The motion is that Section 1 stand part of the Bill.
FINANCE BILL—COMMITTEE.
(1) Income Tax shall be charged for the year beginning on the 6th day of April, 1923, at the rate of five shillings in the pound, and super-tax shall be charged for that year at the same rates as those at which it was charged for the year beginning on the 6th day of April, 1922, under the law then in force in Saorstát Eireann or in the area now comprised therein.
(2) The several statutory and other provisions which were in force in Saorstát Eireann or in the area now corprised therein during the year beginning on the 6th day of April, 1922, in relation to income tax or super-tax shall, subject to the adaptations and modifications made or to be made in such provisions by or under the Adaptation of Enactments Act, 1922 (No. 2 of 1922), and subject to the provisions of the Double Taxation (Relief) Act, 1923 (No. 8 of 1923), and subject to the provisions of this Act, have effect in relation to the income tax and super-tax to be charged as aforesaid for the year beginning on the 6th day of April, 1923.
(3) The annual value of any property which has been adopted for the purpose of income tax under Schedules A and B for the year beginning on the 6th day of April, 1922, shall, subject to the provision of this Act, be taken as the annual value of that property for the same purpose for the year beginning on the 6th day of April, 1923.
AN CATHAOIRLEACH
On Section 1, sir, I wish to raise a point on the general principle of Income Tax. I quite realise that the Government require all the money they can get, but it has also to be considered whether it is wise generally and whether they will effect their purpose by having a different rate of Income Tax from that which prevails in England. There will be, naturally, a lot of adjustments, and a certain amount of form-filling and work of that kind thrown on the payers of Income Tax. Now, a large portion of that Income Tax, to take the official figures, arises from sources outside the Free State. We are, unfortunately, handicapped in this inquiry by figures which are out of date. The latest figures we have on this subject are the accounts for the Financial Year, 1920-21. The Exchequers were consolidated during the years 1921-22, but for some reason which I have not been able to find out the British Treasury have not published for the year 1921-22 the usual white paper which they had been publishing in previous years, and naturally they are the only people who have the information. Then we also look to the figures for last year which, of course, the Free State Treasury are in a position to give, but they might reply that it is rather soon to expect it. I would, on that point, ask the President to say when we may expect some detailed figures as to the receipts for the financial year closed in last April and whether we may expect the usual detailed Appropriation Account, supported by the Certificate of the Comptroller and Auditor General, and also whether that Appropriation Account would be reviewed by a body that will correspond to the Public Accounts Committee. Further, I should like to know if such a body is to be set up, whether this House will have, by courtesy or otherwise, any representation on that body. The figures for the year 1920-21 show that out of a total Income Tax of 9½ millions—that, of course covers the entire geographical island— 5 millions arose from Government stocks, public companies, or foreign dividend coupons, largely or mainly from investments outside the Free State, so it is a question whether in these circumstances and bearing in mind that such a large amount of income arises from sources outside the Free State, it is advisable to tilt the balance of domicile away from Ireland. I am afraid that some of the large payers are only nominally domiciled, and if they have a higher rate of Income Tax and a good deal of trouble with forms and adjustments, they may remove their domicile and with it remove a very large amount of revenue. I put that consideration forward, and I have no doubt the Government will give it due weight. There is another question. I do not know properly whether it arises on this Section, or on Section 10, and it is a very important question if the facts that I have are correct. It is with regard to dividends that arise from industrial concerns, railway and other companies, outside the Free State. According to the figures I have already quoted they represent, or they have represented in the past, a very large amount of Income Tax. I understand as the law is at present that the company concerned, whatever it may be, is bound to deduct at the source, when paying dividend warrants, the entire amount of the British rate of tax— 4s. 6d.—and then in the following year the party affected within the Free State is bound to return for assessment, under Schedule D, that income over again, so that 9s. 6d. will be paid on that investment. Also, under the law, the maximum which can be recovered by way of abatement is half of the British rate of tax— 2s. 3d.—so that in the net, if my contention is right, a person holding shares in, say, J. & P. Coates or North Western Railway, or any other concern of that kind, will have to pay 7s. 3d. in the £. I should like to hear what the Government have to say on that subject, and I am sure the House would be very pleased to hear that my statement is not correct.
With regard to the first part of the question, which deals with the accounts and the return by the Comptroller and Auditor-General, I do not anticipate that that audited account will be ready within six months. I am sure it will take six months. The Standing Orders of the Dáil are at present under consideration, and I do not think steps have been taken so far to set up a Public Accounts Committee. However, I will inquire into that and let the Senator know later. The arrangements that we have made in connection with double taxation relief with the British will not involve, in any case, any higher payment by any person than either country can draw. In other words, the maximum sum for which any person would be liable would be 5s. in the £. If a person is not liable for the maximum amount, but for what is called half-abatement, we would give 2s. 6d. and the British would give 2s. 3d. With regard to the other question as to whether it is advisable to have a different rate of Income Tax, that is, 6d. over the British charge, we have come to the conclusion, having regard to the state of our finances, that we were not justified in recommending a reduction. If it should happen during the year, from our experience of what shall transpire during the time, that the facts did not warrant a different tax here, that will be a matter for consideration next year, but, in the circumstances we were not entitled, I think, to reduce the present Income Tax until we were in a position to see that the balance would be on the right side. From information that is at our disposal no greater transfer of domicile is likely to happen. I mean it is not likely that people will change any ideas they had about remaining citizens by reason of the difference of the Income Tax charge here and that beyond. But we would not be in a position to give a definite expression of opinion on that until next year.
AN CATHAOIRLEACH
This is a matter of such importance to the community in general that I would like to ask the Minister whether the representation made by Senator Sir John Keane is right—namely, that the whole tax to which the investment is liable in England will be taken out of the dividend in the first instance, and then that that same dividend will be liable to the whole of the existing Irish tax, leaving the party who claimed only to recover the difference in the following year. That, I think, was the point that Senator Sir John Keane was anxious to have cleared up.
I will undertake to supply the members of the Seanad with the Double Taxation Relief Order. I think it will show conclusively that it was not intended at any time that there would be a charge of 9s. 6d. in respect of Income Tax.
Section put and agreed to.
Sections 2 and 3 were agreed to, and added to the Bill.
SECTION 4.
Notwithstanding any provision contained in any Act of the Parliament of the late United Kingdom of Great Britain and Ireland, the interest on all securities issued by the Government of the United Kingdom aforesaid subject to the condition that the interest thereon should be exempt from Income Tax, shall be liable to the Income Tax for the time being charged in Saorstát Eireann, but subject to any arrangement for relief which may for the time being exist with the Government of Great Britain under or by virtue of the Double Taxation (Relief) Act, 1923 (No. 8 of 1923), or otherwise.
There seems to be some difference of opinion as to whether Savings Certificates issued by the British Government will be liable to Income Tax in this country or not. As the Minister for Finance takes power under Section 3 to issue Savings Certificates, I think that if the Savings Certificates at present in existence were taxed it would react prejudicially against the Certificates issued in Ireland. I move a recommendation, to insert in line 3, Section 4, "except Savings Certificates issued before the passing of this Act."
I beg to support this amendment. I do not think it would be a reasonable thing that people who had invested money in British or National War Savings Certificates should be liable. It is over a period of seven years since they have been bought. It would be quite reasonable, I think, if the Government said now that anybody resident in Ireland who wished to buy War Savings Certificates would be liable to taxation, but if you should, I do not think the period would be quite reasonable.
Senator Butler mentioned this matter to me yesterday evening, and I have had time to consider it since. It is not our intention to charge Income Tax on those Savings Certificates, and I do not think there is any necessity for adding that particular amendment which might possibly interfere with the issue of such Savings Certificates by the Government. I suppose that undertaking will satisfy Senator Guinness and Senator Butler.
Amendment, by leave, withdrawn.
I propose this recommendation "To add at the end of the Section the words: "provided that British Four Per Cent. War Loan (Tax Compounded) shall not be liable to Income Tax during the current Financial Year." This recommendation I fully developed yesterday, and I do not want to weary the House with it again. The Minister made an offer, which I thank him for. If he and the Government have made up their minds that they will not issue a loan this Financial Year or up to next Financial Year, I do not think there is very much in my recommendation, for this reason that we who hold this British Government Four Per Cent. Loan will be able to unload and, I hope, re-invest inside the time that the Minister specified, and that is, I think, the end of August. Therefore I should not press on him to extend the time to the 1st April, which I first asked, unless there is some object for the Government in the interim to issue this loan. If there is, I think the period ought to be extended to the 1st April, as we all then could make arrangements that the proceeds of this would be absorbed into his loan. If it is not the intention of the Government to do so, then I would be satisfied with August.
My recommendation is "to insert after the word ‘shallrsquo; in line 5, the words ‘as and from the first day of January, 1924.'" This amendment is in connection with the same matter as that moved by Senator O'Dea, and the only difference is that in my amendment I have actually put down the particular date. It will be within the recollection of the Seanad that on the Fourth Stage of the Finance Bill the President announced that the Government of the Irish Free State had been unable to come to an agreement with the British Government in regard to these Tax Compounded loans, and that as from that particular date Irish Free State Income Tax would be leviable upon the dividends of these particular securities. That was on the 1st June. I think until then the people who held those securities were rather lulled to sleep, and expected that they would receive the dividends without deduction of tax, as they had in the past with the British Government, but when they suddenly woke up to find that they were going to be taxed a good many people sold out and invested in other securities which would not have that incumbrance.
I was anxious to make an appeal to the President that in the matter of dividends, which will be payable on these Tax-Compounded Stocks which really amount, for one half-yearly period, to a comparatively small sum, the Government should extend, for the next dividend, the privilege which the securities had hitherto enjoyed. That would be met by the recommendations I have introduced in this amendment. At the present there is inscribed in the books of the Bank of Ireland, £1,330,000 of this 4 per cent. compounded stock, in the form of War Stock, and National War Bonds. The dividends on these securities will be payable on the 1st August, September, and October, and on the 15th October, so that if my recommendation were accepted it would mean that the present owners of these securities would have ample time to dispose of them, if they wished to do so, and thereby save themselves from taxation on the dividends next accruing.
The half-yearly interest on the sum of £1,330,000 would be £26,000, and the Income Tax, at 5/- in the pound for that one dividend out of four, would be £6,600, so it would mean on the part of the Government, if they saw their way to accept this, a remission of a little over £6,000 only. And with that object I hope the President will take the matter into consideration. The amount is not very serious, but it would be a very great boon to the number of people who hold this particular security, and would afford them time to sell and to re-invest in some other loan.
On this matter might I recommend that when the Minister is issuing his own Loan he should so arrange with the British Government that British 4 per cent. War Bonds would be accepted as convertible into Irish Loan, and that any such bonds, so convertible, should be allowed an abatement of any tax that might be charged up to the date of conversion.
Senator Irwin has raised a very interesting point, but it is not very germane to the amendment before us. His suggestion is a very ingenious one, and there is a good deal to be said in favour of it. It would be quite nice for an Irish Chancellor of the Exchequer, or Finance Minister as he is called, to have a considerable block of this 4 per cent. British tax-compounded loan with which he might be able to bargain with a hard-hearted Chancellor of the British Exchequer. How he might arrange to get possession of such a block from the Irish holders might be another matter. Perhaps that might be a consideration for another Finance Bill, possibly to be introduced by my friends on the Labour benches opposite. However I think that the amendment, or rather the two amendments, before us are quite reasonable. A number of our citizens years ago, before there was any idea that things would happen in this country that have happened, invested their money in these particular British securities, under certain pledges from the British Exchequer. Their money has remained in these particular securities for a number of years, and this country has benefited by the amount of interest derived from them. There has been a change here, and we have now our first Finance Bill before us. But of course people were not prophets—it would have been very convenient if some of us were —and no one knew what was going to happen. Those who invested in this particular security rather courted it. Fortunately for the Irish Minister for Finance the amount of capital involved is not very large, and, consequently the amount of sacrifice these people are called upon to make is not very great, and it would be a graceful act, and in spite of the circumstances in which our Exchequer finds itself, I think the Irish Exchequer could afford to do without this £6,000, and should remit it—anyhow it might set an example in generosity to the British Exchequer if the Irish Exchequer makes this remission of £6,000, so as to give people who hold these securities time to invest in some other loan, probably an Irish loan upon solid and substantial Irish security. If our Government has the generosity to take this step in relation to this loan created by the British Exchequer it would be open to us to say to the British Exchequer that they should give us some return.
