FINANCE BILL, 1926—SECOND STAGE.

Motion proposed:—"That the Bill be read a Second Time."

In approaching this Bill I propose, as far as possible, to impose a self-denying ordinance in respect of tariff matters. In ordinary circumstances I should have a good deal to say about our tariff policy but I propose to do that on the Tariff Commission Bill which we expect to receive shortly.

CATHAOIRLEACH

That Bill has passed through the other House. Under our Standing Orders an interval of three days should elapse before it could be considered here, but in view of the urgency of the session I propose to put it on the agenda for to-morrow for the purpose of Second Reading. In order, however, to enable that stage to be taken to-morrow, it will be necessary that Standing Orders be suspended so that before taking up the Second Stage to-morrow the Seanad would, perhaps, be prepared to suspend Standing Orders for that purpose.

This is the one opportunity in the year which this House has for reviewing our fiscal position. One is disposed to have regard to matters of current criticism in the country, and generally in the Press on this occasion. One notices that a great deal is said about our adverse balance of trade, and some people draw rather alarming conclusions from the fact that our visible balance is very much on what we call the wrong side. Personally, I regard the whole question of adverse balance as very technical and involving a consideration of invisible items which, even when treated by experts, are hard to determine and in regard to which a considerable element of guess-work is necessary. Generally speaking, however, as regards the theory balance, I do not place any great alarm on an adverse balance, even if there is one, because I do not believe that it could continue for any length of time. If there is a definite adverse balance it must mean that people are trading out of their capital or are not paying their debts. That will not be allowed to continue very long. Importers will not give excessive credit unless they are paid and obviously, an individual will not go on for any length of time living out of his capital.

You have the extraordinary case of countries in an entirely different position, such as Canada and America. Both of these countries have what is called favourable balances, and yet we know that Canada is a debtor country, owing a lot of money to foreign creditors, while America is largely a creditor country. Switzerland is, similarly, believed to be in an exceedingly sound condition but has an adverse trade balance. I do not believe that economists, or those who are competent to pronounce on this matter, set any great store on these apparently adverse balances.

A most serious aspect of our position is the burden of taxation. There is a good deal of unreasonable clamour and unreasonable criticism on all sides in connection with this matter. We saw recently where, I think, the President—I hope I am not taking his name in vain—but certainly, Deputies, who speak with authority in the other House, were at pains to argue that this country is lightly taxed, because, per unit of the population, the amount yielded in taxation is so very much less than what is yielded in other countries with which comparison is made. I think comparison was made with Sweden, New Zealand and Holland, showing what is well known, that the amount raised in taxation per head of the population of these countries is very much higher than it is in this country. But it does not follow from that that we are more lightly taxed. I think a Senator who sits on these benches when dealing with the cost of education argued that because we spent so much less on education per head or per student—I do not know clearly what the unit was—than these other countries we should be able to pay more. The method of comparison per head is fallacious. The right test is the power to pay, and the power to pay can only be examined, and even then not thoroughly, when we have some indication of what our national income is. We can then ascertain what percentage of that gross income is devoted to taxation. I have not the figures for England, but I think about 20 per cent. of the national income goes in taxation. We have no indication of what the figure is here.

That brings me to the next point, the position of our statistics. There is justification in a young State for not having them, as we have not had time to build up records. However, I do not think the Government is entirely free from blame in this matter. Take the report of the Revenue Commissioners. After all, information for that report should be available at least within two years. The British return for 1924-25 is out. We have not got our report for 1923-24 yet. That report is essential for a serious study of our financial position. It is a forecast and gives such information as the costs of collection of revenue, the capital value of estates assessed for death duty, the number of persons above the exemption limit for income tax, the gross amount brought into revenue from taxation, the arrears of taxation and taxes outstanding. These are all very important matters. Without the figures we cannot embark on a comprehensive study of our financial position. We have had no local taxation returns since the Saorstát was established. These returns are very necessary in order to arrive at true figures of the amount of taxation raised by local authorities.

We have not had yet, but I am very glad to see that we are going to have it next year, a census of production. That is a most important document. We know that there is a big element of guess work and estimation in that regard, especially with regard to agriculture but it is the method by which other countries seriously examine this problem. Without it we are in the dark and can make no attempt to bring serious criticism to bear on our financial position. In the absence of these returns we have to make a certain examination into our ability to meet the taxation and the amount we are able to bear. If you take merely the amount yielded in taxation in England it is roughly about £16 per head against £8 or £9 here. It could be argued that, because the yield is only half here, we are twice as rich or better able to bear taxation. But the real argument is that we are able to bear less taxation as, while roughly taxed on the same basis, we have only half the yield or half the power to bear taxation. Another test that might be applied though it might be one for argument, is that we are not any richer than before the war; that we have not any more goods. Goods are the real test of wealth. On that basis the present taxation would be something about £18,000,000. Our present recurrent taxation is about £24,000,000. From these two comparisons we may conclude that we are bearing a very heavy burden of taxation now. It is a burden that cannot be lightly increased, and it should not be the policy of the Government to increase it. At the same time I would not ask the House to take an alarmist view of the situation. I think there are elements of apprehension but the time has not gone too far and with care and good fortune there is no reason why the position should get out of hand.

One cannot help being rather alarmed at certain remarks made by the Minister for Finance. He has been repeatedly pressed to apply the pruning knife, to do something rather unusual in the way of retrenchment. There is, for instance, this suggested committee of examination. I will ad mit that to a certain extent the Government is doing everything it can to control and prune down expenditure, but much more could be done. One cannot help being rather alarmed at certain remarks made by the Minister for Finance. I am sorry I have not those remarks with me. The Minister gives one to believe that he regards the present scale of service as essential and we cannot seriously consider any policy which involves a diminution. The Minister regards the present scale of service as essential and he looks to increasing revenue due to improved conditions; on the other hand he considers the present standard of living is the irreducible minimum. He cannot stand for that under varying conditions because the yield of tax ation forces the pace and if ominous development took place and trade shrunk he could not sustain that position and I do not think he would try to do so.

I do press upon the Government, and I urge upon the Seanad, that there is a pressing need for economy. As regards services the Minister may rightly say "That is our responsibility. More especially is it the responsibility of the Dáil. The Dáil accepts this policy and the Minister is bound by it." I would not suggest that that is wholly so. The Government must set the lead. The Dáil may bear responsibility and may offer opinions as to whether changes in policy are sound. It should not be entirely for the Government to put up changes in policy. Certain initiative at least should come from the Dáil.

There have been attempts both inside and outside the House to force in a rather strong and fierce manner this question of economy on the Government. I do not think it justifies certain epithets that have been applied to it. I have heard the expressions used in certain responsible quarters, "stunt" and "ramp." The manner in which the case has been presented in some instances has been open to exception. The methods may be questionable, but the general desire for economy is one that, in my opinion, is entitled to every respect, and is one which, I feel, the people in the country would strongly support. It is a matter that, when the time comes for an election, will be prominent. I think the Government will admit that it is a matter that will have to be met.

I venture to suggest certain specific methods of effecting economies that might be considered. They are fundamental and, in consequence, I feel the Minister will not agree with them. One method is decentralisation; everything should not be so closely controlled or so controlled in detail by the Department of Finance. I know that is a fundamental change. It is against the present policy both here and in Great Britain. I cannot see what objection there could be to rationing a Department. Those in authority should say to a Department: "This is all we can give you; you must keep within that amount, and as long as you do not exceed that sum and observe standard scales of salaries and the conditions applying to pensions, you will have a much freer hand in regard to occasional expenditure." Then you will feel that you really do govern your Department, and you can obviate the present very close control in every detail that is exercised by the financial authorities.

