I have heard Deputy O'Malley speaking as Deputy O'Malley and as Parliamentary Secretary making some good convincing speeches, but never on all the occasions I have heard him speak in this House did I hear him so unhappy, so obviously distressed and so obviously unconvinced of the truth of what he was trying to say. In fact, I could not help feeling very sorry indeed for him, in having, out of loyalty to his Minister, to get up and make a speech defending something he knew was quite indefensible. I will say this, however, for it—it was much more pleasant to listen to than the other speech from his side of the House we heard earlier to-day, when the gentleman, who, I think, is chairman of the Party, seemed to imagine that noise was a substitute for intelligence. At least, the Parliamentary Secretary spoke in restrained and dulcet tones, because that was really all that was pleasing about his speech.
This Budget and, indeed, any Budget should be judged on whether it is going to promote economic growth, whether it is going to provide an opportunity for our people to obtain a permanently better standard of living. That is not merely the test on which this Budget should be judged; it is the test on which any Budget should be judged. On that test, no matter how it is applied, this Budget will be found to be defective. It is a bad Budget, a Budget that does not take proper account of the needs of the time, of our economic position. It is a Budget that does not, in the incidence of its taxation, provide for a fair and just distribution, a Budget that does not in the manner in which it was presented make for that certainty which is obviously one of the requisites for economic growth and progress. It is not going to achieve progress but rather to retard it.
I want to state categorically and, in case the Parliamentary Secretary might misunderstand it, I want to say that this is a political observation, that no Minister for Finance has ever introduced a Budget in this House and shown at the end of that Budget how little the implications and effects of his proposals are really understood. It is extraordinary that, at the end of the Budget, the Minister was able in so small a degree to explain the implications of the proposals he had just announced.
I want to be perfectly clear in stating that we regard this Budget as a bad Budget, not designed at all to meet the needs of the moment. Furthermore, speaking on behalf of Fine Gael and speaking with some responsibility and a little experience in these matters, I would say that this is a Budget we would ask the people to reject and we would ask the Government to give the people an opportunity to reject, in an immediate general election. We ask the people in Dublin North-East to give strength to that call for a general election by their vote in the by-election and we believe that if there were a general election at the moment, the effect of it would be to remove Fianna Fáil from office and to give to Fine Gael the task of forming a Government.
If the people are given the opportunity of having that general election now and if we are given from that general election the task of forming a Government before this Budget goes to its full implementation on 1st November, I want to say clearly on behalf of Fine Gael that we will introduce a different type of Budget, that we will not adopt the Budget introduced by the Minister for Finance on behalf of Fianna Fáil. I am saying that with full deliberation and with complete knowledge of what might be involved, with full appreciation of the difficulties there might be in the introduction of a different Budget in which will not be included retrospective taxation, a Budget which will not include the turnover tax announced by the Minister for Finance to come into operation on 1st November next.
I will come to the reasons why we make that declaration later on but I want it to be clear that I am saying that, with the knowledge I have, another Budget can be brought forward by us if we are given the opportunity now of doing so. It would be a Budget that would provide assistance for our economic growth, one that would ensure that the primary and fundamental principles of taxation were observed, that whatever has to be raised will be taken fairly and evenly from all sections of the people. I am asking, on behalf of Fine Gael, that the people be given the opportunity to judge now and if they are given that opportunity, we will abide by their judgment. If they give us that task, we will carry it out in that way for the reasons I am going to indicate now.
Any Budget should be judged, not on whether it is soft or tough, not on whether it is bad or good in the ordinary popular sense but on whether it is bad or good in the sense of whether it is going to promote economic growth and improve permanently the standard of living of our people. Everybody in this House, every member of Fianna Fáil, every member of Fine Gael and everybody else, would like to increase at once to the maximum degree the amount of assistance that can be given to the weaker sections of the community; but the only reason anybody stands back from immediately doing that, be it Dr. Ryan or anybody else, is that he knows that if more is done at any particular time than the country's economic growth can stand, the effect is not going to be to improve the lot of the weaker sections of the community but rather to ensure that the weaker sections, instead of benefiting, will suffer.
