Seanad Éireann debate -
Wednesday, 18 Nov 1931

Vol. 14 No. 38

Finance (Increase of Income Tax) Bill, 1931 (Certified Money Bill)—Second Stage.

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

Minister for Finance (Mr. Blythe)

I do not propose to occupy the time of the Seanad very long in dealing with this Bill. I am sure Senators will have read reports of discussions that have taken place in regard to it during the past week. Up to the present year, taking the different taxes together, the yield of revenue in the Free State has been very steady indeed. There have been ups and downs. There has been a constant fall in the revenue from the beer duty and the spirit duty, but apart from that particular tax, where the fall is due to changed habits amongst the people, the changed habits being produced, of course, partly by high taxation and partly by the introduction of new amusements and new ways of spending money, the yield has been very steady. This year, however, the position is not as good as it has been. The effects of the general world fall in prices are making themselves felt and, as I have said in the Dáil, I must at the present moment estimate that on the basis of taxation which was fixed last April the deficit by the end of March next will be £900,000.

A very large part of that is due to circumstances outside this country. A great amount of the anticipated deficit in the present year may be attributed to factors in Great Britain. For instance, one factor that will adversely affect our revenue is the imposition of the increased beer duty in England. That gives rise to certain changes in policy here. While a great portion of the deficit of this year is due to factors outside the Saorstát, we have to bear in mind that for the next year, the year beginning 1st April next, other factors will operate. There will be, in the year beginning 1st April next, a decline in the yield of income tax as compared with the present year, because incomes from investments generally are down. While part of this year's deficit might be described as an accidental deficit, we cannot treat it as something that does not require to have any remedy applied just now. While the accidental factors that are operating this year will not operate next year, other factors will operate, and we feel it is necessary that steps should be taken to meet the deficit.

It is proposed to meet that deficit, as many other countries have had to meet similar deficits, partly by an increase in the rates of taxation and partly by a scheme of economy in respect of which we will try to spread the sacrifices as well around as possible. The proposed additional taxation consists of an increase of 6d. in the standard rate of income-tax and an increase of 4d. in the duty on petrol. I have before the Seanad a Bill dealing with only one of these taxes, the increase in income-tax. I have put that proposal in a separate Bill, because it is necessary to give legislative effect as rapidly as possible to the Resolution increasing the tax. If the collection of tax for the present year is not to be delayed it is necessary this Bill should become law as soon as possible, because there are something like 600,000 assessments which have to be altered and the duplicates have to be altered if the collectors are to receive them in time and are to be in a position to issue demand notes in anything like the usual time in order to commence the collection of taxes. If the Bill were to be delayed, some of the income we hope to get from the extra 6d. would be lost in the current year. It is for this reason the income-tax proposal has been put into a separate Bill, which was put through all its Stages in the Dáil last week in order that it might become law as soon as possible.

It is disagreeable to have to face the Oireachtas with proposals for increases in the rates of taxation at the present time. It is equally unpleasant to have to face other people, as we shall have, with demands for sacrifices of various sorts. However, the position being as it is, we must do the work that lies before us. We must definitely take steps as speedily as possible to secure that there is a balanced Budget. Any failure to undertake that work, any failure really to face the Budgetary position, would have very speedy effects on national credit, and if any ill effects did accrue to national credit it would probably be a rather slow process to undo them. Other countries have been faced with similar problems. The whole difficulty arises from the fact that the prices of commodities have been steadily decreasing and have recently shown a tendency to decrease more rapidly. A decreased price in commodities is bound to reflect itself in the revenue, and it reflects itself more speedily in the revenue than it is easy to take corresponding steps with regard to expenditure. Revenue may fall; new factors may cause a decline of revenue almost immediately. So far as expenditure is concerned the process of adjustment is a much slower and a much more difficult one.

There are certain items of expenditure in this country which cannot be adjusted at all. They mount up to a very large total. Take two items alone, old age pensions and grants to local authorities. They run to something like £5,000,000 a year. You cannot really make any adjustment there. There are other items of expenditure where adjustments, either because of economic or other circumstances, are not possible. It is a not a very easy thing to reduce expenditure as income decreases, but it is one of those things that has to be done and everybody concerned has to make up his mind to bear whatever has to be borne. I am certain that from the Oireachtas, generally, the Government will receive the support that is necessary to secure that the Budgetary position of the country is such that the credit of the State will be maintained at the level at which it is.

Colonel Moore

Every year since this Ministry came into power there has been a Budget deficit. Every year the Minister has carefully concealed it under various platitudes and names. Sometimes he calls it non-recurrent expenditure; this year he calls it an accidental deficit. These various names are merely to cover up an essential loss which has been occurring regularly every year in this country. These expedients are rather like the lady who went to a shop and bought a lot of dresses. Then she told her husband that the expenditure would not be a recurrent expenditure. She knows very well that it will be; but he has to put up with it, just as we have to put up with this expenditure. These things ought not to recur; and if the State were properly managed and the people properly taxed such expenditure would not be recurrent. These expedients have been practised in other countries. Probably the Minister has looked up details relating to other countries, found out these names, and thought it a good dodge to adopt them. The other countries that adopted them became bankrupt, and I believe that this country will be bankrupt too. These continual deficits must cease.

I am against all increases of taxation, because I do not believe that they are at all necessary. The National Debt is being piled up year after year, and it is being excused in various ways. We are told it is only a small debt— one year's income. The various items forming the National Debt are concealed under different names. We have, for instance, the land annuities; the payment to the British Government for the ex-R.I.C. pensions; local loans and other things. According to some Ministers, these are not debts at all. I would like to know, at that rate, what is a debt. If I buy something in a shop and do not pay for it, it is a debt. The British Government puts down the annuities as a National Debt. We must look for the root cause of the deficit.

Let us examine the circumstances connected with the unbalanced Budget, and let us consider the adverse trade balance. I do not want to go too much into detail, because I have explained this matter to the House on many occasions. Perhaps what I said on those occasions may not have made much of an impression on the minds of some Senators, because these Senators do not listen to reason or commonsense or logic, but simply blindly agree with anything the Minister has to say. In the eyes of some Senators the Minister is always right. If he says the Budget has to be balanced, they quite agree. For my part, I will continue to point out what I believe to be wrong until some effort is made to remedy it. It is declared here by way of excuse that all countries are suffering from bad times. The main reason alleged is that there are heavy war debts to be faced. That is very likely the truth. At one time Lloyd George said that the British could not compete with Irish manufacturers if the income tax were 6d. in the £. It was nicely arranged that a debt, not a war debt, but a debt which we chose to make up for ourselves, should be landed on this country just in order that we might keep a good balance with the other country and have no advantage over England whatsoever.

