Committee on Finance. - Finance Bill, 1961—Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

When the Dáil adjourned last evening, I had just given credit to the Minister for the tax remissions in his recent Budget, with particular reference to the reduction in the standard rate of income tax which I welcome, with every other taxpayer in the country. I suggested that would be a useful means of encouraging private and personal enterprise and initiative.

I also commended the Minister's action in regard to the special concessions he has given, admittedly to persons in the higher income bracket. Contrary to the views expressed by some Deputies, I think that category covers many who have shown the greatest enterprise and initiative in advancing the country's interest, admittedly with their own. It is only right that that section of the community should also be encouraged as well as every other section. I went on to criticise the omission of the Minister in not giving what I regard as adequate incentives to corporate or company initiative and enterprise. I suggested that in one instance at least the Minister had been guilty of a retrograde step to which I intended to refer later on in my contribution to the debate.

In his Budget speech, the Minister emphasised the absolute necessity for manufacturers to equip themselves with up-to-date plant and machinery, to modernise their buildings and have them fully staffed with efficient workers and technicians, if they hope to survive in the Free Trade Area which is now assumed to be advancing on us at a fairly rapid rate. The Minister and the Taoiseach, and even more recently the Minister for Education and the Minister for Lands, have gone out of their way to emphasise, to industrialists in particular, the need for putting their plant into a competitive condition to face the very difficult trading position which obviously lies ahead.

Having regard to these facts, I suggest to the Minister that the main emphasis in his Budget speech, apart from the welcome tax concessions and certain help which he has given in the way of social assistance, should have been on helping industrialists and manufacturers to help themselves. To me, one of the most obvious ways of doing that is to enable the industrialist to retain in his business for further investment in it a greater proportion of his earned profit. Under the present system, whether profits are retained in the industry or paid out to shareholders, they are subject to taxation. It might seem a revolutionary move, but I think it would be a worthwhile move for the Minister to absolve from taxation completely, profits ploughed back into the concern or the industry. If that is too radical a step to take, the Minister could have given some special concession in the way of a reduced rate of taxation on profits retained in an industry for its further development.

The Minister has not seen fit to do that. I suggest to him that, with the comparatively low return on capital in this country compared with other countries with which we will be competing in the fairly near future, it is an absolute necessity to allow manufacturers and industrialists the greatest possible use of their own capital to expand their factories and re-equip them for the competitive era with which we shall be faced, apparently, in the near future. As I say, all these profits retained, as well as those paid out, are subject to taxation.

If a firm earns, say, £10,000 and pays something like 40 per cent. in taxation, either through income tax or corporation profits tax, if that £4,000 happens to be required to purchase some essential item of machinery, it is necessary for the industry concerned to borrow that money from one of the commercial banks or to go to the Industrial Credit Corporation for it. To my mind, it would be a much simpler and more desirable procedure for the company to finance that type of development out of its own resources.

I should like the Minister to give some concession in addition to the initial allowance at present given to purchasers of machinery and equipment. To a large extent, it is a deferred allowance only, and, to my mind, it would have been a practical step to substitute for the initial allowance an investment allowance, something on the lines at present operating in the United Kingdom. Furthermore, I should like to see the Minister extending to non-industrial premises the same depreciation allowances as are applicable to industrial premises. I refer to warehouses, offices and shops, and all those buildings which have to be renewed or repaired. With the rising tempo in international competition, it is now more than ever necessary to encourage owners of that type of premises to renew and repair them. If they renew those premises or alter them substantially, their rateable valuation is increased and they must pay increased rates. For that reason, it is necessary that there should be some effort to help them in another way, if they must bear that increased impost of local taxation.

Up to now, corporation profits tax has been allowable as a deduction when a company is calculating its profits for income tax. The Minister has decided that is not to be the case any longer. With all due respect, I think that is a retrograde step. I know the Minister has argued that by reducing the standard rate of taxation, he has offset his latest move not to allow corporation profits tax as an expense in the running of an industry. I suggest that a concession offsetting the disallowance of C.P.T. as an expense is not a proper step to take. If the Minister is giving a concession to industry, then he should give a clear-cut concession and not bring in something else to offset it.

I think a very good case could be made for the abolition of corporation profits tax altogether. It is a form of double taxation. A firm pays income tax on its profits and then it pays corporation profits tax if its profits exceed £2,500. Some years ago that limit used to be £10,000. It was reduced to £2,500 and it has remained at that figure for a number of years. I think the time has come when that ceiling must be increased substantially. It is a form of penal taxation. It is another form of taking profits away from a company or a manufacturing concern, profits which could be spent modernising and improving the concern. I hope the Minister will seriously consider making some concession in that regard. It would be a valuable concession particularly to the smaller type of business of which there are large numbers throughout the country. As I have saidad nauseam in the past, these businesses find it extremely difficult in present circumstances to accumulate capital for development purposes.

Some years ago the grant for the employment of industrial consultants was 50 per cent. A few years ago the figure was reduced to 33 1/3 per cent., or one third. Because of the necessity for modernising our industries, making them efficient, and bringing them up to date, I think it would be a worthwhile step to consider restoring that contribution from the Exchequer to 50 per cent. Not all these industrial consultants have been a success. We are all aware of that. I am also aware, as I am sure the Minister is, that in a number of instances they have made very advantageous changes in a number of industries. I think their employment should be encouraged. It would bear fruit in the long run.

There are just one or two other points which I should like to mention. I should like to refer once more to the old reliable—death duties. First of all, I should like to commend the Minister for the improvements he has made in the rates. That is a practical step in the right direction. I am sure the Minister shares my view that we should aim ultimately, if not at the complete abolition of death duties, at least at the raising of the limit in successive years. There is another small matter to which the Minister might give his attention. In the Budget he provided for an increase in the dependent relative allowance from £80 to £110. This is an obvious logical step having regard, amongst other things, to the introduction of the old age contributory pension.

