Vol. 189 No. 10
I move that the Bill be now read a Second Time.
The explanatory memorandum which was circulated to Deputies with the text of the Finance Bill sets out the broad effect of each of the sections and it is hardly necessary for me now to give a section by section account of the Bill, the provisions of which were, in the main, foreshadowed in the Financial Statement. Following, however, is a summary of the matters dealt with in the various parts of the Bill.
I am afraid we cannot hear the Minister.
Order.
Part I relates to Income Taxation. Its main provisions cover the reduction in the standard rate of Income Tax, the raising of the income limit for the purpose of Earned Income Relief and the budget proposals in regard to Surtax adjustments.
The income limit for dependent relative allowance is being raised and the housekeeper allowance is being extended to a type of case not covered by existing law. Provision is made for allowance for tax purposes in respect of contributions under the Social Welfare Acts and life assurance relief is being granted, in certain circumstances, in respect of premiums payable by persons coming to reside here who already have life policies with foreign companies.
In future, corporation profits tax paid will no longer be admitted as a deduction in computing a company's profits for income tax but the reduction in the rate of income tax this year ensures that no company with profits of less than £52,500 suffers any loss as a result of the change. The vast majority of companies will still have a net gain from the reduction in income tax. For the relatively few companies with profits exceeding that amount, the loss as I made clear in the Financial Statement, is virtually insignificant.
Mine development allowances are being extended to open-cast mining of any of the minerals scheduled to the Minerals Development Act, 1940, and will relate to any expenditure on such mining incurred on or after the 6th April, 1960.
With a view to simplifying the income tax and sur-tax processes, provision is included for the obtaining of one return to serve for both income tax and sur-tax and, where a taxpayer's income tax is deductible from his remuneration, he may elect to have his sur-tax similarly deducted, where practicable.
Part II of the Bill deals with customs and excise duties. The matters covered include increases in the duties on tobacco, which, of course, were dealt with in the Financial Statement, and the extension from four to six years of the waiting period before increases in census population figures affect liability to entertainment duty in rural areas. Arising from the revision of the duties on motor vehicles, a section is included to re-enact the powers conferred on the Minister for Finance to make regulations providing for the temporary importation of motor vehicles free of customs duty. A penalty clause for contravention of the regulations is included.
Provision is also made in this Part of the Bill for an amendment, in the nature of a concession, of the road tax on vehicles commonly known as "dumpers" and "fork lift trucks" and for a proportionate adjustment of the fee for driving licences where these are taken out for periods of longer than a year.
The orders made on Budget Day relating to the replacement of the special import levies by new or amended customs duties, including a consolidated and simplified customs duty on motor vehicles, parts and accessories, are confirmed in the final section of this Part of the Bill.
Part III of the Bill grants certain easements from death duties. The upper and lower rates of estate duty are being reduced and reliefs are being provided in relation to gifts to the State, certain gifts inter vivos (usually known as gifts with reservation) and analogous releases of life-interests. Relief is also being granted for legacies to which Section 33 of the Wills Act, 1837, applies.
Provision is made for countering certain tax avoidance devices in relation to gifts inter vivos while the liability of trustees for payment of estate duty on property released from trust is being clarified. The exemption from aggregation of small unsettled estates is being discontinued.
Part IV of the Bill relates to stamp duties. It includes provision for the abolition of the stamp duty on receipts, relief in the case of certain mortgages, the increasing of the duty on cheques, and the strengthening of the existing provisions relating to the 25 per cent. stamp duty on conveyances, transfers and leases of lands to non-nationals.
Part V of the Bill deals with miscellaneous matters. It includes the usual provision relating to the Capital Services Redemption Account. It also contains a section removing the restriction which at present prevents the Bank of Ireland from making advances or loans to the Minister for Finance without the consent of the Oireachtas. Section 33 extends the provisions of the Finance Act, 1960, which were designed to prevent abuse of “exports” reliefs, to cover all claims for export reliefs. This part of the Bill also contains the “repeals” section. It is to be noted that the effect of the repeal of Section 22 of the Finance Act, 1924, is to abolish as from 1st August next the duty known as customs entry duty thereby relieving importers of the obligation to affix 6d. stamps to certain customs entries.
That is a brief résumé of the various provisions in the Bill. The debate on the Finance Bill mainly takes place on the Committee Stage and I shall be glad to deal with points of detail on that stage.
May I say, first of all, that the practice that has been growing more and more of Ministers coming in here and reading speeches very speedily, without having the courtesy to submit them to those who have to speak immediately after them, makes very little contribution towards the possibility of good debate. The Minister for Finance read through his speech at such a rate that it would be quite impossible for anybody to take notes of what he said and to listen at the same time. I do not think it matters very much in this case because this is a technical Bill and the Minister dealt purely with technicalities. It is perfectly understandable that lay Ministers in relation to legal matters should read the brief because they might not be able to follow the technical aspects of the revenue code otherwise. I do not blame the Minister in the slightest for that, but I do think we should have a practice here, no matter who may be in Government, that when technical speeches of that sort are read they will be circulated at the same time so that there will be no difficulty in respect thereof.
The Bill introduced by the Minister is one with which, in its detailed provisions, I propose to deal more on the Committee Stage than today. However, there are certain principles involved in this Bill quite apart from the general Government policy in relation to it to which I want to make some advertence. The Bill, in respect of Section 17, is the final stage of the duplicity of Fianna Fáil with regard to the special import levies. Every single one of us knows that throughout the general election campaign of 1957 the canvassers on behalf of Fianna Fáil, particularly here in Dublin city, made it clear to the electors when they were seeking their votes that if only they were elected they would abolish forthwith the special import levies. We all know that, far from being abolished, they have been welded and moulded into the permanent taxation code. They have been changed from temporary levies to meet a particular and difficult situation arising from an international crisis into permanent indirect taxation. This Section 17 is the final act in that drama of duplicity by Fianna Fáil in-relation to those levies. I can assure the Minister that he and his colleagues will not be allowed to forget their duplicity in that respect.
The second point to which I want to refer in relation to the actual sections of the Bill is the abolition of the deduction for corporation profits tax. Anticipating no doubt that I would again make the comment I made on the Budget General Resolution, the Minister made a passing reference to this. No airy-fairy mixing up of the facts can prevent people realising that this abolition penalises a company which makes its money by manufacturing and supplying the home market compared with the company that invests all its capital outside the country. I know that both companies will get a benefit from a reduction in the rate of tax. Take, however, two companies with a profit each of £100,000 to be divided up amongst their shareholders. If a company carries on business solely in Ireland to supply the home market, then in relation to those profits of £100,000 it was liable to income tax only on £90,000 thereof. I am ignoring the trifling first £2,500 which is free of tax. That was because corporation profits tax was deducted before arriving at income tax liability for assessment.
The situation now is that that company has to pay corporation profits tax of ten per cent., which is £10,000, and then it has to pay income tax on the whole £100,000. In other words, it is paying on an income tax assessment which includes the corporation profits tax. On the other hand, for that company to wind up its business and to liquidate itself and for its shareholders to invest the whole of the money on the other side of the water they would have to pay tax on only £100,000, calculated by reference to the income tax rate, instead of having to pay that tax and a ten per cent. corporation profits tax. That is a bad taxation framework. We should not in any way make it more attractive for a person to invest outside Ireland.