In February, 1922, President Cosgrave and his Ministers trekked over to London. It was just after the Treaty, and I presume they did not know very much about their business at that time, whatever they may know now. Blindly, as usual, and without telling anybody, they signed a document described as a working arrangement for implementing the Treaty. This document set out that the Free State should pay £5,000,000 a year to Britain. That was supposed to be only a temporary arrangement. It was kept secret for 18 months, the reason being, I suppose, that it was thought it would do damage to the Government and do good to the Republicans if it were made public. Nothing was said about it for 18 months, and then it was published in the "Irish Times."

Then there was the Partition Treaty. The President trekked over again to London and signed a document, and came back and told us that everything was now clear. He had sold the Six Counties to Britain, and we were told that we had a clean slate—nothing was due except a small sum of £5,000,000, which we could pay off very easily. A little time after the President returned I remember one Minister telling me that it was the greatest victory since the time of Brian Boru. I regarded it as the sort of victory that Dermot McMurrough negotiated with the British many years ago. In December, 1925, the Ministers, forgetting all about the clean slate and the statements about not owing a penny to Britain, went to London and made the Ultimate Financial Settlement, under which a sum of £5,000,000 a year has to be paid to the British Government. Again, that document was kept secret for nine months. Outside his own colleagues, no one authorised the Minister to make a settlement. The whole thing, as I have said, was kept secret.

Some time later, as Senators may remember, it was proposed that the Seanad should appoint a committee to examine the matter. I think it was the Cathaoirleach who proposed it, and immediately he did so the Minister declared that on no account would he have anything to do with the committee; that it was not the business of the Seanad to examine any such things; that if a committee were appointed by the Seanad he would not appear before it, nor would he allow any of his officials to do so, and he would not permit any documents to be submitted. What good would it be under such circumstances? The committee idea was dropped. Why would not the Minister allow this document dealing with the payment of £5,000,000 to be examined? He did not want to, because he was afraid. The fact that the £5,000,000 will have to be paid each year has brought the country to a serious position of embarrassment.

Some people seem to think £5,000,000 a year is not much because it can be put down on a piece of paper in a very short space of time. Let us consider what it really means to this country. It means one-fifth of the taxes of the country. The Minister has told us that the British Treasury has estimated the taxable capacity of Britain compared with the Free State to be 100 to 1.5; in other words, 66 to 1. If you multiply £5,000,000 by 66 you will get £330,000,000. If Britain had to send money out at the same rate as the Free State is sending out £5,000,000 annually it would mean that Britain would be sending out each year £330,000,000. At the present time they are sending out about £38,000,000, and they are making a fine fuss about it.

I will quote now from Mr. Baldwin. I am always quoting people who are against me so as to be sure that what I say is at least right. The Minister laughs at that remark, but I may say that I do not quote him except occasionally. He puts his foot into it so badly that he gives me a great foothold. In 1925, in the House of Commons, Mr. Baldwin said that the Free State exported more of her revenue than Great Britain, and that was perfectly true. I have here the Ultimate Financial Settlement. I will not go through it because it is a long document. I observe from it that the R.I.C. payments in 1926 were £1,300,000; civil superannuation, £186,000; land contributions, £183,000; local loans, £735,000; land purchase annuities, £3,900,000. That last figure is now down to £3,000,000. There are a lot of small items, but the total for that year was about £6,000,000, and in the following year it was £5,000,000.

The principal question is: Do we owe money at all to Great Britain, or if we do why do we owe it? The President and the Minister were the first leaders in Ireland who ever imagined that any money was due to Britain. Every other leader of the Irish people, Redmond, Butt, Parnell, O'Connell and others, have declared that we owe nothing to England. I expect President Cosgrave when he was a Sinn Feiner made probably the same statement, and very likely the Minister for Finance did the same. They suddenly changed their minds.

Several times there have been Commissions appointed by the British Government to examine the relative taxation of Ireland. The Childers Commission sat in 1896, and after two years' careful examination they made certain recommendations. That Commission consisted of British Treasury authorities and representative people from Ireland and England. They reported that Ireland had been overtaxed to the extent of £2,500,000 to £3,000,000 a year, and the Chairman advised that the money should be granted to Ireland.

Cathaoirleach

I think the Senator is going a little outside the scope of the Bill. I have given the Senator every latitude, but I think the subject he is now discussing has little relation to the proposal to increase income tax by sixpence.

Colonel Moore

I want to show that Ireland owes no money to England, and this money that we are now paying England should be kept in Ireland. I am trying to show that on the authority of a British Commission, we ought, instead of paying away £5,000,000 annually, be paid £3,000,000 annually. If I am correct in that it would be quite easy to avoid anything like these taxes. In 1913 the Primrose Commission sat, and they made a similar report. They recommended that Britain should pay Ireland £3,000,000 a year because of the gross over-taxation of this country in the past. Soon after that Professor Oldham, the best authority that we have had on these questions, examined the matter. He had under consideration the years from 1893 to 1920. He laid it down that during a period of seventeen years this country had been overtaxed to the extent of £143,000,000, or £8,000,000 a year.

President Cosgrave and the Minister for Finance wave all these things aside, and they change what should be a debt of £3,000,000 a year to the Free State, to a payment by the Free State of £5,000,000 a year to Britain. I maintain that not a single penny is due by us to Britain. There is no necessity to pay that money, and there is no reason why there should be a deficit or any extra taxation. Everything should be going smoothly in this country. I will vote against taxation. I am afraid that the present condition of things will continue until the Fianna Fáil Party steps in to relieve the country of this burden. Probably that will be the New Year's gift to the Free State. I wonder when that happens what these ladies and gentlemen on the other side will think. They have been maintaining a policy opposite to ours all along, and I wonder what they will think when they will see the country getting from the new Government, which they will probably oppose, a sum of £5,000,000. I rather think that they will look somewhat silly.

Mr. Connolly

Senator Colonel Moore has dealt with the main argument for a reduction of expenditure in this country, an expenditure that we do not admit is legal or justified, and the saving of which would save us and the country the necessity of imposing this extra income tax. I do not propose to add anything to what the Senator has said on that matter. I think that all of us will admit, at least most of us will, that if a tax has to be imposed then a tax on income is perhaps the fairest way of getting what is required, for the simple reason that it is imposed according to the income of the subject. It is pro rata to income. The Minister made several references in the course of his speech, to some of which I would like to refer. He stressed the argument that a decrease in commodity prices is one of the causes of the troubles here. Whilst there may be something in that, it is only partially true and needs to be qualified. There are other factors that are operating. A fall in commodity prices need not necessarily result in commercial loss, nor need it necessarily result in bad trade or in the farmers being in the depressed condition they occupy to-day. It has a temporary depressing effect. It is skidding over thin ice to make that the reason when we know, as a matter of fact, that the depression in the country is due to the system that has been pursued by the present Ministry since they came into office. We know that our farmers are losing money. They have been losing it steadily for the last five or six years, and there does not seem to be any hope for them in the future.