Of course, this involves a valuable item of psychology. I know nothing about the internal relations between the various departments and the Department of Finance, but I have never known any harmonious relations between the Executive Departments and the Department of Finance. The Minister for Finance has always been regarded in the nature of a policeman. There is always a tendency on the part of Departments to be secretive. When they get hold of officials, even if they happen to be redundant they do not say so; they feel that if they give them up they will not get them again, and they sit upon things, so to speak. I believe that if Departments were given a freer hand they would get better value for the money expended than at present. I have no doubt the Minister will smile at this suggested recasting of accounting methods. No Department puts into these Votes the cost of all its services. I am sure the Minister has heard enough about this. I mentioned it yesterday. The Government has not seen fit to make any move to meet the twice expressed desire of this House on the matter.

I hope the Minister will not raise the question of the change of policy in the British War Office in justification of his action. I cannot speak again, and there is a lot I would like to say on that subject. There are not many outside of official circles supporting the action of the British War Office in this matter. A number of eminent accountants, eminent soldiers and two members of the Coal Commission, above all, asked for this reform, and after three years' examination they asked that the reform should continue, and be carried to its logical conclusion. But the powers of darkness—I will not say who they are; that is fairly obvious— triumphed, and the result is they have gone back to a state of things worse than before. A number of accountants are kept on at considerable expense to do camouflaged accounts.

Whether the Minister believes it or not, I think he is justified in assuming that all the Departments have something up their sleeves. I do not say that there is any dishonesty or turpitude. Nobody knows their power of expansion or their hidden resources until they are tested. I am perfectly certain every Minister believes that his Department is working at the absolute minimum, and that there is not an ounce to be got. I contend that you do not know what is possible until you try. I suggest you should not do anything slap-dash. You should stop recruiting for the Civil Service for two or three years, and then you can see to what extent the machinery breaks down. Each Department should be allowed to live on its own fat, if I may say so. If recruiting ceases for a few years, then we will see what will happen. I venture to suggest that nothing serious will happen. We observed in the course of the general strike in Great Britain the extraordinary work that could be done by amateurs.

Nothing very serious will go wrong if four men have to do the work of five, or if three men, perhaps, have to do the work of five. I do not think that that could be done at once, but all kinds of readjustments can be made, and there is a very fertile source of economy in the use of office machinery. A lot of office machinery can be used and is of labour-saving value. As far as one knows, it is difficult to get it now because of financial control. When it is got it does not seem to get rid of anybody. But if conditions are enforced so that people have to do more, then this office machinery will be used to advantage.

I now pass from the suggestion of economy to one further matter, and that is the danger of this policy of over-estimating. I do not know if this policy of over-estimating that has been going on for the past three or four years, is anything more than accidental and due, naturally, to new conditions, but I view with alarm the complacency with which the Minister for Finance regards it. He says that there is a half-million in excess in the Budget and that he has confidence in the hope of making up that in economies. That is a sort of psychology that alarms me when I see a Minister placing such tremendous trust in the spending Departments, that they are not keeping anything up their sleeves, that they are treating him absolutely frankly, and that they really want all this money that they are asking for. I have considerable experience of Government Departments, and I have come to the conclusion that they have in all cases a bit up their sleeve, and if they are allowed to get generous treatment in the matter of over-estimating they will take full advantage of it. They should be pruned very closely, but no matter how closely you prune them and no matter how much pruning you do, you will not do very much harm, because the vital spot is well in. The financial position is the acid test of our social order and stability. We have made very great progress towards the establishment of this new State. We have got law and order and a judiciary system and all that, but until the financial position is thoroughly stabilised we cannot say that we have fully found our feet and that the future of our destinies is fully secure.

Senator Sir John Keane has followed the line of argument that is fairly popular with certain sections of the community at present, and it is also very prevalent with Government Ministers when the argument suits the particular occasion. That is to over-emphasise the alleged poverty of this country with all its natural wealth and its great natural resources. The tendency seems to be to try to impress on every citizen the poverty of the country, both now and in the future; its lack of great possibilities, and the necessity, as a consequence, of the citizens adopting steeply-descending disimproved social conditions. That has been impressed upon us by speech and pamphlet, from platform and in the Dáil. This poverty of the State, the futility of our expecting to have anything like as decent a standard of life as the people of Great Britain, or most other European countries, and the necessity of going back in some respects to almost semi-barbaric conditions, is impressed upon us.

The Minister for Industry and Commerce, in defending the conditions which he set up in the Shannon scheme, is continually reminding us of the deplorable conditions of the agricultural labourer. He tells us there are 212,000 of them with less than 26/- a week. He appeals to all Irish humanity to take that as their standard of life. Now, side by side with that we are embarking on a steeply-ascending programme of protective tariffs. We are hoping to try to develop a home market for our own manufactures, notwithstanding the fact that the tariffs imposed must raise the costs of these commodities above what they are. We cannot at the same time proceed to raise the cost of living and reduce the purchasing power without reducing the standard of life to a very alarming extent. The question of an adverse trade balance is one on which all sorts of arguments can be adduced as an interpretation of its meaning. I do not think, however, that sufficient account is taken of the vast sums of money which reach this country every year from Irish emigrants in foreign countries. There is hardly a household in the West or South or North-West of Ireland that has not a long string of relatives, sons and daughters, in the United States who send home large sums of money annually to enable the people living on absolutely uneconomic holdings to keep a roof over their heads and to maintain some standard of living. I think that is a very large element in our national life, and one which is very difficult to estimate, but which should not be overlooked in considering this question of the adverse trade balance. Senator Sir John Keane is advocating the pruning knife. I am glad that the Minister for Finance has not allowed himself to be stampeded, unduly, by this demand, because we dwell too much on how to save money almost to the total disregard of how to earn more. It seems to me to be like an unenterprising trader who, instead of trying to sell his goods by advertising them and thereby increasing his market and improving his trade, strives on the other hand to work in a negative way by cutting down expenses, reducing his staff and giving a less efficient service, until he gradually goes out of existence altogether. There is too much of the negative type of action taken, and too little on the positive side. We have that very strongly developed side by side with this demand for protection without any reservation.

Hear, hear.

This has developed into what might, I think, reasonably be termed a ramp. All new parties who are trying to establish themselves seem to make it one of their cardinal planks. They will undoubtedly impress public opinion for a while, because the free trade side is not advocated and is not sufficiently organised.

But, whatever the cause, we know that, notwithstanding the imposition of tariffs for protective purposes, a vast amount of these taxed commodities are still coming into the country. I think in many cases there has been no very appreciable reduction in the imports. To that extent, the tax is being paid. Additional profit has been added on by traders, and in that way the cost of these various articles or commodities had been increased to the general community, and to the extent that these prices have been increased, purchasing power has been withdrawn from other industries and to the detriment of other industries. Subsidising one industry at the expense of another is something like the case of the Scotsman in hospital that, I think, was referred to by Mr. Philip Snowden in the debate in the British House of Commons on the question of protection. The story was this: That a Scotsman was dying, or thought he was dying, in hospital. He was in a ward with a lot of other patients and asked, as a dying request, to be given his bagpipes to play a tune. His request was acceded to, with the result that the Scotsman lived and all the other patients died. I am afraid that we are going, by this unscientific application of protective tariffs, to cripple many industries in order to foster a few dying ones. I think it would be much better if Irish manufacturers sought to establish a world market for their goods, or at all events, to advertise to their own countrymen the things they sell, and that they should pay more attention to modern requirements rather than seek to get on by following archaic traditions as regards style, workmanship and so forth. One certain lamentable fact is that the position regarding trade does not seem to have improved, and I think it is generally agreed that the position in regard to unemployment is as bad as it was two years ago.