When I raised this matter on the General Resolution, the Minister for Finance tried to confuse the issue by referring to companies that get export tax relief, and so on. Of course, they do and it is entirely proper that they should get it. It was started by me. However, that is not the point here. The point is that in framing the manner in which corporation profits tax is no longer deductible from income tax assessments—not income tax liability but income tax assessments—a penalty has been put on an Irish company and therefore on people who invest in Ireland vis-á-vis those who invest outside Ireland. That surely is an extremely bad principle of taxation. When the Minister was framing his Budget he should have framed his tax reliefs in such a way that that would be obviated. It would have been quite simple to do so.
The other section to which I wish to refer today is Section 29 which deals with stamp duty on transactions by non-nationals. I have no use whatever for this section in its present form. It contains what I shall assume is a clerical error. The Minister for Finance reached this part of his Budget speech at about 4-30 p.m. on the afternoon of Wednesday, 19th April, 1961. As the section is phrased, subsection (9) means that anybody who carried through a transaction on the morning of Wednesday, 19th April, 1961, is being made liable to retrospective taxation which I do not think is constitutional.
The Minister very properly made it clear that, as from the time of his Budget speech, any transaction that was carried through thereafter would be subject to the provisions he had indicated. In fact, he has introduced a Bill which means that anybody who concluded a transaction some hours before the Minister spoke is now subject to an additional penal taxation. I do not think the Minister intended that. I think the phrase "on or after the 19th April" is a mistake for "on or after the 20th April." What the Minister intended to do, I am quite certain, was to provide that the section would operate after he had given notice of it in the Budget and after he had passed the appropriate resolution in the Financial Resolution that was dealt with that day.
The second thing in relation to this section also concerns subsection (9). There is a long-established principle that where a person has any doubt about the proper stamp duty to be put on any document, or when the marking officer in the stamping office has any doubt, the deed or document is lodged for adjudication of stamp duty. Once it has been adjudicated and the denoting stamp of adjudication has been placed on the document, that ends the matter so far as everybody is concerned. This subsection does violence to that principle. It breaks it completely. I do not know the purpose of inserting it in that form but in lines 15 onwards on page 20 it is set out:
Notwithstanding that it may have been stamped already and irrespective of whether or not it has been stamped with a particular stamp denoting that it is duly stamped...
Once we break the principle of adjudication of stamp duty, nobody knows thereafter where he stands.
It is a well-established and very proper principle that documents in respect of which there is some doubt for stamp duty should be lodged and that the Revenue Commissioners would have an opportunity of examining the matter and of making their case. The solicitor concerned has his opportunity of making the case on behalf of the parties and then it is stamped and adjudicated and marked "judged duly stamped." To break that principle will mean the creation of uncertainty in all forms of examination of title which will be quite impossible and certainly not worth a candle in relation to the month that had expired since Budget Day.
The Minister will realise that the Bill covers cases between Budget day and the passing of this Bill, when enacted. It is certainly not worth while breaking the principle of adjudication merely to cover that period. The Revenue Commissioners should have given instructions that where anybody lodged a document which was doubtful in its application to nationals and non-nationals they should have refused to adjudicate upon it until after the passage of the Bill clarifying the Financial Resolution that was passed on Budget day. This device has been used in the Bill merely because it is a simple way of doing it, without any regard for the principle involved, and perhaps— I use the word "perhaps" deliberately —to cover up some mistake that may have been made in relation to a particular case.
I think Deputy Booth, who usually disagrees with me on most financial matters, will agree that to infringe the practice of adjudicating stamp duty will create untold trouble for everybody and is not worth while. Apart from that, the section is useless. We introduced a Bill quite a short time ago, which the Government opposed with their majority and threw out, for the purpose of being able to estimate accurately the extent of the problem that has arisen by reason of purchases of land by non-nationals in Ireland.
We are all agreed it is a problem that arises in relation to agriculture and industry. All of us are anxious that nothing whatever under any circumstances will stand in the way of industrial development. We want— and I made this clear when I was on those benches, even though I was criticised violently by Fianna Fáil from over here—foreigners to come in here when they have the technical know-how our people may not have and with that technical know-how to start industries of one kind or another.
But there is, undoubtedly, throughout the length and breadth of the land a very considerable uneasiness about the amount of agricultural land that has been bought by foreigners. There is very considerable uneasiness, which is impossible to allay or cover, because nobody really knows the extent of the problem. We wanted to set up a proper, formal register which would ensure that the magnitude of the problem with which we were dealing would be known, easily accessible or easily understandable. The Government decided to utilise their majority to throw out the Bill we introduced. They threw it out largely on foot of the argument made by the Minister for Lands that the Finance Bill was going to provide a far better solution.
This section provides no solution at all. Under the second Finance Act, 1947, there was a provision by which there was an exemption from the 25 per cent. stamp duty for companies that had been incorporated before the 15th October, 1947, regardless of the ownership of their shares. All that was necessary to incorporate in the Act was a section that the company had been incorporated—a perfectly straightforward method of dealing with the matter. Subsequently it transpired that that section was being used, perfectly legitimately and perfectly legally, for the purpose of non-nationals buying land here. The Minister has terminated that as from Budget date, and with that termination I am in entire agreement.
My objection to this section is that it does not cover the other loopholes. The certificate that a company was a pre-1947 company was a truthful honest and honourable certificate. There were other methods of dealing with the evasion of the duty that did not fall into the same category at all, and there has been nothing, and is nothing whatever in this section, to stop those loopholes or to cover up those difficulties.
I do not expect the Minister to understand the legal technicalities, but let me put on record two methods by which I could drive a coach and four through this section. I shall be kind to the Minister and shall not charge him 6/8d. for telling him the methods. The first is quite simple. A non-national wants to buy a property here for, shall we say, £10,000. He gets a national to buy that property and to put up £1. The non-national lends the national £9,999 on a mortgage which does not include a covenant for either the payment of the principal or the payment of the interest. The principal is to be payable by instalments, shall we say, and the first instalment is two months ahead.
The Irish national, having got the company in his name for two months, does not pay the instalments and the non-national legitimately goes into possession as mortgagee. There is no further stamp duty payable. Stamp duty on the purchase is at the rate of three per cent. because a national had the beneficiary interest at that time. The stamp duty on the mortgage was 2/6d. per cent. When the non-national at the end of two months obtains the beneficiary interest as mortgagee in possession, the situation is not covered by this section at all.
I shall give the Minister a second example. A non-national wants to buy a property, again, shall we say, for £10,000. A new company is formed with a share capital of £100. An Irish national takes up 51 shares and a non-national takes up 49 shares. The Irish national, with the majority share holding, proceeds to borrow from the non-national the balance of the purchase money. The Irish national promptly enters into a contract with the non-national in respect of his shares that he will not under any circumstance part with the beneficial ownership of the shares without first offering them to the non-national. Beneficial ownership remains, but that is only an option and it is not a confirmed option. I understand that one counsel in Dublin, who is supposed to be fairly clear on these matters, has advised that the beneficial ownership remains.