I have no hesitation whatever in recommending the adoption of either of these amendments—possibly the second one would be the better—to the Minister for Finance, and I hope he will consider the matter as favourably as he can.
AN CATHAOIRLEACH
Does Senator O'Dea move his amendment, or does he withdraw it in favour of the amendment of Senator Guinness?
I will withdraw in favour of Senator Guinness's amendment.
Amendment, by leave, withdrawn.
AN CATHAOIRLEACH
Then the amendment is that moved by Senator Guinness to insert after the word "shall" in line 5, the words "as and from the 1st day of January, 1924."
I support the amendment. If this amendment were carried these stocks could be sold out. They would then again require to be reinvested and I venture to suggest the action of the Government now would give confidence to the investors in an Irish Government loan in the future, and would show that they would not suffer any more hardship in the Saorstát than applied by the British Government, and for that reason I think that the remission of the £6,000 which is involved, would react on investors to the advantage of the condition of things in the Saorstát.
This is a case in which the Saorstát loses no revenue whatever which is derivable from this security, and the amount, I am informed, held here is £1,330,462. Now, we have not charged upon the April dividend; they have got that, and they have got it free of any deductions, and I would offer the August and September ones, which would mean six months in all, and I think it is a fair bid. That would necessitate an alteration in Clause 4.
AN CATHAOIRLEACH
That is as from the 1st October.
As and from the 1st October.
AN CATHAOIRLEACH
"As and from the 1st day of October." That seems to be a good offer.
It does, but, unfortunately, the amount of money involved seems to be extremely small.
AN CATHAOIRLEACH
Perhaps that is the reason the offer is made.
One of the reasons.
Yes, perhaps the President realises it. The dividends payable in August, 1923, will be on a sum of £31,000, in September on £85,000, whereas in October the dividends will be payable on over one million pounds. On October 1st there will be dividends payable on £388,000, and on the 15th October dividends will be payable on £800,000 so that the concession made by the Minister is really a very limited one.
It amounts to this. There is fair treatment as far as the whole of the holding is concerned. The April people have got the advantage already in April last.
I think they could not help getting it. Your legislation only took effect from the 1st June.
We could have made it retrospective. There are two other holdings of the same security, and if we were to give an exemption a second time the holders would be entitled to claim that they ought to get a further extension down to April of next year. In any case, I take it that this is not a security that will now be held generally: that is to say, where the British Government deduct the whole of the Income Tax in the first instance, and that it is liable to a tax here, it is not likely that any person will hold this particular security, but rather that the opportunity will be availed of at the earliest moment to get rid of it. The main purpose of giving away on this is that something like six weeks is given to persons holding the fourth issue, that is the February to August issue, to get out of the security, and about ten weeks to the September people. We are giving them three months, that is to say, up to October, and they ought to be able to unload in that time. I am sure Senator Guinness shares my opinion that this is not a security that will be generally held after this, and that holders will now take an opportunity to get out of it. The stock stands at a good price to-day, and there is no great advantage to be gained by holding on to the security.
As far as I am individually concerned, I am prepared, after what the Minister has stated, to accept the extension to the 1st October. I think the main object we gain is to give people time to sell their existing holdings. I am prepared to accept the Minister's suggestion. That will make my amendment now read as follows:—"To insert on line 5 after the word "shall," the following—"as and from the 1st day of October, 1923."
Amendment put and agreed to.
Question put: "That Section 4, as amended, stand part of the Bill."
Agreed.
SECTION 5.
(1) In Sub-section 1 of Section 187 of the Income Tax Act, 1918, the expression "purchase annuity" shall mean the first or original annuity payable before any redemption or statutory reduction.
(2) In Sub-section 1 of Section 187 of the Income Tax Act, 1918, the words "the respective surveys and valuations from time to time in force for the purposes of poor rates shall not apply to the annual value of concerns contained in No. III. of Schedule A, and such concerns shall, for the purposes of Schedule A, be assessed and charged under Schedule D so far as the same are not inconsistent with the rules of the said No. III. of Schedule A.
I beg to move the following amendment to Sub-section 1 of this Section:—To delete after the word "mean" in line 12, and to substitute therefor the words "an annuity calculated at 3¼ per cent. upon the original advance made under the Land Purchase (Ireland) Acts or any of them."
When I mentioned this matter yesterday the President hesitated about accepting the suggestion I made, but I am taking up the matter again to-day, and it is the justice of the case that is my reason for doing so. The amendment refers to a section of tenant purchasers who purchased under what is known as the Ashbourne Act, or the Balfour Section of it, in 1891-6. There are nearly 50,000 tenant purchasers. I cannot say how many of these are Income Tax payers, but there are 50,000 of them almost under this Act, or one-sixth of the tenant purchasers in the whole of Ireland. At the time they purchased they were first term tenants, and the rents they paid were very high. The arrangements then made was different to any previous arrangement under a Land Purchase Scheme or to the arrangements under any Land Purchase Scheme since carried out, namely, that the payments extended from 49 years, as previously, to 73 years, while the rate of interest was 2¾ per cent., the general rate prevailing before this, but the sinking fund was 1¼ per cent. As a set-off against the long term and the high sinking fund, it was arranged to grant decadal reductions every ten years for a period of thirty years. While the tenants were paying the high annuities during the first 30 years the Income Tax people were quite content to take that as the basis of taxation, but just now when they have arrived at the period of getting reductions the Minister for Finance is not so obliging. If the whole period of 73 years was taken, a just average would be what I have suggested in my recommendation, namely, 3¼ per cent. That would place the tenant purchasers under this Act on an equality with a large number of tenant purchasers under the Wyndham Act, and therefore, for Income Tax purposes all tenant purchasers would be on the same level. The amendment I have moved is an effort to do the fair thing by a large body of the tenant purchasers of Ireland, and I trust the Minister will see his way to accept it.
As this amendment proposes to do practically the same thing as what I propose in another amendment, I rise to support it. It is not so much the amount of money involved in this increase of taxation on the farmers that I object to, as the fact that at this critical period the farmers have been selected as the only class on which it is proposed to increase Income Tax in this Finance Bill. Farmers feel a great grievance in this matter, particularly as their Income Tax has been enormously increased since pre-war days by previous British Budgets. It is not alone on the annuity, or on the rent, that the farmer is taxed, but according as the annuity is being reduced the farmer has increased taxation under Schedule (A). A considerable portion of money that the Treasury will gain by passing taxation now on the old basis that was in existence thirty years ago will be diminished by the increased taxation put on the farmer under Schedule (A). I might also point out that the tax under Schedule (A) is regarded as unearned, and there will be no ten per cent. deduction on the assessable portion of it, whereas under Schedule (B) there will be a deduction of ten per cent., as that tax is regarded as earned income. I earnestly put it to the Minister for Finance that for the amount to be gained by this Section it is not worth while to depart from the principle which he laid down himself in introducing the Bill, that is, of leaving taxation for the coming year at the same rate as it was in the previous year.
I am afraid I am not in a position to accept the amendment. I said that the general incidence of taxation was much the same as in previous years, but I explained that the general intention of the Legislature in imposing this particular tax was as we set it down here, and only in one case was there a judgment in Court against that. In that case the Judge, I believe, laid it down that it was obviously the intention to charge on the purchase annuity. Should there be a smaller annuity now than twenty or thirty years ago, there is no doubt that the value of the property has increased. The outgoings are less by the difference, and the greater the number of annuities that have been paid the nearer comes the day when the property is vested absolutely in the tenant purchaser. In this case there is an alternative way out. If the man is charged on a sum which represents a greater sum that he has earned out of the property, he has a method of relief. I think the Seanad generally knows that a great deal of advantage is taken by persons who have purchased of that fact. There may be some cases in which there are investments held by a person who is paying this purchase annuity now at a smaller price than formerly, but the State must get revenue. It is only in that case that there could be any hardship, and even in that case the hardship is immaterial. I was not aware of the number, but I take Senator Irwin's statement as being correct that the number is considerable. While the number is considerable the actual number of assessments is inconsiderable, and I do not think there would be any real hardship in this case. I regret very much I am not in a position to accept the amendment, more especially as the matter was debated in the Dáil at very considerable length, and I think that anything that should have been said on the subject was certainly said on it there, and said to an audience which would be, perhaps, regarded as one of the most considerate towards the people affected.
In view of the Minister's reluctance to accept the amendment. I do not wish to press it to a division.
Amendment, by leave, withdrawn.
I beg to move: Section 5 (Sub-section 1), to delete the word "or" before the word "statutory" in line 13, and to substitute therefor the words "except by way of." I wish to point out with reference to what the Minister has stated, that the farmers have the alternative of showing that their profits were reduced under Schedule D, that it is not the custom for farmers to keep accounts, and that in any case they have to give notice three years beforehand in order that their accounts would be accepted by the Inland Revenue. They should give notice on a certain date that they claim to have their Income Tax assessed under Schedule D. Those accounts should be on a basis of three years, and although they need not give the notice until the year of assessment the accounts have to be made up for the previous three years, so that it practically means that a farmer would have to be three years keeping accounts before he could avail of that alternative. If this amendment were accepted it would not affect the case of tenants who had lodged portion of their purchase money, who had actually made a payment to the Land Commission in reduction of their purchase money. It would exclude them, but it would have the effect of allowing the tenants who bought under the Ashbourne and Balfour Acts, and the other Acts before 1903, to be assessed on the reduced annuity after the decadal reductions.
I am afraid I could not accept that.
That being so I beg to withdraw the amendment.
Amendment, by leave, withdrawn.
Section put and agreed to.
SECTION 6.
(1) Where any employed person has omitted to make payment of any income tax under Schedule D or E due and pay able by him for any year, the Revenue Commissioners may give notice to the employer of such person at any time after a period of three months has elapsed since such income tax became due and payable, requiring such employer to deduct the amount of income tax so in arrear from any remuneration payable by him to such employed person.
(2) On receipt of such notice the employer shall deduct such sum or sums, not exceeding in the aggregate the total amount of income tax so in arrear, at such times, and in such manner, as the Revenue Commissioners may direct, and shall forthwith pay over the amounts so deducted to the Accountant General of Revenue.
(3) If any employer refuses or neglects to pay over to the Accountant General of Revenue any such sum or sums within the time specified in such notice, such employer shall be liable to pay such sum or sums as if the same had been duly assessed upon him, and proceedings for the recovery thereof may be taken in any manner prescribed by the Income Tax Act, 1918, including the issue by the Special Commissioners of their warrant to the Collector in whose Collection the business premises or property of the said employer are situated, requiring him to distrain the said employer by his goods and chattels, and failure on the part of the employer to deduct any such sum or sums from the employed person shall not be any bar to the recovery of such sum or sums by proceedings or distraint.
(4) Any employer who neglects or refuses to comply with the provisions of this Section shall be liable to the penalty imposed by Section 107 of the Income Tax Act, 1918, upon a person who neglects or refuses to deliver a list, declaration or statement, and such penalty shall be recoverable without prejudice to any other remedy provided by the Income Tax Act, 1918, or this Act.
(5) Where the employer is a body of persons the provisions of Sub-section 2 and 4 of Section 105 and the whole of Section 106 of the Income Tax Act, 1918, shall apply in relation to anything required to be done under this Act.
(6) Nothing in this Section shall affect the provisions of Rule 11, Schedule E, of the Income Tax Act, 1918, or of Rule 7, Schedule E, of the same Act, as amended by Section 18 (3) of the Finance Act, 1922.
(7) An employer who pays over to the Accountant General or to the Collector in whose Collection his business premises or property are situated, any such sum of income tax as is required by any such notice from the Revenue Commissioners as aforesaid, shall be acquitted and discharged of so much money as is represented by such payment as if that sum of money had actually been paid as remuneration to the employed person.
