Dáil Éireann debate -
Thursday, 25 Apr 1963

Vol. 202 No. 3

Committee on Finance. - Resolution No. 14—General (Resumed).

Debate resumed on the following motion:—

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance.)

Mr. M.E. Dockrell

I was endeavouring to point out yesterday the effect this Budget will have, particularly on the industrial and commercial community. I was very surprised to note the degree of almost levity, and certainly lightness with which members of the Government Party, headed by at least one Minister, talked about the effect of a turnover tax. We had two ministerial incursions into the debate and the Minister for Social Welfare said that the turnover tax was very slight, that it would have a very small effect on industry, and would hardly put up the cost of living at all. I do not know who the Minister thinks will bear this tax. The 2½ per cent tax is not the small measure which members of the Government Party have endeavoured to make out it is. It is the biggest single imposition ever put on industry and business in the history of the State. The fact that it is 2½ per cent need not mislead anyone into thinking that it is small or unimportant. It is an enormous tax.

Hitherto, the tax code of this country has been built up on the taxation of profits. In most cases, profits are a very small proportion of turnover. In many industries, they are not more, and frequently less, than 2½ per cent of the whole turnover. Under this new tax, a sum is to be raised which will, in many cases, be greater than the total profits of the firm. If any individual or any member of the Government Party thinks it will not be passed on to the consumer, he had better have his head examined, because it must be passed on, and will be passed on.

It will not be passed on exactly in the form of 2½ per cent. It will have to be something higher than 2½ per cent. In the course of the Taoiseach's intervention here—I think I am quoting him correctly—he said that last year the cost of living rose by five points, and that this year they think it will rise by only two points or two per cent, and that some of this 2½ per cent tax will become transmogrified into a two per cent increase in the cost of living. That is nonsense. It will be more than that.

At the moment I am not dealing primarily with an increase in the cost of living. What I am dealing with is this very heavy imposition on the business community and industry generally; one which it will be extremely difficult in a number of businesses to pass on to the consumer. It is such a large tax that it cannot readily be borne by the firm. I should like to emphasise again that our tax structure deals with the taxation of the profits of industry and most people who are running a business think they are regrettably small. I shall not go into the details of the tax structure because it is too complicated and cannot be dealt with here. Taxation is levied on the difference between the cost of running the business and the money that comes in. The profits are taxed. In this case, it will have nothing to do with profits and in point of fact, it will be levied on every business to which it applies, irrespective of whether a profit is made. That is very different from what various Ministers have tried to make out. This is one of the most revolutionary and farreaching measures ever introduced in this House. That has not been made clear in any of the Ministerial speeches.

When we had this intervention of the Taoiseach in the debate yesterday, I found myself excited and interested because, contrary to what some people may expect, we are not carried away so much by political differences that we do not wish to see our country prosper and industry making headway. The Taoiseach came into the debate and spoke about the second economic plan, consultations, time tables and the necessity for economic expansion. I found myself getting very interested and very excited about all this but as the speech went on, I failed to see what connection all these sincere wishes for economic expansion and increased industrial productivity had to do with this Budget which has given industrial expansion one of the greatest slaps in the teeth it has ever got, and it has got many.

Business people are hoping that this Budget would bring some measure of relief, some sign that the Government were sincere in their protestations that they wished to help industry and that they would show that that desire was sincere by doing something in the Budget. The only things that are really welcome in the Budget, apart from the small reliefs to widows, blind pensioners and old age pensioners, is that a more sincere effort is being made to deal with tax evasion. Sometimes we are inclined to take the question of tax evasion lightly but tax evasion costs the rest of the community money. It is taking from us they are. If income tax and the various other taxes are paid in the way that they should be, and if all the loopholes are closed, many of us might find that the rate of taxation could be lowered. Tax evaders do not benefit the community and they should be dealt with severely. I am glad to see that steps are being taken to tighten the net.

I am also glad to see that something is being done to hit the individual who is using a farm as a means for hiding the profits of industry or business. That is something that has long been overdue.

Mr. Corry

Deputy P. O'Donnell would not agree with that.

Mr. M.E. Dockrell

I listened with great attention to Deputy O'Donnell last night and I am not sure that Deputy Corry listened with quite the same degree of attention because he left the House in the middle of the speech and, while he was glad that steps were being taken to deal with that form of tax evasion, at the same time, he felt that the whole matter would have to be handled and investigated with great care in order that it would not cause great hardship to certain individuals who were augmenting the profits of very meagre farms. There are undoubtedly in the poorer areas marginal farms, the owners of which are driven to engage in some form of business to exist. One wants to encourage that. We would be long sorry to see individuals prevented or discouraged from doing that by any system of taxation. But what we do want to see and what we are glad to see is that the individual who is prospering at the expense of the community will be made to pay his just and lawful debts to the community via the Government.

The Taoiseach, in the course of his exciting but disappointing intervention, said that there was a shift to the left. Now we are getting some of the truth. I have long held that in spite of protestations to the contrary, this Government are a leftist Government. They are certainly off-centre and have been for a long time, both literally and metaphorically. It is interesting to hear that the Government propose to shift to the left. Considering that they are already there, I wonder where they will finish up if they shift any further in that direction.

We have had here a great deal of State intervention, a great deal of the State entering into business and founding semi-business organisations. The Government, through the ESB, are in direct competition with electrical traders and a great deal of public money went into and continues to go into that admirably managed State-sponsored concern. We could not carry on here if we did not have State-sponsored business. It is very difficult to raise capital in Ireland for those projects and we must have a large degree of State control and State intervention. I hope that this move to the left announced by the Taoiseach last night will not interfere increasingly with business. We have had a great deal of it here. Business needs help, not increasing competition from State-sponsored bodies. I trust, therefore, further interference will not be part of this shift to the left.

I was somewhat disappointed with the other ministerial intervention we had yesterday—that of the Minister for Social Welfare. From the slant he gave to the discussion, one would think that the most important consideration in the mind of the Minister for Finance when framing his Budget was the care and treatment of the less fortunate members of our community. We all know that the treatment of the less fortunate members of the community is a matter of grave importance, but we on this side of the House feel that what has been given to them in this Budget will not do them much good. First of all, the new benefits given are infinitesimal: the increase given to old age and blind pensioners and others will not get them very far when put up against the new tax imposed with the other hand in this Budget.

New taxation is bound to increase the cost of living. It puts up the cost of business and increases in the prices of articles must automatically follow. I am afraid this Budget will lead to further demands for increased wages. I do not see any escape from that when the full impact of this new tax has been realised by the community at large. There will be an increase in the weekly household budget because of the increased cost of essential commodities. It is in the purchase of the necessaries of life that the strongest effects of this Budget will be felt.

We have no monetary unit small enough to meet exactly the effects of this new turnover tax. The farthing is the smallest we have and even that has practically ceased to exist. In any event, I do not think anybody would like to see his pockets lined with farthings in order that he might be able to pay the extra amounts chargeable for smaller priced articles. On a 5d. article, the 2½ per cent would be exactly half a farthing. We have no unit as small as that but a shopkeeper engaged in selling articles at such low prices will naturally put something on so that he will not lose on the transaction. Old people and the poor are the very section who tend to buy such articles and accordingly they will be the most affected. Therefore they will not come out from the effects of this Budget at the heel of the hunt any better than they went in, despite what the Minister for Social Welfare had to say about increased benefits.

I was surprised to hear the same Minister—indeed there were echoes of this in the Budget Statement itself— say that specific articles in the higher price range would carry this 2½ per cent. It would be extremely difficult to operate such a suggestion. The notion that the better-off sections of the community who buy more expensive articles will bear a high percentage of this turnover tax is, in my opinion, fallacious if one looks at the facts. Take more expensive articles, costing £5 or so. People buying such commodities would naturally object very strongly to paying extra for them so that the effect of this turnover tax would not be felt generally. If such a person were asked by a shopkeeper to pay £5 5s. for a £5 article, he would very quickly tell the shopkeeper: "You are charging too much." If the shopkeeper replied that he was charging the extra amount to help pay for the 1/- and 6d. articles, the purchaser of the £5 article would say: "I am sorry, but I am not in the smallest degree interested in that. I will not pay more than the 2/6d. which is the produce of 2½ per cent on the £5."

I fail to see how traders can put more on some articles and less on others. This form of tax will create a great deal of trouble and small shops will be severely hit by it, especially small newsagents and huckster shops. Perhaps the Government think that the existence of such small shops is not in the public interest. I do not see much of a shift to the left in that. This tax will make it very difficult for small shops to realise where they stand financially until perhaps it is too late for them to see that they are in danger of running their businesses on a losing basis.

We have the strange, almost anomalous position, that the larger businesses, many of which are working on low margins of profit, will be very hard hit by the turnover tax and at the other end of the the scale, very small shops will also be hit because they are dealing in articles on which it is difficult to put up the price. The purchaser of a shilling or a sixpenny article will, I think, object strenuously if he is asked to pay four times the tax he ought to be paying on that article. It is very hard to persuade him—and still harder to persuade her—that they are not being fleeced by somebody if they are asked to pay ½d. more when they should pay only one-eighth of a penny more.

The Minister said that certain articles in the building trade would be exempt. The phrase he used was "bulk purchases". Clarification of that at the earliest opportunity would be greatly welcomed by the building trade. I presume he meant goods such as cement in quantity but I do not really know.

I do not wish to speak much longer as I spoke last night also. Regretfully, I must say that the business community and industry in general have been handed a raw deal in this Budget. We expected certain help and concessions. Business here has been carrying a very high load of taxation for many years and it is very hard for business to expand in such circumstances. The reliefs given to industry are much smaller than in other countries and allowances for obsolescence, machinery and so on are much lower than in other countries. We are asked to expand and to engage in the export trade. The increase in the levels of exports from Ireland is very welcome and has shown that our workers and managers, employers and labour, have both the skill and the initiative to hold their own in most markets if they are given a fair chance to do so. The Government constantly talk of incentives but do not give the real incentives which amount to putting us in a position somehow to finance these ventures out of the money we can make here. That is the soundest way. Foreign capital coming into the country is all very well—it is better than no capital—but we still think that if Irish capital could do it, it would be better that our industries should be financed and run by Irish men and women who understand the difficulties we are up against and the conditions in which we work. However admirable it may be to have foreigners coming in, it is not as good as having industries run by our own people.

One way in which our own people can be put in a position to do this work themselves is for the Government, with sensitiveness and knowledge of the situation, to enable the business community to put itself in such a position that it will not need to crawl to foreign capitalists to get them to come in and do what the Irish people could do if they had the money themselves. We can only build up that money out of the profits of business but the minute the profits grow a bit big, the Government come along and say : "Give me that." How can it be done then? If these foreigners had Governments as greedy in their own countries as we have in ours, they would not be able to export their capital to this country. That is one of the fundamental facts. Take the vast expansion in Western Germany after the war. Where does all the surplus money in Germany come from, in spite of what they had to pay in taxation and in spite of having to rebuild many of their cities? If their Government had taken as big a proportion of the surplus of industry as the Government here take, it would not have been possible for them to do it.

We seem to be fleeced by a form of squandermania in Governments here. Business has suffered from it for years and years and years. That is one of the reasons why we have to call in the outsiders to do the work—to provide the money which we ought to be able to provide ourselves.

I am sorry I cannot speak more hearteningly on this Budget. I think it has failed to do for the poorer sections what it ought to do—and it has done for the business community : it has done them properly in the eye. I hope that when we meet for our next Budget the lamentations of the business community will be less than I fear they will be because the Government have done a most serious thing by imposing this turnover tax.

I do not think the country at all realises what has been done to it overnight. The whole face of taxation has been changed. Therefore, I am afraid I cannot accept this Budget and we as a Party must register our disapproval of it.

Mr. Colley

I think a measure of the success of this Budget is the manner in which it has been approached by Deputies on the Opposition benches. By now, the pattern has become fairly obvious. That pattern of approach is basically to concentrate on the new turnover tax—and, I submit, to misrepresent it—and, in addition, to trot out the hoary old tales which we have been hearing for years and which have been explored here in the past but which I suppose will continue to be trotted out until some new political idea strikes the benches across the way.

We have the usual lamentations particularly from the Fine Gael Party about the appalling position of this country today. Apparently we are to believe that the Fine Gael Party think none of us has a memory that goes back further than the advent of the present Fianna Fáil Government. We had the hoary old tale about the alleged promise by Fianna Fáil to provide 100,000 new jobs. We had the story about more emigration now than ever before. All these things, of course, have been gone into in the past and have been shown up for what they are—a misrepresentation of the facts.