Every suggestion that we have made with regard to tariffs to protect our agricultural commodities was resisted, and is still being resisted, though occasionally we find some mornings when we waken up that the Minister for Agriculture, the Minister for Finance or the President of the Executive Council have decided to put a tax on oats or something else, despite the fact that they have been arguing against that for years. What I feel is wrong is that there is no concerted policy being followed as regards the economy of the country, either in agriculture or in industry. In the case of our traders and manufacturers that is true. It is particularly true in the case of our manufacturers because, after all, traders are a secondary consideration in the matter of giving employment. Trade generally is depressed throughout the country. We know that our manufacturers find it impossible to keep their staffs and their hands going. That is due to the fact that the country is still being steadily used for the dumping of commodities against which we cannot compete.

I gave the reasons for that here before. We are catering for a small population. The country itself is not highly developed in manufactures, and we have to compete against a highly organised country that is prepared, if necessary, to dump commodities here. The situation requires remedies, and, I would suggest, drastic remedies. It requires a complete stocktaking of the whole national position, of what we are going to do as regards giving employment and organising both agriculture and industry in the country. Instead of doing that, we are simply following a slipshod day to day line of action, taking the line of least resistance, giving way here and in most cases not giving way at all. Leaving aside the question of taxation, what is the result of all that on the country? We have a depressed population, a population that is not living on anything like the standard it should live on. That reacts on trade generally, for the simple reason that our population at the present time is not, in the main, being adequately fed and clothed or adequately housed. I suggest that if the economy of the country were organised in the way that it should be, we would have a sufficient flow of trade within the country itself due to the organisation of our home market. If you had here a system of development that would tend to make the people prosperous, it would relieve us of a considerable amount in the way of social services that have to be paid for by the State at present.

We have to remember, when discussing the question of finance and matters relating to taxation that we are doing less and less as regards making the position of our people better than that of other peoples. Take, for instance, the question of our unemployment insurance. Last year, I believe, it contributed the sum of £300,000 towards wiping out the old debt. In the Six Counties and in Great Britain a very substantial number of the population have been carried on the dole system. Now, I do not argue for the dole, nor do I say that we should have it, but I do say that it is up to us to maintain certain social services which we are not maintaining at the present time in spite of our relatively high taxation. If we were administering the dole as it is being administered in the Six Counties or in Great Britain, I venture to think that we would want not an increase of 6d. in the pound on income tax, but possibly an increase of 1s. 6d. in the pound.

Sir John Keane

The country would be "broke."

Mr. Connolly

We might be "broke." I do not know that we are not going towards a position when we will have to face up to such a possibility. What I do know is that there are a number of people in this country who, at the moment, are on the border line of starvation. It is not pleasant to have to say that. Of course, we will be accused of preaching the doctrine that the country is in a very bad way, and that we are doing that for political purposes. It is no pleasure to any Irishman, I take it, to have to admit that the country is in a depressed way, but I put it to the House that it is a great mistake to ignore facts, and the facts are as I have stated them. The question of old age pensions was discussed some time ago. We are not doing so much for our people in this matter as is being done elsewhere. I think that elsewhere the qualifying age is now sixty-five. The Minister for Finance made a very severe cut some time ago in the amount which the old age pensioners receive. He took a very big slice out of their allowances, so that in the imposition of these taxes we need not feel that we are in any sense giving those social services that we ought to be giving in this country.

Senator Colonel Moore has pointed to the very big drain that is made on the financial resources of this State by sending out of the country certain moneys. It is our definite line of policy that we are not entitled to pay these moneys, and we are certainly going to resist it. The main thing, outside of that, is that we have got to reach some basis of understanding as to how we are going to organise our internal trade and our home market to arrest the adverse balance of trade to the greatest extent possible. The fact that this country is continuing as it did in the old days to bring in commodity after commodity which could be produced at home is due, I suggest, to a lack of organisation on the part of the Ministry to get these social problems solved.

Mr. O'Farrell

A supplementary Budget must of necessity be unpopular because of the fact that it involves additional taxation. To that extent this Budget is not a popular one. To the extent that additional taxes are necessary, the obvious and the just principle to follow is to impose them on those who are best able to bear them. In that respect I do not think there can be any genuine complaint in regard to the taxes involved in this particular Bill. Prior to the introduction of this Bill the income tax in the Free State was only three-fifths of what it is in Great Britain and Northern Ireland, and even with this additional sixpence in the pound it will still be only seven-tenths of what it is in Great Britain and Northern Ireland. We had a very energetic campaign launched some few years ago in favour of the total abolition of income tax on the grounds that if you had no income tax you would have unbounded prosperity and a wonderful and unprecedented revival in trade. Notwithstanding the fact that we have a lower rate of income tax than that which prevails in the neighbouring country, I do not think anyone will be able to discover any particular revival of trade as a result of that. Consequently, we need not look for any particular depression as a result of the additional taxes involved in this Bill.

The Minister for Finance, in the other House, promised economies to make up the balance of the anticipated deficit in the Budget introduced last April. He has been urged very strongly to wield the axe vigorously and relentlessly. I do hope that the Government are not going to allow themselves to be stampeded by the economy maniacs to make unreasonable inroads on the social services, which are already sufficiently primitive and will not permit of any further disimprovement. In Australia they had to make a reduction of 12½ per cent. in the amount paid to old age pensioners, but even after that reduction the old age pension there is 17s. 6d. a week compared to our 10s. They had to make other economies in Australia; but, despite that, salaries there are generally very much higher, even from the purely purchasing point of view, than they are in this country.

There is a tendency, in view of this world-wide depression, to urge on the Government here to rush headlong into cutting Civil Service salaries, to make inroads on the social services and so on, because it has been found necessary to do that in other countries. Now it is true that trade is depressed here, and that we are feeling to a certain extent the effects of what is a world-wide malady at the present time. But it is well to remember that we are not feeling the effects of that particular malady to the same extent that great industrial countries are. For that reason, what might be justifiable in the way of economies in these countries would not be justifiable here. To the extent that you cut down the purchasing power of any section of the community, of necessity you damage the home market, and of course we must rely very largely upon our home market for some considerable time to come because of the depressed condition of trade in other countries.

There has been a decrease in the prices paid here for agricultural produce and other commodities, but I do not think it has been anything like the decrease that has occurred in other countries. For instance, in the United States of America the price of red wheat has fallen by one-third from what it was in 1929. It is cheaper now than it was at any time since the days of Charles II. The same is true of cotton. The price is less by one-third as compared with what it was two years ago. In the case of corn (maize), copper, hides, crude petrol, the price is less by one-half compared to what it was in 1929, while as regards pork, lard, lead and other commodities the price prevailing now is less by two-thirds. The prices for farm produce generally in the United States fell by 45 per cent. since 1929, while in the case of textiles the fall in prices in the same period has been 43 per cent. I do not know that it will be contended that there has been anything like that formidable drop in prices in this country. These figures give one an indication of the great fall in prices that has taken place in a great country like the United States of America, a country with a sky-high tariff wall. You have the fact that the basic industries of that country are only producing two-fifths of what they produced in 1919, while some of them are only producing 50 per cent. of what they produced in 1913, and that notwithstanding the huge increase in the population of the United States as compared with what it was eighteen years ago. The exports of the United States are only two-fifths of what they were in 1929. In nine months in the United States of America 1,234 banks have gone crash, the amount of money involved being over £200,000,000. That, of course, was a terrible industrial cataclysm and demanded remedies which would not be justified here because of the absolutely different set of circumstances that prevail in the two countries.

