Seanad Éireann debate -
Wednesday, 27 Jun 1928

Vol. 10 No. 19

PUBLIC BUSINESS. - FINANCE BILL, 1928—SECOND STAGE.

Question proposed: That the Bill be read a Second Time.

Sir THOS. GRATTAN ESMONDE

The first part of this measure deals with the subject of Income Tax, and I would like to devote a few minutes to the incidence of this tax in so far as it affects farmers. The Seanad will understand me when I say that I do not stand as an advocate of farmers not paying income tax like everyone else. I agree with John Stuart Mill in that, and I think that farmers, like other citizens, should contribute according to their means to the upkeep of the State. To come down to particulars, the farmer, as we know him in this country, is charged under Schedule A 3/- in the £1, and under Schedule B 3/- in the £1. He is charged on his Poor Law valuation, or, in other words, he is charged twice. In the old days before the Great War, when the farmer was supposed to be pulling the devil by the tail, he was only charged under Schedule A. During the Great War farmers were supposed to be making extravagant profits, so they were charged income tax also under Schedule B. The reason given for this change was that farmers were charged under Schedule A for ownership and under Schedule B for occupation. There was some doubt, I suppose, in the mind of the legislature when that charge was made under Schedule B, so they arranged that in certain conditions farmers were to be allowed a rebate of income tax under Schedule B, but to obtain rebates they had to follow the prescribed form. I have this form here. It is rather difficult to obtain copies of it, but it certainly is more difficult to fill it up.

We know the kind of person the average farmer is. We who have been associated with him all our lives know the mentality of the average farmer. I wish to discuss with the Seanad for a few minutes the form on which farmers must apply for relief from double taxation in connection with Schedule A. The first page is taken up with notes. I need not worry about the first one. The second note is rather peculiar. A farmer has to send in his account every year, and the direction is that "The money figures of ‘sales' on page 5 of the account must be the gross total amount of all sales effected in the year of account, whether the money has all been received by the end of the year or not." Then: "Purchases should be given as the net cost of the purchases effected in the year, whether the farmer has actually paid the money by the end of the year or not." I do not know if the average farmer could quite understand what he is asked to do in filling in this form, but he must bear point No. 2 in mind.

The note goes on to say: ‘Similarly the receipts and expenses on page 6 should be given on the basis of the amounts accruing in respect of the year of account and not merely upon a ‘Cash received or disbursed' basis." Well, I doubt very much if the average farmer would understand what that means. It says later on: "The actual expenses incurred in the ordinary farming operation must not include anything in respect of improvements by way of reclamations, drainage, new fences, addition to farm buildings or other capital expenditure." That seems to me to be rather against the proper development of a man's farm, but that is a question for further consideration. At the end of the page the form goes on: "The Commissioners may accept copies of them in lieu of accounts drawn up on page 5 and page 6 of this form; but in any event the particulars required by pages 2, 3, 4, and 7 of this form should be furnished and the accounts should be certified in the manner set out." There are then further directions. Knowing the farmer as we know him I doubt very much if he could follow those directions when filling up this form.

Turning to page 2, the first thing the farmer has to do is to give the name of the townland, then the area of his part of that particular townland. If he happens to have land in more than one townland he has to give the name of the second townland, and he has to give the area in statute acres. He has then to discriminate in another column between the valuation on land and the valuation on houses. He has in another column to fill up particulars of the tenure of each holding. For instance, he has to give the purchase annuity under the 1903 Act. He may have bought out his farm under different sections of different Land Acts, so that he must put in the various Land Acts under which he bought his holding. He puts down the payments of purchase annuities to the Land Commission under the 1903 or 1923 Acts. If he has a lease he has to put in particulars of the lease. He may hold under fee farm grant, and he must put in particulars of that. When he has done all this he has probably got a fit. He has then to put in what portion of each item is utilised for the purposes of husbandry. That is another conundrum.

CATHAOIRLEACH

He will not fill in that because he has got a fit.

Sir THOMAS ESMONDE

All the same if he has got a fit before he fills in this form and a great many others he does not get any relief. When we turn to page 3 of the form we find the farmer has to say how much land he has under plantation, gardens, lawns, avenues, walks or amenity lands. Senators can imagine the ordinary farmer filling up these statistics. He has also to give the area of land let under the eleven months' system or in con-acre. He has to give the area of agricultural land capable of husbandry or adapted to husbandry, which probably he does not know, and he has to divide it up and to state how much is under pasture, meadow, oats and the various crops. I used to live in a tillage country before I had to quit it, and farmers used to come and ask me whether it was first crop, second crop, or third crop meadow they would put into the form. I told them whatever it was to do the best they could. The farmer has to give the acres under oats, barley, wheat, potatoes, turnips and mangels—in the old days they spelled it mangolds, but now they spell it mangels, which I suppose is a great improvement—the area devoted to flax and other tillage. He has then to put in waste and bog, and on top of that he has to put in how the rest of the land is disposed of. Three lines are left for that. He has then to put in the acreage and add the whole thing up. This is the catch. Really this whole form is the work of a genius. When the farmer has done all this he has to show how the difference between the total area on this page and the total area on page 2 is accounted for. This is the kind of thing the ordinary farmer in this country has to do before he is entitled to relief under Schedule B. I am not half way through the form yet.

He has to make a livestock statement, which is an appalling business. He has to begin with the number of stock on hands at the beginning of the year, which is the 1st of April, and to remember all the beasts he had in hands then. He has to give horses of all sorts, ponies, cattle, including milch cows, sheep, pigs, poultry, mules and jennets, and other livestock. What the other livestock is I cannot say. It may be dogs, cats, rats, or rabbits. He has to give particulars of the number of live stock on his farm on April 1st of the previous year. He has then to fill in a series of columns showing the number sold during the year of horses, cattle, sheep, pigs, poultry, mules, jennets, and other animals. He has to give the number killed for home use during the year of cattle, sheep, pigs, poultry, and other animals. He has then to put in the number of animals that died during the year, horses, ponies, cattle, pigs, poultry, mules, jennets and other animals. He has then to put down the number he has given away as gifts during the year. I do not know if he knows the number of rabbits, dogs or cats, but anyway he has to put them down according to this Schedule. He has then to give the number on hand at the end of the year —31st March. How the farmer is to fill in the number of beasts he had twelve months previously, that had died, or that he had given away is beyond my comprehension. So much for the livestock.