The company with the majority holding of an Irish national, therefore, need pay only three per cent in relation to that property. The non-national has complete control because, by virtue of the agreement, the shares cannot pass from the particular person concerned. If they do, they must be offered to the non-national to buy or he can, instead of buying them himself, get another Irish national to buy, subject to certain conditions. I know hundreds of cases in which one solicitor in Dublin has operated that transaction. I know other cases in which other solicitors in Dublin refused to do it, and correctly refused in my view, but there is nothing whatever in this Bill to prevent that operating again in the future.
I want to ensure that when this section is passed and leaves this House it is absolutely and completely watertight and that we have the proper means of keeping the proper register under Section 12. As the section stands, it is useless. I understand, although I have not got the details of it, that there is a third method already being evolved since this Bill was published of evading the section. The truth is that the means of dealing with this problem by the 25 per cent. stamp duty is the wrong approach altogether. The proper method of dealing with it would be to enquire from every person who was not an Irish national; and if he had any interest, outside the five acres surrounding a dwelling house, in land in Ireland, he would be bound to register his interests.
Some countries abroad even go so far as prohibiting non-nationals from buying land. I am not suggesting that, but I want to see the full measure of the problem. Certainly, under Section 29 there is no prospect whatever of seeing that measurement because anybody who wants to drive a horse and cart through the section can do so with very little difficulty indeed. Personally, I should like to go further in relation to this problem. I should like to make sure that the revision that is in subsection (12) is a revision not merely of cases that go on from now but of cases in the past and I think we should have provided a method by which similar transactions in the past would have to be recorded so that we would know where we stand.
While criticising the section vigorously in its present drafting I should say that, at the same time, I appreciate it is a difficult matter to draft a section which covers all the possible loopholes, but because it is difficult, it is not one that should be shirked and I hope it will not be shirked by the Minister in the immediate future. I should add that I have not the slightest objection to giving the Minister if he wants them particulars of one of the schemes that I know has been operated here already, a scheme which I refused point blank to put into operation myself. I know other solicitors who also refused. I think it would be undesirable that anything arising out of Section 29 in future under this Bill should create a standard which one person would accept and another would refuse.
The provisions in the Bill in relation to death duties are provisions that we could discuss more closely on the Committee Stage. I am glad however that the Minister has brought in Sections 24 and 25. Only in the very recent past I had the experience of realising the effect, following the Privy Council's decision in a case the name of which escapes me for the moment, which Section 25 is designed to cover. It was decided, I think, only last December.
It is entirely desirable from the social point of view that everything possible should be done to ease the transfer from parents to their sons, particularly in regard to farms. We want the younger generation to take over as soon as possible and if the mere reservation of the right of residence or as in that Privy Council case, the mere user of walking across is going to obviate any death duty save in relation to the transfer from father to son then very much fewer transfers will be carried out.
It is, therefore, essential that we should correct that recent decision and I am glad to note that in Section 24 the Minister is changing the law in that respect. The Minister, as I said on another occasion created, and dealt a great injustice to one person in the country. It was a relative of his who laid down the law in relation to Section 24 and it is a good thing now that, at least, we see that being changed.
I often wonder, in reading the White Papers which are explanatory of Finance Bills and which are very properly circulated, if there is anything in the form of the words used from time to time. Page 3 of the White Paper, for example, says that Section 21 is designed to "combat" but when you come to Section 22 and to other sections on page 2—Section 16 for example— you find "provides." Does that mean that the Revenue Commissioners are not so happy about the manner in which they have designed Section 21; that they are worried about their draftsmanship, that they are not as dogmatic in relation to that section as, for example, they are in relation to Customs and Excise under Section 16? If that is so—and it could well be so— it would be more politic not to give the game away quite so obviously as is done in that phrase. Apart from that, the other matters I propose to deal with in regard to the Bill itself I shall deal with on the Committee Stage.
I want to refer to some general matters which arise in respect of this Bill in so far as it adumbrates, specifies and defines financial policy on behalf of the Government. I refer, first of all, to a discussion that the Minister for Finance and I had on the General Resolution. In the Budget statement the Minister, at column 652, referred to the increase in our real output in 1959 comparing it with other European standards. On the General Resolution I challenged the accuracy of that statement and I explained to the Minister that I had been to the Library and had taken from the Library the latest volume that was—shall I say—available and open for inspection by me. The latest volume did not appear to bear out the Minister's statement. However, the Minister was good enough subsequently to send me a letter and I was able to get a later volume since the General Resolution debate. At the end of that debate the Minister will remember that I mentioned what I understood was the latest information available. It now appears from certain further documents made available to me that the Minister and I were both right—with this difference: the Minister was talking about general output for the year 1959. He was comparing—and congratulating himself and ourselves about it—the progress that had been made in 1959 with that made in 1958. It was not about the standard of 1959 that he was accepting congratulations; it was the increase in 1959 over 1958.
The figures which the Minister quoted are undoubtedly accurate but we all know perfectly well that we can get any figures, any statistics we like, by taking any particular datum year. None of us is so foolish as to forget that 1958 was a disastrous harvest year, that the weather was absolutely awful and to use a year, in which we had such appalling weather that it affected not merely our grain harvest in the Autumn but also our turf production, as a datum year and to preen oneself because in the following year we had done somewhat better than in the bad year, does not seem to me to be a realistic comparison.
In fact, the figures I was using are later figures but they refer, of course, I agree, to industrial production. But the figures to which I referred are figures dealing with the industrial production in 1960, compared with 1959. The point I was making then, when using those figures, was that it seemed to me that our industrial increase was petering out in 1960, that whatever movement there had been in industrial expansion—started, I would claim, by the moves some years before of bringing in foreigners with technical know-how, on the one hand, and tax incentives, on the other hand—was losing its momentum, and that the serious thing about 1960 was that the comparison at the end of the year, particularly in relation to the second and third quarters of 1960, showed that that momentum was obviously slowing up and that this Budget did nothing whatever to start that momentum and get it going.
The Minister has had an opportunity of considering and examining the statistics which I gave him that day, just as I have had an opportunity of examining his. As I say, my examination of his shows clearly that he was taking an increase in a datum year with a bad harvest. The Minister promised that he would examine my figures. I did not know whether he did or not but he had the intention—I will give him credit for that. He will see that they proved clearly that whereas the rest of Europe was achieving a great deal of momentum in 1960, with the exception of Belgium, because of the national strike, our momentum was slowing down and our industrial progress tapering off. Undeniably that is the picture that is to be found in Part I of the O.E.E.C. Statistical Bulletin for January, 1961. That, I think, is the relevant comparison: whether we are able to keep pace with the momentum of industrial expansion in Europe or whether we are not able to do so. I am afraid the pattern that was shown in 1960 by the January O.E.E.C. Bulletin shows clearly we are not.