I should like to ask the Minister to look into the present position in regard to the allowance for the income of a child in its own right. That figure is at present £60 a year. I think I am correct in saying it was originally £40. That was in 1920. With the exception of one change over the last 40 years, the figure has remained at £60 a year. I suggest that now that the income tax allowance for a child has been brought up to £120 a year the allowance for a child's income in its own right should be adjusted accordingly.

The Minister in his Budget statement referred to the fact, and quite rightly so, that the level of taxation in this country is lower than in certain comparable countries which he instanced. I should like to suggest that it is not sufficient to have taxation lower. Again, in order to accumulate sufficient capital for development, we must have a rate of taxation here substantially lower. A comparatively poor country, such as ours, cannot afford a rate of taxation comparable with that of a wealthy industrialised country, such as Great Britain, Belgium or Western Germany. Although our figure of some 23 per cent. compares favourably with 25 per cent. in Great Britain, when one has regard to the individual incomes of companies or businesses, the comparison is still invidious. It should be the aim of the Minister—of all Ministers for Finance—to concentrate on a regular reduction in the rate of taxation.

In the last analysis the capacity of a country to produce wealth and ensure prosperity for its citizens depends on three things—education, investment of its capital, the efficient productive capacity of its manufacturing concerns and, above all else, of its people. Every Minister for Finance should weigh his Budget with these three things in view. The Minister in his recent Budget has gone some of the way but, having regard to the points I have just mentioned, he might have gone a good deal further particularly in relation to giving more opportunities to manufacturers and companies to spend out of their own resources the capital so necessary to put this country into an efficient competitive position to face the Free Trade Area which is bound to evolve in the space of a few years.

I believe this Bill should be opposed and I intend to oppose it. I look across the floor of this House and I see three or four Deputies sitting behind the Minister. I look again and I observe that none of them is from rural Ireland. That is not surprising when one remembers that this Bill has nothing in it of advantage to rural Ireland. Indeed, there are many things in it disadvantageous to rural Ireland and it is my task to point them out to the House.

In the last 12 months 7,990 acres of land have been sold to foreigners. One might say in round figures 8,000 acres of the land of Ireland have been sold to foreigners. There is nothing in this Bill to prevent a repetition of that. On the contrary, there is something in the Bill to foster that situation. I am sorry Deputy Carty, Deputy Millar, Deputy Kitt or Deputy Mark Killilea, is not here to help me out in this. In Galway, there are 16,561 farmers, each of whom is trying to exist on less than 30 statute acres. That represents three-fifths of that number of people in the country who have less than 30 acres. I have here the names of people who sold land, the names of the estates sold and the acreage involved, in the past 12 months. I cannot pronounce the names of the buyers, whether they were Jews, Japs or Germans, but I have them here if the Minister wants to see them. The Government allowed roughly 8,000 acres of land to be sold to foreigners within the past 12 months and granted them exemption from taxation, while at the same time the number of people in Galway who have less than 30 acres of land each is 16,561.

In those circumstances, certain Fianna Fáil Deputies have been holding meetings inside closed doors, talking about the achievements of the past four years, about our exports for the past four years. Do they not realise that our chief exports for the past four years were people, that 200,000, mainly small tenant farmers with less than 30 acres, have emigrated for the simple reason that they could not exist in view of the present cost of living and other things of that description for which the Government are responsible? Then they tell you of their plans. We read in the local paper the other day that Deputy Kitt at some meeting referred to the Fianna Fáil plans. There was a plan to provide water; there was another plan for drainage. Of course, the plans were vote-catching plans and nothing else.

I should like the Minister to explain how it happened that over 8,000 acres have been allowed to be sold to foreigners who got certain exemption from taxation, while at the same time 200,000 of our people had to emigrate and, in Galway alone, there are 16,561 persons, each of whom is trying to exist on less than 30 acres? There are 1,569 of them, each of whom has less than one acre of land; 1,521 who have from one to five acres 2,758 with from five to ten acres; 2,361 with from ten to 15 acres; 8,362 with from 15 to 25 acres and there are 16,561 trying to exist on less than 30 acres. At the same time, those Germans, Jews, Japs, Negroes, are allowed to come here and buy up overnight thousands of acres and are getting special tax exemptions.

Since the time of Lord Lucan and the Clanrickardes, there has never been such a clearance of people from the land as there has been within the past 12 months. I defy contradiction of that statement. I want to warn the Minister that whoever will occupy his position after the general election will have to introduce measures to prevent foreigners coming in here and depriving the small tenant farmer of a way of living.

There is nothing in this Bill to restore the food subsidies, the removal of which has caused so much trouble and which has been the cause of emigration from the rural areas. The small tenant farmer was not able to pay his son or daughter £1 or 30s. a week, with the result that they went away and the father and mother went with them. One hears some members of the Fianna Fáil Party saying that emigration is in our blood, that they would go in any case. That is all cod. I know many homes that have been closed up, where the little holding is set for a year or two or three in the hope that some day the people who left them will have acquired a few pounds and can return.

I do not see anything in this Bill to give us the 100,000 jobs promised four years ago. Of course, people like Deputy Kitt may say that there have been a few thousand more people employed in industry. That is a good thing. I wish there were more of it. At the same time, it is admitted in a Government publication that there are 29,000 fewer people working on the land than there were four years ago. The agricultural workers are the chief producers, the only people who make new money in this country through their sweat and toil. Nevertheless, after four years of the present Administration, there are 29,000 fewer persons working on the land and 200,000 have emigrated.

I want to point out to the Minister that there is a form of taxation which does not come before this House, that is, rates. Something must be done about rates. At the present time, in many cases the land is not worth the rates being paid for it. In County Galway at the moment, the rates are nearly 53s. in the £. Galway is the most heavily rated county in Ireland and it is one of the poorest counties. Does the Minister not realise that the land is not worth the rates and that very soon the people will have to run away from the land on that account?

