Seanad Éireann debate -
Wednesday, 24 Jul 1935

Vol. 20 No. 9

Public Business. - Finance Bill, 1935—Committee Stage.

Sections 1 and 2 agreed to.

SECTION 3.

Mr. Brown

I move recommendation No. 1:—

Section 3, sub-section (8). To insert before the sub-section a new sub-section as follows:—

(8) This section shall not apply to tenements and rateable hereditaments valued after the 31st day of December, 1922, and accordingly tax under Schedule A of the Income Tax Act, 1918, shall be assessed and charged on such tenements and rateable hereditaments as if this section had not been enacted.

The section to which this is a recommendation is one which adds one-fourth to the valuation of buildings-for the purposes of income tax under Schedule A. What the recommendation asks the House to do is to say that that sub-section cannot apply to tenements and rateable hereditaments valued after the 31st day of December, 1922. A tax of five-fourths on the valuation of buildings is very objectionable. I must admit that there is a great deal to be said for the Minister's case. The valuation of nearly all buildings in town and country are very old. In most cases they are very likely too low, and owners of properties valued too low in the old valuations are not bearing their fair share of income tax. Admitting all that, the Minister has inserted a proviso that this sub-section is not to apply to the City of Waterford. That city was valued, I understand, in 1923. I have no doubt that the exclusion of the City of Waterford has been made by the Minister because it was just and equitable. The valuations in the City of Waterford are comparatively new valuations and, for tax purposes, under Schedule A, are probably perfectly proper and right. If it is right and just for Waterford, it is right and just for the rest of the country. If the House imposes this extra one-fourth on valuations for income tax purposes it will be doing a thing that it is not justified in doing. Therefore, the recommendation suggests that the section shall not apply to tenements and hereditaments valued after December 31st, 1922, the end of the year before the revaluation of Waterford.

Mr. Johnson

I want to support the general proposition put forward by Senator Brown. I do not think a solid case can be made against his argument. Last week the Minister made some reference to the practice of the valuers, that they valued new property rather on the basis of old property which was adjacent. I doubt very much if that is the practice. I think it is not the practice. As it is merely a doubt, I cannot give any evidence in support of my contention. My general objection to this method is that there is no differentiation between new valuations and old valuations that ought to be made. Senator Brown proposes that there should be an exemption made. I feel that it is very repugnant to adopt this method of saying that five-fourths of the value is reckoned as the value. I do not think there is a precedent for that. If there is a precedent it should not be followed. If there is no precedent it should not be begun. Take the precedent and apply it to a man's income. His income is £1,000. For the purposes of income tax the Minister retains the standard rate at 4/6, but deems the income to be £1,200. That might apply all round. I do not understand the procedure; how the valuation of some property becomes double what it was, or five-fourths of what it was. I think the system introduced here is an utterly vicious one and ought not to be supported in this House. In so far as the recommendation is a departure from it, and applies a logical development of the exemption made in the City of Waterford, I support it.

Mr. MacEntee

I am not able to accept this recommendation, for the reasons I explained at great length elsewhere. Let me again get back to what we try to do under Schedule A rather imperfectly. We try to tax a man's income and, for the purpose of arriving at a quick calculation, it is assumed here that the net income derived from property is represented by a valuation made between 1853 or 1865. That would be struck upon a house or building which either was, or was assumed to be, in existence in those days. What are the real facts? The valuation does not fully represent the income he derives from the property. I do not think I could put the argument any better than Senator Johnson put it. He asked us to consider how unjust it would be, if in the case of a man enjoying a real income of £1,000, we said we were going for income tax purposes to consider that as being £1,200. What do we do in the case of a man deriving income from the ownership of property? The man's actual income may be £1,000 but, for the purpose of assessing tax, we in fact regard it as being, as in the case I dealt with at length in the Dáil, something like £300. We allow the difference between that £300 and the net income of £1,000—the actual income the man enjoys—to go scot free. To remedy that we have adopted the method proposed in this section which, we believe, will not do any injustice to the taxpayers.

