Skip to main content
Normal View

Dáil Éireann debate -
Wednesday, 3 Jun 1959

Vol. 175 No. 8

Finance Bill, 1959—Second Stage.

I move that the Bill be now read a Second Time.

This Finance Bill is exceptionally long and complex and for this reason I have taken the unusual step of circulating, with the text of the Bill, an explanatory memorandum designed to give the broad effect of each of the eighty sections. In the circumstances, I do not propose now to burden the House with a section by section commentary on the Bill. It may be of assistance, however, if I briefly review the purpose or purposes of each of the eight parts into which the Bill is divided.

Part I grants a reduction in the level of Income Tax and easements in the Sur-tax which will in fact remove growing anomalies in that field. A deduction is being allowed for apprenticed children over sixteen and a tax benefit, similar to that available for some years in the case of covenanted subscriptions for research, is provided in the case of covenanted subscriptions for the teaching of the natural sciences. Four sections are introduced to combat the "bond washing" device by virtue of which an unfair tax advantage might have been secured where securities were bought cum-dividend and then sold ex-dividend.

Part II of the Bill deals with the various Customs and Excise matters referred to in the Financial Statement. These relate to the duties on unmanufactured tobacco and hydrocarbon oils, entertainments duty reliefs and the Order relating to the review of the special import levies. Part III continues the Corporation Profits Tax exemption for public utility companies and certain other concerns. Part IV provides that the portion of a purchased life annuity which may be regarded as representing the return to the annuitant of capital laid out in purchasing the annuity is to be relieved from tax.

Part V of the Bill is to come into operation on the 6th April, 1960. It affords relief from Income Tax and Corporation Profits Tax as regards capital expenditure on assets consumed in the earning of profits.

In my Budget Speech I recalled that, in the three years since the Industrial Taxation Committee presented its Report, all its recommendations except two had been translated into law. The two exceptions were the recommendation for an annual allowance on industrial buildings and for an obsolescence allowance where machinery is not replaced. Chapters I and II of Part V of the Bill will now provide for these matters.

Chapter III moves on to another asset, namely, patents. It enacts broadly that there is to be an allowance for tax purposes, over a span of seventeen years (with provision for balancing allowances and balancing charges in appropriate circumstances), of capital expenditure incurred or deemed to have been incurred on or after the 6th April, 1960, on the acquisition of patent rights; and that there is to be a charge to tax on the seller, which may be spread over a six years period, in respect of the sum he receives. Chapter III also provides for a deduction in respect of expenses incurred in taking out a patent and for other reliefs in the same region.

Chapter IV secures that capital expenditure on dredging is to rank for capital allowance in more or less the same manner as capital expenditure on industrial buildings. Chapter V embodies miscellaneous technical provisions and is the concluding Chapter of Part V. Part VI of the Bill incorporates two provisions in connection with the "exports" relief. The scope of the relief is widened so as to embrace certain types of case; and a distortion, which might otherwise arise in the calculations where the price of goods may carry an element of duty, is to be removed.

In addition Part VI amends the law as to industrial buildings to the extent that docks are brought within the definition of that term and capital expenditure on preparing or cutting land may rank for allowances. It also provides that expense on training local staff before a new industry begins is to attract relief.

Part VII simplifies the rates of Stamp Duty on marine insurance policies.

Part VIII, which is the last part of the Bill except for the schedules, is concerned, as its title indicates, with miscellaneous matters. I need mention only three sections which, respectively, make the usual provision with regard to the Capital Services Redemption Account, increase the maximum rate of interest payable on trustee savings banks deposits and extend the time limit in regard to the exemptions for the mining of non-bedded minerals.

I trust that these remarks give a fair summary of the scope of this very lengthy Bill. It is essentially a Committee Stage Bill and I am sure that any points of detail can be dealt with on that stage.

The Minister and I can agree on one point, that this is essentially a Committee Stage Bill. Having said that, it is probably the sum total of our agreement. Because it is essentially a Committee Stage Bill, I do not propose to-day to go into any detail in relation to the various Parts or sections of the Bill, as such. It is an extremely technical Bill and let me say at once that in endeavouring to explain it, I am glad that the Minister took the step of issuing an explanatory memorandum.

I have not had the opportunity of going back over the records to see whether it was an unusual step or not, as he said, but whether unusual or not, it was a desirable step and one that has facilitated us very much in the consideration of the detailed provisions of the Bill. There are, however, a couple of points which are not referred to and to which I should like to refer before going on to discuss the general economic situation. It was a pity that in this Finance Bill this year the Minister did not take cognisance of one circumstance which is undoubtedly affecting us prejudicially in attracting people to come and reside here. The rates of estate duty in this part of the country and in the Six Counties show a disproportion which is not favourable to us.

