With reference to the question of the demands on farmers, I think Senator O'Farrell understands the present position much better than any other Senator who spoke. It is true, as Senator Brown has pointed out, that we cannot have a rigid rule that no assessments shall be made on farmers whose lands are below a certain valuation, because such farmers may have other income. But in any cases where the Revenue Commissioners have no reason to believe that a man has other income the practice is to make no assessment on a small farm. Sometimes mistakes may occur; a man may be suspected of having other income and may be assessed on land, when he has actually no other income, but the policy of the Department, a policy which is steadily carried out, and which it is hoped to carry out perfectly, is that the small farmer whom there is no reason to believe has any other income is not assessed at all. That also applies to some farmers whom most Senators would call big farmers, because income tax on farming profits is generally charged on the basis of valuation, and consequently we can deal only with valuation. Where a farmer is married, generally no assessment is made unless his valuation exceeds £150, and it may be said, therefore, that, broadly speaking, no assessments are made either on small or moderately large farmers except, as I have said, in cases where the Revenue Commissioners have some reason to believe that a farmer has other income—that he has income from investments, from a shop, or from something else of that nature. There may be still even many moderately big farmers on whom assessments are regularly made and who are not liable. There is a Committee sitting to produce proposals for the simplification of the income tax code, and an attempt is being made in that connection to see whether we cannot carry any further with safety to the revenue and in fairness to the different classes of taxpayers, the arrangement for avoiding making assessments in cases where it is ultimately proved that tax will not be paid. But, of course, there are always border-line cases.
We heard a good deal about the trouble farmers get in dealing with assessments where no tax is proved to be payable. That applies to a very small fraction of cases, and, as I say, the policy of the Department is to see that no assessments at all go out to small, or even moderately large, farmers who have no other sources of income than their farms. With regard to charging income tax on gifts to clergymen, that whole question was the subject of litigation in Great Britain in 1909, when income tax was charged on gifts on Easter offerings made to a Church of England clergyman. The church authorities fought the case for the clergymen. They alleged, and in a sense they alleged quite correctly, that these were personal, non-official, freewill gifts; yet the court held that that was part of the income of the clergyman, and he was taxed accordingly. Taxation is levied here on the principle that any income that comes to a man because of his office, profession, or occupation is income for the purpose of income tax, and if we were to get rid of that principle it would mean that in business life, say, methods could be adopted for avoiding the payment of income tax on very large sums of money. It would open the door to great evasion. I do not think it would be in the interests either of the State or of religion taking any long view that we should have a special exemption from income tax in favour of the clergy. I think in the long run it would be much better that the clergyman should pay his tax the same as any other citizen. I think it would prevent agitation and trouble in future that would do a great deal of harm.
In dealing with clergymen I may say it is an instruction that is given to the Revenue Commissioners and acted upon by them that when a clergyman makes a return, if the return appears to be, on the face of it, made by a man who understood the nature of the return, it is accepted without question. There is no policy of saying, "This should have been £25 more," or anything like that. As I pointed out before, you have occasionally amongst the clergy and other people the idea that income is what is left over after all expenses have been paid. Occasionally, you would have a clergyman returning a form setting out his income as £25 or £30 a year. When a form like that is sent in it is challenged, but when any sum is returned in a form which indicates that a clergyman understood what sort of return he was expected to make it is not challenged. I am dealing now with parochial income. So far as income from investments or anything of that nature is concerned, that is in a different position. There might be cases where a man had failed to return investment income which was afterwards discovered, but taking it broadly a clergyman's return of his parochial income is accepted as he puts it in.
Senator Johnson referred to the proportions of taxation paid by the agricultural community. I think, looking at it from the point of view which Deputy Johnson looked at it, he was perfectly correct, although I think the statements made by the Minister for Agriculture and others are also correct. They made their statements on the basis that all taxation comes out of production, and that ultimately the proportion of taxation paid by the agricultural community was equal to the proportion of their production. But, so far as the actual source from which the Exchequer gets revenue is concerned, I think Senator Johnson is right. In the matter of direct payments of income tax and payments by direct tax from the shopkeeper—that is, the payment of tobacco or beer duty—I think the Senator is quite right in saying that very much less than half of the revenue is contributed by the agricultural community. I do not want to go closely into the figures, but I think that is so.