I beg to move the deletion of this Section. I, personally, fail to see any free and easy means by which it can be amended. Workers generally object to the principle of any third party coming in between themselves and the State for the income tax or any other debt. I fail to follow the arguments put up in support of the necessity for this Section. It has been stated by the Minister, I think, on more than one occasion, that those who owe the tax are those who can best afford to pay it, and that in the main they are probably only very few. If that is the case, surely, it is quite within the province and the ability of the income tax collectors to hunt down those people and collect the tax, without introducing an obnoxious principle of this kind. We may be told that there is very little opposition to it. I think I can assure the Minister that there is very stern opposition to it and that he will only realise it when he proceeds to put it into operation. I would ask him not to be misled by the approval given to it by the representatives of the farming interests here who have spoken about it. Everybody knows that no agricultural labourer has ever yet been assessable for income tax. The farmers have taken jolly good care that they have not, and when they have finished with the labourers, at all events if they have their way, the labourers will be further and further away from the income tax limit. Consequently the approval of the representatives of the farming interest is negligible, because they know well that they and their employees are not affected at all, and that they are not going to experience the friction that will be created by the operation of this Section. It is true that Railway Companies have, since the Income Tax Act of 1860, been deducting the Income Tax in respect of their salaried employees. I think the reason for that is that the Railway Companies then, as they are to-day, were strongly represented in the British Parliament, and they suggested that they should do so as a matter of convenience. At that time about 2 per cent, of the Railway salaried staffs were liable for Income Tax, and in fact it was confined to the officers of the companies. The companies, because of the small amount that Income Tax then stood at—9d. and 1/- in the £— decided to pay the tax themselves. It was a mere matter of convenience that they would pay it over to the State rather than pay it to the individual concerned and have it re-collected. Of course as the cost of living went up all salaries went up, and the principle was extended to all those who came within the limit, and the income tax limit itself came down, drawing more and more people within the ambit of the Act. It has never been extended to the operative staff who are the overwhelming majority of those in the railway service. Any suggestions that it would be extended to them, such as the higher paid operatives in the railway shops, would meet with fierce resentment, and there is a chance that they might, for the purpose of challenging the principle, refuse to pay income tax, and challenge the position of the employer in regard to the matter. In the cases where it has been paid on behalf of the salaried staffs there has been endless friction. The employees generally accuse the employers of deducting more than is due, and the explanations forthcoming have not always satisfied the individual concerned. I would also point out that a certain amount of technical trouble may arise. What will be the position of men who derive incomes from two sources? The various orchestras in our theatres and picture houses are mainly made up of people who have other employment during the day. From the second occupation they derive an additional amount of income which will be assessable for Income Tax. I would like to know from the Minister which employer will be liable for the collection of arrears of Income Tax if the employee refuses to pay. Will it be the day time employer or the evening employer who will collect it? There are other people, such as consulting engineers and others connected with several corporations and several railway companies, who have, so to speak, 5 or 6 employers. In these cases who will be responsible for the collection of the Income Tax? I presume if a man's wife has an income and if any part of it is assessable, the employer will also be responsible for that. There is a very distinct objection to disclose one's private income to an employer. I know it is not absolutely essential in these cases if the employee pays his Income Tax, but in order to make this Clause effectively operative the practical procedure will be for the employer automatically to deduct at the source the Income Tax from the money which he pays out to his employee. It has been argued that deductions in respect of Unemployment Insurance and National Health Insurance have been made without friction. There is no analogy, I respectfully suggest. Both these insurances are insurances in the real sense of the word. They form a contract to which the subscriber is a party. He intends to gain by it in some way. It is a protection in some way, and was devised originally for his benefit. The same considerations do not apply in the case of Income Tax. It may be said the employee benefits from Income Tax, but not in the same way as he does from Unemployment or National Health Insurance. It is very amusing to find the inconsistency of people pleading in a pathetic manner for remission of this tax and that tax, and then coming along and stating in an emphatic and stern manner that they were prepared for all sorts of measures to be devised for collecting this tax. That very section of the community are largely responsible to-day for paralysing the public life of the country, because they refused to pay the rates and taxes necessary for the upkeep of the public services. I hope there will be no misunderstanding as to the soundness of the support for the proposal coming from that part of the community who are not and will not be affected by the proposal. I suggest that the present arrangements have not got sufficient trial in a normal atmosphere.
The legislation of this Bill in regard to this particular Section has been devised on the principle of abnormal conditions, and does not seem to take cognisance of what will be the normal conditions obtaining when peace has been restored.
I wish to support Senator O'Farrell's amendment. He has said that the workers are very strongly against this method of collecting Income Tax due by them, and I can say that, as far as the employers are concerned, they are just as strong against it. From the employer's point of view it will throw endless difficulties between himself and his employees. There is one matter for which I can see no provision at all in the Clause, and that is that in certain circumstances an employer would be assessed and instructed to collect so much a week in Income Tax off a certain employee. He would notify the employee of that fact, and the employee would immediately leave him and go to some other employer, and I think I would not blame him very much. The employer would then be left with this assessment, which it would be impossible to collect from the man. That is one of the minor difficulties that Senator O'Farrell has not mentioned.
I think, sir, we all object to taxation and believe that there should be no taxes. I think it is absolutely unjust that any person at all should pay taxes. When Income Tax is being assessed and when we are asked to pay some people object to returning their incomes. Well, if they do not wish to they need not give a return. Give no return and you will be assessed, and then there will be a fight. But the people who make all the objection say this: "We desire to bring under your notice the case of an employee of yours who, we understand, is a clerk employed by you. The man in question is in considerable arrears to this Union and has made no attempt to clear his contribution card. Although he has been repeatedly notified that he was out of benefit, his present attitude leaves us no other alternative but to instruct our members not to work with him in the future."
I rise to support Senator O'Farrell's suggestion. I do not understand much about finance. Mrs. Farren looks after all the finance that I have. I do not understand much about the law, thank God, but what I do understand as a plain man is that stoppage is no payment. I always understood that that was a dictum accepted everywhere. that stoppage was no payment, and that you were not entitled to stop anything from anybody for payment of a debt. Now, the suggestion underlying this proposal is that working people who are in arrears of payment of Income Tax—and by the way, I may say that only about 5 per cent. of the average working class will be assessed for Income Tax at all, because with the crying demands from Senator Fitzgerald and people of his type for reductions and reductions and more reductions in wages we will have nothing at all to pay Income Tax on.
I beg your pardon——
I beg your pardon. Sit down, please.
AN CATHAOIRLEACH
Order. Senators must not address one another. If there is any objection, or if any Senator wishes to rise to a point of order or to give an explanation, the Senator who was in occupation must give way. Senator Fitzgerald.
The statement that has been made that I have reduced wages is absolutely untrue, and there is not the smallest particle of foundation for it.
I say that the employers have been demanding reduced wages and are continuing to demand reduced wages. The propaganda in Senator Fitzgerald's paper every day is tending in that direction also, so that I say that if they continue the demand for reduced wages and are reducing the wages of the employees very little will be left for taxation. I suggest that very few of the average working-class people will be affected by this, but it is the principle that we object to. I believe that every man should pay what he is justly entitled to pay. I believe that every man ought to pay his just and lawful debts, whether they be Income Tax or anything else, but I object to the system introduced here whereby you are going to make a man's employer a tax gatherer. I say it is wrong in principle, and I believe it will lead to endless confusion. The Chambers of Commerce and other leading employers, have already protested against this proposal, and we are at one with them, because we say that it will lead to endless confusion, and any procedure of a Trade Union, carrying out its ordinary functions, is not an analogy to the present position. The principle that Senator Fitzgerald refers to is an accepted principle in the City of Dublin. The large employers and the combination of employers in the city and country recognise that collective bargaining is the only way to solve Labour problems, and we say that you cannot solve these problems without a system of collective bargaining unless you have the whole of the people on each side well and fully organised. I have met different sets of employers in many occupations all over the country and I have always said to them that I believe the employers should be organised 100 per cent. and that the workers should be organised 100 per cent. also, because otherwise you cannot have a settlement of an industrial dispute. However, that is apart from the issue that we are discussing to-day. I am afraid that this will cause endless confusion, and for that reason I believe I am voicing the opinions of the whole of the working-class people anyhow, when I say that they have a decided objection to this method of collecting arrears of Income Tax.
I should like to know from the Minister for Finance if it is intended to make that Section permanent or will it be merely temporary for one year? That would affect our attitude considerably.
AN CATHAOIRLEACH
You must take that as you find it in the Bill. There is no provision in the Bill as to its temporary operation. It will become part of the law of the land once it is passed into an Act.
If it is permanent I will have to vote against it. I think it is a very doubtful experiment indeed. Goodness knows we have trouble enough with our employees at present without having new ones. Some of us are in very good relations with them and we do not want to break these good relations if we can avoid it. I would like to know how I am to collect these two years' arrears of Income Tax from a man that comes into my employment. Am I to take all his wages away from him? If I do and he leaves me am I responsible for it? It is the most extraordinary suggestion that ever I or any business man heard of. I do not think there is another example of it in the whole world. You have a remedy in Russia, that is shooting subjects who do not pay. It is a ready remedy. I do not know whether it is satisfactory, but it is ready, decisive and quick. I am speaking from the employer's point of view and I am certainly not prepared to be turned into a Government tax collector. If the Government are not competent to collect their taxes, in my opinion they are not fit to govern the country.
There appears to me to be some difference between the case that was put by the mover of the amendment and Senator Farren. Senator Farren has enunciated that his own idea was that everybody should pay their debts, and I quite agree with that. I think it is one that Senator Farren always recommended during his life.
So do I.
I am glad to hear that. But this is a case in which you are dealing with an exactly different type of person and whether they are impressed with the fact that the tax is not a just one, or that they are determined not to pay it we do not know. The fact of the matter is that in the City of Dublin something like half a million of money is outstanding.
All sorts of entreaties, numberless applications, and every sort of exhortation that could be made has been made to these people, and there is no result. There is a method that we could adopt. We could go to the court and attach the salaries, but that is expensive. It takes up a lot of time of the servants of the State, and it entails a considerable expense upon the person who, in addition to his objection to pay, is also, perhaps objecting to pay because he pretends he cannot afford to pay. Now, it was our intention to make it easy by accepting instalments. We would require at least three or four times the staff if we were to collect these instalments, and it is possible that even with that additional staff that we would not get these instalments in anything like the order in which it is our duty to collect them. At this moment we stand in need of money, we require money for carrying on the State. We can picture to ourselves two families living in the one street, in one of which is, say, a man earning £400 a year. He has to pay his Income Tax, or at least he ought to pay it. We have next door to him, let us assume, a widow with, perhaps, one child. She also has £400 a year. In her case the Income Tax is deducted before she gets her money. She may make claims afterwards and get repayment, but it is deducted in that case before she gets it. Whether that is in accordance with what Senator Farren says that "stoppage is no payment" or not, I do not know, but there is no opportunity of that person objecting. It is done already, and the widows and orphans do not complain of that. The other man, having his health and the rest of it, seeks to evade what this unfortunate person is mulcted in, and seeks to evade it by getting up popular, or pretended popular, support on his side. I have had some experience of the collection of rates for the last three or four years. I should like to say that, generally speaking, there was a very clear perception of the civic duty of the farmers during that period, and in the case of the City of Dublin I think it would be impossible to find anywhere a better conception of the civic spirit. There were cases in which people escaped, in some counties much more than in others, and they now seek in this case, just the same as in the Income Tax arrears, absolutely to escape responsibility so far as the upkeep of the State or Local Authority is concerned. People have evaded the payment of these taxes for two or three years. They have searched every possible record of the meetings of the Dáil when it met in secret, and met under great difficulties, and when it would have been an exceedingly popular thing to have passed a resolution or a decree ordering non-payment of Income Tax. In all the searching they have not found a single decree or resolution ordering such a thing. Recently after some very drastic action had been taken in a certain county three or four people turned up to pay Land Purchase annuities and they said when putting down their cheques or money:—"Is this what we fought for?" That is a very wrong conception of civic responsibilities and rights, and we ought to get it out of people's heads. The day of appealing to the populace on a popular stunt which has no sound business basis behind it I hope has gone for ever. It must be brought home to every section of the community that their service as citizens can best be evidenced by accepting responsibility in these cases. We do not want to place any burden upon any section of the community which they cannot bear, but we do say where people like those have evaded their responsibilities, that steps must be taken to let them see that the State is bigger than any section of the community. The State will only place a burden that can be borne, but it will insist that it will be borne by every section. Cases have been brought to my notice of people who have eyaded this tax who belong to a rather popular tribe known as bachelors. They have no homes and no furniture, and there is no chance of getting anything from them. You cannot seize any property of theirs, and their bodies are of no use. They would not be bid for if put up for auction. The only resource we have is the salary paid to such a person and it may possibly be for his benefit if we took some of that from him. It was not until after very serious consideration that we decided upon this particular method of getting the tax. I believe if it is accepted in the spirit in which we wish to see it exercised that it will not be a burden on anybody's shoulders—at least a burden that they cannot bear.
