Committee on Finance. - Resolution No. 14—General (Resumed). – Dáil Éireann (17th Dáil) – Tuesday, 30 Apr 1963

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. N. Lemass

I was glad to hear the statement we have just had from Deputy T.F. O'Higgins. I only commented on the appearance of what transpired on the occasion in question and I am glad to have his assurance that nothing irresponsible took place as a result of what appeared to be a little irregular.

There are a few further remarks that I should like to make about the Budget in general. I should like to refer to the additional money being provided for services, particularly the additional £1 million being provided on the capital side for the extension of telephone services. This matter is well worthy of comment because last year the provision was also increased by £1 million and is now very nearly double the amount provided two years ago.

It is probably known to members of the House but may not be so well known outside that the largest employer in Government circles is the Minister for Posts and Telegraphs and it can be reliably anticipated that the labour force in the Department of Posts and Telegraphs will be considerably increased as a result of the provision of a further £1 million.

That is just one item which will contribute to increased employment and the absorption of agricultural employees who may become redundant as a result of mechanisation of agriculture. There are other provisions in the programme of capital expenditure and these were the provisions which I think were in the main supported by the Labour Party. I think the Labour Party would also agree with the raising of additional money to pay increased social welfare benefits and family allowances in order to compensate for any hardship that may result from our efforts to expand the national economy.

No one will deny that it is a good step forward that the provision in respect of the Local Loans Fund Act is being increased by £2 million. That is no small increase. The increase on the capital side in respect of the Turf Development Acts is £250,000. In respect of Nítrigin Éireann Teo there is a provision of £3½ million. In respect of the Industrial Credit Acts 1933-1959, there is a £400,000 increase. There are increases also in respect of the Air Navigation and Transport Acts, Gaeltacht Industries, Shannon Free Airport Development Company and the National Building Agency Limited. All these things certainly help the national economy. They will make more purchasing power available from the general community which in turn will lead to a better national economy.

I should like to conclude by reminding the Minister of a remark I passed on the last occasion with particular reference to the Abbey Theatre. Whatever case has been made here for an exemption from the turnover tax in respect of betting, the case for the Abbey Theatre is unanswerable. It seems to me it would be nonsense to subject the Abbey Theatre to this tax.

At first when I heard Deputy Coughlan protesting against the tax on betting, I thought it was a poor solution coming from the Labour Party but I have subsequently heard Deputy Maurice Dockrell and I take a somewhat different view of the matter now. I look forward to further contributions on this subject. At first sight, it seems wishful thinking that betting should be exempted at all but there may be something in the case that I did not at first realise.

Other points may have been raised. I heard only half of Deputy Dockrell's speech. He may have raised a problem that might arise for auctioneers. If an auctioneer sells a property for, say, £100,000 on which his fees are £5,000, will the turnover tax be applicable to the entire £100,000 or simply to the amount of the fee? If it were applicable to the entire turnover, what would be the position regarding stockbrokers? The tax could run into fantastic figures. I am sure the Minister will clarify that position when he is replying.

So, in all, on examination, it is safe to contend that this Budget will impose taxes that will be equally distributed. There has been a suggestion, particularly when the White Paper Closing the Gap was issued, that if there must be a tax, why not put it on profits. A tax is now being put on profits; in other words, the widest circle of people have been asked to make their contribution towards this national effort.

Since the Minister first took office in 1957, each year that he has come here with a Budget he has earned the congratulations of the House. It is not merely anticipation of what might happen this year; we know from past experience that his policies have been right, have been leading us in the right direction, and once again I should like to join in congratulating the Minister on the Budget he has introduced.

Mr. T.F. O'Higgins

I cannot say that I followed with understanding the remarks of the Deputy who has just concluded. He did not appear to me to add very much to our debate, and I really wonder why he thought fit to intervene. I appreciate that for any Deputy on the Fianna Fáil benches to contribute to this debate is rather like taking a swim on Christmas Day. It is not a very welcome undertaking, because there is very little that can be said in favour of the Budget, and there is very little they can do, except, perhaps, raise red herrings of one kind or another in the hope that the Budget statement will not be studied and carefully analysed by the people.

What are the significant features of the Budget? First of all, there is the huge increase in taxation this Budget will impose on the people. There is an increase of £12 million in taxation, that is, an increase of 9 per cent. Such an increase was never before contemplated in this country. There is a school of thought which expresses the view that, for a small country, we are amongst the most highly taxed people in western Europe. It is true that the level of our direct taxation may compare favourably with the level of direct taxation in other countries, but in this country 70 per cent of our taxation is indirect taxation of one kind or another. As a people, we are amongst the most highly taxed communities in western Europe through central taxation and local taxation.

It is also true to say that amongst those who gave expression to that view in recent years was the President of the State when he was the Leader of the Fianna Fáil Party. He and members of the Government during previous election times, and particularly in 1957, expressed their view in no uncertain way that the level of taxation was so high that it could not be increased in any circumstances. It is against the background of those appalling facts that we have to consider a Budget proposal of the kind which is under discussion here, wherein this huge increase, by way of indirect taxation and direct taxation, is being sought from the general public. We have to realise that this increase will, inevitably, have its effect on local taxation. There is no way in which the ratepayer, the person who has to foot the cost of running the local authorities, can be insulated against this very large increase in central taxation. The pebble that is dropped into the pool of water will radiate ripples outwards and we will find an increase in the level of local taxation coming directly from this Budget.

In addition, it is inevitable that the increased taxation sought in the Budget will have a direct effect on the cost of living. The cost of living—it is a most hackneyed phrase and, indeed, so many speeches have been made about the cost of living that nowadays people do not pay any particular interest when it is talked about—means for hundreds of thousands of poor people in this country the difference between a modicum of pleasure and acute hardship. The cost of living index is the barometer indicating the value of the coin on which they depend to keep body and soul together. As the cost of living increases, of course the real value of money drops.

It is worth recording that in the past seven years the cost of living has increased, definitely, progressively, without apparently any let or hindrance, and today it is 25 points higher than it was just six years ago. Involved in this Budget, as sure as night follows day, will be a further increase in the cost of living index and a further fall in the real value of money. In those circumstances someone must ask: "When will it stop?" It is very simple and very facile for the Government, through the Minister for Finance or the Leader of the Government, to say: "What does it matter? Money will always be found," and seek to put no curb or limit on the expenditure demands of the State.

That is all very fine but in the process it must grind hundreds of people into the dirt and into hardship. In the process it must create a very definite heritage of debt that will have to be paid off by someone in the future.

I carefully studied the contribution made here by the Leader of the Government following the Budget statement. So far as I could gather from what he said, he seems rather to exult in the fact that this year we are seeking to spend through Government channels an enormous sum of money which will be exacted in taxation. He thinks that is good and makes no apology for it. Presumably next year, if the present Government are still in office, a further £12 million, or perhaps £20 million, will be sought from the people in the Budget. Again, that will spread throughout the economy and have its effect on the rates, the cost of living, and so on. The year after the bill will be bigger and step by step a spiral will be created which will reach to the skies. What is to be the end ?

I remember reading in the Official Report of this House a statement made away back in the beginning of the thirties by the then Leader of the Fianna Fáil Party when the Minister for Finance in those days read his Budget Statement in the House and asked for £30 million to run the country. The then leader of the Opposition asked: "What is the meaning of this ? This country is being run like a mighty empire." £30,000,000! What is the situation now ? Where will it end? Inherent in this Budget there is a lack of leadership, a quite definite weakness in control and a scant, or no regard for planning. We would be a happier people, I believe, and we would have a sounder economy, if we bent our efforts here to preserving the real value of our money, if we tried to bring about a situation wherein whatever money is paid to the sick, the indigent, the poor and the aged carried with it an assurance that it would continue to retain its value. The heartless, soul-destroying feature of recent years is the fact that, irrespective of what level we seek to put the old age pension at, we give with one hand and we take away with the other.

Throughout this country, those who have to save, those who have to try to make provision for the future, for the education of their children and the establishment of their children in some way of life, are all so many pawns in the deep game of political expediency which is going on at the moment. No one has regard for them. The Taoiseach says everything is fine; we will continue to spend money, up and up will go State expenditure. It does not matter that pensioners of one kind and another are badly hit, that people endeavouring to save a little see their savings shrinking away.

I assert that this Budget indicates a very serious financial crisis and the time has certainly come when some body of responsible people should be asked to take over control. Presumably the Taoiseach and others will ask in reply in what way is it suggested that expenditure be cut down? That is one of the oldest weapons that a Government being attacked on their Budget use : "Point out to us where to curb expenditure" becomes the catchphrase. But that is the responsibility of the Government. The Government are the trustees of the people's money. Their primary duty and their primary obligation is to preserve the value of the people's money, preserve its real value in every way possible and seek to ensure that the coin in circulation retains a stable value. It is no good shirking that issue. It is no good sitting back and saying: "We are not going to be concerned with that". If that mentality continues, then inevitably this country will endure chaotic conditions.

It is bad enough that the country has to face this increase in taxation, an increase which the Government say is necessary, but there is also the question as to the manner in which this increased taxation is being sought under these Budget proposals. It is sought in two main ways—by an increase of some 50 per cent in corporation profits tax and by this new turnover tax. I do not know whether the Government in devising these taxation proposals paid any real regard to the requirements of the country in this particular day and age. I have often complained that there are so many statements made by so many Ministers, saying so many different things, that there is little reason for surprise that the people are both bewildered and confused.

Last year, the people were led to believe that there was an impelling necessity to re-tool our factories and our business enterprises, to plough profits back into industry in order to shape up, to use the Taoiseach's own words, to the challenge of the Common Market. If ever a message was spread to business people, big and small, throughout the country, it was the urgent necessity to get down to reorganising business to equip it for the highly competitive world that waited outside our shores.

Again, if one is to accept the Taoiseach's utterances as a considered expression of opinion, only last week he said precisely the same thing; he said that, even though the Common Market negotiations appeared to be at an end, in fact they were merely in abeyance and he looked forward to this country entering Europe by the end of the present decade. He stressed how important and urgent it was that owners of businesses should re-equip and modernise, improve and expand. It is against that background then that we have to have regard to the manner in which this new taxation is being sought.

Up to this Budget Statement, the small company running a small business was not liable to corporation profits tax up to a profit figure of £2,500. Henceforth, it will be liable. Not only that, but the liability is retrospective. The small business in particular will now have no incentive to improve, reequip, re-tool or expand. The money out of profits which might have been devoted to improving and re-equipping will now be subject to taxation. I have little doubt the effect of this will cause considerable dismay and dislocation throughout the country. It will be the small unit, the small business, that will feel the effect.

That is bad enough, but the really serious aspect is this new turnover tax. I regard that as a disastrous tax. Now that this new tax has come to be understood, it is causing more concern than any taxation I have ever heard of. I cannot understand the mentality behind this tax. I am concerned chiefly for the small shopkeeper, the small businessman, the person who is engaged in a small way in providing a service in his area. That person may now find that the effect of this taxation is to turn a small profit into a very definite loss. I think the effect of this taxation will be to put many people out of business. It has caused widespread concern in the country. In fact, there is a real danger that money will be taken out of Irish banks and put abroad—in Northern Ireland and elsewhere. Or, worse still, people will get back to doing what they used to do in the bad old days—sleeping on their money.

The only thing one can say calmly about this taxation proposal is that it is novel. It is new. However, it could as well have come from Grangegorman as from Merrion Street. It is a disastrous tax. It is ill-conceived. I have no doubt it is intended merely as an act of political expediency, enabling the Government to say: "No real taxation is being imposed on food, clothing, and so on." Of course, that is absurd. The real problem being created by this turnover tax is the manner in which a small shopkeeper, a small businessman, can most effectively pass on the tax to the consumer.

In relation to things most consistently purchased—all, perhaps, of small value—to the extent to which the small businessman or the small shopkeeper finds difficulty in coping with it, the tax represents a definite problem. However, it enables the Government to say: "No specific article is being taxed." That is just not good enough. The raising of this taxation will have a very bad effect on the economy. Business will suffer. Business will slow down. Many old firms will cease to operate. Unemployment will be created. There will be a very definite lack of confidence in the Government and in the country itself. For all of that, this Government are solely responsible.

One could talk about this turnover tax at greater length. I do not think it is necessary to do so because what I have been saying is being said by so many at the moment that it is unnecessary to underline it.

In the course of his speech on Wednesday last, the Taoiseach said the time had come for the country to take "a shift to the left". I rather imagine he made that statement with his tongue in his cheek and was concerned to divert public attention from the disastrous Budget his Minister for Finance had brought in. I do not know whether it is useful or fruitful for us in this country to borrow political clichés from the Continent. "A shift to the left" is a phrase which presumably the Taoiseach learned in the past 12 months when meeting other Ministers in Brussels and elsewhere. I should like to believe that if that phrase has any meaning at all, it is completely irrelevant to our political considertions in this country.

Proper national activity and sound national development over the years have been bent in this country towards reform and improvement. However, the man who made that statement may have been trying to steal the clothes of the Labour Party. I wonder if he will succeed. Workers in this country must remember that the man who used those phrases was the author of the standstill orders—Orders under which a worker, irrespective of the fall in the value of money or the increase in the complexity of his work, was prohibited by the sanction of the law from seeking an increase in his wages.

The man who now talks about "a shift to the left" was the wage standstill author of the past and the pay pauser of only six weeks ago. Is he to be taken seriously when he talks in that way? Workers no doubt will remember also that the man who made that statement the other day about shifting to the left is the leader of a Government who in the past twice taxed bread, butter, sugar and tea and have just now brought in a Budget taxing all articles of food and everything a worker has to buy.

I do not know what "a shift to the left" may mean. It seems to indicate a desire by somebody in Fianna Fáil to shuffle feet. I have little doubt that whether they step left, right or do a complete right-about turn, it will not affect in any way the political fortunes of that Party. "A shift to the left"— with our health services in this country a disgrace to the community; with no real hope for a proper improvement in social conditions.

It seems to me that at the moment this country is being governed by bluff and bluster and that those who have been responsible are prepared to practise political expediency but seldom to express or rely on political principle. I have little doubt Fianna Fáil would shift anywhere if they thought that, by so doing, they could continue even for a week, their period in office. All of that is bad for the country. It adds to the confusion and the bewilderment which is besetting the people at the moment. How can they know what kind of policy is being followed by the Government when, clearly, the Government themselves do not know? All that doubt permeates the Budget Statement and the acts of the Government. It means that this country at the moment is in a very badly governed condition.

I would prefer if, instead of the Taoiseach making statements about shifting to the left or anything else, we heard a little more from him as to what he and his Government are doing about the things that matter to the people here and now. What is being done about the bus strike? Are the people of this city and the country to continue walking and wearing out their shoe leather with nothing being said in relation to it except that the Government are concerned about it? The only contribution of the Government towards a solution has been advertisements by the Minister for Transport and Power reminding motorists that there are bus stops dotted around the city and if they want to give a lift, they can stop at the bus stops. I should like to hear from the Government Ministers what they are doing about such matters. What are they doing about unemployment? I understand the Minister for Finance was at a meeting recently in his own constituency where he was faced with a serious local unemployment problem. That is all over the country. Let us have some action about that. We used to have a lot of bluff and bluster from Fianna Fáil when they were in office: put us in and we will provide 100,000 jobs. There are 58,500 fewer people working today than there were in 1957. In that period of six years 300,000 Irish people emigrated to England and elsewhere. These are facts and highsounding speeches from the Taoiseach or anyone else will not wipe out these facts from the Irish scene.

We should like to hear what the Government are doing about providing more work. You do not provide more work by closing down shops and putting small businesses out of operation. You do not provide more work by bringing industry and business grinding to a standstill. You do not provide more work by crippling the people with taxation. If you set about doing things like that, you will further increase unemployment and emigration.

I do not know what the Government have in mind about the future but it does appear to me that this Budget and the present situation in the country demands urgent attention. There is a deficit in the current Budget of almost £5 million. That deficit must be met. New taxation and new commitments have been entered into. According to the Minister for Finance, we are all mounting a merry spiralling staircase, which is leading somewhere but nobody knows precisely where. In the process of doing this many people will suffer. What the country wants at the moment is an indication from some member of the Government that they appreciate the seriousness of the situation and an indication that they will measure up to the responsibilities they have undertaken.

Mr. Kyne

Whatever else may be said about this Budget, we must at least give it the honour of being a very clever Budget. It is clever in so far as it has confused most of the people, certainly most of the people to whom I have been talking over the week-end, particularly in relation to the turnover tax. According to yesterday's national papers, manufacturers, employers, seem to be confused as to the actual effect of the increase in corporation profits tax and particularly in regard to its retrospection to January, 1962.

This Budget has led to so much confusion that up to this nobody apparently has been able to say what the tax has been about or who pays it, so much so that one of our daily newspapers, 12 hours after the Budget speech was read, came out with the startling headlines: Petrol: No Increase. Cigarettes: No Increase. Spirits and Beer: No Increase. It took some time for it to percolate into the minds of experienced journalists that although the traditional taxes placed on petrol, spirits and various other things were not increased, in actual fact, a tax of two-and-a-half per cent is imposed on all these items. Therefore, practically every item that goes to make up the cost of living index will show an increase, with the exception of rent.