I do not wish to delay the House by going over them all again. However, I wish once more to point out that they are based on two fallacies. The first fallacy is that of picking out a particularly favourable year on which to base a comparison—which anybody can do—and the second fallacy consists in ignoring the trends which have taken place each year. If you want an accurate picture of what is happening in a country under a Government during their term of office, you must follow the trend of statistics—not just pick out one year and then another ten years later. You must follow the trend. That trend will show that, at the commencement of this Government's term of office, following the last Coalition, the position was very bad, gradually improved and has steadily been improving since. That is the indication given by statistics—in so far as you can get an accurate picture from statistics.

I was singularly struck, however, by the approach of the Leader of the Opposition, Deputy Dillon. I remember not so very long ago when this House discussed the White Paper, Closing the Gap, the case which Deputy Dillon made. He made a point which on the face of it was attractive, that is, his claim that the major fault in the programme outlined in Closing the Gap was that it made no effort to restrain profits. This Budget is taxing profits to a higher extent than heretofore.

Deputy Dillon came in here and in the manner of which only he is capable painted a picture of the dreadful prospects ahead of the small shopkeeper in this country. I do not suppose it is any use to appeal that we should have a little more consistency in these things. However, it is worth while pointing out that there is a completely contradictory approach between what we heard yesterday from Deputy Dillon and what we heard from him not so very many months ago on the debate on the White Paper Closing the Gap.

We also heard from Deputy Dillon in very impressive terms that this Government hold the record on many matters—for instance, that we have the highest cost of living ever recorded; that we have the highest debt ever recorded and various other matters of that ilk. I submit that that means absolutely nothing unless it is taken in the proper context. Deputy Dillon did not mention that we also have the highest national income ever recorded, that real wages are higher than they have ever been and that the standard of living is higher than it has ever been.

It would be equally justifiable to take the case of a man who starts off in business in a small way with, say, an overdraft of £500 in the bank. He builds up his business over the years and after about twenty years, has built up a very successful business. With a successful business, he will almost certainly have a very large overdraft because that is usually the most attractive way in which to get capital. He may end up with an overdraft of, say, £100,000. In that regard, he will have the highest debt he has ever had in his life. He may also be paying overheads which are vastly higher than any he has ever paid but that does not tell you anything. You have to know how his business is doing. If you find his business is vastly larger than it was in the past and in fact, that his profits and real income are very much larger than they were when he started, then you can say that man is doing well.

To talk about the amount of the national debt and the amount of the cost of living means nothing, taken on its own. I believe that this Budget has laid the basis for the future development of this country in a way which probably will not be appreciated for some years. I have no doubt whatever that if by any misfortune the country were in future to be governed by the Deputies across the way, the Minister for Finance appointed by them would be very grateful to Deputy Dr. Ryan for having introduced this Budget because we have now, under this Budget, the beginning of a financial structure which makes sense, one which is not dependent in a most unhealthy way on taxes on three or four major items like beer, tobacco and spirits. Clearly it is a very unhealthy situation for any country to be depending on a small number of items for taxation.

Furthermore, it is also clear from the figures available that the revenue received has not been closely enough related to the state of the economy. This Budget introduces a method by which the revenue received by the Government at any time will be much more closely related to the economic situation. If the country is progressing economically, retail sales will increase; if the country is not progressing, retail sales will go down in number, and correspondingly the revenue received by the Government will go up or down.

This, I submit, is a very important aspect of the financing of our country. It is only reasonable to assume that if the economy is expanding, the Government will spend more. That is what the people want the Government to do. They want the Government to give better services, to spread the increase in the national income more equitably. Consequently, it is of much more benefit to the country that there should be a method of taxation available whereby automatically and very accurately the amount of revenue received will be related to the economy.

Although the negotiations for the entry of Britain to the Common Market broke down in Brussels, it is abundantly clear that as far as this country is concerned, in future years and perhaps in the not too distant future we shall be more and more concerned with economic aspects of the Continent and to that extent it is important that our taxation system should approximate more closely to the system commonly operated in the Continent and, I might mention to the Deputies on the Labour benches, more commonly operated by the socialist governments of Europe. Despite their protestations about the turnover tax——

Mr. Treacy

Not a tax on foodstuffs —most certainly not.

Mr. Colley

Yes.

Dr. Ryan

In both Sweden and Norway, where you have socialist governments, there is ten per cent on them.

Mr. Treacy

It is not general.

Dr. Ryan

Yes, ten per cent.

Mr. S. Dunne

What suits there does not necessarily suit here.

Mr. Colley

Let us be clear that socialist governments in other countries do not apparently regard this as a tax on the poor which cannot be justified. I propose to go a little further into that to show why they take this view.

We have had speaker after speaker here from both the Fine Gael and Labour benches telling us that the turnover tax will mean so much on the lb. of butter, so much on the loaf of bread.

Mr. M.P. Murphy

That is so. It will bring in £11 million. That is a big sum of money.

Mr. Colley

Let us come to that. There is a shop selling bread and it adds on to the price of bread in order to cover this tax but there is a shop down the road that does not. Obviously the people in the district will buy in the shop in which this tax is not added. There will be another shop which will sell bread at the old price but will add the tax on to something else. They will very soon find that they cannot get business if they do this and I am convinced that the essential commodities will not be increased at all and that the tax will be paid in two ways : one, by being added on to luxury items and, two, by the retailers themselves. The man who got nearest to this in the speeches I have heard so far was Deputy Dockrell who is a businessman and who last night spoke from the heart and said this Government were really kicking business in the teeth by increasing corporation profits tax and imposing this turnover tax. He made a very strong case to show that the whole turnover tax would be paid by business. It is my belief that the whole of the tax will not be paid by business but that some of it will and the remainder of it will be paid through luxury items.

Deputy Dockrell, when he came in this morning, changed his tune somewhat and told us this tax would have to be passed on to the consumer. I do not know whether he thought it over last night or somebody spoke to him, but eventually he came back to his original theme that this was primarily a tax on business. Let us face it that this tax is a retail turnover tax and the Minister has made it clear that he is not laying down that a loaf of bread, a box of matches, a motor car or anything else is to be taxed by 2½ per cent. How it will operate will be controlled, I believe, by laws of supply and demand and the laws of competition. In this country today, competition in regard to the basic items, essential foodstuffs sold in grocers' shops, is tremendous. Anybody who thinks that in face of that competition these items will be increased not alone by 2½ per cent but, as some people have argued, by much more, is just not in touch with what is going on in this country.

If you take a very small collection of houses that can hardly be even called a village, where there is only one shop, there could be a case made but communications are such today and there are so few people in any part of the country who never go into town, that I do not think it would operate to any large extent. In regard to the greater part of the country, the towns and cities and the rural areas, I believe this tax will be paid primarily through items like tinned peaches, and so on, plus the contribution of the shopkeeper. I make no secret of my view that the retailer will have to pay some of this tax. He will be forced to do it by virtue of competition. I also think it will be of some assistance to the smaller shopkeepers in the fight they are waging against the very much larger combinations.

Mr. M.P. Murphy

That will put them in a strong position to fight the larger combinations, paying the tax themselves. I think it will put them in the bankruptcy court. Deputy Colley would be engaged by some of them.

Mr. Colley

Retailers have had largely increased business in recent years. Last year, the increase in retail sales was seven per cent and the indications are that it will be even higher in the current year. That being so, it is certainly open to most retailers to work off some of the imposition involved here through increased business. We know, and Deputies on the Labour benches know very well, it is frequently argued to justify a wage claim, if it is not too excessive, that it acts to spur employers to greater efficiency. The same case can be made to some extent for a tax on retailers' turnover which is not excessive—that it acts to spur them to greater efficiency and to cut down their overheads. This will be a tax on their turnover, not on their profits. If they can be more efficient, they can still make the same or greater profit and pay this tax.

I am very proud of the efforts made by this Government and of the success which has attended their efforts. I have no apology to make to anybody on this matter. Far from making an apology, I am prepared to throw out my chest and boast about what has been achieved by this Government. I am proud of the fact that this Government have had the courage and foresight to introduce a Budget clearly designed for further development in this country. It has not only a short-term but a long-term aim in view. That is obvious to anybody who studies the position.

This Government by their efforts have shown they are capable of carrying out the plans they are putting before the people. Our efforts are being directed now to a further expansion in the economy, to the creation of further jobs, to the orderly sharing out of increases in the national wealth, to an expanding programme of education. All these things require money. We have to face up to it that the money must be found. I do not think the Irish people will complain about this so long as the national income is being increased and everybody is somewhat better off. We do not begrudge the money being devoted to these items but we do require that the Government should ensure that the method of collection of the revenue to finance these efforts should be as far as possible equitable and efficient. To that extent, I think the Minister for Finance is to be congratulated because his Budget meets both these tests more than well.

Mr. S. Dunne

If one were to accept Deputy Colley's arguments in regard to the turnover tax and how it will be collected, surely there was no need for the Minister to include essential foodstuffs in any shape or form in this scheme of taxation? Surely he should have exempted them?

Mr. Colley

No. What about hotels? People eat big meals in hotels. They will pay.

Mr. S. Dunne

The number of people who eat big meals in hotels hardly justifies the fact that this turnover tax will mean with the arrival of November a convulsive jump forward in the cost of living. I am one who believes it will not stop at 2½ per cent. When taxation has occurred in the past, the business people have not been known in my experience to absorb it out of existing profits. Inevitably, it has been passed on. Already we hear talk in Dublin of the publican's intention to increase the price of the pint by 2d. to make it 2/-.

In my estimation, the increase in the cost of living which will emerge when this turnover tax comes into operation will be in the neighbourhood of six per cent. The average business person, who is now being asked to act as a tax collector and make monthly returns, will first pass on the 2½ per cent tax. Then he will argue with himself and the public that for the trouble he is taking on the Government's behalf, he must add a further percentage to cover administrative costs which must arise. In the heel of the hunt, the people who will be paying this tax will be the ordinary working people, particularly those of the city and county of Dublin who invariably carry the great burden of taxation and who carry the transport services for the benefit of the rest of the country as well.

I have no objection in principle to the idea of a purchase tax, but I have a decided objection to the manner in which this is applied. As far as I can conclude from looking at the situation and having listened to the Minister's entire speech and to other speakers on the matter, it appears very obvious that at the end of this year the Dublin worker, whose average wage can be fixed at around £10 a week, will find he has suffered a wage reduction, in effect, of between 7/- and 9/-. I am convinced that is how it will work out. Deputy Dockrell has indicated the logical next step. We all know from experience that the workers are going to take whatever steps they can to redress that grievance. This is happening at a time when we should be trying to improve the standard of living of these workers and give them additional reliefs. It is happening at a time when workers throughout the length and breadth of the city are finding it hard to get along and whose incomes are being considerably reduced by the impact of the present bus strike. How they are to accept this, and how the Government will fare in North-East Dublin as a result, will be very interesting.

When a Budget comes along, I am always inclined to judge its worth on what it does for the old age pensioner. Pretty nearly everybody in this country is getting some kind of a living, but the old age pensioner is getting no living. The old age pensioner living on the non-contributory pension should be an object for shame for every Deputy and everybody in the country. Every time a Budget has been introduced in this House, there have been "Hurrahs" from the Government benches because the Government have invariably been able to achieve the remarkable feat of giving half a crown to these people. These people number several thoussands. Many of them are alone in the world, living in tenement rooms, trying to battle a lonely existence on 32/6d. a week and the best we can do, the best the genius and brains of the Department of Finance and the Government can produce, is 2/6d.

It is miserable, it is low and it is mean and it is something of which we should be ashamed. I personally would be prepared to go into the Lobby and vote for a higher purchase tax, applied in a different way, if only something decent had been done for these unfortunate people. It seems to me we are never going to see that day unless this shift to the left which the Taoiseach mentioned yesterday becomes an effective fact.

Personally, I do not think the Government have any intention whatever of shifting to the left but it is interesting to note that when the Taoiseach did mention this shift to the left, there were no howls from the back areas of "Communist" as there were the previous day against other members, a most unjustifiable and disorderly action. There were no howls of "Communist" to the Taoiseach for his proposal to shift to the left, nor should there have been. I do not think the Government really propose to go sufficiently far in that direction. The Taoiseach, in his customary astute political fashion, is anticipating youthful thinking and youthful trends. It has been obvious to me for some time, and I am sure to everybody in contact with the public, that the youth to-day who have been in England and are returning here, are inclined to be a good deal more left of centre than those who preceded them. I want to make it perfectly clear, in case any of the propagandists try to misuse what I am saying, that it is not that there is any sympathy with Communism or anything related thereto but there is a definite trend in young people towards liberalisation of the democratic leftward trend. I am glad the Taoiseach indicated that he was thinking along those lines, although I do not expect to see effective steps taken to implement that kind of policy, in so far as Fianna Fáil are concerned anyway, for many years to come.