I do not think it would be contended that it is not just to tax a man's real income, to assess income tax on a man's real income. I do not think there can be any injustice in that. We may compute roughly, giving the fullest possible margin for errors on the part of the State, but I feel very confident that we would not have done any great injustice to any person if, instead of making this five-fourths, we had made it three-halves. But, in order to make certain that no injustice would be done, we took 25 per cent. instead of 50 per cent., which would be, possibly, more equitable. As well as that, there is the overriding safeguard that if any man is penalised he can go and have the house revalued when the other provisions of the section will apply. So far as a man is in the enjoyment of a net income from property which is assessed at 25 per cent. more than the valuation of the property no injustice is done to him. As far as the merits of the recommendation before the House go, I am not able to accept it, because it would make the whole administration of the section impracticable. It would torpedo it entirely, and, instead of getting the additional money which we are seeking in the section, we should probably lose very considerably if before the collection began each inspector had to be furnished with information showing when revaluation took place.

Apart from that, owing to the application of the principle of relativity, all new buildings are valued in relation to the rent which a building affording similar accommodation would have been worth to be let at in the year during which the original valuation took place. It is quite easy for the Commissioner of Valuation to arrive at that, because there has been a continuous building programme going on in any town, and each antecedent building was valued by reference to a similar building in existence in that time. The chain goes back fairly continuously to the original valuation, which took place somewhere between 1852 and 1865. They are all brought down to a common level and the relativity factor has been applied in every case, so that even new buildings are considerably undervalued. The proof of that is to look how new houses are letting and what they are valued at in the City of Dublin. The usual valuation of a house worth to be let £100 per annum, the landlord paying taxes and repairs, is from £24 to £26.

Mr. Johnson

No.

Mr. MacEntee

Even £28.

Mr. Johnson

£32 or £34.

Mr. MacEntee

Even £32 and £34 and let at £100, the landlord paying rates and repairs.

Mr. Johnson

Let at £80, the land lord paying rates.

Mr. MacEntee

Even if the landlord pays rates and the cost of repairs he probably enjoys a remission of rates because it is a new house. On a house let at £100 the outgoings would not be more than £30 or £35. If we assume that it is valued at £32, nevertheless the total income derived from the house is at least twice £32. That is the most extreme case that could be put up. It will be seen that an obvious injustice is done to the general body of taxpayers owing to the fact that a man who derives a net income of at least £64 or £65 from a house let at £100 per annum is nevertheless only assessed upon £32 of that income, and the difference goes scot free. That is our justification for the section.

Mr. Brown

I have admitted almost everything that the Minister said. I have admitted that a house valued before the war and up to 1922 is probably undervalued now. I will admit that the Minister was justified for the present financial year in doing this to get that right, if he could. He could not have asked for a differential income tax in Schedule A. There is no precedent for that. He has taken the only way.

Mr. Johnson

Is there any precedent for this?

Mr. Brown

No.

Mr. Johnson

You could make a precedent the other way.

Mr. Brown

It is important that owners of houses with low valuation should bear a proper share of taxation and income tax under Schedule A, but my point is that Waterford cannot have been an exceptional case. Why was Waterford excluded from this section? It was valued in 1923. I assume that that valuation is now a fair and just one. Why should not any house valued in the same year as Waterford was valued, or at any time since, get the same treatment as Waterford?

Mr. MacEntee

There is a difference. Waterford was revalued in 1925—not in 1923. When the Waterford revaluation was going through it was enjoying some reduction on the 1913 rentals and it was brought up to the 1913 basis. That is very largely responsible for the tremendous increase in the valuation of Waterford. On the question of precedent, there is a precedent, though not under Schedule A, for this step. At one time incomes under Schedule B were assessed on twice the valuation.