We have in the new adjustment of taxes on motor cars special concessions being granted to the Ford motor car assembled in Cork. In view of that very serious material concession, it is surprising that no explanation has been forthcoming so far as to why the Ford car costs £25 more in the Saorstát than it does in Northern Ireland or in Great Britain. There should be, I think, some explanation of that, but personally I have not yet heard any. I think we are entitled to some explanation in view of the fact that this State subsidy, because in effect it is a subsidy, has been conferred on the Ford industry by the State. The cost of motor drivers licences has been doubled. I do not know if that increase has been made for revenue purposes. I cannot imagine that it will mean a tremendous lot of money. I know, however, that it will inflict a certain amount of hardship on a very poor class of hackney car-owners and drivers. What I would suggest, in that connection, would be to leave the cost of the licences as it was, but to exercise greater supervision in their issue. I think it is hardly fair to the public to give a driving licence to anybody who applies for it, and to allow absolutely irresponsible people to drive motor cars through the streets without any regard for the public safety.

There is just one other matter that I wish to refer to and it is in regard to income tax. I would suggest to the Minister that he might try and impress on the income tax authorities the desirability of paying some regard to queries addressed to them by people over-assessed. I have had dozens of complaints in regard to this from members of my own trade union. They could not get a reply from the authorities, and when they called to the offices they were received in a more or less cavalier manner and were hustled about from one place to another. They find it almost impossible to get any attention paid to their complaints. This seems to be the one Department of the State that is most difficult to deal with. I do not see why that should be the case or why they should not adopt ordinary courtesy, such courtesy as one is accustomed to receive in other Departments of the Civil Service.

It is a long time since I last addressed the Seanad on a Budget. I am glad on this occasion to be able to congratulate the Minister for Finance, and am pleased not to have to make the kind of remarks, I felt called upon to make when I spoke on a Budget some two or three years ago. Through bad report or good report the Minister has undoubtedly tried to make his Budget balance. In doing that he has had to incur a great deal of unpopularity because of the fact that he has to keep the taxes high. I think the policy he is pursuing is one that ought to be commended. It is well the Minister is taking care that we do not follow the French example of not paying our debts. I notice in the Budget a confirmation of the agreement arrived at with the British Government for the solution of the double income tax problem. That ought to prove a most helpful agreement to this country. I am glad to note that under it, if there is to be any loss to either Government, it is so arranged that the loss will not fall on the Free State. The benefit of the agreement to the public will depend to an enormous extent on how those charged with carrying it out do so. I think that both the British and the Free State authorities know very well the trouble, inconvenience and loss that this double income tax caused to the general community. I have no doubt that both Governments will appoint civil servants to carry out the agreement in such a way that its full benefits will be conferred on the public. Coming to the customs and excise agreements, there are a couple of matters connected with them that I do not quite understand. There is, for instance, the abolition of the excise duty on cider and perry. I suppose that means that we are going to produce cider and perry in considerable quantities in the Free State. I did not know before that it was one of the things we were likely to do. I rather doubt the wisdom of these alterations of the excise duty. I take it that this means—the Minister will correct me if I am wrong—that the home produced stuff not having to pay a customs duty, will be able to be sold in this country without any duty being paid on it, and that the imported material will have to bear the customs duty which is now on cider and perry. I have no doubt that the amount involved will be a small matter, but it is to the principle of the thing that I wish to draw attention. As long as this principle is applied to any small thing it may be right enough, but when applied to large products in the Free State, the British Government on the other side may retaliate by at once increasing their customs duty as against Free State products, and then we may find ourselves very rapidly barred out of the trade that we have got across the water. I only mention this because it does not seem to me to be a wise principle to apply: to begin making this kind of distinction in excisable goods. I do not understand the duty on oatmeal either. How this duty is going to pay for the cost of collection I do not know. I have not met anyone in the business who sees that it is going to benefit the production of Irish oatmeal in the slightest. I think that small little things of that kind are hardly worthy of being placed in a Budget of the size that we have to contemplate.

I am sorry to have to trouble the House at some length on a matter which I happen to be intimately acquainted with. The Minister for Finance in introducing his Budget in the Dáil, made certain statements in connection with the spirit trade, and especially with the Irish pot-still whiskey producing industry in Ireland which, I think, I must deal with. I am not going to argue the point on any supposition that the taxes that are put upon this article are being used by the Government from the point of view of prohibition, but I think they are so severe and the effect of them is so self-evident and so drastic, that I believe no one could argue from that point of view. I am going to discuss this matter connected with the spirit duties from the point of view of the business of the State. The income which the State derived from this duty some three years ago was three and one-quarter million pounds.

It is now barely 2¼ millions, and that is a reduction in three years of the revenue derived from the spirit duties of about one-third. All that the Minister says in dealing with that part of the matter is, that he thinks the reduction has nearly come to an end. It is lucky that it has come to an end, because if it goes on very much longer at that rate, both the duty and the trade and everything else will have disappeared. I look on it that we who are engaged in the industry, and the Government who get this enormous revenue out of it, are practically partners in the same business, and the enormous profit that is made out of it is made by the Government and not by those engaged in the industry, who put their capital, labour and everything else in it. The Government tax is 72/6 on a proof gallon of spirits. Now that proof gallon of spirits made in the last seven years has cost the man who bought it something like from 7/6 to 10/6, an average of something like 8/- or 9/-. In Ireland we do not use spirits under seven years old. We who are engaged in the trade know from experience that practically the main mass of the spirits used in the Irish Free State are over seven years old. The man who is paying this 8/- or 9/- or 10/- for his whiskey has to keep it for seven years, and stand the loss in bulk and strength and the interest on his money for seven years, and also the warehousing charges, and the rest of it. I think anybody would agree with me that when he comes to sell it eventually at from 15/- to 20/- or something of that kind, he will be only getting a reasonable profit on his enterprise. I think we may take it for granted that the producers of whiskey do not make more than 5/- or 8/- at the end of seven years out of a proof gallon of spirit. The Government makes 72/6, so it is quite clear that the partner who can be accused of profiteering in this country is certainly not the producer but the Government.

We do not object to a duty that makes the price of the article to the consumer any way reasonable, and I do not think anyone in the trade would wish to see spirits at a price which would increase drunkenness or anything of that sort, but there is a limit, and I am certain that in the Free State in the ordinary household an individual who has a decent income cannot afford to put a bottle of whiskey on his table, and that the ordinary working man cannot afford to pay 1/6 or 1/8 for a glass of whiskey. Down in the West where the people are really poor the present duty makes it an absolute prohibitionary measure on a man. From the point of view of the public I think if they want a glass of whiskey they are entitled to have it at a reasonable price which the ordinary member of the community can afford. They should not be compelled to pay such enormous prices as they are at present. I would like it put from another point of view. I think the community are wrong in following the lead of the Minister for Finance. We are going eventually to lose a great deal of revenue by following his lead, and keeping the duty where it is. In dealing with this part of the matter he has taken the beer duty and the spirit duty and he has spoken of the two in the one sentence, and applied the same reasoning to both. We all know that the arguments which can be applied to the beer duty do not apply to the whiskey duty. Here is what the Minister said: "It is not believed that reductions which would result in stout being brought down to sixpence, and whiskey being retailed at 3d. or 4d. a glass less than at present would bring about any appreciable increase in consumption." As far as I am informed, that is the information which he has been given about beer. He has been told, I believe, that no reduction in duty which he could afford would increase the consumption enough to give him the revenue he would lose. He has been told again and again exactly the opposite by everyone connected with the spirit trade.

