Before I make a statement dealing with those motions, I already notified you, Sir, that I intended to mention the procedure which should be followed. In the case of a Budget Statement, the practice is that short statements are made by the Leaders of the main Opposition Parties after the Budget Statement has been made. This statement refers to three Resolutions and it will be in the form of a Budget Statement as such. I would propose at the end of the statement formally to move the three Resolutions. Those Resolutions will be circulated during the reading of my statement. In the case of the ordinary Budget Statement, these Resolutions are not circulated until after the Budget Statement has been made. If the Leaders of the Opposition Parties want to make short statements today, then those Resolutions will not be circulated until after the short statements have been made. I want to know what is the procedure to be followed today? I suggest the procedure to be followed should be that I move the Resolutions at the end of my statement during which the Resolutions will have been distributed.
Financial Resolutions, 1966-67.
Is that the normal procedure?
The normal procedure is that those Resolutions are circulated after short statements by the Leaders of the Opposition Parties. This is a Budget Statement as such but I propose, with the permission of the House, to have the Resolutions circulated during my statement and that the ordinary short statements would not follow.
I should like to know what the Minister is speaking on now?
I am speaking on procedure now. I suggest that the Resolutions should be moved at the end of my statement.
What will the Minister be speaking on before he moves them?
I shall be making a statement on the provisions.
Could we get this clear? Will all Members of the House have an opportunity of discussing these Financial Resolutions today?
Yes.
We cannot commit ourselves to anything until we see the Resolutions. If the Minister proposes to increase the turnover tax, that will make a difference.
We are entitled as in the case of the ordinary Budget to make short comments.
Perhaps the Leaders of the Opposition Parties and the Front Bench will let me know whether they have got copies of the Resolutions?
I have a copy of the statement.
Is the Minister proposing to withdraw the Finance Bill and to bring in a new one?
I propose to deal with the Finance Bill as it is and to move amendments dealing with the new Finance Resolutions.
There will be additional amendments for the Committee Stage?
Yes.
If there are, how can you deal with the Finance Bill?
I propose to deal with the sections that are not affected by the Resolutions and then to bring in amendments to deal with the Resolutions.
As a humble backbencher, I want to ask a question. As I understand it, the Minister will make his financial statement now. At the conclusion of it, he will submit to the House three Financial Resolutions which for the ordinary reasons of expediency, he desires to have passed before the House adjourns for today.
Some of them.
May we then forthwith proceed to have a debate as we normally have on the General Resolution? That is the procedure in the case of a Budget Statement.
I do not think that would be necessary because there will be sufficient opportunity of debating this on the Committee Stage of the Finance Bill itself.
Ordinarily we may have ten or 11 Financial Resolutions. Those are, by courtesy, given to the Minister for Finance for administrative convenience but we always reserve our rights to demur or assent to the several Resolutions on the General Resolution. Usually, the Leader of the main Opposition Party moves the adjournment on the General Financial Resolution and opens the debate on the following day. We then all participate in a debate on the merits or demerits of the proposals. In view of the close analogy that obtains between what we are about to do today and the normal Budget, I am asking if you propose, under Standing Orders, to provide for a discussion on the general proposals here today analogous to that which we normally have on the General Resolution? I think the House would want that and I think the Taoiseach will agree, as I feel sure, the Leader of my Party will agree and as Deputy Corish has intimated he will agree.
There can be a full debate on the Resolutions which the Minister will move.
The Taoiseach has just said the opposite.
The House has the subtlety to devise ways and means. All we want is a debate similar to what we normally have on the General Resolution.
The normal practice is to have a general debate later and approve the Resolutions today. As the Deputy will appreciate, if taxes are imposed, they must be brought into operation at once.
The Resolutions can be put and the discussion on them can take place later.
On the Bill.
Not on the Committee Stage of the Bill. There will have to be a general discussion.
The practical method would be to postpone the Committee Stage of the Bill until we see these amendments to it. It is not practical to suggest that the Committee Stage should be proceeded with today with the threat of these amendments. We should adopt the normal Budget procedure, take the Resolutions put before the House, adjourn the general debate until tomorrow and postpone the Committee Stage of the Finance Bill until we get the amendments.
Until Thursday.
There is the difficulty of the Financial Resolutions requiring to be in the form of legislation within four months. The four month period will have expired on 8th July, by which time the Resolutions will have to be in the form of legislation passed by both Dáil and Seanad. There will be the difficulty that we may be running against time later on.
We appreciate that but we are not responsible for getting the Government into the mess they are now in.
When the Resolutions, by courtesy, have been given to the Minister for Finance today in order to facilitate administration, shall I, as a backbencher, have an opportunity of intervening in a general debate on what is, in substance, a new Budget? I am entitled to that.
Could the Deputy not do that on the Fifth Stage?
Before these new Resolutions are incorporated in the Finance Bill, we ought to have an entirely new debate on the general principle.
Two of the Resolutions will be directly appropriate for discussion on the Committee Stage of the Finance Bill. One is the Finance (No. 2) Bill, on which there can be a full debate.