He has then to give the quantities of his harvest crops and the estimated quantity on hands at the beginning of the year. I can imagine no more appalling question being asked a farmer than to estimate the quantity he had on hands twelve months ago. The thing is perfectly fantastic. He has to estimate the number of tons of hay, straw, potatoes and other roots, as well as grain and screenings, oats, barley, wheat, and rye by the cwt., and flax and tow by the stone. That is bad enough, but the next thing is, if possible, worse. He has to say how much he harvested in the year of hay, straw, and potatoes in tons, and oats, barley, wheat, and rye in cwts., if he had sown any of these. In addition to all this, he has to give the various amounts of hay, straw, potatoes, and other roots, as well as oats, barley, and rye that he bought outside in the year.

You can imagine an ordinary farmer filling in a form of this kind. He would probably be in a fit before he would be half way through. If he did get a fit he could not get any relief. He has to go on and estimate the quantities of the various things that he sold during the year. He might possibly remember that, but more likely he could not. He has to tell how much of the crops he fed to his livestock in the year in hay, straw and other crops. He has to fill in eight columns with these particulars and to tell further the amount under the various categories that he used as seed in the year. He has then to ask his wife how much hay, straw, oats, rye, barley, flax, or tow were used in the house during the year. He has to state how much was destroyed or lost in all these categories, and, having given what he had at the beginning, he has to tell how much he has on hands at the end of the year.

We will now come to another part of this performance. He has to make a milk statement. Anyone who knows anything about farming knows that that is an absolute impossibility to the ordinary farmer. Most of them know nothing whatever about the quantity of milk they produce. It is only the up-to-date ones, men who farm under latest methods, who know the amount of milk they produce in a year. I have never attempted to farm on scientific principles, but I kept a dairy for 30 or 40 years and at the end of a year I never knew how much milk was produced and never could get any information about it. The farmer has also to give the number of cows in milk on the 1st June and the number of cows in milk on the 1st December. That is a double-barrelled arrangement. He has to give the quantity of milk produced in the year in gallons. He has to give the estimated quantity of whole milk sold as whole milk in a year and he has then to estimate the quantity of milk sold as skim milk in the year. Then he has to give the amount of milk used for butter making on the farm; the amount of milk used for cheese making on the farm, and how much milk he gave to the calves and fed to the stock. So much for the milk business. He has then to fill in a form in relation to eggs. Now that the Department of Agriculture has put eggs at the top of the market and that they are arranged in beautiful boxes most symmetrically and are certainly lovely to look at, we can understand the anxiety to find out the number of eggs laid in Ireland in a year. Each farmer has to say the quantity of eggs produced in the year in dozens on his farm, the quantity of eggs sold in the year, and then he has to give the number of eggs used in the household. The thing is too funny for words. He has to go to his wife and say to her: "How many eggs did you set to the hens in the year, because they want to know how many eggs were hatched?"

Mr. KENNY

Suppose he had not a wife.

Sir T. ESMONDE

So far we have done fairly well, but we have two or three more pages which the ordinary farmer has to go through, and as one of them said: "You see the result." The farmer has to give the value of the stock at the beginning of the year, and then the net cost of the stock bought in a year. He has to give a gross account of the sales of the stock and the value of the stock in hands at the end of the year.

Mr. KENNY

Might I appeal to the Senator not to inflict any more of those harrowing details on us? We are all familiar with them.

Sir T. ESMONDE

Probably all are not familiar, but if you are you will sympathise.

Mr. KENNY

I have been through them all.

Sir T. ESMONDE

Then we have horses, thoroughbreds and hunters, and cattle, sheep, pigs and so forth. The farmer then has to give particulars of his feeding, and other things not produced on the farm, lime, soot, implements, machinery, etc. He has to do that at the beginning and end of each year. Then he has got to make out his losses and his profits, which is absolutely impossible for the ordinary farmer to do. He has then got to add up his total expenses and bring them down, and so forth. And there are quite a number of other things. Here is page 7, which is perfectly impossible for any ordinary farmer to answer. He is asked if he has kept complete and exact figures of his farming transactions during the year—what farmer has?—and if so, are these accounts based thereon? There are 19 or 20 questions on that page, and at the end of them they tell him this: "If any person, for the purpose of obtaining any allowance, reduction, rebate, or repayment, in respect of income tax, either for himself or for any other person, or in any return made in reference to income tax, knowingly makes any false statement or false representation, he is liable, on summary conviction, to imprisonment for a term not exceeding six months with hard labour...." This is the official programme. There are a number of other programmes that he has got to fill up, too, because this thing is sent off to an inspector of taxes, and he sends him back all sorts of conundrums to answer. They ask about working horses, foals, colts and fillies, untrained horses, brood mares and blood-stock, dairy cows, calves under six months, yearlings, two years old, three years old, over three years old, bulls, lambs, wethers and hoggets, rams, fat sheep, stores, ewes, sows, under two months, stores, fat pigs, boars. Then there are other live stock. There are bees——

Colonel MOORE

In their bonnets.

Sir T. ESMONDE

Then there is, under the heading of "poultry," common hens, ducks, geese and turkeys, and he has got to fill in that to the satisfaction of the inspector of taxes. Farmers in this country are not in the habit of filling in these forms. They fill them in as best as they can, knowing perfectly well that if they tell an untruth they are liable to six months imprisonment with hard labour. And this is the sort of question you get back: "What was the nature of the machinery hired, and for what purpose?" That was in respect of a claim for £5 in one year and £6 in another year for hiring threshing machinery. He had paid £5 for the one year and £6 for the next year. I suppose he could not use the threshing machine on a particular day, and the inspector of taxes wanted to know what accounted for the difference. Here is another: "How does the farmer account for the percentage rate of profit on purchase of livestock dropping from 40 per cent. in one year to 24 per cent. in the succeeding year?" If you asked a farmer what it meant when his profits were down from 40 per cent. in one year to 24 per cent. in the next he would answer you, and he would answer you very profanely. Although this particular gentleman did give the number and the sale price of his cattle each year, they wanted to know how his profit had dropped from 40 per cent. one year to 24 per cent. in the other year. Evidently the gentleman who had asked him that question had not studied the lists of the stock market that appear in Friday's papers.