I want to make it clear, having regard to some of the things I heard earlier to-day, that I do not consider that anxiety to promote the welfare of the weaker sections of the community as the prerogative of any one Party in this House. We are all anxious to do it but the various Parties differ as to the way in which it can be done. The aims of most of the Parties are exactly the same but the policies by which those aims may be achieved differ and it is the difference in policy that makes the difference between Parties, not the difference in aims. We all have the same aim, to endeavour to ensure that we will permanently improve the lot of all our people here. When we turn to what occurred in 1962, we must therefore consider it against that background. The first thing in relation to the year 1962 we must look at is the outturn of the current Budget introduced by the Minister last year, an outturn that showed he had a deficit of just under £5 million, a deficit that means that everyone in the country must contribute towards paying for the next 20 years an annual sum of about £240,000 to make it up. Clearly, the Minister was right in assuming that he could not continue with an increased deficit this year. The Taoiseach spoke about deficit financing but the fact is that Budgets have been brought in on a deficit basis in Ireland for the past ten or 12 years, if one considers the method of computation adopted in England.
That is not the point at issue here; it is whether the Minister was wrong last year in having that deficit. He was. It arose not because of failure in revenue, as revenue on the whole was more buoyant last year than he expected, but because he failed to control expenditure last year. It is a fact—an unpleasant one, perhaps, for those interested in the office of Minister for Finance—that it is the task of the Minister to control expenditure to ensure that it stays within the capacity of the nation's purse. The Minister failed last year in that respect. The buoyancy in revenue this year provided, in the ordinary course of events according to the estimates made by the Revenue Commissioners, without the Minister doing anything about it, sufficient, and more than sufficient, to make up that deficit, but it would be in certain circumstances permissible to increase a deficit. In certain other circumstances, a deficit should be wiped out and, indeed, some of what is now used as below-the-line expenditure, be it for capital services or otherwise, should be taken in. This year, it is perfectly clear, in view of the balance of payments position, that the Minister should not look to the Budget for a continuance of the miscalculation he made last year.
National production last year showed a decelerating trend of increase. It showed that the impetus that had been created in earlier years was tapering off and wearing out. Gross national product at constant prices was not showing anything like the increase that earlier years promised. The table included at No. 12 (b) of the Pink Book showed an indication that the curve of economic growth was flattening and that it was not rising as we would all wish. The trade figures we have seen, as indicated by the Minister himself in his Budget speech, show a serious deficit on our balance of trade, offset to some extent by invisible exports but at the same time—and this is the serious point about it—a trend of an adverse balance of payments that is steadily rising quarter by quarter.
If one takes the 12 months up to March 1962, the 12 months to June, 1962, to September 1962 and so on, all the way along in each quarter, we find that the balance of trade figures are steadily rising against us. Nobody minds a short hump of an adverse balance of trade. Even of the order that existed in the last calendar year, it would not make the slightest difference if it were clear that it was a temporary hump but the serious feature of it is that it is rising quarter by quarter. If you take the 12 months to March 1962, the adverse balance of trade was £82 million; to June 1962, it was £85 million; to September it was £90 million; to December, it was £99 million and to March 1963, it was £102.3 million. When you have an ascending adverse balance of that sort, coupled with decending exports, it is clear that a Budget is called for which will help to rectify that position. I see little evidence of that in the Minister's Budget.
We had an increased national income last year also and the Statistics Office itself says the greater part of the increase was due to a change in money values. We know, as the Parliamentary Secretary said a few minutes ago, there is no use in increasing money incomes if they cannot buy more and yet in relation to the Minister's national housekeeping last year, the Central Statistics Office says that the greater part of the increase is due to changes in money values.