Neither is there anything in this Bill to restore one of the great Acts introduced during the inter-Party Government's time when the late Deputy Murphy was Minister for Local Government, namely, the Local Authorities (Works) Act. That Act was a great help to people in the rural areas. Even Fianna Fáil people, including Deputy Corry, praised it. Of course Fianna Fáil can blow hot and cold as it suits them.

I intend to vote against this Bill. There is nothing in it that is of any advantage but everything that can be a disadvantage to the people in the rural areas. The way things are drifting, I say let us have a general election tomorrow or the day after. No matter what Party are in power, if serious measures are not taken by legislation in this House, a chaotic situation will prevail in a few years' time. I have often heard it said that no one would ever succeed in driving the Irish out of Ireland. Nevertheless, in places where the Irish should be there are Japanese, Germans, Jews and Negroes. If as many Irish people drift away in the next four years as have gone in the past four years, there will not be many Irish left.

As has been pointed out by many speakers, the amount of money the Government are spending is colossal and the way in which it is being spent does not meet with the approval of many of the people in rural Ireland. Deputy Donnellan has devoted most of his speech to rural Ireland. The part of rural Ireland I want to refer to is the provincial town. I want to ask the Minister and the Government to desist from going around the country and making statements to the effect that the country was never so prosperous and having those statements sent to the Press, while people who are down and out and who know that no such prosperity exists have to read them.

With reference to the constituency I represent, East Cork, and with particular reference to the town from which I come, Fermoy, the people of Fermoy have been, since we attained native Government, appealing to all Governments to give us some kind of help in regard to industrial activity. We have got nowhere in that appeal, although when men were wanted, that town gave great service indeed to this country. The position is much worse today than it was four years ago because unfortunately many of the young men who grew up with me and who are now in their forties are over in England or elsewhere seeking a living. I want the Government to give serious thought not only to the position of Fermoy but to the position of many towns like it throughout the country.

Not long ago in this House, I said this Government were too Dublin-minded. The more I see of their activities, the more I am convinced that is so. They are not giving consideration to people in towns like Fermoy, Midleton and Mitchelstown who find it hard to meet all the commitments placed upon them, people like shopkeepers and those unfortunate people who have to wait on the side of the street for the customer who is just not there. The Government ought to ensure that the grants and inducements they give to the towns in the undeveloped areas, if at all possible, are extended to the towns to which I refer and are not now in the shaded areas, because they are just as badly off as those towns in the shaded areas.

Perhaps when he is replying the Minister will let us have the answer to this question. I was always told, taking the provincial towns again, that they could not exist except there was a prosperous industrial community around them. I believe that, not only for Dublin but for these provincial towns, agriculture is the only hope for their survival. I cannot understand why, out of the £250,000 earmarked by the Government for the finding of markets abroad for our agricultural produce, only £30,000 has been spent. In the era we are facing, we must make a serious attempt to get markets abroad for our agricultural produce and perhaps the Minister will explain what attempts have been made and why this money is left unexpended in the Government's coffers. Once again, I appeal to the Government to consider other parts of Ireland besides Dublin. If they do that, the people, especially the people of East Cork who sent me here, will say there is some consideration for them at last.

Mr. Ryan

If the economy is as sound as the Minister and the Government like us to think, one would have expected the Government to perform the necessary operations which are crying out for attention in our whole financial structure. When the economy is sound, then is the time to make changes in the status and functions of the Central Bank. The Minister and his Department know that these changes will have to be made, if we are ever again to avoid the difficulties which we twice experienced in the last decade when the balance of payments position went against us. It is cowardice on either the Minister's part or on the part of the Government that they were not prepared to do what they ought to have done, or else they know that the economy is on the brink and that any change now would cause chaos. That would not suit them in a general election year.

One of the most significant factors in our economy over the past couple of years has been the colossal all-time record profits of our banks. That is why the experts are trotting the country showing the bank accounts with black figures instead of red ones because they are doing well, although the incomes of the majority of the people are falling all the time. If ever there was an obligation on the Minister, it fell on him this year to impose a special bank tax. Is the Minister going to say that the banks are in such a shaky position that they could not have carried a special tax? I believe they could have carried a tax without any great upset to the banks themselves. One of the effects of that might have been that the banks would have dropped their lending rate in order to avoid paying tax.

Be that as it may, when there was an obvious course open to the Minister, he would not take it. The only worthwhile tax relief he gave was one to those who are paying surtax. It is no wonder therefore that at chambers of commerce dinners, bank dinners and financiers' dinners we have the clapping of "good old Jim Ryan" on the back. Never have these financiers been so well off; never have they got such concessions. Never was there a time when it was more necessary for the Minister to redistribute the wealth within the economy but he has failed to do it. On that account, I believe this Finance Bill is a hopeless effort to try to tackle the problems of this country as they face us today.

In recent years, due mainly to the foresight of Deputy Sweetman, we have seen the value of having investment in this country and encouraging that investment by giving tax reliefs for investments here. I do not believe we have gone far enough. That was a positive and excellent approach. It is an indication of what Fine Gael will do when returned to power.

I believe a very useful step in that connection would be to impose a dividend tax on investments of Irish people abroad. I believe, in the same context, that if we are as sound economically and financially as the Government pretend we are now is the time to consider some operation of exchange control so that, when the necessity for exchange arises, we will be able to apply it without having to come into this House in an unsettling atmosphere. At a time of financial difficulty any discussion on a Bill giving extra powers, and so forth, would cause an even more unsettling effect. The Government must be condemned because they have failed to do it.

If we had a property-owning democracy we would have a much better economy. It is a sad reflection on the Minister that he did not avail of this Bill to abolish stamp duty on all properties of a lesser valuation than, say, £3,000. The Minister may take any figure he likes. The figure I have in mind is the figure that would purchase a home or a small farm for an average person in the community.

