I should like to say that I am sure we all sympathise with Senator Robinson in having to act the part of a gramophone—"His Master's Voice" kind of thing—but it has been done by other Parties and we do not blame him one little bit and particularly in this case. I am glad that he has given me an opportunity of pointing out to the Minister that he either totally evaded or misunderstood the case I put with regard to profits which were put back into a business. I should like to ask whether if an individual invests money in a speculative investment and is happy enough to make capital profit, he has to pay any income tax? The Minister, I think, will answer that he does not pay any income tax whatever on the capital appreciation which he may achieve. If he happens to prefer to put the money back for the purpose of extending the industry, instead of paying it to himself or his partners which he can do at the present moment, I hold that he is helping the country as a whole. If he takes the profits and puts them into his own pocket and then invests them in some other investment, possibly outside the country, he is giving the minimum amount of benefit. If, on the other hand, he puts the money back into new buildings, machinery or definite improvements he may ultimately gain in the sense that he will get further profits on which he will pay tax. On any ultimate gain he will have he will pay his tax and there is a very great distinction between money that is put back, with the risk involved— and increasing an industry—and money paid out to an individual. The Minister can see no difference according to his own speech. Whether it is right or not to make the distinction is a matter which he and the Government will have to decide but, when he says there is no difference, I must join issue with him. I think there is a very great difference and a difference which the State might very well take into consideration. I do not suggest that the whole amount of the profits should be allowed free of tax even if they were all put back into the business; but I say that it is in the State interest, and I am pleading for something that would make it easier to put them back into the business for purposes of extension which I hold is what we want. I am not speaking now of my own case at all. I know of many other cases and I have been approached by a number of manufacturers on the matter. I see that the Federation of Irish Industries raised this matter, or a kindred matter, at their conference the other day—I think it was yesterday—and I know that the case which I am putting is not an individual case but that it is a view held by a great many people. I am quite certain that the State would gain by giving some exemption on money so put back and that to hinder the same is a great mistake.
Committee Stage.
Some years ago I made a proposition, more or less informally, on the same lines and was told by a person well informed on these matters that it was a dangerous idea to get abroad and was administratively impracticable and generally unsound. It may be administratively impracticable, but I am satisfied that it is sound if one starts off with the idea which, I think, the Government on the whole supports, that individual wealth should be considered as trust moneys—that the individual wealthy man, who has a large sum of money at his disposal, if he disposes of it in a way which is advantageous to the community and not on his personal fancies or upkeep or maintenance or luxuries, and actually administers his wealth for public benefit, uses it in effect as a public fund. It seems to me undesirable theoretically and in principle to treat the income of a man, who spends that income on the fulfilment of his own desires of a personal nature, in the same way as you treat the income of a man who uses his income as a trust and spends it for what are recognised to be public benefits. It is on that ground that I think there is something to be said in favour of the proposition which Senator Douglas has put forward.
As to the impracticability, that is another matter. It may be that it would open the way to evasions by those people who do not treat their funds as trust funds. On that ground the proposition may be quite unsound, but I do not think it should be turned down on the grounds which the Minister himself put forward, as though the income of the taxpayer were equal, no matter what he did with it, for tax purposes and because the money re-spent in the industry is still the property of the individual. While that is quite true, I think it is an undesirable way of looking at the problem of the better utilisation of the individual's wealth. I am afraid that the Minister, if he examines this matter closely, will find that when he puts forward that objection he is adopting the very individualistic outlook and the Victorian view of finance and the responsibility of personal wealth. I think there is more to be said for this proposition than the Minister gives credit for; but if he is not prepared to concede anything on those lines I submit that the alternative is to make a discrimination on all incomes that are drawn from Irish industries as against incomes which are drawn from investments in British or other industries external to the country.
I am not going to proceed on the same item. This section deals with all the money——
Cathaoirleach
All the moneys for the services of this year.
Yes. Perhaps the Minister did not understand me, but I want to put my point to him again. My point was in connection with the money in the Local Loans and my suggestion was that as the money was collected or raised in taxation it should be issued free to the local authorities in order to enable them to build these houses. I cannot see how the grant, which he says is a consideration to be taken into account, would be made up in the future by the Exchequer as it is received, when these repayments are made by the county councils which get this money, and that, in fact, it would be creating a property for the Minister for Finance in the future; whereas a distinction should be drawn clearly between this money loaned from taxation as against money issued from loan. I do not think the Minister understands me, perhaps, but I think that the money should not be charged for at the rate of 6½ per cent. for an object, which, after all, is a very good social object—the building of houses for the poor people of the country and particularly for the agricultural labouring people.
