Finance Bill, 1957—Second Stage.

I move that the Bill be now read a Second Time. As members of the House are aware, the main purpose of the Bill is to incorporate in legislation the Financial Resolution passed by the Dáil on Budget and to make ligislative provision, where that is necessary, for the other budgetary proposals announced, apart from those for which separate legislation has been promoted, that is, increase in social assistance payments and in children's allowances and also the increase in certain charges and the imposition of new charges in connection with the health services. The Bill also contains a number of additional provisions which were not mentioned in the Budget and I shall explain these as I go along. I propose to go through the sections and, in a general way, to outline their contents and purpose.

Section 1 is the customary section imposing income tax and surtax for 1957-58 and continuing previous enactments. It corresponds to Financial Resolution NO. I Passed on Budget Day.

Section 2 increase by 25 per cent. the existing wear and tear rates on plant and machinery (other than vehicles), with effect as from the year 1958-59.

Section 3 provides a tax relief where a person contracts to make annual payments to a university or college in the State, for a minimum period of three years, for the purpose of enabling the university or college to carry on research.

Section 4 is designed to give effect to the proposal by the Industrial Credit Company, Limited, that the relief under Section 7 of the Finance Act, 1932, should be extended to all securities issued to the public—and, subject to coditions, to securities otherwise issued—by Irish manufacturing concern since 1932. The relief, which is a tax remission of 20 per cent. on dividends and interest from the securities to which Section 7 applies, will, in so far as it relates to securities now being brought within the scope of the provisions, be granted with effect as from the 6th April, 1958.

Section 5 gives effect, for income-tax purposes, to the Budget proposal (a) to increase from 50 per cent, to 100 per cent. the tax relief in respect of profits from increased exports of manufactured goods and (b) to grant an alternative tax relief of 25 per cent. in respect of profits from exports of manufactured goods. The provisions will take effect as from the year 1958-59.

Section 6 empowers the Minister for Finance to direct that interest on stocks which may be issued for public subscription by Bord na Móna may be paid without deduction of income-tax. Tax on the interest will be assessable upon the entitled receiving or entitled to it.

Section 7 and the Schedule increase the rates of customs and excise duties on tobacco. The main rate of customs duty on unmanufactured leaf of raised by 3/2 the l. from £2 2s. 9d. to £2 5s. 11d. the lb. and the various other rates are increased correspondingly. The section also provides for an increase in the rates of rebate allowed on hard-pressed tobacco, (viz, plug, roll, twist, coil and bar) from 12/4 to 12/10 the lb.

Section 8 impose a special excise duty of 3/2 the lb. on duty-paid stocks of tobacco held by tobacco manufactures at 5 p.m. on 8th May, 1957, and provides for deferment of payment of this duty to 1st January, 1958.

Section 9 increase the customs and excise duties on beer. The main rate, i.e. the rate of excise duty on homemade beer, is raised from £9 4s. 6d. to £10 5s. 6d. the standard barrel, that is by £1 1s. The custom rates are increase correspondingly.

Section 10 increases the rate of customs duty on mineral hydrocarbon light oil (petrol) from 2/3¼ to 2/9¼ the gallon and the rate of customs duty on other oil (mainly diesel) when used in road motor vechicles from 1/8 to 2/2 the gallon but excludes from the latter increase diesel oil used in buses operating on licensed passenger services. Corresponding charges are made in the rates of excise by on petrol and diesel.

Section 11 provides for repayment of any custom or exicse duty paid on hydrocarbon (heavy) oils which are received unused by a manufacture of hydrocarbon oil and used by him as material for further manufacture.

Section 12 provides new rates of entertainments duty in the case of cinemas.

Section 13 makes certain amendmetns, which experience has shown to be desirable, in the provisions of Section 17 of the Finance Act, 1936, relating to the admission free duty of household effects imported on transfer of residence.

Section 14 confirms the three Emergency Imposition of Duties Orders relating to the Special Imports Levies which were made in April, 1957. These Orders abolished the Special Import Levies on a number of articles and also provided for the grant, in certain circumstances, of licences for the importation of goods free of the levies. The Orders also provided for certain changes in the duties on unprinted paper and on aggregates of parts of motor cars imported for assembly in this county.

Section 15 provides that, in the case of stocks etc. which are now, by section 4 of the Bill, being brought within the provision of Section 7 of the Finance Act, 1932, the corresponding relief from Estate Duty in respect of such stocks, etc., under Section 21 of the Finance Act, 1956, will not be granted expect in respect of the death of a person dying on or after the 6th day April, 1958.

Section 16, gives effect, for Corporation Profits tax purposes, to the Budget proposal (a) to increase fro, 50 per cent. to 100 per cent, the tax relief in respect of profits from increased exports of manufactured goods and (b) to grant an alternative tax relief of 25 per cent. in respect of profits from exports of manufactured goods. The provisions will take effect as from the year 1958/59.

Section 17 provides for the granting of an investment allowance of 40 per cent. on capital expenditure incurred on or after the 6th April, 1957, on the purchase of a new ship for the purposes of a trade.

Section 18 enacts that the investment allowance will not be taken into account in computing the annual deductions allowable in respect of wear and tear.

Section 19 provides for the "carry-forward" on an investment allowance (or part thereof) when there are not sufficient profits to enable full effect to be given to the allowance in any one year.

Section 20 is a technical provision defining the "basis period" by reference to which the investment allowance is to be granted.

Section 21 provides for the withdrawl of the investment allowance, and the substitution therefor of an initial allowance, in any casae where the ship is sold without having been used or before the expiration of five years from the day on which it begins to be used.

Section 22 makes provision for an investment allowance for purpose of Corporation Profits Tax where such an allowance is being made in computing Income-tax.

Section 23 is a construction section.

Section 24 authorises the making of arrangements in certain cases for the payment, by way of composition, of the Stamp Duty chargeable on receipts.

Section 25 is the usual section to provide for the charging of annuities against voted capital services.

The purpose of the amendment to Section 26 is to postpone by 20 years the date, which is at present 23rd March, 1964, after which the Minister for Finance will become entitled to redeem at per outstanding land bonds created and issued under the Land Bonds Act, 1934, as amended by the Land Act, 1953. Seeing that bonds of this category are still being issued for the purchase of lands acquired by the Land Commission, it is left that the period left before they become liable for redemption is rather short. The proposed amendment by which the Minister for Finance may redeem bonds not already redeemed will remove uncertainly as far as holders of these boundsa are concerned.

Section 27 applies the provision of Section 34 of the Finance Act, 1956 to stocks etc., issued by Bord na Móna, the interest on which is payable without deduction of income-tax by virtue of Section 6 of the Bill. The effect of this application means that neither the capital or nor the interest on the stocks, etc., will be liable to any taxation as long as it is shown that the stocks are in the beneficial ownership of persons who are neither domiclied nor ordinarily resident in the State; and furthermore, that the interest will not be liable to income-tax asa long as it is shown that the stocks are in the beneficial ownership of persons who, wherever their domicile, are not ordinarily resident here.

Section 28 is the customary section placing taxes and duties under the care and management of the Revenue Commissioners.

Section 29 is the customary section dealing with the short line, construction and commencement of the Act.

The Minister has not been over-lengthy in his comments on the individual sections. In fact, he rushed through those section with the minimum of comment, a proceeding which would be very understandable indeed of he were ashamed of the production that he has brought to the House. Before dealing with the general question of the Finance Bill, with its legislative implications in relation to the Budget and the general picture as disclosed by it and the other discussion we have had, I want to deal with one or two specific points arising on the sections.

In relation to Part I of the Bill, which deals with income-tax as such,. and particularly in relation to those parts of it which deal with industrial income-tax, I can remember only too well the biting sarcasm of Deputy Lemass, colleague in the present Government of Deputy Dr. Ryan, Minister for Finance, on that fact that last year, when I had only received the Report of the Committee on Industrial Taxation and had had it in my hands for less than a fortnight, I had not immediately implemented all its provisions. I can remember Deputy Lemass suggesting that the Dáil should adjourn forthwith to enable me to have another fortnight in which the draft amendments to the Finance Bill then before the House and, by so doing, to incorporate all the recommendations of that Report.

The Minister has had a great deal longer than I had. Many of the provisions of that Report were alreay implemented by me before we left office and the Minister has had ample time and ample opportunity since he came in to make up his own mind on all the implications and recommendation of the Report.