It is not true to say if he brought down whiskey by 3d. or 4d. a glass he would not increase consumption to an appreciable extent. Any amount of people who cannot afford the present prices would rather take whiskey instead of something else, so that there I do not think the Minister has stated what are the facts of the case. Then he proceeds to say that the loss in revenue would not be far short of £1,400,000. He puts the two together, beer and whiskey. One is arguable and the other is not. The real facts are that beer represents £1,100,000, but on the whiskey duty what he would lose is something like £300,000. From the ordinary business point of view the Minister is wrong in concluding that he would lose that whole £300,000, which he states he would lose. Everybody in the trade that I have ever heard of who advised him on the subject—he may have his own advisers in the Department—have said to him that if such a reduction could be obtained the sale would increase and he would not lose his £300,000. I think the case is something like this: the consumption of spirits in the Free State in 1923-24 amounted, approximately, to 900,000 proof gallons. If the duty had been reduced to 50/- in 1924 it is calculated that three years after the reduction in the duty the sale would have increased by at least one-fifth, or 20 per cent.—that is to say, the consumption would have gone up to 1,800,000 gallons, and at 50/- you would have from that a revenue of £2,700,000. Instead of that the estimates for 1926-27 for that duty are £2,237,000. Therefore, I think anybody can show that if the Minister had reduced the duty as he was advised to do two years ago, instead of facing the loss which he is facing now, he would have established the thing or, at least, he would have saved the industry, and the ordinary consumer could have a glass of spirits at a reasonable price. That I look on as a business proposition which the country ought seriously to consider, because although the Minister thought last year that a stop had come to the decrease he is down £300,000 or £400,000 since that date. He attributes a good deal of that to a large amount of duty not being paid in the last month or two in the year.

He thinks he is going to get all that back this year and, therefore, the loss this year will not appear as great as it otherwise would be, but there is not a doubt that as far as the internal spirit trade of the Free State is concerned, as long as the duty stays at the present high figure, it is only a question of time until the amount consumed is so small that it will not support any of the distilleries now existing. At present I do not think that there is more than one distillery in the whole of Ireland—there may be two—working at all. The effect in the last two years—and that is since we started as a Free State—has been to destroy the distillery industry in the Free State. When we come to that the Minister accuses us, who are engaged in the trade, practically of not being able to manage our business properly.

In 1925 he used those words: "The potstill industry was dying out in Ireland for some reason or other but certainly not because of the duty." When you look at it that the duty has brought down the revenue which the State gets from three million to two million, that is, that there is a loss of a third, within three years, I think anyone who asserts that that duty of 72/6 a gallon, where the profit to the maker is only five to eight shillings, is not the cause of the dying out of the industry and does not support it by any reasoning I have ever heard, is putting forward a strange proposition and one hard to believe. The reason the Minister gives for the complaints of the distilleries is this: the outside markets seem to be falling away from distilleries, and he states that the reason was bigger than could be dealt with in any Budget. I hold he has dealt with it in the Budget. There is one reason why the distilleries are in a bad way, and that is, he is killing their home trade by this excessive duty. The Minister seems to be under a total misapprehension on this subject of the foreign trade—he repeats it again this year—the loss of the major part of its outside markets. I contradicted it here. I think it is in the "Hunting of the Snark" they say: "I have said it once, I have said it twice, and I know it must be true," but the loss of the distilleries' outside trade is not true. None of the outside distilleries I know of ever made anything except a bare profit on its export trade. The potstill distilleries made their money out of their home trade. I think the Minister must have been misled by the large export which used to go from the Free State in the days when the Scottish distilleries had patent-still distilleries in Dundalk, Chapelizod and elsewhere. Those spirits were exported from the Free State to Scotland and made into Scotch whiskey. Of course they have ceased now, and all the whiskey they made, a lot of which was stored here, has been taken out of the country. Of course that now is not being exported, and therefore the exports have fallen, but he is entirely wrong in thinking that the Irish pot-still distilleries are in a bad way because they have lost their export trade. That is not so. They never had a large export trade, and for some of us our export trade is just as much as ever it was except in the case of the United States. We could still be doing a large trade in that part of the world if during the last seven or eight years we had any whiskey to sell to bootleggers in the United States, as the Scotch distilleries had. During the War, when spirits were required for making high explosives, the potstill distilleries were closed both in Scotland and Ireland for about two years, but the patent-still distilleries were working producing strong spirits to make high explosives. During that period, if you look through the quantity of spirits bonded for home consumption in Scotland and Ireland, you will find practically nothing bonded in Ireland and millions of gallons bonded in Scotland. How it was done, I do not know, but undoubtedly patent-still distilleries were able to bond spirits in Scotland when none of us was allowed to bond at all here. We sell whiskey seven to eight years old always. When we were stopped distilling for two years we had, of course, to reduce our sale, and every gallon of spirits we had had to be allotted to different customers entitled to it. We had no spirit to export unless we lowered our quality and sent out something different from what we were in the habit of supplying. Of course we lost our American trade during the War, and as a matter of fact, to show you how really short we were in our case, we were delighted to re-import into Ireland the whiskey already lying in New York to help us out in our sales in this country. It is no wonder we were not able to follow the Scotch lead and send large quantities out to Vancouver, the Bahamas, and so on for importation into the United States. We did not get them.

I do not think it is fair that the Minister who ought to know these things should accuse us of not being able to look after our export trade. Again, I should like to reiterate that there is no truth whatever in the statement that that is the cause of the Irish pot-still distilleries not being in a prosperous condition at present. The reason is one only, and that is that the duty is levied at its present rate. Undoubtedly anyone in the Minister's steps who really, as I hold it, wishes to preserve the revenue for the State, would adopt a different policy from what he is adopting now. He is the great profit-maker out of the distilling industry and he ought to associate himself with the rest of us in the trade who make infinitesimally small profits compared with what the Government make; he ought to see whether we could not put our heads together and adopt a policy to bring down the price in order to preserve the revenue to the State, to preserve the industry and to give the Irish people what they want, a glass of their own whiskey at a reasonable price. He talked apparently as if we, pot-still people, were going out of business and were defunct in our business methods.

Remember it is because we are not able to advertise like the Scotchman. You know, if you advertise anything enough, you sell it. The reason we have not been able to advertise during all these years is that we had nothing to sell. We had sold everything we had made and there was no use in entering upon a large advertising scheme and, when we got replies, not being able to supply the stuff. We in the Free State are undoubtedly behind, but that is not due to anything we did. If the Minister wants us to go on with our export trade, surely as a good business man he must know that if we are to benefit the country at all in that way the export trade is a most valuable asset to the country. If he kills our home trade he kills our export trade at the same moment. We do not need to be told that in the world nowadays one must advertise if one wants to do business, and a big advertisement scheme must be embarked upon both in Great Britain and throughout the rest of the world. We are doing it, but it can only start now because now only we have the material to supply.

If the Minister kills home trade by this duty he kills our export trade at the same time. Yet he accuses us of losing our export trade. I think we have told him before why we could not advertise, why our export trade had to go. I would ask him when he comes to consider the thing from the point of view of the State to take care that the policy he adopts does not only ruin the State revenue but ruin a very big industry in the State which is connected with the whole community, agricultural and otherwise, and which does not deserve being wiped out, simply to maintain a duty of 72/6 per gallon.

I cannot agree with Senator O'Farrell that the country is in a very flourishing condition. The point he made was that this was due to our friends abroad sending home large sums. They do undoubtedly send home a great deal. They always have done so in the goodness of their hearts, but that is more in the way of charity than anything else, and it seems hard to call this country prosperous because it is living on charity. I think everybody must know, as Senator O'Farrell knows very well, of the state of unemployment in this country, and this shows, as nothing else can do, the dangerous condition into which the country has lapsed. I have no hesitation in saying that the poverty in the West is most extraordinary. Many people are not able to live; they are leaving their farms and are emigrating to the United States because they cannot make a living on their farms owing to heavy taxation and difficulties of that sort. Ministers among others, sometimes in the way of defending themselves from charges of various kinds, have often maintained that this country is in a flourishing condition and that it is not taxed very highly. Of course they have to say something to get them out of their difficulties. It has been pointed out that this is the only country in the world that has a very small national debt. That statement is not at all correct, because while we are piling up the debt we have other debts that do not enter into the matter at all as far as their calculations are concerned. We have a debt represented by the capitalisation of £3,000,000 a year which is paid for land purchase annuities, and a further sum of £650,000 for local loans. These sums go out of the country and must be taken as part of the debt.