I happen to be aware of two cases during the past 12 months where people who would otherwise have returned to settle down here have in fact gone to settle in the Six Counties. The reason which ultimately influenced them in reaching that decision was the disparity in death duty rates. I am not talking at all in terms of large estates. I am talking of the reasonably modest estate running from £10,000 to £20,000. The position is that the rates of estate duty are between one per cent and four per cent. higher here than in the Six Counties. In addition, the Six Counties some years ago abolished legacy and succession duty: therefore, the effective rate charged here is more than four per cent., in such cases, higher than it is up there because legacy and succession duty is chargeable in addition on the net estate, after deducting the estate duty payable, between one, five and ten per cent., according to the relationship of the person concerned.

I do not believe that equalising the position here with the position in the Six Counties would give rise to any vast difference in the Budget revenue. When we are thinking in terms of a Budget revenue of over £100,000,000, the variation that would be involved in this matter would be a very trifling one. It might well be that we are in fact losing more than we gain by maintaining the existing disparity. I want to make it clear, as I say, that it is to the more modest ranges that I am referring, the ranges which are likely to affect the person who has perhaps been abroad during his working lifetime and then has the intention of coming back to retire and to live here.

I think the Minister would be well advised to give detailed consideration to the rates in question because in fact the rate is not merely—in the classes of estates to which I have referred—four per cent. higher here but the four per cent. is actually half as much again as the rate in the Six Counties. In relation to these medium-size estates, the rate there is eight per cent.; here the rate is 12 per cent. Obviously, that must have a considerable bearing on the choice that people may exercise in determining where they will end their days.

I want also to refer to an anomaly that arises in relation to the matter of residence for income tax purposes. The general position is that a person who spends six months here in any one fiscal year is considered resident. If he forms a habit of coming here and spending an average of six months in Ireland, he is considered resident in a year in which he spends three months. But there is one exception to this, one to which I want to draw attention this afternoon.

If a person maintains a residence here available for his occupation, he is considered resident in Ireland, even if he spends only one night in that residence. In fact, I am not quite clear, and I should like the Minister to clarify as to whether he is not resident here even if he spends a day in the country without going into his own premises. The type of person I have in mind is the person who gives very considerable employment in my constituency, the stud farm owner. He gives good employment there, employment that provides wages higher than the average and employment which not merely contributes to the benefit of the people in the area concerned, but contributes also to our national production in a particularly beneficial way and to our balance of payments, to which I want to refer at a later stage.

Very often, indeed, those people have to transmit to this country for the purpose of maintaining their stud farms considerable remittances of income. If a person is not domiciled here but has a residence here, then, as I understand the tax position, he is liable for taxation on those remittances. The effect of that is that if additional remittances are necessary and desirable for the purpose of ploughing back into the stud farm and making it better, and if there is a house on the stud farm where he can come to stay, if he so wishes, he will be liable for taxation on those remittances.

That seems to me to be a narrow conception of the position. If I am correct in my interpretation of the law —and I am supported in that interpretation by some accountants who have great experience in the matter— it seems to me that the present law tends to prevent money coming into the country rather than to encourage it. I think we would all agree that that is an undesirable position which should be rectified. It may be that the situation is covered to some extent by the double taxation agreement with Britain and that it may require some consideration in the light of that agreement. But in any event, it is something I commend to the Minister for examination and for some type of action which will encourage people to come and stay here rather than that they should be discouraged, as they are at present, and to ensure that they will not be discouraged from improving stud farms, for example, with the additional employment that such improvement would give.

I want also to refer again to the class of person to whom I referred a second ago in relation to death duties, that is to say, people who have been brought up here but who have earned their livelihood and spent their working lives abroad. I understand that the position in relation to those people has been eased somewhat by Section 11 of the British Finance Act, 1956. I suggest that similar relief should be given here. It would, I think, be advantageous to the country as a whole that Irishmen and Irishwomen, people of Irish nationality who are forced by circumstances to go abroad to earn their living, should be encouraged to retain property here to which they might retire when their working days are over.

There would be many people abroad who would come within this category, people who are in receipt of salaries from oil companies, for example, who are working abroad and who would like to end their days at home in their own native land. At present, however, if those people wish to retain a residence here during the interval, they are in a penalised situation compared with those who enjoy the relief extended by the British Finance Act to which I refer. Of course, they are obviously influenced, too, by the Channel Islands and Isle of Man position. While we may not be able to compete with the Channel Islands and the Isle of Man in the inducements that could be offered, at the same time I think there are certain penalising conditions which could be removed.