I think it is ludicrous that when the State and local authorities have to subsidise housing we should subsidise housing for people who certainly have an income with which they could purchase their own dwellings and thereby relieve the national Exchequer. I have indicated a way in which the Minister could have obtained extra revenue without any great difficulty, a way in which he could collect it, a way in which the burden would be least painful. Therefore, the Minister cannot say that we on this side of the House have looked for more money without indicating where it could be got. I am now indicating where relief could be given. It is necessary in order to encourage people to purchase their own properties. It is socially desirable and I advance it on that ground.

Another thing which discourages people from purchasing their own property is ground rent. That is a matter for another Department and not one which I would ask the Minister necessarily to deal with in the Finance Bill. In relation to the same matter, there is Schedule "A" tax. It is ludicrous to apply a special penal tax on people who invest their savings in their own property. We are imposing that tax. The Minister may say that an occupier who has paid a rent does not pay the tax. He simply pays the ground rent to the landlord and he pays it. However, the burden of making two separate payments, one to the landlord and the other to the Revenue Commissioners, lies on the unfortunate person in the house.

We ought to abolish Schedule "A" tax on people residing in properties of lesser marketable value than £3,000. The Minister might want to adjust it in relation to rateable valuation. I have no objection to that. However, if we are to encourage people to invest their savings in Ireland we ought to encourage them to purchase their own property. One way is by abolishing Schedule "A" tax on properties of low valuation.

In the same context the case is that the Minister must keep his mind on the revenue end and feels he cannot surrender Schedule "A" tax in that regard. I would not hesitate to increase Schedule "A" tax on people who have ground rents. If it were done, the Department of Finance would probably, as I believe they do at present, resist very strongly the abolition of ground rents, because they believe the Schedule "A" tax would be abolished with them.

We must discourage people from investing in ground rents. It is a nonproductive investment. It does not add one penny to the country. It does not produce any valuable service. It is an investment in a private tax. It is a negative thing and of no economic value to the country. It would be good economically to discourage people from investing in these private taxes. If they were discouraged from doing that and discouraged by extra tax levies on foreign dividends, they would have to invest in the brawn and brains of our people in this country.

It is not because I resent any contributions being made to build up the economy of rural Ireland that I make my next remarks. I want to dispel any idea in the mind of the people in rural Ireland that Dublin is doing well. It may be doing well on the front—the banks and expense accounts, gentlemen and ladies. The lounge bar gentlemen and ladies may say:"Good old Jim. Good old Lemass. He is an an economic genius, and so on. They are doing all right." However, let us look at the figures.

During the days of the Costello administration the average rate of surrender of Dublin Corporation houses and flats was 500 per year. That is, 500 families in Dublin per year handed back the keys and emigrated. Of that 500, you will probably allow even up to 50 who might have been buying their own houses, or the person occupying the house might be dying or going to another country. Say that 450 houses per annum was the average number of surrendered dwellings.

Since this Government have taken office that figure has increased and the average is 1,400 surrendered dwellings per annum. Three times as many people are leaving Dublin City, which is supposed to be well off now, compared with a few years ago. Where is the wealth? Where is all the prosperity that we are told is in the country? Why are people giving up? It is because they are being told they were never so well off. The impression is being given that we were never better off.

The people are saying: "If this is what ‘well-off' in Ireland means, we will go abroad. We could not be any worse off there even if we do not do any better." These are realistic figures. Forget about the joy of the bank directors and all these well-to-do people. Look at the figures that have been given by Deputy Dillon and other Deputies. Look at the figures I have given which are official figures and which cannot be controverted. If you think I am lying, look at the official reports of the Dublin Corporation. They are there. Dublin Corporation, which, under the Costello régime, was building 1,500 dwellings per annum to meet the demand for houses, last year built a mere 250. They are afraid the point will be reached in a few years, if our housing programme continues and if the rate of emigration which followed on the return of Fianna Fáil continues, at which we will have more houses than people to occupy them. That is the Dublin that is supposed to be getting everything. If it is getting all that and is in this miserable position, it is no wonder rural Ireland is suffering from increased depopulation and depression. It is not a situation which any of us wants to see or which gives pleasure to any of us on this side of the House; but it is there. When the Minister had an opportunity in the Finance Bill of doing something about it, he failed miserably. On that account I believe this Bill is not worthy of the support of this House.

First, I must apologise to Deputy Sweetman for not circulating a copy of my opening speech. But I honestly thought it was hardly worth circulating as there was so very little in it. It was merely a factual statement of what was in the various parts of the Bill.

I cannot accept Deputy Sweetman's view in regard to the way the Special Import Levies have been dealt with since this Government came into office. My recollection does not coincide with his that we in Opposition had condemned these levies outright. My recollection is that we divided the levies into two categories. First, those concerning commodities necessary for health—in particular, we mentioned oranges—and those concerning the welfare of industry. When we returned to office, we tried to remove such levies. At that time, the levies were yielding about £4 million per annum. Last year, we got £1 million from them. I have not got the figures, but I know the greater part of the £4 million came from levies that were abolished. Others were brought into ordinary taxation and some were modified and brought in also. Those that remained were levies on what might be regarded as semi-luxury items. I think nobody will object, when taxation is necessary, to raising it in that way.

Deputy Sweetman also said that the momentum of output and export was reducing during 1960. That was true so far as the figures went from quarter to quarter but, on the other hand, I am glad to be able to say that the export for the first three or four months of this year is quite favourable, so that we may, perhaps, look forward to a good return from both output and export during the year 1961.

Industrial or general?

I do not know really. One point Deputy Sweetman made was a point he also made in his Budget speech. Perhaps I misunderstand him. but if I do not misunderstand him, I think he is wrong. He pointed out that in making the change in the deductibility of corporation profits tax and income tax, we have put investors in Irish companies at a disadvantage. I must say I cannot see that point. If a person puts money now into an Irish company under the new conditions the Irish company, when it determines its profits at the end of the year, will pay corporation profits tax at the rate of ten per cent., less the first £2,500, and then pay income tax on all the profits, not having deducted as heretofore the amount paid in corporation profits tax.