I want a debate now. We could proceed to fight for our rights and debate the Resolutions one by one. We do not do that. We have always accommodated the Minister for Finance and he, when we were in Government, accommodated us. However, we ought to have the right to a general debate on matters as far-reaching——
I have no objection to a general debate today.
We shall give the Minister the Financial Resolutions. All we want is the same kind of debate as we have on the Budget. I do not mind if the motion is: "I, Seán Lynch, remain Minister for Finance". It could be any motion but we must have a general debate on it.
As far as my Party are concerned, we want Budget procedure adopted. Prior to the last Budget there was no such stipulation or condition. We want the ordinary procedure followed.
The ordinary Budget procedure can be adapted simply to this situation. We could be given the understanding that we may discuss the matter on the Money Resolution.
That is quite acceptable.
Is it understood by the Chair that it is acceptable?
When introducing the Budget for this year on 9th March last, I remarked that at a time of unsettled conditions it was scarcely reasonable to expect that budgetary arrangements made in March or April would continue to fit the year's needs, both financial and economic, until the following March or April. I expressly mentioned the likelihood that, as a result of a general increase in outside pay, the Government, as employer and paymaster, would have to find more money than was provided for in the Budget. I gave notice that, if I found it necessary during the year, I would come back with proposals to raise more revenue because my duty required that I should not countenance the payment of salaries, subsidies or social welfare benefits out of borrowed moneys.
Events since the Budget have reinforced the need to reserve for capital purposes all the money it may be possible to raise by borrowing. One adverse development has been the British restriction on the outflow of capital to this country. In order to finance the public capital programme at the level fixed in the Budget, it will be necessary to borrow £10 million or more from abroad to supplement home savings, even when allowance is made for the credit which can be supplied by the banking system without adverse effects on the balance of payments or on the needs of the private sector for productive capital. Of course, one way out of the difficulty would be to cut the capital programme by several millions, but to do this otherwise than under stress of financial and economic necessity—and particularly to do so merely to use the money to meet current expenditure—is definitely not this Government's policy. It is the Government's aim that public capital expenditure for economic and social purposes should be sustained at as high a level as, taking one year with another, we can afford.
The cost of extending to State-paid personnel the current round of pay increases still overshadows the Exchequer. The cost in a full year of an increase of £1 a week for men and 15/-a week for women, within the income limit of £1,200 a year, for all categories, including teachers and health authority staffs, would not be far short of £4 million.
Apart from the impending liability under this head, not yet exactly measurable, commitments have been assumed since the Budget which would throw it out of balance if steps were not taken quickly to provide extra revenue to meet them. The main item is the cost of the recent income increases for farmers, increases granted in consideration of the unexpected disimprovement in farm income prospects this year. Three months ago it was thought—and the National Farmers Association agreed with the relevant projection—that without any additional redistribution of incomes, but simply on the output and prices prospects as they then appeared, farmers' incomes per head would rise by at least as big a percentage as other incomes this year. These prospects had to be revised because of the exceptionally long spell of bad spring weather.
The various new supports recently provided for farm incomes will cost up to £5½ million in a full year, of which roughly £1½ million is being passed on to the consumers of milk and butter, leaving £4 million to be met by taxpayers. It is this figure which must be kept in mind when increased taxation is being considered, though the net Exchequer liability in the current year is £2.36 million. The Government have kept before the public the implications of these income supports for farmers. They have repeatedly made it clear that further additions to taxation, as well as an increase in market prices for some farm products, would be necessary to provide for them.
A second large item of expenditure which has arisen since the Budget is the cost—£½ million this year—of the pay increases awarded to certain ranks of the Garda Síochána by an independent arbitrator. The £½ million figure allows for retrospection, the continuing annual cost being of the order of £300,000. A similar claim for other ranks awaits arbitration.
The social welfare increases from 1st November next, announced in this year's Budget, involve higher expenditure next year. The various improvements incorporated in the Bill now before the Dáil will add about £100,000 to this liability. The extension, announced last March, of the price supports for beef and lamb exports to quantities in excess of those covered by the Anglo-Irish free trade arrangements also involves an increased Exchequer liability of possibly £¼ million. However rigidly economy is enforced, various other services will inevitably require more money.
Since I do not want to impose more taxation than is absolutely necessary, I have gone carefully into the question of revenue buoyancy. There is as yet, however, no sign of buoyancy; indeed, the signs are the other way. Receipts from turnover tax have reflected the lack of buoyancy in retail sales and the returns from PAYE have been affected by work stoppages. If the existing conditions of industrial unrest should continue—and I most earnestly hope they will not—the yield from both income tax and turnover tax would certainly be reduced, while the British shipping strike, if prolonged, would have a serious effect on customs revenue. I am hopeful that buoyancy may appear later in the year as a consequence of the income increases now being obtained in so many employments, but I would consider it unwise at this stage to count on more than £2 million being available from this source, since this factor had already been allowed for in large measure in the Budget. It is clear, therefore, that, faced with additional expenditure of the order of £9 million in a full year, I must now impose extra taxation calculated to bring in at least £7 million in a full year and to go as close as possible to maintaining a budgetary balance this year.