I know, of course, that in relation to this the Revenue Commissioners have certain discretion to make allowances. The difficulty about those discretionary allowances is that it is impossible, as I understand the position, to get authoritative statements on the basis upon which taxation will be levelled in the future. It seems to me essential that a person who wishes to purchase a residence here, to which to retire or to occupy from time to time when on holidays, should know specificially where he will stand. There must be some method by which he can—on disclosing, of course, to the Revenue Commissioners the full and true facts—know exactly where he will stand and on what basis he will be assessed. As I say, in the British Act this refers particularly to people who work full time in a trade, profession, vocation, office or employment outside the United Kingdom, and similar provisions could usefully be introduced here.

A case has recently been brought to my attention of a situation which arises in respect of anyone resident here and who is also an underwriter at Lloyds. He is of course taxable, and properly taxable, in Ireland in relation to his profits. There is, however, an arrangement in Lloyds by virtue of which they form a special reserve fund to which contributions are made out of the profits from time to time. The position under the Income Tax Act, 1952, as I understand it, is that the contribution to the special reserve fund is deemed for all purposes of the Income Tax Acts to be a payment chargeable to income tax by way of deduction. The single resident in Ireland is, of course, not chargeable to income tax on his underwriting profits, but, apparently, the double taxation agreement, while it exempts single charges, does not exempt contributions to the special reserve fund.

Paragraph 4, Part III, of the Eighteenth Schedule of the Income Tax Act, 1952, makes it clear that the claimant "shall not be entitled to the exemption of any income, the tax on which he is entitled to charge against any other person, or to deduct, retain or satisfy out of any payment which he is liable to make to any other person."

Therefore, the contribution to the special reserve fund comes within that proviso. The purpose of the special reserve fund is to level out the surtax liability, but, as phrased at the moment, the double taxation agreement does not seem to cover up the point. By adhering to the special reserve fund scheme, a person who is resident here has rendered himself liable to United Kingdom profits tax and he gets no relief under the double taxation agreement. That, I understand, has operated in one case to prevent certain income coming here that would otherwise be transferred here but in the ownership of a person desiring to come to live here with consequent loss to ourselves. In that case, the person concerned decided not to come here.

I should also like to ask the Minister to confirm for the benefit of certain people who are not quite clear on the provisions of the Bill that the deduction of allowances for surtax purposes made in this Bill does not cover earned income allowances. As far as I can see, the position is that earned income allowances are not deductible for surtax assessment. I make no comment either way on it. I merely want the position clarified as to whether the view which has been taken of this Bill, as framed, is correct or incorrect. So much for the technical aspects of this Bill. We shall have an opportunity of coming back to them on Committee Stage.

Before I go on to other matters which may, perhaps, cause slightly more heat, I should like to say at this stage to the Minister it would be desirable before the Committee Stage of the Bill that a substantial time be allowed to elapse. Whether we are sitting or not in the week of polling, I think it would be desirable that the Committee Stage at least of the Bill be deferred to the following week. I believe the Minister has no objection to that course.

I am sure it is the Minister's experience, as it was mine when I was over there, that, in fact, no Minister in relation to Bills gets any real constructive criticism or constructive contribution in relation to the manner in which a Bill will impact on any particular section of the community until after it has passed the Second Stage and has the publicity of the Second Stage. In fact, the publication of the Bill never seems to take people's interest in the same way as the discussions in the House. In fact, I think it is fair to say that more often than not outside people bring to the notice of the responsible Minister certain unforeseen consequences of a Bill at the very last possible moment, if not even too late. In a Bill that is as technical as this and where the members of this House, with one or two exceptions, are not competent to discuss the detailed application of the measure, it is highly desirable that there should be a considerable period between the Second Stage and the Committee Stage.

More than any other Minister, perhaps, with the exception of the Taoiseach, the Minister for Finance is the Minister of the Government who should indulge in cold and calculating statements of facts, should avoid hysteria and, above all, should avoid distorting the facts and making innuendoes that are not justified by the facts. The Minister was reported in last Sunday's Sunday Press as having gone to speak at a Dublin South-Central election meeting. I am afraid the Minister, when going to speak there, forgot that he was Minister for Finance and went to speak there as Deputy Dr. Ryan.

For sheer brazen impudence some of the lines the Minister took on that day, assuming, of course, that he is correctly reported in Pravda, the Sunday Press, beat anything we have seen for some considerable time. First of all, let me refer to his comments on the balance of payments. The Minister endeavoured to give the impression that the position in relation to the balance of payments at the present time was one that was highly satisfactory and highly satisfactory as a result of the action of Fianna Fáil.

What is the truth? The truth is that the Minister came in here in May, 1957, and delivered a Budget speech in which he was forced to admit that at the time he took over in the financial year 1956-57, we had achieved a balance on our international account; that the measures taken by me and by the Government of which I had the honour to be a member had achieved their purpose in relation to that international account; and that the position in the financial year 1956-57 had so altered on our international balances that at the time he took over the reins of office we were in balance on that account.