Deputy Sweetman had in mind, I think, a person making an investment here and, let us say, in England. If he invests in an English company, when that company makes up its profits at the end of the year, 15 per cent. is taken in profits tax and then income tax is taken at the higher rate and is paid on the whole lot, as here. Therefore, the amount paid in an Irish company with fairly substantial profits, because the first £2,500 does not make any difference, would be about 41½ per cent. In England, it would be about 52½ per cent. I cannot see therefore, Deputy Sweetman's point that we are putting the Irish company at a disadvantage. Perhaps I have not understood the Deputy properly in the point he made.

We will have it out on the section.

Very good. The next point he made was that in assessing the increase in national income and output, we had in all our discussions taken the datum year as 1958, that 1958 was a bad year from the agricultural point of view and was, therefore, abnormally low in output and that that gives a better figure for 1959 as compared with 1958. There is something in that point certainly, but it does not make a great difference because I had that figure examined and, even if 1958 had been a normal year, as between 1957 and 1959, it would make a difference of something less than half per cent. It would, of course, make that difference. On the other hand, we must keep in mind that the increase in national income in 1960 over 1959 was better still than 1958; and in that case, of course, the datum year of 1958 does not come in at all.

A good deal was said about the Government's attitude to the Common Market. I do not want to go into that very fully, but I want to say this: If the Taoiseach makes a statement that we have not applied for admission to the Common Market group, surely it should not be deduced from that that we have done nothing? We might have done quite a lot of work in making inquiries as to whether we should apply or not and we might have given it a great deal of thought. Maybe it might appear that the more thought you give it, the more thought you found necessary to give it. You might have done a great deal of work before making an application. If the answer is given, therefore, that we have not made an application, it is not fair of Deputies to say we have done nothing in the matter.

The next matter which came up for discussion was the changes made with regard to stamp duty on land purchased by non-nationals. Deputy Sweetman asked if it was a printer's error that 19th April appeared as the date from which the tax would be changed on the pre-1947 company. Well, it was not a printer's error. As a matter of fact, when the Deputy made the point I must say I thought we should give attention to the matter but I believe it has become common practice, in matters of customs and excise at least, to impose the duty on the day on which it is announced. However, I do not think there is much in the point and it is most unlikely that anybody should be caught out on that particular day. However, I will have it examined further.

Another point which Deputy Sweetman made, and which is more technical and a bit beyond me at the moment until I have an opportunity to study it, is in regard to subsection (9) of Section 29 where it reads "irrespective of whether or not it has been stamped with a particular stamp", etc., the Revenue Commissioners can call for a re-examination and a re-stamping. I should say that the argument is not altogether on Deputy Sweetman's side and I shall take more time to examine that point between now and the Committee Stage.

Fair enough.

With regard to this whole question of charging 25 per cent. stamp duty on purchases by non-nationals, the object is to make it more expensive and more unattractive for non-nationals to purchase agricultural land. These section are designed only to deal with agricultural land. We have, as Deputies are aware, excluded land within the urban area; we have excluded a house standing on less than five acres of land and we have excluded land purchased for an industry. As I say, our only aim is to make it unattractive for a non-national to purchase agricultural land and to make it, as it were, more competitive for the Irish buyer of land to get land in opposition to the non-national. Whether we succeed or not is a question that I cannot answer at this stage. My only object in putting in these clauses was to see that as far as possible there was no avoidance or evasion of the law. Perhaps other cases will crop up as time goes on where again we shall find avoidance of the law and if so we must deal with these different cases.

There is no way as far as I know of dealing with this thing in a thorough fashion, short of giving very full power to the Land Commission to say: "You must sanction every sale and reject those you think are not in the interests of agriculture," or something of that nature. That would be a drastic step which I think no Party would like to take unless, of course, the matter became very much more serious than at present. Another thing which I should like to say is that if we do enter the Common Market that matter will all go by the board because it is part of the Common Market scheme that there must be free access to all citizens of other countries to our own country and free access of capital, so that we would have to face that if we wanted to join the Common Market.

Deputy Cosgrave complained that P.A.Y.E. was a very complicated system. All I can say is that when we were drawing it up, as far as I could understand the matter—it is very technical of course—we did adopt a system which is much less complicated than the system in England. When I brought the Bill before the Dáil and when I thought I might be asked to explain the scheme up and down, I must say that as I got an understanding of it at the time I thought it was comparatively simple. Any person I have asked about it who is dealing with the system, an employer who is dealing with the matter himself, or an employee dealing with it on behalf of his employer, has told me in every case that it was not complicated and in fact has been simplified as far as possible in all the circumstances.

Deputy Booth spoke about the increased duty on motor parts. Our desire was to simplify the duties of motor parts and to cut down the number of duties as far as possible. It was an honest calculation of the Revenue Commissioners that the new duties, provided there are the same number of cars coming in this year as last year, will give exactly the same revenue. There may be more cars coming in and there may be fewer; in that case we will collect more duty or we will collect less, but the calculation was on the assumption that we would have the same imports this year as last year.

Deputy Booth also referred to the matter which I have mentioned already where companies are now paying their corporation profits tax on all profits over £2,500 and they will then pay income tax on the total profits. Up to this, as I said, the amount paid on corporation profits tax would be deducted before income tax was calculated. Deputy Booth says he is doubtful whether most companies would be as well off this year as last year because, he very wisely said, the Revenue Commissioners would be inclined to make a change that would favour the Exchequer. I said when bringing in the Budget that any company earning a profit under £52,000 would be somewhat better off this year on account of the reduction in income tax, but if they earned over £52,000 they would be better off only to a very insignificant amount. On the previous occasion I mentioned what the amount was on £100,000 but I forget now what it was, something like £200.