We are getting from certain sections of the community their full quota. Some are paying up to 10/- or 11/- in the pound. There is a suspicion amongst certain of these people that we do not mean to treat fairly all sections, that they are to be plundered, and that those who, perhaps, have taken part in the recent revolution are to escape. I do not think that it would be wise in the first days of the new State that any excuse should be given for such propaganda; and it is our intention to see that every section of the community bears its fair share of the cost of the State. If, as Senator Farren says, there are people for whom he speaks who are escaping by reason of their incomes not being liable for Income Tax, surely they have got no complaint, and is it not to their benefit that we do tax those who have not escaped, and whose salaries or wages do bear the responsibility? If not, it would come to this, that we would have to go to the people he represents and place an undue burden on them. I am sure it is not the intention of any citizen that that should be done. I cannot see that a case has been made for the rejection of this clause. I hope the Seanad will not accept that recommendation.
I asked a question of the Minister as to the case of a man having different sources of income. Before he replies, I would suggest that he has really, so to speak, tried to lead us up the garden by another side path altogether. He has spoken, generally, in favour of the virtue of paying Income Tax and debts. That is a doctrine with which we must all agree. He has, at the same time, admitted that the Government have not prosecuted or taken action against one single defaulter. He talks about the majesty of the State, and of the State being greater than any individual. I notice that the majesty of the State is to be kept by sending out a group of employers to collect taxes that the State is unable or afraid to collect. What have we a Revenue department for if they do not do this? It may be expensive he says. I do not know that it is any more expensive than under the old regime, and it may turn out far more expensive now in the case of employers as matters develop. I contend that the case in favour of this is extremely limited. They might, at least, have made an example of half a dozen or a dozen people, before putting on the Statute Book a thing there is no precedent for that I am aware of, and is something that should not be adopted except on the last resource.
Motion put.
Seanad divided. Tá, 8; Níl, 17.
Tá
|
William Barrington.William Cummins.Thomas Farren.James P. Goodbody. |
Joseph Clayton Love.Edward MacLysaght.Micheal O'Dea.John T. O'Farrell. |
Níl
|
Thomas Westropp Bennett.Richard A. Butler.Mrs. Eileen Costello.Peter de Loughry.Dowager Countess of Desart.Sir Thomas H. G. Esmonde.Sir Nugent T. Everard.Martin Fitzgerald.Sir John Purser Griffith. |
H.S. Guinness.C.J. Irwin.Sir John Keane.P.W. Kenny.T. Linehan.Sir Bryan Mahon.B. O'Rourke.Mrs. Wyse Power. |
Motion declared lost.
I beg to move as a recommendation to add at the end of Sub-section (1) ["arrear from any remuneration payable by him to such employed persons"] the words "by way of salary or wages." The object of the amendment is merely to elucidate from what remuneration the deduction should be made. I am not quite certain what the word "remuneration" there covers, but I take it that this Section applies to people who are in receipt of only salaries or wages: that is, it should only be incumbent upon the employer to deduct the Income Tax from salaries or wages payable by him, and that he should not be responsible for every possible remuneration that the employee might be in receipt of.
The word "remuneration" means not alone salaries and wages, but also means commission which is paid in certain cases, and is often of a very much higher value than the actual salary. In that case we would have no opportunity of getting at the real source of income if only salary or wages were laid down. I do not think that salary or wages would cover the commission, so I am advised, and consequently it would be better to leave it in.
The only reason I have raised is to know whether it means commission payable by the employer, because if it was commission payable by somebody else the employer would not have jurisdiction.
Oh, yes; commission payable by the employer.
Commission payable by the employer who also pays the salary and wages.
Yes.
This really raises the question I mentioned. Supposing there are two sources of income, neither, in itself, being assessable, but the two combined being assessable, which employer would be responsible?
I should say in some cases it would be A and in other cases it would be B.
I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The next amendment I wish to move is in Sub-section (2) to insert after the word "shall" ["on receipt of such notice the employer shall deduct"] the words "notify the employee and after the expiration of 14 days shall."
The object of this recommendation is to give the employee some notice. You may say from the point of view of current Income Tax he would be given notice in any case. I think, however, it would be advisable, and contribute to the happy relations between both employer and employed, that reasonable notice should be given to the employee that the employer is going to deduct Income Tax from wages that are payable.
I would be prepared to consider that in bringing up a recommendation to the Dáil, but I am advised that there would be great difficulty in the case. First of all, these employees have already been written to and they have had ample notice, and difficulty might arise in the case where notification might be in question. "Notify the employee"—If an employee was absent when would the 14 days run from and so on? I will see if anything can be done to meet the views of Senator Guinness in regard to this, but at the moment I do not think we could accept the amendment in the form in which it stands.
Amendment, by leave, withdrawn.
My next amendment is to add at the end of Sub-section 2 the words: "Provided that the employer or the employee may, as to any future deduction to be made under any such notice or direction, apply to the District Justice of the District in which the employee is employed, or, if employed in the City of Dublin, to a Divisional Magistrate, to discharge the notice or vary the directions, and the District Justice, or Divisional Magistrate, as the case may be, shall hear and determine such application, and may discharge the notice or may vary the directions in such manner as to him may seem reasonable. Fourteen days' notice in writing shall be given to the Revenue Commissioners of any such application."
The object of this amendment is to give the employer and the employee the right of appeal. The Clause, as drafted, enables the Revenue Commissioners to act as both judge and jury in the matter, I think that is a principle which is not quite sound, and in order to give a fair and reasonable chance, both to employer and employed, if there is anything that either of them definitely objects to in the assessment, he should have the right of appeal. The amendment here is simply drawn with the object of setting up a Court of magistrates before whom such appeal could be heard.
AN CATHAOIRLEACH
What exactly is the meaning of these words in the amendment "as to any future deduction to be made." The notice only deals with deductions for past arrears due, and how can any magistrate inquire into notice about future deductions before the notice is received?
The object of the words "as to future deductions" is this: the Revenue Commissioners may direct a deduction of the Income Tax in arrear, "at such times and in such manner." I take it that means that the Commissioners may instruct the employers to deduct the amount due on several different occasions. They may not get the whole of the money on the first occasion, and they may probably be instructed to collect in increments the amounts which are due over a long period.
AN CATHAOIRLEACH
I think the word "future" is very embarrassing and ambiguous. Would it not be better to leave out the word altogether?
Yes; I am quite prepared to accept that suggestion.
AN CATHAOIRLEACH
You would cover your purpose quite well without "future," and without it what you want to accomplish would be done.
Yes; I shall be glad to take it out.
Question: That the word "future" be deleted from the amendment, put and agreed to.
I should be glad to know if this amendment would also cover the case in which there is a lump deduction and give the magistrate power to revise the amount, because I am afraid we are all acquainted with a good many cases in which Income Tax is demanded which is not due, and therefore an appeal is very necessary. I have in my mind a case in which a claim was sent down, and a demand made for a certain sum of money—a large sum amounting to £600; and the messenger was actually waiting for a cheque to bring it back in return. Inquiries were made; the Income Tax people were asked for particulars, and when the particulars came down it was found that the claim was for £220, and, on further investigation, that sum was reduced to £20. These mistakes occur pretty often, and if an exorbitant demand is made from the employer, is the employer forced to clear it? He may find that the employee very often would have no means of knowing of how to go through the preliminary means of getting Income Tax adjusted, and I would like to know whether this amendment of Senator Guinness would not apply in that case also.
AN CATHAOIRLEACH
It would cover a case of that kind.
I am not at all satisfied from my knowledge of the subject, imperfect as it is, that an appeal does not lie already I should like the President to assure us on that point. I understand, in a case for assessment, an appeal lies, but not to the District Judge, and I would submit rightly so.
AN CATHAOIRLEACH
I do not think an appeal would lie to the Commissioners in every case under this Section 6, and for this reason: You see it deals with arrears, and the time for making an appeal is the time the assessment was made or within a limited period after that. In the case of arrears the period allowed for an appeal would have lapsed.
I suggest this is an original assessment made upon the employer, and that it has nothing to do with the assessment on the employee. It is a fresh assessment made on another party.
AN CATHAOIRLEACH
I think you must be wrong in that. There is no assessment made on the employer under this section. There is simply a notice sent to him calling his attention to the fact that his employee is in arrears to a certain amount, and requiring him to pay up.
On the legal point I am not going to advance an opinion against yours. The Section says "the employer shall be liable to pay such sum, etc." That is not absolutely specific, but the words do imply that he is having an assessment made upon him, and if that is correct then I submit that, in the ordinary course of the law, an appeal to the established body, which I understand is the Revenue Commissioner now, would lie.
AN CATHAOIRLEACH
You may be quite right in that.
Do you mean that an appeal would lie to the Revenue Commissioners who are the people who have already served the notice?
The point brings into review the whole basis of appeal in every case. If the principle of appeal to the Court is going to be altered, I submit it should not be altered by a side wind, but on general grounds.
There is no doubt about it that this is an assessment upon the employer. I gather from the present position of these Income Tax Acts that there will be no appeal, for the simple reason that this is an assessment on the employer for Income Tax due by somebody else, and the reason the other person is charged with the Income Tax is that he did not appeal when he should have appealed. In practice, that is what happens. You are going to limit the time of appeal, and to imagine that anybody drawing a small salary is going to appeal within a fortnight after the date on which the assessment is made is ridiculous. What happens is, that when people get an assessment they burn it or light their pipe with it. Then, after a fortnight or ten days, you come along and put this section into operation. The employer of the gentleman who has lighted his pipe with the assessment form and who has failed to fill up the particulars asked for within the specified time, is told he must pay the tax forthwith, though this employer knows nothing about the matter. I think there ought to be an appeal somewhere, and that the general principle of Senator Guinness's amendment is worth considering.
AN CATHAOIRLEACH
My own opinion, for what it is worth, is: if the effect of this Section 6 is to make this notice to the employer an assessment upon him, then such assessment would be subject to the right of appeal, but I am not at all prepared to say that it shall be the same as if it was assessed as equivalent to the actual assessment. If they want to make the matter more clear, instead of putting in a clause such as this is, perhaps it would meet the purpose of Senator Guinness, and the Government probably would not object to say that any employer who receives notice of any such assessment shall have the same right of appeal as would attach to the original assessment.
Or employee.
AN CATHAOIRLEACH
The employee would apparently have lapsed his time as far as arrears are concerned. As to the current tax he probably would be in time to appeal. As I understand what this assumes is this: An employee has been assessed last year or the year before. He has had a right to appeal from that assessment. He has not appealed, and has not paid, and the tax is in arrear. This clause says that notice of the existence of these arrears, and that they are unpaid, may be given to the employer and that is to be the same as if he was actually assessed for the sum in arrear. It might carry out the object you have in mind if you were to put a proviso there to say that the employer who receives any notice of the kind shall have the same right of appeal as if he was the party originally assessed.
With reference to what you have just said, heretofore there has been a right of appeal to the County Court Judge, but under the report of the Commission, with which no doubt you are quite familiar, County Court Judges are done away with, and I do not know to whom the appeal would now lie. It seems to me that this recommendation is eminently suited to meet the case.
I think it is plain to the Senators supporting this that this Section cannot be amended satisfactorily. I think it is quite obvious that some Senators are now beginning to get sorry for not having voted for the previous recommendation. The only way, in my opinion, in which the Section can be made satisfactory, at least effective, is to make it compulsory on the employer from the beginning of the financial year to deduct on each pay-sheet a certain amount. Already we are beginning to see coming to light some of the difficulties with which people will be faced. They may try to amend it as they like, but these difficulties will multiply as time proceeds.
In your statement you said that where there were arrears of Income Tax there was no right of appeal.
AN CATHAOIRLEACH
No; what I said was this. If you assume a case where A.B. is in arrears with his Income Tax for three or four years; with regard to each of these years he receives an assessment, and he had a certain time from the date of that assessment to appeal. But if he has allowed the time to lapse in respect of any one of these assessments he cannot avail himself of it now.
That is exactly what I wanted to know. That is one of the things that I think will raise difficulties. The position taken up by working-class people about Income Tax for the past three or four years has been that they took no notice of the forms, and some of them believed it was the highest form of patriotism to tear them up and refuse to pay. There was some provision in the British Finance Act whereby employers had to give certain information regarding the wages of their employees. I know of artisans in Dublin who got these forms and took no notice of them. I think if they had appealed against the assessment that was made it would be found that in many cases the assessments were far and away above what they should have been. I know of one particular case of an artisan who was assessed, and I sent him to a friend of mine who is now gone, and who was a friend of most of us. He was an expert in this business, and he showed this man that he was not entitled to pay anything. If men such as that had no right of appeal against assessments made three or four years ago I think it would be a great injustice.
I would like to say that this recommendation was drawn up by a very eminent Conveyancing Counsel and for that reason I do not like to agree to the removal of words which might be construed to alter the whole meaning.
