Seanad Éireann debate -
Wednesday, 16 Jul 1941

Vol. 25 No. 19

Finance Bill, 1941—(Certified Money Bill)—Report and Final Stages.

Mr. Douglas

I move Recommendation No. 1, as follows:—

In Section 1, page 3, after sub-section (2), that a new sub-section (3) be inserted as follows:—

(3) Where the total income of any individual exceeds £1,500 and the Revenue Commissioners are satisfied that the whole or part of that income is derived from director's remuneration on which corporation profits tax is chargeable under the provisions of Section 36, sub-section (4), of this Act, surtax shall not be chargeable on that part of such income on which corporation profits tax is chargeable.

I frankly admit that if the principle of my recommendation were adopted it would require expert drafting. My object in putting it down is again to draw attention to what I am satisfied is an inequality and a hardship which is being applied to a limited number of persons under this Bill. The main subject matter was dealt with under a different type of recommendation on the Committee Stage, notably recommendation No. 3, which is carried forward to the Report Stage. If the Minister was quite unsympathetic, and if he had stated that it was his desire and his intention to place the additional taxation on these particular types of persons I would not have gone any further, because I would have recognised that it was Government policy and that there was no use in attempting to defeat it here.

But, I am not at all satisfied, particularly on reading the report of the debate, that the Minister himself realises the extent to which what I contend is unfair taxation is being put on a limited number of persons. The only crime of these persons is that having a certain amount of money to invest, they invested it in limited companies which they themselves controlled. If they invested in businesses controlled by some one else, they would not have been caught. The effect of the Bill is that these persons will have to pay on their income in excess of £1,000, if they are caught by the provisions of Section 36, 10 per cent. on the first £500, and on the amount over £1,500, they will have to pay 10 per cent. plus 6d. surtax, and so on, as the surtax increases.

Why these particular persons should have to pay 10 per cent., plus surtax, I cannot see, because the only grounds given for the proposal are that they happen to be persons who receive fees as directors from their own companies, or are managing directors of companies which they do not control, but into which they happen to have put some of their own money. Neither of these seems sufficient ground for placing this additional taxation on them.

The case made by the Minister, in so far as I understood it—and I think he will absolve me from any intention if, by any chance, I do misrepresent him —was that this had been the position prior to this Bill. When I replied to that and stated that it applied to a very much smaller number of individuals before this Bill and then only to those where the total profits of the company were in excess of £5,000 and, therefore, hit only a small number of wealthy persons, he then, in effect, suggested that it had been the law in England until the corporation profits tax was abolished in 1923 or 1924.

I should point out to the Minister that these few wealthy persons who owned and controlled a company which made profits in excess of £5,000, that is, after deducting their salaries up to £1,000, are only hit now by the increased income-tax. In the case of people who are now caught by this Bill, not only have they to pay income-tax at a higher rate but, as already pointed out, they will have to pay 10 per cent. on the amount of the salaries which they did not have to pay last year or for many years previously. It may be said that the 10 per cent. comes out of the company, rather than directly out of the individual salaries, but as it applies only to companies owned and controlled by directors, it is the same thing in effect and, as they will discover in next year's profit, it means that there will be an equivalent reduction in their actual income. If it applied to companies not owned and controlled by them, it might be argued then that it was paid out of the company. If you go back to the time when corporation profits tax was abolished in England, or to the year when it was practically abolished here—it was continued only for companies that had profits of £10,000 and over—at that time the rate of corporation profits tax was less even over the £10,000 limit. The income-tax was lower and surtax was payable only on incomes over £2,000. It is misleading to compare the positions theoretically. The fact is the individual had very much less to pay then.

In spite of the attitude taken by the Minister on the Committee Stage, I still think it was desirable to try to get him to meet the situation in the way I suggested. I know that it would not have wholly met the difficulty, but it would have confined the hardship to persons with incomes over £1,500. I thought I would try another way by suggesting that these persons should not be subject to sur-tax. It seems to me, and I still maintain, that it is unreasonable that they should be subject to both taxes. I cannot say that I put this amendment down with any great optimism, as the Minister stated in the course of his remarks that he had not yet received any complaints. At that, I am not at all surprised, because the number of persons who are going to be caught and who have already discovered it is few and far between. It will not be until corporation profits tax is assessed on the profits for the next trading year that they will discover it, and I felt that when these people find that they have to pay this inequitable and additional tax, they should know that there were some Senators who did see what was happening and did their best to remedy it.

Minister for Finance (Mr. O Ceallaigh)

It is a comfort to know that Senator Douglas was not too optimistic. I might as well put him out of pain at once by saying that I cannot accept the recommendation. Nor can I accept that it is inequitable and unfair, or agree to any of the other adjectives the Senator used with regard to this particular tax on this type of individual or company. If anybody has an income that is subject to surtax I do not see why that individual should be specially treated, and that is what the Senator is looking for in this recommendation. It deals, as do many of the other recommendations in the Senator's name, with a type of private company, that, as the Senator admitted when speaking on other stages on the subject, is practically the same as a partnership, but there are advantages and considerable advantages, not necessarily to the State, but to the individual, in having his private company or partnership registered as a limited company. There are some disadvantages—corporation profits tax is one of them.

Mr. Douglas

Only now.

Mr. O Ceallaigh

Well, there has been an advantage in the past. It is now an advantage, and it has always been a great safeguard to the individual, that, even though the company he is interested in might fail or go bankrupt, he can still be a rich man and his assets cannot be touched. There is a considerable advantage in having his business registered as a limited company. As we have a number of recommendations in the Senator's name on the same subject, I would like to go into the matter rather fully. It raises some questions that, at any rate from the point of view of the Minister for Finance, are fundamental. It will be convenient, in the first instance, to consider the inter-relation of corporation profits tax, income-tax, and surtax by reference to the case of the public company.

The nett profits of such a company in excess of the exempt margin are liable to corporation profits tax. The amount of corporation profits tax payable is treated as an expense in computing the profits for income-tax purposes but, subject to this, the profits are also chargeable to income-tax and in so far as the profits are distributed in the form of dividends to individuals in the surtax range they also pay surtax. I do not propose to discuss the question whether this is equitable. It has been the policy of every Government in power in this State since 1921 and that policy has been endorsed by the Oireachtas.

Now, in arriving at the nett profits of a public company of the usual kind, the fees of the directors and the salaries of managing directors will of course be allowed as an expense. No difficulty arises because the shareholders have power—and must be presumed to exercise it—to see that the remuneration of the directors is not more than their services are worth. The directors get their fees or salaries and such fees and salaries are allowed as an expense in computing the profits of the company. They also get their dividends out of a fund on which corporation profits tax has been paid and they are liable to surtax on those dividends.

When you come to the case of the private company in which all or nearly all the shares are held by the directors, the position is quite different. The company, as Senator Douglas has pointed out, is in many respects similar to the private firm, the directors being more or less in the position of the partners. They have, of course, the very important advantage that if the concern fails their liability is limited to the assets of the company, and their personal resources cannot be touched by the creditors of the concern. But their control over the affairs of the company is virtually as absolute as that of the partners in the firm. They can, therefore, if they please, pay themselves the whole of the profits of the concern as remuneration for their services and show no profit balance, or only a nominal profit balance on the profit and loss account of the company. So that if the statute did not impose a limitation on their remuneration they could evade payment of corporation profits tax altogether. I have no doubt that is what many of them would do.

To meet this difficulty the following provision was inserted in the Finance Act of 1920 by which corporation profits tax was first imposed:—

Section 53 (2) (c)—Any deduction allowed in respect of the remuneration of any director, manager or other person concerned in the management of a company who has a controlling interest in the company, whether directly or indirectly, and whether solely or jointly with any other person shall not exceed an amount calculated at the rate of £1,000 per annum.

It is important to observe that when the Finance Act of 1920 was passed the exempt margin was £500 as against £2,500 in the present Bill. Of course, for some years past it has been £5,000 here. The effect of the provision has been somewhat anomalous. Senator Douglas, last Wednesday, referred to the case of the one-man company, and was obviously under the impression that the £1,000 limit was now being made applicable in such a case for the first time. In fact the limit has operated in that type of case ever since 1920. The provision was for some time interpreted as applying also to the case in which the directors between them held a majority of the shares, but in 1938 it was held by one of the Special Commissioners of Income-Tax here, on an appeal, that the wording of the section was not sufficiently explicit to bear that interpretation, and since then the results have been anomalous. The provision clearly applies to the one-man company, but it was regarded as not applying to the two-men or three-men company.

