I am sorry that this important Bill will have to be discussed in the absence of the Minister for Finance who, I understand, is indisposed. Although the Seanad has no specific power over finance, still it has a very important duty to discharge in criticising and reviewing, and, if necessary, recommending changes in matters of finance. Because in finance, reason is very powerful, and any wrong course pursued would undoubtedly bring its own penalties and those very swiftly. Now, I wish to take first this question of income tax which occupies a distinct section in the Bill, and which deals with a very important question. I do not propose to press the general question that we are taxed too highly. I think that is generally agreed. But the whole issue must be dominated by the fact that the Minister must balance his Budget, and it is far better to have our Budget balanced than to have low taxation; that is to say, the balancing of the Budget must predominate. Necessarily, reduction in the expenditure is the only other alternative to high taxation if we are to balance our Budget, and is the course we should prefer. On the question of income tax this country is unfortunately situated, owing to the fact that a large amount of money bearing income tax is invested outside the country, and is liable in the first instance to deductions for taxes in the country abroad, and is taxed in both countries. The result is that it is necessary to go through very complicated regulations in order to get relief. I am not saying that the Government have not done all they could to mitigate this hardship, but the hardships undoubtedly remain, and they have very prejudicially affected the taxpayers in this country. I go so far as to say, as to income tax regulations at present, it is not double taxation we have, but a treble tax. For investors, except in matters of the simplest character, will have to seek expert advice in order to secure any relief. That is an imposition on the taxpayer, who in many cases will have to seek bank accommodation to tide him over the period during which he is seeking to recover money overpaid already. For this accommodation he has to pay, because the banks do not lend money for nothing. In addition, there is the tax itself. I cannot help feeling that with goodwill on both sides—and I have no reason for saying that there is not goodwill on both sides—the matter can be very much simplified by establishing something in the nature of a clearing house or one office by which all these recoveries of income tax could be dealt with at the same time and adjustments made, and avoid having to go to two separate Departments in two separate countries to obtain this much-needed relief.
On the question of income tax generally, and of the possible change in income tax policy leading, perhaps, to the reduction of either income tax or super tax, it is very difficult to put forward any reasoned criticism on account of the absence of satisfactory figures. We have got items of income tax set out in the returns with no reference as to what years those receipts cover, what proportion of the receipts constitutes arrears, and what proportion arises out of the current investment for the year under review. In that respect I would call the attention of the Government to the delay in issuing the report of the Revenue Commissioners. It is a companion volume to the Appropriation Accounts. We have had the Appropriation Accounts for the year 1922-23 but we have not yet had any report from the Revenue Commissioners.
It is from the Revenue Commissioners' report that you get information in relation to income tax and certain data on which you can criticise income tax policy. I hope the Government will speed up the issuing of that report, which is very important at the present time. It will show what the tendency is with regard to investments. Some of us fear there is a very considerable migration of capital from this country, due largely to these vexatious income tax regulations.
Now, I pass to another matter. I will go into further detail in regard to it on the Committee Stage. It is a somewhat technical matter, and if the Seanad will allow me I would like to prepare the ground. Under the Bill, what was hitherto known as statutory allowance for repairs has been withdrawn, or very considerably modified. It is in Section 2 set out that where a tax is charged in respect of a house or building or parts of a house or building, no allowance or reduction shall be made under paragraph (b) of sub-rule (1) of rule 7 of No. 5 of Schedule A of the Income Tax Act, 1918. I only mention that to show you how complicated this is; yet this is the sort of thing that people anxious to recover income tax have to deal with. The phraseology is similar to this.
The section goes on to read: "of Schedule A of the Income Tax Act, 1918, or under Section 24 of the Finance Act, 1922, unless it is proved to the satisfaction of the Special Commissioners that the whole of the property in respect of which the tax is charged isbona fide let by the landlord or immediate lessor.” I only quote portions of the section to show you how involved it is. The Minister for Finance bases his argument for this change on the fact that the annual value, which is the basis of assessment in Ireland, bears no relation to the true value. I challenge that here and now and specifically. In the case of old valuations that may be true, but in the case of houses recently built it is not true. I had the misfortune to build a house recently and I claim my valuation is the full letting value, yet I am now to be deprived of the statutory allowance for repairs. That is one-sixth, and I would get that if I chose to let the house to a tenant. I say that is inequitable.
This goes further. There is the case of residents in the country who occupy houses—you might call them demesnes or big houses—where the expense of upkeep is very great, and where the attendant expenses outside are also very great. The expenses of living generally are very great, even though they may be of an exceedingly unselfish character. The owner has to support a large number of employees, partly because he considers it a public duty. The hardship of those country residents has been admitted for a long time. Mr. Lloyd George, in the days when his pet aversion was Dukes, went out of his way to admit that the country gentlemen were entitled to special sympathy in the matter of taxation. He went so far as to introduce a provision to the effect that all the money spent on repairs, and not merely the one-sixth statutory reduction, should be allowed as a set off against income tax. That is also in No. 5 of Schedule A, and in sub-section (1) of sub-rule (8) it is set out that if the owner of any land or house shows that the cost of maintenance, repairs, insurance and management, according to the average of the preceding five years, has exceeded in the case of land one-eighth or in the case of buildings one-sixth, he is entitled to a reduction of assessment.