AN CATHAOIRLEACH
As to any future deduction it is not sense.
I admit that.
AN CATHAOIRLEACH
What is probably in your mind is this: "Provided that the employer and the employee may, as to any deduction to be made thereafter." What you want to cover are deductions that are postponed.
That is the object.
AN CATHAOIRLEACH
You do not accomplish that by the word "future," because "future" means something that has accrued after the notice. If you put in "as to any deduction to be made thereafter" it would be better.
I am agreeable.
AN CATHAOIRLEACH
I think the simplest plan is to leave out the word "future" and let the rest stand.
There is first of all the assessment and then the appeal lies. Probably people have not taken advantage of that appeal, and we have not pressed that against them. We still leave it open to them to appeal, but I am advised that including this in this way would not be satisfactory. I do not think the Divisional Magistrates at present deal with this matter of income tax here in Dublin. Certainly the District Justices do not, and to be bound to that would not be satisfactory. We have not pressed in the case of persons who have lost the right of appeal, and we do not intend to. We intend to give them still the opportunity, as if they had not lapsed that particular right. I think that meets the case as far as the Senator's request is concerned.
AN CATHAOIRLEACH
Then the thing could be made quite plain if instead of a Clause like this which is a novel departure, you simply put in a proviso that notwithstanding that the time for appealing has lapsed that the right of appeal will be preserved in such cases.
If the Minister would undertake to get that done I would be quite satisfied, that is to say, to add to this Clause that the appeal would still lie.
AN CATHAOIRLEACH
That is the existing appeal?
Yes.
Would he agree to substitute for these District Justices the officials who will in future take the place of County Court Judges?
AN CATHAOIRLEACH
It will be quite sufficient simply to put in the existing appeal, simply to put in a proviso that the assessment referred to in this notice for which the employer is to be liable shall be subject to the right of appeal, notwithstanding that the time for appealing may have elapsed.
Quite so, but my position is this, that hitherto the right of appeal to the County Court Judge existed, and I do not know what appeal is provided for under this Bill.
AN CATHAOIRLEACH
That appeal still exists.
But County Court Judges are done away with.
AN CATHAOIRLEACH
Oh, no; it will require an Act of Parliament to do that.
A recommendation has been made dealing with the Judiciary but an Act of Parliament has not been passed. I undertake to look into this, and if it is possible get something to meet it. In the meantime, apart from that, we are not pressing against these people who have lost the right of appeal. We are still open to receive appeals from them.
AN CATHAOIRLEACH
You are satisfied with the Minister's assurance?
Yes.
Amendment, by leave, withdrawn.
I beg to move:—Section 6: To insert after this Section a new Section 7 as follows:—
7. (1) Where arrears of income tax due and payable by an employed person in respect of any year prior to the 5th April, 1923, have not been paid prior to the passing of this Act, the Revenue Commissioners, before using the power conferred by Section 6 (1) of this Act, shall notify such employed person that, if he shall pay all arrears due and payable by him within thirty days after being so notified, he shall be allowed a discount of five per cent. on such arrears.
(2) When notice pursuant to Section 6 (1) of this Act is given to an employer in respect of arrears of income tax due and payable prior to the 5th April, 1923, by a person in his employ, such employer may, at his option, pay the full amount of such arrears within thirty days of the receipt of such notice, in which case he shall be allowed a discount of five per cent.
The substance of this recommendation is that a discount of 5 per cent. should be allowed to employed persons for prompt payment of their arrears, and that the same rate of discount should be allowed to employers for payment of the arrears before a certain date. My main idea in making the recommendation is to commend the general principle to the Minister. I understand that in other countries discount is allowed for the prompt payment of income tax. In business, too, reasonable discount is allowed for prompt payments. My object in making the recommendation is that it may prove an aid to the Minister. It would certainly save expense and get in revenue promptly, and he would be always able to count on the approximate amount of revenue he was likely to receive by a certain date by making this allowance. People would be deterred from withholding it unreasonably, and it would encourage the habit in taxpayers of paying promptly. It would also be fair to those who do pay, as it would be just to those who do not pay and who would lose the discount. I have no intention of pressing the recommendation, but simply make it to the Minister, and I hope he will see his way to accept the general principle.
If there is any intention on the part of the Government to accept this amendment I hope it will be extended to all arrears of income tax. I do not think it would be at all equitable that one class should be singled out for special treatment above any other class.
I do not think it is fair to give special treatment to anyone. As I said before, I do not understand finance. If a discount were given for prompt payment by every person, whether employer or employee, or any any other person, it might obviate all this difficulty of getting employers to collect other people's income tax. I think it is a bad principle to set up to say that people who have been in arrears and who failed to carry out their obligations, are going to get discount if they pay their arrears promptly, whereas other people who have met their just obligations and paid when assessed do not get any discount. I think it should be the other way about, and that people who pay promptly should get some discount. I believe if some such system of giving a slight discount were adopted it would be a great saving to the State, to the people, to the clerks and the officials, not to talk of the saving on stationery.
We have been considering this question of discount and the point mentioned by Senator Farren is the one that it broke on; that is that certain people paid in good faith promptly, but they now see that it was a mistake to have paid when they could have had the use of the money for a longer time, and would now get discount of 5 per cent. There is a system in America, I believe, by which a considerable discount is allowed for the payment of rates in the first month, a smaller discount the second month, and smaller still half way through the year. Then there is a slight increase added to people who were a little easy about paying. I rather like the idea, but at present I could not accept this as I think it would be unfair to those who have paid and who are paying. I think the second part of the amendment is one that is not likely to be availed of. I think that employers might, perhaps, be inclined to keep back payment until the last moment. I do not think that 5 per cent. would be an attraction, and in any case there would be the question of an employee leaving his employment so that the employer could not deduct more than a certain proportion of the amount he had paid each month. I think, on the whole, it is a matter that ought to be considered when we are re-considering as we intend to, the whole system before next year, and see if it would be advisable then to adopt it or not.
I beg to thank the Minister for his promise that the idea will receive consideration, and with the leave of the Seanad I will withdraw the Amendment.
Amendment, by leave, withdrawn.
Section put, and agreed to.
SECTION 7.
(1). Whenever any person (in this section called a "defaulter") makes default in paying any sum which may be levied upon him in respect of Income Tax, and notwithstanding (in the case of a Schedule A assessment) that the defaulter is not named in the assessment of the tax, the Collector by whom the sum so in default is collectable may issue a certificate to the Under-Sheriff of the county in which the defaulter resides or has a place of business or (when the tax in default is charged on lands or tenements) in which the lands and tenements are situate, certifying the amount of the sum so in default and the person upon whom the same is leviable and the lands and tenements (if any) on which the sum is charged.
(2). Immediately upon receipt of any such certificate as is mentioned in the foregoing sub-section, the Under-Sheriff shall proceed to levy the sum therein certified to be in default by seizing all or any of the goods, animals and other chattels within his bailiwick belonging to the defaulter and (when the tax in default is charged on lands or tenements) all or any goods, animals and other chattels which may be found on such lands or tenements, and for such purposes the Under-Sheriff shall (in addition to the rights, powers and duties conferred on him by this Section) have all such rights, powers and duties as are for the time being vested in him by law in relation to the execution of a writ offieri facias so far as the same are not inconsistent with the additional rights, powers and duties conferred on him by this Section.
(3). It shall be the duty of the bailiff or other person employed by an Under-Sheriff to levy execution under any such certificate as is mentioned in this Section, immediately upon entry and before seizure, to produce on demand to the defaulter or other the person in apparent possession of the lands and premises upon which such bailiff or other person shall enter, the warrant of this authority from the Under-Sheriff, and on the like demand to deliver a true copy thereof to the defaulter or other person in such apparent possession as aforesaid.
(4). It shall be the duty of every Under-Sheriff under whose authority execution shall be levied upon goods, animals, or other chattels under any such certificate as aforesaid to cause an itemised inventory of the chattels seized to be made out within forty-eight hours of seizure, and, if practicable, before any removal, to cause to be furnished to the defaulter or other the person in apparent possession of such chattels a duplicate of such inventory signed by the Under-Sheriff or by a person acting on his behalf.
(5). It shall be lawful for any Under-Sheriff who shall take any goods, animals or other chattels in execution under any such certificate as aforesaid to sell by public auction such goods, animals or other chattels at any time after the expiration of a period of twenty-four hours after he shall have taken the same in execution, but so that he shall not allow any unreasonable delay to occur, and it shall not be necessary for the Under-Sheriff to publish or announce that any such sale is a sale by an Under-Sheriff or is a sale of goods, animals or chattels taken in execution.
(6). Any such Under-Sheriff who shall have taken goods, animals or other chattels in execution under any such certificate as aforesaid may sell such goods, animals and chattels by public auction at such place or places, whether within or outside his bailiwick, and whether within or outside the territorial boundaries of Saorstát Eireann in which in his opinion such goods, animals and chattels can be sold to the best advantage, and may remove such goods, animals and chattels or any of them or cause same to removed from the place where same were seized to such place or places of sale.
(7) All goods, animals and other chattels taken in execution by any Under-Sheriff under any such certificate as aforesaid may, pending the sale thereof, be impounded, stored and kept by the Under-Sheriff in such place or places whether within or outside his bailiwick and whether within or outside the territorial boundaries of Saorstát Eireann as he shall think fit, and notwithstanding that such place or places is or are not appointed or authorised by law to be used as pounds.
(8) Wherever any goods, animals or other chattels shall be removed under this section by or by order of the Under-Sheriff to any place outside his bailiwick, the Under-Sheriff shall in addition to the amount of the tax stated in the certificate under which such goods, animals and chattels were seized and of all other charges leviable under or by virtue of this section, levy for the amount of all costs incurred by him—
(a) in or about the removal of such goods, animals and chattels from the places at which they were seized to every place (including the place of sale) to which such goods, animals and chattels are removed before the sale thereof;
(b) in or about the storing, impounding and preservation of such goods, animals and chattels (including the feeding and watering of such animals) between the time of seizure and the time of sale;
(c) in or about the sale and any attempted sale of such goods, animals or chattels other than a sale or attempted sale within the bailiwick of the Under-Sheriff.
All such costs and expenses as are mentioned in this Sub-section may be deducted by the Under-Sheriff from the proceeds of the sale of the goods, animals and chattels as a first charge thereon.
(9) The Under-Sheriff shall be sole judge of the place or places at which any goods, animals or other chattels taken in execution by him can be sold to the best advantage and no action shall lie against any Under-Sheriff on account of his having sold any such goods, animals or chattels as aforesaid outside his bailiwick.
(10) Every person who after the passing of this Act shall in good faith purchase at a sale held by or under the authority of an Under-Sheriff any goods, animals or other chattels taken in execution by such Under-Sheriff under any such certificate as aforesaid, shall acquire a good title valid against all persons to the goods, animals and chattels so purchased notwithstanding any invalidity or irregularity in or about the seizure or sale of such goods, animals or chattels, and whether he knows or ought or could have known or is affected with any kind of notice that the sale is a sale by or under the authority of an Under-Sheriff or not.
(11) The power and authority of an Under-Sheriff to sell any goods, animals or other chattels taken in execution by him under any such certificate as aforesaid shall not be prejudiced or affected by reason of such goods, animals or chattels having been out of the custody of the Under-Sheriff or by reason of his custody thereof having been by any means interrupted at any time or times between the time of the seizure and the time of the actual sale of such goods, animals or chattels.
(12) No action shall lie against an Under-Sheriff for or on account of his having entered or broken into any lands, house, close or other premises for the purpose of taking into execution under any such certificate as aforesaid any goods, animals or other chattels which were or might be on or in such lands, house, close or premises, or for or on account of any injury occasioned to such lands, house or premises by or in the course of such entry or breaking in: Provided always that before breaking into any dwelling house or other building the Under-Sheriff shall have made reasonable efforts to enter peaceably and without violence: Provided also that in any case where the Under-Sheriff shall break and enter the premises of a person other than the defaulter named in the certificate, he shall either have found some goods, animals or other chattels of the defaulter therein or thereon or shall have had reasonable grounds for believing that there were some such goods, animals or chattels therein or thereon.
(13) No action shall lie against, and no penalty shall be incurred by, any Under-Sheriff in the absence of fraud, malice or gross negligence, for or on account of his having seized or sold under any such certificate as aforesaid more or less goods, animals or other chattels than would or might be sufficient or meet the full amount of the tax stated in such certificate and all fees, charges and expenses leviable under or by virtue of such certificate.