Mr. Douglas

Does that apply under this Bill?

Mr. O Ceallaigh

It will apply in future. If the Bill goes through it will apply to the one-man and two-men company alike. Two brothers, neither holding more than half the capital, but between them holding all the capital, could arrange to pay themselves any salaries they pleased within the limits of the company's profits, and such salaries had to be allowed when computing the profits for the purposes of corporation profits tax unless it could be shown that the payments amounted to artificial transactions designed to reduce the company's profits—a very difficult undertaking as a rule. If one of the brothers died and his shares passed to the other so that the company became a one-man company, the survivor's salary came under the operation of the limiting provision. Sub-section (4) of Section 36 of this year's Bill is designed to remedy these anomalies. It is designed to make the limiting provision applicable to cases in which the directors between them have a controlling interest whilst leaving the figure of £1,000 as the maximum admissible as an expense in respect of each director's remuneration when computing the profits liable to corporation profits tax.

It is impossible to accept the Senator's recommendation. It would mean a loss of surtax in cases in which we are getting it at present. If you take the case of the one-man company making £10,000 per annum the proprietor could pay himself the whole of the profit as remuneration for his own services.

Mr. Douglas

Under this recommendation?

Mr. O Ceallaigh

Even so.

Mr. Douglas

Does the Minister contend that that could be so under this recommendation?

Mr. O Ceallaigh

Certainly.

Mr. M. Hayes

Is there not a limit suggested in Senator Douglas's recommendation?

Mr. O Ceallaigh

A limit of £1,000.

Mr. M. Hayes

Is not a limit of £1,500 suggested in Senator Douglas's recommendation?

Mr. O Ceallaigh

I shall deal with that point later. Take the case of a one-man company making £10,000 per annum, the proprietor paying himself the whole of the profits as remuneration for his own services, under the Bill as it stands corporation profits tax will be payable on £6,500, that is, £10,000, less £2,500 exempt margin and £1,000 admissible remuneration. The Senator's proposal is that this £6,500 should not be liable to surtax. Out of the proprietor's £10,000 income from the company, surtax would be payable only on the £1,000 allowed for corporation profits tax purposes as proprietor's salary, and possibly, but not certainly, on the £2,500 of profits exempted as marginal allowance.

Whilst the question of increasing the amounts admissible as a director's remuneration in the type of case we are discussing is the subject of separate recommendations, I may perhaps be permitted to say at this point that I have, as I promised, carefully considered the question of increasing the figure to £1,500. I have felt compelled to decide against it. In the original Act the figure was put at £1,000. At that time the exempt margin was only £500. The value of money in relation to goods was lower than it is at present. The Act proceeded on the basis that £1,000 should be regarded as the maximum admissible as remuneration for the services of a director in the circumstances we are considering, and that anything further which he got should be regarded as a distribution of profit. In so far as salaries in excess of £1,000 have been admitted in certain cases in which there has been joint control by two or three directors, I am satisfied that this was the result of a drafting flaw in the original Act. This is borne out by the fact that the limiting provision was originally interpreted as applying to such a case both in England and in this country. We are remedying that flaw and in the present emergency I do not feel at liberty to incur the loss of duty which the increase of the limiting figure from £1,000 to £1,500 would involve.

I have deliberately got this written out so that those interested would have an opportunity of studying the matter, because I am sure it will come up again, not on this Bill, of course, but it is bound to come up at a later date. I have gone into it with the officials of my Department in a very definite and full way. I am satisfied that we would lose a considerable amount of money, because there is quite a number of these companies in existence, and that the limit that already exists and that has existed for a considerable time is a fair limit in the particular type of class that we are dealing with, where the directors control their own company and can distribute the profits of that company as they please. They are getting fair consideration in the limitation of the directors' fees to £1,000. They are escaping a certain amount of tax on that.

The balance of the profits will normally in that type of company go to the individuals. It does not mean depriving them of anything in an improper or unfair way, such as the Senator suggests. There are advantages to the partners who desire to have their company registered and to protect themselves in the way the law permits individuals to protect themselves by forming themselves into a limited liability company. It is only fair, in my opinion, that they should pay something for the protection that they get there and this is one way that does not put an undue burden upon them. If they have an income over £1,500, when every other individual in the country pays surtax on such an income, I do not see why, merely because they are owners of a private company that can make big profits which they can have entirely for themselves, subject to corporation profits tax, they should escape the surtax.

Cathaoirleach

Is the Recommendation being pressed?

Mr. Douglas

No. I will deal with the Minister's remarks on a later recommendation. I do not propose to press it.

Recommendation, by leave, withdrawn.

Mr. M. Hayes

I move Recommendation No. 2:—

In Section 1, sub-section (3), line 24, that the words "as amended by this section"(proposed to be inserted by Recommendation 1 in Committee) be deleted.

This is merely a matter of drafting. On last Wednesday, the House agreed to a particular recommendation in my name and certain words were inserted consequentially. Looking at the Bill since, it appears that the words were not necessary. I am, therefore, moving now to rescind the recommendation to put in these consequential words. I think the House will agree. It is a matter of drafting.

Recommendation agreed to.

Mr. Douglas

I move Recommendation No. 3:—

In Section 36, sub-section (4), line 35, page 20, that the words "one thousand" be deleted, and the words "one thousand five hundred" be substituted therefor.

This, in effect, has been rejected by the Minister on my previous recommendation but, nevertheless, I propose to move it. In doing so I should like to refer to certain statements made by the Minister. He has adopted a practice which is not unusual in debate, as far as at least half of his speech is concerned, in proving the undesirability of something that was never proposed. At no time in any speech made by me or in any recommendation made by me did I suggest there should not be a limit as to what might be charged as directors' fees in the case a private limited company. I did suggest a different limit but at no point in any of the recommendations did I suggest there should be no limit. Consequently, with half of the Minister's arguments I find myself in complete agreement.

Mr. O Ceallaigh

If I may interrupt the Senator, I have had the Senator's recommendation examined and studied and I am told that the recommendation, as drafted, would leave the Bill open to what I suggested, that if they made £10,000, they could have the whole £10,000 for themselves as directors fees.

Mr. Douglas

I am dealing now with Recommendation No. 3.

Mr. O Ceallaigh

I was referring to the Senator's previous recommendation, the one on which I have just spoken, that if the Senator's recommendation in the wording as proposed were adopted——

Mr. Douglas

I still adhere to the statement that I did not propose that there should not be some limit. Recommendation No. 1 indicated the principle which I endeavoured to set up, that persons should not be charged both taxes. If it had been accepted—I confess I did not expect it would be accepted—it would have required a certain amount of technical drafting but I did not, in Recommendation No. 1, propose to change Section 36 and in all the recommendations I have put down to Section 36 there is a limit. I think I am quite entitled to say I did not propose and certainly I can say I did not intentionally propose to abolish all limits. I can say with absolute truth that from the very beginning I appreciated the reasons why there must be a limit. I do not think the Minister should go to the trouble, but if he has a doubt, I suggest that he read the debate last week where he will see that I made it perfectly clear that I was in favour of a limit. If his advisers say Recommendation No. 1 would remove the limit, I do not see how, but I am quite willing to accept that statement if he will accept my statement that I intended there should be a limit. That point is relatively unimportant. I only want to dispose of that fact first. I do not, however, agree with the Minister that this position which he has set out has existed for a considerable time for the persons coming under it in this Bill. He has emphasised the fact that this has existed for a considerable time.

I do not know of any way of leaving the position the same for the persons who have been paying this tax up to the present time and not putting the new tax on a new person who has been, shall we say, a managing director of a company in which he had 5 per cent. capital which he did not control. Take the case of an individual who is managing director of a company, who is paid £1,500 a year and has been paid it for several years. He now finds himself subject to income-tax plus 10 per cent. on £500 and, if he received £2,000, to surtax as well. My first recommendation was only to draw attention to the fact that he was under the Bill subject to three taxes.