Colonel Moore

It is a mistake to imagine that the value of large houses has increased in recent times or has even remained the same. The contrary is the fact. Rates have doubled in and around Dublin and the income from houses is much less than it was before. Then there is the question of the upkeep of these houses, which is very expensive. In many cases, the owner gets nothing out of the renting of his houses. A Senator mentioned that he had two houses and that they did not pay him at all as the cost of upkeep was greater than the amount he received. I think that that is generally true. The upkeep of these houses is very costly and if a man desires to sell his house, he can get no price for it. People have changed their mode of living. They have moved into the country and are living in small houses. If the owner tries to get out by sellins, he cannot find a buyer. Those are the facts.

Mr. Johnson

I have no objection to the Minister getting the full rate of income tax on incomes derived from house property or any other kind of property, but I object, particularly, to the support the Minister gives his case by saying that he wants to get at the real income. Whose real income? The real income of people assessed under Schedule A. They are all assumed to have a real income based on five-fourths of the valuation —an equal, flat rate, applicable to all. That is not getting at the real income. That is merely an assumption that they are all working under the same conditions and making the same rate of income out of their property. The pretence that the Minister is trying to arrive at the real income of these people, assessed under Schedule A, is quite fallacious. He tells us that they are all on the same basis—that they are all robbing the Exchequer and that he is going to make them all pay equally. I do not know how much inquiry the Minister has made in reward to the instances he gave, but I feel pretty sure that he has been misinformed in regard to a great deal of his information. I wonder whether it would not have been wiser to have found a way of getting at that part of the income which is derived from the increase in ground rents, whether on the part of the immediate owner or the ultimate owner. I think he could have found a way of getting at the real profit in these cases and that he could have devised a scheme for taking the cream off that particular source of income. I am not at all convinced that it is a legitimate method of gathering in income tax to assume that everybody ie on the same basis and that everybody who has property of a particular kind should be assessed on the assumption that they are all going to gain in the same way at the same rate by virtue of their ownership of that property.

Mr. O'Farrell

The Minister seems to have dealt with this recommendation on the basis that the houses affected by it are entirely owned by persons who let them. In other words, he regards it as a tax on profits derived from the letting of houses. I have in mind, particularly, people who are far from well-to-do, who have had of sheer necessity to make arrangements to purchase their houses during the last ten or 12 years, when it was quite impossible to get a house to rent. Newly-married couples and people in very humble circumstances managed to scrape together sufficient to put down a deposit with a building society or public utility society whereby they were able to buy their houses on the instalment system. I know dozens of people who have committed themselves financially up to the neck to pay for these houses over a period of, say, 20 years. They have had to deny themselves many things in order to get a little house of their own. They are now paying interest and sinking fund in respect of the moneys owing. Their rates have increased, and in many cases their family commitments have increased. When they bought these houses the income tax was based on five-sixths of the valuation. There was a remission of one-sixth in respect of repairs. A year ago, that one-sixth was eliminated and they had to pay on the full valuation. Hot foot on that comes this other increase of 25 per cent. That is imposing a very unjust and unfair burden upon these people. The increase in income tax must have increased the weekly or monthly burden on people who bought their houses on the instalment system through the Dublin Corporation and other bodies, and many of these people are in poor circumstances. The fact that all these houses have been valued since 1922 must of necessity mean that they have been valued according to the present-day basis. If they were not, Waterford would not have been valued on that basis. To seek to treat them as if they were valued 70 years ago is entirely unjust and unreasonable, and there is no logic whatever behind it. I sincerely hope the Minister will receive the recommendation in a different spirit from that in which he has dealt with it heretofore, because he seems to have dealt with it as a case in which landlords rented their houses and were only concerned with the net profits they could secure from these houses.