One farmer was asked what he had credited in his account for "freedoms." I thought we had more or less of a republic in this country now, and I do not know if that is what was meant by "freedoms." The farmer did not know what "freedoms" meant in this connection, and he said so; he told the inspector to go to a warm place. Another question that was asked was this: "What proportion of timber grown on the farmlands and/or fences?" Can you imagine such an inconceivable question being asked in relation to income tax? What difference did it make whether the trees were grown on the fences or on the land? After all, what has that to do with income tax? Another man lent his threshing engine to a neighbour, who was hard up, for two or three days. Farmers throughout this country always help one another, and they do not put it in their income-tax returns. Anyhow, this inspector wanted to know the market value of the services of this engine and threshing machine which he lent to one of his neighbours. There are swarms of other questions, but this is a thing I would like to quote, because it is typical of the whole situation. This case was that of a gentleman who was worried very much in the filling up of his income-tax return. He said: "I am in my eightieth year—for God's sake don't drive me mad. No wonder lunacy is greatly increasing in Ireland. I swear that my farm accounts are perfectly correct and that I have not wronged the Revenue or anybody else out of one penny." This is interesting: "My accounts are kept in farm account books as recommended by the Department of Agriculture, and all receipts and payments are entered in the sub-heads there and not split up into various other sub-heads, concocted by some impossible person unacquainted with farming." That is the answer that was drawn from this particular farmer, in desperation as a result of these unanswerable queries.

The Seanad has listened to me with great patience, and I think them very much. I will not detain them much longer. I do not blame the Finance Minister at all, because after all he has succeeded to this heritage, and it is almost impossible to carry it out. But what I would suggest to him is this: We all know the reason for this amazing situation in this country with regard to income tax. This income tax system was devised in England, and it was devised for English application. England is an industrial country, and its farming industry, though important, does not bear much relation to the industries of the country, which is mainly an industrial country. This particular scheme has been devised for farmers of superior calibre, if you like, who farm on a large scale and who probably are able to answer all these conundrums. But it is utterly unfitted to a community like ours. We are mainly agricultural and are likely to remain so. This country is not likely to be industrialised in our time, and this system of income-tax examination does not suit this country at all. It would be very much better and more profitable to the revenue if a simpler system were devised. I do not hold that farmers should not pay income tax; they should pay their taxes like everybody else, but it would be very much cheaper and very much more profitable for the revenue if some scheme were devised whereby, instead of the farmers having to go through all this ridiculous nonsense of filling in these forms, the farmers were to pay under one schedule and not under two or three.

I take the opportunity of suggesting to the Finance Minister that, in view of the unsuitability of this income-tax system to this country, devised as it has been for England, he should appoint a committee or carry out some investigations to see how it would be best to deal with the income tax of the Irish farmers, because the simplest thing for the revenue is to get the taxes without any trouble, and without any annoyance to the people who pay, and to get them in quickly. If you get them to go through all these ridiculous forms, fill them up and answer all sorts of queries arising out of them, the result is that the tax is held up for six, twelve or eighteen months, or longer than that. I think the time has come when we should have a clearance in this matter, that we should have some tribunal set up, or have some investigation carried out, by capable people who would understand the position of the farmer, so that some scheme might be arranged whereby his income tax would be perfectly plain and clear to him, and he could pay it without any bother.

That is what I would suggest to the Minister. I do not find fault with him or with his Department. But the whole prosperity of this country depends on the farmer. There is no doubt about it that the farmer is the backbone of the Free State. On him depends the whole administration of the Government; on him depends our system of local taxation, our schools and hospitals, our charities and our employment —because the farmer is really the largest employer of labour in this country—our railways and our financial institutions. He is really a vital asset to the Government of this country, and therefore I think he ought to be helped in every way. Certainly he ought not to be bothered with conundrums of this kind which it is absolutely impossible for him to answer.

I hope that the Finance Minister does not imagine that I am in any way finding fault with him. I am not. I say that he has inherited this position, but I think it is time, in his own interests, in the interests of the Department, and in the interests of his successors, that he should evolve some scheme whereby the farmer would know what his tax was so that he would pay it promptly.

Mr. COUNIHAN

I am encouraged to rise so early in this debate by the eloquent plea made by Senator Sir Thomas Esmonde on behalf of the farmers, and I would impress on the Minister for Finance the need for evolving some simplified method for the farmers to make their returns, for it is almost impossible for them to fill in the forms supplied at present. But I want to say, in fairness to the income tax inspectors and officials, that the position is not so bad as it appears from Senator Sir Thomas Esmonde's statement, that in a good many cases, at least with the smaller farmers, if they pay a visit to the income-tax office they will find the officials most courteous and helpful. These officials ask a few simple questions as to your valuation, your family, and a few matters like that, and if they find from these questions that you are a person who is not liable for income tax you get off fairly lightly. Even with these forms it is not necessary to supply all these details that Senator Sir Thomas Esmonde has pointed out. But that is not my main point.

For the last four or five years what has been required by the farmers is not so much relief from income tax as some relief from rates. When we saw the Budget introduced in the English Parliament some months ago and saw the relief which it gave to agriculture we had high hopes that our Minister for Finance would also give us some relief from the very high rates which are oppressing our industry. But we were sadly disappointed. We did not get the smallest particle of consideration. We thought and we hoped that at least the main and trunk roads in the country would be taken off our hands and that the whole cost of the maintenance of these roads would be borne out of national funds. The perfect condition in which these roads are kept is of no advantage to the agricultural community; it is more of a disadvantage, for it is most dangerous for our horses and our live stock to travel on them. Of course, they are perfect for motoring, and I do not object to that if the city and town dwellers want the luxury of good roads on which to use their motor cars to go into the country, and these roads are certainly a great help in the development of the tourist traffic. We do not object to the development of the tourist traffic, but we certainly object to paying for the luxury of good roads for city and town dwellers when these roads are of no advantage to ourselves and are not required by us.