For the first time this year, we had a separate publication by the Minister in relation to the capital Budget. I am, and always was, sorry that the Minister was constrained by political difficulties to do in 1957 what I had announced I would do, that is, introduce to the House the capital Budget at a different time from the current Budget. It is natural and inevitable that if you introduce the capital and current Budgets together, people will give more thought and attention to the current Budget and the capital Budget proposals tend to be overwhelmed and not to receive the publicity they should get. Publication of the booklet Capital Budget, 1963 this year goes part of the way towards what was suggested. I welcome that advance but I am sorry we are not going the whole way so that we could have a discussion on the capital Budget alone, unhindered by considerations of current budgetary problems.
I made it clear long ago, speaking authoritatively on behalf of this Party, that we believe that the proper basis for a capital Budget is that it should be the highest possible productive capital Budget that the country and the people could support. My quarrel with the Minister for Finance in relation to his capital Budget provisions, not merely this year but over the past years, is not on the amounts, although I think he made a grave error in 1957-58 and 1958-59 in unduly depressing the capital Budget figures of those years below the amounts I had indicated were going to be put forward. My quarrel with him is not about the amounts of the capital Budget but about the fact that it is apparent from the figures with which we are faced this year that the capital Budget has over the years not been expended in such a way as to produce an adequate return, either direct or indirect.
Only a Government are in the position of having the confidential information, having the confidential assessments before them, of various capital requirements, capital schemes. An Opposition cannot, of necessity, know many of the confidential matters that are known to the Government and to the Ministers concerned about the proposals made in relation to the expenditure of substantial sums of capital. We had an example of that recently in connection with the fertiliser factory. The Minister for Industry and Commerce came in here and told the House that he had information on which he was able to assess the value of the scheme but that the information was confidential and could not be given. Ministers came in here before in relation to the guarantee to be given of State money, taxpayers' money, to the Avoca mines. They said that they had confidential trade information that they could not give to the public at large or to the House. They had to accept the Ministers' judgment. An Opposition, no matter how much it may dislike it, in the absence of that confidential information, cannot always arrive at the position of being able to examine as it would wish proposals for the expenditure of substantial capital sums.
I am certain, for example, that if one had available all the information I have now in relation to the expenditure of vast sums in Dundalk, at the time the money was being voted, we would have raised very arched eyebrows about the foolhardiness of going so inefficiently about the job of trying to protect and preserve the employment of the people in the Great Northern Railway Works in Dundalk. It was right that steps should be taken to try to do everything possible to protect their employment but we know now that what happened was that it was not protected, that instead, a great deal of money was lost that should have been put to proper productive use. It is examples like that, and the failure of the Minister to put the money to productive use, that have made his capital Budgets over the years fail to provide the buoyancy and the direct returns that could be shown in this year's account, and so avoid some of the problems with which he is faced.
The Minister in his Financial Statement naturally and properly went on to talk about employment, unemployment and emigration. In the few remarks I am going to make, I am quite deliberately following the pattern of the various sectors of the economy that he took in his Financial Statement, doing it in that way for his convenience, so that he will have an opportunity of dealing with it and of assessing my comments against his own.
In relation to employment, we have a situation which is difficult to understand, a situation described not, I hasten to remind the Parliamentary Secretary to the Minister for Finance, by Fine Gael propagandists, but by the Central Statistics Office when they said that there has been a gradual but cumulative over-estimation of the total number of persons at work throughout the intercensal period. "Gradual and cumulative over-estimation of the number of persons at work." Yet, when we study what is published in these Tables in regard to employment, we find that the numbers engaged in all transportable goods, industries in 1962 went up by only 3,600, that the number of males engaged in farmwork, as permanent paid employees, came down by 3,500 and, in relation to temporary employment, came down by 1,700.