The old age pensioners, as I say, are usually people on whom any Minister for Finance should look with the utmost concern when preparing his Budget. Deputy Dockrell suggested that an intervention made yesterday by the Minister for Social Welfare did seem to indicate that that Minister's measurement of the Budget's value was based on the manner in which the less fortunate members of the community, as they are described, are treated. I would have the same point of view as the Minister for Social Welfare in that I think you have to measure the progress of the nation and the prosperity of the nation in terms of how the economically lowest section of the nation stand. If we cannot get satisfactory results at that level, we are not doing all right.

I have no quarrel at all with the Minister's imposition of the corporation profits tax. Deputy Dockrell and others seemed to make the case that this might be a disincentive to the expansion of industry. I do not think that the absence of these taxes helped towards expansion. There is no evidence of it. As far as I can judge, whenever taxes are removed with the intention of providing industrial incentives, their removal is availed of by the vested interests to put further money into their own pockets and not to expand at all. It seems to me that one of the major problems that any Irish Government have to face in getting industry to expand to any degree at all stems largely from the fact that we have to a great extent been over-protected for many years. Protection has been part and parcel of the economic set-up for so long that industrialists and business people have come to regard it as an absolute right and have come to regard the removal of taxation when it does occur, not as an incentive to expand but simply as a means of giving them additional profits.

Much has already been spoken about practically every aspect of the Budget but just how this turnover tax will operate has not yet been appreciated outside the House and indeed it is almost impossible for Deputies to appreciate just what all the implications are. Listening to the Minister making his Budget speech, and replying to subsequent questions, I got the impression that this was a hastily conceived idea which had not been given the thorough examination which a serious step such as this deserves. From every speaker we hear about a new aspect or a possible aspect of this tax which creates problems and which does not seem to have occurred to the Department. For instance, it was mentioned that in a business with a turnover of £100,000, with the tax applied to that, the figure would be £102.500 and the question was asked if tax would be applied to the tax. In other words, will the position be that the State will be getting a tax upon a tax?

That is one aspect. There are many others. How in the name of goodness is it to be implemented in the case of the thousands of huckster shops? We all know there are thousands of these shops throughout the country and many people in them are barely existing, selling goods with a very small margin of profit. They are probably living on five per cent, or less, depending on the turnover they get. Many of these people do not bother with books except in so far as it is essential to keep some record of goods sold on credit. How will the State ensure that there will be accurate accounting from such people of their turnover when the people themselves will find it difficult to say what that turnover is at any given time? What penalties will be introduced, I wonder, within the course of the next few months and what penalties will be imposed for neglecting to make these monthly returns? All these implications appear, the more one thinks about this Budget.

It would seem to me that a purchase tax would be justifiable if a scheme had been worked out whereby it was levied at source or at some point nearer source so that the tax could be contained at 2½ per cent. and not allowed to grow any bigger. As was suggested by a representative of a trade body, it might have been far more effective and certainly more equitable and would cause much less disquietude if the tax had been imposed at, say, the wholesale distribution point instead of at the retail sale level and if regulations had been brought in to prevent profiteering on this tax. I have not the slightest doubt that profiteering will occur and will flow from this tax. Neither have I any doubt that the people who will pay this tax are those who are paying everything in this country, who are carrying this country more than any other section, namely, the ordinary working people of this city and county.

It is for that reason and also for the reason that the old age pensioners were so shabbily treated that I voted against this Budget.

Mr. J.A. Costello

Having had personally some considerable and rather painful experience of what it means for a Government, and particularly for a Minister for Finance in a Government, in difficult financial and economic circumstances to frame a Budget, I rather tend, even in Opposition, to have considerable sympathy for a Minister for Finance faced with the difficulties with which the present Minister is faced. I regret, therefore, that having considered the matter very carefully, I am convinced that the proposals in this Budget are not for the good of the country as a whole and that they will not help, even in tendency, to bring about the prosperity, advancement, and expansion in industry that is so urgently required in the conditions obtaining at the moment in the country and outside.

In the concluding sentence of the Minister's speech in offering this Budget to the House the other day, he recommended the Budget "as a set of responsible and equitable measures designed to keep our national finances in order, to be fair in the allocation of benefits and burdens, and to promote the higher rate of economic growth which is the key to greater prosperity for a larger population." It would have been a pleasure for anybody to agree with that recommendation but it is utterly impossible, when the facts and circumstances facing the country at the moment are calmly and dispassionately weighed, to agree to any of the propositions set out in that concluding sentence. I personally believe that the conditions in the country at the moment, conditions of finance, economics, and the outside facts impacting upon our conditions here in international affairs generally face this country with a situation of great gravity for the solution of which, I believe, all the energies of all sections of the people combined together in goodwill, working together in a patriotic endeavour, are required to bring this country out of the condition of jeopardy in which it is at the moment and I regret that I cannot see in this Budget any help towards securing that co-operation from all sections of the community which, in my view, is urgently required to solve the problems and difficulties that confront us at the moment.

While I have, therefore, from conviction, to make certain criticisms of this Government, I think at the outset it is proper that we should recognise that there are certain benefits in the Budget itself, benefits which unfortunately are largely offset by some of the other provisions of the Budget.

In particular, from my personal point of view as representing a city constituency in which there are many officials, civil servants, pensioners of one kind or another, I am glad that the Minister did see fit to give even a small measure of additional justice to the old Civil Service pensioners. I am very glad of the increase, particularly for the first child, in children's allowances. The old age pension increase is again a small figure of almost a traditional amount of 2/6d., largely unfortunately offset by the impact of the cost of living and by the impact of the further rise in the cost of living which, in my view, will inevitably flow from the provisions of this Budget.

I regret that the Minister did not see fit to give a further measure of justice to a particular section of pensioners who are, in my view at all events and from my experience, in a very distressful condition. I have spoken here before of the position of the widow who has a non-contributory pension. She has a pension of a particular amount and she gets a little increase this time but, by virtue of the administrative control over the earnings of such a widow, she is not in fact allowed by work or by her own labour or by the assistance of her kith and kin to increase that pension without the danger of having the amount paid by the State reduced. That is a matter that should receive very serious consideration, and has not.

Last year, I pointed out that I appreciated from experience the fact that when old age pensioners get 2/6d. which, as I say, is a traditional figure now when an increase is given, nobody thanks any Government for giving that amount but very few realise that while 2/6d. a week is an insignificant amount for an old age pensioner, it costs the taxpayer a very considerable and inordinate relative sum, a tremendous amount—over £500,000—to give that 2/6d. Nobody realises that. I did suggest last year to the Minister that some consideration should be given to the matter to see if by other devices the old age pension could be increased, not perhaps by direct subvention from the Exchequer but by other devices which would enable the old age pensioner to supplement that income without having the official, doing his duty, often very harshly, inquiring into the means and the circumstances of the particular pensioner. The old age pensioner and, in particular, the widow I have referred to who gets a non-contributory pension, are simply harrassed by official inquiry and by official interference to the point that they find it is not possible to work and, indeed, they are forced to cease endeavouring to obtain work because of the fact that their pensions will be decreased as a result of the inquiries of the officials.

I am not casting any aspersions on these officials. Their inquisition is of a very searching kind and I know personally that their inquiries have resulted in illness, worry and anxiety to old age pensioners and widows with non-contributory pensions. If it were possible to find some means by which widows and non-contributory pensioners and old age pensioners could work or get assistance from their kith and kin or charitable associations and get their pensions without having the fear of inquisition and the danger of their pensions being reduced, there would not be such a clamant demand for an increase of pensions and criticisms of this small amount of the traditional 2/6d. every time it is granted.

Some business people give their employees a pension when they retire. Very frequently, they are not adequate pensions. They have been earned by hard work over 30, 40 or more years. When these pensioners reach the age of 70 years and get the old age pension, their pensions from the firms are reduced. That should not be allowed because those firms advanced through the efforts and work over an extended period of their pensioners. Those people are entitled to pensions and they are also entitled to old age pensions.

If some device could be found, and if there were less inquisition as to whether the St. Vincent de Paul Society or some charitable person was assisting an old age pensioner with money or food, they might be able to have a little more income coming in, and there would be less demand for old age pensions, and less demand on the Exchequer. I spoke to deaf ears last year, and I suppose it will be the same this year. However, I am glad that the pensioners whose interests I represent here are getting some little amelioration. I regret it but in my view and the view of most people outside the House who have no political axe to grind, the effect of this proposal will be to increase the cost of living and reduce the purchasing power of old age pensions, widows' and other pensions given under the Budget provisions.

So far as I have been able to judge in the past two days from my contacts outside the House, the dominant mood of the public is not merely one of understandable shock at the increased taxation—because that is what it is in effect—that will be caused by the imposition of this new turnover tax, by the imposition of the additional corporation profits tax and by the change in taxation on residences, but also of wonderment as to how on earth this Budget which aims at securing economic expansion can hope in any way to secure the economic expansion that is so urgently required. There is a mood of shock, bewilderment and confusion. No one seems to know what the effect of this new turnover tax will be. Deputy Dunne has referred to what has been our experience in the past two days of the endless queries and questions which were put to us as to whether this, that and the other thing in such and such circumstances are covered by this tax, what it means and how it will be enforced, in what circumstances does it cover this particular commodity and that particular service. No one seems to know where we stand.

That confusion which is, of course, primarily directed at the effects and scope of the new turnover tax is also relevant to the corporation profits tax and to how it is hoped to increase economic expansion, increase employment and bring prosperity all around, as the Minister claims. The turnover tax is a new tax and to practically everyone except some expert economists and financiers, it is an unknown tax. The ordinary people, even if they are not economists, are familiar with the words "purchase tax" and "sales tax". They know what they mean in a vague sort of way. They know about them because they have heard so many discussions about the effects of purchase tax in England. Sometimes purchase tax in England is increased on certain commodities and sometimes within a certain range of commodities, it is reduced. People have heard of a purchase tax through the radio, television and the newspapers. They know vaguely that there is something which is called a purchase tax, but very few of them except the expert economists, while they know there is such a thing as a sales tax, have the remotest idea of the difference between a purchase tax and a sales tax.

I would venture to say that until the Minister made his Budget statement, 90 per cent of the people had never heard of, much less understood, what a turnover tax is. Is it any wonder, therefore, that there is such bewilderment, confusion and alarm amongst the general public as to the possible scope and effect of the new tax? I think the Minister can be subjected to criticism because of the fact that he introduced this tax in his Budget without giving any explanation. He merely imposed it, and said it would produce £3½ million in four months and £10½ million or £11 million in a full year. To justify it he answered Deputy Norton by saying: "I want the money."

In that context, the last sentence of the Budget speech in which the Minister recommended the Budget to the Dáil because it was designed "to keep our national finances in order" is justified only by virtue of the fact that it will keep our national finances in order by bringing in a vast amount of money. Apparently it is necessary to get a vast amount of money from a tax that is unknown and which, because of the fact that it is unknown, like all unknown things, creates the utmost fears, anxieties and dismay in the minds of the people likely to be affected by it. The Minister should have told the House the history of this tax and the difference between this tax and a sales tax or a purchase tax. In my opinion, it was his duty to have educated a good many members of the House who required education— including myself—and also the general public.

Comment was made earlier in this discussion on the Budget leaks—if they can be so called—that took place some months before the actual introduction of the Budget; where they came from, whether in fact they were leaks in the technical sense, and whether they contravened the convention that the secrets of the Budget are not disclosed before they are given to Parliament. There is no doubt that public interest was aroused by the speeches of the Taoiseach and others in connection with the imposition of a new tax. In the newspapers and amongst the public generally, there were discussions as to what on earth this tax would be. Everyone was more or less resigned to the fact that we would have something like the English purchase tax, and those who had more knowledge of the matter and had, perhaps, read more were still more confused when they remembered the various economic documents and White Papers and what other Ministers had said about not accepting the recommendations of the Income Tax Commission on the imposition of a purchase tax. The general feeling was that it would be something like a purchase or sales tax, whatever that was. Then the Minister came in with his new tax which no one understands except a few expert economists.

In an intervention, the Minister controverted a statement by Deputy Dunne or one of the members of the Labour Party that the continental countries did not tax foodstuffs in connection with the imposition of this retail tax. That is a matter of controversy. So far as I know, that was the first time the Minister mentioned Norway and Sweden where this tax has been imposed. I think the House and the people were entitled to know the nature and scope of this tax. To my knowledge, this tax has never been imposed in England. It was got from the Continent.