He has not given us any indication, expect in relation to Section 2, as to what his views are on the remaining provisions of the Report with which I had not the opportunity to deal. The Minister should at least have indicated what his views are, so that the House, the country and those affected would know what they might expect in the years to come. I can appreciate that he might feel that he was not in a position to make concession at the moment; but it would surely have been desirable to indicate that he had some mind of his own on this Report— that is, if he has read and considered it. I am assuming—I give him the benefit of the doubt—that he had the engery, even before became Minister for Finance, to read and consider the Report.

I am surprised, too, that in relation to the increase in depreciation allowances referred to in Section 2 he has not indicated him view on a problem that was cropping up and which should be dealt with. I refer to the question as to whether an obsolescence allowance should be granted, even if machinery is not replaced. I seem to remember one of his colleagues suggesting when I was over there that, if I had given any thought to the problem, I would have been able to dispose of that one in double-quick time. The Minister has now the responsibility of speaking to his won colleague in the Government and we would like to know whether he has taught that colleague the error of his way, whether he has had an opportunity of considering the problem or has not considered it at all.

In relation to the income-tax code, the gravest and the most serious objection to this Finance Bill must be the fact that no provision whatsoever is made for superannuation allowances for the self-employed. That was a problem which we were considering last year and consideration of which was initiated last year. It is a problem which is a difficult one, but one which, I have no doubt whatsoever, if we had been left as Government, would have been met by certain provisions this year, even if it was only to ensure that one sector of that class, those in society groups, would have superannuation schemes recognised for the purposes of allowance under the Income Tax Acts.

The emphasis in relation to income taxation must be on saving and it is a grave defect that we have not got in our legislation a provision by virtue of which there is that inducement for saving for superannuation for the self-employed. If the Minister turns back on the files, he can see that even last year,at the time of last year's Budget, we were giving consideration to the problem but that consideration had not been fully implemented at that time. Twelve months have gone and examination proceeded during the course of last year and the Minister has had almost three months to produce some amelioration in that respect, but there is nothing whatever in relation to it in this Finance Bill.

It is a great pity there was not some recognition of the additional cost that there must be for the middle income group and even for the lower income group, from another point of view, if children, once they have reached the age of 16. The cost of giving some recognition cannot be very substantial. In the lower income groups, families suffer if they keep children at school by not having them earning as they would otherwise be earning. If is tied up, I know, with the question of apprenticeship fees and the allowances that should be made for such fees, by, again, these are problems that have been under consideration for some time and an indication should have been given this year of some approach to their solution.

We all know that in the middle income goup, once children come to the age of 16, schooling becomes even more expensive, perhaps because of the younger children coming on at the same time. By a little ingenuity, quite substantial benefits on those lines could have been provided without any great loss of revenue.

I am glad the Minister has repeated the provision in section 3 which I was anxious to introduce on another Bill and which I was unable to introduce because the matter was brought to my attention only after the long Title of that Bill had been introduced. it is desirable that our universities and colleges should be encouraged in any way possible to get assistance from private sources. It is desirable that private sources should be encouraged to assist research of the type that is envisaged in this section. I think the Minister estimated—from recollection, it was the figure given to me—that some £15,000 was likely to be the cost of this concession. It is, I would suggest, a concession that is well worth while for the benefits that it may bring to reaserch in our universities or in the constituent colleges of such universities.

The Minister was, I think, sitting on this side of the House last year when his colleague, Deputy Lemass, as he then was, poured ridicule and scorn on the suggestion that I made at that time that an extension of Section 7 of the Finance Act, 1932, might be a desirable thing. I want to congratulate him on having shown the Minister for Industry and Commerce that he was then, 12 months ago, talking nonsense, talking through his hat. I want to congratulate the Minister for Finance on having brought him around to see that the obscurantist, cumbersome method of dealing with relief under that section which he adumbrated from this side of the House was all wrong and that it was not the manner in which that type of relief was ever granted.

I must congratulate the Minister on being more successful than I was in that respect, but, of course, probably the answer to that is that the Minister, when I was explaining it to him, did not want to understand. Whether that is the reason or not, the Minister is to be congratulated on having shown the Minister for Industry and Commerce the error of his ways.

At the same time, the Minister is gravely to be criticised for the form that Section 4 now takes. Last year I introduced a section to extend the provisions of Section 7 to "rights" or bonus issues arising from the original issues. By that, I gave what one might terms the children the right of their parents in this world of stocks, but the present section goes entirely in a different direction; it gives an uncovenanted benefit to many issues, to the holders of many issues as well as to the issues themselves. For what purpose? I never was able to understand for what purpose. I know that this suggestion was made to me by another body. I could not understand why they thought it would have any effect at all. It does not in any way deal with the case of transfer; it does not in any way make the shares more negotiable. I think the Minister tried to imply in his Budget speech that it did, but that is not a fact.

This section will not enable amalgamation of issues in the same way as the "rights" section of last year would. It merely gives an uncovenanted benefit to the holders of certain stocks and shares in a way which will not increase saving, which will not make shares more negotiable and which is highly objectionable for the reason that the Minister has started with the year 1932. If this uncovenanted benefit were to be given, there is no reason whatever why it should not be given to every stock or share issued since 1st May, 1923, the date upon which there was the transfer of financial functions to the Irish Free State. There is no justification whatever for restricting the issues to 1932, except a political one, and I would have hoped that the Minister in the introduction of a Finance Bill would not have descended to political motives of that sort. However, we shall have an opportunity on Committee Stage of dealing with that matter.

The Minister has given, in Section 5 in relation to income-tax, and in Section 16 in relation to corporation profits tax, certain inducements for exports. I am glad he has done so. I only wish that the Minister and the Government were consistent in giving inducements to export. I wish that this Bill represented a consistent policy of pull in one place and push in the other, but the removal of the levies, which is confirmed in Section 14, is in one direction, and this export inducement is in the other, while, at the same time, last week we had evidence of the Government's policy acting in a different direction when it proceeded to impose a tax on salmon exporters.

I have no intention of discussing a matter appropriate to the Fisheries Department in relation to the export tax on salmon, but it seems to be quite fanciful and quite farcical for one Minister of State to be bringing in an inducement to export and for another of his colleagues sitting further down the way—perhaps the fact that the gangway divides them is the reason they do not speak to each other—to be introducing at the same time a tax on exports when exports are available. That is the type of contradiction which makes the people wonder if the Government knows where it is going.

In the farming of Section 5, as I understand it, the Minister has also put a brake on the possibility of exports for the current year. I appreciate, of course, that in relation to the type of trade that is being carried on by a company of this nature, it will be taxed on the profits of the preceeding year and that, therefore, in the case of an existing company the fact that the concession does not arise until 1958-59 will not make any difference. As I understand the situation, the more they frame their basis of operation this year on exports the move it will benefit them in 1958-59, but in respect of a new company, there is quite a different situation.

A new company starting to trade for the first time in the current financial year will be assessed on its actual profits during this financial year and will not, as I read Section 5, get the benefit of the concession in relation to that trading for this year. Therefore, if my reading of the section is correct, it would seem to me that any company would be wise for its own sake to defer the commencement of any export business or any business at all, until 6th April, 1958. Frankly, I do not think that is an eventuality or a situation the Minister would desire, but it does seem to me that must arise in respect of the new company.

In the case of the existing company, it will be assessed on actual profits for the current year, 1958-59, and therefore anything it does towards increasing exports or to increase its profits this year from exports will benefit it next year. A company, however, set up as from to-day must be hit in the way I have suggested and therefore would find it more advantageous to wait until next April. I take the view, and I think the Minister will agree with me, that it is vital that we should increase our exports, not next year but at once, and therefore any phraseology or any farming of any section which has such an effect is very much to be deplored.

I wonder, also, is the same effect likely to occur in relation to Section 2 where the changing of the five-fourths depreciation allowances to next year might, perhaps, have the effect in certain cases of making people defer their modernisation and their purchases of new machinery. We must make a real effort to modernise our production in every shape and form and anything that assists that modernisation is to be welcomed and anything that suggests it is in the private interest to defer it, is reprehensible.

In Part II, we have the sections covering the changes proposed in the Budget, As regard Section 7, I would suggest that we are arriving at an extremely unhealthy tax structure. I want to make it quite clear that I accept the agreement that the Minister expressed with my view of taxing, where the tax is necessarily on expenditure rather than on income, but we have a situation in which the proportion of our tax revenue derived from tobacco is somewhat frightening when one realises the manner in which the whole revenue structure of the State would be affected by any change in taste in that regard.