I am not concerned with the persons to whom this has applied for a considerable time, the persons who were affected when the limit was £5,000 or £10,000 but I think that it is very definitely unfair to place the imposition on a number of individuals in smaller companies. The Minister referred back to the circumstances when the limit was £500. That was introduced, to the best of my recollection, during a war. But apart altogether from that, at that time, as far as this country was concerned, there were not nearly so many limited companies. The last Government did not, I think, hold the same views as those enunciated by the Minister now. They did not abolish fees chargeable on the formation of a limited company, but they considered it desirable to encourage the formation of new limited companies and they reduced the percentage rate from, I think, £1 to 5/- and that has been continued by the present Government even though, apparently, the present Minister does not really approve of any such encouragement, by way, at any rate, of equal taxation on a limited company as against a partnership.

I do not want to take up the time of the House, nor have I fully prepared myself, but I would be very glad at some time to discuss the desirability, from the point of view of the public generally, of running most businesses by partnerships or by limited companies, and I would be surprised if I could not in the long run persuade the Minister that, taking it all round, there was better control from the State point of view and much more difficulty in evasion of tax by a limited company than by a partnership. However, the Minister does not, at the moment, take that view, judging by his speech, and I do not think I ought to take up the time of the House in debating it. My case, in fact, is this, that persons have been receiving an income as a result of companies, many of which—those I am most interested in—are small industrial companies set up in the last six or seven years. I think the State encouraged them, at any rate, to set up the industries or the trades. It may be argued whether or not they encouraged them to form limited companies, but I would be prepared to argue that they did encourage them to form limited companies, if only for the fact that unless they were limited companies they could not get certain facilities such as trade loans, and that was because of the impracticability of controlling that type of loan to an individual or to a partnership.

However, be that as it may, the State definitely encouraged them, and now the directors are placed in the position that they must submit to heavy taxation as far as their own particular salaries are concerned. My sympathy is with the managing director who has been foolish enough, apparently—I would have said, prior to this Bill, "wise enough"—to invest 5 per cent. of his own money in the concern. He can, of course, evade the tax in some cases by selling those shares, as they are not of much value to him and do not give him any active control. Probably, the Minister would say that would be the best way to do it. As far as other directors are concerned, however, if they find this too onerous they will be driven to a method for which the Minister has not provided, that is, instead of being directors of the company in which they control the shares, they will become employees, and some employees will become directors. The directors, as he has said, must do what the shareholders tell them, and the control cannot well remain the same.

The fees paid to individuals will not be caught in this but, I suppose, if that happens, the Minister will try to find some other way to deal with it. In effect, all he will do is very definitely to discourage individuals putting money into a business which they intend to run themselves. They will say there is no use in doing that if the State's attitude is that, as soon as things are going well, they will be harshly treated, and a very large portion of their income will be taken away which could not be taken if they did not invest their capital in a business run by themselves. They will not want to pay 8/9 tax if an ordinary individual pays only 7/6. I think the net result will be definitely to discourage them. However, I do not propose to press this particular recommendation any further, as the Minister has made it quite clear that he will not accept it.

Recommendation No. 3, by leave, withdrawn.

Mr. Douglas

I move Recommendation No. 4:—

In Section 36, sub-section (4), page 20, after the word "annum" in line 35, that the words "or the amount of the remuneration paid to such director in the trade year which ended in the year ending December 31st, 1940, whichever is the greater" be inserted.

This deals with a specific point. When you come to excess corporation profits tax, this point is conceded, that is, if the directors were paid a certain rate of remuneration in the years preceding the years in which excess corporation profits tax is chargeable, they can be paid the same rate now. I think that is perfectly fair, but I am not at all clear as to why if it is fair in that case it would not be fair in the case of ordinary corporation profits tax. The Minister will appreciate—and if he does not I will demonstrate it to him on a later recommendation—the extreme difficulty of an individual Senator in drafting recommendations to the Finance Bill without the technical advice which the Minister himself finds necessary.

Mr. O Ceallaigh

Personally, I would always welcome any Senator coming to me with a recommendation and asking the advice and help of my officials in the drafting of it.

Mr. Douglas

I thank the Minister for that. I appreciate very fully that the officials would be quite willing to help. I am not making an attack on the Minister now, but wish to say that, in the case of amendments which are in the form of recommendations, the same technicality is not essential as, if the principle were adopted, the drafting would be put right elsewhere. This is not in any sense a complaint. With this Minister and other Ministers, I have never found anything but readiness to assist in drafting, though it is not generally wise, on the Committee Stage, to waste time, but better for a Senator to introduce the matter himself and, if he sees a chance of acceptance, to get in touch then with the officials or with the Minister and endeavour to reach agreement.

What I really want on this particular recommendation is to get from the Minister the reason why this principle is wrong in the case of ordinary corporation profits tax and right in the case of excess corporation profits tax. My point would be entirely met if the salaries which had been admissible before where they were in excess of the £1,000 were allowed—I would go even further, though it is not specifically in this recommendation and agree that they should not exceed a maximum of £1,500.

Mr. O Ceallaigh

I am sorry I cannot meet the Senator on this recommendation either, as it would mean a loss of revenue. All these points and difficulties arise—the changes from the exemption of £5,000 down to £2,500 that are introduced in this Bill— because I need additional revenue. Speaking a few minutes ago, the Senator said he would like the position to be left as it was before, but is it not the same for everybody? All those who pay income-tax, and most people who pay tax of any kind, are paying additional taxation this year. The same applies, generally speaking, to the owners of private companies and to the owners of shares in all sorts of companies. They are all being asked to pay additional tax this year, because the State needs additional revenue. There are hardships involved, not alone for directors and shareholders but for those who are not in the happy position of being owners of shares in any company. They all have to pay.

Mr. Douglas

I really want the Minister to say why this was right in the case of excess corporation profits tax and not in the case of ordinary corporation profits tax.

Mr. O Ceallaigh

Simply because I am looking for more money.

Recommendation, by leave, withdrawn.

Mr. Douglas

I move Recommendation No. 5:—

In Section 36, sub-section (4), line 41, page 20, that the word "five" be deleted, and the word "twenty-five" be substituted therefor.

I presume the Minister will say the same thing in this case. He will admit that it is not quite equitable, but will say that he must have more money. Probably he will give the same answer as in the last case. However, I wish to repeat that a managing director who does not himself control the business should not be penalised just because he has 5 per cent. of the capital; 25 per cent. would not in any sense give him control and would be a more equitable amount. As I take it that the Minister's attitude is the same, I do not intend to press this recommendation.

Recommendation, by leave, withdrawn.

The following Recommendation appeared on the Order Paper:—

In Section 39, sub-section (2), page 23, at the end of paragraph (c), that the word "and" be inserted.— (Senator Douglas.)

Mr. Douglas

This recommendation is consequential on Recommendation No. 7 and depends on whether Recommendation No. 7 is accepted or not. I move Recommendation No. 7:—

In Section 39, sub-section (2), page 23, at the end of the sub-section that a new paragraph (d) be added as follows:—

(d) a sum equal to 3 per cent. of the paid up ordinary stock or shares of the company.

I should point out again that this deals only with the substituted standard. The substituted standard is applicable to a new company, but it also is applicable to a company in existence for two or three years which may have made very small profits or may have had losses. The Minister will agree with me that some companies were started with the very best intentions as a result of the industrial development scheme, but failed to make profits and in some cases had losses. At the moment I am fortunate enough not to be interested, in an individual capacity, in any of those companies, but I am interested in them in a general way, as I believe it is highly desirable, from the point of view of the success of industrial development generally, that those companies should get a chance to survive.

If they have to use the substituted standard, and if 75 per cent. of their profits from now on are to be taken from them— that is, 75 per cent of any excess of the bare standard of an amount that would equal 6 per cent. on their shares and the requisite amount on debentures or preference shares—I suggest to the Minister that these companies never will be able to make up for that loss.