It is not difficult to expect the people to be confused by this Budget when experienced journalists were misled. However, the people have become wise over the weekend. They are beginning, to quote Deputy Corish, to find the sugar icing on the social welfare increases melting away to leave the unpalatable hard cake of the increased cost of living to be chewed upon. I think Deputy Corish was quite right in describing the social welfare increases as a sugar coating for the pill the people are now being asked to swallow.

It must be obvious to everybody that the delay in the implementation of either the social welfare increases or the imposition of the turnover tax was deliberate not because, as the Government suggested, it took time to establish the machinery whereby the tax could be implemented but rather because within the next few months this Government will be facing a byelection in a constituency in Dublin and it is hoped that not until then will the people realise the full effect of the two-and-a-half per cent turnover tax and not until then, too, will the public be able to judge the mitigation the social welfare increases will afford vis-à-vis the increased cost of living.

The Labour Party welcome any increase in social welfare. We do not despise or laugh at an increase of 2/6d. for the old or the blind. That has been Labour policy. That is why we are elected to this House, to represent the people who constitute the greater part of the social welfare group. We welcome it, not because of the amount, but because, once having been granted, no other Government elected here will attempt to reduce it. It is another step in achieving what the Labour Party would do if they had complete power: provide for the social welfare group, particularly the old and disabled, a scale of benefits to enable them to live instead of having them existing as at present on a completely inadequate scale.

In the course of his speech, the Taoiseach posed the question to members of the Opposition: If you do not like the taxes we have imposed or if you think the benefits we have given are insufficient, will you indicate what you would do or where you would get the money? The traditional Fianna Fáil answer to such a question posed by members of the inter-Party Government in 1956-57 was to say that it was the duty of the Government to impose taxation, to indicate what benefits they proposed to give and what economies they proposed to make. It would be easy to follow that line in this case. However, as Chairman of the Labour Party and as a Labour Deputy, I indicated to the Minister for Finance in 1958 and 1959 that the Labour Party were prepared to support any legislation brought in by the Government, such as increased taxation on cigarettes, spirits and other luxury items, provided an assurance was given —and it was clearly indicated how it could be implemented—that all taxation so received was devoted to improving social welfare benefits.

The Labour Party still have that attitude, provided the money is raised by taxing luxury items. Even as a heavy smoker, I cannot deny that, while smoking may be a pleasure and a sedative to the nerves, it is not an absolutely essential item. An increase of 5d. on 20 cigarettes would bring in something between £4 million and £5 million. It is true a heavy impost might cause a drop in the consumption of cigarettes. I understand they are 4/- for 20 in Great Britain and Northern Ireland. Even if it did cause a slight drop, would that be a catastrophe? We have the Department of Health issuing propaganda statements calling on the public to reduce the consumption of cigarettes or even give them up altogether. If successful, such a tax would enable a badly needed increase in social welfare benefits to be given. Even if unsuccessful, it would at least help in protecting the health of the younger members of the community.

In regard to the increases proposed by the Minister for Finance in infectious diseases allowances and disablement benefits, I would ask that an order be made by the Minister for Social Welfare and the Minister for Health, if they are the appropriate Ministers, to ensure that any increases granted will not be offset by the local authority, as has been customary, reducing home assistance or assistance given in some other form. When contributory social welfare pensions were paid to old people and blind people in the past, we found that the benefits paid by local authorities in the form of home assistance or additional blind pension were reduced, and sometimes reduced by an amount even greater than the increase in social welfare benefits. The Minister, therefore, should take steps to ensure that the compensatory increases he proposes are not offset in this way.

I hope that the 2/6d. increase for old age pensioners and blind people will mitigate the impact of the increased cost of living. Whether it will be full compensation for the increase in the cost of living that will follow the introduction of the turnover tax on 1st November is something in regard to which we shall have to wait and see. I notice that in certain cases the increase in children's allowances will fall far short of compensating even for the increase we can estimate at present. Take a married man with a wife and two children. He will now receive an additional 10/- per month for the first child. Assuming he is earning in the neighbourhood of £10 a week, and allowing that £8 of his earnings will go towards the purchase of goods that will carry a tax, it can be easily seen that he and his family will be paying 16/- per month in tax while receiving back only 10/-. This represents a considerable increase in taxation on the ordinary working family.

Again, if you consider that his children's allowances will be paid on the calendar month, or 12 payments per year, whereas his tax payments will be paid on the lunar month of 52 weeks in the year, it means that there will be a period of one month in which he will pay 16/- in tax for which he will receive no compensation at all. Does the Minister consider that the children's allowances in such a family will be adequate compensation ? Does he believe it is right and proper that an additional 4/- a week, 1/- per head, should be contributed by such a head of a family on top of all the other taxes he has to provide ?

The turnover tax, as indicated by the Minister, is in complete conflict with the policy of the Labour Party. In the past, in any Government of which we were members, we fought for and insisted upon a cheap food programme. We believe that the essentials of life, bread and butter, tea and sugar, should be made available to people who cannot pay the full economic price for them at a price within their means so that they can be assured of having enough to eat even at the cost of from £8 million to £9 million in food subsidies. We always hoped that the necessity for the food subsidies would not be there, that this country would progress sufficiently to permit of employment to such an extent that people would be able to secure wages sufficient to enable them to pay an economic price for their food. We also hoped that the State, in its turn, would be able to provide social service benefits on a sufficient scale to enable those in receipt of them to pay an economic price for their food.

That has been our ideal but, pending that, our policy has been to provide subsidies so that those who were unable by their own effort, either because of illness, unemployment or old age to provide the money for the necessities of life, could obtain those necessities at a reduced price which they could afford.

What does the turnover tax mean? It means that all the essentials of life must automatically increase in price unless the shopkeeper is prepared to pay the tax himself. I do not know the profits from shopkeeping. I have never been engaged in trade but I do know many small shopkeepers throughout rural Ireland and I find it difficult to believe they are making so much profit on their business that they can now provide one bookkeeper, or books, the time to keep them in order to comply with the law, and on top of that added expense, pay 2½ per cent tax on their turnover which, I presume, will include their bad debts.

These shopkeepers will have to account for what they buy from the wholesaler and for the stock left in their shops. That will be subject to check and investigation by inspectors of the Department of Finance. On them the shopkeepers will have to pay tax not only on their good sales but on their bad sales. In case they will not have suffered enough, I suggest that the revenue people will use the very books the shopkeepers now have to keep to make them pay increased income tax so the shopkeeper is more to be pitied than any other group in Ireland at the moment. Not only will they have to pay as ordinary citizens for what they eat, drink and wear but they will have to provide the machinery for collecting a Government tax, pay that tax and then have the very services they have been compelled to provide used against them so that they can be compelled to pay an extra tax if they have been neglecting to declare their full profits.

I do not know the profits of shopkeepers in rural Ireland or in Dublin but I would feel that they are none too happy about the present position. That does not mean that I have any sympathy with any of them who may have been evading tax. I have not the slightest sympathy with such people if they are now found out and compelled to pay what it has been their duty to pay but I suggest that there are certain situations arising from this turnover tax that will not become clear until it is fully implemented.

Suppose a shopkeeper decides that he will not put the 2½ per cent tax on to one item but will depend on getting it from another item. What about his competitor next door? Suppose he decides to do the reverse? Will not the consumer have the best of both worlds? He can buy from either shopkeeper the item that is not taxed and the shopkeeper will have to pay the tax whether he receives it from the consumer or not. In the large cities where there is organisation, it is likely that the shopkeepers will come together and indicate a range of goods or services on which the tax shall be placed so that their combined sales will provide the 2½ per cent tax on the turnover.

How will that operate in the smaller towns where indeed some of the shopkeepers are not even talking to one another? I am well aware that the Minister has made provision for the very small shopkeeper. In fact, so ample is the provision that he is prepared to permit them to take £2 10s. tax from the public on the sale of £100 worth of goods, provided they return 17/6 to the Exchequer.

I wonder has the Minister taken into account the effect this tax will have on local rates. Will county councils in their purchase of petrol and other day to day items, and the hospitals in their purchases of food, medicines and other items, outside of services, not have to increase their budget in the next financial year starting in April, 1964? Will the estimates of the county managers not show a considerable increase which will have to be passed on in the form of increased taxation to the people who already will have paid 2½ per cent on their own account ?

I do not know if the Minister had made an allowance for this or whether he accepts it as being so small that its effects will be such that the ordinary estimate will be adequate. I notice that the Minister forecast a yield of something over £10 million from the turnover tax in a complete financial year. I endeavoured to make a rough assessment by taking the population of the Twenty-Six Counties and working it out at so much per head and my result was slightly more than the Minister's figure but I did not include the money which will be spent by tourists. I suggest that there will be quite a nest-egg from the money spent by tourists. Of course, they will avoid paying tax on transport but their expenditure on board and lodgings, amusements, luxuries and, indeed, all their other expenditure will come to some £20 million or £25 million and which will be subject to 6d. in the £ tax. As I say, that will be a considerable nest-egg for the Minister and it will enable him in the future, and at an opportune time, to announce rebates which will do his Party the most good at election time.

Deputy Corish dealt with employment figures and I am sure he was told "they are much better than they were when you were in office". That is quite true—they are much better than when we were in. At one time, there were 95,000 people on the live register. That was around 1957 when the Labour Party took part in an inter-Party Government. All these people have now gone to England and the most recent figures, those for 11th April, show that the number now is almost 58,000 people. As Deputy Corish said, between 1958 and 1962, there was an increase of 20,200 in those engaged in the transportable goods industry. Now, we want to give the fullest credit to the Government and to anyone who helped to keep that increased number of people at home, but we have to take the figure for those in the agricultural industry and as Deputy Corish pointed out, in the same period, there was a decrease of 34,500 in that sector, which meant a net decrease of 14,300. There were 14,300 fewer people employed since 1958. Do not let us have anyone saying that this is unfair. In Volume 157, Column 177 of the Official Reports for 9th May, 1956, the present Tánaiste, then Deputy MacEntee, speaking on an inter-Party Budget said:

The Minister—

he was referring to Deputy Sweetman who was then the Minister for Finance—

has told us there was an increase of about 1,700 people in industrial employment, but that this increase in industrial employment was more than counter-balanced by a decrease of 3,000 employees in agriculture. Taking it by and large, therefore, there was, so far as the whole of our economy is concerned, in fact a decrease in employment in this country.

That is what the Tánaiste said in 1957 about taking one section and leaving out the other. I am quite sure that in 1963 the Tánaiste and his colleagues will not object if I take the same view. There is no use saying that we have increased employment in one sector if in another sector that increase has been turned into a decrease and the sum total is—and this is what matters from the point of view of the prosperity of the country—that some 14,300 fewer people are employed than there were in 1958.

That is not a good record or a record about which any Government can be complacent. I do not suggest that this Government caused it, nor do I suggest that they are glad about it. I believe any Government, either this Government or any other Government, will endeavour to stop emigration and to promote employment. In a Budget discussion, we do not talk of what they wanted to do. It is the effects of policy, not the intentions behind it, that matter.

In relation to unemployment, the Minister said that it was unfair for a Deputy to quote the figures for last January or February, when the cold weather effected the position. I suppose it was unfair to quote the figures for that period. However, if one takes the figure for 11th April, when it could not be suggested that the weather had an adverse effect, one finds that 57,841 persons were unemployed, which was 100 higher than the figure for 6th April, 4,000 higher than the figure for April 1962 and 5,000 higher than the figure for April 1961. Notwithstanding all the propaganda, all the talk of factories opening and all the prosperity that one heard of in the speeches on the White Paper, Closing the Gap, I do not think one can be complacent or can say that the unemployment position is all right now, that the figure is 50 per cent less than when the Inter-Party Government were in office. The point is that there are over 60,000 persons in this country seeking work and unable to get it. In addition, there are approximately 20,000 people who have to emigrate each year. Therefore, in any period of five years, there would be 100,000 added to the unemployment figure, if emigration were to stop. There is no room for complacency in relation to unemployment or emigration. If there were no emigration, God knows what would happen in this country.

read the Sunday Press for last Sunday very carefully. Not one single letter appeared in it to say the Budget was a good Budget or even to say it was a bad Budget. I would not expect that there would be a letter to say it was a bad Budget but in all other years, there were letters from “Paddy” from somewhere, saying “God bless the Minister. See what he gave to the old age pensioners. See what he did in respect of children's allowances,” and so on. This year, such letters are conspicuous by their absence. Neither in leading articles nor in articles by contributors or in inspired letters did we get a single mention of the Budget. One is inclined to ask why. It must be that the attitude of the proprietors of the Sunday Press is that the Budget is better left alone, that the least said about it, the soonest mended. I can assure the Minister that the public have no intention of leaving it alone. They will chew over it and digest it and by 1st November, this will certainly prove to have been a turnover Budget. When the taxes provided for in the Budget are implemented, there will be a complete turnover on the part of the people. They will seek a change of Government in order to secure what they were promised from a Government who have consideration for the ordinary people.

Parliamentary Secretary to the Minister for Lands (Mr. Lenihan)

It is important in this annual debate to put the budgetary proposals into proper perspective. I feel that that has not been done sufficiently in the various contributions from the other side of the House.

The first point to emphasise in taking the budgetary proposals into perspective is the overall economic situation of the country. The figure of £100 million deficit in our balance of trade has been bandied about, by a number of Fine Gael spokesmen in particular. In fact, it is not the balance of trade figure that is the vital figure as far as our economy is concerned; it is the balance of payments figure; and consideration of that balance of payments figure, again, must be related to the position of the external reserves of the community and the growth of capital formation at home. If we bring the over-all economic or financial position of the country into perspective, we see that the balance of trade deficit of £100 million is largely mitigated by various other invisible exports such as tourism, remittances and various returns received by people here from abroad.

Dr. Browne

Emigrants, you mean.

Mr. Lenihan

In fact, tourism makes up half the figure which has brought down this balance of trade figure of £100 million to a very reasonable figure of £13.5 million deficit in the balance of payments. About half of the amount which brought down that figure of £100 million to £13.5 million derived from our expanding tourist industry. Again, that £13.5 million can be shown as a deficit in the balance of payments in the context of an economy where the external capital reserves are rising and where gross capital formation here at home is rising.

It should be emphasised that last year our external reserves rose by a figure in the region of £9½ million. The explanation of that—and this must be emphasised again—is that we have an inflow of capital invested here, in construction work and in industry. We have an improved investment from abroad which is helping to maintain and increase the number of our people who are employed. That is, of course, a reflection of the fact that there is external confidence in our economy here at home and that external confidence is best displayed by this direct investment by investors abroad in our industry and in our construction business. That, to a very large extent, offsets the balance of payments figure. What is still more important is that within that context we have been able to increase the level of gross fixed capital formation which rose by over £14 million to a figure of £115 million, which is the highest increase in recent years. In other words, there has been further total capital investment both from private and State sources in our economy in the past 12 months.

The State itself is going to play its part in the coming 12 months and it is estimated that the public capital requirements for the coming year will be practically at the all time high figure of £80 million, an increase of £15 million in public investment in the coming 12 months.

All of this again puts the £100 million balance of trade deficit into the perspective of an economy that is going ahead, an economy whose external reserves have been strengthened and an economy whose capital formation is rising, an economy in which the State plans to invest a further £15 million to bring the figure in the coming 12 months to an all time high figure of £80 million invested by the State in the economy. Of course, the result of that is a continuing trend towards a decline in unemployment. There may be temporary difficulties in the present months compared with last year, but the over-all trend during the past four years has been a downward graph in regard to unemployment figures, and a rising graph in regard to employment in industry. There are now 25,000 more people employed in industry than there were four years ago.

It is also clear from the latest emigration figures that the decline in unemployment can no longer be explained, as it has often been explained, by an alleged increase in emigration. The net outward passenger movements, which are the most accurate criteria of emigration, show that in the 12 months ending February of this year, the emigration figure was 12,200. More than twice as many people emigrated in 1961, when the figure stood at 26,800. We can now say that the latest emigration figures show that the rate of emigration has been more than halved. They are the latest figures available, and they have been unchallenged in this debate heretofore. They were given by the Minister for Finance in his Budget Statement.

Taking the economy as a whole, and not merely selecting particular aspects of the budgetary provisions, we find a situation in which emigration has been halved, unemployment is continuing its steady downward trend which began four years ago, and employment in industry is continuing to go up. If we take all those figures together, it is quite apparent that we have also rounded the corner as regards agricultural employment. Last year, for the first time in a number of years, our total population began to rise. We have not yet got very up-to-date figures in regard to agricultural employment but when they are revealed, I think that the total effect of the figures I have given will be to show that agricultural employment has also rounded the corner and is on the rise.

When one views the Budget proposals, bearing those factors in mind, a much more realistic picture emerges. Our challenge is to maintain the tempo of progress which began with the initiation of the Programme for Economic Expansion in 1958. We cannot allow anything to slow down that tempo of progress. Certainly, if the State, through its various direct and indirect measures of helping to maintain that tempo of progress, failed to provide the expenditure necessary to main it, that progress would go into a decline. Every item of Government expenditure which gave rise to these budgetary proposals is designed to maintain and increase in the coming 12 months the progress which has been made in the past four years.