Very roughly, 25 per cent. of our tax revenue comes from tax tobacco and cigarettes. If it were believed by the public, whether it is a fact or not, that smoking had the somewhat deleterious effect that some doctors in various parts of the world suggest, the effect on revenue here in Ireland would be quite disastrous. Personally, no matter what the doctors say, I am afraid as far as I am concerned, I shall go on smoking, and if I should be persuaded to stop, it would be more injurious to the nerves of all those with whom I come in contact than it would be beneficial to my health; but other people may not look on it in that way, and if the situation does arise in which there is any change in public taste for tobacco and cigarettes, then I am afraid the task of whoever is sitting over there will be more unenviable than ever.

I can remember only too well a former Minister for Finance and a colleague of the present Minister waxing satirically vicious on the subject of the taxation of beer without any increased taxation on whiskey and wine. I remember Deputy MacEntee on two occasions speaking in a village at the same time as I was speaking, and on each occasion, curiously enough, the theme of his speech was that the wicked Government which I was supporting had not increased the tax on whiskey or wine, on the one hand, and on the other hand, had remitted the tax on wine imposed by the Supplementary Budget of 1947.

In this Bill, the Minister has done exactly the same time. He has increased the tax on beer but has not imposed any additonal tax on whiskey or wine. Let me say straight away I agree with him completely that he was wise not to impose any additional tax on whiskey or wine. Wine, as a source of revenue, is only beginning to recover from the unbelievable stupidity of the Minister for Finance in 1947, Deputy Aiken, when he introduced his Supplementary Budget. The trend in whiskey consumption is such that I am quite certain it has reached the point of no return from the point of view of revenue, so that an additional tax on that commodity would mean less revenue.

I shall not therefore, adopt the irresponsible attitude of the Minister colleague. I shall content myself with expressing surprise that the Minister, in Section 9, did not give some consideration to the position of the smaller breweries, some of which, even at the old rate of taxation, were finding it difficult enough to carry on. With additional burdens on their industry, an increase in duty must bring about a position that will make it almost impossible for them to carry on. The Minister would have found it well advised to case that burden as I did in the Budget of 1955.

The tax on petrol and hydrocarbon oils included in Section 10 is one the effect of which permeates throughout our whole economy. It is, if you like, a tax on expenditure, but at the same time it is a tax on a vital source of distribution. The days are gone when petrol and purchasing of petrol can be in any way considered as a luxury. It is a necessity, part of the essential cost of distribution, and I think the Minister was most unwise to impose this additional tax of 6d. a gallon. I grant that it is an easy way of picking up a large sum and that the ability to pick up a large sum in taxation by one single operation must always be tempting to any Minister for Finance.

However, the Minister should, certainly in this respect have avoided that temptation. There were plenty of other ways available to him in which he could have made, if not the whole required amount, at least a substantial part of the amount. It will affect every business throughout the country: it will affect the cost of distribution of raw materials for industry and will affect the cost of living in a general way quite apart from the specific impact to which reference was made in the Central Statistics issue the other day. It will have a considerable effect on the tourist trade, a trade which is the equivalent of an export. Altogether, I think, it is extremely unwise economy to impose an additional 6d. a gallon on petrol haphazardly in this way.

At the time of the Budget, I referred to the fact that the Minister had not given any relief from this additional tax to farmers who utilise petrol for their tractors. We shall have another opportunity of discussing that on Committee Stage, but it seems to provide further evidence of the manner in which the Minister in one breath speaks about increased production and in the next proceeds to tax the means of that production.

I am disappointed also that the Minister did not, in Part II of the Bill, make the small concession—very small indeed from the point of view of money —which was requested of me in the last month or so of my term of office, in respect of amateur films made by members of the International Amateur Film Association, that these films should be free from entertainment duty when they were being shown here. It does not arise very often; it arises very seldom indeed. It is the only means by which these amateur bodies have an opportunity of covering their expenses for one or two showings each year. It should have been quite feasible to have provided an exemption in the case of films made by affiliated members of the International Amateur Film Association. It would have been a very small thing but would probably have meant the difference between survival and extinction to these societies.

I do not propose to say anything at this stage on Section 14 which involves matters that we might discuss in a more general context. I have already made it clear that it seems to me the Minister cannot go on saying that the balance of payments equalisation which we obtained was precarious and, at the same time, knock out the props from under our scheme, wiping out completely the hire purchase restrictions as he has done.

I relation to Part V of the Bill, I notice that the Minister has—I presume, deliberately—provided that the investment allowance is not to apply to secondhand ships. The investment allowance which i introduced last year did apply to secondhand ships. I gave the concession last year in relation to such ships because it was stressed to me at the time that most small Irish shipping companies did not buy any but secondhand ships. The smaller companies very often have not got a sufficient coastal trade to provide the finances necessary to buy new ships. They are threfore forced to buy secondhand ones. I can, of course, understand that it is essential in any such arrangements that there should be provision so that a shipowner, having got an investment allowance for the purchase of a ship, would not then re-sell it to another owner, who might again get an investment allowance. I am thinking of ships bought outside Ireland and brought into Ireland under the Irish register. There is a great deal to be done in relation to our shipping code.

When I had the honour of being Minister for Finance I felt, in relation to the various types of codes we had, that the first it was necessary to deal with was the mining code. The House is well aware of the very substantial alterations made in that code 12 months ago, and last November. The tax code I would have liked to tackle in the same way was the shipping code, if circumstances had permitted me to do so. I believe there is a future fro us here to build a shipping register. I believe that owners in other parts of the world are no longer satisfied with the flags of convenience that they got so easily from Panama and other South American Republics. I believe that, if we had a shipping code of taxation here that was more in keeping with modern requirements, we might be able to do something quite substantial in that respect. I admit it is a difficult problem and I accept that the Minister has pointed some distance towards that problem in Part V of the Bill. However, I am afraid that if he is to achieve anything worth while in that respect he will certainly have to tackle it in a very much more radical manner.

There would also be a very strong case for the Minister to tackle the problem of death duties in a more radical manner. Unless we are to ensure that we shall have an expanding revenue year by year we are going to be in financial difficulties. We might get such an expanding revenue if we could take steps to ensure that our position was better comparatively than that of other countries. The law relating to death duties is one of the cases in which a comparison with other countries is not so very good. Anybody considering coming here, and examining our position with that in Northern Ireland, will find that there is nothing very much from a death duty angle to induce him to do so.

I must confess, quite frankly, that I was very surprised to discover the discrepancy in rates between here and the Six Counties. It was only in the last six months or so that I discovered it. I am talking of a discrepancy in the small estate rate rather than in the large estate rate. For example, on an estate of £2,000 to £3,000 we charge 1 per cent. In Britain and the Six Counties no estate duty whatsoever is levied on such estates. On a £3,000 to £4,000 estate, we charge 2 per cent, but the rate charged in the Six Counties and also in Britain in respect of such an estate is 1 per cent, higher than ours. When we go into the rates on estates from £10,000 up to £20,000 and £25,000, the medium estate, we find our rates vary from 1 per cent, to 4 per cent higher than the Six County rates.

That is a situations we have to change. It is a situation which I admit any Minister for Finance must find some difficulty in changing because of the immediate loss that would be involved but, in the long run, there would not be a loss. On the contrary, it is more likely that there would be a gain by the effect of additional money coming in and, with that additional money, easing nor merely the current revenue problem but also part of our problem arising from shortage of capital.

I should like also if the Minister when he is replying would give some indication as to whether or not he has considered the effect of the current British Finance Act as regards export allowances. Is there any danger that the effect of this Act would be to influence British parent companies of subsidiaries here to switch production back to Britain in order to get the export allowances provided for in the British Budget? If it is not clear beyond question that this ACt cannot react adversely on subsidiary companies manufacturing here, then for the sake of the employment and productive content we must take steps to rectify that position at home.

At this time last year a problem was raised in relation to the British Act and insurance companies. I think it was adequately disposed of at the time but I should like an assurance that is so. There was also a question on the Finance (Miscellaneous Provisions) Act last November in relation to gypsum, the position being that neither the Mining Tax Act of February 1956, nor the Finance (Miscellaneous Provisions) Act of November, 1956 gave relief for unmanufactured gypsum exports. I gave an undertaking at that time that I would look into that matter, consider the operations of those Acts, and make sure that the companies mining gypsum here were not unfairly treated. I hope that has been done and that the companies concerned have been satisfied in that respect.