Another matter that we thought this Bill would provide money for was the building of labourers' cottages, but nothing has been done. In pre-war days hundreds of plots were purchased by the district councils for the building of labourers' cottages, but the war stopped building. The plots are still there, but no cottages have since been built, and there is no immediate prospect of any being built, because the councils cannot afford to pay for them, and except the Government devises some scheme which will give a special grant for this purpose, I am afraid it will be a long time before there will be very much building in the country. It is very essential to have labourers in the country properly housed. It would prevent them going into the cities and towns and crowding out the slums. The Governments of every country in the world are at present encouraging the agricultural industry, and I am sure that our Government is anxious to help. But in my opinion the present Executive Council, with the one exception of the Minister for Lands and Agriculture, have such a complete urban outlook that they cannot understand and have not much sympathy with agricultural requirements.

Mr. BENNETT

There are one or two suggestions that I would like to make. I listened with great care to the meticulous statement of Senator Sir Thomas Esmonde. The amazing thing is that a number of farmers have contrived to fill in this extraordinary form and make out a valuation. One always heard that a farmer had to be everything—a labourer, a mechanic, a bit of an engineer, and every conceivable thing—but now he is obviously to be a first-class clerk as well, and in many cases he is. But having filled in that amount of information, and filled it in to the satisfaction of the inspector, he has got to meet the income-tax commissioners, and these are the gentlemen who harass you to a much greater degree. I have one case in point. I know a widowed lady who took the greatest interests in her affairs, who had her accounts made up properly, and she made a return of the depreciation in her cows. Every farmer knows that his cows deteriorate so much a year, and he puts down £2 or £3 under that head, as the case may be. This lady put down £2 for the deterioration of her herd. The august gentleman who was dealing with the case said to this poor lady: "When did the moment arrive when these cows deteriorated £2? Was it at 12 o'clock on New Year's Day, because you say that at 11.59 they were worth £14 each, and yet you say that at 12 midnight they were worth £2 less?" That lady went away in tears from this august commissioner of income-tax. That is the kind of thing that people have to run the gauntlet of.

There was one point on which Senator Sir Thomas Esmonde did not touch. In pre-war times the farmer was assessed on one-third of his valuation. He is now assessed on his whole valuation, that is, his taxable capacity is supposed to be three times as great, and his taxation is three times as high; so that he is taxed nine times as much as he was taxed in pre-war days. There is £660,000 odd for the Revenue Commissioners for the collection of taxes and for their enormous staff, and not content with the enormous staffs that they have, they want to get the public to assist them in doing their duty.

If farms with valuations of less than £120 are not liable to tax why are small farmers with valuations ranging from £25 to £30 a year sent forms day after day and week after week to fill up for income tax purposes? Why should the Commissioners try to make them pay a tax when they know implicity that they are not liable for it? It is for that reason I say that the action of the income tax authorities in sending forms to these small farmers to be filled up is unreasonable, unjust and illogical. They ought to know their business well enough not to be sending bills to men in that position. I suggest to the Minister that he ought to instruct the income tax authorities not to be making demands for payment which they know are not due. What would be thought of a shopkeeper who demanded the payment of £20 from a man that he knew quite well the man did not owe? Such a person would be branded at once as a criminal. I think it is wrong, and almost criminal, to be making assessments on these small farmers when it is known quite well, or ought to be known, that they are not liable for payment. There is a very large staff employed for this work, and surely they ought to know their business well enough not to be making these demands. I hope that the suggestion I have made to return to the position as it was before the war, when a man was taxed on one-third of his valuation and not on the full valuation, as at present, for income tax purposes, will be favourably considered by the Minister.

I know that the Minister has difficulties in finding money and in balancing his Budget. It is realised pretty generally, however, that farmers are entitled to some reliefs, and I suggest that this is one relief that ought to be given to them. With regard to the filling in of the forms sent out, I feel very strongly on this. I have filled in these statements myself day after day and week after week. In some cases the statements so filled in by me were accepted by the Revenue authorities, but that was only after I had made a severe fight. I think that the statement of accounts required to be furnished to the authorities should be simplified, and that there should not be the undue elaboration in them that there is at present, causing the persons required to fill them sleepless nights and hardworking days in order to comply with the law, and to render the accounts which the Minister for Finance thinks should be rendered in the interests of the nation.

Mr. LINEHAN

I rise to call attention to two sections in this Bill. Section 9 deals with the general notice to deliver lists, declarations or statements, and Section 10 with notices of assessments and the time for giving notice of appeals. Both sections indicate a radical change from the system previously in operation. Section 9 provides that "the Special Commissioners shall, in each year of assesment, cause general notice to be given, requiring all persons who by the Income Tax Acts are required to deliver any list, declaration or statement to make out and deliver such list." In passing I might point out that this is a very indefinite description of the persons who have to supply information. I think that there should be a definition of the persons who are to furnish the statement. The section goes on: "to make out and deliver such list, declaration or statement to the inspectors of taxes for the respective districts, or to the Revenue Commissioners within such time as shall be limited by such notice, not being less than twenty-one days from the giving thereof.

Sub-section (2) reads:

The said general notice shall in each year be given by causing the same to be inserted once in the "Iris Oifigiúil" and once at least in each of two daily newspapers published in Saorstát Eireann and such insertions shall be deemed to be sufficient compliance with the foregoing subsection and to be good service of such general notice on all persons concerned.

Previously each taxpayer got a notice by post of the assessment made on him. In that way he had an opportunity of reading it over and of consulting his legal advisers or his income tax expert on it. Now, it will be observed that it is only by a notice published in the daily papers that he will become acquainted of the assessment that has been made on him. Senators will also observe that it is only proposed to publish that notice in two daily papers, although there are three published in this State. It might happen, therefore, that a particular taxpayer would be a subscriber to the daily paper which did not receive this advertisement from the income tax authorities. He would, therefore, be unaware of the assessment made on him.