Relevant figures in the Minister's statement show where increased Government expenditure is going, and the trend in which it is going. I challenge speakers on the other side of the House to dispute the necessity for this expenditure trend which can be shown to be in three directions. The provision for servicing the national public debt has risen from £24 million in 1958-59 to £34 million in 1962-63, an increase of 20 per cent on the total Government expenditure which goes towards servicing that debt. It is necessary for the purposes of national development, building houses, developing agriculture and improving industry. It is necessary to maintain the State's capital programme which is designed to maintain the level of our economic activity. That has been increased and is part of the reason for the increase in Government expenditure.

That could be cut. It could be cut at a price, and the price of cutting down the level of public expenditure would be the sort of spiral of unemployment which we experienced in 1956. We cannot afford a repetition of that. Even though there was a 20 per cent increase in the cost of servicing that debt for the past four years, it can be fully defended, as can the proposed increase in public expenditure of £15 million in the coming year. That trend can be defended on the basis that it is necessary. Indeed, it is an obligation on the State to maintain and increase this level of public expenditure in order to sustain an expansion in national economic development.

A further trend in the increase which I am sure will not be disputed by anyone on the other side of the House is that during the same four-year period there was an increase in expenditure on social services of from £47 million to £57 million. In other words, that is the other expenditure trend which is reflected in the budgetary proposals, a trend towards increased expenditure for the less well off sections of the community. The third principal Government expenditure trend has been on economic services, agriculture, industry and transport, where there has been a rise of from £22½ million to £35 million over the past four years.

There we have the trends shown in Government expenditure: an increase in direct State investment, an increase in the requirements for funding the debt in relation to that investment; an increase in social services to look after the more needy sections of the community; and an increase in the economy sector of the community such as agriculture and industry. If there is to be any reduction in Government expenditure, it can be in two ways only: one, a reduction in public investment in industry, construction and agriculture; and secondly, a reduction in social services. Those facts must be hammered home.

The public are becoming fully aware that if the Government are to face up to their responsibilities today, they must increase expenditure in certain defined directions. Provided that expenditure goes to maintain national development, to increase employment and, at the same time, to look after the less well-off sections of the community, it can be fully defended. It can be pointed out that anyone who criticises increased Government expenditure, or the revenue proposals which are necessary to finance Government expenditure, is, in fact, attacking expenditure proposals by the Government for maintaining employment and providing social services for the less well-off people in the community. There is no answer to that.

I can understand the Fine Gael attitude in this matter. They have been traditionally anti-expenditure, anti-Government planning and anti-Government investment. That is their tradition as a conservative Party who purport to represent and protect a certain section of our community. In the past, they have traditionally opposed the initiation of social services by the Fianna Fáil Government. They have been traditionally concerned about increased Government expenditure. Agreed, we should not have increased Government expenditure in non-productive and non-social directions, but when that increased expenditure is, as I have shown, in the direction of funding direct and indirect State investment in industry, agriculture, building and so on, it can be fully defended and those who oppose extra expenditure for the purpose of that investment are, in fact, opposing expansion in industry, agriculture and building. They are, in fact, those who vote for and who support unemployment. It comes down to that. There is no escape from it. I am not surprised that the Fine Gael Party, because of their tradition and their policy, should be more concerned with the conservative aspects of Government expenditure, more concerned with the rising level of expenditure rather than with the necessity to provide a growing level of investment by the State in order to improve the unemployment position.

Mr. P. Hogan

(South Tipperary): They never taxed food.

Mr. Lenihan

It is surprising, however, that the Labour Party do not see eye to eye with us on this aspect. They, too, are a Party who have produced policies for expanding the national economy in a planned way by increasing Government intervention and Government expenditure. They must face up to the responsibilities which these principles involve. Those responsibilities include the primary responsibility of raising the revenue to finance development. One cannot have one's cake and eat it; one cannot have it both ways. If the Labour Party believe in national development and economic expansion, and in State planning to achieve these aims and also believe in increasing capital formation and public investment, then they must support them. They can only support them in a realistic way by voting for the increased expenditure and the revenue necessary to get that increased expenditure in order to provide for a rising level of development. The same argument applies to social services. I am not at all surprised that Fine Gael come down on the side of opposing expenditure rather than increasing social services. Here, again, the Labour Party will have to face up to their responsibility. The trend over the past four years has been towards a progressive increase in social services, dramatically shown in the figure of 10/- increase in old age pensions over that period. We now have additional social welfare benefits in the present Budget, providing for an allowance of 10/- per month for the first child and increased allowances for the second and third children.

Mr. Tully

No increase for the second.

Mr. Lenihan

That again is progressive social legislation. It is linked with the increases in unemployment assistance and the various allowances administered by local authorities under the Infectious Diseases and Health Acts. These increased allowances must be financed in the same way as increased capital expenditure and State investment. I ask the Labour Party to face up to their responsibilities and to recognise that, if these services are to be provided, the revenue must be obtained from some source. It is all very well having principles, plans and programmes; in government, the job is to put the plans and programmes into effect. We in this Government have faced up to our responsibilities in that regard.

The Minister for Finance has outlined his position. Having dealt with the various items of expenditure and present revenue, having outlined the increases in social welfare allowances and the proposed increase in State capital expenditure, having set out the increases under the headings of agriculture, industry and the other economic developments in which the State indirectly participates by way of aids, the Minister was left in the position that there was a gap of £6.25 million to be met. As I have already stated, that gap would not have occurred had the Minister retrenched on State capital development and social services. That fact is an unwelcome one which the people on the opposite side have not faced; in fact, in voting against this Budget, they are voting for a cutting down in the State's investment programme and social services and for unemployment and deflation.

We have decided to face up to our responsibilities by granting further social welfare increases and planning a further increase in the State capital development programme. It is because of that that this £6.25 million revenue has to be found to fund these activities. How to bridge the gap was the problem. The Minister decided to do so in a way that can be fully defended from the social point of view. More than half of that sum will be secured by way of an increase in corporation profits tax and a tax on uncontrolled rents. This is a type of fund raising that the Labour Party should support. It is a tax on profits over and above a certain level. There is an increase from ten per cent to 15 per cent in corporation profits tax. More than half of the deficit between revenue and expenditure will be met by this tax and the rent tax with no ill-effects whatever on the various salary, income and wage earners, or the needy sections, of our community. Not one single wage packet or salary cheque, and not one single needy person, will be affected in any way by more than half the proposed revenue the Minister is raising to fund the activities of the State. That is something that can be defended both here and outside this House.

The balance of this £6.25 million will be met by way of a turnover tax to be collected in the last three months of this year. This is a turnover tax on expenditure. It is not a sales tax on commodities. It is not a purchase tax on particular commodities. It is a turnover tax on expenditure. It will affect principally those with a high rate of expenditure. It will affect least those with a low rate of expenditure. To those who survey our community properly, and appreciate the realities, it must be quite apparent that what will happen is that, because of the competitive nature of the retail business, in relation to the necessaries of life there will be very little, if any, increase in the prices of these particular commodities. The highly competitive nature of retail grocery will ensure that the essential commodities of life will not be affected or, if affected, will be very little affected by this turnover tax.

Take the person dealing with the consumer, be he retailer, ballroom proprietor, no matter what the goods or services the person or firm is engaging in, what in effect will happen is that the luxuries and semi-luxuries and articles of a more expensive nature purchased by people with higher incomes and with a higher rate of expenditure will bear the largest proportion of this turnover tax.

The effect will be that the people selling to the public will know themselves how to apportion the particular increase, if any increase at all. This is not a tax on any commodity; this is a tax on total turnover. It is a tax on expenditure. An attempt has been made to put it across to the public that this is a tax on particular selected commodities, that this is a sales tax on particular commodities. That is not the case. It is a tax on turnover which can be met in whatever way the person dealing with the public wishes to meet it. The effect will be to bring into the taxation net a large range of activities —from gambling to ballroom dancing and the purchase of expensive goods— which heretofore were not included in the range of taxation.

It is obvious to anybody who looks at taxation figures in a realistic way that the traditional items of taxation have reached their limit in regard to further traditional taxation.

Mr. H.P. Dockrell

Will it not apply to cigarettes and drink?

Mr. Lenihan

There is no budgetary item providing for increased taxation on cigarettes, liquor, petrol——

Mr. Clinton

Nonsense.

Mr. Lenihan

There is no budgetary increase as heretofore in these commodities.

Mr. P. Hogan

(South Tipperary): In an exice sense.

Mr. Lenihan

The turnover tax on expenditure is a method of taxation which has been used very successfully in a number of other countries. It is a form of taxation which will enable the State to spread a less onerous burden of taxation at a very low rate over a wide range of commodities not brought within the net at present. At 2½ per cent, it will mean that at retail outlet the necessaries of life that are sold in the most competitive field of all will go up, if at all, only very slightly if they do go up. It will mean, in respect of many semi-luxuries and luxuries in the line of goods, services and many other activities which cannot be included in this category, that where expenditure takes place, they will come within the net.

The people who will pay are the people who spend most. The poor and the needier sections of our community do not spend much and they will be included to the very smallest extent. The very easiness of an expenditure tax is that the people who spend more will, in effect, pay more taxation. As the income bracket goes up, so will expenditure go up and so will that particular person pay more in expenditure or turnover tax.

It is flagrantly dishonest to suggest that this is a tax of the nature of a sales tax on selected commodities. It is just not that. An attempt has been made to cloud the issue as far as the public are concerned and to get it across in a propaganda fashion that it is a sales tax. Indeed, I was very intrigued by the whole public reaction to this Budget in the past week. Despite the smoke screen of propaganda which has been set up in this House by Fine Gael speakers in particular, the effect of this Budget on the thinking people of Ireland—and that means 99 per cent of them—has been very good.

Not a single letter has appeared in the letter columns of any newspaper condemning the provisions of this Budget. The Evening Herald which is not a supporter of the Government in the ordinary course of events congratulated the Minister for Finance on the very evening he presented it— last Tuesday.

If there is any realistic examination of the budgetary proposals, it can be seen in the light I have mentioned— that £6.25 million had to be found to finance increased investment, more production, increases in our social welfare services. It will be seen that that has been met in two ways. It has been met, as to a little over half, by tax on profits and certain rents and, as to a little under half, by a widely spread turnover tax that will bring into the taxation net the various luxury and semi-luxury commodities heretofore excluded.

I feel this Budget has been welcomed. It is a Budget which shows that the Government are facing up to their responsibilities. It is a Budget which shows the Government realise that economic progress must be continued and that social welfare must be looked after. In that situation, revenue must be obtained to finance increased expenditure in these directions. The revenue has been obtained largely in the two ways I have mentioned and those two ways of additional taxation can be fully defended in this House.

It is up to the people on the other side of the House to state where they stand in this matter. Are they in favour of increased Government expenditure in the directions I have mentioned or are they not? If they are not in favour of such increased expenditure, then they are in favour of more unemployment and fewer social services. If they are in favour of increased Government expenditure in these directions, then, as responsible political organisations, they must acknowledge that revenue must be obtained to finance this expenditure. If revenue must be obtained, how is it to be done? What alternative method can be suggested that will not introduce an army of inspectors and administrators? This turnover tax will be the most easily administered tax imaginable. It would not be so, if selected items were taken which would require constant investigation and inspection.

Mr. H.P. Dockrell

We shall see how easy it is.

Mr. Lenihan

As it is proposed—I have discussed this matter with friends who are revenue people—this will be the most easily collected tax imaginable. It will not require an army of inspectors or administrators which would be the case if it were proposed to put a tax on selected items. If such a tax were introduced, a large number of people would have to go around the various businesses dealing with these items to make sure the returns they made were in relation to these items and not in relation to other items.

Mr. H.P. Dockrell

It is a completely new tax. Surely they will need somebody to deal with it?

Mr. Lenihan

It is a turnover tax on expenditure. All it means is that the returns on turnover are submitted. There is no inspection, which would be necessary in a selected sales tax type of taxation. In such event, it would have to be in the nature of a 20 per cent increase in order to get the required money. The explanation of that is that you would have to have a massive administrative apparatus of inspectors all over the country calling on everybody dealing with the public to make sure that the return was a return which accurately reflected the sales of these selected commodities rather than some other commodities. That, I hope, has gone home to people on the other side of the House. Compare that type of taxation with the total turnover taxation—2½ per cent—which will merely require a return and no more because there can be no evasion as in the case of the selective type of taxation which would leave us wide open to a type of evasion which would have to be controlled by an army of inspectors and administrators.

The main point is that the Fine Gael Party are seeking to establish a smokescreen by saying this is a tax on this commodity, on that commodity and on the other commodity. It is no such thing. It is not a selective sales tax on any particular commodity. It is a total turnover tax on expenditure which will hit most where expenditure is most. Expenditure will be higher as incomes go up and as people spend more in the higher brackets. Expenditure will be low where people are in the poorer sections of the community, where people are unable to afford the luxury of increased expenditure. As expenditure goes up, so will the yield from expenditure increase. Therefore, the largest percentage of revenue from such a turnover or expenditure tax will come precisely from the sources where expenditure is greatest.

This new method of taxation shows that the Government are very much alive to the necessity of reforming our taxation system and of ensuring that we have a balanced taxation system which will yield to the revenue the funds which will be necessary, I believe, to an increased degree for the various aspects of Government expenditure if we are to plan for the future. This Budget or any budget is the main weapon to be used by the Government in planning ahead. The success of the first five-year economic programme which is now coming to a close shows clearly the benefit of planning. If we are to make a greater success of the second Programme for Economic Expansion now being prepared, we must have a taxation system which will, in the least oppressive way, yield the revenue necessary for the State's participation in increased public investment. If we are to make a success of this second five-year plan and if we are to have any hope of attaining the target of the increase of 50 per cent in national income by 1970, we must maintain and increase the level of State investment, the level of State planning, and provide that the revenue necessary to sustain this level will come in the least oppressive way.

That is precisely the reasoning behind these budgetary proposals and they should be viewed not in the context of merely stopping the gap for 12 months but of providing a taxation system which will result in a progressive improvement in the economy over the coming five years.

Dr. Browne

Not for the first time have I been lost in admiration at the facility with which the Parliamentary Secretary succeeds in making political bricks without straw. He seems to have excelled himself on this occasion but while I have a certain admiration for somebody doing something which is particularly difficult—I suspect, impossible—it is a little saddening to find a young Deputy of the new generation failing to face up to the position as it really is. The kind of rubbish he has been talking for some time has been bandied backwards and forwards between his predecessors and my predecessors for the past 40 years. He has sufficient intelligence to know that the result of this refusal to face their own failure on either side of the House has created a situation verging on disastrous seriousness for our society here in Ireland during the years.

In regard to the Parliamentary Secretary's approach to this turnover tax, it seems to me that, as Shakespeare said, he "doth protest too much". He is clearly trying to square his approach with the statement he made some little while ago. I do not intend to bother with it—Deputy O'Higgins dealt with it extremely well —except to say that it was a reasonable speech in that he said that nobody in his senses would tax anything other than luxuries or semi-luxuries in a society such as ours. I do not believe that in his wildest imaginings he would have expected this fantastic proposition put forward by the Minister for Finance and the Government that there should be a tax on food, a tax on essential consumer goods. I believe that when he made that speech he believed, just as we do, that the proposition was an outrageous one, an unthinkable one and one which no politicians who were seriously concerned with the welfare of the society as a whole would have contemplated introducing.

The Parliamentary Secretary is faced with attempting to defend the indefensible and he would have been wise, if he were permitted to do so, to remain silent in the circumstances in which he found himself. Quite clearly, unless he has changed his mind in the last couple of weeks, he shares our views here that this is an iniquitous tax in so far as it taxes not luxury or semi-luxury goods but essential commodities.

I think the most serious indictment in the Budget is of the Taoiseach. It is reasonably true to say that, rightly or wrongly, he was left with practically the sole responsibility, with the exception of the Minister for Industry and Commerce, of expediting and facilitating our entry into the EEC. In order to do that, the Taoiseach behaved in a way which could only be described as completely irresponsible in the light of the present findings of the Minister for Finance. I do not think anybody was left in doubt about the situation in which we were during the greater part of last year and part of the year before. All the means of communication—which in Ireland are now completely dominated by the Government groups—the newspapers, certainly the mass circulation newspapers, the television, the radio, were inundated with propaganda of one kind or another, mainly emanating from the Taoiseach's Department and funnelled through spokesmen of one kind or another, backbenchers, Senators, so-called political economists of one kind or another, all hammering out the one Party line, completely ruthlessly and completely relentlessly, that this country economically is in a sound position, a position which is so sound, so wellfounded, so well-based and so prosperous that we are well fitted to take our place in Europe not side by side but in competition with the toughest competitors of the industrial society of Europe.

That was the theme throughout last year and for most of the year before it. Those of us—the very few of us—who dared question this thesis, this Party line, were, as far as I can see, dealt with more ruthlessly and more toughly than Mr. Khrushchev or any of his friends might deal with their opponents. We were trodden on, suppressed and misrepresented, told that we were anti-national and hostile to the development of the nation. We were, of course, told that we were communists and there was every kind of misrepresentation of our simple assertion that the country's position was unsound, that we were not in a position to take our place in Europe and that the vast majority of our industries were unable to face competition from Britain or Europe.

I remember the figure I gave one and a half years ago, a simple assumption later borne out by the CIO report, that 60 per cent would go to the wall. It may be 40 per cent or 50 per cent, but it is now borne out by the CIO report that industry in Ireland based on private enterprise, on capitalism, is grossly inefficient and completely incapable of standing up to competition, not only with the highly efficient British industries but in relation to France, Belgium and Germany. This was the lie that was promulgated against our tiny opposition and is now being exposed as such a lie by the facts and figures produced by the Minister for Finance.