I would add, of course, that that is not a view of mine only. The Minister will find, if he asks any Irish economists, that he will be told the same thing. It has been frequently referred to by Mr. Fitzgerald, who is sometimes quoted with great éclat by members of Fianna Fáil, and who has said it was obvious that the momentum of industrial expansion was slowing up in 1960. I think it was referred to in another statement by another economist, somewhere about three months ago, but the figures in the January Bulletin of O.E.E.C. make it clear, not merely in relation to our own position. We have had those statements which make it clear beyond question that while our momentum was petering out, in other countries in Western Europe it was accelerated. That is the point that I was making in relation to the general position. That is something about which this Budget does nothing, to increase the momentum and to get things moving again.
On the last occasion when dealing with the Budget, I referred to the fact that the Budget as such was a failure because it did nothing to ease the movement into the Common Market. We have had a great deal of discussion since in relation to the Common Market. The Taoiseach has made various speeches but all these speeches show, as he admitted in the House last week, that in fact he has done precisely nothing. The Greeks took 18 months to negotiate and discuss terms with the administration in Brussels before they had a problem upon which they could take a decision, before they knew what the situation was going to be. The Taoiseach accepts that we cannot take a decision on the Common Market until we know what the terms are likely to be, but under cross-examination in this House he said that he has taken no steps whatever to find out what those terms are likely to be.
It is an extraordinary and sad commentary on the efficiency of the Government that we have to wait for the German Federal Minister to come here and give a Press conference so that we can learn things about the Common Market, things that we could not learn from our own Government. It seems an extraordinary position that our Government have done nothing except make airy-fairy statements, that they have not made a firm inquiry and are not in a position to give firm answers in relation to any of the questions that must be posed to us all.
It would be very odd, if it were true.
And it happens to be true. The Taoiseach said here last week that they had made no approach whatever to the administration in Brussels, absolutely none. Indeed, the German Minister said the same thing, that there had been no approach whatever by the Irish Government. In fact, the Taoiseach became extremely cross here last week that he should be asked to make any approach. He said the time was not appropriate or ripe even to inquire what the situation was. I suggest that shows a lamentable lack of responsibility on the part of the Government. It is not to be wondered that the Minister for Finance in those circumstances made no effort in this Budget to ease the transfer this country will have to face, if and when there is an expansion of the six European countries in the Common Market into a wider sphere by the accession to the European Economic Community of Great Britain and other countries.
I accept that the time for a decision is not yet ripe. That is an understandable thing for anyone to say. It is an understandable thing that a Government, with their special knowledge, should say that but to say that and then to do nothing in relation to finding authoritatively what the principles are likely to be seems to me to show a complete lack of responsibility. I am glad that Deputy Booth agrees that it shows a complete lack of responsibility. In a few seconds, I shall have the opportunity of quoting the particular reply of the Taoiseach, so thereafter I will get the complete support of Deputy Booth in castigation of the Minister for Finance and the Taoiseach for having done nothing in that respect.
This Budget does nothing whatever to face the problems that will arise in that respect. This Budget does not even consider the problems with which we will be faced here. This Budget does not even face the position. It does not make any improvement and it does not make any suggestion on how matters could be eased in that respect.
May I refer Deputy Booth, through the Chair, of course, to the debate on Wednesday, 31st May, as reported in the Official Report at column 1258, volume 189, No. 9? Deputy Russell asked the Taoiseach:
Would the Taoiseach seriously consider making at least some exploratory contacts with the Common Market Six?
The Taoiseach: I have made quite definite and clear my opinion that the time is not yet opportune to do that.
I think that is a disgrace. The Government should have ascertained the facts of the position and then been able to communicate them to the House, and through the House, to the country. We should not have had to wait until his Excellency the German Federal Minister gave at a press conference facts which the Government should have been in an authoritative position to announce.
I might add that in the following column, the Taoiseach said:
I have just informed the Dáil that we have not yet made any approach to the European Economic Community.
The Greeks took 18 months to explore the situation and to make exploratory contacts of one sort and another. At the end of that exploration, they arrived at a solution that seemed suitable both to the members of the European Economic Community and the Greek Government. We shall wake up some morning to find that steps have been taken in relation to the expansion of the Six, and we will then be in a hurry and a flurry to find out what the situation is. We should be making exploratory contacts now. Then, at the appropriate time, we would be in a position to assess the question as to whether it is desirable or undesirable for us to go in as a full member, to seek some special type of associate membership, or otherwise.
We cannot possibly do all that at the last minute. This is the time the preliminary spade work should be done. There are many aspects which require full and adequate consideration. So far as we can find out from questions answered by the Taoiseach in the House, and certainly under the economic scheme as provided in this Budget and as crystallised in the Finance Bill, there does not seem to be anything that will help us in any way, in the very serious problems with which we may be faced sooner or later. Some people say sooner and some say later. I do not propose to be a prophet in that respect but the general impression I got recently from business contacts I have with England, is that the British Government are very near an approach. Other people say it is still some distance away. One Minister is on record as saying that it is some distance away. Whether it is sooner or later does not matter; we should be making preparations now to meet the situation when it arises.
Ever since the industrial revolution started in the past century, the tendency has been for the movement in relation to industry to pick up. There were the old handcrafts, and one or two people operated and worked in small factories. Then, as science and mechanisation progressed, the manufacturing industry in particular got into larger and larger units. It is likely that the effect of that on the industrial side will also operate on the consumer side of the market. We shall be faced with a difficult situation in that respect. There are certain highly specialised things which we could do better perhaps than a big organisation. We should be concentrating on those things, and we should be concentrating on the situation in relation to our whole taxation policy, and on seeing how it will be affected in the situation in which Western Europe has to amalgamate economically in some shape or form, if it is to avoid being dominated by the communists. The Government seem to be particularly silent and quiet in that respect. That is one of the reasons I suggest to the House that this Budget is a failure.
I remember when the Minister was in Opposition, he and his colleagues complained violently and vigorously about the heavy burden of taxation. In 1956-57, the year before he was responsible for it, the amount of revenue collected in taxation was £89,781,000. In the coming year, he proposes to collect £111,750,000 in taxation, an increase of £22 million. The incidence of that tax has been shifted slightly in one place and another, but if we examine the volume of estimates over the two years, we find that the exact situation is that about £21 million or £22 million more tax revenue will be collected by the Minister this year than was collected the year before he took office. To put it mildly, that seems to be a pretty staggering sum for a small country like ours.
I have yet to hear any explanation by anyone in Fianna Fáil as to why they criticised the taxation raised in 1956, when they are now raising over £20 million more. It would be interesting to hear them make some explanation for their duplicity of five years ago. The fact, of course, is that they were speaking dishonestly with their tongue in their cheek at that time. They were speaking particularly dishonestly when they suggested from these benches, at that time, that they would be able to cut down the amount of taxation revenue that was being collected and, at the same time, maintain the other services. We know, of course, that they did cut it in certain respects and saved, on the Minister's own word, about £9 million.
Allowing for any deficit there might be, there are still some £16 millions more being collected in tax revenue under this Bill than were collected in the year before the Minister took office. The general picture of our taxation policy is one that must be considered not only from our own point of view but from the point of view of where we will stand if we are suddenly faced overnight with the news that there has been a very considerable expansion from the six-member European Economic Community into a great many more. I do not see any evidence anywhere that any thought has been given to that problem. The Taoiseach has stated categorically and clearly that he has not made direct contact with that body. The Minister for Finance has given us no indication anywhere that he has given any thought to the taxation problem that will arise, should such an expansion take place. Neither has he given us any indication as to what will be involved and what will be necessary.