I do not propose today to go back over all the misrepresentations and attacks that were made upon us, and upon me in particular, by Deputy Dr. Ryan, as he then was, and his Fianna Fáil colleagues. To go back on all the innuendoes, on specific promises made by Fianna Fáil canvassers that the Fianna Fáil Government would at once remit the levies which I had imposed for balance of payment purposes would be futile. Two years have come and gone and the balance of international payments was in order in the financial year in which the Minister took over as he himself admitted, but far from their being any remission of those levies, part of this very Finance Bill we are now discussing is for the purpose of making those levies permanent, building them into the permanent tax code of the State and ensuring that they will be collected for ordinary current Budgetary purposes.

If anybody said in March, 1957, that that would be the purpose and policy of the Fianna Fáil Party and of the Fianna Fáil Minister for Finance, whoever he might be, clearly we would have been told by Deputies opposite that we were indulging in fanciful lying, but the facts speak for themselves. The unfortunate thing, however, is that not merely have the public been mulcted in that way, not merely will the public continue to have these moneys extracted from their pockets on a permanent basis— whereas with us it was made quite clear that it was only a temporary management for balance of payments purposes—but we are now running into a situation in which Fianna Fáil have allowed the balance of payments already to start getting into a position which is far from satisfactory.

For the four months ending last April, the first four months of the year, our import excess was £33½ million. That is approximately £9½ million more than the import excess for the same period of last year. If one were to multiply the import excess merely by three, we would find that on our trading account that would mean we would have an import excess this year of approximately £100,000,000. But of course it would not be fair to do that because the fall of the year is always somewhat better than this time of the year but it is fair to compare like with like. In the first four months of this year we have an increased import excess of £9½ millions.

It is also fair to remind the Minister of the fact that in his Budget estimates for the current year the one place where he is budgeting for any substantial increase in revenue at existing rates of taxation is in respect of customs duties. Increased customs duties, even allowing for the switch from import levies to customs, can only be based on increased imports or increased use of tobacco. I do not think that the Minister, particularly in view of statements made recently by his colleague, the Minister for Health, will say that he can fairly or adequately estimate increased customs revenue on the basis of increased tobacco consumption.

In passing I might say—and I think this is another point on which the Minister will agree with me—that it is a most unhealthy situation for national finances to be based on a system in respect of which the taxation from one single commodity, tobacco, is approximately 25 per cent. of our whole national revenue. It is a basis which leaves us more than vulnerable to change in the habits of the people and one which could, in certain circumstances, have most dreadful results on the outturn of a Budget in any year. Be that as it may, it is quite clear that we are running at present at the rate of £100,000,000 a year trading deficit. We shall not reach that, I hope, and I do not think we shall. Our invisible income last year was in the region of £64½ million and if we can keep to the same rate of import excess as at present we would end the year, probably, with a deficit on our international trading account of about £36,000,000.

I do not think things will be quite as bad as that but on the existing figures nobody could suggest, unless there is a tremendous improvement that none of us can foresee, a balance of payments deficit this year of an order any less than of about £30,000,000. In those circumstances, for any person holding the office of Minister for Finance to go out to Dublin South Central to an election meeting and start jeering at the previous Government for having a deficit in 1956 of £14½ million which they corrected before he took office, so as to get the balance of payments into equilibrium, is brazen dishonesty.

I hope circumstances will change. The terms of trade are about as favourable as we can hope to expect; we cannot genuinely foresee any further improvement in those terms, so far as the published figures are available. We are facing a position in which it would be difficult to make any estimate at present in relation to our balance of payments account for 1959 other than that we shall have a deficit somewhere between £25,000,000 and £30,000,000. That is not much of a record for Fianna Fáil considering they themselves had to admit that, at the time they took over the reins of Government from us, our balance of payments account was in equilibrium.

But there is worse than that. By the manner in which he has turned temporary levies into permanent taxation the Minister has deliberately thrown away a weapon already forged and easy to use if, unfortunately, we should get into difficulties of that sort again. The method that was adopted then is no longer available to him because he has taken what was purely a temporary balance of payments remedy and turned it into a permanent imposition on the people. I hope, therefore, from that point of view, that there will be some unforeseen change in the situation. Certainly, everybody on this side of the House would welcome anything that we could see coming round the corner in any shape or form that would avert any difficulties on that score.