I want to make it quite clear—it is an old trick to turn on those who criticise any act of the Government and to suggest that because you criticise industry you are criticising Ireland, criticising nationhood, or the national persona and their attitudes of one kind or another to work or not work—that I am criticising an attitude, an economic approach to the establishment of industry. I am not criticising the craftsmen or the technocrats, or the workmen, or the labourers, or anybody involved in Irish industry. They have shown that they have done the best they possibly could under the difficult circumstances of working an unworkable system, unworkable certainly from their point of view.

As I say, we had to stand for a lot of pillorying in this House and outside it. Our views were suppressed and we were not given access to any of the main outlets of communication. We were misrepresented. However, I think most people here know that what I say is true, that this was the general picture painted by one man, the Taoiseach. This was the completely false picture painted by the Taoiseach. It seems to me that he made a most disreputable attempt to buy his way into Europe on what was essentially a bogus balance sheet, with bucket-shop tactics, as they call them on the Stock Exchange. Not only did he do that, but in order to sweeten the pill, should it be a pill, for the hardheaded economists of Europe, he was prepared to trade even our neutrality, if that should be necessary, in order to buy his way into the new Europe. Even the Minister for Finance continues to refer to this dream. What utter rubbish is this to suggest, in the first place, that we were competent or capable of taking our place in that society, even if we wanted to go into it, which I certainly did not want? We have the example at the present moment of Britain, which was one of the great powers, with her unprecedented unemployment. Obviously her whole economy is in a state of stagnation. I believe it is even worse than our own, that there is there a slower rate of growth than here.

In France, de Gaulle is turning his police on the unfortunate people wanting a living wage. Where is the prosperity that does not allow a nation to pay its people a proper wage? West Germany was the kingpin of the whole edifice. What are they facing? As far as I can gather, a general strike. What for? A living wage. This is the new world. The octogenarians were to lead us into this promised land of unlimited prosperity, flowing with milk and honey.

Memories are short in politics. Public memories are short also. I think the Taoiseach is the person who can be quoted in his summary of the position of stability, prosperity, unlimited future which did face Ireland only four months ago. Last December, the position of stability was such according to the Taoiseach, that he could say to Deputy Dillon—Volume 118, column 1470:

A multitude of devices have been brought into operation to stimulate exports and they are working well and satisfactorily.

He said, sneering at Deputy Dillon, no doubt:

There is no comparison between the situation that exists today and that which existed in 1956 when Deputy Dillon was controlling the affairs of the nation.

He went on:

The situation today does not require the emergency measures which had then to be resorted to, with serious consequences in that year ...

That is only four months ago. What has happened since? What disaster has overcome the country that it should now be necessary to find this £10 million to £12 million in increased taxation in a society which is booming with prosperity, with an unequalled prosperity, a prosperity for which, I understand, the Taoiseach believed there was no precedent in our history? What has gone wrong that you have to rob the till, that you have to take bread out of the children's mouths, that you have to take the few small comforts the old person might buy? What has gone wrong in the intervening period with all the money that was at our disposal only four months ago?

The Taoiseach was not worried then about any diminution in external reserves. He said our economy was in a healthy state. Is it still in a healthy state? If it is still in a healthy state, why is it that we have to go to the old age pensioner, the widow, the orphan child, the ordinary child, the man with a large family and ask for money to keep us in funds? This is at a time when we are told that though there has been an increase of seven points in the cost of living figure in a year, the workers cannot ask for a wage increase in order to compensate for that rise in the cost of living, which means that there is that much reduction in their standard of living.

If we are that prosperous as the Taoiseach said, if our economy is in a healthy state, if there is no need for any emergency measures, fair enough, why go to these unfortunate people whom the Government are already oppressing by refusing to allow them to meet the needs created by their permitting the cost of living to have risen, by bringing in this wages standstill order? Why is it that the Government further promise now to reduce their standard of living by putting a tax on bread, butter, tea, sugar, tobacco, wines, spirits, clothes, boots, shoes, shirts, socks, trousers, everything that these people use? Make no mistake about it, the Government will not continue to fool the people into believing, as the Minister has himself suggested and as now appears to be the Party line and which will be contended by the propagandists of the Party line in the ensuing months, that there is no taxation on these essential and indispensable consumer goods. They will not continue to fool the people by continuing to reiterate this untruth, the Goebbels' technique, in the hope that the oftener a lie is repeated the more likelihood there is that it will be believed.

The fact of the matter is that the Taoiseach did not take the advice he gave Deputy Dillon at that time when he said to him that if Deputy Dillon had consulted the Central Bank report, it would have relieved him of any anxieties. I have no time for the Central Bank or its reports but the fact of the matter is that the Central Bank at that time had drawn attention to the deterioration in the economic situation of the country and it was the Taoiseach who had not read the Central Bank report and certainly, if he had read it, had decided to suppress it or conceal it or ignore it and, in a whole rigmarole of fantasy and mythology which he indulged in the previous year or previous year and a half, suggesting that Irish industry, based as it is on private enterprise capital, had come to its pitch of efficiency which would allow it to compete in Europe, had grossly, consciously and deliberately misled the public in a wild gamble to get into Europe and, having got into Europe, would blame the transition of our economy into the European Community for any of the ill-effects which were inevitable and which we now find are here with us but not cloaked, for the Taoiseach's sake, by the excuse, "Do not you know you are now in the Common Market?" as he used to say in the last war, "Do not you know there is a war on?" That was a completely irresponsible gamble on the part of the Taoiseach. Anyone who was responsible for taking that gamble in the circumstances, faced as he is with this exposure of his duplicity, should have the grace to resign.

One of the most distressing aspects of the Budget Statement was the failure of the Government to disclose any sign of a policy to deal with the situation as it now faces us. I have looked through the Budget Statement very carefully and I cannot find any reference to a purposeful, imaginative, creative suggestion to solve the economic problems which are clearly facing the Government.

The Front Bench of the Government is, without doubt, the most politically able Front Bench in the country—I use the word "politically" in the pejorative sense—and I agree with Deputy Dillon that the Minister for Finance is the shrewdest Minister in the Cabinet. I do not think they took this step without being forced to do so by the desperate circumstances of our economic position. I have no doubt that these proposals will not solve our economic position.

There is in the Budget Statement the usual pious suggestion that "the State should, directly and indirectly, increase the volume of productive investment and do everything else in its power to promote as rapid a growth of the economy as can be sustained without excessive strain on the balance of payments." That is a quotation from column 68, Volume 202, of the Official Report. Of course, it means nothing at all. It is the kind of ráiméis and rubbish we have heard year after year after year since the foundation of the State. It has no meaning of any kind and it has no effect, certainly, on the prosperity of our society.

This year, the Minister opened his Budget Statement with the fatuous reflection that:

The purpose of a budget nowadays is not merely to regulate the nation's finances but also to promote national progress.

He said that last year also, and his predecessor said it before him. Speaker after speaker has shown that there has not been national progress. There has been continued emigration. I do not accept the figures relating to a reduction in emigration. I believe that we have now reached the stage at which there are very few of the age group who usually emigrate left in the country. The figure for emigration is rising at a time when traditionally it should, in fact, be falling.

In regard to agricultural production, in spite of the fact that £39 million is paid in subsidies, there is no plan and there is no suggestion that the Government have attempted to deal with the clear failure of the agricultural industry to provide us with the national income which would make it unnecessary for us to impose harsh taxes of one kind or another.

I should like to give a quotation in relation to another Budget. At column 45, volume 157 of the Official Report for 8th May, 1956, the then Deputy Lemass said:

The heavy increases in taxation which are to be imposed will provide the shock; the disappointment will arise from the evidence that this Government appears to have no conception of policy or plan for dealing with the very serious national problems which, in their incompetence, they have allowed to develop.... What a pack of "phoneys" you have proven yourselves to be.

Deputy Lemass was complaining about the imposition of £13 million taxation over two years, that is £6½ million a year. Whether that statement was true or not true is unimportant now. It is water under the bridge. Quite clearly, there is no suggestion in the Budget Statement that the Government know how they are to meet the great demands facing the country at the moment for an expansion in our economy, an increase in national income and an increase in money wherewith we could try to provide some sort of socially just society here.

The Minister murmured about the need for a wage policy. I do not think there is any feasible wage policy in a society such as ours, a society in which the Government are not prepared to accept that there should be some sort of proper policy. It is no good talking to the worker about the necessity for increased productivity. I sincerely hope the worker will completely reject the proposition that he should wait for a wage increase until productivity rises. I said before that obviously the people who have no say at all in the rate of productivity are the people in fixed employment, civil servants, municipal workers, nurses, roadworkers. Obviously no matter how hard they work, they cannot increase their productivity in any way, and it is absurd to talk to them about wage restraints when they have no say in increased production or the fact that production does not increase.

Again, I believe it is absurd to talk to the worker in ordinary industry about increased productivity. He has no more say in increasing productivity than the civil servant, the nurse or the roadworker. The man who works in industry can produce just as much as the machine at his hands will allow him to produce, and no more. If a machine is designed to produce 1,000 electric light bulbs per hour, it will produce that, and no more. No matter how hard the man works, he cannot increase productivity, although there may be a machine in a neighbouring country which produces 10,000 or 100,000 electric light bulbs per hour. How can that man, or Irish industry, compete against that type of competition? It is nothing to do with the worker. It is a decision by management as to what they will do with their capital and their productivity, if they decide to go on using out-of-date antediluvian machinery, the inefficiency of which has been demonstrated by most of the CIO reports.

In my view, it is thoroughly dishonest and stupid to suggest that the Irish worker will not come back with a simple answer and say: "How can I increase productivity if the people in charge of the firm will not get the most efficient machinery?" That is what is happening. We have seen what happened in relation to agriculture. What has happened in relation to agriculture is automation. Labour is now very frightened, and understandably frightened, that what has taken place in agriculture may take place in Irish industry. Mechanisation has been used not to increase production but to displace the agricultural worker from rural Ireland. Production is static or falling. The use of machinery is widespread throughout the country, but that does not mean that the national income from agriculture has gone up in real terms. It does not mean the worker is better off.

As we know, in 1961-62, we had the fantastic figure of 19,000 people leaving rural employment. That is what is happening. The agricultural worker is fired on the unemployment scrapheap and no one gives a damn what happens to him. There is no pretence—as there is a pretence at the moment in relation to industrial employment—on the part of the Government that they will set up retraining schemes and redeploy those people into alternative employment. All that happened was that mechanisation went on and it was used to produce virtually the same amount of produce from the land as had been produced before with men. The only difference was that the farmers were saved paying men's wages. There has been no attempt to use the wonderful advances in mechanisation to increase production from the land. The biggest mistake of all has been that there has been no attempt to base industries on the land. That would have been the proper basis for any proper industrial development or expansion in this country.

We are now faced with the position that the Government are exhorting the worker to accept, first of all, a wages standstill order and, secondly, the tying of his wage increases to the increase in productivity. That is an outrageous proposition by a Government who have refused to accept the need for price control of some kind, refused to interfere with their friends in industry or business, refused to dictate to them in any way the terms upon which they should trade, allowed the cost of living to rise without any effort on their part to stabilise conditions, and now ask the worker, his wife and his children to take a cut in their standard of living because of the Government's failure to take any steps to curb increases in living costs.

Again, having refused to face the necessity for a basic reconsideration of the whole structure of Irish industry, they are now asking the worker to accept a position in which his standard of living will rise just at a particular rate, and no faster, a rate which is notoriously low and which has no real relationship to the welfare of the worker and no concern with our society as a whole.

The position with regard to industry is that private enterprise capital has worked extremely well and discharged its purpose extremely well. Its purpose is, of course, to make a great deal of money for a few people at the expense of the masses. To that extent it has succeeded. To the extent of our people having to do without better education for their children, freer access to secondary schools and university, better health services, private enterprise industry has been a failure. Lack of these things is part of the price the masses have had to pay because of the Government's continued refusal to face the need for a complete rejection of this whole conception of private enterprise capitalism as either desirable or efficient in the organisation of a socially just and prosperous society.

Socialism in one form or another is the only creed which has effected increased industrial production, sometimes at a ratio of as much as nine to ten per cent per annum compared with the miserable 2½ per cent to four per cent which is suggested as adequate in our society. Under socialism, it is possible to deploy land, labour and capital to the optimum value for the benefit of the masses as a whole rather than for the wealthy few who enjoy prosperity, good living, good education for their children, good health services and the best hotels or homes in their old age.

Unfortunately our society in the past 30 or 40 years has taken a wrong direction. It is a society in which there are, without any shadow of doubt, two nations. That was, however, the decision of an earlier generation. It rests with those of us now who will be, I hope, influencing things in the future to change that. We reject this conception of society that so long as the few are all right, the rest may suffer on in silence.

The Government have failed to give the social services to the masses that I have suggested they should get. They have failed to provide the health services to which our people are entitled. They have failed to provide proper care for the old. They have failed to provide jobs. Nearly one million people have been denied the right to work in this country since this State was formed, denied that right because of our dependence on private enterprise capitalism. We have long lectures on the sacrosanctness of the rights of private property and the rights of capital. We hear very little about the rights of the individual who is denied the right to work, denied the right to make enough to enable him to care for his wife and family, to educate his children properly, or provide them with proper care when they fall ill. Surely one of the most humiliating aspects of our life today is the labour exchange. There you have these poor men, talented, gifted in some form or another, denied the right to work because of this type of economy in which both sides of this House unfortunately believe. These men are finally demoralised, if they do not emigrate. I find it difficult to understand how anybody can go on year after year in politics aware of this colossal failure and continuously refuse to face it, continuously refuse to do anything about it.

I cannot understand how the Taoiseach and the Minister for Finance can continue to believe that industry will change its ways. I quoted the figures recently established by the economic survey carried out, figures which show that the worker in Irish industry is in a worse position than is his counterpart in many other countries. So inadequate is the national income that we cannot do the things we should for our people. We cannot provide enough work to keep our people at home, to keep them from emigrating, to stop the depopulation of rural Ireland. Even when our industries do produce, they produce so inefficiently that the cost of production is anything up to 12 per cent higher than the cost of production in Great Britain, which is a relatively inefficient industrial community. In addition to all the sacrifices we had to make in order to sustain the type of industry we have here, we have had to pay up to 12 per cent more for the cost of employment provided.

We had a survey carried out by a number of European communities. That survey shows that the Irish worker, male and female, is the lowest paid in seven different European countries. He pays more for his fringe benefits; his fringe benefits are on average less than those enjoyed by his counterpart in other European countries; he pays more in indirect taxation than do his counterparts in most of these other societies. The type of society we have has produced 40 years of failure, 40 years of blundering by the politicians in power. The suggestion now is that we should accept the need for the imposition of this new taxation. The Minister has failed completely in his alleged objective of promoting national progress.

We should be glad, I suppose, that there has been an end to the wild euphoria of the past 18 months, an end to the Taoiseach's wanton misrepresentation of our financial position. At least we know now that our failure has been a very considerable one. We know now that the present policies in regard to agriculture and industry have proved completely ineffective. We have the CIO reports to confirm, what many of us already suspected a long time ago, that the advantage given to Irish industrialists by protective tariffs of one kind or another to save the small growing industry from competition were misused; that, instead of taking the opportunity of establishing industry on a sound and efficient foundation by mechanisation of one kind or another, they merely increased their own personal wealth, that once they were satisfied with that, they made no attempt to increase the national wealth as a whole. In that way, I suppose private enterprise capitalism was successful to that extent. That is, I suppose, their objective.

The average industrialist is merely concerned for himself and for his family. For that reason, it seems to me logical that the only kind of organisation of industry is one in which the worker himself has complete control through the executive and through his own position in the industry. In that way, he has control over the disposal of the capital. He has control over the way in which the capital will be used and over the way in which the profits will be distributed or reinvested. He will have the objective, which none of our industrialists have, of trying to create prosperity for all of the people rather than for a minority within that group of the people. He will be concerned to see that every child must get the same right to higher education—vocational, secondary or university education; that everybody will have the same health services; that everybody will be looked after properly in their old age. He has a vested interest in the maximum output of the inter-use of land, labour and capital.

Nobody can deny that 40 years have shown us that under the present operation of industry the dynamic is there. It certainly is not there in sufficient strength to create prosperity of any kind. All we can hope is that, for the Minister for Finance or the Opposition, looking back on their own experience, looking back on the fact that they have tried, I suppose as sincerely as any of us are capable of trying, to make this kind of economy operate successfully — they have tried and failed on every occasion—this may be the turning point when they may at last recognise that their responsibilities are not merely to a wealthy minority but to every man, woman and child in the community.

Mr. P. Hogan

(South Tipperary):“One hundred thousand new jobs” without increased taxation, without promoting a loan. “Wives, get your husbands back to work.”“Let us get cracking.” These were the clarion calls echoing through the length and breadth of the land seven years ago. These were the clarion calls on foot of which the electorate gave a mandate to the present Government and returned them to office. It is not inappropriate now to examine and see how far these promises were implemented and fulfilled. The 100,000 new jobs have materialised threefold in Birmingham, Coventry, London and elsewhere in so far as 300,000 of our people have left this country in the past seven years. Furthermore, we have 58,000 fewer people employed now than seven years ago.

