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.