Section 10 of the Bill provides:

(1) When assessments under Schedules A and B shall have been signed, the Special Commissioners shall cause notice thereof and of the time for giving notice of appeal to be given in such manner as they shall deem expedient.

(2) Any such notice may be given—

(a) by depositing the assessments with the inspectors of taxes for the respective districts for inspection by the persons assessed, and publishing notice of the time for giving notice of appeal in the "Iris Oifigiúil" and in at least two daily newspapers published in Saorstát Eireann.

Under that section it will be necessary for the taxpayer to travel from his residence to the office of the inspector of taxes, which, in several cases, is a very long distance. I know inspectors of taxes whose districts comprise not only the county in which they reside, but other adjoining counties. Therefore, under this section the taxpayer, instead of having the notice of assessment sent to him by post, must travel to the office of the inspector for his assessment if he wants to contest the amount charged, or if he wants to get a copy of it to take to his legal adviser or income tax expert. That will all mean considerable expense, inconvenience and trouble to the taxpayer.

I do not know why this change has been made, or whether there will be any saving in respect of it except as regards the postage. Hitherto the notice of assessment was served by post at the public expense. I do not think that system should be abolished. I see by the section that there is an alternative whereby the special commissioners may deliver "to each person assessed a notification of the amount of his assessment and of the time for giving notice of appeal." That is an alternative which the special commissioners may adopt but they are not bound to adopt it. If, for instance, a taxpayer does not see the advertisement in the newspaper and has no opportunity of knowing how much is charged against him, he may possibly allow the period provided for lodging an appeal to lapse. That would be a very serious thing for him, because of he allows the time for lodging an appeal to lapse there will be no more to be said about it. The case will go against the taxpayer by default. In such cases it has been the custom of income tax inspectors to levy the maximum demand. They salve their consciences by saying that, if the taxpayers had filled in the return and complied with the other requirements, they would only have had to pay the proper figure.

There is a system that I would like to see adopted and it is this: that when a taxpayer gets the first notice of the demand to be made upon him, that the full amount of the income tax assessment for that year should be fully set out on that notice. If that were done he would know at once how he stood for that year. The system would have this advantage, too, that if there was going to be an appeal it would mean that you would only need to have the one appeal on the entire amount of income tax levied for the year, and not as at present be having appeals on different items under Schedules A, B, C, D, etc. I think the adoption of that system would greatly facilitate the income tax authorities themselves as well as the taxpayers. I think it would be satisfactory to all parties.

As regards the old arrears, there is a great deal of dissatisfaction at the manner in which attempts have been made to collect them. I am referring now to arrears due prior to the first of April, 1923. I suggest that where a demand is made under this Bill for any arrears which accrued prior to the 6th April, 1923, the right of appeal should be given to the taxpayer concerned to contest that amount. We all know, of course, that prior to that date things were in a very unsettled condition here. In many cases the records do not show whether appeal notices were lodged or not. In many cases, too, there are no records available as to claims made by taxpayers for reliefs that would entitle them to be free from the payment of income tax. I hope that the Minister will see his way to adopt that suggestion.

The Minister's statement, in introducing the Budget, which I have read was, I think, very fair. In the course of his speech he said: "A good deal of misapprehension exists as regards the assessment and collection of income tax. The Minister for Finance and the Revenue Commissioners have no functions as regards the amounts of assessments. The law provides that assessments should be made by Inspectors of Taxes in the first instance. Taxpayers have a right to appeal to the Special Commissioners of Income Tax against any such assessments. The Special Commissioners are not subject to the Minister, or to the Revenue Commissioners, in regard to their decisions. If taxpayers are not satisfied with the result of appeals to the Special Commissioners they have the further right of appeal to the Circuit Judges, and, on points of law, to the High Court.

When an assessment has become final and conclusive as the result of appeals, or in the absence of appeal, it is the duty of the Revenue Commissioners to see that the tax is collected within a reasonable time."

No one could find fault with that policy if it was carried out. I hope that it will be carried out, especially as regards the old arrears. Even if it became necessary, I think an opportunity should be given the people concerned to enable them to lodge a fresh appeal. Justice would surely be done by the authorities here allowing fresh appeals, whether to the Circuit Judges or the Special Commissioners. As regards the publication of notices in the newspapers, I hope that the Minister, if he insists on giving notice in that way, will see that they are published in the three daily newspapers and not in two only, as at present.

Mr. O'FARRELL

We all listened with interest and sympathy to the farmers' tales of woe, as depicted by Senator Sir Thomas Esmonde and some other Senators. Listening to what these Senators said, one was driven to the conclusion that the Revenue Commissioners must certainly be pressed for work when they send out all these documents to the small farmers of the country to fill up, because from what has been stated, they seem to be more like a census of production than forms to be filled up in connection with income tax. I feel that after all the work that is involved in sending out these forms and the substantial expense that it must mean to the Revenue Commissioners to carry it out, that it might be considered a commercial proposition by the Commissioners to exempt farmers altogether from the payment of income tax, because I do not believe that one in every two hundred farmers ever pays a penny income tax.

MINISTER for FINANCE (Mr. Blythe)

The figure is much less than that.

Mr. O'FARRELL

I think then it is a waste of the farmers' time to ask them to fill up these forms. The farmer is just as likely to fill them up correctly as the Revenue Commissioners are to get any income tax out of the farmer, even though he may be liable for it. As another Senator suggested, when Senator Sir Thomas Esmonde was speaking, if someone went to Senator Sir Thomas Esmonde as a banker to look for a loan of a couple of hundred pounds he would have about twice the number of forms to fill up in order to satisfy the banker that he should get the loan. So that the Revenue Commissioners are not the only people who insist, on what looks to the people concerned, on getting superfluous and useless information. I think that the difficulty with the Revenue Commissioners is that the only people from whom they are able to get anything like reliable returns and from whom they are able to extort the last penny in the way of income tax, are those in receipt of fixed salaries or wages. In that respect, I am glad to see the Minister for Finance promised in the other House to institute an investigation with a view, if possible, to recasting the methods of relief in regard to the payers of income tax, especially those in receipt of small incomes.