Looking over the pink book, Economic Statistics, issued before the Budget, if my addition and subtraction are right, it would appear that 49,000 fewer people are now employed on the land of Ireland than seven years ago. Admittedly, 16,000 more people, according to that book, are employed in industry. But that leaves us, in these two sectors of employment, with a net fall of 33,000 people.

Our consumer price index, taking the base at mid-August, 1953, has risen from the figure of 107 in 1956 to the figure of 125 at the present day. That is the social picture now presented to us after seven years of Fianna Fáil rule.

What is the financial picture? Our national debt on 31st March last was £531 million. To service that national debt will cost us £37 million. In 1956, our national debt was £322 million and the total cost of servicing it at that time was £20 million.

This year, our adverse trade balance is over £100 million. I do not think the economy of this country can carry an adverse trade balance of £100 million or anything near it. Our balance of payments shows a deficit of £13.4 million according to Economic Statistics.

Great play has been made for the past few years about expanding economy. Before last Christmas, we had the Taoiseach in his endeavour to enter the Common Market announcing that we were prepared to "go it alone" and presumably capable of doing so. Our gross national product, which the Government have been very fond of mentioning, has shown a considerable tapering off over the past year or two. In 1959, there was a rise of 4.9 per cent; in 1960, a rise of 5.9 per cent; in 1961, a rise of 3.8 per cent; and in 1962, it was down to 2.5 per cent.

These figures in themselves may not be of great significance but, taking one year with another, the ominous feature here is the general trend. Whatever one may say about statistical methods, however one may doubt or question them, presumably these figures were calculated on a common pattern and, in showing a general trend, they show a declining economic position. Our objective, as stated by the Minister for Finance in his speech, was an increase in gross national product of 50 per cent between 1960 and 1970, and the hope was expressed of a 4 per cent increase in the present year. That hope was reinforced, according to the Taoiseach, by the OECD report. I wonder would the experts, who wrote the last OECD report, based presumably upon data provided by the various Government Departments here, if they examined this Budget, feel as optimistic about our prospects as they did when they wrote that report a few months ago?

The salient feature of this Budget is the introduction of the turnover tax. This tax makes no distinction whatever between the necessaries of life and the luxuries of life; neither does it make any percentage selectivity, although I will not join issue with the Minister in that aspect because I can see the administrative difficulties in operating a tax which showed a percentage selectivity. However, I do join issue with any Government which proceeds to introduce a tax on the ordinary commodities which people must use, such commodities as food and fuel. The Commission on Income Taxation have been in operation here over a number of years and have issued a report in seven volumes. In their Third Report, page 50, paragraph 115, they say:

We accordingly recommend the introduction of a purchase tax at a rate or rates of between 7½ and 15 per cent on a base of £65/75 millions wholesale value, but in any event excluding

(a) goods essential for agricultural production;

(b) goods essential for industrial manufacture;

(d) food, particularly essential food;

(e) fuel;

(f) newspapers and books;

(g) household non-durable goods;

(h) goods already subject to heavy customs and excise duties, e.g. tobacco;

(i) works of art, and goods that are primarily of a cultural nature.

We recommend that the purchase tax be a part-substitute for income tax and that the revenue from it be used to reduce the rate of income tax. The revenue which we recommend to be raised by a purchase tax, i.e. £6 millions at least, should permit of a reduction of about two shillings in the present rate of income tax, i.e. from 7/- to 5/-.

Page 83, paragraph 10, of the same report, reads:

Accepting that a single-stage tax would be the more suitable for this country, if a purchase tax were to be introduced here, it would seem that a tax at the wholesale stage is on balance preferable to a tax at the retail or the manufacturing stage. The fact that with a tax at the wholesale stage the number of traders affected would be less than one twelfth of those to whom a retail tax would apply (3,000/4,000 against 40,000/50,000) outweighs any disadvantages that might be attributed to, e.g. possible "pyramiding" of the tax, trade disturbance on changes in tax rates, etc. With moderate rates of purchase tax such matters are likely to cause serious problems.

Financial circumstances may have become more stringent for the Government since that was written but the basic conditions of life here remain the same. This Commission suggests that the tax should operate at the wholesale level. It also suggests that only about one-fifth of the expenditure should be taxed and at a higher rate than the 2½ per cent introduced by the Minister for Finance. It also eliminates the fundamental requisites of our society such as food and fuel. Furthermore, it does not tax services. The Minister for Finance has seen fit to depart from these recommendations and has introduced a retail tax on all commodities and on all services.

One may wonder what effect this type of tax will have upon the pattern of our trading. We are all familiar with the post-Christmas sales in our cities, where traders, in an effort to renew their stock, mark down the prices of their commodities to cost level or thereabouts. Such a sale is the mecca of the average poor housewife. They come from all over the cities to secure bargains. Under our new taxation system, where the proprietor has to pay 2½ per cent on the turnover, that type of sale must cease. No businessman will have a large turnover sale with minimum profits if he has to pay 2½ per cent on that sale. Sales will continue as such in name, but there will be no bargains. The pattern of trade based on a large turnover and small profit, which did reflect itself in cheap commodities to the people, will give way to a pattern of trade based on the idea of a small turnover and large profit. The average poorish person will suffer as a consequence.

Our newspapers, peculiarly enough, seem to have misinterpreted the impact of this tax, in so far as the evening papers and daily papers showed pictures of various commodities, bottles of stout, whiskey and cigarettes, with a caption "No increase in tax". It is of course obvious that every single article which anybody has to buy will now be subject to a tax. It may not necessarily be 2½ per cent; in effect, it will be more than 2½ per cent.

The 41,000 retailers in the country will now become, in effect, tax collectors for Revenue. The Minister for Finance mentioned he is not particularly interested how they will collect this tax or what percentage they will add to each commodity, so long as he gets his 2½ per cent. He will collect it monthly. I seem to remember there was a gentleman who once lived in Chicago. He instituted as a private individual a self-imposed turnover tax. He became a millionaire in the process. His name was A1 Capone. Our Minister for Finance has now taken unto himself the cloak of A1 Capone. Every month, his collectors will call at the door of every retailer in the country to collect his protection money.

Much play has been made with the increased money given to social welfare by the Minister for Finance, but he admitted he is getting more than he is giving. He is giving 2/6 per week to the average old age pensioner, that is, 4d. per day. With the increased cost of living which this tax must necessarily produce, where will 4d. per day carry him?

This tax will have an impact on our rates, which are already higher than ever in our history. Every county has to buy food for its institutions. It has to buy medicines and drugs, equipment for its roads and for its institutions. All these commodities rising in price will inevitably cause an increase in our rates. Even some of the welfare benefits under the Infectious Diseases Acts which have been increased will be paid for on a 50-50 basis by the central Government and the county councils.

Certain services will be exempt— telephones, television, public transport —but the tax will cover drugs, hospitals, dancehalls, co-operative societies, proprietors of bottled milk, the ESB. Our co-operative societies will now find, for the first time in their history, that they will have to pay income tax under Schedule D on that section of their business related to retail trading. They will also find, for the first time in their history, they will be paying a turnover tax upon the same type of activity.

There were numerous traders here who, by virtue of the fact they had large families or relatives whom they had to look after, so far have escaped paying income tax. These traders will now find they are taxed for the first time on a turnover basis. Let us not forget this. If the same technique applies to this turnover tax as applies to income tax, whether a trader gets his money over the counter or not, whether it goes on the book or whether he is ever paid, he will still have to pay the turnover tax at the end of the month. Presumably he will get a refund for his bad debts or uncollectable debts at a later stage, if he can satisfy the revenue authorities he has made every effort to collect those debts; and to satisfy the revenue authorities, I presume, you will have to take the matter into the public court.

All our traders will have to keep accurate bookkeeping accounts of the turnover, which in many cases means they may have to employ increased secretarial help. Already many employers are complaining about the burden of keeping PAYE accounts. Now they will have the additional burden and expense of employing extra staff to keep an accurate account of their returns. Most of them will be compelled to employ an auditor and, if you read the Minister's speech, he has to be an approved auditor.

What exactly does that mean? It means that if an inspector of taxes is not satisfied with the return which a particular auditor gives him about a particular trader, that auditor will find himself on the wrong side of the inspector of taxes. That auditor will, in all cases, make every effort to get on the right side of the inspector of taxes. It will mean that the citizen will be paying the auditor who will regard himself as the servant of the Revenue Commissioners. This is the position that exists at the present time in regard to income tax. Those traders who have not so far paid revenue taxation of any kind must also remember that they are guilty until they are proved innocent. Unlike the provisions of the common law, they cannot purge their debt by prison or part payment unless they have come to an arrangement with the inspector. I wonder how this innovation will affect many of the older people, the simple old man and his wife running a small huckster shop in one of our towns or villages, people who are completely unversed in the technique of tax collection as applied by revenue officials in this and other countries.

I thought it rather naive of the Taoiseach and the Minister for Finance to suggest that the impact of this turnover tax would not be likely to cause an increase in the price of consumer goods, that it would create such tremendous competition which, indeed, was said to exist already, that there would be no increase whatever. Let me quote a communication in the Evening Herald of 27th of this month which states:

The Federation of Trade Associations, in a statement, says that traders are appalled by and take exception to, the observations of the Taoiseach in the Dáil debate on the Budget that traders might absorb either in whole or in part, the new tax.

The statement also says that the Taoiseach must be aware that the margin of profit of Irish traders is much lower than that of traders in other countries and that they cannot possibly afford to bear any part of the sales tax.

The Federation says that the public should be in no doubt about the position—the new tax must be borne in full by consumers and will have to be applied to the full range of goods including essential as well as luxury articles.

That is the answer. This is a federation which consists of many trading associations. I have no doubt that they and their subsidiaries will fix the price of most articles which the consumer has to buy. The retailer will have to add on to the 2½ per cent tax the other ancillary expenses which he will be forced to meet in relation to this tax.

In many instances, the retailer will have to employ secretarial assistance and in most cases will have to employ an accepted auditor who will charge him anything from £20 to £50 per annum for his services. These two expenses will have to be added to the 2½ per cent tax and the consumer will have to pay them all.

The Minister for Finance, in adumbrating the virtues and advantages of this tax, stressed its simplicity, its productivity and its collection cost. It is brutally simple or, should I say, it it simply brutal. It is productive. It is a wholesale levy on the entire nation. The Minister has told us that its collection cost will be the cheapest ever, a mere one per cent. At the present time it costs us 9d. in the £ to collect income tax. I thought, when we paid 9d. in the £ to our rate collectors, that we were overpaying them, although they have to find their own travelling expenses and often have to lodge money in the bank before it is collected or pay interest on it.

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

Mr. P. Hogan

(South Tipperary): I was speaking about the cost of collecting this new turnover tax and I had adverted to the fact that income tax was at present costing 9d. in the £ and that excise moneys were costing us in the region of 5d. in the £. According to the Minister for Finance, it is estimated that this tax will cost one per cent, or 2½d. in the £. There are 41,000 retailers in the country, I understand, and about 5,000 manufacturers and wholesalers, some of whom do a measure of retail business. Then we have hotels, guesthouses, restaurants, hairdressing saloons, barber shops and so on, and I suppose it would be true to say that, as a round figure, this retail tax will apply to about 50,000 establishments.

The Minister for Finance hopes to get in £10 million, and if you take a collecting figure of one per cent of that, or £100,000, it will mean that you collect at a cost of £2 per establishment. I think he is being a little bit optimistic. I am afraid that £2 per establishment may be like the 2/- in the £ which many years ago he told this House the new health legislation would cost. The truth is that it is going to cost the taxpayer, the retailer, much more than £2 to keep his accounts and present his case to Revenue.

The second feature of importance about this Budget is the alteration in the corporation profits tax, or the company surtax, as some people call it. The Commission on Income Tax in its Sixth Report, on page 65 recommends:

Point B: Corporation profits tax should not be deducted from income in computing income tax. As a consequence the rate of corporation profits tax should be reduced to avoid any increase in company taxation because of this change.

If there are two taxes on income, whether of companies or other taxpayers, it is illogical to deduct either tax in computing the amount of income subject to the other. It would be as justifiable to deduct income tax in computing surtax, or vice versa, or indeed to deduct income tax in computing corporation profits tax, as to deduct corporation profits tax in computing income tax.

I think it was in the last Budget that the Minister for Finance accepted one part of this recommendation. It suited him to do so, as it increased his revenue. But the second part of the recommendation which says: "As a consequence, the rate of corporation profits tax should be reduced to avoid any increase in company taxation because of this change" has been quietly glossed over by the Minister. The recommendation suggested that because of the increase in corporation profits tax which he made in the 1962 Budget, he should reduce the actual incidence of the tax on them in order to compensate them.

What has he done? He has not reduced it and he has not left it as it was but he has increased it. He has increased it in respect of profits over £2,500 from ten per cent to 15 per cent, but, what is more invidious, he has applied a five per cent tax to all companies with a profit of less than £2,500. Whatever one may feel about the application of that increase of five per cent in the tax on profits over £2,500, one certainly feels that it is scraping the pot rather closely when he now brings into the mesh all companies on whatever profit they may make from £1,000 to £2,500. I do not know how many extra companies he will get into the net by this particular tax. Already these companies pay about half on income tax and the pattern of companies is quite different from the pattern of public companies in England, Germany and the more industrialised communities.

According to statistics, there are 8,841 private companies here as against 384 public companies. Everybody realises that many of our private companies are just private companies for accounting purposes or for family reasons. We all know it is very difficult, or well-nigh impossible, for private companies to secure money to expand their business, apart from what they secure by their own efforts. They cannot go on the public market and float an issue of shares. They must go to the bank and ask the bank manager to give them a loan. If they want to refurbish or expand or improve their businesses, that is what they are forced to do. That is the position that obtains in 95 per cent of the companies in this small community of ours. This taxation will put an added burden upon small companies and that is the pattern of companies operating in this country. The answer the Minister for Finance gives them is that they will be free of tax on exports. Many of these small companies are not manufacturing and not in a position to export. What have they got to do? Integrate — join some combine—or be wiped out?

Whatever one may say about increasing the tax of ten per cent to 15 per cent, onerous though it may be, there is very little to defend in the imposition of this new tax on small companies on a profit of from zero up to £1,500. If I read the Financial Statement properly, this tax is to be retrospective to 1st January, 1962. Our small Irish companies may now have to face an increased corporation profits tax, a turnover tax of 2½ per cent, if they are engaged in any retail business, increased competition from the tariff reduction if they are engaged in any productive business, increased rates, increased transport costs, the increased wage demands which will be inevitable when the cost of living manifests itself in some months' time, after the introduction of these increased taxation measures.

There is another innovation in this Budget, a minor one but not minor to the people whom it will affect. It is a tax on money received for conacre. This now will come under Schedule D. Perhaps this may be aimed at the wheat rancher but in effect it will hit many relatively poor people. If you examine the situation you will find that land is let in conacre because the husband has died and a widow with, perhaps, a couple of young children has perforce to lease her land. There is no exemption clause in this Bill. Surely, on humanitarian grounds—it would not cost the Minister very much —he should introduce some exemption clause to the effect that in certain circumstances, such as I have mentioned, very old people or a widow with a young family should be able to make application and secure exemption from this added burden?

I find, reading this Budget, that the Minister has moved to effect an economy. The helicopters are out again. Since I first entered this House there has been a continuing barrage of questions every time an accident occurs along our seashore as to where were the helicopters. At last they seemed to be within sight. Judging by this Budget, they seem to be going out of sight again, at a time when we find our newspapers announcing that we are going to extend the limits of our territorial waters, at a time when, in the interests of the protection of our fishing industry, they would be far more useful than the peculiar ships we have along our coast protecting the rights of our fishermen.

The hand of the Income Tax Commission is very evident in the new provision introduced as regards tax evasion. The Minister did not exactly accept in a technical sense the recommendations of the Commission but he did introduce a provision exactly parallel with one obtaining in Great Britain to the effect that all banks operating within the State must now disclose any deposit yielding £15 interest or over. This is identical to what was introduced in Great Britain over ten years ago. The Minister may not have been uninfluenced by what happened in Britain and what flowed from that measure. British bank disclosures following the 1951 Finance Act brought to the British Treasury, in 1952, £9 million. In 1952-53, as more deposits were uncovered, they brought £11 million; in 1954, £50 million; in 1955, £20 million again. That was enough to appeal to the avarice in the heart of any Finance Minister. The temptation proved too much to our Minister for Finance, Dr. Ryan, and he has incorporated this provision in his Budget propositions and, cutely enough, he has made it retrospective. The tax will operate over the year 1962-63. Those who have something in their stocking and wish to shift it can shift it now if they like but the Minister for Finance will know it was there anyway.

To sweeten the pill, he has introduced a clemency clause. If people come forward and say: "We have undisclosed moneys here and we want to confess to Papa" they will be absolved but, if they do not do that —the Minister for Finance is introducing in this Finance Bill a penalty clause—Papa will get angry.

The position in Great Britain and the position here as regards bank disclosures of that nature are somewhat different. I do not know whether PAYE was in operation in Great Britain in 1951 when this British Finance Act was introduced; neither do I know what exact amount of income tax is collected from the farming community in Great Britain. If we take the population of Great Britain, the percentage of those engaged in farming would be about four or five. I understand they always paid income tax. Here, in effect, the farmers do not pay income tax. They pay a notional tax under Schedule B and, I think, some other schedule, which amounts to approximately three-fifths of their valuation. The tax is statutorily fixed and, in the event, unless the farmer's valuation is £300 or £400, he is practically never liable for income tax in any form. That means that probably 95 per cent of our farmers are completely outside Schedule A tax.