The Minister said in the Dáil some time ago when he was discussing other matters—I think the Pact—that the British Treasury contended that the Irish taxable capacity was 1.5 to 100, and he argued that from a special point of view. He did not confine himself to that. He said it might be 1.6, or, on the other hand, it might be 1.4 or 1.3, but he left it at 1.5, so as not to be contentious. Supposing that to be the case, we know that England complains that it is very heavily taxed, and that it is losing its industries because of heavy taxation. According to that calculation made by a British Minister and accepted to a certain extent by the Minister for Finance, Ireland is taxed at least twice as heavily as Great Britain. The British revenue each year may be put down as £800,000,000. At the rate of 1.5 to 100, and taking £800,000,000 as the British revenue, if Ireland were to be taxed at the same rate as Great Britain, Ireland's revenue should be about £12,000,000. It is very easy to calculate that. I do not think that will be denied, although the Minister may have some explanation to offer. That would be the taxable capacity of Ireland if it were taxed at the same rate as Great Britain. Instead of that our taxation amounts to something like £24,000,000 or £26,000,000. In addition to that we are piling up a debt each year. Mr. Baldwin, the Prime Minister of England—I suppose his authority was the British Treasury, and perhaps our own Treasury—stated that the Free State exported more of its income than any country in the world. He calculated that the Free State exported one-tenth of the whole revenue, which never comes back. I suppose he included amongst those items land purchase annuities and various things of that kind. That is the most dangerous condition of things that could befall any country. We cannot go on pouring water out of a barrel without emptying it. This country is being emptied of its capital and is getting poorer and poorer. That would account for the poverty of the country at present.

Senator Jameson, I think, is not a protectionist, but he stated just now that if the home trade for whiskey was killed the foreign trade would be killed as well. I think that is the best argument for Protection that could be adduced—that if the home trade of other industries is killed as it has been killed, in the past, the foreign trade goes with it. Personally, I have been more and more coming to the conclusion that Protection for industries is very necessary for this country, and that if it is not done this country will lose its trade, as it has been doing. It will continue losing year by year. I believe the people of this country have only a certain amount of land to live on. A farmer in the West has four or five, or six or seven sons. Very often only one of these can continue to live on the farm. The rest must go abroad. There is no industry for them in this country, and there is nothing else for them to do. As a matter of fact they do go abroad. They certainly send back some of the wages they earn, but that is only a small matter compared with what they would do if there were industries for them to work at here. In regard to income tax, I might say that the manner in which it is collected means that a great many people are robbed. Anybody who has tried to make out the calculations supplied by the officials and who in despair has handed the matter over to a specialist knows that he has been paying about twice too much in the past. I have tried that myself and found I was paying about twice too much when I handed the matter over to a specialist.

CATHAOIRLEACH

Would you give us his name, Senator?

He might get too much business to do if I did. Nowadays nearly everybody hands over his business to a specialist of that sort, because if he tries to do it himself not only is there a financial loss but there is a loss of brain power that is really worse. I have tried it and I gave it up. However, everybody in Ireland knows that, so that I will not say anything more upon the subject except to press on the Minister the desirability of reducing taxation in every way possible.

I take this opportunity of appealing to the Minister to reconsider Clause 24. In it he takes power to put a tax of 2½ per cent. on betting on the racecourse. This 2½ per cent. is a tax, not on winning bets, but on turnover, so that it will mean a daily tax to a man who has a bet on each of the six races of 15 per cent., that is, that one-sixth of his capital will have been paid away in taxes. The Minister may understand how the business can be carried on under this load, but nobody connected with racing and racecourses has been able to see how it can be done. I know it can be said that a much larger tax on turnover is taken in other places, places where the totalisator or thepari mutuel is in operation. A tax of 2½ per cent. on the turnover of a bookmaker is not comparable with that. These machines cannot lose. The odds are not calculated until after the race, whereas the bookmaker must, by some method of arithmetic, arrive at a price before the race, and may have to shoulder a very big loss.

Racecourse companies and racehorse owners in Ireland are in a pretty bad condition. In the whole of the Free State there are only four solvent racecourse companies. There are a few non-proprietory racecourse meetings where the whole of the takings is divided in the stakes, but the vast majority of companies are not able to pay a dividend and are scarcely able to carry on giving the minimum amount of stakes permitted by the Turf Club. Considering that racecourses are in this anaemic condition, it seems very difficult to understand how they are to exist when being bled by this 2½ per cent. tax on turnover. It will cause a big falling off in the attendance and it will cause a diminution in the stakes. It will certainly put many of the small owners out of business and thereby put the small breeders, who are in the vast majority in the Free State, in such a position that they will not be able to sell the animals that they breed.

A great many interests are bound up with racing. Railways derive a huge revenue from carrying people to the different meetings. Hotels in towns like Galway, Waterford and Limerick profit very largely when race meetings are held in their neighbourhoods. People engaged in motor haulage, the owners of charabancs and taxis, depend to a very great extent for their existence on carrying people to races. For years we have been struggling to gain a footing in the world market for bloodstock. After many years of struggle and many great difficulties, due to the fact that we are a poor country and that we had to buy what we regarded as inferior animals and build up from these a stock for which there is now a world demand, we are faced, when we look like getting on our feet, with a tax which, I believe, administered as the Minister proposes to administer it, will mean the annihilation of the industry. We suggest that the Minister should give half of any tax collected on racecourses, and on racecourses only, for increasing stakes. At the moment stakes in Ireland are miserably small, in round figures a little over £120,000 a year. There are 1,200 to 1,300 horses in training, and if you divide the total stakes amongst the horses it only amounts to £120 or £125 a year for each animal. The training and racing of these animals cost at least £250 a year each, so that the 600 owners in the Free State have to carry a loss of in or about £150,000 a year. Up to now this loss was partly got over by lucky speculations on the course and by the sales of the animals. The Minister in the other House said that the bookmaker will not pay, that the backer will have to pay the tax. Will the bookmaker in his attempt to protect himself so that in reality the backer will pay, make betting so unproductive to the owner that that source of revenue will be taken from him? When it is gone from him he will not be in a position to run his horses and therefore he will not be able to get for them the hallmark of the racecourse by means of which he could sell his animals.

In every other country where the tax is levied on racecourses half of that tax is given back to the ruling authorities for the increase of stakes. This is an attempt to put a tax on turnover and to collar the whole of the tax without giving anything back to the improvement of stakes. Of course we know the Minister has offered to give half of the totalisator tax. Half of the totalisator tax would be all right if, and when, the people were used to the totalisator and it became a popular way of speculation. But in this transition period, before the people have become acquainted with the machine, and while the racecourses are struggling to live, we think that the proposed tax will be fatal, or very nearly fatal, to the whole industry.

I appeal to the Minister to reconsider the position and to get the co-operation, if not of all, at least of the majority of the people in the business by meeting them and guaranteeing that half of the tax will be turned over to the Minister for Agriculture if he likes, or to the Turf Club, the main ruling body on racing in the country. If he does this I think he will get the revenue for the State without ruining the industry.

In supporting Senator Parkinson I would like to say I disapprove of anything in the nature of faddist legislation, and in this proposal I think I can see a tendency, or the extension of a tendency to tax people for their little weaknesses and human frailties. The incidence of taxation should be like rain from heaven and fall upon the just and the unjust alike. I think those engaged in the pastime of racing, or what the self-righteous regard as the immoral practice of betting, already contributed more than their just share to the revenue. Breeders, trainers and jockeys, and all engaged in the industry, pay substantial sums in income tax. As few of them are addicted to abstemiousness they contribute indirectly in other ways, not to speak of the amount they pay for telephones, telegrams and postage, so that when you consider the entertainment tax, taxes on race companies' dividends, and all those others that I have mentioned, I think it is quite unfair to add to the burden, especially at a time when, as Senator Parkinson explained, racing is suffering from depression just as is every other industry in the country.