The income tax here is 3/- in the pound as compared with 4/- in the pound in Great Britain and Northern Ireland. Yet, a person here in receipt of a small salary or wage of, say, £300 pays more in income tax than a person in receipt of the same salary in Great Britain where the income tax rate is higher. That is due to the fact that in Great Britain there is a remission of one-sixth of the total income, while the remission here is only one-tenth. The result is this: that a man in receipt of a salary of £300 a year who is married and has no children pays £3 7s. 6d. in income tax per year, while a person with the same salary and in the same conditions in Great Britain, pays only £2 10s. That is in regard to earned income. But if his income of £300 a year is unearned income he pays £11 5s. in the Free State, and £15 in England, so that you have a principle there which tends towards the development of making Ireland the happy hunting ground for idle people. I believe that a large proportion of the income tax that is collected is got from people with wages or salaries running up to, say, £400 a year. These people, with their comparatively small salaries, have to compete in industry with a whole horde of pensioners in this country, many of them young men drawing big pensions. These pensioners are competing in industry with salaried men who have to earn the money that goes to pay their pensions. A person with a small salary has to pay the greater part of it for the actual necessaries of life, and to that extent he contributes more in the way of direct taxation when he buys boots, shoes and clothing, soap, sugar and other taxed articles. He has to pay an undue proportion of indirect taxation, in addition to paying more than his proportion of direct taxation.

A good deal of talk has been made of the restoration of part of the cut in the old age pensions. It has been stated that this will amount to £150,000 a year, but it has to be remembered that there is taken from the people this year the sum of £200,000 under the new tax on sugar. In regard to the sugar tax, I notice that sugar made from beet grown in the Saorstát is exempt from that tax. I would like to know what that amounts to, because, of course, that new tax is an additional subsidy to the Carlow sugar-beet factory. I think there is universal agreement on the point that the sugar-beet factory at Carlow is already very handsomely subsidised. In view of what has taken place, one would like to know whether the sugar made at that factory from beet grown in this State is now going to be sold cheaper than imported sugar, which, of course, will have to bear the additional tax. Certainly, if there was any excuse for an increase in the price of sugar, I fancy that the Carlow factory would not be slow to take advantage of it.

A good deal of play was made out of the fact that capital was being kept out of Ireland when the income tax rate here was 5/- in the pound as against 4/6 in Great Britain. Now the shoe is on the other foot, as the income tax rate here is 3/- in the pound as against 4/- in the pound in Great Britain. I wonder whether, as a result of the income tax rate being lower here than it is in Great Britain, there has been any improvement in the direction of attracting capital to Irish industry? As far as outward results go to show, there has not been. The Agricultural Credit Corporation is an example. It was a complete failure as far as the investment in it of money by the public was concerned, and that despite the fact that a dividend of 5 per cent. was guaranteed by the Government. I think the same is true as regards a number of attempts that were made to float some small industries here. We certainly find in the wills of some wealthy citizens of this State that most of their money is invested in countries outside of Ireland. If the improvement that was spoken of, and that was looked for, has not come about as a result of reducing the income tax rate here, I hope at any rate that we have heard the last of the marvellous things that were going to happen in Ireland, industrially, if we could only abolish income tax altogether. One wonders if income tax was abolished altogether to-morrow how much more capital we would get invested in industry here with a view to providing employment. The reduction that has already taken place does not give any grounds for hoping that any further reduction in the rate of income tax is going to encourage the promoters of industry.

Mr. BLYTHE

I am afraid that I must ask the Seanad to discount a good deal of what was said by Senator Sir Thomas Esmonde in regard to farmers' income tax. A discussion like that as regards farmers' income tax is really a case of much ado about nothing, because if we exclude from our consideration farmers who have sources of income other than what they derive from farming, and deal only with farmers who make their living out of the land and whose sole income is derived from farming, the amount of income tax paid by all such farmers in the Free State would not cover the cost of the electric light for the Dáil and Seanad.

Colonel MOORE

What is the use of having these forms then?

Mr. BLYTHE

To illustrate that these forms do not go to ordinary farmers and have not to be filled up by them, I might refer to one example that I put before the Dáil. Take the case of a farmer whose valuation is £200. He would be a very big farmer in this country. Take it that he purchased his holding under the 1903 Land Act, and that the annuity he pays to the Land Commission amounts to £104 a year. If that farmer is married, he has no income tax to pay. If he is single, he would have income tax to pay to the extent of £3 8s. per annum. That is, as I have said, in the case of a farmer who has a valuation of £200, and there are comparatively few farmers with that valuation in this country. Farmers under £200 valuation would not have to pay at all, so that a comparatively small number of farmers are concerned in this. There are farmers, of course, who have other sources of income, and who, even though their holdings are much under a £200 valuation, have to pay tax. They are in a different category, of course, from the farmer whose income is derived solely from farming. They may be men who have shops and derive a large part of their income from that source. I suggest that they ought to be able to keep accounts. The form that was read out at such length by Senator Sir Thomas Esmonde is only required in the case of a farmer who does not keep accounts. Any farmer who keeps accounts will have his accounts accepted.

The form that is sent out is an omnibus form. The whole form is not applicable to any farmer, but in case a farmer wishes to be charged, not on his valuation or on the amount of his land annuity, he is entitled to be charged on his actual profits if he wishes to be charged in that way. But in order that that may be done, he must supply particulars to enable the Revenue authorities to find out what his profits are. If he has no accounts, and suppose he is a substantial farmer, he will be asked and will be expected to supply fairly elaborate particulars. But as I think Senator Counihan pointed out, the forms present really no difficulty for even the small number of farmers who have to fill them up. Those who have to fill them up will get assistance by discussion with the local inspector of taxes, who will make it quite easy for them to fill up the forms.