The rate of income tax can, from the practical standpoint, best be raised from the beginning of an income tax year, i.e. from 6th April. To my regret I have already had to raise it this year and I do not now propose to raise it further. I consider it more appropriate to try to find the requisite money by taxing expenditure. The same reasons which set aside consideration of an increase in the general turnover tax at Budget time still operate. I am, therefore, compelled to look once again to those expenditure taxes which, however unpopular, can at least be said not to bear on the necessities of life. In this connection, I have had to pay attention to the fact that retail sales have been virtually static for some time. This accentuates the risk that any big increase in the tax on the traditional consumer items might produce very little, or affect consumption so much as to cause an actual revenue loss. The price increase in beer which the Prices Advisory Body considers permissible has turned my mind away from that item. I can, however, turn to petrol with less misgiving because of the price reductions just announced by the oil companies. Tobacco can also, I think, bear something extra.
It is, nevertheless, clear that what can safely be done to raise further money from petrol and oil and from tobacco will be far from sufficient to safeguard a budgetary balance even over a full year. It is necessary, therefore, to have recourse to some new form of taxation to supplement the existing range of taxes. In my view, this should be a tax which, while providing a substantial sum in a full year, will make a worthwhile contribution even in the current year and will do so with minimum impact on essential living costs. What I am proposing is that, in addition to an extra twopence a gallon on petrol and oil and the equivalent of an extra two-pence on the standard packet of 20 cigarettes (with a corresponding tax on stocks), there should be a new tax at the rate of 5 per cent from 1st October next on all goods affected by the existing turnover tax except food, clothing, fuel, medicines, drink, tobacco, petrol and oil.
Is that in addition to the turnover tax?
Only about one-seventh of total consumer expenditure will be liable to the new tax. Industrial machinery, materials for manufacture, cement, seeds and fertilisers, agricultural equipment, and all the categories of goods exempt from turnover tax will also be exempt from the new tax.
The new tax, which may be described as a selective wholesale tax, will distinguish between different classes of commodities, will operate at wholesale level and by reference to wholesale prices. As in the case of the turnover tax, it will apply to any additions made to prices to recover the tax. The definition of wholesalers will extend to manufacturing retailers and manufacturers who deal direct with retailers. Taxable goods which are imported will bear the tax at the point of import unless they are imported by wholesalers as so defined.
There seems to be some confusion. I do not want to interrupt the Minister but is this five per cent in addition to the two and a half per cent?
If Deputy Dillon did not interrupt as he did, the Deputy would have understood.
I have read the Minister's speech and I cannot understand it.
The tax will be administered as closely as possible on the lines of, and in conjunction with, the retail turnover tax. In many cases very little additional record-keeping should be required. Where the same concern handles taxable and non-taxable goods, however, or operates both a wholesale and a retail business, new procedures will be necessary. I am anxious that the business community should have an opportunity of expressing their views on these procedures before the tax comes into effect and I shall be glad to arrange for discussions on this over the next month or so.
The new tax is not expected to bring in more than £1½ million this year because some forestalling is bound to take place. It is estimated that it will not have the effect of increasing the consumer price index by more than one half of one point. The expected yields from the taxes now announced, both this year and in a full year, are as follows:
|
£ million |
||
|
1966-67 |
1967-68 |
|
|
Petrol and Oil |
0.8 |
1.0 |
|
Tobacco |
0.8 |
1.0 |
|
Selective Wholesale Tax |
1.5 |
5.0 |
|
3.1 |
7.0 |
This year's £3.1 million yield, plus the hoped-for revenue buoyancy of £2 million, will go within a reasonable distance of meeting the extra outlay now foreseen but not covered in the Budget.
The Financial Resolutions dealing with hydrocarbon oils and tobacco need to be passed this evening as the new taxes are to come into effect from midnight tonight. They will form the subject of amendments to the present Finance Bill at Committee Stage. The Resolution on the selective wholesale tax, when approved, will be confirmed by a special Finance (No. 2) Bill which I propose to introduce without delay and circulate within a fortnight.
I hope that there will be some appreciation of the unavoidable necessity for these additional taxes. It would be inconsistent to complain of them and at the same time approve of the recent income increases for farmers since they are needed to help pay for these increases. It would be unrealistic to expect finance to be made available for housing and other capital purposes if the money had to be used instead to defray current outgoings. It would be unreasonable to suggest or imply that all the available bank credit should be claimed for State purposes to the neglect of the legitimate needs of productive private enterprise.
I consider I am doing my duty in trying to balance the Current Budget and safeguard all the available funds for the Capital Budget. When the balance of payments position is secure enough to allow higher spending from borrowed moneys, this should be capital, not current, expenditure. I would like to assure the Dáil that I shall do everything I can, as Minister for Finance, to contain current expenditure within the revenue now likely to be available and to effect all possible savings.
Because of the effects, not only on the Exchequer but on the national economy, of excessive income increases, I have placed a motion on the Order Paper asking the approval of the Dáil for the findings of the majority report of the tribunal on clerical pay and urging that they be accepted and effect given to them by all concerned. I set up this tribunal with the approval of the Dáil and Seanad some months ago to advise on the appropriate pay relativities in clerical jobs. I did this because of the evidence that, with different arbitrators and different pay scales, a situation existed which made "leap-frogging" inevitable. Some groups were pressing for parity with the highest rates and those who already enjoyed the highest rates were striving to maintain the differentials they had secured. The tribunal has now given an objective and authoritative judgment on this question of relativities and a great responsibility rests on all concerned to ensure respect for its findings. I shall be saying more on this topic when the motion itself is being discussed.