It does seem to me that a possible gap might be created between the effect of the Mining Tax Act of February, 1956, the Finance (MIscellneous Provisions) Act of last November, and this Bill so that certain mining concerns may fall between the three stools. Perhaps that is a matter we might discuss more carefully on the Committee Stage but I take it that the Minister would be adverse to that occurring and that his anxiety would be the same as mine to ensure that any company concerned would at least be able to claim under one od the three statutes in question.

As I said at the beginning, this Bill is the technical measure for the implementation of Budget policy. I would have thought that there would have been since the Budget speech, some more clear indication of the policy of the Government. The Minister, when he was replying to the Budget debate, made a speech quite adequate for a cross-roads. In fact, if one likes one particular type of cornerboy cross-road speech it was an excellent one, but it was a speech sadly lacking in the guidance, judgment, realism and discrimination that this House and the country as a whole has a right to expect from a Minister for Finance. He was much more concerned with Party politics than he was with the economics of the country. I would have thought when he chose that line, no doubt deliberately, on the concluding stages of the Financial Resolutions, that he would have given us to-day in his opening speech some indication of further economic policy and some indication of the policy which he proposes to adopt.

There were one or two serious problems to which I drew his attention when speaking in that Budget debate. They are problems to which it is not I who wants an answer; they are problems to which the country wants an answer; they are problems to which those who are employers, those who are manufacturing and those who are working require answers; and they are problems in respect of which there cannot be any real progress unless we have a firm line which the Minister will keep, whether it is right or wrong.

Since this Government came into office, we have seen a variety of chops and changes. We are inclined to wonder whether they intend to go in the same direction or whether they are having a tag of war among themselves. Anyone who reads the Budget speech of the Minister for Finance and contrasts it with the removal of the levies on motor cars and on other types of luxury and semi-luxury goods; anyone who reads his warning—a correct warning—that our balance of payments equilibrium is a tenuous thing which we have achieved with great difficulty —let me add we achieved it for him— and which must be kept, cannot reconcile that warning with the action, no doubt motivated by the Minister for Industry and Commerce, of removing levies and wiping out every type of hire purchase restriction. Anyone who noticed the fact—and all of us noticed it—that one day the Government in the Budget of the Minister for Finance announced bread decontrol and within two or three days came along and imposed it again—anyone who sees that type of contradiction must wonder whether the Government knows where it is travelling.

Let me be quite specific. I think the Minister for Industry and Commerce was right to reimpose control in the second instance, but where I think the Government were sadly lacking was that they have not made any effort to foresee where decontrol was likely to lead them in the circumstances in which they announced it and the manner in which they announced it.

We had certain indications from the Minister for Finance in this Budget speech about what might be the effect if the measures employed by him in the Budget were followed by other measures. I would have expected some calm, deliberate and sound contribution by the Minister on that subject, whether at the conclusion of the Budget debate or at the opening of this debate. There is no subject that is more fraught with difficulty in the national interests and no subject upon which a lack of a positive lead could be more harmful. I am sure all of us are anxious at times to indulge in a little wishful thinking. Many people are inclined to think that we in Ireland will be able to attain the standard of living we desire merely by saying so. I think the Fianna Fáil Party have a great deal of responsibility in that regard by their propaganda right from the beginning in 1932, but whether it is the fault of that side of the House or of this side of the House, the sooner we all realise that it is not a fact, the better for the country as a whole. The sooner we all realise that our standard of living will depend only on our current output and only upon what we produce, the better it will be for all of us. The sooner we get away from wishful thinking of the type I indicated a moment ago, the more chance we have of achieving realism.

The people decided on 5th March that I was not going to have the responsibility of framing this Budget. Let me be quite categorical when I say that the Minister is wrong when he says his method was the only way to frame the Budget and to meet these problems. There were other methods that could have been used. There are other methods that probably I would have used but whoever is Minister for Finance has ultimately the task of deciding the method and, having decided that method, then it becomes the property of this House. The divisions in the House on Budget day and at the termination of the Budget debate made it clear that this House, as the Parliament of the country, decided that was the manner in which the problems were to be met.

I think the Minister was mistaken— I think he was grievously mistaken—in scorning this stability, as he did scorn it, in winding up the Budget debate. I think he approached the problem of framing this Budget entirely the wrong way by such scorning of stability; but, having said that the Minister was in my view, wrong and totally wrong, I want to make it quite clear that two wrongs do not make a right. If the mistake made by the present Government is followed by another mistake, then the position will be very substantially worse.

Ten men employed at £6 per week require approximately £3,000 to pay their wages in the year. That is not quite an accurate calculation, but it is near enough. If the wages and the salaries of those men are increased, then the £3,000 is not going to be adequate to carry those people. Either of two things has to occur: nine men only will be employed for the same £3,000 or the £3,000 will have to be augmented. If, therefore, the initial and serious mistake of this Government in jettisoning the stability we had brought to hand is followed by a second mistake on the part of other people by seeking wages and salaries beyond current production, then only one of two things can happen: either we will have to provide more funds to employ the same number of men or provide the same amount of money to employ fewer people.

Either of those alternatives will be extremely bad for the country. On the one hand, it might bring a worsening of our balance of payments equilibrium, a disequilibrium in our balance of payments such as we had in 1952, and, on the other hand, it might bring with it more unemployment and worse unemployment than there was in 1956.

I hope, therefore, that the initial mistake—the crass mistake—made by this Government will not be followed by a second mistake which will have even worse effects and that, instead, we can travel along the line of ensuring that the mistakes made by the Government will be rectified in the best possible manner by reducing costs and by ensuring that there will be an expansion of employment, rather than the difficulties to which I adverted. I know that that is not a popular thing to say but there are times when people in public life, whether it be popular or unpopular, must say what they think. I am quite certain from my knowledge of the situation—it is not exhaustive: I do not pretend to claim it is exhaustive—that any move in that direction, any excess of current production, will inevitably bring difficulties and a real economic crisis. If it does, the responsibility will be that of the Minister because he had handed over to him a stable position in that regard —a position in which our trade excess was being matched and more than matched by our invisible receipts; in which our savings were coming back to the optimum level; in which the bogey of inflation from internal causes had been met and broken and in which that confidence was beginning to come to pass which would be the real basis and the essential need for an expanding output. I hope the mistakes made by the Minister and this Government in the type of Budget they introduced and in the manner of its introduction will not upset that and cause the difficulties to which I have adverted.

This Finance Bill which we are discussing to-day is to give effect to the budgetary proposals of the Minister for Finance. As such, one would expect from the Minister, now that they have been some months in office and have imposed these heavy burdens on the people, a more distinctive exposition of policy. I do not think anybody will dispute that if you take an extra sum of money from the taxpayer and tell the taxpayer you are doing so for the purpose of expanding your economy it is reasonable for every member of this House to expect to hear from one of the principal Government speakers what that policy is to increase production and reduce unemployment.

Over the past few decades, the City of Dublin has been growing. More people have been coming into Dublin and the main basis of employment in the city has been building. In the first flush of victory, when he was being interviewed by journalists and a remark was passed to him to the effect that he had a difficult situation with regard to employment to deal with, the Taoiseach said he had no specific plans but that he thought building would meet the question. I submit that vast employment has been given in Dublin over the past couple of decades in building and that the policy, as far as it relates to employment in this city by the present Government, is to continue building—not only building houses but building boulevards leading into the new building sites or estates that are being set up in different parts of Dublin.

The question of building in Dublin does not arise on the Finance Bill.

They are spending money. We are under the impression that these taxes have been raised for the purpose of expanding employment. I submit that the employment they are giving in Dublin is by building and nothing else. I shall finish with the subject soon. I simply want to say that you can go on building houses in Dublin and you may employ people by doing so but that that is of no economic benefit to the Irish people when the houses are not being occupied. I shall pass from that now, in view of the ruling of the Chair.

With regard to the expansion of our economy, we have frequently heard from the Fianna Fáil benches about the expansion of agricultural production. At present, agricultural markets are going through perhaps one of the biggest revolutions they have been through in modern times. It is the duty of the Government to aid, foster and improve these markets. Were they able to do so, I think we could all accept it as reasonable that we would not have any more economic difficulties. If you provide markets—not only agricultural markets but industrial markets as well —all your difficulties will be solved.