(14) Sub-section (3) to (13) inclusive of this Section shall only apply to any such certificate as aforesaid which relates to Income Tax for the year beginning on the 6th day of April, 1923, or any previous year.
I beg to move the deletion of this Section. I think we have to-day established a record for withdrawing amendments in deference to the Minister. I am inclined to think we will become another edition of the Belfast Parliament in this respect where the Premier gets up and beseeches a member of the opposition not to divide the House. The arguments in favour of the deletion of this Section have been adduced at length in the Dáil, and to some extent here yesterday so that it is unnecessary to go over them again. The admission of the Minister in regard to the principal amendment for the deletion of Clause 6 is, I think, the strongest argument in favour of the deletion of this Clause. No serious attempt has been made to utilise the present powers, but instead this bogey is set up which will probably never be put into operation. The argument is, if you have this rod in pickle, that it will inspire such terror in people that everything will be done as it should be done. That is so from the point of view of expediency perhaps, but it is hardly one that would justify an instrument of this kind being placed in the first Finance Bill of the Saorstát. I do not know that there is any precedent for it in any other Parliament in existence, and the fact that when the Enforcement of Law (Temporary Provisions) Act was passed through the Seanad and the Dáil it was agreed to only because it was a temporary Bill for 6 months is an indication of the extraordinary nature of the powers in this Bill which it is proposed to make of longer duration. One could understand the necessity for it if the existing powers had been utilised. One might also see the necessity for it if we were still in a state of war such as we were in when the Enforcement of Law (Temporary Provisions) Bill was passed. To-day there is comparative peace, and violence has ceased as we knew it at that time. I fail to see the necessity for this particular section and I move its deletion.
I would support the deletion of this section because I really do not think it is necessary or that the conditions are comparable with the Enforcement of Law (Temporary Provisions) Bill. In the case of the Enforcement of Law (Temporary Provisions) Bill we were up against that curious agrarian problem. We all know the psychology whereby people enter upon land and get a large amount of sympathy and what happens when auctions are called.
I need not sum it up as all of us in the country know what it is. I do not think there will be anything like the same sympathy for people who object to pay Income Tax. I cannot keep thinking that the Government will easily dispose within the country of any goods distrained for Income Tax. For that reason I do not think these powers are really necessary, and they are open to considerable objection.
When we discussed a similar Bill some time ago I opposed these particular provisions as strongly as I possibly could, and I think in the present instance the case against them is stronger still. I stated my reasons then for objecting to the other Bill, and I asked the Seanad to divide upon it. I object to these provisions, because if we make a law of them they are constitutional, but they are not in accordance with our ideas of liberty or of constitutional practice. I do not think it is advisable to make these extraordinary changes in what has been the settled practice of these countries from time immemorial. I can say many things about this clause. It is to be a perpetual clause. The first two sections are perpetual, and the other ones only relate to Income Tax now in arrear. I object to the general principle underlying these proposals, and if the Senator will go to a division I will certainly support him.
Our objection to these provisions is for identically the same reasons as we objected to some of the provisions in the Enforcement of Law (Temporary Provisions) Bill. We went over the whole ground then and we were told that it was an emergency measure. Now, we see that the Government are automatically taking it into their own hands to deal with the question of Income Tax, and so on, until such time as there will be no liberty of the subject left. There is a provision in this clause also whereby the Sheriff can come into my house and search for goods belonging to my brother, or someone else, if he has reasonable ground to suspect the goods are in my house. I do not think that is fair. It is not just that the Sheriff should have power to break into any man's house in search of another man's goods. There ought to be some other means of dealing with that situation without giving the Sheriff such extraordinary power. I suggest that since we were discussing the Enforcement of Law (Temporary Provisions) Bill some time ago there has been a material change and that conditions are not now the same, and that there is no necessity for the special precautions that the Government asked for on that occasion. Therefore I think it is only fair that the Government ought to be asked to delete this particular section of the Bill.
I am in agreement with the last speaker. Income tax is a tax which nobody pays willingly, a tax which so far as this country was concerned, should never have been imposed. It was always looked upon as being earmarked for war or defence purposes, and it was only imposed on this country by Gladstone on the understanding that it would be only for a few years. It has now become ingrained, as it were, and is a permanent item of the Budget. But with regard to the collection of a tax like this, which is not paid willingly, it is necessary that drastic provisions should be made for its recovery from a reluctant payer. Against the ordinary well-disposed citizen none of these Clauses should be brought into operation. If, through stress of circumstances, through sickness or otherwise, seeing that it is our own people who are going to collect these taxes now, the payer makes representations to the collector, I am sure that the collector's warrant is not of such arbitrary kind that he cannot take these matters into consideration and give ample time. I know it was the practice, even under the old regime, that collectors gave notice upon notice, and it was only upon the very last resort that they went to extremes. I think we should expect much more generous consideration from officials of the Free State, so that I think we are pleading, rather, for people who are dishonestly inclined, and I do not think that any Senator should lend himself to support any clause or amendment that would really be implied as supporting that form of dishonesty. We have a civic sense since we know that it is for the upkeep of the State that these taxes are collected. The Government is only taking these reserved powers into its hands to deal with dishonest persons. Acts are on the Statute Books in England which make the Britisher the veriest slave. In all the legislation in England extreme powers are taken but they are never used, except as against a citizen who is a menace to the State in one form or another, or who has not a civic sense. Now, there might be a weakness in the individual collector. He might, through spleen if he were a local man, exercise arbitrarily the powers given him. When he serves his notice the tax is at once payable, and he might take a short cut with a man with whom he might not be very friendly, and I say some break should be put upon that, such as the sanction of, or subject to the sanction of, the Revenue Commissioners—that there should be some impartial power over him before he could take this first drastic step which he is empowered to do under this clause, and that he should submit it to some higher authority.
We find that there is real danger in certain parts of the country in utilising the ordinary law or the pound, or so on, and the very fact that we have authority such as would be given by the Section would mitigate most of the troubles, if not dispose of them altogether in dealing with a matter of this kind. It is not for the purpose of exercising this particular power but of letting it be known that we have it and that we intend to use it if occasion should arise, that we have put down this particular Clause. The case, as I say, occurred in which some seizure was made and stock put into the pound. A certain number of people from one small area assembled at the pound, released the animals, and brought out the band and torches and so on, and had what seems to have been a great procession.
Was it for Income Tax?
I do not remember whether it was for Income Tax or for some ordinary debt. It is the case that acting under such a democratic Constitution as we have, there are people who think that there is no limit to their liberty, or, in other words, that they have got absolute licence. That is not the spirit of the Constitution. The spirit of the Constitution and the rights of the Constitution are there for every one, and should protect them all in accordance with the spirit intended. If they go outside of it and evade their due liabilities and responsibilities then they cannot claim what is in it and seek to go outside at the same time. There have been cases in which very strong action has had to be taken, where gross abuses of the ordinary law took place in the country, and the pounds would have been no use whatever to us if we had only these to facilitate us in doing our work, and while a clause such as this is open to criticism because people have not got the same duty as we have who are in the Government, I have no doubt whatever that any body of men placed in the same position would come to the Dáil or Seanad and ask for the same powers. They are exceptional. Everyone likes to be able to say "They are going too far,""They should not do this" and "They should not do that," and "Less would do," and so on, but we have had a very long experience of the people. We know that it is not fair or just to restrict them in their rights or privileges, but we also know that there are sections of the community in various parts of the country who are only seeking to impose on the generosity of any Executive. It is not a credit to the country to have this particular Clause in, but it is to the credit of the country when occasion arose, or does arise in its history, that a Clause of this kind is necessary, that the country has a Parliament that will put it in, and that will give that support to any Executive that will enable them to carry on and not allow the Government to be dragged in the mud and made a humbug of. If it be not so, I cannot answer for the collection of arrears of income tax due. We pass it, and somebody else comes in. And new Governments will have a much less enormous task to carry and less trouble, but their troubles will be rendered all the greater if you do not afford them now in the earlier years great powers to draw upon in necessitous cases. The Parliament is here, and the Executive can be continually paraded if it exceeds its authority, or if it draws on its authority to an extent that is not justified by the circumstances. It is after careful and serious consideration that we put down this Clause. We believe that it is necessary, and no matter what order of the community is running the country it would be necessary to enable them to collect these taxes.
As one who spoke in favour of this, I wish to say that having heard the Minister, I intend to vote against it.
Motion put and declared lost.
I propose this amendment to Sub-section (1): "To delete, in line 11, the word ‘may,' and to substitute therefor the words ‘and the Inspector by whom the assessment has been made may jointly.'" This amendment deals more or less with an administrational matter, but I suggest that it is necessary as a protection against possible injustice. Under the Bill, as proposed, a certificate for distraint will issue from the collector alone. Well, we know that the collector and the assessor or inspector who makes the assessment, work in water-tight compartments; in fact, I had it myself from a high official in the Revenue Department recently that the collector has no knowledge of the assessment. He gets an order sent to him and that is the end of it. In practice there are in many cases a number of claims for rebate in the hands of the inspector. Some of them may have come in, possibly, in the case of farm losses after the mandate for collection has gone to the collector. It is not fair or equitable that these summary powers should be used while those claims are under consideration; in fact, that the whole of a person's account, his assessments and his claims, should be taken into consideration before proceedings for distraint are taken. I have no doubt that in those cases before a certificate would issue that the collector and the assessor would correspond, but that does not seem to be fully satisfactory. They often live miles apart, perhaps in an adjoining county, and to make the thing perfectly safe so that co-operation is secured I put down this amendment.
I would like to support this amendment, and I would also likely to be sure that Senator Sir John Keane means, if it comes to a division, to vote for his own amendment.
I do not understand what the last Senator means by supporting this amendment. I take it he has examined this matter very carefully, and knows why the amendment has been put down. I understand Senator Sir J. Keane's point of view, but the Senator opposite has not given me any assistance in regard to his point of view. This is a case in which we do not intend to put these powers into operation for three months from date. There would be a difficulty in associating the two names of Inspector and Collector, because of the possibility of changes. An Inspector might have made an assessment in Cork, and might be removed to Donegal to do some other work in connection with Customs and Excise. Although the Collector's name is put there as the person who will put the law in motion, as a matter of fact he is not the person who will do that. In every single case in which a seizure, or a motion to make a seizure, of this sort is to be put in force, the instructions will be sent from the head office by the Commissioners themselves. Although the name of the Collector is included—it has been put down in his name—no such activity will be undertaken by him except on the directions of the Revenue Commissioners. When the matter was being dealt with in the Dáil I gave that undertaking, so that there need be no apprehension of abuse on the part of the local Collector in such cases as these. I think that should meet Senator Sir John Keane's point. We have numbers of Collectors, some of whom earn small sums, while others, by reason of the extent of their areas, earn a much larger income. I think the point made was that an irresponsible person, for a reason other than the mere collection of taxes, might put the law in motion, but that in cases where persons had a greater responsibility they would not do so at all. We have taken steps to deal with that, and I can assure the Seanad that the putting in motion of these particular powers will only be undertaken by order of the Revenue Commissioners themselves.
Have you any objection to insert the words suggested?
They would not make the matter any clearer than I have stated. The Collector must be the person who will first inform the Revenue Commissioners about these things. He is the immediate machinery by which the work is done, but it is not on his own volition, he does not judge whether it is a case to be put in or not. He forwards his list to headquarters with his report, and these are considered by the Revenue Commissioners, and not until they have decided that it is a case to be put in, will it be done.
I must confess I am not quite happy about this. I quite realise the point of view put by the President, that these powers will not be used arbitrarily, and that all the precautions he has indicated will be taken; but, on the face of the Statute, the Collector has these powers, and you can only take disciplinary action against him if he uses them capriciously. I do not press the amendment, but I would ask the President to consider the matter. As regards the point about the Collector going into another district, that could be met, I think, by putting in words indicating the officer or district from which the matter is originated. I quite understand that the individual may go, but the office continues.
Would it meet the case if the Section were amended by inserting after the word "may" on line 11, the words "on the order of the Revenue Commissioners?" That seems to me a simple solution of the matter.
I will undertake to consider it.
Amendment, by leave, withdrawn.
Question: "That Section 7 stand part of the Bill," put and agreed to.
SECTION 8.
Question "That Section 8 stand part of the Bill," put and agreed to.
SECTION 9.