I do not propose to go back again on the many promises that are broken in this Finance Bill. I was down the country over the week-end, mixing, shall we say, a holiday with business. I was amazed at the number of people from all walks of life, people who had been strangers to me until then, who came up to me to discuss the political situation. The one thing they all had to say was: "Was it not an extraordinary thing that any Party could make as many promises as Fianna Fáil did in 1957 and turn their backs so quickly on those promises after they had got the votes?"
The Finance Bill before the House implements the Budget introduced here some two months ago. This is the measure which imposes the various tax rates laid down in the Budget. I believe the Budget came as a disappointment to many people. There was a good deal of speculation before the Budget. People believed, because of the very favourable economic circumstances, that it would have been possible for the Government to grant considerable remissions.
When this Government were elected in 1957, they assumed office under very favourable auspices. They assumed office at a time when, for the first time for a number of years, import prices had begun to show a downward trend. That trend continued and, during the past four years, the drop in import prices has been quite considerable. But, despite these favourable circumstances, the consumer price index and the other indices of prices show a considerable increase. In February, 1957, the consumer price index was 107.7. The figure for the same period this year was 119.8. The May figures are not yet available. In addition to that, other items have increased substantially. Bus fares have increased by 14 per cent. and train fares by 12 per cent. Food alone shows an increase of 16 points between February, 1957, and November, 1960. The most remarkable increases were in respect of flour and bread. Bread increased by 69 per cent. and flour by 89 per cent., in the short space of four years. It is quite remarkable that, while these increases in prices have occurred, the country has had the advantage of lower import prices. What we have had to import from abroad has fallen in price. Yet we have charged our own consumers more for what they must consume. That has been especially so in the case of food, but other items have increased also.
With favourable economic conditions, with lower import prices, with generally satisfactory trading conditions abroad, and other favourable factors, it is significant that the numbers in employment show a reduction of over 50,000 compared with 1956. On many occasions, considerable play has been made with the difficult economic circumstances of that year and the effect of action taken by the Government at the time to remedy an adverse trade balance. It is, however, notable that, taking the numbers contained in Table VII and Table XVI of Economic Statistics published just prior to the Budget, there are today 50,000 — the precise figure is 51,000 — fewer people employed as compared with 1956. It is notable, too, that that figure does not take into account the numbers who have emigrated.
I have never held the view that we can provide employment for all our people; we can only set the points in a particular direction and implement a policy to provide as far as possible for increased employment. It was the present Government, when in Opposition, who laid down a very specific and detailed plan designed to provide over a five-year period 100,000 new jobs. Now, after four years in office, during which the Government have had favourable external economic factors, the advantage of a comfortable majority in this House, and the advantage of a co-operative Opposition, we find there are 50,000 fewer people in employment.
Last December, in reply to a question in the House of Commons, figures were given which showed that, in the year 1959, 64,000 new employment permits were granted in Britain to people from this country who sought employment there for the first time. The figure for 1958 was 58,000. So that, for two years alone, over 120,000 new entrants to employment, from this country, sought work in Britain. If we take it, therefore, over the four year period, without exaggerating the figures, it is obvious that a very considerable number of people have left this country in search of work elsewhere.
It is true that we have availed of the advantages of improved economic circumstances, that our industrialists have availed of the incentives that were provided first in 1956 and that were since extended and altered by the present Government in respect of tax reliefs for export. I have previously referred to the tribute paid to that decision and the tribute expressed by an impartial observer, Professor Carter, who is Professor of Political Economy in Queen's University. Earlier this year, he said:
Progress in industry in the Republic has been remarkable. The biggest technical factor in the change has been the tax exemption for export industries.
The very welcome improvement which has resulted from that tax exemption has contributed greatly to the development of our industrial exports.
There are, however, certain aspects of our industrial policy that have been the subject of comment by industrialists who have already established industries in this country. Speaking at the annual general meeting of Sunbeam Wolsey, held in Cork on 20th March last, Mr. Declan Dwyer, the chairman, referred to the effect of taxation. I quote from the Cork Examiner of March 21st, in which he is reported as follows:
Direct taxation continues to be the greatest disincentive to industry in this country, and the old established industries have a legitimate grievance against the discrimination shown in favour of newcomers, which would appear to be the continued policy of the Government. But these matters have been aired on so many occasions by private and public bodies that we can only continue to hope that the appeals will eventually penetrate and the overdue levelling of the position as between the old and the new will come about. Surely, if it is the policy of the Government to allow tax relief on all the exports of the manufactured products of a new Company the same relief should be extended to an old established Company who had put its efforts into developing an export trade before it was the fashionable thing to do. Less than 60 per cent. of our total exports qualified for tax reliefs, but if this production had been undertaken in a new factory built either in the Shannon Free Area or elsewhere, the total would have qualified for relief.
These remarks merit attention. We should not overlook the very considerable contribution which existing industries have made to the economy and consideration should be given to extending the relief on the lines to which Mr. Dwyer referred.
It is a fact that under the relief at present granted to newly established industries they are obliged to sell not more than 10 per cent. of their total production on the domestic market. I have recently had complaints from an old established, or earlier established firm, whatever way it may be described, which had quite a considerable home trade and had also developed a very successful export trade. Quite recently they found they had to compete on the home market with a company that was enjoying the preferential tax concessions and that, in their view, was exceeding the limit of 10 per cent.
It is extremely difficult for a Government Department to ascertain whether a company is complying with the requirements which limit it to 10 per cent. and it is almost impossible to get accurate figures. It is worthy of note that some existing firms which had established a satisfactory trade find themselves now subject to unfair competition from newly-established companies who avail of the tax concessions to develop an export trade but who are prepared also to compete with existing established industries in respect of the domestic market.
It may be contended that 10 per cent. is not a very considerable share but very little may affect the market one way or another and many of these companies who had built up a sizeable trade here find that when the competition from a firm engaged in a similar line of business is allowed free play here it can seriously interfere with their business. That matter should be investigated and strict compliance with the regulations should be enforced.
During the course of the discussion on this measure and on the Budget the question of tax relief for persons over 65 years of age was considered. The matter was also discussed on the Finance Bill and the Budget for 1960. I want to refer again to some comments I made here in favour of these persons.
Under the present income tax relief provisions, the income limit is retained at the same level as it was some years ago. In 1960, the Pensions Increase Act provided for approximately 38 per cent. of a total of just over 2,000 civil servants who were in receipt of pensions of under £200 per annum. Allowing for the present value of money, anyone can see that that is a small pension. There should be some automatic arrangement which would operate to provide increases in respect of Civil Service and other State pensioners, just as applies in the case of existing civil servants, Garda or Army personnel.
