This Bill has been duly certified by the Ceann Comhairle of the Dáil as a Money Bill.
FINANCE BILL, 1927.—SECOND STAGE.
CATHAOIRLEACH
Question proposed—"That the Bill be now read a Second Time."
Perhaps the Minister for Finance will tell the House how the clearing house for dealing with a certain class of income tax payers has got on? I believe that was adumbrated last year. Its actual working has not yet penetrated to the benefit of the double income tax payer. I do not suppose the income tax payer minds very much the delay; he will have to pay sooner or later. It would be desirable, however, that he should know his position and liabilities. As the Minister for Finance knows, it may be two years after payment that the income tax payer gets a refund. There are always lots of correspondence and queries in regard to assessment. It may be fully two years after the date on which payment was made that the matter of rebatement is settled. It is obviously inconvenient for many taxpayers to make provision over such a lengthy period.
The conjoint office has been set up. It has not had very long experience yet, but I understand it is working satisfactorily. Of course it is only dealing with cases of double residents. It was not proposed that we should, by means of this conjoint office, deal with cases of people who had income tax arising in Great Britain, who might be subject to tax and were themselves resident here. It is to simplify the cases of double residents, and I understand while the work is in its early stages—and it is, perhaps, impossible to judge it yet—that it is working satisfactorily. I think it would not be possible at this time to give a detailed account, but this time next year it is a matter that might be debated at length. I do not think it could be very fairly judged so far, but I have no reason to believe it is not able to work satisfactorily, and that it will not, in the course of a little time, be able to give all the services that could possibly be given to double residents in a matter of settling claims.
I was not suggesting that it was not working well. I was only suggesting the 1926-27 assessments have not been raised yet by that office.
I should like to call the Minister's attention to a matter that was the subject of correspondence between his Department and the Waterford Chamber of Commerce for some time. I was asked by the Waterford Chamber of Commerce to bring the matter to the notice of the Minister on the occasion of the presentation to this House of the Finance Bill. There was a revaluation of the city of Waterford two years ago and, in the aggregate, the assessment was raised 50 per cent., from £50,000 to £75,000. The result of that is that income tax payers in Waterford city were assessed over and above the previous year to the extent of 4/- in the £, the increase representing £5,000. They protested against that.
It was said that the protest came from the Chamber of Commerce, because it was at the instance of the Waterford Corporation the revaluation was made. The Chamber of Commerce consists largely of traders and income tax payers. They protested against the revaluation being made. They followed up that protest when the revaluation was made and when the demand was made by the Income Tax Commissioners. They protested to the Minister for Finance that there should not be an increase in the income tax for a certain period. A conference ensued, and it was arranged by the Department for Finance, through their representatives, that the increased income tax, following the increased assessment, would not take effect until the end of the then quinquennial period, which would not terminate until the year 1929. Those who protested were fairly well satisfied with that, and the matter was allowed to rest. Then came the Finance Bill of 1925, by which all these reassessments came into operation, and on which income tax was based. The Minister was approached, and his attention was called to the matter. He admitted that the promise had been made to the income tax payers of the City of Waterford, but he regretted that the Finance Act of 1925 went through without any advertence to the position in Waterford or the promise ratified, admittedly, by the Minister, and the Bill slipped through.
In an interview which I had with the Minister at the suggestion of the Chamber of Commerce, I suggested that the remedy would be easy, that the Finance Bill was coming on, and that an exemption clause could be inserted to remedy the position. The Minister undertook to look into the whole matter and undertook to send a further communication, which we have been expecting for the past week or ten days. So far it has not reached me. In view of the position I have been asked by the Chamber of Commerce to ask this House to make a recommendation that there should be inserted in the Bill an exemption clause dealing with Waterford. As I have already stated, the Minister admitted the position. In correspondence from his Department on September 20th, 1924, the following appeared in a letter sent by Mr. McElligott:—
It was also pointed out that the present quinquennial valuation roll for Waterford would be in force for about four years more, and except in the case of new and improved premises the revaluation would not become operative for income tax purposes until the expiry of that period.
That was a ratification of the promise made by Mr. Fullerton, also on behalf of the Department of Finance. The whole position is admitted. The inequity is there, a breach of faith with the merchants of the City of Waterford, and they suggested that this is a proper time to have the matter remedied by having an exemption clause in the present Bill.