I would strongly support Senator Parkinson's appeal that at least 50 per cent. of the money raised from these taxes should be applied to the improvement of bloodstock and to the increase in stakes at race meetings. If the Minister can see his way to do that he will remove a great many of the objections to the tax, and he will reconcile many of the people engaged in races to these proposals which they now regard as a serious menace to sport. While I do not altogether share the opinion of those who prophesy dire disaster to racing as a result of the betting tax, still I would be much better pleased if the Minister let it alone. I would be much better pleased if he followed the very sporting example of his compatriots in the Northern Government, who refused to put Mr. Churchill's proposals into force in their area. I am sure every sportsman was delighted to see the action they took. We certainly must take off our hats to them in this instance. They have shown a sturdy independence of England in rising superior to imperial considerations in a manner that must compel the admiration of even Senator Colonel Moore. I am quite certain time will prove the wisdom of their action, and if the Minister for Finance would only drop these proposals and align himself with his sturdy fellow-countrymen in the north in their attitude towards sport far-reaching political results might follow. At any rate I venture to predict that this island could be made a playground for millionaires and a happy hunting ground for Maharajahs and Nabobs who would come over here to buy stud farms and spend more money than the Minister will get from all these taxes, which will be easy to evade and hard to collect.

I see that the British Chancellor has reduced his percentage to 2½ per cent. all round. It would be much easier to administer than to have one percentage for off the course betting and another percentage for racecourse betting. Another suggestion is that he might alter the date in the Bill when this tax takes effect. The 1st November is the date, and that is only three weeks before the end of the flat-racing season. And as a good many of the bookmakers are going out of business it would be a pity to deprive them of the remaining weeks of November, and I suggest, therefore, that the date should be altered from the 1st to 30th November.

I desire to ask the Minister a question—whether he is aware that the product of an industry in the Free State, namely, the manufacture of down quilts, is subjected to a high import duty by Great Britain though a similar product of British manufacture is admitted to this country free; whether he has made any attempt to bring about free trade in this article between both countries, or whether he intends to take such measures as will place the home manufacturer on even terms with his British rivals?

I would like to support Senator Parkinson in what he said. There is no question that horse-racing in Ireland is at a fairly low ebb and wants all the support it can get. From the statements the Minister has made in the other House it is certain he is ready to give some consideration to this matter. The horse-breeding industry, which has a very great future, is very much dependent on horse-racing. As regards what has been said about the tax levied on betting off the course and on the course I think the tax on betting off the course should be higher. A man betting away from the course is no use to the country in any way. A man betting on the course helps the revenue as far as luxury tax goes, and he helps the country. He helps the railways, he has to pay his fare for his travelling and he spends his money in the country. A man who bets off the course is no use to anybody and does a good deal of harm to himself very often. One Senator made a suggestion in which there is a great deal, and that is that we should do away with the betting tax altogether. If that were done it would, very likely, attract a great deal of money to this country, and would increase the support of racing from the other side of the Channel. The racing people there do not approve of the tax in any way, and they would send their horses here and bring a great deal of money into Ireland if we had no betting tax.

I desire to support the appeal that has been so ably made by Senator Parkinson. There is no better authority than the Senator on the incidence of taxation on racing and on the horse-breeding industry. To my mind, if you kill racing you will kill horse-breeding. As Senator Parkinson pointed out, where a man starts with an initial capital of £5 he finds at the end of the day that 15 per cent. is gone in taxation. In other countries where there is a tax, portion of it is allocated towards developing the horse-breeding industry. In the Saorstát, where we have the reputation of being keen horse lovers, many of those who frequent racecourses do not go there to bet. A large percentage go there because they love a horse. I appeal to the Minister to agree to the concession that has been asked for. By doing so greater interest will be taken in racing and in the advancement of horse-breeding. It is an industry that is increasing, so that the Minister, in granting the concession, will be contributing to the interests of the community, and will not lose any portion of the revenue that he anticipates from the tax. The tax as proposed would be an incubus and would lead to a decline of horse-breeding.

During the debate Senator Keane alluded to the standard of living in this country. In my opinion the standard of living is not too high, and cannot be reasonably reduced. The attention of the Finance Minister should be directed towards maintaining the standard of living and arriving at some method by which there would be a more generous distribution of whatever wealth there is in the country. Senator O'Farrell stated that large sums of money were sent to this country by emigrants. I do not subscribe to the view that large sums are received from emigrants. I have no means of arriving at the total figure, but I know that sons and daughters of people whom I have met send £1 at Christmas and 10/- at Easter. On the other hand the people who send these sums are lost to Ireland, and if that process continues it will drain the human resources of the country. Our energies, I think, should be devoted towards providing employment for people in Ireland and reducing emigration.

Listening to the debate on the Finance Bill one very quickly realises what is the objective. Senator Keane led off by appealing to the Government to reduce the standard of living, as if the Government had not gone far enough in that direction when they set up as a standard a wage of 32/- a week on the Shannon scheme.

I may have used the term loosely, but I did not mean it individually. I stated that I thought public establishments were conceived on too extravagant a scale. I did not allude to the standard of the individual.

"The standard of living" were the words used by the Senator, and when he used them I thought he meant the working-class standard.

People of wealth and influence will, we know very well, have no reduction in their standard. Senator Parkinson has appealed to the Minister to allow half of the total tax collected to be handed back to the stewards, in order that racing may be continued in Ireland. As the Minister knows very little about racing, I might mention that it is a disgrace that horses coming over here from England can win every big stake here.

They were bred here.

They may have been bred here, but apparently they get better care and better feeding across the water. To a great extent that applies also to human exports, as they come back better men. They have not to live on 32/- a week. The concession, if agreed to, may be the means of retaining some good horses that will be able to make a show in the big races here. I think that is an argument in favour of increasing the stakes and giving an inducement to breeders to retain some of the best blood at home. As to street bookmaking, that system is certainly a vice, and to my own knowledge has been responsible for a great deal of misery and hardship amongst the working classes, and, no doubt, amongst business classes. Since it cannot be removed, the Minister apparently is going, to a certain extent, to legalise it. Might I suggest that he might make a virtue out of a vice by allowing half the proceeds from the taxation of such betting to go towards the relief of unemployment or towards subsidising a housing scheme for the working classes? In that way he would be turning the tax to great advantage and doing something that would be permanently useful. I respectfully suggest that the Minister should seriously consider that proposal.

I take it that the Minister's main desire is to derive revenue from this source. Some people may consider betting and racing as evils, just as people consider drinking an evil. I am impressed by one aspect of the question, namely, that we have in connection with racing and, incidentally, with the facilities for betting, which are essential to the carrying on of racing, an Irish industry, namely, that of horse-breeding, the breeding of thoroughbred racehorses. The Irish soil and climate are remarkably favourable to the production of the very best class of hunter and racehorse. Whatever the ingredients of the soil, they are reproduced in the pasture and, as a result of that, we have, through the skill, enterprise, and acumen of men like Senator Parkinson, who made a life-long study of all that has to do with the building up of the racehorse industry, established a world-wide fame as producers of racehorses. It may be news to Senators to know that, as the result of Senator Parkinson's enterprise, our reputation in that respect is world-wide. When I was in Australia practically all the best bloodstock was bought by the Maharajahs and Rajahs of India for the purpose of winning large prizes in their country. Senator Parkinson sold an Irish horse to one of these Maharajahs who happened to be touring here, for a couple of hundred pounds. In the following season that horse won the biggest stake in India. The result was that eyes were immediately turned towards Irish racehorses, and since then there has been a considerable trade built up in that connection in India, South Africa and the Colonies. When Senator Parkinson speaks on a subject of this sort, we must admit that he knows what he is talking about. He is a sportsman, and he does not put on the poor mouth, and when he considers that it is absolutely essential to grant these facilities and concessions which he is asking, in order to maintain the continued progress of the horse-breeding industry, great weight should attach to his opinion. I think that the Minister, in face of the statements made here today, will not turn down the matter abruptly. I take it that he has gone as far as he can in taking counsel with the very best sources of information on this matter, but if he has been fortunate in selecting the men whom he has drawn into his counsel, and has not been overborne by people of another type, who may regard this question from a purist point of view, I ask him to reconsider the whole position and not to do anything in a hasty manner or make his mind up here and now, so that the matter will receive every consideration.