In Germany, one of the greatest industrial countries of the world, you have another instance of the effects of this world-wide depression. In 1930 the national income of Germany was estimated at 60 milliard marks, while the total taxation was between 25 and 30 milliard marks, or close on one half of the total national income. But in Germany you have the extraordinary position that they expect this year to have a favourable credit balance equivalent to £150,000,000 sterling. Yet they have unemployed to the extent of nearly four and a half millions, while it is estimated that during the coming winter the number of unemployed in Germany will be close on seven millions. Germany is a most interesting study for economists who believe that a favourable trade balance is absolutely necessary to prosperity, and particularly to those who believe that tariffs are the essence of prosperity. In Australia, which in one sense would be more like our own country, they have also a very difficult position to deal with, a position which is quite unlike ours. The total national debt of the Commonwealth and States of Australia is £1,154,000,000 sterling. The population of the country is only slightly twice that of the Free State. The Government there have to provide for the interest and sinking fund on that debt, and the amount necessary to meet it is £62,000,000 per annum. As I pointed out, that has to be met by a population that is only slightly twice that of the Free State. Then, to add to their difficulties, the value of their exports has fallen by £60,000,000 in two years.

It does not require any great flight of the imagination to realise the terrific upheaval and dislocation that occurrences of that kind must create, especially in a country with a small population. They have had to make up a deficit of £20,000,000 on their Budget. Because of that, and to meet the depreciation of the Australian pound, the value of which fell by nearly 30 per cent., the Government there found it necessary to effect economies of a fairly drastic character; but, as I said at the beginning, despite the fact that they had to put these economies into operation, the salaries paid in Australia are somewhat higher than they are here, while the old age pension paid in Australia is 17/6 per week as compared to our 10/-.

In Canada there is a budget deficit of £17,000,000, while the national debt of that country is in or about £465,000,000. Our national debt is not anything like the national debt of the countries I have referred to, and to that extent we have not the same amount of difficulties that they have. Very insistent demands have been made for reductions, particularly for reductions in the salaries of civil servants. Every Tom, Dick and Harry who aspires to political notoriety generally begins his political career by attacking the Civil Service. One would imagine that the Civil Service was a highly paid, underworked institution, a sort of modern edition of the Garden of Eden. But everyone who has bothered to inquire into the position knows that there have been continuous and heavy decreases in the salaries paid to civil servants, with the result that a very large majority of them are to-day underpaid. It is true, too, that there has been an increase in the work while there has been no corresponding increase in the staff. The result is that every member of the Civil Service is to-day working harder and is being paid proportionately less than he was paid at any previous period for his service. It is very popular, of course, to suggest that all men in the Civil Service with salaries of over £500 should be cut ruthlessly, but I think it is an admitted fact that any member of the Civil Service earning over £500 is performing duties which would command a much higher salary in any commercial service.

The policy of sweating civil servants can be pursued to an extent that will result in very considerable disadvantage to the State. Any State that has a mediocre or an inefficient Civil Service has to labour under tremendous disadvantages, particularly in these days when States are entering more and more on semi-commercial undertakings. Low salaries make for corruption and disloyalty and keep out of the service the best brains that would otherwise be available. It must be remembered that another class who are favourite targets for vote-catching speakers are the national teachers. They had to suffer a very heavy reduction in 1924 and have been bearing that during all the years since. In view of all those facts, I hope that the Minister is not going to allow himself to be stampeded, for the sake of meeting a comparatively small deficit, into taking action that would involve very grave injustice on any section of the community, while at the same time it would make no serious contribution to the national finance.

We are suffering, as I stated earlier, from many of the effects which are paralysing other countries, but at the same time I think we can say we have escaped the typhoon in a way that few other countries have. We should simply cut our coat according to our cloth, and not take steps which seem popular but which in the long run would work injustice and be the greatest possible disservice to the State.

Mr. Jameson

Senator O'Farrell has spoken at very considerable length. His speech, I think, was more in the nature of putting up a notice to non-trespassers than an attempt to deal with the Bill before the House. I do not see anything in the Bill with reference to the cutting down of salaries. Senator Colonel Moore has held out an El Dorado in front of us. I presume, if the Senator occupied the seat of the Minister for Finance and announced to the Seanad that in future we were to have no more taxes, income-tax or other taxes, that we would all applaud him very much. Whether we are going to have such a state of things I do not know, but at any rate I do not think it arises on the Bill before us. I think everyone who has been watching what has been going on in the world and who has dividends of any sort coming in to him—it is from these that a good deal of the revenues of the State are derived— must have come to the conclusion that the State is not going to get this year the amount of revenue that was estimated in the Budget introduced last April. It is from that source that the State gets most of its revenue, especially as regards income tax.

Many other things have occurred since April last to upset the calculations that the Minister made when preparing his Budget in April. Those who have been watching what has been going on on the other side of the water as well as what they know from their own personal experience, both as regards their income and the progress of their business, must be aware that there is a great deal less money being earned in and paid into this country than there was during last year. Therefore, I think no Senator can be astonished at the introduction of this Supplementary Budget. The Minister expects that under it he will realise about half a million in revenue.

I think that in introducing this Supplementary Budget the Minister has done a very wise thing, a thing that financial people will approve of. The Minister, instead of increasing taxation under this Bill, could quite easily have borrowed money. Until the end of the financial year, when he would be faced with a large deficiency, he could have carried on those borrowings, but the result of that would be that we would be in a very much worse position next year than we will be as a result of the introduction of this measure. That is what the Labour Party in Great Britain did for two years or more until they finally brought Great Britain to the verge of bankruptcy. Luckily our Government did not do that.

Mr. Johnson

Is this an attack on Philip Snowden?