We are going through an anxious time in Ireland. The economy is being upset by strikes and threats of strikes. There are calls for Government intervention, though procedures already exist to deal with wage and salary claims and guidelines have been laid down by the Labour Court. These guidelines, indeed, go further in regard to the amount of income increase to be accepted at present than a strict concern for price stability would justify. A general rise in pay of 6 per cent or 7 per cent is not reconcilable with a rate of increase in national output of only 3 per cent; adverse effects on prices must be expected. The Government accepted these guidelines only on the basis of the Court's judgment that even more serious economic results would otherwise follow. Notwithstanding all the efforts made to achieve industrial peace, there have been a number of serious and prolonged disputes. The calls for Government intervention either do not specify what action the Government is expected to take or do not show a realistic appreciation of the basic limitations of democratic Government in this area. Because of the paramount public interest, emergency legislation has been introduced and enacted to deal with the ESB situation. A new Department of Labour is in course of being set up to concern itself more immediately and actively with problems of industrial relations and their bearing on national progress. Proposals for new legislation on industrial relations have been drafted and are under discussion. The Government will continue to keep in close touch with developments in the unsettled disputes and will take any initiative likely to lead to reasonable settlements. But the Government cannot be expected to turn its back on its own judgment of national policy needs and to sponsor or welcome settlements which would cause serious harm to the economy.
We have here an economy which, having made only limited and erratic progress in previous decades, began to move forward at a more satisfactory rate seven or eight years ago. We needed to maintain this higher rate of growth—indeed, to increase it —in order to overcome the national problems of unemployment and emigration. For over a year now, however, progress has been retarded by a number of factors, not all of which have been outside our own control. It has been necessary to make an adjustment in the level of national spending in order to bring it more closely into line with dependable resources. In spite of all the difficulties, we may still be edging forward at a rate of 2½ per cent to 3 per cent per annum, which indicates the basic resilience of the economy, and exports are on an upward trend.
It is time that excessive preoccupation with sectional interests was suspended and that our energies were turned again towards raising the general standard of living and the level of employment by increased competitive production for export. By pressing too hard for large income increases now—and bringing output to a stop or making our products less competitive—we would frustrate not merely the economic advance on which greater employment and less emigration depend but even that needed to satisfy our own expectations. At present we are not using our full potential for economic progress. On all sides we are working below capacity. We cannot continue to do this and achieve the objective of higher incomes and improved standards for growing numbers. It is of the greatest national importance that disputes should now be settled, that reasonable solutions should be accepted even if they are not fully satisfactory, that more time should be given for the achievement of legitimate ambitions—and that all should join together to work for the maximum rate of national development.
The people now know what it cost to buy the Presidential election.
Why do you not put up with your defeat and shut up talking?
(Cavan): Why did they not let the Minister for External Affairs stand and see how he would have done?
I understood the Resolutions would be moved immediately.
Might I make this suggestion in regard to order? It would obviously not be possible to discuss the General Resolutions and the Money Resolution this evening and if the other Resolutions are finished, we should then adjourn until tomorrow—when they are finished—and take the Money Resolution tomorrow. I do not think Resolution No. 3 has any urgency at all. It is only Resolutions Nos. 1 and 2 that have any urgency.
Would it not be possible to go on with the order and take the Finance Bill in Committee?
How could you?
Will you not be moving additional amendments to it?
There are additional amendments on the Order Paper.
But I gather from the Minister for Finance that there will have to be another one.
The only business we have ordered today is financial business. I think we could go on with the order.
We shall take no decision on it until we see how the time works out.
Introducing his Budget last March, the Minister for Finance asked himself, the Dáil and the country what had gone wrong with his Budget of the previous May, only ten months earlier.
Hear, hear.
It was well he should have asked that question because the Budget he had introduced in May, 1965, resulted in a deficit of £8 million. It covered a situation in which there had been a definite reduction in our external assets. It produced a shattering position in which our credit-worthiness as a nation had been substantially reduced and it ended with a condition of great economic malaise throughout the country. It was in these circumstances that in his Budget 14 weeks ago the Minister indicated that he might find it necessary to introduce a further Budget towards the end of the year. It is now 14 weeks later and we have a second Budget in the month of June. This time I should like to ask: what went wrong with the Budget of last March? What went wrong with the people who introduced it? What is wrong with the Government today and what is wrong with the country itself?
I think there is strong evidence that this Government lack leadership; strong evidence that they are incapable of planning even for a period of 365 days. There is strong evidence that this Government have lost whatever zip or verve they ever possessed and are now staggering on from one difficulty to another, hoping by makeshift arrangements to avoid trouble and difficulty. Here we have this Budget introduced by a Minister for Finance who says among other things that he could not have contemplated in March of this year that farmers would face a difficulty in relation to their incomes. If he did not know that and if the Government did not know it, they are about the only people in the country who were not aware of it.