I have always maintained that our future expansion lies in Europe. Up to this, we have had the majority of our eggs in one basket. We buy extensively from Britain. Admittedly, we have certain benefits out of Commonwealth preferences but, at the same time, O.E.E.C.—an organisation to which we belong—gave the advice in their report that Ireland should go out and seek markets elsewhere as it is dangerous to be engaged entirely in the one market. Action must be taken in order to procure markets and, as I have said on other occasions, it must be taken at political level. Deputy Cosgrave and myself asked a question here last week with reference to the sale of sheep and mutton and lambs generally——

The Deputy is getting away from the Finance Bill which deals with taxation and the budgetary policy of the Government.

I submit that taxation has been imposed on the Irish people, as stated by the Minister for Finance, for the purpose of procuring markets and increasing employment. I am relating the subject in this way— that if you have not got proper markets, if you are not able to sell your produce, you cannot employ people. Am I in order?

I feel the Deputy is not in order. These matters of detail could relevantly be raised on the Estimates. There is nothing in the Finance Bill relating to the matters which the Deputy is raising.

With respect, the Minister, in his Budget speech, and the Tánaiste subsequently stated here, as well—speaking, I presume, as No. 2 for the Government—that the purpose for which they had to impose this taxation was to reduce unemployment. In order to reduce unemployment you must put people into productive employment. I am trying to show that the Government have no policy for putting people into productive employment. I submit that if I had been talking about industry, the Chair would probably not have ruled me out of order. It happens that the main industry of this country, on which we are all dependent, is agriculture——

The remarks of the Deputy would be relevant on the Estimate for the Department of Agriculture.

Then I will ask the Minister if he can tell us in reply to this debate what arrangements he has made to expand our industry. Is that in order, Sir? I will ask the Minister to tell us if any members of the Government have sought any trade agreements with any country anywhere or if they are prepared to continue the existing situation by taxing the lifeblood out of the Irish people and giving them nothing in return. I submit that, if a Government is taking in taxation out of the Irish people the sum which the Minister gave in answers to a question—the sum of £184,000,000——

No, I said £94,000,000.

Total taxation?

I was talking about the Revenue Commissioners.

I think the Minister stated the other day that £184,000,000 was taken in taxation?

In my answer to-day I gave what the Revenue Commissioners collected, that is, £94,000,000.

I am referring to the other day last week. I think the Minister said the total taxation was £184,000,000.

I am told it was stated as £184,000,000. That was a misprint. It should be £94,000,000.

Is the total taxation being taken out of the taxpayers £94,000,000?

That is what is collected by the Revenue Commissioners. That is income-tax, customs and excise and so on, but there are other things, such as Land Commission annuities and the post office, which are not included. You will have to add those up.

I was referring to taxation generally. I understood that the total taxation the Minister takes out of the Irish people is £184,000,000. In any event, he is taking a sizeable sum, shall we say, from the Irish people——

It depends on what you call taxation.

——and there should be some definite statement from some responsible Minister as to what their policy is in relation to the over-all economic changes taking place in the world to-day. It is necessary for a Government to cite a policy, and on a Finance Bill, when we are providing for all this taxation, we are entitled to have a statement of policy from the Minister or from the Government as to what their actual policy is. Deputy John A. Costello, speaking here after the Government were first elected, stated that one of the most closely-guarded secrets of the modern political age was the policy of the Fianna Fáil Party. We, on this side of the House, are all in the dark as to what that policy is.

I submit that, in the potentialities which exist at the present moment for increasing our trade, the Government should do something. I am not satisfied that the Government are really doing anything about it. We are told that at the present moment there are discussions going on in Europe with regard to the potentialities open to us amongst the different nations there, in particular the group of six known as the Common Market Group. I am told —I only know what I read in the papers like anybody else—we have got a representative negotiating for us there on behalf of the Government, in which the Minister is the Finance Minister and has over-ruling and controlling guidance of the finances of the country. We have the Secretary of the Department of Industry and Commerce out negotiating an agreement for us.

Without wishing to refer too much to agriculture, I should like to stress this point. Surely, in an entirly agricultural country such as Ireland, it is reasonable to ask the Minister who has to make money available in this Budget for the procuring of markets—and I presume that is contained in the Finance Bill—to have some other representative negotiating on behalf of the Government other than the Secretary of the Department of Industry and Commerce?

That does not arise on the Finance Bill.

As I, apparently, am not being allowed to discuss anything, I think I shall resume my seat. I always understood that the debate on a Finance Bill, covering the policy of the Government, enabled one to have a good deal of latitude in discussion.

The same latitude is not permitted on the Finance Bill as in the debate on the Budget. The Deputy is raising points that would be more relevant on the Estimate.

Very good, I shall resume my seat. Before doing so, I would ask the Minister to give us some indication of the policy of the Fianna Fáil Government to ameliorate the conditions of the Irish people and the effects of the hardships he and his Government have seen fit to impose.

We had many people working miracles on the platforms of the inter-Party Group a few years ago but nobody as good as the last two speakers. Judging from the trend of their remarks, they expected we would be able to employ everybody a week after coming into office and alleviate the distress caused by incompetent government over the last few years. Apparently, they expected that the Minister for Finance had more powers than his predecessors. I was a little perturbed to hear Deputy Sweetman being so ungracious as to refer to the Minister's speech as one such as a corner boy would make, or something like that. I was rather surprised at the Deputy descending that low——

It was the Minister, not I.

Surely the country does not expect miracles overnight?

Notice taken that 20 Members were not present; House counted, and 20 Members being present,

I am sure the people will be delighted to know that Fine Gael have no sense of responsibility whatever in this House, that they might as well be at home. We have this play-acting at calling for a House.

That cannot be debated on the Finance Bill.

This type of play-acting is as old as the hills. It is children's practice. When the previous Deputy was speaking, he wanted to know the policy of the Government and what the Government intended to do about the relief of taxation, the expansion of industry and the expansion of production. Surely he knows very well these things cannot be done in six weeks or three months. Surely no one in Ireland expects such a miracle. I hate to be sarcastic, but our position results from the mismanagement by the inter-Party Government and we will have a hard fight to get out of these bad economic conditions. We are anxious to see increased production and full employment and we are taking all practical steps we can for that purpose. We are not anxious to bring hardships on the people, but unfortunately we were left in this awkward position and we must try to keep the ship floating. Deputies on the other side had the very same opportunities during the last three years and succeeded not alone in bringing the country to where it is to-day but in destroying the confidence of the people. We are trying to rectify that and to increase production in the future.

I want to point out the sheer hypocrisy of Deputies opposite in trying to put it over that they are defending the rights of the Irish people now, when they destroyed the economic rights of the Irish people during the last three years. They are expecting us, inside a few months, to make everything in the garden lovely and to pat the former Minister on the back for the work he carried out. Our economic conditions are bad and it will take the very best brains in the country to put them right. There is not a man sitting on these benches, from the Taoiseach to the back bench Deputies, but is very anxious to see that everyone will be employed.

We received a legacy from the last Government of an emigration figure of 100,000 in two years and 90,000 unemployed. Deputies here do not seem to be able to face realities and only continue petty abuse across the floor of the House. The people of Ireland are weary listening to this sort of thing and want practical suggestions. They have been deceived long enough, but will be deceived no longer. They realise now that the economic position is serious and they realise also that we, as a Party and as a Government, are doing everything we can to right the ship of State again, to attack the evils of emigration and unemployment and to expand production.

This Bill imposes an extra £3,000,000 in taxation. The items to which the Minister has asked the House to agree, in respect of which extra taxes will be imposed, amount to approximately £3,000,000. That is the length and breadth of this Bill. We have an opportunity on this occasion to discuss the financial policy of the Fianna Fáil Government. The first point which occurs to me is that, when the Minister finds it necessary to impose an extra £3,000,000 taxation on the public, in addition to the extra cost of bread, butter and sugar, amounting to approximately £7,000,000, we should ask to what policy we are contributing this money. Have we had an announcement of any policy?

The present Government did not announce a policy before or after the general election. They have left the people still guessing. They complained that there was a high percentage of emigration during the term of office of the previous Government. There was; but they offered no remedy to the people for it, before or after the election. They said they intended to reduce unemployment, but they did not. They have announced no policy likely to reduce unemployment. They talked glibly about the unemployment figure of 90,000 persons.