What do those figures mean? Leaving out the number of families at work on farms, what do they mean? They mean that if you take Tables 7 and 8 together of Economic Statistics, there are declared by the Central Statistics Office of the Government to be fewer persons in paid employment in Ireland in 1962 than there were in 1961. Leaving out family labour altogether, taking purely paid labour on the land, on the one hand, and in transportable goods industries, on the other, the figures show that the number in transportable goods industries is up by 3,600 and the number of permanent agricultural employees is down by 3,500—a difference of 100 in permanent employees and, as I have said, there are 1,700 fewer paid temporary employees on the land.
We all know in relation to farm labour that wherever you go, to whatever county you go in Ireland, there were fewer people at work on the land last year than there were the year before and the year before that and the year before that again. The Taoiseach has made the point here again and again, in an effort to explain away these figures, that he does not consider the criterion of family labour worth considering. We do. But, even without going into that at all, there were fewer paid employees in agriculture in 1962 as compared with 1961, on the one hand, and transportable goods industries, on the other.
Again, if we turn to the booklet Economic Statistics, we find that agricultural output is virtually steady— no increase—and that the increase on the industrial front is on a decelerating scale. It is natural therefore—I hope to take other opportunities of reminding the Taoiseach of this—that we should feel, and the country should feel, that this is a far cry from the 100,000 jobs promised in Clery's Restaurant in November, 1955. The people were told at that time that this was a coherent plan and scheme, that there was nothing airy-fairy about it, that there would be so many jobs the first year, so many jobs the second year and so many jobs the third year. They were to be divided out. So we were told in that famous, or should I say, infamous, speech made in Clery's Restaurant for the purpose of duping the electorate at that time. When I heard the Taoiseach speaking the other day of a new plan, I wondered how many of the promises in that new plan would go the way of the promises made in Clery's Restaurant some seven and a half or eight years ago.
I will not go through the list of increases in prices. The Minister himself in his Budget Statement admitted and acknowledged that consumer prices were up last year. By the look of them this year, from what we see in the Economic Survey published by the Institute, there is a prospect now of their increasing still further. I shall not tantalise the Minister because it does apparently tantalise Fianna Fáil to be told about the cost of living and the increase in the price of individual items, but the fact is that, however much it may tantalise the Minister here, it tantalises the housewife far more when she goes into the shops to buy that which she has to buy.
As I said, agricultural output is virtually static; in fact, net output this year is shown in Table 6 to be slightly down on last year. Is it not a strange commentary on the boasts that this Government have made as to the efficacy of the way in which they have helped agriculture so much that net output in 1962 was less than in 1961? It is no use taking gross output because we want to ensure that the land is farmed and not mined. Net output shows that.
Let us hark back now to economic development and to the basis of economic development in relation to agriculture. It was stated that we must take proper and adequate steps to ensure that we would increase our cattle population. The objective of policy, it was stated, and this was repeated in the Government's policy statement, would be to increase cow numbers progressively to at least 1,500,000 by 1964. If that were the objective of policy, is it not pretty obvious now in 1963 that that policy has completely failed and that the Minister and his Government have been failures in getting anywhere near that objective? Is that not one of the reasons why we have a static net agricultural output?
The Government have completely failed to provide the 50,000 a year extra breeding stock they set out as the foundation of a proper agricultural policy. It is no good saying that the reason for the failure is the necessity for implementing the scheme for the eradication of bovine tuberculosis. They knew the bovine tuberculosis scheme had to be put into effect at the time they were setting out this objective and telling us their policy was going to achieve that result. The fact is, of course, that it did not achieve it and I cannot see anything in this Budget designed to improve our chances now of reaching that objective by this time next year.