Exemption shall be granted from tax for the year beginning on the 6th day of April, 1923, under Schedule C of the Income Tax Act, 1918, in respect of any interest, annuities, dividends or shares of annuities, and from tax for the same year under Schedule D of the same Act in respect of any yearly interest or other annual payment, forming part of the income of any body of persons or trust established in Great Britain or Northern Ireland before the 6th day of April, 1923, for charitable purposes only, or which, according to the rules or regulations established by Act of the Parliament of the late United Kingdom of Great Britain and Ireland, charter, decree, deed of trust, or will, are applicable to charitable purposes only, and so far as the same are applied to charitable purposes only, provided such interest, annuities, dividends, shares of annuities, yearly interest or other annual payment belonged to such body of persons or trust, or was subject to such rules and regulations on the 5th day of April, 1923, or arises from investments or other property which on the 5th day of April, 1923, was held by or belonged to such body of persons or trust or was subject to such rules or regulations.
I desire to call the Minister's attention to the wording of this Section. It says that exemption from tax shall be granted in respect of yearly interest or other annual payment forming part of the income of any body of persons or trust established in Great Britain or Northern Ireland before the 6th April, 1923, for charitable purposes only, or which, according to the rules or regulations established by Act of the Parliament of the late United Kingdom of Great Britain and Ireland, charter, decree, deed of trust or will applicable to charitable purposes, etc. I should just like to point out that there may be some charters, decrees or trusts set up by the old Irish Parliament which are still extant, and to say that I think these should be safeguarded.
Question put: "That Section 9 stand part of the Bill," put and agreed to.
Sections 10, 11, 12, 13 and 14 were then put, and agreed to, and added to the Bill.
Motion made: "That Clause 15 (Continuance of Taxes and Duties in First Schedule) stand part of the Bill."
I shall try to be as brief as possible on the recommendations that I propose to raise. It is a rather wide question, that of preferential duties. True, it only refers to one item, one commodity which is benefited by preferential duty, but seeing that the whole case for Imperial Preference came before the British House of Commons this week, and was argued there, and the reasons for and against given, I think it might be well if I pointed out the reasons that we can offer for it, and also examine the reasons given against a continuance of a preference here. I think we will all admit that we are in a somewhat different position from Great Britain with respect to these duties. The amendment that was proposed in Committee on the Finance Bill would, in effect, repeal Imperial Preference rates introduced in the Finance Act of 1919. The argument in favour of continuing them, advanced by Sir Joynson Hicks in the House of Commons, was that the principal Dominions give a very substantial preference to English goods. The argument against was that the consumers did not benefit, in any respect, on account of sacrifice of revenue, except in the case of Indian tea, which they got 2d. less; but from the concession of 4s. 3d. per cwt. on sugar grown within the Empire they got no benefit at all. The price to the consumer is the same as that of foreign grown sugar. Then it was said—I do not like to use a word that sounds rather irreverent—by one member that the Dominions did not look for preference to maintain their loyalty, and that it was an insult to suggest it.
It had been suggested that Imperial Preference was a bond of Empire. I only mention these things to show that it is still a debatable question in England as to whether this preference should be continued, but when it comes to our own case the sacrifice of revenue is described by the President as gratuitous. Our goods are not admitted to the Dominions under the preferential rate that applies to British goods unless we describe them as British. I have the rates in the case of the Dominions here and they classify goods under three heads. They are "the British Empire Tariff; the Intermediate Tariff, and the General Tariff." I have taken some trouble to obtain from Consuls what the intentions of the Colonies and Dominions may be. Some say that the matter is still unsettled, others say that the goods must be British to get the benefit. Therefore, I do not see that any reciprocity comes in. Then is it not more or less a sacrifice of revenue if we continue to give preference to other countries within the Empire from which we get no quid pro quo whatever? Great Britain, in giving these Preference Duties, was careful to give them only upon such commodities that did not interfere materially with her own, except in the case of sugar. If we started a home-grown sugar industry we could only meet the difficulty of sugar being brought in at Preferential Rates by abolishing the duties on home-grown sugar altogether. In the case of tobacco that is what one would think would be a consistent policy. If you abolish duties in the case of home-grown sugar because Colonial sugar comes in with a preference which would be on a level with your production, and having the advantage of cheaper labour— labour at 2d. per day, while you have to pay trade union rates—it is only reasonable there should be a corresponding reduction of duty, but in the case of home-grown sugar it was entirely abolished. I only mentioned that to show that I do not think it is a very extravagant request that where a number of men have put their money into an experiment on a commercial scale—there are no less than 138 growers spread over six counties—I do not think it is a very large demand that we should drop into the place of the poor Indian who has a subsidy of actually £50 per acre, because it is well known that he can raise tobacco at a cost of £3 per acre. You make him a present in the form of Preferential Duty of £50 or more. That does not seem to my mind actually necessary, but it is the actual result. Then you may say, “I do not see why you want to grow tobacco here. Other people grow it cheaper than you.” Of course they do. In countries where you have indentured labour you can produce almost anything for half nothing, but if we are going to take every industry in this country and treat it in the same way, I suppose we should soon have the country without industries except ranching. Therefore, when you have an opportunity of introducing an industry which gives the largest amount of employment of any crop grown, and that only requires protection, if you call it protection, give it the same preference over this Indian tobacco which is brought in and can be brought in in unlimited quantities. Over a thousand million pounds of tobacco is produced in India— even more than in America—and it is simply the surplus which is dumped upon our market in order to induce the Irish manufacturer to purchase it. It is very bad stuff, I can tell you. I never tried it, and I do not recommend any of you to try it. But in order to induce the Irish manufacturer to buy this stuff instead of Irish tobacco, they make him a present of the preference, which is 1/4 per pound. They have taken as low as 4d. per pound for their own product, but what does that signify to them. They can produce it for 1d. per pound in India with labour at the rate of 2d. per day. That is quite natural and possible. The dealer comes over here bringing that stuff with him which he had bought for a little over 1d. per pound, and he makes a good thing out of it. I do not intend to detain you much longer, but why is it that this is encouraged in every country in the world? I have a list of the countries here and the amount they produce. Why is tobacco grown in Norway, Sweden, Denmark, Canada? It is because of the employment it gives. If you have any doubt in your minds as to the usefulness of this crop to employ small holders, men of small occupations, I can give you the reason from the official figures which were put before the Agricultural Commission. The amount of manual labour required for the production of various staple crops is given in the number of hours employed per acre. Here it is:—Barley 85½ hours; turnips, 173 hours; sugar beet, 270 hours; mangolds, 270 hours; flax, 228 hours; potatoes, 309 hours; tobacco, 748 hours. I do not think anybody can say after that that it is a matter of indifference to the Labour Party, at any rate, if we can introduce a crop like that which can be grown generally. People may say, as a friend said to me when I suggested I was going to grow tobacco, “Why don't you grow bananas?” Many people think it is just as difficult a problem. As a matter of fact, one of the very first concessions made to public opinion in former days was the removal of the prohibition on the cultivation of tobacco. Public opinion in those days was expressed in a rather rough manner. Not very far from here there were guns in College Green, and round the muzzles of the guns was a placard, “Free Trade or This.” They staved off the rebellious feeling then, and the first concession they gave was the right to grow tobacco. The preamble contained a rather extraordinary sentence as giving the motive for it. It was something like this: “As the industries and the products of Ireland deserve to be considered and promoted so long as they do not interfere with the commercial interests of England, hereby all those Acts which prohibited the cultivation of tobacco are repealed.” I need hardly say that the Irish nation was asking for so much more that that concession was received with contempt. That was in 1779. However, they did commence to grow tobacco, and in 1830, after the Union, it was pretty widely grown. There were more than 1,000 acres in Wexford alone. It was then discovered that Ireland was exporting quantities to England. Every little country town in Ireland had its tobacco factory. The manufactured tobacco coming from England could not very well find a market over here, there was so much tobacco produced here. So a Commission sat, of which Sir John Power was the Chairman, and heard evidence. The Irish evidence, of course, was very strong as to the benefit it was to the country, but the English evidence prevailed, and that evidence was to the effect that if tobacco growing went on in Ireland not a single pound of English manufactured tobacco would be sold in the country. The result was that the industry was suppressed.
Senators will recollect that when the Local Government Act passed everybody thought that there was going to be a period of revival and all sorts of wildcat schemes were started. The I.A.O.S. started creameries all over the country. Some people thought they might as well try to grow tobacco as well as it was grown eighty years before. They did it to such an extent that in 1907, I think, Sir Thomas Esmonde's name was to the back of a Bill repealing the Acts which prohibited the growing of tobacco in this country, and that Bill passed the House unanimously. Since then the tobacco industry has been kept in tutelage. I may say it has been in an experimental stage until lately, when it was put upon a commercial scale. The commercial scale meant that machinery of such a nature as would deal with 1,000 acres had to be provided, yet only one hundred and fourteen acres were grown to supply it. It is uneconomic for that reason, but the growers, until the outbreak of the war, were able to make a very fair return for their labour. When Imperial Preference came, before the Indian article had time to be dumped on our markets to any great extent, Irish tobacco was sold at 2/- a pound. Within three months of the dumping of the tobacco on the market the bottom fell out of the market for Irish tobacco, and it can only be sold at sixpence. Of course it costs a good deal more than that to raise, and these unfortunate growers who have got nothing whatever of the grant, except such as would help them to put up barns and pay for the special manure which the Department thought they ought to use, and who had put labour into that crop representing as much as £40 per acre, have that crop left on their hands, because it simply cannot be sold in competition with coolie labour. We ask for this slight concession which could, of course, be done in another way. Instead of the Excise Duty on Irish tobacco being five-sixths of the duty it could be four-sixths. I wish to point out that the preference given to other parts of the Empire does us no good, and I thought it would be saving money to the Treasury when I suggested that for that particular commodity, which does interfere with an industry which we are trying to introduce, that it would be better to ask that the preference on this particular commodity should be withdrawn.
Senator Sir Nugent Everard has been, I think, the pioneer of the Irish tobacco industry, and he deserves very great credit for that. For years he has supported this industry and he has promoted its claims on every possible occasion, in season and out of season. I do not know whether what he proposes will give any great assistance to Irish tobacco growing, but if it gives any assistance whatever, I think it is a matter the Government ought to consider. Tobacco can be grown in this country exceedingly well. It has been grown, and it was a very great industry before the Union, and for some years subsequently. It is one of the most expensive crops in the way of the employment of labour that can be grown in this country, and it can be grown very successfully. I did not read the discussion in the Dáil on this question, but I had an idea, probably erroneous, that the President did not approve of Irish tobacco. I do not know if the President has ever smoked Irish tobacco, but I imagine that if he had he would strongly approve of it, because it really is an excellent tobacco. I have grown it myself —not as successfully as Senator Sir Nugent Everard has grown it—but I have smoked my own tobacco and his and I still survive. It is really quite a good tobacco, and if it got a chance I think we might be able to develop it. It is an industry that gives a very large amount of employment. If the proper seed is selected the plant grows quite well in our climate, and it is a much better tobacco than that grown in Belgium, Denmark, or Sweden, in which countries they grow a great deal. I commend this proposal to the Government if it can be reasonably adopted, and if the Government cannot adopt it now I hope that next year, when their Budget is brought in, they will do something very special to encourage what I believe can be made a very profitable industry in this country.
I have not very much to say on this subject, but as far as I gather from Senator Sir Nugent Everard he is anxious that tobacco grown in this country should pay no duty.
What I said was that we should have the same preference in the duty over Indian, that Indian is given over American. India is a country where you can get labour for 2d. per day. It is impossible to put on the market at the same rate of duty tobacco grown in Ireland to compete with that.
If not altogether the removal of duty, it at any rate, amounts to a preference. When it was debated in the Dáil, I understand that the Minister for Agriculture pointed out that if they give the preference Senator Sir Nugent Everard asked for, it would mean a loss of approximately £500,000 yearly, which is a serious amount.
That was supposing we grew all the tobacco required in Ireland. As a matter of fact it is only 200,000 lbs at the present moment —three years' crop—and to give that preference would be only £10,000. There is plenty of money to pay for it out of the special grant.
In any case I think it is economically admitted by most people that where an industry, either from the soil of the country or the cost of labour, appears to be unsuited to a country that that industry should not be encouraged. Senator Sir Nugent Everard stated that tobacco is produced in India by coolies who get 2d. a day. I spent 14 years of my life in India, and I do not know of any coolie labour to be had at that figure. Reference has also been made to sugar. As we know, sugar has been produced in England, and a great deal of trouble was taken to ascertain in the first instance if sugar could be grown. It was proved it could. It now appears that the cost of production of sugar is so high that it is going out. The Manager of the Home Sugar Corporation who is a friend of my own told me that in order to obtain the sugar beet necessary for the production of sugar the Government and the company had to give a subsidy of £3 a ton. If that subsidy had not been granted they could only have turned out the sugar economically at £15 per ton. As the subsidy is now going to be withdrawn I think we will hear very little more about home-grown sugar. Tobacco growing in Ireland, as Senator Sir Nugent Everard tells us, is in competition with India. It is, I admit; but in India there is no subsidy or preference given for the production of tobacco. No doubt, it can be grown in Ireland, but it cannot compete, I claim, with tobacco grown in other countries, where there is no subsidy and no preference given. As to the quality of the tobacco that is a matter of opinion, and I do not think it is a subject necessary to enter into now.