Senator Sir John Keane dealt in a very moderate and reasonable way with the question of taxation and expenditure. It is true that you cannot come to any conclusion in regard to expenditure by merely comparing the yield per head of taxation in the Saorstát with the yield per head in other countries which are differently circumstanced. Power to pay is a factor and is, perhaps, in the end the real factor, but power to pay is, I think, a conditional thing. When we speak of power to pay I think we really must have in mind the question of weighing up the advantage of continuing a service with the disadvantage of dispensing with it. If I ever said that the present scale of services cannot be reduced — I do not know that I said anything so flat-footed as that — I, at any rate, said it with that point of view in mind, that it does not meet the criticism one has heard about taxation, merely to say that certain services should be dispensed with. I could find any amount of services that could be dispensed with, but the question to be weighed is whether the community gains by dispensing with them. We can take a trade analogy in regard to this. A certain trader may feel that his advertising costs are too high, but he has to consider whether he will lose more by cutting down advertising than by continuing to pay at the same rate. A man who runs a shop may think that he has too many assistants because on slack days there is not enough work for them. He must consider whether it is more profitable to have them to deal with the business when it comes than by dispensing with them when they are half idle on slack days. There is no absolute standard by which to judge the taxation of the country. I think that the case of each country must be taken by itself. You will get a certain illumination by considering the case of other countries, but you will not find anything to serve as an absolute guide. I think that I have always paid attention to the need for economy, and I have claimed, many times, that the present Government has paid the closest attention to the need for economy and, perhaps, it has gone further towards getting economy than many people outside the Oireachtas, who talk loudly about it, would go, if they had the responsibility. I need hardly go over the story again. All-round we have reduced salaries below the scale existing when we took over control. At every point, where it was possible to effect economy, we have tried to do so. On the other hand, we have had to undertake services that were not in existence. We have had to initiate new services. I recognise that we have reached the point where we must be slow to initiate further services. I would not like to pledge myself that no new responsibilities will be undertaken by the Government, because I think it might be the greatest possible mistake not to undertake new duties.

I pointed out many times that the new functions in regard to agriculture which have been undertaken by the State have cost substantial sums. The work done under the Dairy Produce Act, the Agricultural Produce (Eggs) Act, and the Live-stock Breeding Act has involved increased expenditure. The work we are now doing under the Drainage Maintenance Act means increasing expenditure, as also does the work carried out under the Arterial Drainage Act. It was justifiable for us in all these cases to undertake increased expenditure; it was justifiable to do the things we have done; to promote expenditure on housing and so on. I would not say that we will not undertake any new things. It is a question of weighing up the advantages of the expenditure and the disadvantages of refusing to undertake expenditure.

Anybody who merely looks at it from the point of view that you will sometimes find a local body viewing it from: "How can we keep down the rates and how can we keep down local taxation?"—is not judging the matter from its proper aspect. Sometimes people on local bodies have no other outlook beyond keeping down the rates. It is very desirable, no doubt, to keep down the rates, but that is not everything. Other considerations come in more insistently when you are dealing with the government of the country and when you are dealing with a far wider range of activities than come under the purview of a local authority. The sort of criticism which is based merely on reducing taxation regardless of consequences is not of much help.

I pointed out in the Dáil that we could reduce taxation by ten millions if we wanted to do so. If we said that education is the duty of parents, that free elementary education should no longer be given, that the colleges and universities should charge fees if they have not an endowment that will enable them to pay expenses, that secondary schools should charge fees and so should technical schools, we would meet with plenty of criticism. If we said that it was the duty of relatives to maintain the aged; if we said we would pay no more unemployed, and that we have no more use for unemployment insurance; if we went over a range of services like that we could effect reductions, but would the community be better off? Would there be any greater prosperity as a result? I do not believe there would.

I do not believe we can turn the clock back. There is no use in thinking that we need not have the social services that modern countries have. We must administer all local services as economically as possible. We must not rush ahead with ameliorative undertakings. Being a poor country we cannot afford those undertakings like other countries. I would not like to say that we should not move at all.

I do not find myself in agreement with Senator Keane when he suggests that by a process of decentralisation of control and by a rationing of Departments, economies will be effected. I think the result would very speedily be the reverse of economy. You might have conditions existing and you might, perhaps, have communities with an outlook where such a thing could be operated. I am emphatically of opinion that any attempt to ration Departments would break down and, after suffering loss, we would have to revert to some scheme such as we have at the present time.

When one talks about three men doing the work of five it is rather misleading. There is no possibilty of arriving at that position. You may have in any Department certain individuals who are redundant while in other Departments you have others overworked. Work in the different divisions of the Departments comes in tides. Sometimes a division of a Department is extremely busy and cannot overtake the work; later on the work falls off very considerably and you may have a redundant staff which is not immediately got rid of. We try to ensure as far as possible that a staff is not held beyond the time it is not absolutely required. You cannot ensure that there is never anywhere any redundancy. There will always be occasional redundancy, and one has to keep it to the minimum and see that it does not continue beyond the shortest possible period wherever it does occur. You can only get a substantial reduction in the number of staffs by ceasing to do work that is now done.

We have a continual clamour from the public for more work. We had from Senator Keane himself calls for additional statistics and for additional reports and information that is not now available. To get that additional information would mean more staffs. We could reduce staffs and in consequence not do things that are now being done, but if we did so we would have a clamour against us. Various Departments have been inspected and the work of the staff has been scrutinised by officers experienced in these things. Numbers have been reduced in some places and increases have been refused, and there has been going on continuously a scrutiny of staffs. That scrutiny will be continued. Good results have been got from it, and further results will be obtained.

When one talks of three men doing the work of five or three men doing the work of four, that is an impossibility. There is no room for anything like that. If three men are to do the work of four it can only be accomplished by leaving a portion of the work undone. I think Departments and heads of Departments have shown a very commendable disposition to co-operate in reducing expenditure in the various Departments, and in reducing staffs where possible. There is no doubt the views of the Finance Department and the Executive Departments will not coincide, but I think, on the other hand, you have very little of the position where people in other Departments fear to carry out economies or let go staff because they believe they might have difficulty in getting them back again. Departments are quite ready to let go staff and put up a fight for them because of an increase of work later on when further staff becomes necessary.

I would not agree that recruiting for the Civil Service might be stopped. Up to recently there has been no regular recruitment for the Civil Service. Since the European War started the ordinary examinations stopped, and a great deal of staff came in to the service. While it is a good enough staff, it is not quite up to the standard that we would have got by competitive examination. People came in as temporary staffs and were established as the result of examinations since 1914. I think it is desirable that we should have a reasonable amount of recruitment from the schools and we are getting that. We are getting no more than the needs of the departments demand. There is no such thing as recruiting for the sake of recruiting. But I certainly would not take up the line of keeping the staffs below what we are convinced is necessary in order to see whether or not the department would break down. I think that suggestion, if one examines it, is not a reasonable suggestion. I do not think that public administration can be carried on on that kind of a basis.