Mr. MacEntee

I think that Senator O'Farrell is under a misapprehension as to the effect this section will have on those who are purchasing their houses on some credit system—through a building society or from the Corporation or by an advance from a bank on the security of a mortgage. The most of these people will not be affected by this section at all. In many cases, when ground rent and mortgage interest have been deducted, they stand quite clear. An example may illustrate what I mean. Let us take the case of a man whose income is such that he is liable to income tax at full rate, and is the owner of a house assessed to Schedule A at £30, subject to a ground rent of £5 and mortgage interest, £20. As he is liable to income tax, he pays Schedule A tax, 4/6 in the £, on £30 and deducts tax at 4/6 from the ground rent, £5, and from the mortgage interest, £20. He is, therefore, left to bear tax on £5 at 4/6 in the £. The net effect in the case of that man of this increase of one-fourth would be an addition of about 34/6 per annum. I do not say that that would be the precise amount but it would be in or about that sum. Take the case of a man whose income is such that he is exempt from income tax. His house is assessed at £30 and it is subject to the same charges for ground rent and mortgage interest—£5 and £20. Being exempt from tax on account of family allowances and other things, that man's assessment of £30 will be discharged, leaving him to pay tax on £25, all of which he recovers either from the ground landlord or from the person to whom he pays the mortgage interest, so that he has no tax to pay himself. That is roughly true of people who bought houses through building societies or with the assistance of banks or through the Property Loan Investment Company, Limited, with whom there are special arrangements for collection of tax. They are liable to the Revenue for tax on the interest received by them and, consequently, the allowance for such interest is given against the Schedule A assessment. So far as the generality of persons referred to by Senator O'Farrell are concerned, this change does not affect them at all. It probably does not affect any person who has bought a house from the Dublin Corporation or through the medium of a building society or public utility society. Even in the very worst possible case—in this connection, I think there is a misprint in the report of last day's discussion which I should like to correct—the case of a person who owns a house valued at £20, free of all charges, the maximum amount in income tax which the owner, if liable to income tax, would normally be responsible for under this section would be 11/3 per annum. When these figures are kept in mind, I think it will be conceded that the possibility of hardship is exceedingly remote, indeed.

Recommendation put and agreed to.

Question proposed: "That Section 3 stand part of the Bill."

Mr. Brown

On the section, this additional 25 per cent. on the valuation of houses is going, I think, to produce a curious effect. I do not know whether the Minister realises it or not. There must be a considerable number of people in this country who are very large holders of property which is assessable under Schedule A. There must be a great many in this city, for instance. A great many of those people are paying supertax, and this will have the indirect effect of increasing the amount of their super-tax. It may also have the pleasant effect for the Minister of making people who are not assessable at present to supertax become assessable to it owing to the increase that will be made under this section. If so, I congratulate the Minister on the effect of the section.

Mr. MacEntee

I do not think the effect of the section on the super-taxpayer will be very significant.

Mr. Jameson

The position is that we have not sufficient time to consider this. The Minister does not know whether it is going to increase the supertax or not. If he can give an assurance that it will not, then, of course, it is all right, but undoubtedly it looks the other way. Senator O'Farrell has argued for one section of the community, but it looks as if this is one of the hidden things which this Bill will put on another section of the community.

Question put and agreed to.

Sections 4 to 10, inclusive, agreed to.

SECTION 11.

Mr. Brown

On behalf of Senator Douglas I move recommendation No. 2:—

Section 11, sub-section (3). To insert before the sub-section a new sub-section as follows:—

(3) Whenever the Minister for Finance after consultation with the Minister for Industry and Commerce is satisfied that any articles chargeable with duty under this section are essential raw materials of a process of manufacture carried on or intended to be carried on in Saorstát Eireann and are not obtainable or likely to be obtainable in Saorstát Eireann and are required to be imported by a manufacturer for use in Saorstát Eireann in such process, the Revenue Commissioners may by licence authorise such manufacturer, subject to compliance with such conditions as they may think fit to impose, to import without payment of this duty the said articles either, as the Revenue Commissioners shall think proper, without limit as to time or quantity or either of them or within a specified time or in a specified quantity.