I admit a change was made in regard to the coming into force of these assessments without any advertence to the position in Waterford. What happened was: The city moved for a re-valuation. When it was found that the re-valuation meant a considerable increase in the valuation they got alarmed and tried to have the process stopped. It was impossible to stop it. They had set the machinery in motion, and it could not be stopped. In the course of an interview they were told that owing to the fact that these assessments as the law then stood would not come into operation until the end of the quinquennial period they had a respite. In the course of certain other changes being made in 1925, a change was made in regard to the coming into force of these assessments, and that respite was lost because the position in Waterford was not adverted to. If we had remembered the position we might not have made the change, but the change was made. It applied to the whole country. We could certainly not make a special exemption for Waterford. As a matter of fact, I do not admit that there is a great grievance of any sort with regard to Waterford. In certain cases there might be some increase, but as far as the ordinary owner-occupier of a business house is concerned, there is no increase, because any increase there may be under Schedule A can be off-set in the reduction allowed against Schedule B. There will be no increased tax paid. It seems to me that it is impossible at this stage to take any steps to deal with the matter. The whole thing flows really from the steps that were taken to have the city re-valued.
It is a matter of £6,000. The Minister admits now that if it had been present to his mind in 1925 probably he would have dealt with it. Surely the Minister should right the wrong.
It is no wrong.
Is the position this then, that the income taxpayers of the city are to be levied on the new assessment?
Yes.
Is the position this, then, that they were promised they would not be levied on that new assessment until the end of the quinquennial period?
No.
I will quote from the Minister's letter again:—
It was also pointed out that the present quinquennial valuations roll for Waterford would be in force for about four years more, and except in the case of new and improved premises the re-valuation would not become operative for income tax purposes until the expiry of that period.
It has become operative and is being pressed at this moment in Waterford by threatening letters from the income tax collector. The Minister, in face of his own letter, written under his own hand, says now that there was never a promise. Is that so?
CATHAOIRLEACH
You will have to leave the House to draw its own conclusions. I cannot have this interrogating and cross-examining of the Minister. You asked him for an explanation and he has given it. It may, or it may not, be satisfactory, but the House and the country will have to determine that. You cannot settle it here by cross-examining the Minister.
It may be a lapse of memory on the Minister's part, but he denied this. I then quoted for him what he wrote, and now he remains silent.
There was not anything in the nature of a promise. I pointed out what the law then was, and even if the law was not so we could not have stopped what was started by the Corporation in demanding a revaluation.
There was no qualification whatever in his letter. It was well known that the law was so, and that if the law was not changed such and such might happen. The Chamber of Commerce pointed out that in future legislation this promise should be kept in mind. The Minister admits now that when the Finance Act of 1925 was being drafted the position in Waterford was forgotten, and that if it had been in mind it would have been remedied. I ask Senators, as business men and income tax payers, that for the sake of the credit and the good name of the Government, they should pass a recommendation that an exemption clause be introduced, as far as the City of Waterford is concerned, based on the correspondence and on the Minister's admissions.
CATHAOIRLEACH
We are now on Second Reading. On the Committee Stage it will be open to the Senator to put down this in the shape of a recommendation, but it does not really touch the Second Reading Stage.
The Minister said, some time ago, that he was handing back to the British Government the income tax on the guaranteed loan. I think the amount was stated to be £550,000. I am not clear as to whether it was paid for the past only, or whether it will be paid for the future. The case seems to me a little uncertain, and I would like it cleared up, if possible. When I asked the Minister the question he said: "The £550,000 was the total sum that we have retained in respect of our claim for income tax. Consequently, it was held in the Suspense Account. Our revenue has received no income tax in respect of the interest portion of any land annuities paid before this." This was paid, I suppose, for the past. I am not clear whether the income tax that the Minister repaid to the British Government was the whole of the income tax, and from what I have just read it seems to me to be the whole. I would like to know if the income tax on the guaranteed loan is to be continued to be handed over to the British Government or is to be kept in this country. Perhaps the Minister might inform me on this matter.
With regard to the expenses of collection, and also with regard to the annuities, supposing these annuities are due to the British Government, as he says they are, but which I do not admit, I cannot understand why the money should be handed over to the holders of the bonds through a second person. Why should not the interest on this debt be paid direct to the bond holders? By paying it over to the British Government we are liable for two things. First we have to collect it and pay the expense of the collection, and, secondly, we clear the British Government of any expenses, leaving them in a better position than they were before. Then there is the question of income tax, which also depends on what I have asked before. If that income tax is sent over to England, why should not we, when we collect the annuities and pay the bond holders, keep at least some of the income tax over here? Perhaps we do keep some. It does not seem to me to be very clear. I would also ask the Minister why annuities on public offices are being paid to the British Government. I cannot see in the accounts any statement as to what this money is derived from. As I understand the matter, the loans made by the British Government were made out of funds in their hands in the savings bank, and various other moneys that every Government holds in its hands. These are departmental loans that are being repaid, and repaid only with the money which was actually in hands. The Free State Government succeeded to these loans, and they should be repaying themselves. I may not be right in these matters, but the whole thing requires explanation. I questioned the Minister some time ago about the public debt and the national debt. He said: "There is no reference in Article V. to the national debt," and in that he is quite right. It is the public debt. But I see he goes about the country talking of the wonderful success of the Government in getting rid of the British National Debt. In Monaghan he is reported as having said, "Had they not got agreement, as they had. they would have had all this disturbance and still be responsible for a big share of the British national debt. Instead, they had evaded the disturbance, and had got the debt squelched." He told me in a speech the other day that it was not the national debt we got rid of under Article V., but the public debt, and he went on to say that he had no notion what the public debt is.