Mr. Jameson

No. That is what brought England to her present position: that the Government there did not recognise the deficiencies that had arisen, that they did not take steps to meet them, and did not produce a balanced Budget. We have not followed the same road, I am glad to say. When it became evident that a Supplementary Budget was necessary here, I think it was a wise thing on the part of our Government to introduce it. Now that we have it before us there are a few things that occur to some of us, especially those who are connected with institutions that have the handling of the machinery of what is in this Bill. I have now got before me the rules for the collection of income tax for the year 1931-32, published by the Inland Revenue authorities in Great Britain last October. Regulations are laid down there for everybody who has to cash dividend warrants, with instructions for the managers and the secretaries of big business. The trouble is that such a document cannot be published here until we have passed this Bill. We do not know what sort of regulations are going to be made by the Inland Revenue authorities here for the collection of the tax with which this Bill deals. If we had those regulations we would be able to criticise them and probably to clear away a great many difficulties. The present position is very much like as if the Rules of Court which we heard so much about were brought in by an outside authority, and that we had no opportunity of considering them: that they were suddenly adopted without our having a word to say about them. We will not have a word to say about the production of this document after you pass the Bill. It is only because of the knowledge that these Inland Revenue authorities are human beings and considerate people who will probably try to make the document and the conditions of it as reasonable as possible, that we expect the thing to work properly. I would like to ask the Minister, and I think it would be only fair for him to answer: Can we in any way know now whether the document that is going to be issued by the Free State Inland Revenue authorities will contain the same sort of conditions and the same liabilities to companies, bankers and others that are contained in this Inland Revenue document? If that were so, I believe I am right in thinking that these conditions can be carried out. This, of course, must cause a great deal of inconvenience to a great many people who are getting dividend warrants paid. There will be a very considerable balance that cannot be cashed across the counter. In future, a great deal of examination and all sorts of things will have to occur, and the public will have to put up with it no matter what the regulations are. I have no doubt, however, that a Government that depends on votes will be very careful. They will not annoy the public any more than they can possibly help. Bankers who have to cash these documents also depend upon the public. So far as the two authorities go, I believe so far as it is possible the interests of the public will be taken care of. I see that half of the things that I am now talking of are implied in the Act. If you look at Section 4, you will see this:

"...any deficiency in the amount deducted in respect of income tax for the year beginning on the 6th day of April, 1931, from a payment made before or within ten days after the passing of this Act shall, if such deficiency arises from the change made by this Act in the rate of such tax, be made good so far as possible by increasing the deduction required or authorised by law to be made from the next and (so far as necessary) any subsequent payment made after the passing of this Act and before the expiration of one year and ten days from such passing."

Candidly, when I began to examine that and what it meant, not being a practical banker and a payer of dividend warrants across the counter, I could not know how it was going to act. These conditions can only be complied with and carried out by a document issued by the Inland Revenue authorities to all those who are connected with the collection of these taxes, and that is the document that I would like to hear the Minister tell us about. If we had some authority to say that our Free State conditions are not going to be worse than those in the document I have referred to, we would be in a fairly satisfactory position.

I doubt if there is anybody at the present moment who knows ahead what difficulties will arise in dealing with some of these questions. We will discover them as time goes on. When these things arise I hold that the Revenue authorities should be ready to consult with those who are finding these difficulties. Let them consult and establish conditions that will get over these things. If we had those two assurances, that these friendly conferences would be held, and that the opinions of those who find difficulties in actual practice would be considered, and also an assurance that our conditions will not be worse than those in this document, probably we would be able to get over the practical difficulties of carrying out this Act.

I might just as an illustration give the House some idea of the little difficulties that would occur. As regards the Register of British and India Government Stocks, it is understood that in cases of fresh purchases tax will be deducted at 3/6 in the £, whereas an adjusted tax is deducted where the Stock has remained constant. This departs from the British practice where the adjusted tax is to be charged in all cases, and will throw a large amount of work on the Transfer Office as it will be necessary to differentiate between the amounts carrying the different rates of tax which will complicate the preparation of the dividend warrants, and make necessary the printing of special warrants. Arrangements are sufficiently complicated at present as the Stock has to be differentiated for income tax purposes between—(1) Stock (subject to Free State tax only); (2) Stock (subject to British and Free State tax); (3) Stock (exempt from tax), and now another differentiation has to be introduced, and owing to the Irish Free State not following the British method it will happen that on certain warrants the Irish tax and British tax charged will be arrived at by different methods. Where the amount of Stock in an account has changed a special calculation will have to be made in every case, i.e., if a customer had £300 Stock and now has £100 he will suffer tax at 3/6 in the £ on £100 and 6d. in the £ on £300 for each previous payment undercharged. It is understood that in England the banks are not asked to make such calculations and the tax is charged in all cases at the adjusted rates.

I am merely submitting that to show the House some of the difficulties inseparable from putting up a supplementary budget of this sort. There is, of course, one thing to remember: this can only last for a little over a year. But I would ask the Minister to give us an assurance that this kind of difficulty during this year for the public and all of us who have to handle these documents and to carry out regulations will be as sympathetically considered as possible. Beyond that, it is a wise thing for the Government to put on this thing and not to accumulate debts to smother us next year. It is possible to argue that it had better be left over and that it would be time enough to meet the bill when it comes in. That, I think, is totally wrong. It is far better to meet our debts when they are known, and unfortunately the Ministry know them too well now. I believe it is a good and a wise thing to bring in this Supplementary Budget, and I hope that in the working of it the Government and those who have the handling of it will so arrange matters that the public will meet with as little trouble as possible in the circumstances.

Mr. Crosbie

This will probably be my swan song in your Assembly. I would like to have to say it as quickly as I can, but I am afraid I am bound to be out of harmony with a good many here, because I have an extraordinarily bad ear for music. Incidentally, I would like just to say one or two things in reference to what Senator Moore said a moment ago. Let me say straight that I am entirely in sympathy with his preachings and his principles. I always held that the ancient Pistol was quite right—"Base is the slave that pays"—but I am afraid in practice we have all got to pay our debts, and this debt that Senator Moore so airily dismisses, we have got to remember, was undertaken by our representatives and that, therefore, we are honourably bound to pay it. I would not for a moment agree with Senator Moore that our Government made a bad bargain in that transaction.

I want to congratulate two interests, first of all, the people of the Free State and, secondly, the Minister for Finance. The shortage is 5 per cent., so far as I can calculate it, on our revenue. Is there any other country in the world to-day that can come within measurable distance of that? Of course you know that fools rush in where angels fear to tread. I do not claim to know much about finance, but it seems to me that the fetish for balancing the Budget has not always turned out in practice to be correct. You remember that last April in a neighbouring country they balanced their Budget; in fact they had £30,000,000, as far as I can make out, over, and later on they found they had to summon Parliament for a supplementary Budget. They arranged that by the 6th next April the English Budget would be balanced. But what happened? The £ sank in the most amazing way. I think now it is only worth in the currency of the world about 15/- as against 20/-. Therefore, balancing the Budget is not always successful for a country. What really happened it seems to me, without knowing much about it, was that the export trade of England did not come within measurable distance of her import trade, and that, therefore, gold had to be found to meet the balance, with the result that the English Treasury was practically denuded of gold. That is really what I consider caused the tremendous depreciation in the English currency.