We have only the April figures. I am certain the Minister has not the May figures yet. But the first four months of this year show a trend which, if it is continued, will present a problem to whoever is sitting over there as Minister for Finance. I have no doubt whatever that if the rôles were reversed, if we were in Government and the Minister for Finance were over here, he would be stumping the country during this election campaign saying we had been lacking in the performance of our duty in not already having taken remedial measures because of the upsurge in the import excess. I do not take that view but I do say that the position is one of which serious note will have to be taken, and it has come simply and solely because of the manner in which the Minister and his Government have mismanaged the situation in those two years.

When I was speaking on the Budget of 1957 I recollect—I have not looked it up—telling the House, much to the jeers of the Minister and Fianna Fáil, that we had handed over the finances of this country, on the Minister's own admission at that time, in balance of our international account, that I hoped they would keep it in balance but that I doubted if they had the ability to do so. Two years afterwards we can say that that was correct and that, in fact, they have thrown away the advantages then obtained, advantages which were dearly bought, and undoubtedly bought at the expense of political popularity, because we felt it essential in the national interest to protect the means by which the country would have in the years ahead the reserves and the wherewithal to buy the raw materials of industry without which industry would collapse and employment would virtually cease. We did that and in doing so we were attacked ferociously by the Minister and by other Fianna Fáil speakers. We left them a situation which was in balance. They have allowed it now to get out of balance and the responsibility must rest fairly and squarely on their shoulders.

When the Minister was speaking the other day he went on to talk of unemployment. I must confess it is the first time I have ever heard a Minister in this State say that ten years ago there was too much employment in agriculture. I wonder, if the Fianna Fáil voters throughout the country had known in 1957 that that was going to be part of the policy of Fianna Fáil, would they have given Fianna Fáil their support at that time, when a Minister would solemnly express it as his opinion that there had been over employment ten years ago in agriculture?

It is well for us to know what exactly is the outlook of the Fianna Fáil Party and the Fianna Fáil Government in relation to employment in agriculture. The economic statistics published show that it is not only in relation to agriculture that the employment record of this Government is far from satisfactory. This morning we all received the result of the quarterly statistical inquiry from the Central Statistics Office. The quarterly volume index of manufacturing industries for the first quarter of 1959 is at 102.2—agreed at once that that is substantially higher than it was in March, 1957. It was lower then because of the steps that had to be taken. When we had turned the tide, with proper and efficient management in Government, we should in the period of two years have got back at least to the position of March, 1956.

Again if anybody was told during the general election of 1957 that the volume of manufacturing industries after two years of Fianna Fáil Government would still be three per cent. under what it was in March, 1956, and that the number of people employed in manufacturing industries in March, 1959, would be approximately 3,000 fewer than in March, 1956, would the present Government receive the votes they did receive from the people?

The Minister and myself had some discussion in relation to the date on which the employment statistics were taken. I am not quite clear yet whether the time I mentioned, March, 1954, or the 1st June, 1954, is the correct one. In any event, as I told the Minister on that occasion, I concede the 1954 figure to him because whether it was March or the 1st June it was before the change of Government came. However, we have a situation now, as outlined in Economic Statistics, that in construction we are down a long, long way in relation to the number of people employed compared to the time when the Minister took up the reins of office—12,000 fewer people employed. Yet the Minister for Finance proceeded to speak the other day about the building industry. This is a quotation from his speech as reported in last Sunday's Sunday Press.

The Department of Local Government continued to sanction building and sanitary schemes but instead of providing capital for them left them to hawk their propositions....

The same is true in relation to the amount of finance being provided by this Government and by the last Government in relation to housing and other services. I would refer the Minister to the reply he gave to me on the 12th February, 1958. The State capital programme on housing in 1954/55, for which we were responsible, was £10.49 million. In 1955/56 it was over £10 million again. In 1956/57, the year to which the Minister apparently was referring, the expenditure in the State capital programme of housing was £10.72 million That was the expenditure in the year at which the Minister jeered in his speech last Saturday night.

What is the position this year? What was the position last year when nobody except the Minister was responsible? I refer to Table V of the tables issued with the financial programme. Instead of a housing expenditure of over £10 million, the expenditure last year was £6.48 million. How on earth, therefore, can anybody with any viewpoint of honesty, in the position of a responsible Minister for Finance, go out and make the speech, for election purposes, to delude the people, that the Minister made last week referring to housing and construction, when he knows or should know and certainly has the means of knowing and has the means to his hand to find out that, in fact, last year, he provided £4,000,000 less for housing than was provided in the year of our time in respect of which he was uttering criticism?

No responsible, honourable Minister for Finance could make that mistake and I cannot help feeling that it was done deliberately for political purposes without bothering as to what was the truth and without bothering as to the effects it might have on our economic fabric and on the country as a whole.

Even this year, the Minister is estimating on the basis of £8.27 million as against the £10 million odd to which I have referred. Let him take his whole public capital programme that is set out in Table 5 of the Tables issued with the Budget Statement and he will find that in respect of all those items, one after the other, the amount last year was considerably different from the amount to which he has referred in criticism in his speech.