I should like to ask very seriously whether this country in present circumstances can afford a continuance of the makeshift policies and expedients now being indulged in. We are, as a country, on the verge of a new era of fierce competition, in which our people and the country will face the sternest of all possible competition, an era in which our young people will be in danger of being swept and sucked away by the power of great industrial nations with whom we compete. It is an era in which we now have the opportunity to prepare and surely there is a crying need for proper and efficient economic planning towards a just and desirable end? That is what we in this Party have advocated and put before the people. The Taoiseach has been against it; he has scoffed at the idea. He has preferred to tell the people that everything necessary to be done and achieved lay in the Second Programme for Economic Expansion. What has happened to that Programme? It was talked of quite a lot 12 or 18 months ago: I now notice that it is rarely mentioned in Ministerial speeches.
Let us look at where the Programme stands now. The Budget of this year increased central Government taxation by six per cent. It raised taxation from £211 million to £223.5 million. With the fresh taxation imposed today, there has been an increase in taxation this year of 9½ per cent. Surely that is a staggering figure? It indicates a load is being put on the people generally which is almost intolerable. When that substantial increase is considered, whether it has got to be borne or not, the ordinary test to apply is, what social benefits have been conferred on people in return? Of course, if that is examined, this year, for an increase of 9½ per cent in central Government taxation, there has been practically no increase in our social benefits. Our health services, despite many promises, still remain unreformed. Our educational structure is still unchanged. The desire and goal of equal opportunity for our young people is still as far away as ever.
I should just like to go a little bit further into this. With these taxes, the burden of taxation from all sources totals £285.2 million this year and that is out of a gross national product of £1,070 million. This means that roughly 27 per cent of our national output is now being taken in taxation.
How does this compare with the Second Programme? In terms of 1960 values, £230.5 million is now being taken in taxation out of a national output, in 1960 values, of £863 million. That is what is involved in the total of the two Budgets this year but the Programme envisaged that this year taxation would be just £211 million out of an expected national output of £853 million.
So that, in relation to the Programme which the Government said they were supporting and were going to see achieved, we find now, in the third year, that national output has dropped short of the target figure by £27 million while taxation has increased beyond the target figure by £19.5 million and has, in fact, risen 50 per cent faster than was envisaged. That is so far as taxation is concerned.
How about the ordinary people for whom we are responsible in this House, who do not concern themselves with percentages or millions or things of that kind, the families who are struggling to eke out an existence, the young people who are seeking a way of life and an opportunity to live and to work and to raise their families in their own country? How about them? The Second Programme assured them that, this year, there would be 35,000 new jobs and that this increase in employment would result from the implementation of the policy in the Programme by the Government. In fact, today, not only are there not 35,000 new jobs but employment has dropped by 6,000. With national output lower than promised, with taxation having risen 50 per cent faster than expected and already reaching a figure higher than the Programme envisaged in 1970, with employment dropping, with emigration continuing apace, it is clear that this Government have ignored the discipline of planning, have turned their backs on their own Programme, have failed to produce any great social aim which could make national effort significant for our people and, in fact, are indulging in a series of exercises in expediency to bridge them from one difficulty to another.
I know that it may be said that in any programme fluctuations may take place but a drop in employment from an expected 35,000 increase to a reduction by 6,000 is no fluctuation. The raising of the level of taxation well above the 1970 target cannot be considered as any fluctuation. These are disastrous failures and they indicate that this Government have not been able to give the country either the leadership it requires or the kind of efficiency in government which is essential now if the country is to survive.
Today, with this Budget, we have reached the appalling position that 60 per cent of the yearly increase in our national output is now being taken in taxation and only 40 per cent is being left to the workers and the farmers and the business people who produce the wealth of the country.
I do not know what immediate future the Taoiseach has in mind but it is perfectly clear that this is a Government which have lost control of the situation. It is perfectly clear that people outside desire new leadership and I believe that the economic and financial difficulties which we now face can only be met by a new Government that can give new leadership to the country, that can put forward worthwhile social aims for our people, that can point the way in an efficient and responsible manner, that can see that economic planning towards the desired aims is carried out, that targets are achieved, not merely hoped for. It is only in that way that we can face the challenge which the future has in store for us. Certainly, we will not be able to do so if we continue on now with a Budget introduced 14 weeks after the earliest Budget ever introduced in this country, with no assurance that next autumn we may not have a third Budget this year, with a Government that allow a whole lot of other incidental expenses to affect the people and then complain if living costs go up.
Here we have the turnover tax now increased along the specialist lines which were at one time indicated but scoffed at. That is bound to increase living costs. We have a further tax on petrol, made possible because of a reduction, but that again will add to distributive costs and there does not appear to be any evidence anywhere of an earnest effort by the Government to control and restrict spending on their part.
I believe that this Supplementary Budget will add further to the picture of general deflation which exists in the country, will add further to the economic difficulties which the country is facing and I am certain that the only real hope for the country, the only real thing the people desire, is the opportunity to change the policy even if that means a change of Government.