I have listened to with great attention and I have read with great interest a lot of speeches and articles dealing with the present situation in Ireland. If I happened to be in the position of an exile from Erin who had only a chance of learning what was happening in Ireland through reading the newspapers, upon my honour, I believe I would come to the conclusion that if we were not in the position that Ireland was in '47 we were rapidly approaching it. Now, is not that, to our knowledge, an absurdity? I am painfully aware of the fact that at least in the City of Cork there is a tremendous dearth of employment. I have had over and over again able-bodied men, able and anxious to work for anything, coming to me, and I have had to give them the invariable answer that I can see no prospect of their being found employment. But, on the other hand, there is another side to the picture, that every Sunday in Cork there are tens of thousands of people flocking to football and hurling matches, and if the money that was legitimately spent in these amusements was invested in potations my belief is that the Cork accent would be suppressed, for the reason that we would be all speechlessly drunk. The Cork cinemas book 25,000 seats a week, and this is supposed to be a poverty-stricken country. I do not know whether Senator Moore goes through the country. I do a lot of motoring through Munster, and all I can say is that it is a pleasure to go through it. I see on every side new houses arising. I see well-clad people, and I maintain that the Irish peasants are the most expensively dressed people in the world, because, through a misguided interest in the workingman, we encourage him to buy a cheap shoddy which gives a very uneconomic wear. You see all the girls turned out in extraordinarily comfortable and good wear, so much so that I sincerely regret that I am not in the drapery trade in Ireland, because I believe that they must be making fabulous fortunes. Our people look healthy and happy, and they are well clad. If they discovered a beggar in Munster I believe they would capture him and send him up as a specimen of a race that is practically extinct and put him in a case next door as an exhibit.

While that is all going on, is it not a very wrong thing to represent to the public that we are not well-off? I attribute all that prosperity—and I maintain that it is prosperity, though we have temporary setbacks—to the fact that we do balance our trade, that we are really within measurable distance, if we do not actually cover it, of finding the money for all we have to buy from outside. It seems to me that we will have an extremely prosperous year in the coming year. My only objection to these taxes is that I believe long before the financial year is up the deficit that now exists will have been wiped out. My reason for saying that is this: Emigration from this country has ceased. We have an addition of from 10,000 to 15,000 of a rural population to what we might reasonably be expected to have. Does anyone here believe that any one of these people will go hungry? I personally do not.

I believe that it is up to all of us to urge on the rural community to put all their energies into improving the land which can be improved, because though I say that the country looks prosperous, we all know that there is enormous room for development and extension in our land. I believe that if we can only induce our people and put a little heart and hope into them and make them cultivate that land. we would find that we would very quickly wipe out any deficiency that is in our balance; that we would make the people still more comfortable than they are. We want a little bit of hope in this country. After all, we must remember that the £ sterling was below par and we did not starve. We must remember also that England will have to pay roughly 25 per cent. more for all agricultural produce obtained from outside. England will have to pay 25 per cent. more for its potatoes next year, as well as for its wheat. It will have to pay 25 per cent. more for everything that it imports in the eating line that it does not produce itself. I believe, therefore, that it would be much better for us to try and put a little heart into the country. I would recommend the Senator to learn off a little couplet which was sung, I believe, by a knave to a fool, and which runs something like this:

"Jog on, jog on the footpath way,

And merrily hent the stile-a;

A merry heart goes all the day;

Your sad tires in a mile-a."

There is a tremendous lot of sound philosophy and true patriotism in that.

Mr. Johnson

If I may presume, on behalf of all the members of the Seanad, I think we may congratulate ourselves upon the most recent addition to our numbers. The speech of Senator Crosbie has been delightful, and no doubt contains a good deal of sound advice. But I wonder whether it is more dangerous to be too optimistic than to be pessimistic. It seemed to me that the Senator has been over-optimistic in his suggestion that there is no poverty and that there is practically an assurance that next year is going to be an extremely prosperous year, and that there is no risk of anybody going hungry. I hope the Minister, if he can, will confirm the confidence that the Senator has given expression to. I have no doubt that the Minister is in a better position than anybody else to confirm or refute the optimistic statement of the Senator. I would hope that if it can be done it will be done here this afternoon.

The Minister, in introducing this Bill, naturally and rightly touched upon other subjects than the Bill itself. I therefore think that it is inevitable that we must also touch on the surrounding circumstances. It might be right even to raise a question as to whether the method proposed of raising taxation—partly by an increased income tax and partly by an increased tax on petrol—is the right apportionment. Speaking generally, it might be said that the same class of people who will pay the increased petrol tax also will pay the increased income tax. I suppose it would be right for the spokesmen of that particular class of the community to express their view, but I am inclined to think that the tax would have been better raised wholly from income tax than to have any portion raised on petrol. If it is true, as I think it is, that a fairly large proportion of the petrol consumption is for industrial transport, probably the petrol tax will have a detrimental effect upon industry of that character. However, that can be left to others to speak on.

I would like the Minister to give us a little more information as to his remark that the bulk of the contemplated shortage arises out of a decline in the beer duty, and that that is not a real deficit. As he said in the Dáil, it is an artificial loss of revenue. We have been assured it is not due to a decline in the consumption of beer in this country, that it is really a shortage due to in effect, I think, book-keeping arrangements, a change in the method of conducting the business of the brewer. Inasmuch as the duty that enters into the revenue returns on beer is ultimately derived from the consumers and that the consumption has not declined and there has been no change in the rate, one can only say that it is not a real deficit at all, but that it is a shortage this year which will be made up next year. I can only take that meaning out of what the Minister himself has said. The shortage for the present year it is estimated in respect of beer duty is £580,000 out of a total of £900,000, while there has been no decline in consumption.

Mr. Blythe

I did not say there would be no decline in consumption.

Mr. Johnson

"That decline is not at all due to a falling consumption here. In fact, the greater part of it is due to other factors, to trade factors or things that have caused a reduction in the stocks of beers in the hands of the brewers." I gather now that the Minister meant the decline was not wholly due to a fall in the consumption here.

Mr. Blythe

That is so.

Mr. Johnson

I correct that statement. In any case, it is only partially due to a fall in consumption here. If I am right in my deduction from his statement that such deficit as there has been this year in the actual money to be returned will automatically be made up next year, then the £900,000, which is expected to be the deficit for the current year, is not a real deficit at all. A question, of course, that I am sure is in the mind of the Minister, and ought necessarily to be in the minds of Senators, is the effect of this upon next year, because, if I understand the matter right, the fall in the revenue from income tax which Senator Jameson has referred to will mainly be based upon the incomes for the preceding year and not for this year. If one gathers the truth from one's reading, this year's income from over-seas investments will show a heavier decline and the effect upon income tax revenue in respect of this will not appear until next year.

I would like to feel that the assurances given by Senator Crosbie are well founded, but I look at certain ominous signs. We have had a decline of 22 per cent. in the values of agricultural produce exported for the first nine months of this year compared with last year. While there has been something approaching a concurrent decline in the value of imports, I do not think that makes up to the agriculturist for his loss of income. What strikes me as even more ominous is that the import of fertilisers for the first nine months of this year has declined by 41,000 tons—from 179,000 to 138,000. I think that is an indication of real danger to agricultural prosperity. There is another indication which the Senator probably took no notice of, and that is that since June of this year there was an increase of 22 per cent. in the number of registered unemployed.