My belief and conviction is that it is only the expert economist and financiers in the Department of Finance who recently investigated and produced this tax instead of a purchase tax and a sales tax who know where it came from. The House is entitled to know and I think that even belatedly in his reply the Minister should tell the House and the public where it came from. What is the justification for this tax, what is its scope and what would be its effect in our conditions? What is the experience of the impact of this tax if it exists in other countries?

I gather from what the Minister said by way of intervention that it exists in Norway and Sweden. I did not know it existed in these countries. When I was in office and when we were facing a serious financial position, I expressed the view that I would not touch any of these taxes. I am not criticising the Minister for bringing in this tax with my tongue in my cheek while thinking that I would bring it in myself if I were in office. In the present circumstances and conditions of this country, it is not proper to bring it in. When we were in office and facing a serious crisis, we did not bring in such a tax.

Mr. M.P. Murphy

It would be interesting to hear what the Minister for Finance and the Taoiseach would say if you had brought it in.

Mr. J.A. Costello

We do not know what is the origin of this tax. The Minister for Finance has merely thrown it at the country and told the people they are to have a 2½ per cent tax on turnover. I think that even the Minister himself does not know the scope and effect of it and this is proved by the Taoiseach when he said yesterday in his speech that he was prepared to listen to reasonable recommendations and proposals from various interested parties. Why was that not thought out before this tax was imposed?

The Minister for Finance traditionally meets representatives of the chambers of commerce, publicans and other interests before Budget Day and traditionally tells them that he will give careful consideration to their representations before he frames his Budget. If he wanted to consider the scope and effect of this tax and if he could not see representatives of RGDATA, the chamber of commerce, the Federation of Irish Industries, the Federated Union of Employers or the trade unions without revealing the terms of the Budget he should have had it thought out by the Department. I am convinced that the impression which has been created with the people is that the Minister has not the slightest notion of what the tax will embrace, that he has no clear view as to what it means. The Minister's attitude is that he wants money. That is a clear explanation of Government policy and of the aim of the Minister but he does not give us any clear answer when we want to know why we should have to pay that money and when we ask what businesses are to come within the scope and effect of the tax.

There have been all sorts of discussions between economists as to whether a purchase tax is better than a sales tax but I do not know if there has been any discussion about the effect of a tax such as this. I know, and Deputies will know, from our travels abroad that in France and other countries, they have taxation on everything you eat and everywhere you go, but that is no justification for bringing over a tax to this country without adequate consideration and examination and careful preparation of the public and the bringing of the public into the confidence of the Government. I hope the Minister will exert himself at the conclusion of this debate to explain to the House where he got this idea of a retail tax and what advantages it has over a purchase tax or a sales tax. He should tell us, if he has examined the position in Norway or Sweden, what is the result of that examination and what justification there is for saying that a tax which is applicable in the circumstances of Norway or Sweden is applicable to this country in our particular circumstances. Those are matters upon which we should be enlightened.

The Minister should give us some indication as to what are the intentions of the Department with regard to the collection of this tax. He should let interested parties know what is to happen or else Deputies will be inundated with questions as to whether particular people come within the scope of the tax or whether they do not. I would appeal to the Minister and his colleagues not to adopt the attitude of the Parliamentary Secretary to the Minister for Lands, Deputy Lenihan, when he said yesterday that this is not a tax. That is merely false pretences and it might do a very great disservice to this country if the backbenchers, for the purposes of propaganda, were to go around the country and say that no new taxation was being imposed, that the newspapers were right when they said that beer, and whiskey, cigarettes and tobacco had escaped. This is a tax no matter how you try to conceal the fact by nomenclature.

The Taoiseach is reported in the newspapers as saying that the turnover tax is not a purchase tax or a sales tax but simply a tax on total retail turnover. That is stating the obvious. Of course it is a tax on the total retail turnover but he does not say what that means. It is a tax on turnover. Therefore it is a tax and the person who says it is not a tax, even for the purpose of propaganda, is falsely pretending. To say that this retail tax will not impact very heavily on the consuming public is again false pretences. It will impact indirectly on the consuming public, whether it is simply a tax on total retail turnover or not.

The actual impact must be and will be that the consuming public will have to pay more for their purchases, if not for all of them, at least for a very considerable range of their purchases, and I repeat that it would be a public disservice to maintain that this is not a tax on the consumer because that, in effect, is what it is.

I do not intend to cover the ground that has been so widely covered already and doubtless will be covered again before the debate concludes. We have been told that in a full year £10½ million will be collected from this tax. I believe it will be nearer to £11 million. Eleven million pounds will be collected and the collectors of that tax will be the small business people, the not-so-small business people, the industrialists and the other businessmen in the community. Eleven million pounds will be collected by the business and industrial community of this country who are to be turned into tax gatherers. That is another effect of the tax which will certainly be passed on to the people in some or all of the commodities that pass over the counter or in exchange for given services. Was it not rather ingenuous of the Taoiseach to say this yesterday, if the morning papers to-day are reporting him correctly?

The volume of retail sales was rising steadily and it was certain that this increased tax would continue. Traders could generally expect that a rise in the volume of business would help them to carry this tax in part, if not altogether.

Does anybody except the Taoiseach believe that a rise in the volume of business will help the business community to carry this tax in part, if not altogether? People are not all that foolish. One point stands out quite clearly in that statement I have read: it is quite clear and absolutely true that this tax will continue. There is nothing more certain in this life than that this tax will continue. What will happen is that in the next financial year after this, £11 million will be collected and the then Minister for Finance will say: "This is a gift. It is 6d. in the £ now—let us shove it up another penny."

It is the experience of all Governments that once a tax is on, it stays on: it almost invariably increases and very seldom decreases. Not merely will this tax continue but it will increase because it is such an easy tax, and once the Minister gets his claws on it, he will regard it as a soft thing and people will have got used to it. That is what we have to consider here in the House and outside.

I want from the Minister an answer to another question. I feel sure I will not get it, but I will at least go to the trouble of posing the question. In the few months of this year in which the turnover tax will operate, £3½ million will be collected—it would be between £10½ million and £11 million in a full year. The Minister this year will have balanced his Budget in four months of this tax. Given £1 million for extravagance or for increased budgetary expenses, in the next year he will have from £5 million to £6 million available for something. My question is: what will he do with that money? He finds that £3½ million is sufficient this year. Give him as much as £1½ million extra administrative expenditure in the next Budget, he will still have £5 million in hand. What will he do with it? I know the Minister will probably suggest that we wait and see. I want to know beforehand. There will be £5½ million of loose money that apparently, at the moment at all events, will not be wanted. I think the public are entitled to know why information about the disposition of this money is not given in advance. Is there any precedent in financial history for such procedure?

Mr. Sherwin

Will it not go back in social benefits?

Mr. J.A. Costello

That is what I want to know.

Mr. Sherwin

That is where it will go, of course.

Mr. J.A. Costello

The Minister will tell us to wait and see, but I shall now suggest where it can be spent not only to greater social advantage but to the general advantage of the economy and the nation. I am suggesting the gradual abolition of death duties. I notice in the tables furnished that a little over £3 million is provided this year in death duties. It has gone up slightly from the previous year. On several previous occasions, I have made a case, from the national and social viewpoints, for the abolition of death duties. I have suggested that it would be good for the national economy, that it would increase the revenue from income tax by inducing a large inflow of capital into the country. That is what would happen if there were no death duties. The money coming in would be available in a very easy form—not hot money— for investment in capital projects of a beneficial kind. This is the Government's chance of doing it and I sincerely hope some Minister for Finance will take up this suggestion. Of course, I am perfectly sure he will not.

I have said that the abolition of the death duties would be of great benefit to the country generally, socially as well as economically. I would advocate it on human grounds also. Again and again over the years, I have drawn attention to the fact that whereas you will always find people to speak on behalf of the old age pensioners—it is always easy to make speeches about them: it does not require any great eloquence or command of language to paint a picture of their distress—you will seldom find anybody to speak on behalf of the people I represent, people who have very small incomes, who are living on fixed incomes, who have been living for many years since the war in conditions of extreme difficulty, in very many cases, extreme distress.

Where is the person who will advocate their case? I speak of the people living on fixed incomes flowing from the savings of their relatives— parents and husbands—over the years. The amount of the money has depreciated and the benefits accruing have consequently depreciated. Taxation has increased and now we have added this 2½ per cent turnover tax. I speak on behalf of self-employed people like myself who spent the best years of their working lives making provision for their families by way of policies of insurance and other things. They found in the years after the war, in the years of almost war or of uneasy peace, that the value of the insurance was depreciating. When those people died, the money gathered up so providently over the years came to the notice of the Department of Finance and a lump of it was taken in death duties, thereby eating into the provision those people made for their widows and children.

I have recommended the abolition of these death duties year after year in every Budget. Of course, it is not a very popular thing to do. As I said, it is easy to speak for the old age pensioners, the unemployed and the workers, but there are very few of the type of person I mention who can get any advocacy on their behalf. They are a section of the community who give good service to the country and who are required to make great sacrifices in the interests of the other sections. That is one of the reasons why I say this Budget is not fair in its allocation of benefits. The people I have spoken about are not looked after at all, because, I suppose, politically they do not count.

It is not quite clear what the scope of the corporation profits tax will be. In fact there is confusion there too. I suppose it will become clear when the Revenue Commissioners and their officials adequately instruct the Minister. There is the question of the accounting date and I think Deputy Sweetman asked during his statement if this was a retrospective tax. Personally I do not believe the Revenue Commissioners or the Minister intended it to be a retrospective tax, but it is urgent that this matter should be cleared up in order to take away some uneasiness that exists in reference to the impact of that tax on the business community who will be affected by it. I think this increase in the corporation profits tax is a bad thing. I do not believe I am doing anything popular here—I have the firm belief that it will not gain me a single vote—so I can speak quite dispassionately. Corporation profits tax is something that exists in the public mind as a proper tax on rich industrialists and business people. So far as it is a tax of that knid, it is a proper tax, but, in fact, as it will operate in future, it will impact on smallish family businesses and it will have a further bad effect upon the economy as a whole even in regard to big businesses. It is going to increase again the cost of goods, materials and services. It will increase the cost of living in some way. Any businessman listening to the Minister's speech could probably say: "That is going to cost me an additional £40,000." That is going to be passed on to somebody. For the Taoiseach to say something which is extremely ingenuous is something I think cannot be accepted when he says:

The increase in corporation profits tax had been decided on after very careful consideration by the Government. They had to give much thought to the effect that the higher tax would have on the realisation of the aim of economic expansion.

At least we can take it that that very important item was considered. It is in that context, and not in the context of appealing for rich industrialists, that I am criticising the imposition of this tax because I believe it will have a very adverse effect on economic expansion.

The Taoiseach went on to say:

They believed ...

I presume, the Government believed—

... that the consequences would increase the pressure to maximum efficiency and secure the most economic working of undertakings so that the effect of the higher tax would be off-set.

In other words, the Government were concerned as to whether the increase in corporation profits tax would have a deleterious effect on economic expansion and said: "No, it will not; it will cause those fellows to work harder and they will have to find some method to increase efficiency to offset this tax. Therefore, it is all right." That is, of course, all nonsense.

The last point I want to make is on the effect of this Budget on the economics and prosperity of the country. The aim of this Government, of all Governments, all Parties and persons in this House, is to increase expansion, expansion of trade and industry and particularly of exports. This is absolutely essential if we are to survive but what incentives are there in this Budget for that? The Minister in the final sentence recommended these proposals as something that would promote a higher rate of economic growth and lead to greater prosperity for the country. So far from achieving any such purpose, it will act as a disincentive to further growth and economic advance. Instead of increasing pressure to secure maximum efficiency as the Taoiseach said, in business concerns, will it not have the human effect—this is notoriously the thing economists and financiers overlook in their calculations—of making people say: "Why should I work any harder for the Government? When you are working on your own you work hard to gain money for your family and yourself. You reach a point when you would be working for the taxpayers and you simply will not do it. You say: "Why should I bother killing myself for that purpose?" That is the human effect which is ignored by economists and financiers whose theories look good on paper or in vacuo. But economic theories have a habit of going wrong, no matter how widely they are held by experts when they come up against the human effect and that is where this Budget will go wrong.

If we are to survive or have any hope of doing so as a prosperous country and of increasing the standard of living, there must be what economists call and what is repeated ad nauseam in this statement, increased production.” We must have increased exports. What is the use of saying: “You must have increased production,” if you cannot get the people who are to produce into the frame of mind in which they have some incentive for themselves to increase production which is so necessary? These proposals will stop any such incentive. Why should a businessman say: “I shall work harder for the Government?” That is the popular phrase. What we want is businessmen, workers and every section of the community working, not for the Government, but for the country. But the human reaction when increased taxation is imposed is to say: “Why should I work my fingers to the bone for the Government?”