The reason for this amendment was explained by Senator Douglas on the Second Reading of the Bill. It arises in connection with the Customs duties on imports. There are a number of industries in the Saorstát which, for some of the processes of their manufactures, are obliged to use substances which are imported and on which there is a Customs duty. On the Second Reading of the Bill, Senator Douglas illustrated what is happening in a particular industry— the linen industry—of which he has personal knowledge. One of the processes in linen manufacture is the finishing of linen and that requires starch. There is a duty of £3 a ton on starch that is imported. Starch is not manufactured here, and the object of the recommendation is that starch which is required for the manufacture of linen and which cannot be obtained here should be allowed in duty free. I am aware that in the linen trade there is provision for a drawback of the duty paid on an article used in the manufacture of linen that is exported. I think that was stated by the Minister. Assuming that that is so, you have to wait for the drawback. It is of an uncertain amount and you cannot take into consideration the amount of the drawback when you are determining your price in your fight with competitors in the foreign market. Now, a number of our manufacturers, especially those in the linen industry, have to compete with Northern Ireland and Scotland. The result is that this Customs duty places an undue burden on that industry. I think a better way of doing it would be this: that the Minister should abolish the drawback and instead accept this recommendation. He could require the manufacturer to make a return of his entire sales for the financial year and have an apportionment of the quantities of linen exported and of the quantities sold in this country. He would then charge on the imported article only in so far as it was used in the manufacture of the linen sold in this country. In that way he would get the same results as under the section, and I make that suggestion to him.

Mr. MacEntee

I think that Senator Douglas put down this amendment under a misapprehension as to what the real position is, because Section 12 of the Finance Act of 1932 contains an almost similar provision which is of general application. In fact, the only difference between it and the recommendation is that while the words in the recommendation are "raw materials of a process of manufacture" the words in the Act are "under this or any other Act are essential to the process of any manufacture." There is an existing section in the Act of 1932 which would give us power to do what the Senator suggests here and which would be applied in the case of the raw material of commodities manufactured for export such as linen. In fact, the probabilities are that we shall proceed rather by way of sanctioning imports under licence than by way of drawback. That is to say, I think we shall accept the suggestion which has been made by Senator Brown. But, in any event, it is not necessary to have this section of particular application to the Schedule as the general power already exists. At the same time, I want to say this, that that power will be exercised very sparingly—only after a great deal of investigation—and after we shall have been satisfied that the materials are required for the manufacture of articles intended for export. Otherwise, the revenue producing efficiency of the Schedule would be completely destroyed.

Recommendation, by leave, withdrawn.

Sections 11 to 20 inclusive agreed to.

SECTION 21.

Question proposed: "That Section 21 stand part of the Bill."

Mr. Johnson

I suppose it would not be desirable or advisable to ask the Minister to explain this long section dealing with the duties on hydrocarbon oil. It is a section with 15 sub-sections.

Cathaoirleach

I do not think it would.

Mr. Blythe

It is self-explanatory, I think.

Question put and agreed to.

Sections 21, 22, 23 and 24 agreed to.

SECTION 25.

Mr. Fitzgerald

On behalf of Senator Dowdall I move recommendation No. 3:

New section. Before Section 25 to insert a new section as follows:

The first two thousand tons of coal used in the manufacture of gas and its by-products in any gas undertaking shall be exempt from duty and the duty of five shillings per ton imposed on coal under the Emergency Imposition of Duties (No. 5) Order, 1932, and confirmed by the Imposition of Duties (Confirmation of Orders) Act, 1933 (No. 21 of 1933), shall cease to be charged, levied or paid on such two thousand tons of coal as on and from the date of the passing of this Act.

Senator Dowdall has asked me to speak to this recommendation, and while he is quite willing to withdraw it, he thinks the Minister might consider the advisability of doing something to assist the smaller gas companies in the position in which they find themselves as a result of the tax of 5/- a ton on coal. As a matter of fact, one would imagine that the explanation given by the Minister on recommendation No. 2 would cover the case of those smaller gas companies because they do carry out a process of manufacture on a raw product. The remission of duty is given to certain industries, such as foundries and brick works, and the remission of duty has been passed on to the Great Southern Railways Company. The larger gas companies will not be affected very seriously by this tax. They will be in a position to balance things up, but I fear, from the information that has been given to me, that as a result of this tax the position of the smaller gas companies may be somewhat jeopardised, due to the fact that they are paying an increased price for coal, and, in addition, this duty of 5/- a ton. It might be expected that some consideration would be given to them. The recommendation is that the first 2,000 tons of coal should be admitted free of duty. It is estimated that that would cost the revenue about £10,000. Senator Dowdall feels that the matter may be left in the hands of the Minister to see if something can be done. I do not press the recommendation.

