A twin surprise for Seanad Eireann in the form of a Supplementary Budget presented by a new Finance Minister is sufficiently unusual to deserve a passing reference. We have not had a Supplementary Budget since 1931 and then the architect of the earlier Budget had to carry the responsibility of the latter. I arrived on the scene after the first Budget and with a heavier burden. My rôle is unpopular, but the tax gatherer has never found favour. Nobody regrets more than I do the occasion which has given rise to all this financial malaise, and none hopes more fervently that its duration may be short. But the omens are against this, and elementary prudence requires that the Government should try to have the nation in a state of preparedness as far as possible for all eventualities. Long in advance of the outbreak of the war we had been considering steps to cope with the situation, but its drastic suddenness at the end took almost everybody, even the belligerents themselves, I believe, by surprise and with their preparations only partially complete. Some things which were inevitable could not be guarded against and, amongst these, was the short fall in revenue and a rise in expenditure.
To cope with this situation our first step was, naturally, in the direction of economy in existing services, and to this end the Government set up the Economy Committee under the chairmanship of the Parliamentary Secretary to my Department. The committee devoted considerable time and energy to its inquiries and presented us with three reports, two interim and one final. The recommendations it submitted are not drastic in character as it had to bear in mind the undesirability of displacing labour in urban areas to a material extent. It was also given to understand the desirability of maintaining, as far as possible, the State's outlay on social services. At present the latter form such a considerable element in Government expenditure that it is difficult to secure large-scale retrenchment without interfering seriously with the high standards which have been set in this country. At the same time we have also to bear in mind that taxation in itself tends to create unemployment, especially when it reaches the high levels it is approaching here. The balance of advantage and disadvantage has to be carefully weighed, and it was in this spirit that I approached the financial problems confronting the Exchequer.
On the one hand, I was faced with a fall in tax and non-tax revenue amounting to £1,620,000 and on the other with an increase in expenditure unknown in size but offset by other decreases. This increased expenditure relates mainly to defence and here uncertainty arises from delays in the execution of orders and the delivery of equipment. Other items of a capital or abnormal character for which provision was made in the Budget of last May, for example, air ports, employment schemes and afforestation, are not affected by the emergency and, so far as normal expenditure is concerned, I made every effort to supply the needs of the new or expanding Departments by transfers of staff from other Departments, where their services were not so urgently necessary. I am glad to say that the extra work of the Ministry of Supplies, the Department of Defence, the censorship, air raid precautions and compulsory tillage, to take some examples, has been or will be met mainly by transfers of existing personnel. I must acknowledge the assistance afforded to me in this respect by my colleagues.
It will be seen that our financial problem thus resolves itself mainly into one of meeting the deficiency in revenue which, as I previously mentioned, was put at £1,620,000. The labours of the Economy Committee produced a figure of £400,000 to set against this sum, thereby reducing the deficit to £1,220,000. No economy axe, no matter how drastically wielded, could serve to bridge this gap and, accordingly, I was forced to appeal to the taxpayers to tighten their belts a little further. But I endeavoured to distribute the burden as equitably as possible.
I do not wish at this stage to go into all the details of the taxation proposals that I submitted to the Dáil. It will suffice to say now that I raised the standard rate of income tax by 1/- in the £ for the year beginning on the 6th April, 1940. The scale of surtax for the current year (1939-40) will be revised upwards and tax on the new scale will be payable on the 1st January, 1941. As the revision of the surtax scale is complicated, particulars will not be available until the ordinary Budget next year. I have also proposed an increase forthwith in the rates of estate duty chargeable on estates of a value exceeding £10,000, the increase varying from one-tenth in the case of estates exceeding £10,000 and not exceeding £50,000 to one-fifth in the case of estates exceeding £50,000.
So much for inland revenue duties. On the customs and excise side I increased the duty on imported sugar by 7/- from 16/4 to 23/4 per cwt. and the excise duty on sugar made from homegrown beet by the same amount, from 1/2 to 2/8 per cwt. Tobacco also came in for a share of my unwelcome attentions and the main rate of duty, that is the sum chargeable on the unmanufactured leaf, was increased by 2/8 per lb., thus raising the customs duty to 13/4 per lb., and the excise duty to 12/6 per lb. Beer and spirits also felt the blow of the emergency taxation, the beer duty being raised by 12/- per standard barrel of 36 gallons thus bringing the excise duty to £5 12s. and the customs duty to £5 12s. 6d. An addition of 10/- per gallon at strength of proof was made in the spirits duty, thus bringing the rate chargeable on the home-made article to £4 2s. 6d. per proof gallon, the rates of customs duty on imported spirits being slightly more, as hitherto.