Without any reference whatever to this in the Dáil, and under cover of an innocent and limited amendment, the whole of the benefits of rule 8 have been taken away. I speak for a shattered remnant. They are people who, I claim, have done their duty by remaining in the country when they might have spent their money elsewhere on their own personal amusement. They have had to bear very heavy charges in connection with the upkeep and attendant expenses of their houses. It seems cruel that those people, after all they have gone through, both under the Land Act and other kinds of legislation, are now without any word of explanation going to have the benefits, the liberal and almost radical benefits—the Chancellor for the Exchequer gave them—taken away. I do hope, before the Report Stage is reached, the Government will reconsider this matter and see whether they cannot by some form of words, at least allow those statutory deductions to continue to apply to the residents on big estates who are doing their duty under very great difficulties at the present moment. I would further add that the same class has been hit by another measure. Those who have had to shut up their houses, who have been unable to continue to live in them, have now, under the Rent Restriction Act, to pay rates on empty houses. Of course, the Government may say that these people are not much of an asset, that they do not produce much in the country, that all the tendency is for them to go away, and a little more or less now will not keep them from doing so. If that is their policy well and good; some of us claim that they are the greatest civilising influence—such as remain—in our country life to-day.
We notice in this Bill a departure from what I might call the traditional fiscal policy of Free Trade. Now, this is a very big question, and for my sins I have waded through, perhaps not too scrupulously, the debates on this matter in the other House. I assure you that I do not intend to follow a certain example that was set there of examining this matter in excessive detail. I would, however, point out that this policy of Protection, which the Government classes as an experiment, is not supported by the conclusions reached— I will not say the recommendations made, because they made none—by the experts the Government appointed to examine the problem. It is a very complex problem, and I have no doubt that there is room for honest doubt on both sides. However, I wish to make the case that this country is an exporting country, and that as trade is a matter of exchange the more we can sell the more we can buy, and the volume of this trade is the measure of our prosperity. The more costly our products the less the volume of commodities we can receive in exchange and also the lower standard of living in consequence of our lower national wealth. That is, roughly, the case. When you come to examine that from the point of view of agriculture, which is our main industry, what do you find? Anything that will increase the cost of production of agricultural produce will decrease the buying power of our agricultural exports, which are our main, almost our only exports, and as a result our volume of trade will shrink. We, agriculturists, allege that this policy of Protection is going to increase the cost of living. It has increased the cost of living already, and the cost of living affects the cost of our production.
High labour costs, high cost of the farmer's own personal living, high costs of his own raw material, including boots—very much an item of the farmer's raw material—will all go to increase the farmer's cost of production, and the farmer will do either of two things. He will either get less in exchange for what he produces, because it will cost more, or else he will cut down his working expenses, produce less, and turn his land back to grass, throwing his labour on to the unemployed market. Therefore we say that on the balance of advantages this policy of Protection, although it may be only the thin edge of the wedge, is wrong. I know that it is argued that if we get an industrial population within our shores we can sell our food to them. We say that during the time you are trying to set up these industries within our shores you are increasing the cost of living and prejudicing our main industry, which is agriculture. That is, crudely, so far as I can put it, more or less the pure and theoretical argument; but there is another, perhaps a more important argument, and that is the human or Party argument.
If you are going to have tariffs at all, and you can make out, no doubt, a theortical case for tariffs, it is essentially a scientific matter. It is an endless problem, and if it can be dealt with at all, even to a limited extent, it should be dealt with scientifically by people divorced altogether from the hurly-burly of party politics and of various things that operate between parties, and I submit that this policy of Protection is rendered doubly difficult by these public discussions on the hustings, and even in what we call a democratic assembly. You open the door to all kinds of party bargaining, pull, and influence of every sort and kind, log-rolling and vote manipulation of every conceivable kind, whereas if you stand firmly on this doctrine of Free Trade you know where you are. You at least cut out all that, and you have your duties for your revenue purposes only, although I know some people who will argue as to what are revenue purposes. It is pretty hard to define them. Still, broadly speaking, it is generally agreed what revenue duties are and what protective duties are. I cannot see what the present inhibitions really are on the development of industries within our State. I see that Arthur Guinness and Sons, in the face of open competition of the world, with big competitive interests on the other side, have built up a very satisfactory business, and they never wanted Protection. I see that Jacob and Co. have done likewise. They have to import certain of their raw materials. They seem to be in a very satisfactory and flourishing condition. For the life of me I cannot see, if these two businesses have prospered, why other people cannot do the same. It is due rather to what the Minister for Agriculture referred to the other day as the feeling of insecurity, which is something intangible, something that cannot be exactly described. There is a hesitation on the part of people to start business in Ireland, and I do not think they are going to get over the hesitation by what I might call even artificial stimulants. You will get over it by low taxation, by reducing your income tax by two or three shillings, as we fondly hoped we would have been able to do in our new State. Also you must, if you are going to get industry to return, have a solicitous regard for the rights of property different from that seen in legislation since the creation of the State.