Mr. MacEntee

I may say in reply that, while I am not prepared to make any statement at the moment, the matter has been brought to my attention by the Minister for Industry and Commerce. I think a case exists for consideration for smaller gas companies at least. I am prepared to give that, but I am not prepared to accept the recommendation in the terms in which it has been moved.

Recommendation, by leave, withdrawn.

Sections 25 to 32 agreed to.

SECTION 33.

Question proposed: "That Section 33 stand part of the Bill."

Mr. Blythe

On the section, I wonder has the Minister considered whether this particular section may not lead to a considerable amount of money being deposited outside the Saorstát. I know that this idea of transferring money is something that is in the air to some extent. Rumours get around which, possibly, may not have any foundation whatever, but they affect people's actions, and I have heard that already there has been an appreciable transfer of money out of the Saorstát. It seems to me that, if it is true that there is that tendency, a proposal such as is contained in this section will tend to increase the disposition of people to act in that way. The difficulty that people might have in holding their money outside the country would relate much more to current accounts than to deposit accounts. I presume that on the deposit accounts there would be no frequent lodgments and no great difficulties arising. I do not know how this would affect banks with branches both here and outside. It might be that branches here would act as agencies for banks outside, and that the deposits would be outside the Saorstát, and that no practical difficulty would be experienced by the persons making the deposit, because there would be agency machinery here to facilitate them. If that is so, it would mean that the object the Minister has in view would be fairly easily defeated, and I do not think it is a desirable thing that any encouragement or inducement should exist for people to transfer their deposits outside the country. In certain cases it may have no practical results of any importance, but, for one thing, it helps to put our statistics wrong; it helps to throw the balance of these figures out of gear. Then, in other cases, it may have a practical result, and I think that, when there is a certain undercurrent of this kind existing, it is particularly desirable that the tendency should be discouraged.

Mr. MacEntee

I have carefully considered the point raised by Senator Blythe with reference to this section and, on the whole, I am satisfied that it will not produce any general tendency to diminish deposits. A number of reasons have led me to form that opinion. The primary one is that I do not think that any person who has money can find any safer place to put it than in an Irish bank. When we look at the position, political and otherwise, elsewhere, I think we must come to the conclusion that money is just as safe here as it would be lying with one of the Big Six or any place else. After all, apart from that, I suppose that most of this money has been lying idle for a long time and it is only when the people want to use it that they would have to ask the bank to release it to them. Therefore, as is the custom with people when they are in a position of this sort, they will not disturb the money and the section may not affect them for a very long time. Apart altogether from that, however, I do not think their money would be as safe elsewhere as it would be here, and I think that many of them will come to that conclusion with the passage of time. There is also the fact that there is no assurance that what we are doing here will not be done elsewhere by other authorities.

Sections 33 and 34 put and agreed to.

SECTION 35.

Question proposed: "That Section 35 stand part of the Bill."

Mr. Counihan

On Section 35, I should like to ask the Minister a question with regard to farmers who have paid income tax under Schedule B— the occupation tax—and who let land on the 11 months' system. The income tax officials come along and demand income tax on that land that has been let on the 11 months' system. I claim that that is demanding double income tax for the one set of profits. Income tax is supposed to be charged under Schedule B—the occupation tax; and if that is so, why is it that the man who is in occupation and working on the land should be taxed? I maintain that that is double income tax.

Mr. MacEntee

I do not think that arises on this section.

Mr. Counihan

It may not arise on this section, but I should like the Minister to deal with my point.

Mr. MacEntee

I have not caught the Senator's point precisely. I understood him to say that a particular individual he had in mind was assessed under Schedule B, and then let the land on the 11 months' system.

Mr. Counihan

Yes, the man who took the land—the grazier, if you like. I maintain that that is a double assessment.

Mr. MacEntee

I do not think so— not on the same man.