Unlike Deputy O'Higgins, I would not accuse the present Government of political expediency—I think that is the phrase he used—I would accuse them of political dishonesty. We had an early Budget on 9th March, about three months ago. It is becoming abundantly clear now that, while the Minister for Finance on that occasion talked about not shirking his responsibility, he and the Fianna Fáil Party did, in fact, shirk their responsibility in March because that Budget was framed early in March so that the effects of the proposals introduced on that occasion might have worn off to some extent before the Presidential election held a fortnight ago.
The Minister now says that, because he has extra commitments, it is necessary to introduce this Budget in order to get an extra £7 million. This is not the only year and this is not the first year in which a government were confronted with extra taxation. This is merely part of the Budget he should have introduced in March or April of this year. This is political dishonesty. I am reminded of a reference I made some time ago to the Fianna Fáil Party; I said then they appeared to be much more concerned with election rather than with the economy of the country.
Deputies
Hear, hear.
We had demonstrations of that. We had it in the proposal of the Minister for Local Government to postpone the local elections. We had it before general elections and, in what was supposed to be a non-political contest, the Fianna Fáil Party shirked their obligations in relation to balancing the Budget to such an extent that they are forced three months later to introduce a Supplementary Budget.
It is true that the Minister for Finance in his Budget Statement on 9th March talked about the possibility of another Budget. I think it was accepted he might have to introduce that in view of the fact that the economy was not progressing as well as it should have been. But everybody assumed that this Budget would be an autumn Budget because nobody believed there could be such miscalulation that the Minister would have to come in three short months afterwards to the House and say that he wanted another £7 million.
At that particular time, as has been pointed out, he knew there was a clamour from the agricultural community for extra assistance. He knew on 9th March that he would have to make some provision for increases in salaries to certain public servants. It is true he did not know whether it would be X, Y or Z pounds or X, Y or Z shillings, but he definitely must have known—it would have been necessary for him at the time to keep in mind the 10th round of wage increases for civil servants, the gardaí, the teachers, soldiers, and so on—that all these categories would be looking for more money and it is no excuse for him to say now that the pattern had not emerged. He did not even make provision to the extent of £1,000.
It appears to me now that this Government are quite capable of coming along again in the autumn and introducing a third Budget. Mark you, the importance in all this is the effect on the people and on the economy. At page 10 of his speech today the Minister, in a very long paragraph, devoted certain remarks to strikes and threats of strikes. He began by saying that we are going through an anxious time in Ireland: that the economy is being upset by strikes and threats of strikes. The Labour Party and the trade union movement would readily agree that strikes, no matter how they are caused, have an adverse effect on the economy, but it is a little too much for the Minister, referring to unrest in the country and lack of stability, to appear, whether deliberately or not I do not know, to give the impression to ordinary people that the economy is in the state it is because of strikes and threats of strikes. In the latter part of his speech on the last Budget the Minister, the Taoiseach, speaking on that Budget, and the members of the Fianna Fáil Party who contributed to the debate disclaimed all responsibility on their part for the state of the economy.
Do they believe they have done everything and tried everything in order to ensure that the economy will progress? The Minister talked about strikes and threats of strikes. There was talk of outside influences too. Surely everybody knows now that it is the incompetence of the Government in the main that has brought us to the state in which we find ourselves. However, let us talk about strikes. Some of the Minister's constituents must, I am sure, be on strike at the present moment, as are some of the Taoiseach's, Deputy Seán Lemass. What does he think the workers are at? Does he think they are on strike because they are anti-Fianna Fáil or anti-Government? Does he think they are anarchists? Do Fianna Fáil believe they want to disrupt the country? I am sure they know them well enough to know that all they want is a fair crack of the whip where their weekly incomes are concerned and, if they are dissatisfied, the Government and the Fianna Fáil Party must bear the brunt of the responsibility for this apparent dissatisfaction right through practically every sector of the working class.
The Minister for Finance said in his speech that the Minister for Agriculture had carried out a recent review of the position and prospects of agriculture and that the report following on this review was now in his hands and he would be announcing on the general Budget proposal certain decisions. I do not remember any world-shaking decisions on that occasion. I do not remember him announcing any further assistance one way or the other for the agricultural community. In any case, I think all of us will agree with the last speaker who said that the Government and the Minister for Agriculture must have known and must have been aware of the clamour for some assistance from the agricultural community right through the winter and spring months.
Would the Minister be able to tell us now—there is a vague reference here to prospects in relation to capital works — whether there is any more money for capital works, such as housing, water supply and sewerage? Does he not know—he must since he has been sitting alongside his colleague, the Minister for Local Government, for the last six months — that local authorities are in a desperate position and those in need of houses certainly cannot look forward with any degree of optimism to prospects of obtaining houses this year or even next year? Prospects are poor, not alone for those who need houses but also for those who expect to get employment, employment not alone in housing but in water supply schemes, sewerage schemes, and so on. As well as that, if money is not forthcoming for such essential services as roads, not alone will the roads deteriorate but there will be fewer road workers as the year goes on because the money raised through motor taxation, money ordinarily paid into the Road Fund, has now been taken by the Minister for Finance and devoted to some other purpose. Roads and road workers will suffer because of that.