In this country, a large number of people are now paying tax under PAYE. Central Government servants, local government servants and people in employment in banks and insurance companies have a vouchable income. If the Minister is merely pursuing the question of tax evasion, and that alone, why does he institute here a blanket requirement covering everyone in the country who has a deposit bringing him in more than £15 per annum? If the Minister is merely seeking tax evaders, why did he not, in the interest of preserving the confidential nature of the banking business, make an effort to exempt those classes? This law puts paid to the confidential nature of the banking business as we knew it, and no attempt is made to preserve even a measure of that confidential nature.

Farmers who are engaged exclusively in husbandry cannot evade income tax except in one small way: if they buy Government or other stocks and shares; if they do not disclose the dividend they get; and if that dividend added to their valuation brings them within the scope of income tax. Here is the point. Various shares floated here are bought by members of the farming community, amongst others, and yet, as I understand it, no information is passed between the authorities who issue the shares and the revenue authorities. If a farmer buys shares and does not disclose the dividend he receives from them, are not the Government conniving with him in not disclosing it?

It seems to me that the Minister— I would not say entirely under a pretence—in his witch-hunt for tax evasion has also taken advantage of the situation to find out the economic and the banking position of everyone in the State who has a dividend of £15 a year or over, irrespective of tax liability or otherwise. He is obviously and clearly seeking information as well as investigating the question of evasion. Looking for that information under the pretext that he is merely concerned with evasion will be damaging to the confidential nature of the banking business.

Another innovation to which perhaps one cannot object is the introduction of taxation under Schedule D for land in the ownership of a man who is also engaged in a business or profession. If we take the farmers with a valuation of £30 and upwards — I think we can ignore people under that valuation — who might come within that category for taxation purposes, we find that there are 20,000 farmers who are engaged in farming and in something else, be it business or profession. Those 20,000 part-time farmers, if I may so call them, will now come under the attention of the Revenue Commissioners and pay under Schedule D on the profits they make on the farm.

The Parliamentary Secretary to the Minister for Lands seemed to deprecate the importance of trade. He seemed to think that if your balance of payments and your external reserves were all right, everything was in order. Apart from our internal position—the position that arises as between Government income and expenditure, our purely domestic situation — the most important thing for our country is what we can export. I have never been quite able to understand why we buy so much from so many countries who buy so little from us. It is understandable that in certain circumstances this must be so but, if you look at our general trade figures, it is rather inexplicable why we should have such an imbalanced trading position with so many countries. Last year's figures show that we imported from the Federal Republic of Germany £18 million worth of goods and merchandise; they bought from us £5 million worth. We imported from the USSR £2 million worth; they bought from us £40,000 worth. From the Netherlands, we imported £8 million worth; we exported £1.6 million worth. From India, we bought £3 million worth; we sold to India £20,000 worth. From Canada, we imported £6 million worth; we exported to Canada £1.6 million worth. From the United States of America we imported £20 million worth; we exported £13 million worth. From Poland, we imported £1.8 million worth; we exported £190,000 worth. From Denmark, we imported £1.9 million worth; we exported to Denmark £137,000 worth. From Morocco, we imported £1 million worth; we exported £1,000 worth.

On 21st March, I asked a question here in an effort to find out how our trading position lay with Great Britain in comparison with countries like Denmark, New Zealand and Canada. The answer to that question shows a similar pattern. In the last year for which figures are available, Denmark imported from Great Britain and the Six Counties £105 million worth of goods and merchandise and she exported to Great Britain and the Six Counties £152 million worth of goods and merchandise. Her exports to Great Britain were £46 million on the positive side in her favour. New Zealand imported £107 million worth from Great Britain and she exported to Great Britain £169 million worth, putting her in the happy position of having a positive trade balance of £61 million. Canada imported from Great Britain £194 million worth; her exports to Great Britain were £349 million worth giving her a positive balance of £155 million. The figures for this country show our imports from Great Britain at £142 million; our exports to Great Britain were £138 million, giving us a slightly negative balance of £3 million. These figures show clearly that we have an excellent bargaining position in regard to trade with Great Britain. I do not know what particular love they have for Denmark. I do not know what other factors enter into the trading situation but it seems odd that Denmark can have a positive balance of trade with Great Britain of £46 million while we have a negative trade balance of £3 million, considering that Denmark imports from Great Britain only £105 million worth per annum while we import £142 million worth. We are a far better customer getting much less trade.

All of us have seen recently particulars of our butter position. The quota to Denmark is 96,000 tons. Our quota is 12,000 tons. Butter production has become a major problem in our economy. Yet we have persisted down through the years in turning our milk largely into one product, butter. I understand it is somewhat easier to get a market for milk products other than butter. Yet there has been very little attempt at diversification in the processing of our milk. At the moment we are producing about 600,000 gallons of milk. In the past five years, diversification of milk from butter production into other commodities, such as chocolate crumb, cheese and dried milk, increased from 39 million gallons to 69 million gallons, a miserable increase. If diversification has any merit, and I understand it has, surely we should have made some effort to divert our milk from almost complete butter production into some of these other commodities. The present rate of diversification is only one per cent. Yet we are prepared to pay £3½ million to other people to eat our butter.

While on this matter of trading I want to mention one small point. It is apposite. I quote from The Kerryman of April 27th; this is from the annual report of the South of Ireland leather and shoe firm, Plunder and Pollak (Ireland) Limited:

Owing to the expansion of output a high proportion of our hide requirements are now imported. At the same time encouragement to export hides is provided for meat factories and representations to the Government to discourage the export of hides have proved unsuccessful. We are now in the unusual position of importing into Ireland Irish hides already exported to Great Britain, converting these hides into leather and again exporting the leather to England. The national loss involved is considerable.

It is added:

We must consider the profits earned by the cross-Channel companies in the carrying of this freight.

All of which, of course, go to enrich the British.

Somebody described this Budget—I think it was the Taoiseach—as incorporating an all-time tax. The reference was, of course, to the new turnover tax. I have given my criticisms of that tax. I have given the findings and recommendations of the Income Tax Commission. If a more broadly based tax were desirable in this country or if, through the ineptitude or squandermania of the Government, the Minister for Finance had to seek new ways to get revenue, surely this purchase tax as recommended here by the Income Tax Commission would be less onerous and less burdensome upon the more unprotected members of our community than the tax now envisaged?

I do agree, of course, that this new turnover tax solves, perhaps for all time, the Budget worries of any future Minister for Finance He has merely to add one per cent, two per cent, three per cent, bit by bit, to the sales tax and "Bob's your uncle"—the money just flows in. It is certainly broadly based. I have no doubt but that by the time the next election comes, if the Minister for Finance gets the time he will have sufficient money in the kitty and will be in such a position to disimburse that he can go to the people like a veritable Daddy Christmas and, knowing that our people have short memories, he may turn the trick.

Whatever about our domestic situation, one thing is sure, namely, that the impact of increased taxation will have a deleterious effect upon the trading position of this country. How far the Minister may succeed in resolving his domestic financial problems, unless he can now succeed, with the money made available to him by increased taxation, in increasing exports from this country and in getting a good market for these exports, no form of financial juggling or manipulation will save him ultimately from the nemesis of the verdict of the electorate.

Minister for Transport and Power (Mr. Childers)

It is fascinating to listen to the members of the Opposition talk about this Budget. Few of them even dared to suggest that we do not have a sales tax. None of them made a definite proposal as to how we should reduce Government expenditure to avoid a sales tax or, alternatively, what other form of tax we should have in order to balance the Budget.

It is just about time we started to hear some words of wisdom from the Opposition on this subject. The principal increases in State expenditure relate to the social welfare services which take £3¼ million more; the services in aid of the farming community which take just over £8 million; the expenditure on education — which, incidentally, has very nearly doubled since 1957—which takes £1,650,000. There is not much else of an increase about which we need worry. We should like to hear some members of the Opposition suggest that those figures be reduced or, alternatively, we should like to hear how they propose to raise the money.

All through the years, the Opposition keep asking us to spend more and more money. If we increase social welfare services they ask for more. If we increase the services for the Department of Agriculture they ask for more. But they never get down to brass tacks and tell us how we are to raise the funds for these services.

I was thinking back to events which have taken place since the War where the Fine Gael Party talked about taxation and prices. I hope the people will beware of any observations they make on the occasion of this Budget because they have a frightful reputation since 1948 in regard to the criticisms of our Budgetary decisions and the promises they make thereafter to correct them and the awful and fantastic results which follow when they try to do a better job than ourselves.

It is just as well to remind members of this House and the public of the dreary record of the Fine Gael Party in association with other Parties in this respect because we shall hear quite a lot about the sales tax for the next few months and we shall hear it spoken of no doubt at the coming bye-election. Therefore, we might as well cast our minds back and judge the position when it comes to criticising Fianna Fáil objects and Fianna Fáil national financing.

If we go back to 1948 when we had brought the country safely through the Second World War, when the finances of the country allowing for the difficulties of the time, were in splendid shape, we recall that the main propaganda at that time was (1) that we had inflated prices; (2) that we had encouraged profiteering; (3) that taxes were too high and that there was a gigantic bubble of inflated expenditure and taxation that could easily be burst by the Fine Gael Party if it took office. At that time, they were infected by a sort of pale pink sentimental policy advocated by the Clann na Poblachta Party——

Mr. Barron

The Party.

Mr. Childers

The Parties met and produced a situation and a crisis which we had to face in 1951. They were not able to discover any profiteers. They were not able materially to reduce taxation. They did not find that our financial handling of the country was wrong, inept or corrupt but they themselves set the country very definitely on the wrong road so far as finance was concerned.

Knowing that there was a great deal of money pent up that could be spent in restoring the normal consumption needs of the people after the war, seeing the inevitable effects of the Korean crisis and the inflation it produced, they deliberately advocated the reduction of our external reserves. They went around the country saying that no one was patriotic unless he advocated bringing back money from Great Britain. They did not tell the people that the only way that money invested abroad can be brought back is by importing goods. What counts is the kind of goods imported, whether they are consumption, for further manufacture or in the form of machinery for further production.

Therefore, in 1951, we had the first great inflation in which our adverse trade balance was not £13 million, as it was last year, but £61 million, almost equivalent to £100 million at the present value of money. We warned them over and over again of where they were leading the country. We warned them that external reserves must be kept at such a level that any time our imports temporarily exceeded our exports, there would be a reserve of money there to discharge our liabilities. They laughed at us. They told us that we were not Irish in feeling, that we had no national feeling, that it was a dreadful thing to keep external reserves abroad for this purpose and that we should repatriate the reserves. Deputy John A. Costello, the then Taoiseach, wrapped the green flag round him and went around addressing bankers' institutes, bankers' associations and chambers of commerce all over the country telling them we should get rid of external reserves as quickly as possible.

Mr. T. Lynch

Will the Minister give us the quotation?

Mr. Childers

We got into office and we corrected the situation. When we corrected the situation, first of all, by finding the necessary taxes to pay for a Budget that was unbalanced by about £15 million, the Fine Gael Party and the others made the usual mistake of saying it would bring dire distress to the public, that it would result in decreased production and decreased trade, that we were heading for a serious financial situation, that we were wrong in correcting the inflation they had induced by their poor economic policy. Naturally the imposition of our taxation had a minor disinflationary effect on the economy and then in 1953 the country started to go ahead again. We found it almost impossible to direct the minds of the people to the economic needs, to the economic realities, because of a hurricane of propaganda for the whole of the three years during which we had only a very small majority in this House.

This propaganda was directed solely towards convincing the people that things could be easier for them if Fianna Fáil could be defeated and a new Government elected. There were no warnings by the Opposition of the need for facing realities, such as the end of the post-war period when anyone could sell anything at any price because of the scarcity of commodities. There was no effort to consider an alternative programme to the Fianna Fáil programme of economic advancement. The whole of the political and economic life of the country was virtually disrupted for two-and-a-half years by this nonsensical talk of the effect of the increased prices as a result of the corrective Budget undertaken by Fianna Fáil.

When the election came in 1954, what did we have to face? We did not face any group of Parties which offered any solid programme of economic advancement. No one in the Opposition warned the country of the need for new methods of production or greater productivity. The whole of the 1954 campaign was rather like what we have been hearing from the benches here today. It consisted of the dissemination of millions of pamphlets with pictures on them of all the commodities whose price had increased during the Fianna Fáil Government's period of office at that time, all the taxes that had increased, and with an absolute promise, made unreservedly, that if the Opposition Parties got back to office, prices would be reduced, taxes would be reduced and everything would be lovely in the garden again.

That was the kind of propaganda served up to the Irish people in 1954. We have been hearing exactly the same talk now, the easy talk, the suggestion that a country can have a growing number of State services and need not pay for them. They were returned to office in 1954 and what happened? Not a single article was reduced in price; not a single tax was reduced, and then they met the Waterloo of the next round of inflation.

By their action in 1951, the Coalition Government had already reduced the external reserves available to us to meet any kind of serious crisis in the balance of payments. We had done our best to correct it but these reserves had disappeared. When they got into office, the Coalition Government paid no heed to the economic indicators of the day. As late as 1954, Deputy J. A. Costello, the then Taoiseach, again said they had not yet finished spending and repatriating the external reserves.

Then came the crisis of 1955 and 1956. They have been trying since then to make the very poor case that it had something to do with the Suez question and some sort of economic crisis in Britain. There was no economic crisis in Great Britain in 1955 or in 1956. Production rose in Great Britain during both those years. There was nothing extraordinary in Anglo-Irish trade or economic relations, save the fact that because of a series of economic circumstances, the terms of trade turned slightly against us. In 1955, we had the next serious year, when there was an adverse balance of payments of £35 million.

One would have imagined that since the war we might have accumulated and maintained sufficient external reserves to meet a balance of payments problem of that kind, but not at all. The Coalition Government at a very critical phase in our history had not prepared the country for the competition to come, had not prepared the country for the competition we would face in trade and agriculture. They were concerning themselves entirely with trying to make things easy for the people all round, while, at the same time, reducing the country's capacity to face a crisis. Because of those things, there was just £80 million of the external reserves easily got at and left in the banks to meet the crisis.

The result of all this was that this Coalition Government, who promised to reduce the price of everything, who promised to reduce the taxes we had increased, brought the country into a state of the most appalling crisis in 1956, increased taxes and finally went out, leaving us an unbalanced budget. In 1956 and 1957, there was record emigration, record unemployment, the highest unemployment ever known at any time in this country.

Mr. Corish

That is wrong.

Mr. Childers

The national income decreased.

Mr. Corish

That is wrong. Go back to the thirties.

Acting Chairman (Mr. P. O'Donnell)

The Minister must be permitted to make his speech.

Mr. Corish

He ought to be accurate. We do not deny the figures he gives in respect of 1956 and 1957 but he should not describe them as the biggest ever.

Mr. Childers

There was one month, I understand, in which there was a record figure.

Mr. T. Lynch

Quote some of the speeches Deputy J.A. Costello was supposed to have made.

I should like to point out some facts about taxation in relation to what people produce, so that people will realise there has not been a great deal of change and it is unlikely there will be a change unless we have some very astonishing or unforeseen growth in the economy for one reason or another. If the economy grows steadily, without great leaps forward over a particular period, I cannot see that there will be any very great change.

For example, I find if you take the total of the non-capital Supply Services and the Central Fund Services, including the payments to the Road Fund, add to those the rates levied by local authorities and work out the total figure as a percentage of gross national product at whatever are the current market prices, you will find that in 1956-57 the percentage was 24.8 per cent and in 1962-63, it was 24.9 per cent.

Although the Minister for Finance in answer to a question to-day was not prepared to make a specific statement about it, if you make the assumption we have the same growth in national production in the current financial year as we had last year, the percentage will not greatly vary. Allowing for what we expect to be increased national production, this year, in spite of the imposition of the sales tax towards the end of the year, the total amount we are taking as a percentage of the total production will not greatly alter or only fractionally alter.

I would mention in that connection that the people of the country last year had their personal expenditure on goods and services increased by £39 million. The sales tax imposed is based on the fact we knew there had been that increase. We knew that the people had spent £39 million more. We are not objecting to them spending more, but we felt that, as expenditure had gone up more than the total productivity of the country, as our exports had not expanded sufficiently and as we had to deal with the general effect of the eighth round of wage increases, which has been fully dealt with in this House, there would be no objection to the imposition of a sales tax, the effect of which would be corrective in so far as we might continue spending too much compared with what we produce and, as a result, have another year in which our imports were excessive.

One of the major factors to our advantage at present is that in spite of the adverse balance of payments of £13 million, to be compared with £35 million in 1955 and £61 million in 1951, that adverse balance of payments succeeded a number of years in which the net position was highly satisfactory. We have had a 20 per cent increase in our external reserves in the past four years. There are more external reserves now with which to meet a temporary condition of adverse balance than there were at any time since 1953 in relation to the problem we are likely to meet.