Perhaps we did try to do too much, too soon, too quickly. If that was the criticism, then I could understand it. But it seems to me dishonest and dishonourable to criticise us for making available too little money to local authorities when the facts are that the amount that was made available for housing purposes—and it was housing to which he was referring—in our last year of office was over £10 million and the amount he is making available this year is somewhere in the region of £6½ million.

As I say, I could understand the criticism, if it were that we were trying to do too much too quickly. There might be some validity in that, but there can be no excuse, except that it was an effort to get cheap, petty, political propaganda, for the jibes in which the Minister indulged when he went out last Saturday and made the speech to which I have referred.

I would not subscribe, and nobody from this side of the House would subscribe, to the view that we have not at the present time serious, difficult, economic problems to face. As I have already said, we have a rising deficit in our balance of payments. There has been a drop in employment of 32,000 in the past two years, on the figures published by the Minister. Deputy Faulkner need not look surprised. I would refer him to Table 12 of the Economic Statistics issued by the Department of the Taoiseach. There he will find that two years of Fianna Fáil Government have meant that there are 32,000 fewer people employed in Ireland than there were on the day his Party took office.

Fewer people in insurable employment, which is a different thing altogether.

Fewer people employed.

In insurable employment.

No; that is a different figure. I shall come on to that figure also, if the Deputy wishes. He should read Table 12. I shall forgive him. He might not appreciate it. I would not forgive the Minister but I shall forgive Deputy Faulkner. Table 12 is the estimated total labour force, not the total insurable employment. The only basis on which you can assess the number of people in insurable employment quickly is the sale of social insurance stamps and that shows a reduction also, but that is not the figure I am referring to. The figure I am referring to is the total labour force, the total number of people employed in Ireland, and not merely social insurance contributors. If the Deputy takes the Economic Statistics which were circulated and available for all of us at the time of the Budget and refers to page 19, Table 12, he will see there that the drop is from 1,163,000 to 1,131,000, a drop of 32,000, in two years of government by Fianna Fáil, in the total labour force, that is, the total number of people employed.

That is not a record of which any Government should be proud. Certainly, it is not a record on foot of which a Minister for Finance, whose job it is, in any Government, to tell the truth and the whole truth to the people, should go out and indulge in the type of untrue political diatribes in which the Minister indulged last week. If that is the sort of thing for which the Minister for Finance and the Fianna Fáil Party are calling for a strong Government, if that is the sort of thing for which they wish to have an overwhelming Government Party in this House, if that is the sort of thing for which they wish to wipe out all opposition and alternatives to them, then, on this issue alone, the people have a fair chance of making up their minds as to what would be in store for them if they allowed Fianna Fáil to filch their rights in that respect.

The fact, however, remains that the position in relation to all our economic problems at present is far from satisfactory. The Minister for Finance went out again and preened himself on the question of balancing his Budget. The Minister and I had some pretty acrid discussion and words on that before. It is easy to balance a Budget if you take revenue that should be treated as capital revenue and use it for current purposes. It is easy to balance a Budget if you take expenditure that was taken as current expenditure and transfer it to borrowing. That is an easy way, a simple way. The fact, of course, is that, when you strip the politics away from Budgets of recent years, no Budget in this country, and certainly not the last one, has been balanced by the standards that were operative pre-war and I do not think it is desirable that Budgets should be balanced by the pre-war standard.

What should be done is that the necessities of the economic situation should be estimated and that, in relation to those necessities, one should have consideration as to whether it was desirable for a Budget to go into surplus, to run on line ball, or to go into deficit. In the past ten years, all Budgets, by reason of the segregaton of certain items of expenditure as being capital items, have gone heavily into deficit, according to the concept of, shall we say, 1938. I do not think that is the right concept but it is certainly not the right concept to endeavour to criticise the Budget of one year on one basis and to criticise the Budget of another year on a different basis. If they were taken on the same basis the criticism of the out-turn on 1956-57 and on 1958-59 would not redound in favour of the Minister.

As I said in the beginning, so far as the provisions of the Bill are concerned—this is really a Committee Stage Bill—we shall have an opportunity of considering them at a later date. So far as the general economic situation is concerned, it bears little resemblance to the high hopes that were unfortunately engendered in the people when they were misled by the Fianna Fáil election propaganda of February, 1957. The people have found out now exactly how they were misled and I hope that, not merely in relation to the referendum issue on 17th June but also in relation to the issue of Government, they will have an opportunity of giving a decision in the near future. Then the Minister for Finance will discover that, though he may be able to make a dishonest speech like that he made last week-end and have it published in the Sunday Press, he will not be able to get it accepted by the people.