Ministers and Deputies must see for themselves the evidence of the decrease in employment in the building industry. A document was circulated to Deputies last week, or the week before, which showed there are 1,550 fewer workers engaged in building and construction work generally in May, 1966, as compared with May, 1965. Some would protest that this is desirable because we cannot afford that kind of capital expenditure, but all this means a loss of employment; it means these people will be compulsorily attracted to other places, particularly to Britain.
Have the Government any responsibility at all for that situation? Do the Government recognise that, despite the valiant speech documented and sent to the members of the Fianna Fáil Party recently, in every single employment group there are more unemployed in May, 1966, than there were in May, 1965? In textiles, in the services, in building and construction, in the metal industry, in agriculture, in every single industry the figure at the middle of May this year shows that fewer are employed as compared with the previous year. If anybody wants simple evidence of that, the document circulated weekly to Deputies showed last Friday that there are 6,000 more workers in receipt of unemployment benefit in the fourth week of May, 1966, as compared with the same period last year.
Who has the responsibility for this? It is the Government. There is no point in the Minister's trying to give the impression that the present industrial unrest is a big contributing factor to the depressing state of the economy. I do not think the Minister was fair to himself in the short speech he delivered. This could, I suppose, be described as a mini-Budget but, in our present circumstances, I do not think we should have got a mini-speech. He said the buoyancy of revenue was not as good as he would like it to be or anticipated it might be when he spoke here on his Budget on 9th March of this year. However, having regard to the general increase that has now been given to workers, he must have regard to an increase in turnover tax receipts. He must also take into account the tax he will get from other taxable goods by reason of the fact that there will, I am sure, be increased spending. The Minister also omitted to mention that the ten per cent British surcharge will be discontinued from 30th November next so that, while he budgeted for a 12-months period, there is, in fact, a saving for the four months: I do not know the actual figure concerned. These factors, in a speech such as the Minister has given, should be mentioned and taken into consideration.
The Minister referred briefly to the extra amount he must collect by way of PAYE. The increase of £1 that has been conceded to many workers and which we trust will be given to many more, will also mean an increase in income tax revenue. I am sure the Minister must have taken all these factors into account but he did not mention them in his speech or say what effect on taxation generally they would have.
I believe that this Budget and these proposals are another example of indiscriminate taxation. I believe the time has long passed when we should look at and revise the whole system of raising money in this country. It is a little too simple: it is an expedient to which any boy out of secondary school would have recourse in a situation like this, where he wanted £7 million, to look again at petrol, cigarettes and the turnover tax and, by putting 2d on this and 2d on that and an increase here and an extra percentage there, he would get his £7 million. Do the Government understand or fully appreciate or ever examine the effect of these taxes on individuals and various sections in the community? I believe the whole system of raising money should be re-examined and re-examined quickly.
I do not talk about taxation alone: I do not talk about indirect or direct taxation alone. I have in mind the money our citizens are expected to pay for the running of our community and the country generally—rates, indirect taxation, direct taxation and even social welfare contributions. I do not think anybody knows how much, for example, a man with a wife and two or three children is paying for the upkeep of the State and for the running of the community. I do not think anybody has considered that point. The Commission on Income Taxation did not give any clear opinion as to whether or not the burden is shared in a fair and equitable fashion. All these factors, as has been pointed out by the NIEC report, have contributed towards the present unrest which undoubtedly prevails.
I do not want to make a point about this and particularly I do not want to make a personal point. We had a serious debate here last week on an incursion, so to speak, on the rights of trade unions. It was big news last week. However, the one fact that caught the public mind more than anything else was that a retiring chairman of a semi-State company will get a pension of £3,500 per annum, plus a golden handshake of over £8,000.
Deputies
Hear, hear.
I do not say that of the man in any personal way. I do not want to make an attack on any individual. However, if people in receipt of £2 12s 6d per week read of this sort of thing, then surely it is calculated to make them uneasy? If CIE pensioners are asked to live on 22/6d per week, plus their contributory old age pension, and then read of a man getting a pension of £3,500 per annum, plus a golden handshake of over £8,000, surely they are entitled to be dissatisfied?
(Cavan): Plus another job.
I do not think anybody would suggest that if that money were distributed amongst the needy, it would go any distance but I mention it as only one example of the queer thinking we have in this country with regard to salaries. I had a letter this morning from a couple who are in receipt of £3 7s 6d per week. Surely they are entitled to be uneasy and to demand more? When the Government talk about industrial unrest, do they understand that there are 100,000 male workers in this country who have less than £10 per week?
At this stage, only short speeches are made.
I shall be as brief as I can.
On a point of order, Deputy Corish has, so far, taken up much less time than the first Opposition speaker. There should be no discrimination against speakers in this House.
Deputy Corish is telling the truth, too.
Deputy T.F. O'Higgins took up 16 minutes; Deputy Corish has now exceeded 16 minutes.
I am sure I am not supposed to take my standard from anybody else in the House.
Deputies
Hear, hear.
Am I to take it that if Deputy T.F. O'Higgins takes nine minutes, I should take eight minutes?
The Chair does not infer anything. The House agreed that a general debate would take place.