Deputy Declan Costello says that the Budget gives only £600,000 to social welfare and £1.2 millions for income tax payers. He said that for that reason it was a Tory Budget. One does not mind being called a Tory but one would like to know why that name is given to this Budget. It would be a pleasant thing for any Minister for Finance, and I am sure he would get the applause of certain people if he did so, to give all the surplus he had to social welfare recipients. He would have done nothing in that case towards creating more employment and, after all, as another Deputy said, the unemployed are not seeking social welfare but jobs. If the Minister for Finance were doing his job properly, he should devote at least some of that surplus to the provision of employment for the unemployed. That would not be done by giving the whole surplus as extra benefits. Furthermore, if that were done for, say, two or three years in succession, there would obviously be no increase in revenue over these years. There would be stagnation of the economy here and we could do nothing to build up the country and give employment to those now idle or to improve the lot of those who are employed by giving them a better standard of living. If that is what a Tory approach means, I am all with Deputy Declan Costello and his idea of how to manage finances.

Deputy Costello went on to say that in our capital Budget, we had also shown great conservatism, that we had reduced the amount for housing. First, I should like Deputy Costello and Deputy Ryan to settle the difference between them because Deputy Ryan told us that no more houses are necessary in Dublin city and that there are too many vacant at present. I do not believe that story, of course. Apart from that, I want to say that what is put into the capital Budget is the estimate of what will be used for housing. There is no use in my putting in £10 million or £15 million, if it is not going to be used. I have put into the Budget what I think will be used and if Dublin or Cork Corporations and other town councils go ahead with more building and tell me —or whoever is here next year—that more money is required, I am sure more money will be given.

Let nobody think that because the amount is lower now than it was, say, five or six years ago, it is Government policy that fewer houses should be built. It is merely an estimate of what is required for housing in all circumstances. I have certainly never given a direction to the Minister for Local Government to keep the bill down. In fact, the Minister for Local Government has increased his grants in many directions under this Government and he has made these increases with—I shall not say without any— little resistance by me.

The next point Deputy Costello made was that we had any amount of money for what he called prestige spending. He mentioned the air companies. It is a phobia with Fine Gael that too much money is being spent on air companies. I do not know why Fine Gael are so much against air companies. It is one thing for which they always attack Fianna Fáil—"no money for old age pensions, no money for the farmers but always money for air companies." I wonder why this hostility is shown to the air companies? I imagine that if we had closed down the air companies and said that there were British, American and other companies coming in to take people away from here by air and if we had put no money into those companies, Deputy Costello would say that I was a Conservative or Tory Minister for Finance.

Whatever money will be put into the air companies will be put in on the calculation, as far as it can be made, that it will be money well invested and will pay dividends. If we have made a mistake—well, I suppose we have made more mistakes than that—but that is the basis on which the money is being invested.

In regard to direct taxation, Deputy Cosgrave said that Mr. Declan Dwyer had complained that in our system of grants and concessions for industry, we had favoured the new man coming into the industry as against the industrialist who had been there all the time, and that we had built up those industrialists by these grants and concessions which were introduced. The concession on income tax on export profits was brought in as an inducement to people to export more. It was not introduced as a reward for those who had built up exports. To that extent Mr. Dwyer is right. I do not think it would be favourably received by Deputies if Deputy Sweetman, when he brought in this concession first, had brought it in as a flat rate for all industries because it would look like rewarding people for a business that was obviously profitable when they were exporting at that time.

It must be said that the concession was to be made for all increases in exports so that the exporter who was already established as such, was, after all, in a better position to build up exports than the man coming in for the first time and was more likely to benefit by the concession than the man coming in for the first time. For all his increased exports, he would get the concession. Apart from that, this particular complaint was made when I first became Minister for Finance and we thought there might be something in the point. We introduced a 25 per cent. relief for existing exports, so that the man who was previously exporting and who goes on into more exports now, can take either the 25 per cent. flat or take the 100 per cent. on his increased exports, whichever he likes.

Deputy Dillon said that Fianna Fáil believe that this country can survive irrespective of the agricultural industry, or, in other words, that we are prepared to let agricultural fall into bankruptcy and that we think, according to him, that we can make the country survive even in that case. There are a few points that Fine Gael will dwell on very much coming up to the general election and one is that Fianna Fáil are not interested in agriculture, but the one class of people they will not get to believe that are the agriculturists themselves. They may get people in cities to believe it or those who take an academic interest in economic affairs but why, or how, can they make that accusation against Fianna Fáil? Everybody knows it is very hard for a Minister for Finance to make ends meet, but even so, we are endeavouring to provide £8 million more for agriculture than was provided in 1956-57, the last year in which the Coalition Government were in office. That money is provided for various purposes and we believe that the only way we can help agriculture is to help farmers in their production.

We have given liberal subsidies for fertilisers and so on in order to enable farmers to get more out of the soil, whether crops or grass, so that they can produce more on their farms. In addition, we have provided more for price incentives.

There were certain price incentives under the previous Government. We have increased the price incentives for milk products and also for top grade bacon, and we have over the past year brought in price incentives for beef. I do not know of anything else we could usefully do for agriculture. I am certain of course that no one from the Fine Gael side has suggested anything else we could do. They are trying to persuade the country that we are doing nothing for agriculture, and trying to give the impression to the country that they would do a whole lot more, without saying what they would do. I do not think that will carry much weight with the country people, unless Fine Gael tell them what they will do. They have not said anything of that kind. After all, the farmers are a very big class, and we all agree that they are not doing as well as we would like to see them doing, but it is unfair to the farmers, if Fine Gael have some policy up their sleeve and do not tell us what it is, in order that we can improve the lot of the farmers now, and not wait until after the next general election to do so.