I follow Senator O'Farrell in expressing the hope that when dealing with the question of retrenchment and spreading sacrifices the Ministry are not going to take steps which will still further increase the number of unemployed. Inasmuch as a large proportion of the purchasing power of the masses is expended on the employment of people within this country, if you appreciably reduce the purchasing power of those masses—however they may receive their incomes—you will inevitably add to the number of unemployed and throw upon the rest of the community a heavier burden for the maintenance of those unemployed, because, however they may be maintained, they must be maintained by the remaining section of the community, and in the case of unemployment it is mainly maintenance by other people who are poor.

If we are to look forward to another year of greater depression from the agriculturist's point of view and a decline in the number of productively employed people, surely we are not going to be satisfied to deal with that prospect by way of revenue adjustments, increases of taxation, and the curtailment of expenditure? Attention surely ought to be directed to some method of increasing the productive output of this country? The President, speaking in Waterford last week, said one thing, at any rate, that is worth noting. He said that what matters in the long run is the amount of food or clothing or furniture that each man produces, and the quantity of other commodities which he requires that he can get in exchange for his own products. I think he was right in decrying a great deal of the talk and writing about currency and gold and the like. I think that the fault in paying attention to currency and gold and the like lies as much at the door of the President and the Minister for Finance and others who speak in that school, and I think they would be well advised to direct attention to the possibility of bringing the people who produce food, furniture and clothing into contact one with the other within this country, because unless we are able by some means, whatever that means may be, to increase the return in commodities to the agriculturist and to provide the producers of manufactured commodities with the food that the agriculturist produces, we are not going to solve any of the problems, and we ought not to be dependent, as we are, upon the vagaries and accidents of international finance.

The questions that are uppermost in the minds of people in the world to-day are undoubtedly very serious, but we are not in the position, as Senator O'Farrell said, of the big industrial countries that have collapsed by virtue of the fall in the purchasing power of the agriculturist. It is possible within this country to create something of a new economy, whereby the agriculturist can be brought into direct contact with the industrialist and vice versa, and there can be an exchange of commodities produced by one or the other which ought not to be subject to the fluctuations which depend upon things outside the control of this country. Unless we are prepared to direct our attention to the solution of the problem internally, I am afraid the prospect is not going to be as hopeful as that which Senator Crosbie would ask us to believe.

Mr. Guinness

We have listened to rather depressing statements arising out of this proposal to increase income tax—never a very popular subject. If I may, I would like to submit to the House some views of a more hopeful and a more joyful character. I was present this morning for about an hour at what appeared to me to be an interesting and at the same time an extremely popular meeting. I allude to the draw which took place in connection with the Sweepstake. Senators may not think it relevant to the present discussion, but I think when I have said what I have to say it will be found quite relevant. I was informed this morning that the amount of money at stake was a very small amount short of three millions sterling, representing some six million ten shilling tickets. It occurred to me as I watched the draw being carried out that the State here had derived little or no benefit from the large amount of money that had come to the country and which will be distributed, some here and some all over the world. It struck me—I should think it has probably occurred to the Minister already —that a tax of a very small amount on each ticket would not injure anybody particularly and would be beneficial to a Minister who has certain difficulties, such as the Minister has mentioned to us, in balancing his Budget.

If there were a tax of five per cent., sixpence on each ticket, and I do not think anybody would grumble a great deal about such a tax, it would mean a revenue of £150,000. With a tax of 1s. on each ticket there would be a revenue of £300,000. I should imagine the Minister would not reject such a sum, and the collection of a revenue of that description would be quite simple. There may be objections. I cannot tell you what they are. I can imagine that this matter has been brought to the notice of the Minister already and has been considered by him. It occurred to me to-day, and I would like to know if the Minister considers it would be worth while following up, whether there are any objections to such a tax and, if so, what are they.

Mr. Blythe

I do not intend to traverse the misrepresentations and misstatements of Senator Colonel Moore. I think when a country defaults it is very common for it to default on its external liabilities. We have not reached the stage where we need default, and I do not see any danger of our reaching the stage where we will have to default. Consequently I do not propose to discuss the question of the particular external liabilities to which the Senator directed his attention. Senator Connolly seemed to me to argue that we should increase taxation still further, and that we should increase social services. Senator O'Farrell argued that we should be careful about the reduction of social services. The view of the Government on that matter is that in the world as it is at the moment, and as it is likely to be, the tendency must be for social services to increase. New demands are arising constantly, and to a greater or lesser extent those new demands have to be met. What we have to bear in mind in dealing with social services is that social services are paid for out of production. Sometimes a social service may increase directly and immediately the efficiency and the volume of production. When that happens all the human and economic arguments are in favour of the social service. In other cases, while the social service may increase the happiness and the welfare of the people generally, its effect on production may be negligible or it may be indirect and very slow to manifest itself.

When we are faced with that aspect of social services we have to weigh up whether more good would be done by undertaking the service and burdening industry and production or whether more good will be done by allowing industry and production to continue and extend. It would be quite possible to undertake some very desirable social services and to have as a result of the increase in social services an increase in unemployment, to have bankruptcies, to have the lot of the agricultural community made still more difficult in difficult times. In dealing with all social services, what we have to do is to weigh up the two sides of the problem, bearing in mind always that social services, be they never so desirable, are something that have to be paid out of the fruits of industry, and unless they are of a kind that directly increase efficiency they constitute a burden, and they may in remedying some evils create new evils.

We are anxious, when a financial difficulty like this arises, to cause the minimum of hardship in any direction to the taxpayer, and to cause the minimum of hardship to those who will suffer by any scheme of retrenchment. I do not think I need follow Senator O'Farrell in the remarks he made with regard to particular retrenchments that are talked about. In regard to retrenchment and economy, very often a great deal of prejudice comes into play, and there are certain people who suggest certain cuts without very much regard for the merits of the case or without very much examination of the merits of the case. They make the suggestion simply because they think a certain amount of political propaganda will result or because they may have an objection to particular individuals, groups of individuals or services. It is recognised that in certain directions sacrifices have already been made, and whatever may be necessary in future we will have to look at the whole position and take into account any sacrifices that were made or called for in the past when we are trying to get the money that is necessary for the purpose of putting our Budgetary position right.

Senator Jameson referred to the practical difficulties that the increase in the rate of income tax in the middle of the year gives rise to. Within a day or so after the passage of the Bill the Revenue Commissioners will issue a circular to bankers and others describing what is to be done towards the collection of the increased amount. The circular will be roughly on the lines of the British circular. There are certain respects in which the law differs here from the law in Great Britain, and, of course, there will have to be certain differences in that connection. Roughly speaking, the substance of the circular will be the same. Of course there will be many classes of dividends, as the Senator will remember, very important classes, that will not be affected; for instance, British dividends where the tax will not be deducted and of which the bankers will give particulars.