If we read the figures sent out by the Economic Institute, we find that to-day, in this year of 1963, there will be a reduction of some two per cent as compared with last year in industrial exports. I freely admit that it is quite impossible to be accurate at this time of the year to within one or two per cent, but the fact is that our imports are increasing and the balance of trade is rising steadily against us. We know, therefore, that if we are to have at best a static figure for exports, the effect will be far from encouraging on our whole balance of payments position. The latest estimate—it is, of course, only an estimate—is for a six per cent increase in home production. If there is a decrease of two per cent in exports, not merely have we got to have that two per cent decrease in exports wiped out but we have got to ensure a substantial increase in industrial exports this year if we are to be able to meet, and survive, the increasing imports month after month.
I see no sign whatever in this Budget of anything that will help to promote the growth of exports to meet that situation. In fact, I think it is true to say that this Government have done nothing in relation to exports other than to increase the incentive that we provided for exports in 1956. We were suffering then and we are suffering now—and only gradually getting over it—from the effect of the Lemass policy of the thirties, which was to concentrate public attention on trying to build an island wall and trying to ensure that we would not be an outward-looking people in relation to our production but an inward-looking one. Naturally, the difficulty of changing people's outlook on that is one that took and is taking a considerable time to overcome, but it is true to say that it was the Lemass inward-looking view, so often expressed all through those years in the thirties, that was responsible for the export troubles in which we have found ourselves in the post-war era.
If we are adequately and permanently to increase our standard of living, we must increase our exports substantially. We must do it on both the agricultural and the industrial fronts. Industry needs more help than mere financing. While we want to get the technical know-how as far as we possibly can from people outside the country, at the same time, we want to get psychologically the belief among our own people that they will have every bit as good a chance of improving their production as the foreigner coming in. There is undoubtedly abroad at present the feeling that if you want to get assistance towards the expansion of an industry, you have a better chance of getting it if you are a foreigner. That must be killed. We must go on making it clear again and again to our own people that it is on them the results depend and that though we want to get all the technical know-how and skill we can from people outside, we shall provide for our own factory owners and workers, for our own businesses, the means and the ability adequately to expand and to modernise.
Does this Budget do that? On the contrary, this is one of the three aspects in relation in which I venture to say this Budget will be known as the rob-the-till Budget. The only way existing industry can modernise and expand is out of the profits it earns. It must do that and the imposition of this retrospective corporation profits tax is a blow at modernisation, at productivity and at increased employment. It is easy for people like Deputy Nicholas Egan to say that it is taking something from rich profits. If it were desirable and necessary to tax profits, there was a proper way to do it, but this does not hit the profits that are being taken out of industry. It hits the profits that are being left in industry for the purpose of creating greater employment in future.
It would have been a perfectly simple matter for the Minister to provide a type of tax, differentiating, on the one hand, between profits distributed and taken out for spending and, on the other, profits retained in business and ploughed back for the purpose of modernisation. Corporation profits tax does not do that. Corporation profits tax strikes at the root of the funds necessary and available for expansion of employment, for increased productivity, for bettering the standards of the workers working on these machines, for the provision of a better chance of competitive export. Modernisation and productivity could bring down prices. Far from this Budget doing anything to assist industry in that respect, it has done exactly the reverse. It has hit it a body blow which will be felt not by the people who are drawing their profits out of industry but by the whole community because the hope of the increased employment, increased production, increased productivity and increased modernisation that those moneys could have provided is now gone as the result of this stipulation by the Minister.
Other improvements could be made in relation to the assistance necessary for industry to increase exports. Technical assistance grants, by their nature, are limited and though I believe that a development bank, such as operates in other countries for industry, should be operated by private hands, it should be assisted and promoted by the State. A development bank, which has been a great success in other countries, would assist in the provision of finance, as the Industrial Credit Company does and, I think, does adequately—if we can get over the feeling our own people have that it is only for foreigners, with which I do not agree —and could have governmental financial support. There could be some form of subsidy to the development bank which could provide the technical advisory functions utilised in other countries and could operate a wider type of technical assistance scheme. That would be a worthwhile scheme.