The Minister also made a remark about the Guarantee Fund. As I understand it, next half year the land annuities will be collectible only as to 50 per cent. In what way will that be brought into operation? Will the Bill about which the Minister speaks be passed before the next gale day or what will take place?
I want to point out to the Minister that, while we have been talking so much about the income tax, there is one disability from which businesses in the Free State suffer very much as compared with businesses on the other side of the water, and that is the Corporation Profits Tax. That tax was put on in Great Britain for a war purpose and when we found it carried on here in times of peace I went to the late Minister for Finance and I got out of him a declaration that as soon as possible financially he would take off that tax because, as he admitted, it was a very serious charge against businesses. Our present Government, however, have added strokes to it instead of taking it off, and instead of it being 5 per cent., it is now 7½ per cent. This is over and above income tax and it is a very distinct crippling handicap on Irish businesses competing with businesses across the water. On Senator Johnson's own showing, it comes in even if you want to put money back into your business. First of all, you have got to pay the same income tax as the people across the water and then you are charged 7½ per cent. in addition. The late Minister for Finance practically justified it by saying that as it was only on a few firms which paid such large amounts he could not do without the money. I think that is what he said. But now the profits of the businesses which pay this have been reduced and the position now is that much smaller businesses pay this corporation profits tax than used to pay it. As I have not had the pleasure of addressing the present Minister on the matter, I suggest that if he is looking into the handicap on Irish industries he should certainly look into this matter of having to pay 7½ per cent. more than anybody across the water has to pay. I can assure the Minister that in a competitive business such as mine it is not a matter to be sneered at and that it would be a very good thing if the Minister could solve this problem.
To deal with the point raised by Senator Wilson I think that the misapprehension which lies under his whole argument is that the whole of the money in the Local Loans Fund is naturally going to be provided out of taxation. I think that, in view of the fact that we are providing £1,600,000 more for local loans than last year, it is an appalling assumption on the part of Senator Wilson. Certainly I do not think that we would want to raise that out of taxation in any one year. The theory I advanced on it last year was that a certain amount should be provided every year as a grant for local loans for the purpose of enabling them to carry out useful works and at comparatively low rates of interest. At the same time, I also felt that if we were providing the authorities with assistance in any other way—that, in fixing the rates of interest, we should be entitled to take the additional forms of assistance into consideration and adjust our rates accordingly. Apart from the very generous increase in the housing grants we have also given very substantial grants for public health works. For that reason, I felt that on the balance of the cost of these works which, in many cases, I think, was something about one-third or one-fourth of the whole, the authorities could pay more easily the current rate of interest, or interest at a rate which would be related to the rate at which the Government itself could borrow. I think that we shall have to maintain that until the position becomes more normal. When we reach that condition of affairs, then I think we will be able to reconsider the whole question of the rate of interest and possibly to reduce it even below what would represent the current rate at which money could be borrowed, so as to give the local authorities that additional inducement to carry on work. But during the present stage of transition, as I might call it, which is naturally owing to the difference which has arisen between ourselves and our neighbours on the other side of the water, the whole general financial scheme of the Government must be of a somewhat tentative nature. I would not like to commit myself now to fixing a rate of interest which would represent what would be our final word on that matter.
With regard to the Guarantee Fund I may say that the last date on which that matter would arise for consideration would be about the 18th February next; so, we hope that the new Land Bill, which would give effect to the Government's pledge, would be law long before that date.
I am very well aware of the grievous way—and I do not wish to minimise it in any way—in which the Corporation Profits Tax does affect a rather large number of our joint stock undertakings, and in fact some undertakings which are not of that character. At the same time I have to plead after all, as a final and incontrovertible reason for a Minister for Finance for imposing extra taxation, that under present circumstances it is unavoidable. I realise that it would be desirable if some arrangement or some reconsideration of the whole position of the Corporation Profits Tax could be undertaken, and when times are better I promise that that will be one of the things I shall consider very carefully.