolled into one.

There has been no relief given to income-tax payers. The main argument here this evening has been as to who should and who should not pay income-tax. The people who pay say the other fellow should pay, and vice versa. Deputy Byrne, making his maiden speech, spoke of the immorality of the present Government because they do not make all the farmers pay income-tax. I think the Minister for Finance would be able to tell Deputy Byrne that all those farmers are paying substantial income-tax, that, if they are not paying it directly as income-tax on land, they are paying it in many other ways. Deputy Byrne is surely aware of that.

Of course all this is good propaganda in the City of Dublin where not a single acre of land is owned by the electors. It is fine propaganda in Deputy Byrne's constituency, or in any other city constituency, to say that farmers should be taxed, that the farmers are millionaires and should not be allowed to get away with it, while the poor slaves in the cities must pay for everything. That is fine stuff and the more the latest recruit to the inter-Party Government makes use of it, the better from our point of view. We will make full use of it throughout the country.

I want to suggest that, had the Minister and the Government carried out the promises they made to the people two years ago, income-tax would now be reduced to 5/- in the £, because of the fact that overall revenue is so much greater with £10,000,000 additional taxation coming into the Exchequer, as well as £4,000,000 from special taxation. I hope that before this Bill is passed the Minister will mend his hand and bring in amendments to Section 1, even on Report Stage, providing for reduced taxation. It will ease his mind and ease the minds of the other city Deputies and let them realise that the agricultural community are going to stand up and fight their corner, and that no pressure group in the city, with the newspapers behind it, will smash the agricultural community completely by its efforts.

Progress reported; Committee to sit again.

Dáil Éireann debate - Wednesday, 13 Jun 1956