Where serving personnel are concerned, they can take their case to arbitration or conciliation, or whatever the appropriate machinery is, and an increase in salary or wages, as the case may be, is granted in respect of an increase in the cost of living. If the cost of living affects, as it does affect, serving personnel, whether they are civil servants, Garda, Army or local authority personnel, it must equally, if not more severely, affect retired State servants. These retired State servants retired on pensions which were based, as all pensions are, on the rate of salary appropriate at the date of retirement.
That basis of calculation was all right when the cost of living was stable. That was the old basis on which pensions were fixed. It is still the basis on which they are fixed but since the war there have been Pensions (Increase) Acts. The Minister for Finance in the course of a discussion last November said it was a novel idea. I quote from Column 549, Volume 184, of the Dáil Debates of the 3rd November, 1960:
Indeed, it is even a novel idea to give these increases because I believe increases to pensioners were unknown until after the last war, so that at least we have done something that was not done before.
Of course prior to the last war for many years the cost of living was stable but during the war and since then the cost of living has continued to rise and these old age and retired pensioners find themselves in very difficult circumstances. The amount involved would not be considerable and I believe there should be an automatic adjustment in respect of these pensioners. In addition the present income maximum in respect of income tax, the figure of £600, should be increased. It was increased some years ago in Britain, and in respect of persons over the age of 65 here the income maximum figure should be raised.
This Finance Bill operates in respect of income tax and in that connection I want to refer again to a matter discussed here before, that is, the procedure which operates under P.A.Y.E. This system which was copied very largely from the British system, with certain modifications, is extremely complicated and it is very difficult for individuals or small businesses to comply with its requirements. There is a great deal of unnecessary paper work. Many forms have to be filled up and entries made. I would urge on the Minister that very serious consideration should be given towards operating a simplified system.
It was inevitable that in the initial stages of P.A.Y.E. many problems and difficulties would be involved and that some of these could not be foreseen. It was only natural that the system adopted here would follow largely on the lines of that operated in Britain. This country is very different from Britain. Our business and commercial units are in the main smaller. Some of them are very small, depending on an individual or the members of the family of an individual who runs his or her own business. In other cases a person may be obliged to make returns in respect of one employee or a small number of employees. With the exception of larger firms, many undertakings are without trained or qualified accountants and without trained personnel to fill up these forms. Therefore we should endeavour to adopt a system that would be simple and easy to operate and not involve individuals or small businesses in filling up a great number of forms which is a great consumer of time and energy as well as being in certain respects a costly procedure for those concerned.
In the Minister's Budget, changes were made in respect of the temporary levies which were introduced and which have been consolidated and made permanent. Some of those levies affected motor and motor cycle parts. Prior to the Budget they were at the rate of 15 per cent. Since the Budget these have been increased to 37½ per cent. When the Minister referred to this matter in the Budget he implied that it was a consolidation measure and that it would simplify arrangements. The position now is that a great variety of goods or parts for commercial and ordinary motors, motor cycles, scooters, and so on, will now carry, instead of the 15 per cent. levy, a levy of 37½ per cent. These parts or goods will now cost more and the result will be that repairs to cars, lorries, commercial vehicles and scooters will be more expensive.
The list supplied to me contains particulars of a great many items and this alteration will involve a very considerable increase in the cost of repairs because the list of goods affected includes brake linings for commercial vehicles, motor cycles, and so on. radiator hoses, tyre gaiters, track rod ends, battery straps, choke and starter cables, light units, rims for light units, clutch linings, valve springs and so on.
These items are used in the everyday repairs which have to be carried out to commercial or private motor vehicles and the increase from 15 per cent. to the figure under this Bill, a permanent duty of 37½ per cent., is quite considerable. There is reason for modification in that and for a reversion to the earlier levy or duty, whichever it is called, of 15 per cent. An increase of 22 per cent. whether it is called a levy or a duty is very substantial and will involve an increase in the cost of repairs for people who have to operate cars for business or commercial purposes. Motorists and lorry users have already had to bear over a number of years an increase in the cost of petrol. In fact a variety of increases have had to be borne by them. Not only is this a tidying-up process but it is a very tidy increase, if it may be so described, when the figure is being raised by 22 per cent.
The Finance Bill implements the proposal mentioned in the Budget to revert to the arrangement which operated under the 1947 Supplementary Budget in respect of purchases by non-nationals. I do not know whether the changes on this occasion will adequately control that development. I hope the steps taken will ensure that there will be no evasion. A very considerable volume of feeling has grown up in many parts of the country because of the large-scale purchases of land by non-nationals. Quite recently, the German Ambassador to this country, on a visit to Germany, rightly expressed the view that industrialists were welcome here. He said we were affording encouragement to foreign industrialists with capital or technical knowhow to come here but that the same was not true in respect of agricultural land.
It is well known that since the State was established, and even before, efforts have been made to expedite land division and the acquisition of land to alleviate congestion. That fact has undoubtedly contributed to the resentment which people feel because of purchases of agricultural land by foreigners.
The work of the Land Commission and the efforts to establish holdings for our people are to some extent nullified by the purchases which have taken place. While the Land Commission have full freedom at any time to acquire land, whether owned by Irish people or by non-nationals, nevertheless, the feeling of resentment is there when, in a particular locality, people see large-scale purchases by non-nationals. I hope the measures in this Finance Bill will prove adequate.
If the provisions in Section 29 do not prove adequate, the Government should not hesitate to introduce amending legislation. The matter has been the subject of considerable comment for quite some time. It is one of the anomalies of our situation that we have very considerable emigration from rural areas and, at the same time, we have a very considerable incursion by people from abroad who are acquiring large estates, especially in certain localities. I hope the steps taken in this Bill will prove adequate. If not, the Government should not hesitate to take effective action forthwith.
First, I should like to refer to the provisions of Section 6 relating to corporation profits tax. The Minister has stated that a very great majority of companies will benefit by the new provision and that the additional burden on the few companies which will be adversely affected will be negligible. I find it rather difficult to appreciate that. I feel that if the amount of additional revenue which will be paid by those companies which will be adversely affected will, in fact, be negligible, the Minister's advisers would not have advised him to make this provision at all. I think they would have advised him to leave all companies on the same basis.
The only possible justification for discrimination between companies over and under a certain profit level must be that the Revenue will stand to gain, to some extent at least. If the Revenue does stand to gain, as I firmly believe it will, I do not agree that the additional burden on the affected companies will be negligible.
I would agree with Deputy Cosgrave on Section 17, which refers to the new rate of duty on motor car parts. I believe this provision was inserted simple to tidy up a rather complicated code of duties. I am informed that it was not intended that the Revenue should benefit in any way. Here, again, I think the Minister has been misinformed. It is perfectly clear to me, as an interested party, that the Revenue will benefit very considerably indeed.
The impact of this new duty, so far as the price of motor vehicle parts is concerned, other than parts imported for assembly of complete vehicles, will be that the cost to the user will go up by at least five per cent. overall. Admittedly, the duties on some parts have come down but the duties on others have gone up. The net result is that unless there is some review of the Order already made, and unless such review leads to amendment, motor car parts will all have to be increased in price by at least five per cent. Some distributors have already increased their prices.