Would the Minister not consider that what has been done in Italy quite recently under the new régime justifies itself by the extraordinary improvement in the social and financial position of the country?

In that connection, I would just say one thing—I understand that there was a condition of affairs in Italy which necessitated and brought about the drastic changes, politically as well as administratively. I do not believe there are any such conditions here. Probably if such conditions ever arose similar results would follow all along the line. Senator O'Farrell talked about not having got ordinary business courtesy from the income tax authorities. I have heard many complaints about the collection of income tax, but no complaints along that line. I have have had no complaint about the discourtesy of income tax officials. In fact, I have had many commendations from even people who complain about having to pay income tax.

I might say that it was mainly because of the failure to reply. When I wrote to the Minister my complaint mainly was regarding the failure to reply to my letters.

I do not know. I might perhaps examine that. I might point out to the Senator what I have pointed out to the Dáil, and that is, that on the income tax side of the revenue we are working on an insufficient staff. We could not carry on our income tax administration but for the fact that inspectors have been lent to us by the British Government. We have here inspectors on loan to help us to carry on. To train people to become income tax inspectors takes four or five years. The people we recruited are not yet able to take charge of a district, and will not be able to do so for a couple of years. When we took over the administration, Irishmen in the British service were not willing to transfer to our service. The service has since been carried on under very great difficulties, and that explains the delay in the preparation of the report of the Revenue Commissioners. We really have not sufficient staff. At any rate there is a very great strain on the whole responsible body, the body of responsible officials on the income tax side.

So far as the arrangement with Great Britain is concerned in regard to relief from double income tax, we will make every effort to work it in such a way as to give the greatest possible facilities to the taxpayers. In choosing the people who will be our representatives in the clearing house that necessity will be borne in mind.

The abolition of the Excise duty on cider, to which Senator Jameson referred, was agreed to really for the purpose of stopping long debates in the Dáil. The amount involved is £80 a year, so that I do not think it is a serious matter. In regard to the spirit duties, where I differ most with Senator Jameson is in this respect — I am unable to say that we can deal with spirit duties separately from beer duties. I do not think it would be wise or socially desirable to reduce the spirit duty, and leave the beer duty where it is. In fact, in Great Britain the opposite has been done. Spirit duty in Great Britain is the same as our duty, whereas beer duty is £1 per barrel less than our beer duties. It seems to me that you cannot, in dealing with these spirit duties, altogether leave the social aspect of the matter out of the question, and it does seem to me that it would be undesirable to reduce the spirit duties by practically one-third and leave the beer duty still at the figure at which it is.

Reduce both.

If you give a reduction it ought to be a reduction on both. If there is such a reduction then it means some such figure as I said in the Dáil, round about £1,400,000, or a very substantial figure such as that. We could not lose that. We know that it would mean a big reduction in revenue. We know from the British experience in reducing their beer duties there, that there is bound to be a substantial loss in the revenue from beer. We have no British experience to guide us in the matter of spirit duties. I cannot quite take the view that Senator Jameson takes. I believe that before the beer duty was reduced in England there were many who thought and argued that there would be no loss in revenue because of the increase in consumption. They argued that the increase in consumption would mean that the yield would be the same. These people have now been disappointed. Those people who are now so optimistic would be disappointed if the same were done here. I believe that the people who now say that if we reduce the duty on whiskey to 50/- there would be little reduction in the yield of revenue are over-optimistic and that it would turn out in fact that there would be very little increase in consumption. That is a matter about which, of course, no proof can be obtained. It is a matter of opinion. Some people hold the view that there would be a very sharp rise in the consumption and that very little loss of revenue would result. I am inclined very strongly to the other view, that what would be effected by such a reduction would be that it would stay the fall in consumption.

Is the Minister aware that the tax imposed has had the effect of closing down two distilleries which were paying £3,500 a week in wages?

No, I am not.

It is absolutely true.

I have not before me what is the output capacity of the Irish pot-still distilleries, but I doubt if any consumption that we would like to see in the Free State would keep all the distilleries going. The consumption is now very low and, certainly, I will say quite frankly that I do not think any social harm would result from a moderate increase, but I would not like, for instance, to see the consumption doubled, although that would be very good from the revenue point of view. I do believe that 640,000 proof gallons for a population such as we have is very small and that a moderate increase in that would result in no social harm. There are people who do not take, that point of view, but I have no objection at all in doing things that would result in some moderate increase on that. Senator MacLoughlin said that he was afraid that the betting tax savoured of faddist legislation and an inclination to tax people for their little weaknesses. Well, the scheme of taxation that we inherited was largely based on raising revenue from things that were not strictly necessities, and in applying a tax on betting we were certainly following on the line of the general scheme we inherited.

I discussed two or three times, in the Dáil, the question of giving back to the racecourse executive half the yield of the 2½ per cent. tax on betting on racecourses. I indicated that, as we could only establish totalisators with the consent of the racecourse executives, and as we are not proposing to take any compulsory powers, we were prepared to give back half the nett proceeds of the totalisators to the racecourse executives. In regard to the tax on betting on racecourses, we feel that there is not sufficient information available to justify us in giving anything like a firm promise. We do believe that we ought to give something, apart altogether from what may be the yield of this 2½ per cent. tax, to increase the stakes. As a matter of fact, the British Exchequer is at present paying, I think, about £1,600 a year for stakes for races, and we believe that it would be right for us to do something to increase the stakes. We believe that increasing the stakes will have a very good effect on horse-breeding. It will give the small breeder a chance to carry on that he has not at the present time. I would not like to name any figure, but we would be prepared to give a substantial sum for that purpose. To say that we would give half of the yield from the tax is another matter. I am not at all sure that this 2½ per cent. tax is going to injure the position of racecourse executives. Perhaps in saying that I am only reacting to the exaggerated prophecies of disaster that I heard. So many of the statements about the effect of the tax were so exaggerated that I have practically come to the opinion that a tax as low as 2½ per cent. is not likely to do any damage at all to the position of racecourse executives, or to keep anybody who goes now from attending race meetings. That may be an optimistic view, but the position of the Government is that they want to wait and see in this matter, and if the condition of the racecourse executives, and if the effect of the tax on the attendance at race meetings justify it, they would be prepared to go as far as applying half the yield of this 2½ per cent. tax towards increasing the stakes, but we are not prepared to give any definite promise on the matter until we have had some experience of the tax in operation. We realise perfectly that the prosperity of the horse-breeding industry is bound up with the continuance of racing. We are not going to do anything consciously that would injure racing or react unfavourably on horse-breeding.

Senator Linehan asked me about the British tax on down quilts. He asked me did I know that there was a British tax on down quilts, whereas we had no tax on such goods imported from England. If we were to begin asking questions in that way I might ask him did he know that we had a tax on British boots, whereas they had no tax on boots made here, and he might, say, have asked me further, "Did I try to get free trade in the matter." I do not think the matter could be approached along such lines at all. If the people who manufacture down quilts—there is only the one firm—want a tariff, as I understand they do, they will, when the tariff commission is established, be able to submit their case to it, and if there is a report of such a nature as would seem to us to justify action, then action may be taken. But I do not intend to enter into any negotiations with the British Government in the matter. The tax to which the down quilts have become liable is, of course, the silk tax. I do not think there is any other point that I need refer to except the one made by Senator Foran, when he suggested that half the proceeds of the 5 per cent. tax on starting-price betting should go to the relief of unemployment. Our general principle is not to ear-mark the proceeds of various taxes for particular purposes. The tax will go into the Exchequer, money out of which will be voted for whatever purpose the Government and the Dáil think money should be spent.

Question:—"That the Bill be read a Second Time"—put and agreed to.