I was asked in the Dáil a year or two ago whether the form could not be simplified. That was examined, but it is difficult to simplify a form and at the same time make it suitable for sending it out generally. If we were to simplify it too much we would require to have different forms to send to the farmers, and the confusion would be made greater. I want to end up by saying that the farmer class entitled to sympathy is the farmer who lives by the land, and he has to pay no income tax in practice.

Sir THOMAS ESMONDE

Could the Minister give statistics about the number of farmers who pay income tax?

Mr. BLYTHE

I do not know whether statistics could be easily obtained that would be sufficiently accurate for the Senator's purpose. If they could be obtained without a considerable amount of expense and labour I would consider the matter. With regard to relief of rates, I would like to remind Senator Counihan that to relieve agricultural rates in this country, as it is proposed to relieve them in England, would be a more difficult proposition here. Agricultural rates in England, relatively speaking, are a small matter. Agriculture there is a comparatively minor factor in the life of the country; here everything depends on agriculture, and if you are seeking a means of relief for agriculture you have got to find those means practically off the agriculturalists. A fourpenny petrol tax in this country would go but a very small way towards a scheme for the relief of rates on agricultural land. It would produce a comparatively trivial amount of money. While it might do something it would not enable the Government here to contemplate the thing that it might be possible to do with the proceeds of such a tax in England. Even a tax of a shilling a gallon on petrol, with the difficulties of collection, would be so great, even if extended to paraffin, that it would tend to reduce the productivity of the tax. A shilling a gallon would only go a short way towards providing the sort of relief that Senator Counihan has in mind. Where agriculture is the main industry, where there is no other form of production from which any considerable amount of money can be raised, it is not possible to give aid to agriculture by means of Exchequer grants in the way it can be done in England, where there are industries greater than agriculture which can be taxed, and where there are great accumulations of wealth which can be taxed for the relief of agriculture. I am not saying nothing should be done about rating, but the problem is vastly greater here than in England.

In regard to trunk and main roads. I do not think it is a fact that farmers are paying for roads of a quality they do not require. I think, allowing for the change in the value of money, the ratepayers are not contributing more towards the maintenance of roads now than pre-war. The cost of improving the roads beyond the 1914 standard is, I think, in the main, being provided out of the Road Fund. I cannot agree with Senator Bennett that there is the excessive zeal he alleged on the part of the income tax authorities. The position has to be remembered that there was a great tangled mass of arrears to be dealt with when the Free State took over the collection of revenue. There was an inadequate staff, and there is still a shortage of staff, and the task of the revenue authorities has been exceedingly difficult. It may be that certain errors took place that would not have taken place if we had not been labouring under such tremendous stress. As I pointed out in the Dáil, it takes four or five years to make an inspector of taxes. We were unable, at the beginning, to induce a sufficient number of income tax inspectors to transfer, as the position was disturbed and the prospects did not look good. and they preferred to remain in the British service. We are still in the position that we have not enough of inspectors of taxes to do the work. Naturally, that will lead to occasional slips that would not take place if there were sufficient men to do the work that has to be done, but as for any deliberate harassing of small farmers or anybody else, that does not take place. Considering all the difficulties they were up against, I think the revenue staff have really done magnificently. I do not claim perfection for anybody, but, taking everything into account, they have done exceedingly well.

With regard to Senator Linehan's references to Sections 9 and 10 in the present form of the Bill, the real purpose of these two is to substitute advertisement in the daily papers for church door notices. Church door notices were not suitable to the conditions here. There were no parish assessors here as in England. In any case, there is too much trouble involved in getting church door notices posted up here, and no one sees them. All modern legislation is in favour of having publication by notice in the Press rather than church door notices. I will read what is in the Act of 1918, and the Senator can compare it with the provisions in Section 10 in the Bill as it stands. Section 134 of the Act of 1918 reads:—

(1) As soon as the assessments under Schedules A and B for any parish have been signed and allowed, the general commissioners shall cause notice thereof, and of the day for hearing appeals therefrom, to be given in such manner as they deem expedient.

(2) Any such notice may be given

(a) by delivering a copy of the assessment to the assessor of the parish for inspection by the persons assessed, together with a notice of the day of appeal, to be affixed on or near to the church door or on any other public place in the parish; or

(b) by delivering to each person assessed a notification of the amount of his assessment and of the day of appeal.

(3) With respect to assessments under Schedule D. the general commissioners shall cause a general notice to be fixed up in their office, or left with their clerk, and also to be affixed on or near the door of the church or chapel of each parish, or, if there be no such church or chapel in any such parish, of the church or chapel of some adjoining parish, limiting a reasonable time for hearing appeals, and, except as otherwise provided in this Act, no appeal shall be heard after the time so limited.

So that all we propose to do is to substitute advertisement in the daily Press for affixing notices to church doors.

Mr. COUNIHAN

Will the usual notices be sent out as previously?

Mr. BLYTHE

Yes, in exactly the same way. There is no other change in the law than what I have mentioned. With regard to the schedule system referred to by Senator Linehan, we are quite aware it would be desirable to introduce a simpler system here. Perhaps we would have done something in that regard but for shortage of staff. If experienced members of the inspectorial staff were available we would have devised a new income tax code, but we had not sufficient experienced men to do even current work when we took over the system. We are now almost in sight of the position in which we will have sufficient inspectors. Some of the young men recruited in 1923 have been commissioned as inspectors, and others will be suitable for taking on duty as inspectors within a year or two. The more experienced men can then be relieved, and it will be possible to examine the system with a view to simplification. We recognise that all the intricacies of the British system are undesirable. It is intended to make a change as soon as practicable. With regard to the collection of arrears, some time during 1923 notices were issued in the Press allowing people to appeal, the ordinary time for appealing having elapsed. A great number of people took advantage of that special opportunity to appeal. I do not think any further opportunity can be given. By far the greater portion of arrears which had arisen prior to 1923 have now been collected and only a small portion remains. I think nothing can be done with regard to the people who have outstanding arrears which accrued during the period prior to 1923. I cannot hold out to the Senator any hope that we will do anything more for them. They got a fair chance in 1923, assuming they had neglected to appeal prior to that date.