Section 30 deals with the duty payable on the acquisition of land by non-nationals. I am still far from happy about it. I agree very much with what Deputy Sweetman said in this connection. I believe it is a virtual impossibility to phrase a taxation provision which an astute lawyer will not be able to circumvent. It should go on record that a number of members of the legal profession have refused to avail themselves, or to allow their clients to avail themselves, of loopholes which already exist. Members of the legal profession who have availed of these loopholes are still essentially within the letter of the law. However, it is putting an intolerable burden on the profession when a taxation provision is framed in such a way as almost to invite evasion.
Whilst there is considerable public opinion against the acquisition of land by foreigners, the fact remains that we have a long tradition of trying to circumvent the Revenue. It is very hard to prevent people from continuing this tradition, especially in this connection. Personally, I feel that it is not really worth our while to try to block foreigners from buying land, nor do I feel this problem is as great as some people believe it is. Deputy Cosgrave referred to the speech by the German Ambassador to Ireland recently when he returned to his own country. The trouble there was that there was a most ill-informed article written in a German magazine, the title of which, as far as I can remember, is Look, and which has a very wide circulation in the Federal Republic of Germany. This article on Ireland gave what appeared to be a categorical assurance to Germans, especially those who wished to engage in agriculture and found it difficult to acquire farmland in their own country, that there was an ample supply of good arable land in Ireland at rock-bottom prices. That statement did gain very wide currency and has been a tremendous source of embarrassment to our Ambassador in Bonn, to the Government here and even to estate agents in this country.
There was a time when German estate agents were actually making offers for offices in Dublin to deal with this tremendous trade expected from German buyers of Irish land. It has taken quite a long time and a lot of authoritative statements to convince Germans that there is not enough land here for ourselves and that there is no ready market for an unlimited number of German buyers. In view of the fact that our own people in other countries are not usually the victims of discrimination, if they attempt to buy land in that country, I am not at all sure we are wise in trying to block citizens of other countries from buying land here. It is to a certain extent an admission of inferiority complex on our part — that we feel that the foreigner is obviously going to beat us in money resources and technical ability, whereas, in actual fact, I do not believe that is the case.
I am not at all sure that Section 30 will properly deal with this problem at all, if it is to be dealt with. It will only invite further attempts at invasion, and I am sure that invitation will be be accepted. I would agree with Deputy Sweetman in his reference to subsection (9), which refers to deeds bearing the same date or being executed on the same date as the Budget statement. I would agree with him that the 20th April would be a better date in that subsection. I would also agree with him, as he anticipated I would, on the question of the final acceptance of the stamp of the adjudication office to show that a deed has in fact been duly stamped. Those are matters which can be dealt with more properly on Committee Stage.
Deputy Sweetman produced a statement which was new to me and which I have not heard him make before. He referred to the definite promise made by candidates in the city in the 1957 election that, if returned to office, Fianna Fáil would remove the temporary import levies. We have been accused of a number of things before, but it has taken Deputy Sweetman a long time to think up that one. He merely made the accusation and then moved swiftly on, which I think was as wise, because it did not come with any great conviction and he certainly did not attempt to justify it or prove it in any way.
I certainly did not make any such promise in my own constituency, although I always did campaign against the policy of the Coalition Government in trying to deal with a balance of payments crisis by the introduction of temporary levies. That was the very last way to deal with such a problem because it brought very many businesses to a complete stoppage and almost to disaster. Quite obviously, if you put temporary levies on certain articles, the sale of those articles is not reduced; it is stopped. No one is prepared to buy an article which has attracted a levy which is about to come off. But, having put on those levies, I know, again from my own business interests, it is very difficult to take them off without putting an intolerable burden on those affected.
If, for instance, these temporary levies were suddenly removed, the stock value of anything a businessman had at the time would be reduced by the amount of the levy. Such a sudden drop in stock values would be catastrophic. It would be no use saying to a prospective purchaser: "If you buy this week, the price will be plus 15 per cent. but if you can wait for a month until some other suckers have bought the goods on which the duty has been paid, you will get it cheaper." That would be quite impossible. Once the levies came off, the price would have to go down at once, even though the levy had been paid by the businessman to the Revenue.
I do not believe there is the slightest justification for Deputy Sweetman's accusation that promises were made to remove the special import levies. He went on to criticise the Minister for his comparison of production in 1958 and 1959. If he believes his criticism will carry any weight, he is sadly mistaken. He stated it was quite unfair for the Minister to select for what he referred to as a datum year the year 1958, because he stated that 1958 was so bad as regards weather conditions that not only was the grain crop entirely lost, but the subsequent imports of grain put a strain on the whole economy. He stated it was unfair, therefore, to compare 1958, with its bad weather to 1959, with its perfect weather.
I must say I am disappointed that Deputy Sweetman should have so misjudged 1959 and the effect of the weather on the farming community in particular. I do not think it was fair of him to overlook the fact that, in 1959, cattle prices suffered a very serious setback and sales of cattle were very difficult. The weather was extraordinarily good for bathing, but it was not good for the production of grass and it had a very adverse effect on milk and butter production. Deputy Sweetman, therefore, erred considerably when he decided that the weather in 1958 was the cause of all the disasters and that the weather in 1959 was the farmers' delight.
Later, he made a completely false comparison between the situation of this country and that of Greece, insofar as association with the European Economic Community is concerned. It is one thing for Greece, with one particular export market, to enter into long-term discussions with the Commissions of E.E.C. and it was probably very wise of the Greek Government to do that, but Greece has no British market, as we have, and it is quite obvious that we could not enter into negotiations with E.E.C. which might be in direct conflict with our trade agreement with Britain. It is not so much a question of ourselves being tied by outside forces to Britain as of our being linked to Britain by reason of our Trade Agreement. When we have that Agreement, which is remarkably beneficial to us and which Britain feels is remarkably beneficial to her, it would be quite impossible for us to enter into direct negotiations with the Community.
Deputy Sweetman went on to say that it was intolerable that we should have to wait until the German Foreign Minister visited this country to get information which was news to the Government. There, again, he slipped rather rapidly over that accusation, especially when I agreed that it would be ludicrous, if true. Actually, I do not believe there is any justification for it at all; I do not believe that the German Foreign Minister was able to give any information to the Government which was not already in their possession nor do I believe that Herr von Brentano came here with any direct authority from the Commission of E.E.C. to make any statement on its behalf. He may have expressed certain opinions which were, perhaps, personal opinions or the opinions of his Government, but to regard him as the final spokesman of E.E.C. is unjustified.
In his concluding remarks, Deputy Sweetman referred to the question of election promises again. He said that on a recent visit to the country everybody had agreed that they had never heard of any Party that made and broke so many promises. At that stage he very wisely sat down. It was not a point which carried any conviction to this side of the House. It was a stupid accusation to make; I do not think he even convinced himself.
Deputy Cosgrave who followed referred to the speech of Mr. Declan Dwyer of Messrs. Sunbeam Wolsey on the rate of direct taxation. Deputy Cosgrave is quite honest and gave the date of Mr. Dwyer's statement and I think he did not sufficiently underline the fact that Mr. Dwyer made that statement before Budget day when direct taxation was very substantially reduced. A curious connection came to my mind between Deputy Cosgrave's speech and that of Deputy Sweetman in that Deputy Cosgrave quoted, with evident agreement, Mr. Dwyer's criticism of some aspects of tax remissions on exports. He seemed to think his criticism should be directed towards the Government, but, shortly before that, Deputy Sweetman had taken full credit for the whole scheme of tax remission on exports.