What I would call a rather undesirable type of propaganda is coming from Fine Gael, and Deputy Dillon is the man who is spearheading it. He talks about what we have done for industry, which we have put on its feet, contrary to what some Fine Gael Deputies say. He says we have made industry prosperous and have done nothing for the farmers. In other words, he is appealing to a very low instinct in the farmers and trying to create a feeling of jealousy in them by saying they are not doing as well as every other class. That is a very bad thing to do because, after all, if the farmer is not as well off as the others, he should be left fairly content as he is, and this feeling of resentment and jealousy should not be stirred up against the people in the towns because the farmers are not doing as well as the people in the towns.

We, of course, had not the same opportunity of doing that, whether or not we would have done it, because when the Coalition were in office, we could not draw the attention of the farmers to the fact that the people in the towns were doing well, because they were not doing well. I am appealing to Fine Gael not to try to stir up this feeling of jealousy amongst the farmers. Deputy Dillon is a very impressive speaker. I can quite see that if he were speaking, his audience would be convinced that the farmers were never so badly off as they are at the present time. But why are they paying so much for land? Land was never so dear. The farmers may be very good supporters of Fianna Fáil, but I am quite sure there is no Fianna Fáil farmer who would pay £1 more for a farm than he thought it was worth, for the sake of boosting Fianna Fáil. He pays for it because he thinks the land is worth it, and because he has confidence in the future of agriculture, and he buys the land to make his living on it.

Under the Coalition back in 1956, every other farmer one talked to was in the doldrums. He was called in by his bank manager and told: "You must pay something off your bill." In the past few years, the bank managers have been saying: "Do you want any more money for your business?" Bankers are not fools; bankers do not give money in order to boost Fianna Fáil, but because they know there is a future in agriculture. The objective opinion of the bankers and the farmers that agriculture is progressing and will progress is much more useful than the pessimistic propaganda of Fine Gael.

Deputy Corish talked about the income tax reliefs and said that he was dissatisfied. He quoted figures to show that a single man earning £1,000 a year got much bigger reliefs than a married man on the same salary. It is inevitable unless we make some big changes in the system that when we bring down income tax, the single man will get a bigger relief. Of course, when it goes up, he pays more than the married man, because as every Deputy knows, the married man is exempt at a higher level than the single man. Therefore, when income tax goes down, the single man gets more out of it than the married man.

Deputy Corish also talked about indirect taxation and said it was unfair, in a way, to the less well-off person because he has to pay his share of indirect taxation in a higher proportion than the better-off man. First of all, I should say that Deputy Corish is right when he says that of our total revenue 70 per cent. comes from indirect taxation. I remember saying in my Budget speech that I was very much inclined, so far as it was possible, to change from direct taxation to indirect taxation, for the reasons I mentioned earlier to-day, that we would get better results from building up the economy by taking less from earnings and putting a tax on spending instead.

However, Deputy Corish may be right when he says that the poor man will have contributed a certain amount on tobacco or a pint of beer in indirect taxation. Let us take the three big items of indirect taxation: tobacco, alcoholic beverages and petrol. They make up four-fifths of the entire amount collected in indirect taxation. I do not say that a person on a low income should not have a smoke or a drink, but at least he can regulate his spending on those items to a moderate amount, if he so wishes.

I mentioned elsewhere, not here, that our total revenue from income tax is almost equivalent to the amount paid out in social services, if you like to put it that way. In answer to another point raised by Deputy Corish, we are taking income tax from people and giving it out in social services. If the income tax payer pays 6/4d., he is doing well and helping his brethren, and the more wealthy man who must pay 13/10d. at the top of the surtax rate is helping his brethren also. While the rate of income tax and surtax is lower here than it is in England and in other places, it is still a fairly substantial amount to take from a man's earnings.

As Deputy Corish pointed out, it is true that the amount of money collected by way of revenue is very much higher now than it was in 1956/57. I think it is higher by about £20,000,000 as far as I remember but, if you take the Departments mentioned by Deputy Corish—that is, Education, Health and Social Welfare—and if you add to them the Department of Agriculture, these four Departments between them are taking £16,000,000 more than they did in 1956-1957. Therefore, apart from these four the amount coming in in extra revenue now as compared with 1956-1957 is a fairly moderate amount. It is not true, as Deputy Corish said, that those in receipt of social welfare benefits are worse off now than they were three or four years ago. The one class usually mentioned in this connection is the non-contributory old age pensioner. From 1st August next he will have 25 per cent. more than he did in 1956-1957 and the cost of living has gone up, as far as I recollect, between 14 and 16 points.

Deputy Corish wanted to know what would happen to the industries established in the undeveloped areas. The point made by the Deputy was, of course, that they were obviously uneconomic, otherwise they would not have got the very large grants they did to induce them to go into these areas, and they are obviously competing at a disadvantage in operating in these areas. He asked what will happen to them if we go into the Common Market? I do not know. It may be that the industries which are operating in remote areas may have certain advantages. We only hope they will be able to carry on even if we do go into the Common Market.

Deputy Russell spoke of our tax on undistributed profits and he advocated something that has been advocated very often before; he said we should have a lower tax on undistributed profits. The reason he thinks that should be done is because our profits are low by European standards. While admitting that our profits are lower. I can only answer the Deputy by saying that our taxes are also comparatively low by European standards. It must be remembered, too, that we are giving exceptional treatment by way of grants, loans and so on to industries starting here. Taking our treatment of industries generally, I do not think we can be accused of treating our industries less generously than industries are treated in other European countries.

Deputy Russell said that a good case could be made for the abolition of corporation profits tax. I do not know. It must be remembered that corporation profits tax and income tax combined amount to just a little over 40 per cent. I do not think you will find another country in this part of Western Europe where taxation is so low. It has been argued of course that in very wealthy countries they can afford to pay bigger taxes because their businesses are bigger and they have better profits. On the other hand, in countries which are not so wealthy money is required more for the Exchequer, and so on. If you take the company as compared with the individual, I must admit I think the individual here is badly treated as compared with the company. The individual, if he is in business, pays income tax on profits, and he pays surtax as well. He may actually pay as much as 13/10 in the £. The most that the company will pay is 8/4 in the £.