I argued on the Committee Stage in favour of a provision for a reserve. I feel very strongly that any company —I am referring to a new company or a company which is being started —must calculate on profits which it believes it will make after having a reasonable reserve set aside. But in the case of the reserve the Seanad was totally opposed to me and is quite out of sympathy with my view. Consequently, I cannot debate that again, but I would emphasise that what I have now proposed only deals with the substitute standard in a limited company. I am simply pleading the case of a company, of which there are cases, which had losses or was not able to make a profit and saying that the substituted standard is too meagre and that 6 per cent. is not sufficient. I have suggested a further 3 per cent. I am not asking for the payment of dividends. I do not approve of the payment of dividends even to the extent of 6 per cent. in companies of that category. Emergency Powers (No. 83) Order would prevent that in any case and we may assume that that order is likely to remain in force during the emergency. I am completely in favour of its remaining in force during the emergency. I am concerned with the profits which should be retained for the purpose of keeping business safe and in that connection because of the remarks of the Minister I was very much surprised at the attitude of Labour members although not so much surprised at the Fianna Fáil members.

I was very surprised at the Labour Party seeing that it is only possible for companies during the present emergency to maintain their labour for a longer period than is absolutely justified by the actual operations of the companies if they have reserves out of which to pay salaries. The Government have rightly begged employers—and employers here are almost entirely limited companies—to try to keep their people employed as long as they can. I am sure that there are some employers who would reject that recommendation out of hand. The people I met in the Federation of Irish Industries have made an effort to do it, but they could only do it out of reserves, not out of increased profits. You cannot get increased profits, and if you try to get them the Government probably would not let you, but you can only keep people employed because you have reserves. In the case of companies affected by the substitute standard, the Government would not agree to increase the figure of the reserve. I am now asking them to agree to the figure of another 3 per cent. although if it were applied only to those companies that had a loss it would not be enough. In this case I am trying to establish what is a very vital principle.

Mr. Lynch

Senator Douglas says he was disturbed at the attitude of the Labour Party.

Mr. Douglas

Not disturbed; only surprised.

Mr. Lynch

I want to say that the Labour Party is not the least surprised at the fallacies in Senator Douglas's speech.

Mr. O Ceallaigh

I have, perhaps, more sympathy for what he has in mind than the Senator appears to give me credit for. I expressed myself, maybe not as clearly as I should, when he spoke in similar terms on an amendment to this section on the Committee Stage. I cannot accept his recommendation at this stage of 9 per cent. dividend, for that is what it amounts to.

Mr. Douglas

Not 9 per cent. dividends. I think Emergency Powers (No. 83) Order would prevent that.

Mr. O Ceallaigh

Order No. 83 would step in, but that is what the Seanad is being asked to adopt in principle by this recommendation.

Mr. Douglas

May I make it clear that if the Minister does not say "dividends" probably we will not differ about his line of argument. I am not asking for dividends.

Mr. O Ceallaigh

I understand. I said I was sympathetic and that I was prepared to consider the type of case and the type of company the Senator had in mind. I had been considering the points that were raised when the Bill was before the Dáil and I have not yet arrived at a satisfactory way out of my difficulties. I know there are difficulties, and in the case of the companies that, perhaps, the Senator has in mind and that I had in mind, this section might make difficulties. I am anxious to help these companies over these difficulties. I hope to do something next year, but I cannot this year. I hope to do it next year and I hope to make it retrospective. The Senator objected to the retrospective aspect as well as to the suggestion that I should leave it over. I certainly intend to try to find a way out of these difficulties, for certain companies may be injured in their business as the result of this. I made a promise that I would consider it and that promise I still intend to keep.

Mr. Douglas

I can only express the hope that the companies I have in mind will be there next year. I doubt it.

Mr. O Ceallaigh

Many will not have to bear the extra tax for a year, and this will be retrospective, so that they will be there so far as it is concerned.

Mr. Douglas

Do I understand that the corporation profits tax is not payable for a year? I thought it was payable immediately.

Mr. O Ceallaigh

It takes some time before the companies' accounts are made up. It will be July or August before the balance sheets of these companies are issued, and it will be some months later before the companies get a demand from the income-tax people. They will get a reasonable time for payment. There will be very little of this revenue in the Exchequer, I am afraid, by March 31.

Mr. Douglas

I am very, very pleased to hear that statement, but I am rather surprised at it. I hope it does not mean that the next Budget will be in the autumn, but I am pleased to hear that there will not be pressure for payment before March 31. That is completely new to me and is a valuable statement.

Mr. O Ceallaigh

What I have said refers to the companies that the Senator had in mind, and what I have said is correct.

Recommendations Nos. 6 and 7, by leave, withdrawn.

Recommendation No. 8 not moved.

Government Recommendation No. 9:—

In Section 41, sub-section (1), page 24, lines 37 and 38, that the words "consequent on an invitation to the public to subscribe therefor" be deleted, and the word "and" be substituted; and after paragraph (c) that a new paragraph be inserted as follows:—

(d) either the said new issue was made consequent on an invitation to the public to subscribe therefor or the Revenue Commissioners are satisfied that no part of such issue was paid for or satisfied by the utilisation, directly or indirectly, of assets which were in the hands of the company on the last day (in this paragraph referred to as the said day) of the trade year which ended in the year ended on the 31st day of August, 1939 (excluding from such assets a sum equal to the amount (if any) of dividends distributed and directors' remuneration paid within six months after the said day in respect of a period ending on or before the said day) or by the utilisation, directly or indirectly, of profits of the company made after the said day (excluding from such profits so much thereof as was applied in the payment of dividends or of directors' remuneration to an extent not exceeding in rate the average amount of the dividends distributed or directors' remuneration paid (as the case may be) not later than six months after the said day in respect of the three, two, or one years or year by reference to the profits in one of which the standard profits of the company are computed).

Mr. O Ceallaigh

This Recommendation is intended to implement a promise I gave the last day when I accepted, in principle, a recommendation by Senator Douglas. He desired to exclude anything but new cash under his recommendation, but the recommendation did not make that clear, and I promised to introduce a recommendation which would make clear that the reference was to new cash and new cash only. The recommendation now before the House is long, intricate and involved. I doubt if Senator Douglas, or Senator Douglas and I together, or any other member of the House, would have been able to draft an amendment which would satisfy the draftsman. This is his own draft to meet the case put up by Senator Douglas, which I had explained to him. It fully meets the points raised by Senator Douglas and, at the same time, it does not open the door to evasion.

Mr. Douglas

I appreciate the action of the Minister in tabling this Recommendation. I am told by some of my friends beside me that this is a question of an act of faith. I may tell the Minister that I read the recommendation, with a towel on my head, so to speak, four times, and I came to the conclusion that it did meet my point. However, until the Revenue Commissioners commence to act on it, nobody will know how it will work.

Recommendation agreed to.

Recommendation No. 10 not moved.

Sir John Keane

I move Recommendation No. 11:—

In Section 41, sub-section (3) (b), line 9, page 25, after the word "the" that the word "average" be inserted.

In view of what the Minister has just said, I do not think that there is much use in moving this recommendation. I do hope that the Minister will not allow the respite during the holiday season from this laborious, troublesome business to interfere with his appreciation of the precarious position in which these companies may find themselves after the emergency. If they run into periods of loss and the bulk of their previous profits have been taken from them in taxation, they will be in a position far worse than that in which companies were after the last war, because during the last war the machinery introduced provided for relief. Nothing of that kind is provided now, and I hope the Minister will be alive to the serious dangers of the future if he does not mitigate his present intentions.

Mr. O Ceallaigh

I said in the Dáil, and I think I said here, that the position of companies when this emergency is over, would have to receive the serious consideration of the Minister for Finance. The type of allowances Senator Sir John Keane has in mind in relation to corporation profits tax and excess profits tax was not introduced simultaneously with the introduction of excess profits tax and corporation profits tax during the last war. After the war amendments were made in the law whereby allowances of various kinds for loss, renewals of machinery and so forth were made available. When the time comes for review of this special taxation arising out of the emergency, companies which have suffered loss and have not been able to put by reserves for renewals will have to receive special consideration.

Recommendation, by leave, withdrawn.

Recommendations Nos. 12, 13, 14 and 15 not moved.

Bill, with recommendations, received for final consideration.

Agreed to take the Fifth Stage now.