CATHAOIRLEACH
A very good reason for getting rid of it.
But he paid five millions to get rid of it. He cannot tell me if it is the public debt. He says the British Government did not know— that nobody knows. On the other hand, he is constantly stating it. Not only did he state it in Monaghan, where it might have been a casual and flippant way of talking to a public audience, which I would not much mind, but he stated it in the Dáil. When he was asked how the British Government made up their charge against the Free State, he said they took first the national debt—not the public debt—and then took a percentage of the national debt—1.5 to 100—and put that down as part of the claim against the Free State. If it was not the national debt but the public debt, how could they put down 1.5 of a sum which they did not know? Apparently they had the national debt in mind, which they knew the amount of. Now the Minister says it is 1.5 of an unknown figure. All this business seems to be curiously mixed up in the Minister's mind. Sometimes he uses "national debt" and sometimes "public debt." Then he says the national debt is not in Article 5. I should like if he would be sufficiently condescending to give some explanation. He does not like being questioned on it, I know.
I wish to call attention to Section 1, with reference to the reduction of income tax. I want to protest against the reduction of the income tax without the restoration of the shilling taken off the old age pensioners. Two years ago there was a reduction of a shilling in the income tax, and now there is the further reduction of a shilling. It is hardly fair that the wealthier sections of the community should be enriched, if one might say so, at the expense of the poorest and most defenceless section. There is no doubt that the aged and infirm poor are the most defenceless section. It seems to me hardly fair that there should be a further reduction of a shilling in the income tax without restoring the much-needed shilling to the poor old age pensioners. I have a recollection that the Minister made a promise that on the first opportunity that shilling would be restored. In all decency, the reduction made in the income tax might have been sixpence instead of a shilling, as the other sixpence would be more than would be required to restore the shilling to the old age pensioners.
I also think that there ought to have been more relief given in connection with income tax by increasing the minimum sum liable for tax, because in present conditions a great hardship is inflicted on wage earners with the taxable minimum as at present. With high rent and high cost of living they find it extremely hard to live. In addition, they are paying their quota of indirect taxation, such as the taxes on boots, clothing, etc. I think that the Minister might have dealt with the matter on a more equitable basis.
I have nothing to add on the points raised by Senator Moore. With reference to the statement of Senator Sir John Keane, that assessments have not been made in certain cases, they may not have been made, but in other cases they have been made. It is not, of course, directly the business of the conjoint office to make assessments. They are made by the proper authority. The conjoint office really collates the information. As I say, I think they are proceeding with that work as satisfactorily as can be expected, and that there will be increasingly useful work done in connection with it.
Senator Farren has stated that we might have done better than give the shilling cut in the income tax. That, of course, is a matter that we could argue at very considerable length. The view I have taken in regard to the cut in old age pensions is that the time when we might restore it would be when there was such a change in economic conditions that revenue was showing a tendency to expand. As long as revenue is showing—as it has been showing, although in a lesser degree— a tendency to decrease, we ought not to resume the expenditure which we took off the taxpayers. In previous years there was a great fall in the revenue from alcoholic liquor, and there were decreases in certain other taxes. To a considerable extent, if not entirely, that fall has stopped. There was a slight fall last year in the yield from the beer and spirit duties, but the fall was very much less than it had been previously. Still, there is no indication so far of an expansion in the yield of revenue, and until we have that expansion I do not think we should add to the expenditure, however desirable the advantage might be. The Senator referred to the reduction in the old age pensions, but there were certain reductions in taxation which would be very helpful to most families in which old age pensioners live. For instance, we reduced the tea duty from eightpence, and then we finally abolished it; we have reduced the duty on sugar by 1¾d. per lb. These are tax reductions which benefit the poor equally with the rich, and more in proportion.
Our idea in reducing the income tax was not for the purpose solely of giving relief from taxation, but for getting results that a particular sort of relief in taxation may give. It was with a view to encouraging investment and producing a certain spirit of confidence in the business community. It is the belief of the Government that actually the poor and the workers of the country will benefit more by this particular reduction than they would have benefited by a reduction which came directly to them in the first instance. The matter has been already argued, and I do not wish to argue it again.
Question put and agreed to.