I agree with Deputy Russell that the three prerequisites to progress in industry are education, capital and productivity. Deputy Russell thinks the Budget did not go far enough in encouraging these. My only answer to that is that it went as far as our resources would permit.

Deputy Donnellan spoke about local rates. For some while past I have been thinking the time has come when the whole question of financing local authorities should be examined by some independent body to see if a better system could be found. I do not know whether or not a better system can be found, but I think the matter should be examined. I suppose that is not likely to happen now until a new Government takes office.

Deputy Barry said that serious thought should be given to conditions in towns like Fermoy. In answer to a Parliamentary Question not so long ago, I heard the Minister for Industry and Commerce state that he had the whole system of grants and the present division as between undeveloped areas and other areas under review to see if a better system could be evolved. I know the Minister is examining into that and he may, or may not, produce a scheme in due time.

Deputy Ryan said that, while we are talking about the great progress the country has made, people's incomes are falling all the time. Now that cannot be true. After all, total national production is going up and it could not go up if incomes were going down. Secondly, the yield in income tax is going up and it could not go up if incomes were going down. Deputy Ryan will have to find some other cause for what he regards as the great depression in the country.

He also advocated our doing more to encourage people to buy Irish shares as opposed to foreign shares. He asked me to supplement what Deputy Sweetman did when he was in office. I must say I was not aware that Deputy Sweetman did anything while he was in office. I may be wrong in that, but the system of giving relief in income tax on the interest from Irish shares was brought in by my colleague, Deputy MacEntee, when he was Minister for Finance.

Deputy Ryan referred to the stamp duty on the purchase of property. He said it was very, very high. He made the point that a man purchasing a house should not have to pay the very high rate of stamp duty exacted at the moment. When a house is bought by a purchaser from a builder for the first time, the rate of stamp duty is not much more than nominal. However, I do not profess to know all about the operations of stamp duty on the purchase of property. It is a matter I shall have to look into. I do not think there is any other point to which I need reply, but, if I have missed any point, let me say that it was not because I was trying to avoid it.
The Dáil divided: Tá, 64; Níl, 43.

Tá.

  • Aiken, Frank.
  • Bartley, Gerald.
  • Blaney, Neil T.
  • Boland, Gerald.
  • Boland, Kevin.
  • Booth, Lionel.
  • Brady, Philip A.
  • Brady, Seán.
  • Breen, Dan.
  • Brennan, Joseph.
  • Brennan, Paudge.
  • Breslin, Cormac.
  • de Valera, Vivion.
  • Doherty, Seán.
  • Donegan, Batt.
  • Dooley, Patrick.
  • Egan, Kieran P.
  • Egan, Nicholas.
  • Fanning, John.
  • Faulkner, Padraig.
  • Flanagan, Seán.
  • Geoghegan, John.
  • Gibbons, James.
  • Gilbride, Eugene.
  • Gogan, Richard P.
  • Hillery, Patrick J.
  • Johnston, Henry M.
  • Kennedy, Micheal J.
  • Killilea, Mark.
  • Lemass, Seán.
  • Loughman, Frank.
  • Lynch, Celia.
  • Briscoe, Robert.
  • Browne, Seán.
  • Burke, Patrick.
  • Calleary, Phelim A.
  • Carty, Micheal.
  • Childers, Erskine.
  • Clohessy, Patrick.
  • Collins, James J.
  • Corry, Martin J.
  • Crowley, Honor M.
  • Cummins, Patrick J.
  • Davern, Mick.
  • MacCarthy, Seán.
  • McEllistrim, Thomas.
  • Maher, Peadar.
  • Medlar, Martin.
  • Millar, Anthony G.
  • Moher, John W.
  • Moloney, Daniel J.
  • Mooney, Patrick.
  • Moran, Michael.
  • Ó Briain, Donnchadh.
  • Ó Ceallaigh, Seán.
  • O'Malley, Donogh.
  • Ormonde, John.
  • O'Toole, James.
  • Ryan, James.
  • Ryan, Mary B.
  • Sheldon, William A.W.
  • Smith, Patrick.
  • Teehan, Patrick.
  • Traynor, Oscar.

Níl

  • Barry, Richard.
  • Beirne, John.
  • Burke, James.
  • Byrne, Patrick.
  • Byrne, Tom.
  • Carroll, James.
  • Coburn, George.
  • Coogan, Fintan.
  • Corish, Brendan.
  • Cosgrave, Liam.
  • Costello, Declan D.
  • Costello, John A.
  • Crotty, Patrick J.
  • Desmond, Daniel.
  • Dillon, James M.
  • Donnellan, Micheal.
  • Esmonde, Sir Anthony C.
  • Fagan, Charles.
  • Giles, Patrick.
  • Hogan, Bridget.
  • Jones, Denis F.
  • Kenny, Henry.
  • Kyne, Thomas A.
  • Larkin, Denis.
  • Lindsay, Patrick.
  • Lynch, Thaddeus.
  • McLoughlin, Joseph.
  • McMenamin, Daniel.
  • Manley, Timothy.
  • Murphy, Michael P.
  • Murphy, William.
  • O'Donnell, Patrick.
  • O'Higgins, Micheal J.
  • O'Higgins, Thomas F.
  • O'Reilly, Patrick.
  • O'Sullivan, Denis J.
  • Palmer, Patrick W.
  • Reynolds, Mary.
  • Rooney, Eamonn.
  • Russell, George E.
  • Ryan, Richie.
  • Spring, Dan.
  • Sweetman, Gerard.
Tellers:— Tá: Deputies Ó Briain and Loughman; Níl: Deputies O'Sullivan and Crotty.
Question declared carried.
Committee Stage ordered for Tuesday, 20th June, 1961.