Question proposed: "That the Bill, with recommendations, be returned to the Dáil."

Mr. Baxter

There is not much profit in joining issue with the Minister on many of the points he made on Second Reading in reply to my comments but I cannot feel convinced that the Minister is sufficiently appreciative of conditions in the country at present. I suppose it is a good thing to be able to take things as the Minister takes them but the country is not getting from the Minister and his colleagues that kind of leadership which it expects. While it might be conceded that the Minister has shown a considerable amount of imagination in the manner in which he stretched out his tentacles in this Bill to gather in taxes —it may have been his advisers who were responsible—one cannot feel convinced that there is any inspiration behind the method adopted in trying to gather this taxation nor can one feel convinced that we shall be in a better position as a result of this taxation in another year. We have reached a stage in which our income is dropping and there is no evidence that the Minister expects our total income to be any better than it is. Nothing in this measure gives evidence that the Minister has taken steps to ensure that the national income a year hence will be of such proportions as to enable him to get anything like the amount of money from the taxpayer which he is asking this year. It is quite clear that his method of taxation and Government policy generally, will leave the country more impoverished, with a lower income, a lower productive capacity and less money in circulation.

There will be a general weakening of the national morale in a way that can be disastrous. I am saying that because I believe it is true. I would prefer to be in the position of applauding the Minister for the imagination and courage which he and his colleagues were displaying in relation to financial policy as applied to the work of national government generally. In this Bill one cannot feel that confidence one would like to have in the policy of the present leaders. There is a great need for those leaders to be more progressive than they are. The shortages which the country is going to experience in the next twelve months are due to the lack of imagination on the part of the Ministry and the lack of courage to provide essentials which we could have had in abundance if they had exercised more foresight.

That is how I view the situation. We know it is quite easy to have a good deal of money, perhaps, in circulation and to reach the stage they have reached across the water in which they are ensuring that the people will not spend money on the kind of goods they want to spend money on, rather than on the kind of goods the Government want them to buy. We may have money here during next winter and spring and yet we may not be able to provide ourselves with sufficient food or fuel. That is a situation which we should never have permitted to develop. I think it was avoidable if the Government had made the effort. There was a great weakness in Government policy, or a lack of foresight among the leaders. Even now when we are restarting exports of live stock, I am wondering what we are getting back for them. In the days when we were very concerned to get them out—we are concerned to get them out to-day— during the economic war period, the British attitude was that they would take our goods provided we took their coal. I do not know what we are doing about that to-day. It seems to be a line on which we ought to proceed. Their coal would be better than their pound notes to us. I feel we have reached that stage, both with regard to the sending out of meat and cement. Even if we are smuggling sugar across the Border or any other goods that are being sent out we ought to try to get goods back, inasmuch as we are short of a considerable amount of things that are essential to life here. In that respect I urge on the Minister that when we send out food or goods of another kind, we ought to try a policy of barter and get other goods back. I have said already, that we have here the raw materials for the production of food and fuel in such quantities to-day as to remove the danger of being cold or hungry.

It is because Government policy does not show definite imagination that we are going to be short of these things. There are great and grave dangers of a shortage in our cities, and even in the towns. That is a situation which none of us can afford to face with equanimity. No matter on what side of the House we sit, none of us can fail to wonder what use we are making of our liberty. I know that the Minister can come back, as he came back the last day, and try to indicate that I have some wild cat scheme at the back of my mind. Perhaps the Minister might think that at times I have been too conservative, but we have reached a pass when it would be much better for the Government to realise that this is a particularly abnormal period and that the normal method of handling our affairs is not going to keep order, or peace or stability, or provide our people with the essentials they require.

The Minister for Finance has, possibly, the most responsible office of all. It is his duty to oil all the machines that are operating to keep the institutions of the State sound and stable, and I think he will agree if I suggest that he could have done much more. I am not making the charge that he is not anxious to do more, but he is losing some of the fire he used to have in the old days, and I feel that it would be much better for the State if, instead of growing conservative, he could recapture a little of the old revolutionary spirit. I think one of my colleagues, Senator Hayes, is murmuring disapprovingly at that.

Mr. M. Hayes

I think I will have to be allowed to explain myself.

Mr. Baxter

I will leave it to the Senator to do that. I fear that we may fail where we might have succeeded. We have no confidence among our people at present and one has only to be down the country to realise that. People holding different points of view are agitated. They are asking what is going to happen and what do the Government mean to do. Take the plight in which many of us find ourselves. I cannot find anything to light my home, neither candles, paraffin oil, electricity nor anything else.

Professor Johnston

There is always the moon.

Mr. Baxter

The people who are able to turn on the Shannon scheme will tell you that very blandly, but if they were living in the country like the majority of the people who have to provide the food, I can tell them they would be very discomfited. The men who work the machines are perturbed about the position of the harvest. What answer can one make to these people? I am afraid that one cannot offer them anything that is very consoling. Generally, we might have been in a much stronger position than the one we now occupy, if Government policy had been different. There is no hint in the Bill now before us that Government policy is not going to continue in the old narrow rut. At the end of another year, we will probably be poorer in supplies, and people may want more money to spend without being able to find it. I believe that the responsibility is on the Minister for Finance to find credits to put people working who are now leaving the country. Put them producing the goods that could be produced if the credits were available. We could have produced a great deal more in the 1941 period, if policy in 1940 and 1939, in regard to credits had been different. The Minister's predecessor was as reluctant as the Minister to do anything in that direction. It is very difficult to make people realise that you have to rear a calf for three or four years before she becomes a cow. I always feel about financial policy that the men who are responsible for it never had sufficient contact with agriculture to enable them to get that long view which is requisite in a sufficient financial policy for a country predominantly agricultural.

We had, at some time, a statement and a great many people are wondering what exactly was meant, or what is being done about it. The statement was made in some place by the Taoiseach, either in the Dáil or at a public meeting, that the Government intended to introduce a measure for the establishment of a central bank. As we have not heard anything about that since perhaps the Minister would enlighten us as to the stage which that measure has reached. We certainly ought to have some indication of it. It would enable the people, more correctly to diagnose the position and find out whether progress is being made, or whether they are being given information which indicates that something is going to be done when, perhaps, it is being put on the long finger.

Anyway, we want something fresh and something new. It is not in this measure which the Minister is putting through this House and, because it is not there, I think myself the country and many of us here are not as optimistic about the future as we should like to be. We could, had the circumstances been otherwise, be optimistic because we have the means and the grounds for optimism if we got the leadership which the country deserves and requires.

Mr. Douglas

Generally speaking I am still of the opinion that the biggest mistake the Government made in this Bill was in endeavouring to get money out of industry rather than out of individual incomes. When you are up against an emergency, even if it does mean smaller incomes, it is better to get the people to face frankly what they have to pay on their incomes. It may be suggested that that attitude is inconsistent with my efforts in regard to other aspects of the Bill, but I do not think it is. I think that it was, and it is, a mistake to attack industries or trades which employ people, and to try to get revenue in the way in which this Bill does. As the Bill was introduced, it would have created chaos, and, as the Minister more or less admitted, it might have killed a certain number of industries.

When I spoke on the Second Stage, I asked the Minister a question in all seriousness, in order to get some assistance from him, on a certain point, but I think he forgot to answer it. I propose to repeat the question now. It is, what attitude a trader or manufacturer should adopt if he finds himself in the position that his trade is reduced as a result of want of supplies or for other reasons? If he is in the dilemma that he is faced with the alternative of increasing prices and maintaining a fair amount of employment, or selling at the old prices and substantially reducing employment, which should he do? I know that that is a problem which has to be faced at the present time by a very considerable number of people, and I find it extremely difficult to know what answer should be given to them. It is very difficult for individuals or firms who are anxious to do their best in the emergency to make up their minds on that policy without getting some indication from the State. The nearest approach to guidance we got came from the Minister for Supplies when he stated some time ago that it might sometimes be necessary to increase prices a little so as to maintain employment. I do not know whether the Minister for Finance has any views on that matter, but I hope that somebody in authority will be in a position to deal with that very serious and genuine problem which faces many people at the present time.