All these changes of taxation, which I proposed to Dáil Eireann, were approved and became effective as from the 9th November. Considerable though they were, they still left me with a considerably large sum to find, even allowing for the economies to which I have referred. So far as the finding of this sum is concerned, I relied and still rely for a little further help on the buoyancy of the revenue, which has often come to the help of my predecessors in similar, if not equally critical, situations, and to some extent my optimism is borne out by the good showing made in recent weeks by the customs receipts. Up to last Saturday the revenue from customs duties amounted to £7,679,000 as compared with £6,865,000 in the corresponding period of last year—an increase of £814,000. Excise has also shown a slight upward tendency at £4,295,000, as compared with £4,160,000 in the same period last year. But, as will be seen by reference to the weekly exchequer statement, most of the other items of revenue betray a downward tendency. The result is that in the aggregate our receipts to Saturday last at £19,008,000 show an increase of only £458,000 on last year's corresponding figure. Up to the same day the total expenditure on Central Fund and supply services shows an expansion of £701,000. All things considered, this increase is not unduly high but it has to be remembered that our commitments for defence equipment are considerable and have still to be paid for.
As I have already stated in the Dáil, the financing of this capital and abnormal expenditure will require the issue of a public loan. As regards this issue it has been brought to my notice from a number of quarters that owing to the relatively short period for which the subscription lists of public loans remain open, limited liability companies, trustees and others sometimes find difficulty in completing arrangements for making application before the lists are closed. To obviate these difficulties, I now desire to announce that, provided all the necessary arrangements are, as I expect them to be, completed, it is proposed to publish the prospectus of the new issue in the daily papers on Saturday next, and applications will be received from Monday. The amount of the loan will be £7,000,000 in the form of registered or inscribed exchequer bonds, redeemable 1950-1960, bearing 4 per cent. interest, and issued at par. These bonds will, of course, be a full trustee security. A substantial sinking fund will be provided—1½ per cent. per annum, which will be applied half-yearly to the purchase and cancellation of the bonds. In addition, the loan will carry a right of conversion which will be expressed in the following terms:—
"If the Government of Eire should make, during the present state of emergency, or within six months after the termination thereof, a public issue other than Exchequer Bills or similar short-dated securities, bonds of this issue will be accepted at par, with an allowance for any interest accrued thereon, as the equivalent of cash for the purpose of subcription to such issue."
The duration of the present state of emergency referred to in this extract which I am quoting from the prospectus will coincide with the duration of the Emergency Powers Act, 1939, so that, as long as that Act remains in force or is renewed, and for six months thereafter, the conversion rights attached to these bonds will hold good. I might add that the allowance for interest accrued on the bonds, referred to in the extract, is a cash allowance and will be payable as such.
The purposes for which the loan is to be floated are, I think, already sufficiently clear from my previous announcements. They include the funding of floating debt, mainly in the form of Exchequer Bills, payment for works directed towards the relief of unemployment, capital expenditure on defence equipment and the financing of advances to the Local Loans Fund and the Electricity Supply Board for the Liffey Development scheme and other reproductive projects. These purposes are, I think, such as to commend themselves to all members of this House and in making an appeal to them for their support by precept and example of the forthcoming issue, I do so with a considerable degree of confidence. In the Dáil I urged that all Parties, all financial interests and the investing public, whether they have much or little to invest, should help in this important task. The co-operation of all elements in the State is necessary if the present crisis is to be surmounted, and with such co-operation the success of the contemplated issue is, I feel, assured.
There is little else I want to say, except, in further reference to the emergency and to the cause of the emergency, the war, to say that I think it is generally accepted that the war threatens to be long drawn out, and naturally, that causes all of us great concern. The troubles of the war are not brought home to us in the same way, or in the same measure, as they are brought home to belligerents, or to some who are closer to the conflict than we are, but nevertheless we are affected, and bound to be affected, to a certain extent. If the war continues for a considerable time, no nation can say with certainty that it may not be drawn in, or involved in it, before its close. I hope that will not be our fate, but that we will continue to remain outside the scene of conflict. We are a small, neutral nation anxious to stand aside from the conflict, so far as we can. We have seen the tragic end of some moderately small nations in very recent times, and their fate and those things of which we are sad witnesses in these very days, the happenings in Northern Europe and in the Baltic area, where another small nation is making a gallant stand for its rights, give us furiously to think. We hope that we may not see anything of the kind come near our shores. We know that these troubles have brought a certain measure of uneasiness to our people, as well as the economic and, to some extent, financial difficulties which have come upon us as a result of the conflict in Europe. We hope that we may come through safely, that the war will be as short as possible and that, in in the end, when peace does come, it will be a peace inspired by justice and charity for all concerned.