Deputy Cosgrave also referred to P.A.Y.E. I agree that, to some extent, the system is complicated and is probably a greater burden in some ways on the very small employer than on employers of larger numbers of staff, but I should like to record that, in my own business, our experience has been that when difficulties or doubts arise, officials in the office of the Collector of Taxes have been extraordinarily helpful. By extraordinarily, I do not mean I am surprised, but it is extraordinary that they should have been able to explain so well a system which is inevitably complicated. Any of us in any doubt about the administration of P.A.Y.E. should have no hesitation in approaching his local collector of income tax and will be more than pleased at the way in which any difficulties will be ironed out for him. It is only right that this small tribute should be paid to the collectors of taxes who have mastered the new scheme very well and who, in our experience, are only too glad to straighten out difficulties. In general, I feel that the criticisms so far on general Government policy have been entirely without foundation and hardly merit any further consideration. So far as the details as the Bill itself are concerned, I shall have some further comments to make on Committee Stage.
I feel that the Dáil by voting against this Finance Bill should register a protest against what I think can fairly be called the reactionary, Tory financial policy of the Government. I use these words deliberately. I know they are colourful, emotive words but I am quite satisfied that any examination of the Government's financial policy over the past few years and, in particular, in respect of the current Budget, will draw the conclusion that in fact this Government's financial policy can properly be described as reactionary and Tory.
I should like to remind the House of the economic circumstances in which this Government came to present the Budget this year. For some years past, there has been a boom in Europe and a boom in Great Britain which has spilled over into this country and has resulted in increased demands for our exports which have had, undoubtedly, favourable effects on our economy. For some time past the terms of trade have been favourable to this country and for the last couple of years the revenue has been bouyant.
As a result of these facts, and as a result of certain manipulations carried out by the Government in bringing certain matters into capital which heretofore had been current and cutting certain expenditure, particularly in regard to food subsidies, there came about this year circumstances in which the Government found themselves able to give away fairly substantial reliefs to the public. What did the Government proceed to do? To what is admittedly the worst-off section of the community, a section of the community living very close to the borderline of subsistence, namely those persons in receipt of old-age pensions, to persons in receipt of social assistance in the form of unemployment assistance and other forms of pension, they gave this year £600,000; to income tax payers, to sur-tax payers and to persons who have to bear death duties, they gave nearly £1½ million. To the poorest section of the community this Budget gave a little over half-a-million pounds and to the more well-to-do this Budget gave £1½ million.
To my mind, any Government which so develops its resources in that way can properly be described as a Tory Government. There is not a person who pays income tax who does not welcome the reduction in income tax. I am quite satisfied there are many people to whom income tax is a severe burden and to whom relief should be given, but in the circumstances in which we live at present, in the difficult circumstances particularly of the poorer section of the community, if a choice had to be made — and a choice had to be made — between giving blanket reliefs to all income tax and sur-tax payers, no matter how well off they were, and the persons in receipt of social welfare assistance, I have little doubt where the choice should lie.
It would have been possible so to devise this Budget that the income tax payers who really need relief, the persons with large families, persons with dependent relatives or people with old persons to look after, could have been given special attention. In my view, however, to give, as the Government have done, a blanket relief to everybody, while undoubtedly most welcome to the recipients, reveals a wrong scale of values. I know this need not necessarily be very popular in certain circumstances but I feel it should be said where a Government is faced with scarce resources, where a Government has got a certain amount to give away to the community, there is something wrong where it gives £600,000 to the poorest section and nearly £1,500,000 to the more wealthy section of the community.
If we look also at the Capital Budget of this Government, the Capital Budgets of the last few years and not just this year, we shall see also that what I have said about this Government being a reactionary, Tory Government is fully justified. The Government in their Budget last year set out to spend £54,000,000 on capital services but, in fact, they spent only £50,000,000. We said in the course of the debate here that they would not spend the money they said they intended to spend, such as the money they were to give to the Industrial Credit Corporation. We said it was a lot of bluff to say that they were going to give this money to the Industrial Credit Corporation and that the Industrial Credit Corporation would give it out to industries. In fact, events proved us correct.
This figure of £50,000,000 which the Government has spent, as compared with previous years, shows, on the figures, only a mere increase of £5,000,000 on the year 1956-57. In fact, if it is examined more closely it will be seen that the expenditure on what can be called capital items has been reduced. The increase is mainly as a result of increased expenditure on items which are not strictly speaking capital items at all, such as the bovine tuberculosis scheme — expenditure of a sort which for financial, budgetary considerations is put into capital services but which cannot by any other criterion be termed capital expenditure. If a comparison is made with items of expenditure in 1956-57, it will be clearly seen that, in fact, the Capital Budget has been reduced.
The orthodox view now is, I know, that social capital is uneconomic and should be cut down and the Government has accepted that view. There has been a decline in social capital since this Government came into office. There has been a decline in expenditure on housing, schools and hospitals and those figures are available for any Deputy who wishes to look at them. However, it is no trouble for the Government to get money for prestige capital, as I shall call it, such as our air services or our television service. We should protest against a scale of values which is prepared to develop a transatlantic service for purely prestige reasons.
The Deputy would not be in order in discussing expenditure on air services. It does not arise.
With respect, I am entitled to refer to financial policy.
The Deputy is so entitled but the question of expenditure cannot arise.
Very well; I shall put my remarks in a different context. What I say is that a financial policy which is prepared to accept prestige capital as worthy of support and prepared to expend money on prestige capital at the expense of social capital is a financial policy which should not be supported. These are the facts and anybody who is conversant with conditions in the city of Dublin, and I venture to say also in the cities of Cork and Limerick, will certainly not accept the view that expenditure on housing should be reduced. That is what happened in these cities and in the city of Dublin. Anybody conversant with conditions here knows that we have a serious housing problem and that when resources are scarce, they should be expended on things which affect the livelihood of the people and which are important to them.
Reference has been made to the issues involved in our association with the Rome Treaty. I want to say that it is wrong for the Government to refer to the Rome Treaty and similar types of organisation as merely trading arrangements. There is much more in the Rome Treaty than trading arrangements; the whole basis, the whole raison d'être, was political. The architects of what was one of the most remarkable developments in the post-war world, this Rome Treaty, had political considerations all the time in their minds. I would welcome the accession of Ireland to the Rome Treaty if it is economically possible. I would welcome the accession of Ireland for political reasons to the Rome Treaty if it is economically possible. I believe the time is now coming when economically it is going to be necessary for us to consider our accession to the Rome Treaty. The fact is that the Government completely ignored developments in Europe over the last ten years. In particular they have ignored developments with regard to the Rome Treaty and in all these matters we have merely followed the line taken by our wealthy and strong neighbour, without availing of the opportunity to take the initiative ourselves where the initiative was very important.