Mr. Wilson

The man who takes the land is a different man altogether and his accounts would have to bear income tax.

Mr. Counihan

But it is double income tax for the one set of land.

Mr. Brown

The conacre tenant—the man who is there for eleven months— is not in occupation in law at all. He is a mere licensee, and, if he is assessable, he is assessable under a different section altogether.

Mr. MacEntee

Yes.

Mr. Counihan

Why is it that one has to make a return to the income tax officials of any land that one has on the eleven months' system?

Mr. Brown

He does not under Schedule B.

Mr. Counihan

He pays under Schedule B already. In this case you charge twice.

Mr. MacEntee

The land bears the burden, not the individual.

Section 35 put and agreed to.

Sections 36, 37, 38 and 39 put and agreed to.

First and Second Schedules put and agreed to.

THIRD SCHEDULE.

Question proposed: "That the Third Schedule stand part of the Bill."

Mr. Blythe

This Third Schedule is the Schedule in which we see clearly the effect of the policy of the Government in regard to the sugar beet industry. This Schedule shows clearly, when one knows what the production is in the country, the amount of the subsidy. It also shows, when we take it with certain figures that the Minister quoted the other day, the heavy taxation that is borne by the people for such a small return to the Exchequer. I forget the particular figure the Minister quoted, but he pointed out that the return to the Exchequer was less than the return obtained under the former Administration. The reason stands out very clearly in this particular Schedule, because such a proportion of the sugar is now home-grown. Of course, this particular Schedule is simply an item of the Budget, but it is one of the taxes that falls heavily on the poorer section of the community. Sugar is one of the necessities of life, with tea, which is also taxed in this Budget. I think it is right to point out to the Minister a thing that he does not need to be told, and a thing that, perhaps, he may refuse to recognise: That the continuance of the present policy of the Government means a continuance of the impositions that we find in this Budget. The other taxes, that are either taxes on the rich or taxes that are luxury taxes, have very narrow limits as revenue yielders, whereas these taxes have wide limits. There will be no appreciable contraction of the consumption of sugar as a result of the tax now imposed. It could go up, perhaps, a good deal more before there would be a serious contraction and, as I say, this is part of the whole scheme of the Budget.

Nothing can be done about it at this stage, but it is certainly something that is to be regretted as a feature of the Budget and it has to be used as an argument to try to bring home to the Government what the mere facts ought to bring home to them, and that is, that the general policy pursued by them is going to lead to a repetition, on a more serious scale, of the increases in taxation on the necessities of life. I do not suggest that the Seanad could do anything at all about it, but I think it is serious in a whole variety of respects. It is serious in the subsidy that it gives to an industry which has a value but which, possibly, has not a value equal to the charge that it is throwing on the State. It is not any use at the present stage to talk about the haste with which the industry was extended before the first experimental factory had been completely worked out and before the economic as well as the technical lessons had been learned from it. The technical lessons were learned in a year or two, but there was an economic lesson which could only be learned by allowing the factory to be worked right to the end and by allowing it to reach the point where all obligations were cancelled and where there was sufficient knowledge at the disposal of the Government and the farmers and everybody interested in the industry to enable a fresh start to be made on the soundest basis possible. As it is now, we have this large subsidy which must continue, for we do not know how long, and which must be paid by the poorest families in the State to farmers who are on by no means the worst land in the State. All this 16/4 per cwt., which everybody contributes, goes mainly to where the lands are relatively good and it is quite possible that, even on those lands, only for the present difficulties and for the fact that other branches of agriculture are not paying, the price would not induce the growing of a sufficient quantity of beet. This Schedule has many sides and I think that the various sides are regrettable in different ways.

Mr. Johnson

I should like to ask the Minister is this 16/4 the protective rate?

Mr. MacEntee

That 16/4 is the protection which the Irish sugar is being given.

Third, fourth, fifth, sixth, seventh, and eighth Schedules ordered to stand part of the Bill.

Title ordered to stand part of the Bill.

Question—"That the Bill be reported to the House"—put and agreed to.