Senator O'Farrell asked whether the reduction of income tax had resulted in the attraction of more capital here. In certain cases persons who possess an income bringing money into the country and who had intended to leave the country did not leave it, and there were certain other cases where the persons returned. That is one of these matters where it is very hard to see effects. It is impossible to collect statistics, but the impression is that the reduction of tax had a certain stimulating beneficial effect. I do not believe that you will get effects commensurate with the loss as a result of the abolition of the tax. If we are to take care not to have a tax higher than the British rate, or if preferably we had a little lower rate, we would get as much advantage by that as by having it a great deal lower. I do not believe the results suggested would arise from the abolition of the tax. If there is reluctance to invest money in this country that reluctance arises from the fear that profits will not be earned rather than from fear of a tax on the profits. Except on the basis of the British tax being substantially reduced I would not be in favour of any further reduction in the rate of tax here. Senator O'Farrell made certain references to the Carlow beet factory. Of the total amount of subsidy due to the factory, that was paid partly by remission of excise duty, that is by the fact that any excise duty went against the customs duty, and partly in cash.

Mr. BENNETT

Perhaps the Minister will deal with my suggestion as to returning to the pre-war position, that is to assess farmers on one-third of their valuation instead of the full valuation.

Mr. BLYTHE

I think the basis of charge is the valuation of the land, or the purchase annuity.

Mr. BENNETT

In no industry, except the farming, has the basis of valuation been trebled.

Mr. BLYTHE

The man who would pay is really charged on his profits, and the valuation basis is for the purpose of persons who will not present accounts. As a matter of fact, if farming conditions were good and profits were being made to any extent, the present basis of valuation would be extremely lenient, and I think a basis of one-third of the valuation was ridiculous.

Mr. BENNETT

It was regarded as satisfactory in England and Ireland.

Mr. GUINNESS

There is a point I wish to raise in connection with Sections 2 and 3. It is probably a point that should be raised on the Committee Stage, but it might be too late then. It refers to the discontinuance of the super-tax and the substitution of the surtax. Similar changes have been introduced into the Finance Bill in England. Sections have been introduced by the Chancellor of the Exchequer that have been the subject of a great deal of discussion and comment in the Press. From the correspondence with reference to the English Finance Bill it would appear that under certain conditions a number of people liable to super-tax will, under the change, be now liable under the new name, surtax, to double payment of super-tax for a year, but not longer. The question has been taken up in the Press and it is an extremely complicated one. The financial papers have discussed it and, as a result, I understand several amendments are being brought in on the Committee Stage of the English Finance Bill. What I would like to know is, are these sections introduced in the Finance Bill of the same nature as those in the English Bill, because if the Minister wishes to follow suit, and if the amendments are carried, and there is a possibility some of them will be, would not that alter the whole basis here? The amendments which are to be brought up in Westminster, if passed, would completely alter the incidence of this tax. Surely if the Minister wishes to be on the same lines as England, he should wait and ascertain what the Imperial Parliament is going to do in the matter. The hardship caused by the sections I have mentioned in the English Bill would be very severe, judging from the views expressed by the correspondence in the Press. It may be that under the Bill as framed here the same hardship would not exist. Perhaps the Minister would be able to let us know.

Mr. BLYTHE

There is no need to follow exactly the arrangements that may be made in Great Britain. It is desirable to have a certain broad similarity largely because of the considerable number of people doubly resident, but there is no need to follow it closely. The changes made in Great Britain in comparatively minor matters would not cause any embarrassment so far as we are concerned. Generally, the effect of the substitution of a surtax for super-tax is this: "Under the code that has existed up to the present if, say, a person became entitled to an income of £3,000 in one particular year he was not liable to any super-tax within the year, for his assessment would be on the basis of his assessment of the previous year. The effect of having the super-tax here as in Great Britain will be that the surtax is based on the year of assessment, and payment is postponed till the following year, but the tax is payable for the year of assessment, so that the person who for the first time this year had an income of, say, £3,000, would be assessed on the surtax to the appropriate amount that will really be due in the present year, but time would be given for payment until January the following year. Generally, the effect of this substitution of a surtax for super-tax is that every person who has the requisite income will pay the higher tax on his income in respect of every year he has that income. I do not know that it will cause any person to be charged twice—that is, to pay either for super-tax or for surtax for two years. Personally, I do not propose to make any amendment.

CATHAOIRLEACH

I think the Senator's point is this: Would it be possible under the provisions of the Bill to compel a person to pay double tax in any one year?

Mr. GUINNESS

I am not speaking for myself. People who know what they are writing and talking about have, in the Press, strongly expressed the view that under certain conditions there were individuals who will be called on under the Bill as it stands in the Imperial Parliament to pay for one year the super-tax twice over.

Mr. BLYTHE

I do not think so.

CATHAOIRLEACH

Perhaps the Minister would give an assurance that it will not be done under this Bill.

Mr. GUINNESS

These amendments to the British Bill will be brought up in Westminster in a day or two by very prominent people.

Mr. BLYTHE

It is not the intention.

Mr. BROWN

If a person has paid the super-tax already, he may pay a second super-tax in the same year, but he will not pay any more money in the end, though he may have to pay twice in one year.

Mr. GUINNESS

I was anxious to put the point before the Minister that if the phraseology in the sections in this Bill is on the same lines as that in the british one, it is open to confusion.

CATHAOIRLEACH

The Minister has gone this far, that he says it is not the intention of the Government and, therefore, if it works out in that way, I presume the Government would be under the obligation of amending the Bill.

Mr. BARRINGTON

Can the Minister give us an assurance that it cannot be done?

Mr. BLYTHE

I cannot. The courts and other people will be there to interpret the law after the Bill is passed. If any grave injustice occurs we might rectify it by legislation, but once the Bill becomes law, the interpretation of it passes out of the hands of Ministers.

Mr. BARRINGTON

As the Minister cannot do that, would it not be better to put some section in the Bill so that that would not happen?

CATHAOIRLEACH

On the Committee Stage of the Bill a recommendation could be proposed, that under the provisions of the Bill there was to be no double charge in the same year.

Motion put and declared carried.