There is one other matter with which I should like to deal. On the Second Stage Senator Hawkins made a statement in relation to the general financial policy of the Government. I think I might be allowed to take this opportunity of dealing with it for, although I think the Senator made the statement in perfect good faith, he completely misstated the facts. I must say that Senator Hawkins' contributions to the deliberations of this House are generally helpful, and I hope that what I have to say will not be interpreted as an attack upon him, for nothing is further from my mind. The Senator gave expression to a statement indicating that he is under an impression that appears to be very widely held throughout the country, but that is, nevertheless, quite erroneous. He stated that when the emergency arose the Government had taken steps to provide credit to enable manufacturers and traders to lay in stocks and that those people had not taken advantage of that credit and had not laid in stocks. Now, the fact is that the Government did not provide any such credit and, for my part, I think the Government were quite right. What the Government did was to advise the purchase of substantial stocks, and they asked the banks to give as many facilities as possible to traders for that purpose, and the banks, as far as I know, did so, always provided that the assets of the particular concerns were sufficient to warrant increased credit facilities. Such facilities as were given were given entirely on the credit worthiness of the companies or the individuals concerned. I think that that was quite correct. The impression, however, has been created that the Government guaranteed credit or in some way gave an assurance to the banks to enable them to give credit to people who were not otherwise creditworthy. That, of course, was not so.

I should like to say that in my opinion the vast majority of manufacturers and a very considerable number of traders did borrow up to the hilt and did lay in stocks—not all of them of course. You cannot get perfection all round. The very fact that this country is only now beginning to feel the pinch is proof positive that substantial stocks were brought in. I want to make it clear that that charge made by the Senator—if it can be interpreted as a charge against the Government, he really meant it as praise, though I regard it as a charge—is not correct. Similarly, the charge against manufacturers that stocks were not laid in is not, to my own knowledge, correct. There may be some few cases in which it would be correct, but they are very few. It is true that there were certain weaker firms that could not get facilities. It is not true that the Government guaranteed credit for merchants or firms to enable them to buy in stocks. If it had been considered desirable to provide such stocks, the Government could have bought in these stocks themselves and there would be no necessity for their guaranteeing credit such as Senator Hawkins suggests.

Mr. Goulding

I must confess that Senator Baxter's contribution to the debate left me rather bewildered. I gathered that the Senator criticised the Government because the taxation which they had imposed was not sufficiently high. I think the tenor of his remarks was to the effect that the Government was to be censured for not inflicting more taxation. It is all very well to indulge in criticism but what exactly could the Government have done? How better could the Government have dealt with the extraordinary situation arising out of the war? We talk very loosely about credit, but do we really mean by credit that the Government should have gone in for inflation at the beginning of the crisis, should have issued more currency and, by the issue of that currency, enabled farmers, for instance, to purchase increased stock? Does the Senator mean that the Government should have financed every importing firm in the country and by such financing enabled those firms to purchase more stock? I do not exactly know what Senator Baxter wished the Government to do unless it was something along these lines. He criticised the Government for not doing one thing or for not doing another thing. I do not know that Senator Baxter in the past was very enthusiastic about the Government's programme.

Mr. Baxter

I could not be.

Mr. Goulding

Exactly.

Mr. Baxter

A good many other people are not enthusiastic about it.

Mr. Goulding

One hates to have to repeat oneself to defend a situation that does not need defending, but were it not for the amount of protection afforded in the past, we would be in a far worse situation now. Senator Baxter speaks of the future. None of us can know what may happen in the future. Nobody in this world is wise enough to make provision against what may happen from week to week in such an international crisis as we are now going through. The wisest men cannot foresee what may happen in six months' time or what effect it may have on the lives and fortunes of every country in the world. We are accused of not having taken precautions to guard against these untoward events. In regard to the matter of providing credit, what exactly do we mean by credit? Does it mean, as I have said, that we should issue more and more bank notes and thereby incur inflation? If there is one thing on which I agree with Senator Baxter it is his suggestion that for any goods we export at the moment— cattle, corn or butter—it would be far better for us to get goods in exchange than to get English bank notes.

If there is any danger in the future as a result of this international situation, it is the danger that the bank notes that are being issued to-day may be worth far less 12 months from now, and if the war is not over then at the completion of the war they may be worth far less again. To that extent I agree with Senator Baxter that for any goods we are exporting it would be far better for us if we were to get coal and the materials for the manufacture of our own goods here in exchange. The taxation that is being levied in this Budget is certainly very severe, and it is likely to be extremely severe on our own young companies, but when you have to incur extraordinary expenditure you have got to resort to extraordinary means to get the wherewithal to meet that expenditure. If anyone can suggest any alternative policy it would be a very useful contribution to the debate.

Sir John Keane

There are one or two points I should like to raise on this final stage. One is the question of the taxation of the so-called allowances to members of the Oireachtas. Does the Minister realise that there is a very considerable feeling in the country on that point? Many people one meets casually say, "Why are not these salaries or allowances taxed, or, at least, why are the expenses not vouched for and why is what cannot be proved as being expenses not taxed?" It does seem strange on the face of it that people should be voting taxes a large number of whom do not pay any taxes themselves. I feel that this is a matter that is arousing very considerable feeling in the country and one that the Government should consider.

The next matter I wish to refer to-the Minister has heard me on this before, or his predecessor has—is the position of what I call, for want of a better name, the remnants of the demesne-owning class, many of whom are living under extremely hard conditions at the present time. They are overhoused; they have expenses out of all proportion to their income; and the only way they can avoid those expenses is to sell their places at a great sacrifice, in many cases at prices which would not enable them to buy even a modest villa. Does the Government consider that that would be a good position to force in the national interests? Whatever may be the record of these people as a class, they are leaders to a great extent in their districts. They are leaders of sport, and I would go so far as to say that in some districts they are almost outposts of civilisation. They are a desirable asset to maintain. They are a class of people who are being taxed on money they never receive.

Only a few demesne owners are fortunate enough to have much outside income, investment income. Very often their investment income is in trust and they cannot touch the capital. The only way many of them can now save themselves is either by selling their places at a sacrifice and letting all those social amenities go by the board or by reducing employment. I do not think for a moment that any Government who looks at this matter fairly would say that is a desirable course to compel these people to adopt.

It would be possible, I believe, to treat that class of property owners in a way that would not embarrass or would not affect the general principle that the Government seem bent upon, that those who live in fairly big houses say, near cities, shall not get the relief for repairs that they have got in the past. These people who farm their own property and who have considerable grounds to keep up do deserve special treatment. They have been exceedingly badly treated in the past by this Government. I do not want to keep on repeating this but the Minister will know that when that socialistically disposed Chancellor of the Exchequer, Mr. Lloyd George, was putting heavy tax of a socialistic character on the community he made exception in these very cases I am pleading for. He looked into the case of those people who live on their own properties and who spend a very large percentage of their income in outgoings and he said: "They are entitled to special relief and I will give them relief in this Bill. I will allow them exemption from income tax on all the money they spend on the maintenance of their places. By maintenance, I do not mean their living but repair of their houses and upkeep of their places." That has been virtually all swept away by our Government and there is an increasing burden of taxation on these, what I call, remnants of demesne owners. They are no longer landlords.

I do not want anyone to believe I am making a plea for landlords. Landlords have ceased to exist. These are remnants of the land owners, living in these places, who cannot get any rent. They are leaders of sport, leaders of local society, leaders, very often, of the Local Defence Force, who are being taxed on income they never receive. There is a way of giving them relief and I hope the Government will consider it. I make an earnest plea. that there should be some restitution of the reliefs that they had in the past, which were given by a socialistically disposed Government, before the countries were separated, and which now is the only means by which many of them can be saved from, practically, economic extinction.

Mr. O Ceallaigh

This Bill has led to a very interesting discussion on all aspects of the country's situation at the present time. The Second Reading discussion spread over many subjects and I thought it right and proper to address certain comments to Senator Baxter for the type of speech he delivered. Having read over my own remarks, I think I was not unjust or unfair. The speech that the Senator made to-day rather surprised me. I thought I was listening to a speech inside the Fianna Fáil Party. That was the type of speech the Senator made to-day—very different from the one he made the last day.