Training of management personnel is something that has been tackled by the Management Institute but it must be tackled in a much wider sphere, if we are to get that outward and forward-looking approach to our industrial export problems. Again, I see no sign of any such constructive proposition. I think I am right in saying that the World Bank provides special facilities for that type of exchange cost of consultant. I wonder whether it would be possible to stimulate here something of the American concept of the independent consulting engineer, which has broadened during the past two decades or so into the management-cum-engineering consultant firms, and have it accepted on a wide basis throughout the country. We must show some imagination and some belief in the practical manner in which we can assist those in industry and those in agriculture to meet the problems with which they are faced.
The survey given by the Minister of the economic position failed to indicate any positive increased constructive approach. It failed to indicate any positive increased hope of substantial growth. The Taoiseach, when he spoke on the Budget of veering to the left, was, I think, only playing with a political catchcry. Nobody could suggest that he gave any concrete evidence of what he had in his mind except another fake Clery's employment plan.
Against that picture and pattern, what has the Minister done in this Budget? He found, and I agree with him, that tobacco was unlikely to provide substantial additional tax revenue, that the consumption of tobacco in pounds weight was down on that of the year before. Spirits, as the result of the blow he dealt it last year, was not merely down on home consumption but the base for exports was also down. He said he could not turn to these as the two main normal sources of indirect taxation. However, he did, all the same, turn to them and included them in his other proposals. The tax he announced and with which I shall deal later was in fact the equivalent of 1d. on the packet of cigarettes and 1d. on the glass of whiskey, though he said himself he did not think they would take it. It looks at least possible, therefore, that the effect of his imposition in that respect may slow down and may harm the goose that has laid the golden egg.
The Minister started off, when looking for his money, by taking balance out of revenue. Surely the Minister for Finance will not seriously tell the House that to balance this year's Budget by taking £2 million from the revenue balances is an honest transaction when he had a Budget deficit of £4,857,000? He must have known in March whether he would safely be able to do without that revenue balance. If he is able safely to do without it—he is or he is not—he must have know in March; nothing has happened since. PAYE is providing the flow of revenue to which he refers. He must have known in March he would impose one or other type of sales tax which in the future would provide an even flow.
If the Minister knew and thought then—and he should have known then, if he thought about the matter—that that £2 million revenue balance was not required, the honest thing to do with it was to pay it into the Exchequer account before 31st March so as to reduce last year's deficit by £2 million. Instead, what he did was to take it out. It is what I would term a fake accounting transaction for this year— robbing the till. I am not the person who coined that phrase in this respect. The person who coined the phrase "robbing the till" is no less a person than the Tánaiste. When the suggestion was made that the revenue balances need not be kept quite so high —not that they should all be taken away but that they need not be kept quite so high—he said that would be robbing the till.
The Minister for Finance is already robbing the till in the corporation profits tax of the money that would be there for modernisation and increased employment. He is now robbing the till in relation to this revenue balance. Further, on his own saying in relation to the turnover tax, he will rob the till of every shopkeeper in Ireland, if he does not want them to pass on the tax that is being imposed. These are three ways in which I think this Budget will become known as the "Rob the Till Budget".
Naturally enough, there have been a great many different viewpoints on the manner of operation of this so-called turnover tax. I use the words "so-called turnover tax" quite deliberately. This is not a turnover tax as known by any economist, nor is it a turnover tax as known by the Fianna Fáil Government themselves. For the purpose of pulling a trick of the loop on the people, they have changed the name. This is a retail sales tax. Lest anyone should wonder why I think so, I would refer them to the Government White Paper on Direct Taxation published on 19th April, 1961. In Chapter III there, they deal with the turnover tax proper; with the value added tax; with a retail tax, a manufacturers' tax, a wholesale tax and a purchase tax.