The point made by Deputy Sweetman, in relation to death duties, was made last year by the Deputy and by the leader of his Party, Deputy Costello. I think everybody realises that when a Minister for Finance is apportioning his Budget he has not unlimited resources at his disposal. He may find, as he sometimes does, that he has to cover a gap by imposing extra taxation. Occasionally, as we were lucky enough to find this year, he may find some surplus. He then has to make up his mind as to the best way in which to apply that surplus.

I had in mind what the Deputy also has in mind, namely, the advantage of offering some inducement to wealthy people to live in this country. It was a choice between surtax and death duties. Now, in the case of surtax, there is a better chance of getting people to come and live here because, by doing so, they will get relief on their incomes. In the case of death duties, however, no benefit can be given unless the individual concerned also transfers his assets here before death. Very often that is not an easy matter. It is certainly not an easy matter for a wealthy person to transfer all his assets here. That was one reason why I thought that in this instance, at any rate, the choice should be surtax rather than death duties.

Secondly, the amount available for the purpose was sufficient to make a fairly big impression on surtax whereas the same amount would have made very little impression, I am afraid, on death duties. That is the reason governing the choice made and the giving of the relief in surtax rather than in death duties.

Is the correct figure £160,000?

I think the figure is about £70,000 in relation to death duties.

I am afraid it would be a good bit more.

I thought £70,000 in the first year was the figure I was given. Unfortunately, I have not got the figure here.

To bring our Tables into line with Northern Ireland Tables it would be £85,000.

That may be. I may have overlooked the second one in my estimate.

It would be about £250,000. That would be fairly hefty. The Deputy also asked about the personal allowances allowed in surtax. Earned income allowance is not countable in that. It is the personal allowance and also the allowances for children or for an adult dependant.

The next point about income tax I shall not be able to deal with very fully here. With regard to a person resident here for one night, or perhaps more than one night, I have got reports from the Revenue Commissioners on more than one occasion and I have also discussed the matter with the Chambers of Commerce. It is a very complex question and, so far as I could follow it, I think we would largely be giving a benefit to the British Exchequer, assuming it is a British citizen who is involved, by conceding the point raised without, as far as I can make out, giving any benefit whatever to the person concerned.

None of us would want to do that anyway.

No, but that is what it would amount to. With regard to the Irishman working in England who comes home here for a period, he is taxed here. I am afraid what is really desired by these people in most cases is that they should not be taxed at all. Again, that is not an easy matter with which to deal.

I agree with Deputy Sweetman that it is not a very happy position when there is so much dependence on the yield from one particular tax. Deputy Sweetman referred to the tobacco tax. That tax forms a very high proportion of our total revenue. Last year it amounted to about £25,000,000. The money is there. It is needed and I do not see that we can do very much about it. Recently I made inquiries. I think any Minister for Finance should be anxious about the tobacco tax because, first of all, it is a very heavy item in our revenue and, secondly, because of the general talk about the injurious effects of tobacco. I found that this year revenue is the same as last year. Apparently people are not too much impressed by the warnings given as to the injuries which may result from the consumption of tobacco.

I cannot follow the Deputy exactly when he says that by turning the temporary levies into permanent taxes we are thereby removing a weapon which could be used against a non-manageable excess of imports over exports. I should have thought that by making them permanent we were thereby using the weapon perhaps more effectively as compared with a purely temporary measure. Should the need arise, I take it the taxes can be increased. I have often expressed the opinion that this is a rather painful way of dealing with this problem—I do not like temporary measures—and I should certainly prefer to deal with it in another way, if that were at all possible.

I should not be so alarmed as the Deputy is in relation to the imbalance which has resulted as between imports and exports for the first four months of this year. The figures the Deputy gave are correct, I think. The Deputy said there is an increase in the excess for the first four months of this year of £9.3 millions. I think that is correct, but when we come to analyse figures we find that imports are up by £6.6 million and exports are down by £1.8 million. We naturally like to look on these things as being abnormal. Under imports, there is an excess in wheat alone this year of £3.1 million. That, of course, is due to the bad harvest last year and it is not a thing that is likely to occur again. This year, if conditions are as good as they have been up to the moment, we should have almost enough wheat for ourselves in the coming harvest, so we can take it that the abnormal importation of wheat will not be repeated. We can take it, therefore, as an item which has occurred because of the unfortunate circumstances which obtained last year and which should not cause us any undue perturbation, even if we exceed the figures this year.