The Deputy may not discuss unemployment on the Finance Bill, except in so far as it is related to the Bill before the House. We cannot have a wide debate on unemployment. The Deputy may reserve his remarks on that for the Estimate for the Department of Industry and Commerce.

I listened for days to talk of unemployment, on last year's Finance Bill.

Deputy Lemass, as he then was, was allowed to deal with it last year.

I am relating it to financial policy. We are being asked to provide £3,000,000 and I am asking the Minister for what it is required. As I say, there were 90,000 person registered unemployed, at the worst time of the year and at the time when the greatest number of persons are registered as unemployed. If we are to talk about that figure, let us talk about the Fianna Fáil record figure of 146,000 unemployed.

The Deputy may not discuss unemployment in detail on the Finance Bill. It is a matter for the Estimates, on which the Deputy can go into it in great detail. He cannot on the Finance Bill deal with this particular matter.

On a point of order, Deputy Burke was allowed to refer to the figure of 90,000 unemployed. Surely, therefore, Deputy Rooney is entitled to refer to a similar figure of another time?

Deputy Rooney has also been allowed to refer to the figure, but I am telling the Deputy he cannot be allowed to go into that in detail.

The Deputy did not get a chance of going into detail on it, before he was stopped.

Deputy Sweetman should not reflect on the Chair.

The only point I made was this, and it was a reference to the 90,000 unemployed. I began to question the Government on that very point, as to their policy at the present time. In relation to financial policy, can we learn from the Minister why, in these difficult times, hire purchase restrictions have been remitted? Will the financial position of the country not be aggravated to an even greater extent by remitting some of these restrictions? Similarly, a number of the levies were abolished. They were designed by the previous Government as a positive and effective financial policy to put the finances of the country right. Those levies have been abolished and we now have a position where the adverse trade balance, which had been unproved by £25,000,000 in less than 12 months, is going to be aggravated again by these steps of the Government in encouraging the importation of non-essential goods.

On this question of financial policy, I should like to ask the Fianna Fáil Party why did they operate a policy. which resulted in the expenditure of £20,000,000 in eight months, in 1951— £20,000,000 of the American Counterpart Fund? If we examine the manner in which that £20,000,000 was spent, we will find that it included expenditure on the importation of mousetraps, gramophones, records, Japanese pencils and other such goods.

I shall be speaking in Balbriggan on Sunday morning and I will tell you all about it then.

You would never get caught in a mousetrap, anyway.

I am referring to the spending of £20,000,000 of the American Counterpart Fund in the space of eight months by the previous Fianna Fáil Government. I am bringing this point out to show that they have no organised, positive and effective financial policy. I pointed out also that the levies introduced last year by the previous Minister for Finance improved our trading in less than 12 months to the extent of £25,000,000. That action caused a fall in business and a certain amount of unemployment, and it remains to be seen whether it would not have been better to maintain a measure of those restrictions which did ensure that at least our trading balance would be kept right. In my opinion, it was a mistake to abolish the levies and particularly to remove the hire purchase restrictions because many of the hire purchase agreements are for the purchase of non-essential articles imported into this country, and this has the effect of upsetting our trade balance, in so far as imports are related to exports.

In this Bill, the Minister proposes to take £1.1 million from tobacco smokers, in addition to the large amount already being contributed by them. The Bill also proposes to take £620,000 from the consumers of beer in addition to the heavy tax already being contributed by them. The Bill also asks us to adopt a proposed extra tax of 6d. a gallon on petrol which is to bring in £1.15 million. There are many people who do not take the trouble to examine what service the people get from petrol or who do not examine the purpose for which a car is used or the service its owner is giving to the community in general. They do not realise the heavy consumption of petrol in commercial vehicles, either in haulage lorries or lorries used by their owners for the collection on delivery of their own goods.

Those lorries are giving a service to the community in the collection and delivery of various classes of goods to the consuming public, in addition to the general carrier who is available for hire to carry goods and who gives that service to people engaged in the manufacturing business or owners of livestock. Similarly, the petrol used in vans or lorries for the collection or delivery of goods is giving a service. The vehicles of such people as commercial travellers and agents are also giving a service to the community. Generally speaking, the private car is used for pleasure——

The Deputy is in order referring to the tax, but I feel he should reserve discussion of detail for the Committee Stage of the Bill.

The detail I am going into is designed to show on what exactly the tax is being imposed, but I will depart from it, if the Chair insists. When the man in the street hears of a tax on petrol, he immediately concludes that the ordinary private car is used mainly for pleasure outside working hours; otherwise, one could take it that the private car is giving a service. A tax of 6d. per gallon on petrol is a tax on every service given by each type of vehicle I have mentioned and in the long run it is the consuming public, therefore, who will be obliged to pay.

There is, too, a proposal in this Bill to put a tax on diesel oil. The fruit of that tax, mainly £120,000, will be contributed mainly by farmers who use diesel tractors in the cultivation of their land and the production of food thereon. It is, in other words, a tax on agricultural production and that tax will eventually have to be met by those who consume the produce from the land. This is a direct tax of £120,000 on tractor users. In addition, there are a few diesel lorries and trucks. Possibly there are a few diesel buses, but, generally speaking, diesel oil is used by the farmers and it is the farmers who will be obliged to pay this £120,000.

The Deputy is wrong. The farmers have not to pay this at all.

Whoever is using diesel who will have to pay in the long run.

The Deputy is wrong.

Will the Minister say who will have to pay then?

The Deputy has made many false statements already. I am merely pulling him up on that one.

Has the Deputy concluded?

Is the Minister, prepared to answer? I am waiting for the Minister to tell me.

These are matters for the Committee Stage of the Bill.

Surely the question of the deliberate omission by the Minister of a provision to safeguard farmers in relation to production is a matter for the Second Stage. The exemption of farmers from the payment of the additional petrol tax is a matter for the Second Stage.

But Deputy Rooney is not talking about petrol; he is talking about diesel oil.

I am trying to get him on to the right lines, but the Leas-Cheann Comhairle was not on the right lines, either.

Deputy Rooney is in possession.

As against that tax, there is a proposal in this Bill to relieve vehicles licensed under the Road Traffic Act of some £110,000. That relief will be given mainly in respect of buses used in public transport and, in the long run, therefore, it will be borne on the shoulders of other sections of the community.

While there have been some reliefs in relation to income-tax, the income-tax code itself has not been changed, although those affected have been clamouring for a long time for fair play. It is only fair play they ask for, these people who are taxed on their earnings, their enterprise and their work. A committee was set up to examine into the income-tax code, but we have no report of progress from the Minister. Neither have we any report from the Government in relation to income-tax, except the minor reliefs which have been given under the existing structure, a structure which is regarded by many as completely out of date and in drastic need of being brought into keeping with modern conditions. Only about 5 per cent. pay income-tax and that small proportion contribute £20,000,000 per year. These people are beginning to wonder why there has been no announcement from the Government of a change in the systems. That £20,000,000 represents a substantial part of the revenue. People living on fixed pensions are beginning to wonder why they should be asked to pay income-tax on these pensions and at the same time pay the increased prices for bread, butter, sugar and flour.

This Bill, like most of the Fianna Fáil policy, contains promises. There are always the promises. I have not counted the number of times the date, 6th April, 1958, appears in this measure. The provisions will take effect as from that date. It is strange the Minister did not advert to this in his speech—perhaps procedure requires that it should be done in this way—but surely the Minister should have declared that, for technical reasons, it was necessary for him now to make certain provisions in relation to income-tax as from 6th April, 1958. Instead of that, however, the Bill was presented once more as a carrot to entice the Fianna Fáil donkey, the Fianna Fáil donkey who is prepared to believe the Fianna Fáil Party promises. This is a promise that, all going well and nothing adverse occurring in the meantime, as from 6th April, 1958, certain revisions will take place in the income-tax code, particularly in relation to the scale of tax which will be applied to profits from exports.

When this promise of a revision in the income-tax code which is to take place on the 6th April, 1958, was announced, it was mentioned that this change was intended to encourage employment and enterprise amongst persons engaged in the export business. For the reasons indicated by Deputy Sweetman when he was speaking, it is obvious that certain firms will not gain advantage from this proposal and I was wondering whether the Minister would consider introducing amendments on the Committee Stage which would give effect to Deputy Sweetman's suggestion.