As I have said, if you find a growth in personal consumption of the order of £39 million in one year, it is not asking too much to seek money for the farmers whose incomes have grown at a lesser rate than that of the non-farming population—that has happened not only in this country; in other countries, farming income has also consistently shown a lesser growth—and also to provide for social welfare services and for an increase in educational services, on all of which will be spent the bulk of the increased figure for budgetary requirements in the coming year.

We ought to be honest about it and make quite clear that that is the position. It is in the form of a tax which will grow steadily with the national income and which can be altered to meet circumstances. It will enable the Government of the day to take some portion of the national income and to redistribute it in an orderly way, sharing it between social welfare services, pension services and the farming community. It seems to me it is all the more essential to have a fund upon which to draw, now that we know we are not, at least for the present, joining the European Economic Community, and that the disposal of our agricultural surplus, as far as we can see it, is not going to be to countries which have an ordered and planned system of marketing and price stabilisation as envisaged in the EEC.

Therefore, we must have some kind of surplus available from the total income of the people so as to give assistance to the farming community, because we have no doubt that the failure of farm incomes to expand is something which has been a general problem in Europe for at least the past ten years. Nothing but a planned agricultural scheme of the EEC type can get over that situation. The only other way to deal with it is by a redistribution of income of some form or other and that can only be secured by a tax such as the sales tax. That is what the Taoiseach meant when he spoke about the trend to the left in our policy. By that, he meant the distribution of our national surplus on a more specifically planned basis.

In the autumn the second Programme for Economic Expansion will be published. We will indicate our plans for the next five years for agriculture, industry, electric power, transport, fisheries, forestry and all the other Government services. In addition, we will try in so far as we can to assess our capital commitments. That will help us to plan the economy of the country to better advantage. We have been delighted with the fact that we did succeed in securing an increase in national income and production greater than we anticipated and greater than was published in 1958 when we produced the first Programme for Economic Expansion.

That reminds me that I am going to deal again with the nausèating propaganda of the Fine Gael Party in regard to the allegation that in the 1957 general election, we specifically promised to employ 100,000 men. We did nothing of the kind. If the Fine Gael Party wish to devote themselves to cheap propaganda of that kind, they can go on doing it. It means that they entirely ignore the very serious statement which the Taoiseach published on the eve of the general election in order to make certain that no one would think that the blueprint for the increase in the nation's production showing how we could secure a greater national income, which had been published a year before, was being used as an election document in 1957. This speech, made at the time by the Taoiseach, received just as much publicity as the blueprint did the year before but that statement is never mentioned by the Fine Gael Party. They still think that the people are going to listen to that kind of cheap propaganda that there was a promise that 100,000 more men were going to be employed.

Nothing could be fairer or more clear than the Taoiseach's statement at that time. I want to repeat that statement this evening. It has already been recorded on the annals of the House but it will have to be recorded again when we have to listen to this cheap propaganda about the employment of 100,000 more men in this year of grace, 1963. He said that in October, 1955, he had put forward proposals for a full employment policy.

Mr. T. Lynch

What was the date of that document?

Mr. Childers

It was published some time in October, 1956, in the Irish Press and it is a reprint of what was published in all the newspapers. The Taoiseach went on to say:

It will be asked whether the ideas which I will put forward reveal firm and final decisions of the Fianna Fáil Party, a plan of campaign to be implemented by a Fianna Fáil Government after a General Election.

The answer to that question must to some extent be hypothetical. Our understanding of the causes and character of the country's economic difficulties is derived from the information available to us, and we cannot be quite sure of its adequacy.

There may be factors of which we are not aware: a party in opposition can never be certain that it knows the whole story.

Ministerial statements are becoming increasingly evasive and their forecasts are proving to be invariably unreliable.

Furthermore, circumstances may change. We do not know for certain when a General Election may take place, or what may happen before then.

The rapid and extensive deterioration of conditions since 1955 has rendered out-of-date some of the plans which were publicised then.

As Fianna Fáil has no intention of making commitments or giving pledges which it is not certain can be honoured, proposals put forward now under its auspices must be regarded as indicating the ideas at present being discussed within the Party—a revelation of its outlook on present national problems— rather than as a finalised programme.

In the rest of the document reprinted in the Irish Press, Deputy Lemass made a remarkable forecast of what could be achieved by changes in policy, by changes in the application of Fianna Fáil policy, by facing up to the new problems. However, it would take too long now to read all the proposals made there which have been put into practice and which have resulted in giving employment to 20,000 more people.

That knocks on the head some of the ridiculous arguments produced by the Opposition that we have increased social welfare services only sufficiently to meet whatever increases in taxation there have been. We have gone far beyond that and all the old age pensioners who have been able to earn stamps have had their pensions increased. The contributory old age pension for a man and wife is some 70/- per week, another illustration of what we have been able to do. No matter where you look in the social welfare field, you will find that the increases have been far greater than anything related to the increase in the cost of living. We have always said that our social welfare services are not yet adequate, but we are increasing them year by year, and I hope that the institution of a sales tax will enable us at least to make certain that we will be able to go ahead as fast as possible and as fast as the growth of the national economy allows.

Lastly, I want to deal with the position in regard to the agricultural services. One of the reasons for the increase in taxation is the very large increase of £8½ million for the Department of Agriculture. It is just as well to remind the House that the total State aid for agriculture in 1955-56, including all varieties of schemes, amounted to nearly £16 million and the amount estimated for this year is close on £38 million, an enormous increase, whether related to farm production or the national income or anything else, and absolute proof of the tremendous effort being made by the Government to help farmers expand production, to help them find remunerative markets and to help them raise their income where it compares ill with that of the non-agricultural sector.

One of the reasons for the impost in this Budget has been the effect, inevitably, of the increase in agricultural grants. I worked out the figures for County Monaghan and County Tipperary to see what the agricultural grant represented per holding. In the case of Monaghan, it worked out at an average of £23 per holding of agricultural land. In the case of Tipperary, it worked out at £31 per agricultural holding in the North and South Ridings of Tipperary, not a niggardly contribution. I wanted to see how one could measure or estimate the grants of the general rating position in the rural areas. I found in the case of Monaghan that, between the agricultural grant and Government contributions to local services, 58 per cent of the total cost of the County Monaghan services, including all the urban areas, was being met by Government grants. I feel that that being the case, the decision of the Minister for Local Government to conduct an intelligent survey of the rating position to see what anomalies would be found, to see what the position is, is a much more reasonable way of examining the problem than making the ridiculous suggestion that all at once we could transfer the health services from the portion of the rate levied for health services, to the Central Government. It is quite obvious, if the Government are already paying between 50 per cent and 60 per cent of all local services, they are making a very good contribution and the matter will have to be very carefully considered before anything better could be done.

I then made an estimate of how much the farmer was being helped. If one takes the whole of the agricultural aid and the contribution per holding, it works out at £100, that is, the agricultural aid of all kinds which this year the Government are giving. I do not think that can be regarded as niggardly. It is a genuine contribution towards assisting the farmer. We never hear any comment from the Opposition on the numerous increased services to aid farmers provided by the Government since 1957. No reference is ever made to those. I do not suppose the Opposition like to give them publicity, but there has never been a single year in which there have not been new services or aids for the farming community, over and above the contribution to the agricultural rate.

Just to give one example of the type of service which is costly and which makes it essential for us to levy sufficient taxation to find the necessary sums, the total subsidy for lime and fertilisers in 1955-56 was £694,000; this year, it is estimated that the total subsidies will amount to £4 million, a colossal increase and one designed directly to help the farmer increase his production and lower his unit cost of production. To take another example of the effort being made to improve services, we have the arterial drainage grant. Arterial drainage was started in 1945 by Fianna Fáil and the grant was £762,000 in 1955-56. In the coming year it will be £1,800,000——

Mr. McQuillan

And no engineers.

Mr. Childers

——again, a tremendous increase. We hear a great deal from Deputy Dillon about increases in the advisory services. The Vote for advisory services was some £272,000 in 1955-56 and now it is nearly £500,000, which shows how the service has extended since the Government took office. Aid to rural organisations has increased in the past five years. We do not give very much because we think they should act independently of all Government influence but we manage to make some small grants and they have increased in the past six years.

Wherever one looks, one sees evidence of more and more money being poured into the rural community to help them improve their position and I do not think anyone can say that in this Budget we have not done our utmost for the rural community.

I do not intend to repeat many of the statements that have been made already by my colleagues in the course of this Budget discussion. I wish to state again that the country has improved in its economic position in the past five years, that people are about one-sixth better off than they were four years ago—not at all a poor improvement considering the position in which the country found itself in 1957. The earnings of workers have gone up far more than the increase in the cost of living, increasing their purchasing power and making it possible for us, at a time when we need to have greater productivity, greater exports and to think more about increasing output, production and consumption, to impose this small levy on the purchase of goods.

Mr. McQuillan

What goods?

An Leas-Cheann Comhairle

Order.

Mr. McQuillan

Bread, butter, tea and sugar—that is it.

Mr. Childers

I have no doubt that the effect of this Budget will be to stimulate those in business to re-equip their premises——

Mr. Browne

That is the joke of the year.

Mr. Childers

——to re-equip their premises with modern machinery, to consider exports as of prime importance, to supplement their sales at home by increasing their export facilities and looking for more exports. I have no doubt that the increase in the corporation profits tax will have the same effect and should have the same effect of encouraging firms to purchase new equipment, to engage in greater productivity, to undertake work study to see how far they can go in meeting competition that is going to come as a result of the reduction of tariffs. I have no doubt that this Budget will be considered fair by the people when the results of it in expenditure for national purposes are duly considered and duly valued in the coming years.

Mr. T. Lynch

It would be very laughable if it were not so serious. I have listened to the Minister for Transport and Power on the Budget. He was able to tell us what was being done in the Department of Social Welfare and every other Department but he did not tell us what was happening in the Department of Transport and Power or what wreckage he had in mind for the railways in the coming year. I was speaking to a stalwart of Fianna Fáil last week. He said to me: "We are a great Party." I said that that was a matter of his opinion. "We are a great Party," he said. "We are able to carry the liability of the Minister for Transport and Power." There may be something in it.

I must reply to some of the things the Minister for Transport and Power mentioned. He mentioned in particular our external reserves being frittered away by the inter-Party Government in the years 1948-51 and 1954-57. It was a pity they did not fritter away a great deal more of them in 1948-51 in the way that they did it because every house built in 1948 with money that was brought back is worth a great deal more today. The same applies to every school and every harbour and all the other fine public works that were carried out. The external reserves represented money that had accumulated and which could not be spent during the war. They were created through the export of cattle, which Fianna Fáil did not want, and they were lying there. Exports continued but we could not buy anything with the money and it accumulated.

The Leader of Fianna Fáil stated in 1947 that taxation had reached its zenith and could not go any higher. Then they brought in a supplementary budget and put 2d. on the pint. They said they could not do anything for the old age pensioner. They put a tax on spirits and a few other things. The inter-Party Government got into office and removed the tax. The first thing they did was to raise the income ceiling for the old age pension from £39 a year to £104, which brought in hordes of people who would not have qualified before that, and gave them 17/6d. a week. That was not mentioned by the Minister for Transport and Power. That is the dishonesty of Fianna Fáil and Fianna Fáil Ministers when they speak on matters like these.

The Minister for Transport and Power referred to Deputy Costello, the then Taoiseach, going around to the chambers of commerce dinners. Of all the people going to chambers of commerce dinners, we are sick and tired listening to the Minister for Transport and Power, on the Budget and everything else, giving us forecasts about the Common Market and the effects it will have and making incorrect statements such as he has made here tonight, generalising. I asked him several times for quotations but he did not give them. He was definitely dishonest. He said that when the inter-Party Government got in in 1948 everything in the garden was lovely. Do people forget what Fianna Fáil did in a short interval of a few weeks between the defeat of Fianna Fáil at the polls and the coming in here of the newly-elected Government? Do they forget the blisters they put on the necks of the inter-Party Government when they bought £6 million worth of wheat at £50 a ton? That was a bit of deliberate sabotage and deliberate waste of the nation's money.

The Minister for Transport and Power said that the inter-Party Government did not reduce prices when they were in office. I remember when I came into this House the subsidies were put on and they reduced the price of bread, butter, tea and sugar. We carried out our promise.

The Minister for Transport and Power quoted what the then Deputy Lemass said in 1956 to the effect that Ministerial statements were becoming increasingly evasive. That came from the most evasive man in this House who would not answer a civil question to anybody in the House, especially myself. He said that Fianna Fáil are going left. He was talking about Fine Gael being pinkish and Clann na Poblachta being pinkish. When Fianna Fáil go left, I do not know what colour they will be. Fianna Fáil would always be inclined to go left or to follow the Russian procedure. They are following it again. They are bringing out their second economic plan. It reminds me of what they used to do in Russia. There was a five-year plan and another five-year plan and then another five-year plan. I am old enough and have read enough to be aware of what happened in the case of Fianna Fáil. Although not communists, they always had a tender eye for the Kremlin because it was the Fianna Fáil Party outside of Russia that gave Russia its first diplomatic recognition.

An Leas-Cheann Comhairle

Let us go back to the Budget.

Mr. T. Lynch

The Minister for Transport said—and I must reply to him—that the inter-Party Government would not keep their undertakings in regard to finance and that Fianna Fáil would. The Taoiseach said that he would remove the levies if they got back into office in 1957, but he did not remove them, because it was right to put them on. He had to come here and defend them and the Minister had to use them as permanent taxation. It is surprising that a Minister should speak on the Budget and not tell us anything about his own Department. That speaks very badly for the Department of Transport and Power.

In regard to the depth charge called a turnover tax in the Budget, which the Minister for Transport and Power tonight called a purchase tax, I think we should differentiate between the two taxes. A turnover tax is a tax on practically everything, and a purchase tax is a tax on specific articles. The impact of the turnover tax was extraordinary, especially last Tuesday night in the Press. I am not speaking of the Irish Press but of the whole Press of the country. We read in responsible newspapers that there would be no taxation on this, that and the other thing, but now everyone is waking up to the fact that there will be taxation on everything: on bread, butter, tea, sugar, and medicines.

Mr. P.J. Burke

Pepper and salt.

Mr. T. Lynch

Mr. T. Lynch

You discourage me when you say "They may be ..." I wonder will they be. How can I ever air this? I hope they will be and I am sure you will give me an opportunity of letting loose some facts then which I have been collecting over many years.

I do not know how many thousands more the Minister for Transport and Power said we have now working. From the official figures, we know there are 30,000 fewer people in jobs to-day as compared with 1957. But, of course, everything in the garden is lovely. According to Deputy Childers——

An Leas-Cheann Comhairle

The Minister for Transport and Power.

Mr. T. Lynch

According to the Minister for Transport and Power, it will be all quite wonderful for the people who have to pay corporation profits tax. Indeed, he appears to think they will welcome it; it will be an incentive to them to put in more plant and machinery. So he says. I can see them all rushing to do so.

The Minister was ill-advised in bringing in this turnover tax. This will be an appalling imposition on all our people, and especially on the small shopkeeper who will now be compelled to keep records. That will be a penance on these small shopkeepers. I am opposed to this Budget. I came into this Dáil in the days when we had the inspired policy of the then inter-Party Government, the policy of reducing the prices of the staple foods of our people—bread, butter, tea and sugar. Now I am here and the Fianna Fáil Government are going to vote for dearer butter, dearer bread, dearer tea and dearer sugar for our people. The farmer will have to pay more for his raw materials. Everyone will have to pay a tax on clothes, including the ordinary working classes and the small farmer. Even at this late hour, I think this whole business should be reconsidered. Again, it is not a good thing for the Leader of the Government to make important statements outside this House at social functions or cumann meetings leaving us to read them in the newspapers the next day. Such statements should be made here in this House.

It is said that every farmer will get £100—it is said he is being subsidised to the tune of £100. I wonder how much of the £100 actually reaches the farmer? It would be very difficult to convince many of the farmers I know that they are getting any kind of subsidy.

The total figure on the face of this Budget shows what Fianna Fáil promises are worth, Fianna Fáil who hammered their way in here on the disgrace of a Budget for £30 million and the statement that no one should have more than £1,000 a year. But it was Fianna Fáil, too, who put up the green bills all over the country saying they would do away with unemployment and bring back our emigrants. We had the Minister for Transport and Power this evening quoting from this publication of the Taoiseach in 1956—he was then Minister for Industry and Commerce. He did not read out the wonderful bill that was posted up all over the country. I remember it plastered on the big CIE walls in Waterford. One hundred thousand jobs! There was a big picture of the Taoiseach: " `Let's get cracking,' says Seán Lemass. Fianna Fáil has a plan." Surely nobody will deny that that poster appeared and was plastered on every wall. One hundred thousand jobs! The Taoiseach later backed down on that and said that it would be done over five years—20,000 jobs per year. But we have fewer people in employment to-day. That is the truth; it is not propaganda. There is no good in the Minister for Transport and Power striking his breast and saying that this is untrue; he would not, of course, be so unparliamentary as to say it was a lie. But it is true. We had, too, the famous poster and the famous handbill on election day: "Wives, put your husbands to work. Vote Fianna Fáil." It looked as if they were all going into jobs the following Monday.

Mr. O'Sullivan

So they did—in England.

Mr. T. Lynch

They emigrated to England. They got jobs all right there. They were put to work. The last day I was speaking here, I mentioned Great Britain and I was jumped on by a Parliamentary Secretary for doing so, almost as if Great Britain were an enemy tearing us to pieces. It is a good thing Britain is there now giving a job and a decent home to so many of our people, doing something the Government could not do. A total of 600,000 of our people have gone.