Another item on the export side is that we are down by £2.7 million in cattle exports. I must say I find it very hard to understand the cause of that because the price of cattle was good during the early four months of this year, and it would appear from the census that we had more cattle in the country in the early part of January, and that being the case, having more cattle in the country, and a better price being offered, one would have thought that there would be a bigger export this year than last year. It is hard to understand why we did not have that bigger export. If the figures are anyway correct, that we have more cattle this year than we had last year, you would have expected to make up with the export of cattle during the early part of this year——

Up to what period was that figure for cattle?

For the first four months. It was down by £2.7 million.

I thought the figure was available only for the first three months.

No, for the first four months. So, leaving these two items out—there are a few other items you might regard as exceptional also but they do not amount to very much and it is not worth while taking them into consideration—or making allowance for them—not taking them out completely perhaps—I should have thought that we would have had a greater excess of imports over exports compared with last year. I suppose we could say for the past three years anyway we have worked out fairly evenly and, apart from that, the tendency in recent years has been that our invisible items are better—items like tourism and so on are improving—and when it comes to making final calculations, things may not work out altogether as badly as forecast by Deputy Sweetman here today.

On the whole, I have no fault to find with Deputy Sweetman in saying that we should take £10,000,000 and multiply that by three which gives a figure of £30,000,000. That would be an alarming figure. On the other hand, I think it may have a rather disturbing effect on the people—I do not think it can do much harm—but we had better not make the story any worse than it really is.

It may be a bit worse than the Minister says. There may be a half-way house.

Perhaps it is.

Because the Minister is wrong in his tourist figures which, according to the Economic Statistics, have been steady for the past few years at £19 million, £20 million, £18.5 million and £20 million. There is no variation there.

I was giving some explanation on a former occasion—I am not sure what the occasion was—but I did say that our tourist traffic outwards was abnormally high because of the Lourdes Centenary.

Is that a net figure?

It is. We shall leave it at that. I do not intend to go back over my speech to which the Deputy took exception and which was so faithfully reported in, what he calls, the Pravda of Fianna Fáil. I should like to say that the Pravda of Fine Gael did not report it at all.

How right they were; it was nonsense.

So the Pravda of Fine Gael must have thought it was rather an effective speech——

Maybe the Minister did not supply them with a copy of the speech.

They were supplied all right, but, however, I do not mind that. I always feel that if the Independent is up against you, you are on the right road.

On the question of over-employment, I dealt with that fairly fully. I do not think the Deputy is right in taking me to task because I said there was over-employment in agriculture 10 years ago. That does not mean there was too much employment—at least, it gives a wrong impression to say that there was over-employment. What I meant by over-employment was that there were too many people to have full employment. I think over-employment is the technical term used and it was used in a technical sense —under-employment, I mean. They were under-employed.

I spoke of agricultural employment and said it went up by 70,000 in the past 10 years. Incidentally, I said that the only time there was a stoppage of the reduction in agricultural employment was during the term of office of Fianna Fáil during the years from 1951 to 1954, or towards the end of that term, at any rate. I put that aside in order to deal with agricultural employment. I took year after year for the whole 10 years and I pointed out that of the reduction of 33,000 in those 10 years, a reduction of 29,000 took place under the two terms of office of the Coalition Government.

While that, of course, is fair enough comment, I was making the case that a coalition Government can never do anything right and that single-Party Government can put things right. I even went to the trouble, in order to be fair, of saying that even a single Party Fine Gael Government or a single Party Labour Government could have done much better than a coalition Government. I am sure that every man on the Fine Gael side and the Labour side of the House believes that, so that means that every man in the Dáil agrees with that statement.

Oh, no, we do not.

Labour and Fine Gael combined would do much better than Fine Gael?

Better than Fianna Fáil anyway. You can bet your life on that.

I would have to go back and consult the records to deal with the quotations Deputy Sweetman made from my speech with regard to the balance of payments at the beginning of 1957.

If the Minister likes, I shall give it to him.

I should like to have a look at it quietly. We can go back to it at another time.

Fair enough.

The Deputy raised one other point with regard to Budget balancing. Of course, I quite admit— and I have said this not only from these benches but from the Opposition benches—that a Minister for Finance can manipulate to a certain extent. He must do so within reason. He can put into capital on the expenditure side that which was hitherto current, where there is justification for doing so, and conversely, where income was regarded as capital, he might regard it as current income, as we did in the case of the import levies. But, having done all that and having given his estimate of what the income is likely to be for the coming year, and the expenditure, too—it is his own estimate, anyway—there is one thing that cannot be denied, that on that basis the Budget was balanced last year for the first time during the past ten years. That was the only claim made and that claim was true.

Question put and agreed to.
Committee Stage ordered for Tuesday, 23rd June, 1959.

Will you still be Minister for Finance then?

I shall not say I hope so or I hope not.

You might be elevated.

Someone will have to go in and clear up the mess.

Clear up a second mess?

Top
Share