When we are considering remission of income-tax on profits from exports we ought to consider the origin of the goods exported because then we shall be able to decide whether in fact the remission is being given in return for services rendered instead of a remission for the export of raw materials which originated in this country. There are some firms, unfortunately too few of them, who are highly efficient in the manufacture of certain classes of goods with the results that they are able to import the raw materials, process those materials here and export them to other countries. In the long run we are only exporting a service. We are not encouraging the manufacture and processing of native materials and native goods in addition to the export service given by our people in the factories engaged in the processing of the goods which are manufactured. We ought to examine to what extent this tax remission will be a remission in favour of those who are giving a service as against a remission in favour of those who are engaged in the production of goods and their export.

When the Minister asks the House to give him this Bill which will increase taxation by £3,000,000, we should remember that he came into this House a few weeks ago asking the people to pay for the loaf 7d. more than it was as a result of the Fianna Fáil Budget of 1952. Similarly, butter to-day, under the Fianna Fáil Budget, is 1/7 dearer than it was under the Fianna Fáil Budget of 1952. The price of flour has gone beyond calculation. I think it has increased by something like 3/- a stone. These extra costs have been deliberately imposed upon consumers in addition to the extra taxes now proposed in this Bill.

I am glad that Deputy Burke brought up the question of financial policy when he was contributing to this debate. When the Minister is replying to this discussion, I should like him to indicate whether his Party is asking for this money to enable them to implement a positive policy. We were treated to the suggestion that the building trade would be improved in order to absorb our unemployed. That remains to be seen, but it is doubtful whether a trend in the direction of increased building will have any lasting economic benefit for the country.

The question of the building industry may be raised on the Estimate for the Department of Industry and Commerce.

Very well, Sir. I am merely relating it to the question of employment and I am asking the Minister whether this Bill will obtain money which will have the effect of giving increased employment to our people. If it is not designed to implement a policy which will give more employment, can the Minister say when we can expect an announcement from him regarding any kind of policy from the Government and from the Fianna Fáil Party which will result in increased employment? The recent figures have shown a backward trend instead of an improvement in relation to previous years.

The House has listened to a very confused speech. The Deputy who has just spoken is an expert in this House in trying to create a smokescreen but it is generally so thin that it is transparent. He is asking what is the Government's financial policy. The previous Government has got this country into such a state of depression and stagnation that the policy is to try to get the country out of it. The previous Government presented the bills to the country and, consequently, to the incoming Government, so that the policy for the incoming Government is to devise ways and means hurriedly to get out of that situation.

Does the Deputy really believe that?

Then the Deputy is more innocent than I thought he was.

Is that not exactly what the position is?

It is not. It is nonsense.

I shall give way to the Deputy if he will tell me how it is not so. That is the position.

Of course, it is not.

Deputy Rooney has said that the imposition of levies improved our trade. Did any member of the House ever hear a statement so ridiculous?

I said "trade balance".

Deputy MacCarthy would not know the difference.

The Deputy omitted the word "balance". However, even if I concede that, it does not necessarily contribute to an improvement in our national position or in our trading, because the levies hold up essential industries and create unemployment, thereby causing a general state of depression where both imports and exports are reduced and consequently the country is endangered.

If levies are imposed as a temporary measure, that must be done with some kind of planning which, in my judgment, the previous Government did not sufficiently examine. If the supply of transport fuels is reduced, the production of tyres, garage work and all the rest are reduced and the whole industry is depressed. If supplies of essential stocks are reduced, that does not even show an improvement in trade balance. That is what happened: essential stocks were diminished and, consequently, there was a general air of depression because unemployment was rife in many essential industries, including the building industry.

If the import of timber is stopped, houses cannot be built and, consequently, the man working in the sandpit, the man making concrete blocks, the man making tiles becomes unemployed, and the building industry gets into the position in which we found it when we came into office. At that time there was no building of any consequence being carried out except the building that the local authorities were trying to carry on on overdrafts and on promises by the Government for the future, which the country saw they were not in a position to fulfil.

Deputy Rooney spoke about the loaf. The cure of the last Government was to give a smaller loaf. Neither the subsidies nor the levies saved many people in the City of Cork whose families have been engaged in the bakery industry for generations, from the monopolist. When you have a depression in a country, it always happens that the man in a small way, who is trying to make ends meet, is eaten up by the monopolists; his business goes to the wall. That has happened during the past year in the South of Ireland and, I presume, elsewhere.

It is not a bed of roses for the Government to have to face a situation of that kind created by the ineptitude of the previous Government who failed to face the situation and created a state of economic chaos that it would be difficult for any Minister to remedy. The bills were presented by the previous Government. This Government has to get the means of paying them so as to restore the economy of the country and enable progress to be made. Local authorities, public bodies, private enterprise did not know from day to day what was in store for them. They faced one disaster after another.

Five or six big bakeries whose names were associated with the industry in Cork for generations have been eaten up by one big monopolist. The entire production of the loaf, big or small, is now in the hands of that monopoly and the distribution of that essential commodity to the people in the second city of the State is at their discretion. That was a very undesirable thing to have happened. If those bakeries could have seen, during the period of office of the previous Government, with the loaf big or small, either with levies or subsidies, that they could preserve for their families the businesses that had been built up over generations, they would not have allowed that situation to develop.

In the same way all the main industries were held up, people were going abroad and a general state of depression existed. There was stagnation in industry. That is what we have set out to remedy. That is what this Bill sets out to make provision for in the coming year. In the short time at the disposal of the Government the whole position could not have been adequately examined, but there was sufficient staring them in the face to make them see that remedies had to be applied quickly. This Government had the courage to face that situation. The country realises that and have accepted the decisions of the Government with good grace. A feeling of confidence is being restored because when the Government is prepared to examine and face the situation and has the interests of the people at heart, the country can go forward with the confidence that the Irish nation always had in facing difficulty.

The most controversal item of this year's Budget was, of course, the abolition of the food subsidies. The debate on this matter, which took place in this House over the past few weeks, was confined to a fairly narrow issue. The Government's case on the abolition of the food subsidies was based on the simple principle that they had no alternative to cutting the subsidies in order to balance the Budget. The Opposition denied that. The Opposition stated that it was possible to balance the Budget without cutting the food subsidies.

It is of very great importance that the House and the country should have very clearly before them these two issues because if the view which we on this side of the House took was correct then the very grave hardships which our people are being asked to bear, the very grave difficulties which the weakest sections in our community are being asked to bear, the economic difficulties which will come about as a result of that decision would not have been necessary.

The Government's case was based on the proposition, as I say, that it was necessary to cut the subsidies in order to balance the Budget. Let me remind Deputies of what the Opposition suggested could have been done this year to obtain the funds necessary to balance the current Budget. Deputies will recall that the amount of savings on the food subsidies this year was £7.1 million and that compensatory payments had to be made by the Government to members of the uncalled social assistance class, amounting to £1.95 million and that the total sum which the Government gained as a result of cutting the subsidies and giving the increase in the social assistance payments was £5.15 million. That is what the Government gained this year by their action and their action brought in, in relief of the Exchequer, £5.15 million.

The suggestion made by the Opposition speakers as to how that sum could be obtained was that if the Government had retained the import levies and if, instead of putting them into the capital account, they had put them into the current account, there would have been enough from the import levies to have balanced the Budget this year. What are the import levies? Indirect taxes, customs duties, but they were called something special last year. They were referred to as import levies and the proceeds were put into a special Capital Fund and special legislation was passed last year to ensure they were put into capital account. Those were the import levies for last year brought in by the previous Government. The first group of levies was brought in in March and that group was subsequently increased in July, and on neither occasion was a division challenged by the then Opposition——

Hear, hear!

——and the case made by the then Opposition was that the steps we were taking were inadequate to deal with the situation.

The Government facing the problems of last year had very difficult decisions to take and one of those decisions was to put the proceeds of the import levies into capital account rather than into relief of taxation. That was done for several reasons. It was done because of the shortage of capital; because of the dangerous inflationary trends of the time, creating an excess of imports over exports. The Government's action was accepted by the Opposition of that time and again there was no division challenged on this matter of financing the capital programme by import levies.