If I were as provocative as some people in this House are, I could go on for another half an hour and the Leas-Cheann Comhairle could do nothing about it. The reason for the prevailing unrest is that our sense of values is wrong. Let us stress that the Government should examine the burden of taxation in respect of rates, indirect and direct taxation and even factors such as social welfare contributions. Furthermore we ought to try to get more money by way of direct taxation in the form of income tax from people who can afford to pay more. Many people in this country would be surprised to hear that surtax is not payable until a person is earning approximately £3,000. Therefore, the fellow earning £8 or £9 a week is paying income tax at the same rate as everybody else. Furthermore, the person who has more than £6 per week is bound to pay income tax. I do not think the income tax laws as originally conceived intended that a man with £6 per week should have to pay income tax, a tax which, from its description, means and meant that, after purchasing all necessary requirements, he should pay a tax on his surplus in order to contribute to the coffers of the community. Until all these factors are examined and put in order, I do not believe we can say that the burden of taxation is equitably distributed.
A few years ago, Senator Dr. Ryan, the then Minister for Finance, said, when introducing the turnover tax, that to increase taxation on petrol and cigarettes would be a dead loss from the revenue point of view. Nevertheless, in the past two or three Budgets, the Government have had recourse to increased taxation on petrol and cigarettes for the purpose of securing money. What surprises me is the change of mind and the change of heart by the Fianna Fáil Government as far as the turnover tax is concerned. When this tax was introduced to operate from 1st November, 1963, the then Minister for Finance and every member of the Fianna Fáil Party said it could not be a selective tax. From these benches we asked the Minister for Finance could he exempt food, fuel and particularly medicines. He said the machine was set up to such an extent that nothing could be excluded. Now we discover that the Minister for Finance can operate the turnover tax in a selective way cutting out what would be regarded as the essential things of life. The Minister again made a serious omission on this occasion. He did not tell us what effect this new turnover tax would have on the cost of living.
I did.
I am sorry; I missed it.
He did but he was codding.
It is going to have an effect. This again is going to cause some trouble and the consequences will certainly be on the head of the Minister for Finance and on the Fianna Fáil Government.
When we advocated a capital gains tax we were pooh-poohed. We were told we did not know what we were talking about. On one occasion the Taoiseach said that taxes on wealth in this country were no good because there was no wealth in this country worthwhile; but when the Secretary of the Irish Congress of Trade Unions made this suggestion after the last Budget the Taoiseach thought it was a great idea. If the Taoiseach wants this to be a deliberative assembly in which we can have free discussion and exchange of ideas, he will have to have a little more regard for suggestions made by individuals and Parties. Because it was made by an outsider, the Taoiseach thought it was a great idea. However, he said it would bring in nothing this year. I have heard that from the Taoiseach and from Senator Dr. Ryan when he was Minister for Finance in the past five or six years— a protest that it was no good because it would get in nothing this year.
I would ask the Minister for Finance seriously to consider it for his Finance Bill of this year. I do not know how much it will bring in, whether it is £500,000 or £1 million, but at least it is more money from people who can afford to give it as against the man who will have to pay another 2d for his cigarettes, the driver who will have to pay another 2d for his petrol or the person who travels by train or bus who has to pay the increased fares.
On one occasion, I think in 1956, we had, apart from the turnover tax, somewhat similar proposals submitted by Deputy Sweetman. As far as the Fianna Fáil Party were concerned, the merits of those proposals were never considered. The Taoiseach on the last occasion taunted Deputy Tully and other members of the Labour Party with voting for an increase in the price of minerals, cigarettes and tobacco. I remember on that occasion what Deputy Lemass as he then was did and said. He said he would not examine these proposals at all because he was not concerned with them. He said he was going to vote for them because of the state to which the Government had brought the country. He was not concerned about the merits of the taxes. We are concerned about the merits of these taxes. We are concerned about the state to which the economy has been brought by the Fianna Fáil Party. We will not be as irresponsible as Deputy Lemass was in 1956. But we will vote against these proposals as a mark of our dissatisfaction with the Government and that we have no confidence in them.
I do not think it is for me or any other Deputy to say the country has no confidence in the Government. The Taoiseach demonstrated that when he sent out this long letter to his Party members, who should have been informed, containing a restatement of mere pious resolutions to keep them going until, like Mr. Micawber, something would turn up. He will have to change his plan. He will have to do as the Labour Party would do and intervene as a Government and not leave everything entirely to private enterprise. Some sections of private enterprise have done well out of this country. Some sections of private enterprise have not done their job. Unless the Taoiseach is prepared to plan not in the way talked of but in the manner in which the Labour Party advocated in their policy statement, we may find that the Minister for Finance may have to come back next autumn for more money.
On a point of procedure, consultations proceeding have produced the following suggestions: the first two Resolutions only to be put to the Dáil now and the Dáil to proceed to discuss items Nos. 9 and 10 on the Order Paper, which are amendments of the Finance Bill, and the Committee Stage as far as the end of Part 1. Then, if that does not occupy the whole of the day, adjourn for the rest of the day. Tomorrow the third Resolution will be the subject of a general discussion without limitation of time.
It is agreed that the discussion on the third Resolution can be a general discussion?
Yes.