Mr. M. Hayes

Is the Party so dissatisfied with the Minister for Finance as that? That is news to us.

Mr. O Ceallaigh

The Party is never satisfied that we are making enough progress in industrialising the country. That was the main subject of the Senator's speech this afternoon—we are not doing half enough in providing all our own necessities.

Mr. Baxter

I said nothing of the kind. I am very sorry to mislead the Minister.

Mr. O Ceallaigh

I am not misrepresenting the Senator. I would not like to do that.

Mr. Baxter

I was talking about food and fuel.

Mr. O Ceallaigh

I think if the Senator reads over his remarks he will find, generally, that he referred to the want of production.

Mr. Baxter

Yes.

Mr. O Ceallaigh

And that he referred to want of industrialisation.

Mr. Baxter

Oh, no.

Mr. O Ceallaigh

Oh, yes. That is my interpretation. I thought the last day, if I may say so with respect, that Senator Hayes made a critical speech but a reasonable speech. I had no reason to find fault with the criticisms of the financial policy, at any rate, in the remarks of Senator Hayes. I could not accept all that he said. I could not accept his point of view in many matters but I could not say that his speech was an unreasonable speech. I think that was something new for him, as far as my experience in coming here is concerned. Certainly that was the way his speech impressed me.

Mr. M. Hayes

I will have to examine my conscience. I must be going wrong.

Mr. O Ceallaigh

That is how the Senator's speech impressed me—that it was not at all unreasonable, and that it would be worth while having a debate on the matter that he dealt with. I would be happy at any time to debate it here or elsewhere. The type of speech that Senator Baxter made that day was one that deserved the type of answer that he got. I do not think it is correct for Senator Baxter to say, as he said this afternoon, that the Minister for Finance is not sufficiently wide awake to the conditions of the present time. The very fact that we have had such a Bill brought in here, such additional taxation and such a long and detailed discussion on the subject of the Finance Bill, means that there has been necessity to change matters.

I agree with Senator Baxter that there is no great originality. I made a similar remark the last day and I repeat it to-day, in regard to the type of taxation that is embodied in this Finance Bill. I said the last day that I would be very happy and obliged to any Senator who would provide anything in the way of a new or original suggestion for taxation. It would help me very much as I have not been able to think of anything unique or original. All the taxes embodied in this Bill have been used elsewhere at some time or other. Some of them— the excess corporation profits tax, for instance—certainly are new, but not new as far as the Minister for Finance is concerned. I could not find fault with the Senator's statement that there is no inspiration in the method of collecting these taxes. There may not be inspiration, but there is a good deal of efficiency.

Mr. M. Hayes

And considerable perseverance.

Mr. O Ceallaigh

Yes, perseverance and efficiency. The general complaint is that our tax collectors are too efficient. The net is wide and anybody who should come within the net cannot escape. Anything the law allows the revenue people to take in the way of taxation, they make sure to get. I agree that we have not advanced as far as we might have in the way of industrialising this country, but we have gone a good distance on the road. We have in existence now industries that were not thought of 20 years ago. Some of them were not thought possible for this country even ten years ago Some of them are making good profits and earning good wages for the people employed in them. If we had got more encouragement of the type that Senator Baxter gave us this afternoon, in regard to that matter, we would have still more; but every effort that was made got nothing but the most hostile criticism from Senator Baxter and those associated with him during the last nine years.

Mr. Baxter

I was talking about the factories in the fields.

Mr. O Ceallaigh

We have done a good deal to encourage agriculture.

Mr. Baxter

No; production is lower.

Mr. O Ceallaigh

We have done both. There is more in the way of subsidies to agriculture. Some day I must get a list of the subsidies paid, directly and indirectly, to agriculture.

Mr. Baxter

Fewer people are employed.

Mr. O Ceallaigh

The list would show that while we were building up the industrial arm on one side—though we may not have been doing so as rapidly as the Senator now would wish—we were not neglecting agriculture on the other side. Agriculture had gone through a hard time—no one can deny that—in the trying period from 1929 to 1932. That was a particularly depressing time, when prices were not merely falling but tumbling down rapidly. The value of our agricultural produce of all kinds was practically halved in a few years. Then we had the economic dispute with England and the restriction on our agricultural produce. That certainly did not help the farmer, either, to get a profitable return for his goods. This Government tried to meet that and did meet it to some extent. However, there is no use in going into all that, as it is ancient history, but I do not want to let the Senator get away with the statement that we were not doing our duty to the country during the last nine years, either on the industrial side or the agricultural side. We may not have done all that was required of us, and there is bound to be argument on that point. Certainly there was no lack of activity or imagination, and there was no lack of goodwill for the farmer any more than for the industrialist.

I have just got the figures for the last three years for the value of our agricultural production, as given in the last issue of the official Trade Journal, showing the total value as follows: 1937-38, £49,662,000; 1938-39, £53,481,000; 1939-40, £60,799,000.

Professor Johnston

Would the Minister read from the same journal what the figure was for 1929-30?

Mr. O Ceallaigh

I have only those figures. The Senator probably has the journal.

Professor Johnston

I thought the Minister had the journal. The aggregate was more in 1929-30.

Mr. O Ceallaigh

The Senator talked about the figure for production. Since 1937-8 we have increased it by £11,000,000.

Mr. Baxter

The Minister has taken the lowest period.

Mr. O Ceallaigh

I do not want to misrepresent the situation at all. If I had the figures now I would give them.

Mr. Baxter

The Minister should have got them.

Mr. O Ceallaigh

They are in the Trade Journal. The Senator knows that, and he can read them out any day he wishes.

Mr. Baxter

But the Minister will not like them.

Mr. O Ceallaigh

I will like them. I have nothing to fear from the truth. I would be glad to hear the Senator draw his own conclusion from the figures. If he would wait, I would send down for the book and get the figures for the past ten years.

Mr. Baxter

The Minister, as the Minister for Finance, should know them off by rote.

Mr. O Ceallaigh

I hope the Senator will know them off by rote if he is Minister. I know he is a past master at figures, while I am only a child as Minister for Finance for the past one and a half years, and may not be a very apt pupil, either.

Mr. Baxter

Work hard.

Mr. O Ceallaigh

I do work hard. The weakening of the national morale was referred to by the Senator. I wonder where that came from— certainly not from Fianna Fáil or its Government.

Mr. Baxter

If you lead people astray.

Mr. O Ceallaigh

If there is any national morale left—and there is a good deal—we are responsible for maintaining it, despite the croakers, the wailers and the snivellers. There are too many of them all over the country. The national morale never was better. It had to stand up to a lot in the last nine years.

In particular in the last nine years we have gone through a good deal and we have come through with flying colours—the country as a whole has done well. We will stand up to anything that comes and, please God, carry the country with safety through the dangers and difficulties that are pressing on us from all sides. The morale of the people is good and will remain good under the present leadership; leadership in which the country has complete confidence because it has been tested over and over again and has come through. There is no lack of courage. I may not be the revolutionary that I was 25 or 30 years ago, but I wonder is Senator Hayes——

Mr. M. Hayes

I was never a revolutionary: neither was the Minister.

Mr. O Ceallaigh

—I am a man who carried the gun against the authorities that were here then. I do not know what you would call that, or whether you would say we were revolutionaries.

Mr. Baxter

You got a good deal of help from other people, and a good many other people made sacrifices, and more sacrifices than many who talk most about it now.

Leas-Chathaoirleach

I hope it will not end up under the bed in this debate.

Mr. O Ceallaigh

It may be that I have not the courage I had then, but perhaps because of my grey hairs, what little of them I have left, I look at things a little more carefully, and at the consequences of acts a little more carefully than when I was more hotblooded, 25 or 30 years ago. Maybe I am a little slower in action, but I do not think the country will be any the worse off because I hold such a responsible position as I hold to-day. The ideals of this country and the ideals that were then dominant in my mind I have not forgotten, and with my colleagues I try as best I can, when we believe that they will be for the benefit and welfare of the country, to put them into operation. I agree with Senator Baxter that our people are suffering through not having supplies. They cannot get coal, paraffin oil and candles in some parts, and, of course, the Government is there to blame for all that.