The Minister appealed for what is now a cliché, "wage restraint" on the part of the workers. In other words, the workers are not to ask for any more but the Minister wants money. He says: "I want money and I ask the workers to work harder and to take less for their harder work." What hope is held out in a Budget based on such a proposition as that? We are asked to increase production at a time when it is insisted that increased production is necessary and the people who can give it are told: "Do not ask for any greater share in the benefits that come by your increased production. The Government want money." This Budget will leave £6 million or £7 million for Government expenditure in the next financial year without any indication of how it will be applied.

I feel very strongly that far from helping economic expansion and being really an instrument to increase expansion, this Budget will inevitably have the effect of slowing down economic growth. It will inevitably increase the cost of living, increase taxation and increase the irritation of the taxpayers at having to pay increased taxation without any benefits, "giving it to the Government," as the popular phrase is. Therefore, I do not think there is any benefit from this Budget.

Finally, I shall ask one more question in addition to the endless questions that have been asked about this taxation. Apparently business people are to be made the instruments for the collection of this tax. So far as I can see, that is the only method indicated in the Budget speech. Businesses are to be registered and every business, small or great, will have to employ large or small staffs, as the case may be, to keep records for the benefit of the Exchequer. The burden is placed on the business community, whether a huckster shop or a departmental store, to furnish returns so that this tax may be collected. How will there be registration of the business? My mind goes back to various sections in different Acts of Parliament where registers have been set up. Provision is carefully made by the parliamentary draftsman and passed by the Dáil and Seanad—it goes into an Act of Parliament—for the setting up and preparation of this register and there is one little subsection that invariably goes into it. I want to know if it will go into this one. Will the Minister for Finance be empowered to charge such fees as he thinks proper in connection with the maintenance of the register? Will that be done in the huckster's shop and in the department store?

An Leas-Cheann Comhairle

Before calling on the Parliamentary Secretary to the Taoiseach, I wish to announce that owing to the unavoidable absence of the Ceann Comhairle, I have nominated Deputy George Colley temporarily to be a member of the Panel of Chairmen.

Parliamentary Secretary to the Taoiseach (Mr. J. Brennan)

I have always found it much easier to speak from the Opposition side of the House on a Budget debate and I suppose the members of the Opposition will at least agree with me on that point. An Opposition speaker has only to sort out the unpopular points in a Budget, play them up to the public, stress them and condemn the whole structure of the Budget on account of those things which he knows are unpopular with the people.

The Taoiseach said here yesterday that tax is always unpopular. It is very nice to stress it and to shed crocodile tears for the people who have to pay it. It has been charged since man was first civilised in the world and I suppose it will be charged to the end and its unpopularity will continue in perpetuity. What is the purpose of tax? That is the point we have to come to. Is it just for the amusement of the Government that it is charged? An Opposition will of course carefully avoid tackling that point.

The last speaker, who usually makes a more balanced contribution to this or any other debate from the Opposition benches, made, I think, a reasonably fair speech to-day. In fact, it was the best vindication of this new tax I have heard from that side of the House. Whether he made it consciously or otherwise I do not know but he certainly projected to me much more the image of the situation than the Leader of Fine Gael did—the person who is the leader appointed at the moment. He wondered why this extra money was being collected. In fact, I think his only condemnation of the tax was when he tried to enshroud it in mystery and bewilderment— which I shall deal with shortly. That was completely untrue. It is the very opposite, actually. Deputy Costello wondered what the Minister would do with all the money collected when the tax would be operative for a full year next year. Before he had been on his feet three minutes, he expressed ways and means of spending more than the Minister would collect next year. He advocated increases for various groups of the social welfare classes—particularly the non-contributory widows' pensions. Before he sat down, he cited the abolition of death duties as deserving of consideration which would absorb the full amount and more. That goes to show that these taxes which are being condemned are not even sufficient to meet all the things the Opposition advocate for the people.

It is a lovely thing to advocate all sorts of benefits, reliefs and assistance when one is playing the game in an irresponsible way, when one knows he is not called upon to meet the demands advocated and then, on the other hand, to play up to the section of the community who have to pay by condemning the means of collecting the money to do these things. Deputy Dunne was in the enviable position of being able to advocate something for everybody and then to condemn the system by which the money is raised to pay for it. It remains to be seen how far his statement will be taken seriously by any section of the community. I suppose there will be that gullible section who will say: "It is a pity Deputy Dunne is not the Taoiseach. He has an easy way out for everything."

I am not quite sure who said it but I remember reading recently a statement by some world figure in which he said: "Let us not try to tell the people there is an easy way out of any difficulty." I suppose the greatest disservice we could do our people would be to create the impression that there is an easy way out because there is not an easy way.

Mr. Coogan

Out of what?

Mr. J. Brennan

Out of any difficulty in the running of a State.

Mr. Coogan

You are admitting it —you are in difficulties. That is right. That is all I wanted to be clear about.

Mr. J. Brennan

I am coming to deal with difficulties now and how they have been tackled in the past. There are always difficulties and there always will be. But let us not try to mislead people by saying there is an easy way, that there is some panacea. It is quite easy to suggest there is—but nobody has ever successfully attempted to explain it.

I want to deal with one of the points Deputy Costello made. In fact, the only feature of his speech to which one could take exception was where he tried to create the impression that this new turnover tax is creating bewilderment, confusion and that the people do not know how it is going to work. If there is one thing to recommend it more than another, it is its simplicity. It is 6d. in the £ tax on turnover on retail business.

Any other tax that is collected in this country or any other country is a difficult tax. The trader already has to keep books. He has to make his income tax returns. He has to claim his reliefs. He has, if his volume of business is of any worthwhile size, to employ an auditor because the taxes he pays are difficult to assess and the returns he makes are difficult to make. There is no obvious difficulty associated with this tax. The suggestion by a man who had been Taoiseach that it was not fully considered is, as he perfectly well knows, nonsense. It has been thoroughly considered.

The Government had the advantage of knowing the types of similar taxes operated in many other countries. For the benefit of the Labour Party, I should like to say that any forwardlooking, progressive country that claims prosperity seems to have a tax like this or something similar. Deputy Costello admitted that when you go to the Continent, everything you do is taxed. If you buy a box of matches, their is a tax stamp attached to it. When you pay your bill in a hotel, it is taxed. We return from these countries and talk about their prosperity. We do not talk about the infinite range of taxes they have to pay. For instance, Norway and Sweden, have a tax system most nearly similar to the one we are now suggesting and it does not seem to operate with any difficulty whatever. We very often draw comparisons in regard to the successful operation of Governments in these countries. The advocates of the Labour people, particularly, use them as the criteria of a good Government but they do not for a moment think of mentioning how they finance the many welfare schemes they operate for the benefit of their people.

The retail trade have under this Budget a tax of 2½ per cent imposed on them. Those people who are members of the trading community are pretty intelligent sections of the community. They know perfectly well what is the position and they do not anticipate any difficulty whatever. Furthermore, they know it will not be operated until November and there is ample time to have every little item smoothed out. There is nothing being done in a hurry. They know that when the PAYE scheme came in, the Revenue people did the greatest possible job of work to make it run smoothly and cooperated with every section in order to operate it smoothly. We may expect the same again without doubt.

The traders know something else. They can ask themselves what is the alternative to the 6d. in the £ which they will be called upon to pay under this Budget. Let them ask themselves what they had to pay in 1956 when this country was plunged into a depression, when they went bankrupt in hundreds. That is the alternative. Those were the steps taken then, when the people who are talking about taxes applied a credit squeeze and put people out of business overnight. They could lose ten times more in the one month than they will lose now in the entire year. Ask a Dublin trader does he want the conditions of 1956 or does he want the system which will continue to provide the expansion and buoyancy of trade which he is enjoying at the present time.

Those are the tests to apply. Any trader will prefer to find himself in a position where he has to pay on an expanding business rather than the alternative of not having to pay on a declining business, which is the nightmare of Coalition memories. This Budget is calculated to continue the expansion in our economy and I have yet to know the businessman, be he large or small, who will not settle for a continuing expansion of our economy and a buoyancy of trade at any time rather than a recession. If we are to use the old conventional methods of meeting the situation and apply a credit squeeze, levies and the various things which contract distribution and shrink business, then there is really reason to be worried, when the Government find themselves in a position where they cannot give anything to the social welfare classes.

Deputy Costello was very fair in admitting at the outset that he welcomed the provision made for the improvement of social welfare benefits in so far as we have gone in this Budget. Some of the speakers who were afraid to say anything in favour of the Budget lest it would mean that they would fail to secure the full propaganda value out of their speeches when they have them published in the local papers, did advocate we had a long way to go before the social welfare classes have been anything like reasonably catered for. That is exactly the position. We could do much better but we can only go as far as the position allows and the people who are wondering about what we shall do with the extra money next year were promptly answered by Deputy Sherwin. We can find 101 things to do with it even in regard to the social welfare classes.

I could take a few items out of the Book of Estimates for this year which would provide a means of balancing the Budget. Will anybody suggest we should do that? This year in the Book of Estimates, approximately £40 million is being provided for agriculture, almost £2 million for tourism, over £3 million for forestry, over £21 million for our building programme. That does not relate to private building, except in so far as grants are concerned.

Mr. Coogan

Does that cover embassies?

Mr. J. Brennan

It does not. The embassies which are being built by America are a sign of the confidence these countries have in the prosperity and future of this country.

Mr. Coogan

I am talking about Nigeria, not America.

An Leas-Cheann Comhairle

Order. The Parliamentary Secretary.

Mr. J. Brennan

I thought the Deputy was ignorantly referring, as he usually does, to the embassies being built in Dublin.

Mr. Coogan

The Parliamentary Secretary is ignorant of the facts.

Mr. J. Brennan

He would be very ignorant of the facts if he learned anything from the Deputy from Galway. He should keep silent as long as he can and the less will be known of his ignorance.

Mr. Coogan

The Parliamentary Secretary should answer the question he is asked.

An Leas-Cheann Comhairle

Deputy Coogan will get an opportunity of speaking later. The Parliamentary Secretary is entitled to speak without interruption.

Mr. J. Brennan

We are spending over £29 million on Social Welfare. That sum does not include what will be spent under various other headings, such as fisheries. Do we want to cut down on those items? Not one member on the other side of the House will stand for that for a moment. As a matter of fact, every speaker has advocated further expenditure under each heading and can justify it. We can on this side, too, and let us hope we shall have greater expenditure under these headings.

Now let us talk about building. I took it when Deputy Coogan asked about embassies that he was referring to the signs of prosperity here, to the very modern and palatial embassies being built by other countries, but it transpired that he was referring to embassies which we are building for our own representatives abroad. That is a line Fine Gael dropped long before Deputy Coogan came to this House. There was a time when, if Fianna Fáil suggested taking a bend off a road, Fine Gael would talk about it as squandermania. Even when Fianna Fáil built the new offices in Kildare Street, they were condemned by the other side of the House as squandermaniacs. The only thing they found wrong afterwards was that we did not build enough of them at the time.

That kind of talk has long since been abandoned by the Fine Gael Party. As long as we build in other countries for our representatives, I hope we shall raise a building that will be a credit to the country and that when our people go abroad they will not be ashamed to see an Irish representative living in a back street in some town, in some building not worthy of the high traditions of this country's architecture. I hope they will have good Killybegs-made carpets, second to none in the world, in those buildings.

Mr. M.P. Murphy

Very few ordinary Irishmen enter those buildings at all.

Mr. J. Brennan

I have seen the visitors' book in some of them and they have quite a few visitors.

Mr. M.P. Murphy

But not the ordinary people.

Mr. J. Brennan

You will find the names of the Labour Party there as well. Our building programme is a credit to us. Speaking on the Vote on Account, I was following a Deputy who had made comparisons about building figures now and what they were when the Coalition were in office. He was talking about county council cottages. I asked him one question worth repeating. If you want to know the activity in the building industry now compared with what it was in the years preceding 1957, ask any building contractor in the country.

Mr. M.P. Murphy

Give us the statistics you have there. They should be interesting.

An Leas-Cheann Comhairle

Deputy Murphy might allow the Parliamentary Secretary to proceed.

Mr. J. Brennan

I am giving you something far more interesting. You condemn statistics. I am asking you to ask any building contractor in the country.

Mr. Coogan

There are three kinds of lies—lies, damned lies and statistics.

Mr. J. Brennan

You are asking me to quote statistics.

(Interruptions.)

An Leas-Cheann Comhairle

If Deputy Coogan does not cease interrupting, he will have to leave the House.

Mr. Coogan

On a point of order, Sir, there have been interruptions from the other side and you have not said that.