With regard to the question of income tax reliefs, it is not correct, as some Senators in the course of the discussion said, that we had reduced the tax on larger incomes and increased it on smaller incomes. What happened was that we reduced the standard rate of tax which gave relief to everybody. The British have since given special reliefs to smaller taxpayers. The financial conditions here have not so far allowed us to follow the British in giving these reliefs. I have stated frequently in the Dáil, that owing to the difference in conditions here it is quite possible that we will not be able to keep pace with the British in the matter of reliefs to the smaller taxpayers, for this reason, that we have so few large taxpayers that any relief to the smaller taxpayers costs us a much higher proportion of our total revenue from income tax than it costs in Great Britain. In Britain it would be possible to give relief to the smaller taxpayers that would cost only 10 per cent. of the total revenue, but, if we gave the same relief, instead of losing ten per cent., we would perhaps lose twenty or twenty-five per cent. of our revenue from income tax. Consequently, in a sense, it is misleading to say that we are lagging behind the British in the matter of reliefs. We are lagging behind, perhaps, from one point of view, but we may not be lagging behind if we were to look at it from the point of view of the revenue that had to be sacrificed.
In regard to the question of stimulus given to industry and to industrial development by the reduction of income tax, Senator Johnson asked if we could point to the direct effects of such relief on industrial enterprise. I believe I stated at the time the reduction of the standard rate of income tax took place that you could not see it directly, that its effects would be indirect. I think any Senator will see this, that before we reduced our standard rates by 1/- in many cases our income tax on industrial enterprise was actually higher than the British rate, although both were nominally 4/-, because in addition to income tax we have a corporation profits tax at the rate of 1/- in the £. The position that existed when our standard rate was 4/-, and when the British standard rate was 4/-, was that industrial enterprise in Great Britain was paying in the way of direct taxation to the Exchequer 4/- in the £, while here industrial enterprise, except very small ones, was paying 5/- in the £. They were paying 4/- income tax and 1/- corporation profits tax, and I think that would be very harmful in the long run to industrial enterprise here. I know cases where there seemed to be a fair measure of proof that industrial enterprise was being hurt. It would be harmful if we maintained income tax at the same rate as the British, and also charged corporation profits tax.
Senator Johnson referred to the taking of the surplus interest earned by the Post Office Savings Bank, and suggested that the rate of interest on deposits should be raised. Heretofore the Post Office Savings Bank since its establishment has been able to earn very high rates of interest on its investments, but the rates which may be earned are falling. They show a very definite tendency to fall, and there is good ground for believing that as much income cannot be earned in future by the Post Office Savings Bank as was earned in the past. It would not be justifiable, in the circumstances that exist, to raise the rate of interest payable to depositors. As a matter of fact if it were raised, in a very short time it might become necessary to reduce it again, so that the position of the Post Office Savings Bank would not be helped if that were to take place. The practice has always existed in Great Britain of appropriating for the Exchequer surplus interest earned by the Post Office Savings Bank over the amount required for payment of interest to depositors, after allowing for the expenses of administering the Bank. I do not see that we should follow any other policy.
Senator Barrington referred to delays in making repayments of income tax and was answered by Senator the Countess of Desart. There must have been some peculiar features of difficulty in the case to which the Senator referred. If he cares to send me particulars of these cases I will have a report made on them and will communicate with him.
Senator Miss Browne referred to legacy duties. It is certainly a hardship on a person if a demand for legacy duty were delayed for several years, perhaps until the amount of money received had been expended. I think that rarely happens. It is a case with which I could not deal unless I had all the details before me. I gather that the revenue authorities alleged that the demand was made, while the farmer says he did not receive it. I would be inclined, on the whole, to believe the revenue authorities in that case.
The argument of Senator Comyn in regard to tariffs has been already demolished by Senator Douglas. If we imposed tariffs for revenue, in so far as revenue is raised by tariffs, the cost falls on the farmers. If revenue has to be raised you cannot give remission following the imposition of tariffs. I rather think Senator Comyn's proposal amounted to a suggestion that we could have our cake and eat it.
The question raised by Senator Douglas about the importation of cinematograph films by tourists can be dealt with administratively. It has been under consideration, and it has been decided that where a tourist brings in a small roll of miniature cinematograph films for the purpose of taking photographs here, no charge will be made. Of course, if he were to bring in an unreasonable quantity a different position would arise. Where an American or another tourist brings in an amount which the Customs Officer would regard as reasonable in the circumstances there would be no charge. As a matter of fact, a person from this country who had been on a trip brought back some films of this kind with him that he had been taking photographs with abroad, they could be admitted free, provided the quantity was reasonable. I disagree with Senator O'Farrell when he stated that Senator Moore invented the land annuities.
So far as the allowances for children are concerned, I have indicated in the Dáil that when there is a surplus available for the remission of taxation, the Government think the remission should take the form of increased allowances for children. Senator Fanning referred to the remission of the duty on tea, and said that when the 3d. or 4d. a lb. was knocked off the tea the dealers immediately increased the price by 6d.