Might I ask is there any country in the world in which there is an Excise duty on tobacco produced in that country? Senator Guinness says that in India there is no subsidy, but there is no duty, and they have the protection of a duty against foreign tobacco.
With regard to the question of protection generally the fundamental idea is that in starting a new industry, presuming it is a suitable industry for the country, the climate, and the soil, some measure of protection is needed until that industry gets on a sound basis. In a small way an industry cannot be conducted as economically as in a large way, and, therefore, like a young plant in its earlier growth which requires protection, staking, or shelter, so the youthful and nascent industry requires to be protected from the attacks of competitive industries of the same character. These have been long established and are working at their maximum of production, with all the labour-saving and finishing machinery that science can bring to the support of the economic turning out of the finished product. That tobacco is a natural crop for this country is beyond the region of discussion. Senator Sir Nugent Everard has given us the history of the growth of this crop and has shown that at a time when it was untrammelled it developed very rapidly in this country, so much so that the British importers and the British manufacturers had to intervene, and begged that the State would save them from the development of an industry which was entering into severe competition with their trade. In that way the industry received a very bad set back. The introduction of the mangold crop into Ireland was a matter of only 70 or 80 years ago, and I remember an old man telling me he travelled a great distance to see the first mangolds grown in this country. I think the introduction of the mangold crop largely displaced the growth of tobacco. When unemployment is so rife in the country we must remember that of all the crops mentioned tobacco gave the most employment. I would like to impress upon the Minister for Finance this particular aspect of the case, that every man you can employ in this country who is receiving unemployment benefit the State makes a clear profit of £38. If you take 15/- a week for a man, it may not be paid for the whole year, but if you cut it by two the State makes a profit of £20 on every man who gets employment who is now receiving unemployment benefit. If the State, by means of fostering industry, can increase employment, even if it sacrifices a little revenue, it must set off against that sacrifice the number of men who are given increased employment. It must set, on the other side of the account, the fact that we make £20 on every man so employed. Possibly in the tobacco industry women and children could be employed, the dependants of workers to whom the State has to contribute unemployment benefit, so that tobacco growing calls for special consideration even from the financial point of view.
There would be an excellent economy and saving, I would argue, to the State, in giving a measure of relief, and making an apparent sacrifice of revenue in the fostering of this industry. Further than that, it is an industry that gives employment, winter and summer, indoor and outdoor, like the sugar industry, so that it is a valuable industry in that respect, because it gives uniform employment and saves periods of distress amongst the workers. I would say that for these reasons I think all the arguments used, and the case made, by Senator Sir Nugent Everard deserves the most generous consideration by the Minister.
I wish to support Sir Nugent Everard's recommendation. If my understanding of the recommendation is correct, there is to be no loss of revenue except through the non-importation of these Empire-grown tobaccos. If no Empire-grown tobacco comes in, then there is a danger that all Irish tobacco will be used in the country and that Customs Duties will reduce, but I take it that there is no possibility of that, and all that we are asked to do, as far as I can see, is that the rebate or drawback now given in the case of Indian tobacco should be withdrawn, and that instead of paying £5 they should be made pay £6 to the Exchequer, and that apparently would be of disadvantage. Apart from that aspect, we are told by Sir Nugent Everard, who knows, that if you gave this relief the enormous quantity of bad tobacco which comes from India will be replaced by good tobacco grown, on the evidence of Sir Thomas Esmonde, in Ireland. Surely that is devoutly to be wished in any country, that you can increase revenue, and at the same time foster a local industry. In most cases where you give a preference you are asked to sacrifice revenue. You are asked to do nothing of the kind here. Take the question of Empire preference. The principle might be right or wrong, but this is a small case to advance the tobacco industry. I feel very strongly on these native industries. Although Senator Guinness says Irish tobacco will never be grown, I believe it will be grown some time, and as I can prove that the best sugar beet in the world has been grown in the County Limerick, beet sugar that contained a saccharine value unexampled in any part of the world, I support Sir Nugent Everard's motion that this drawback be discontinued and that the full rate be charged on Empire-grown tobacco, and the resultant gain to Ireland will be very great indeed.
I wish to associate myself also with Sir Nugent Everard. I do not know anything about the qualities of these tobaccos, and I am not concerned with that, but I am very seriously concerned with any industry giving employment. I understand from Sir Nugent Everard that there are 138 growers of tobacco in this country and that the employment is of a very high degree. Now, there are a number of employments which are not worth much to the country because they are very low. The valuable employments are those in which the production of the article means a large amount of wages. Employments that carries a very low percentage of wages are of no very great concern. For instance, a motor car is probably the highest type of employment that you could have. Tobacco, I am sure, from what Sir Nugent Everard says, gives a very high percentage of employment. I believe this is the first demand that has been made on this poor Finance Minister that has not meant a cutting to the revenue. Sir Nugent Everard, if I read the sense of his demand correctly, means that he is going to increase the revenue. He is going to raise the revenue and he wishes the revenue to be put into a flat rate such as applies to America. I do not think there is anything very wrong in that. I see a great deal of advantage in it. The fact of Sir Nugent Everard's tobacco crushing out the American and Indian I think is very remote. I am afraid he will never see that. What I am concerned with, and what, I think, Sir Nugent himself is really concerned with, is to give employment in this country. The country is perishing for want of employment, and until there is employment and you get the working people of Ireland to pull their oars and do something, no progress will ever be made. This artificial remedy of doles and insurance is the most accursed thing that ever came into this country.
I am not sure that we are all quite clear as to what the effect of these proposals will be. I gather that there will be a certain sacrifice of revenue, although small.
No; a gain of revenue.
Anyhow, I think I am right in this, that while a good case may have been made out, or has been made out, for the artificial stimulation by means of tariffs, I do not know that it is wise to deal with this whole question of Protection and Free Trade by a side wind. You begin with tobacco and you immediately open the door. You immediately prejudice your whole fiscal question and form a precedent which, as may already be seen from Senator Bennett's speech, may advance a claim for similar protection in favour of home-grown sugar. I understand the Government are of an open mind and are quite prepared to deal with this whole question on its merits, after full inquiry, and that they, have agreed to set up a body of experts to go into this whole matter of protective duties and examine their effect in all its bearings. It is an exceedingly complicated question, and I strongly feel that it would be unwise to prejudice the question in favour of any one industry without a full examination. For that reason I would suggest that it would be wiser to let this thing remain as it is for this year, and when the country is in possession of more information to raise it again.
I think that Senator Sir John Keane has practically covered all I have to say on this subject. We hope to have this Committee starting its work next week or in a fortnight. Taking up any one section of our fiscal arrangements and dealing with that to the exclusion of all others did not appeal to the Government or the Executive Council. This question of preferential Customs was accepted in good faith. If we had not adopted the preferential duties a sum of something like £200,000 would not have come into the Exchequer this year. That would have meant an increase of perhaps 2d. a pound on tea, and some small infliction on sugar and other items, making up, perhaps, £50,000 or £60,000, or £70,000. Well, that was immaterial, because it will be noticed that in one particular case we have given away, that is on chloroform and sulphuric ether. The reason we gave away there was that though it may be manufactured in this country, two questions usually were asked at inquests in England. One was, was a medical man present when this particular article of diet was administered, and secondly, what was the quality of it when it was administered. The question raises a rather important issue. If we did interfere in any way with this preferential part that is alluded to, it might have had certain reactions upon important employments or business throughout the country, and there was not the opportunity for careful examination. We have not experts in the Executive Council on such matters as these, and it was not a matter that one could trifle with without running great risks. We did not take these risks. One or two or more trades may have been seriously hit, but it will be only for twelve months. Anyway none of them is any worse hit this year than last year, and even this tobacco growing industry is in no worse position than it was twelve months ago so far as our laws are concerned. They can wait till next year. If it be an economic proposition we are prepared to support it, if it be not I think none of us are prepared to support it, even Sir Nugent Everard himself, even though he may have a sentiment regarding it, but there is a limit to sentiment regarding certain things. If they cost too much they will have to be got rid of. I expect in a week or a fortnight this Committee will sit. I will see the Chairman and draw his attention to this suggestion, and get it explored at the earliest opportunity.
May I mention that while I support Senator Sir Nugent Everard's request for special consideration for the tobacco industry, I have in mind the Minister's remarks, but I might state that in connection with one of our premier industries, Guinness's Brewery, when it was about being established in Dublin, one of the founders was informed in London, where he served his time as a brewer, that to make porter successfully in Dublin, he should bring the Thames over with him. That has been found to be wrong, as we know by result. The same thing might occur in the case of tobacco.
I wish to say that I quite appreciate the difficulty the President finds just now in repealing the preferential duties, I anticipated that would probably be the answer, but that does not really affect the main question which is this: is it not fair and just that you should give the Irish tobacco, the product of your own soil, the same preference over India that you freely give to the Indian over American, and foreign tobacco? If the Minister can see his way to do that it would simply mean the alteration of one word in the Budget. That is to say, that instead of the excise duty on home grown tobacco being five-sixths the full duty it would be four-sixths. That would affect the same object without disturbing the system of preferential duties to other parts of the Empire which I have no doubt, will be well debated and considered before the next Budget is drawn up. This is the last year of the experiment, and we only ask it because these men who are nearly all very small farmers, have got three years' crops in bond, which cannot be cashed. If that were liberated, as it would be by such a change, by conceding one-sixth of the duty, it would enable it to be cashed, even in competition with the Indian. That, I think, is a very moderate request, and as it is only a small amount of money, I think it might be easily conceded. This is the last year of the experiment. You will have a considerable balance which you could do what you like with if you think the industry is worth preservation.
AN CATHAOIRLEACH
Do you wish me to put your amendment, Senator?
No; I am prepared to withdraw it if the President will give an assurance that he will consider the suggestion.
The position I am in is this, that, in the first place the British Government, without any recommendation or request from us, included us with Canada, Australia and other places where preferential advantages were given. In the absence of an examination of the circumstances of the case we came to the conclusion that, bearing in mind that we might disturb certain industries, it was our duty to do something pending an examination. That is what we have done. This particular amendment would violate that arrangement, that is, we would withdraw from India an advantage it derives here. The alternative suggestion of Senator Sir Nugent Everard has a disadvantage. This would be a breach of—it was not an understanding or agreement, or anything else, but simply our statements up to this. Either means a loss in Revenue, and a rather serious one, because we are entitled to whatever duty there is on tobacco we have in bond. If we give an additional one-sixth off it means a considerable loss to the Revenue. We do not know how much that is, or how many lbs. are in bond.
Two hundred thousand lbs., and one-sixth preference would be £10,000.
I will consider the question if the Senator will tell me where I can get another £10,000. If there is anybody I can rob I will hand it over to him, but, at the moment, bearing in mind the extraordinary difference between our revenue and expenditure, it is not a time when we can part with money.
AN CATHAOIRLEACH
I understand also, Sir Nugent Everard, that the Minister for Finance has given his undertaking that he will direct the special attention of the Chairman of the Committee to this particular question.
I have been asked a question by the President as to where he will find the money. My answer is, out of the same purse it is found for the poor Indian. Apart from that I think the President agreed that there was £30,000 still available in the grant that was earmarked for tobacco, and that would still leave you £20,000 to play with afterwards.
It appears an undertaking was given that a certain sum of money would be levied each year for a certain number of years, but there is no grant. There is not that much money we can lay our hands on for that particular purpose. It was put on the Estimates each year. The British Government voted it for 4 or 5 years out of 10 or 12 years, and we took on the difference. I do not know that we import 20,000 lbs. in Indian tobacco every year. We may import more, but I doubt it. I think in the circumstances it is not fair, not having at my disposal or before me all the information that I require, to give a judgement on this matter.
Recommendation, by leave, withdrawn.
Question: "That Section 16 stand part of the Bill," put and agreed to.
Sections 17, 18, 19, 20, 21 and 22 agreed to, and added to the Bill.
SCHEDULES.
Question: "That the Schedules be the Schedules of the Bill," put and agreed to.