An Leas-Cheann Comhairle

Deputy Coogan has been interrupting since the Parliamentary Secretary commenced.

Mr. Coogan

I am asking questions.

An Leas-Cheann Comhairle

The Deputy has no right to ask questions.

Mr. J. Brennan

I am not terribly worried about Deputy Coogan's questions. Whenever he asks a question, you can be certain it is not going to be a very intelligent one.

Mr. Coogan

You can be certain the Parliamentary Secretary's answer will not be intelligent. Like the Minister, he has not a clue about this.

Mr. J. Brennan

As one of the front benchers there used to say, do not draw me out or I might tell you a few things which were better unsaid.

Mr. Coogan

Not personally.

Mr. J. Brennan

I am not referring to anything personal. Just leave me alone.

Mr. M.P. Murphy

Well, give us the statistics now.

Mr. J. Brennan

You just keep quiet.

An Leas-Cheann Comhairle

Order. Perhaps the Parliamentary Secretary would be allowed make his speech.

Mr. M.P. Murphy

I am only reminding him.

Mr. J. Brennan

I want to put on record a challenge to the other side in regard to the building trade. These figures I have quoted are an indication of what the Government are doing——

Mr. Coogan

The Parliamentary Secretary has not quoted.

Mr. J. Brennan

——in regard to productive development to-day. The White Paper on economic expansion emphasises one important feature, that is, that as much of the public purse as possible be spent on increased production. If we impose this new turnover tax, it will be accepted immediately that the money is for that purpose. But we are not asking anybody to accept anything without explaining the details. We ask those people who pretend they do not know to look at the Book of Estimates this year and see the schemes operated in respect of agriculture, industry and every branch of our economy. Then they can judge whether or not we are spending the money for productive purposes.

The Opposition always try to pick out the unpopular parts of a Budget and attack them in order to blacken the whole structure. This turnover tax of 2½ per cent. may be carried in one way or another by the retail trade. It is a matter for themselves how they offset that payment. The Opposition have been seeking to stress what this means on every article sold in order to create an impression in the minds of the people that there will be an increase in the price of every item. That need not necessarily be the case. They may offset the payment in any way they wish. They may reduce overheads. They may decide to charge something extra on a particular line of goods. They may decide to reduce their margin of profit in a particular direction. I know traders who will put up a sign in their shop windows saying: "Prices here remain the same."

It would be wrong to suggest that there will not be any increase, but the tax does not mean that there will be an increase in every item. I remember the Party opposite imposing taxes which had to be paid by the business community. We were justified then in asking how much did that mean on the ounce of tobacco, the pair of gloves or the ounce of wool. I know that for the purposes of political propaganda it would suit the Opposition to have the public regard this tax as the same as the sales tax they have in France, where everything you buy has a stamp on it showing the amount added. It would suit them to have the public regard it the same as the tax in other countries where you get a ticket setting out, like a waiter's bill, the amount added in respect of tax.

We have had the advantage of knowing the different types of purchase tax, sales tax and turnover tax operated in practically every country in the world. If we selected the one easiest to operate and causing the least upset, it is because we have had that advantage. Many States in America have a sales tax on every single item, including food. We do not hear about the taxes they have in America; we hear only about their prosperity. The prosperous countries all seem to operate a widelybased tax in some form. In some countries, it is referred to as an added value tax. This is where a tax is added at every stage from the initial production stage down to the counter of the retailer. It is a most difficult tax to operate. But it is productive and it is considered to be equitable insofar as it weighs on the community. This tax falls equitably on our community, no matter what anybody may try to say.

Some member of the Hierarchy— I think it was the Bishop of Limerick— speaking a few months ago referred to a lot of overspending which was taking place. I do not know whether that was correct or not but that was the statement he made. He said there was too much overspending.

Mr. Coogan

At Government level probably.

Mr. J. Brennan

He was referring to the community. If people wish to spend their money, let them. That is always a sign of better times and it makes for distribution, but this is a means whereby they will contribute to the national wealth in tax and gives us a means of coming to the aid of the less well-off people, the old age pensioner, the unemployed and the needy. Mind you, when one looks at it in that way, it is a very fair tax, for the man who seeks to spend the most, pays the most, particularly the people who will spend on luxury goods and goods over and above the essentials of life. The man on a county council wage of £6 10s. or £6 15s. a week who will contribute about 1/6d. or 2/- in this tax will, in 99 cases out of 100, find it more than offset by the benefits we have given. If he has children, it is offset; if he has aged parents living with him, it is offset; and if he becomes unemployed at some stage, he finds that he gets more. From every aspect, it cannot be regarded as anything other than an equitable tax.

Again, let us emphasise that we do not expect it to be a popular tax—no such thing as a popular tax has yet been devised. No tax is popular and no tax ever will be, but the only means whereby a Government can come to the aid of sections of the people, the only means by which they can give incentives to the various schemes that promote employment and which expand the economy is by taking the money in taxes from the community. The best they can do is to seek to take it in the fairest means possible, a means that is widely distributed and equitable to all sections.

Mr. Coogan

Why not put it on luxury goods then?

An Leas-Cheann Comhairle

Order.

Mr. J. Brennan

Luxury goods come under this. The man who buys luxury goods, spends on goods over and above the necessaries of life, will by this tax contribute every time he purchases something like——

Mr. Coogan

Why not leave out the labourers?

Mr. J. Brennan

The man who sells luxury goods pays 2½ per cent on his turnover.

Mr. Coogan

The labourer will, too.

Mr. J. Brennan

I think that nobody is surprised. When we were on that side, we did not stand up and praise any of the Coalition's Budgets. We tried to be constructive.

Mr. M.P. Murphy

Very constructive.

(Interruptions.)

Mr. J. Brennan

That is perfectly true.

Mr. Coogan

You did everything to undermine it.

Mr. J. Brennan

There were circulars sent out saying to ease off expenditure.

Mr. Coogan

You cut it off.

Mr. J. Brennan

We pointed out, on that Budget, what we would do and we did it. That may be the thing which annoys you.

(Interruptions.)

An Leas-Cheann Comhairle

If Deputy Murphy wishes to speak, he will get the opportunity. I would ask him to keep quiet now.

Mr. J. Brennan

I do not know half the time what Deputy Murphy is saying.

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

Mr. J. Brennan

I was asked by Deputy Murphy to say something about housing and I do not think I could say anything more definite in that respect than what I have said previously. It could not be said too often. What I said is that if you want to know what the present building programme is to-day, compared with what it was prior to 1957, ask any building contractor in the 26 Counties. I am prepared to stand by that as the test. You can go further and ask any builders' provider, those who provide building materials, and I am prepared to accept their answer in every solitary case. That amply disposes of any taunts anybody may make with regard to building. The same may be applied to every other section of the economy, which brings me to the important point at which I set out. If the traders had a choice today to go back to the conditions which they enjoyed prior to 1957, or to have the conditions of our expanding economy supported by the present sales tax or turnover tax, they would gladly accept the turnover tax in preference to the recession, the credit squeeze and the bad memories of prior to 1957. We know they would rather it was not there but since they know why it is there and what the future outcome will be, I know they will gladly co-operate and accept it for what it is, a means whereby we may continue the expansion of our economy and the improvement of conditions for every section of the community. No speaker on the other side of the House has advocated meeting the position by any other means. With the exception of Deputy J.A. Costello, they all have condemned the tax and at the same time, have advocated further improvements under various headings, in particular under social welfare.

The greatest vindication of the tax was found in the speech of the ex-Taoiseach, Deputy Costello, when he asked what would we do next year when we would have collected over £10 million, which for a moment implied that we were collecting money unnecessarily. Before he sat down, he had suggested matters which were crying out for this extra money which we would have collected next year. His only regret was that his advocacy of these things would fall on deaf ears.

Mr. Coogan

On a point of order, is the Parliamentary Secretary not repeating himself?

An Leas-Cheann Comhairle

That is not a point of order.

Mr. Coogan

Well, disorder, if you like.

Mr. J. Brennan

That was the greatest vindication of the new tax that anybody could have made and it could not have been repeated more frequently, having regard to the fact that every speaker from the other side of the House has made the same speech since the Budget was introduced. Deputy Coogan's practice is to look up the debate of last year and to repeat it.

Mr. Coogan

He does not have to. It would not fit in this year.

Mr. J. Brennan

That is not a bad practice, when one understands his position. The salient feature of the Budget is the new turnover tax. Nobody expects that the people who will pay it will welcome it but I have been in touch with traders around the country since the Budget was announced and they seem quite happy to know that we are not heading for a position such as we experienced prior to 1957. The less well-off sections of the community are happy to know that anything extra they may be called upon to pay is more than offset by the benefits we are giving them. We are all happy to know that there are indications of a better future, an impetus in the expansion that is already taking place and that we can face the future with courage and confidence.

Mr. M.P. Murphy

On Tuesday last, the Minister for Finance in introducing the Budget said that its main purpose was to promote national progress. He has gone about that by introducing an innovation in the tax system, which he has termed a turnover tax. Naturally, the debate on the Budget has centred around that tax because it is something new, something we had never heard of before in our tax system and until very recently, something we thought would never arise. The title "turnover" tax is most appropriate because it represents a complete turnover, in the tax system operated by Governments since the State was founded. Years ago, it would have been impossible to visualise the introduction of such a tax. If, as mentioned by the ex-Taoiseach, he had resorted to the imposition of such a tax in 1956, one can imagine the comments that would have been made by the present Minister for Finance, the Taoiseach and other members of the Fianna Fáil Party. It is more or less suggested by Government speakers, including the Parliamentary Secretary to the Taoiseach, that this new tax is something to be proud of, something that we should congratulate ourselves on planning, something that should have been in operation years ago but which, unfortunately, we did not think of until this year.

What is the main feature of this new tax? What does it ask the people to do? It asks the people to hand over to the Exchequer £11 million. That is an undeniable fact. That fact is stressed in the Budget Statement. Eleven million pounds is a big amount of money in this country. It represents a contribution of £4 per head of our population, man, woman and child.

Mr. N. Lemass

Where is that said in the Budget Statement?

Mr. M.P. Murphy

I am saying that for the benefit of the Deputy. I do not imply that it is in the Budget Statement. I said that, according to the Budget Statement, it can be assumed that the tax will bring in £11 million and I have said that, on our economic standards, £11 million is a sizeable figure and represents a contribution of £4 per head of the population of something more than 2¾ million.

Mr. N. Lemass

That is not in the Budget Statement.

Mr. M.P. Murphy

I am not quoting it.

Mr. N. Lemass

That is what you said.

Mr. M.P. Murphy

It arises out of the statements contained in the Budget speech. The Government having looked for £11 million, we may ask what is the necessity for this money, where is it going, what sections of the community will benefit, what sections of the community will pay it? The answer to the last query is quite obvious.

We are told that a percentage of this money will be devoted to increasing social welfare benefits. It has been stressed during the course of the debate that social welfare benefits have been increased regularly in recent years but if one examines the figures, one finds that the proportion of tax revenue devoted to social welfare is being steadily reduced and is much less than 20 per cent. of the total tax revenue at the present time.

The Taoiseach yesterday made a strong point in support of this tax when he said that there are great and exciting prizes to be won. If we pay this tax, as we must pay it, according to what the Taoiseach told us yesterday, there are great and exciting prizes to be won. He did not tell us what the great and exciting prizes are likely to be. I cannot visualise what form they will take. The Taoiseach kept that a secret. He did not elaborate. To judge that statement, we must go back to the statement which has been referred to on several occasions in the course of this debate, made by the then Deputy Lemass prior to the 1957 election. He told the people that great and glittering prizes were available if they did one thing, that is, if they elected a Fianna Fáil Government. As everyone knows, mainly as a result of that promise, an overall majority was secured by the Fianna Fáil Party in 1957.

Earlier this morning. I was sure that after years of waiting we were going to get an explanation of this statement made by the Taoiseach in 1956. Deputy Colley referred to these "hoary old statements", such as the one about the 100,000 jobs, being trotted out here time and again. I thought when he referred to this "hoary old statement"—it is his description of the statement the Taoiseach made in 1956—that he would tell us something about it, that he would give some explanation.

In examining the economic position of the country this year, we must take into account what has happened in past years. Everybody knows that instead of there being 100,000 new jobs available in this country, the Taoiseach's car has gone into reverse gear. Instead of moving ahead to provide 100,000 extra jobs, it has reversed, and there are almost 100,000 fewer jobs in the country at present than we had when that "hoary old statement" was made.