Let me remind Deputies of this the import levies were put on at a time of very grave national difficulty. They were put on, as was stated, for exceptional reasons and it was also stated that they would be of a temporary nature. That being so, it is interesting to see the argument which the Minister put forward in his reply to the Budget debate a couple of weeks ago when he dealt with this aspect of the case made by the Opposition against the Budget. The Minister said two things about this Opposition argument. First of all, he described the proposals of the Leader of the Opposition and Deputy McGilligan as borrowing, and he said, at column 2101 of Volume 161, No. 15:—

"Suggestions by Deputy Costello and Deputy McGilligan which amounted to balancing the Budget very borrowing ...."

Earlier, he referred to them in the same volume, at column 2085:—

"They advised that borrowing should be done, borrowing for the Budget, which would put us back in the bad old days of Coalition Government."

I think it is not correct that the Minister should be permitted to make a statement like that without being contradicted. The suggestion which we made on this side of the House that the revenue from the import levies, which are indirect taxes like many others from customs duty, should be put into the current Budget, is not, by any stretch of the imagination, borrowing. We suggest that current taxes should be put into current revenue and should be used to balance the Budget. To describe that suggestion as one alleging that we are borrowing for the current Budget is, to my mind, not being open and fair with the House and the country.

The Minister, however, had a second defence for his action in not doing what the Opposition suggested he should do. In the same volume, at column 2093, the Minister referred to the fact that his predecessor had made provision in the Central Fund Act last year by which the proceeds of the import levies were to go into capital account, and after referring to this very correct action he said:—

"They were created as capital and if we had done what Deputy Costello and Deputy McGilligan advocated we would have to change that Act."

May I pause there for a moment? Is there anything extraordinary in changing the Act or amending the Central Fund Act? Would the Minister bring in a Bill next week amending this year's Central Fund Act? He goes on, however:—

"I am not saying that is impossible but it just gives the House an idea of the Fine Gael Party who this time last year passed an Act of Parliament to make them capital and they now come along and blame us for not turning them over to current expenditure."

That is a comment on the Fine Gael Party which the Minister is entitled to make. I do not think there is any point in going into detail on that aspect of it now, except to say that we believe that last year it was correct that these revenues should be put into capital account, but we suggest this year, in view of the extraordinarily difficult circumstances, in order to avoid the disastrous consequences of cutting the food subsidies, we would be justified in changing them and putting them into current account. The Minister, as I say, is entitled to comment on the attitude of Fine Gael, but let me remind Deputies of that very significant phrase in his remarks, "It would have been possible". Why did he not do it?

The Minister, in his reply, gave no reason why he did not put the revenue from the import levies into current, instead of capital account and so avoid cutting the food subsidies. Will he not give it now in his reply to this debate? Let him not satisfy himself by saying that it amounts to borrowing for the current Budget, because it does not.

Let me say straight off there would be difficulties in doing that; let me admit quite fairly that the Minister, by doing what we suggest, would have difficulties. He would have difficulties on the Capital Account because of the shortage of capital and also in regard to industries on which the remainder of the import levies will be placed; but if that is the argument, let us have it, and we can debate the matter because we do not believe that the difficulties which the cut in subsidies will causes are commensurate with the difficulties which would be caused by taking the levy revenues away from where they are at the moment. The whole future economic policy of this State for several years to come is at issue here——

Hear, hear!

——and the whole lives of many people in the community are being affected by the Government's decision. We have spoken on this side of the House, and members on the other side have accepted the position in regard to the hardship that the cut in the food subsidies will cause to the very weakest sections of the community. I suggest to the Minister and his Government that any steps would have been justified, or almost any steps, to avoid taking the action which they took at the beginning of last month. We have suggested one way of avoiding that and the Minister, I suggest, has not answered our argument.

When the Minister is replying, he may perhaps point out the difficulties involved in keeping on the import levies at the level at which they were before he cut some of them, and changing them from capital to current account. He may point out, as he did in his Budget speech, that by leaving the imports levies on, he would create difficulties, for example, in the manufacturing industries and the assembling industries, such as the radio industry. These are arguments in favour of cutting the import levies. They are arguments for giving reliefs to certain sections, but I do not think they outweigh the argument for keeping the levies and putting them into current account, because it is agreed on all sides of the House that this is a difficulties year for the country.

If there is a choice between the economic chaos which will come about as a result of the withdrawal of the food subsidies and the imposition of temporary difficulties on certain sections, I know which way a Government which had the interest of the community at heart would decide. We do not suggest that Deputies opposite liked cutting the food subsidies. I feel sure they would have liked to have increased them. We are agreed they did not do it for sadistic reasons. The Deputies opposite are past masters at the political art and they know the political effects of what they are doing.

I think they did it out of incompetence. The action of the Government clearly demonstrates that they have not got the proper approach to the economic and financial difficulties of the country. I believe any other Government would have taken any steps other than the cutting of the food subsidies. However, it is done now. Deputies on this side of the House know what is happening in the case of old age pensioners whose extra shilling a week does not last them until Wednesday. We know what is happening to people who were in receipt of tuberculosis allowances or home assistance. I wonder is it too Utopian to think the Government might change their minds. Perhaps it is too much to hope that the Government might set here are other ways of balancing the Budget besides cutting the food subsidies.

May I suggest that the Minister for Finance bring in a four or five line Bill next week amending the Central Fund Bill? We will support such a Bill; he will not have any difficulty in getting it through. Such a measure would involve the reimposition of the import levies, which might cause difficulties in the industries concerned, but let us weigh that against the social effects and the economic effects of what the Government are doing.

On this side of the House we have naturally been concerned to discover the well-kept secret of the Government their financial and economic policy. We know they had to review the situation when they got into office. However, they have had more than the month of six weeks referred to by Deputy Burke; they have been three months in office now and all they have produced is the Budget. We would like to know what their financial and economic policy is.

I hope the Minister will answer this question: does he believe that cutting the food subsidies is a disinflationary move, or does he believes that, by cutting the food subsidies, by increasing prices and taxation he will bring about conditions of smaller demand, conditions which will reduce the demand for our industrial goods, consequently reducing the demand for labour and bringing about more unemployment? Does he believe that his policy, as enshrined in the Budget, is one likely to inflate the economy?

I want to say that I believe in a policy now aimed at inflating the economy. Indications of a fall in employment, of smaller industrial production and the fact that we have the balance of payments in equilibrium, all indicate that a policy aimed at inflating the economy is now justified. Does the Minister agreed? If he does, where are his financial proposals and when is that policy to be put into operation? Just as every Deputy on the opposite side wants full employment and a higher standard of living, so do we. There is no use arguing about it. We are all agreed, but we disagree on the means by which these ends are to be achieved.

We particularly disagree when the Government come in and say they are in favour of bringing about conditions of greater employment and of increased industrial production, when at the same time they take steps to produce the opposite effects. I believe that is what is being done in the Budget. Last year, the action of the Government solved a very difficulty balance of payments problem. Consequently, the present Minister is not faced with that problem. In 12 months very grave difficulties were overcome and, in the first quarter of this year, there was considerable expansion of our exports, particularly our agricultural exports. This Government have got an economy which should be inflated, requiring the pumping of more credit into it. The people and the resources are there and all the country needs is the inflation of its economy.

It should like to know if the Minister agrees with that proposition. I oppose the measures taken by the Government in this year's Budget, not just for social reasons, for the consequences which will flow to the weakest sections of the community, not just because the weaker sections are being asked to bear greater burdens, but also for economic reasons. I think it is high time there was a statement by the Minister as to what he believes is the best type of policy at the present time —whether a disinflationary one or one likely to inflate the economy. Secondly, I should like the Minister to tell us which is his policy and how it is to be borne out by his financial proposals. I feel quite sure that the results of the Minister's Budget this year will be of a disinflationary character and that, far from relieving the situation of which we all wish to be relieved, it will aggravate it.

The Government have had three months now in which to make up their mind. They were a long time in office previously, so that the affairs of Government were not new to them on this occasion. They have had two and a half years in Opposition during which to lay their plans. Some members of the Government told us of their plans when in Opposition. I should like to know now where these plans are and what they are. Perhaps the Minister would let the House and the country know.

In considering financial matters, there are two items which the people of this country have to consider. There are two bills to be met. In this respect, many of the Deputies on the other side seem to be living in the clouds. In 1923, the Government that came in here were faced with civil war. When Fianna Fáil came into office in 1932, they were faced with the economic war in which our agricultural production was negligible.

The Deputy is putting it mildly.

We had, as I say, the economic war then.

Debate adjourned.