The Government does not deserve the entire blame for the lack of these things, because there is nothing that this Government or any other Government could do under present circumstances that would get as much coal as there was here even 12 months ago. It cannot be got in the home of coal, Great Britain, the best coal country in Europe. They are short of coal and they cannot get it for vital industries. They are taking men out of the Army and out of the Navy and out of the munition factories and trying to put them back to get coal. When that is practically our only source of supply, how can we expect that they will give us coal? I should like to be in a position to say, as Minister for Finance, that no cattle would go to England unless they would give us something like coal. It would be a very happy position, as far as the supplies of coal and petrol are concerned, but it would be no use. We would be told very quickly: "Keep your cattle."

Professor Johnston

The cattle would get the old age pension in that case.

Mr. O Ceallaigh

Well, that is the problem. I believe the Government, under present circumstances, could not find a solution of that difficulty. We are trying. We have some coal in this country. We have certain hard coals, such as anthracite, at Castlecomer, and the people there tell us they are working to the fullest extent. That is what we are told. We have founded a company to mine coal at Slievardagh. The Government has provided the capital. As no private enterprise was found to come along to develop that coalfield the Government has undertaken the task. The Minister for Finance, out of the Exchequer, is to provide the money to do it. Perhaps the Senator agrees that it ought to have been done long ago. That may be so, but when we did try anything of that kind in the last nine years we all know what sort of reception it got from the Senator's Party.

Mr. Baxter

For instance?

Mr. O Ceallaigh

I will go down the list. Take the question of food.

Mr. Baxter

What about food?

Mr. O Ceallaigh

What kind of reception did our activities about food get? What kind of reception did our activities with regard to turf get?

Mr. Baxter

There were no activities with regard to turf except in one spot.

Mr. O Ceallaigh

Our activities were the subject of the greatest scorn by the Senator's Party.

Mr. Baxter

That is not so.

Mr. M. Hayes

I do not think so.

Mr. O Ceallaigh

Well, I cannot produce the quotation now.

Donnchadh O hEaluighthe

"It was a cod to grow wheat." That is one quotation.

Mr. O Ceallaigh

Were it not for the activities of the Turf Board and the drainage of bogs that the board completed in the area where they are operating, we would be much poorer by hundreds of thousands of tons of turf than we will be. The work of drainage has taken years. If they had not done that we would be much poorer to-day. They got very little help from the Senator's Party. That is putting it mildly. I know we are short of a great many of the raw materials that the Senator refers to. Our main source of supply was Great Britain. We are still getting some supplies, and I hope we will continue to get them so that employment may continue and that our people may be able to live and to an extent enjoy the comforts that they are used to. But the Senator admitted that these were abnormal times. They are quite abnormal.

Professor Johnston

Has the Minister ever thought of putting it to Britain that if they gave us more raw materials we might give them more of our exports?

Mr. O Ceallaigh

Now, where do you think we have the little intelligence—

Mr. M. Hayes

I have often wondered.

Mr. O Ceallaigh

All the brains and intelligence and ability and energy are over there, and we are the damnedest set of fools, if the Senator is to be believed. We are not without having thought of a suggestion.

Professor Johnston

I should like to know what their attitude was.

Mr. O Ceallaigh

I do not think that it would be wise or helpful, in the present state of affairs, to go into a long debate on that matter. It would exacerbate feeling. If I were to make statements which, I think, I am entitled to make in answering the questions the Senator has asked, I should be told that I was raising passions. I, certainly, do not want to do that.

Professor Johnston

I merely want to appeal to common sense and the sense of common interest.

Mr. O Ceallaigh

That is being done. Appeals to common sense have been made by those in authority here to those in authority on the other side.

Professor Johnston

It is quite possible that there is a bit of unreason on both sides.

Mr. O Ceallaigh

We all know that these are very difficult times and we realise that the people who used supply us with raw materials and fuel are going through difficult times. We have tried reason and argument with these people as to the advantages that are here readily accessible to them. They have not seen fit to accept that point of view. Over and over again, it has been put up to them. I do not want to say any more on that subject. I do not think that it would be the least bit helpful.

In reply to a remark by Senator Douglas, that he would prefer an increase in income-tax to a tax on industry, it would certainly have been much easier for the Minister for Finance to have put an additional 2/- on the income-tax and drop all the other taxes.

Mr. Douglas

I do not want to be taken as having suggested a figure of 2/- increase.

Mr. O Ceallaigh

I know that the Senator did not mention a specific figure but I have to think of the figure. I could have put an additional 2/- on the income-tax but I wonder what sort of reception I should have got here if I came in with that proposition. The war may not be over before next year and, so far as I can see, when the next Finance Bill comes along, I may be in a position to please the Senator by increasing income-tax——

Mr. Douglas

Provided you take off the other taxes on business at the same time.

Mr. O Ceallaigh

There is little hope of that. It is natural that, as the war goes on and expenses become greater, taxation will increase. We shall be looking for taxation in almost every direction. The taxes are heavy at present. I have no desire to minimise the burden the country is bearing. The country should be told what it is bearing and how the money is being spent. Everybody in the country should know and feel that. It seems to me that, if the present emergency continues and if the demands for expenditure continue, the likelihood of reduced taxation next year is remote. On the contrary, taxation will, probably, be heavier next year than it is this year.

On the question of employment, mentioned by Senator Douglas last day, and to which I omitted to reply, I should personally do everything I could to keep my own staff in employment. I should take any step in reason to keep them in employment.

Mr. Douglas

Even if it meant increases in prices?

Mr. O Ceallaigh

Yes.

Mr. Douglas

I agree.

Mr. O Ceallaigh

The Senator referred to the provision of credit. He is quite right. Up to last year, the Government did not directly provide credit but they did go to the standing committee of the banks and to the governors of the Bank of Ireland and asked them to provide credits for people who wished to lay in stocks. So far as my information goes, the banks compiled with that request readily and generously. Stocks were laid in all over the country but by, as the Senator said, people who had credit. It is quite true to say that not until the past few months did this country suffer because of the emergency to any extent. We were living our normal life until the past few months. It is only in these days that, to quote Senator Douglas, we are beginning to "feel the pinch". That we did not do so previously was due to the foresight of manufacturers and traders and, if I may say so, to the foresight of the Government, who, long before the war, had arranged with the banks to provide the necessary credits.

Mr. Douglas

I think that the statement that the Government had arranged with the banks to make the necessary credit available misled Senator Hawkins and other people. They did not arrange credit with the banks. They asked them to do their best in giving credit. The people concerned did not get credit otherwise than on their own assets.

Mr. O Ceallaigh

That is quite right except that, in the case of certain industries, they arranged for credit.

Mr. Douglas

The credit was secured only by the assets of the industries.

Mr. O Ceallaigh

Even that would not be correct. Take Grain Importers. That company had no assets. The Government asked the bank to provide that company with credit.

Mr. Douglas

Against the assets they were to get.

Mr. O Ceallaigh

When the company was formed, it had no assets and it had to buy wheat. The Government did go to the bank and asked them to give it credit.

I know something of the difficulties of demesne owners, to which Sir John Keane referred. I have had a few cases of that type before me since I became Minister for Finance. We have done everything possible in these cases. I have had letters from two owners, with whom Senator Sir John Keane is, probably, familiar, thanking me for the considerable help given and for making things light for them, so far as that could be done within the law. I have had letters thanking the Minister for Finance for the time, energy and help given by the officials to work out ways and means where the burden on them could be lightened. That has been done.

Sir John Keane

I do not want to interrupt the Minister, but he used the expression "within the law". I suggest that he has got very little scope "within the law" to deal with their pressing problems. I am sure that he and his officials do all they can "within the law", but I suggest that in scope they are very restricted, indeed.

Mr. O Ceallaigh

It is restricted, I admit, but still it has meant help of a not inconsiderable kind in some of these cases.

Sir John Keane

You always get that.

Mr. Baxter

Will the Minister reply to my question about a Central Bank?

Mr. O Ceallaigh

I am sorry. I should have said that the Central Bank Bill is practically finished, in draft. I have not been able to give it much time since my Finance Bill came along. I should have given it more time but for that and it would have been in a more advanced stage. It is practically drafted now.

Question put and agreed to.