We cannot refrain from mentioning that statement in the House and, in the course of this debate, a somewhat similar statement, but in more vague terms, was made yesterday by the Taoiseach about the great and glittering prizes that were to be won. I am very doubtful, and I am sure the people are very doubtful, about the great and glittering prizes that are to be won if we are to increase production, contribute £11 million, keep our mouths shut, and let the Government move along as they think fit. It is quite obvious from the number of errors made by the Government in recent years, not the least being the blunder they made about the Common Market——

Mr. O'Connor

If there are 100,000 fewer jobs, how does the Deputy account for increased productivity?

Mr. M.P. Murphy

The statistics supplied by the various State offices show that figure is moving close to 100,000 fewer jobs.

Mr. O'Connor

Where did the extra material come from?

Mr. M.P. Murphy

In the course of this discussion, if Deputy O'Connor will bear with me, I will elaborate more than they elaborated in their statements. The most peculiar feature about this new tax, and the Minister's announcement of its introduction, is that there has been a complete changeover from the procedure adopted in past years. Before the Minister introduced his Budget in past years, people could only guess at what new methods, if any, of raising revenue would be devised.

The Irish people were not left to guess anything this year. It was made an open secret months before the Budget that this turnover tax, or as it was then termed, this sales or purchase tax, would be implemented. The purpose of doing so was, to use an Eastern-European term, to brainwash the people so that they would not be suddenly struck with it when the new method of taxation was introduced. It is most unusual for the Minister and the Government to make their plans public months before the Budget is introduced and so much so that the national newspapers were able to give a reasonably good account of what would be contained in the Budget. That should never happen in any country. It would not have happened here, were it not that past conventions were thrown overboard and this type of Budget leakage was wilfully brought about by the Minister and his colleagues.

We have to examine how the £11 million is to be expended. I have already mentioned the social welfare benefits and I suppose the next section of the community that should be mentioned is the agricultural section. The farmers are amongst the hardest workers in the country. A big number of the small farmers have to contend with uneconomic holdings and labour under many disadvantages such as shortage of capital and so on. Even though this Budget Statement is a lengthy document, a very insignificant part of it was devoted to the farming community. Incidentally, they got no increase whatsoever from the Budget.

Mr. Fanning

How does the Deputy make that out?

Mr. M.P. Murphy

If I have to explain it to the Deputy, I shall do so.

Mr. Fanning

£39 million is a fair share.

Mr. M.P. Murphy

The Minister for Agriculture and the Government announced some time ago, due to extreme pressure from the farming organisations, that they had agreed to allow 1d. extra per gallon for milk supplied to creameries. That statement was made about a month ago and in this Budget there is confirmation of the statement that the money will be provided to meet it.

Mr. Meaney

As from 1st May.

Mr. M.P. Murphy

It is estimated that it will be £1¼ million.

Mr. Meaney

That is nothing.

Mr. M.P. Murphy

That was known long before the Budget. As against that, people who buy a 1b. of butter must pay back 1¼d.

Mr. Fanning

The farmers?

Mr. M.P. Murphy

Farmers eat butter as well as everyone else. They have to pay back 2½ per cent of the price of the 1b. of butter which is almost 1¼d. So from their point of view the amount of tax they will have to pay on butter consumption will go a long way towards offsetting——

(Interruptions.)

Acting-Chairman (Mr. Colley)

Deputy Murphy.

Mr. Fanning

The farmer has not to pay any tax on butter he buys from the creamery.

Mr. M.P. Murphy

Sales of butter to consumers are taxable and creameries or shops in Dublin or in the country which sell butter must include it in their sales, and the Government will collect this 2½ per cent tax on the sale of butter.

Mr. Fanning

Not from creameries.

Mr. M.P. Murphy

I am sure it would be information to the people of this city and country if they were told that butter, that very important food commodity, is exempt from taxation. If a farmer buys a 1b. of butter, it has no immunity because he is a farmer.

Mr. Meaney

The farmers buy butter from the creameries.

Mr. Fanning

If a farmer buys butter, he does not buy it from the shops but from the creameries.

Mr. M.P. Murphy

Deputy O'Connor mentioned a while ago the reduced number of jobs there are in the country now as compared with 1956.

Mr. O'Connor

I did not. The Deputy mentioned it.

Mr. M.P. Murphy

The Deputy asked me for clarification. As we are speaking of agriculture——

Mr. O'Connor

Deputy Murphy raised the question of the 100,000 jobs and I raised the question of the increased production of materials.

Mr. M.P. Murphy

As the Deputy knows, we have improved methods of doing work. There is a steady improvement year by year. There are new methods of work which, to a large extent, are responsible for increased output. I am speaking of manual labour. Those 100,000 jobs were supposed to be held by men, not machines. The number engaged in agriculture is steadily declining.

Mr. Moher

All over the world.

Mr. M.P. Murphy

It is steadily declining.

Mr. Moher

All over the world.

Mr. M.P. Murphy

I must say I am most grateful for so many assistants——

Mr. Fanning

We want to keep the Deputy on the right track.

Mr. Moher

We want to keep him on the rails.

Acting-Chairman

Deputy Murphy must be allowed to make his speech.

Mr. M.P. Murphy

I am not unfavourably disposed to these interrupters. I am sure they mean well.

Mr. Moher

There is always team work in Cork.

Mr. M.P. Murphy

Statistics show us that the number of people engaged in agriculture is steadily declining. The explanation of that is quite obvious. Agriculture does not now offer those engaged in it a reasonable return for their work. In a large part of this country, along the western seaboard, from Donegal to the Cork coast, you have an area of land which is of indifferent nature and a big percentage of which has little productivity potential. Naturally it is difficult for the farmers and their families to make a reasonable living from these holdings and the tendency is for them to leave these holdings, and a big number of them in the south have left the country also, because there was not sufficient work available for them in other industries in the towns and villages.

I am hopeful that the new venture of the sugar company will be helpful in keeping an additional number of these people on the land and that it will arrest the steady decline in the number of people engaged in agriculture.

Mr. O'Connor

They are not in the areas where the decline is.

Mr. M.P. Murphy

They will be. There will be one in West Cork and another in South Kerry.

Mr. O'Connor

The big decline is in the richer counties, in Tipperary, Kilkenny, Wexford and Meath. You will see that if you look up the statistics.

Mr. M.P. Murphy

The Deputy will agree that most of the farms in his constituency and in south-west Cork are worked by family labour. They are not extensive enough to employ outside labour. I am making the case that these people have got very little from this Budget. The penny a gallon on milk is of no great concern to the small farmers who are in the great majority throughout the country.

Mr. Moher

It represents £2 a cow.

Mr. M.P. Murphy

The bulk of the money will be paid back to the Exchequer through the levy of 1¼d. a 1b. on butter. The Minister and the Government should have dwelt more on the needs of the agricultural community when drawing up this Budget. It is all very well for the Minister to say that they are giving £40 million to agricultural interests. A good part of that money has been given towards the eradication of bovine TB which has been forced on us by marketing conditions in other countries. It is a good thing to get rid of bovine TB but, despite the considerable help given towards it, the farmer has still to make his own contribution which is a substantial one. When a farmer sells a reactor to the Department, he has to find the difference between the price of the animal he has sold and the replacement.

Mr. Moher

Can he not breed his own replacements?

Mr. M.P. Murphy

It is imposing a hardship on those farmers. The farmer members of this Assembly will agree that there is an imposition on the farmers at the present time to provide such replacements.

Mr. Fanning

A number of them rear their own heifers.

Mr. M.P. Murphy

That does not apply everywhere. I cannot speak for the farmers in Tipperary because there they have bigger farms and better land and they would not put the same industry into their land as the farmers in my constituency have to put.

Mr. Moher

That is all right in the county committee of agriculture but not here.

Acting-Chairman

Deputy Murphy must be allowed to make his speech.

Mr. M.P. Murphy

It must also be remembered that the report of the Milk Costings Commission indicated very clearly the differential between milk production costs in the different parts of the country. That report cost the Exchequer over £40,000 and the Fianna Fáil Government consigned it to some annex because they did not like it. It indicated that the cost of milk production varied from 1/5d. to 2/9d. a gallon but the Government thought that the men who brought in that report should be confined in institutions which I will not mention. They did nothing about the report despite the fact that the West Limerick by-election was fought on it. That election was fought on the milk costings report because the Fianna Fáil Party alleged that the inter-Party Government then in office were afraid to bring forward the report and were delaying its publication.

I want to return to this turnover tax. A number of speakers, who have been able to give a much more impartial view of it than the Government side, have painted a reasonable picture of what that tax will mean. When, for example, the Minister buys his Irish Press on 1st November next and reads the death column announcing 40 deaths, he can say: “I am up another £40 or thereabouts.” That is so because the burial services, the provision of the coffins, hearses and so forth, will be subject to this 2½ per cent tax. Is that correct or is it not? Imagine a Government in 1963 imposing a tax on burial services. This is the note of sympathy which Deputy Dr. Ryan will send out to the relatives: “I will have my whack out of your bereavement. If the coffin costs £20, I will get 10/-; if the hearse costs £5, I will get 2/6d.” I think it is outrageous.

That gives some idea of how this tax will operate. Tea and sugar, bread and butter, drink of all description, all types of essential foodstuffs, are to be taxed, as well as what can be described as luxury goods. When this leak was made by the Government, when we were told beforehand of the imminent imposition of this new tax, it was implied it would be confined to goods used mainly by the better-off sections of the community. None of us believed or imagined it would be a tax on bread and butter and in fact, on all household commodities. I am sure when the Parliamentary Secretary to the Taoiseach told us it was a better system than that adopted in 1956, he had his tongue in his cheek, because if the Government then were to introduce a tax like this——

Mr. Meaney

At that time they were too weak.

Mr. Corry

Deputy Costello will guarantee that he will continue it if you go back—ever. Do not forget that.

Mr. M.P. Murphy

I spoke some time ago about the difficulties of small farmers and others and I must now refer to a Parliamentary Question I addressed to the Minister yesterday relative to the operations of money lenders in this country. The Parliamentary Secretary to the Taoiseach stated today that we were a very well off nation, that there was an increasing expansion of the economy and so on. Whether that is correct or otherwise, it does not take away from the fact that on 31st December last, according to the information given me yesterday by the Minister, the Irish people owed to hire purchase companies £31,900,000. That is a big sum of money, almost £11 per head of the population, owed to hire purchase companies by the Irish public. It is a serious matter that requires close consideration by the Government in the not too distant future. Let us forget the Fianna Fáil nonsense about how well off the people are now. The fact is that they owe £31,900,000 to moneylenders. The people who owe that money are mainly workers who require autocycles to take them to work, small farmers who may require some additional implements——

Mr. Moher

Tractors.

Mr. M.P. Murphy

—or people who may have to procure some sort of equipment to help them earn a livelihood.

Mr. Moher

What about the TV sets?

Mr. Tully

Why do you not close down Telefís Éireann?

Mr. M.P. Murphy

The total amount owed is £31,900,000. It may be asked why these people go to hire purchase companies for their loans, why a farmer would not go to the Agricultural Credit Corporation in Harcourt Street where he would be treated fairly.

Mr. Moher

They will not give anything for television sets.

Mr. M.P. Murphy

I know, but a big part of this £31,900,000 relates to agricultural equipment. I have no doubt about that. Although the Agricultural Credit Corporation are empowered to give loans for agricultural purposes, they require the submission of title deeds, solvent sureties and yards and yards of red tape must be cut, so that eventually the applicant gets tired of waiting and falls into the trap set for him by the hire purchase companies all over the country. In many cases, he does not realise what he is appending his name to. The position is that most of these companies, on a simple interest calculation, actually charge more than the 39 per cent interest permitted. In fact, as far as I can see, they are permitted to charge 100 per cent interest if they like. In his reply to my question yesterday, the Minister said this:

There is at present no State restriction on the amount of interest that may be charged on private or hire purchase loans.

He qualifies that by saying that if they charge more than 39 per cent, you can go to the courts and the courts will not allow interest at more than that percentage to be charged. Everyone knows people do not like going to the courts against moneylenders, so that safeguard is not worth mentioning. I am now asking that a closer watch be kept on those moneylending firms.

It is a noteworthy feature of the Minister's reply that banks in this country own, partly or wholly, five of the moneylending companies or HP companies—they are all the same, irrespective of what name you apply to them. I should not like this position to obtain with the honest man down the country who may be short of capital for some work or other and who goes into a bank which may wholly own one of these moneylending or hire-purchase firms and asks the bank manager if he can be accommodated to the extent of £100 or £150 to buy a cow or two, or a machine, or perhaps a tractor. I can visualise the bank manager saying that they could not lend out money that way, that they had to satisfy the directors of the creditworthiness of the client and adding that at the same time, they could facilitate him by recommending him to one of their hire-purchase companies who would give the money without the difficulty the banks would impose if they were to examine his application. Naturally, the man would be delighted and avail of the loan not from the bank but through the bank from the hire-purchase company. Everybody knows the difference in the interest rates is enormous.