The Minister for Finance, when explaining on Budget Day what this is, made clear that this is a tax which will operate exactly as the tax operates in Norway and in Sweden. I cannot remember whether or not he mentioned America. However, he said it works successfully in Norway and Sweden and that the tax he was proposing was exactly the same tax as was in operation in Norway and Sweden. Here is what the Government said, two years ago:
The retail tax; this is a single-stage tax levied at the retail level.
It is widely used as a source of state (as distinct from federal) revenue in the USA and as a local tax in the Canadian provinces. It was employed in Sweden in the period 1940-48 and was re-introduced there recently. It is also in use in Norway.
I want the Minister for Finance to tell the country simply, quietly and categorically why he changed the name of the tax he has now introduced from the name he gave it in the Government White Paper published in April, 1961.
A turnover tax is a multistage tax. The French system to which, I think, the Minister also referred, is not a retail sales tax of this sort. It is turnover tax and the value is added back by each retailer and by each wholesaler as the goods pass through the chain of distribution. The French system is a tax on the amount the particular person in the chain and industry believes should be added back before he passes on his goods to the next stage in the distributive chain. That is generally accepted as being a type of turnover tax and indeed the White Paper in paragraph 34 refers to the turnover tax as a general cumulative tax or multistage tax applying to sales in all stages in productive and distribution channels covering all goods and services.
I want to know what good and valid reason the Minister can give for changing the name, other than that he was trying to cod the people as to the manner in which this tax is to work. I want to ask him in what other countries specifically is this type of tax operated as he intends it to operate in Ireland. Let me say at once that I agree with him on one thing and one thing only: a single stage tax is preferable to a multistage tax. I want to ask why it is that he announced in his Budget Statement and in relation to the Resolutions passed on that day, that it was going to be possible to take out of the orbit or ambit of this tax certain raw materials but not possible to take out necessaries of life like bread, butter, flour, tea or sugar. Perhaps I was wrong and that he intended to tax fertilisers, for example, for the farmers, but he indicated that he did not want to tax raw materials. If a hardware shop in the country has a grocery in one section, hardware in another and sells fertilisers to the farmers in a third section, why will it be possible to extricate from the turnover of that shop the money that comes into the till for fertilisers, while it will not be possible to extricate and take out of the ambit of the tax the money paid for bread and other necessaries of life? What can be done for one could be done for the other.
It seems to me quite indefensible that any Minister for Finance should impose a tax on every type of retail sale which meant that the same rate of tax was paid on the necessaries of life as on the luxuries of life. No Minister for Finance likes imposing taxation. I do not believe that even Dr. Ryan as Minister for Finance likes it, although I think this has been imposed this year for a particular purpose to which I will advert in a minute. No Minister likes imposing taxation. I did not like having to do it. I did not like having to do it in 1956 for the purpose of getting a more solid framework on which it would be possible to get economic growth, but when I did do it, I made very sure that I placed a higher tax on luxuries than on necessaries. I made very sure that the ordinary necessaries of life were not taxed at the same rate as luxuries which people could, if necessary, do without.
The fundamental objection to this tax is that it imposes exactly the same rate on the loaf of bread as on the fur coat, to take two extremes of the scale. It imposes exactly the same rate of tax on food of all necessary descriptions as it does on food of exotic descriptions. It imposes exactly the same rate of tax on necessary articles of clothing as it does on those that may be pleasant for those who have sufficient income to buy them but which are definitely luxuries and not part of the necessaries of everyday life.
That infringes the cardinal principle of taxation that taxation must bear fairly on those who must pay it. This tax does not and it is primarily because of that that I made it very clear in the beginning that if the Government now give the people the opportunity they want to test this Budget by a general election, we will ask the people for a mandate to enable Fine Gael to form a Government, in the knowledge that we will bring in a different type of Budget, a Budget designed to meet the economic needs of the moment and to ensure that this type of tax hitting the necessaries of life just as hard as the luxuries will not come into force next November. That will give a better chance and opportunity for those in agriculture and those in industry not merely of increasing production but of increasing the exports we must have if the country is to survive.