The policy of this Government also was to put up money for the undeveloped areas. I drew attention already in this House to the fact that, with all this talk of undeveloped areas and all these Japanese and others being brought in and getting grants of hundreds of thousands of pounds, at the railway station in the city where I was born, thousands of single tickets to England were sold in a period of four months. That is no policy for the Minister to come in here and say he is proud of.

Outside of Dublin, this retail sales tax will be the highest in Ireland in my constituency. That is why I am protesting against it. This retail sales tax will take more out of my constituency than it will take out of any other constituency in Ireland with the exception of Dublin. I have here the Census of Distribution. There is a map of Ireland showing retail sales, per head of the population, in county districts. In Dublin, it works out at £127 a head. Of course, all the people coming up from the country supplement that. We have nothing to say to that—it is all right. We respect our capital city. They often give people better value, maybe, and often they do not. It is the people's business.

Mr. O'Sullivan

Even Deputy Corry has to come to Dublin for his socks.

Mr. T. Lynch

Next, it shows Waterford with £97, Louth, £95, Cork East, £95, Wexford, £92, Wicklow, £81, Carlow, £80, Kilkenny, £76, Laois, £76, going down to Kerry South, with £36. This means that my constituents in Waterford will be paying the highest taxes I mentioned out of all the constituencies in Ireland, barring Dublin. I must protest against that.

A lot of inspectors will have to be appointed. I hope there was a proper examination for this, although I doubt it. I cannot imagine any rational people going in for a thing like this. I am sure there is an easier way of collecting taxes. I am sure there is a fairer way of doing it than to put the poorest people in the country down at 2½ per cent as against the richest people in the country at 2½ per cent.

I do not think I have any more to say about this now except to ask the Minister whether if a creamery sold five tons of artificial manure to a farmer, that would be considered a retail or a wholesale sale. I would ask the Minister also whether, if a merchant or a creamery sold, say, one or two tons of meal to a farmer, it is a retail or a wholesale sale. If it is a wholesale sale it would not be taxed whereas if it is a retail sale it would.

Mr. Barron

I listened to the speech of the Minister for Transport and Power. I am glad other Ministers do not adopt the same attitude and make a most irresponsible statement about what Fine Gael did and about what they did and the rest of them. It is about time we finished with that kind of nonsense in this House. I cannot refer to the Minister for Finance, the Minister for Industry and Commerce, the Minister for Education, and some of the other Ministers. However, the speech of the Minister for Transport and Power was absolutely——

Mr. Browne

Piffle.

Mr. Barron

——disgusting. There has been a change in the method of taxation in this Budget. The Government want money to carry out their work. They must have the money. Heretofore, when taxes were put on any item, the old reliables were: tobacco, the pint, petrol. People knew exactly what they would pay. Under this sales tax, I am sorry to say people do not know what they will pay for any article. How it will be enforced, I do not know.

The Government have passed the collection and the enforcement of the tax on to the business people. I do not think that is the best way to collect it. We have had experience of what happened over the past 25 years when firms were protected by the Government of the day with the money of the people. Those business people, with a few noble exceptions who ploughed back the profits into their business in order to be able to compete, did not use their profits for that purpose. Will there be something of that nature in the present position?

One young Parliamentary Secretary said there is no tax on anything now. I do not see how that argument can stand. The Government will get two-and-a-half per cent on turnover, 6d. in the £. That is small but it will mean a lot of money to the Government in a full year, perhaps to the tune of £11 million to £13 million, which can be put towards the development of the country. That is admitted but how will that increase be applied by the businessman? I wonder is it wise to leave the matter in his hands.

I believe a purchase tax would be far better because this turnover tax means a tax on food. Irrespective of what anybody will say, this is a tax on food. The Minister has given increased social welfare benefits and increases in children's allowances, including something for the first child. For those with large families, for old age pensioners and other people on social benefits, that will cushion the position in a small way but not fully. This turnover tax will hit the poorer section of the people. A tax should never be placed on food. As is well known to anybody who has reared a family, it is a case of: "Mammy, bread and butter".

It is said that in view of competition between firms the tax may not be put on at all. There are very few philanthropists in this country and if at the end of a month business people have to pay the turnover tax they will not pay it out of their own pockets. They will get it from the people who buy goods from them.

I agree that more money will be obtained from this turnover tax than perhaps could be got from a purchase tax on luxuries. The Minister will remember when I mentioned before the matter of putting a tax on luxuries I was asked what were they. Apparently, they are there now. It was said that if a tax were put on luxuries it might interfere with business, that it might cause unemployment. Personally, I do not think it would interfere with business in any way. Perhaps the super salesman of the different firms might impose on poorer people with the hire-purchase system and make them buy but, generally speaking, it is the people who can afford to buy luxury goods who will do so.

I dare say it is not the intention of the Minister or even of the Government that the poorer sections of our people will be most hurt by this turnover tax but I believe that they are the people who will be hardest hit by it. Business people have the means of collecting whatever they have to pay on their turnover. The unfortunate old age pensioner, the unemployed man, the widow, the salaried worker or the wage earner must pay it. They have no means of recouping it and must pay it or do without. The Minister should also consider people living on fixed incomes. I was listening to the former Taoiseach, Deputy J. A. Costello, and he said there was nothing in this Budget for them. In deciding the rate at Dublin Corporation, we have always considered people living on fixed incomes, whose money depreciates every year because of the increased cost of living. Deputy Burke will bear me out that we try to keep down the rates as much as possible in order to help those people.

I do not know very much about the corporation profits tax—I have no opportunity, not being in business— but I think it is unfair to make it retrospective, particularly at the end of the year when people have made up their accounts and have paid their dividends. It may be necessary for some of them to go to their bank manager now. Perhaps the Minister would reconsider that?

Throughout the year, we had speeches similar to what we heard from the Minister for Transport and Power this evening — grandiose speeches from some, but not all, members of the Government about the improvement in our trade returns. Nevertheless, we had a deficit of £100 million. I can understand such a deficit arising but I cannot understand how some Ministers and others give the people the impression that everything is going well, while at the end of the year we find ourselves in that position. Such speeches are all right at a crossroads at election time, but Ministers, no matter of what Government, should be above that. I never heard such speeches from our Minister for Finance, Minister for Industry and Commerce, Minister for Education and others. The Ministers who adopt that attitude should be more modest. People would then be more inclined to believe them when they speak on emigration, unemployment and other matters. We are all Irish, irrespective of how we differ, and our only interest should be our own country, to do everything we can to prevent emigration and unemployment and to get as much work as possible going in order to keep our people at home. They have been going since 1847, when the foreigner pushed them out. Surely we should do our utmost to keep as many as possible at home?

For many years now every Government has passed on to local authorities charges that should be met by the central authority. The health services provide an example. I do not know what they pay in other parts of the country, but in the city of Dublin our rate last year was 47/- in the £. Out of every 47/-——

We have to pay a subsidy on our butter for other people to eat it. I cannot understand that. It would be far better, if possible, that the subsidy be paid to our own people to eat our own butter. It should be possible, if there is not a sufficient market for our butter, to turn our milk into some other product that could be sold. These things should be gone into by the Government and apparently they are not. It is a strange thing that our people should be asked to pay 4/7d. a lb. for our butter while other people across the water, who cannot get enough of it, get it for 2/6d. a lb. To any ordinary sensible Irish person that seems very strange.

The last matter I would like to refer to is our national debt which is now £531 million. On that we pay interest of £28 million. I was looking at the current Budget, Table No. 63, and I noticed that the amount collected last year in income tax and surtax was £31 million. So it seems that the amount of income tax we pay in this country has to go to pay the interest on the national debt. Year after year the Government of the day have to borrow money at a high rate of interest but it is difficult to understand that any Government should have to pay away all the income tax they collect on the national debt.

The national debt was incurred with the best intentions. It was done to get things going, to get industries started and to improve the national economy but perhaps we moved a little too fast. Perhaps the Government should have waited until the money was on hands so that they would not have to borrow it at a high interest. I cannot see why the Government should not differentiate between the interest paid on money borrowed for the building of schools, the building of Garda barracks and other non-productive works of that sort and the interest paid on money borrowed for business purposes where profits can be made. There are no profits to be made on the building of schools, Garda barracks, houses or playgrounds for children. That is a matter that should be looked into and if the Minister did so he might be in a position to get money at a cheaper rate for non-money producing works.

There is little else to be said on this matter except that we have a rising cost of living which naturally follows increases in wages and salaries. The greater the increase in wages and salaries the greater will be the lump sum to be given to servants of local authorities and the State on retirement and the greater will be their pensions. It is about time that we in this country should set up a commission to go into the whole matter of salaries and wages in connection with the cost of living. We have no control of prices and perhaps such a commission would help also in that matter. Unless prices are controlled wage earners and salaried workers will always look for increases to counter increased costs. If the Minister is not in a position to set up such a commission now he might keep it in mind for the future.

Mr. P.J. Burke

Listening to some of the statements made here by Opposition Deputies, to some of the statements made by public men outside the House and to statements made by responsible trade unionists, I am going to put it to them, if they were concerned with the national economy and if they were honest with the people, what would they do in the same circumstances? The first thing they might consider doing is what the inter-Party Government did in 1951 when they left office with an unbalanced Budget. If the present Opposition were faced with the problem of balancing the Budget and keeping national development going, what would they do?

I do know what they did in the past. In 1948, they got the country in a sound financial position and in 1951, they ran away from their responsibilities and retarded the progress of the country. I do not want the people to fall into the same trap as they fell into in 1948 when they defeated Fianna Fáil. We have faced up to our responsibilities and we have taken a long-term view of the development of this country. Everybody who spoke on the hustings in 1948 told the people to put out Fianna Fáil because of the tax on beer.

Opposition speakers asked us why did we not tax luxuries and leave other commodities alone. We did tax luxuries in 1947 and we subsidised bread and butter and other things when we taxed beer, cigarettes and other commodities. Then there was an outcry and the people fell for it and put us out of office. I hope the people will remember the way they were hoodwinked in 1948. It was a terrible blow to this country that Fianna Fáil were defeated at a time when we were going ahead. The economic prosperity of the country was retarded for years as a result of an irresponsible Coalition. Directly any economic pressure was felt, they fell out amongst themselves and we had a general election.

In 1952, after we came back, we were faced with the most difficult problem of all times and the Minister for Finance had to balance his Budget again. Then the "Merchant of Venice" was brought out again and the play was rehearsed at great length. They had cures for all ills and when we went to the country in 1954 we were defeated. Why were we defeated?

Mr. O'Sullivan

Why did you go to the country?

Mr. P.J. Burke

Because we had not got a majority.

Mr. O'Sullivan

You have not got it now, either.

Mr. P.J. Burke

We were defeated because the same misrepresentation went on, that we had no need to bring in a tough budget in 1952. Were we to let the nation drift? Were we to sabotage the efforts of the men who gave their lives for this country, or of the people who had put money into the country? That is what we were expected to do and bring in popular budgets. I am appealing to the better judgment of the people to consider these two phases in Irish history. In 1954, when the inter-Party Government came back to office, Fianna Fáil had the country in reasonably good shape. We had not got it in as good shape as we would have liked but we had balanced the budget and prosperity was on the upward trend. We restored confidence to the people and buildings were going ahead and industry was also going ahead and industrialists were getting into foreign markets. Generally speaking, economiclife was stable.

After three years of inter-Party Government, the people were faced with the same problem they had in 1951. We were left with an unbalanced budget. There was not a Minister or a Parliamentary Secretary who would face up to his national responsibility. They have criticised the Minister for Finance because in 1957 he had to do a tough job. The Minister has my greatest sympathy because he had to come along and for the third time try to put the nation back into a strong financial position and pay the debts which the inter-Party Government left behind. I often think of the people in County Dublin who left their houses overnight and even left some of their furniture behind them; of the builders who could not get their money and of the Act which was brought in to stop a man with £10 a week from getting an SDA loan. There was no money in the banks and they were squeezing anybody who owed them money. The building societies were in the same position. We had to face that national crisis again and we were prepared to do the unpopular thing. Any political freedom we had in 1957 was nearly gone because our economic freedom had been sabotaged.

Are the people going to depend on the criticism of the people they trusted on two occasions and who sold them "down the river"? The people are still gullible and can be sold again because of the whispering which will go round about the 2½ per cent tax and the vicious statements that can be made about it. If we were to cut down on national expenditure, what would be the result? The purchasing power of the people would fall immediately. They would not be in receipt of the profits they have today due to the nation's prosperity. The income of our people has increased, even during the last year, by some seven per cent due to the nation's purchasing power.

The people on the opposite side of the House ask us to do certain things, to increase old age pensions, to increase widows' and orphans' pensions and to increase special allowances of all kinds, but when we do anything like that they vote against it. I do not see my old friend Deputy Donegan here tonight. He is always talking about the farmer getting a better price for milk. I do not find fault with that. We are all anxious for the farmer to get a good price for milk. I have been advocating that for some time but I do find fault with the hypocrisy of Deputy Donegan and others because when the Minister decided to give over £1,200,000 to the farmer to increase the price of milk by one penny a gallon, the very people who had been advocating that voted against it.

The division lists show how votes were cast by Deputies who are supposed to be friends of the workers, who are supposed to ask the Minister for Finance to increase the old age pensions, Old IRA pensions and all other pensions. They often challenged a division when they wanted these increases granted by way of private motion. Directly the Minister for Finance wanted to do this and had decided to do it, what did they do? As soon as the Minister for Finance introduced it in the Budget, the Fine Gael Party voted strongly against an increase in old age pensions. They voted against an increase in social welfare benefits. They voted against an increase in Old IRA pensions and military service pensions. They voted against an increase in the number of social welfare services and, if you do not mind, the Labour Party did the same. I waited until I got a bound volume of the debates here to see the names of those who went into the division lobby to vote against increases in social services.

Deputies cannot have it both ways. If that is not hypocrisy, I am a Dutchman. I have heard the most complete hypocrisy I have ever listened to in the short time that I have been listening to this debate.

The Minister is supposed to give increases in these services. It is considered a laudable political act to put down a motion in the House asking for an increase of 5/- a week in the old age pension but when the Minister agrees to do that, the attitude is that he can give it out of his own pocket or from anywhere he likes, but if he tries to give it in the only way he can give it, that is, through taxation in some form or another, the suggestion is repudiated immediately. That is the position we have to face in this democratic Parliament. That is why I say there is a dishonest approach to the problems facing the country. That is the cause of the misrepresentation and hypocrisy that is going on outside.

If the Minister were to suggest cutting down the moneys provided to stimulate national production, to help agriculture or industry, what would be the result? It would simply mean putting the clock back, that mechanisation of agriculture could not take place, that we would revert to the spade and the old plough.

Those who have commented adversely on the Budget should know better. They should realise that a Minister or a Government will not increase taxation unnecessarily. To increase taxation is the most unpopular thing any Minister for Finance or any Party could do, irrespective of the purposes to which the increased taxation may be devoted.

The Minister for Finance has done great work for the country since he took over the Department in 1957. I hope that some day the nation will realise how honest he has been, how sincere he has been, in promoting the national welfare, in trying to maintain and increase the purchasing power of the people. We have heard Deputies, including Labour Deputies, suggesting that certain commodities should be taxed but that there should not be a general tax. Does every Deputy not know that in regard to drink and tobacco to increase taxation would be to kill the goose that lays the golden egg, that these commodities have been taxed to the limit, that there is no point in taxing them out of existence? The best way to secure the necessary moneys was to impose a general 2½ per cent turnover tax. It is a fair tax.

As a result of the policy of the Government in promoting national prosperity and economic development, trade generally has increased to such an extent that it is easier for the people to pay this tax now than it would be if there were a slump or if the Fianna Fáil Government were to do what the inter-Party Government did, namely, run away completely from our responsibilities and leave the ship, have a general election and let others take over. It would be disastrous for the nation if we were to do that. I never thought I would see such dishonest tactics in the public life of this nation as I witnessed during the two periods of office of the inter-Party Government.

Unfortunately, a number of our people will not give serious consideration to matters of national importance. That is why I have spoken tonight in this debate. It will be a serious matter for the country if the people can be fooled again into believing that if they put in "John Murphy" as head of a Government, "John Murphy" has the cures for all ills.

A Government can get money only from the people. Social services can be increased only according to the prosperity of the country. Under a Fianna Fáil Government, the standard of living of the workers has increased. Their housing conditions have been improved. They have got better employment. Generally speaking, the nation is on the upward march. We do not want anything to happen that would retard progress again.

We have heard petty statements to the effect that the price of butter, pepper and salt will be increased. There is not a trader in this country who cannot say that prosperity has increased, that his business has improved. That is due to the increased purchasing power of the community. For that reason, traders are in a better position to stand up to the small tax imposed in this Budget. On the other hand, if they do not want to stand up to it, if they want to sabotage the national economy, they can say to the Minister for Finance: "we do not want any taxation".

I never thought I would live to see the day when Deputy Norton would vote against those increases. It is down here in black and white. Deputy Browne and Deputy O'Sullivan voted against them, too.

The Dáil adjourned at 10.30 p.m. until 3 p.m. on Wednesday, 1st May, 1963.

Dáil Éireann debate - Tuesday, 30 Apr 1963