Mr. Meaney

He can get it from the Agricultural Credit Corporation.

Mr. M.P. Murphy

This is not a trivial matter to be dealt with flippantly. There are people held by these firms to the extent of almost £2 million, and I know young fellows working very hard trying to earn money to keep up payments to hire-purchase companies. I hope the Department will examine the moneylending facilities. It is good to get money when required and to have loan facilities for people who can put the money to good use. What I am against is the exorbitant rate of interest charged generally. The State should step in when the rate is considered exorbitant. If a man is credit-worthy enough to get money from a hire-purchase firm through a bank, he should be credit-worthy enough to get the loan direct from the bank without hire-purchase. Do not stop the lending of money to people who can use it gainfully and well, but at the same time the State should have regard to the position at present existing to ensure that people will not be fleeced—I do not think that is too strong a word—in the interest rates charged. I ask the Minister for Defence as a member of the Government to bear that in mind and if it is raised at some Government meeting, it would be no harm.

I do not want to misquote any statements made by the Acting-Chairman at the moment, seeing he cannot very well reply to them. In the course of his remarks, he thought up a very easy way of finding this £11 million. He said cut-price competition would do the job; that the consumers would not be charged the two-and-a-half per cent on the box of matches, the butter, tobacco or cigarettes, that prices might not be increased at all and that there would be so much competition that demand and supply would manage the whole business. The bulk of the tax would be paid by the traders themselves and the ordinary man in the street would hear nothing about it. To use a mild word, I thought that was an out-of-the-way approach. The Minister must get £11 million. Everybody knows there is cut-price competition between shops today and the net result will be, if we may anticipate the future, that small shopkeepers will be wiped out. The big combines employ very little labour, a few boys keeping the shelves filled, an overseer and a few girls at the counter. When you deal in the self-service store, you are helping to pay the overhead costs of these buildings which are exceptionally light.

I believe the other small traders have sufficient problems to meet at the present time without, as Deputy Colley suggested, taking on the payment of this tax themselves. Shopkeepers are finding things difficult. There is a change in marketing conditions and whether we like it or not, supermarkets are growing and I believe are likely to grow. Possibly you will have a supermarket in all towns of populations of 2,000 and upwards and perhaps even where there are lower populations. Naturally, some of these existing stores in the smaller towns are financed and helped for the present, at any rate, by big combines in the hope that all local competition will be wiped out and that if losses are sustained, they can be wiped out and can be recouped later.

It is an unfair system of trading when—and I know this to be the case—a store sells an article at a price less than was paid for it to the manufacturer. That is a proved fact. This unfair competition focuses attention on a particular store where, for instance, you can get a packet of biscuits for threepence or fourpence less than in the ordinary shop. Immediately you are drawn to that store like a magnet and possibly eventually become a regular customer. I believe the shopkeeper is entitled to a fair profit for his work and to enable him to pay staff reasonable wages and leave a reasonable return for himself. While we like prices to be competitive, we feel every man is entitled to a fair deal and fair trading.

It is proposed that the disablement allowances be increased by 2/6d. a week from 1st of November. These are paid by the local authorities to those who are receiving benefits at the maximum rate. That was the provision in the past and it resulted in West Cork, so far as the majority of cases was concerned—and I believe it happened in East Cork also—that only those receiving maximum allowances got the additional halfcrown. All the others had to submit to a rigid investigation, as a result of which a big number did not get the additional 2/6d. I think the term "maximum" should be removed from the Minister's statement in page 32 of his speech where he says:

It is again proposed to provide for increases—of the infectious diseases allowance by 2/6d. a week for a person without dependants and by 5/- a week for a person with an adult dependant, and of the disabled person's allowance by 2/6d. a week on the maximum rate.

Mr. Moher

What the Deputy is alleging is not right.

Mr. M.P. Murphy

In most of these cases, they got nothing. We discussed this several times in the health authority in West Cork without any satisfaction and I ask the Minister to remove that word "maximum" because it will deprive people receiving lesser amounts than the maximum of this extra benefit.

The Deputy from South Kerry was worried about my statement about the number of unemployed but I think there is nothing in this Budget which will expand the employment potential, nothing likely to provide extra jobs. It is regrettable that we have not an inter-departmental committee with representatives, particularly from Departments employing labour such as the Department of Lands, the Department of Finance, the Office of Public Works, the Department of Local Government and any other Department that gives employment to see what new works and what new jobs could be provided.

In general, few, if any, want to see a labour exchange. What they want is employment. Workers would prefer to be employed rather than be forced to go to the exchange for unemployment benefit or assistance. With our relatively small population of three million, I believe some schemes could be devised between the different Departments and between the heads of the Departments whereby we could provide full-time employment. That was the position obtaining in Britain up to quite recently. Full employment was available there. Not only were they able to cater for their own population but they were able to help us in catering for a substantial section of our population as well.

Everybody appreciates the position of a worker in part-time employment. You must have some type of permanent job to feel safe, to give you security. A large number of our people have to get along with temporary jobs. They go along to the county council engineer today for a job that may last a month. They go to the forester for part-time employment, and so on. That system is out of place. We should try to provide for our people productive schemes that will give full employment. In that way, we would save large sums of money at present paid out by the Department of Social Welfare. Mention has been made of progress in Western European countries. We should have schemes such as some of those which operate in those countries which would enable our people to have full-time employment.

The Parliamentary Secretary made some reference to fisheries. Reading this statement from end to end, one notices that there is no mention of the fishing industry. The Government and the Minister completely forgot about fishing when compiling it. We have stressed the value of fishing to many people resident on our excellent coasts. In my constituency, a large number of people engaged in fishing at one time and a reasonable number are at present engaged in it. So far as I can see, no mention was made of the fishing industry in that lengthy statement and I think it was completely out of place that some reference to that important industry was not included.

In my opinion, we have too unwieldy an administrative system here. The administrative staffs of public offices are exceptionally large. We have large numbers of people in big jobs, and so on. Whilst we do not want to take jobs from anybody, I think the statement on page 25 of this statement that a big percentage of our income goes towards administrative costs cannot be overlooked. We all know that a big percentage of that amount makes up the salaries of very highly qualified men who are in receipt of very high salaries. When the Minister asked where savings would be effected I wonder if that field was combed properly. Would it be possible to find some economies in that field? Could we not have a better system of coordination between the top officers of the different Departments and avoid the duplication of inspectors and inspections?

Speaking about inspectors and inspections, this will be a difficult time for our shopkeepers. They are warned in this Budget that they will be subject to close inspection by officers of the Minister's Department. Whether it be to inspect their returns so far as the payment of the turnover tax or income tax is concerned, we are going back again to the days of inspectors and inspectors to inspect the inspectors.

No matter from what angle we view this Budget, from that of the worker who is getting a few shillings which are offset by the increases or of the person who is getting no encouragement so far as the prospect of additional employment is concerned or of people who are unemployed or of people who have members of their families ready and available for work, there is no great encouragement. Take the farmers, particularly the small farmers around our coasts whom I have spoken about. There is no great encouragement for them. There may be some encouragement for the big farmers about whom Deputy Fanning was interrupting. I know they are completely different from the type of people we have in West Cork.

With regard to the industrial sector, we have had statements in this House from some members of that sector that the Budget will be no help to them but rather a big hindrance in the promotion of additional employment. I hope that will not be the case. We should like to see industries, whether publicly or privately owned, expanded. However, when one hears Deputy Dockrell say that that is not likely to happen under this Budget, we must be warned. People conversant with all aspects of our industries and industrial development cannot commend this Budget.

We feel that the section of the community likely to be the hardest hit are the shopkeepers, small and large, and business people who, from their own resources, will have to provide figures for the Minister's Department and make returns regularly once a month. The Minister says this tax should not cost more than one per cent. He is probably correct. He has in mind to ask the shopkeepers to collect it, to do the book-keeping, and so on, from their own resources, and to make returns to the Department. Then there will be inspectors to ensure that they are doing their job properly.

I conclude by voicing my opposition to this Budget. Our economic state did not warrant the introduction of this new type of tax on all commodities to be purchased, irrespective of what they are—food, drink and so on. As I have said, even without our knowing it, we shall have to pay this tax. It is rather peculiar that we had not more exceptions and that certain commodities such as food were not excluded. Despite all the fine phrases used by the Minister and other members of the Government to describe this brand-new turnover tax, I think it will be very difficult for the Minister to sell it to the Irish public.

Mr. Cosgrave

The great defect of this Budget is that it does nothing to promote economic expansion or to provide what is necessary in the economy, if the country is to meet the competition which is inevitable in future world trading. It does nothing to provide for an increase in employment or for an increase in production. It is a negative Budget with a negative, depressive approach, where the approach should be positive, progressive and expansionist.

This turnover tax imposes taxes on a limitless range of commodities, food, clothing, fuel, drink, cigarettes, and so on. These will all increase in price from November. What effect will this have on the ordinary domestic outlay of families? What effect will it have on the consumer price index? Has any estimate been made of the increase in the cost of living which will result from the turnover tax? The tax will hit all sections. It will hit especially families with children because it is a tax on food, clothing and fuel. An obvious defect in this tax is that it may start the old familiar cycle of a rise in the cost of living followed by wage demands.

Leaving aside the direct consequences of this tax, I have tried to discover what the Government's policy in the matter is and I have related what has been done in respect of this turnover tax to what was published in Economic Development in 1958, which says at page 22:

A general purchase tax, for instance, would have an immediate reaction on sales of Irish products but would probably in the end, have inflationary effects on wages and salaries and the cost of living. It is desirable that taxes on spending should bear most heavily on less essential imports as this helps to ensure the retention at home of as much as possible of the stimulating effect of capital formation on employment.

It went on to say:

Unless our tax is relatively light, this country can scarcely hope to attract foreign capital, enterprise and organisational competence.

That was published in 1958 and it was the considered policy of the Government announced as a Programme for Economic Expansion.

In 1956, Deputy Lemass, as he then was, expressed opposition to the proposals in the then Budget because of the number of commodities that were included in the tax proposals. At Column 621, Volume 157, of the Official Report of 17th May, 1956 he had this to say:

I think it is true to say that most people who have written upon the theory of public finance subscribe to the view that the number of separate taxes should be kept as few as possible, that the State should rely for the bulk of its revenue on a few main taxes and should not try to multiply the number of separate taxes.

There is an obvious reason for that. It is undesirable that the hand of the tax-gatherer should be brought into business. The number of businesses subject to the regulation which is necessarily involved in the collection of taxes should be kept to a minimum. Government intervention for tax-raising purposes in any business always results in waste and is a cause of higher costs as well as of higher prices.

Furthermore, it is obvious to expect that the smaller the yield from any tax the higher will be the proportion of that yield absorbed in collection expenses. And, the wider the number of taxes, the greater the prospect of successful evasion by individuals.

That is a very emphatic refutation by the Taoiseach, then Deputy Lemass, of a proposal to tax in 1956 a relatively few commodities. This proposal, as I have said, broadens to an almost limitless extent the range of commodities available for tax and puts the hand of the tax-gatherer into the pocket of every shopkeeper and every businessman, whether big or small, and also, as Deputy Murphy remarked, makes not only the cost of living more expensive but, for the first time, the cost of dying as well. It may be truly remarked that in this Budget the hand of bureaucracy is in every home from the cradle to the grave.

It has been alleged in defence of this tax that it does not fall unduly heavily on essential commodities, that traders will impose this tax only on luxuries or non-essentials. How is that related to the statement included in the speech of the Minister for Finance that if this tax excluded food, clothing and fuel, a tax of 2/- in the £ would be needed to bring in a comparable revenue? Of course, the two do not tally. It may well be that in a shop that sells, say, certain types of hardware and also sells electrical goods, radios, television sets and so on, the tendency will be naturally to transfer the incidence of the tax to the less essential items, but what about the shops which will affect the bulk of the people, the shops where the vast majority of the purchases of essential goods are made and which, according to the Minister for Finance, will be affected because if the tax had excluded food, fuel and clothing, it would require to be raised to 2/- in the £.

In regard to commodities such as butter, essential groceries, there is no method of transferring that tax to other commodities. It has been suggested that it may be transferred to selected tinned foods. If these selected tinned foods are luxury or semi-luxury goods, goods not consumed more than once or twice by a family in a period, that will absorb some of the tax but nowadays a very large proportion of foodstuffs is sold in pre-packaged containers and it is obvious that if a grocer is to recoup himself, he must recoup himself by passing the tax on to the customer.

Progress reported: Committee to sit again.