Where tax has to be deducted the Revenue authorities will be glad at any time to meet and hear the views of representatives of the banks in regard to the machinery that may be adopted, and in order to facilitate the work so far as may be possible. The Senator can rely that from the revenue side everything that can be done will be done to enable the work to go on smoothly with the minimum of inconvenience to the taxpayer and the minimum of trouble to the bankers and others charged with the recovery of this extra taxation.

Senator Johnson asked about the shortage in the beer duty. I have previously explained that a duty on beer is paid two months after the beer is brewed. If brewers for any reason increase their stocks of beer that involves extra brewing beyond what is necessary to meet the week to week or month to month consumption, and if in any particular year brewers' stocks have been increased, that means that more beer was brewed than was consumed, and it means that revenue comes into the Exchequer in excess of the revenue that would correspond to the consumption in the year. If, on the other hand, for any particular reason, brewers decreased their stocks, then it means that there is less beer being brewed in that year than is being consumed, and consequently less revenue comes into the Exchequer. We have no means of controlling the fluctuation of brewers' stocks. That fluctuation may be due to a great variety of circumstances. One thing that naturally will cause a reduction in stocks will be the increase in the duty in England, because that means a decline in English consumption. In fact a pretty sharp decline has been admitted. The recent figures available in the Press would indicate that the consumption of beer has fallen even more than was anticipated. A brewer might or might not reduce stocks in consequence of that decline in consumption in England. The tendency would be to reduce, because a less amount would have to be held in hand for the trade.

There are many other factors that come in from time to time that cause brewers to reduce or increase stocks, factors about which they need not inform us, and which we can only guess at. If there is a loss in one particular year it does not follow that it will be made up next year. If a stock is reduced to a particular figure, that figure may be retained for one, two or three years. There is a very definite limit to the loss that can be sustained by a reduction in stocks, because there is a limit below which brewers cannot go. It does not follow that the amount lost this year will be gained next year, just as if there was an excess revenue this year, it does not follow that there will be a loss next year. There was an occasion on which we gained substantially, due to an increase in stocks, and these increased stocks remained for a time.

While the substantial loss of revenue anticipated this year is due to a factor other than a decline in the consumption of beer, it does not follow that that will be made good in the year beginning 31st of March next. Since the setting up of the Free State there has been a steady decline in the consumption of beer and spirits. The primary factor has been the very high rate of duty, the high price of the article. Two other factors have operated, but these other factors have been enabled to operate strongly by reason of the high price. Senator Crosbie has referred to the amount spent on cinemas in Cork. I am quite satisfied that if we had no cinemas a good deal of the money now being spent on them would go to swell the revenue on beer duty. It has been said that the introduction of the motor bicycle has left lots of young men with no money to spend on alcoholic liquor, as they would have spent it in other days. A number of other factors have come into operation. If the beer duty were at prewar rates some of these things would not become as fashionable, perhaps. There has been a change in the habits of the people which the introduction of these things tended to bring about, but that change has been magnified by the very high duty on beer and spirits.

I do not think there is any reason to regret the change in the habits of the people. The only thing that may be said about it is that at times it seemed as if the change was coming so rapidly that it might cause very great hardship and dislocation to a great section of the business people of the country. We had to bear in mind that here were legitimate businesses in which capital had been invested and through which people earned a livelihood. If a change came too suddenly the hardship might be very great indeed and there might be such dislocation as would cause quite serious economic effects. At times it seemed as if the change were likely to be catastrophic. Generally, however, we felt that there were no great grounds for regretting the effects of this high taxation.

I would not venture to prophesy as to the future, either the immediate future or the economic events of the next year or two. There are far too many unknown factors to make it safe or wise for anybody to prophesy. Most of the people who are really expert, so far as one can read about them, are little inclined to be dogmatic about the future. We have to take the position as it stands, and the position as we can see it for a certain short period ahead and we have to be in a position to meet our liabilities. If conditions were to get worse, then new steps might have to be taken. If they get better, then things will be easier and burdens might be reduced. I do not think we need prepare at this moment for things getting worse and I do not think that we ought depend on their getting better. I think we should take this year as we find it now, bearing in mind that there is no certainty of things getting better when we see that in certain respects the revenue for next year will be worse because, as a matter of fact, this year's dividends are down, and next year's collection of income tax will be based on the dividends of the present year.

Whatever may happen about other items of national revenue, the yield of income tax is certain to be down in the year beginning on the 31st of March next. If there were some change now for the better other items of revenue might go up, but we cannot depend on that and we must adjust our scheme of taxation to the needs of the moment as we see them. It is impossible for us to avoid the effects of outside currents and outside events. If we wanted to adopt a policy based on that of Japan or based on the policy of Tibet, we could not do it suddenly; we could not do it without great suffering and without an upheaval that would be absolutely revolutionary. People here would need to become accustomed to very much more severe conditions than exist and would need, in fact, an entirely different system of Government if they were to be, for instance, stopped from drinking tea, if they were to be stopped from eating imported flour or if they were to be stopped from using motor cars or anything that would involve the employment of petrol or rubber. It is not practical politics. It is not to be contemplated that we could shut ourselves off and that we could avoid the effects of these changes outside. We have a certain system of agricultural production here that depends entirely for its prosperity on an external market. The prices to be obtained in that external market depend on factors which we cannot control. We cannot escape the effects of them. We cannot adjust things in any short length of time so that our agriculture will not depend for its prosperity on that external market. We can do various things to alleviate the effects of these world currents and changes, but we cannot escape them, and any discussion on the matter that is on that basis seems to me to be entirely fruitless and in the nature of wasting time.

We have got to do what we can to increase employment here and to alleviate hardships. We have got to adjust our national expenditure as rapidly as we can and to such an extent as we can accomplish it, to any changes in the general yield of taxation. There is no use in saying that anybody here is to blame, because we are experiencing the same sort of difficulties that are being experienced outside. It is just as fruitless, too, to suggest that we can escape our difficulties by some repudiation of our liabilities. That seems to be the popular cry now, at any rate of the Fianna Fáil Party, that instead of carrying out retrenchments and instead of imposing taxes that we should repudiate our liabilities. I am perfectly satisfied that not only is there no case, legal or moral, for the repudiation of these liabilities, but also that there would be no possibility of effectively repudiating them. There would be no means of escaping the putting in of the bailiff in what particular form that might be done. The liabilities that we have to meet outside—the main part of them, the land annuities — were deliberately undertaken by the farmers of the country or by their fathers. There is no moral or legal obligation upon the British taxpayer or on the British Exchequer in regard to them, and anybody who suggests that we are going to throw a burden like that, in the present condition of affairs in Great Britain, on the British taxpayer and that he is meekly going to put up his hands—if he is sincere in saying that he is a fool, but generally he is only a political rogue.

Mr. Comyn

Will the Minister lay all the papers before the House?

Cathaoirleach

The debate is closed now, Senator, and we can have no more speeches.

Mr. Comyn

The Minister selected a nice time to say that.

Question put and declared carried.